AM Best has affirmed the B++ (good) financial strength rating and bbb+ long-term issuer credit rating for Qatar Islamic Insurance Company (QIIC). The outlook of these ratings is stable.
The ratings reflect QIIC’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
QIIC adopts a hybrid takaful model, whereby the shareholders’ fund (SHF) charges the policyholders’ fund (PHF) a wakalah fee based on gross written contributions (GWC) and a mudarabah fee based on investment income. QIIC’s ability to accumulate surpluses within the PHF whilst regularly distributing surplus back to policyholders supports the sustainability of the takaful model.
QIIC has a track record of strong operating and technical profitability, highlighted by a five-year average (2013 - 2017) combined ratio of 79% that has remained very stable over recent years. While there has generally been a good balance of earnings between technical and investment income, a volatile investment environment in Qatar has meant investment returns have declined over the past four years. During 2017, the company reported net profit of QAR62 million, equivalent to a sound return on equity of 13%.
Although the company is concentrated on its domestic market of Qatar, the company maintains a niche market position as an established provider of shari’ah-compliant products and a strong reputation that is partially attributable to the company’s track record of distributing surpluses back to its policyholders. The company also benefits from being a member of the National Insurance Consortium, which provides QIIC access to sizable government infrastructure contracts. QIIC reported modest premium growth in 2017, as the company reported a 1% increase in GWC to QAR317 million, compared with 2016.