Posted on August 02, 2015

Standard & Poor's Ratings Services yesterday affirmed its 'A' insurer financial strength and counterparty credit ratings on Qatar-based Doha Insurance Co. QSC (DIC), said The Peninsula. The outlook remains stable. "The affirmation reflects our view that DIC's capital base will remain extremely strong and support the company's business expansion plans outside of Qatar," the S&P said in a statement.

Although the company's operating performance deteriorated in 2014 as a result of higher expenses, mainly in relation to set-up costs of its Dubai entity, the company continued to outperform its peers with a combined (loss and expense) ratio of 79.9 percent (versus 75.3 percent in 2013). Also, we view favourably DIC's diversification plans and the relatively high level of controlled distribution. We have therefore changed our assessment of the insurer's competitive position to strong from adequate, the statement said.

"We expect that DIC's expense base will not further increase in 2015 and that claims will remain at a similar level as in previous years. We therefore anticipate a combined ratio of less than 81 percent in 2015. Furthermore, we expect that the company will diversify its premium income outside of Qatar, from where it currently generates all of its income, once its new Dubai-based entity is fully operational. Our overall assessment of the company's business risk profile remains adequate, reflecting sector risks and the company's continued dependence on reinsurance protection.

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"We continue to view DIC's financial risk profile as strong based on its very strong capital and earnings, moderate risk profile and adequate financial flexibility. In April 2014, Doha successfully raised Qatari rial 437m ($120m) from a rights issue to existing shareholders. The funds were used to increase the company's capital base, which we view as extremely strong. DIC's risk position continues to be moderate, reflecting our view of its relatively large exposure to high-risk assets, some investment concentrations to banks, and a potential slower economic growth rate in Qatar leading to a potential increase in capital and earnings volatility.

"We think that the insurer's financial flexibility remains adequate, based on DIC's demonstrated track record in accessing funds through the capital market, if required. The stable outlook reflects our view that DIC's extremely strong capital base will support the company's expansion and growth plans over the next two years," the statemen added. 

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