Most Qatar-based insurers' ratings unaffected by political rift: S&P
Source: Middle East Insurance Review | Jul 2017
The ratings on most Qatar-based insurance entities have not been immediately affected after a group of governments, including Saudi Arabia, the UAE, Bahrain, Egypt, Libya, and Yemen, moved to cut diplomatic ties, as well as trade and transport links, with Qatar, said S&P Global Ratings.
The ratings agency lowered its long-term rating on Qatar to ‘AA-’ from ‘AA’ and placed the rating on CreditWatch with negative implications. Consequently, the agency placed the ratings on Doha Bank and its insurance subsidiary Doha Bank Assurance on CreditWatch with negative implications.
“We do not consider that the downgrade of Qatar will have an immediate effect on the business and financial profiles of the rated insurers because they have limited or no direct exposure to these countries. They also have robust levels of capital relative to balance sheet risks.
“However, a prolonged crisis that hinders the economy will slow premium growth and make the operating environment more difficult, particularly for insurers that rely primarily on local business.
“Furthermore, investment income is a key contributor to the insurers’ earnings and lower asset prices could reduce their profit,” said S&P.
The agency said that it would closely monitor the potential long-term effect of the cut ties and downgrade of Qatar on the insurers’ business and financial risk profiles, notably the quality of their assets, bearing in mind that the majority of their investments are held in Qatar.
The ratings on the following entities are unaffected:
- Qatar Insurance and its rated subsidiaries (A/Stable);
- Doha Insurance (A-/Stable);
- Al Koot Insurance & Reinsurance (A-/Negative);
- Al Khallej Takaful Group (BBB+/Stable); and
- Seib Insurance and Reinsurance (BBB/Positive). M