The operating performance of Qatar Islamic Insurance Group (QIIG) is strong, evidenced by a five-year (2020-2024) weighted average return on equity of 16.6%, AM Best said in a recent report.
QIIG’s combined family and general takaful portfolios have exhibited excellent underwriting performance over the medium term, with the five-year weighted average combined ratio of 73.1%. Underwriting performance of the general takaful book was affected adversely by underperformance of the medical segment in 2023 and 2024; however, the company has taken actions to remediate this portfolio.
Ratings affirmed
AM Best has affirmed QIIG’s Financial Strength Rating of ‘A-’ (Excellent) and the Long-Term Issuer Credit Rating of ‘a-’ (Excellent). The outlook of these credit ratings is ‘Stable”.
QIIG is a takaful insurer and operates through a hybrid model, whereby the shareholders’ fund charges the policyholders’ fund (PHF) a wakala fee based on gross written contributions (GWC) and a mudarabah fee based on investment income.
Balance sheet strength
The ratings reflect QIIG’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
AM Best assesses the company’s risk-adjusted capitalisation on a combined basis, including its policyholders’ and shareholders’ funds, due to the strength of domestic regulation and requirement that the shareholders’ fund would have to support the PHF were it to fall into deficit.
Other positive balance sheet factors include the company’s track record of internal capital generation through the retention of earnings and QIIG’s accumulated surplus within the PHF. An offsetting factor to the assessment is QIIG’s exposure to illiquid real estate assets and investments in associates, which accounted for 41.3% of its total investments as at year-end 2024. Despite this, the company maintains a robust level of liquidity, with its consolidated cash and deposits covering net technical provisions by 170.5% at year-end 2024.
Business profile
QIIG holds a niche position within its domestic insurance market, where it is a market-leading takaful player. The company has good diversification by line of business, offering a range of Shariah-compliant insurance products. In 2024, QIIG wrote GWC of QAR551.2m ($157.4m). The business profile assessment is constrained by the company’s geographical concentration and limited competitive position within the wider Qatari insurance market. M