Qatar: Strong technical results drive Qatar Islamic Insurance Group's profits
Source: Middle East Insurance Review | Jul 2023
Qatar Islamic Insurance Group’s (QIIG) ability to generate strong operating returns is demonstrated by its five-year weighted average return-on-equity ratio of 13.8% (2018-2022), said AM Best.
Profitability is driven mainly by QIIG’s strong and stable technical results, which have generated positive returns in each of the last 10 years. The company’s earnings have been moderately supported by investment income. However, investment yields have experienced some volatility in recent years driven by fair value losses arising on real estate and the impairment of investments in associates.
QIIG’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2022, as measured by Best’s Capital Adequacy Ratio (BCAR) and is expected to remain comfortably at this level over the medium term. Supporting the balance sheet strength assessment is QIIG’s consistent demonstration of internal capital generation.
In 2022, the company reported capital and surplus of QAR456.3m ($126.1m), growing by 8.3% compared with 2021 (5.7% growth when including the PHF to QAR701.2m). While maintaining sufficient liquidity to support its insurance operations, QIIG’s investments portfolio continues to carry exposure to higher-risk real estate assets and investments in associates, which accounted for 40% of its total investments as of year-end 2022, albeit a decline in recent years. QIIG is moderately dependent on reinsurance, as the group cedes a high proportion of its large commercial risks. M