Historical control failings, which led to excessive risk exposures and underwriting losses outside of the approved risk appetite, have now been resolved. We anticipate that DBAC’s risk management will continue to evolve as the company grows. This will be particularly key if the insurer starts to write larger and more complex risks.
S&P assess DBAC’s business risk profile as fair, constrained by its modest size and market share within the Qatari market. With a gross written premium income of QR107.1m in 2014, DBAC’s market share was below 2 percent.
Although the company benefits from its parent, Doha Bank, through which it sources roughly half of its gross premiums, we believe that the company could further develop this relationship. We expect that premium income sourced through Doha Bank will increase in the medium term, but that overall premium growth will remain modest, at around 2 percent in 2015.
S&P continues to assess DBAC’s financial risk profile as lower adequate, with its moderately strong capital and earnings and adequate financial flexibility constrained by its high risk position. DBAC’s extremely strong capital adequacy is a key strength to the rating, and we expect it to remain at this level through 2017. More robust risk management and underwriting procedures have, in our view, contributed to DBAC’s significant improvement in technical results.
“On the investment side, our assessment of DBAC’s risk position remains high due to its significant concentration in the banking sector, which holds 70 percent of DBAC’s invested assets. We expect that the company will improve its investment portfolio diversification over time,” the bank said.
S&P’s assessments of DBAC’s management and governance (fair) and liquidity position (exceptional) remain unchanged.
The stable outlook reflects the opinion that DBAC’s extremely strong capital adequacy will support the company’s moderate and profitable growth ambitions over the next two years.