DOHA: The acquisition of Antares Holdings Limited by Qatar Insurance Company (at regulatory approval stage) is “credit positive” for both QIC and Lloyd’s of London, and it is expected to enhance QIC’s international profile among insurance brokers, global rating agency Moody’s said yesterday.
The rating agency, in a press statement, also said the deal marks a reversal of previous trends in which Western insurers bought insurers in emerging markets.
QIC, the largest insurer of the country, on February 13, had announced that it would acquire Antares, a speciality lines insurer and reinsurer that comprises a Lloyd’s of London operation (Antares provides capital to support Lloyd’s Syndicate 1274), and a Bermuda-based reinsurer.
Moody’s said the acquisition is credit positive for QIC because it will expand its geographic and line-of-business diversification by providing access to the Lloyd’s market via Syndicate 1274.
It also said that the acquisition is credit positive for Lloyd’s of London too, which benefits from the presence of another internationally focussed insurer within its ownership structure.
QIC expects to close the transaction some time during the second half of this year, pending regulatory approval in Qatar, Bermuda and the UK.
QIC, also the third-largest insurer in the Gulf Cooperation Council (GCC) region, with year-end 2013 gross premiums written of QR3.53bn ($970m) and total shareholders’ equity of QR5.38bn ($1.48bn). QIC owns a stake in Damaan Islamic Insurance Company (Beema, financial strength Baa2 stable).
QIC’s acquisition of Antares is another step in QIC’s five-year plan approved in December 2012 to expand its insurance operations. QIC’s non-Qatari business constituted 63 percent of its gross premiums written in 2013, up from 52 percent in 2012, and we expect the proportion of international business to increase with the Antares acquisition, resulting in increased diversification of QIC’s revenues and earnings. Because the GCC region is heavily exposed to the hydrocarbon sector and underwriting profitability in the region is volatile, an expansion into other geographies and business lines is credit positive.
Syndicate 1274, of which Antares provided 76 percent of its capital in 2012, writes a broad range of business lines, including marine cargo, professional indemnity, property treaty, aviation and marine hull, each of which accounts for more than 10 percent of Syndicate 1274’s insurance premiums. In 2012, Syndicate 1274 wrote gross premiums of £197m (QR1.19bn) and generated a profit of £16m (QR97m).
In addition, although QIC has a strong reputation in the GCC, the acquisition is likely to raise QIC’s international profile among insurance brokers and should lead to QIC writing more risks through international brokers.
In our view the acquisition by QIC reflects GCC insurers’ desire to move away from a focus on local insurance markets, which offer relatively few lines of
business and increases concentration risk.
Acquiring Antares should increase QIC’s exposure to the European and North American insurance markets, which collectively accounted for 74 percent of Lloyd’s overall 2012 revenues, and would reduce QIC’s reliance on the Qatari and other GCC insurance markets.
The Peninsula
