Global rating agency Moody’s has revised Damaan Islamic Insurance Company, Beema’s outlook to positive from stable, reflecting its continued strong profitability and improved market position.
It has affirmed Beema’s ‘Baa2’ insurance financial strength rating, mirroring strong capitalisation, with consolidated equity of QR297mn, representing 33.6% of its total assets at YE 2015; broad distribution, via its diversified shareholders (including two of the largest Islamic banks, the largest Qatari insurer and a real estate company); and relatively strong asset quality, with the vast majority of investments held as cash, bank deposits and investment grade sukuk bonds, translating to a low high risk assets.
Furthermore Moody’s expects that Beema will benefit from compliance with the new set of rules issued by the Qatar Central Bank in March 2016, in areas such as asset liability management, capital adequacy and reserve setting. These rules have, amongst other things; implemented new risk based capital and actuarial-led reserving requirements starting April 2016.
More negatively, Beema’s financial and total leverage remains somewhat high compared with Gulf peers, at 30.4% and 39.8% respectively at YE 2015. The leverage levels mainly reflect the increased use of ‘murabaha’ financing proceeds largely invested into investment grade sukuks.