Investing.com -- S&P Global Ratings has revised its outlook on Qatar-based Doha Insurance Group Q.P.S.C. (DIG) from stable to positive, while affirming the ’A-’ insurer financial strength and long-term issuer credit ratings. The positive outlook on DIG is based on the company’s stronger-than-expected performance in 2024, the continued de-risking of its asset portfolio, and the maintenance of a substantial capital buffer above the 99.99% benchmark, as per S&P’s model.

In 2024, DIG reported an increase in insurance revenues to 1.58 billion Qatari riyal (QAR), up from QAR1.37 billion in 2023. This growth was largely driven by the acquisition of large non-life accounts in Qatar. The company’s reinsurance subsidiaries, MENA Re and MENA Re Life, contributed to the group’s growth and diversification by geography and line of business. In the first quarter of 2025, DIG’s insurance revenue increased by about 19% compared to the same period in 2024. S&P Global Ratings anticipates DIG’s top line to grow by about 20%-30% in 2025 as the company expands its international and domestic operations.

DIG’s combined ratio, a key profitability metric in the insurance industry, is expected to remain between 80%-85% over the next two years, stemming from the company’s focus on underwriting profitability. In 2024, DIG achieved a combined ratio of about 81.6%, down from 82.7% in 2023, due to an improvement in its loss ratio.

S&P Global Ratings projects DIG’s capital adequacy to remain substantially above the 99.99% benchmark in its model from 2025 to 2027. This projection is based on an expected annual net profit of more than QAR180 million, the majority of which will be retained. In 2024, DIG reported an after-tax profit of about QAR190.4 million (approximately $52.3 million), up from QAR150.7 million in 2023, leading to an increase in shareholders’ equity to about QAR1.3 billion in 2024 from QAR1.2 billion in 2023.

DIG is also expected to continue reducing its exposure to high-risk assets in favor of highly rated fixed-income instruments. In 2024, the company reduced its total exposure to real estate and equity investments to about 37%, down from about 44% in 2023.

The company’s borrowings, which were held against real estate investments in Germany, decreased to about QAR33.5 million at the end of 2024, down from QAR65.9 million in 2023. This reduction is anticipated to lower the company’s finance costs.

The positive outlook suggests that S&P Global Ratings might raise its ratings on DIG over the next two years, provided the company continues to profitably expand its business while maintaining a substantial capital buffer at the 99.99% benchmark.

However, the outlook could be revised back to stable if DIG’s regional expansion and diversification lead to weaker than expected underwriting results, if there are unexpected underwriting or investment losses causing a significant and permanent deterioration in capital adequacy to below the 99.99% benchmark, or if there is a marked increase in tolerance to high-risk assets.

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