A combined ratio averaging above 100 per cent for a five-year period, and with a $318 million loan repayment on the horizon, AM Best has decided to revise its outlooks to negative for Qatar Insurance Company QSPC, and its Bermudian-based subsidiary Qatar Re.However, the rating agency has also affirmed the financial strength rating of A (excellent) and long-term issuer credit ratings of “a” of QIC and Qatar Re. The ratings reflect the “very strong” balance sheet strength of QIC, its strong operating performance, neutral business profile and enterprise risk management, AM Best said.Regarding the change of outlooks from stable to negative, the agency said it “largely reflects pressure on AM Best’s current operating performance assessment of strong due to underperformance emanating from the group’s non-Middle East insurance operations [QIC Global]”. It said QIC Global, which includes Qatar Re, has experienced “considerable staff turnover and a fluctuating business strategy, at the same time as pursuing aggressive growth in a soft market”. AM Best, in a statement, also said: “Results have been adversely impacted in recent years (2017 to 2019) by natural catastrophe losses and Ogden rate adjustments in the UK motor segment. “As a consequence, the group has produced a five-year (2014-2018) average combined ratio of 101.2 per cent and AM Best’s expects the group to report a combined ratio in excess of 100 per cent to be reported for 2019.”The agency said the group has a QAR 1.1 billion ($316 million) “receivable due from the Markerstudy Group before May 2020. Whilst the group maintains sufficient capital to absorb a default on this loan, any impairment would represent a material loss to earnings”.AM Best said pressure on QIC’s underwriting earnings “highlight governance and underwriting control deficiencies in the group’s decision-making process”.It noted that QIC reported gross written premium of $3.4 billion in 2018, and increase of 8 per cent year-on-year. The growth was primarily driven by the acquisition of Markerstudy carriers which “offset material non-renewal of loss-making contracts in the group’s reinsurance platform”.AM Best said: “Going forward, the group plans to focus on low-volatility lines, with more than half of GWP emanating from motor insurance in the UK, Continental Europe and the Middle East.”