London, 26 November 2008 -- Moody's Investors Service announced today that it had assigned a first-time insurance financial strength rating of Baa2 to the Qatar Islamic Insurance Company ("QIIC") Qatar Islamic Insurance Company ("QIIC") . The rating outlook is stable.

Qatar Islamic Insurance Company (QIIC) Qatar Islamic Insurance Company (QIIC) was created in 1995 and was one of the first Islamic insurance companies in the world. Operating exclusively in the State of Qatar (although expanding into other Islamic markets), QIIC QIIC provides both life and non-life insurance to individuals and businesses in Qatar with gross contributions of QR 159 MM in 2007 (US$

43.6 MM) and total assets of QR 579 MM (US$ 159 MM). The company ranks fifth in the Qatari insurance market when ranked by premium, and focuses mainly on retail and SME commercial lines of business. Although privately owned, QIIC QIIC is a well recognized financial institution in Qatar, with the Chairman of the Board being Sheikh Thani Bin Abdullah Al-Thani, a member of the ruling family. Sheikh Thani, together with his children and dependents and his wholly owned companies constitute a principal owner of QIIC QIIC . QIIC QIIC is run on the al-Wakala Islamic insurance model, which maintains separate accounts and funds for policyholders and shareholders.

Moody's notes that QIIC QIIC 's rating reflects the potential support from its shareholders and the wider financial system. Thus, despite the absence of explicit guarantees, in the context of its role as the leading Islamic insurer in Qatar, QIIC QIIC 's rating reflects Moody's view on the strong ability and potentially likely willingness of QIIC QIIC 's main shareholders, and also the wider financial system, to support the company if it were to come under financial distress. Absent such support, the rating would be lower.

Moody's notes the main standalone strengths of QIIC QIIC are its extremely strong capitalization in relation to insurance risk, with underwriting leverage standing at a very low 50% as at end 2007. In addition, insurance profitability has been strong in recent years, with non-life combined ratios averaging 77% over five years and with overall policyholder surplus and shareholder profit at QR418 MM in 2007 growing from QR323MM in 2006. More negatively, Moody's notes that QIIC QIIC 's main challenges include managing the very high level of investment risk, as QIIC QIIC invests predominantly in Qatar equity and property markets (respectively 41% and 15% of non-linked assets). In addition, Moody's notes the company's overall heavy exposure to Qatar both through insurance and investment risk, in particular as Qatar's insurance market is small in comparison to some Gulf peers, although it is growing at a strong rate. Finally, as with many insurance peers in the region Moody's regards QIIC QIIC 's risk management functions as modest, and would expect these functions to improve as the size and complexity of the business grows

Moody's said that upward rating pressure for QIIC QIIC may evolve over time from 1) a significant reduction in investment risk, either through wider spread of asset classes and/or geographic exposure and 2) through sustained profitable growth and international expansion reducing concentration risks

On the other hand, the rating may experience downward pressure from 1) a significant deterioration in the Qatari economic environment, particularly if the real estate market is impacted, 2) reduced underwriting profitability with QIIC QIIC 's policyholders fund becoming reliant on investment income for over 80% of the policyholder's surplus generated and 3) any evidence of reduced likelihood of support from QIIC QIIC 's main shareholders and business partners

At H108 QIIC QIIC recorded 5% growth in gross contributions to QR102MM from QR97MM at H107. Total policyholder surplus generated increased by 31% to QR13MM from QR10MM. Total policyholders surplus and shareholders equity stood at QR 476MM (QR418MM YE07)

The following rating was assigned:

Qatar Islamic Insurance Company -- Baa2 insurance financial strength rating, stable outlook.

-Ends- London Simon Harris Managing Director Financial Institutions Group Moody's Investors Service Ltd. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 London Paul Oates Vice President - Senior Analyst Financial Institutions Group Moody's Investors Service Ltd. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Copyright 2008, Moody's Investors Service, Inc. and/or its licensors and affiliates including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved.

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