Doha Insurance Group Q.P.S.C. (DOHI) Earnings Call Transcript & Summary

Good day, and welcome to the Doha Insurance Group Q2 2021 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Roy Thomas. Please go ahead, sir.

Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Doha Insurance Group's Second Quarter 2021 Financial Results Conference Call. On this call, we have Ghaith Jardaneh, the Chief Financial Officer; and Osama Ryan, Doha Insurance Group's Chief Investment Officer. We will conduct this conference call with management first reviewing the company's results followed by a Q&A. I will turn the call now over to Ghaith Jardaneh. Go ahead, Ghaith.

Good afternoon, everybody. Just to give you some highlights of Doha Insurance Group's performance for the first half of 2021. Gross premiums having by 22% in the first half of 2021 compared to first half 2020, reaching QAR 578 million compared to around QAR 476 million in 2020. The largest contributors to this growth were Mena Re, our subsidiary in the DIFC in Dubai; Mena Re Life, our subsidiary in Lebanon that focuses on getting us reinsurance business across the Middle East in Medical and Life. Other strong contributors were General Accident line in the Qatari market, the Energy line in Qatari market and the Engineering line in the Qatari market. The distribution of our in gross written premiums have shifted more towards the fire and General Accident line and away from the Marine and Aviation and from the Motor line, with Motor line dropping from 24% to 20% in 2021. Marine and Aviation dropping from 15% to 12%, while the fire and general accidents and other lines have grown from 61% in the first half of 2020 to 68% in the first half of 2021. Our net earned premium has increased from QAR 144 million to QAR 209 million approximately at a growth rate of 45%. Our loss ratio has increased substantially in the first half of 2021 from 54% in 2020 to 64% in 2021. This was -- this can be mainly attributed to 2 things. First of all, the loss ratio experienced in the first half of 2020 was mitigated by the lack of traffic that was going on and the lockdowns that were happening in the first half of 2020 due to the pandemic. These results -- these lockdowns resulted in abnormally favorable loss ratios in both motor line and medical lines specifically. And in general, across all lines of business, they were -- the loss ratios were kind of mitigated. The -- of course, these lockdowns were lifted later on during the year and the first half of 2021, show a much more normal activity in the Qatari market. And with life going back to normal at that point, we've seen a loss ratio that was closer to the loss ratio usually experienced by the company. However, there was another aspect that has resulted in this increased loss ratio compared to 2020. We booked a large IBNR reserve increase in the first half of 2020 from our Mena Re Life operation in Lebanon. So between the increase in IBNR reserves and the fact that last year's loss ratio was kind of subdued due to the lockdowns, we had this major increase in our loss ratio. Net commission costs increased from around QAR 2.7 million to QAR 5.1 million. However, as a percentage of gross premiums, it's relatively the same. Our net underwriting results improved from QAR 63.2 million in 2020 to QAR 69.5 million in 2021. However, as a percentage of gross written premium, they have actually decreased from 9.2% of gross written premiums to at 8% of gross written premiums. Our combined ratio increased from 86.3% to 89% in 2021. However, this is mainly driven by the increase in the loss ratio. Investment performance improved in 2021. We booked investment income of $17.3 million in the first half of 2020 compared to $21.5 million in the first half of 2021. Furthermore, the return on the investment assets have increased from 3.2% to 3.8%. And also, the company was able to allocate more of assets into its investments. And as you can see, we have increased our investment portfolio from QAR 1.08 billion to QAR 1.13 billion in the first half of 2021. Net income achieved by the company stood at QAR 40.5 million in the first half of 2021 compared to QAR 31.9 million in the first half of 2020. The net income margin held steady at 7% in both those time periods. And the growth rate, net income registered for the first half of 2021 was 27%. Net -- the total assets that the company grew from QAR 2.6 billion in the first half of 2020 to QAR 2.9 billion in the first half. Shareholders' equity grew from QAR 1.1 billion in the first half of 2020 to QAR 1.14 billion in the first half of 2021. And this is after paying out approximately the total amount in dividends that was payable in the first -- that was paid out in the first quarter of 2021 of QAR 50 million. And it's worth mentioning here that also our fair value reserve and equity has decreased from around [ QAR 60 million ] in -- by the end of 2020 -- by the end of the fiscal year 2020 to approximately [ QAR 21 million ] in the first half of 2021. Of course, this -- the fair value reserve was a [ negative QAR 60 million ], and it currently stands at a [ negative QAR 21 million ]. The DIG share price as of the second of August 2021 stood at QAR 1.939. The shares trading at a P/E ratio of approximately 12x. According to the last dividend payment of -- dividend per share payment of QAR 0.1. The current share price base and the last dividend payment resulted in a dividend yield of approximately 5.2%. Please, if you have any questions, please -- we're more than happy to answer any questions you have.

[Operator Instructions] It appears there are no questions at this time.

Yes. If there are no questions, then we'd like to thank Doha Insurance Group's management for the results update, and we look forward to speaking to you all for the next quarter results. Thanks.

Thank you all.

Thank you. That does conclude the call. Thank you for your participation. You may now disconnect.