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

Good day, and welcome to the Doha Insurance Group Quarter 3 2021 Results Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Ghaith Jardaneh. Please go ahead, sir.

Good afternoon, everybody. Welcome to the Doha Insurance Group Conference Call for the Third Quarter of 2021. Doha Insurance Group achieved very good results for the third quarter of 2021. We had an increase in gross premiums of 22%, with both our foreign operations contributing likely to this growth. We also were able to grow our Qatari business, our direct insurance business very well, with both -- with increases in all fire, general accident, energy and aviation lines of business. The underwriting results improved by 11%. And this was in spite of booking extra IBNR reserves in the first 9 months of QAR 19 million compared to the previous year. Our investment income improved by 25%. Both dividends and interest income decreased in the first 9 months of 2021, which is attributed to the decrease on dividends being paid by local public shareholding companies that we're invested in and also from the decreased interest rates on deposits. However, we had major increase in our rental income, which kind of offset some of the drops in both dividend and interest income. This came about from finally launching our -- a new residential building in the heart of Doha. And it's -- and we're happy to say that it's currently fully occupied. Loss ratios at the company did increase to 63% compared to 58%. This -- of course, the 58% achieved last year was really supported by the abnormal, very low loss ratios incurred in some of the lines of business due to the lockdowns in place due to the pandemic. With the lifting of all these lockdowns, our loss ratios have come back to the normal levels that we are currently accustomed with. Our loss ratio was also impacted by our -- by MenaRe Life, which is our subsidiary that gets us life and medical insurance business from across the region as reinsurance business. And they had relatively -- so far, year-to-date, they've had a little bit of -- they incurred some losses compared to the previous year. And those losses that have been incurred at MenaRe Life have actually also impacted our overall loss ratio and was one of the primary reasons why our loss ratio has increased compared to 2020. But still MenaRe Life did contribute very heavily to our gross written premiums and has grown vibrantly. So has MenaRe, our operation in Dubai. MenaRe, on the other hand, is also generating very good net income for the company and has actually offset a lot of the negative effect of MenaRe Life on this -- in 2021 so far. To go into the details a little bit more, gross written premiums at the company has increased from QAR 236 million in 2020, or in Q3 2020, to QAR 307 million -- I'm sorry, these are net earned premiums, not -- net earned premiums have increased from QAR 236 million to QAR 307 million. Gross written premiums have increased from QAR 694 million to QAR 849 million. The business -- the business lines that have -- we have been underwriting have been tending more towards fire and general accidents, with that portion of the business increasing from 58% last year to 63% this year. And this came at the expense of a lower share for motor and marine aviation -- and aviation. As we previously said, loss ratio increased from 58% to 63%. Our net commissions increased from QAR 6.3 million to QAR 11.2 million. However, as a percentage from premiums, they are at the same level of 1%. Despite the increase in the loss ratio, we still are having -- net underwriting results increased by approximately 11% from QAR 92.8 million in 2020 to QAR 102.7 million in 2021. So despite the lower margins, the greater amount of gross written premium is paying off by actually contributing a better underwriting result on an absolute value level. Operating expenses increased from QAR 72 million to QAR 81.2 million. However, as a percentage of gross written premiums, they've decreased from 10.4% to 9.6%. Our investment returns, after allocating all investment-related expenses to our investment performance, have improved from QAR 23 million in 2020 to almost QAR 28 million in 2021. And as a return on total investment assets, they've also increased from 2.5% to 2.6%. The combined ratio at the company has increased from 91% to 93%. But of course, this was -- the reason for this increase is mostly from the increase in the loss ratio that took place in 2021. Net income increased from QAR 44.8 million to QAR 54.8 million. And net profit margin held steady at 6%. Total assets at the company has increased from QAR 2.6 million to QAR 2.9 million. Most of the increase is due to increasing our investment portfolio. So a lot of this increase is growth in our investment portfolio and our allocation to all kinds of investment securities. Total liabilities also increased by approximately QAR 320 million. This is -- a huge part of this increase is due to us issuing new debt that was used -- that was deployed to further increase our investment portfolio. We were able to get some credit lines at favorable terms which we then were able to place in the fixed income, mostly fixed income investments, and whereby the return rate on the investments exceed -- or the interest rate of these investments exceeds the interest charged to the credit facilities that were granted to us. Shareholders' equity improved by approximately QAR 50 million. The actual improvement in the equity was actually even bigger than that. We had an increase between net income and other comprehensive income combined of around QAR 100 million. However, we paid QAR 50 million in dividends in the first quarter of 2021 which was against the results of 2020. And that's why the total equity increased by only QAR 50 million. DIG's share price as of the 27th of October 2021, is approximately QAR 1.91. Currently, it's -- the share is trading at a PE of approximately 13x. This on the latest dividend of QAR 0.1. The current dividend yield on the share price is 5.2%. This concludes what we have for Q3 2021. And please, if any questions, we're more than happy to answer any queries you might have.

[Operator Instructions]

Yes, I have a question, Ghaith. This is [ Firas ] from QNB. Ghaith, with the upcoming mandatory health insurance that was announced recently by law, how prepared is Doha Insurance Group going into this new law, which should take effect in April from what we understood? And also, is there anything in terms of the mechanics of this new scheme that investors should be aware of?

We're currently in the process of developing products that actually reflect what has been -- what has been decreed by the new law. So these products will be in compliance with whatever -- will at least provide a product that is to meet the minimum of what is required by the law. But we will also have several service levels whereby if somebody requests something, even service level that is higher than the one stipulated by the newly introduced law for the health insurance for expat in Qatar, we'll also have those levels. We're also considering -- maybe in addition to marketing these policies digitally, we're also thinking of maybe opening a few outlets, distribution outlets, to market this product also, along with our other products. But yes, this new -- the introduction of this new health insurance scheme will be a very positive impetus for the insurance business. It will create more -- a larger market for the -- for, of course, the medical insurance line of business in Qatar.