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

Hello, and welcome to the Doha Insurance Group conference call. I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mr. Roy Thomas to begin the conference. Roy, over to you.

Yes. Thanks, [ Paresh ]. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Doha Insurance Group's fourth quarter and year-end 2023 Financial Results Conference Call. On this call from Doha Insurance Group, we have Osama Rayyan, the Chief Investment Officer; and Ghaith Jardaneh, the Chief Financial Officer. We will conduct this conference call with management, first, reviewing the company's results followed by Q&A. I will turn the call now over to, Ghaith. Go ahead, Ghaith.

Good afternoon, everybody. We'd like to welcome you to Doha Insurance Group's Investor Relations conference call. First, we'll start with the premiums. The Group achieved a premium of QAR 1.534 billion compared to QAR 1.486 billion for 2022, with a meager growth of 3%. However, this was achieved even though there was a very major policy that was written in 2022 and did not renew in 2023. Despite the huge drop from this policy, the Group was able to compensate many of -- a huge part of this lost premium and even overcompensated to reach a higher level of premium. Insurance revenue increased from QAR 1.2 billion in 2022 to QAR 1.37 billion in 2023. The most noticeable thing about the mix of premiums that we have. We had a major jump in life and medical compared to last year, with that being the segment of premiums or the line of business that achieved the most growth in 2023. The company's loss ratio for 2023 reached 54% compared to only 49% in 2022. Even though we didn't have a higher loss ratio, we are still pleased with the performance, and we believe this is still an acceptable loss ratio. The loss ratio in 2022 was abnormally low, and it was induced by certain claim reserves at our Mena Re branch that turn out to be settled at much lower values than originally estimated, and this resulted in a much reduced loss ratio. We don't expect -- of course, due to this abnormal event, the loss ratio in 2023 did increase. However, we're still pleased with it, and it's considered within favorable levels. Net commission cost has been increasing at the company, and 2023 proved to be a case in point. The growth is mainly because we are relying more on our branches, Mena Re and Mena Re Life, and these companies tend to pay a high ceding commission to get us this reinsurance business. Accordingly, this is -- the growth that's happening in the commission cost is expected. Our net underwriting results as measured under IFRS 17 have decreased from QAR 145 million in 2022 to QAR 143 million in 2023. However, even though there was a decrease in net underwriting results, this was mainly due to attributing our expected credit loss to insurance service expenses as opposed to previous years before the adoption of IFRS 17 where bad debt costs would be -- and expected credit loss from receivables would lie as part of our operating expenses. As per the new standard, they should be allocated to your insurance activities. And accordingly, since we took around QAR 10 million in bad debt or in expected credit losses, this resulted in a reduced insurance service result as compared to last year, where we only had QAR 1.3 million in ECL against our receivables. Operating expenses increased slightly from 2022 to 2023 in accordance with expansion and activity that is undergoing at the Group. However, our -- as a percentage of OpEx, they decreased from 4.9% to 4.5%. In terms of our investment, the investment return reached 5.7% compared to a meager [ 1.9% ] last year. So there was a major improvement in our investment results, and it was a huge part of the improvement in the overall performance of the company. This return is relative to maintaining the entire portfolio of investments at around QAR 1.4 billion. And we expect this -- a lot of this improvement came from the major improvement in interest income that we have seen during the past year as interest rates have increased. And we are trying to lock in at some of this improved interest income by taking long duration positions on bonds and in placing the long-term or medium-term deposits with banks in order to benefit from the higher rates. The combined ratio of the company increased from 78% to 85% driven mainly by the increase in loss ratio. Net income at the company reached QAR 150 million compared to QAR 103 million in 2022, representing almost a 45% increase and the profit margin increased from 8% to 11%. Return on equity clocked 17% in 2023, a very healthy percentage, we believe. Of course, there was a drop in total assets at the company from around QAR 3 billion in 2022 to QAR 2.8 billion in 2023. This was mainly a result of big payments made during the year against many of the large outstanding claims that we had on our books. That's why this drop in assets corresponds with the drop in liabilities that represents this drop and -- which represents the settlement of large premiums during 2023. We have a small amount of debt on our books relative to the size of the company and the interest expense that we've incurred so far on 2023 reached QAR 4.6 million compared to QAR 2.6 million in 2022. The decrease is a result of reducing some of the debt we're carrying on our balance sheet. And our interest coverage ratio is 87x with the interest incurred by the company becoming very small relative to the profitability of the company. As you can see, we still hold a very strong liquid position. Our investment portfolio covers our net insurance provisions by almost 4x, 3x -- 3x to 4x actually, and we continue to hold our -- enjoy this strong position. Our accounts receivable have been improving at the company. We were able to reduce accounts receivable even though premiums have been increasing. And we've reached days to receivables ratio of only 82 days as of the end of 2023. Furthermore, our solvency ratio has improved from 267% to 280% and it far exceeds whatever is required by the regulator, which stands at 150% only. The Board of Directors has proposed a dividend of 17.5% of capital. This would result in a dividend yield of 7% at the market value of DIG share, this was prepared when the DIG share was at QAR 2.5. So we believe that dividend is still very strong. It produces a very high dividend yield relative to the market, which should compensate the shareholders for their faith in the company. Of course, the dividend payout ratio had reduced from 2022 to 2023 from 72% to 58%. But the absolute amount is a growth over the last dividend that was paid. And the retention will allow the company to maintain some retained earnings for potentially future years, which it can stabilize its dividend even if, God forbid, should, the performance for specific years be impacted by some adverse event or -- if profitability was compromised for some reason. We'd like to turn it back to you now for any questions you might have for us.

[Operator Instructions] There appear to be no questions at this time. I'll now hand the call back to Mr. Roy Thomas.

There are no questions, 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 first quarter 2024 results conference call. Thank you.

Thank you, guys. Thank you.

Thank you. This concludes today's conference call. You may now disconnect.