Muscat Insurance Company SAOG (MCTI) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining today's investor call. We truly appreciate your time and continued support. During this call, we will provide a brief update on Muscat Insurance Company's recent performance, key development and our strategic direction moving forward. In this room with us, we have me, Sara Bulushi, Compliance Officer; the acting Chief Executive Officer, Mr. Syed Hussaini; Mr. Sreekumar, Head of IT; Mr. Mohammed Al Hashmi, Head of Legal; and Ms. Waheeda Pathan, Board Secretary; Mr. Abdullah Al Abri, Chief Customer Service Officer; Mr. Mahfoudh Al Jafri, Chief Regional Manager; and we have Ms. Aleena Tony, the Deputy Chief Finance Officer, who is with us online. To start, I'll briefly set the stage and then I'll hand it over to our acting Chief Executive Officer, Mr. Syed Hussaini for broader overview and therefore Ms. Aleena to take it over and run it and brief the financials. We look forward for your engaging and proactive discussion, and we are happy to address questions, if any. With that, I'll now turn it over to Mr. Syed Hussaini.

Thank you. Good afternoon. Welcome to the MSX investor discussion session for the first half of 2025. We are pleased to share that the company has achieved a profit of OMR 407,000, a significant improvement compared to our OMR 89,000 during the same period in 2024. To walk us through the key financial highlights. I now invite Ms. Aleena, Deputy CFO, to take the discussion forward. Thank you.

Good evening, good afternoon, everyone, and thank you all for joining the meeting. Today, we are here to discuss and to present the financial highlights of Muscat Insurance Company as of 30th June 2025, compared to same period last year. The main agenda is to discuss on the financial highlights and performance, financial position, investment details, key ratios and to answer any questions if you have in this regard. Now starting with -- and now moving on to the next slide, [indiscernible], please. Financial highlights. Starting with financial highlights. Starting with insurance revenue. The financials are prepared on the basis of IFRS 17. Starting with insurance revenue, our insurance revenue stood at OMR 8.9 million versus OMR 10.63 million in 2024, showing a decline of about 15%. This was primarily due to lower premium volumes in motor segments as part of our disciplined underwriting approach. Next is insurance services expenses. Insurance services expenses also reduced from OMR 6.3 million to OMR 4.28 million, a drop of approximately 32%. This reflects stronger cost control, improved claims management and a more favorable risk profile. The insurance service -- as a result for the insurance service result has also improved from OMR 686,000 lots to OMR 182,000 loss as of 30th June 2025. We lead from efficient claim management and better underwriting controls. The investment income has slightly reduced by 11% from OMR 1.15 million to OMR 1.03 million as of June 2025. This was impacted by softer market returns, though investment income continues to provide a stable contribution. Finance expenses are slightly higher compared to previous year, which is OMR 116,000 compared to OMR 80,000. It's mainly due to IFRS 17 interest rate effects. Net insurance and investment results. Overall, our combined net insurance and investment results rose to OMR 731,000 compared to 393 -- OMR 386,000 same time last year, which is 89% improvement. Other expenses. Other expenses remain controlled, which is OMR 326,000 compared to OMR 295,000 last year. And broadly, it is in line with last year. This has resulted in increase in net profit after tax to OMR 407,000 compared to OMR 89,000 same time last year, which is a remarkable growth of 357%. Earnings per share, earnings per share increased from OMR 0.008 to OMR 0.037, reflecting the strong improvement in profitability. Just to summarize the financial highlights. Despite lower top line revenue, we delivered strong profitability growth by focusing on disciplined underwriting, effective claims management and controlled expenses. This positions us well for sustainable growth in the coming quarters as well. Now moving on to the capital presentation of financial performance. This is the same thing what we have explained in the previous slide, just showing the pictorial presentation starting from 2023. The insurance revenue stood at OMR 20.7 million in 2023, has increased slightly to OMR 21 million in 2024. As of H1 2024, it was OMR 10.6 million compared to OMR 8.9 million in the same time current year, which is -- this decline of about approximately 15% reflects our strategy to prioritize quality over volume of business. Net insurance services results for 2023, it was OMR 995,000, loss. And it has slightly improved in 2024, which was OMR 987,000. For H1 2024, it was OMR 686,000 improved a lot of OMR 182,000 in current year 2025. The net investment income, as we have already explained. Current quarter, OMR 1.029 million is comparing with OMR 1.15 million and slight reduction is because of the softer market returns. For 2024, it was OMR 1.8 million and 2023 was OMR 1.4 million. The profit after tax, current year 2025 was OMR 407,000 compared to OMR 89,000 previous year. 2024, it was OMR 368,000 profits in comparison to the loss of OMR 469,000 in 2023. The current half year 357%, there is an increase, mainly driven by improved insurance performance and expense management. Moving on to the financial position. The total paid up capital remains unchanged at OMR 11.02 million, reflecting stability in our capital base. The total equity increased from OMR 17.6 million in June 2024 to OMR 18.3 million in June 2025, which is 4% growth, mainly driven by retained earnings from the improved profitability for the period. The total liabilities declined from OMR 25.9 million to OMR 23.4 million, showing stronger risk management and lower exposure, and this reduction has also improved our balance sheet strength. The total assets has also reduced from OMR 43.4 million to OMR 41.9 million, which slightly lower, the quality of assets improved and reflecting our focus mainly on the profitable and prudent investment location. The total investments have slightly reduced from OMR 28.7 million to OMR 28 million, a minor reduction of approximately 3%, and this decrease was primarily due to the reduction in cash and bank balances, which was utilized for operational requirements. Now coming to insurance and reinsurance contract assets and liabilities. Insurance and reinsurance contract as it reduced from OMR 12.3 million to OMR 10.8 million, while related liabilities also has reduced from OMR 20 million to OMR 17.5 million. This indicates a healthier balance between receivables and payables, improving our cash flow management as well. Next is on the net assets per share net assets per share increased from OMR 1.594 to OMR 1.656, reflecting strong shareholder value creation as well. In summary, our financial position, our balance sheet remains strong and resilient. Equity has grown, liabilities reduced and net assets per share also improved, reinforcing our ability to sustain growth while protecting shareholders' interest. Moving on to investment mix, while comparing the investment mix, there is a slight change in the composition of investment mix. In equities, mainly equities slightly increased compared to H1 2024 and 2025, that is from 13% to 15%. This exposure is mainly based on the long-term growth outlook and believe in our market potential, this is one of this shift in 2025 compared to previous year. And last year, we had more conservative allocation towards loans and deposits. Current year having the balance or having the balanced approach by ensuring that we are retaining a portion lower-risk assets such as bonds and deposits which also continue to provide stability to our portfolio. Meantime, we are exploring the opportunities to get higher returns for our shareholders, having more confidence in our market as well. Now moving on to asset scale ratios, mainly through key ratios, which we are going to explain here, net assets per share as well as the earnings per share. We have observed overall stable movement in our net assets per share over the last few periods, with slight dip in H1 2024, followed by a recovery in H1 2025, which is 1.586 in 2023 has grown to 1.619 in 2024. Slight dip was there in H1 2024, which is OMR 1.594 has further improved to OMR 1.656 in 2025. We achieved a solid rebound, reflecting the strengthening of our underlying assets and strategic shift. We continue to focus on optimizing our asset mix and improving the operational efficiency ensuring that our investment value will be maximized in line with our shareholders' expectations. We believe this approach will -- definitely will help us to drive our long-term value for our stakeholders as well. Next is on the earnings per share. When we turn to earnings per share, it has been a positive movement over the past 6 months. EPS has steadily improved in H1 2025, reflecting our ongoing efforts to enhance profitability. There was a slight variation or reduction in H1 2024 mainly due to many, many challenges, but the strategic realignment and operational optimizations in the latter part of 2024 have really been paid off and which leads to the healthier bottom line in the first half of 2025. Just to summarize on our financial performances and financial highlights, which we have explained. We had a slight reduction in the revenues, which is a conscious approach, but we delivered a significant improvement in profitability, driven by stronger underwriting discipline, reduced expenses and steady investment income. Our equity has grown, liabilities have also come down and net assets per share have increased, highlighting a stronger balance sheet and solid foundation for sustainable growth. This is an overall outlook about our presentation of our performance of June 2025. Now the floor is open for any kind of questions if you have in this regard mainly on the financial performance and highlights, which we have explained.

If you have any questions, please you can ask this time which we are happy to clarify.

There is a question in the chat. Could you please reply in chat. Could you please answer the questions in the chat?

Sorry, we are just checking the chat. I understand that you have requested or you have some queries given in the chat.

Yes. So comments on that.

What I understand is first point is on the cash dividend. You are asking the cash dividend, shareholders have not received any cash dividends for many years, and this has weakened the confidence in the stock. So regarding the cash dividend, actually, you have seen the improved performance of the company in the current quarter. Definitely, the management is trying for the better performance. And definitely, over the period, it will be done. First, the accumulated losses has to be cleared. And definitely, we are working for the better management. We are looking for the better performance of the company and definitely will be paid off in future. And next on the accumulated losses, I have combined both the points together. The accumulated losses has to be cleared. And with the current performances and current profit, we have seen that it is better profit current year. And definitely, over the period, it will be cleared -- accumulated losses will be clear and accordingly, the company will be making the payment to the shareholders as and when the profit -- the accumulated losses turns to accumulated profits. Regarding the trading activity, we will check and you can just give your e-mail ID as well. On the other activities now we will discuss mainly on the financial performance and the other trading activity and other activities, definitely, we will check and reply specifically on your queries. You can just drop your e-mail ID as well; we will check and reply on the other queries as well other than the financial matters. Here, mainly, we will be discussing on the financial matters. Definitely, we will look into the other matters, and we will come back to you. You can just share your mail ID as well. I think that is on the first point. And one more chat we have seen regarding the net profit. It's saying net profit improved to OMR 406 but remains modest. How will you achieve the sustainable profitability? Definitely, we you have seen when I was comparing actually the financial performance over the period, that's why we have included the financial performance graph as well. By comparing the financial performance graph as well, while there is actually an improvement compared from previous year. The company has picked up. The profit has increased from 2024, OMR 368,000 was the overall profit for the year-end. It has improved to OMR 407,000 in current year. Showing the improvement and efficiency of the management with better underwriting control and efficient claims management, definitely over time, it will be paid off and the company will be coming back with a profitable position. Next point is on the insurance revenue declined 16%, especially in motor, what corrective measures are planned? Ideally, it was an intentional approach to reduce the motor because the claims ratio was high during the previous year. So it was a conscious effort taken by the management to reduce the motor business and to increase in other kinds of businesses, especially non-motor businesses, definitely, that is showing positive results, and we will continue to have better control on this claims management to continue the better profit in future. Regarding the dividends, we already explained. Over the period, the accumulated losses will be reduced. It will turn to accumulated profits and definitely that will be taken care. And regarding the share trading as well those points, we will be discussing, probably will be individually replying to the queries. You can just drop your e-mail ID as well, we will be replying that separately. Thank you. Anyone have any other questions regarding specifically on the financial performance, highlights, financial position as of June 2025. One more question in the chat when to distribute the dividends? I have already answered. You can see the performance and growth of the company from 2024, it is in the positive direction. The profits are coming. So slowly, the profits will continue to improve, grow. The accumulated losses will return to accumulated profits. And definitely, after that, we will be having the distribution of dividends. I think if we don't have any other questions, we can conclude the session.

Thank you all for your time and attention today. We greatly appreciate your participation and insightful discussion. Once again, thank you for your continued support, and we look forward to staying connected. Have a great day ahead. Thank you very much.

Thank you, everyone. Thank you all for joining.

Thank you, Aleena. Thank you.