Oman Qatar Insurance Company SAOG (OQIC) Earnings Call Transcript & Summary

Hi, good afternoon, everyone. I just want to make sure that we are audible. Please, somebody confirm?

Yes.

And can you see this [Audio Gap] 2024?

Yes.

Okay. So good afternoon. We officially kick start the discussion for the full year 2024. We'll go through the agenda. There are 8 agenda here and after the questions and answers. The first is the snapshot of the Board of Directors, the senior management on the [Audio Gap] chart, snapshot of financial performance based on IFRS 17, which is the case now in the market. Financial performance and position, we'll cover some segmental review as well, key ratios, investment details and then the solvency position. To begin with, the Board of Directors. So the new Board of Directors was formed last year. The Chairman is Mr. Khalaf Ahmed Al Mannai. Then we have Dr. Musallam Mahad Ali Qatan, who is Deputy Chairman and also chairing the Audit Risk and Compliance Committee; Mr. Abdullah Khalfan Al Mezeini, a Board member and NRC member as well; Mr. Unnikrishnan, who is a Board of Director and sitting in the Strategy & Investment Committee as well as the NRC; Mr. Mohammed Wahid Al-Kharusi, a Board member and sitting in the ARC Committee; Mr. Ahmed El Tabbakh, Board member, chairing the NRC committee and is part of the ARC committee as well; and finally, Mr. Chirag Doshi, who is a Board member and chairing the Strategy & Investment Committee and is part of NRC committee as well. I have with me in this meeting room, our CBO, Ali Mohamed Al Lawati; and Mohamed Jawad, our CFO and is the Secretary to the Board and [Audio Gap] government HR and my other colleagues are joining us online. Now let's get into the financial performance. This is a snapshot and comparison between -- for the last 4 to 5 years from 2021 to 2024. We'll start with insurance revenue as opposed to GW premium, and this is the language of IFRS 17. In 2024, we recorded 69.5% in insurance revenue versus 63.7% [Technical Difficulty]. Of course, for the years 2021 and 2022, this is not applicable because IFRS 17 got only implemented in 2023. But in terms of GWP, we have seen a growth across all the years in GWP. So in 2022, we have a higher GWP than 2021, the same in 2023 and in 2024 as well. Insurance service result, earlier, we were focusing on what was called the net underwriting income. And now it's called the insurance service result with a slightly different calculation. In 2023, we recorded OMR 2.2 million and in 2024, OMR 1.8 million, which is a drop for a number of reasons, and we can discuss these reasons later. Profit after tax. In the year 2023, we recorded OMR 4 million, but it's important to note that we completed a merger by incorporation with Vision Insurance, and we had to record an acquisition gain of OMR 1.92 million in 2023. So it's not apple-to-apple comparison. And in the year 2024, the profit after tax was reported as OMR 2.2 million. But if we want to compare the 2 years in absolute terms and taking this one-off revenue, then the -- we have seen OMR 200,000 higher net profit after tax than 2023. Yes, this is the gross written premium -- I beg your pardon, yes, we have a table there. So from OMR 31.4 million in 2021 all the way to the OMR 70.7 million in 2024, which is a growth year-on-year. Underwriting income, even despite we have seen insurance service result, there's a drop from OMR 2.2 million to OMR 1.8 million. The underwriting income, however, was on the contrary side, we have seen an increase to OMR 5.8 million from OMR 5.1 million in 2023. Investment income fairly stable over the last 3 years. In the year 2022, was OMR 3.1 million. And then in 20 -- sorry, between 2021 and 2023, it was very much the same. And then in 2024, it's OMR 2.6 million, and mainly the hit was on the securities side, and we can have a separate discussion around it in further slides. This is a quick snapshot of the balance sheet items. So the paid-up capital between the year-end 2023 and year-end 2024 is the same. The total equity slightly increased from OMR 36.9 million to OMR 37.8 million, almost OMR 1 million. Total assets have seen OMR 12 million increase and then what is worth noting here is the total investment, the investment book has increased, expanded from OMR 58 million to OMR 63 million. The insurance and reinsurance contract assets, a slight change from OMR 45 million to OMR 51 million, and this was very much in line with the growth in business. And then from the insurance reinsurance lability side, also it has increased from nearly OMR 62 million to OMR 78 million, and this is very much the business that we have underwritten in 2024. Number of employees also the same, remain quite flat. When it comes to the key ratios, we can see on the table on the top left, the gross premium mix, we have seen some change in the mix. We have to also -- if you all remember, the discussion we have last year in -- for the year ended 2023, it was a year where we have completed the merger by an incorporation with Vision Insurance, and we started business integration. The business integration process was completed to its entirety in the mid of 2024, and that also includes the finance integration as well -- the finance and the accounting books integration. So 2024 second half, you could see -- one may say that it was post integration and post merger processes. But before that, we always had an element of merger. The liability -- the drop in liability, and this has went through the very competitive environment that we are operating in. And the only way was to start cutting rates, and we've seen rates dropping by 40%. And I cited one example which is the cyber risk where we had a good exposure in 2023 that we lost in 2024 and mainly due to price cutting. Property on the contrary, we have seen an increase. Our market share increased from 31% to 39%, and we are really focusing on prudent underwriting. We are only dealing with A-rated markets. And committee part of OQIC is regularly meeting and reviewing the securities. Marine, aviation seen a drop, mainly from the marine cargo side and predominantly because of the falling in rates. Life & Medical, we've seen an increase from 36% to 41% and both Life and Medical segments have seen massive growth in premiums. In retail, there is a slight drop in business because of the increase in property and Life & Medical books. Combined ratios, and just to reconfirm, the combined ratio here it is for the last 2 years is as per IFRS 17 but for the previous years from '20 to [ 2022 ] -- so just not to confuse ourselves from the years -- for the years 2020 to 2022 combined ratio is as -- is calculated as per the IFRS 4 accounting standard, but for the last 2 years, 2023 and 2024, it is based on the IFRS 17. So it's not really apple-to-apple comparison but you may compare 2023 and 2024. Return on equity, you can see in front of you. From the year 2023 and 2024, a major is the increase in the equity of paid-up capital has gone up and the total equity has gone up,and that's why the margin has slowed down versus the period between 2020 and 2022. However, we have prepared our strategies for the upcoming 3 years. We know what we want to achieve, and we feel [ aspirational here ]. We're not talking into the same levels of 2022, but it will be very much close to what we have seen in 2023. That's what we are projecting [Technical Difficulty]. And then the NAV per share keep growing and increasing year-on-year from 181 Baisa to 235 Baisa by end of '24. I will hand over now to our CFO, Mohamed Jawad, to walk us through the investment details and the solvency margin position.

Thank you, Mr. Hasan. So in term of investment details for the financial year 2024, we will start with the investment portfolio composition. So we witnessed a total base of OMR 63.3 million versus OMR 58.36 million in 2023. So the shift, the increase, the OMR 5 million increase in the investment book contributed in all angles. So if we compare '23 with '24, we can see that in equities, it increased from OMR 16 million to OMR 16.2 million, OMR 200,000 more. In fixed income instruments, we have added OMR 2 million and in bonds also, we have added another OMR 3 million. So we distributed this as per our distribution metrics in our financial instruments. In terms of the investment income generated from this investment base, it is slightly lower than 2023 and we can see mainly that from the pie chart below. So in 2024, we recorded OMR 2.6 million as an investment income compared to OMR 2.9 million in FY 2023. We can see that our earning -- investment income from interest income increased to OMR 2.3 million compared to OMR 1.9 million in 2023. However, the main reduction coming from the realized and unrealized gain and losses from equity market. And OQIC is maintaining an equity based in Oman and other GCC countries and the market sentiments were negative by year-end 2024. That gave us a reduction of around OMR 1 million. We recorded OMR 400,000 as a realized and unrealized combined in 2023, which came down to a negative OMR 600,000 in 2024. In terms of bonds and in terms of dividend income, we witnessed also a growth of OMR 300,000 from OMR 600,000 to almost OMR 900,000 in FY 2024. Moving to the solvency position of OQIC and this is calculated based on risk-based solvency margin calculation, where it requires the insurance company to maintain OMR 4 million for the general business, OMR 2 million from the medical business and OMR 1 billion for the life business, which is the minimum calculation. So we have made a table here that gives the attendees a clear picture of our solvency position for the last 3 years. So the minimum required by the RBC method is OMR 10 million for the last 3 years, '24, '23, '22. And the minimum required as per OQIC position applying risk-based solvency calculation for the last 3 years is increasing because the company business is increasing over the last 3 years. So from almost OMR 8 million to OMR 12.5 million to OMR 17 million to 2024. However alongside of the minimum requirement, we are seeing the solvency surplus also is growing massively. So it was OMR 12.8 million compared to OMR 8 million. Then it jumped to OMR 29 million compared to OMR 12.5 million and we maintained the same position and added on top of it around OMR 400,000 and it is OMR 29.6 million for the year 2024 compared to OMR 17 million minimum required as per OQIC calculation. This gives the reader a clear cut that OQIC is gearing above the solvency position and the company is well solvent to capture any claim in the future. I believe by this, we have ended our presentation and we open the floor for any question and answer. Any questions?

We appreciate this is the month of Ramadan, some of you might have been fasting, but we are happy to receive questions, if any. Okay. Thank you very much. This presentation has ended. Thanks for your attendance and your patience. See you.