Oman United Insurance Company SAOG (OUIC) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Moosa Amri. I'm the Investor Relations Officer. And on behalf of the management, I would like to thank you for joining us today. We also appreciate the FSA and MSX for their support to make this session happen. Today, we will review the annual financial statements for the first half 2026 as disclosed on the MSX website. Joining us from the executive management, Sayyid Nassir Busaidi, Chief Management Executive; and Mr. Shiva Kumar, Deputy CEO and online, Mr. Muthukumar, the CEO. Please note any questions for the Q&A session at the end. And now I invite Mr. Shiva Kumar to commence the presentation.

Good morning, everyone. Thank you for joining the presentation, and we appreciate the time taken to join to take -- and I'll be taking you through the presentation for the 30th June '26 results. The presentation, which we have formulated, it is maybe for the benefit of the investors community. So as disclaimers, any forward-looking statements, we have to -- a lot of assumptions are there. So we would not like to be on an ongoing basis reflecting on that. The presentation should not be distributed without the permission of the concerned authorities of Oman United. For people who are fresh as far as this presentation is concerned, Oman United has been a very long-standing insurance player in the market since 1985. And our whole mission and vision is to give consistent, stable and sustainable cash dividends to the shareholders. And we combine that thought process with a better quality of underwriting and consistent underwriting in spite of the challenge of the market. And from a customer service perspective, we are aligned to have customers -- pleasant customer experience for our new and renewal business customers. As a backdrop, I think our retention levels of customers across lines of business have been consistently high. And so I'll take you through that. As far as award recognitions are concerned, we have -- over the last so many years, we had the AIWA awards, which is a local recognition for consistent performance. We had the Mid-Cap awards, and we had customer service and excellence awards on the OER. So different awards, but just to give you a flavor that the company is spread -- as a composite company, we are spread across all lines of business, life, medical and [ general commercial ] business. And we do get recognitions as a long-standing company in the market. From a corporate history perspective, we were established in 1985 with a OMR 2 million capital and listed in the MSM since inception. Our present paid-up capital is OMR 10.5 million. We've reached a contingency reserve of OMR 10.5 million, which is equivalent to the paid-up capital and as required under the company's law. And we have a legal reserve also, which is the statutory minimum, which we are compliant with. So if everything is stable, I think we don't see further appropriations to reserve as required in the net profit going forward. As for our Board of Directors, I think you can notice that from the Board as well as the executive management, which is in the next slide, we have consistency of people. And our Chairman is Mr. Saud bin Nahari, Deputy Chairman is Sayyid Khalid Busaidi. And they have been there in the company for a long since 1998 and 2003. The other Board members also have a continuity as far as -- the member of the Board who joined afresh was Mr. P. R. Ramakrishnan, who joined in 2025. He is also an industry veteran in the Oman market, and he joined the Board once the vacancy of the passing away from our late Chairman in 2025. As far as senior management team is concerned, Sayyid Nassir, is our Chief Management Executive; Mr. Muthukumar, our CEO. I'm Shiva Kumar. I have been there in the company since 2011. And most of the senior management team members, Yahya Kharusi taking care of claims. Sayyid Bashar Busaidi was in claims earlier and now takes care of as General Manager of agency and branches. And all our senior team members have been there in the system for long. So there is continuity of the management performance as far as Oman United is concerned. I think this is an important slide to drive home the point that we are a dividend-paying company. We are conservative, but we have grown also in the last 1, 1.5 years. So dividend history for the company in the last 17 years, we have distributed OMR 43 million as cash dividends. So consistent and uninterrupted cash dividends as our philosophy goes. Coming to distribution channels, we are spread across different distribution channels. We have 11 branches spread across Oman. We do not have any outside branches outside of Oman. We have 35 tied agents. We have 25 marketing agents, and we have relationship with 20 active brokers in the market. So total about 91-odd distribution touch points are there. And as far as our partnerships are concerned with the reinsurers in the back end, more or less stable relationships. They have been supporting us for the last 15 to 17 years. And we have a presence of all A-rated securities in the reinsurance panel, which supports us for our growth aspirations as well as meeting our claims liabilities on an ongoing basis. As a summary on the financial performance in IFRS 4, this slide talks about the IFRS 17 numbers. But just to give a kind of brief flavor from a gross premium written, which is not an index for IFRS 17, 30th June ending, we ended with OMR 23.5 million against 17 -- close to OMR 18 million in the last year. So, which is a 33% growth on the GPW. The growth was fueled by growth across lines of business. So we had motor, medical, life as well as non-motor lines of business, all contributing to the growth. However, we have to be wary of the growth, certain changes in the markets are happening driven by international premium. So we are wary of the growth going forward. We have to be careful. Now coming to the IFRS 17 numbers, the insurance revenue, which is an indicator of the real premium which we are hitting against our last year number of OMR 16.2 million, we are at about OMR 19.2 million. The investment income, which was at OMR 2.5 million last year ended on 30th June with OMR 4.5 million, which is an 82% growth. Net profit for the year was OMR 3.2 million against slightly less than OMR 1 million of last year 30th June '25. Overall comprehensive income, OMR 3.4 million against close to OMR 0.5 million. So overall, the performance of 30th June was primarily driven by good investment income, but with a conservative policy. We have been conservative, and we have -- in spite of a very volatile market on the equity side, we have been careful and we've held on to our investments. So Overall, our investment was -- the returns on the net profit was driven by growth in investment income as well as reduction in the losses on the main insurance business. So to give you a flavor, broadly a 5-point reduction in the combined net loss ratio in comparison to last year on 30th June. Next as a snapshot, 30th June, total assets are OMR 103 million, shareholders of OMR 31.4 million. Net profit, OMR 3.26 million versus slightly less than OMR 1 million last year. And we have to keep it in perspective that the contingency reserve was increased last year along with paid-up capital to from 10% to 10.5% based on mandate of the regulations. Investment total book is about OMR 67 million, out of which 56% is in deposits. Solvency surplus, which is an important indicator of the health of the insurance company. We are with the ability to meet liabilities. So we are at 31st of December, 18.47% versus 9.52%, which is statutory requirement based on the calculations. As you know, there is no midterm assessment of solvency as on 30th June, which is not the regulation required. As far as the comprehensive income financial statement piece is concerned, as I explained, a 19% growth in the insurance revenue over last year, which is OMR 19.2 million against OMR 16.2 million. On the investment income side, our investment income was OMR 4.5 million against OMR 2.5 million, which is an 82% growth, primarily driven by OMR 2.34 million gain on investment on FVTPL and a change in the market value and a realized gain of the investment sale of OMR 680,000. So overall, it's been consistent and stable. And as far as profit for the -- net profit for the year is concerned, against OMR 1 million last year, we ended 30th June with OMR 3.2 million. As I explained, it was primarily driven by increase in the investment income and decrease in the net service results for the insurance service. On the financial position, you will see that OMR 103 million, which is against OMR 96 million as the size of assets last year. Overall financial assets at FVTPL is OMR [ 20 million ] against OMR 18 million. So overall, all other components have been more or less stable. As for equity and liabilities, as I explained, share capital last year to 30th June was OMR 10 million. Based on the approval from the Board and the regulators, the increase in capital was made by another OMR 0.5 million, which is OMR 10.5 million now. This corresponds based on the local regulation. This will require an additional allocation for contingency reserve also from OMR 10 million to OMR 10.5 million and a legal reserve based on 1/3 of the paid capital. So that has increased from OMR 3.3 million to OMR 3.5 million. Retained earnings as on 30th June is OMR 7 million against OMR 2.7 million. Shareholders' equity, just more details on this as a separate head. Share premium, no change. Legal reserve, slight change because of the last year's change of the approval of the Board and capital going up and the corresponding increase there. Contingency reserve also increased from OMR 10 million to OMR 10.5 million. And overall, capital reserves OMR 31.4 [indiscernible]. Just a flavor of our investments. We have been conservative. We are careful as far as the equity investments, but we'll be open but cautious on equity investments since the market is a little volatile, and we need to be careful. Fixed investments are about OMR 37 million against OMR 36.45 million last year. Equity was again OMR 19.4 million to OMR 28 million. And there is a component of immovable properties at cost, which is our building of United Insurance head office here in Al Khuwair, Muscat, Oman. And there is a garage, which we own 20,000 square yards or so in Ghala. So, these 2 are immovable properties at cost. So these are -- as far as these 2 big assets are concerned in our books, our book value for the head office property is OMR 2 million and a market value is at OMR 4.3 million. So there is an unrecognized appreciation of OMR 2.3 million. As far as garage property in Ghala is concerned, market value is OMR 2 million against a book value of OMR 0.3 million. So there is unrecognized appreciation together for both these assets at OMR 3.9 million. As far as Oman United is concerned, we are a stable company, and we have been -- we take pride in our human capital. So we are having 204 people as staff and management together. We have an 88% Omanization ratio. Our balance sheet is very strong with a retained earnings of OMR 7 million. We hope to continue this. And IFRS 17 compilation has been quite challenging because of the time frame within which the compilation has to get completed. But I think we have been doing it within the time schedule given by the regulator. Overall actuarial oversight has also been there with 2 separate actuaries overseeing the life and medical business and the general business. And our assessments on the liabilities, et cetera, has been stable. As regards to the last one, which is the reinsurance relationships, we take pride in the fact that the major reinsurers for our programs, which is SCOR Paris, Munich Re, Hannover Re, they are all partners who have been there for long, and they continue to support in spite of the challenges in the market. Yes, reinsurance capacity was slightly soft in the last -- we had a clean treaty renewal from the 1st of July. Slightly -- market was slightly soft, so we had the benefit of certain improvements there. And that goes to show that the reinsurers are having a kind of faith in our continued underwriting capability. We have been careful. Certain challenges are there in the market, but we are trying to seize those opportunities wherever we can, and there is more to be done. As far as challenges is concerned, I think motor business and the medical business both do not -- there are challenges to the profit margins there. Catastrophic events do not allow and Oman is a particular country where catastrophic exposures are high. The fresh kind of reinsurers available to lead the programs are generally not available. So we have to be mindful of that. The medical business, we have applied for the license. There are regulators who have come back with certain queries, which we have responded, but this is an ongoing kind of work in progress. And lastly, certain challenges in the premium collections. But we feel that we are fairly in control or better. And we thank our partners in the programs to make sure that we are having a good cash flow on a consistent basis. So from a future perspective, there has been a lot of focus from the regulator to ensure that we all move towards an increased digital marketing presence. I think there is work just happened -- is happening on an ongoing basis on this. But there is more to be done as far as this particular area is concerned. Expand the equity investment, but cautiously. We are focusing on non-motor growth. It has done okay for the first 6 months. Hopefully -- we are hopeful that we'll be comfortable as far as the budgets are concerned across services. And of course, readiness for mandatory health depending upon the license being looked at favorably, that will be the kind of path for the next 6 months. So thank you very much.

Now we open the floor for any questions from the management.

I have a question on the medical insurance segment. Can you give some update on what's happening with the medical insurance? Are you seeing any cost increasing over there, the insurance cost or the medical checkup cost or something -- over there? Are you seeing any increase in the expenses over there? If you could shed some light on that?

Sure. Thank you for your question. For Oman United, the portfolio composition of the medical business is less than 8%. So it is only a growing business, but we are mindful of the fact that there has to be margins in the business. So the market has been very competitive, but we are not fully into that space as far as full growth is concerned. But your point is well taken. The medical inflation is running at 6% to 7%. And we try to ensure that we are pricing it accordingly. We have Munich Re as our partner on the medical side. And we are fortunate that we have a consistent long-term underwriting contract on the reinsurance side for 3 years, which ends this year. But medical will be not a huge bottom line as far as the market is concerned. So some corrections are happening in the market, but it will take some more time.

Okay. My second question is on your general insurance book. So I just wanted to understand how exposed is the general insurance book to the current ongoing regional tension? Like is it exposed to that? Like just wanted to understand that particular part as well.

Well, I think we are in a risk business. So risk certainly is there. I'm not denying it. But we are fairly well placed as far as reinsurance placements are concerned. War as a kind of exposure doesn't sit in our books. So we are fairly stable as far as underwriting results and returns are concerned.

Okay. Okay. Understood. And my last question would be on your dividend policy, like any guidance for that?

Sorry, we may not be able to give any guidance because we have to wait for the losses to develop. But till now, I think it's...