Qatar General Insurance & Reinsurance Company Q.P.S.C. (QGRI) Earnings Call Transcript & Summary

Good day, and welcome to the Qatar General Insurance & Reinsurance Company Third Quarter 2022 Financial Results Conference Call. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mr. Rob [sic] [ Roy ] Thomas to begin the conference. Roy, over to you.

Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Qatar General Insurance & Reinsurance Company's Third Quarter 2022 Financial Results Conference Call. On this call from Qatar General Insurance & Reinsurance Company, we have Khalid Al-Aswad, the Group Chief Financial Officer; and Ahmad Almasry, the Assistant Manager, Investments, and IR Manager. We will conduct this conference call with management first reviewing the company's results, followed by a Q&A. I will turn the call now over to Ahmad Almasry. Go ahead, Ahmad.

Thank you, Roy. Thank you, guys, attending for -- attending this conference call. My name is Ahmad Almasry, QGIR's Investor Relations Manager. I'll start with a disclaimer. Thereafter, we will provide you with a summary of our operational and financial results. I will now read our disclaimer to this conference call. This call may contain, constitute or imply information or forward-looking statements regarding the operational or financial performance of QGIRCO. Such statements are based on the current expectations and assumptions of QGIRCO's management to their best knowledge and diligent assessment. As such, QGIRCO. and its directors and its officers shall not be liable for any costs or losses resulting from using the forward-looking statements throughout this call. I'm delighted to give the floor to our Financial Reporting Manager, Mr. Omar Alsabbah, who will start with a general update on QGIR Co.'s results on the 9 months for 2022.

Thank you, Ahmad. As a result of continuously applying a prudent approach to our performance, our insurance and investment activities during the 9 months of 2022 resulted in a net profit of QAR 38.9 million. We have reached a gross written premium of QAR 568.2 million, owing to our proactive and careful approach in insurance business. Our net written premiums increased to QAR 18.4 million compared to QAR 177 million for the same period last year. Our net claims reduced to QAR 90 million compared to QAR 113.1 million last year. As for investment operations, our prudent policy succeeded in keeping us away from the market volatility resulting from regional and international political unrest, except for investment income, which heavily declined during 2022 and is expected to attain normal by 2023. Our insurance and investment policies will positively impact our profitability in the coming years. QGIRCO remains in good financial condition as our total assets are above QAR 9 billion, and our total shareholders' equity exceeds QAR 5 billion. My colleague, Mr. [indiscernible] will discuss the financial results in more detail before handing over to our colleague, Mr. Ahmad Almasry, to take you through the outlook.

To start, I will provide high-level results before we get into the details. QGIRCO's 9 months total insurance revenue stands at QAR 568.2 million, with gross written premiums representing 70.6% and contributions from General Takaful representing 29.4%. During this period, the management has taken proactive measures to enhance the group's insurance profitability by undertaking a client portfolio review and applying a practical approach to claims management. This led to a strong underwriting result, showing QAR 114.6 million compared to QAR 87.4 million for the same period last year. Furthermore, the management successfully reduced finance costs by 4% over the same period last year. Despite the drop in our rental income, we succeeded in keeping our investment portfolio performance as per our expectations. The total investment income, including the share of profits from associates during the 9 months reached QAR 138.6 million compared to QAR 146 million for the same period last year. The above resulted in shareholders' net profit of QAR 40.1 million during the period and earnings per share of QAR 0.046. Now, I'm handing over to Ahmad, who will take you through the outlook.

Thank you, Omar. Thank you, [ Gregory ], for the financial update. Okay. Starting from the top, we see that the Qatar's economy is doing quite well, backed by the strong hydrocarbon prices that are boosting the overall liquidity into the system, which has positively affected the local market. However, the global economic environment is still challenging to capture, and this is making us alert to any changes that could affect both our insurance and the investment income lines. First, let's discuss QGIRCO's insurance business outlook. QGIRCO's insurance business line is getting stronger, aided by the recovery in economic activity, the tourist arrivals during the '22 FIFA -- 2022 FIFA World Cup and the rollout of the new health insurance plan for expatriates and their families and visitors. And we also expect that the industrial insurance business, oil and gas, property and insurance to increase next year. Secondly, regarding QGIRCO's investment and real estate business, we expect to record less total investment income this year compared to 2021 due to the following. Number one, replacing major tenant of one of our most significant commercial real estate, the General Tower. Number 2, adopting a new investment strategy and asset reallocation. Finally, highlighting these effects on QGIRCO's income statement and balance sheet. On the income statement level, we expect that rising interest rate environment will increase our cost of funding throughout 2023, which will affect QGIRCO's profitability and cash flows, as well as the fair value losses throughout the income statement we are expecting in the event of a stock market correction or real estate market value corrections that we can have some values to hit the [ P&L ] as well. On the balance sheet level, we are expecting that QGIRCO's investable assets ratio to change subject to the asset reallocation strategy that we're currently adopting, as well as any loss in value due to the market corrections and the real estate or the soft market. I would also like to elaborate more on QGIRCO's internal corporate update that we have achieved significant updates to our internal policies and the procedures, IT infrastructure and marketing strategies, as well as QGIRCO has launched its new website, which is up with updated functions for the insurance e-business and the other -- and some other features as well. I invite you all to visit us and give us your opinion about it. QGIRCO has also the pleasure to announce the appointment of the new Head of Investor, Mr. Mohammad [indiscernible]. Mr. [indiscernible] joined us from the Commercial Bank of Qatar and QGIRCO team wishes all the best for Mr. [indiscernible] in his new role. We believe that these recent updates will start paying off into 2023 despite the challenges ahead. We believe that under the guidance of the Board of Directors and the management team, we are certain of achieving progress in implementing our new strategy. I'm here done with presenting the outlook. And I would like to note that, that this call and the investor presentation and fact sheet will be available on the IR section of our website, www.QGIRCO.com, by the end of tomorrow. And you can reach us anytime through our contacts on the IR section. Ladies and gentlemen, on behalf of the whole QGIRCO team, thank you very much, and we wish you a great day and the productive week ahead. If you have any questions now, please go ahead.

[Operator Instructions] First question comes from the line of [ Maam Mui Osis].

Yes. If you can just provide more color on how the rental income will be in the foreseeable future, given that it went all the way from QAR 21 million to QAR 2 million?