Qatar General Insurance & Reinsurance Company Q.P.S.C. ($QGRI)

Thank you for standing by. My name is Janice, and I will be your conference operator today. At this time, I would like to welcome everyone to the Qatar General Insurance & Reinsurance Conference Call. [Operator Instructions]. And I would now like to turn the conference over to [indiscernible]. You may begin.

Thank you, Janice. Good afternoon to you all, and I'd like to welcome you all to the Qatar General Insurance & Reinsurance Q1 of 2026 Earnings Conference Call. On the call today from the management team of Qatar General Insurance, we have Omar Alsabbah, the Group Chief Financial Officer; Greg Bueno, Group Head of Finance; and Kabir Sher Ali, Investor Relations Officer. And as usual, the management team will first give us an overview of what transpired during the first quarter of the year. And then after that, we have a Q&A session. Let me now turn over the call to Kabir to begin. Over to you, sir. You may go ahead.

Good afternoon, ladies and gentlemen. Welcome to the earnings conference call of Qatar General Insurance & Reinsurance Company, which will be referred to hereafter as QGIRCO or the group for the period ended on 31st March 2026. I'm Kabir Sher Ali, QGIRCO Investor Relations Officer. We will start our investor call with a disclaimer, after which we will provide you with a summary of our financial results. I will now read out the disclaimer to this conference call. This call may contain, constitute or imply information or forward-looking statements regarding the operational or financial performance and future of QGIRCO or any of its subsidiaries. Such statements are based on the current expectations and assumptions of QGIRCO management to their best knowledge and diligent assessment. As such, QGIRCO, its directors and its officers shall not be liable for any costs or losses resulting from using forward-looking statements throughout this call. I am delighted to hand over to Mr. Omar Alsabbah, who will present the group financial results.

Thank you, Kabir. We are pleased to report that Qatar General Insurance & Reinsurance Company delivered a strong first quarter in 2026, building on the operational and financial progress made throughout 2025. The group achieved a net profit of QAR 63.8 million for the 3 months ended 31st March 2026, a 29% increase compared to QAR 49.3 million in the same quarter last year. Net profit attributable to shareholders reached QAR 63.9 million, translating to earnings per share of QAR 0.073 for the period. Our insurance service result improved to QAR 27.8 million from QAR 20.5 million in Q1 2025, driven by disciplined underwriting and active portfolio management. Notably, insurance revenue for the quarter was QAR 138.4 million compared to QAR 175.7 million in the period -- prior year period, reflecting a deliberate strategic decision to focus on quality over volume and generate sustainable profitability. Investment and other operating results reached QAR 72.4 million, up from QAR 49.4 million in Q1 2025. The primary driver was a significant increase in dividend income, which rose from QAR 21.5 million in Q1 '25 to QAR 49.2 million in Q1 2026. We note that dividend income is inherently subject to timing variability and may not reoccur at the same level in subsequent quarters. Our rental income remained broadly stable at QAR 18.1 million versus QAR 17.8 million in Q1 2025. We continue to make progress on cost optimization. Other operating and administrative expenses declined by 37% to QAR 12 million. Finance costs were reduced by 27% to QAR 11 million, reflecting continued debt reduction across our banking facilities. Net impairment losses on financial assets increased to QAR 22.1 million this quarter in relation to certain related party exposures. Qatar General Insurance & Reinsurance maintains a strong financial position with total assets exceeding QAR 5.5 billion and shareholders' equity above QAR 3.7 billion as of 31st March 2026. In summary, Q1 2026 reflects meaningful progress across our core priorities, stronger underwriting margins, leaner cost structure and continued deleveraging of our balance sheet. Our capital position remains sound, and the group's focus is firmly on delivering consistent, sustainable returns to shareholders over the long period. With that, I will hand it over to Mr. Kabir, who will take you through the outlook.

Thank you, Omar. Let us first discuss QGIRCO Insurance business. Management remains cautiously optimistic regarding the resilience of the insurance sector in Qatar and the broader region. Now withstanding the ongoing geopolitical challenges in the Middle East, Qatar domestic economy continues to demonstrate resilience, supported by strong government finances and ongoing infrastructure investment. We anticipate a recovery in regional economic activity as conditions stabilize. QGIRCO is actively developing its product portfolio to serve a diversifying economy with particular focus on digitization, life business and other emerging lines such as cyber insurance and renewable energy. Secondly, regarding QGIRCO investment and real estate business. On the investment side, the Qatar Stock Exchange has shown relative stability compared to broader international markets, supported by Qatar's strong financial position. We note, however, that our own equity portfolio experienced mark-to-market declines during Q1 2026, in line with regional market conditions, and we continue to monitor our exposure actively. We are exploring selective opportunities to increase allocation to fixed income instruments with the objective of generating more predictable recurring income and further enhancing portfolio liquidity. We also anticipate maintaining a stable recurring income from our real estate portfolio. Finally, let us highlight the effects on QGIRCO income statement and balance sheet. From an income statement perspective, the group objective remains to grow its bottom line through 3 parallel levers: improving underwriting quality, growing diversified investment income and maintaining a lean cost structure. We are targeting further reduction in our finance costs as we continue to deleverage, and we will maintain tight discipline on operational expenses. These measures are expected to strengthen both our liquidity position and our leverage ratios over the medium term, further consolidating the balance sheet for sustainable growth. With this being said, it is worth noting that the outlook has now been fully presented and the fact sheet will be available on the Investor Relations section of our website, www.qgirco.com, by the end of the day tomorrow. Please feel free to reach out to us through the contact details provided in the Investor Relations section of our website. Ladies and gentlemen, on behalf of the entire QGIRCO team, thank you very much. We wish you a great day ahead. And if you have any questions, please feel free to ask now.

[Operator Instructions] There's no question in queue at this time. Sorry, there's one that came through. The first question is coming from the line of Sagar Deshmukh from Aranca Private Limited.

Am I audible?

Yes.

I have a couple of questions. So my first question is like debt instruments make up only 0.3% to 0.5% of the total investment portfolio, basically, which is highly unusual for an insurer that should like match liabilities with predictable or low volatility cash flows. So my question is why has management chosen such minimal fixed income exposure, leaving the portfolio heavily exposed to like equity and real estate volatility? And what is your target asset allocation over the next 3 to 5 years? And my second question is...

Okay. So can we take one by one? So for the first question. Yes. So for the first question, in the past, there was a sizable portfolio with the group. However, because of the negative carry between that portfolio return and the loans that are outstanding, the management and the Board back then decided to just settle the loans that were outstanding in the past, taking the opportunity that they will be saving more from the finance costs versus the interest from bonds and Sukuks. Now what is the strategic direction of the group is to convert and to also increase the investments in the bonds in the coming 3 years. I hope that I answered your question.

Yes. Like what is like your target asset allocation over the next 3 to 5 years, like if you are...

It is going to be depending on the opportunities of exiting from the current portfolio and converting part of it to the bonds as well as the excess funds to be directed towards profitable investments in bonds and Sukuks. But to the ratio, it might be like above 30%, but that is all depending on the market conditions and the pricing that we are going to get. So it depends on what is going to be the market. And we see now that the market has reduced in value. So it is not a good time to actually exit or reinvest in any of the bonds.

So 30% like fixed income exposure or like what?

Yes, for the fixed income exposure as a concentration. But that -- as I mentioned, it all depends on the circumstances at the time of execution of the plan. And this depends also on the internal approvals that are to be seek. Yes, I'm with you. So can you go ahead with the second question?

[Technical Difficulty] remained negative over the last 4 to 5 quarters.

Sorry, we lost your voice. Can you please repeat the second question?

Yes, yes, yes. Sure. Second question. So we have observed that company's cash flow from operations has remained negative over the last 4 to 5 quarters. So what is management's strategy to improve like operating cash flow like rather than relying on asset sales or investment income?

Well, that depends on actually the outstanding liabilities and the timing of settling of claims. So it depends on the cycle of the insurance rather than actual fiscal year of operating cash flow. It has to do with maybe a claim that happened a few years ago, but now only concluded and settled. So it is not really reflective of the current operational inflow and outflow, but rather maybe timing of settlement of claims and ceding of premiums.

Your voice was a little like cracky. I have not...

Yes, you did not hear the answer or...

Like could you please repeat your answer please? Actually, it was a little breaking.

Yes. What we are trying to say, this is about the cycle of the insurance settlements and the insurance ceding premium. It has to do with maybe claims that occurred a few years ago, but only settled this year or the subsequent years. It has nothing to do with the exact operational income and outflow of the physical year. It has to do with the span of several years and the timing of settlements. So that would explain why you are seeing operational income to be negative. Plus, we are always deducting all the revenues from those that are not really core insurance, for example, dividends and the other incomes, although they might be partially indirectly generated from the insurance like collections and funds. However, what we are believing that it has to do with the timing of the insurance cycles. Do you have any more questions?

Actually, I have one follow-up question. So like it's on like non-core activities of the business. So if you look at like '25's result, the group has already liquidated certain non-core subsidiaries, including Oriental Garage and National Rebar Factory. So does management intend to further streamline the group structure through additional divestments of non-core business such as like hospitality business, companies water bottling business? Or if not, how does management justify retaining these like businesses within an insurance-focused group?

No. It really depends on fulfillment of certain requirements for us to exit noninsurance core businesses. When the time is right and the requirements are fulfilled, management will take the appropriate decision.

Okay. Like what strategic value do they contribute to shareholders if we look at from the current present scenario?

Okay. So certain investments and certain companies, they are not to be exited from because they either are generating enough revenue to continue with the group or because of some legalities that need to be fulfilled before exiting. So until then, no decision will be taken. But as you can see, 2 companies which are no more required in the group has been already like in the last stage of liquidation, as you mentioned just now.

Yes, yes.

We are expecting actually for these 2 companies to be fully liquidated this year.

Okay. Like what is the time line? Actually, yes.

It really depends on the formalities. However, we are expecting maybe between 1 to 6 months. But really, it depends on the formalities. You cannot really predict when the, for example, tax clearance will be completed. You just have to apply and wait. There is no specific time frame you can really follow.

Can we move on to the next question, Janice, if we have questions on the line?

There's no other questions in queue at this time. And that concludes our Q&A session. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.