Qatar Insurance Company Q.S.P.C. (QATI) Earnings Call Transcript & Summary

Good day, and welcome to the Qatar Insurance Company Q2 2021 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mehmet Aksoy. Please go ahead, sir.

Hi. Good afternoon, ladies and gentlemen. This is Mehmet Aksoy from QNB Financial Services. I would like to welcome everyone to Qatar Insurance Company's Second Quarter 2021 Financial Results Conference Call. On this call from QATI, we have Mr. Varghese David, who is the Group Chief Financial Officer; Mr. Chirag Doshi, who is the Group Chief Investment Officer; and Mr. Mena Mounir, Senior Vice President of Group Finance. We will conduct this conference call first with brief comments on the presentation followed by the Q&A. I will now turn the call over to Mr. Varghese David to get us started. Varghese, please go ahead.

Hi, good afternoon, everyone. Welcome once again for QATI's quarterly call. I mean, as usual, first, I'll give a broader update of our Q2 results. See, I mean, Q2, as you all know, we have reported a profit of QAR 351 million against a loss of QAR 198 million for the same quarter of last year. We -- as per our group strategic plan, we continue our exercise of derisking and re-underwriting the nonprofitable and international risks. That has been successfully going on. And during this quarter, during the first 6 months of operations, we have further come out of U.S. cat exposures. From a top-line point of view, we currently stand at QAR 6.5 billion. That is as per the business planning and the business planning figures. With regard to the MENA region, we are seeing strong growth in the top line. Overall, I mean, we have around 10% to 11% growth arising from our Doha and the regional operations. The growth is primarily coming out of rate hardening, which you will see within the region, also new clients being added. So I mean, overall, I mean, the MENA region, in terms of top line, has grown. Coming to the international side. I mean this Q2, we have seen a new business coming in from the Marketstudy [ called ] deal, part of that we have seen new premium being added. Meanwhile, we have seen our derisking exercise continues. So overall, I mean, plus/minus, we have seen a drop in the international premiums. But -- and overall, at QAR 6.5 million. As of now, international constitutes around 77% of the group's premium, whereas the -- around 23% -- the remaining 23% is from our regional operations. Coming to the insurance operations. We have reported an underwriting income of QAR 115 million against a loss of the reported last year on account of the COVID. This year, again, I mean our regional operations have done exceptionally well, because we have seen further positive aspects coming primarily from our digital initiatives we have done. And so overall, I mean, our Doha -- I mean, UAE operations all are on track from an insurance profitability point of view. Coming to the international side. This quarter, we have seen a couple of losses coming in from our Lloyds, I mean, operations, international operations, and there is -- we had a couple of losses coming from the previous years, PI and FI losses. That has impacted our insurance systems. Also, on account of the -- I mean the COVID -- the changing scenarios in the COVID, we also, as a management, we have taken a position of taking a conservative view on the ultimate loss ratios. So there's, I mean, we have taken a more conservative view on the reserving for Q2 reporting. So all put together, we are showing in our writing results of QAR 115 million. Our investment income has done exceptionally well at QAR 587 million against investment income of QAR 124 million. Overall, we are after plan. Our net profit stands at QAR 351 million against a loss of QAR 198 million. Other key development -- business development which has happened during this Q2 closing is with regard to the Marketstudy loan, which was due from them, which we're expecting that receipt of the funds before 30th of September, those funds are fully received. So the impact of that has not been currently shown in the current reported financials, but that will be coming as an impact to the Q3 and the following reporting period, Even though there is no impact to the period, but this is being a key market event. This is for the information. Beyond that, I mean, we expect our combined ratio. Currently, it stands at 104%, but that is primarily on account of the conservative reserve approach we followed post the COVID evolving matter. Also on the Antares, the Lloyd's operation, the previous year's losses. But our expectation is our combined ratio will be closer to 200% at the end of this year. And so this is a general overview of where we stand as of the Q2 reporting. If you have any further queries, I mean, you're welcome to, I mean, for your queries.

Operator, can you open up for questions now please.

[Operator Instructions] We will now take our first question from [ Stacy X. ] from [ Ninety One UK ].

My question's, as usual, your solvency ratio as of end of Q2. And then I saw that Q2, the underwriting result was actually a small loss. You've mentioned a few reasons. Could you please quantify it, like breaking it down into how much is related to previous year's Lloyd's losses? And how much is due to your change in assumptions on the COVID scenarios? And have you had any cat losses in Q2, and so far in Q3? Because there's been quite an extreme weather events around the world. Also, the market started along this notion. Could you please also quantify how is it going to impact your Q3 results?

Stacy, on the solvency ratio, quarter 1 2021, we reported 183%. Quarter 2 should be 180% to 182%. So a very similar to what we reported in quarter 1 2021. So low 180% is where the solvency ratios are. I'll ask Varghese to answer the other questions.

Okay. Stacy on -- with regard to the underwriting impact, I mean, which I did mention, the Antares, the losses arising from our Lloyd's operation, this is primarily from professional indemnity and financial institution losses coming in. That is, I mean, around $35 million is on account of that. With regard to the reserve strengthening, I mean, as a conservative impact, we have taken that is around $25 million. So overall, it is between $55 million to $60 million. It is around QAR 200 million is the impact. So if you take out these 2 abnormal impacts, our combined ratio stands at around 99%. So I hope we answered everything. What was the third question, Stacy? I just missed that.

The Marketstudy loan that you mentioned that you've received the funds end of Q2. So how is that going to translate into different lines for Q3, please?

No, I mean, Q3, from a profitability point of view, that will have no impact. So the business, I mean, in our current financials, I mean, this is shown as a receivable. So Q3, in sort of receivable this is good as cash received.

Sorry. So it will come off receivables and turn into cash?

Yes, exactly.

And remind me, what's the amount, please?

It is GBP 167 million.

Okay. And I had another question on your cat losses. Do you have any cat losses in Q2 and so far in Q3?

Yes. So with regard to Q2, we didn't have any specific cat losses. But just to remind you, in Q1, we had the Florida -- the Uri losses that is around $13 million. But that's to be considered as part of our normal losses arising. That is nothing abnormal. So that is already reported in Q1 and nothing specific in Q2.