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

Hello, and welcome to the Qatar Insurance Company First Quarter 2023 Financial Results Conference Call. I would like to advise all participants that this call is being recorded. I'd now like to welcome Mr. Roy Thomas to begin the conference. Roy, over to you.

Thank you, April. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Qatar Insurance Company's First Quarter 2023 Financial Results Conference Call. On this call from Qatar Insurance Company, we have Varghese David, the Group Chief Financial Officer; Chirag Doshi, the Group Chief Investment Officer; and Faten Keyrouz, the Investor Relations 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 Faten Keyrouz. Go ahead, Faten.

Thank you, Roy. Good morning, everyone, and thank you for joining us today for the financial results conference call for QIC for the first quarter of 2023. Let me welcome Mr. Varghese David, Group Chief Financial Officer; and Mr. Chirag Doshi, Group Chief Investment Officer, who will be handling all your questions and give you an overview of the financials for the quarter. I'm going to give the word now to Mr. Varghese David. Thank you.

Hi. Good afternoon, everyone. I welcome once again to QIC Group's Q1 2023 financial highlights. See the key highlights for the first quarter is, QIC reported a net profit of QAR 175 million for the first quarter. Gross written premium for the first 3 months was QAR 2.7 billion against QAR 3.8 billion for the previous quarter and the last year. Premium volume benefited from a 7% growth in the gross written premium in QICs, domestic and MENA operations to reach close to QAR 1 billion, which is close to 38% of QIC Group's overall gross written premium as of Q1. I mean, it also means that our international operations contribute 62% of the gross written premium, which used to be 80% in the previous years. So we brought down our international exposure, has been our plan always. So currently, it has reached to level of 62% and 38% is the domestic and the GCC operations. The IFRS 17 insurance revenue for Q1 stands at QAR 1.3 billion. IFRS 17, I mean, the net insurance financial results have shown a profit of QAR 154 million compared to a loss of QAR 85 million, which is restated for the previous period of last year. The group reported a net investment income of QAR 223 million for Q1 2023 compared to QAR 267 million for Q1 2022. The annualized return on investment came in at close to 5.1%. The regulatory solvency ratio for the group as of Q1 2023 currently stands at 160%. The other key highlights during the quarter is, first is with regard to Markerstudy. We are pleased to inform that QIC has recently signed the SPA to sell its 100% stake in the Gibraltar-based entities, West bay Insurance Plc and Markerstudy Insurance Company Limited, to strategic financial investors. The sale is subject to GFC, that is Gibraltar Financial Services Commission regulatory approval. Moving on to the international operations of the group. The group's tactical shift to discontinue its earlier loss-making and low margin, high volatile and high severity international business led to impressive underwriting performance during the first quarter, making a significant rebound from the previous year and which is seen as in the positive results of the first quarter. The group also succeeded in completely expecting from the catastrophe bond home insurance, which used to write in the U.S., which are completely exited. It ensures the cessation of the loss-making business and, again, positively reflecting to the profitability of our insurance activities overall. QIC Group has continued to execute the strategy to take advantage of the significantly improved market conditions. And currently, our renewed focus is to the group's flagship international underwriting platform at Lloyd's Syndicate, which is the Antares Lloyd's Syndicate, through which we currently write most of our international insurance risk. Regarding on the Lloyd's Syndicate, just a word on that, as you're aware, Lloyd's of London is one of the premier insurance platform across the globe through which almost 75 syndicates write business globally close to $47 billion. And we have -- we are one of the syndicates operating over there. So the benefits of the double-digit rate hardening and the tightening market conditions in the niche global line of business, we are now better positioned to Lloyd's syndicates operations to produce better results going forward. Moving on to the MENA operations. QICs -- as we've been saying earlier, QIC strategic emphasis on expanding direct and personal lines within domestic and MENA markets continue to grow at a higher pace with increasing market share. Recently, QIC successfully completed the merger of Vision Insurance Company with our Omani subsidiary, Oman Qatar Insurance Company. QIC remains committed to foster the growth and development of the direct insurance vertical in the region by leveraging its position as the leader in the digitalization of personal lines and the other select lines of business. So as we maintain our strategic focus on expanding our profitable direct line business towards GCC, QIC has, once again, witnessed a strong performance from a primary domestic and the GCC insurance business in this quarter. Our operations continue to impress with strong underwriting profitability, benefiting from our highly efficient and automated digital sales channel, which has been recently seen. You might have seen the Ramadan campaigns and so and so. All put together, these steps, which have been initiating for the last couple of years, is being seen in the group's net insurance results for this quarter, the total quarter profit of QAR 276 million compared to a loss of QAR 83 million, it represents the same as last year. The other key important update during this quarter is IFRS 17. QIC and its subsidiaries have successfully adopted the new IFRS 17 standard, which will be a major transformation for the entire insurance industry. QIC Group along with the big 4 consultants and it's IT subsidiary Anoud Technologies, was one of the first insurance companies in the region to report its consolidated financial statements under IFRS 17. So this is a general overview of the Q1 results and the operational aspects. If there are any further queries coming, we can answer.

[Operator Instructions] Our first question comes from the line of Riyas Abdul Kader from Integra Asset Management.

I just want to -- one question regarding your continued operations. We see strong recovery on that. What was driving this improvement quarter-on-quarter? And also if you can give us like a breakdown in terms of loss ratio and expense ratio, things like this?

I mean, I think, it's a very, very important and relevant question. See, there are two key reasons. I mean, one is, our strategy has been always to come out of the loss-making and the low margin, high severity and high volatile international business, which we have almost come out now. So -- and the focus has always been to the domestic and the GCC markets where the margins are high. So that is one key reason. The other important reason is even in the international markets, we write most of our business, almost 80% of the business we write is through the Lloyd's Syndicate, which is called the Antares Syndicate, which is fully owned by QIC. So there, I mean, globally, we have seen the rates hardening. Rates hardening in the sense, the premium rates are going up. So on an average, I mean, we have seen double-digit growth coming in the premium rates. And some of the niche specialty lines of business we write through Antares. There are -- I mean, much bigger growth rates have seen in the premium rates. So all put together, I think the figures are and the underwriting results are showing this growth. This is an expected growth. I mean, so all put together, I mean, we're able to show how much better underwriting results compared to the previous quarters.

So previously, you had a guidance for your combined ratio of 98%. Given the restructuring and all what's happened recently, and after some -- your -- you can also distinguish, et cetera, what is the currently your combined ratio? And you had a change in your guidance?