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

Hello, everyone, and a warm welcome to the Qatar Insurance Company FY '24 Earnings Conference Call. My name is Emily, and I'll be coordinating your call today. [Operator Instructions] I will now turn over to Karim Kekhia with Arqaam Capital to begin. Please go ahead.

Thank you. Good afternoon, ladies and gentlemen. Thank you for joining QIC's 2024 earnings webcast hosted by Arqaam Capital. I am pleased to introduce our speakers: Mr. Varghese David, Group Chief Financial Officer; Mr. Chirag Doshi, Group Chief Investment Officer; Mr. Mena Mounir, Group Finance; Mr. Pradeep Kumar, Assistant Manager; and Mr. Saugata Sarkar, the Head of Research. Please go ahead, gentlemen.

Hi. Good afternoon, everyone. I once again welcome all to QIC Group's quarterly earnings call. We are pleased to report the financial highlights of QIC Group for the year ended 31st December 2024. The key highlights for the year are the following: QIC Group reported a net profit of QAR 735 million for the year against a net profit of QAR 615 million with a 19% year-on-year growth. The gross written premium for the year remained at QAR 9.1 billion. The insurance revenue for the year was QAR 8.6 billion, and the insurance service results for the group for the year was QAR 514 million compared to QAR 300 million for the previous year with a 71% year-on-year growth during the year. The group reported a net investment and other income of QAR 973 million for the year with an investment yield of 5.3%. The solvency ratio for the group at the year-end is at 184%. The Board has recommended a 10% dividend for the year, which will be presented for approval at the AGM scheduled on 26th of Feb 2025. 2024 is the 60th year of QIC. And as we cross this key hurdle -- key milestone, the group is poised to enter the seventh decade with robust growth built on a solid foundation. QIC, being one of the first insurance companies in the region, continues to maintain its dominant position in the MENA as the largest insurance group in terms of total assets and total equity. Having demonstrated its resilience over the past years, QIC has consolidated and further built upon the progress over the past 12 months with excellent, stable and consistent results, which underlines the success of the group's commitment to its set long-term strategy. With focus on bottom line-driven growth, over the years, QIC has been able to optimize and stabilize its underwriting portfolio with a balanced and well-diversified lines of business across regional and international markets. With this key strategic change in business mix, the company has now been able to deliver consistent and stable bottom line-driven growth for the past several quarters, supplemented by focus towards in-house process efficiencies initiatives and automation initiatives, which we have been doing through our digital transformation initiatives by applying the latest AI opportunities. Over the recent years, QIC has strategically focused on increasing the proportion of the group's premium generated in the MENA region. And during the year, we have seen further acceleration to that. Domestic and regional gross written premium have grown to QAR 4.8 billion during the year 2024. The MENA-sourced direct premium now currently constitutes 52% of the group's total premiums, having jumped from less than 20% of the total GWP 3 years ago. QIC's business in UAE and Oman witnessed substantial growth over the course of the year, and wider regional markets are expected to again give us further opportunities for growth as we move on. In terms of activities outside the Middle East, QIC's international operations have been delivering consistent and healthy underwriting results over the past several quarters. By the close of 2024, QIC has exited from all loss-making, low-margin and high-volatile and high-severity international business. Currently, majority of the group's international business is being written through our fully owned subsidiary at the Lloyd's of London, Antares Syndicate, the independent managing agency operating at Lloyd's of London. During the year, we also successfully completed the strategic restructuring of our international business. This key restructuring now positions QIC Group for greater stability and profitability with controlled exposure as a reinsurer to the U.K. motor, while we have successfully exited from our earlier exposure to the direct U.K. motor through Markerstudy. With the focus on bottom line-driven growth, our recent -- over the recent years, QIC has been able to optimize and stabilize its underwriting portfolio with a balanced and well-diversified lines of business across the GCC and the international markets, predominantly the Lloyd's of London. In the MENA region, the growth has been driven -- again driven by the personal lines and health segment of business, which are short tail in nature and less vulnerable to long-tail uncertainty. In line with the said enhanced underwriting strategy, QIC's personal lines and health segment of the nonvolatile business has expanded in terms of percentage contribution to the gross written premium. The energy and the marine business has also been growing, while our traditional P&C sector has continued to grow. As you are aware, 2024 has been a difficult year for the global insurers with 2024 beginning witnessing the unprecedented flooding happening in Dubai, wherein most of the regional companies had incurred big losses. The global markets witnessed the Baltimore U.S. loss, which has been said as the biggest marine loss. Also, we had the back-to-back U.S. Hurricanes Helene and Milton hitting during the year. While the regional and the global insurance industry faced the above cat losses during the year, QIC Group continued to show its resilience and has delivered healthy, stable and improved combined ratios in both its domestic and international operations. The group has posted an insurance service result of QAR 514 million, as I told earlier, which is 71% growth from the previous years. Now moving on to investments, QIC's key -- which is QIC's key differentiator, which has always given us robust and stable investment returns. During the year, the total investment and other income is QAR 973 million with an investment yield of 5.3%. The above is a brief summary of the 2024 financial results. And do let us know if you have any further queries or clarifications. Any questions, please? Can we please open it for Q&A?

[Operator Instructions] Our first question comes from Asadullah Javed with Mashreq.

Just wanted to ask, can you elaborate the performance on the Qatar side of the business?

Yes. See, Qatar, I mean, operations has always been the pillar for QIC. See, in terms of top line, I mean it's almost remained stable. But in terms of bottom line, I mean, we have seen the growth, especially coming from the personal lines. When I say personal lines, if you notice, QIC has been one of the most active insurer in Qatar in terms of digital transformation, reaching the customer, primarily on the personal lines business like motor, home care and travel. So there, I mean, we have been able to grab a much bigger market share. And to that extent, the bottom line has improved for personal lines. So overall, I mean, Qatar, I mean the market performed as we expected. And so I mean we expect despite the competition in the market, I mean, we continue to maintain our leadership position in Qatar.

All right. Perfect. And also just wanted to ask -- just wanted to talk about any modifications on the business side after the shareholders emphasized prioritizing stability and talk about that a little.

Yes. See, I mean, in fact, I did mention this in my initial statement. If you see, I mean that -- I mean we are now currently come out of the international business making, which were loss-making, which had lower margins. So if you look at the investor presentation also, in the previous years, we had international business to the extent of 81% and regional business was only 19%. As of now, end of 2024, we have 52% of the regional and Qatar business, which is direct business where the margins are good. These are relatively short-tail business. So that's what I was stressing on the change in the business mix. So this has been a planned journey. This has been a strategy to balance the portfolio, I mean, have a diversified portfolio split between international and MENA. And we would -- our plan is to maintain the status quo while we grow international only through the Lloyd's of London. Lloyd's of London is the insurance hub for the global insurance business. We got our underwriters, professionals who are the niche underwriters there. So that way, I think I mean QIC is now well positioned from an insurance point of view with the change in the business mix, which we have achieved as we speak.

[Operator Instructions] And with that, we have no further questions registered. I will hand back to the management team for any closing comments.

Thank you. I mean, if you have any further queries, I think you can write to our investor team, and we'll be happy to respond to any further queries. Thank you.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.