QLM Life & Medical Insurance Company Q.P.S.C. (QLMI) Earnings Call Transcript & Summary

Hello, and welcome to Qatar Life and Medical Conference Call. Please note that this call is being recorded. [Operator Instructions]. I would like to hand the call over to Shahan, you may begin.

Thank you, and hello, everyone. I want to welcome you to QLM's Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call. So on this call from management, we have Puneet Pakshi, Vice President of Finance. And so as usual, we will conduct this call with first management reviewing the company's results followed by a Q&A session. I will turn the call over now to Puneet. Please go ahead.

Thank you, Shahan, and good afternoon to all. Welcome to QLM Life and Medical Insurance Company's 2024 Performance Results Investor Call. Let me first go through the quick highlights on the different aspects of the financial performance numbers, and then we can open the house for question and answers. To start with, the insurance revenue was stood at QAR 1.22 billion, 9% higher than last year, which was QAR 1.12 billion. Insurance service expense was QAR 1.16 billion, 11% higher than last year, QAR 1.04 billion. The net results from reinsurance contracts was a negative QAR 34.9 million as compared to QAR 38.6 million last year. The overall insurance service result was QAR 28 million as compared to QAR 44 million last year. The major -- I'd just like to elaborate on this decline this year on the insurance service results. The major thing has come from the increased insurance service expense, which mainly comprises of the medical claims side. Now if we look at the insurance revenue, both medical as well as the life portfolio has registered an increase in the respective portfolios. And if I give a split, the life portfolio increased by almost 15% and the medical portfolio increased by 8% as compared to last year. Even when we look at the net results of reinsurance operations, that also -- there was a slight improvement there of around about QAR 3-odd million. But mainly because of the insurance medical claims, we had an increased insurance service expense, and which has majorly resulted in our insurance service result overall decline. And we have always been saying right from the start of the year that this year, particularly, we have been witnessing a very high utilization levels from the members, almost in the range of 10% to 15% increased activity when we compare that with last year. And that's where the insurance service expense have registered an increase. Of course, we are doing our own in-depth analysis. We're trying to look at the provider billings, whether there have been any abusive trends over there, and we've taken our mitigative steps to encounter and control the claim side -- on the claims side. But yes, that is expected to deliver results. Somehow we will see coming out in this year. But yes, [ positive thing ] overall, for 2024, yes, there is an increase on that side. The investment income registered an increase of 4% as compared to last year, which was at QAR 57 million as compared to QAR 54.6 million. The net insurance financial result was net of QAR 1.7 million as compared to a negative QAR 2 million last year, so quite a turnaround there. And overall expenses registered an increase of 7% and which stood at QAR 21.5 million as compared to QAR 20 million last year. But these are nonattributable expenses, which are -- which as per the presentation format of IFRS 17. But if I look at overall expense in the old format, the expense ratio is almost similar what we had in last year, which is 5.3% in the current year as compared to 5.5% or 5.6% last year. Profit before tax was QAR 65.6 million as compared to QAR 76.6 million and profit after tax was QAR 65.05 million as compared to QAR 76.3 million last year. On the solvency side, the company is very adequately capitalized. Solvency stood at 261% as at December, as compared to the regulatory threshold of 150%, and yes, we have been mentioning in our third quarter call also, we are seeing some old lost accounts, which are coming back to us. One of the examples of the key big account was Qatar University, which we -- which came back to us in October. All major accounts for the current year have been renewed except for Qatargas, which is now Qatar -- QatarEnergy LNG. The 3-year contract was over. And this year, we could not renew on the tender side. But, however, on the business update thing, we are expecting some very high-value accounts this year, which are coming to the market during the course of the year, particularly Qatar Airways, [ Al Koot], Amiri Diwan, Al Jazeera and almost, if I sum it up, the total value of all these accounts will be anywhere in the range of QAR 300 million to QAR 400 million. And of course, we'll be very actively participating and competitively bidding for these accounts. So probably we will update you on the outcomes as and when we -- these -- the outcomes are declared. So from our side, these are the performance results.

[Operator Instructions] And your first question comes from the line of [ Rob Steffer with Ashmore].

Yes, I just want to ask, I mean, given obviously this higher utilization that you are seeing from policy holders, like what's your sense of how this looks across the industry and whether there'll be kind of some pricing uplift given that these trends seem like they're here to stay?

Sorry, Bob, your voice was a little echoing. Can you please repeat the question.

Yes. is this better?

Yes. absolutely.

I just wanted to ask, so yes, obviously, the results has been impacted by higher utilization from policyholders. Just be interested to hear your comments. Presumably that's an industry-wide phenomenon. And normally, when this happens in markets, it's kind of here to stay. So policyholders get used to a certain level of utilization and it kind of doesn't go back down. So would you expect like a pricing response across the industry?

Yes. Look, on the -- in Qatar market, particularly, I would rather say that there are only 2 major players in the market on the medical insurance side, which is QLM and [ Al Koot. ] Now of course, what we hear from the market, I think situation is equally on the competitors' front as well, the situation does not look good. But then, of course, these are all market news. But on the premium side, yes, we are trying to adjust and correct the premiums, but that part, there are challenges on the increase in the premium pricing. We are able to renew accounts with a marginal increase, but not like -- not too much increase is possible. The key to strengthen the bottom line would still lie in the fact that we'll have to come back to the drawing board and control our average claim cost and control our providers, maybe renegotiate some prices or discount structures. So overall, the ball will come back on the claims side rather than expecting too much increase on the premium side to offset this or offset this particular higher utilization level from the members.

Yes. Okay.

I mean there are certain accounts where, for example, certain critical illness, which -- because in a particular policy causes the policy to significantly -- the loss ratio to significantly go towards the southward direction. But yes, we -- those kind of things we are kind of taking care while renewing the accounts. But on a regular claims and where there is an increase in the routine and regular claims, those things will still come to the fact that we'll have to still come down and control with the providers only.

Yes. Okay. And then just what's your sense in terms of -- there's been a lot of capacity that's come on in the kind of hospital and clinic space over the last few years. And as you say, your focus is now on like controlling the claim cost and kind of looking at the kind of network on that side. Do you think there's kind of a lot of spare capacity in the market now? Like do you think that's going to be easy to try and control those costs?

With some hospitals, yes, and with some hospitals, no, because in Qatar, particularly in the -- over here -- I mean, what happens is that there are 1 or 2 facilities, which are considered to be like where you can't really touch and you can't really do much about it. But then there are some other facilities where you can really go ahead and press on negotiating and getting some better discounts and getting some better discount on particular prices like -- particular policies, sorry, when it comes to high value, you can go and approach these facilities to give some specific higher discounts on there and try to route the volumes from those facilities, which cannot be touched to these -- to the other facilities where we can negotiate the rates to our advantage. So those kind of things are all explored. Those alternatives, we are exploring all of that and kind of working on that. Yes. But on the spare capacity, some new facilities are coming up. For example, this year, there is a Pearl Hospital, which has new hospital, which is, again, a very big facility, which is coming up, and we are already in talks with them to enroll them in our and panel them in our network. So those kind of things will also help us to route more of people over there and then -- and of course, extract some better pricing structure from these new facilities.

[Operator Instructions] . There are no further questions. I would now like to turn the call back over to Shahan for any remarks.

Thank you. Okay. If there are no more questions, we can wrap up this call. I'd like to thank management for giving us an update for the year and the quarter, and we will pick this up again next quarter. Thank you.

Thank you, Shahan. Thanks, everyone. Thank you.

That concludes today's conference call. Thank you all for joining. You may now disconnect.