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QIC Group posts a net profit of USD 113 million for the first half of 2019, up 7% y-o-y – International

QIC Group posts a net profit of USD 113 million for the first half of 2019, up 7% y-o-y – International

Jul 31, 2019 (0) comment

QIC-Qatar

Qatar Insurance Company (QIC), the leading insurer in Qatar and the Middle East North African (MENA) region reports a net profit of USD 113 million for the first half of 2019, an increase of 7% compared with the previous year. The MENA markets continued to produce stable premiums and underwriting profitability, despite unabated geopolitical headwinds. At a slowing pace, given the non-renewal of underpriced business, QIC’s international operations further expanded in select low volatility classes. Compared with the first half of 2018, the Group’s gross written premiums remained stable at USD 1.8 billion. QIC reports a combined ratio of 100.2% in the first half of 2019, against 100.5% in the same period of the previous year.

Commenting on the financial performance for H1 2019, Mr. Khalifa Abdulla Turki Al Subaey, Group President & CEO of QIC Group stated, “We remain on track to repositioning our international book towards areas of lower volatility. QIC’s stable underwriting profitability increasingly reflects the attractive economics of this business which yields relatively stable and predictable margins.”

He further continued, “The Group’s outlook for the remainder of the year is cautiously optimistic. Our exposure to the geopolitical situation in the Middle East and the vagaries of global re/insurance pricing is relatively moderate. As QIC does not underwrite the market but focuses on bespoke, innovative and expertise- based transactions we can view the various risk scenarios presented by the political and economic environment with relative equanimity”.

Overview of key financial results

Figures in USD million
H1 2019
H1 2018
Gross written premiums
1,754
1,806
Net written premiums
1,552
1,549
Net underwriting result*
91
91
Non-life combined ratio
100.2%
100.5%
Consolidated net profit attributable to the parent
113
106
Earnings per Share (in USD) ; 2018 restated
0.031
0.029
Net investment result
117
112
H1 2019
Q4 2018
Total assets
11,182
10,760
Market capitalization
3,230
3,145
Shareholders’ equity
2,229
2,122

*Net underwriting result is defined as net earned premium reduced by the sum of (i) gross claims paid, (ii) reinsurance recoveries, (iii) movement in outstanding claims, (iv) net commission expense, and (v) other insurance income.

Financial performance

In H1 2019, QIC adopted a more restrictive and selective approach to new business generation, reflecting the company’s continued focus on de-risking its book and placing more emphasis on low-volatility segments. Gross written premiums (GWP) remained stable at USD 1,754 million.

The Group’s international carriers, namely Qatar Re, Antares, QIC Europe Limited (QEL) and its Gibraltar based carriers continued to expand in select low-volatility areas and now account for approximately 75% of QIC’s total GWP, compared to 74% in the first half of 2018.

Overall, QIC’s domestic and MENA operations, remained stable. QIC Insured, the personal insurance division of QIC, continued its growth in digital transformation and innovative products. As a testament, Qatar Insurance Company was conferred the “Best Digital Transformation in Insurance Award” at the inaugural edition of the Enterprise Transformation Summit in Doha.

The Company’s net investment result improved from USD 112 million in H1 2018 to USD 117 million in this reporting period. The 4% y-o-y increase is mainly attributable to favourable global and regional market conditions across most asset classes. QIC’s current investment yield amounted to an annualized 5%, compared with 4.9% for the same period of 2018, further adding to a long track record of superior investment performance based on careful diversification across geographies and asset classes. The Company’s investment performance remains unrivalled by any of its peers.

The Group’s net underwriting result remained stable at USD 91 million in H1 2019.

On 15 July 2019, the Lord Chancellor, Ministry of Justice, United Kingdom, announced that, under the provisions of the Civil Liability Act 2018 the prescribed discount rate (OGDEN rate) to be taken into account by the courts when assessing lump sum damages awards for personal injury would be established at minus 0.25% with effect from 5 August 2019. QIC through its UK Motor insurance and reinsurance business is exposed to impacts caused by the changed discount rates and expected future lump sum settlements of personal injury cases. The Group is currently reviewing the actuarial estimates and shall account for the full impact within the next reporting period.

QIC reported a combined ratio of 100.2% for the first half of 2019, against 100.5% in the same period of the previous year. Low severity high frequency business now constitutes a significant portion of the total underwriting portfolio.

Overall, the Group’s net profit for H1 2019 stood at USD 113 million, compared with USD 106 million in the same period last year, a year-on-year increase of 7%.

Operational efficiency

During the reporting period, QIC has vigorously maintained its focus on streamlining operations in order to further improve its operational efficiency. At H1 2019, the administrative expense ratio for its core operations came in at 6.4%. The Group continues to reap the benefits from its ongoing endeavor towards process efficiencies and automation.

Ratings developments

Earlier in July 2019, Standard & Poor’s reaffirmed QIC’s financial strength rating of A/Stable, referring to the Company’s “strong business and financial risk profiles, its scale, diversified premium base (by geography and product), and ability to post good results”.

QIC benefits from ‘AAA’ level risk-based capital adequacy despite rapid growth and various acquisitions over recent years.

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