Financial results highlight QIC Group’s robust performance amidst regional political turbulence and unabated global (re)insurance market softening
Qatar Insurance Company (QIC), the leading insurer in Qatar and the Middle East North African (MENA) region recorded a growth of 14% in gross written premiums (GWP) to USD 1.714 billion in the first six months ended 30 June 2017.
Against the backdrop of a politically driven investment and ultra-soft underwriting environment, QIC Group’s net profit amounted to USD 139 million for the first six months of 2017, compared with USD 165 million for the same period of the previous year.
Mr. Khalifa Abdulla Turki Al Subaey, Group President & CEO of QIC Group commented: “The financial results for the first half-year of 2017 clearly demonstrate the effectiveness of QIC Group’s diversification strategy which is predicated on tapping into global growth opportunities whilst maintaining our leading position in our home markets. With minimal exposure in the countries involved in a diplomatic rift with Qatar, it is business as usual for us.”
Offering a conservative outlook for the remainder of 2017, Mr. Al Subaey continued, “In line with our business objectives, we will continue to adapt to the changing environment and renew our focus on a bottom line driven sustainable growth strategy for QIC Group.”
|Figures, in USD million||H1 2017||H1 2016|
|Gross written premiums||1,714||1,506|
|Net written premiums||1,369||1,280|
|Net underwriting result||72||120|
|Non-life combined ratio||101.5%||96.9%|
|Return on investment||5.7%||7.2%|
|Figures, in USD million||H1 2017||Q4 2016|
For the six months ended 30 June 2017, QIC Group’s GWP grew by 14% to USD 1.714 billion compared to USD 1.506 billion for the same period of the previous year.
This performance reflects QIC Group’s steady and systematic expansion across its global and regional target markets, lines of business and client segments. QIC Group’s international operations, namely its global reinsurance subsidiary Qatar Re (based in Bermuda), London-based specialty insurer Antares and Malta-based subsidiary QIC Europe Limited (QEL) were instrumental in growing the Group’s volume of business. During the first half of 2017, these subsidiaries contributed 89% to the Group’s combined premium growth.
As at 30 June 2017, Qatar Re, Antares and QEL accounted for 71% of QIC Group’s total premium volume, up from a 69% share a year ago.
In its domestic market, Q Life and Medical Insurance Company (QLM) contributed significantly to the Group’s performance, growing its premium income to USD 190 million (up 17%) from USD 163 million for the same period last year.
Premium income from the countries involved in the political standoff with Qatar does not represent a material portion of the Group’s revenues.
Despite continued global financial market volatility and regional diplomatic and economic turbulence, QIC Group generated robust investment income of USD 155 million in the first six months of 2017 (USD 132 million in H1 2016). The annualised return on investment amounted to 5.7% for the first half of 2017, significantly in excess of the global industry average.
QIC Group’s investment exposure to those countries involved in the diplomatic rift with Qatar is minimal.
Qatar’s domestic financial markets have proven resilient to the most recent challenges. Over the past six weeks, the country’s key stock market index has recovered to the level before the regional political standoff.
Moreover, most regional and international observers do not expect any material adverse impact of the political standoff on Qatar’s economic growth performance, even under a prolonged scenario.
QIC Group’s net underwriting result came in at USD 72 million for the first half of 2017 (vs. USD 120 million in H1 2016). The Group’s non-life combined ratio stood at 101.5% against 96.9% in the previous year.
The half-year performance was materially affected by the UK Government’s decision to drastically cut the Ogden Discount Rate, which shook up the UK motor insurance market, with an expected industry-wide reserving hit of over USD 10 billion. QIC Group has a major underwriting footprint in the UK and decided to strengthen its motor reserves by USD 31 million. In addition, first half performance was impacted by a few large risk losses in the Group’s international operations.
Overall, QIC Group’s underwriting performance continues to benefit from its strong commitment to technical and analytical underwriting as well as effective enterprise risk management.
The implementation of effective cost control policies, in combination with an accelerated pace of work process automation resulted in a slight decrease in the administration expense ratio to 7.90% against 8.10% during the same period in 2016.
As at 30 June 2017, QIC Group’s shareholders’ equity stood at USD 2.309 billion, compared with USD 2.326 billion a year earlier. In Q1 2017, the Group, via Qatar Re, successfully issued Tier 2 capital totalling USD 450 million. The issue was 14 times oversubscribed.