QIC Group reports stable net profit of USD 184 million and Gross Written Premiums of USD 3.5 billion in 2019 – International
Qatar Insurance Company (QIC, QIC Group or the Group), the leading insurer in Qatar and the Middle East North African (MENA) region, reports a net profit of USD 184 million for the financial year 2019. QIC’s operations benefited from the Group’s strategic reallocation of capacity into lower volatility and higher frequency risks, such as short-tail personal lines business. In addition, growth was driven by the successful digitization of QIC’s direct insurance business in the MENA region. QIC’s international business continued the integration of its operations under the QIC Global umbrella. Compared with 2018, the Group’s gross written premiums grew by 2% to USD 3.5 billion. With the catastrophe losses incurred due to the Typhoons Faxai and Hagibis in the 3rd and 4th quarter, reserve increases due to the decision of the UK government to revise the Ogden discount rate to minus 0.25%, and the impact of prudent reserve strengthening policy applied across the international business, QIC reports a combined ratio of 103.3% for 2019, compared to 101.3% in the previous year.
Commenting on QIC’s stable financial performance for 2019, Mr. Khalifa Abdulla Turki Al Subaey, Group President of QIC Group said: “In 2019, QIC Group was particularly pleased with the strong and profitable premium growth that we enjoyed in our core markets in the MENA region. At the same time the integration of our international business; Qatar Re, Antares, QIC Europe (QEL) and the Gibraltar based insurance companies, is progressing on target. These developments reflect the success of our efforts to refocus our underwriting capacity on risks with a more favorable risk-return ratio, namely, our short-tail, personal lines business. Moreover, in the MENA region, we are spearheading the digitization of our industry, thereby increasing our operational efficiency while strengthening our client relationships.”
Overview of key financial results (year ended, December 31)
|Figures in USD million||9M 2019||9M 2018|
|Gross written premiums||3,528||3,463|
|Net written premiums||3,049||2,970|
|Net underwriting result*||98||158|
|Net investment and other income||298||237|
|Consolidated net profit||184||182|
|Return on Equity||8.0%||8.2%|
|Non-life combined ratio||103.3%||101.3%|
|Earnings per Share (in USD); 2018 restated||0.048||0.048|
*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 performanceContinued consolidation and integration of QIC’s international operations
In 2019, QIC recorded growth in gross written premiums (GWP) of 2% to USD 3.53 billion compared to USD 3.46 billion for the same period of the previous year. QIC’s international business posted gross written premiums of USD 2.70 billion in 2019, compared to USD 2.67 billion in 2018. QIC continued to consolidate further its position as a global insurance and reinsurance player with a local presence in 13 geographies across the Middle East, Europe, the Americas and Asia. QIC’s international business, namely, Antares, Qatar Re, QIC Europe Limited (QEL) and the Gibraltar based insurers continued the integration of its operations under QIC Global and now account for 76% of the Group’s total premium base. Qatar Re now ranks 26th in A.M. Best’s rankings of the World’s Top-50 Largest Reinsurance Groups, up from 35th rank in 2016.
Expanding leadership in domestic and MENA markets
QIC Group’s MENA operations reported gross written premiums of USD 832 million in 2019 compared to USD 796 million in 2018 and continued to benefit from stronger economic growth and diversification in the region. With its retail operations QIC Insured and the Group’s Life and Medical insurance subsidiary, QLM Life & Medical, QIC is spearheading the digital transformation of the industry by introducing innovative tech-enabled products and integrating machine learning and AI into its underwriting processes. As a testament to its success in innovation, in June 2019, QIC won the prestigious “Best Digital Transformation in Insurance Award”, recognizing its best-in-class digital technologies both in the retail and in medical insurance space. In January 2019, QIC was once again recognized as the “Best Motor Insurance Company MENA” region at the Global Banking & Finance Review awards.
Focus on less capital-intensive risks and a more reliable underwriting performance
The Group’s net underwriting result came in at USD 98 million, as compared to USD 158 million in 2018. This reflects the prudent reserve strengthening policy applied across the international business, the impact of increase in reserves for our UK motor business in response to the further revision of the Ogden discount rate by the UK Government, and the impact of natural catastrophe losses experienced in the autumn of 2019 due to Typhoons Faxai and Hagibis that caused landfall in Japan. On the other hand, the direct business in Qatar and MENA continued to perform strongly, benefiting from enhanced efficiencies through the wider use of digital technologies. Based on the above, QIC reported a non-life combined ratio of 103.3% for 2019 (2018:101.3%).
QIC’s stable underwriting performance reflects the overall composition of its book of business. Besides, already in 2018 the company started steadily reallocating its underwriting capacity to lower severity but higher frequency risks, which are less capital intensive and thus provide a more stable and predictable return on the invested capital. QIC will continue this strategic realignment of its portfolio, particularly benefiting from the strong performance in short-tailed personal lines business.
Investment management continues its strong track record
In 2019, the investment team of QIC Group once again proved its mettle. Despite heightened global market volatility due to ongoing trade wars and geopolitical turbulences, our investment team performed exceptionally well, holding its track record as one of the best asset managers in the Middle East region.
QIC Group achieved an excellent total investment income of USD 298 million, as compared to USD 237 million in 2018. On a year-to-year basis, the return on investment, excluding one-off gains, came in at 4.4%, compared with 4.3% for 2018. The team’s outstanding investment performance is built on careful diversification of the portfolio across geographies and investment classes.
In 2019, QIC’s investment team was recognized as the “Top Investment House” in a survey conducted by The Asset magazine in collaboration with Benchmark Research. In 2019, QIC Group also received authorization to establish Epicure Investment Management Company regulated by Qatar Financial Centre (QFC). Epicure Investment Management has been set-up to carry out investment business consultancy, building on QIC’s recognition as a leading investment manager.
Strong ERM framework
QIC Group is a frontrunner in Enterprise Risk Management and corporate compliance culture. Its risk-based capital adequacy ranks among the strongest levels, benefiting from the company’s large capital base. QIC has been accredited for its exceptionally strong financial flexibility proven by its ability to successfully access capital markets and generate organic growth. QIC continuously improves its risk management framework, which is commensurate with the complexity of its risk portfolio. With the full integration of QIC’s international business into its group-wide risk management framework, the Group further drives forward its centralized Enterprise Risk Management on a global scale.
Commitment to advancing national talent to top positions
QIC is committed to further its efforts in achieving Qatarization, in accordance with the country’s efforts to realizing the Qatar National Vision (QNV) 2030. QIC has a track record of empowering younger Qatari talents into demanding corporate roles and executive management positions.
As part of a smooth transition and succession planning at the executive management level, the Board approved the recommendation of Mr. Khalifa A. Al Subaey, the Group President & CEO and appointed Mr. Salem Khalaf Al Mannai as the Group CEO of Qatar Insurance Group. Mr. Salem Khalaf Al Mannai has been with QIC since 2001 and has been instrumental in positioning QIC Group as the digitally transformed insurance company in the region. Mr. Khalifa A. Al Subaey will continue in his capacity as Group President of Qatar Insurance Group.
QIC’s operations producing stable returns
QIC Group maintains a lean and efficient organization. In 2019, the Group’s continued endeavour towards further streamlining and automating of its processes resulted in a healthy operational expense ratio of 6.5%.
In total, the Group’s underwriting income together with the strong investment income translated into a consolidated net profit for 2019 of USD 184 million, compared with USD 182 million for the previous year. As of 31 December 2019, QIC Group’s shareholders’ equity stood at USD 2.32 billion, compared to USD 2.12 billion in 2018.