q3 2019 results - qgirco.com€¦ · q3 2019 results highlights 1 insurance revenue 39% growth in...
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Q3 2019 resultsOctober 2019
Disclaimer
By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by thefollowing limitations:
These materials contain statements about future events and expectations that are forward-looking statements.These statements typically contain words such as "expects" and "anticipates" and words of similar import.Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.None of the future projections, expectations, estimates or prospects in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the presentation.Past performance cannot be relied on as a guide to future performance.Qatar General Insurance and Reinsurance Co. assumes no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.The opinions presented herein are based on general information gathered at the time of writing and are subject to change withoutnotice.Qatar General Insurance and Reinsurance Co. relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness.
2© Qatar General Insurance & Reinsurance Company Q.P.S.C
Q3 2019 results highlights
Insurance revenue1▪ 39% growth in Gross Written Premiums for the 9 months period of 2019 (vs. same period 2018)▪ Excellent development of international insurance business with growth of 141% in Gross Written
Premiums over the same period
Investment income3▪ Investment income declined by 11% for the 9 months period of 2019 (vs. same period 2018) ▪ Decline due to fair value adjustment of listed security portfolio
Total expenses5▪ Total expenses increased by 6% for the 9 months period of 2019 (vs. same period 2018)
➢ Mainly driven by increase in finance costs due to increase in loans and borrowings➢ Positive impact of management cost cutting initiatives reducing administrative expenses by 11%
Profitability6▪ Net profit reduced to QAR 6.3m for the 9 months period 2019 compared to QAR 69.5m for the
same period. This represents an EPS of QAR 0.009 for the 9 months period
Outlook7
▪ Market conditions paired with an increase in finance cost and exceptional major claims have significantly impacted the Group’s results in 2019 year-to-date
▪ Measures taken by the new management team have already shown a positive impact on the key focus areas and the ongoing efficiency and cost cutting initiatives are expected to further enhance financial performance in 2020
3© Qatar General Insurance & Reinsurance Company Q.P.S.C
Net claims2▪ Exceptional increase in claims during Q3 2019 in the energy and property segments▪ 57% increase in net claims for the 9 months period of 2019 (vs. same period 2018)
Strong growth in the insurance business diminished by increase in net claims and lower investment income
Message from the Group CEO
▪ The Company continues to affirm its prominent position in Qatar’s Insurance market, beingrecognized for its leading role in the field of product mix development
▪ Our primary objective remains to focus on expansion while ensuring our clients experience thehighest standards of service. Our results in Gross Written Premiums in the internationalinsurance market confirms our competitiveness and the opportunities abroad
▪ The Group’s long-term strategy provides it with the ability to adapt to market trends in order toconduct appropriate investments, optimizing customer service and increasing returns for ourshareholders
▪ We have witnessed strong growth in our insurance revenue which is up 39% for the 9 monthperiod of 2019 compared to the same period in 2018. However, the Group’s net profit is lowerdue to an exceptional increase in claims during Q3 2019, an increase in finance costs and lowerinvestment income due to fair value adjustments
▪ We see the first positive results of our efficiency and cost cutting measures implemented in theyear with administrative expenses being reduced by 11% for the 9 months period and expectfurther positive impacts to materialize going forward
▪ Our exceptional employees are one of the key factors in establishing, developing and executingthe strategies and objectives. QGIRCO will continue to develop Qatari talents and we are proudof our achievement thus far
Joined QGIRCO in March 2019 as Group CEO, with extensive experience in the financial sector. Prior to joining, Mr. Al-Efrangi was Deputy CEO of Ahli Bank Q.P.S.C.
Mr Hassan Al-EfrangiGroup CEO
4© Qatar General Insurance & Reinsurance Company Q.P.S.C
47,216 42,544
180,533 161,351
Q3 2018 Q3 2019 9M 2018 9M 2019
6.31 6.27
31-Dec-18 30-Sep-19
Consolidated Q3 2019 results – financial overview
Consolidated operating results(QAR ‘000)
Consolidated shareholders equity(QAR billions)
Solvency Ratio (%)
186
5© Qatar General Insurance & Reinsurance Company Q.P.S.C
163
16,279
-15,531
69,478 6,264
Q3 2018 Q3 2019 9M 2018 9M 2019
0.019
Earnings per share
Consolidated net profit(QAR ‘000)
0.081-0.017 0.009
82,218 10,158
- 4,672
87,704
Q3 2018 Insurance Non-insurance Q3 2019
292,354 7,197
- 19,182
280,369
9M 2018 Insurance Non-insurance 9M 2019
Consolidated revenue1 (Q3 2018 vs. Q3 2019)(QAR ‘000)
Consolidated revenue (9M 2018 vs. 9M 2019)(QAR ‘000)
1) Consolidated revenues calculated as net earned premiums and inclusive of all investment revenue
Chapter 1 Consolidated Q3 financial results publication 6
1.1 Consolidated results 8
1.2 Insurance results 13
1.3 Non-insurance results 16
Chapter 2 QGIRCO at a glance 21
Chapter 3 Shareholder information 25
Table of contents
6© Qatar General Insurance & Reinsurance Company Q.P.S.C
Chapter 1 Consolidated Q3 financial results publication 6
1.1 Consolidated results 8
1.2 Insurance results 12
1.3 Non-insurance results 16
Chapter 2 QGIRCO at a glance 21
Chapter 3 Shareholder information 25
Table of contents
7© Qatar General Insurance & Reinsurance Company Q.P.S.C
Consolidated Q3 2019 revenue
Total consolidated revenue1
(QAR ‘000)
Management comments
▪ Slight decrease in total revenue for the 9 months period 2019 compared to same period previous year
▪ Significant increase in revenue from insurance operations
▪ Consolidated revenue decrease due to the decrease in non-insurance related revenue, mainly due to the result of fair value adjustments of listed securities in the investment portfolio
▪ Income from real estate remained stable for the period
Non-insurance revenue split(%)
8© Qatar General Insurance & Reinsurance Company Q.P.S.C
9M 2018
9M 2019
71%
29%
GWP insurance revenue split(%)
61%
39%
General Takaful
58%
42%
Real estate Investment Other
67%
32%
1%
9M 2018
9M 201943% 51%
38% 42%57% 49%
62% 58%
82,218 87,704
292,354 280,369
Q3 2018 Q3 2019 9M 2018 9M 2019
Insurance Non-insurance
7%
(4%)
1) Consolidated revenues calculated as net earned premiums and inclusive of all investment revenue
Consolidated Q3 2019 expenses
Total consolidated expenses split(9M 2018)
Total consolidated expenses split(9M 2019)
© Qatar General Insurance & Reinsurance Company Q.P.S.C
▪ Total consolidated expenses increased by 6% for the 9 months period of 2019 (vs. same period 2018). Mainly driven by increase in finance costs due to increase in loans and borrowings
▪ Positive impact of management cost cutting initiatives reducing administrative expenses by 11%
9
1,27410% reduction vs Q3 2018
Headcount(No. of employees)
34%
8%
59%
26%
3%70%
Finance costs Cost of sales from construction Other operating and adminstrative
Total consolidated expenses(QAR ‘000)
Management comments
187,229198,7144,454 7,031
9M 2018 Insurance Non-insurance 9M 2019
61,586 67,475 5,610 279
Q3 2018 Insurance Non-insurance Q3 2019
26%
3%
70%
QAR 187.2m
QAR 198.7m
Consolidated Q3 2019 net profit
Management comments
10© Qatar General Insurance & Reinsurance Company Q.P.S.C
▪ Consolidated net profit declined 91% for the 9 months period 2019 compared to the same period last year. This is mainly due to:
▪ 57% increase in net incurred claims (QAR 28m)
▪ 11% decrease in investment income (QAR 19m)
▪ Increase in finance costs due to increase in loans and borrowings
16,279
-15,531
69,478
6,264
Q3 2018 Q3 2019 9M 2018 9M 2019
Consolidated net profit(QAR ‘000)
Earnings per share(QAR per share)
0.019
-0.017
0.081
0.009
Q3 2018 Q3 2019 9M 2018 9M 2019
Chapter 1 Consolidated Q3 financial results publication 6
1.1 Consolidated results 8
1.2 Insurance results 12
1.3 Non-insurance results 16
Chapter 2 QGIRCO at a glance 21
Chapter 3 Shareholder information 25
Table of contents
11© Qatar General Insurance & Reinsurance Company Q.P.S.C
Insurance operations overview – Q3 2019
Gross written premiums(QAR ‘000)
Net earned premiums(QAR ‘000)
12© Qatar General Insurance & Reinsurance Company Q.P.S.C
Management comments
▪ Significant increase in GWP in general insurance and Takaful products
▪ Excellent growth of 141% in the international insurance business
▪ Exceptional increase in claims in the energy and property segments led to an increase in the loss ratio
62%71%
61%
71%
38%29%
39%
29%
Q3 2018 Q3 2019 9M 2018 9M 2019
General Takaful
51%
39%
32,166 38,555
98,151 103,853
Q3 2018 Q3 2019 9M 2018 9M 2019
Net claims total(QAR ‘000)
Loss ratio(%)
13,337
36,960 48,570
76,229
Q3 2018 Q3 2019 9M 2018 9M 2019
177%
57%
GWP – domestic vs. international(%)
525,313
379,145
170,805113,241
49% 50%
72%
60%
73%
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
85%
15%
Domestic International
74%
26%
Domestic International
9M 2018 9M 2019
Insurance operations overview – Q3 2019
Consolidated shareholders equity(QAR billions)
13© Qatar General Insurance & Reinsurance Company Q.P.S.C
6.12
6.316.36
6.29 6.27
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
Q3 2019 solvency ratio (%)
Combined ratio(%)
94% 89%
122%110%
118%
Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
▪ QGIRCO’s consolidated solvency ratio as at Q3 2019 was 163%, which is 13% above the solvency requirement set by QCB. On an insurance business only (i.e. solo level), QGIRCO’s solvency ratio is 216% well above the required 150%.
163%
216%
Consolidated Solvency Ratio Solo Solvency Ratio
QCB Regulatory limit:
150%
+13% above requirement
+66% above requirement
Management comments
Management’s view on insurance sector trends
Insurance sector trends QGIRCO action to benefit
Digital transformation required to remain competitive 1Program started and results
becoming visible in 2020
InsureTech expected to become driving force2 Exploring options
Big Data analytics capability to reduce risk 3 Internal assessment ongoing
Expanding product offering to satisfy changing customer behavior and lifestyle
4Changes implemented and product offering tailored
Continuous change in the regulatory landscape5Close collaboration and constant
dialogue with authorities in Qatar
14© Qatar General Insurance & Reinsurance Company Q.P.S.C
Chapter 1 Consolidated Q3 financial results publication 6
1.1 Consolidated results 8
1.2 Insurance results 12
1.3 Non-insurance results 16
Chapter 2 QGIRCO at a glance 21
Chapter 3 Shareholder information 25
Table of contents
15© Qatar General Insurance & Reinsurance Company Q.P.S.C
Non-insurance operations overview – Q3 2019
Investment income split(%)
16
▪ Investment income declined by 11% mainly due to decline in fair value of listed securities portfolio (QAR 19m)
▪ Value of real estate investments increased to QAR 6.2 billion
▪ 85% of the investment portfolio is invested in Qatar
Investment split by asset class(%)
Management comments
58%
42%
Real estate Investment Other
67%
32%
1%
9M 2018
9M 2019
Investment income comparison 9M 2018 to 9M 2019(QAR ‘000)
74%
11%
11%
3% 1% Real estate
Investment in associates
Equities
Debt securities
Cash and others
9M 2019
52,410
5,844 17,914
96,690
7,230 445
180,533
52,408
798
-866
89,445
18,495 1,071
161,351
Investment income Net realized gains Fair value gains (losses) Rental income Revenue from sales andconstruction activities
Other income Total
9M 2018 9M 2019
© Qatar General Insurance & Reinsurance Company Q.P.S.C
Non-insurance operations overview – Q3 2019 financial position
Real estate investment(QAR millions)
17© Qatar General Insurance & Reinsurance Company Q.P.S.C
6,032 6,230
31-Dec-18 30-Sep-19
3%
956 939
31-Dec-18 30-Sep-19
(2%)
1,186 1,235
31-Dec-18 30-Sep-19
4%
Investment in associates(QAR millions)
Financial assets(QAR millions)
98%
2%
Qatar GCC
10%
51%
20%
18%
Qatar GCC Asia Europe
98%
1%
Qatar GCC
28%
38%
19%
15%
Qatar GCC Asia Europe
Non-insurance operations overview – Q3 2019
Total investment assets as at Dec 2018 (%)
18
Total investment assets as at Sep 2019(%)
Equity and debt split by region (Q3 2018)(%)
Equity breakdown Debt breakdown
Equity and debt split by region (Q3 2019)(%)
Equity breakdown Debt breakdown
73%
20%
1%
6%
Equities
Debt Securities
Managed Fund
Cash71%
17%
1%11%
Equities
Debt Securities
Managed Fund
Cash
© Qatar General Insurance & Reinsurance Company Q.P.S.C
Measures taken in 2019 and their impact
19
Appointment of Mr. Hassan Al Efrangi as the CEO of the Group and hiring of selected subject matter experts in key areas
Closure of Mozoon Insurance Marketing Company
Strategic decisions taken Results achieved
Complete strategy review across various segments, including risk management, information technology, human resources, insurance and investments
Expand international insurance business
Liquidation of non-performing subsidiaries
Gross written premiums increase by 39%
International insurance business increase by 141%
Closure of 8 local branches across general insurance and takaful
Reduction in administrative expenses by 11%
Lean management exercise
© Qatar General Insurance & Reinsurance Company Q.P.S.C
Table of contents
20
Chapter 1 Consolidated Q3 financial results publication 6
Chapter 2 QGIRCO at a glance 21
Chapter 3 Shareholder information 25
© Qatar General Insurance & Reinsurance Company Q.P.S.C
QGIRCO Group management team
Mr. Al-Efrangi has over 20 years of experience in the financial sector. He has significant business management capabilities and has extensive experience with performance improvement, growth and leadership. He was previously the Deputy Chief Executive Officer at Al Ahli Bank.
Hassan Al-Efrangi
Group Chief Executive Officer
21
Abdallah Barrage
Deputy Chief Executive Officer -Investment
Dr. Deepa Chandrakeshar
Acting Chief Financial Officer
Mohammad Elailah
Chief Operating Officer -
Insurance
Jamal Abu Nahl
Chief Executive Officer -
Insurance
Hassan Taha
Legal Advisor and Secretary of the Board
Jassim Al Kuwari
Group Head of Human Resources and Administration
Dimitrios Voukelatos
Deputy Head of Risk Management and Principal Actuary
Ramesh Kini
Acting Head of Internal Audit
Basil Falah
Group Head of Compliance
Georges Wakim
Group Legal Manager
Noura Al Maraghi
Head of Corporate Communication and Government Relations
Marwan Azar
Group Head of Marketing
© Qatar General Insurance & Reinsurance Company Q.P.S.C
QGIRCO’s key investment highlights
Qatar’s leader in new product mix development First mover on:
Trade Credit, Cyber, Senior Liability
Deep understanding of the local market More than 40 years of experience
Strong balance sheet and cash generation capabilityConsolidated solvency ratio as at
163%, being 13% above QCB requirement
Experienced management driving efficiency and profitability Admin expenses decrease 11%
Quick to adapt to market trends and customer preferencesMarket opportunity ‘SME’ identified
and captured in short time frame
22© Qatar General Insurance & Reinsurance Company Q.P.S.C
QGIRCO company profile
Company history Product overview
• QGIRCO was established in 1979, with the vision of providing individuals and businesses with general and Takaful insurance products. QGIRCO was listed on the Qatar Exchange in 1997
• QGIRCO expanded to become one of the most dominant players in the insurance industry in Qatar, with over 120 employees working in core insurance operations, serving clients through its 7 branches across the country
• QGIRCO has maintained an “A- (Excellent)” credit rating for 10 years, according to AM Best credit ratings
Investment portfolio Recent strategic developments
• Under the leadership of Mr. Al-Efrangi, QGIRCO is undergoing significant strategic changes to align the operations of the Group to the long-term vision
• QGIRCO will continue to focus on both general and Takaful insurance products
• Efficiency and cost saving initiatives ongoing to enhance shareholder value
• Selected strategic hiring for key positions in the insurance business
As at Q3 of 2019, the majority of
QGIRCO’s assets are invested in
real estate
Personal insurance
• Offers protection from risks associated in different areas of customer’s lives
• 10% of total insurance revenue is from sales of personal insurance products
Commercial insurance
• QGIRCO offers both general and specialized insurance products for corporate clients
• Commercial insurance represents 90 % of the Company’s insurance operations
59%
9%
10%
13%
3%4%Investment properties
Investment in associates
Reinsurance assets
Financial assets
Takaful assets
Other
23© Qatar General Insurance & Reinsurance Company Q.P.S.C
Table of contents
24
Chapter 1 Consolidated Q3 financial results publication 6
Chapter 2 QGIRCO at a glance 21
Chapter 3 Shareholder information 25
© Qatar General Insurance & Reinsurance Company Q.P.S.C
Shareholder information
Company name Qatar General Insurance & Reinsurance
Ticker (QE) QGRI
Market Capitalization QAR 3.1B
Common Shares Outstanding
875.1M
Free float 77%
Figures as at 30 September 2019 and in QAR. Unless, otherwise stated.
25
Top shareholders Ownership (%)
Ghazi Kamel Abdul Rahman Abu Nahl 9.99%
Sheikh Nasser Ali Saud Al Thani 7.32%
Sheikh Ahmed Ali Saud Al Thani 5.63%
General information Shareholder structure
68%
32%
Qatari Non-Qatari
59%37%
4%
Retail Institutional Other
© Qatar General Insurance & Reinsurance Company Q.P.S.C
Share price performance and share trading liquidity
26
Share price performance % change
Since 30 June 2019 (3M) (14%)
Since 30 March 2019 (6M) (19%)
Year to date (22%)
Liquidity daily averages QAR ‘000
Since 30 June 2019 (3M) 567
Since 30 March 2019 (6M) 410
Year to date 356
Share price performance versus QE Index as at 30 September 2019
Share trading volume as at 30 September 2019
3
3.5
4
4.5
5
5.5
Jan-19 Mar-19 May-19 Jul-19 Sep-19
QGIRCO QE Index0
100,000
200,000
300,000
400,000
500,000
Jan-19 Mar-19 May-19 Jul-19 Sep-19
© Qatar General Insurance & Reinsurance Company Q.P.S.C
Investor relations contacts
Ali Mourad
Senior Investment Analyst & Investment Relations Officer Tel.: +974 4428 2301E-mail: [email protected]
Noura Al Maraghi
Head of Corporate Communication & Government RelationsTel.: +974 4428 2200E-mail: [email protected]
27© Qatar General Insurance & Reinsurance Company Q.P.S.C
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