Qatar Re, whose short-term outlook remains “cautiously optimistic”, has reported an 8% growth year-on-year in gross written premium (GWP) to $1.25bn in 2016 despite sharp depreciation of the British pound.
Net earned premium grew faster at 43% to $351mn on the back of solid expansion across its key geographical markets, lines of business and client segments, said Qatar Re, whose parent is Qatar Insurance Company (QIC), which had injected $200mn in the Bermuda-registered entity, taking its shareholders’ equity now at $772mn. “In 2016, our focus was on consolidating Qatar Re’s book of business in what has been a continuously degrading market environment. In line with our expectations, the pace of our premium growth has slowed as we focus on maintaining price adequacy,” Qatar Re chief executive Gunther Saacke said.
A three-fold jump in investment income to $32.7mn more than offset a 17% decline in underwriting income to $54mn. Its net income grew 52% to $38mn in 2016.
Highlighting that GWP growth was also despite a withdrawal from business no longer considered “attractive”, he said “whilst it has been necessary to withdraw from certain underpriced business, we were successful in replacing it with more attractive risks, primarily emanating from highly specialist reinsurance transactions and bespoke support of insurance entrepreneurs.”
Qatar Re increased its participation in the UK motor structured deals, international property facultative, and the US property per risk as these businesses continued to demonstrate attractive returns.
“Certain new specialist lines of business, such as residual value insurance and the US casualty, are also expected to contribute to the company’s future growth, albeit at modest levels,” Qatar Re said.
However, the loss ratio on the company’s net earned premiums rose to 72.9% in 2016 due to an “unusually” high frequency of large man-made losses as well as “sizeable” catastrophe losses owing to Hurricane Matthew and earthquake in New Zealand.
Amidst the continued challenging market conditions, Qatar Re pared its participation in several lines of treaty business, including marine and energy, non-US property catastrophe, and Middle East property and casualty.
Its attritional loss patterns nevertheless remained “stable” in 2016 and continued to maintain “prudent” reserving levels on the current underwriting year, while maintaining the strength of reserves on prior years, it said, adding the combined ratio, based on net earned premiums, was 98.2% in 2016 against 93.8% a year ago.
The renewal performance demonstrates that the company is willing to pass on underpriced business as it pursues new opportunities associated with its increasing scale, diverse capabilities and global reach, according to its spokesman.
“Going forward, the ongoing deterioration of global reinsurance market trading conditions will place a growing premium on Qatar Re’s entrepreneurial and individualised client approach. The company will continue to seek and capture project-based opportunities with insurance entrepreneurs and innovators who require bespoke solvency relief and capital management solutions,” he said.
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