Domestic insurance firms’ aggregate assets grew 11% to QR56.2bn in end-2018

The aggregate assets of the domestic insurance firms grew by 11% to QR56.2bn in end-2018, Qatar Central Bank’s data show. In 2017, the aggregate assets of the national insurance companies supervised and regulated by QCB stood at QR50.6bn.During 2018 all the insurers recorded growth in assets led by “healthy growth” in the largest company, QCB said in its 10th Financial Stability Review.Reflecting the healthy growth in insurance, gross written premium (GWP) grew by 7.5% during 2018 on top of 14.5% during the previous year. GWP stood at QR15.5bn in end-December 2018. The entire increase came from the contribution of domestic insurers in Qatar, which was QR15.2bn and GWP of international branches was QR0.3bn. Net Written Premiums (NWP) grew by 10.6% following similar increase in the previous year.Increasing business, lower losses and healthy rise in investment income contributed to rise in income and profits. The growth in gross income in 2018 doubled to 12.8% from 6.4% during 2017. Net profit after declining sharply during the previous two years, recorded a healthy 22% growth in 2018. Consequently, there was a sharp rise in the return on equity.Reflecting the increase in business and the consequent need for funds, there was significant increase in the leverage ratio during the year. Solvency of insurance firms moderated somewhat from very high levels but remained much above the regulatory requirements.Average solvency ratio stood at 247.7% on solo basis and 231.4 on consolidated basis.Liquidity moderated due to increase in technical provisions but remained comfortable during 2018.Both GWP and NWP recorded healthy growth during 2018 and the retention ratio increased from 76.9% to 79.1%. It shows higher retention of premium for direct insurance, QCB said. The loss ratio moderated during 2018 from the high level of losses in global operations due to a natural calamity in the previous year. This decline in loss ratio more than offset the increase in expense ratio resulting in lower combined ratio.Despite the combined ratio remaining above 100% the market continued to remain profitable because the insurers also earned commission income from reinsurers, as well as investment income, which offset the insurance losses.Reflecting the increase in business and increasing conservativeness based on the loss arising from natural calamities in the previous year, the technical provisions continued to rise during 2018 to take care of potential increase in future claims.The ratio of technical provisions to net earned premium recorded a modest increase.In view of the emphasis on prudence in investments, fixed maturity instruments investments continued to record sharp growth, which led to increase in its share to almost half of the investment portfolio by end 2018 while equity investment continued to decline.Investment in real estate recorded recovery from the decline in the previous year. In view of growing business, companies are increasing their direct insurance and reinsurance, resulting in rise in premium receivable and reinsurance receivable. On the liabilities side, a steep increase in reinsurance payable and healthy growth in technical provisions was observed. Sharp increase in reinsurance shows that companies are becoming more conservative and taking small portions of risk.There was marginal decline in equity in view of adjustments for IFRS-9, increase of goodwill acquisition of a new subsidiary and deferred acquisition cost.The institutional structure of the insurance sector under the regulatory jurisdiction of QCB remained unchanged during 2018. The country’s insurance sector comprised of some 12 firms, of which eight are domestic and four are branches of international companies. There are eight conventional firms and four takaful firms. The insurance sector is exclusive of brokers, reinsurance firms and intermediaries.