Total assets of Qatar's insurance firms rose 6.7% to QR61.2bn at end-2020, the Qatar Central Bank (QCB) has said in a report.
The risk level in the investments portfolio of these firms improved during the year as there was a sharp rise in fixed maturities investments, the share of which jumped to 52.5% compared to 49.2% in the previous year.
Investment in equities moderated while that in real estate remained almost stagnant. Both reinsurance receivable and premium receivable recorded healthy and better growth during the year.
On the liabilities side, technical provisions increased during 2020. Reinsurance payable after recording sharp rise in 2019 grew relatively modestly in 2020. Continued increase in reinsurance shows that companies remain conservative and underwrite less risk.
Despite the economic slowdown, insurance premiums continued to record healthy growth during 2020. Gross written premium (GWP) grew by 5.6% on top of 6.3% recorded in the previous year, the QCB said in its latest Financial Stability Review.
Healthy growth in GWP was recorded by both Qatari and foreign firms. Net written premium, however, declined during the year resulting in fall in retention ratio.
The fall in net written premium and retention ratio can be attributed to the growing uncertainties and increasing reinsurance payment.
Increasing business contributed to rise in income in 2020. This was reflected in improved profitability as the return on equity of the insurance firms rose to 3.3% from 2.7% in the previous year.
Moderation of net earned premium coupled with rise in capital contributed to the dip in 'Leverage Ratio' during the year. Solvency of insurance firms, which had been ruling above the regulatory requirements, improved further.
Average solvency ratio stood at 257.3% on solo basis and 237.8% on consolidated basis.
Reflecting efforts towards cost efficiency, the expense ratio declined during the year.
However, there was increase in loss ratio attributable to the pandemic and economic slowdown. This contributed to the rise in combined ratio.
Nevertheless, the insurance firms continued to record profits based on commission income earned from reinsurers, as well as investment income, which more than offset the underwriting losses, the QCB report said.