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Financial Crisis Hits Qatari Insurance Profits

Feeling the economic pinch, insurance companies in Qatar have seen profits slide from 2008.

Qatari insurance companies saw profits decline in 2009 as the economic downturn took its toll on the industry.

Of the five insurers that recently released financial reports, only two registered growth while the remaining three suffered fiscal setbacks last year.

Worst hit was Qatar General Insurance and Reinsurance which reported a huge QR140.2 million profit drop from QR226.2 to QR86 million between 2008 and 2009. The company’s gross and net premiums also suffered significant losses during the same period. Gross premium dropped to QR504.5 million from QR719.1 million, with net premium falling to QR209.4 million from QR241.7 million.

Qatar Islamic Insurance reported a QR34.2 million profit decline, from QR68.5 million in 2008 to QR34.3 million last year. Gross contributions dropped to QR159.1 million from 167.9 million, while net contributors declined to 65.4 million from 73.1 million during the same period.

Al Khaleej Takaful suffered a similar profit setback, albeit not to the same extent as Qatar General and Qatar Islamic. The company’s net profit reached QR73.8 million – down from QR87 million in 2008. On the upside, gross premiums climbed to QR281.8 million from QR267.2 million, with net premiums also up to QR130.1 million from QR118.4 million.

But not all Qatari insurance companies felt the economic pinch, with Doha Insurance Company generating a QR52.1 million net profit compared to QR47.2 million the previous year. Its company earnings per share amounted to QR2.89 million this year, up from QR2.82 in 2008.

Gross premium climbed slightly to QR316.5 million from QR3.16 million during the same period, while net premium was up to QR89.5 million from QR83.6 million.

Having announced strong profits, Doha Insurance’s board recommended issuing 25% cash dividends, equivalent to QR2.5 a share, as a profit distribution to stakeholders.

Qatar Insurance Company (QIC) enjoyed similar success last year, with net profit rising to QR532.8 million from QR510,8 million 12 months earlier. Gross premium also increased, climbing to QR2.149 million having reached QR1.972 million the previous year. In 2008, the company’s net premium hit QR974.4, climbing to QR1.135 million for 2009.

The board recommended a cash dividend of QR5 per share 2009, to be distributed among its investors.

When announcing QIC’s full-year results, group president and CEO Khalifa Abdullah al-Subaey revealed premiums increased more than 80% in the last three years.

“Due to effective and prudent risk management the company was able to weather the storm and produce a healthy realisation on the investment portfolio,” he added.

“Even with the current global economic crisis and its contagion impact on the region, 2009 was a stable year for QIC. As a premium insurer not only in Qatar but also in the Gulf region, QIC has capitalised on the economic growth of Qatar and other GCC countries.”

A “special insurance reserve” of QR100 million has been set up to safeguard the company against adverse economic conditions.

But despite the cautionary measure, QIC’s management remains positive about the future. Buoyed from retaining its Standard & Poor’s ‘A stable’ rating, the highest for any insurer in this region, the company is looking to expand this year. It has already launched Q-Re, a new initiative to broaden its business in North Africa and South Asia.