Qatar Insurance Company Q.S.P.C. (QATI) Earnings Call Transcript

Good morning or good afternoon, and welcome to the Qatar Insurance Company Q2 2026 Earnings Conference Call. My name is Adam, and I'll be your operator today. [Operator Instructions] I will now hand the floor to Hussein Safieddine to begin.

Good afternoon, ladies and gentlemen. This is Hussein Safieddine from Arqaam Capital. Thank you all for joining us for Qatar Insurance Company's Second Quarter 2026 Results Call. It's our pleasure to welcome QIC's senior management team, Mr. Mena Mounir, Chief Financial Officer; Mr. Chirag Doshi, Chief Investment Officer; and Mr. Vignesh Mohan from Investor Relations. Management will present the first half of 2026 results, followed by a moderated Q&A session. And with that, I will hand over the call to Mena.

Good afternoon, everyone, and thank you for joining our half year 2026 results call. QIC delivered a resilient first half. Net profit was QAR 365 million, close to last year. Even with the regional geopolitical conflict, an event without recent precedent for our market, we absorbed the impact, grew the business and kept the balance sheet strong. Insurance revenue increased by 15% to QAR 4.8 billion, reflecting the earned growth of our existing book. Most of the growth came from our UAE medical business and our international operations. Gross written premium grew by 4.3% to QAR 5.9 billion. For the insurance service result. The insurance service result was QAR 202 million, down by 8.4%. The combined ratio was 94.7% under IFRS 17. The increase in combined ratio mainly reflects the impact of the conflict. Without it, our underwriting improved on last year, helped by a better result in regional operations. Let me turn to the conflict. The escalation of the regional geopolitical conflict is one of the most significant events for the insurance market this period. At the first quarter on a limited early information, we reported a net impact of $25 million. As more claim information came in through the second quarter, that estimate evolved. By midyear, our net impact is around $50 million, mostly held as incurred but not reported reserves. It was concentrated on our international operations on specialty lines written in international markets, mainly war, terrorism, political violence and related marine costs. Our regional business carry limited war exposure. As the claims develop, we observed the event -- we reserve the event to our actuarial best estimate. The net impact was absorbed by the reserves we already held for large events and stronger results in our other businesses, mainly in the region. This is what a diversified group is built to do. We are adequately reserved today. The ultimate cost is still uncertain and will depend on how the situation and claims develop, and we are watching it closely. Investment income was up by 2.8% to QAR 477 million. The portfolio stayed high-quality diversified [indiscernible]. Total equity was QAR 10.1 billion at 30th June '26. Based on our current estimate, the QCB solvency ratio is around 200%, broadly in line with the first quarter. Earnings per share were QAR 0.076. We entered the second half in a strong position, and we remain alert to how the conflict develops. Our priorities are unchanged, disciplined underwriting, the quality of our book and value for our shareholders. Thank you, and let me hand back to the operator, and we look forward to your questions.

[Operator Instructions] We have no questions at this time. So I'll hand back to you for closing comments.

[indiscernible] question from my side.

Please go ahead.

Okay. So how much was the decline in the insurance service result was caused by the regional conflict? If you can please quantify the impact before and after reinsurance [indiscernible] between that paid claims and [indiscernible]. This is my first question. The second question is the reported combined ratio was 95%, which is slightly higher year-over-year. And what was the [indiscernible] combined ratio before [indiscernible]? These are my two questions.

Okay. Thank you, [indiscernible], for your questions. I'm sorry, the line was not very clear. So I'll try to -- I'll respond to whatever I managed to get. I think your first question was on the split between -- related to the conflict and the split between how much was the claims paid and how much is like the reserves. As I mentioned, most of -- I would say, no, all of these. The impact at the moment is all in the -- mostly on the [indiscernible] side. At the moment, there is no -- I would say, as of 30th June 2026, there was no claim payments, all reserves at our actuarial best estimate. For the second point, I take your point with respect to the combined ratio. And yes, the combined ratio is higher. And I think the main reason behind the combined ratio is due to the conflict, from an overall perspective, the impact for the H1 2026 was $50 million. Of course, that was absorbed by the large event by the [indiscernible] and good results coming from the operations. But as we mentioned, from an overall perspective, insurance service results decreased by 8.4%, and this is the main reason. It's on account of the conflict. Other units are performing, I would say, regional is improved compared to last year.

Okay. Last question. So the effective tax rate fell significantly year-over-year. Can you please give us a color on what caused the decline and what tax rate should we assume for the full year and for the years after, please?

I'm sorry, again, can you come back? Is this related to investment?