The Qatar Insurance Company (QIC) has revealed that Qatar Re, its reinsurance subsidiary, took an approximate $31 million profit hit in the first-quarter of 2017 as a result of the cut to the Ogden discount rate in the UK, resulting in a lower Group net underwriting result for the period.
QIC has reported its Q1 2017 results, posting a net underwriting result of $49 million, down 36% from the $76 million recorded in the first-quarter of 2016. This is despite gross written premiums (GWP) increasing year-on-year to $849 million, and net written premiums jumped 5.6% to $640 million.
QIC attributes the 36% deterioration of its underwriting result in the first-quarter of 2017 to the recent cut to the Ogden discount rate in the UK, from 2.5% to -0.75%. “Qatar Re, QIC’s global reinsurance subsidiary, has recognized the Ogden impact in Q1 2017, reducing its underwriting income by about USD 31 million,” says the firm.
As a result, the re/insurer’s consolidated net profit declined from $90 million to $85 million in Q1 2017, and its non-life combined ratio weakened to 99%, from 92% a year earlier.
A number of insurers and reinsurers have announced impacts to first-quarter earnings as a result of the Ogden rate change, but analysts have said that the impact to earnings will only be for the short-term.
Absent the Ogden rate impact Qatar Re, as well as QIC subsidiaries Antares and QLM, were key contributors to the Group’s premium growth in the first-quarter. The firm notes that its global subsidiaries in London, Bermuda, and Malta now account for approximately 69% of the Group’s total GWP.
Investment and other income also performed well in the quarter, explains QIC, jumping from $55 million in 2016 to $83 million this year.
Discussing the company’s first-quarter 2017 results, Group President and Chief Executive Officer (CEO), Khalifa Abdulla Turki Al Subaey, said; “The results for Q1 2017 highlight the Group’s sound risk management principles and its constant endeavour at exploiting profitable growth opportunities. We will continue to increase our book of business, build on our capabilities and expand our reach in order to introduce innovative products and services in the target markets.
“The Group’s outlook for the future remains cautiously optimistic. Our long term goal remains to seize market opportunities as they arise whilst focusing on maintaining close proximity with our clients and adapting to a rapidly changing environment.”