Total assets of insurance companies in Qatar increased 6.7% to reach QRF 61.2 billion at the end of 2020, the Central Bank of Qatar (QCB) said in a report.
The risk level of the investment portfolio of these companies improved during the year due to a sharp increase in fixed-term investments, the share of which jumped to 52.5% from 49.2% the previous year.
Investment in equities moderated while that in real estate remained almost stagnant. Both reinsurance receivables and premium receivables recorded healthy and better growth during the year.
On the liability side, technical provisions increased in 2020. After registering a strong increase in 2019, reinsurance payable experienced relatively modest growth in 2020. The continued increase in reinsurance shows that companies remain cautious and underwrite less. risks.
Despite the economic downturn, insurance premiums continued to register healthy growth in 2020. Gross written premiums (GWP) rose 5.6% from the 6.3% recorded the previous year, said the QCB in its latest financial stability review.
Healthy PRP growth was recorded by Qatari and foreign companies. However, net written premiums decreased during the year, leading to a decrease in the retention rate.
The decline in net written premiums and the retention rate can be attributed to increasing uncertainties and increasing reinsurance payments.
The increase in business contributed to the increase in revenues in 2020. This was reflected in the improvement in profitability, as the return on equity of insurance companies rose to 3.3% from 2.7 % the previous year.
The moderation of net earned premiums coupled with the increase in capital contributed to the drop in the ‘Leverage Ratio’ during the year. The solvency of insurance companies, which had voted above regulatory requirements, further improved.
The average solvency ratio stands at 257.3% solo and 237.8% consolidated.
Reflecting profitability efforts, the expense ratio declined during the year.
However, there has been an increase in the loss ratio due to the pandemic and the economic downturn. This contributed to the rise in the combined ratio.
Nonetheless, insurance companies continued to record profits based on commission income received by reinsurers, as well as investment income, which more than made up for underwriting losses, according to the QCB report.