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Qatari government policy has stimulated enormous insurance sector growth, now the largest local player sets sights on regional domination

Interview - March 20, 2015

GCC economic momentum is growing exponentially, spurred by reinvestment of hydrocarbon wealth, economic reform and political guidance. Qatar is investing itself to champion Doha as the sports capital of the Middle East, propelling itself forward with an unrivalled amount of dedication to sport and sporting events.

KHALIFA ABDULLA TURKI AL-SUBAEY, GROUP PRESIDENT & CEO OF QATAR INSURANCE COMPANY (QIC)
KHALIFA ABDULLA TURKI AL-SUBAEY | GROUP PRESIDENT & CEO OF QATAR INSURANCE COMPANY (QIC)

Taking into account the four guiding principles of Vision 2030 and the effect on other sectors of hosting a plethora of sporting events, how will the State of Qatar realize its socio-economic aspirations?

Sporting events definitely exert a positive influence on Qatar’s socio-economic fabric. Qatar is passionate about sports at all levels, be this within the educational system or to the hosting of high profile world-class events. Qatar hosts an annual European Tour golf championship, as well as an ATP tennis tour event. Qatar was the venue for the Asian Games in 2006, one of the world’s three largest sporting events.  The 24th World Handball Championship in 2015 will be yet another illustration of Qatar’s dedication towards sports.

Sporting events bring together people from different cultures and diverse backgrounds and this paves way for a sound socio-economic sporting hub. This is how Doha has emerged as a significant, and growing sporting hub helping to connect sports fans from all over the globe with a spirit of true sportsmanship and goodwill.

is investing billions of dollars in infrastructure development in the run-up to the 2022 FIFA World Cup and Qatar Insurance Company (QIC) will play a leading and positive part in ensuring that this level of investment is suitably and securely insured against any unforeseen loss or damage. Closer to the commencement of the event there would be further requirements to have special covers such as cancellation insurance etc.

Being a national insurance company, Qatar Insurance Company (QIC) has always aligned its goals to work in concert with the Qatar National Vision 2030. We extend our full support to all initiatives related to promoting sports and related ancillary disciplines. In our opinion, such initiatives are a part of our drive to support and give back to the community in which we operate. We believe in the tenet that that the more we grow as a company, the better poised we are to support more Corporate Social Responsibility.

Ranked the world’s fourth largest economy, recent figures show the MENA region generated a combined GDP of approximately 3.6 trillion USD. While the global financial system may remain in flux, the uncertain landscape poses opportunity for financial institutions. Many multinational insurance companies that hunkered down to conserve capital and trim expenses are now ready to invest in global markets that are poised for significant growth.  Is the financial crisis now a distant memory for the region, and what role will the Middle East play in shaping future investment and global economic trends in the mid-term?

It has been six years since the financial crisis broke across the globe. Like every other economy, the Middle Eastern economy too has been slowly recovering over the past few years. The financial crisis of 2008 has taught all of us to be more prudent and conservative in our approach towards yield and growth. These lessons are crucial for the success of every financial institution and one cannot disregard these at any point in time.

Having a diverse economy based on a wide range of profitable sectors, not just a few—has long been a key element in a sustainable economy. Economic diversification can reduce a nation’s economic volatility and increase its real activity performance. The Middle East, particularly Qatar, has constantly endeavored to diversify its ‘hydrocarbon rich’ economy to a ‘knowledge-based’ sustainable economy. The current fall in the oil price further reinforces the fact that the Middle East needs to continue to diversify the economies of the hydrocarbon rich states.

An Emir Decree established Qatar Insurance Company in 1964, and over the course of 50 years QIC has become and has remained the dominant insurer in Qatar with market share exceeding 50%, boasting ratings of A/Stable from S&P’s and A/Excellent by A.M. Best, while being listed on the Qatar Exchange with a market capitalization of US$ 4.4 billion. Could you share with the readers the genesis of QIC and its growth and development up to today?

Qatar Insurance Company was founded by the Emiri Decree in March 1964 and sparked the beginning of an enduring legacy in the insurance space in the State of Qatar. The company was built meticulously with the team effort provided by our highly talented and dedicated employees, some of who are working with us even today. Going back, there was very little demand for insurance in 1964. Only large business units would purchase insurance products. With time, there was growing economic activity and with it came greater awareness towards protecting assets and insuring against legal liabilities. When a country develops, risks become more diverse.

We started our business in the heart of Souq Waqif with a paid-up capital of 1.5 million Indian Rupees, which was the currency at that time.

Today we operate from the prominent QIC building, which is located in the business district of West Bay. Over the years, QIC has grown in both structure and complexity and has a balance sheet of USD 4.4 billion. The Group’s net profit, after minority, was QAR 780 million in Q3 of 2014 demonstrating an increase of 46% over QAR 535 million achieved during the same period in 2013.

2014 has truly been remarkable as we reached a milestone of completing fifty years of operational excellence. Through these 50 years of memorable journey, we have carved a niche in the history of Qatar’s insurance industry and have contributed positively towards boosting Qatar’s insurance sector. Being committed to the growth of Qatar, we have from the very beginning, painstakingly crafted innovative insurance solutions in response to bear the risks related to the growing energy, marine, aviation business insurance sector. Casting a spotlight on personal insurance, we have tailored insurance solutions for the well-being and safety of all the people of Qatar, nationals and expatriates alike.

QIC has long experience in all aspects of insurance related to energy exploration, processing and production, both on and off shore. Clients include national companies (QP, Qatargas), but also many international companies such as Mobil, Total, and British Gas. QIC is also acquiring insurance entities abroad. Would you please expand on QIC’s internationalization strategy?

Companies must innovate and grow in order to avoid stagnation. With globalization, it was evident that there were both opportunities to be grasped and challenges to be met. Whilst retaining our leadership role in our home market, we chose to be ambitious and entered the global insurance and reinsurance arena. Our first venture beyond the borders of Qatar dates back to 1968, when we set up our first branch office in Dubai, UAE.

QIC’s internationalization strategy is aligned to its Group Mission, which is to be ranked amongst the top fifty global insurers by 2030. Going forward, in addition to the expected growth in local and regional operations, the Group had also taken into consideration the targeted expansion in international insurance and reinsurance activities. For months we have worked closely with Oliver Wyman to design and implement our internationalization strategy, which has been highly successful right from its implementation. Thus, gathering momentum, we are spreading beyond the Middle East, and have now positioned ourselves to be known and recognized in the global insurance arena.

Besides recording year-on-year profits, the Group was highly successful in acquiring UK based Lloyds Syndicate “Antares Holdings Limited” in a deal which was worth more than QAR one billion. Antares with the Group’s reinsurance arm Qatar Re constitutes the key pillars of QIC’s international operations, representing approximately 60% of the overall insurance revenue at the Group level.

Qatar has experienced significant growth of the insurance industry in recent years. Still, waves of global legislation continue to pressure management and absorb precious resources. Taking into account increasing demand, how is QIC innovating to adapt to the changing market?

As a response to market demand, and an increasing market share, QIC has expanded its branch network to include offices in new locations. This is a crucial part of our strategic initiative to expand our reach to new customers and grow our existing customer base. By enhancing our service levels and becoming more accessible to our customers at their convenience, we have consistently strived to be in sync with the requirements of local business life in Qatar.

QIC has always been innovative in reaching out to its customers. We pioneered the Automated Insurance Machines and introduced it to the Qatari market. Further, we have recently introduced a home delivery system, where our customers can now renew or purchase insurance policies and have it delivered to their homes for a small fee.

While the Solvency II directive is to be implemented in the EU in 2016, ranges of regulatory measures are being introduced here within the GCC insurance industry. Insurers are adapting by leveraging technology and developing operating models that are compliant with Solvency II. New business architectures will enable insurers to release better products more quickly and cheaply. How are new regulatory laws affecting your strategy and policy moving forward?

As your question correctly alludes to, the regulatory landscape facing insurers and reinsurers within the GCC is continually evolving. The Qatar Financial Centre Regulatory Authority (QFCRA) is committed to enhancing market participants risk management and disclosure practices including state-of-the-art risk-based solvency as well as aligning their core principles to those of the International Association of Insurance Supervisors (IAIS). 

In the short to medium term, one of the most notable regulatory enhancement/requirement and areas of focus for QIC and its regulated entities is the ‘Own Risk and Solvency Assessment’ (ORSA). 

ORSA is the core element of a number of regulatory environments- not just under the upcoming Solvency II regime in the European Union but also in the United States and other parts of the world including Qatar. The QFCRA expects regulated entities to produce an ORSA from the beginning of next year.

It is important to stress that QIC is committed to best-in-class risk management practices because they are indispensable for ensuring the company’s long-term success. ORSA is not just for the regulator but is also a key reporting element, which is embedded in our internal decision-making process.  Using ORSA, we can review the risks we currently face and will face in the future and assess the capital required to mitigate those risks.  Our ORSA report will describe how we quantify and manage risk under stressed conditions—and how we translate these findings into our capital management processes and priorities. In addition, the report will furnish prospective solvency assessments.

Reinsurance coverage helps to stabilize expected results, strengthening the primary insurer’s financial situation and protecting against catastrophic losses. As a result, a worldwide marketplace has developed to share these risks. Why is Qatar an interesting case in terms of reinsurance and how would you evaluate this subsector with respect to the region?

Within the MENA region and especially Qatar, a vast majority of high value commercial risks are related to infrastructure, energy and logistics projects, which are either underway or in the pipeline. This would certainly create the need and desired opportunity for capacity providers or reinsurers as an insurance company cannot retain all its risk exposures in its books. It would only be prudent for the insurers to transfer or cede the risk exposures to the reinsurers.

Hosted by the Qatar Central Bank and the Qatar Financial Centre Authority, Multaqa Qatar is the MENA region’s leading risk and insurance forum, attracting more than 600 senior executives from 25 countries. What makes this event particularly exciting to you for Qatar as an international insurance and financial assembly?

Multaqa is a very successful event which serves as a networking platform for professionals belonging to the insurance, reinsurance and insurance intermediaries’ fraternity. We meet, greet and exchange views and get an update on the insurance and reinsurance market developments. Often we make strategic alliances and global partnerships during this high-brow event. In my opinion, Multaqa has contributed positively to the development and growth of the insurance industry in Qatar and the wider MENA region.

Lord Howell stated that the UK and Qatar shared a multitude of investor opportunities - from infrastructure development projects related to the 2022 FIFA World Cup. UK Trade and Investment have also prioritized Qatar by putting them on the ‘High Value Opportunities Programme’, seeking to support business-to-business engagement bilaterally. In which sectors do you see the greatest investment or partnership opportunities for British companies in Qatar today?

Qatar and UK have enjoyed a healthy trading relationship over many years, with trading volume climbing to QAR 18.9 billion by the end of 2013 from QAR 9.0 billion registered in 2009, growing at an annual average growth rate of 20.5%. Recently, comments from Gareth O’Brien, Director of UK Trade & Investment at the British Embassy stating that Qatar remains an important investment destination for the UK, spurred optimism about growing interest of UK businesses in Qatar.

Over the years, UK’s major investment in Qatar has come from the Anglo-Dutch oil conglomerate Shell, which is their (Shell’s) largest overseas investment, amounting to QAR 76.4 billion. This is also the single largest foreign investment in Qatar.

Qatar is UK’s third largest export market in the Middle East and North Africa region. UK visible exports rose 12% from GBP 1.31 billion in 2012 to GBP 1.46 billion in 2013. UK’s market share in Qatar is ranked eighth at 5.1%. Qatar has approximately GBP 22 billion in investments in the UK. This includes stakes in BAA, Sainsbury’s, Barclays, London Stock Exchange, Harrods and the Shard. Also, the British expatriate population has grown from less than 1,500 in 1995 to over 20,000, which shows the level of reputation UK holds for the quality of its goods and services.

Qatar is an emerging economy which has planned huge investments in various sectors, mainly in infrastructure, to shore up the economic activities in the nation. Several UK companies stand to benefit largely from such investment opportunities, as Qatar aims to improve the strategic environment to achieve its desired goals.

Construction of a railway network project, estimated at USD 35 billion in Qatar remains the largest source of opportunity for the UK companies to exploit, as the former plans to build a well-integrated rail network in the nation that will extend railways by 325 kilometers and connect Qatar’s rail networks to those of the GCC countries.

Qatar is gearing up to host the 2022 FIFA World Cup which has left significant opportunities for the British companies, as the preparations would require construction of stadia, training grounds and accommodation facilities. Several UK construction companies stand to benefit by taking up the related services for building up the necessary amenities. According to MEED Projects, Qatar’s active projects market has been estimated at USD 285 billion, which is mainly driven by the FIFA 2022 World Cup and the Qatar National Vision 2030.

Having grown from the ground up, QIC is now the number one insurance company in the Middle East. Last year, you were inducted as a member of The Geneva Association, the leading international insurance think tank comprised of 90 CEOs from the world’s top insurance and reinsurance companies. Having been with QIC since 1986, what achievement(s) are you most proud of and what legacy do you seek to achieve?

Starting from its humble beginnings, the QIC Group has attained a number of milestones over the last fifty years of operation.These include:

  • The ability to earn the trust of our clients by consistently offering best-in-class products and services. Not only that, but we also ensure to settle claims in a timely manner to retain our clients. Most of our clients have been with us for more than 15 years, which is testament to the level of service we provide.
  • Being the largest insurer in Qatar and in the MENA region.
  • Being an integral part of the economic development of Qatar.
  • Gaining recognition as the best capitalized and profitable insurance Group in the region and in the MENA region, as well as attaining and retaining our ‘A’ rating from leading credit rating companies such as S&P’s and A.M. Best.

Celebrating fifty years of successful operation by itself is a great accomplishment. We are proud of the fact that the claims that we have settled have contributed in the alleviation of our customers’ misfortunes. This after all is a key function of our raison d’être.

Our future goal is to be ranked amongst the top fifty insurers in the world and to become a globally recognized composite insurer with robust lines of business in direct, life, medical and reinsurance capacity.

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