Wednesday 24 / April / 2024
Muscat: Three leading brokerage firms have backed the initial public offering of Oman Qatar Insurance Company, which will close one-month subscription of its share offer on Thursday.
Al Maha Financial Services worked out a fair price of 168 baisas, while Gulf Baader Capital Market estimated a fair price of 165 baisas. Oman Qatar Insurance Company is offering 25 million shares at 160 baisas in one-month subscription between September 6 and October 5.
“We recommend investors to subscribe to the IPO of Oman Qatar Insurance Company as it is a medium sized player in the market focusing on property, engineering and liability lines, and enjoys strong support from parent company,” said the United Securities in its research note.
Highlighting the performance, Gulf Baader Capital Markets said that being the subsidiary of Qatar Insurance remains positive in terms of business strategies and underwriting standards.
“OQIC is one of the subsidiaries of Qatar Insurance Co, one of the leading insurance companies in the Mena region. The company has developed strong underwriting expertise, differentiated products, enhance customer base and strong reinsurance partners.” However, Gulf Baader noted that the historical performance was mixed amid cleaning up of the book.
Also, investment returns seems volatile historically with higher exposure in equities. The company has reported mixed performance over the last three years and management gave guidance that worst is behind.
Better risk management
The management expects the claims ratio and the operating performance to improve going forward with better risk management and effective reinsurance strategy.
Al Maha Financial Services said that OQIC has so far concentrated on the general insurance sector and has more recently expanded its operations to other sectors of insurance, including life and medical. Going forward, the company’s management plans to focus on the medical and life segments and capitalise on the future growth expected for the same.
The company plans to offer regular cash dividends and an attractive yield over the long term. As per the company’s projections, average cash dividend yield for the projected period between 2017 and 2021 equals around 9 per cent at the offer price with an average projected payout of 53 per cent, added Al Maha Financial Services.
OQIC has seven full-scale branches excluding the head office, offering extensive corporate and retail products. The company also has 6 agency branches and 30 brokers to sell products across all segments. OQIC has bank assurance agreement with one of the banks to offer its general and life products. The company do offer online platform to sell retail products to both new and existing customers for renewals.
Gulf Baader also noted that the insurance premium revenue of OQIC has grown at a compounded annual growth rate of 4.4 per cent over 2013-2016, while underwriting results reported annualised decline of 13.8 per cent over the same period. Overall market share of the company remained between 4.5-4.9 per cent during 2013-16. The reported decline in 2015 underwriting results is due to increased reserve against motor claims and increased losses in medical and life segments. OQIC maintains a loss ratio of about 76 per cent levels as compared to 80 per cent levels of national insurers and the industry.
United Securities said that the capital increase of OMR4 million at 100 baisas per share in July 2017 through rights issue provide the company with additional fire power for business growth, increased premium retention, and investments.
Oman Qatar Insurance is one of the few companies which are targeting to focus on the medical and life business lines. Also, topline growth and improved combined ratio from careful risk selection and better claims management to drive underwriting performance, noted United Securities.
The IPO is available for both Omani and non-Omani investors, and to individual and institutional investors. As many as 65 per cent of the shares available for subscription have been reserved for investors applying for a minimum of 1,000 shares and a maximum of 100,000 shares, with the balance 35 per cent reserved for investors applying for a minimum of 100,100 shares up to a maximum of 2,500,000 shares.
