The insurance and transport sectors were seen going through their troughs in terms of profitability during the first six months of this year, but they exhibit inherent intrinsic strengths in view of the country's capital expenditure-driven economy.
The cumulative profit of the insurance sector, under which there are five listed constituents, had fallen 33.26% in January-June this year against a stupendous 148.71% growth in the corresponding period of 2013. The five national insurers were among the consortium that recently won a big-ticket risk cover contract for Qatar's mammoth metro rail project, which is now progressing as per the schedule for completion by late 2019.
Qatar Rail - which is in the forefront of building a Doha Metro, Lusail Light Rail Transit and Long Distance Freight and Passenger - recently awarded the "single project tunneling and rail construction" insurance to a consortium of national insurance companies that also include Qatar General and Reinsurance, Al Khaleej Takaful Group, Doha Insurance, Qatar Islamic Insurance and Al Koot Insurance and Reinsurance.
The listed insurance companies together netted a profit of QR839.28mn in H1 this year with Qatar Insurance Company contributing as much as about 76%. Their cumulative net profit was QR1.26bn in the 2013 period. In the stock market, the insurance sector considerably outperformed with 19.66% gains against a marginal 0.64% contraction in the main barometer quarter-to-date ended June 30.
The overall net profitability was largely impacted by Qatar General and Reinsurance, whose net income reported 92.78% shrinkage compared to a 997.99% acceleration in the year-ago period. Otherwise, Qatar Insurance Company, a dominant force in the domestic risk cover industry, reported a 53.03% jump in net profit during the first six months of this year against 37.16% in the previous year period.
Doha Insurance Company witnessed a 49.27% surge in net profit during January-June this year compared to a 12.75% decline in the corresponding period of 2013. Al Khaleej Insurance and Reinsurance had seen a 68.15% jump in net profit during the first half of 2014 against a 51.98% plunge in the year-ago period. Qatar Islamic Insurance registered a 35.63% increase in net profit during the review period compared to mere 2.87% rise seen in the previous year period.
Market sources say that Qatar's large scale investments in infrastructure, including in Qatar Rail, is expected to have a positive "spin off" for the insurance sector, which now comes under the ambit of the Qatar Central Bank as part of a single financial regulatory set up. The transport sector, which has three listed constituents, saw its net profit rise 4.65% to QR1.03bn in H1 2014 against 14.26% in the corresponding period of the previous year. In the stock market, the transport index had fallen 0.67% quarter-to-date ended June 30.
Milaha (formerly Qatar Navigation) saw its net profit slump 9.67% in the first six months of this year compared to 30.13% growth in the year-ago period. Gulf Warehousing Company witnessed an almost flat course with net income growing 29.91% against 28.74% in the previous year period. Nakilat (Qatar Gas Transport Company) reported a 23.86% jump in net profit in H1 2014 compared to 5.65% decline in the corresponding period of the previous year.
source: Gulf Times