Claims and Expenses - Gross claims and claim adjustment expenses increased by 15.7% from $203.4 million in 2021 to $235.3 million in 2022[616] - Net claims and claim adjustment expenses decreased by 10.5% from $176.2 million in 2021 to $157.7 million in 2022, resulting in a net claims ratio of 41.9% for 2022 compared to 51.0% for 2021[616] - Net claims and claim adjustment expenses in the specialty long-tail segment decreased by 41.3% from $86.2 million in 2021 to $50.6 million in 2022[669] - Net claims and claim adjustment expenses in the specialty short-tail segment increased by 24.0% from $72.6 million in 2021 to $90.0 million in 2022, primarily due to higher current accident year losses[681] - Net claims and claim adjustment expenses in the reinsurance segment decreased by 1.7% from $17.4 million in 2021 to $17.1 million in 2022[692] Underwriting and Profitability - Net underwriting results increased by 40.4% from $105.8 million in 2021 to $148.5 million in 2022[621] - Profit after tax increased from $43.7 million in 2021 to $85.5 million in 2022, reflecting a significant rise in net underwriting results and total investment income[634] - The profit after tax for the year increased from $27.2 million in 2020 to $43.7 million in 2021, mainly due to the increase in net underwriting results[660] Investment Income - Total investment income, net rose by 46.8% from $14.1 million in 2021 to $20.7 million in 2022, driven by increased interest income[622] - Total investment income for 2022 was $16.6 million, more than doubling from $8.7 million in 2021, reflecting a significant increase of approximately 90%[741] - The investment yield for 2022 was 2.2%, compared to 1.6% in 2021, showing an improvement of 0.6 percentage points[741] Expenses - Net policy acquisition expenses increased by 11.1% from $63.2 million in 2021 to $70.2 million in 2022, with a policy acquisition expense ratio of 18.7% for 2022[620] - General and administrative expenses rose by 14.6% from $58.9 million in 2021 to $67.5 million in 2022, primarily due to increased employee-related costs[629] - Policy acquisition expenses in the reinsurance segment increased by 43.6% from $3.9 million in 2021 to $5.6 million in 2022, with a policy acquisition expense ratio of 18.5% compared to 16.5% in 2021[694] Cash Flows - Net cash flows from operating activities decreased by $215.2 million from a net cash inflow of $129.8 million in 2021 to a net cash outflow of $85.4 million in 2022[704] - Net cash flows used in investing activities decreased from $2.5 million in 2021 to $1.2 million in 2022, primarily due to lower additions of office premises and intangible assets[706] - Net cash flows used in financing activities decreased by $2.7 million from a net cash outflow of $16.9 million in 2021 to $14.2 million in 2022, with a significant portion attributed to a dividend payment of $10.8 million[708] Capital and Solvency - The company targets a solvency ratio of more than 120% of the group capital requirement to ensure capital strength and support a stable dividend policy[702] - The Minimum Margin of Solvency (MSM) required for IGI Bermuda was $57.8 million in 2022, with actual statutory capital and surplus reported at $413.8 million, exceeding the requirement by 179%[719] - The Enhanced Capital Requirement (ECR) for IGI Bermuda was $231.0 million in 2022, with the actual statutory capital surplus exceeding the requirement by 179%[717] - IGI UK's actual statutory capital surplus exceeded the PRA's requirements by 52% in 2022, reflecting strong capital adequacy[727] - IGI Europe's actual statutory capital surplus exceeded the MFSA's requirements by 108% in 2022, demonstrating robust financial health[735] Investment Portfolio - The investment portfolio managed in-house in 2022 was primarily liquid, with approximately $18.2 million managed by a third-party investment advisor, ensuring liquidity and capital preservation[740] - The fair value of total investments as of December 31, 2022, was $990.8 million, an increase from $914.3 million in 2021, representing a growth of approximately 8.4%[741] - Average investments for the year ended December 31, 2022, were $931.2 million, up from $855.9 million in 2021, indicating a year-over-year increase of about 8.8%[741] Claims Reserves - Net outstanding claims at the beginning of 2022 were $393.6 million, up from $304.8 million in 2021 and $236.8 million in 2020[782] - The total net provision for claims occurring during 2022 was $198.2 million, compared to $192.3 million in 2021 and $157.8 million in 2020[782] - The gross case reserves, IBNR, and ULAE as of December 31, 2022, were $634.6 million, compared to $575.9 million in 2021 and $492.3 million in 2020[782] - The net outstanding claims as of December 31, 2022, were $445.7 million, reflecting a decrease of $52.1 million from $393.6 million in 2021[785] - As of December 31, 2022, IGI had $239.1 million in incurred but not reported (IBNR) loss reserves, an increase from $207.0 million in 2021 and $152.8 million in 2020[790] Actuarial and Reserve Management - The actuarial recommended reserve is intended to represent the best estimate of the outstanding unpaid claims liabilities, without any prudence or bias[787] - The company utilizes various actuarial methodologies, including the Chain Ladder Method and the Bornhuetter-Ferguson method, to project claims to ultimate[767][774] - The estimation of adequate reserves is particularly challenging for long-tail policies, which may not see claims paid until well after the policy term[764] - Changes in trends and other factors could result in reserves being inadequate, potentially leading to a material adverse effect on financial results[765] - Management reviews provisions for claims incurred and claims incurred but not reported on a quarterly basis[803]

International General Insurance Holdings Ltd. (NASDAQ:IGIC) Q4 2022 Earnings Conference Call March 3, 2023 9:00 AM ET Company Participants Robin Sidders - Head of Investor Relations Wasef Jabsheh - Chairman and CEO Waleed Jabsheh - President Pervez Rizvi - Chief Financial Officer Conference Call Participants Mark Dwelle - RBC Capital Markets Operator Good day, and welcome to the International General Insurance Holdings Ltd.'s Fourth Quarter and Full Year 2022 Financial Results Conference Call. [Operator Ins ...

Financial Performance - Gross written premiums for Q4 2022 were $156.7 million, a decrease of 4.2% from $163.5 million in Q4 2021[11] - Net premiums earned for the year ended December 31, 2022, increased to $376.4 million, up from $345.2 million in 2021, representing an increase of 9.8%[2] - Profit for the full year 2022 was $85.5 million, compared to $43.6 million in 2021, marking a 96.5% increase[8] - Core operating income for the year ended December 31, 2022, was $94.4 million, up from $53.1 million in 2021, reflecting a significant increase of 77.7%[9] - The company reported a profit for the period of $85.5 million in 2022, significantly higher than $43.6 million in 2021, with basic earnings per share rising to $1.74 from $0.89[35] - For the quarter ended December 31, 2022, the net profit attributable to equity holders was $23.8 million, a significant increase from $8.5 million in the same quarter of 2021, representing a growth of 180%[3] - The basic and diluted earnings per share attributable to equity holders for the year ended December 31, 2022, were $1.74, compared to $0.89 in 2021, reflecting a year-over-year increase of 95.5%[3] Underwriting Performance - The combined ratio for the year ended December 31, 2022, improved to 78.5%, down from 86.4% in 2021[16] - The net claims and claims expense ratio for the year ended December 31, 2022, was 41.9%, compared to 51.0% in 2021, indicating improved underwriting performance[15] - The net claims and claim adjustment expenses for the year ended December 31, 2022, totaled $157.7 million, a decrease from $176.2 million in 2021, indicating improved claims management[51] - The combined ratio for 2022 was 78.5%, compared to 86.4% in 2021, reflecting enhanced operational efficiency[40] - The combined ratio for the year ended December 31, 2022, was 78.5%, an improvement from 86.4% in 2021, demonstrating enhanced underwriting performance[61] Investment Performance - Total investment income for the year ended December 31, 2022, was $20.7 million, compared to $14.2 million in 2021, representing a 45.8% increase[2] - The net investment income for 2022 was $16.4 million, slightly up from $16.1 million in 2021, indicating stable investment performance[35] - The investment yield for the year ended December 31, 2022, was 2.5%, compared to 2.1% in 2021, indicating an improvement in investment performance[54] - The net investment income for the quarter ended December 31, 2022, was $7.6 million, significantly higher than $3.0 million in the same quarter of 2021[54] - The company experienced a realized loss on investments of $0.7 million for the year, compared to a gain of $0.3 million in 2021, highlighting volatility in investment performance[64] Segment Performance - The Long-tail Segment accounted for approximately 40% of gross written premiums in 2022, with net underwriting results increasing to $83.7 million from $50.9 million in 2021[19] - The Short-tail Segment saw gross written premiums increase by 13.0% to $318.6 million for the full year 2022, compared to $282.0 million in 2021[22] - The Reinsurance Segment's gross written premiums increased to $31.0 million in 2022, up from $24.0 million in 2021, reflecting growth in this area[25] Equity and Assets - Total equity increased to $429.8 million as of December 31, 2022, from $401.9 million at the end of 2021, with a book value per share rising to $9.49 from $8.83[31] - Total assets increased to $1,561.1 million as of December 31, 2022, from $1,451.9 million in 2021, driven by growth in investments and term deposits[38] - Cash and cash equivalents decreased to $138.0 million from $242.1 million, while term deposits increased to $297.0 million from $180.0 million[38] - The total equity as of December 31, 2022, was $429.8 million, an increase from $401.9 million in 2021, marking a growth of 6.9%[45] - As of December 31, 2022, the book value per share increased to $9.49 from $8.83 in 2021, representing a growth of 7.5%[45] Shareholder Actions - The company repurchased 310,542 common shares at an average price of $7.65 per share by December 31, 2022, and an additional 2,271,775 shares at $8.60 per share in January 2023[32] - The weighted average number of vested common shares for the year was 45.5 million, consistent with the previous year, indicating stable share count[66] Future Outlook and Risks - The company aims to expand its portfolio in specialty lines, with operations in multiple international markets including Bermuda, London, and Dubai, enhancing its global footprint[69] - The company emphasizes that forward-looking statements may differ from actual results due to various risks and uncertainties[70] - Key factors affecting performance include changes in demand for services, competition, and the impact of global events such as the COVID-19 pandemic and geopolitical tensions[70] - The company highlights the potential effects of the proposed acquisition of EIO and the importance of realizing anticipated benefits from this acquisition[70]

Financial Data and Key Metrics Changes - The company reported a six-month combined ratio of 33.5% and a core operating return on average shareholders' equity of 26.8%, indicating strong performance and shareholder value creation [7] - The six-month combined ratio for the second quarter was 73.5%, compared to 72.2% in the first quarter, reflecting solid profitable growth [11] - The impact of foreign currency exchange movements was a negative $9.2 million for the second quarter and negative $12.7 million for the first six months [12] Business Line Data and Key Metrics Changes - The company experienced solid profitable growth across all areas of the business, with a focus on identifying new diversified opportunities [11] - The cumulative net increases for the first six months of 2022 were 11.3% in long tail lines and 4.3% in short tail lines, with moderate improvement in the reinsurance portfolio [14] Market Data and Key Metrics Changes - The company noted that the US and Europe are both growth markets, with gross premiums more than doubling in the US and close to $24 million written in Europe for the first half [15] - The company is seeing more opportunities in short tail lines than long tail lines, with a competitive landscape emerging in the UK [14] Company Strategy and Development Direction - The company is focused on expanding its underwriting portfolio and footprint into new lines of business and territories while maintaining quality [8] - The company plans to acquire Energy Insurance Oslo to expand its existing business and leverage relationships for further growth opportunities in Scandinavia [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite challenges from elevated inflationary pressures and rising interest rates [9] - The company is taking a conservative view on pricing and has adjusted its asset allocation to higher-rated bonds and increased cash and short-term deposits [13] Other Important Information - The company has initiated a share repurchase program, having repurchased over 335,000 common shares at an average price of $7.51 [18] - A new dividend policy was announced, reflecting the company's commitment to generating shareholder value [18] Q&A Session Summary Question: Was there a benefit or one-time item affecting the negative tax rate? - The negative tax rate is due to a deferred tax asset for the Malta operation, which recorded a loss in the first half [22] Question: Can you elaborate on reserve releases in the quarter? - Reserve releases were predominantly on long tail lines, with most reserves lying in older accident years [23] Question: What will be the focus of the Bermuda subsidiary's reinsurance treaty business? - Initially, the focus will be on property, with plans to grow based on opportunities [24] Question: Why was the rate increase in short tail lines lower than other companies? - The rate increase depends on the portfolio's composition and territorial weighting, with US property averaging just under 20% increases [27]

Claims and Expenses - Gross claims and claim adjustment expenses decreased by 4.9% from $214.0 million in 2020 to $203.4 million in 2021, while net claims and claim adjustment expenses increased by 16.2% from $151.7 million in 2020 to $176.2 million in 2021[695]. - The net claims and claim adjustment expenses ratio improved to 51.0% for the year ended December 31, 2021, down from 53.5% in 2020, driven by favorable development on net loss reserves from prior accident years[695]. - Net claims and claim adjustment expenses in the specialty long-tail segment decreased by 2.9% from $88.8 million in 2020 to $86.2 million in 2021[751]. - The overall net claims and claims expense ratio increased by 1.2 percentage points to 47.2% in 2021 from 45.9% in 2020, driven by higher incurred losses in the political violence, energy, and engineering lines of business[768]. - Net claims and claim adjustment expenses in the reinsurance segment surged by 176.2% from $6.3 million in 2020 to $17.4 million in 2021, largely due to reserves built for the 2021 floods in Europe[784]. Underwriting and Premiums - Net underwriting results increased by 36.7% from $77.4 million in 2020 to $105.8 million in 2021[701]. - Gross written premiums in the specialty long-tail segment increased by 13.8% from $210.5 million in 2020 to $239.6 million in 2021, with casualty premiums rising from $157.5 million to $190.0 million[745]. - Gross written premiums in the specialty short-tail segment increased by 18.7% from $237.5 million in 2020 to $282.0 million in 2021[760]. - IGI Bermuda generated net written premiums of $382.6 million in 2021, up from $338.4 million in 2020 and $252.1 million in 2019[808]. - Net premiums earned in the specialty short-tail segment increased by 24.9% from $123.2 million in 2020 to $153.9 million in 2021, following a 23.8% increase from $99.5 million in 2019 to $123.2 million in 2020[766]. Investment Performance - Total investment income, net increased by 22.6% from $11.5 million in 2020 to $14.1 million in 2021, primarily due to a $1.9 million increase in interest income[702]. - Realized gains on investments decreased from $1.2 million in 2020 to $0.3 million in 2021, while unrealized gains on investments improved to a net gain of $3.1 million in 2021 from a net loss of $0.2 million in 2020[703][705]. - The fair value of investments increased to $914.3 million as of December 31, 2021, up from $775.3 million as of December 31, 2020[833]. - Average investments at cost rose to $826.5 million in 2021, up from $667.0 million in 2020, reflecting a growth of approximately 23.8%[1]. - The total investment income for 2021 was $14.1 million, an increase from $11.5 million in 2020[1]. Expenses and Profitability - General and administrative expenses increased by 25.6% from $46.9 million in 2020 to $58.9 million in 2021, attributed to new hires and technology investments[709]. - Profit after tax for the year increased from $27.2 million in 2020 to $43.7 million in 2021, mainly due to the increase in net underwriting results[713]. - Net policy acquisition expenses rose by 16.2% from $54.4 million in 2020 to $63.2 million in 2021, with the policy acquisition expense ratio declining from 19.2% in 2020 to 18.3% in 2021[700]. - The net charge to profit/loss for IBNR reserves in 2021 was $54.2 million, compared to $45.5 million in 2020 and $26.1 million in 2019, indicating a significant increase in reserve requirements[889]. - Reserve strengthening of $16.1 million was recorded in 2021, compared to $6.1 million in 2020 and $6.3 million in 2019, highlighting a trend of increasing reserve needs[889]. Cash Flow and Solvency - Net cash flows from operating activities improved significantly, increasing by $220.3 million from a net cash outflow of $90.5 million in 2020 to a net cash inflow of $129.8 million in 2021[798]. - The company targets a solvency ratio of more than 120% of the group capital requirement to ensure capital strength and support a stable dividend policy[796]. - The Minimum Margin of Solvency (MSM) required for IGI Bermuda was $55.6 million in 2021, compared to $49.9 million in 2020 and $31.9 million in 2019[809]. - The Enhanced Capital Requirement (ECR) for IGI Bermuda was $234.0 million in 2021, an increase from $199.7 million in 2020 and $137.0 million in 2019[810]. - IGI Bermuda's statutory capital and surplus exceeded the BMA's requirements by 161% in 2021, 180% in 2020, and 244% in 2019[813]. Reserves and Claims Development - The total net provision for claims and claims expenses for 2021 was $481.0 million, compared to $388.5 million in 2020 and $314.9 million in 2019, reflecting a year-over-year increase of 23.8% from 2020 to 2021[878]. - The gross reported case reserve as of December 31, 2021, was $306.9 million, down from $312.4 million in 2020, while the net reported case reserve increased to $186.6 million from $152.0 million[879]. - The company experienced favorable claims development across most lines of business in 2021, except for engineering, surety, marine, and downstream energy, which saw increased ultimate claims[882]. - The reserving process is reviewed quarterly, with adjustments made based on actual claims development compared to expectations, impacting current year profits positively or negatively[876]. - The company utilizes various actuarial methodologies, including the Chain Ladder Method and the Bornhuetter-Ferguson method, to estimate reserves and claims development[863][871].

Claims and Expenses - Gross claims and claim adjustment expenses decreased by 4.9% from $214.0 million in 2020 to $203.4 million in 2021, while net claims and claim adjustment expenses increased by 16.2% from $151.7 million in 2020 to $176.2 million in 2021[603]. - The net claims and claim adjustment expenses ratio improved to 51.0% for the year ended December 31, 2021, down from 53.5% in 2020, driven by favorable development on net loss reserves[603]. - Net claims and claim adjustment expenses decreased by 2.9% from $88.8 million in 2020 to $86.2 million in 2021, attributed to favorable development of loss reserves[659]. - The net claims and claims expense ratio for the casualty line improved from 66.2% in 2020 to 52.9% in 2021, reflecting better loss reserve management[661]. - The overall net claims and claims expense ratio increased by 1.2 percentage points to 47.2% for the year ended December 31, 2021[676]. - Net outstanding claims at the beginning of 2021 were $304.8 million, an increase from $236.8 million in 2020 and $196.8 million in 2019[776]. - The total net provision for claims and claims expenses for 2021 was $481.0 million, compared to $388.5 million in 2020 and $314.9 million in 2019, reflecting a year-over-year increase of 23.8%[776]. - Claims occurring during the current year amounted to $192.3 million in 2021, up from $157.8 million in 2020 and $124.4 million in 2019[776]. - The net payments for claims in 2021 totaled $87.3 million, slightly higher than $83.8 million in 2020 and $78.1 million in 2019[776]. - Gross case reserves, IBNR, and ULAE as of December 31, 2021, were $575.9 million, compared to $492.3 million in 2020 and $413.0 million in 2019[776]. - The net IBNR reserves and ULAE increased to $207.0 million in 2021 from $152.8 million in 2020, representing a growth of 35.4%[777]. - The net outstanding claims at the end of 2021 were $393.6 million, an increase of $88.8 million from $304.8 million in 2020[777]. - The total incurred claims increased by $66.7 million in 2021, indicating a trend of rising claims costs[780]. - Inflationary pressures may materially affect the company's consolidated results, particularly in the cost of settling claims[788]. Financial Performance - Net underwriting results increased by 36.7% from $77.4 million in 2020 to $105.8 million in 2021[608]. - Profit after tax for the year increased from $27.2 million in 2020 to $43.7 million in 2021, largely due to the increase in net underwriting results[620]. - General and administrative expenses increased by 25.6% from $46.9 million in 2020 to $58.9 million in 2021, attributed to new hires and technology investments[616]. - Share of loss from associates increased significantly from a loss of $1.5 million in 2020 to a loss of $7.3 million in 2021, primarily due to declines in fair value of investment properties[615]. - Total investment income, net increased by 22.6% from $11.5 million in 2020 to $14.1 million in 2021, primarily due to a rise in interest income[609]. - Other income (expenses) increased by 238.5% from $1.3 million in 2019 to $4.4 million in 2020, mainly due to an impairment loss on insurance receivables[645]. Premiums and Underwriting - Gross written premiums increased by 33.8% from $349.2 million in 2019 to $467.3 million in 2020, driven by growth across various segments[624]. - Net premiums earned increased by 31.6% from $215.5 million in 2019 to $283.5 million in 2020, primarily due to the rise in net written premiums[630]. - Gross written premiums in the specialty long-tail segment increased by 39.5% from $150.9 million in 2019 to $210.5 million in 2020, driven by positive rate movement in the casualty line of business[652]. - Gross written premiums in the specialty long-tail segment increased by 13.8% from $210.5 million in 2020 to $239.6 million in 2021, with casualty premiums rising from $157.5 million to $190.0 million[653]. - Gross written premiums in the specialty short-tail segment rose by 18.7% from $237.5 million in 2020 to $282.0 million in 2021, with significant growth in the construction and engineering line[668]. - The construction and engineering line of business saw a 73.7% increase in gross written premiums from $17.9 million in 2020 to $31.1 million in 2021[669]. - Gross written premiums in the reinsurance segment increased 24.4% from $19.3 million in 2020 to $24.0 million in 2021[687]. Investment Performance - Total investment income for the year ended December 31, 2021, was $14.1 million, compared to $11.5 million in 2020, reflecting an increase of approximately 22.6%[735]. - The average investment yield remained stable at 1.7% for both 2021 and 2020, while the investment yield based on average investments excluding cash slightly decreased from 2.2% in 2020 to 2.1% in 2021[735]. - The fair value of the company's total investments increased to $914.3 million as of December 31, 2021, up from $775.3 million in 2020, representing a growth of approximately 17.9%[734]. - Fixed income securities accounted for $420.9 million of the total investments, showing an increase from $393.6 million in 2020, which is a rise of about 6.7%[734]. - The company managed approximately $21.5 million of its investment portfolio through a third-party investment advisor, while the majority is managed in-house[733]. - The total investment income for 2021 included realized gains and losses, unrealized gains and losses, and expected credit losses, highlighting the complexity of the investment income structure[736]. - The company maintains certain minimum thresholds of cash and highly-rated fixed maturity securities to ensure liquidity in various scenarios, reflecting a conservative investment strategy[734]. Capital and Solvency - The company targets a solvency ratio of more than 120% of the group capital requirement to ensure capital strength[700]. - IGI Bermuda's statutory capital and surplus was $377.5 million in 2021, exceeding the Target Capital Level (TCL) of $280.8 million by $96.7 million[715]. - IGI UK's actual statutory capital surplus exceeded the PRA's requirements by 57.5% in 2021[722]. - IGI Europe’s actual statutory capital surplus exceeded the MFSA's requirements by 183% in 2021[727]. - The Enhanced Capital Requirement (ECR) for IGI Bermuda was $234.0 million in 2021, compared to $199.7 million in 2020 and $137.0 million in 2019[713]. Reserves and Actuarial Review - The independent actuarial reviews of reserves are conducted every six months, ensuring compliance with regulatory requirements[753]. - The reserving committee meets quarterly to review and recommend the quantum of claims reserves, incorporating inputs from various departments[752]. - The estimation of adequate reserves is particularly challenging for long-tail policies, which may not see claims paid until well after the policy term[758]. - As of December 31, 2021, IGI had $207.0 million of incurred but not reported (IBNR) loss reserves including ULAE, up from $152.8 million in 2020 and $107.3 million in 2019[785]. - The reserve strengthening for the year ended December 31, 2021, amounted to $16.1 million, compared to $6.1 million in 2020 and $6.3 million in 2019[786]. - The carrying balance of IBNR reserves at the end of 2021 was $207.0 million, which included a net charge to profit/loss of $54.2 million for the year[786]. - The company’s actuarial recommended reserve is intended to represent the mathematical expected value of the distribution of reasonably foreseeable outcomes of unpaid liabilities[781]. - Total carrying amount of insurance contract liabilities as of December 31, 2021, was $575.9 million, an increase from $492.3 million in 2020[802]. - Gross incurred but not reported claims (IBNR) as of December 31, 2021, amounted to $269.0 million, up from $179.9 million in 2020[802].

Financial Data and Key Metrics Changes - The company reported a strong fourth quarter, with gross premiums growing by over 16% year-over-year, reaching over $545 million for the full year 2021 [8][21] - Core operating earnings return on average equity was 13.7% for Q4 and 13.6% for the full year [8][35] - Book value per share increased by 5.2% year-over-year, totaling $8.83 at year-end [35] Business Line Data and Key Metrics Changes - In the Short-tail segment, gross premiums grew by 18.7% for the full year, primarily in energy, property, and engineering lines [22] - The Long-tail segment saw a 13.8% increase in gross written premiums, driven by professional indemnity and D&O business [22] - The treaty reinsurance book reported gross premiums of $4 million for Q4 and $24 million for the full year, marking increases of 42.9% and 24.4% respectively [24] Market Data and Key Metrics Changes - The U.S. market saw a 50% increase in premiums written in 2021 compared to 2020, with expectations for continued growth in 2022 [21][36] - In Europe, significant opportunities are anticipated, particularly in long-tail lines, with expected gross written premium production of around $25 million in 2022 [37][38] Company Strategy and Development Direction - The company aims to continue being a responsible steward of shareholders' capital while building on its solid foundation for future growth [16][44] - The growth strategy has been entirely organic and tightly controlled, focusing on core strengths and capabilities [43][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future, highlighting the importance of navigating market cycles effectively [45] - The ongoing situation in Ukraine is being monitored closely, with potential impacts on the energy book, though these are not expected to be material [41][42] Other Important Information - The company reported record net underwriting income of $30.6 million for Q4 and $105.8 million for the full year 2021 [25] - General and administrative expenses increased due to new hires and technology investments, with a focus on managing these costs as the company grows [28] Q&A Session Summary Question: Exposure to Russia and Ukraine - Management elaborated that exposure is mainly on the energy side, with physical damage and business interruption risks related to property engineering [48][49] Question: Real estate write-down in Lebanon - The remaining value from Lebanese real estate is about $5.7 million, with the rest predominantly from the head office in Amman, Jordan [50][51] Question: Catastrophe losses related to European flooding - Net losses from European floods currently stand at about $8.5 million, which is within expectations for the overall portfolio [52]

Company Overview - IGI's average unlevered core operating ROE since 2011 is 10%, even including "soft market" periods[5] - IGI's combined ratio through the market cycle, including heavy catastrophe years, is 90%[5] - Jabsheh Family Ownership is 30%[6] Financial Performance (Q2 2021) - Gross Written Premium increased by 21% to $166.1 million, compared to $137.3 million in Q2 2020[7] - The combined ratio was 92.3%, compared to 84.0% in Q2 2020, with a 6 points increase in the current accident year loss ratio[7] - Investment income increased to $3.9 million, compared to $2.6 million in Q2 2020, driven by a 40bps improvement in investment yield[7] - Core Operating ROAE was 9.0%, compared to 11.6% in Q2 2020[7] Strategic Developments - IGI Europe is now operating from Malta, having received all necessary approvals from Maltese regulators to write virtually all IGI lines of business[8] - S&P reaffirmed IGI's financial strength ratings, citing IGI's improved competitive position to "strong" from "satisfactory"[8] Market Position - MGA - Originated Business is 22%[25] - Treaty is 5%[25] - Individually Underwritten is 73%[25]

International General Insurance Holdings Ltd (NASDAQ:IGIC) Q2 2021 Earnings Conference Call August 13, 2021 9:00 AM ET Company Participants Robin Sidders - Head, IR Wasef Jabsheh - Founder, Chairman & CEO Waleed Jabsheh - President & Director Conference Call Participants Mark Dwelle - RBC Operator Good day, and welcome to the International General Insurance Holdings Limited Second Quarter and Half Year 2021 Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference o ...

PART I [Item 3. Key Information](index=8&type=section&id=Item%203.%20Key%20Information) The company faces significant risks related to the insurance industry, its business operations, and security ownership [Risks Relating to the Insurance and Reinsurance Industry](index=11&type=section&id=Risks%20Relating%20to%20the%20Insurance%20and%20Reinsurance%20Industry) The company operates in a highly competitive, cyclical, and regulated industry with exposure to catastrophic events and accounting changes - The insurance and reinsurance industries are **highly competitive**, with pressure on premium rates and policy terms[68](index=68&type=chunk)[69](index=69&type=chunk)[73](index=73&type=chunk) - The company's results are affected by the **cyclical nature** of the insurance industry, which impacts premium rates and capacity[76](index=76&type=chunk)[77](index=77&type=chunk) - IGI is subject to **extensive insurance laws and regulations** in multiple jurisdictions governing solvency and capital adequacy[84](index=84&type=chunk)[85](index=85&type=chunk) - The upcoming **IFRS 17 accounting standard** is expected to introduce fundamental changes to financial reporting[94](index=94&type=chunk) - The company is exposed to unpredictable claims from catastrophic events, with Hurricane Laura resulting in **$20.7 million in net claims** in 2020[116](index=116&type=chunk)[119](index=119&type=chunk) - The **COVID-19 pandemic** poses significant risks to claims, investment performance, and operational continuity[100](index=100&type=chunk)[101](index=101&type=chunk)[103](index=103&type=chunk) [Risks Relating to Our Business and Operations](index=23&type=section&id=Risks%20Relating%20to%20Our%20Business%20and%20Operations) Operational risks include uncertainty in loss reserves, dependency on brokers, investment portfolio volatility, and IT system vulnerabilities - Estimating insurance loss reserves is inherently uncertain, and **insufficient reserves** would negatively impact financial results[151](index=151&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - The company relies heavily on brokers, with the **top 5 international brokers accounting for 67.4%** of gross written premiums in 2020[166](index=166&type=chunk) - **Fixed maturity securities constituted 50.8%** of the total investment portfolio, exposing the company to interest rate and credit risk[189](index=189&type=chunk)[191](index=191&type=chunk) - A downgrade in the **"A (Excellent)" A.M. Best rating** could significantly hinder the ability to market products and retain business[212](index=212&type=chunk)[213](index=213&type=chunk) - The business is highly dependent on IT systems, and a **system failure or security breach** could lead to significant losses[220](index=220&type=chunk)[258](index=258&type=chunk)[261](index=261&type=chunk) - **Brexit** has resulted in the loss of passporting rights, prompting the establishment of an EU insurance operation in Malta[284](index=284&type=chunk)[286](index=286&type=chunk) [Risks Relating to Ownership of Our Securities](index=45&type=section&id=Risks%20Relating%20to%20Ownership%20of%20Our%20Securities) Ownership risks stem from its Bermuda incorporation, foreign private issuer status, and significant ownership concentration - As a **Bermuda-incorporated company**, shareholders may face difficulties in enforcing U.S. judgments[315](index=315&type=chunk)[322](index=322&type=chunk) - **CEO Wasef Jabsheh beneficially owns about 33.8%** of common shares, allowing for significant influence over shareholder matters[334](index=334&type=chunk)[337](index=337&type=chunk) - The company's status as a **"foreign private issuer"** exempts it from certain SEC rules, resulting in less frequent disclosure[328](index=328&type=chunk)[330](index=330&type=chunk) - As an **"emerging growth company,"** the company can take advantage of reduced disclosure and governance requirements[332](index=332&type=chunk) - The potential resale of a significant number of shares by former shareholders **may adversely affect the market price**[338](index=338&type=chunk)[339](index=339&type=chunk) [Item 4. Information on the Company](index=55&type=section&id=Item%204.%20Information%20on%20the%20Company) The company is a global specialty insurance and reinsurance provider with a disciplined underwriting approach and a diversified portfolio - IGI is a global specialty insurance and reinsurance provider with a **diversified portfolio** across energy, property, and casualty lines in over 200 countries[357](index=357&type=chunk) - The company's disciplined "underwriting first" strategy resulted in a **10.7% compound annual GWP growth rate** from 2009 to 2020[359](index=359&type=chunk) Gross Written Premium (GWP) by Geography and Segment (2020) | Category | Sub-Category | GWP ($M) | Percentage | | :--- | :--- | :--- | :--- | | **By Geography** | United Kingdom | 158.3 | 33.9% | | | Continental Europe | 60.0 | 12.8% | | | Middle East | 48.4 | 10.4% | | | Asia | 37.4 | 8.0% | | | Other | 163.2 | 34.9% | | **By Segment** | Specialty Short-tail | 246.1 | 52.7% | | | Specialty Long-tail | 201.9 | 43.2% | | | Reinsurance | 19.3 | 4.1% | - Key strengths include an experienced management team, deep broker relationships, and a **scalable, technology-enabled operating platform**[363](index=363&type=chunk)[365](index=365&type=chunk)[370](index=370&type=chunk) - The strategy focuses on expanding in existing markets, growing into new specialty lines, and maintaining a **conservative investment approach**[371](index=371&type=chunk)[373](index=373&type=chunk)[374](index=374&type=chunk) [Item 5. Operating and Financial Review and Prospects](index=87&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) The company reported significant growth in 2020, with increased premiums and improved underwriting results across all segments [Results of Operations — Consolidated](index=94&type=section&id=Results%20of%20Operations%20%E2%80%94%20Consolidated) Consolidated results for 2020 show significant growth in premiums and net underwriting income, reflecting strong overall performance Consolidated Financial Highlights (2019 vs. 2020) | Metric | 2019 ($M) | 2020 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Gross Written Premiums | 349.2 | 467.3 | +33.8% | | Net Premiums Earned | 215.5 | 283.5 | +31.6% | | Net Underwriting Results | 52.0 | 77.4 | +48.8% | | Profit for the year | 23.6 | 31.6 | +33.9% | | Basic and diluted EPS ($) | 0.69 | 0.69 | 0.0% | - The **33.8% increase in gross written premiums** was driven by growth across all segments, attributed to new business and favorable market conditions[636](index=636&type=chunk) - Net claims and claim adjustment expenses increased by 28.5%, though the **net claims ratio improved to 53.5%** from 54.8% in 2019[641](index=641&type=chunk) - General and administrative expenses rose 19.3% due to costs for planned growth and **additional expenses following the Nasdaq listing**[654](index=654&type=chunk) [Results of Operations — Segments](index=105&type=section&id=Results%20of%20Operations%20%E2%80%94%20Segments) All operating segments, including Specialty Long-tail, Short-tail, and Reinsurance, demonstrated strong premium growth and underwriting results in 2020 Segment Net Underwriting Results (2019 vs. 2020) | Segment | 2019 ($M) | 2020 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Specialty Long-tail | 16.4 | 23.5 | +43.3% | | Specialty Short-tail | 35.4 | 44.4 | +25.4% | | Reinsurance | 0.2 | 9.5 | +4650% | - **Specialty Long-tail GWP growth** was driven by significant positive rate movement, particularly in the casualty line of business[684](index=684&type=chunk) - **Specialty Short-tail GWP growth** was led by the property and energy lines, benefiting from positive rate movements and new business[701](index=701&type=chunk) - The Reinsurance segment's claims ratio **dramatically improved from 82.0% to 33.2%** due to reduced claims activity[723](index=723&type=chunk)[731](index=731&type=chunk)[733](index=733&type=chunk) [Liquidity and Capital Resources](index=112&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and regulatory capital, with its Bermuda and UK subsidiaries significantly exceeding solvency requirements Cash Flow Summary (2019 vs. 2020) | Cash Flow Activity | 2019 ($M) | 2020 ($M) | | :--- | :--- | :--- | | Net cash from (used in) Operating Activities | 21.4 | (90.5) | | Net cash used in Investing Activities | (1.0) | (1.9) | | Net cash (used in) from Financing Activities | (16.5) | 35.7 | | Net change in cash and cash equivalents | 7.7 | (59.0) | - The Bermuda subsidiary maintained a **Bermuda Solvency Capital Requirement (BSCR) Ratio of 180%** as of Dec 31, 2020, significantly exceeding the regulatory minimum[760](index=760&type=chunk) - The UK subsidiary **exceeded its Solvency Capital Requirement (SCR) by 51%** under the PRA's Solvency II regime as of Dec 31, 2020[769](index=769&type=chunk) - The company holds financial strength ratings of **"A" (Excellent) from A.M. Best** and "A-" from S&P Global Ratings, both with a stable outlook[749](index=749&type=chunk)[750](index=750&type=chunk) [Reserves](index=121&type=section&id=Reserves) The company's reserving process involves complex judgments and is overseen by a committee with independent third-party reviews Net Outstanding Claims Reserves (2019 vs. 2020) | Reserve Component ($M) | Dec 31, 2019 | Dec 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Net Reported Case Reserve | 129.5 | 151.9 | +22.4 | | Net IBNR Reserves & ULAE | 107.3 | 152.8 | +45.5 | | **Total Net Outstanding Claims** | **236.8** | **304.8** | **+68.0** | - The company experienced a **favorable prior-year reserve development of $6.1 million** in 2020, driven by positive movements in several lines[820](index=820&type=chunk)[824](index=824&type=chunk) - The reserving process involves a quarterly review by an internal actuarial team and is supplemented by **semi-annual independent actuarial reviews**[796](index=796&type=chunk)[797](index=797&type=chunk)[798](index=798&type=chunk) [Item 6. Directors, Senior Management and Employees](index=138&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section details the company's leadership, compensation, board structure, and committee oversight - The board of directors is comprised of seven members and is divided into **three staggered classes** with three-year terms[948](index=948&type=chunk) - Wasef Jabsheh, the company's founder, serves as Chairman and CEO, with family members in key executive roles[936](index=936&type=chunk)[937](index=937&type=chunk)[945](index=945&type=chunk)[952](index=952&type=chunk) 2020 Compensation Summary | Recipient Group | Aggregate Cash Compensation | Other Benefits | | :--- | :--- | :--- | | Executive Officers | ~$5.3 million | Accrued $0.3M in long-term benefits (restricted shares) | | Non-Employee Directors | ~$0.45 million | N/A | - The company has established an **Audit Committee, a Nominating/Governance Committee, and a Compensation Committee**[995](index=995&type=chunk)[996](index=996&type=chunk)[1000](index=1000&type=chunk)[1002](index=1002&type=chunk) - As of December 31, 2020, the company had **252 employees**, with the majority based in Amman, Jordan[1010](index=1010&type=chunk)[1011](index=1011&type=chunk) [Item 7. Major Shareholders and Related Party Transactions](index=149&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) The company's ownership is concentrated, with the CEO being the largest shareholder, and key related party transactions stem from the 2020 Business Combination Major Shareholders (as of March 19, 2021) | Shareholder | Beneficial Ownership (%) | | :--- | :--- | | Wasef Salim Jabsheh (Chairman & CEO) | 33.8% | | Oman International Development & Investment Company SAOG | 14.2% | | Argo Re Limited | 9.7% | | Weiss Multi-Strategy Advisers LLC | 7.43% | | Church Mutual Insurance Company | 6.8% | | Michael T. Gray (Director) | 5.1% | - Key transactions related to the Business Combination include the **Sponsor Share Letter**, which transferred warrants and founder shares to Wasef Jabsheh and Argo Re[1023](index=1023&type=chunk)[1024](index=1024&type=chunk) - Major shareholders entered into **Lock-Up Agreements** restricting the sale of their shares for up to one year post-merger[1043](index=1043&type=chunk)[1044](index=1044&type=chunk)[1046](index=1046&type=chunk) - The company entered into **employment agreements** with its CEO, President, and COO, outlining salary, bonus, and severance benefits[967](index=967&type=chunk)[1048](index=1048&type=chunk) [Item 10. Additional Information](index=158&type=section&id=Item%2010.%20Additional%20Information) The company's governance as a Bermuda-exempted entity includes a classified board and special voting rights for its founder - The company is an exempted company incorporated under the laws of Bermuda, and its **Amended and Restated Bye-laws** govern its corporate structure[1063](index=1063&type=chunk)[1064](index=1064&type=chunk) - The bye-laws establish a **classified board** with three classes of directors serving staggered three-year terms[1082](index=1082&type=chunk) - **Wasef Jabsheh holds special rights** to appoint directors and influence major corporate actions based on his family's ownership level[1084](index=1084&type=chunk)[1091](index=1091&type=chunk) - Material contracts primarily relate to the **Business Combination**, including registration rights and forward purchase commitments[1112](index=1112&type=chunk)[1122](index=1122&type=chunk)[1124](index=1124&type=chunk) [Item 11. Quantitative and Qualitative Disclosures about Market Risks](index=176&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) The company is primarily exposed to insurance, financial, and credit risks, which are managed through disciplined underwriting and monitoring - The primary risks faced by the company are **insurance risk, market risk** (interest rate, currency, price), credit risk, and liquidity risk[1180](index=1180&type=chunk)[1190](index=1190&type=chunk) Insurance Risk Sensitivity Analysis (2020) | Sensitivity Factor | Impact on Gross Outstanding Claims ($M) | Impact on Net Outstanding Claims ($M) | Impact on Profit Before Tax ($M) | | :--- | :--- | :--- | :--- | | +7.5% | +36.9 | +22.9 | (22.9) | | -7.5% | (36.9) | (22.9) | +22.9 | Interest Rate Risk Sensitivity Analysis (2020) | Change in Basis Points | Effect on Profit Before Tax ($M) | | :--- | :--- | | -25 bps | (1.4) | | -50 bps | (2.9) | - As of December 31, 2020, **88.3% of reinsurance recoverables** were with carriers rated "A-" or better by A.M. Best[788](index=788&type=chunk) - The company is exposed to foreign currency risk, primarily from the **Pound Sterling (GBP) and Euro (EUR)**[1196](index=1196&type=chunk)[1198](index=1198&type=chunk) PART II [Item 15. Control and Procedures](index=181&type=section&id=Item%2015.%20Control%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2020 - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2020[1218](index=1218&type=chunk) - Based on an assessment using the COSO framework, management determined that **internal control over financial reporting was effective**[1222](index=1222&type=chunk)[1223](index=1223&type=chunk) - As an emerging growth company, IGI is currently **exempt from the auditor attestation report** on internal controls[1224](index=1224&type=chunk) [Item 16. Other Information](index=182&type=section&id=Item%2016.%20Other%20Information) This section covers governance topics including the audit committee financial expert, auditor fees, and foreign private issuer exemptions - The Board of Directors has determined that **Wanda Mwaura is an "audit committee financial expert"**[1226](index=1226&type=chunk) Principal Accountant Fees (Ernst & Young LLP) | Fee Category | 2019 ($ thousands) | 2020 ($ thousands) | | :--- | :--- | :--- | | Audit Fees | 1,029 | 1,303 | | Audit-Related Fees | 0 | 0 | | Tax Fees | 61 | 5 | | All Other Fees | 42 | 47 | | **Total** | **1,132** | **1,355** | - As a foreign private issuer, the company follows Bermuda corporate governance practices in lieu of certain **Nasdaq requirements**[1241](index=1241&type=chunk) PART III [Item 18. Financial Statements](index=185&type=section&id=Item%2018.%20Financial%20Statements) This section contains the company's audited consolidated financial statements for the fiscal year ended December 31, 2020, prepared under IFRS [Report of Independent Registered Public Accounting Firm](index=191&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued an unqualified opinion on the company's consolidated financial statements for the three years ended December 31, 2020 - Ernst & Young LLP expressed an **unqualified opinion** that the consolidated financial statements are presented fairly in accordance with IFRS[1260](index=1260&type=chunk) - The audit was conducted in accordance with the standards of the **Public Company Accounting Oversight Board (United States)**[1262](index=1262&type=chunk) [Consolidated Financial Statements](index=192&type=section&id=Consolidated%20Financial%20Statements) The financial statements show significant growth in total assets and equity, with the 2020 business combination treated as a share-based payment Consolidated Statement of Financial Position Highlights | Metric ($ thousands) | Dec 31, 2019 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Assets | 1,009,074 | 1,279,207 | | Total Liabilities | 696,931 | 884,568 | | Total Equity | 312,143 | 394,639 | Consolidated Statement of Income Highlights | Metric ($ thousands) | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | | Gross Written Premiums | 301,618 | 349,292 | 467,273 | | Net Premiums Earned | 183,309 | 215,544 | 283,516 | | Net Underwriting Results | 56,058 | 52,045 | 77,354 | | Profit for the year | 25,542 | 23,565 | 31,669 | - The business combination was accounted for as a continuation of IGI, with the transaction treated as a **share-based payment under IFRS 2**[1273](index=1273&type=chunk)[1274](index=1274&type=chunk) - The company is currently evaluating the impact of **IFRS 17 (Insurance Contracts)**, effective January 1, 2023[1301](index=1301&type=chunk)[1302](index=1302&type=chunk)