International General Insurance(US:IGIC)2023-04-06 10:22Claims 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]