International General Insurance(IGIC) - 2023 Q2 - Quarterly Report

Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Balance Sheets Total assets reached $1.73 billion by June 30, 2023, up from $1.58 billion, with equity rising to $466.8 million Consolidated Balance Sheet Summary (USD '000) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Investments | 861,980 | 836,655 | | Cash and cash equivalents | 170,392 | 122,143 | | Premiums receivable, net | 281,859 | 216,014 | | TOTAL ASSETS | 1,733,390 | 1,580,414 | | Reserve for unpaid loss | 684,978 | 636,245 | | Unearned premiums | 445,606 | 390,250 | | TOTAL LIABILITIES | 1,266,559 | 1,169,475 | | TOTAL SHAREHOLDERS' EQUITY | 466,831 | 410,939 | Interim Condensed Consolidated Statements of Income Net income surged 68.2% to $74.4 million in H1 2023, driven by higher premiums and investment income Consolidated Income Statement Summary (USD '000) | Account | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Gross written premiums | 373,534 | 307,111 | | Net premiums earned | 223,427 | 183,316 | | Total revenues | 247,849 | 190,455 | | Net loss and loss adjustment expenses | (93,757) | (66,955) | | Total expenses | (168,700) | (145,580) | | Net income | 74,363 | 44,211 | | Diluted earnings per share (USD) | 1.59 | 0.92 | Interim Condensed Consolidated Statements of Comprehensive Income Comprehensive income reached $79.2 million in H1 2023, a significant turnaround from $2.3 million in the prior year Consolidated Comprehensive Income Summary (USD '000) | Account | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Net income | 74,363 | 44,211 | | Change in unrealized gains or losses in investments, net of tax | 4,797 | (41,854) | | Comprehensive income | 79,177 | 2,310 | Interim Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $87.8 million in H1 2023, resulting in a net cash increase of $47.5 million Consolidated Cash Flow Summary (USD '000) | Activity | Six months ended June 30, 2023 | Six months ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | 87,816 | 60,909 | | Net cash used in investing activities | (15,274) | (75,311) | | Net cash used in financing activities | (25,061) | (10,479) | | NET CHANGE IN CASH | 47,481 | (24,881) | Interim Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased to $466.8 million by June 30, 2023, driven by net income and comprehensive income Reconciliation of Shareholders' Equity (USD '000) | Account | Amount | | :--- | :--- | | Balance at December 31, 2022 | 410,939 | | Net Income | 74,363 | | Other comprehensive income | 4,814 | | Purchase of treasury shares | (23,813) | | Dividends paid | (879) | | Other | 1,407 | | Balance at June 30, 2023 | 466,831 | Notes to the Interim Condensed Consolidated Financial Statements Note 1: Description of Business The company is a Bermuda-based holding company focused on insurance and reinsurance, expanding into Nordic markets - The company is a holding company for insurance and reinsurance businesses, incorporated in Bermuda[10] - On March 25, 2023, the Group acquired Energy Insurance Oslo AS to broaden its presence in the Nordic markets[12] Note 2: Summary of Significant Accounting Policies Effective January 1, 2023, the company transitioned from IFRS to U.S. GAAP, reclassifying earn-out shares as liabilities - The company transitioned from IFRS to U.S. GAAP effective January 1, 2023[13] - The change to U.S. GAAP resulted in a decrease in Shareholder's equity at December 31, 2022, from $429.8 million (IFRS) to $410.9 million (U.S. GAAP), primarily due to the reclassification of earnout shares from equity to a liability[20] Note 4: Reserves for Unpaid Loss and Loss Adjustment Expenses Net reserve for unpaid losses was $482.3 million in H1 2023, with a $27.5 million favorable development - During the six months ended June 30, 2023, the company recorded a net favorable development of $27.5 million on prior accident years' loss reserves[25] - The favorable development was driven by decreases of $19.6 million in the short-tail business, $4.6 million in the long-tail business, and $3.3 million in the reinsurance book[25] Note 5: Derivative Financial Liabilities Derivative financial liabilities totaled $27.2 million at June 30, 2023, comprising warrants and earn-out shares - The company has 17,250,000 warrants outstanding, accounted for as a derivative liability with a fair value of $10.5 million as of June 30, 2023[28][30] - Earn-out shares, a derivative liability under U.S. GAAP, increased in fair value from $13.8 million to $16.6 million, with a $2.8 million change recognized in income[36][38] Note 6: Fair Value Measurements Total assets measured at fair value were $649.9 million, with liabilities at $27.2 million, as of June 30, 2023 Fair Value of Financial Instruments (June 30, 2023, USD '000) | Category | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | Assets measured at fair value | 262,335 | 381,531 | 5,997 | 649,863 | | Fixed maturity securities | 219,810 | 370,148 | 1,994 | 591,952 | | Equity securities | 42,525 | - | 374 | 42,899 | | Liabilities measured at fair value | - | 10,548 | 16,640 | 27,188 | | Derivative financial liabilities | - | 10,548 | 16,640 | 27,188 | Note 7: Treasury Shares The company repurchased 2.77 million shares for $23.8 million in H1 2023, cancelling 2.74 million shares Treasury Share Activity (H1 2023) | Activity | Number of shares | Value (USD '000) | | :--- | :--- | :--- | | Balance at Dec 31, 2022 | 1,668 | 14 | | Repurchases | 2,771,775 | 23,813 | | Cancellation | (2,741,477) | (23,541) | | Balance at June 30, 2023 | 31,966 | 286 | Note 8: Earnings Per Share Basic EPS was $1.60 and diluted EPS was $1.59 for H1 2023, calculated using the two-class method Earnings Per Share Calculation | Metric | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | | :--- | :--- | :--- | | Net Income (USD '000) | 74,363 | 44,211 | | Net income available to common shareholders (USD '000) | 69,590 | 41,909 | | Weighted average number of shares – basic | 43,513,654 | 45,616,180 | | Weighted average number of shares – diluted | 43,755,831 | 45,664,111 | | Basic earnings per share (USD) | 1.60 | 0.92 | | Diluted earnings per share (USD) | 1.59 | 0.92 | - The two-class method was applied to compute basic EPS because unvested earn-out shares are considered participating securities[48] Note 9: Subsequent Events On July 28, 2023, the company initiated a cash offer to purchase all outstanding warrants at $0.95 per warrant - On July 28, 2023, the Company initiated an offer to purchase all outstanding public and private warrants for $0.95 in cash per warrant[52]