International General Insurance(US:IGIC)2024-04-08 20:05Financial Performance - Net loss and loss adjustment expenses decreased by 8.9% from $173.0 million in 2021 to $157.6 million in 2022, primarily due to favorable development on loss reserves and currency devaluation impacts [654]. - The loss ratio improved by 9.5 percentage points from 51.4% in 2021 to 41.9% in 2022, driven by favorable development on loss reserves from prior accident years [654]. - Core operating income for 2023 was $133.8 million, up from $93.9 million in 2022, reflecting strong underlying profitability [702]. - Return on average equity increased to 24.8% in 2023 from 22.5% in 2022, indicating improved efficiency in generating returns for shareholders [702]. Premiums and Revenue - Gross written premiums in the specialty long-tail segment decreased by 2.7% from $233.1 million in 2022 to $226.9 million in 2023, attributed to negative rate movement and cautious market conditions [661]. - Net premiums earned in the specialty long-tail segment decreased by 5.7% from $167.4 million in 2022 to $157.8 million in 2023 [668]. - Gross written premiums in the specialty short-tail segment increased by 26.2% from $317.4 million in 2022 to $400.7 million in 2023, driven by a 9.0% increase in average renewal premium rates [674]. - Net premiums earned in the specialty short-tail segment increased by 32.2% from $178.7 million in 2022 to $236.2 million in 2023 [678]. - Gross written premiums in the reinsurance segment increased by 94.0% from $31.5 million in 2022 to $61.1 million in 2023, supported by a 25.4% increase in average renewal premium rates [686]. - Net premiums earned rose by 75.6% from $30.3 million in 2022 to $53.2 million in 2023 [690]. Expenses - Net policy acquisition expenses increased by 17.8% from $59.6 million in 2021 to $70.2 million in 2022, with the net policy acquisition expense ratio rising from 17.7% to 18.7% [657]. - General and administrative expenses rose by 15.5% from $58.2 million in 2021 to $67.2 million in 2022, mainly due to increased employee-related costs and technology investments [658]. - Net policy acquisition expenses increased by 39.3% from $5.6 million in 2022 to $7.8 million in 2023, with the expense ratio decreasing to 14.7% [695]. Losses and Reserves - Net loss and loss adjustment expenses in the specialty long-tail segment increased by 37.0% from $50.5 million in 2022 to $69.2 million in 2023, due to higher current accident year losses [669]. - The short-tail segment loss ratio decreased by 11.0 percentage points to 39.4% in 2023 compared to 50.4% in 2022, primarily due to higher net premiums earned [682]. - Net loss and loss adjustment expenses increased by 56.7% from $17.1 million in 2022 to $26.8 million in 2023, primarily due to a $14.0 million increase in current year accident year losses [692]. - The loss ratio improved to 50.4% in 2023 from 56.4% in 2022, driven by higher net premiums earned [694]. - The total loss and loss adjustment expenses incurred, net of reinsurance, for the current accident year 2023 amounted to $228.4 million, compared to $199.5 million in 2022, representing a 14.4% increase [794]. - The net reserve for unpaid loss and loss adjustment expenses increased to $499.9 million from $447.4 million in 2022, reflecting a growth of 11.2% [794]. - The reserve for unpaid loss and loss adjustment expenses at the end of the period was $712.1 million, up from $636.2 million in 2022, indicating a rise of 11.5% [794]. Cash Flows - Net cash flows from operating activities increased by $41.7 million to $196.6 million in 2023, primarily due to business growth [716]. - Net cash flows used in investing activities decreased significantly from $246.6 million in 2022 to $90.4 million in 2023, reflecting a positive movement in term deposits and short-term investments [718]. - Net cash flows used in financing activities increased from a net cash outflow of $12.5 million in 2022 to a net cash outflow of $49.1 million in 2023, primarily due to share repurchases totaling $31.1 million and warrant redemptions of $16.3 million [720]. Capital and Solvency - The company targets a solvency ratio of more than 120% to ensure capital strength and support a stable dividend policy [714]. - IGI Bermuda's statutory capital and surplus was $548.7 million in 2023, exceeding the Target Capital Level (TCL) of $312.0 million by 76% [731]. - The Minimum Margin of Solvency (MSM) required for IGI Bermuda was $65.0 million in 2023, compared to $57.8 million in 2022 and $58.3 million in 2021, indicating an increase of 21% from the previous year [728]. - The Enhanced Capital Requirement (ECR) for IGI Bermuda was $260.0 million in 2023, up from $230.8 million in 2022, representing an increase of 12.6% [729]. Investment Performance - The fair value of investments as of December 31, 2023, was $1,132.7 million, an increase from $958.8 million in 2022, reflecting a growth of 18.2% [751]. - Investment income for 2023 was $40.5 million, significantly higher than $20.9 million in 2022, marking an increase of 93.3% [751]. - The investment yield improved to 3.9% in 2023, compared to 2.4% in 2022 and 1.8% in 2021, indicating a positive trend in investment performance [751]. Risk Management - The primary market risk affecting the company includes interest rate risk associated with investments in fixed-maturity securities [1062]. - The company does not have significant exposure to commodity risk, focusing instead on credit, interest rate, and foreign currency risks [1060]. - Management reviews its provisions for claims incurred on a quarterly basis, indicating a proactive approach to reserve management [816].