International General Insurance(IGIC) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income of $34.1 million for Q2 2025 and $61.4 million for the first half of the year, resulting in an annualized return on average equity of 20.8% for Q2 and 18.6% for the first half [6][31] - Book value per share increased by 3.4% to $15.36 in the first half of the year, with a total of $77 million returned to shareholders through dividends and share repurchases [7][31] - Gross premiums for Q2 2025 were just under $190 million, reflecting a decrease of 8.7%, while for the first six months, gross premiums were up almost 2% to around $395 million [15][16] Business Line Data and Key Metrics Changes - In the short tail segment, gross premiums decreased by 8.5% for Q2 and 4.2% for the first half, with underwriting income up almost 21% in Q2 due to lower losses compared to the previous year [21][22] - The reinsurance segment saw flat gross premiums compared to Q2 last year, but a growth of about 33% for the first half, driven by strong renewals and new business [22][23] - The long tail segment faced challenges, with gross premiums down almost 12% in Q2 and 5% in the first half, resulting in an underwriting loss of $3 million for Q2 [26][27] Market Data and Key Metrics Changes - The company noted competitive pressures in various areas of its portfolio, particularly in the long tail segment, which is most affected by foreign currency movements [10][11] - The underwriting portfolio is diversified geographically, with about half transacted in non-U.S. Dollar currencies, impacting the revaluation of loss reserves [12][14] - The overall market conditions remain generally healthy, but certain areas are experiencing increased competition, particularly in property and energy lines [32][38] Company Strategy and Development Direction - The company focuses on cycle management, moving capital to areas with strong rate momentum and high margins while reducing exposure in less profitable areas [7][10] - There is a commitment to not sacrifice bottom-line profitability for top-line growth, emphasizing sustainable value generation for the long term [36][43] - The company is expanding its capabilities in specific markets while maintaining a cautious approach to underwriting in competitive segments [37][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating headwinds and highlighted the importance of a diversified strategy to manage cyclicality and volatility [42][43] - The outlook for the remainder of 2025 includes continued contraction in certain areas of the portfolio where profitability does not meet targets [32][34] - Management remains optimistic about finding profitable opportunities across various lines despite competitive pressures [32][39] Other Important Information - The company repurchased over 1.34 million shares at an average price of $23.28 during Q2, with approximately 800,000 shares remaining on the repurchase authorization [31] - Total assets increased by over 4% to about $2.1 billion, with total investments and cash at $1.3 billion [30] Q&A Session Summary Question: Net to gross retention on a written premium basis was 64% in the quarter, down from 73% year over year. Can you speak to that? - Management indicated that the decrease was primarily due to opportunistic buying of facultative reinsurance in a softer market, aiming to generate higher fee income [46][47] Question: Regarding the professional indemnity portfolio that will be non-renewed, what was the session level a couple of years ago versus now? - Management noted that the quota share has hovered between 60% to 85% over the years, with the intent of non-renewal aimed at improving overall profitability [48][49]