International General Insurance(US:IGIC)2024-05-08 16:18Financial Data and Key Metrics - The company posted a combined ratio in the 70s, with a return on average equity of 27.6% and a core operating return on average equity of 29.2% [11] - Book value per share grew by 1.5% in Q1 2024, following a 26% growth in 2023 [11] - Net income for Q1 2024 was just under $38 million, up from $34 million in Q1 2023, driven by higher underwriting income and a $3 million increase in net investment income [31] - Core operating income increased by more than 35% to $40 million in Q1 2024 compared to $29 million in Q1 2023 [32] - Total assets increased by 2% to $1.88 billion, and total equity grew by 3% to $567 million at the end of Q1 2024 [33] Business Line Performance - Gross written premium growth in Q1 2024 was 4.5%, with significant growth in the reinsurance segment, which grew by 21% compared to Q1 2022 [22] - The short-tail segment saw a 2.8% increase in gross premiums, driven by opportunities in engineering, contingency, property, and marine cargo [23] - The long-tail segment experienced a contraction in gross premiums due to rate and condition challenges, with the company choosing not to renew some business [24] - The treaty reinsurance business saw net price improvements of more than 70% in Q1 2024, following a 25% increase in 2023 [48] Market Performance - The US market remains a key growth area, with rates outpacing other markets in property, energy, and contingency lines [43] - In Europe, the company wrote over $22 million in Q1 2024, up from $19 million in Q1 2023, with growth opportunities in Nordic markets [44] - The company has established a presence at Lloyd's of London, offering lines such as property, energy, contingency, and marine cargo [50] Strategic Direction and Industry Competition - The company is focusing on managing cycles, maintaining underwriting discipline, and shifting capital to areas with strong rate momentum and high margins [13][14] - The company is expanding its geographic footprint, adding talent, and diversifying its reinsurance portfolio [19] - The company is cautious about competition in the short-tail segment, particularly in aviation and upstream energy, while reinsurance remains the most attractive area [58][59] Management Commentary on Market Conditions and Outlook - The company expects growth for 2024 to be in the high single-digits to low double-digits, with opportunities in engineering, property, and marine cargo [27][37] - The company is optimistic about 2024, despite competitive pressures and mixed market conditions [20][37] - The company is focusing on technical underwriting and cycle management to navigate the current market environment [39] Other Important Information - The company has repurchased shares under its existing authorization, with around 1 million shares remaining [34] - A special dividend of $0.50 per share was announced alongside the regular quarterly dividend of $0.01 per share in Q1 2024 [35] - The company has a core operating ROE of just under 30% for Q1 2024, compared to 27.9% in Q1 2023 [36] Q&A Session Summary Question: Reserve Releases in Q1 2024 - The strong reserve release in Q1 2024 reflects the company's cautious approach to reserving and the benign loss environment in 2023 [53] Question: Competitive Landscape in Short-Tail and Reinsurance Segments - The short-tail segment is mixed, with the US being the strongest market, while aviation is under pressure [58] - The reinsurance segment remains the most attractive, with significant growth opportunities, although competition is increasing [59][60] Question: Investment Yield and Cash Deployment - The company deployed cash into fixed income investments, maintaining an average rating of A and an average duration of 3.1 years [64]