International General Insurance Holdings Ltd. (“IGI” or the
“Company”) (NASDAQ: IGIC) today reported financial results for the
second quarter and first six months of 2023. Beginning on January
1, 2023, IGI’s results have been reported in accordance with
Generally Accepted Accounting Principles in the United States of
America ("U.S. GAAP"). As a result of the voluntary change to U.S.
GAAP, the Company no longer reports financial information in
accordance with IFRS. The prior period comparatives for the second
quarter and first six months of 2022 have been adjusted from those
previously reported to conform with the current basis of accounting
under U.S. GAAP.
Highlights for the second quarter and first half of 2023
include:
(in millions of U.S. Dollars, except
percentages and per share information)
Quarter Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Gross written premiums
$199.6
$180.7
$373.5
$307.1
Net premiums earned
$118.4
$96.0
$223.4
$183.4
Underwriting income
$50.2
$40.3
$90.0
$82.0
Net investment income (1)
$14.4
($1.4)
$26.7
$0.7
Net income for the period
$40.5
$22.0
$74.4
$44.2
Combined ratio (2)
73.5%
74.9%
75.7%
73.5%
Earnings per share (diluted)
(3)
$0.88
$0.45
$1.59
$0.92
Return on average equity
(annualized) (4)
36.1%
23.5%
33.9%
23.4%
Core operating income (4)
$38.1
$29.0
$67.5
$52.3
Core operating earnings per share
(diluted) (4)
$0.83
$0.60
$1.44
$1.08
Core operating return on average equity
(annualized) (4)
34.0%
31.0%
30.8%
27.7%
- See Note (1) in the “Notes to the Condensed Consolidated
Financial Statements (Unaudited)” below.
- See “Supplementary Financial Information” below.
- See Note (2) in the “Notes to the Condensed Consolidated
Financial Statements (Unaudited)” below.
- See the section titled “Non-GAAP Financial Measures”
below.
IGI CEO Mr. Waleed Jabsheh said, “IGI produced another set of
exceptional results across all key measures in the second quarter
of 2023 as we continued to benefit from sustained hard market
conditions in many of our reinsurance and short-tail lines, and a
more favorable investment environment. This culminated in net
income of $40.5 million, a 73.5% combined ratio, a 36.1% return on
average equity and 34.0% core operating return on average equity in
the second quarter. Most importantly, we grew book value per share
by 9.3% in the three months ended June 30, and 20.3% for the first
six months of 2023.”
“The trends that we saw during the first quarter of 2023
continued throughout the second quarter resulting in gross premium
growth of 10.5% in the second quarter and 21.6% for the first half
of 2023. We are seeing plenty of opportunities to continue to show
profitable growth in reinsurance and many short-tail markets where
we have deep expertise, while being cautious in other short-tail
and long-tail lines where there is more competitive pressure, and
remaining focused on disciplined and selective underwriting.”
“All indications are that the positive trends in many short-tail
and reinsurance lines that we have experienced over the last
several quarters will remain for at least the near-term and we look
forward to building on this momentum in the quarters ahead, and
continuing to generate sustainable long-term value for our
shareholders.”
Results for the Periods ended June 30, 2023 and 2022
Net income for the quarter ended June 30, 2023 increased 84.1%
to $40.5 million from $22.0 million for the quarter ended June 30,
2022. The increase in net income was primarily driven by an
increase of $22.4 million in net premiums earned, and positive
movement of $15.8 million in net investment income, partially
offset by increased net loss and loss adjustment expenses, net
policy acquisition expenses and general and administrative
expenses. Return on average equity (annualized) was 36.1% for the
second quarter of 2023 compared to 23.5% for the second quarter of
2022.
Core operating income, a non-GAAP measure, defined below, was
$38.1 million for the quarter ended June 30, 2023, compared to
$29.0 million for the comparable period in 2022. The core operating
return on average equity (annualized) was 34.0% for the second
quarter of 2023 compared to 31.0% for the second quarter of
2022.
Net income for the six months ended June 30, 2023 increased
68.3% to $74.4 million from $44.2 million for the six months ended
June 30, 2022. The increase in net income was primarily driven by
an increase of $40.0 million in net premiums earned, and positive
movement of $26.0 million in net investment income, partially
offset by increased net loss and loss adjustment expenses, net
policy acquisition expenses and general and administrative
expenses. Return on average equity (annualized) was 33.9% for the
first six months of 2023 compared to 23.4% for the first six months
of 2022.
Core operating income was $67.5 million for the six months ended
June 30, 2023, compared to $52.3 million for the comparable period
in 2022. The core operating return on average equity (annualized)
was 30.8% for the first six months of 2023 compared to 27.7% for
the first six months of 2022.
Underwriting Results
Underwriting income, a non-GAAP measure, increased 24.6% to
$50.2 million in the second quarter of 2023 compared to $40.3
million for the second quarter of 2022, with the increase largely
driven by higher net premiums earned offsetting a higher level of
net loss and loss adjustment expenses and net policy acquisition
expenses.
Gross written premiums were $199.6 million for the quarter ended
June 30, 2023, representing an increase of 10.5% compared to gross
written premiums of $180.7 million for the quarter ended June 30,
2022. The increase was driven by growth in all segments.
The loss ratio improved by 1.5 points to 38.7% for the quarter
ended June 30, 2023, compared to 40.2% for the quarter ended June
30, 2022, largely the result of proportionately higher net premiums
earned in the second quarter of 2023 compared to the second quarter
of 2022.
The net policy acquisition expense ratio was 18.9% in the second
quarter of 2023, an increase of 1.1 points when compared to 17.8%
in the same quarter of 2022, as a result of proportionately higher
net policy acquisition expenses in the second quarter of 2023
compared to the second quarter of 2022.
The combined ratio for the quarter ended June 30, 2023 improved
by 1.4 points to 73.5% compared to 74.9% for the quarter ended June
30, 2022.
Underwriting income increased 9.8% to $90.0 million for the
first six months of 2023 compared to $82.0 million for the first
six months of 2022, largely the result of proportionately higher
net premiums earned offsetting a higher level of net loss and loss
adjustment expenses and net policy acquisition expenses.
Gross written premiums were $373.5 million for the six months
ended June 30, 2023, representing an increase of 21.6% compared to
gross written premiums of $307.1 million for the six months ended
June 30, 2022. The increase was driven by growth in all
segments.
The loss ratio was 41.9% for the six months ended June 30, 2023,
compared to 36.5% for the six months ended June 30, 2022, largely
driven by an increased level of losses incurred during the first
six months of 2023, partially offset by proportionately higher net
premiums earned in the first six months of 2023, when compared to
the comparable period in 2022.
The net policy acquisition expense ratio was 17.8% in the first
six months of 2023, an improvement of 1.0 point when compared to
18.8% for the same period of 2022, as a result of higher net
premiums earned in the first six months of 2023 compared to the
first six months of 2022.
The combined ratio for the six months ended June 30, 2023 was
75.7% compared to 73.5% for the six months ended June 30, 2022. The
increase was primarily the result of a higher loss ratio during the
first six months of 2023, as described above.
Segment Results
The Long-tail Segment, which represented approximately
32% of the Company’s gross written premiums for the quarter ended
June 30, 2023, recorded gross written premiums for the second
quarter of 2023 of $62.7 million, an increase of 4.7% compared to
$59.9 million for the second quarter of 2022. Net premiums earned
for the quarter ended June 30, 2023 were $41.9 million, a decrease
of 2.1% compared to $42.8 million in the comparable quarter in
2022. Underwriting income was $15.9 million, a decrease of 21.7%
compared to $20.3 million in the second quarter of 2022. The
decline was primarily due to a higher level of net loss and loss
adjustment expenses and net policy acquisition expenses and a
slightly lower level of net premiums earned in the second quarter
of 2023.
Gross written premiums for the first six months of 2023 were
$104.7 million, relatively flat when compared to $104.6 million for
the first six months of 2022. Net premiums earned for the six
months ended June 30, 2023 were $82.2 million, also relatively flat
compared to $81.7 million in the comparable period in 2022.
Underwriting income was $27.3 million, a decrease of 27.0% compared
to $37.4 million in the first six months of 2022, for the same
reasons described above.
The Short-tail Segment, which represented approximately
63% of the Company’s gross written premiums for the quarter ended
June 30, 2023, recorded gross written premiums of $126.5 million,
reflecting an increase of 11.7% compared to $113.3 million in the
second quarter of 2022. Net premiums earned were $61.8 million, an
increase of 35.5% compared to $45.6 million in the comparable
quarter in 2022. Underwriting income was $30.3 million, an increase
of 62.9% compared to $18.6 million for the comparable quarter of
2022, driven by higher net premiums earned and improved rates in a
number of lines.
Gross written premiums for the first six months of 2023 were
$218.1 million, an increase of 20.5% compared to $181.0 million in
the first six months of 2022. Net premiums earned increased 29.5%
to $112.8 million from $87.1 million in the comparable period in
2022. Underwriting income was $59.1 million, an increase of 43.1%
compared to $41.3 million for the comparable quarter of 2022, for
the same reasons described above.
The Reinsurance Segment, which represented approximately
5% of the Company’s gross written premiums for the quarter ended
June 30, 2023, recorded gross written premiums of $10.4 million, an
increase of 38.7% compared to $7.5 million for the second quarter
of 2022. Net premiums earned for the quarter ended June 30, 2023
were $14.7 million, compared to $7.6 million for the comparable
quarter in 2022. Underwriting income was $4.0 million for the
second quarter of 2023, compared to $1.4 million for the second
quarter of 2022. The improvement in underwriting income was the
result of a 93.4% increase in net premiums earned due to improved
pricing in reinsurance lines in the second quarter of 2023 compared
to the second quarter of 2022.
Gross written premiums for the first six months of 2023 were
$50.7 million, compared to $21.5 million for the first six months
of 2022. Net premiums earned were $28.4 million, compared to $14.6
million for the comparable period in 2022. Underwriting income was
$3.6 million, compared to $3.3 million for the first six months of
2022. The increase in underwriting income was the result of a
significant increase of 94.5% in net premiums earned in the first
six months of 2023 compared to the comparable period in 2022, for
the same reason described above.
Net Foreign Exchange Gain (Loss)
The gain on foreign exchange in the second quarter of 2023 was
$1.8 million, compared to a loss of $5.4 million in the second
quarter of 2022, both of which largely represent currency
revaluation movements. The second quarter of 2023 saw a greater
degree of positive currency movement in the Company’s major
transactional currencies (mainly Pound Sterling and Euro) against
the U.S. Dollar, when compared with negative currency movement in
the second quarter of 2022.
The gain on foreign exchange in the first six months of 2023 was
$3.1 million, compared to a loss of $6.8 million in the first six
months of 2022.
Investment Results
Net investment income was $14.4 million in the second quarter of
2023, compared to a loss of $1.4 million in the second quarter of
2022. Investment income was $9.7 million and $4.7 million for the
quarters ended June 30, 2023 and 2022, respectively, which
represented an annualized investment yield of 3.9% on average total
investments and cash and cash equivalents in the second quarter of
2023, compared to 2.2% in the corresponding period in 2022. The
increase in net investment income was primarily attributable to (a)
the growth in interest income, driven by the rise in interest rates
compared to the same period of 2022, and (b) the change in the net
unrealized gain (loss) on equity investments from a loss of $6.2
million in the second quarter of 2022 to a gain of $4.9 million in
the same period of 2023. Net investment income was $26.7 million in
the first six months of 2023, compared to $0.7 million in the first
six months of 2022. Investment income was $18.4 million and $8.6
million for the six months ended June 30, 2023 and 2022,
respectively, which represented an annualized investment yield of
3.7% on average total investments and cash and cash equivalents in
the first half of 2023, compared to a 2.0% annualized investment
yield in the corresponding period in 2022. The increase in net
investment income was primarily attributable to the reasons
described above.
Total Shareholders’ Equity
Total shareholders’ equity at June 30, 2023 was $466.8 million,
compared to $411.0 million at December 31, 2022. The movement in
total shareholders’ equity during the quarter and six months ended
June 30, 2023 is illustrated below:
(in millions of U.S. Dollars)
Quarter Ended June
30, 2023
Six Months Ended June
30, 2023
Total Shareholders’ equity at beginning
of period
$430.2
$411.0
Net income for the period
$40.5
$74.4
Unrealized gains (losses) arising during
the period for available-for-sale investments
($1.4)
$4.8
Purchase of treasury shares
($2.8)
($23.8)
Issuance of common shares under
share-based compensation plan
$0.8
$1.4
Cash dividends declared during the
period
($0.5)
($1.0)
Total shareholders’ equity at June 30,
2023
$466.8
$466.8
Book value per share was $10.91 at June 30, 2023, compared to
$9.07 at December 31, 2022.
In the second quarter of 2023, the Company repurchased
approximately 320,960 common shares at an average price per share
of $8.61. In the first six months of 2023, the Company repurchased
2,768,775 common shares at an average price per share of $8.50. The
Company has approximately 1.9 million common shares remaining under
its existing 5 million common share repurchase authorization.
International General Insurance Holdings Ltd. Condensed
Consolidated Statements of Income (Unaudited)
Quarter Ended
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars except per
share data)
2023
2022
2023
2022
Gross written
premiums................................................................
$199.6
$180.7
$373.5
$307.1
Ceded written
premiums..............................................................
($48.4)
($52.3)
($81.4)
($85.0)
Net written
premiums..................................................................
$151.2
$128.4
$292.1
$222.1
Net change in unearned
premiums.............................................
($32.8)
($32.4)
($68.7)
($38.7)
Net premiums
earned...................................................................
$118.4
$96.0
$223.4
$183.4
Investment
Income(1).....................................................................
$9.7
$4.7
$18.4
$8.6
Net realized loss on
investments(1)..............................................
($0.1)
-
-
-
Net unrealized gain (loss) on
investments(1)..............................
$4.5
($6.3)
$7.9
($7.2)
Change in allowance for credit losses on
investments(1).........
$0.3
$0.2
$0.4
($0.7)
Change in fair value of derivative
financial liabilities...............
($3.3)
$3.4
($3.4)
$5.3
Other revenues
..............................................................................
$0.4
$0.4
$1.1
$1.2
Total revenues
...............................................................................
$129.9
$98.4
$247.8
$190.6
Expenses
.........................................................................................
Net loss and loss adjustment expenses
.....................................
($45.8)
($38.6)
($93.7)
($67.0)
Net policy acquisition expenses
..................................................
($22.4)
($17.1)
($39.7)
($34.4)
General & Administrative
expenses............................................
($18.8)
($16.2)
($35.8)
($33.3)
Change in allowance for credit losses on
financial assets.......
($1.0)
$1.3
($0.9)
($2.2)
Other expenses
..............................................................................
($0.8)
($0.7)
($1.6)
($2.0)
Net Foreign exchange gain
(loss).................................................
$1.8
($5.4)
$3.1
($6.8)
Total
expenses................................................................................
($87.0)
($76.7)
($168.6)
($145.7)
Net income before
tax..................................................................
$42.9
$21.7
$79.2
$44.9
Income tax Expense
......................................................................
($2.4)
$0.3
($4.8)
($0.7)
Net income for the period
..........................................................
$40.5
$22.0
$74.4
$44.2
Diluted earnings per share attributable
to equity holders (2)
$0.88
$0.45
$1.59
$0.92
See “Notes to the Condensed Consolidated Financial Statements
(Unaudited)” below.
International General Insurance Holdings Ltd. Condensed
Consolidated Balance Sheets
(in millions of U.S. Dollars)
As at June 30, 2023
(Unaudited)
As at December 31,
2022
(Unaudited)
ASSETS
Investments
Fixed maturity securities
available-for-sale, at fair value
$590.0
$489.1
Fixed maturity securities held to
maturity
$2.0
$2.0
Equity securities, at fair value
$42.9
$31.4
Other investments
$11.4
$12.2
Short-term investments
$176.2
$265.7
Term Deposits
$35.9
$31.3
Equity-method investments measured at fair
value
$3.6
$4.9
Cash and cash equivalents
$170.4
$122.2
Accrued investment income
$11.4
$6.3
Premiums receivables
$281.8
$216.0
Reinsurance recoverables
$202.6
$188.8
Ceded unearned premiums
$79.8
$93.2
Deferred policy acquisition costs, net of
ceding commissions
$65.0
$59.5
Deferred tax assets
$4.9
$5.8
Other assets
$55.5
$52.0
TOTAL ASSETS
$1,733.4
$1,580.4
LIABILITIES
Reserve for unpaid loss and loss
adjustment expenses
$685.0
$636.2
Unearned premiums
$445.6
$390.2
Other liabilities
$23.4
$28.8
Insurance and reinsurance payables
$85.4
$90.4
Derivative financial liabilities
$27.2
$23.8
TOTAL LIABILITIES
$1,266.6
$1,169.4
SHAREHOLDERS’ EQUITY
Common shares at par value
$0.4
$0.5
Additional paid-in capital
$125.8
$147.9
Treasury shares
($0.3)
-
Accumulated other comprehensive income,
net of taxes
Foreign currency translation reserve
($0.4)
($0.4)
Fair value reserve
($39.0)
($43.8)
Retained earnings
$380.3
$306.8
TOTAL SHAREHOLDERS’ EQUITY
$466.8
$411.0
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$1,733.4
$1,580.4
See “Notes to the Condensed Consolidated Financial Statements
(Unaudited)” below.
Supplementary Financial Information – Combined Ratio
(Unaudited) International General Insurance Holdings Ltd.
Quarter Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Loss ratio
(a)...........................................................
.
38.7%
40.2%
41.9%
36.5%
Net policy acquisition expense ratio
(b).................................
18.9%
17.8%
17.8%
18.8%
General and administrative expense ratio
(c).......................
15.9%
16.9%
16.0%
18.2%
Expense ratio
(d)......................................................
34.8%
34.7%
33.8%
37.0%
Combined ratio
(e)...................................................
73.5%
74.9%
75.7%
73.5%
(a) Represents net loss and loss adjustment expenses as a
percentage of net premiums earned. The split of loss ratio between
current accident year, current year Catastrophe (“CAT”) losses,
which are included in ‘Net loss and loss adjustment expenses’, and
prior years’ loss development is as follows:
Quarter Ended June 30,
Six Months Ended June
30,
2023
2022
2023
2022
(in millions of U.S. Dollars, except
percentages)
Net loss and loss adjustment
expenses
% of net premiums earned
Net loss and loss adjustment
expenses
% of net premiums earned
Net loss and loss adjustment
expenses
% of net premiums earned
Net loss and loss adjustment
expenses
% of net premiums earned
Current year net incurred
claims
$45.8
38.7%
$38.6
40.2%
$93.7
41.9%
$67.0
36.5%
Minus: Current accident year CAT
losses
$9.6
8.1%
$0.4
0.4%
$24.0
10.7%
$5.6
3.1%
Minus: Effect of prior years’
development
($15.5)
(13.1%)
($5.5)
(5.7%)
($27.5)
(12.3%)
($23.1)
(12.6%)
Current accident year (before CAT
losses)
$51.7
43.7%
$43.7
45.5%
$97.2
43.5%
$84.5
46.0%
(b) Represents net policy acquisition expenses as a percentage
of net premiums earned.
(c) Represents general and administrative expenses as a
percentage of net premiums earned.
(d) Represents the sum of the net policy acquisition expenses
ratio and the general and administrative expense ratio.
(e) Represents the sum of the loss ratio and the expense
ratio.
International General Insurance Holdings Ltd. Supplementary
Financial Information – Book Value per Share (Unaudited)
(in millions of U.S. Dollars, except share
and per share data)
As at
June
30,
2023
As at
December 31, 2022
Investments........................................................................................................
$862.0
$836.6
Cash and cash
equivalents...............................................................................
$170.4
$122.2
Total investments and cash and cash
equivalents.....................................
$1,032.4
$958.8
Common shares outstanding (in millions)*
………………………………………….
46.6
49.0
Minus: Unvested shares (in millions)**
……………………………………………….
3.8
3.7
Number of vested common outstanding
shares (in millions) (a) ……….
42.8
45.3
Total shareholders’ equity (b)
……………………………………………………………
$466.8
$411.0
Book value per share (b)/(a)
…………………………………………………………….
$10.91
$9.07
* Common shares issued and outstanding as at June 30, 2023 and
December 31, 2022 are as follows:
No. of shares as at
June 30, 2023
Vested common shares as of December 31,
2022
45,308,596
Vested restricted share awards
283,859
Cancelled treasury shares
(2,741,477)
Treasury shares balance as of June 30,
2023
(31,966)
Total vested common shares as of June
30, 2023
42,819,012
Unvested earnout shares as of June 30,
2023
3,012,500
Unvested restricted share awards as of
June 30, 2023
762,322
Total unvested shares as of June 30,
2023
3,774,822
Total common shares outstanding
46,593,834
No. of shares as at
December 31, 2022
Vested common shares as of December 31,
2021
45,471,084
Vested restricted share awards
146,386
Cancelled treasury shares
(308,874)
Treasury shares balance as of December 31,
2022
(1,668)
Total vested common shares as of
December 31, 2022
45,306,928
Unvested earnout shares as of December 31,
2022
3,012,500
Unvested restricted share awards as of
December 31, 2022
667,181
Total unvested shares as of December
31, 2022
3,679,681
Total common shares outstanding
48,986,609
** Earnout Shares are subject to vesting at stock prices ranging
from $11.50 to $15.25, and are entitled to dividends and voting
rights, but are non-transferable by their holders until they vest.
If the Earnout Shares do not vest on or prior to March 17, 2028,
they will be cancelled by the Company. Restricted Share Awards were
issued in 2023, 2022, 2021 and 2020 pursuant to the Company’s 2020
Omnibus Incentive Plan and beneficiaries are entitled to dividends
and voting rights. However, the Restricted Share Awards are
non-transferable by their holders until they vest as per the
respective Restricted Share Award Agreements. As at June 30, 2023,
the vesting conditions attached to both Earnout Shares and unvested
Restricted Share Awards to employees have not been met, and as a
result these shares were not included in the weighted average
number of common shares for diluted earnings per share.
International General Insurance Holdings Ltd. Supplementary
Financial Information - Segment Results (Unaudited)
Segment information for IGI’s consolidated operations is as
follows:
For the quarter ended June 30,
2023
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$62.7
$126.5
$10.4
$199.6
Ceded written premiums
($22.2)
($26.2)
-
($48.4)
Net written premiums
$40.5
$100.3
$10.4
$151.2
Net change in unearned premiums
$1.4
($38.5)
$4.3
($32.8)
Net premiums earned
$41.9
$61.8
$14.7
$118.4
Net loss and loss adjustment expenses
($15.6)
($22.2)
($8.0)
($45.8)
Net policy acquisition expenses
($10.4)
($9.3)
($2.7)
($22.4)
Underwriting income*
$15.9
$30.3
$4.0
$50.2
For the quarter ended June 30,
2022
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$59.9
$113.3
$7.5
$180.7
Ceded written premiums
($14.8)
($37.5)
-
($52.3)
Net written premiums
$45.1
$75.8
$7.5
$128.4
Net change in unearned premiums
($2.3)
($30.2)
$0.1
($32.4)
Net premiums earned
$42.8
$45.6
$7.6
$96.0
Net loss and loss adjustment expenses
($13.7)
($20.2)
($4.7)
($38.6)
Net policy acquisition expenses
($8.8)
($6.8)
($1.5)
($17.1)
Underwriting Income*
$20.3
$18.6
$1.4
$40.3
* Underwriting income is a non-GAAP financial measure.
International General Insurance Holdings Ltd. Supplementary
Financial Information - Segment Results (Unaudited)
For the six months ended June
30, 2023
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$104.7
$218.1
$50.7
$373.5
Ceded written premiums
($29.5)
($51.9)
-
($81.4)
Net written premiums
$75.2
$166.2
$50.7
$292.1
Net change in unearned premiums
$7.0
($53.4)
($22.3)
($68.7)
Net premiums earned
$82.2
$112.8
$28.4
$223.4
Net loss and loss adjustment expenses
($37.4)
($36.4)
($19.9)
($93.7)
Net policy acquisition expenses
($17.5)
($17.3)
($4.9)
($39.7)
Underwriting income*
$27.3
$59.1
$3.6
$90.0
For the six months ended June 30,
2022
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$104.6
$181.0
$21.5
$307.1
Ceded written premiums
($29.2)
($55.8)
-
($85.0)
Net written premiums
$75.4
$125.2
$21.5
$222.1
Net change in unearned premiums
$6.3
($38.1)
($6.9)
($38.7)
Net premiums earned
$81.7
$87.1
$14.6
$183.4
Net loss and loss adjustment expenses
($27.4)
($31.1)
($8.5)
($67.0)
Net policy acquisition expenses
($16.9)
($14.7)
($2.8)
($34.4)
Underwriting Income*
$37.4
$41.3
$3.3
$82.0
* Underwriting income is a non-GAAP financial measure.
International General Insurance Holdings Ltd. Notes to the
Condensed Consolidated Financial Statements (Unaudited)
(1) The following are the calculated investment yields and the
reconciliation of investment income included in the Condensed
Consolidated Statements of Income (Unaudited) to net investment
income:
Quarter Ended
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except
percentages)
2023
2022
2023
2022
Investment
income(a)........................................................
$9.7
$4.7
$18.4
$8.6
Plus
Net realized loss on investments
.....................................
($0.1)
-
-
-
Net unrealized gain (loss) on
investments......................
$4.5
($6.3)
$7.9
($7.2)
Change in allowance for credit losses on
investments.
$0.3
$0.2
$0.4
($0.7)
Net investment
income........................................
$14.4
($1.4)
$26.7
$0.7
Average total investments and cash and
cash equivalents (b) ……………………….….…….….…………………
$998.8
$864.8
$989.4
$863.8
Investment Yield (a) / (b)
annualized……………………….
3.9%
2.2%
3.7%
2.0%
(2) Represents net income for the period available to common
shareholders divided by the weighted average number of vested
common shares – diluted calculated as follows:
Quarter Ended
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except share
and per share information)
2023
2022
2023
2022
Net income for the period
$40.5
$22.0
$74.4
$44.2
Minus: Net income attributable to the
earnout shares
$2.6
$1.3
$4.8
$2.2
Minus: Dividends attributable to
restricted share awards
-
-
-
$0.1
Net income available to common
shareholders (a)
$37.9
$20.7
$69.6
$41.9
Weighted average number of shares –
diluted (in millions of shares) (b)*
43.1
45.7
43.8
45.7
Diluted earnings per share attributable
to equity holders (a/b)
$0.88
$0.45
$1.59
$0.92
* The weighted average number of common shares refers to the
number of common shares calculated after adjusting for the changes
in issued and outstanding common shares over a reporting
period.
International General Insurance Holdings Ltd. Non-GAAP
Financial Measures
In presenting IGI’s results, management has included and
discussed certain non-GAAP financial measures. We believe that
these non-GAAP measures, which may be defined and calculated
differently by other companies, help to explain and enhance the
understanding of our results of operations. However, these measures
should not be viewed as a substitute for those determined in
accordance with U.S. GAAP.
Reconciliation of Combined Ratio to Accident Year Combined
Ratio Prior to CAT Losses
The table below illustrates the reconciliation of the combined
ratio on a financial and accident year basis. The combined ratio is
the sum of our loss ratio, our net policy acquisition expenses
ratio and our general and administrative expenses ratio. We show
the combined ratio because we believe investors can utilize the
combined ratio to illustrate our underwriting results.
Quarter Ended
June 30,
Six Months Ended
June 30,
(In millions of U.S. Dollars, except
percentages)
2023
2022
2023
2022
Net premiums earned (a)
$118.4
$96.0
$223.4
$183.4
Net loss and loss adjustment expenses
(b)
($45.8)
($38.6)
($93.7)
($67.0)
Net policy acquisition expenses (c)
($22.4)
($17.1)
($39.7)
($34.4)
General and administrative expenses
(d)
($18.8)
($16.2)
($35.8)
($33.3)
Prior years favorable development (e)
($15.5)
($5.5)
($27.5)
($23.1)
CAT losses (f)*
$9.6
$0.4
$24.0
$5.6
Combined ratio ((b+c+d)/a)**
73.5%
74.9%
75.7%
73.5%
Minus: Prior years unfavorable (favorable)
development (e/a)
(13.1%)
(5.7%)
(12.3%)
(12.6%)
Accident year combined ratio
86.6%
80.6%
88.0%
86.1%
Minus: CAT losses on an accident year
basis (f/a)
8.1%
0.4%
10.7%
3.1%
Accident year combined ratio prior to
CAT losses
78.5%
80.2%
77.3%
83.0%
*The CAT losses for the second quarter ended June 30, 2023 are
primarily attributable to $4.0 million of losses recorded for the
earthquake in Turkey (in the Reinsurance Segment) and flooding in
New Zealand from Cyclone Gabrielle (in the Short-tail Segment),
both of which occurred in February 2023, and a general CAT reserve
of $3.9 million.
The CAT losses for the six months ended June 30, 2023 are
primarily attributable to $12.4 million of losses recorded for the
earthquake in Turkey (in the Reinsurance Segment) and flooding in
New Zealand from Cyclone Gabrielle (in the Short-tail Segment),
both of which occurred in February 2023, and a general CAT reserve
of $9.6 million.
** See “Supplementary Financial Information - Combined Ratio
(Unaudited)”
Core Operating Income
Core operating income measures the performance of our operations
without the influence of after-tax gains or losses on investments
and foreign currencies and other items as noted in the table below.
We exclude these items from our calculation of core operating
income because the amounts of these gains and losses are heavily
influenced by, and fluctuate in part according to, economic and
other factors external to the Company and/or transactions or events
that are typically not a recurring part of, and are largely
independent of, our core underwriting activities and including them
distorts the analysis of trends in our operations. We believe the
reporting of core operating income enhances an understanding of our
results by highlighting the underlying profitability of our core
insurance operations. Our underwriting profitability is impacted by
earned premiums, the adequacy of pricing, and the frequency and
severity of losses. Over time, such profitability is also
influenced by underwriting discipline, which seeks to manage the
Company’s exposure to loss through favorable risk selection and
diversification, IGI’s management of claims, use of reinsurance and
the ability to manage the expense ratio, which the Company
accomplishes through the management of acquisition costs and other
underwriting expenses.
In addition to presenting net income for the period determined
in accordance with U.S. GAAP, we believe that showing “core
operating income” provides investors with a valuable measure of
profitability and enables investors, rating agencies and other
users of our financial information to analyze the Company’s results
in a similar manner to the way in which Management analyzes the
Company’s underlying business performance.
Core operating income is calculated by the addition or
subtraction of certain line items reported in the “Condensed
Consolidated Statements of Income” from net income for the period
and tax effecting each line item (resulting in each item being a
non-GAAP measure), as illustrated in the table below:
Quarter Ended
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except for
percentages and per share data)
2023
2022
2023
2022
Net income for the
period.....................................................
$40.5
$22.0
$74.4
$44.2
Reconciling items between net income for
the period and core operating income:
Net realized loss on investments (tax
adjusted) (i).............
$0.1
-
-
-
Net unrealized (gain) loss on investments
(tax adjusted)
(i)..................................................................................................
($4.5)
$6.1
($7.8)
$7.1
Change in allowance for credit losses on
investments (tax
adjusted)(i).........................................................................
($0.3)
($0.2)
($0.4)
$0.7
Change in fair value of derivative
financial liabilities........
$3.3
($3.4)
$3.4
($5.3)
Net foreign exchange (gain) loss (tax
adjusted) (i) .............
($1.0)
$4.5
($2.1)
$5.6
Core operating income
$38.1
$29.0
$67.5
$52.3
Average shareholders’ equity
(ii)............................................
$448.5
$373.7
$438.9
$378.1
Core operating return on average equity
(annualized) (iii) and
(v).............................................................................................
34.0%
31.0%
30.8%
27.7%
Diluted core operating earnings per share
(iv) ....................
$0.83
$0.60
$1.44
$1.08
Return on average equity (annualized)
(v)...........................
36.1%
23.5%
33.9%
23.4%
i. Represents a non-GAAP financial measure as components within
the line-item balances for net investment income and net foreign
exchange gains or losses reported in “Condensed Consolidated
Statements of Income (Unaudited)” have been adjusted above for the
related tax impact.
ii. Represents the total shareholders’ equity at the reporting
period end plus the total shareholders’ equity as of the beginning
of the reporting period, divided by 2.
iii. Represents annualized core operating income for the period
divided by average shareholders’ equity.
iv. Represents core operating income attributable to vested
equity holders divided by weighted average number of vested common
shares –diluted as follows:
Quarter Ended
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except per
share information)
2023
2022
2023
2022
Core operating income for the period
$38.1
$29.0
$67.5
$52.3
Minus: Core operating income attributable
to earnout shares
$2.5
$1.8
$4.3
$2.7
Minus: Dividends attributable to
restricted share awards
-
-
-
$0.1
Core operating income available to
common shareholders (a)
$35.6
$27.2
$63.2
$49.5
Weighted average number of shares –
diluted (in millions of shares) (b)
43.1
45.7
43.8
45.7
Diluted core operating earnings per
share (a/b)
$0.83
$0.60
$1.44
$1.08
v. Return on average equity (annualized) and core operating
return on average equity (annualized), both non-GAAP financial
measures, represent the returns generated on common shareholders’
equity during the period.
The Company has posted a Second Quarter 2023 investor
presentation deck on its website at www.iginsure.com in the Investors section
under the Presentations & Webcasts tab.
---
About IGI: IGI is an international specialty risks commercial
insurer and reinsurer underwriting a diverse portfolio of specialty
lines. Established in 2001, IGI has a worldwide portfolio of
energy, property, general aviation, construction & engineering,
ports & terminals, marine cargo, marine trades, contingency,
political violence, financial institutions, general third-party
liability (casualty), legal expenses, professional indemnity,
D&O, marine liability and reinsurance treaty business.
Registered in Bermuda, with operations in Bermuda, London, Malta,
Dubai, Amman, Oslo, Kuala Lumpur and Casablanca, IGI aims to
deliver outstanding levels of service to clients and brokers. IGI
is rated “A” (Excellent)/Stable by AM Best and “A-”(Strong)/Stable
by S&P Global Ratings. For more information about IGI, please
visit www.iginsure.com.
---
Forward-Looking Statements:
This press release contains “forward-looking statements” within
the meaning of the “safe harbour” provisions of the Private
Securities Litigation Reform Act of 1995. The expectations,
estimates, and projections of the business of IGI may differ from
its actual results and, consequently, you should not rely on
forward-looking statements as predictions of future events. Words
such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” “commitment,” and
similar expressions are intended to identify such forward-looking
statements. Forward-looking statements contained in this press
release may include, but are not limited to, our expectations
regarding the performance of our business, our financial results,
our liquidity and capital resources, the outcome of our strategic
initiatives, our expectations regarding pricing and other market
conditions, and our growth prospects. These forward-looking
statements involve significant risks and uncertainties that could
cause the actual results to differ materially from the expected
results. Most of these factors are outside of the control of IGI
and are difficult to predict. Factors that may cause such
differences include, but are not limited to: (1) changes in demand
for IGI’s services together with the possibility that IGI may be
adversely affected by other economic, business, and/or competitive
factors globally and in the regions in which it operates; (2)
competition, the ability of IGI to grow and manage growth
profitably and IGI’s ability to retain its key employees; (3)
changes in applicable laws or regulations; (4) the outcome of any
legal proceedings that may be instituted against the Company; (5)
the potential effects of the COVID-19 pandemic and emerging
variants; (6) the effects of the hostilities between Russia and
Ukraine and the sanctions imposed on Russia by the United States,
European Union, United Kingdom and others; (7) the inability to
maintain the listing of the Company’s common shares or warrants on
Nasdaq; (8) the failure to realize the anticipated benefits of the
acquisition of EIO; (9) risks that the Company’s pending tender
offer for its warrants may not close, may not close on the
timetable anticipated, or may not close without modifications,
because of market conditions, warrant holder response, regulatory
review, or otherwise; and (10) other risks and uncertainties
indicated in IGI’s filings with the SEC. The foregoing list of
factors is not exclusive. In addition, forward-looking statements
are inherently based on various estimates and assumptions that are
subject to the judgment of those preparing them and are also
subject to significant economic, competitive, industry and other
uncertainties and contingencies, all of which are difficult or
impossible to predict and many of which are beyond the control of
IGI. There can be no assurance that IGI’s financial condition or
results of operations will be consistent with those set forth in
such forward-looking statements. You should not place undue
reliance upon any forward-looking statements, which speak only as
of the date made. IGI does not undertake or accept any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statements to reflect any change in its
expectations or any change in events, conditions, or circumstances
on which any such statement is based except to the extent that is
required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230815517168/en/
IGI Contacts: Investors: Robin Sidders, Head of Investor
Relations T: + 44 (0) 2072 204937 M: + 44 (0) 7384 514785 Email:
robin.sidders@iginsure.com Media: Aaida Abu Jaber, AVP PR
& Marketing T: +96265662082 Ext. 407 M: +962770415540
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