International General Insurance Holdings Ltd. (“IGI” or the
“Company”) (NASDAQ: IGIC) today reported financial results for the
third quarter and first nine months of 2023. Since 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. Prior period comparatives for the third quarter and
first nine 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 third quarter and first nine months of
2023 include:
(in millions of U.S. Dollars, except
percentages and per share information)
Quarter Ended September
30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Gross written premiums
$150.3
$120.1
$523.8
$427.2
Net premiums earned
$108.9
$96.4
$332.2
$279.7
Underwriting income
$49.7
$42.0
$139.5
$124.0
Net investment income (1)
$9.0
$5.6
$35.7
$6.2
Net income for the period
$10.9
$22.6
$85.2
$66.8
Combined ratio (2)
73.2%
74.0%
74.9%
73.6%
Earnings per share (diluted)
(3)
$0.24
$0.46
$1.82
$1.38
Return on average equity
(annualized) (4)
9.3%
23.9%
25.8%
23.3%
Core operating income (4)
$36.3
$28.1
$103.7
$80.4
Core operating earnings per share
(diluted) (4)
$0.79
$0.58
$2.22
$1.66
Core operating return on average equity
(annualized) (4)
31.0%
29.7%
31.4%
28.1%
(1)
See Note (1) in the “Notes to the
Condensed Consolidated Financial Statements (Unaudited)” below.
(2)
See “Supplementary Financial Information”
below.
(3)
See Note (2) in the “Notes to the
Condensed Consolidated Financial Statements (Unaudited)” below.
(4)
See the section titled “Non-GAAP Financial
Measures” below.
IGI CEO Mr. Waleed Jabsheh said, “IGI’s excellent third quarter
and nine month results - reflected in a combined ratio of 73.2% and
a core operating return on average equity of 31.0% - demonstrate
our continued discipline and ability to shift focus to those lines
with the strongest margins.”
“While market conditions remain healthy in many lines and
increasingly pressured in others, we achieved overall net rate
increases of more than 7% across our portfolio, recording healthy
premium growth of 25.1% during the third quarter and 22.6% for the
first nine months of 2023.”
“As we look ahead to 2024, we expect to build on the momentum
and profitable growth trajectory of the last several quarters,
enabling us to continue to deliver on our value proposition to all
our stakeholders.”
Results for the Periods Ended September 30, 2023 and
2022
Net income for the quarter ended September 30, 2023 decreased
51.8% to $10.9 million from $22.6 million for the quarter ended
September 30, 2022. The decrease in net income was primarily driven
by the negative movement of $17.2 million in the change in fair
value of derivative financial liabilities relating to warrants and
earnout shares (see table below), and to a lesser extent higher net
loss and loss adjustment expenses and general and administrative
expenses. This was partially offset by the increase of $12.5
million in net premiums earned and the positive movement of $3.4
million in net investment income. Return on average equity
(annualized) was 9.3% for the third quarter of 2023 compared to
23.9% for the third quarter of 2022.
Core operating income, a non-GAAP measure, defined below, was
$36.3 million for the quarter ended September 30, 2023, compared to
$28.1 million for the same period in 2022. The core operating
return on average equity (annualized) was 31.0% for the third
quarter of 2023 compared to 29.7% for the third quarter of
2022.
Net income for the nine months ended September 30, 2023
increased 27.5% to $85.2 million from $66.8 million for the nine
months ended September 30, 2022. The increase in net income was
primarily driven by an increase of $52.5 million in net premiums
earned, and positive movement of $29.5 million in net investment
income, partially offset by the negative movement of $25.7 million
in the change in fair value of derivative financial liabilities
mentioned above, increased net loss and loss adjustment expenses,
and general and administrative expenses. Return on average equity
(annualized) was 25.8% for the first nine months of 2023 compared
to 23.3% for the first nine months of 2022.
Core operating income was $103.7 million for the nine months
ended September 30, 2023, compared to $80.4 million for the same
period in 2022. The core operating return on average equity
(annualized) was 31.4% for the first nine months of 2023 compared
to 28.1% for the first nine months of 2022.
Underwriting Results
Underwriting income, a non-GAAP measure, increased 18.3% to
$49.7 million in the third quarter of 2023 compared to $42.0
million for the third quarter of 2022, with the increase largely
driven by higher net premiums earned as a result of the overall
growth of the portfolio. This was partially offset by a higher
level of net loss and loss adjustment expenses.
Gross written premiums were $150.3 million for the quarter ended
September 30, 2023, representing an increase of 25.1% compared to
gross written premiums of $120.1 million for the quarter ended
September 30, 2022. The increase was driven by growth in all
segments.
The loss ratio was 37.3% for the quarter ended September 30,
2023 compared to 38.2% for the quarter ended September 30,
2022.
The net policy acquisition expense ratio was 17.1% in the third
quarter of 2023 compared to 18.3% in the same quarter of 2022.
The combined ratio for the quarter ended September 30, 2023
improved by 0.8 points to 73.2% compared to 74.0% for the quarter
ended September 30, 2022.
Underwriting income increased 12.5% to $139.5 million for the
first nine months of 2023 compared to $124.0 million for the first
nine months of 2022, for the same reason noted above for the
quarter.
Gross written premiums were $523.8 million for the nine months
ended September 30, 2023, representing an increase of 22.6%
compared to gross written premiums of $427.2 million for the nine
months ended September 30, 2022. The increase was driven by growth
in all segments.
The loss ratio was 40.5% for the nine months ended September 30,
2023, compared to 37.1% for the nine months ended September 30,
2022 as a result of a higher level of net losses and loss expenses
incurred during the first nine months of 2023, compared to the
first nine months of 2022.
The net policy acquisition expense ratio was 17.5% in the first
nine months of 2023 compared to 18.6% for the same period of
2022.
As a result, the combined ratio for the nine months ended
September 30, 2023 was 74.9% compared to 73.6% for the nine months
ended September 30, 2022.
Segment Results
The Long-tail Segment, which represented approximately
38% of the Company’s gross written premiums for the quarter ended
September 30, 2023, recorded gross written premiums for the third
quarter of 2023 of $57.6 million, an increase of 7.9% compared to
$53.4 million for the third quarter of 2022. Net premiums earned
for the quarter ended September 30, 2023 were $38.0 million, a
decrease of 14.0% compared to $44.2 million in the same quarter in
2022, largely as a result of an increase of $7.3 million in ceded
premium. Underwriting income was $23.1 million, a decrease of 36.4%
compared to $36.3 million in the third quarter of 2022. The decline
was primarily due to a higher level of net loss and loss adjustment
expenses and a lower level of net premiums earned in the third
quarter of 2023.
Gross written premiums for the first nine months of 2023 were
$162.3 million, an increase of 2.7% compared to $158.0 million for
the first nine months of 2022. Net premiums earned for the nine
months ended September 30, 2023 were $120.2 million, a decrease of
4.5% compared to $125.9 million in the same period in 2022.
Underwriting income was $50.4 million, a decrease of 31.6% compared
to $73.7 million in the first nine months of 2022, for the same
reasons described above.
The Short-tail Segment, which represented approximately
52% of the Company’s gross written premiums for the quarter ended
September 30, 2023, recorded gross written premiums of $77.4
million, reflecting an increase of 28.4% compared to $60.3 million
in the third quarter of 2022. Net premiums earned were $60.9
million, an increase of 36.2% compared to $44.7 million in the same
quarter in 2022, partially driven by overall growth in this Segment
and an $8.7 million lower level of ceded premium. Underwriting
income was $20.8 million compared to $4.7 million for the same
quarter of 2022, with the increase driven by the higher level of
net premiums earned and a lower level of losses during the third
quarter of 2023, compared to the same period in 2022.
Gross written premiums for the first nine months of 2023 were
$295.5 million, an increase of 22.5% compared to $241.3 million in
the first nine months of 2022. Net premiums earned increased 31.8%
to $173.6 million from $131.7 million in the comparable period in
2022. Underwriting income was $79.8 million, an increase of 73.9%
compared to $45.9 million in the first nine months of 2022, for the
same reasons described above.
The Reinsurance Segment, which represented approximately
10% of the Company’s gross written premiums for the quarter ended
September 30, 2023, recorded gross written premiums of $15.3
million, compared to $6.4 million for the third quarter of 2022.
Net premiums earned for the quarter ended September 30, 2023 were
$10.0 million, compared to $7.5 million for the same quarter in
2022. Underwriting income was $5.8 million for the third quarter of
2023, compared to $1.0 million for the third quarter of 2022. The
improvement in underwriting income was primarily the result of a
33.3% increase in net premiums earned due to the significant
premium growth in this Segment and improved pricing in reinsurance
lines in the third quarter of 2023 compared to the third quarter of
2022.
Gross written premiums for the first nine months of 2023 were
$66.0 million, compared to $27.9 million for the first nine months
of 2022. Net premiums earned were $38.4 million, compared to $22.1
million for the same period in 2022. Underwriting income was $9.3
million, compared to $4.4 million for the first nine months of
2022. The increase in underwriting income was primarily the result
of a 73.8% increase in net premiums earned in the first nine months
of 2023 for the same reason as described above for the quarter,
partially offset by a $9.4 million increase in net loss and loss
adjustment expenses compared to the same period in 2022,
Net Foreign Exchange Loss
The loss on foreign exchange in the third quarter of 2023 was
$6.5 million, compared to a loss of $6.9 million in the third
quarter of 2022, both of which largely represent currency
revaluation movements.
The loss on foreign exchange for the first nine months of 2023
was $3.4 million, compared to a loss of $13.8 million in the first
nine months of 2022.
Change in Fair Value of Derivative Financial
Liabilities
The change in fair value of derivative financial liabilities
consists of the following:
(in millions of U.S. Dollars)
Quarter Ended September
30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Change in fair value of warrants*
($6.2)
($0.5)
($6.7)
$3.1
Change in fair value of earnout
shares**
($11.0)
$0.4
($13.8)
$2.1
($17.2)
($0.1)
($20.5)
$5.2
* The negative movement in the third quarter and nine months
ended September 30, 2023 compared to the same periods in 2022 is
attributable to the increase in the fair value of warrants which
primarily related to the settlement of warrants in cash pursuant to
the Company’s offer to purchase all of its outstanding warrants at
a purchase price of $0.95 per warrant in cash.
** The negative movement in the third quarter and nine months
ended September 30, 2023 compared to the same periods in 2022 was
the result of the increase in the fair value of the earnout shares
which is driven by the increase in the quoted market price of IGI
common shares, as the market price approached the first level in
the vesting schedule of earnout shares.
Investment Results
Net investment income was $9.0 million for the third quarter of
2023, compared to $5.6 million for the third quarter of 2022.
Investment income was $10.4 million and $5.6 million for the
quarters ended September 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 third quarter of
2023, compared to 2.5% in the corresponding period in 2022. The
increase in net investment income was primarily attributable to the
growth in interest income, driven by the rise in interest rates and
growth in the investment portfolio compared to the same period of
2022.
Net investment income was $35.7 million for the first nine
months of 2023, compared to $6.2 million for the first nine months
of 2022. Investment income was $28.8 million and $14.1 million for
the nine months ended September 30, 2023 and 2022, respectively,
which represented an annualized investment yield of 3.8% on average
total investments and cash and cash equivalents in the first nine
months of 2023, compared to a 2.2% annualized investment yield in
the corresponding period in 2022. The increase in net investment
income was primarily attributable to the same factors as described
above for the quarter.
Total Shareholders’ Equity
Total shareholders’ equity at September 30, 2023 was $470.1
million, compared to $411.0 million at December 31, 2022. The
movement in total shareholders’ equity during the quarter and nine
months ended September 30, 2023 is illustrated below:
(in millions of U.S. Dollars)
Quarter Ended
September
30, 2023
Nine Months Ended
September
30, 2023
Total Shareholders’ equity at beginning
of period
$466.8
$411.0
Net income for the period
$10.9
$85.2
Unrealized losses arising during the
period for available-for-sale investments
($5.4)
($0.7)
Purchase of treasury shares
($2.7)
($26.5)
Issuance of common shares under
share-based compensation plan
$0.9
$2.4
Cash dividends declared during the
period
($0.4)
($1.3)
Total shareholders’ equity at September
30, 2023
$470.1
$470.1
Book value per share was $11.04 at September 30, 2023, compared
to $9.07 at December 31, 2022.
In the third quarter of 2023, the Company repurchased
approximately 247,483 common shares at an average price per share
of $10.82. In the first nine months of 2023, the Company
repurchased 3,019,258 common shares at an average price per share
of $8.77. The Company has approximately 1.5 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 September
30,
Nine Months Ended
September 30,
(in millions of U.S. Dollars except per
share data)
2023
2022
2023
2022
Gross written premiums
$150.3
$120.1
$523.8
$427.2
Ceded written premiums
($60.7)
($62.1)
($142.2)
($147.2)
Net written premiums
$89.6
$58.0
$381.6
$280.0
Net change in unearned premiums
$19.3
$38.4
($49.4)
($0.3)
Net premiums earned
$108.9
$96.4
$332.2
$279.7
Investment Income(1)
$10.4
$5.6
$28.8
$14.1
Net realized gain (loss) on
investments(1)
$4.7
($0.6)
$4.7
($0.6)
Net unrealized (loss) gain on
investments(1)
($5.9)
($0.1)
$2.1
($7.3)
Change in allowance for credit losses on
investments(1)
($0.2)
$0.7
$0.1
-
Change in fair value of derivative
financial liabilities
($17.2)
($0.1)
($20.5)
$5.2
Other revenues
$0.6
$0.7
$1.7
$1.9
Total revenues
$101.3
$102.6
$349.1
$293.0
Expenses
Net loss and loss adjustment expenses
($40.6)
($36.8)
($134.4)
($103.7)
Net policy acquisition expenses
($18.6)
($17.6)
($58.3)
($52.0)
General & administrative expenses
($20.5)
($16.9)
($56.3)
($50.1)
Change in allowance for credit losses on
financial assets
$0.5
($0.1)
($0.4)
($2.3)
Other expenses
($3.3)
($0.9)
($4.9)
($2.8)
Net Foreign exchange loss
($6.5)
($6.9)
($3.4)
($13.8)
Total expenses
($89.0)
($79.2)
($257.7)
($224.7)
Net income before tax
$12.3
$23.4
$91.4
$68.3
Income tax expense
($1.4)
($0.8)
($6.2)
($1.5)
Net income for the period
$10.9
$22.6
$85.2
$66.8
Diluted earnings per share attributable
to equity holders (2)
$0.24
$0.46
$1.82
$1.38
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
September 30, 2023 (Unaudited)
As at
December 31, 2022 (Unaudited)
ASSETS
Investments
Fixed maturity securities
available-for-sale, at fair value
$693.2
$489.1
Fixed maturity securities held to
maturity
$2.0
$2.0
Equity securities, at fair value
$28.6
$31.4
Other investments
$10.2
$12.2
Short-term investments
$123.2
$265.7
Term deposits
$76.1
$31.3
Equity-method investments measured at fair
value
$3.6
$4.9
Cash and cash equivalents
$114.8
$122.2
Accrued investment income
$12.8
$6.3
Premiums receivables
$253.0
$216.0
Reinsurance recoverables
$208.6
$188.8
Ceded unearned premiums
$93.1
$93.2
Deferred policy acquisition costs, net of
ceding commissions
$68.8
$59.5
Deferred tax assets
$5.0
$5.8
Other assets
$54.4
$52.0
TOTAL ASSETS
$1,747.4
$1,580.4
LIABILITIES
Reserve for unpaid loss and loss
adjustment expenses
$691.9
$636.2
Unearned premiums
$439.7
$390.2
Other liabilities
$30.0
$28.8
Insurance and reinsurance payables
$87.1
$90.4
Derivative financial liabilities
$28.6
$23.8
TOTAL LIABILITIES
$1,277.3
$1,169.4
SHAREHOLDERS’ EQUITY
Common shares at par value
$0.4
$0.5
Additional paid-in capital
$124.0
$147.9
Treasury shares
($0.1)
-
Accumulated other comprehensive income,
net of taxes
Foreign currency translation reserve
($0.4)
($0.4)
Fair value reserve
($44.5)
($43.8)
Retained earnings
$390.7
$306.8
TOTAL SHAREHOLDERS’ EQUITY
$470.1
$411.0
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$1,747.4
$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 September
30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Loss ratio (a)
37.3%
38.2%
40.5%
37.1%
Net policy acquisition expense ratio
(b)
17.1%
18.3%
17.5%
18.6%
General and administrative expense
ratio (c)
18.8%
17.5%
16.9%
17.9%
Expense ratio (d)
35.9%
35.8%
34.4%
36.5%
Combined ratio (e)
73.2%
74.0%
74.9%
73.6%
(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 September
30,
Nine Months Ended September
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
$40.6
37.3%
$36.8
38.2%
$134.4
40.5%
$103.7
37.1%
Minus: Current accident year CAT
losses
$4.8
4.4%
$6.7
7.0%
$28.8
8.7%
$12.3
4.4%
Minus: Effect of prior years’
development
($13.8)
(12.7%)
($21.7)
(22.5%)
($41.3)
(12.4%)
($44.7)
(16.0%)
Current accident year (before CAT
losses)
$49.6
45.6%
$51.8
53.7%
$146.9
44.2%
$136.1
48.7%
(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
September 30,
2023
As at
December 31, 2022
Investments
$936.9
$836.6
Cash and cash equivalents
$114.8
$122.2
Total investments and cash and cash
equivalents
$1,051.7
$958.8
Common shares outstanding (in
millions)*
46.5
49.0
Minus: Unvested shares (in millions)**
3.9
3.7
Number of vested common outstanding
shares (in millions) (a)
42.6
45.3
Total shareholders’ equity (b)
$470.1
$411.0
Book value per share (b)/(a)
$11.04
$9.07
* Common shares issued and outstanding as at September 30, 2023
and December 31, 2022 are as follows:
No. of shares as at
September 30, 2023
Vested common shares as of December 31,
2022
45,306,928
Vested restricted share awards
298,859
Treasury shares balance as of December 31,
2022
1,668
Cancelled treasury shares
(3,009,947)
Treasury shares balance as of September
30, 2023
(10,979)
Total vested common shares as of
September 30, 2023
42,586,529
Unvested earnout shares as of September
30, 2023
3,012,500
Unvested restricted share awards as of
September 30, 2023
877,130
Total unvested shares as of September
30, 2023
3,889,630
Total common shares outstanding
46,476,159
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 per the
respective Restricted Share Award Agreements. As at September 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 September 30,
2023
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$57.6
$77.4
$15.3
$150.3
Ceded written premiums
($16.4)
($44.3)
-
($60.7)
Net written premiums
$41.2
$33.1
$15.3
$89.6
Net change in unearned premiums
($3.2)
$27.8
($5.3)
$19.3
Net premiums earned
$38.0
$60.9
$10.0
$108.9
Net loss and loss adjustment expenses
($7.7)
($30.0)
($2.9)
($40.6)
Net policy acquisition expenses
($7.2)
($10.1)
($1.3)
($18.6)
Underwriting income*
$23.1
$20.8
$5.8
$49.7
For the quarter ended September 30,
2022
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$53.4
$60.3
$6.4
$120.1
Ceded written premiums
($9.1)
($53.0)
-
($62.1)
Net written premiums
$44.3
$7.3
$6.4
$58.0
Net change in unearned premiums
($0.1)
$37.4
$1.1
$38.4
Net premiums earned
$44.2
$44.7
$7.5
$96.4
Net loss and loss adjustment expenses
$0.2
($31.9)
($5.1)
($36.8)
Net policy acquisition expenses
($8.1)
($8.1)
($1.4)
($17.6)
Underwriting Income*
$36.3
$4.7
$1.0
$42.0
* Underwriting income is a non-GAAP financial measure.
International General Insurance Holdings Ltd. Supplementary
Financial Information - Segment Results (Unaudited)
For the nine months ended September 30,
2023
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$162.3
$295.5
$66.0
$523.8
Ceded written premiums
($45.9)
($96.3)
-
($142.2)
Net written premiums
$116.4
$199.2
$66.0
$381.6
Net change in unearned premiums
$3.8
($25.6)
($27.6)
($49.4)
Net premiums earned
$120.2
$173.6
$38.4
$332.2
Net loss and loss adjustment expenses
($45.1)
($66.4)
($22.9)
($134.4)
Net policy acquisition expenses
($24.7)
($27.4)
($6.2)
($58.3)
Underwriting income*
$50.4
$79.8
$9.3
$139.5
For the nine months ended September 30,
2022
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$158.0
$241.3
$27.9
$427.2
Ceded written premiums
($38.4)
($108.8)
-
($147.2)
Net written premiums
$119.6
$132.5
$27.9
$280.0
Net change in unearned premiums
$6.3
($0.8)
($5.8)
($0.3)
Net premiums earned
$125.9
$131.7
$22.1
$279.7
Net loss and loss adjustment expenses
($27.2)
($63.0)
($13.5)
($103.7)
Net policy acquisition expenses
($25.0)
($22.8)
($4.2)
($52.0)
Underwriting Income*
$73.7
$45.9
$4.4
$124.0
* 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 September
30,
Nine Months Ended
September 30,
(in millions of U.S. Dollars, except
percentages)
2023
2022
2023
2022
Investment income (a)
$10.4
$5.6
$28.8
$14.1
Plus
Net realized gain (loss) on
investments
$4.7
($0.6)
$4.7
($0.6)
Net unrealized (loss) gain on
investments
($5.9)
($0.1)
$2.1
($7.3)
Change in allowance for credit losses on
investments
($0.2)
$0.7
$0.1
-
Net investment income
$9.0
$5.6
$35.7
$6.2
Average total investments and cash and
cash equivalents (b)
$1,062.2
$893.4
$1,013.4
$867.3
Investment Yield (a) / (b)
annualized
3.9%
2.5%
3.8%
2.2%
(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 September
30,
Nine Months Ended
September 30,
(in millions of U.S. Dollars, except share
and per share information)
2023
2022
2023
2022
Net income for the period
$10.9
$22.6
$85.2
$66.8
Minus: Net income attributable to the
earnout shares
$0.7
$1.4
$5.5
$3.5
Minus: Dividends attributable to
restricted share awards
-
-
-
$0.1
Net income available to common
shareholders (a)
$10.2
$21.2
$79.7
$63.2
Weighted average number of shares –
diluted (in millions of shares) (b)*
43.0
45.7
43.7
45.7
Diluted earnings per share attributable
to equity holders (a/b)
$0.24
$0.46
$1.82
$1.38
* 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 September
30,
Nine Months Ended
September 30,
(In millions of U.S. Dollars, except
percentages)
2023
2022
2023
2022
Net premiums earned (a)
$108.9
$96.4
$332.2
$279.7
Net loss and loss adjustment expenses
(b)
($40.6)
($36.8)
($134.4)
($103.7)
Net policy acquisition expenses (c)
($18.6)
($17.6)
($58.3)
($52.0)
General and administrative expenses
(d)
($20.5)
($16.9)
($56.3)
($50.1)
Prior years favorable development (e)
($13.8)
($21.7)
($41.3)
($44.7)
CAT losses (f)*
$4.8
$6.7
$28.8
$12.3
Combined ratio ((b+c+d)/a)**
73.2%
74.0%
74.9%
73.6%
Minus: Prior years favorable development
(e/a)
(12.7%)
(22.5%)
(12.4%)
(16.0%)
Accident year combined ratio
85.9%
96.5%
87.3%
89.6%
Minus: CAT losses on an accident year
basis (f/a)
4.4%
7.0%
8.7%
4.4%
Accident year combined ratio prior to
CAT losses
81.5%
89.5%
78.6%
85.2%
*The CAT losses for the third quarter ended September 30, 2023
are primarily attributable to $1.1 million of combined losses
recorded for the earthquake in Turkey (in the Reinsurance Segment),
adverse weather conditions in Oman (in the Short-tail Segment), and
a general CAT reserve of $1.8 million.
The CAT losses for the nine months ended September 30, 2023 are
primarily attributable to $13.9 million of combined losses recorded
for the earthquake in Turkey (in the Reinsurance Segment) and
flooding in New Zealand from Cyclone Gabrielle (in the Short-tail
Segment), adverse weather conditions in Oman (in the Short-tail
Segment), and a general CAT reserve of $11.4 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 September
30,
Nine Months Ended
September 30,
(in millions of U.S. Dollars, except for
percentages and per share data)
2023
2022
2023
2022
Net income for the period
$10.9
$22.6
$85.2
$66.8
Reconciling items between net income for
the period and core operating income:
Net realized (gain) loss on investments
(i)
($4.7)
$0.6
($4.7)
$0.6
Net unrealized loss (gain) on investments
(tax adjusted) (i)
$5.8
($0.1)
($2.1)
$7.0
Change in allowance for credit losses on
investments (tax adjusted)(i)
$0.1
($0.7)
($0.2)
-
Change in fair value of derivative
financial liabilities
$17.2
$0.1
$20.5
($5.2)
Expenses related to conversion of warrants
in cash(ii)
$2.0
-
$2.0
-
Net foreign exchange loss (tax adjusted)
(i)
$5.0
$5.6
$3.0
$11.2
Core operating income
$36.3
$28.1
$103.7
$80.4
Average shareholders’ equity (iii)
$468.5
$378.6
$440.5
$381.5
Core operating return on average equity
(annualized) (iv) and (vi)
31.0%
29.7%
31.4%
28.1%
Diluted core operating earnings per share
(v)
$0.79
$0.58
$2.22
$1.66
Return on average equity (annualized)
(vi)
9.3%
23.9%
25.8%
23.3%
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.
This expense is included in ‘Other
expenses’ line item in the condensed consolidated statements of
income.
iii.
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.
iv.
Represents annualized core operating
income for the period divided by average shareholders’ equity.
v.
Represents core operating income
attributable to vested equity holders divided by weighted average
number of vested common shares –diluted as follows:
Quarter Ended September
30,
Nine Months Ended
September 30,
(in millions of U.S. Dollars, except per
share information)
2023
2022
2023
2022
Core operating income for the period
$36.3
$28.1
$103.7
$80.4
Minus: Core operating income attributable
to earnout shares
$2.3
$1.7
$6.7
$4.4
Minus: Dividends attributable to
restricted share awards
-
-
-
$0.1
Core operating income available to
common shareholders (a)
$34.0
$26.4
$97.0
$75.9
Weighted average number of shares –
diluted (in millions of shares) (b)
43.0
45.7
43.7
45.7
Diluted core operating earnings per
share (a/b)
$0.79
$0.58
$2.22
$1.66
vi.
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 Third 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 effects of the
war between Israel and Hamas; (8) the inability to maintain the
listing of the Company’s common shares or warrants on Nasdaq; (9)
the failure to realize the anticipated benefits of the acquisition
of EIO; 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/20231114964141/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 Email:
aaida.abujaber@iginsure.com
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