NASDAQ:IGIC International General Insurance Q1 2024 Earnings Report $25.55 +1.46 (+6.06%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$25.54 -0.02 (-0.06%) As of 06:05 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast International General Insurance EPS ResultsActual EPS$0.89Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AInternational General Insurance Revenue ResultsActual Revenue$130.10 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AInternational General Insurance Announcement DetailsQuarterQ1 2024Date5/7/2024TimeN/AConference Call DateWednesday, May 8, 2024Conference Call Time9:00AM ETUpcoming EarningsInternational General Insurance's Q1 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled on Wednesday, May 7, 2025 at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by International General Insurance Q1 2024 Earnings Call TranscriptProvided by QuartrMay 8, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Note this event is being recorded. I would now like to turn the conference over to Robin Sitters, Head of Investor Relations. Please go ahead. Speaker 100:00:12Thank you, Debbie, and good morning. Welcome to today's conference call. Today, we'll be discussing our Q1 2024 results. You will have seen our press release that we issued after the market closed yesterday. You can also get a copy of the press release on the Investors section of our website at www.iginshore.com. Speaker 100:00:33We've also posted a supplementary investor presentation, which can be found on our website as well, also in the Investors section on the Presentations page. On today's call are Executive Chairman of IGI, Wasif Jabsheh President and CEO, Walid Jabsheh and Chief Financial Officer, Pervaz Rizvi. As always, Wazif will begin the call with some high level comments before handing over to Walid to talk you through the key drivers of the results for the quarter and finish up with our views on the market conditions and our outlook for the remainder of 2024. At that point, we'll open the call up for Q and A. Beforehand, I'll just go through the customary Safe Harbor language. Speaker 100:01:15Our speakers' remarks may contain forward looking statements. Some of the forward looking statements can be identified by the use of forward looking words. We caution you that such forward looking statements should not be regarded as a representation by us as the future plans, estimates or expectations contemplated by us will in fact be achieved. Forward looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward looking statements due to a variety of factors, including the risk factors set out in the company's Annual Report on Forms Form 20F for the year ended December 31, 2023, and the company's reports on Form 6 ks and other filings with the SEC as well as our results press release issued yesterday evening. Speaker 100:01:58We undertake no obligation to update or revise publicly any forward looking statements, which speak only as of the date they are made. During this call, we will use certain non GAAP financial measures. For a reconciliation of the non GAAP measures to the nearest GAAP measure, please see our earnings press release, which has been filed with the SEC and is also available on our website. With that, Josh Hsieh. Speaker 200:02:29Thank you, Robin, and good day to everybody. Thank you for joining us on today's call. I'll just make a few short remarks before handing the call over to Eileen. We had an excellent start to 2024 as you can see from our results that we issued last night. Once again, we posted a combined ratio in the 70s, a return on average equity of 27.6% and a core operating return on average equity of 29 above 2. Speaker 200:03:14We grew our book value per share by 1 half percent on top of the more than 36% in 2023. Rohit can go into more detail on what's behind these numbers. As you know, our primary focus is managing the cycles that are inherent in our business. 1 of the hallmarks for IGI is our deep technical underwriting talent, people who understand the dynamics of their business, who have strong relationships and who can anticipate shifting tides in their markets and respond accordingly. Our business does not doesn't move in near some different lines and markets move at different times and at different stages. Speaker 200:04:13What's most important at any stage of our cycle is that we maintain our discipline, execute consistently and move our capital to those areas with the strongest rate momentum and the highest margins. And always work within our risk appetite and tolerances. This is exactly what we are doing today. Throughout our 22 year history, we have consistently demonstrated our ability to Speaker 300:04:52do this, Speaker 200:04:53while producing high quality results that is adjusted to us by our shareholders. Our markets remain broadly positive overall, more so in insurance and some of our core specialty lines and it is more challenging in others. It is natural to see more competition in those lines where conditions are strong and this capital is increasing. I'm confident 24 will represent more opportunities for IGI to see that will both expand and diversify our footprint and generate profitable results as we continue to build on our very solid foundation. We will continue to actively and efficiently manage our capital, deploying it first for underwriting opportunities and then returning excess capital to shareholders as we have demonstrated in recent quarters and years. Speaker 200:06:09I will now hand over to Alit, who will discuss the Q1 results in more detail and talk about market conditions and our outlook for the remainder of 2024. I remain on the call for any questions at the end. Speaker 300:06:35Good morning. Thank you all for joining us today. Thank you, Oscar. As Arthur said, I mean, we've had a very strong start to the year with really solid results. We started the year with relatively healthy, but some more challenging conditions. Speaker 300:06:50And it's fair to say that we are responding quickly in the size of these changes we're seeing in our markets. Today this year we've had a relatively active loss environment from a natural catastrophe perspective and this has carried into the Q2 with the earthquake in Taiwan and the flooding in Oman and the United Arab Emirates along with some storms in the U. S. Of course. We also witnessed a major market loss potentially in the 1,000,000,000 of dollars and potentially the largest ever marine loss when the container ship can be guided with 12 floors Francis Scott Key Bridge which resulted in its collapse. Speaker 300:07:35And as we've said in prior quarters we're seeing an increasing degree of polarization heightened tensions in many parts of the world and we expect this to continue for the foreseeable future. We're working on some specific initiatives undertaking to continue grow and strengthen our company specifically our new Lloyd's presence that we just announced this morning, further growing and diversifying our reinsurance portfolio, adding talent across our offices and teams and expanding geographic spread of our products. I'll elaborate on these a little bit more later in the call. So now I'll just give a quick recap of the results for the Q1 and I'll talk more about our outlook for the market and for us for the remainder of 2024. As I said, our markets are still relatively healthy. Speaker 300:08:33Although as we noted in prior quarters, we're seeing more competitive pressures, mixed rating environment, fixed condition, market conditions. From an overall rating perspective, we're not seeing and consequently not benefiting from the larger rate increases I've seen in recent years. But we are still within positive territory overall and across many of our business lines. Given the very healthy conditions at the start of last year, there's definitely a great degree of competition among existing players who are wanting to show more growth and are expanding their risk appetites. But on the positive side, we were not really seeing this coming from new capital entering the market. Speaker 300:09:21It's more from existing players getting hungry. For IGI, gross and premium growth in the Q1 was almost 4.5%. This is on top of the significant growth we saw in the same quarter of last year. Similar to the patterns of the past several quarters, growth coming from both the short tail and reinsurance segments, but mostly from the Reinsurance portfolio which grew 21% compared to the Q1 of 2023. In the Shore and Tail segment, we're seeing good opportunities for growth as well, particularly in line such as engineering, contingency, property and marine cargo. Speaker 300:10:06Gross premiums in the Q1 in this segment were up 2.8%, but were impacted by some timing issues and I'm happy to expand on that in the Q and A session. Long tail segments saw some contraction in gross premium in the Q1 as rates and conditions are reaching levels where we are choosing non renew some business at this time. Given that our long tail book is different to many of our competitors, you all know we don't write in the U. S. Business. Speaker 300:10:36The pace of rating decline and adequacy of business for us is a little more measured than the broad mark commentary we've been hearing. The decline in gross premiums was also somewhat distorted as a result of our decision to put our IDI portfolio, the inherent defects portfolio into runoff as returns were just not meeting our requirements. You'll recall the significant growth we've experienced in segments over the years since about 2018. That was to take advantage of the strong conditions and a healthy rate environment. And now that long tail lines have had several consecutive quarters of rating decline, albeit from very quite high levels. Speaker 300:11:20We have been and continue to take a more cautious view here. And that's all part of our food cycle management. Lastly, and I've said this many times before, 1 quarter is not a trend. We expect growth for the full year of 2024 to be in the high single digits to low double digits. There are still opportunities to grow, but maybe just perhaps less of them compared to previous years. Speaker 300:11:48I'll talk more later on about our growth initiatives. Specifically on the Q1 losses I mentioned a moment ago, our share of those losses, they were relatively small and very manageable. On the Baltimore bridge, we've taken a very conservative view on this based on our total disclosure and fully reserved for this event in Q1, which we expect to be more than that. Our combined ratio of 74.1% was well below our long term average and an excellent result. This included 8 points of higher favorable development than the favorable development recorded in the Q1 of last year. Speaker 300:12:32Net investment income similar to past several quarters showed significant improvements in Q1 when compared to the same period the year before. This resulted in a 0.7 point improvement in the annualized investment yield to 4.2% for the 1st month. Specifically in our fixed income portfolio, we maintain total average average rating at 8, average duration at 3.1 years. Net income for the Q1 was just under $38,000,000 compared to just under $34,000,000 in the Q1 a year ago. This increase was driven by higher level of underwriting income on a larger portfolio as well as a $3,000,000 increase in net investment income. Speaker 300:13:23All those being offset by $5,600,000 of higher net ForEx sources and a higher general administrative expenses, mostly raising to adding new talent across our teams. Core operating income which we believe is a true measure of fundamental performance was $40,000,000 in the Q1 of this year, representing an increase of more than 35% versus 29 $1,000,000 in the Q1 of last year. On the G and A expense ratio, which was 3.3 points higher in the Q1 when compared same period a year ago. We do expect it to be running a little higher in the near term as IGI continues to grow in numbers. We're now more than almost 425 people across the group. Speaker 300:14:17In addition to supplementing talent across our offices, we've also been taking the important step of replacing what were previously outsourced roles with dedicated in house teams providing greater control and efficiency on our side. Turning to the balance sheet, total assets increased a little over 2% to $1,880,000,000 and total equity increased a little over 3% to $557,000,000 at the end of Q1. The second tranche of earn out shares totaling 600,000 with a vesting threshold of 12 point $7.5 vested during the Q1. In total today, 2,000,000 earn out shares are vested and a little over 1,000,000 remain with vesting thresholds of $14 $16.25 On the capital management front, we continue to repurchase our common shares under our existing 5,000,000 share repurchase authorization and we now have around 1,000,000 shares remaining under the existing. As always, as Watsen mentioned a moment ago, Our priority is underwriting first and where we have capital in excess of the opportunities to work in underwriting, we will return it to shareholders. Speaker 300:15:40You will recall we announced special dividend $0.50 per share alongside the regular quarterly dividend of $0.01 per share during the Q1, which meant our equity was impacted by a payout of just under $24,000,000 during Q1. Ultimately, we recorded the core operating ROE of just shy of 30% for the Q1 compared to 27.9% in the same period last year. And we grew our book value per share by 1.5 percent to $12.58 at March 31. So all in, a very solid quarter and start to the year with a few moving pieces. And but we continue to be optimistic about 2024. Speaker 300:16:32Just moving on to our markets for a bit, we're seeing a continuation of the trends that we saw during 2023. Opportunities though are still very much prevailed across much of our portfolio. But momentum is as I noted the moment ago, we expect to see a growth rate of around high single digits to low double digit percentages which I'll say a few more words about in a moment. Overall, I think we're in that critical transitional phase where cycle management levels of levers come into play. And this is where we are most effective. Speaker 300:17:15We are shifting or increasing our focus on those areas with better conditions, higher returns or returns that meet our profitability and risk return thresholds. And we're reducing or moving away from areas that no longer meet those thresholds. This is exactly the type of market where we can demonstrate our strengths. And as we've always said, we're very much technical underwriters here at IGI and the conditions we're seeing today are all about technical underwriting and smart growth centers. When we think about the short tail segment, we're most encouraged by opportunities in engineering, property, contingency, and marine cargo, but then other lines like aviation, upstream energy are definitely more challenging. Speaker 300:18:07Engineering and construction continues to be a bright spot for us in many of our markets, including the Middle East and Asia. And we're expanding teams and our underwriting expertise across many offices most recently in Malaysia, Kuala Lumpur. As you know we've entered the U. S. Construction market and we'll continue to build our presence there while always staying well within our risk appetite of course mindful of cat exposures. Speaker 300:18:36In our 3T Reinsurance business, our Reinsurance segment, we saw net rate improvements of more than 70% in the Q1 on the back of 25 plus percent increases last year. This is by far the most attractive area of our portfolio right now and there continues to be plenty of opportunities to drive new business And we of course are exploring ways to diversify this book and expand especially our specialty reinsurance footprint which historically have not made up a significant proportion of our portfolio. We expect this book of business to continue to grow in proportion to our overall book for the foreseeable future as conditions remain positive. In the long tail segment, where I reiterate rate we don't write in the U. S. Speaker 300:19:33Business, rates continue to follow the past several quarters trending downward, but mostly in an orderly. Overall, net rates remain broadly adequate, but again like other areas of our business there's much variation by line and where rates are not adequate we're walking away from business. And one thing I would notice, I would not expect to see much growth in this segment in 2024. Turning to our geographic markets, rates in the U. S. Speaker 300:20:07Continue to outpace all other markets in the lines of property. Again all the short tail lines including property, energy, PV, tariff and contingency. And this remains a big growth area for us. In the Q1 of the year we've written just over $34,000,000 in gross premium in the U. S. Speaker 300:20:28And that represents about 35% growth over the same period last year. We expect to benefit from our entry into the U. S. Construction market as I noted earlier, but we're going at it cautiously right in small to medium sized projects with manageable policy periods, managed cat exposures, quite varying from the way we write international construction. In Europe, where we wrote over $22,000,000 in Q1 versus about $19,000,000 in the same quarter last year, We do expect to see further opportunities to show growth throughout the year, especially given our new hospital platform where we've bolstered our underwriting team to expand our presence and relationships in Nordic markets specifically focusing at this time on professional and financial lines. Speaker 300:21:27I've covered other opportunities in other areas already like engineering in the Middle East and Asia. So I'm not going to go back over that. I am particularly excited about our announcement this morning that we've established the presence of Lloyd's, Lloyd's of London with a company box and we begin trading tomorrow. We're offering a number of lines of business, property, energy, contingency, political violence, ports and terminals and marine cargo as well as very long tail lines including marine liability, professional indemnity and financial institutions. Our underwriting teams will be there and operate on a rotational basis. Speaker 300:22:12While our offices on Lime Street here in London are just a sole throw away from the Lloyd's building, of the London market at Lloyd's offers us a significant opportunity for us to build on the profile of the presence and more importantly benefit from the additional distribution opportunities that Lloyds brings. Everything we're doing today and the significant enhancements we have made over the past several years are what continue to strengthen our solid foundation. We've grown and diversified our company, focused on our core principles of selective and disciplined underwriting with dynamic cycle management and cautious reserving with the ultimate goal of protecting the profitability profile of our company and the capital that is entrusted to us. We've generated excellent results that will serve us well in the quarters and years ahead and allow us to continue to deliver on our promises to all the same. So I'm going to pause here and we'll turn it over for questions. Speaker 300:23:29Operator, we're ready to take the first question, please. Operator00:23:32We will now begin the question and answer session. Our first question comes from Alan Chen with RBC Capital Markets. Please go ahead. Speaker 400:24:07Hey, thanks. I'm on for Scott this morning. My first question will be on reserve. It looks like the reserve release in the Q1 was very strong. Can you maybe provide more colors on the 19.4 points favorable development we see there? Speaker 400:24:22And does that change your view on the reserve release for the next few quarters? Thanks. Speaker 300:24:30Hi, Alex. Thanks for the question. I think the reserve releases, yes, they were healthy in Q1. I think that's a reflection of our cautious approach to reserving as we mentioned every quarter. But it's also a reflection of the year that we had last year. Speaker 300:24:49I mean, 2023 was very much one of the more benign years from a cat exposure perspective or cat loss perspective or severe cat loss perspective and also even from a large loss perspective for us. So that has resulted in the release of this level of reserves. Our approach continues to be cautious, will always be and in markets like this, we expect a continuation very difficult to tell the level going forward. But in an environment like this, releases are expected to continue. Speaker 400:25:39Okay, thanks. That's very helpful. And then my second question will be on the ShoreTel line. It appears there has been more competition in the space as you mentioned. And can you maybe expand more on the competitive landscape that you see there? Speaker 400:25:55And maybe if you can touch on the reinsurance segment as well? Thanks. Speaker 300:26:02Sorry, was that short tail? Speaker 400:26:05Yes. Can you briefly maybe expand on the short tail line and maybe talk about the competitive landscape that you see there? And then if you could also talk about reinsurance segment as well, that will be helpful. Speaker 300:26:22Yes, yes, absolutely. So I'll start with the short tail. We've always said and 2023 was a reflection of that as well. It's fairly mixed. It's mixed by line of business, by territory. Speaker 300:26:37Again, the U. S. Is definitely the best area for short tail business for us. But probably currently are on the political violence side, the onshore energy side. The rest are fairly modest. Speaker 300:26:58This segment saw net rate movements in Q1 of just under 3%, which is marginal in our opinion and relatively flat. But areas such as aviation are definitely under a lot of pressure and our book is actually shrinking in that line of business. If you look at if you turn to the reinsurance side of things, I mean, this is as we said in the call, this is by far the most exciting part of what we do. We practically doubled our book last year and that portfolio in the Q1 has grown by further 20%, 21%. I think you're not getting the same level of rate increases and rate movement for this year as you saw last year. Speaker 300:27:58However, the market looks to remain to be disciplined to a certain extent. Although as we mentioned, I mean after the year that the market and the industry did have last year especially the reinsurance players, there is you are seeing a lot more hunger this year than you did last year. And so people want a bigger piece of the people are wanting a bigger piece of the pie. So that's just something you have to deal with. But the opportunities are abundant, are plenty. Speaker 300:28:30Historically our book of business has been more focused on that non marine property including cash book. But we've now expanded that into areas such as political violence, aviation, cyber and we're looking to bring now to bring in and expand the team to further diversify and grow our specialty portfolio, which historically has not made a big proportion of the overall volume. So definitely the most exciting part of Speaker 400:29:13Got it. Thanks. If I can maybe ask one more. So, looks like the investment yield went up during the quarter and I noticed that your cash balance went down by like $30,000,000 Can you provide additional colors on where you deployed the cash and what opportunities that you might see there? Thanks. Speaker 300:29:45The cash balance is a reflection of where we place the money from an investment perspective. I mean our investment approach and appetite has not changed. We continue to focus on fixed deposits and a fixed income fixed deposit portfolio. So it's just a matter of making sure any cash line around this puts a good use. Thanks. Speaker 400:30:16Got it. Thanks for answering my questions. Operator00:30:24This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Speaker 300:30:37Thank you. Thank you all for joining us today and thank you for your continued support of IGI. If you have any additional questions, please contact Robin and she'll be happy to assist. We look forward to speaking with you on next quarter's call. Wish everybody a good day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallInternational General Insurance Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) International General Insurance Earnings HeadlinesInternational General Insurance (IGIC) Expected to Announce Earnings on TuesdayMay 5 at 3:39 AM | americanbankingnews.comInternational General Insurance's Greatest Catalyst Is Its Ability To Manage Its Combined RatioApril 12, 2025 | seekingalpha.comElon’s Terrifying Warning Forces Trump To Take ActionElon Musk has avoided two major financial crises before. He pulled Tesla and SpaceX back from the brink of collapse and built two of the most valuable companies in history. 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Sign up for Earnings360's daily newsletter to receive timely earnings updates on International General Insurance and other key companies, straight to your email. Email Address About International General InsuranceInternational General Insurance (NASDAQ:IGIC) engages in the provision of specialty insurance and reinsurance solutions worldwide. The company operates through three segments: Specialty Long-tail, Specialty Short-tail, and Reinsurance. It is involved in underwriting a portfolio of specialty risks, including energy, property, construction and engineering, ports and terminals, general aviation, political violence, professional lines, financial institutions, motor, marine liability, contingency, marine, treaty, and casualty insurance and reinsurance. 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There are 5 speakers on the call. Operator00:00:00Note this event is being recorded. I would now like to turn the conference over to Robin Sitters, Head of Investor Relations. Please go ahead. Speaker 100:00:12Thank you, Debbie, and good morning. Welcome to today's conference call. Today, we'll be discussing our Q1 2024 results. You will have seen our press release that we issued after the market closed yesterday. You can also get a copy of the press release on the Investors section of our website at www.iginshore.com. Speaker 100:00:33We've also posted a supplementary investor presentation, which can be found on our website as well, also in the Investors section on the Presentations page. On today's call are Executive Chairman of IGI, Wasif Jabsheh President and CEO, Walid Jabsheh and Chief Financial Officer, Pervaz Rizvi. As always, Wazif will begin the call with some high level comments before handing over to Walid to talk you through the key drivers of the results for the quarter and finish up with our views on the market conditions and our outlook for the remainder of 2024. At that point, we'll open the call up for Q and A. Beforehand, I'll just go through the customary Safe Harbor language. Speaker 100:01:15Our speakers' remarks may contain forward looking statements. Some of the forward looking statements can be identified by the use of forward looking words. We caution you that such forward looking statements should not be regarded as a representation by us as the future plans, estimates or expectations contemplated by us will in fact be achieved. Forward looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward looking statements due to a variety of factors, including the risk factors set out in the company's Annual Report on Forms Form 20F for the year ended December 31, 2023, and the company's reports on Form 6 ks and other filings with the SEC as well as our results press release issued yesterday evening. Speaker 100:01:58We undertake no obligation to update or revise publicly any forward looking statements, which speak only as of the date they are made. During this call, we will use certain non GAAP financial measures. For a reconciliation of the non GAAP measures to the nearest GAAP measure, please see our earnings press release, which has been filed with the SEC and is also available on our website. With that, Josh Hsieh. Speaker 200:02:29Thank you, Robin, and good day to everybody. Thank you for joining us on today's call. I'll just make a few short remarks before handing the call over to Eileen. We had an excellent start to 2024 as you can see from our results that we issued last night. Once again, we posted a combined ratio in the 70s, a return on average equity of 27.6% and a core operating return on average equity of 29 above 2. Speaker 200:03:14We grew our book value per share by 1 half percent on top of the more than 36% in 2023. Rohit can go into more detail on what's behind these numbers. As you know, our primary focus is managing the cycles that are inherent in our business. 1 of the hallmarks for IGI is our deep technical underwriting talent, people who understand the dynamics of their business, who have strong relationships and who can anticipate shifting tides in their markets and respond accordingly. Our business does not doesn't move in near some different lines and markets move at different times and at different stages. Speaker 200:04:13What's most important at any stage of our cycle is that we maintain our discipline, execute consistently and move our capital to those areas with the strongest rate momentum and the highest margins. And always work within our risk appetite and tolerances. This is exactly what we are doing today. Throughout our 22 year history, we have consistently demonstrated our ability to Speaker 300:04:52do this, Speaker 200:04:53while producing high quality results that is adjusted to us by our shareholders. Our markets remain broadly positive overall, more so in insurance and some of our core specialty lines and it is more challenging in others. It is natural to see more competition in those lines where conditions are strong and this capital is increasing. I'm confident 24 will represent more opportunities for IGI to see that will both expand and diversify our footprint and generate profitable results as we continue to build on our very solid foundation. We will continue to actively and efficiently manage our capital, deploying it first for underwriting opportunities and then returning excess capital to shareholders as we have demonstrated in recent quarters and years. Speaker 200:06:09I will now hand over to Alit, who will discuss the Q1 results in more detail and talk about market conditions and our outlook for the remainder of 2024. I remain on the call for any questions at the end. Speaker 300:06:35Good morning. Thank you all for joining us today. Thank you, Oscar. As Arthur said, I mean, we've had a very strong start to the year with really solid results. We started the year with relatively healthy, but some more challenging conditions. Speaker 300:06:50And it's fair to say that we are responding quickly in the size of these changes we're seeing in our markets. Today this year we've had a relatively active loss environment from a natural catastrophe perspective and this has carried into the Q2 with the earthquake in Taiwan and the flooding in Oman and the United Arab Emirates along with some storms in the U. S. Of course. We also witnessed a major market loss potentially in the 1,000,000,000 of dollars and potentially the largest ever marine loss when the container ship can be guided with 12 floors Francis Scott Key Bridge which resulted in its collapse. Speaker 300:07:35And as we've said in prior quarters we're seeing an increasing degree of polarization heightened tensions in many parts of the world and we expect this to continue for the foreseeable future. We're working on some specific initiatives undertaking to continue grow and strengthen our company specifically our new Lloyd's presence that we just announced this morning, further growing and diversifying our reinsurance portfolio, adding talent across our offices and teams and expanding geographic spread of our products. I'll elaborate on these a little bit more later in the call. So now I'll just give a quick recap of the results for the Q1 and I'll talk more about our outlook for the market and for us for the remainder of 2024. As I said, our markets are still relatively healthy. Speaker 300:08:33Although as we noted in prior quarters, we're seeing more competitive pressures, mixed rating environment, fixed condition, market conditions. From an overall rating perspective, we're not seeing and consequently not benefiting from the larger rate increases I've seen in recent years. But we are still within positive territory overall and across many of our business lines. Given the very healthy conditions at the start of last year, there's definitely a great degree of competition among existing players who are wanting to show more growth and are expanding their risk appetites. But on the positive side, we were not really seeing this coming from new capital entering the market. Speaker 300:09:21It's more from existing players getting hungry. For IGI, gross and premium growth in the Q1 was almost 4.5%. This is on top of the significant growth we saw in the same quarter of last year. Similar to the patterns of the past several quarters, growth coming from both the short tail and reinsurance segments, but mostly from the Reinsurance portfolio which grew 21% compared to the Q1 of 2023. In the Shore and Tail segment, we're seeing good opportunities for growth as well, particularly in line such as engineering, contingency, property and marine cargo. Speaker 300:10:06Gross premiums in the Q1 in this segment were up 2.8%, but were impacted by some timing issues and I'm happy to expand on that in the Q and A session. Long tail segments saw some contraction in gross premium in the Q1 as rates and conditions are reaching levels where we are choosing non renew some business at this time. Given that our long tail book is different to many of our competitors, you all know we don't write in the U. S. Business. Speaker 300:10:36The pace of rating decline and adequacy of business for us is a little more measured than the broad mark commentary we've been hearing. The decline in gross premiums was also somewhat distorted as a result of our decision to put our IDI portfolio, the inherent defects portfolio into runoff as returns were just not meeting our requirements. You'll recall the significant growth we've experienced in segments over the years since about 2018. That was to take advantage of the strong conditions and a healthy rate environment. And now that long tail lines have had several consecutive quarters of rating decline, albeit from very quite high levels. Speaker 300:11:20We have been and continue to take a more cautious view here. And that's all part of our food cycle management. Lastly, and I've said this many times before, 1 quarter is not a trend. We expect growth for the full year of 2024 to be in the high single digits to low double digits. There are still opportunities to grow, but maybe just perhaps less of them compared to previous years. Speaker 300:11:48I'll talk more later on about our growth initiatives. Specifically on the Q1 losses I mentioned a moment ago, our share of those losses, they were relatively small and very manageable. On the Baltimore bridge, we've taken a very conservative view on this based on our total disclosure and fully reserved for this event in Q1, which we expect to be more than that. Our combined ratio of 74.1% was well below our long term average and an excellent result. This included 8 points of higher favorable development than the favorable development recorded in the Q1 of last year. Speaker 300:12:32Net investment income similar to past several quarters showed significant improvements in Q1 when compared to the same period the year before. This resulted in a 0.7 point improvement in the annualized investment yield to 4.2% for the 1st month. Specifically in our fixed income portfolio, we maintain total average average rating at 8, average duration at 3.1 years. Net income for the Q1 was just under $38,000,000 compared to just under $34,000,000 in the Q1 a year ago. This increase was driven by higher level of underwriting income on a larger portfolio as well as a $3,000,000 increase in net investment income. Speaker 300:13:23All those being offset by $5,600,000 of higher net ForEx sources and a higher general administrative expenses, mostly raising to adding new talent across our teams. Core operating income which we believe is a true measure of fundamental performance was $40,000,000 in the Q1 of this year, representing an increase of more than 35% versus 29 $1,000,000 in the Q1 of last year. On the G and A expense ratio, which was 3.3 points higher in the Q1 when compared same period a year ago. We do expect it to be running a little higher in the near term as IGI continues to grow in numbers. We're now more than almost 425 people across the group. Speaker 300:14:17In addition to supplementing talent across our offices, we've also been taking the important step of replacing what were previously outsourced roles with dedicated in house teams providing greater control and efficiency on our side. Turning to the balance sheet, total assets increased a little over 2% to $1,880,000,000 and total equity increased a little over 3% to $557,000,000 at the end of Q1. The second tranche of earn out shares totaling 600,000 with a vesting threshold of 12 point $7.5 vested during the Q1. In total today, 2,000,000 earn out shares are vested and a little over 1,000,000 remain with vesting thresholds of $14 $16.25 On the capital management front, we continue to repurchase our common shares under our existing 5,000,000 share repurchase authorization and we now have around 1,000,000 shares remaining under the existing. As always, as Watsen mentioned a moment ago, Our priority is underwriting first and where we have capital in excess of the opportunities to work in underwriting, we will return it to shareholders. Speaker 300:15:40You will recall we announced special dividend $0.50 per share alongside the regular quarterly dividend of $0.01 per share during the Q1, which meant our equity was impacted by a payout of just under $24,000,000 during Q1. Ultimately, we recorded the core operating ROE of just shy of 30% for the Q1 compared to 27.9% in the same period last year. And we grew our book value per share by 1.5 percent to $12.58 at March 31. So all in, a very solid quarter and start to the year with a few moving pieces. And but we continue to be optimistic about 2024. Speaker 300:16:32Just moving on to our markets for a bit, we're seeing a continuation of the trends that we saw during 2023. Opportunities though are still very much prevailed across much of our portfolio. But momentum is as I noted the moment ago, we expect to see a growth rate of around high single digits to low double digit percentages which I'll say a few more words about in a moment. Overall, I think we're in that critical transitional phase where cycle management levels of levers come into play. And this is where we are most effective. Speaker 300:17:15We are shifting or increasing our focus on those areas with better conditions, higher returns or returns that meet our profitability and risk return thresholds. And we're reducing or moving away from areas that no longer meet those thresholds. This is exactly the type of market where we can demonstrate our strengths. And as we've always said, we're very much technical underwriters here at IGI and the conditions we're seeing today are all about technical underwriting and smart growth centers. When we think about the short tail segment, we're most encouraged by opportunities in engineering, property, contingency, and marine cargo, but then other lines like aviation, upstream energy are definitely more challenging. Speaker 300:18:07Engineering and construction continues to be a bright spot for us in many of our markets, including the Middle East and Asia. And we're expanding teams and our underwriting expertise across many offices most recently in Malaysia, Kuala Lumpur. As you know we've entered the U. S. Construction market and we'll continue to build our presence there while always staying well within our risk appetite of course mindful of cat exposures. Speaker 300:18:36In our 3T Reinsurance business, our Reinsurance segment, we saw net rate improvements of more than 70% in the Q1 on the back of 25 plus percent increases last year. This is by far the most attractive area of our portfolio right now and there continues to be plenty of opportunities to drive new business And we of course are exploring ways to diversify this book and expand especially our specialty reinsurance footprint which historically have not made up a significant proportion of our portfolio. We expect this book of business to continue to grow in proportion to our overall book for the foreseeable future as conditions remain positive. In the long tail segment, where I reiterate rate we don't write in the U. S. Speaker 300:19:33Business, rates continue to follow the past several quarters trending downward, but mostly in an orderly. Overall, net rates remain broadly adequate, but again like other areas of our business there's much variation by line and where rates are not adequate we're walking away from business. And one thing I would notice, I would not expect to see much growth in this segment in 2024. Turning to our geographic markets, rates in the U. S. Speaker 300:20:07Continue to outpace all other markets in the lines of property. Again all the short tail lines including property, energy, PV, tariff and contingency. And this remains a big growth area for us. In the Q1 of the year we've written just over $34,000,000 in gross premium in the U. S. Speaker 300:20:28And that represents about 35% growth over the same period last year. We expect to benefit from our entry into the U. S. Construction market as I noted earlier, but we're going at it cautiously right in small to medium sized projects with manageable policy periods, managed cat exposures, quite varying from the way we write international construction. In Europe, where we wrote over $22,000,000 in Q1 versus about $19,000,000 in the same quarter last year, We do expect to see further opportunities to show growth throughout the year, especially given our new hospital platform where we've bolstered our underwriting team to expand our presence and relationships in Nordic markets specifically focusing at this time on professional and financial lines. Speaker 300:21:27I've covered other opportunities in other areas already like engineering in the Middle East and Asia. So I'm not going to go back over that. I am particularly excited about our announcement this morning that we've established the presence of Lloyd's, Lloyd's of London with a company box and we begin trading tomorrow. We're offering a number of lines of business, property, energy, contingency, political violence, ports and terminals and marine cargo as well as very long tail lines including marine liability, professional indemnity and financial institutions. Our underwriting teams will be there and operate on a rotational basis. Speaker 300:22:12While our offices on Lime Street here in London are just a sole throw away from the Lloyd's building, of the London market at Lloyd's offers us a significant opportunity for us to build on the profile of the presence and more importantly benefit from the additional distribution opportunities that Lloyds brings. Everything we're doing today and the significant enhancements we have made over the past several years are what continue to strengthen our solid foundation. We've grown and diversified our company, focused on our core principles of selective and disciplined underwriting with dynamic cycle management and cautious reserving with the ultimate goal of protecting the profitability profile of our company and the capital that is entrusted to us. We've generated excellent results that will serve us well in the quarters and years ahead and allow us to continue to deliver on our promises to all the same. So I'm going to pause here and we'll turn it over for questions. Speaker 300:23:29Operator, we're ready to take the first question, please. Operator00:23:32We will now begin the question and answer session. Our first question comes from Alan Chen with RBC Capital Markets. Please go ahead. Speaker 400:24:07Hey, thanks. I'm on for Scott this morning. My first question will be on reserve. It looks like the reserve release in the Q1 was very strong. Can you maybe provide more colors on the 19.4 points favorable development we see there? Speaker 400:24:22And does that change your view on the reserve release for the next few quarters? Thanks. Speaker 300:24:30Hi, Alex. Thanks for the question. I think the reserve releases, yes, they were healthy in Q1. I think that's a reflection of our cautious approach to reserving as we mentioned every quarter. But it's also a reflection of the year that we had last year. Speaker 300:24:49I mean, 2023 was very much one of the more benign years from a cat exposure perspective or cat loss perspective or severe cat loss perspective and also even from a large loss perspective for us. So that has resulted in the release of this level of reserves. Our approach continues to be cautious, will always be and in markets like this, we expect a continuation very difficult to tell the level going forward. But in an environment like this, releases are expected to continue. Speaker 400:25:39Okay, thanks. That's very helpful. And then my second question will be on the ShoreTel line. It appears there has been more competition in the space as you mentioned. And can you maybe expand more on the competitive landscape that you see there? Speaker 400:25:55And maybe if you can touch on the reinsurance segment as well? Thanks. Speaker 300:26:02Sorry, was that short tail? Speaker 400:26:05Yes. Can you briefly maybe expand on the short tail line and maybe talk about the competitive landscape that you see there? And then if you could also talk about reinsurance segment as well, that will be helpful. Speaker 300:26:22Yes, yes, absolutely. So I'll start with the short tail. We've always said and 2023 was a reflection of that as well. It's fairly mixed. It's mixed by line of business, by territory. Speaker 300:26:37Again, the U. S. Is definitely the best area for short tail business for us. But probably currently are on the political violence side, the onshore energy side. The rest are fairly modest. Speaker 300:26:58This segment saw net rate movements in Q1 of just under 3%, which is marginal in our opinion and relatively flat. But areas such as aviation are definitely under a lot of pressure and our book is actually shrinking in that line of business. If you look at if you turn to the reinsurance side of things, I mean, this is as we said in the call, this is by far the most exciting part of what we do. We practically doubled our book last year and that portfolio in the Q1 has grown by further 20%, 21%. I think you're not getting the same level of rate increases and rate movement for this year as you saw last year. Speaker 300:27:58However, the market looks to remain to be disciplined to a certain extent. Although as we mentioned, I mean after the year that the market and the industry did have last year especially the reinsurance players, there is you are seeing a lot more hunger this year than you did last year. And so people want a bigger piece of the people are wanting a bigger piece of the pie. So that's just something you have to deal with. But the opportunities are abundant, are plenty. Speaker 300:28:30Historically our book of business has been more focused on that non marine property including cash book. But we've now expanded that into areas such as political violence, aviation, cyber and we're looking to bring now to bring in and expand the team to further diversify and grow our specialty portfolio, which historically has not made a big proportion of the overall volume. So definitely the most exciting part of Speaker 400:29:13Got it. Thanks. If I can maybe ask one more. So, looks like the investment yield went up during the quarter and I noticed that your cash balance went down by like $30,000,000 Can you provide additional colors on where you deployed the cash and what opportunities that you might see there? Thanks. Speaker 300:29:45The cash balance is a reflection of where we place the money from an investment perspective. I mean our investment approach and appetite has not changed. We continue to focus on fixed deposits and a fixed income fixed deposit portfolio. So it's just a matter of making sure any cash line around this puts a good use. Thanks. Speaker 400:30:16Got it. Thanks for answering my questions. Operator00:30:24This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Speaker 300:30:37Thank you. Thank you all for joining us today and thank you for your continued support of IGI. If you have any additional questions, please contact Robin and she'll be happy to assist. We look forward to speaking with you on next quarter's call. Wish everybody a good day.Read morePowered by