NASDAQ:IGIC International General Insurance Q2 2024 Earnings Report $23.04 -0.05 (-0.22%) Closing price 04:00 PM EasternExtended Trading$23.12 +0.08 (+0.36%) As of 07:57 PM 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. ProfileEarnings HistoryForecast International General Insurance EPS ResultsActual EPS$0.74Consensus EPS $0.62Beat/MissBeat by +$0.12One Year Ago EPSN/AInternational General Insurance Revenue ResultsActual Revenue$135.60 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AInternational General Insurance Announcement DetailsQuarterQ2 2024Date8/6/2024TimeAfter Market ClosesConference Call DateWednesday, August 7, 2024Conference Call Time9:00AM ETUpcoming EarningsInternational General Insurance's Q2 2025 earnings is scheduled for Tuesday, August 5, 2025Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by International General Insurance Q2 2024 Earnings Call TranscriptProvided by QuartrAugust 7, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Good day, and welcome to the International General Insurance Holdings Limited Second Quarter Earnings Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. At this time, I'd like to turn the conference over to Robin Sitters, Head of Investor Relations. Please go ahead. Speaker 100:00:42Thank you, Alison, and good morning. Welcome to today's conference call. Today, we'll be discussing our second quarter and half year twenty twenty four financial results. You will have seen our results press release, which we issued after the market closed yesterday. But if you'd like a copy of the press release, you can find it on our website in the Investors section at www.iginsure.com. Speaker 100:01:06We've posted a supplementary financial a supplementary investor presentation as well, which can also be found on our website under the Presentations page. On today's call are Executive Chairman of IGI, Waseb Japshey President and CEO, Walid Japshey and Chief Financial Officer, Pravez Ritvi. As always, Waseb will begin the call with some high level comments and then hand the call over to Walid to talk through the key drivers of our results for the Q2 and first half and finish up with our views on market conditions and our outlook for the remainder of 2024. At that point, we'll open the call up for Q and A. I'll begin with some customary Safe Harbor language. Speaker 100:01:46Our speakers' remarks today may contain forward looking statements. Some of these 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 that the future plans, estimates or expectations contemplated by us will in fact be achieved. These 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 forth in the company's annual report on Form 20 F for the year ended December 31, 23. Speaker 100:02:24The company's reports on Form 6 ks and other filings with the SEC, as well as our results press release issued yesterday evening. We 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 review certain non GAAP measures. For a reconciliation of these measures to the nearest GAAP measure, please see our earnings release, which has now been filed with the SEC and is available also on our website. With that, I'll turn the call over to our Executive Chairman, Wasif Jabshe. Speaker 200:03:01Thank you, Robin, and good day, everyone. Thank you for joining us on today's call. I'll just make a few short remarks before handing the call over to Ali. I'm pleased to report that IGI once again delivered excellent results in the Q2 leading to a very strong first half of 2024. We reported an annualized return on average equity of 22.9 percent for the quarter and 25.1 percent for the half year. Speaker 200:03:42These are impressive numbers, especially given that our average equity increased by almost 30% in the year to June 30. So far in 2024, we have grown our book value per share, which is our most important measure, by 7.3%. And this is after paying regular quarterly dividends and an extraordinary cash dividend of $0.50 per share. I would also note that this is on the back of book value per share growth of more than 36 percent in 2023. Our promise to shareholders is to generate consistent and sustainable value over the long term. Speaker 200:04:41We do that first through our underwriting, where we believe we can generate the greatest returns. In the past 5 years, we have more than doubled our underwriting portfolio, significantly improving our diversification along with the strength of our growing balance sheet where we have doubled the size of our investment portfolio, we are more resilient than ever, and that is showing in our results. Our value at IGI is in our ability to generate consistently high quality results in any stage of the market cycle, so that we continue to reward our shareholders who have put their trust in us and supported us. I will now hand over to Alid, who will discuss the 2nd quarter results in more detail and talk about market conditions and our outlook for the remainder of 2024. I will remain on the call for any questions at the end. Speaker 300:06:03Good morning, everyone. Thank you, Patrick, and thank you all for joining us today. As Wasek said, we're in a great position as we continue through the second half of twenty twenty four. We've had another excellent quarter and a strong first half with very solid results. We're continuing to see relatively healthy conditions across much of our portfolio and pursuing opportunities to enhance our distribution capabilities that will ultimately generate additional value. Speaker 300:06:32That is our primary goal and our promise to create opportunities that will generate consistent and sustainable value for the long term. And as we've demonstrated over the past 2 decades, we do this throughout market cycles. In 2024, while conditions remain generally healthy, are areas of our portfolio which continue to be a little bit more challenging. Overall, market conditions for our short tail and reinsurance lines are the strongest with a little more variation on the short tail side. In our longer tail lines conditions are a little tougher, but I'd say that the market is behaving in an orderly manner. Speaker 300:07:11And there are some areas where the pace of breaking decline is actually slow. Broadly speaking, there's definitely a more pressure environment where many players in the market and by that I mean predominantly existing capacity. They're pushing for increased market share and I'll talk about that a little more later in the call. So far this year, we've seen a more active loss environment overall, notably natural cat events like the earthquake in Taiwan, the flooding in Oman and in the UAE, as well as some offshore energy losses. As you see the impact of these in our results. Speaker 300:07:51I'll give a good recap of the results for the Q2 and half year and then I'll talk more about what we're seeing in our markets and our outlook for the remainder. Growth in premium growth in the Q2 of 2024 was 3% and 3.7% for the first half, driven by growth in the short tail and reinsurance segment. This is a little more disappointing than I would have expected. But to be clear, it's not that the business and opportunities aren't there. It's that the underlying possibility of the business isn't meeting our requirements. Speaker 300:08:30This goes back to the point I made a moment ago on the increasing competitive pressures. The profit if the profitability doesn't meet our requirements, we simply won't write it. It's as simple as that. We said in last quarter's call that we expect growth premium growth would be in the high single digits to low double digits for the year. But I think it's now more likely to be mid possibly high single digits. Speaker 300:08:57I'll talk more about this in a few moments. As I said earlier, the Q2 was also more active last quarter. Specifically in the short tail segment, we're seeing good opportunities for new business, particularly on the engineering and onshore energy side, but also contingency marine cargo and property. Gross premiums in the 2nd quarter were up 8.5% and up 6.1% for the first half. Earnings being however was up 6.3% and 11.9% for the 2nd quarter and first half respectively. Speaker 300:09:34The reinsurance segment continues to perform well with gross premiums up 67.7% for the 2nd quarter and 28 point 4 percent for the first half. Net premiums earned up almost 35% and just under 25% to 29% respectively for the same periods. The long tail segment continued to see some contraction in gross premium volume in the Q2 and first half as raising conditions and some lines have reached levels where we are choosing to non renew something. That's not to say that there aren't opportunities to write new business. There are and our enhanced distribution capabilities which I'll talk about a little bit more in a moment are helping. Speaker 300:10:17Our notes, the pace of rating decline appears to be slowing in some lines such as DNO. Just providing some context on our long tail portfolio, This is an international portfolio of D and O, financial institutions, professional indemnity, legal expenses with a little bit of third party liability business only written in the Middle East and Africa. Our long tail portfolio was broadly written on a claims made basis. We don't write U. S. Speaker 300:10:45Long tail business in this portfolio, so the tail on our book is relatively shorter and averages around 4 to 7 years. We've grown this portfolio significantly in recent years taking advantage of the strong conditions, market conditions and the healthy rating environment as well as to add to the diversification of our portfolio. But I expect for the foreseeable future as we've seen several quarters of rating decline now will be from very high levels. We'll continue to take a more cautious view here and that is all part and parcel of our sound and prudent cycle management. One final note on growth expectations and I continue to say this, we are not a top line company. Speaker 300:11:30Our focus is on the profitability of the business and creating value. Specifically on the Q2 of losses I mentioned the home to go, I mean our share of these losses was very manageable and illustrates the resilience we created in a larger and more diversified portfolio. Our combined ratios of 81.2% and 77.7% for the 2nd quarter and first half are well below our long term averages and an excellent results. Investment income showed significant improvement in Q2 and in H1 of 2024 resulting in a 0.6 point improvement in the annualized investment yields to 4.6% for the first half. Specifically in our fixed income portfolio, we maintain the overall average credit rating at A and the average duration of 3.2 years. Speaker 300:12:28Net income for Q2 was $32,800,000 then $70,700,000 for the first half, which is down slightly from the prior year largely as a result of the greater loss activity we've seen in 2024, but certainly solid results. Core operating income, which we believe is a true measure of fundamental performance was just over $33,000,000 in Q2 and just over $73,000,000 in the first half. For the 6 months to June 30, core operating income is up 8.6% from the first half of last year, which itself was an exceptional year for us. Turning to the balance sheet, total assets increased under 7% to $1,960,000,000 and total equity increased just under 9% to 588 $200,000 at the end of June. On the capital management front, as you know, we increased our common share repurchase authorization to 7,500,000 shares. Speaker 300:13:40We repurchased a little over 600 1,000 shares in the Q2 and just a little less than 1,000,000 shares in the first half of the year, leaving approximately 2,800,000 shares remaining at the end of June. We also announced an increase to our quarterly dividend to $0.025 per share per quarter, up from $0.01 per share per quarter. And as you recall, as Vasanth mentioned, we paid a special cash dividend of $0.50 per share in April. Ultimately, we recorded a core operating ROE of 20 3.2% for Q2 and 26% for the first half of twenty twenty four. Lastly and most importantly, we grew our book value per share by 7.3% to $13.31 at the end of June. Speaker 300:14:34So all in, another excellent quarter and half year. Moving on to our markets and our outlook for the remainder of the year, we're seeing a continuation of the trends that we've been talking about now for the last several quarters. Although I would note that they are a little more pronounced. With increased capacity across the board, we're seeing more competition in virtually all our markets as some players continue to want to show growth and are pushing for increased market share and expanding their risk appetite. So, like this has been for IGI, broadly speaking, we're still seeing some good opportunities. Speaker 300:15:14We're pulling levers across our portfolio that are generating some excellent new business. Specifically in underwriting, we've bolstered our talent across the group to give us more direct access and targeting new business. We've hired people in specific regions or moved existing people between regions to take advantage of specific opportunities. As an example, we've added engineering, construction, underwriting capabilities in our Kuala Lumpur office specifically started opportunities out there. We've added financial professional life and the writers in our Oslo, Norway office to build out those capabilities in the Nordic and European markets. Speaker 300:15:56You'll recall our announcement that we've established a presence at Lloyd's with the company Box. We're already seeing tangible benefits in accessing business that we may not seen otherwise. And these are the types of actions that we can and do take quickly and decisively to maximize our opportunities for profitable growth. What's changed over the past 3 months since we last spoke to you is that there is increased capacity across the market. Some coming from new capital and new entrants like MGAs, but predominantly it's from existing players wanting a bigger piece of the pie and we're seeing that intensify. Speaker 300:16:37You're hearing this in the commentary from other insurers and reinsurers. There's a scramble to continue to show growth while rates remain strong in some areas. We're seeing greater competitive pressures in domestic markets across the board. This isn't necessarily a good thing and I'll continue to say our primary objective is the bottom line in creating value and not showing growth just for the sake of it. We're focused on the profitability of the business we take on no matter where we are in the side. Speaker 300:17:06And we will not try business that doesn't meet the profitability targets and generate value for our shareholders. And this should not be seen as an active. Our business is and has always been cyclical where different lines and markets move at different times at different paces. This is nothing new to us. We've been doing this for over 2 decades during which we've been through many market cycles and consistently produce results, strong results and solid returns for our shareholders. Speaker 300:17:341 of the hallmarks of i2rhyze are deep technical underwriting talent, people who understand the dynamics of their business, who have experienced strong relationships and who can anticipate shifting ties in their markets and respond accordingly. What's most important at any stage of any 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, all while working within our well defined risk appetite and tolerances. Throughout our history, we've clearly demonstrated our ability to do this, reducing high quality results and ultimately protecting shareholder value. That is where we are today. Everything is about technical underwriting, discipline, intelligent risk selection. Speaker 300:18:26Looking at specific lines and markets, the headlines are similar to the last few quarters. Price spots continue to be reinsurance and some of the short tail lines, while growth is increasingly challenging in other short tail lines and pretty much across our long tail portfolio. Not to say that opportunities for growth are not there, they are. They're just relatively harder to come by at rates terms that are acceptable to us. Specifically in our short tail segment, rate momentum remains broadly steady with what we saw in the Q1 with lots of variation by line of York. Speaker 300:19:08We're seeing the most positive rate momentum and opportunity in parts of our marine portfolio for German, those cargo marine trades as well as in the marine liability. In other lines and where rates are coming down, it's mostly in an orderly fashion. There continues to be some good opportunities in engineering, contingency and property, but then you've got other lines that are more challenging. Engineering construction continues to be a bright spot for us in many of our markets. And we will continue to focus on those most attractive regions, the Middle East and Asia as I said earlier, as well as the U. Speaker 300:19:48S. Where we're building our presence and relationships in the business class. In our 3 d Reinsurance segment, we continue to see positive rate movement on the back of upwards of 25% increases we saw last year. This continues to be the most attractive area of our portfolio right now and we expect to continue to see opportunities to write new business. The growth that we've shown in our Q3 book over the past 18 months is a good example of our ability to move our capital quickly and decisively to those lines, those areas with the highest margins. Speaker 300:20:24So as I mentioned earlier, it's all about pulling the right levers at the right time, so we maximize profitability and generate the most value. In the long tail segment, story is fairly similar to prior quarters. Net rates overall remain broadly adequate but continue to be pressured. We shouldn't expect to see any growth in this segment in 2024. Although the build out of our Oslo office and our presence at Lloyd's is producing positive results. Speaker 300:20:54Looking at our geographic markets, the U. S. Continues to be a growth area for us and we've increased our U. S. Gross premiums by over 47% in the 1st 6 months of the year compared to same period last year. Speaker 300:21:09But this is also where we're seeing rising competitive pressures, mostly coming from existing players and domestic markets as I mentioned previously. We're a relative newcomer to the U. S. When we started writing business there in 2020. As you know, we're only writing short term lines there and earlier this year entered the engineering construction space writing small to medium sized projects. Speaker 300:21:35We continue to focus on property, energy, political violence, contingency, cargo business and reinsurance. And to date, we've reached just over 73,000,000 dollars of premium in the U. S, 55% of which is E and S. In Europe, we were all around $17,000,000 in the 2nd quarter and around just under $40,000,000 in the 1st 6 months. We expect to see further opportunities for growth in throughout the year. Speaker 300:22:11As we continue, as I mentioned earlier, we focus our efforts in the Nordic and Mainland Europe with our platforms there. In the MENA region in Asia, we continue to add talent on the ground across various lines of business opportunities there and looking to capitalize on those. So in conclusion, we continue to do what we're doing. We keep our focus sharply on our core principles of selective and disciplined underwriting, dynamic cycle management and conservative reserving with the ultimate goal of protecting the profitability profile of our company and the capital that is entrusted to us. We continue to generate excellent returns that will serve us well in the quarters and years ahead And as we've done throughout our history and allow us to continue to deliver on our promise to reward our shareholders by ultimately building consistent and sustainable value. Speaker 300:23:15So I'll pause there and we'll turn it over to questions. Operator, we're ready to take the first question, please. Operator00:23:27Thank you. And we will now begin the question and answer session. Our first question today will come from Scott Heleniak with RBC. Please go ahead. Speaker 400:24:16Yes. I hope everyone's doing well. Just a quick question here on the growth outlook that you provided, the mid to high single digits. It sounds like that's most of the growth is going to continue to come from the reinsurance and the ShoreTel. But and you mentioned some of the opportunities, but anything you can touch on there as well as the areas of long tail that are challenging in particular where you're pulling back from that maybe are different than a few quarters ago. Speaker 400:24:49It sounds like that will continue, but anything you can talk about in terms of just kind of give more detail on the growth outlook by segment and what you expect to see? Speaker 300:25:04Thanks, Scott. Thanks for the question. Yes, sure. I think what we've been saying we've been saying today is in line with what we've been saying for quite a few quarters now. If we look at the long tail segment, we announced earlier last year that we withdrew from an inherent defects class. Speaker 300:25:25So we're seeing that impact the overall numbers and that was a pure underwriting profitability decision. But in terms of market conditions you're seeing pretty much across all our subclasses or business lines within the segment come under pressure. The most pressure is probably on the D and O side and the financial institution side, but you're starting to see more of that creep into the professional indemnity as well. So as I said earlier, I mean, this is not about volume for us, this is about profitability. And so we will continue to take the measures that we believe are necessary to protect that profitability and to continue to be able to generate results in line with what we've been delivering for the last many quarters. Speaker 300:26:24Reinsurance is definitely the brightest spot. And this is the area where we're putting a lot of focus on. We want to grow it more and we are working on ways to take bigger advantage of this. Definitely the healthiest segments within our overall portfolio. And as long as that remains the case, we will continue to push as hard as we can in this area. Speaker 300:26:56Short tail segment is mixed bag. I mentioned those business lines on the call, the engineering, contingency, the cargo, the marine elements, the marine portfolio, those are still behaving very well. And by and large property continues to be good. It was a nice modest growth for us on property side. Onshore energy is driving good opportunities and still healthy conditions. Speaker 300:27:27On the flip side, aviation is extremely challenging. And that's an area where our book has reduced quite significantly. And upstream energy despite the losses in the market doesn't seem to be reacting the way we would want them to would want the market to react. Other markets flattish. So that's why you saw most of the short term lines are either relatively stable the way they are or pushing up with a couple coming down. Speaker 300:28:09That's why you're seeing overall growth in that segment. Reinsurance is reinsurance and long tail, we're seeing pressure across practically everything within. So looking forward, I don't think that's going to change not in the near term, not for the rest of this year. The long tail will continue to be under pressure and we'll push as much as we can, taking advantage of the conditions within reinsurance and within the attractive short term. Speaker 400:28:44All right. That's great detail. And then just switching over a little bit on the U. S. Business, gross written premiums you mentioned were up 47 percent. Speaker 400:28:52So it sounds like you're seeing a lot of opportunity there. But within the property market in the U. S, some people are talking about rates coming down a little bit and a little less opportunity. Just curious, the growth that you're seeing this year, is it how much of that is coming from some of the other lines you mentioned versus property and how you're viewing that relative to the rest of that U. S. Speaker 400:29:18Book? Speaker 300:29:24As you know, we've expanded our product suite adding engineering structure, so that's delivering good opportunities growth because our portfolio is relatively different. I mean, yes, it's 4 years old, but we always said whenever we enter a new market, we take it step by step cautious and try to what do you call it, to grow the book, grow our portfolios in a controllable and measured fashion. For us achieving that growth is not we are seeing the pressures. Now the pressures are that the market is probably stabilized, which means that the rating environment is still adequate, still healthy. You are seeing as I mentioned on the call, players wanting a bigger piece of the pie, wanting a bigger market share and some players out there are a lot more aggressive than others. Speaker 300:30:22But by and large, we're able to cut deals for ourselves that remain attractive. We're able to cut deals on new business for ourselves that are attractive allowing us to continue to grow. We've grown the property book, we've grown the partial energy book, we've grown the contingency, the treaty. It's across the board where we've been able to capitalize on opportunities. And the U. Speaker 300:30:53S. Underwriting season is pretty much over for us. It's all gets underwritten in the 1st 6 months, 7 months of the year. It will be interesting to see whether the forecasters are right about this year's wind season and what impact that may have on the market going forward. Speaker 400:31:16Got it. And then just moving over to reserve development, your favorable reserve development is running really high level for the company for a while now. Just a little more detail on that, kind of where that's coming from by segment, if there's any particular line that stands out, whether it's New Year's or accident years, just any context on why that's coming in so much better than expected would be helpful. Speaker 300:31:46I think similar to what we've said in previous calls, we take a very cautious approach to reserving. And we'd rather we consider we'd rather conservatively reserve to begin with rather than find ourselves in situations where we have to actually put more reserves in. In terms of the releases, there isn't a specific year that these releases are allocated to. It varies across it goes back to many years, especially within the obviously the long tail lines. The short tail lines will be more on the 2023 and 2022 accident years. Speaker 300:32:36But the releases were more on the long tail segment in this quarter as opposed to Q1. But there were releases across the board within short tail, long tail and reinsurance. And that is a trend that given our reserving philosophy is something that we would expect to see. And given the healthy rates that we've been achieving and putting on our books over the last several years, ultimately your margins what do you call it, would expect it to be there. Speaker 400:33:23Okay, that's helpful. I just had one last one. You mentioned in the press release some offshore energy losses in the quarter. Anything any further detail you can provide on that? Was it multiple losses and any kind of total that you can quantify of that, that would be helpful? Speaker 400:33:42I'm assuming that's in cat losses, right, the cat loss total, but anything more you can share on that? Speaker 300:33:50No, the upstream losses were all risk losses. It wasn't a particular loss. It was a multitude of losses. I mean, we've just noticed an increase in frequency of losses in that business line. We're not out there on our own. Speaker 300:34:08Others will the whole market will have been exposed to this. And this predominantly been on the offshore construction side, not as much on the operation. The operational book whilst rates are under pressure and challenging continues to perform well. It's the challenges on the offshore construction side where we've seen that increased frequency in Los Angeles. Speaker 400:34:40Thanks a lot for the answers. Speaker 300:34:46Thanks, Operator00:34:49Scott. Ladies and gentlemen, at this time, we will conclude our question and answer session. I would like to turn the conference back over to management for any closing remarks. Speaker 300:35:03Thank you, Allison, and thank you all for joining us today. And thank you for your continued support of IGI. If you have any additional questions, please get in touch with Robin and she'll be happy to assist. And we look forward to speaking to you on the next quarter's call. Have a good day, everybody. Speaker 300:35:22Thank you. Operator00:35:28Conference has now concluded. Thank you for attending today's presentation and you may now disconnect.Read morePowered by Key Takeaways IGI delivered strong Q2 and H1 results with an annualized ROE of 22.9% in Q2 and 25.1% for H1, while growing book value per share by 7.3% year-to-date after regular and special dividends. The reinsurance segment saw robust growth—gross premiums up 67.7% in Q2 and 28.4% in H1—while short-tail lines like engineering, marine cargo and property remain healthy; long-tail lines faced contraction amid rating pressure and selective non-renewals. IGI’s combined ratios of 81.2% in Q2 and 77.7% in H1 are well below long-term averages, and the annualized investment yield improved to 4.6% through a high-quality A-rated, 3.2-year duration fixed income portfolio. Management now expects full-year premium growth in the mid- to high-single digits, emphasizing that they will only write business that meets strict profitability targets rather than chase volume. Despite increased market capacity and competition, IGI is focusing on disciplined underwriting, dynamic cycle management and expanded distribution (new regional hires and its Lloyd’s presence) to deploy capital into highest-margin opportunities. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallInternational General Insurance Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) International General Insurance Earnings HeadlinesInternational General Insurance Holdings (NASDAQ:IGIC) shareholders have earned a 37% CAGR over the last five yearsMay 23, 2025 | finance.yahoo.comIGI Announces Increase in Quarterly Ordinary Common Share DividendMay 15, 2025 | businesswire.comDo You Believe In President Trump? Answer This 1 QuestionThey said you wouldn’t last—that Bidenflation, Wall Street selloffs, and DEI funds would break your loyalty to Trump’s economic plan. But now there’s a way to protect your retirement without backing down. This free 2025 Wealth Protection Guide reveals how you can use a legal IRS loophole—nicknamed “Piggy Bank”—to shield your savings.May 27, 2025 | Colonial Metals (Ad)International General Insurance: Soft Q1, Still A Strong BusinessMay 15, 2025 | seekingalpha.comInternational General Insurance Holdings Ltd. (IGIC) Q1 2025 Earnings Call TranscriptMay 9, 2025 | seekingalpha.comIGI Earnings Call: Resilience Amidst ChallengesMay 8, 2025 | tipranks.comSee More International General Insurance Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like International General Insurance? 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. The company was founded in 2001 and is based in Amman, Jordan.View International General Insurance ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Bullish NVIDIA Market Set to Surge 50% Ahead of Q1 EarningsBooz Allen Hamilton Earnings: 3 Bullish Signals for BAH StockAdvance Auto Parts Jumps on Surprise Earnings BeatAlibaba's Earnings Just Changed Everything for the StockCisco Stock Eyes New Highs in 2025 on AI, Earnings, UpgradesSymbotic Gets Big Earnings Lift: Is the Stock Investable Again?D-Wave Pushes Back on Short Seller Case With Strong Earnings Upcoming Earnings NVIDIA (5/28/2025)Synopsys (5/28/2025)Bank of Montreal (5/28/2025)Salesforce (5/28/2025)Haleon (5/28/2025)Costco Wholesale (5/29/2025)Marvell Technology (5/29/2025)Canadian Imperial Bank of Commerce (5/29/2025)Dell Technologies (5/29/2025)National Grid (5/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 5 speakers on the call. Operator00:00:00Good day, and welcome to the International General Insurance Holdings Limited Second Quarter Earnings Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. At this time, I'd like to turn the conference over to Robin Sitters, Head of Investor Relations. Please go ahead. Speaker 100:00:42Thank you, Alison, and good morning. Welcome to today's conference call. Today, we'll be discussing our second quarter and half year twenty twenty four financial results. You will have seen our results press release, which we issued after the market closed yesterday. But if you'd like a copy of the press release, you can find it on our website in the Investors section at www.iginsure.com. Speaker 100:01:06We've posted a supplementary financial a supplementary investor presentation as well, which can also be found on our website under the Presentations page. On today's call are Executive Chairman of IGI, Waseb Japshey President and CEO, Walid Japshey and Chief Financial Officer, Pravez Ritvi. As always, Waseb will begin the call with some high level comments and then hand the call over to Walid to talk through the key drivers of our results for the Q2 and first half and finish up with our views on market conditions and our outlook for the remainder of 2024. At that point, we'll open the call up for Q and A. I'll begin with some customary Safe Harbor language. Speaker 100:01:46Our speakers' remarks today may contain forward looking statements. Some of these 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 that the future plans, estimates or expectations contemplated by us will in fact be achieved. These 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 forth in the company's annual report on Form 20 F for the year ended December 31, 23. Speaker 100:02:24The company's reports on Form 6 ks and other filings with the SEC, as well as our results press release issued yesterday evening. We 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 review certain non GAAP measures. For a reconciliation of these measures to the nearest GAAP measure, please see our earnings release, which has now been filed with the SEC and is available also on our website. With that, I'll turn the call over to our Executive Chairman, Wasif Jabshe. Speaker 200:03:01Thank you, Robin, and good day, everyone. Thank you for joining us on today's call. I'll just make a few short remarks before handing the call over to Ali. I'm pleased to report that IGI once again delivered excellent results in the Q2 leading to a very strong first half of 2024. We reported an annualized return on average equity of 22.9 percent for the quarter and 25.1 percent for the half year. Speaker 200:03:42These are impressive numbers, especially given that our average equity increased by almost 30% in the year to June 30. So far in 2024, we have grown our book value per share, which is our most important measure, by 7.3%. And this is after paying regular quarterly dividends and an extraordinary cash dividend of $0.50 per share. I would also note that this is on the back of book value per share growth of more than 36 percent in 2023. Our promise to shareholders is to generate consistent and sustainable value over the long term. Speaker 200:04:41We do that first through our underwriting, where we believe we can generate the greatest returns. In the past 5 years, we have more than doubled our underwriting portfolio, significantly improving our diversification along with the strength of our growing balance sheet where we have doubled the size of our investment portfolio, we are more resilient than ever, and that is showing in our results. Our value at IGI is in our ability to generate consistently high quality results in any stage of the market cycle, so that we continue to reward our shareholders who have put their trust in us and supported us. I will now hand over to Alid, who will discuss the 2nd quarter results in more detail and talk about market conditions and our outlook for the remainder of 2024. I will remain on the call for any questions at the end. Speaker 300:06:03Good morning, everyone. Thank you, Patrick, and thank you all for joining us today. As Wasek said, we're in a great position as we continue through the second half of twenty twenty four. We've had another excellent quarter and a strong first half with very solid results. We're continuing to see relatively healthy conditions across much of our portfolio and pursuing opportunities to enhance our distribution capabilities that will ultimately generate additional value. Speaker 300:06:32That is our primary goal and our promise to create opportunities that will generate consistent and sustainable value for the long term. And as we've demonstrated over the past 2 decades, we do this throughout market cycles. In 2024, while conditions remain generally healthy, are areas of our portfolio which continue to be a little bit more challenging. Overall, market conditions for our short tail and reinsurance lines are the strongest with a little more variation on the short tail side. In our longer tail lines conditions are a little tougher, but I'd say that the market is behaving in an orderly manner. Speaker 300:07:11And there are some areas where the pace of breaking decline is actually slow. Broadly speaking, there's definitely a more pressure environment where many players in the market and by that I mean predominantly existing capacity. They're pushing for increased market share and I'll talk about that a little more later in the call. So far this year, we've seen a more active loss environment overall, notably natural cat events like the earthquake in Taiwan, the flooding in Oman and in the UAE, as well as some offshore energy losses. As you see the impact of these in our results. Speaker 300:07:51I'll give a good recap of the results for the Q2 and half year and then I'll talk more about what we're seeing in our markets and our outlook for the remainder. Growth in premium growth in the Q2 of 2024 was 3% and 3.7% for the first half, driven by growth in the short tail and reinsurance segment. This is a little more disappointing than I would have expected. But to be clear, it's not that the business and opportunities aren't there. It's that the underlying possibility of the business isn't meeting our requirements. Speaker 300:08:30This goes back to the point I made a moment ago on the increasing competitive pressures. The profit if the profitability doesn't meet our requirements, we simply won't write it. It's as simple as that. We said in last quarter's call that we expect growth premium growth would be in the high single digits to low double digits for the year. But I think it's now more likely to be mid possibly high single digits. Speaker 300:08:57I'll talk more about this in a few moments. As I said earlier, the Q2 was also more active last quarter. Specifically in the short tail segment, we're seeing good opportunities for new business, particularly on the engineering and onshore energy side, but also contingency marine cargo and property. Gross premiums in the 2nd quarter were up 8.5% and up 6.1% for the first half. Earnings being however was up 6.3% and 11.9% for the 2nd quarter and first half respectively. Speaker 300:09:34The reinsurance segment continues to perform well with gross premiums up 67.7% for the 2nd quarter and 28 point 4 percent for the first half. Net premiums earned up almost 35% and just under 25% to 29% respectively for the same periods. The long tail segment continued to see some contraction in gross premium volume in the Q2 and first half as raising conditions and some lines have reached levels where we are choosing to non renew something. That's not to say that there aren't opportunities to write new business. There are and our enhanced distribution capabilities which I'll talk about a little bit more in a moment are helping. Speaker 300:10:17Our notes, the pace of rating decline appears to be slowing in some lines such as DNO. Just providing some context on our long tail portfolio, This is an international portfolio of D and O, financial institutions, professional indemnity, legal expenses with a little bit of third party liability business only written in the Middle East and Africa. Our long tail portfolio was broadly written on a claims made basis. We don't write U. S. Speaker 300:10:45Long tail business in this portfolio, so the tail on our book is relatively shorter and averages around 4 to 7 years. We've grown this portfolio significantly in recent years taking advantage of the strong conditions, market conditions and the healthy rating environment as well as to add to the diversification of our portfolio. But I expect for the foreseeable future as we've seen several quarters of rating decline now will be from very high levels. We'll continue to take a more cautious view here and that is all part and parcel of our sound and prudent cycle management. One final note on growth expectations and I continue to say this, we are not a top line company. Speaker 300:11:30Our focus is on the profitability of the business and creating value. Specifically on the Q2 of losses I mentioned the home to go, I mean our share of these losses was very manageable and illustrates the resilience we created in a larger and more diversified portfolio. Our combined ratios of 81.2% and 77.7% for the 2nd quarter and first half are well below our long term averages and an excellent results. Investment income showed significant improvement in Q2 and in H1 of 2024 resulting in a 0.6 point improvement in the annualized investment yields to 4.6% for the first half. Specifically in our fixed income portfolio, we maintain the overall average credit rating at A and the average duration of 3.2 years. Speaker 300:12:28Net income for Q2 was $32,800,000 then $70,700,000 for the first half, which is down slightly from the prior year largely as a result of the greater loss activity we've seen in 2024, but certainly solid results. Core operating income, which we believe is a true measure of fundamental performance was just over $33,000,000 in Q2 and just over $73,000,000 in the first half. For the 6 months to June 30, core operating income is up 8.6% from the first half of last year, which itself was an exceptional year for us. Turning to the balance sheet, total assets increased under 7% to $1,960,000,000 and total equity increased just under 9% to 588 $200,000 at the end of June. On the capital management front, as you know, we increased our common share repurchase authorization to 7,500,000 shares. Speaker 300:13:40We repurchased a little over 600 1,000 shares in the Q2 and just a little less than 1,000,000 shares in the first half of the year, leaving approximately 2,800,000 shares remaining at the end of June. We also announced an increase to our quarterly dividend to $0.025 per share per quarter, up from $0.01 per share per quarter. And as you recall, as Vasanth mentioned, we paid a special cash dividend of $0.50 per share in April. Ultimately, we recorded a core operating ROE of 20 3.2% for Q2 and 26% for the first half of twenty twenty four. Lastly and most importantly, we grew our book value per share by 7.3% to $13.31 at the end of June. Speaker 300:14:34So all in, another excellent quarter and half year. Moving on to our markets and our outlook for the remainder of the year, we're seeing a continuation of the trends that we've been talking about now for the last several quarters. Although I would note that they are a little more pronounced. With increased capacity across the board, we're seeing more competition in virtually all our markets as some players continue to want to show growth and are pushing for increased market share and expanding their risk appetite. So, like this has been for IGI, broadly speaking, we're still seeing some good opportunities. Speaker 300:15:14We're pulling levers across our portfolio that are generating some excellent new business. Specifically in underwriting, we've bolstered our talent across the group to give us more direct access and targeting new business. We've hired people in specific regions or moved existing people between regions to take advantage of specific opportunities. As an example, we've added engineering, construction, underwriting capabilities in our Kuala Lumpur office specifically started opportunities out there. We've added financial professional life and the writers in our Oslo, Norway office to build out those capabilities in the Nordic and European markets. Speaker 300:15:56You'll recall our announcement that we've established a presence at Lloyd's with the company Box. We're already seeing tangible benefits in accessing business that we may not seen otherwise. And these are the types of actions that we can and do take quickly and decisively to maximize our opportunities for profitable growth. What's changed over the past 3 months since we last spoke to you is that there is increased capacity across the market. Some coming from new capital and new entrants like MGAs, but predominantly it's from existing players wanting a bigger piece of the pie and we're seeing that intensify. Speaker 300:16:37You're hearing this in the commentary from other insurers and reinsurers. There's a scramble to continue to show growth while rates remain strong in some areas. We're seeing greater competitive pressures in domestic markets across the board. This isn't necessarily a good thing and I'll continue to say our primary objective is the bottom line in creating value and not showing growth just for the sake of it. We're focused on the profitability of the business we take on no matter where we are in the side. Speaker 300:17:06And we will not try business that doesn't meet the profitability targets and generate value for our shareholders. And this should not be seen as an active. Our business is and has always been cyclical where different lines and markets move at different times at different paces. This is nothing new to us. We've been doing this for over 2 decades during which we've been through many market cycles and consistently produce results, strong results and solid returns for our shareholders. Speaker 300:17:341 of the hallmarks of i2rhyze are deep technical underwriting talent, people who understand the dynamics of their business, who have experienced strong relationships and who can anticipate shifting ties in their markets and respond accordingly. What's most important at any stage of any 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, all while working within our well defined risk appetite and tolerances. Throughout our history, we've clearly demonstrated our ability to do this, reducing high quality results and ultimately protecting shareholder value. That is where we are today. Everything is about technical underwriting, discipline, intelligent risk selection. Speaker 300:18:26Looking at specific lines and markets, the headlines are similar to the last few quarters. Price spots continue to be reinsurance and some of the short tail lines, while growth is increasingly challenging in other short tail lines and pretty much across our long tail portfolio. Not to say that opportunities for growth are not there, they are. They're just relatively harder to come by at rates terms that are acceptable to us. Specifically in our short tail segment, rate momentum remains broadly steady with what we saw in the Q1 with lots of variation by line of York. Speaker 300:19:08We're seeing the most positive rate momentum and opportunity in parts of our marine portfolio for German, those cargo marine trades as well as in the marine liability. In other lines and where rates are coming down, it's mostly in an orderly fashion. There continues to be some good opportunities in engineering, contingency and property, but then you've got other lines that are more challenging. Engineering construction continues to be a bright spot for us in many of our markets. And we will continue to focus on those most attractive regions, the Middle East and Asia as I said earlier, as well as the U. Speaker 300:19:48S. Where we're building our presence and relationships in the business class. In our 3 d Reinsurance segment, we continue to see positive rate movement on the back of upwards of 25% increases we saw last year. This continues to be the most attractive area of our portfolio right now and we expect to continue to see opportunities to write new business. The growth that we've shown in our Q3 book over the past 18 months is a good example of our ability to move our capital quickly and decisively to those lines, those areas with the highest margins. Speaker 300:20:24So as I mentioned earlier, it's all about pulling the right levers at the right time, so we maximize profitability and generate the most value. In the long tail segment, story is fairly similar to prior quarters. Net rates overall remain broadly adequate but continue to be pressured. We shouldn't expect to see any growth in this segment in 2024. Although the build out of our Oslo office and our presence at Lloyd's is producing positive results. Speaker 300:20:54Looking at our geographic markets, the U. S. Continues to be a growth area for us and we've increased our U. S. Gross premiums by over 47% in the 1st 6 months of the year compared to same period last year. Speaker 300:21:09But this is also where we're seeing rising competitive pressures, mostly coming from existing players and domestic markets as I mentioned previously. We're a relative newcomer to the U. S. When we started writing business there in 2020. As you know, we're only writing short term lines there and earlier this year entered the engineering construction space writing small to medium sized projects. Speaker 300:21:35We continue to focus on property, energy, political violence, contingency, cargo business and reinsurance. And to date, we've reached just over 73,000,000 dollars of premium in the U. S, 55% of which is E and S. In Europe, we were all around $17,000,000 in the 2nd quarter and around just under $40,000,000 in the 1st 6 months. We expect to see further opportunities for growth in throughout the year. Speaker 300:22:11As we continue, as I mentioned earlier, we focus our efforts in the Nordic and Mainland Europe with our platforms there. In the MENA region in Asia, we continue to add talent on the ground across various lines of business opportunities there and looking to capitalize on those. So in conclusion, we continue to do what we're doing. We keep our focus sharply on our core principles of selective and disciplined underwriting, dynamic cycle management and conservative reserving with the ultimate goal of protecting the profitability profile of our company and the capital that is entrusted to us. We continue to generate excellent returns that will serve us well in the quarters and years ahead And as we've done throughout our history and allow us to continue to deliver on our promise to reward our shareholders by ultimately building consistent and sustainable value. Speaker 300:23:15So I'll pause there and we'll turn it over to questions. Operator, we're ready to take the first question, please. Operator00:23:27Thank you. And we will now begin the question and answer session. Our first question today will come from Scott Heleniak with RBC. Please go ahead. Speaker 400:24:16Yes. I hope everyone's doing well. Just a quick question here on the growth outlook that you provided, the mid to high single digits. It sounds like that's most of the growth is going to continue to come from the reinsurance and the ShoreTel. But and you mentioned some of the opportunities, but anything you can touch on there as well as the areas of long tail that are challenging in particular where you're pulling back from that maybe are different than a few quarters ago. Speaker 400:24:49It sounds like that will continue, but anything you can talk about in terms of just kind of give more detail on the growth outlook by segment and what you expect to see? Speaker 300:25:04Thanks, Scott. Thanks for the question. Yes, sure. I think what we've been saying we've been saying today is in line with what we've been saying for quite a few quarters now. If we look at the long tail segment, we announced earlier last year that we withdrew from an inherent defects class. Speaker 300:25:25So we're seeing that impact the overall numbers and that was a pure underwriting profitability decision. But in terms of market conditions you're seeing pretty much across all our subclasses or business lines within the segment come under pressure. The most pressure is probably on the D and O side and the financial institution side, but you're starting to see more of that creep into the professional indemnity as well. So as I said earlier, I mean, this is not about volume for us, this is about profitability. And so we will continue to take the measures that we believe are necessary to protect that profitability and to continue to be able to generate results in line with what we've been delivering for the last many quarters. Speaker 300:26:24Reinsurance is definitely the brightest spot. And this is the area where we're putting a lot of focus on. We want to grow it more and we are working on ways to take bigger advantage of this. Definitely the healthiest segments within our overall portfolio. And as long as that remains the case, we will continue to push as hard as we can in this area. Speaker 300:26:56Short tail segment is mixed bag. I mentioned those business lines on the call, the engineering, contingency, the cargo, the marine elements, the marine portfolio, those are still behaving very well. And by and large property continues to be good. It was a nice modest growth for us on property side. Onshore energy is driving good opportunities and still healthy conditions. Speaker 300:27:27On the flip side, aviation is extremely challenging. And that's an area where our book has reduced quite significantly. And upstream energy despite the losses in the market doesn't seem to be reacting the way we would want them to would want the market to react. Other markets flattish. So that's why you saw most of the short term lines are either relatively stable the way they are or pushing up with a couple coming down. Speaker 300:28:09That's why you're seeing overall growth in that segment. Reinsurance is reinsurance and long tail, we're seeing pressure across practically everything within. So looking forward, I don't think that's going to change not in the near term, not for the rest of this year. The long tail will continue to be under pressure and we'll push as much as we can, taking advantage of the conditions within reinsurance and within the attractive short term. Speaker 400:28:44All right. That's great detail. And then just switching over a little bit on the U. S. Business, gross written premiums you mentioned were up 47 percent. Speaker 400:28:52So it sounds like you're seeing a lot of opportunity there. But within the property market in the U. S, some people are talking about rates coming down a little bit and a little less opportunity. Just curious, the growth that you're seeing this year, is it how much of that is coming from some of the other lines you mentioned versus property and how you're viewing that relative to the rest of that U. S. Speaker 400:29:18Book? Speaker 300:29:24As you know, we've expanded our product suite adding engineering structure, so that's delivering good opportunities growth because our portfolio is relatively different. I mean, yes, it's 4 years old, but we always said whenever we enter a new market, we take it step by step cautious and try to what do you call it, to grow the book, grow our portfolios in a controllable and measured fashion. For us achieving that growth is not we are seeing the pressures. Now the pressures are that the market is probably stabilized, which means that the rating environment is still adequate, still healthy. You are seeing as I mentioned on the call, players wanting a bigger piece of the pie, wanting a bigger market share and some players out there are a lot more aggressive than others. Speaker 300:30:22But by and large, we're able to cut deals for ourselves that remain attractive. We're able to cut deals on new business for ourselves that are attractive allowing us to continue to grow. We've grown the property book, we've grown the partial energy book, we've grown the contingency, the treaty. It's across the board where we've been able to capitalize on opportunities. And the U. Speaker 300:30:53S. Underwriting season is pretty much over for us. It's all gets underwritten in the 1st 6 months, 7 months of the year. It will be interesting to see whether the forecasters are right about this year's wind season and what impact that may have on the market going forward. Speaker 400:31:16Got it. And then just moving over to reserve development, your favorable reserve development is running really high level for the company for a while now. Just a little more detail on that, kind of where that's coming from by segment, if there's any particular line that stands out, whether it's New Year's or accident years, just any context on why that's coming in so much better than expected would be helpful. Speaker 300:31:46I think similar to what we've said in previous calls, we take a very cautious approach to reserving. And we'd rather we consider we'd rather conservatively reserve to begin with rather than find ourselves in situations where we have to actually put more reserves in. In terms of the releases, there isn't a specific year that these releases are allocated to. It varies across it goes back to many years, especially within the obviously the long tail lines. The short tail lines will be more on the 2023 and 2022 accident years. Speaker 300:32:36But the releases were more on the long tail segment in this quarter as opposed to Q1. But there were releases across the board within short tail, long tail and reinsurance. And that is a trend that given our reserving philosophy is something that we would expect to see. And given the healthy rates that we've been achieving and putting on our books over the last several years, ultimately your margins what do you call it, would expect it to be there. Speaker 400:33:23Okay, that's helpful. I just had one last one. You mentioned in the press release some offshore energy losses in the quarter. Anything any further detail you can provide on that? Was it multiple losses and any kind of total that you can quantify of that, that would be helpful? Speaker 400:33:42I'm assuming that's in cat losses, right, the cat loss total, but anything more you can share on that? Speaker 300:33:50No, the upstream losses were all risk losses. It wasn't a particular loss. It was a multitude of losses. I mean, we've just noticed an increase in frequency of losses in that business line. We're not out there on our own. Speaker 300:34:08Others will the whole market will have been exposed to this. And this predominantly been on the offshore construction side, not as much on the operation. The operational book whilst rates are under pressure and challenging continues to perform well. It's the challenges on the offshore construction side where we've seen that increased frequency in Los Angeles. Speaker 400:34:40Thanks a lot for the answers. Speaker 300:34:46Thanks, Operator00:34:49Scott. Ladies and gentlemen, at this time, we will conclude our question and answer session. I would like to turn the conference back over to management for any closing remarks. Speaker 300:35:03Thank you, Allison, and thank you all for joining us today. And thank you for your continued support of IGI. If you have any additional questions, please get in touch with Robin and she'll be happy to assist. And we look forward to speaking to you on the next quarter's call. Have a good day, everybody. Speaker 300:35:22Thank you. Operator00:35:28Conference has now concluded. 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