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IGI Reports First Quarter 2021 Condensed and Unaudited Financial Results

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International General Insurance Holdings Ltd. (“IGI” or the “Company”) (NASDAQ: IGIC) today reported condensed and unaudited financial results for the first quarter 2021.

Highlights for the first quarter 2021 include:

(in millions of U.S. Dollars, except percentages and per share information)

 

Quarter Ended March 31,

 

2021

2020

Gross written premiums

$100.6

$99.2

Net premiums earned

$82.3

$68.5

Net underwriting results

$27.6

$23.2

Total investment income, net (1)

$4.0

$2.6

Profit (loss) for the period

$14.5

($0.9)

Combined ratio (2)

84.6%

81.3%

Earnings per share (Basic and Diluted) (3)

$0.30

($0.02)

Return on average equity (annualized) (4)

14.7%

(1.1%)

Core operating income (4)

$14.7

$13.4

Core operating earnings per share (4) (Basic and Diluted)

$0.30

$0.35

Core operating return on average equity (annualized) (4)

14.9%

16.4%

  1. See Note (1) in the “Notes to the Condensed Consolidated Financial Statements (Unaudited)” below.
  2. See “Supplementary Financial Information” below.
  3. See Note (3) in the “Notes to the Condensed Consolidated Financial Statements (Unaudited)” below.
  4. See the section titled “Non-IFRS Financial Measures” below.

IGI Chairman and CEO Mr. Wasef Jabsheh said, “We have had a very solid start to 2021 on the back of our strong performance in 2020. Our results for the first quarter of 2021 clearly illustrate the strength of our underwriting capabilities and our agility in managing the portfolio to maximize returns. While rate momentum remained robust with increases of more than 15% across our portfolio during the first quarter, we saw the pace of rate acceleration slowing down in certain lines. Gross written premiums were broadly in line with the first quarter of 2020, but more significantly, net earned premiums were up 20.0% with a combined ratio of 84.6%.”

“We recently announced our entry into the contingency market, which you’ll know from the headlines has experienced significant disruption globally as a result of the COVID-19 pandemic. Consistent with our underwriting philosophy, we will grow this book carefully and thoughtfully. We are also close to completing the process of establishing a European platform in Malta and we expect to be able to start writing business inside the European Union in the near future.”

“Having completed our first full year as a U.S. listed company, I am very pleased with our progress, having grown our book value per share by 15.1% from March 31, 2020. We look forward to continuing our long track-record of success in generating value for our shareholders.”

Results for the Quarters Ended March 31, 2021 and 2020

Net profit for the quarter ended March 31, 2021 was $14.5 million, compared to a net loss of $0.9 million for the quarter ended March 31, 2020.

Core operating income, a non-IFRS measure defined below, was $14.7 million for the first quarter of 2021 compared to $13.4 million for the comparable quarter in 2020, primarily the result of a higher level of underwriting income. Despite the $1.3 million increase in core operating income, the core operating return on average equity (annualized) decreased to 14.9% for the quarter ended March 31, 2021, compared to 16.4% in the same period of 2020 as a result of the increase in average shareholders’ equity from $328.1 million at March 31, 2020 to $395.3 million at March 31, 2021.

Underwriting Results

Gross written premiums were $100.6 million for the quarter ended March 31, 2021, compared to $99.2 million for the quarter ended March 31, 2020. While market conditions remained positive, the Company also continued to further refine its existing portfolio, achieving improved terms and conditions.

The claims and claims expense ratio was 50.0% for the quarter ended March 31, 2021, compared to 46.3% for the first quarter of 2020. This included current accident year net catastrophe losses of $0.1 million or 0.2 points for the quarter ended March 31, 2021, compared to $0.8 million or 1.2 points for the quarter ended March 31, 2020. Prior year development on loss reserves was favorable amounting to $4.3 million or 5.3 points for the quarter ended March 31, 2021 driven by improvement in prior year loss reserves in the professional indemnity and financial institution lines of the Long-tail segment and the property line of the Short-tail segment. This compares to favorable development of $10.0 million or 14.6 points for the quarter ended March 31, 2020.

The combined ratio for the quarter ended March 31, 2021 was 84.6%, compared to 81.3% for the first quarter of 2020, which had benefitted from the weakening of the Pound Sterling against the U.S. dollar.

Segment Results

The Long-tail Segment, which represented approximately 38% of the Company’s gross written premiums for the quarter ended March 31, 2021, includes all professional and financial lines written by the Company, including D&O, professional indemnity, financial institutions, legal expenses, as well as surety, marine liability, inherent defects insurance, and general third-party liability (non U.S. casualty).

Gross premiums written for the first quarter of 2021 in the Long-tail Segment were $38.2 million, a slight increase from the $37.8 million in the first quarter of 2020. Net written premiums for the quarter ended March 31, 2021 were $30.1 million, compared to $34.4 million in the comparable quarter in 2020. The net underwriting result for this segment was $12.7 million for the first quarter of 2021, compared to $12.6 million in the first quarter of 2020.

The Short-tail Segment, which represented approximately 53% of the Company’s gross written premiums for the quarter ended March 31, 2021, includes energy, property, general aviation, ports and terminals, marine trades, marine cargo, construction and engineering, and political violence.

Gross premiums written for the first quarter of 2021 in the Short-tail Segment were $53.4 million, compared to $54.4 million in the first quarter of 2020. Net written premiums for the quarter ended March 31, 2021 were $38.0 million, compared to $37.8 million in the comparable quarter in 2020. The net underwriting result for this segment was $13.4m for the first quarter of 2021, an increase of $5.0 million from the first quarter of 2020, primarily driven by an increase in net premiums earned of $4.5 million and a $0.9 million lower level of claims and claims adjustment expenses.

The Reinsurance Segment, which represented approximately 9% of the Company’s gross written premiums for the quarter ended March 31, 2021, comprises the Company’s inwards reinsurance portfolio.

Gross and net premiums written for the first quarter of 2021 in the Reinsurance Segment were $9.0 million, compared to $7.0 million in the first quarter of 2020. The net underwriting result for this segment was $1.5 million for the first quarter of 2021, compared to $2.2 million in the first quarter of 2020 primarily due to a $1.9 million higher level of claims and claims adjustment expenses partially offset by a $1.3 million higher net premium earned in the first quarter of 2021 compared to the first quarter of 2020.

Foreign Exchange Losses

The loss on foreign exchange for the quarter ended March 31, 2021 was $1.2 million compared to a loss of $11.9 million for the first quarter of 2020. The loss was primarily driven by currency revaluation recorded in Euro denominated cash, investments, and insurance receivable balances led by the weakening in the Euro against the U.S. Dollar as of March 31, 2021 versus December 31, 2020, whilst other major operating currencies - the Pound Sterling and Australian Dollar - remained relatively flat compared to year-end 2020. The higher level of loss in the first quarter of 2020 was driven by weakening in all three of IGI’s other major operating currencies, U.S. Dollar apart, notably the Pound Sterling, Euro, and the Australian Dollar relative to the U.S. Dollar at the start of the COVID-19 global pandemic in the first quarter of 2020.

Investment Results

Total investment income was $5.1 million for the first quarter of 2021, compared to a loss of $2.0 million in the first quarter of 2020, the latter including significant unrealized revaluation losses on investments as a result of a sharp global market dislocation caused by the COVID 19 pandemic in the first quarter of 2020. Total investment income, net (which excludes realized and unrealized gains and losses, expected credit losses on investments, and the share of profit from associates) was $4.0 million and $2.6 million for the quarters ended March 31, 2021 and 2020, respectively. This represented an annualized investment yield of 2.1% for the first quarter of 2021, compared to 1.7% for the corresponding period in 2020 whereby the increase is mainly driven by higher yields on the Company’s fixed income bonds portfolio.

Cash, cash equivalents and term deposits totaled $297.1 million at March 31, 2021, representing 38.0% of the total investments and cash portfolio, compared to $305.6 million at December 31, 2020, when it represented 39.4%. The total investment and cash portfolio includes cash, cash equivalents and term deposits (cash portfolio), investments, investment in associates, and investment properties.

Total Equity

Total equity as at March 31, 2021 was $396.0 million compared to $394.6 million at December 31, 2020. The movement in Total Equity during the quarter ended March 31, 2021 is illustrated below:

 

(in millions of U.S. Dollars)

Quarter Ended March 31,

 

2021

Total Equity at beginning of period at January 1, 2021

$394.6

Profit for the period

$14.5

Net change in fair value reserves for investments through other comprehensive income

($5.0)

Issuance of restricted share awards

$0.2

Cash dividends declared during the period

($8.3)

Total Equity at March 31, 2021

$396.0

Total Equity includes $9.2 million of warrants issued and outstanding at March 31, 2021 and December 31, 2020. On April 12, 2021, the Division of Corporate Finance and the Office of the Chief Accountant of the Securities and Exchange Commission (the “SEC”) released a “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (SPACs)”. The statement focused on guidance under U.S. Generally Accepted Accounting Principles (US GAAP) considered in determining whether to classify warrants as equity or as a liability measured at fair value with changes in fair value reported in earnings. The Company does not report under US GAAP. The Company is currently in the process of evaluating the applicability of, and whether there is any impact of, the statement on its accounting, including classification, for warrants on its IFRS financial statements.

Book value per share was $8.71 at March 31, 2021, representing a marginal increase from $8.69 at December 31, 2020, and up 15.1% from $7.57 at March 31, 2020.

International General Insurance Holdings Ltd.
Condensed Consolidated Statements of Income (Unaudited)

 

Quarter Ended

March 31,

(in millions of U.S. Dollars, except for percentages and per share data)

 

2021

 

 

2020

 

 

 

 

Gross written premiums.......................................................

$100.6

 

$99.2

Reinsurers’ share of insurance premiums..........................

($23.5)

 

($20.0)

Net written premiums.........................................................

$77.1

 

$79.2

Net change in unearned premiums.....................................

$5.2

 

($10.7)

Net premiums earned..........................................................

$82.3

 

$68.5

Net claims and claim adjustment expenses........................

($41.2)

 

($31.7)

Net policy acquisition expenses...........................................

($13.5)

 

($13.6)

Net underwriting results………………………………………………

$27.6

 

$23.2

Net investment income (1)………………………………….……………

$5.0

 

($2.0)

Share of profit from associates (1)……….…………………………..

$0.1

 

-

General and administrative expenses.................................

($15.0)

 

($10.4)

Other expenses, net (2)..........................................................

($0.7)

 

($0.3)

Listing related expenses.......................................................

-

 

($2.5)

Bargain Purchase

-

 

$2.4

Loss on foreign exchange ....................................................

($1.2)

 

($11.9)

Profit (loss) before tax.........................................................

$15.8

 

($1.5)

Income tax ............................................................................

($1.3)

 

$0.6

Profit (loss) for the period...................................................

$14.5

 

($0.9)

Basic and diluted earnings per share attributable to equity holders(3)……………………………………………………………

$0.30

 

($0.02)

International General Insurance Holdings Ltd.
Condensed Consolidated Statements of Financial Position (Unaudited)

(in millions of U.S. Dollars)

As at March 31,

2021

 

As at December 31, 2020

ASSETS

 

 

 

Cash and cash equivalents

$107.7

 

$133.4

Term deposits

$189.4

 

$172.2

Insurance receivables

$156.1

 

$166.6

Investments (4)

$452.4

 

$438.1

Investments in associates (4)

$11.7

 

$11.6

Reinsurance share of outstanding claims

$186.4

 

$187.5

Reinsurance share of unearned premiums

$44.3

 

$50.1

Deferred excess of loss premiums

$14.5

 

$17.1

Deferred policy acquisition costs

$54.1

 

$55.2

Other assets

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NASDAQ:IGIC

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About IGIC

international general insurance holdings limited (igih) is registered in the dubai international financial centre (difc) with operations in bermuda, the united kingdom, jordan and malaysia. the igi group commenced operations in march 2002 and has evolved as a major participant within its specialised lines of business. the group underwrites a worldwide portfolio of energy, property, marine, construction and engineering, financial institutions, general aviation, casualty, ports & terminals, political violence and non-proportional reinsurance treaty business with the main geographical focus on the afro – asian markets. igi bermuda is a class 3b (re)insurer regulated by the bermuda monetary authority (bma) and is the principal underwriting entity for the group with the jordan office (igi underwriting company limited amman) providing all management, underwriting and operational functions. igi bermuda is rated a-(excellent) with a stable outlook by a.m. best company. igih has two sub