International General Insurance Holdings Ltd. (“IGI” or the
“Company”) (NASDAQ: IGIC) today reported financial results for the
third quarter and first nine months of 2021.
Highlights for the third quarter and first nine months of
2021 include:
(in millions of U.S. Dollars, except
percentages and per share information)
Quarter Ended
September 30,
Nine Months Ended September
30,
2021
2020
2021
2020
Gross written premiums
$115.3
$101.2
$382.1
$337.7
Net premiums earned
$91.2
$73.3
$259.0
$209.5
Net underwriting results
$26.7
$16.4
$75.2
$62.5
Total investment income, net
(1)
$4.0
$3.0
$12.0
$8.1
Profit for the period
$16.1
$5.1
$34.5
$19.6
Combined ratio (2)
85.0%
93.7%
87.3%
86.5%
Earnings per share (Basic and
Diluted) (3)
$0.31
$0.10
$0.71
$0.43
Return on average equity
(annualized) (4)
16.4%
5.6%
11.8%
7.7%
Core operating income (4)
$15.4
$6.4
$39.1
$30.1
Core operating earnings per share
(4) (Basic and Diluted)
$0.31
$0.13
$0.80
$0.67
Core operating return on average equity
(annualized) (4)
15.7%
6.9%
13.4%
11.8%
- See Note (1) in the “Notes to the Condensed Consolidated
Financial Statements (Unaudited)” below.
- See “Supplementary Financial Information” below.
- See Note (3) in the “Notes to the Condensed Consolidated
Financial Statements (Unaudited)” below.
- See the section titled “Non-IFRS Financial Measures”
below.
IGI Chairman and CEO Mr. Wasef Jabsheh said, “This was another
strong quarter for IGI and our results for the year-to-date reflect
the robust underlying fundamentals of IGI’s business. Through the
first nine months of 2021, we have performed well on all key
measures, most notably growing our book value per share by
3.6%.”
“Attractive market conditions are holding up with further rate
increases across our portfolio in excess of 13%, though I would
note that we are now seeing some easing in upwards rate momentum,
and we expect this to continue as we approach the January 2022
renewal period. Having said that, we are seeing attractive
opportunities across our markets, particularly in Europe following
the launch of our European subsidiary in Malta in July.”
“We look forward to continuing the significant progress we have
made since becoming a public company in March 2020, and maintaining
our track record of generating long-term value for our
shareholders.”
Results for the Periods Ended September 30, 2021 and
September 30, 2020
Net profit for the quarter ended September 30, 2021 was $16.1
million, compared to a net profit of $5.1 million for the quarter
ended September 30, 2020.
Core operating income, a non-IFRS measure defined below, was
$15.4 million and $6.4 million for the quarters ended September 30,
2021 and September 30, 2020, respectively. The improvement in core
operating income in the third quarter of 2021 when compared to the
same period in 2020 is primarily due to an increase in net earned
premiums and a decrease in net claims and claims expenses. The
quarter ended September 30, 2021 benefited from an 8.7 point
improvement in the combined ratio primarily driven by an increase
in net premiums earned and higher favorable development of net loss
reserves from prior accident years compared to the same period in
2020.
The core operating return on average equity (annualized) was
15.7% for the quarter ended September 30, 2021, compared to 6.9%
for the quarter ended September 30, 2020.
For the first nine months of 2021, net profit was $34.5 million,
compared to a net profit of $19.6 million for the first nine months
of 2020.
Core operating income was $39.1 million for the first nine
months of 2021 compared to $30.1 million for the comparable period
in 2020, primarily driven by an increase in net premiums earned,
partially offset by an increase in net claims and claim adjustment
expenses and net policy acquisition expenses.
The core operating return on average equity (annualized)
increased 1.6% to 13.4% for the first nine months of 2021, compared
to 11.8% in the same period in 2020.
Underwriting Results
The net underwriting results improved to $26.7 million for the
quarter ended September 30, 2021 from $16.4 million for the quarter
ended September 30, 2020, largely driven by growth in premiums.
Gross written premiums were $115.3 million for the quarter ended
September 30, 2021, representing growth of 13.9% compared to $101.2
million for the quarter ended September 30, 2020.
The net claims and claims expense ratio was 50.4% for the
quarter ended September 30, 2021, compared to 58.8% for the quarter
ended September 30, 2020, primarily driven by the increase in net
premiums earned. The third quarter of 2021 also benefited from
favorable development of net loss reserves from prior accidents
years recorded across all segments of $7.1 million or 7.8 points
compared to favorable development of $0.3 million or 0.4 points for
the quarter ended September 30, 2020.
The combined ratio for the quarter ended September 30, 2021 was
85.0% compared to 93.7% for the quarter ended September 30, 2020
and benefited from an increase in net premiums earned and favorable
development of net loss reserves from prior accident years during
the quarter.
The net underwriting results improved to $75.2 million for the
nine months ended September 30, 2021 from $62.5 million for the
nine months ended September 30, 2020, largely driven by growth in
premiums.
For the first nine months of 2021, gross written premiums were
$382.1 million, an increase of 13.1%, compared to $337.7 million
for the comparable period in 2020.
The net claims and claims expense ratio was 52.5% for the first
nine months of 2021, compared to 51.3% for the first nine months of
2020, as the increase in net premiums earned was partially offset
by an increase in net claims and claim adjustment expenses. The net
claims and claims expense ratio was impacted marginally by lower
favorable development of net loss reserves from prior accident
years of $10.4 million, or 4.0 points, for the period ended
September 30, 2021 compared to favorable development of $11.5
million, or 5.5 points, for the period ended September 30,
2020.
The combined ratio for the nine months ended September 30, 2021
was 87.3%, compared to 86.5% for the nine months ended September
30, 2020.
Segment Results
The Long-tail Segment, which represented approximately
41% of the Company’s gross written premiums for the nine months
ended September 30, 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 written premiums for the third quarter of 2021 in the
Long-tail Segment increased 1.7% to $55.3 million from $54.4
million in the third quarter of 2020. Net written premiums for the
quarter ended September 30, 2021 were $45.8 million, compared to
$48.2 million in the comparable quarter in 2020. The net
underwriting results for this segment were $17.1 million for the
third quarter of 2021, compared to $6.5 million in the third
quarter of 2020 primarily due to higher net premiums earned coupled
with a lower level of net claims and claim adjustment expenses in
the third quarter of 2021 compared to the third quarter of
2020.
Gross written premiums for the first nine months of 2021 in the
Long-tail Segment were $156.6 million, representing an increase of
10.7% from $141.5 million in the first nine months of 2020. Net
written premiums for the nine months ended September 30, 2021 were
$120.2 million, compared to $122.3 million in the comparable period
in 2020. The net underwriting results for this segment were $39.5
million for the first nine months of 2021, compared to $25.9
million in the comparable period in 2020, primarily as a result of
the higher level of net premiums earned in 2021, partially offset
by an increase in net claims and claim adjustment expenses and net
policy acquisition expenses.
The Short-tail Segment, which represented approximately
54% of the Company’s gross written premiums for the nine months
ended September 30, 2021, includes energy, property, general
aviation, ports and terminals, marine trades, marine cargo,
contingency, construction and engineering, and political
violence.
Gross written premiums for the third quarter of 2021 in the
Short-tail Segment were $54.6 million, an increase of 30.6%
compared to $41.8 million in the third quarter of 2020, reflecting
growth in all Short-tail lines except for the aviation line. Net
written premiums for the quarter ended September 30, 2021 were
$33.9 million, compared to $24.4 million in the comparable quarter
in 2020. The net underwriting results for this segment were $8.8
million for the third quarter of 2021, compared to $8.4 million for
the comparable quarter in 2020 as the increase in net premiums
earned was partially offset by an increase in net claims and claim
adjustment expenses and an increase in net policy acquisition
expenses.
Gross written premiums for the first nine months of 2021 in the
Short-tail Segment increased to $205.5 million, compared to $179.7
million in the comparable period in 2020. Net written premiums for
the nine months ended September 30, 2021 were $131.6 million,
compared to $109.4 million in the comparable period in 2020. The
net underwriting results for this segment were $32.3 million for
the first nine months of 2021, compared to $29.8 million in the
first nine months of 2020 as the increase in net premiums earned
was partially offset by an increase in net claims and claim
adjustment expenses and an increase in net policy acquisition
expenses.
The Reinsurance Segment, which represented approximately
5% of the Company’s gross written premiums for the nine months
ended September 30, 2021, includes the Company’s inwards
reinsurance portfolio.
Gross and net written premiums for the third quarter of 2021 in
the Reinsurance Segment were $5.4 million, compared to $5.0 million
in the third quarter of 2020. The net underwriting results for this
segment were $0.8 million for the third quarter of 2021, compared
to $1.5 million in the third quarter of 2020, primarily due to a
higher level of net claims and claim adjustment expenses in the
third quarter of 2021 compared to the third quarter of 2020.
Gross and net written premiums for the first nine months of 2021
in the Reinsurance Segment were $20.0 million, compared to $16.5
million in the comparable period in 2020. The net underwriting
results for this segment were $3.4 million for the first nine
months of 2021, compared to $6.8 million in the comparable period
in 2020, primarily due to a higher level of net claims and claim
adjustment expenses, partially offset by an increase in net
premiums earned in the first nine months of 2021 compared to the
same period in 2020.
Foreign Exchange Losses
The loss on foreign exchange for the quarter ended September 30,
2021 was $4.9 million, compared to a gain of $5.0 million for the
quarter ended September 30, 2020.
The loss on foreign exchange for the nine months ended September
30, 2021 was $8.1 million compared to a loss of $3.7 million for
the nine months ended September 30, 2020.
The loss in both the third quarter and nine months ended
September 30, 2021 was primarily driven by currency revaluation
losses recorded in non-U.S. Dollar cash, investments and insurance
receivable balances as a result of the weakening of the Euro, Pound
Sterling and Australian Dollar against the U.S. Dollar at September
30, 2021, when compared with June 30, 2021 and December 31,
2020.
Investment Results
Total investment income was $3.3 million for the third quarter
of 2021, compared to $1.4 million in the third quarter of 2020.
Total investment income, net (which excludes realized and
unrealized gains and losses on investments, realized and fair value
gains or losses on investment properties, expected credit losses on
investments, and the share of profit or loss from associates) was
$4.0 million and $3.0 million for the quarters ended September 30,
2021 and September 30, 2020, respectively. This represented an
annualized investment yield of 1.9% for the third quarter of 2021,
compared to 1.7% for the corresponding period in 2020, reflecting
slightly higher yields on the Company’s fixed income bond
portfolio.
For the first nine months of 2021, total investment income was
$13.0 million compared to $4.1 million in the first nine months of
2020, as 2020 was impacted by significant unrealized revaluation
losses on investments as a result of the 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 loss from associates) was $12.0 million and $8.1
million for the periods ended September 30, 2021 and September 30,
2020, respectively. This represented an annualized investment yield
of 2.0% for the first nine months of 2021, compared to 1.7% for the
corresponding period in 2020, reflecting higher yields on the
Company’s fixed income bond portfolio.
Cash, cash equivalents and term deposits totaled $385.8 million
at September 30, 2021, representing 44.1% of the Company’s 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 at September 30, 2021 was $395.5 million, compared
to $381.0 million at December 31, 2020. The movement in total
equity during the third quarter and nine months ended September 30,
2021 is illustrated below:
(in millions of U.S. Dollars)
Quarter Ended September 30,
2021
Nine Months Ended September
30, 2021
Total Equity at beginning of
period
$390.2
$381.0
Profit for the period
$16.1
$34.5
Net change in fair value reserves for
investments through other comprehensive income
($3.4)
($5.2)
Change in foreign currency translation
reserve
($0.1)
($0.1)
Issuance of restricted share awards
$0.5
$1.4
Cash dividends declared during the
period
($7.8)
($16.1)
Total Equity at September 30,
2021
$395.5
$395.5
Book value per share was $8.69 at September 30, 2021,
representing growth of 3.6% from $8.39 at December 31, 2020.
Condensed Consolidated Statements of Income
(Unaudited)
Quarter Ended
September 30,
Nine Months Ended
September 30,
(in millions of U.S. Dollars, except per
share data)
2021
2020
2021
2020
Gross written
premiums.......................................................
$115.3
$101.2
$382.1
$337.7
Reinsurers’ share of insurance
premiums..........................
($30.2)
($23.6)
($110.3)
($89.5)
Net written
premiums.........................................................
$85.1
$77.6
$271.8
$248.2
Net change in unearned
premiums.....................................
$6.1
($4.3)
($12.8)
($38.7)
Net premiums
earned..........................................................
$91.2
$73.3
$259.0
$209.5
Net claims and claim adjustment
expenses........................
($45.9)
($43.2)
($135.9)
($107.4)
Net policy acquisition
expenses...........................................
($18.6)
($13.7)
($47.9)
($39.6)
Net underwriting
results………………………………………………
$26.7
$16.4
$75.2
$62.5
Net investment income
(1)………………………………….……………
$3.8
$2.1
$13.2
$5.2
Share of loss from associates
(1)……….……………
($0.5)
($0.7)
($0.2)
($1.1)
General and administrative
expenses.................................
($13.0)
($11.8)
($42.3)
($34.2)
Other expenses, net
(2)..........................................................
($1.9)
($0.6)
($3.5)
($3.3)
Change in fair value of derivative
financial liability ………..
$5.4
($4.4)
$1.6
($1.1)
Listing related
expenses.......................................................
-
($0.2)
-
($3.6)
(Loss) gain on foreign exchange
.........................................
($4.9)
$5.0
($8.1)
($3.7)
Profit before
tax...................................................................
$15.6
$5.8
$35.9
$20.7
Income tax
............................................................................
$0.5
($0.7)
($1.4)
($1.1)
Profit for the
period.............................................................
$16.1
$5.1
$34.5
$19.6
Basic and diluted earnings per share
attributable to equity
holders(3)……………………………………………………………
$0.31
$0.10
$0.71
$0.43
See “Notes to the Condensed Consolidated Financial Statements
(Unaudited)” below.
The Consolidated Statements of Income for the quarter and nine
months ended September 30, 2020 were restated – see 6-K furnished
to the SEC on October 19, 2021.
Condensed Consolidated Statements of Financial
Position
(in millions of U.S. Dollars)
As at
September 30, 2021
(Unaudited)
As at
December 31, 2020
(Audited)
ASSETS
Cash and cash equivalents
$224.4
$133.4
Term deposits
$161.4
$172.2
Insurance receivables
$155.1
$166.6
Investments (4)
$460.2
$438.1
Investment in associates (4)
$11.3
$11.6
Reinsurance share of outstanding
claims
$191.9
$187.5
Reinsurance share of unearned premiums
$57.1
$50.1
Deferred excess of loss premiums
$25.9
$17.1
Deferred policy acquisition costs
$59.2
$55.2
Other assets
$9.9
$9.5
Investment properties (4)
$17.8
$20.0
Property, premises and equipment
$13.5
$13.2
Intangible assets
$5.1
$4.7
TOTAL ASSETS
$1,392.8
$1,279.2
LIABILITIES
Gross outstanding claims
$572.5
$492.3
Gross unearned premiums
$297.1
$277.2
Insurance payables
$81.2
$83.5
Other liabilities
$23.8
$20.5
Derivative financial liability
$12.1
$13.6
Deferred tax liabilities
$0.2
$0.1
Unearned commissions
$10.4
$11.0
TOTAL LIABILITIES
$997.3
$898.2
EQUITY
Common shares at par value
$0.5
$0.5
Share premium
$159.0
$157.6
Foreign currency translation reserve
($0.4)
($0.3)
Fair value reserves
$13.0
$18.2
Retained earnings
$223.4
$205.0
TOTAL EQUITY
$395.5
$381.0
TOTAL LIABILITIES AND EQUITY
$1,392.8
$1,279.2
See “Notes to the Condensed Consolidated Financial Statements
(Unaudited)” below.
The consolidated financial statements for the year ended
December 31, 2020 were restated - see 20-F/A filed with the SEC on
October 19, 2021.
Supplementary Financial Information – Combined Ratio
(Unaudited)
Quarter Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Ratios
Net claims and claims expense ratio
(a)...................
50.4%
58.8%
52.5%
51.3%
Net policy acquisition expense ratio
(b)..........................
20.4%
18.7%
18.5%
18.9%
General and administrative expense ratio
(c)................
14.2%
16.1%
16.3%
16.3%
Expense ratio
(d).................................................
34.6%
34.8%
34.8%
35.2%
Combined ratio
(e)...............................................
85.0%
93.7%
87.3%
86.5%
- Represents net claims and claim adjustment expenses as a
percentage of net premiums earned.
- Represents net policy acquisition expenses as a percentage of
net premiums earned.
- Represents general and administrative expenses as a percentage
of net premiums earned.
- Represents the sum of the net policy acquisition expense ratio
and the general and administrative expense ratio.
- Represents the sum of the net claims and claim expense ratio
and the expense ratio.
Supplementary Financial Information – Book Value per Share
(Unaudited)
(in millions of U.S. Dollars, except share
and per share data)
As at
September 30, 2021
As at
December 31, 2020
Cash and cash equivalents and term
deposits ...........
$385.8
$305.6
Total investments
***..................................................
$489.4
$469.7
Total Investments and cash
portfolio........................
$875.2
$775.3
Common shares outstanding (in
millions)*
48.9
48.5
Minus: Unvested shares (in millions)**
3.4
3.1
Number of vested common outstanding
shares (in millions)
(a)......................................................
45.5
45.4
Total equity (b)
$395.5
$381.0
Book value per share (b)/(a)
...............................
$8.69
$8.39
* Common shares issued and outstanding as at September 30, 2021
and December 31, 2020 are as follows:
No. of shares as at
September 30, 2021
Common shares as of December
31, 2020
45,426,251
Vested restricted shares awards
44,833
Common shares as of September 30,
2021
45,471,084
Earnout shares as of September 30,
2021
3,012,500
Unvested restricted share awards
as of September 30, 2021
399,857
Total unvested shares as of September
30, 2021
3,412,357
Total Common shares outstanding
48,883,441
No. of shares as at
December 31, 2020
Common shares as of December 31,
2020
45,426,251
Earnout shares as of December 31, 2020
3,012,500
Unvested restricted share awards as of
December 31, 2020
134,500
Total unvested shares as of December
31, 2020
3,147,000
Total Common shares outstanding
48,573,251
** Earnout Shares are subject to vesting at stock prices ranging
from $11.50 to $15.25, are entitled to dividends and voting rights,
but are non-transferable by their holders until they vest. If the
Earnout Shares do not vest on or prior to March 17, 2028, they will
be cancelled by the Company. Restricted Share awards were issued in
2021 and 2020 pursuant to the Company’s 2020 Omnibus Incentive Plan
and are entitled to dividends and voting rights. However, the
Restricted Share awards are non-transferable by their holders until
they vest as per the respective Restricted Share Award Agreements.
As at September 30, 2021, the vesting conditions attached to both
Earnout Shares and unvested Restricted Share awards to employees
have not been met, and as a result these shares were not included
in the weighted average number of common shares for both basic and
diluted earnings per share.
*** See Note 4 in the “Notes to Consolidated Financial
Statements (Unaudited)” below.
Supplementary Financial Information - Segment Results
(Unaudited)
Segment information for IGI’s consolidated operations is as
follows:
For the quarter ended September 30,
2021
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$55.3
$54.6
$5.4
$115.3
Reinsurers’ share of insurance
premiums
($9.5)
($20.7)
-
($30.2)
Net written premiums
$45.8
$33.9
$5.4
$85.1
Net change in unearned premiums
($1.0)
$6.6
$0.5
$6.1
Net premiums earned
$44.8
$40.5
$5.9
$91.2
Net claims and claim adjustment
expenses
($19.3)
($22.6)
($4.0)
($45.9)
Net policy acquisition expenses
($8.4)
($9.1)
($1.1)
($18.6)
Net underwriting results
$17.1
$8.8
$0.8
$26.7
For the quarter ended September 30,
2020
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$54.4
$41.8
$5.0
$101.2
Reinsurers’ share of insurance
premiums
($6.2)
($17.4)
-
($23.6)
Net written premiums
$48.2
$24.4
$5.0
$77.6
Net change in unearned premiums
($10.3)
$5.9
$0.1
($4.3)
Net premiums earned
$37.9
$30.3
$5.1
$73.3
Net claims and claim adjustment
expenses
($25.4)
($15.1)
($2.7)
($43.2)
Net policy acquisition expenses
($6.0)
($6.8)
($0.9)
($13.7)
Net underwriting results
$6.5
$8.4
$1.5
$16.4
Supplementary Financial Information - Segment Results
(Unaudited)
For the nine months ended September 30,
2021
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$156.6
$205.5
$20.0
$382.1
Reinsurers’ share of insurance
premiums
($36.4)
($73.9)
-
($110.3)
Net written premiums
$120.2
$131.6
$20.0
$271.8
Net change in unearned premiums
$7.3
($17.3)
($2.8)
($12.8)
Net premiums earned
$127.5
$114.3
$17.2
$259.0
Net claims and claim adjustment
expenses
($65.6)
($59.4)
($10.9)
($135.9)
Net policy acquisition expenses
($22.4)
($22.6)
($2.9)
($47.9)
Net underwriting results
$39.5
$32.3
$3.4
$75.2
For the nine months ended September 30,
2020
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$141.5
$179.7
$16.5
$337.7
Reinsurers’ share of insurance
premiums
($19.20)
($70.30)
-
($89.5)
Net written premiums
$122.3
$109.4
$16.5
$248.2
Net change in unearned premiums
($19.4)
($16.3)
($3.0)
($38.7)
Net premiums earned
$102.9
$93.1
$13.5
$209.5
Net claims and claim adjustment
expenses
($57.8)
($45.2)
($4.4)
($107.4)
Net policy acquisition expenses
($19.2)
($18.1)
($2.3)
($39.6)
Net underwriting results
$25.9
$29.8
$6.8
$62.5
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. The following are the calculated investment yields and the
reconciliation of investment income and share of loss from
associates included in the Condensed Consolidated Statements of
Income (Unaudited) to Total investment income, net, used to
calculate investment yield:
Quarter Ended
September 30,
Nine Months Ended September
30,
(in millions of U.S. Dollars, except
percentages)
2021
2020
2021
2020
Net investment
income*...............................................................
$3.8
$2.1
$13.2
$5.2
Share of loss from associates
.......................................................
($0.5)
($0.7)
($0.2)
($1.1)
Total investment
income.............................................................
$3.3
$1.4
$13.0
$4.1
Minus..............................................................................................
Realized gain (loss) on investments
............................................
$0.2
($0.1)
$0.4
$1.5
Unrealized gain (loss) on
investments.........................................
-
($0.2)
$2.1
($2.9)
Realized loss on investment properties
…………………………….
-
-
-
($0.1)
Fair value loss on investment
properties.....................................
($0.4)
($0.5)
($1.3)
($1.2)
Expected credit losses on
investments........................................
-
($0.1)
-
($0.2)
Share of loss from associates
.......................................................
($0.5)
($0.7)
($0.2)
($1.1)
Total investment income, net
(a)……………………………………..
$4.0
$3.0
$12.0
$8.1
Average investments and cash portfolio, at
cost (b)…………..
$841.4
$689.8
$801.7
$648.2
Investment Yield (a) / (b)
annualized………………………………..
1.9%
1.7%
2.0%
1.7%
* Net investment income is comprised of interest and dividend
income, realized and unrealized gain (loss) on investments,
realized and unrealized gain (loss) on investment properties,
expected credit loss on investments, investment custodian fees and
other investment expenses.
2. Represents the sum of other revenues, other expenses and
impairment loss on insurance receivables as follows:
Quarter Ended
September 30,
Nine Months Ended September
30,
(in millions of U.S. Dollars)
2021
2020
2021
2020
Other
revenues......................................................................
$0.4
$0.1
$1.4
$0.2
Other expenses
.....................................................................
($0.6)
($0.3)
($2.1)
($1.0)
Impairment loss on insurance
receivables..........................
($1.7)
($0.4)
($2.8)
($2.5)
Other expenses,
net.................................................
($1.9)
($0.6)
($3.5)
($3.3)
3. Represents net profit for the period attributable to vested
common shares divided by the weighted average number of shares –
basic and diluted calculated as follows:
Quarter Ended
September 30,
Nine Months Ended September
30,
(in millions of U.S. Dollars, except share
and per share information)
2021
2020
2021
2020
Profit for the period
$16.1
$5.1
$34.5
$19.6
Minus: Profit attributable to the Earnout
Shares
$1.6
$0.3
$2.1
$1.2
Minus: Profit attributable to the
Restricted Shares
$0.2
-
$0.3
-
Net profit for the period attributable
to equity holders (a)
$14.3
$4.8
$32.1
$18.4
Weighted average number of shares – basic
and diluted (in millions of shares) (b)
45.5
45.4
45.5
42.2
Basic and diluted earnings per share
attributable to equity holders (a/b)
$0.31
$0.10
$0.71
$0.43
4. Total Investments includes the following:
As at
(in millions of U.S. Dollars)
September 30, 2021
December 31, 2020
Investments.........................................................................
$460.2
$438.1
Investment
properties........................................................
$17.8
$20.0
Investments in
associates...................................................
$11.3
$11.6
Total
investments...............................................................
$489.3
$469.7
Non-IFRS Financial Measures
In presenting IGI’s results, management has included and
discussed certain non-IFRS financial measures. We believe that
these non-IFRS measures, which may be defined and calculated
differently by other companies, help to explain and enhance an
understanding of our results of operations. However, these measures
should not be viewed as a substitute for those determined in
accordance with IFRS.
Combined Ratio
The table below illustrates the reconciliation of the combined
ratio on a financial and accident year basis:
Quarter Ended
September 30,
Nine Months Ended September
30,
(in millions of U.S. Dollars, except
percentages)
2021
2020
2021
2020
Net premiums earned (a)
$91.2
$73.3
$259.0
$209.5
Net Claims and claim adjustment expenses
(b)
($45.9)
($43.2)
($135.9)
($107.4)
Net Policy acquisition expenses (c)
($18.6)
($13.7)
($47.9)
($39.6)
General and administrative expenses
(d)
($13.0)
($11.8)
($42.3)
($34.2)
Prior years favorable development (e)
($7.1)
($0.3)
($10.4)
($11.5)
Catastrophe (CAT) losses (f)*
$17.6
$4.6
$19.0
$7.2
Combined ratio ((b+c+d)/a)**
85.0%
93.7%
87.3%
86.5%
Minus: Prior years favorable development
(e/a) ..........
(7.8%)
(0.4%)
(4.0%)
(5.5%)
Accident year combined ratio
92.8%
94.1%
91.3%
92.0%
Minus: CAT losses on an accident year
basis (f/a).........
19.3%
6.3%
7.4%
3.4%
Accident year combined ratio prior to
CAT losses.......
73.5%
87.8%
83.9%
88.6%
* The CAT losses for the quarter ended September 30, 2021 are
primarily attributable to $11.6 million of reserves recorded for
the 2021 Afghanistan political unrest and the South Africa riots
(in the political violence line in the Short-tail Segment) and $2.9
million of reserves for the 2021 floods in Europe (in the
Reinsurance Segment).
The CAT losses for the nine months ended September 30, 2021 are
primarily attributable to $11.6 million of reserves recorded for
the 2021 Afghanistan political unrest and the South Africa riots
(in the political violence line in the Short-tail Segment) and $3.9
million of reserves for the 2021 floods in Europe (in the
Reinsurance Segment).
** See “Supplementary Financial Information - Condensed
Consolidated Statements of Income (Unaudited).”
Core Operating Income
Core operating income measures the performance of our operations
without the influence of after-tax gains or losses on investments
and foreign currencies and other items as noted in the table below.
We exclude these items from our calculation of core operating
income because the amount of these gains and losses is heavily
influenced by, and fluctuates in part according to, economic and
other factors external to the Company and/or transactions or events
that are typically not a recurring part of, and are largely
independent of, our core underwriting activities and including them
distorts the analysis of trends in our operations. We believe the
reporting of core operating income enhances an understanding of our
results by highlighting the underlying profitability of our core
insurance operations. Our underwriting profitability is impacted by
earned premium, the adequacy of pricing, and the frequency and
severity of losses. Over time, such profitability is also
influenced by underwriting discipline, which seeks to manage the
Company’s exposure to loss through favorable risk selection and
diversification, IGI’s management of claims, use of reinsurance and
the ability to manage the expense ratio, which the Company
accomplishes through the management of acquisition costs and other
underwriting expenses.
In addition to presenting profit for the period determined in
accordance with IFRS, we believe that showing “core operating
income” provides investors with a valuable measure of profitability
and enables investors, rating agencies and other users of our
financial information to more easily analyze the Company’s results
in a manner similar to how Management analyzes the Company’s
underlying business performance.
Core operating income is calculated by the addition or
subtraction of certain line items reported in the “Condensed
Consolidated Statements of Income” from profit for the period and
tax effecting each line item (resulting in each item being a
non-IFRS measure), as illustrated in the table below:
Quarter Ended
September 30,
Nine Months Ended September
30,
(in millions of U.S. Dollars, except for
percentages and per
2021
2020
2021
2020
share data)
Profit for the
period.....................................................
$16.1
$5.1
$34.5
$19.6
Reconciling items between profit for the
period and core operating income:
Realized (gain) loss on investments (tax
adjusted) (i).
($0.2)
$0.1
($0.4)
($1.4)
Expected credit losses on
investments……………..
-
$0.1
-
$0.2
Unrealized loss on investments (tax
adjusted) (i)........
-
$0.1
($2.0)
$2.6
Realized loss on investment
properties......................
-
-
-
$0.1
Fair value loss on investment properties
………….
$0.4
$0.5
$1.3
$1.2
Change in fair value of derivative
financial liability
($5.4)
$4.4
($1.6)
$1.1
Listing related
expenses...............................................
-
$0.2
-
$3.6
Loss (gain) on foreign exchange (tax
adjusted) (i)
$4.5
($4.1)
$7.3
$3.1
Core operating
income................................................
$15.4
$6.4
$39.1
$30.1
Average shareholders’ equity
(ii)..................................
$392.9
$364.9
$388.3
$340.8
Core operating return on average equity
(annualized)
(iii)..............................................................
15.7%
6.9%
13.4%
11.8%
Basic and diluted core operating earnings
per share
(iv)....................................................................................
$0.31
$0.13
$0.80
$0.67
Return on average equity (annualized)
(v)..............
16.4%
5.6%
11.8%
7.7%
- Represents a non-IFRS financial measure as components within
the line-item balances for Net investment income and (Loss) gain on
foreign exchange reported in “Condensed Consolidated Statements of
Income (Unaudited)” have been adjusted above for the related tax
impact.
- Represents the total equity at the reporting period end plus
the total equity as of the beginning of the reporting period,
divided by 2.
- Represents annualized core operating income for the period
divided by average shareholders’ equity.
- Represents core operating income attributable to vested equity
holders divided by weighted average number of shares – basic and
diluted as follows:
Quarter Ended
September 30,
Nine Months Ended September
30,
(in millions of U.S. Dollars, except per
share information)
2021
2020
2021
2020
Core operating income
$15.4
$6.4
$39.1
$30.1
Minus: Core operating income attributable
to the Earnout Shares subject to vesting
$1.0
$0.4
$2.4
$1.9
Minus: Core operating income attributable
to the Restricted Shares Awards subject to vesting
$0.1
-
$0.3
-
Core operating income for the
period attributable to vested equity holders (a)
$14.3
$6.0
$36.4
$28.2
Weighted average number of common shares –
basic and diluted (in millions of shares) (b)
45.5
45.4
45.5
42.2
Basic and diluted core operating
earnings per share (a/b)
$0.31
$0.13
$0.80
$0.67
v. Return on average equity (annualized) and core operating
return on average equity (annualized), both non-IFRS financial
measures, represent the returns generated on common shareholders’
equity during the year. IGI’s objective is to generate superior
returns on capital that appropriately reward shareholders for the
risks assumed.
The Company has posted a Third Quarter 2021 investor
presentation deck on its website at www.iginsure.com in the Investors section
under the Presentations & Webcasts tab.
---
About IGI: IGI is an international specialty risks commercial
insurer and reinsurer underwriting a diverse portfolio of specialty
lines. Established in 2001, IGI has a worldwide portfolio of
energy, property, general aviation, construction & engineering,
ports & terminals, marine cargo, marine trades, contingency,
political violence, financial institutions, general third-party
liability (casualty), legal expenses, professional indemnity,
D&O, surety, marine liability and reinsurance treaty business.
Registered in Bermuda, with operations in Bermuda, London, Malta,
Dubai, Amman, Labuan and Casablanca, IGI aims to deliver
outstanding levels of service to clients and brokers. IGI is rated
“A” (Excellent)/Stable by AM Best and “A-”/Stable by S&P Global
Ratings. For more information about IGI, please visit
www.iginsure.com.
---
Forward-Looking Statements: This press release contains
“forward-looking statements” within the meaning of the “safe
harbour” provisions of the Private Securities Litigation Reform Act
of 1995. The expectations, estimates, and projections of the
business of IGI may differ from its actual results and,
consequently, you should not rely on forward-looking statements as
predictions of future events. Words such as “expect,” “estimate,”
“project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,”
“may,” “will,” “could,” “should,” “believes,” “predicts,”
“potential,” “continue,” and similar expressions are intended to
identify such forward-looking statements. Forward-looking
statements contained in this press release may include, but are not
limited to, our expectations regarding the performance of our
business, our financial results, our liquidity and capital
resources, the outcome of our strategic initiatives, our
expectations regarding pricing and other market conditions, and our
growth prospects. These forward-looking statements involve
significant risks and uncertainties that could cause the actual
results to differ materially from the expected results. Most of
these factors are outside of the control of IGI and are difficult
to predict. Factors that may cause such differences include, but
are not limited to: (1) changes in demand for IGI’s services
together with the possibility that IGI may be adversely affected by
other economic, business, and/or competitive factors globally and
in the regions in which it operates; (2) competition, the ability
of IGI to grow and manage growth profitably and IGI’s ability to
retain its key employees; (3) changes in applicable laws or
regulations; (4) the outcome of any legal proceedings that may be
instituted against the Company; (5) the potential effects of the
COVID-19 pandemic and emerging variants; (6) the inability to
maintain the listing of the Company’s common shares or warrants on
Nasdaq; and (7) other risks and uncertainties indicated in IGI’s
filings with the SEC. The foregoing list of factors is not
exclusive. In addition, forward-looking statements are inherently
based on various estimates and assumptions that are subject to the
judgment of those preparing them and are also subject to
significant economic, competitive, industry and other uncertainties
and contingencies, all of which are difficult or impossible to
predict and many of which are beyond the control of IGI. There can
be no assurance that IGI’s financial condition or results of
operations will be consistent with those set forth in such
forward-looking statements. You should not place undue reliance
upon any forward-looking statements, which speak only as of the
date made. IGI does not undertake or accept any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements to reflect any change in its
expectations or any change in events, conditions, or circumstances
on which any such statement is based.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211111005969/en/
IGI Contacts: Investors: Robin Sidders, Head of Investor
Relations T: + 44 (0) 2072 204937 M: + 44 (0) 7384 514785 Email:
robin.sidders@iginsure.com
Media: Aaida Abu Jaber, AVP PR & Marketing T:
+96265662082 Ext. 407 M: +962770415540 Email:
aaida.abujaber@iginsure.com
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