International General Insurance Holdings Ltd. (“IGI” or the
“Company”) (NASDAQ:IGIC) today announced condensed and unaudited
financial results for the third quarter and first nine months of
2020.
Highlights for the third quarter and first nine months of
2020 include:
(in U.S Dollars Millions, except
percentages and per share information)
Three Months Ended September
30
Nine Months Ended September
30
2020
2019
2020
2019
Gross written premiums
$101.2
$73.9
$337.7
$260.2
% growth
36.9%
29.8%
Net premiums earned
$73.3
$54.0
$209.5
$157.4
Net underwriting results
$16.4
$15.6
$62.5
$41.7
Profit for the period
$9.5
$4.3
$20.7
$19.2
Combined ratio (1)
93.7%
89.3%
86.5%
91.5%
Total investment income, net
(3)
$3.0
$2.5
$8.1
$8.3
Earnings per share
$0.20
$0.13
$0.46
$0.56
Return on average equity
(annualized) (2)
10.2%
5.5%
8.0%
8.3%
Core operating income (2)
$6.4
$8.2
$30.1
$21.2
Core operating earnings per share
(2)
$0.13
$0.23
$0.67
$0.58
Core operating return on average
equity (annualized) (2)
6.7%
10.5%
11.6%
9.2%
(1)
See “Supplemental Information” to the
“Condensed Consolidated Statements of Income (Unaudited)”
below.
(2)
See the section titled “Non-IFRS Financial
Measures” below.
(3)
See Note (1) in the “Notes to the
Condensed Consolidated Statements of Income (Unaudited)” below.
IGI Chairman and CEO Mr. Wasef Jabsheh said, “We are pleased to
share another set of strong financial results for the third quarter
and first nine months of 2020.
“With the continued uncertainty in global financial markets
caused by the COVID-19 pandemic and the frequency worldwide of
catastrophe events continuing unabated, it is a testament to IGI’s
diversified business profile, risk management, targeted business
focus and broad geographic footprint that the Company has not been
severely affected either financially or operationally in 2020. Our
focus on successfully executing our strategy, the provision of
excellent service to our clients and partners, and our inherent
financial strength gives us confidence that we will maintain our
track record of maximizing value for shareholders over the
long-term.
“The pricing environment remains robust – with rates across our
book of business up over 21% for the year-to-date – and we continue
to thoughtfully, carefully, and profitably grow our book of
business, as demonstrated by the 29.8% increase in gross written
premiums so far this year. We remain cautious in managing our net
exposures to minimize our overall risk profile, and again, this is
demonstrated in our combined ratio of 93.7% for the third quarter
and 86.5% for the year-to-date. I congratulate all our people
across our various offices for the excellent results achieved in
what, particularly operationally, has been a very demanding year
for IGI.”
Results for the Three and Nine Months ended September 30,
2020 and 2019
Net profit for the quarter ended September 30, 2020 was $9.5
million, up from a net profit of $4.3 million for the quarter ended
September 30, 2019. Net profit for the nine months ended September
30, 2020 was up slightly to $20.7 million when compared to a net
profit of $19.2 million for the nine months ended September 30,
2019.
Core operating income, a non-IFRS measure defined below, was
$6.4 million and $8.2 million for the quarters ended September 30,
2020 and 2019, respectively. This decrease in core operating income
for the quarter ended September 30, 2020 compared to the same
quarter of 2019, was primarily the result of a higher combined
ratio, which was 4.4 points higher in the third quarter 2020 when
compared to the third quarter of 2019. As a result, core operating
return on average equity (annualized) decreased to 6.7% for the
quarter ended September 30, 2020, compared to 10.5% for the same
period of 2019.
The higher core operating income of $30.1 million for the nine
months ended September 30, 2020 compared to $21.2 million for the
nine months ended September 30, 2019, benefitted primarily from the
combined ratio being 5.0 points lower in the nine months ended 2020
when compared to the nine months ended 2019. While average common
shareholders’ equity increased by 12.8% on a comparative basis
primarily due to growth in retained earnings during the period,
core operating return on average equity (annualized) also increased
to 11.6% for the nine months ended September 30, 2020 compared to
9.2% for the same period in 2019.
Underwriting Results
Gross written premiums were $101.2 million for the quarter ended
September 30, 2020, an increase of 36.9% compared to $73.9 million
for the quarter ended September 30, 2019. The increase in gross
written premiums for the quarter was the result of new business
generated across virtually all lines, as well as improved renewal
pricing. With market conditions still firming, the Company also
continued to further refine its existing portfolio, achieving
improved terms and conditions.
For the first nine months of 2020, gross written premiums were
$337.7 million, up 29.8% compared to $260.2 million for the first
nine months of 2019.
The claims and claims expense ratios were 58.8% and 48.9% for
the quarters ended September 30, 2020 and 2019, respectively. This
included current accident year net catastrophe losses of $4.6
million or 6.3 points for the quarter ended September 30, 2020,
compared to $2.0 million or 3.7 points for the quarter ended
September 30, 2019. Favorable development on loss reserves from
prior accident years was $0.3 million or 0.5 points for the quarter
ended September 30, 2020 compared to favorable development of $5.8
million or 10.8 points for the quarter ended September 30, 2019.
Catastrophe losses during the third quarter of 2020 were driven
primarily by the heavy rain and high velocity winds that damaged
cranes at the Jawaharlal Nehru port in Mumbai, India, and are
included in the Short-tail segment.
The claims and claims expense ratio remained stable at 51.3% for
the nine months ended September 30, 2020 compared to 51.9% for the
nine months ended September 30, 2019. This included current
accident year net catastrophe losses in the Short-tail segment of
$7.2 million or 3.4 points for the nine months ended September 30,
2020, compared to $7.8 million or 5.0 points for the nine months
ended September 30, 2019. Favorable development on loss reserves
from prior accident years was $11.5 million or 5.5 points for the
nine months ended September 30, 2020, compared to favorable
development of $4.5 million or 2.9 points for the nine months ended
September 30, 2019.
The combined ratio for the quarter ended September 30, 2020 was
93.7%, compared to 89.3% for the same quarter in 2019.
Deterioration in the combined ratio was the result of greater level
of claims and claims expense driven by lower positive loss
experience on prior accident years when compared to the same period
in 2019. Nevertheless, the combined ratio for the nine months ended
September 30, 2020 improved 5.0 points to 86.5% from 91.5% for the
same period in 2019 as the benefit of increased pricing per unit of
exposure began to be earned through results.
Segment Results
The Long-tail Segment, which represented approximately
40.3% of the Company’s gross written premiums for the first nine
months of 2020, 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 and general third-party liability (casualty), all of
which are non-U.S. exposures.
Net written premiums for the quarter ended September 30, 2020 in
the Long-tail Segment were $46.2 million, compared to $26.4 million
in the comparable quarter in 2019, primarily driven by growth in
the financial and professional lines. The net underwriting result
for this segment was $6.5 million for the third quarter of 2020,
compared to $2.8 million in the third quarter of 2019, with
financial and professional lines being the biggest
contributors.
Net written premiums for the nine months ended September 30,
2020 in the Long-tail Segment were $116.7 million, compared to
$82.7 million in the comparable period in 2019 driven by growth in
the financial and professional lines. The net underwriting result
for this segment increased by $14.1 million to $25.8 million for
the first nine months of 2020, compared to $11.7 million in the
first nine months of 2019, again driven by the financial and
professional lines.
The Short-tail Segment, which represented approximately
54.8% of the Company’s gross written premiums for the first nine
months of 2020, includes energy, property, general aviation, ports
and terminals, marine cargo, marine trades, construction &
engineering, and political violence.
Net written premiums for the quarter ended September 30, 2020 in
the Short-tail Segment were $26.3 million, compared to $21.7
million in the comparable quarter in 2019, driven by increases in
most lines, as well as the growth of the new U.S. E&S business.
The net underwriting result for this segment was $8.4 million for
the third quarter of 2020, down from the $13.1 million recorded in
the third quarter of 2019, primarily due to higher incurred losses
recorded in the ports and terminals line.
Net written premiums for the nine months ended September 30,
2020 in the Short-tail Segment were $115.0 million, an increase of
$23.2 million compared to $91.8 million in the comparable period in
2019, primarily the result of increases in all short-tail lines,
except for ports and terminals, and the growth of the new U.S.
E&S business. The net underwriting result for this segment
improved to $29.8 million for the first nine months of 2020,
compared to $28.0 million in the first nine months of 2019, despite
a $13.6 million increase in net claims and claims adjustment
expenses, driven by the growth in premiums written while the
increase in net claims and claims adjustment expenses was primarily
attributable to higher incurred losses recorded in the ports and
terminals line.
The Reinsurance Segment, which represented approximately
4.9% of the Company’s gross written premiums for the first nine
months of 2020, comprises the Company’s inwards reinsurance
portfolio.
Net written premiums for the quarter ended September 30, 2020 in
the Reinsurance Segment were $5.1 million, compared to $4.2 million
in the comparable quarter in 2019. The net underwriting result for
this segment was a profit of $1.5 million for the third quarter of
2020, compared to a loss of $0.3 million in the third quarter of
2019, due to a lower level of claims and claims adjustment
expenses.
Net written premiums for the nine months ended September 30,
2020 in the Reinsurance Segment were $16.5 million, compared to
$15.1 million in the comparable period in 2019. The net
underwriting result improved to $6.9 million for the first nine
months of 2020, compared to $2.0 million in the first nine months
of 2019, primarily due to a lower level of claims and claims
adjustment expenses.
Investment Results
IGI’s investment results for the third quarter of 2020 showed
some positive recovery in mark-to-market and foreign currency
adjustments from the impact of market turbulence related to the
COVID-19 pandemic during the first half of 2020. Combined, the
fixed income and equity portfolios benefitted from a gain on
revaluation of $8.1 million during the third quarter of 2020, which
represents an appreciation in fair value reserves recorded through
‘Total Equity’. This, coupled with the benefit arising from
recoveries in foreign exchange losses of $5 million recorded in
income, added $13.1 million to ‘Total Equity’ at September 30,
2020.
Total investment income was $1.4 million during the third
quarter of 2020, compared to $2.7 million in the third quarter of
2019. Total investment income, net (which excludes realized and
unrealized gains and losses on investments and investment
properties, expected credit losses on investments, and the share of
profit (loss) from associates, was $3.0 million and $2.5 million
for the quarters ended September 30, 2020 and 2019, respectively.
This resulted in an annualized investment yield of 1.9% for the
third quarter of 2020, compared to 1.8% for the corresponding
period in 2019.
For the first nine months of 2020, total investment income was
$4.1 million, compared to $10.1 million in the first nine months of
2019. Total investment income, net was $8.1 million and $8.3
million for the nine months ended September 30, 2020 and 2019,
respectively. This resulted in an annualized investment yield of
1.7% for the first nine months of 2020, compared to 2.0% for the
corresponding period in 2019.
Cash and short-term deposits totaled $312.1 million at September
30, 2020, representing 42.6% of the total investments and cash
portfolio, compared to $312.2 million at December 31, 2019, when it
represented 51.6%. The total investment and cash portfolio is
comprised of cash and short-term deposits (cash portfolio),
investments, investment in associates, and investment
properties.
Total Equity
‘Total equity’ at September 30, 2020 was $379.7 million,
representing an increase of 21.7% compared to $312.1 million at
December 31, 2019. The movement in Total Equity during the three
and nine months ended September 30, 2020, is illustrated below:
(in U.S. Dollars Millions)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2020
Total Equity at beginning of
period
$366.3
$312.1
Net profit for the period
$9.5
$20.7
Net change in fair value reserves for
investments through other comprehensive income for the period
$8.1
$10.3
Capital injection in connection with the
Business Combination
-
$40.8
Interim ordinary dividends declared for
the period
($4.3)
($4.3)
Total Equity at September 30,
2020
$379.6
$379.6
Separately, the Company previously announced that Chairman and
CEO Wasef Jabsheh purchased an aggregate of 363,278 common shares
of the Company for approximately $2.4 million in open market
transactions during June, August and September of 2020. In
addition, President Waleed Jabsheh purchased an aggregate of 50,000
common shares of the Company for approximately $350,000 in open
market transactions during September of 2020.
International General Insurance
Holdings Ltd.
Condensed Consolidated Statements of
Income (Unaudited)
Quarter Ended September
30,
Nine Months Ended September
30,
(in U.S. Dollar Millions, except for
percentages and per share data)
2020
2019
2020
2019
Gross written premiums
$101.2
$73.9
$337.7
$260.2
Reinsurers’ share of insurance
premiums
($23.6)
($21.6)
($89.5)
($70.6)
Net written premiums
$77.6
$52.3
$248.2
$189.6
Net change in unearned premiums
($4.3)
$1.7
($38.7)
($32.2)
Net premiums earned
$73.3
$54.0
$209.5
$157.4
Net claims and claim adjustment
expenses
($43.2)
($26.4)
($107.4)
($81.8)
Net policy acquisition expenses
($13.7)
($12.0)
($39.6)
($33.9)
Net underwriting results
$16.4
$15.6
$62.5
$41.7
Net investment income (1)
$2.1
$2.7
$5.2
$10.0
Share of profit (loss) from associates
(1)
($0.7)
-
($1.1)
$0.1
General and administrative expenses
($11.8)
($9.9)
($34.2)
($28.3)
Other expenses, net (2)
($0.6)
-
($3.4)
($0.4)
Listing related costs
($0.2)
-
($3.5)
-
Gain/(loss)/gain on foreign exchange
$5.0
($4.1)
($3.7)
($3.7)
Profit before tax
$10.2
$4.3
$21.8
$19.4
Income tax
($0.7)
-
($1.1)
($0.2)
Profit for the period
$9.5
$4.3
$20.7
$19.2
Basic and diluted earnings per share
attributable to equity holders (3)
$0.20
$0.13
$0.46
$0.56
Quarter Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Return on average equity (annualized)
(4)
10.2%
5.5%
8.0%
8.3%
Supplemental Information:
Claims and claims expense ratio (5)
58.8%
48.9%
51.3%
51.9%
Policy acquisition expense ratio (6)
18.7%
22.3%
18.9%
21.6%
General and administrative expense ratio
(7)
16.1%
18.1%
16.3%
18.0%
Expense ratio (8)
34.8%
40.4%
35.2%
39.6%
Combined ratio (9)
93.7%
89.3%
86.5%
91.5%
International General Insurance
Holdings Ltd.
Condensed Consolidated Statements of
Financial Position (Unaudited)
(in U.S. Dollars Millions)
As at
September 30, 2020
As at
December 31, 2020
ASSETS
Cash and short-term deposits
$312.1
$312.2
Insurance receivables
$144.4
$113.0
Investments (10)
$384.2
$253.7
Investment in associates (10)
$11.9
$13.1
Reinsurance share of outstanding
claims
$187.0
$176.2
Reinsurance share of unearned premiums
$46.1
$33.9
Deferred excess of loss premiums
$25.3
$15.2
Deferred policy acquisition costs
$51.1
$41.7
Other assets
$8.7
$7.8
Investment properties (10)
$23.0
$25.7
Intangible assets
$3.7
$3.9
Property, premises and equipment
$11.7
$12.7
TOTAL ASSETS
$1,209.2
$1,009.1
LIABILITIES
Gross outstanding claims
$473.2
$413.1
Gross unearned premiums
$257.1
$206.2
Insurance payables
$71.4
$53.5
Other liabilities
$16.1
$14.9
Deferred tax liabilities
$0.1
$0.3
Unearned commissions
$11.7
$8.9
TOTAL LIABILITIES
$829.6
$696.9
EQUITY
Common shares
$0.5
$143.4
Warrants
$12.2
-
Additional paid in capital
$154.2
$2.7
Treasury shares
-
($20.1)
Foreign currency translation reserve
($0.4)
($0.3)
Fair value reserves
$14.6
$4.3
Retained earnings
$198.5
$182.2
TOTAL EQUITY
$379.6
$312.2
TOTAL EQUITY AND LIABILITIES
$1,209.2
$1,009.1
Supplemental Information:
(in U.S. Dollars Millions)
As at
September 30, 2020
As at
December 31, 2019
Cash and short term deposits
$312.1
$312.2
Total investments (10)
$419.1
$292.5
Total Investments and cash
portfolio
$731.2
$604.7
Common shares outstanding *
48.4
34.0
Minus: Unvested shares**
3.0
-
Number of vested common outstanding
shares (in millions of shares)
45.4
34.0
Total equity
$379.6
$312.2
Number of vested common outstanding shares
(in millions of shares)
45.4
34.0
Book value per share
$8.36
$9.18
*Actual common outstanding shares as of December 31, 2019 are
adjusted at a share exchange ratio of 0.254 used in the March 2020
Business Combination with Tiberius Acquisition Corp. to facilitate
comparison to September 30, 2020.
**Represents earn out shares subject to vesting but which are
issued and outstanding for purposes of voting and receipt of
dividends. As at September 30, 2020, the vesting conditions
attached to the earn out shares have not been met, therefore the
earn out shares were not included in the weighted average number of
ordinary shares for both the basic and diluted earnings per
share.
Notes to the Condensed Consolidated
Statements of Income (Unaudited):
(1)
The following is the calculated investment
yields and the reconciliation of investment income and share of
profit (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 U.S. Dollar Millions, except
percentages)
2020
2019
2020
2019
Net investment income*
$2.1
$2.7
$5.2
$10.0
Share of profit (loss) from associates
($0.7)
-
($1.1)
$0.1
Total investment income
$1.4
$2.7
$4.1
$10.1
Minus
Realized gain (loss) on investments
($0.1)
($0.2)
$1.4
$0.3
Unrealized gain (loss) on investments
($0.2)
($0.2)
($2.9)
$0.8
Gain (loss) on investment properties
($0.5)
$0.6
($1.2)
$0.6
Expected credit losses on investments
($0.1)
-
($0.2)
-
Share of profit (loss) from associates
($0.7)
-
($1.1)
$0.1
Total investment income, net
(a)
$3.0
$2.5
$8.1
$8.3
Average investments (excluding investments
in associates) and cash portfolio, at cost (b)
$621.8
$551.1
$649.2
$540.8
Investment Yield (a) / (b)
annualized
1.9%
1.8%
1.7%
2.0%
*Net investment income is comprised of interest and dividend
income, net of investment custodian fees and other investment
expenses.
(2)
Represents the sum of other revenues,
other expenses and impairment loss on insurance receivables.
Quarter Ended September
30,
Nine Months Ended September
30,
(in U.S. Dollars Millions)
2020
2019
2020
2019
Other revenues
$0.1
$0.3
$0.2
$1.2
Other expenses
($0.3)
($0.3)
($1.1)
($1.6)
Impairment loss on insurance
receivables
($0.4)
-
($2.5)
-
Other expenses, net
($0.6)
-
($3.4)
($0.4)
(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:
(in U.S. Dollars Millions, except per
share information)
Quarter ended September
30,
Nine months ended September
30,
2020
2019
2020
2019
Net profit for the period attributable to
equity holders
$9.5
$4.3
$20.7
$19.2
Minus: Earnings attributable to the earn
out shares subject to vesting
$0.6
-
$1.3
-
Net profit for the period attributable
to vested equity holders (a)
$8.9
$4.3
$19.4
$19.2
Weighted average number of shares – basic
and diluted (in millions of shares) (b)
45.4
34.0
42.2
34.4
Basic and diluted earnings per share
(a/b)
$0.20
$0.13
$0.46
$0.56
To make earnings per share for the period ending September 30,
2020 comparable with same period of September 30, 2019, the actual
weighted average number of basic and diluted shares for the period
ended September 30, 2019 is adjusted with the share exchange ratio
of 0.254 that was used in the March 2020 Business Combination with
Tiberius Acquisition Corp.
(4)
Represents annualized net profit for the
period divided by average shareholders’ equity.
(5)
Represents net claims and claim adjustment
expenses as a percentage of net premiums earned.
(6)
Represents net policy acquisition expenses
as a percentage of net premiums earned.
(7)
Represents general and administrative
expenses as a percentage of net premiums earned.
(8)
Represents the sum of the policy
acquisition expense ratio and the general and administrative
expense ratio.
(9)
Represents the sum of the claims and claim
expense ratio and the expense ratio.
Notes to the Condensed Consolidated
Statements of Financial Position (Unaudited):
(10)
Includes the following:
As at
(in U.S. Dollars Millions)
September 30, 2020
December 31, 2019
Investments
$384.2
$253.7
Investment properties
$23.0
$25.7
Investments in associates
$11.9
$13.1
Total investments
$419.1
$292.5
International General Insurance
Holdings Ltd.
Segment Results (Unaudited)
Segment information for the IGI’s
consolidated operations is as follows:
For the quarter ended September 30, 2020
(in U.S. Dollars Millions)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$53.1
$43.0
$5.1
$101.2
Reinsurers’ share of insurance
premiums
($6.9)
($16.7)
-
($23.6)
Net written premiums
$46.2
$26.3
$5.1
$77.6
Net change in unearned premiums
($8.7)
$4.3
$0.1
($4.3)
Net premiums earned
$37.5
$30.6
$5.2
$73.3
Net claims and claim adjustment
expenses
($25.1)
($15.3)
($2.8)
($43.2)
Net policy acquisition expenses
($5.9)
($6.9)
($0.9)
($13.7)
Net underwriting results
$6.5
$8.4
$1.5
$16.4
For the quarter ended September 30,
2019
(in U.S. Dollars Millions)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$32.0
$37.7
$4.2
$73.9
Reinsurers’ share of insurance
premiums
($5.6)
($16.0)
-
($21.5)
Net written premiums
$26.4
$21.7
$4.2
$52.3
Net change in unearned premiums
($3.1)
$4.7
$0.1
$1.7
Net premiums earned
$23.3
$26.4
$4.3
$54.0
Net claims and claim adjustment
expenses
($14.7)
($7.8)
($3.9)
($26.4)
Net policy acquisition expenses
($5.8)
($5.5)
($0.7)
($12.0)
Net underwriting results
$2.8
$13.1
($0.3)
$15.6
International General Insurance
Holdings Ltd.
Segment Results (Unaudited)
For the nine months ended September 30,
2020
(in U.S. Dollars Millions)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$136.1
$185.1
$16.5
$337.7
Reinsurers’ share of insurance
premiums
($19.4)
($70.1)
-
($89.5)
Net written premiums
$116.7
$115.0
$16.5
$248.2
Net change in unearned premiums
($14.9)
($20.8)
($3.0)
($38.7)
Net premiums earned
$101.8
$94.2
$13.5
$209.5
Net claims and claim adjustment
expenses
($57.2)
($45.8)
($4.4)
($107.4)
Net policy acquisition expenses
($18.8)
($18.6)
($2.2)
($39.6)
Net underwriting results
$25.8
$29.8
$6.9
$62.5
For the nine months ended September 30,
2019
(in U.S. Dollars Millions)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$91.9
$153.2
$15.1
$260.2
Reinsurers’ share of insurance
premiums
($9.2)
($61.4)
-
($70.6)
Net written premiums
$82.7
$91.8
$15.1
$189.6
Net change in unearned premiums
($14.2)
($15.4)
($2.6)
($32.2)
Net premiums earned
$68.5
$76.4
$12.5
$157.4
Net claims and claim adjustment
expenses
($41.2)
($32.2)
($8.4)
($81.8)
Net policy acquisition expenses
($15.6)
($16.2)
($2.1)
($33.9)
Net underwriting results
$11.7
$28.0
$2.0
$41.7
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, better 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 U.S. Dollar Millions, except
percentages)
2020
2019
2020
2019
Net premiums earned (a)
$73.3
$54.0
$209.5
$157.4
Net Losses and loss adjustment expenses
(b)
$43.2
$26.4
$107.4
$81.8
Policy acquisition expenses (c)
$13.7
$12.0
$39.6
$33.9
General and administrative expenses
(d)
$11.8
$9.9
$34.2
$28.3
Prior year adverse/ (favorable)
development (e)
($0.3)
($5.8)
($11.5)
($4.5)
Catastrophe (CAT) losses (f)
$4.6
$2.0
$7.2
$7.8
Combined ratio ((b+c+d)/a)*
93.7%
89.3%
86.5%
91.5%
Minus: CAT losses on an accident year
basis (f/a)
6.3%
3.7%
3.4%
5.0%
Minus: Prior year development
(favorable)/unfavorable (e/a)
(0.5%)
(10.8%)
(5.5%)
(2.9%)
Accident year combined ratio prior to
CAT losses
87.9%
96.4%
88.6%
89.4%
* See “Supplemental Information” to the “Condensed Consolidated
Statements of Income (Unaudited)” below.
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 growth, 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 our results in a
manner similar to how management analyzes our 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 each item being a non-IFRS
measure), as illustrated in the table below:
Quarter Ended September
30,
Nine Months Ended September
30,
(in U.S. Dollar Millions, except for
percentages and per
2020
2019
2020
2019
share data)
Profit for the period
$9.5
$4.3
$20.7
$19.2
Reconciling items between profit for the
period and core operating income:
Realized (gains)/loss on investments (tax
adjusted) (i)
$0.1
$0.2
($1.3)
($0.3)
Expected credit losses on investments
$0.1
-
$0.2
-
Unrealized loss/(gain) on investments (tax
adjusted) (i)
$0.1
$0.2
$2.6
($0.8)
Loss/(gain) on investment properties
$0.5
($0.6)
$1.2
($0.6)
Listing related costs
$0.2
-
$3.6
-
Loss/(gain) on foreign exchange (tax
adjusted) (i)
($4.1)
$4.1
$3.1
$3.7
Core operating income
$6.4
$8.2
$30.1
$21.2
Average shareholders’ equity (ii)
$373.0
$312.0
$345.9
$308.3
Core operating return on average equity
(annualized) (iii)
6.7%
10.5%
11.6%
9.2%
Basic and diluted core operating earnings
per share (iv)
$0.13
$0.23
$0.67
$0.58
Return on average equity (annualized)
(v)
10.2%
5.5%
8.0%
8.3%
- Represents a non-IFRS financial measure as the line item
balances reported in “Condensed Consolidated Statements of Income
(Unaudited)” have been adjusted above for the related tax
impact.
- Average shareholders’ equity equals 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 dividend by weighted average
number of shares – basic and diluted for the period. For weighted
average number of shares, see note 3 to the “Condensed Consolidated
Statements of Income” (unaudited) above.
- See note 4 to the Condensed Consolidated Statements of Income
(unaudited) above.
Return on average equity and core operating return on average
equity, 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 and Nine Month 2020
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 specialist commercial insurer
and reinsurer underwriting a diverse portfolio of specialty lines.
Established in 2001, IGI is an entrepreneurial business with a
worldwide portfolio of energy, property, general aviation,
construction & engineering, forestry, ports & terminals,
marine cargo, marine trades, financial institutions, general third
party liability, legal expenses, professional indemnity, marine
liability, political violence, and reinsurance treaty business.
Registered in Bermuda, with operations in Bermuda, London, 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, information regarding our estimates of losses for
catastrophes and other large losses including losses related to the
COVID-19 pandemic, measurements of potential losses in the value of
our investment portfolio, 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, our
growth prospects, and valuations of the potential impact of
movements in interest rates, credit spreads, equity securities'
prices and foreign currency rates. 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 potential inability to recognize the
anticipated benefits of the business combination with Tiberius; (5)
the outcome of any legal proceedings that may be instituted against
the parties in connection with or related to the business
combination with Tiberius; (6) the potential effects of the
COVID-19 pandemic; (7) the inability to maintain the listing of the
Company’s common shares or warrants on Nasdaq; and (8) other risks
and uncertainties indicated in IGI’s annual report on Form 20-F for
the year ended December 31, 2019, including those under “Risk
Factors” therein, and in the Company’s other 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/20201112006018/en/
IGI: Investors: Robin Sidders, Head of Investor Relations
T: +44 (0) 2072 204937 M: +44 (0) 7384 514785
robin.sidders@iginsure.com
Media: Aaida Abu Jaber, PR & Marketing Manager T:
+96265662082 Ext. 407 M: +962770415540
aaida.AbuJaber@iginsure.com
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