International General Insurance Holdings Ltd. (“IGI” or the
“Company”) (NASDAQ: IGIC) today reported financial results for the
second quarter and first six months of 2021.
Highlights for the second quarter and first six months of
2021 include:
(in millions of U.S. Dollars, except
percentages and per share information)
Quarter Ended June 30,
Six Months Ended June
30,
2021
2020
2021
2020
Gross written premiums
$166.1
$137.3
$266.8
$236.5
Net premiums earned
$85.5
$67.7
$167.8
$136.2
Net underwriting results
$20.9
$22.9
$48.6
$46.1
Total investment income, net
(1)
$3.9
$2.6
$7.9
$5.2
Profit for the period
$5.6
$12.0
$20.1
$11.2
Combined ratio (2)
92.3%
84.0%
88.5%
82.6%
Earnings per share (Basic and
Diluted) (3)
$0.11
$0.25
$0.41
$0.26
Return on average equity
(annualized) (4)
5.6%
13.5%
10.1%
6.6%
Core operating income (4)
$9.0
$10.3
$23.8
$23.7
Core operating earnings per share
(4) (Basic and Diluted)
$0.18
$0.21
$0.49
$0.55
Core operating return on average equity
(annualized) (4)
9.0%
11.6%
11.9%
14.0%
- 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, “Our results for
the second quarter and first half of 2021 provide further
confirmation of the successful track record IGI has built over the
past 20 years. Premium growth in the second quarter was strong at
21%, after more muted production in the first quarter, with strong
profitability for the first half of 2021 reflected in our 88.5%
combined ratio.”
“With market conditions holding up well and rate increases
across our portfolio at close to 13%, we remain focused on
maximizing opportunities. In addition to seeing attractive business
in the new contingency line written by our UK subsidiary in London,
we recently announced that our subsidiary in Malta has been granted
approval by local regulators to begin writing business. Overall,
Europe represents a good growth opportunity for IGI and we expect
our results in the coming months and years to reflect this. Our
Malta subsidiary is already seeing significant interest and
activity and we have an experienced team in place to capitalize on
opportunities across Europe.”
“We have grown our book value per share by 1.9% for the year to
date in 2021, and 17.0% since becoming a public company in March
2020. You will have seen the announcement, made separately, that
our Board of Directors has declared an ordinary common share
dividend of $0.16 per share in support of our shareholders. I am
very pleased with our progress, particularly in what has been an
extraordinary and turbulent time for all of us, and we look forward
to continuing our track record of generating value for our
shareholders over the long-term.”
Results for the Periods Ended June 30, 2021 and June 30,
2020
Net profit for the quarter ended June 30, 2021 was $5.6 million,
compared to a net profit of $12.0 million for the quarter ended
June 30, 2020.
Core operating income, a non-IFRS measure defined below, was
$9.0 million and $10.3 million for the quarters ended June 30, 2021
and June 30, 2020, respectively. The lower core operating income in
the second quarter of 2021 when compared to the same period in 2020
is primarily the result of a 6-point increase in the current
accident year loss ratio, the majority of which is recorded in the
engineering line of the Short-tail Segment and the inward treaty
reinsurance portfolio of the Reinsurance Segment. The decline in
net underwriting results on a comparative basis was partially
offset by an increase in total investment income, net in the
quarter ended June 30, 2021 over the comparable period in 2020. The
core operating return on average equity (annualized) was 9.0% for
the quarter ended June 30, 2021, compared to 11.6% for the quarter
ended June 30, 2020.
For the first six months of 2021, net profit was $20.1 million,
compared to a net profit of $11.2 million for the first six months
of 2020.
Core operating income was $23.8 million for the first six months
of 2021 compared to $23.7 million for the comparable period in
2020. While core operating income remained relatively flat in the
first six months of 2021 versus the same period in 2020, core
operating return on average equity (annualized) was 2.1% lower at
11.9% for the first six months of 2021, compared to 14.0% in the
same period in 2020, as a result of a 17.6% increase in average
shareholders’ equity in the first six months of 2021, compared with
the same period in 2020.
Underwriting Results
Gross written premiums were $166.1 million for the quarter ended
June 30, 2021, representing growth of 21.0% compared to $137.3
million for the quarter ended June 30, 2020.
The net claims and claims expense ratio was 56.9% for the
quarter ended June 30, 2021, compared to 48.1% for the quarter
ended June 30, 2020. This included current accident year net
catastrophe losses of $0.4 million or 0.5 points for the quarter
ended June 30, 2021, compared to $1.8 million or 2.7 points for the
quarter ended June 30, 2020. Prior year development on loss
reserves was unfavorable amounting to $1.0 million or 1.2 points
for the quarter ended June 30, 2021 driven by deterioration of $2.3
million in the Short-tail Segment, primarily in downstream energy,
and $0.5 million in the Reinsurance Segment, partially offset by
favorable movement of $1.8 million in the Long-tail Segment,
primarily in the Director & Officer (“D&O”) and financial
institutions lines of business. This compares to favorable
development of $1.2 million or 1.8 points for the quarter ended
June 30, 2020.
The combined ratio for the quarter ended June 30, 2021 was
92.3%, compared to 84.0% for the quarter ended June 30, 2020. The
quarter-over-quarter increase is primarily the result of the higher
current accident year loss ratio of 55.8% in the quarter ended June
30, 2021, compared to 49.8% in the quarter ended June 30, 2020.
For the first six months of 2021, gross written premiums were
$266.8 million, an increase of 12.8% compared to $236.5 million for
the comparable period in 2020.
The net claims and claims expense ratio was 53.5% for the first
six months of 2021, compared to 47.2% for the first six months of
2020. This included current accident year net catastrophe losses of
$0.5 million, or 0.3 points for the six months ended June 30, 2021,
compared to $2.6 million or 1.9 points for the six months ended
June 30, 2020. Prior year development on loss reserves was
favorable, amounting to $3.3 million or 2.0 points for the period
ended June 30, 2021, driven by favorable movement of $4.7 million
in the Long-tail Segment, primarily the professional indemnity and
financial institutions lines, partially offset by unfavorable
movement of $0.8 million in the Short-tail Segment and $0.5 million
in the Reinsurance Segment. This compares to favorable development
of $11.2 million or 8.2 points for the period ended June 30,
2020.
The combined ratio for the six months ended June 30, 2021 was
88.5%, compared to 82.6% for the six months ended June 30, 2020,
which had benefitted primarily 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 six months
ended June 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 second quarter of 2021 in the
Long-tail Segment were $63.0 million, representing an increase of
27.8% from the $49.3 million in the second quarter of 2020,
reflecting growth primarily in the casualty (non-U.S) line. Net
written premiums for the quarter ended June 30, 2021 were $44.2
million, compared to $39.7 million in the comparable quarter in
2020. The net underwriting result for this segment was $9.7 million
for the second quarter of 2021, compared to $6.8 million in the
second quarter of 2020.
Gross written premiums for the first six months of 2021 in the
Long-tail Segment were $101.3 million, representing an increase of
16.3% from the $87.1 million in the first six months of 2020. Net
written premiums for the six months ended June 30, 2021 were $74.4
million, compared to $74.1 million in the comparable period in
2020. The net underwriting result for this segment was $22.5
million for the first six months of 2021, compared to $19.4 million
in the comparable period in 2020.
The Short-tail Segment, which represented approximately
57% of the Company’s gross written premiums for the six months
ended June 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 second quarter of 2021 in the
Short-tail Segment were $97.5 million, an increase of 16.8%
compared to $83.5 million in the second quarter of 2020, reflecting
growth in all Short-tail lines except for the property line. Net
written premiums for the quarter ended June 30, 2021 were $59.7
million, compared to $47.2 million in the comparable quarter in
2020. The net underwriting result for this segment was $10.1
million for the second quarter of 2021, compared to $13.0 million
for the comparable quarter in 2020, primarily driven by an increase
in net claims and claims adjustment expenses as well as an increase
in net policy acquisition expenses.
Gross written premiums for the first six months of 2021 in the
Short-tail Segment were $150.9 million compared to $137.9 million
in the comparable period in 2020. Net written premiums for the six
months ended June 30, 2021 were $97.7 million, compared to $85.0
million in the comparable period in 2020. The net underwriting
result for this segment was $23.5 million for the first half of
2021 compared to $21.4 million in the first half of 2020.
The Reinsurance Segment, which represented approximately
5% of the Company’s gross written premiums for the six months ended
June 30, 2021, includes the Company’s inwards reinsurance
portfolio.
Gross and net written premiums for the second quarter of 2021 in
the Reinsurance Segment were $5.6 million, compared to $4.5 million
in the second quarter of 2020. The net underwriting result for this
segment was $1.1 million for the second quarter of 2021, compared
to $3.1 million in the second quarter of 2020, primarily due to a
higher level of net claims and claims adjustment expenses in the
second quarter of 2021 compared to the second quarter of 2020.
Gross and net written premiums for the first six months of 2021
in the Reinsurance Segment were $14.6 million, compared to $11.5
million in the comparable period in 2020. The net underwriting
result for this segment was $2.6 million for the first six months
of 2021, compared to $5.3 million in the comparable period in 2020,
primarily due to a higher level of net claims and claims adjustment
expenses in the first half of 2021 compared to the same period in
2020.
Foreign Exchange Losses
The loss on foreign exchange for the quarter ended June 30, 2021
was $1.9 million compared to a gain of $3.2 million for the second
quarter of 2020. The loss in the current period was primarily
driven by currency revaluation recorded in Euro denominated cash,
investments and insurance receivable balances led by weakening of
the Euro against the U.S. Dollar at June 30, 2021 when compared
with December 31, 2020. Other major currencies, in particular, the
Pound Sterling and Australian Dollar, remained relatively flat at
June 30, 2021 when compared with December 31, 2020, although
short-term volatility in these currencies against the U.S. Dollar
during the second quarter of 2021 resulted in a net foreign
exchange revaluation loss in the Pound Sterling and the Australian
Dollar.
The loss on foreign exchange for the first six months of 2021
was $3.2 million compared to a loss of $8.7 million in the first
half of 2020. The higher level of loss during the first half of
2020 was driven by weakening in all three of IGI’s other major
operating currencies - the Pound Sterling, the Euro, and the
Australian Dollar - at the start of the COVID-19 global pandemic in
the first quarter of 2020. However, these currencies recorded some
recovery in the second quarter of 2020 which resulted in a net
forex revaluation gain in that period.
Investment Results
Total investment income was $4.5 million for the second quarter
of 2021, compared to $4.7 million in the second 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 $3.9 million and $2.6
million for the quarters ended June 30, 2021 and June 30, 2020,
respectively. This represented an annualized investment yield of
2.0% for the second quarter of 2021, compared to 1.6% for the
corresponding period in 2020, reflecting higher yields on the
Company’s fixed income bond portfolio.
For the first six months of 2021, total investment income was
$9.7 million compared to $2.6 million in the first half of 2020,
the latter being 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 profit from associates) was $7.9 million and $5.2
million for the periods ended June 30, 2021 and June 30, 2020,
respectively. This represented an annualized investment yield of
2.0% for the first half of 2021, compared to 1.6% for the
corresponding period in 2020, again reflecting higher yields on the
Company’s fixed income bond portfolio.
Cash, cash equivalents and term deposits totaled $365.9 million
at June 30, 2021, representing 42.9% 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 June 30, 2021 was $403.1 million compared to
$394.6 million at December 31, 2020. The movement in total equity
during the second quarter and six months ended June 30, 2021 is
illustrated below:
(in millions of U.S. Dollars)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2021
Total Equity at beginning of
period
$396.0
$394.6
Profit for the period
$5.6
$20.1
Net change in fair value reserves for
investments through other comprehensive income
$3.3
($1.7)
Effect of reclassifying Private Warrants
from an equity instrument to a derivative liability at the closing
of the business combination on March 17, 2020
($2.4)
($2.4)
Issuance of restricted share awards
$0.6
$0.8
Cash dividends declared during the
period
-
($8.3)
Total Equity at June 30, 2021
$403.1
$403.1
In response to the Securities and Exchange Commission (“SEC”)
Staff Statement dated April 12, 2021, the Company has reassessed
its accounting treatment in respect of warrant instruments. After
careful analysis, the Company has concluded that a proportion of
its warrants (the “Private Warrants”), totaling 4,500,000 Private
Warrants, should have been recorded as a derivative liability
instead of equity with a value of $2.4 million at the closing of
the business combination with Tiberius Acquisition Corp. (the
“Business Combination”) and subsequently remeasured at fair value
with the changes recorded in income. The Company has further
evaluated the resulting accounting error and does not consider it
to be quantitatively or qualitatively material to its financial
statements. IGI has corrected the impact of this error by recording
the full impact of fair value movement of these Private Warrants
from the date of the closing of the Business Combination on March
17, 2020 through June 30, 2021 for an amount of $2.2 million under
the line item ‘Change in fair value of derivative financial
liability’ in the “Condensed Consolidated Statements of Income” and
accordingly resulted in the fair value of the Private Warrants
being revalued at $4.6 million at June 30, 2021. The Company’s
accounting for its warrants is subject to review by the SEC and
could potentially change as a result of SEC comments.
Book value per share was $8.86 at June 30, 2021, representing
growth of 1.9% from $8.69 at December 31, 2020.
Condensed Consolidated Statements of Income
(Unaudited)
Quarter Ended
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except for
percentages and per share data)
2021
2020
2021
2020
Gross written
premiums.......................................................
$166.1
$137.3
$266.8
$236.5
Reinsurers’ share of insurance
premiums..........................
($56.6)
($45.9)
($80.1)
($65.9)
Net written
premiums.........................................................
$109.5
$91.4
$186.7
$170.6
Net change in unearned
premiums.....................................
($24.0)
($23.7)
($18.9)
($34.4)
Net premiums
earned..........................................................
$85.5
$67.7
$167.8
$136.2
Net claims and claim adjustment
expenses........................
($48.7)
($32.5)
($89.8)
($64.3)
Net policy acquisition
expenses...........................................
($15.9)
($12.3)
($29.4)
($25.8)
Net underwriting
results………………………………………………
$20.9
$22.9
$48.6
$46.1
Net investment income
(1)………………………………….……………
$4.3
$5.1
$9.4
$3.0
Share of gain (loss) from associates
(1)……….…………………
$0.2
($0.4)
$0.3
($0.4)
General and administrative
expenses.................................
($14.3)
($12.1)
($29.3)
($22.4)
Other expenses, net
(2)..........................................................
($0.8)
($2.4)
($1.6)
($2.6)
Change in fair value of derivative
financial liability ………..
($2.2)
-
($2.2)
-
Listing related
expenses.......................................................
-
($0.9)
-
($3.4)
Bargain purchase
……………………………………………………………
-
($2.4)
-
-
(Loss) gain on foreign exchange
.........................................
($1.9)
$3.2
($3.2)
($8.7)
Profit before
tax...................................................................
$6.2
$13.0
$22.0
$11.6
Income tax
............................................................................
($0.6)
($1.0)
($1.9)
($0.4)
Profit for the
period.............................................................
$5.6
$12.0
$20.1
$11.2
Basic and diluted earnings per share
attributable to equity
holders(3)……………………………………………………………
$0.11
$0.25
$0.41
$0.26
Condensed Consolidated Statements of Financial Position
(Unaudited)
(in millions of U.S. Dollars)
As at June 30, 2021
As at December 31,
2020
ASSETS
Cash and cash equivalents
$180.1
$133.4
Term deposits
$185.8
$172.2
Insurance receivables
$188.8
$166.6
Investments (4)
$456.5
$438.1
Investment in associates (4)
$11.8
$11.6
Reinsurance share of outstanding
claims
$186.6
$187.5
Reinsurance share of unearned premiums
$66.4
$50.1
Deferred excess of loss premiums
$5.4
$17.1
Deferred policy acquisition costs
$61.1
$55.2
Other assets
$11.8
$9.5
Investment properties (4)
$18.8
$20.0
Property, premises and equipment
$12.9
$13.2
Intangible assets
$5.5
$4.7
TOTAL ASSETS
$1,391.5
$1,279.2
LIABILITIES
Gross outstanding claims
$545.1
$492.3
Gross unearned premiums
$312.5
$277.2
Insurance payables
$93.6
$83.5
Other liabilities
$20.5
$20.5
Derivative financial liability
$4.6
-
Deferred tax liabilities
$0.2
$0.1
Unearned commissions
$11.9
$11.0
TOTAL LIABILITIES
$988.4
$884.6
EQUITY
Common shares at par value
$0.5
$0.5
Share premium
$158.5
$157.6
Warrants
$6.8
$9.2
Foreign currency translation reserve
($0.3)
($0.3)
Fair value reserves
$16.4
$18.2
Retained earnings
$221.2
$209.4
TOTAL EQUITY
$403.1
$394.6
TOTAL LIABILITIES AND EQUITY
$1,391.5
$1,279.2
Supplementary Financial Information – Condensed Consolidated
Statements of Income (Unaudited)
Quarter Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Ratios
Net claims and claims expense ratio
(a)...................
56.9%
48.1%
53.5%
47.2%
Net policy acquisition expense ratio
(b)..........................
18.6%
18.1%
17.5%
19.0%
General and administrative expense ratio
(c)................
16.8%
17.8%
17.5%
16.4%
Expense ratio
(d).................................................
35.4%
35.9%
35.0%
35.4%
Combined ratio
(e)...............................................
92.3%
84.0%
88.5%
82.6%
(a) Represents net claims and claim adjustment expenses as a
percentage of net premiums earned.
(b) Represents net policy acquisition expenses as a percentage
of net premiums earned.
(c) Represents general and administrative expenses as a
percentage of net premiums earned.
(d) Represents the sum of the net policy acquisition expense
ratio and the general and administrative expense ratio.
(e) Represents the sum of the net claims and claim expense ratio
and the expense ratio.
Supplementary Financial Information – Consolidated Statements
of Financial Position (Unaudited)
(in millions of U.S. Dollars, except share
and per share data)
As at June 30, 2021
As at December 31,
2020
Cash and cash equivalents and term
deposits ...........
$365.9
$305.6
Total investments
(4)......................................................
$487.1
$469.7
Total Investments and cash
portfolio........................
$853.0
$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)
……………………………………………………..
$403.1
$394.6
Book value per share (b)/(a)
...............................
$8.86
$8.69
* Common shares issued and outstanding as at June 30, 2021 and
December 31, 2020 are as follows:
No. of shares as at
June 30, 2021
Common shares as of December 31,
2020
45,426,251
Vested restricted shares awards
44,833
Common shares as of June 30,
2021
45,471,084
Earnout shares as of June 30, 2021
3,012,500
Unvested restricted share awards as of
June 30, 2021
399,857
Total unvested shares as of June 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 and 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 Shares awards are non-transferable by their
holders until they vest as per the respective Restricted Shares
Award Agreements. As at June 30, 2021, the vesting conditions
attached to both Earnout Shares and unvested Restricted Shares
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.
Supplementary Financial Information - Segment Results
(Unaudited)
Segment information for IGI’s consolidated operations is as
follows:
For the quarter ended June 30,
2021
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$63.0
$97.5
$5.6
$166.1
Reinsurers’ share of insurance
premiums
($18.8)
($37.8)
-
($56.6)
Net written premiums
$44.2
$59.7
$5.6
$109.5
Net change in unearned premiums
($2.3)
($22.3)
$0.6
($24.0)
Net premiums earned
$41.9
$37.4
$6.2
$85.5
Net claims and claim adjustment
expenses
($24.7)
($19.9)
($4.1)
($48.7)
Net policy acquisition expenses
($7.5)
($7.4)
($1.0)
($15.9)
Net underwriting results
$9.7
$10.1
$1.1
$20.9
For the quarter ended June 30,
2020
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$49.3
$83.5
$4.5
$137.3
Reinsurers’ share of insurance
premiums
($9.6)
($36.3)
-
($45.9)
Net written premiums
$39.7
$47.2
$4.5
$91.4
Net change in unearned premiums
($7.4)
($16.4)
$0.1
($23.7)
Net premiums earned
$32.3
$30.8
$4.6
$67.7
Net claims and claim adjustment
expenses
($19.4)
($12.3)
($0.8)
($32.5)
Net policy acquisition expenses
($6.1)
($5.5)
($0.7)
($12.3)
Net underwriting results
$6.8
$13.0
$3.1
$22.9
Supplementary Financial Information - Segment Results
(Unaudited)
For the six months ended June 30,
2021
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$101.3
$150.9
$14.6
$266.8
Reinsurers’ share of insurance
premiums
($26.9)
($53.2)
-
($80.1)
Net written premiums
$74.4
$97.7
$14.6
$186.7
Net change in unearned premiums
$8.3
($23.9)
($3.3)
($18.9)
Net premiums earned
$82.7
$73.8
$11.3
$167.8
Net claims and claim adjustment
expenses
($46.2)
($36.7)
($6.9)
($89.8)
Net policy acquisition expenses
($14.0)
($13.6)
($1.8)
($29.4)
Net underwriting results
$22.5
$23.5
$2.6
$48.6
For the six months ended June 30,
2020
(in millions of U.S. Dollars)
Specialty Long-tail
Specialty Short-tail
Reinsurance
Total
Underwriting revenues
Gross written premiums
$87.1
$137.9
$11.5
$236.5
Reinsurers’ share of insurance
premiums
($13.0)
($52.9)
-
($65.9)
Net written premiums
$74.1
$85.0
$11.5
$170.6
Net change in unearned premiums
($9.1)
($22.2)
($3.1)
($34.4)
Net premiums earned
$65.0
$62.8
$8.4
$136.2
Net claims and claim adjustment
expenses
($32.4)
($30.2)
($1.7)
($64.3)
Net policy acquisition expenses
($13.2)
($11.2)
($1.4)
($25.8)
Net underwriting results
$19.4
$21.4
$5.3
$46.1
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
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except
percentages)
2021
2020
2021
2020
Net investment
income*...............................................................
$4.3
$5.1
$9.4
$3.0
Share of profit (loss) from associates
..........................................
$0.2
($0.4)
$0.3
($0.4)
Total investment
income.............................................................
$4.5
$4.7
$9.7
$2.6
Minus..............................................................................................
Realized gain on investments
......................................................
$0.3
$1.5
$0.2
$1.5
Unrealized gain (loss) on
investments.........................................
$0.8
$1.8
$2.1
($2.9)
Fair value loss on investment
properties.....................................
($0.7)
($0.7)
($0.8)
($0.7)
Expected credit losses on
investments........................................
-
($0.1)
-
($0.1)
Share of profit (loss) from associates
..........................................
$0.2
($0.4)
$0.3
($0.4)
Total investment income, net
(a)……………………………………..
$3.9
$2.6
$7.9
$5.2
Average investments and cash portfolio, at
cost (b)…………
$797.0
$656.5
$787.2
$633.2
Investment Yield (a) / (b)
annualized………………………………
2.0%
1.6%
2.0%
1.6%
* 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.
Quarter Ended
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars)
2021
2020
2021
2020
Other
revenues......................................................................
$0.6
-
$1.0
$0.1
Other expenses
.....................................................................
($0.8)
($0.2)
($1.5)
($0.6)
Impairment loss on insurance
receivables..........................
($0.6)
($2.2)
($1.1)
($2.1)
Other expenses,
net.................................................
($0.8)
($2.4)
($1.6)
($2.6)
(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
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except per
share information)
2021
2020
2021
2020
Profit for the period
$5.6
$12.0
$20.1
$11.2
Minus: Profit attributable to the Earnout
Shares
$0.3
$0.7
$1.2
$0.7
Minus: Profit attributable to the
Restricted Shares
$0.1
-
$0.2
-
Net profit for the period available to
common shareholders (a)
$5.2
$11.3
$18.7
$10.5
Weighted average number of shares – basic
and diluted (in millions of shares) (b)
45.5
45.4
45.5
40.6
Basic and diluted earnings per share
(a/b)
$0.11
$0.25
$0.41
$0.26
(4) Includes the following:
As at
(in millions of U.S. Dollars)
June 30, 2021
December 31, 2020
Investments.........................................................................
$456.5
$438.1
Investment
properties........................................................
$18.8
$20.0
Investments in
associates...................................................
$11.8
$11.6
Total
investments...............................................................
$487.1
$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
June 30,
Six Months Ended June
30,
(in millions of U.S. Dollars, except
percentages)
2021
2020
2021
2020
Net premiums earned (a)
$85.5
$67.7
$167.8
$136.2
Net Claims and claims adjustment expenses
(b)
($48.7)
($32.5)
($89.8)
($64.3)
Net Policy acquisition expenses (c)
($15.9)
($12.3)
($29.4)
($25.8)
General and administrative expenses
(d)
($14.3)
($12.1)
($29.3)
($22.4)
Prior year adverse/ (favorable)
development (e)
$1.0
($1.2)
($3.3)
($11.2)
Catastrophe (CAT) losses (f)
$0.4
$1.8
$0.5
$2.6
Combined ratio ((b+c+d)/a)*
92.3%
84.0%
88.5%
82.6%
Minus: CAT losses on an accident year
basis (f/a).........
0.5%
2.7%
0.3%
1.9%
Minus: Prior year development
(favorable)/unfavorable (e/a)
........................................
1.2%
(1.8%)
(2.0%)
(8.2%)
Accident year combined ratio prior to
CAT losses.......
90.6%
83.2%
90.2%
88.9%
* 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 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 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
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except for
percentages and per
2021
2020
2021
2020
share data)
Profit for the
period..........................................................
$5.6
$12.0
$20.1
$11.2
Reconciling items between profit for the
period and core operating income:
Realized gains on investments (tax
adjusted) (i)...............
($0.4)
($1.3)
($0.2)
($1.4)
Expected credit losses on
investments……………..
-
$0.1
-
$0.1
Unrealized (gain) loss on investments (tax
adjusted) (i)..
($0.8)
($1.6)
($2.0)
$2.5
Losses on investment
properties………………………
$0.7
$0.7
$0.8
$0.7
Change in fair value of derivative
financial liability ……………………………………………………………..
$2.2
-
$2.2
-
Listing related
costs............................................................
-
$0.9
-
$3.4
Bargain
purchase................................................................
-
$2.4
-
-
Loss (gain) on foreign exchange (tax
adjusted) (i)
$1.7
($2.9)
$2.9
$7.2
Core operating
income......................................................
$9.0
$10.3
$23.8
$23.7
Average shareholders’ equity
(ii)........................................
$399.6
$355.1
$398.9
$339.2
Core operating return on average equity
(annualized)
(iii).............................................................................................
9.0%
11.6%
11.9%
14.0%
Basic and diluted core operating earnings
per share (iv)..
$0.18
$0.21
$0.49
$0.55
Return on average equity (annualized)
(v)..................
5.6%
13.5%
10.1%
6.6%
i. 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.
ii. 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.
iii. Represents annualized core operating income for the quarter
divided by average shareholders’ equity, and core operating income
for the six months divided by average shareholders’ equity
respectively.
iv. Represents core operating income attributable to vested
common shares dividend by weighted average number of shares – basic
and diluted as follows:
Quarter Ended
June 30,
Six Months Ended
June 30,
(in millions of U.S. Dollars, except per
share information)
2021
2020
2021
2020
Core operating income
$9.0
$10.3
$23.8
$23.7
Minus: Core operating income attributable
to the Earnout Shares subject to vesting
$0.6
$0.6
$1.5
$1.5
Minus: Core operating income attributable
to the Restricted Shares Awards subject to vesting
$0.1
-
$0.2
-
Core operating income for the
period attributable to vested equity holders (a)
$8.3
$9.7
$22.1
$22.2
Weighted average number of common shares –
basic and diluted (in millions of shares) (b)
45.5
45.4
45.5
40.6
Basic and diluted core operating
earnings per share (a/b)
$0.18
$0.21
$0.49
$0.55
v. 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 Second 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, 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 outcome of any legal proceedings that may
be instituted against the Company; (5) the potential effects of the
COVID-19 pandemic; (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 annual report on Form 20-F for
the year ended December 31, 2020, 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/20210812005692/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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