IGI to restate financial statements
IGI to Restate Financial Statements in Response to the SEC Staff Statement for Warrants Issued by Special Purpose Acquisition Companies (SPACs)
International General Insurance Holdings Ltd has announced that it will file restated consolidated financial statements as of and for the year ended December 31, 2020 and also amend its previously published quarterly financial results for 2020 and 2021 as a result of further consideration of a statement issued by the Securities and Exchange Commission (“SEC”) (the “SEC Staff Statement”) on April 12, 2021, with respect to the accounting treatment for warrant instruments issued by Special Purpose Acquisition Companies (SPACs).
IGI has 12.75 million public warrants and 4.5 million private warrants (collectively, the “Warrants”) outstanding. No Warrants have been exercised or redeemed since originally issued. The impact of the restatement on the consolidated financial statements will be a decrease to net income of $4.4 million for the year ended December 31, 2020, an increase in total liabilities of $13.6 million as of December 31, 2020, and a corresponding decrease to total equity of $13.6 million as of December 31, 2020. The restatement of the consolidated financial statements had no impact on the Company’s liquidity, cash or cash equivalents, or cash flows from operating, investing, and financing activities.
IGI Chairman and CEO Wasef Jabsheh said, “IGI is one of several hundred U.S. public companies to restate or revise their financial statements as a result of the SEC’s Staff Statement on warrant accounting for SPACs. This restatement does not impact the financial strength of IGI. We do not anticipate the restatement to impact our previously communicated core operating income and core operating earnings per share. We continue to remain confident in the positive momentum IGI has achieved since we became a public company in 2020.”
The SEC statement on “Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” highlighted potential accounting implications of certain terms that are common in warrants issued in connection with the initial public offerings of SPACs. Consistent with market practice for SPACs, the IGI Warrants were recorded as equity instruments in the Company’s consolidated statement of financial position as a result of the Business Combination with Tiberius Acquisition Corp. (“Tiberius”) which closed on March 17, 2020. Following subsequent dialogue with the staff of the SEC, the Company has determined that, given the circumstances of the transaction with Tiberius, the Warrants should have been recorded at fair value as liabilities in the Company’s consolidated statement of financial position, and not as equity.
The Company intends to file as soon as practicable an amended Annual Report on Form 20-F/A for the year ended December 31, 2020 to reflect the restatement.
In a press release issued on August 12, 2021, the Company announced a reclassification of its private warrants as a derivative liability instead of equity with the changes recorded in income. After further analysis and discussion with the SEC staff, IGI has determined that the public warrants should also be recorded as a derivative liability. As a result of this restatement, the Warrants will be reflected as liabilities at fair value on the Company’s consolidated statement of financial position at December 31, 2020, and the change in the fair value of such liabilities in the period is recognized as a gain or loss in the Company’s consolidated statements of income.
Authored by IGI
About IGI
Established in 2001, International General Insurance (IGI) is a global privately-owned specialist commercial insurer and reinsurer. Our vision is to be the company of choice for clients and brokers through market-leading service and our reputation for stable management and capital security.
A diverse and highly experienced team of underwriters operates our office in London. We also have offices in Dubai, Amman, Casablanca and Kuala Lumpur.
Our diverse portfolio of specialty lines includes Energy, Property, Construction & Engineering, Ports & Terminals, Financial Institutions, Aviation, Professional Indemnity, Political Violence, Legal Expenses, D&O, Casualty, Forestry and Treaty Reinsurance.
Standard and Poor’s upgraded our financial strength rating to “A- “, with a Stable outlook. A.M. Best rated the company A- (Excellent), with a Positive outlook, stating, “the revised outlook reflects IGI’s consistent record of very strong operating performance and the continuous improvement in its enterprise risk management framework.”
We take pride in providing proactive claims management, coupled with open communication, leading to the efficient handling of claims. We endeavour to act fairly and honourably in our relations with clients and brokers.