IGI reports Q1 2020 condensed unaudited financial results

International General Insurance Holdings Ltd. (IGI) has announced condensed unaudited financial results for the first quarter of 2020.

Highlights for the first quarter 2020 unaudited results include:

• Gross underwriting profit of $23.2 million for the quarter ended March 31, 2020, compared to $11.8 million for the quarter ended March 31, 2019
• Reported loss after tax of $0.9 million for the quarter ended March 31, 2020, compared to a net profit after tax of $6.5 million for the quarter ended March 31, 2019
• Combined ratio of 81.3% for the first quarter of 2020, an improvement of 13.8 points as compared to the first quarter of 2019
• Gross written premiums of $99.2 million for the quarter ended March 31, 2020, compared to $80.0 million for the quarter ended March 31, 2019, reflecting year over year growth of 24%
• Net investment income of $2.6 million for the quarter ended March 31, 2020, compared to $2.4 million for the quarter ended March 31, 2019
• Book value per share at March 31, 2020 was $7.57
• Core operating income of $13.4 million for the quarter ended March 31, 2020, compared to $4.6 million for the quarter ended March 31, 2019

First quarter 2020 financial impacts attributed primarily to the COVID-19 pandemic include:

• Foreign exchange losses of $11.9 million, specifically weakening in the Company’s transactional currencies (Pound Sterling and Euro) against the U.S. Dollar
• Mark-to-market adjustments in the equity investment portfolio resulting in an unrealized loss of $4.6 million
• Net claims and claims expenses of $2.0 million, primarily representing the cost of claims incurred but not yet reported

IGI Chairman and CEO Mr. Wasef Jabsheh said, “The first three months of 2020 have been extraordinary across the globe but particularly for IGI: we became a public company and began trading on Nasdaq in mid-March while the world was experiencing unprecedented turmoil from the outbreak of the COVID-19 pandemic. We have seen significant turbulence across global financial and capital markets, disruption in (re)insurance markets, and the way we do business has been upended.

“Our results for the first quarter of 2020 – similar to other (re)insurance companies – clearly show the impacts of this crisis. While we recorded unrealized investment losses and significant fluctuations in our operating currencies, to date we have not recorded material underwriting losses as a direct result of the pandemic, but we are constantly monitoring this as the situation continues to evolve.

“Notwithstanding the uncertainty, IGI remains strong. I am very proud of the performance and resilience of all our people who have had to adjust to a whole new way of working. I am particularly pleased with the strong underwriting performance achieved during this period, and also that we were able to leverage our long-standing relationships and market position to take advantage of opportunities to refine our portfolio in our core lines and geographies, while writing profitable new business.

“During the quarter, we continued to see rate increases of more than 13% across our book of business, with price momentum continuing to build in most lines of business. We are optimistic this will continue throughout 2020, and with our entry into the U.S. E&S markets in April, we will maintain our focus and discipline as we strive to continue to generate attractive risk-adjusted returns for our shareholders.”

Underwriting Results

Gross written premiums were $99.2 million for the quarter ended March 31, 2020, compared to $80.0 million for the quarter ended March 31, 2019. The increase in gross written premiums was the result of new business generated across most lines of business, as well as improved renewal pricing. Given hardening market conditions, the Company also took the opportunity to further refine its existing portfolio, achieving improved terms and conditions.

Claims and claims expense ratios were 46.3% and 54.7% for the quarters ended March 31, 2020 and 2019, respectively. The claims and claims expense ratios included current accident year net catastrophe losses of $0.8 million, or 1.2 points, for the quarter ended March 31, 2020, and current accident year net catastrophe losses of $3.7 million, or 7.4 points, for the quarter ended March 31, 2019. Favorable development on reserves from prior accident years was $10.0 million or 14.6 points for the quarter ended March 31, 2020 and $4.1 million or 8.2 points for the quarter ended March 31, 2019, respectively.

The combined ratio for the quarter ended March 31, 2020 was 81.3%, compared to 95.1% for the same quarter in 2019. The improvement in the combined ratio was the result of a number of factors: lower acquisition and G&A expense ratios; significant growth in net earned premiums; and improvement in the claims and claims expense ratio, driven by relatively benign catastrophe activity and partly by foreign exchange fluctuations.

Investment Results

Investment results were impacted by market turbulence related to the COVID-19 pandemic, with unrealized mark-to-market adjustments of $4.6 million leading to an overall investment portfolio loss of $2.0 million in the first quarter of 2020, compared to total investment income of $3.7 million in the first quarter of 2019. Excluding these realized and unrealized gains and losses, total investment income, net, was $2.6 million and $2.4 million for the quarters ended March 31, 2020, and March 31, 2019, respectively, representing quarter over quarter growth of 10.0%, and resulting net investment yields of 1.7% for the first quarter of 2020, and 1.8% for the corresponding period in 2019.

Cash and cash equivalents and term deposits totaled $310.7 million at March 31, 2020, representing just under 50% of the total investment and cash portfolio.

During March 2020, the Company began to reposition its investment portfolio to higher yielding bonds with an average rating of ‘A’. Given ongoing dislocation in both the fixed income and equity markets as a result of the COVID-19 pandemic, the Company is continuing to look for opportunities to further reposition the portfolio to enhance investment yields while maintaining a conservative profile and a cautious approach.

Other

The loss after tax for the quarter ended March 31, 2020 was $0.9 million compared to a net profit after tax of $6.5 million for the quarter ended March 31, 2019.

Core operating income was $13.4 million and $4.6 million for the quarters ended March 31, 2020 and March 31, 2019, respectively. The increase in core operating income during the first quarter of 2020 compared to the first quarter of 2019 was primarily the result of the lower combined ratio, which was 13.8 points better in the first quarter 2020 when compared to the first quarter in 2019.

Core operating return on average equity (annualized) was 16.4% for the quarter ended March 31, 2020, and 6.0% for the quarter ended March 31, 2019.

Book value per share was $7.57 at March 31, 2020.

Business Outlook

IGI President Mr. Waleed Jabsheh said, “All our teams at IGI are continuing to forge ahead with the same consistency of focus and discipline as always, despite the distraction and market disruption created by the COVID-19 pandemic. We are seeing significant opportunities in our underwriting operations as well as our investment operations, but as always we remain judicious in evaluating these and maintaining balance in our portfolio.”

Authored by IGI