HAMILTON, Bermuda–(BUSINESS WIRE)–International General Insurance Holdings Ltd. (“IGI” or the “Company”) (NASDAQ: IGIC) today reported financial results for the fourth quarter and full year of 2022.
Highlights for the fourth quarter and full year of 2022 include:
|
(in millions of U.S. Dollars, except percentages and per share information) |
||||
|
|
Quarter Ended December 31, |
Year Ended December 31, |
||
|
|
2022 |
2021 |
2022 |
2021 |
|
Gross written premiums |
$156.7 |
$163.5 |
$581.8 |
$545.6 |
|
Net premiums earned |
$97.0 |
$86.2 |
$376.4 |
$345.2 |
|
Net underwriting results |
$24.7 |
$30.6 |
$148.5 |
$105.8 |
|
Total investment income, net (1) |
$6.7 |
$2.2 |
$20.7 |
$14.2 |
|
Profit for the period |
$25.7 |
$9.1 |
$85.5 |
$43.6 |
|
Combined ratio (2) |
92.4% |
83.8% |
78.5% |
86.4% |
|
Earnings per share (basic and diluted) (3) |
$0.53 |
$0.19 |
$1.74 |
$0.89 |
|
Return on average equity (annualized) (4) |
24.8% |
9.2% |
20.6% |
11.1% |
|
Core operating income (4) |
$13.5 |
$13.6 |
$94.4 |
$53.1 |
|
Core operating earnings per share (basic and diluted) (4) |
$0.28 |
$0.28 |
$1.92 |
$1.09 |
|
Core operating return on average equity (annualized) (4) |
13.0% |
13.7% |
22.7% |
13.6% |
(1) See Note (1) in the “Notes to the Condensed Consolidated Financial Statements (Unaudited)” below.
(2) See “Supplementary Financial Information” below.
(3) See Note (3) in the “Notes to the Condensed Consolidated Financial Statements (Unaudited)” below.
(4) See the section titled “Non-IFRS Financial Measures” below.
IGI Chairman and CEO Mr. Wasef Jabsheh said, “IGI finished its 20th anniversary year with excellent results across the board, marked by continued profitable growth, diversification and consistent execution of our strategy, reflected in a 78.5% combined ratio and 22.7% core operating return on average shareholders’ equity for the full year. This is particularly gratifying given the many challenges our industry faced during 2022, including significant natural catastrophes, rising financial and social inflation, currency volatility, and political instability.”
“So far in 2023, the market overall continues to be robust, though there remains wide variation in terms and conditions by line of business and geography. We expect the dislocation in reinsurance markets that was evident in the lead up to the January renewals will result in plenty of opportunity for us to continue to achieve profitable growth.”
“While our industry continues to be challenged on many levels, IGI, as always, remains focused on consistently executing our strategy, growing our company, and being a reliable and trusted partner to our clients. We have a demonstrated ability to successfully manage the cyclicality and inherent volatility of our business. We are excited and confident about our future and to continuing our commitment to delivering value to our customers and our shareholders over the long term.”
Results for the Quarters and Years ended December 31, 2022 and 2021
Profit for the quarter ended December 31, 2022 was $25.7 million, compared to profit of $9.1 million for the quarter ended December 31, 2021. The higher level of profit was primarily driven by an increase of $10.8 million in net premiums earned, positive movement of $11.6 million in total investment income and an increase in foreign exchange gains of $10.8 million as a result of a greater degree of currency revaluation against the U.S. Dollar on comparative basis. These increases were partially offset by unfavorable development of net loss reserves from prior accident years, which were negatively impacted by the currency revaluation on loss reserves denominated in Pounds Sterling and Euros during the quarter.
Core operating income, a non-IFRS measure defined below, was $13.5 million for the quarter ended December 31, 2022, compared to $13.6 million for the comparable period in 2021. The core operating return on average equity (annualized) was 13.0% for the fourth quarter of 2022 compared to 13.7% for the fourth quarter of 2021.
For the year ended December 31, 2022, profit was $85.5 million, compared to profit of $43.6 million for the year ended December 31, 2021. The increase was primarily the result of higher net premiums earned and total investment income, together with a lower level of net claims and claim adjustment expenses driven by strong underwriting results and reinforced by higher favorable development of net loss reserves from prior accident years, which benefited from the currency devaluation impact on loss reserves denominated in Pounds Sterling and Euros during the year.
Core operating income was $94.4 million for the year ended December 31, 2022, compared to core operating income of $53.1 million for the year ended December 31, 2021. The core operating return on average equity increased 9.1 points to 22.7% for the full year of 2022 compared to 13.6% for the full year of 2021.
Underwriting Results
Net underwriting results were $24.7 million for the fourth quarter of 2022 compared to $30.6 million for the fourth quarter of 2021, with the decrease largely driven by a higher level of net claims and claim adjustment expenses, partially offset by growth in net premiums earned.
Gross written premiums were $156.7 million for the quarter ended December 31, 2022, representing a decrease of 4.2% compared to gross written premiums of $163.5 million for the quarter ended December 31, 2021. The decrease in gross written premiums was primarily in the Long-tail Segment.
The net claims and claims expense ratio increased to 55.7% for the quarter ended December 31, 2022, compared to 46.8% for the quarter ended December 31, 2021, primarily driven by unfavorable development of net loss reserves from prior accident years of $4.3 million, or 4.4 points, compared to favorable development of $5.7 million, or 6.6 points, for the quarter ended December 31, 2021. The unfavorable development of net loss reserves from prior accident years in the fourth quarter of 2022 resulted from currency revaluation on prior period loss reserves denominated in Pounds Sterling and Euros, largely in the Long-tail Segment during the quarter.
The general and administrative expense ratio was 17.8% in the fourth quarter of 2022, a decrease of 1.5 points when compared to 19.3% in the same quarter of 2021.
The combined ratio for the quarter ended December 31, 2022 was 92.4% compared to 83.8% for the quarter ended December 31, 2021. This was primarily the result of a higher net claims and claim adjustment expense ratio as described above.
For the full year of 2022, gross written premiums were $581.8 million, an increase of 6.6% compared to $545.6 million for the full year of 2021.
The net claims and claim expense ratio was 41.9% for the year ended December 31, 2022, compared to 51.0% for the year ended December 31, 2021, primarily driven by higher favorable development of net loss reserves from prior accident years of $40.4 million or 10.7 points, compared to favorable development of $16.1 million or 4.7 points for the year ended December 31, 2021. The favorable development of net loss reserves from prior accident years was positively impacted by currency devaluation on loss reserves denominated in Pounds Sterling and Euros during 2022.
The general and administrative expense ratio increased 0.8 points to 17.9% for the full year of 2022 compared to the same period of 2021, largely due to expansion of the business.
The combined ratio for the year ended December 31, 2022 was 78.5%, compared to 86.4% for the year ended December 31, 2021, primarily due to a lower year-over-year net claims and claim expense ratio, partially offset by a slight increase in the general and administrative expense ratio.
Segment Results
The Long-tail Segment, which represented approximately 40% of the Company’s gross written premiums for the year ended December 31, 2022, includes financial institutions, marine liability, inherent defects insurance, and professional lines, which is comprised of professional indemnity, directors and officers, legal expenses, and other casualty lines (non-U.S.).
Gross written premiums for the fourth quarter of 2022 in the Long-tail Segment were $75.4 million compared to $82.9 million for the fourth quarter of 2021. Net premiums earned for the quarter ended December 31, 2022 were $41.7 million, compared to $40.0 million in the comparable quarter in 2021. The net underwriting results for this segment were $10.1 million for the fourth quarter of 2022, compared to $11.3 million in the fourth quarter of 2021.
Gross written premiums for the full year of 2022 in the Long-tail Segment were $232.2 million compared to $239.6 million for the full year of 2021. Net premiums earned for the year ended December 31, 2022 were $167.4 million, compared to $167.6 million for the comparable period in 2021. Net underwriting results for this segment were $83.7 million for the full year of 2022, compared to $50.9 million in the full year of 2021. The growth in net underwriting results benefitted primarily from a lower level of net claims and claim adjustment expenses, primarily due to higher favorable development of net loss reserves from prior accident years, which were positively impacted by the currency devaluation impact on loss reserves denominated in Pound Sterling and Euro during 2022.
The Short-tail Segment, which represented approximately 55% of the Company’s gross written premiums for the year ended December 31, 2022, includes energy, property, general aviation, ports and terminals, marine trades, marine cargo, contingency, construction and engineering, and political violence.
Gross written premiums for the fourth quarter of 2022 in the Short-tail Segment were $77.1 million compared to $76.6 million in the fourth quarter of 2021. Net premiums earned for the quarter ended December 31, 2022 were $47.1 million, compared to $39.7 million in the comparable quarter in 2021. Net underwriting results for this segment were $11.4 million for the fourth quarter of 2022, compared to $20.3 million for the comparable quarter of 2021. The decline in net underwriting results was primarily due to a higher level of net claims and claim adjustment expenses in the fourth quarter of 2022 compared to the fourth quarter of 2021, partially offset by the increase in net premiums earned.
Gross written premiums for the full year of 2022 in the Short-tail Segment were $318.6 million, an increase of 13.0% compared to $282.0 million for the full year of 2021. Net premiums earned for the year ended December 31, 2022 were $178.7 million, compared to $153.9 million for the comparable period in 2021. Net underwriting results for this segment were $57.2 million for the full year of 2022, compared to $52.5 million for the comparable period in 2021.
The Reinsurance Segment, which represented approximately 5% of the Company’s gross written premiums for the year ended December 31, 2022, includes the Company’s inwards reinsurance portfolio.
Gross written premiums for the fourth quarter of 2022 in the Reinsurance Segment were $4.2 million, compared to $4.0 million for the fourth quarter of 2021. Net premiums earned for the quarter ended December 31, 2022 were $8.2 million, compared to $6.5 million for the comparable quarter in 2021. Net underwriting results for this segment were a gain of $3.2 million for the fourth quarter of 2022, compared to a loss of $1.0 million for the fourth quarter of 2021.
Gross written premiums for the full year of 2022 in the Reinsurance Segment were $31.0 million, compared to $24.0 million for the full year of 2021. Net premiums earned for the year ended December 31, 2022 were $30.3 million, compared to $23.7 million for the comparable period in 2021. Net underwriting results for this segment were $7.6 million for the full year of 2022, compared to $2.4 million in the full year of 2021.
Foreign Exchange Losses
The gain on foreign exchange in the fourth quarter of 2022 was $14.0 million, compared to a gain of $3.2 million in the fourth quarter of 2021, both of which largely represent currency revaluation gains. The fourth quarter of 2022 saw a greater degree of positive currency movement in the Company’s major transactional currencies against the U.S. Dollar, when compared with the fourth quarter of 2021.
The loss on foreign exchange for the full year of 2022 was $9.1 million, compared to a loss of $4.9 million in the full year of 2021, reflecting the greater level of negative currency movement in the Company’s major transactional currencies against the U.S. Dollar particularly during the first nine months of 2022, partially offset by the positive currency movement in the fourth quarter of 2022, when compared with the same periods in 2021.
Investment Results
Total investment income was $7.5 million in the fourth quarter of 2022, compared to a loss of $4.0 million in the fourth quarter of 2021. Total investment income, net, was $6.7 million and $2.2 million for the quarters ended December 31, 2022 and 2021, respectively. This represented an annualized investment yield of 2.6% on average total investments, term deposits (bank deposits with a maturity of more than three months), and cash and cash equivalents (bank deposits with a maturity of three months or less) in the fourth quarter of 2022, compared to a 1.0% annualized investment yield in the corresponding period in 2021. The Company’s total investments and term deposits produced an investment yield of 3.0% in the fourth quarter of 2022, compared to 1.3% in the corresponding period in 2021. The increase in total investment income was primarily attributable to the growth in interest income, supported by growth in the Company’s investment portfolio driven by positive operating cash flows, the rising interest rate environment globally, and a lower level in the of share of loss from associates in the fourth quarter of 2022 compared to the same period of 2021.
Total investment income was $16.6 million for the full year of 2022, compared to $8.8 million for the full year of 2021. Total investment income, net, was $20.7 million and $14.2 million for the years ended December 31, 2022 and 2021 respectively. This represented an investment yield of 2.2% on average total investments, term deposits, and cash and cash equivalents in the full year of 2022, compared to a 1.7% investment yield in the corresponding period in 2021. The Company’s total investments and term deposits produced an investment yield of 2.5% in the full year of 2022, compared to 2.1% in the corresponding period in 2021. The increase in total investment income was driven by the same reasons described above, including a share of profit of $0.2 million from associates compared to a loss from associates of $7.3 million for the full year 2022, partially offset by the change on the unrealized gain (loss) on investments from an unrealized gain of $3.1 million for the full year 2021 to an unrealized loss of $2.9 million in 2022.
Total Equity
Total equity at December 31, 2022 was $429.8 million, compared to $401.9 million at December 31, 2021. The movement in total equity during the fourth quarter and year ended December 31, 2022 is illustrated below:
|
(in millions of U.S. Dollars) |
Quarter Ended December 31, 2022 |
Year Ended December 31, 2022 |
|
Total Equity at beginning of period |
$400.3 |
$401.9 |
|
Profit for the period |
$25.7 |
$85.5 |
|
Net change in fair value reserves for investments through other comprehensive income (OCI) |
$4.6 |
($47.3) |
|
Change in foreign currency translation reserve |
$0.2 |
$0.1 |
|
Purchase of treasury shares, net |
($1.3) |
($2.4) |
|
Issuance of restricted share awards |
$0.8 |
$2.8 |
|
Cash dividends declared during the period |
($0.5) |
($10.8) |
|
Total Equity at December 31, 2022 |
$429.8 |
$429.8 |
Book value per share was $9.49 at December 31, 2022, compared to $8.83 at December 31, 2021.
During the second quarter of 2022, the Company began to repurchase common shares in the open market pursuant to its 5 million common share repurchase program announced in May 2022. As of December 31, 2022, the Company had repurchased 310,542 common shares at an average price per share of $7.65. On January 30, 2023, the Company subsequently announced that it had repurchased 2,271,775 common shares at a price of $8.60 per share in a privately-negotiated transaction.
Condensed Consolidated Statements of Income (Unaudited)
|
|
Quarter Ended December 31, |
Year Ended December 31, |
||||||
|
(in millions of U.S. Dollars except per share data) |
2022 |
2021 |
2022 |
2021 |
||||
|
|
|
|
|
|
||||
|
Gross written premiums………………………………………………. |
$156.7 |
$163.5 |
$581.8 |
$545.6 |
||||
|
Reinsurers’ share of insurance premiums…………………….. |
($50.1) |
($52.7) |
($186.5) |
($163.0) |
||||
|
Net written premiums………………………………………………… |
$106.6 |
$110.8 |
$395.3 |
$382.6 |
||||
|
Net change in unearned premiums………………………………. |
($9.6) |
($24.6) |
($18.9) |
($37.4) |
||||
|
Net premiums earned…………………………………………………. |
$97.0 |
$86.2 |
$376.4 |
$345.2 |
||||
|
Net claims and claim adjustment expenses…………………… |
($54.0) |
($40.4) |
($157.7) |
($176.2) |
||||
|
Net policy acquisition expenses……………………………………. |
($18.3) |
($15.2) |
($70.2) |
($63.2) |
||||
|
Net underwriting results……………………………………………… |
$24.7 |
$30.6 |
$148.5 |
$105.8 |
||||
|
Net investment income (1)………………………………….………….. |
$7.6 |
$3.0 |
$16.4 |
$16.1 |
||||
|
Share of (loss) profit from associates (1)……….………………… |
($0.1) |
($7.0) |
$0.2 |
($7.3) |
||||
|
General and administrative expenses…………………………… |
($17.3) |
($16.7) |
($67.5) |
($58.9) |
||||
|
Other expenses, net (2)…………………………………………………. |
($1.2) |
($2.6) |
($3.7) |
($6.0) |
||||
|
Change in fair value of derivative financial liability ……….. |
($0.2) |
($0.9) |
$2.9 |
$0.7 |
||||
|
Gain (loss) on foreign exchange …………………………………… |
$14.0 |
$3.2 |
($9.1) |
($4.9) |
||||
|
Profit before tax…………………………………………………………. |
$27.5 |
$9.6 |
$87.7 |
$45.5 |
||||
|
Income tax …………………………………………………………………. |
($1.8) |
($0.5) |
($2.2) |
($1.9) |
||||
|
Profit for the period……………………………………………………. |
$25.7 |
$9.1 |
$85.5 |
$43.6 |
||||
|
Basic and diluted earnings per share attributable to equity holders(3)…………………………………………………………… |
$0.53 |
$0.19 |
$1.74 |
$0.89 |
||||
See “Notes to the Condensed Consolidated Financial Statements (Unaudited)” below.
Condensed Consolidated Statements of Financial Position
|
(in millions of U.S. Dollars) |
As at December 31, 2022 (Unaudited) |
As at December 31, 2021 (Audited) |
||
|
ASSETS |
|
|
||
|
Cash and cash equivalents |
$138.0 |
$242.1 |
||
|
Term deposits |
$297.0 |
$180.0 |
||
|
Insurance receivables |
$184.8 |
$179.4 |
||
|
Investments (4) |
$534.7 |
$470.2 |
||
|
Investment in associates (4) |
$6.0 |
$5.7 |
||
|
Reinsurance share of outstanding claims |
$188.9 |
$182.3 |
||
|
Reinsurance share of unearned premiums |
$70.5 |
$64.1 |
||
|
Deferred excess of loss premiums |
$19.7 |
$17.2 |
||
|
Deferred policy acquisition costs |
$69.4 |
$64.8 |
||
|
Deferred tax assets |
$5.7 |
$0.6 |
||
|
Other assets |
$14.3 |
$10.0 |
||
|
Investment properties (4) |
$15.1 |
$16.3 |
||
|
Property, premises and equipment |
$13.4 |
$14.9 |
||
|
Intangible assets |
$3.6 |
$4.3 |
||
|
TOTAL ASSETS |
$1,561.1 |
$1,451.9 |
||
|
|
|
|
||
|
LIABILITIES |
|
|
||
|
Gross outstanding claims |
$634.6 |
$575.9 |
||
|
Gross unearned premiums |
$354.0 |
$328.8 |
||
|
Insurance payables |
$86.8 |
$89.5 |
||
|
Other liabilities |
$29.1 |
$29.2 |
||
|
Derivative financial liability |
$10.0 |
$12.9 |
||
|
Unearned commissions |
$16.8 |
$13.7 |
||
|
TOTAL LIABILITIES |
$1,131.3 |
$1,050.0 |
||
|
|
|
|
||
|
EQUITY |
|
|
||
|
Common shares at par value |
$0.5 |
$0.5 |
||
|
Share premium |
$159.9 |
$159.5 |
||
|
Foreign currency translation reserve |
$1.1 |
$1.0 |
||
|
Fair value reserves |
($38.9) |
$8.4 |
||
|
Retained earnings |
$307.2 |
$232.5 |
||
|
TOTAL EQUITY |
$429.8 |
$401.9 |
||
|
TOTAL LIABILITIES AND EQUITY |
$1,561.1 |
$1,451.9 |
See “Notes to the Condensed Consolidated Financial Statements (Unaudited)” below.
Supplementary Financial Information – Combined Ratio (Unaudited)
|
|
Quarter Ended December 31, |
Year Ended December 31, |
||||||
|
|
2022 |
2021 |
2022 |
2021 |
||||
|
|
|
|
|
|
||||
|
Net claims and claim expense ratio (a)………………. . |
55.7% |
46.8% |
41.9% |
51.0% |
||||
|
Net policy acquisition expense ratio (b)…………………….. |
18.9% |
17.7% |
18.7% |
18.3% |
||||
|
General and administrative expense ratio (c)……………. |
17.8% |
19.3% |
17.9% |
17.1% |
||||
|
Expense ratio (d)…………………………………………. |
36.7% |
37.0% |
36.6% |
35.4% |
||||
|
Combined ratio (e)……………………………………….. |
92.4% |
83.8% |
78.5% |
86.4% |
||||
(a) Represents net claims and claim adjustment expenses as a percentage of net premiums earned. The split of net claims and claims expense ratio between current accident year, current year CAT losses and prior years’ loss development is as follows:
|
Quarter Ended December 31, |
Year Ended December 31, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
(in millions of U.S. Dollars, except percentages) |
Claims and claim adjustment expenses |
% of net premiums earned |
Claims and claim adjustment expenses |
% of net premiums earned |
Claims and claim adjustment expenses |
% of net premiums earned |
Claims and claim adjustment expenses |
% of net premiums earned |
||||||||
|
Current year net incurred claims |
$54.0 |
55.7% |
$40.4 |
46.8% |
$157.7 |
41.9% |
$176.2 |
51.0% |
||||||||
|
Minus: Current accident year CAT losses |
$12.1 |
12.5% |
$9.9 |
11.5% |
$24.4 |
6.5% |
$28.9 |
8.4% |
||||||||
|
Minus: Effect of prior years’ development |
$4.3 |
4.4% |
($5.7) |
(6.6%) |
($40.4) |
(10.7%) |
($16.1) |
(4.7%) |
||||||||
|
Current accident year (before CAT losses) |
$37.6 |
38.8% |
$36.2 |
41.9% |
$173.7 |
46.1% |
$163.4 |
47.3% |
||||||||
(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 – Book Value per Share (Unaudited)
|
(in millions of U.S. Dollars, except share and per share data) |
As at December 31, 2022 |
As at December 31, 2021 |
||
|
Cash and cash equivalents and term deposits …………………………………… |
$435.0 |
$422.1 |
||
|
Total investments ***……………………………………………………………………… |
$555.8 |
$492.2 |
||
|
Total investments, term deposits and cash and cash equivalents……… |
$990.8 |
$914.3 |
||
|
|
|
|
||
|
Common shares outstanding (in millions)* ……………………………………….. |
49.0 |
48.9 |
||
|
Minus: Unvested shares (in millions)** …………………………………………….. |
3.7 |
3.4 |
||
|
Number of vested common outstanding shares (in millions) (a) …….. |
45.3 |
45.5 |
||
|
|
|
|
||
|
Total equity (b) ………………………………………………………………………………. |
$429.8 |
$401.9 |
||
|
Book value per share (b)/(a) ………………………………………………………….. |
$9.49 |
$8.83 |
* Common shares issued and outstanding as at December 31, 2022 and December 31, 2021 are as follows:
|
|
No. of shares as at |
|
|
|
December 31, 2022 |
|
|
Common shares as of December 31, 2021 |
45,471,084 |
|
|
Vested restricted share awards |
146,386 |
|
|
Cancelled treasury shares |
(308,874) |
|
|
Common shares as of December 31, 2022 |
45,308,596 |
|
|
|
|
|
|
Earnout shares as of December 31, 2022 |
3,012,500 |
|
|
Unvested restricted share awards as of December 31, 2022 |
667,181 |
|
|
Total unvested shares as of December 31, 2022 |
3,679,681 |
|
|
Treasury shares as of December 31, 2022 |
(1,668) |
|
|
Total common shares outstanding |
48,986,609 |
|
|
No. of shares as at |
|
|
|
December 31, 2021 |
|
|
Common shares as of December 31, 2020 |
45,426,251 |
|
|
Vested restricted share awards |
44,833 |
|
|
Common shares as of December 31, 2021 |
45,471,084 |
|
|
|
|
|
|
Earnout shares as of December 31, 2021 |
3,012,500 |
|
|
Unvested restricted share awards as of December 31, 2021 |
396,857 |
|
|
Total unvested shares as of December 31, 2021 |
3,409,357 |
|
|
Total common shares outstanding |
48,880,441 |
** 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.
Contacts
IGI Contacts:
Investors:
Robin Sidders, Head of Investor Relations
T: + 44 (0) 2072 204937
M: + 44 (0) 7384 514785
Email: [email protected]
Media:
Aaida Abu Jaber, AVP PR & Marketing
T: +96265662082 Ext. 407
M: +962770415540
Email: [email protected]
