IGI Reports Fourth Quarter and Full Year 2020 Condensed and Unaudited Financial Results

Rhea-AI Summary

International General Insurance Holdings Ltd. (NASDAQ: IGIC) reported robust financial results for Q4 and FY 2020, highlighting a strong growth trajectory. Gross written premiums surged to $129.5 million for Q4, a 45.3% increase, while total premiums for the year hit $467.3 million, up 33.8% from 2019. The net profit rose to $10.9 million in Q4, and $31.6 million for the year, reflecting a solid earnings per share of $0.22 and $0.69 respectively. Notably, the combined ratio improved to 96.8% in Q4 and 89.3% for the year, indicating better underwriting profitability.

Positive

• Q4 gross written premiums increased by 45.3% to $129.5 million.
• Full year gross written premiums rose 33.8% to $467.3 million.
• Net profit grew to $10.9 million for Q4 and $31.6 million for FY 2020.
• Earnings per share remained strong at $0.69 for the year.
• Combined ratio improved to 89.3% for FY 2020, showing better profitability.

Negative

• The claims and claims expense ratio for Q4 was 59.8%, indicating potential challenges.

International General Insurance Holdings Ltd. (“IGI” or the “Company”) (NASDAQ: IGIC) today reported condensed and unaudited financial results for the fourth quarter and full year 2020.

Highlights for the fourth quarter and full year 2020 include:

(in millions of U.S. Dollars, except percentages and per share information)
	Quarter Ended December 31,		Year Ended December 31,
	2020	2019	2020	2019
Gross written premiums % growth	$129.5 45.3%	$89.1	$467.3 33.8%	$349.2
Net premiums earned	$73.9	$58.1	$283.5	$215.5
Net underwriting results	$14.7	$10.4	$77.4	$52.0
Total investment income, net (1)	$3.4	$2.7	$11.5	$11.1
Profit for the period	$10.9	$4.3	$31.6	$23.6
Combined ratio (2)	96.8%	101.0%	89.3%	94.1%
Earnings per share (Basic and Diluted)(3)	$0.22	$0.13	$0.69	$0.69
Return on average equity (annualized) (4)	11.3%	5.5%	9.0%	7.7%
Core operating income (loss) (4)	$4.2	($0.1)	$34.1	$21.2
Core operating earnings per share (4) (Basic and Diluted)	$0.09	-	$0.74	$0.62
Core operating return on average equity (annualized) (4)	4.4%	(0.1%)	9.6%	6.9%

(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, “2020 has been a successful year for IGI on many levels. Our strong financial performance, achieved during a year of significant distraction and disruption as well as during our first year as a public company trading in the U.S., clearly demonstrates the agility, discipline and focus of our teams and our ability to execute and deliver on our strategy.”

“We broadened our footprint by entering new territories and lines of business and increased our market share, with gross premiums up more than 33% in 2020 compared to 2019, while maintaining underwriting profitability at a combined ratio below 90%. We expect to continue on this path in 2021, although likely at a more measured pace, and with the same careful approach to risk selection and portfolio balance.”

“With the first quarter of 2021 almost completed, the indications on price momentum remain very positive, and we are continuing to see exciting opportunities to build and diversify our business. We will continue to be cautious in managing our net exposures to minimize our overall risk profile so that we maintain our long-term track record of generating strong value for our shareholders.”

Results for the Quarters and Years ended December 31, 2020 and 2019

Net profit for the quarter ended December 31, 2020 was $10.9 million, up from a net profit of $4.3 million for the quarter ended December 31, 2019. Net profit for the year ended December 31, 2020 increased significantly to $31.6 million compared to a net profit of $23.6 million for the prior year.

Core operating income, a non-IFRS measure defined below, was $4.2 million for the fourth quarter of 2020 compared to a core operating loss of $0.1 million for the comparable quarter in 2019. Consequently, core operating return on average equity (annualized) was 4.4% for the quarter ended December 31, 2020, compared to (0.1%) in the same period of 2019.

The increase in core operating income to $34.1 million for the year ended December 31, 2020 compared to $21.1 million for the year ended December 31, 2019, was primarily the result of a higher level of underwriting income during 2020. While total equity increased by 26.4% due to the capital injection from the Business Combination with Tiberius Acquisition Corp. (“Tiberius”) as well as growth in retained earnings during the year, core operating return on average equity also increased to 9.6% for the year ended December 31, 2020 compared to 6.9% for the same period in 2019.

Underwriting Results

Gross written premiums were $129.5 million for the quarter ended December 31, 2020, an increase of 45.3% compared to $89.1 million for the quarter ended December 31, 2019. For the year ended December 31, 2020, gross written premiums were $467.3 million, up 33.8% compared to $349.2 million for the year ended December 31, 2019. The increase in gross written premiums was the result of new business generated across virtually all lines, as well as improved renewal pricing. While market conditions remained positive, the Company also continued to further refine its existing portfolio, achieving improved terms and conditions.

The claims and claims expense ratio was 59.8% for the quarter ended December 31, 2020, an improvement of 2.7 points over the corresponding quarter in 2019. This included current accident year net catastrophe losses of $6.3 million or 8.5 points for the quarter ended December 31, 2020, compared to $8.3 million or 14.3 points for the quarter ended December 31, 2019. Prior year development on loss reserves was unfavorable amounting to $5.4 million or 7.3 points for the quarter ended December 31, 2020 driven by deterioration in prior year loss reserves in both the Long-tail and Short-tail segments which were impacted by foreign exchange, specifically the strengthening of the Pound Sterling, the Company’s major transactional currency, against the U.S. Dollar. This compares to favorable development of $1.7 million or 3.0 points for the quarter ended December 31, 2019. Catastrophe losses during the fourth quarter of 2020 were driven primarily by Hurricane Laura, a Category 4 storm which caused significant damage in the mid-western U.S., and is included in the Short-tail Segment.

The claims and claims expense ratio was 53.5% for the year ended December 31, 2020, an improvement of 1.3 points compared to the year ended December 31, 2019. This included current accident year net catastrophe losses of $13.5 million or 4.8 points for the year ended December 31, 2020, compared to $16.2 million or 7.5 points for the year ended December 31, 2019. Catastrophe losses for the year ended December 31, 2020 were driven primarily by the storms that damaged cranes at the Jawaharlal Nehru port in Mumbai, India and property damage and business interruption losses resulting from Hurricane Laura, both of which are included in the Short-tail Segment. Favorable development on loss reserves from prior accident years for the year ended December 31, 2020 was $6.1 million or 2.2 points, reduced by the impact of foreign exchange, specifically the strengthening of the Pound Sterling, the Company’s major transactional currency, against the U.S. Dollar. This compares to favorable development of $6.3 million or 2.9 points for the year ended December 31, 2019, which was also impacted by strengthening of the Pound Sterling.

The combined ratio for the quarter ended December 31, 2020 was 96.8%, compared to 101.0% for the same quarter in 2019. The combined ratio for the year ended December 31, 2020 improved 4.8 points to 89.3% compared to 94.1% for the same period in 2019, primarily due to the benefit of increased pricing per unit of exposure.

Segment Results

The Long-tail Segment, which represented approximately 43% of the Company’s gross written premiums for the full year 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 December 31, 2020 in the Long-tail Segment were $47.6 million, compared to $37.2 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 a loss of $2.4 million for the fourth quarter of 2020, driven by higher incurred losses in financial and professional lines, compared to a profit of $4.7 million in the fourth quarter of 2019.

Net written premiums for the year ended December 31, 2020 in the Long-tail Segment were $164.3 million, compared to $119.9 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 $7.1 million to $23.5 million for the full year 2020, compared to $16.4 million for the full year 2019, again driven by the financial and professional lines.

The Short-tail Segment, which represented approximately 53% of the Company’s gross written premiums for the full year 2020, includes energy, property, general aviation, ports and terminals, marine trades, marine cargo, construction and engineering, and political violence.

Net written premiums for the quarter ended December 31, 2020 in the Short-tail Segment were $39.7 million, compared to $22.4 million in the comparable quarter in 2019, driven by increases in most lines, as well as the growth of the new U.S. Excess & Surplus business. The net underwriting result for this segment was $14.5 million for the fourth quarter of 2020, up from the $7.6 million recorded in the fourth quarter of 2019, driven by growth in most lines in the Short-tail Segment.

Net written premiums for the year ended December 31, 2020 in the Short-tail Segment were $154.8 million, an increase of $40.6 million compared to $114.2 million in the comparable period in 2019, primarily the result of increases in most Short-tail lines as well growth of the new U.S. Excess & Surplus business. The net underwriting result for this segment improved to $44.4 million for the full year 2020, compared to $35.4 million in the full year 2019, supported by 35.5% growth in net written premiums which was partially offset by a $ 12.7 million increase in net claims and claims adjustment expenses driven by higher incurred losses recorded in the Ports & Terminals, Energy, and Property lines in the Short-tail segment.

The Reinsurance Segment, which represented approximately 4% of the Company’s gross written premiums for the full year 2020, comprises the Company’s inwards reinsurance portfolio.

Net written premiums for the quarter ended December 31, 2020 in the Reinsurance Segment were $2.8 million, compared to $2.9 million in the comparable quarter in 2019. The net underwriting result for this segment was a profit of $2.6 million for the fourth quarter of 2020, compared to a loss of $1.9 million in the fourth quarter of 2019, due to a lower level of claims and claims adjustment expenses in the fourth quarter of 2020.

Net written premiums for the year ended December 31, 2020 in the Reinsurance Segment were $19.3 million, compared to $18.0 million in the comparable period in 2019. The net underwriting result improved to $9.5 million for the full year 2020, compared to $0.2 million for the full year 2019, primarily due to a lower level of claims and claims adjustment expenses.

Investment Results

Total investment income was $4.5 million during the fourth quarter of 2020, compared to $2.9 million in the fourth quarter of 2019. Total investment income, net (which excludes realized and unrealized gains and losses, expected credit losses on investments, and the share of loss from associates) was $3.4 million and $2.7 million for the quarters ended December 31, 2020 and 2019, respectively. This resulted in an annualized investment yield of 1.8% for the fourth quarter of 2020, compared to 1.9% for the corresponding period in 2019.

For the full year 2020, total investment income was $8.5 million, compared to $13.0 million for the full year 2019. Total investment income, net was $11.5 million and $11.1 million for the full years 2020 and 2019, respectively. This resulted in an investment yield of 1.7% for the full year 2020, compared to 2.0% for the full year 2019.

Cash, cash equivalents and term deposits totaled $305.6 million at December 31, 2020, representing 39.4% 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, cash equivalents and term deposits (cash portfolio), investments, investment in associates, and investment properties.

Other

Gain on foreign exchange for the quarter ended December 31, 2020 was $6.2 million compared to $2.5 million for the fourth quarter of 2019. The gain in the fourth quarter of 2020 was primarily driven by strengthening of the Pound Sterling, Euro and Australian Dollar against the U.S. Dollar from September 30, 2020 to December 31, 2020, coupled with greater exposure to Pound Sterling-denominated cash and insurance receivable balances, supported by increased business in the Specialty Long-tail Segment when compared to the corresponding period of 2019.

Gain on foreign exchange for the year ended December 31, 2020 was $2.5 million compared to $5.7 million for the full year 2019. The gain in 2020 was primarily driven by strengthening of the Pound Sterling, Euro and Australian Dollar against the U.S. Dollar from December 31, 2019 to December 31, 2020, coupled with greater exposure to Pound Sterling-denominated cash and insurance receivable balances, supported by increased business in the Specialty Long-tail Segment.

Total Equity

Total equity at December 31, 2020 was $394.6 million, representing an increase of 26.4% compared to $312.1 million at December 31, 2019. The movement in Total Equity during the quarter and year ended December 31, 2020 is illustrated below:

(in millions of U.S. Dollars)	Quarter Ended December 31,	Year Ended December 31,
	2020	2020
Total Equity at beginning of period	$379.7	$312.1
Profit for the period	$10.9	$31.6
Net change in fair value reserves for investments through other comprehensive income	$3.5	$13.9
Capital injection in connection with the Business Combination	-	$40.8
Issuance of restricted share awards	$0.5	$0.5
Cash dividends declared during the period	-	($4.3)
Total Equity at December 31, 2020	$394.6	$394.6

International General Insurance Holdings Ltd.
Condensed Consolidated Statements of Income (Unaudited)
	Quarter Ended December 31,				Year Ended December 31,
(in millions of U.S. Dollars, except for percentages and per share data)	2020		2019		2020		2019
Gross written premiums	$129.5		$89.1		$467.3		$349.2
Reinsurers’ share of insurance premiums	($39.4)		($26.6)		($128.9)		($97.1)
Net written premiums	$90.1		$62.5		$338.4		$252.1
Net change in unearned premiums	($16.2)		($4.4)		($54.9)		($36.6)
Net premiums earned	$73.9		$58.1		$283.5		$215.5
Net claims and claim adjustment expenses	($44.3)		($36.3)		($151.7)		($118.1)
Net Policy acquisition expenses	($14.9)		($11.4)		($54.4)		($45.4)
Net underwriting results	$14.7		$10.4		$77.4		$52.0
Net investment income (1)	$4.8		$3.4		$10.0		$13.4
Share of loss from associates (1)	($0.3)		($0.5)		($1.5)		($0.4)
General and administrative expenses	($12.5)		($11.0)		($46.9)		($39.3)
Other expenses, net (2)	($1.0)		($1.1)		($4.4)		($1.3)
Listing related expenses	-		($4.8)		($3.4)		($4.8)
Gain on foreign exchange	$6.2		$9.4		$2.5		$5.7
Profit before tax	$11.9		$5.8		$33.7		$25.3
Income tax	($1.0)		($1.5)		($2.1)		($1.7)
Profit for the period	$10.9		$4.3		$31.6		$23.6
Basic and diluted earnings per share attributable to equity holders(3)	$0.22		$0.13		$0.69		$0.69

International General Insurance Holdings Ltd.
Condensed Consolidated Statements of Financial Position (Unaudited)
(in millions of U.S. Dollars)	As at December 31, 2020		As at December 31, 2019
ASSETS
Cash and cash equivalents	$133.4		$192.5
Term Deposits	$172.2		$119.7
Insurance receivables	$166.6		$113.0
Investments (4)	$438.1		$253.7
Investment in associates (4)	$11.6		$13.1
Reinsurance share of outstanding claims	$187.5		$176.2
Reinsurance share of unearned premiums	$50.1		$33.9
Deferred excess of loss premiums	$17.1		$15.2
Deferred policy acquisition costs	$55.2		$41.7
Other assets	$9.5		$7.6
Investment properties (4)	$20.0		$25.7
Property, premises and equipment	$13.2		$12.7
Intangible assets	$4.7		$3.9
TOTAL ASSETS	$1,279.2		$1,009.1
LIABILITIES
Gross outstanding claims	$492.3		$413.1
Gross unearned premiums	$277.2		$206.2
Insurance payables	$83.5		$53.5
Other liabilities	$20.5		$14.9
Deferred tax liabilities	$0.1		$0.4
Unearned commissions	$11.0		$8.9
TOTAL LIABILITIES	$884.6		$697.0
EQUITY
Issued share capital	-		$143.4
Common shares at par value	$0.5		-
Additional paid in capital	-		$2.7
Share premium	$157.6		-
Warrants	$9.2		-
Treasury shares	-		($20.1)
Foreign currency translation reserve	($0.3)		($0.3)
Fair value reserves	$18.2		$4.2
Retained earnings	$209.4		$182.2
TOTAL EQUITY	$394.6		$312.1
TOTAL LIABILITIES AND EQUITY	$1,279.2		$1,009.1

International General Insurance Holdings Ltd.
Supplementary Financial Information – Condensed Consolidated Statements of Income (Unaudited)
	Quarter Ended December 31,				Year Ended December 31,
	2020		2019		2020		2019
Ratios
Claims and claims expense ratio (a)	59.8%		62.5%		53.5%		54.8%
Policy acquisition expense ratio (b)	20.1%		19.6%		19.2%		21.1%
General and administrative expense ratio (c)	16.9%		18.9%		16.6%		18.2%
Expense ratio (d)	37.0%		38.5%		35.8%		39.3%
Combined ratio (e)	96.8%		101.0%		89.3%		94.1%

(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 policy acquisition expense ratio and the general and administrative expense ratio.
(e)		Represents the sum of the claims and claim expense ratio and the expense ratio.

International General Insurance Holdings Ltd.
Supplementary Financial Information – Consolidated Statements of Financial Position (Unaudited)
(in millions of U.S. Dollars, except share and per share data)	As at December 31, 2020		As at December 31, 2019
Cash and cash equivalents and term deposits	$305.6		$312.2
Total investments (4)	$469.7		$292.5
Total Investments and cash portfolio	$775.3		$604.7
Common shares outstanding (in millions)*	48.5		34.0
Minus: Unvested shares (in millions)**	3.1		-
Number of vested common outstanding shares (in millions) (a)	45.4		34.0
Total equity (b)	$394.6		$312.1
Book value per share (b)/(a)	$8.69		$9.18

* Common shares issued and outstanding as at December 31, 2020:

	No. of shares
Common shares	45,426,251
Earnout shares	3,012,500
Restricted shares awards	134,500
**Total unvested shares	3,147,000
Total Common shares outstanding	48,573,251

* Common shares issued and outstanding at December 31, 2019 of 134,025,678 were adjusted at a share exchange ratio of 0.254 used in the March 2020 Business Combination with Tiberius Acquisition Corp. to facilitate comparison to December 31, 2020. Each of the shares above have a par value of $0.01.

** Earnout Shares are subject to vesting at stock prices ranges from $11.50 to $15.25, are entitled to dividends and voting rights, however, 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 Shares awards were issued pursuant to the Company’s 2020 Omnibus Incentive Plan and are entitled to dividends, however the Restricted Shares awards are non-transferable by their holders until they vest as per the respective Restricted Shares Award Agreements. As at December 31, 2020, the vesting conditions attached to both Earnout Shares and Restricted Shares awards to employees have not been met, therefore these shares were not included in the weighted average number of common shares for both the basic and diluted earnings per share.

International General Insurance Holdings Ltd.

Supplementary Financial Information - Segment Results (Unaudited)

Segment information for IGI’s consolidated operations is as follows:

For the quarter ended December 31, 2020
(in millions of U.S. Dollars)	Specialty Long-tail		Specialty Short-tail		Reinsurance		Total
Underwriting revenues
Gross written premiums	$65.8		$60.9		$2.8		$129.5
Reinsurers’ share of insurance premiums	($18.2)		($21.2)		-		($39.4)
Net written premiums	$47.6		$39.7		$2.8		$90.1
Net change in unearned premiums	($11.7)		($7.1)		$2.6		($16.2)
Net premiums earned	$35.9		$32.6		$5.4		$73.9
Net claims and claim adjustment expenses	($30.8)		($11.6)		($1.9)		($44.3)
Net policy acquisition expenses	($7.5)		($6.5)		($0.9)		($14.9)
Net underwriting results	($2.4)		$14.5

FAQ

What were IGIC's earnings results for Q4 2020?

IGIC reported a net profit of $10.9 million for Q4 2020.

How much did IGIC's gross written premiums grow in 2020?

Gross written premiums increased by 33.8% to $467.3 million in 2020.

What is the combined ratio for IGIC in 2020?

The combined ratio improved to 89.3% for the year ended December 31, 2020.

What is IGIC's earnings per share for 2020?

IGIC reported an earnings per share of $0.69 for the full year 2020.

What trends are observed in IGIC's premium growth?

IGIC saw a significant premium growth, with Q4 increasing 45.3% over the prior year.