Q2 2024 International General Insurance Holdings Ltd Earnings Call

Good day and welcome to the International General Insurance Holdings Limited third quarter and first nine months of 2023 financial results Conference call.

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I would now like to turn the conference over to Robyn Sitters head of Investor Relations. Please go ahead.

Thank you Betsy and good morning, and welcome to today's conference call today, we'll be discussing our 2023 third quarter and nine months results. You will have seen our results press release that we issued after the market closed yesterday, if you'd like a copy of the press release, it's available on our website in the investors section.

We've also posted a supplementary investor presentation, which can also be found on our website on the presentations page in the investors section.

With me on today's call are our executive chairman wants a job shape, our CEO, while the job site and our CFO per beds risky Whatsapp will begin the call with some high level comments before handing over to will lead to talk through the key drivers of our results for the third quarter and also giving some insight into current market conditions and our outlook for the.

Remainder of 2023 at that point, we'll open the call up for Q&A.

And before we begin I will just go through some of the customary safe Harbor language.

Our speakers remarks may contain forward looking statements. Some of these forward looking statements can be identified by the use of forward looking words, we caution you that such forward looking statements should not be regarded as a representation by us that the future plans estimates or expectations contemplated by us will in fact be achieved.

Forward looking statements statements involve risks uncertainties and assumptions actual events or results may differ materially from those projected in the forward looking statements due to a variety of factors, including the risk factors set forth in the company's annual report on form 20-F for the year ended December 31, 2020 to the company's reports on.

6K, and other filings with the SEC as well as our results press release issued last yesterday afternoon.

We undertake no obligation to update or revise publicly any forward looking statements, which speak only as of the date. They are made.

In addition, as Youre aware, we voluntary voluntarily changed our basis of accounting from IR for us to U S. GAAP as of the first of January 2023 during this call we will use certain non-GAAP financial measures for a reconciliation of non-GAAP financial measures to the nearest GAAP measure please see the earnings release.

Which we posted and which has now been filed with the SEC and is available on our web website with that I'll turn the call over to our executive Chairman Whatsapp job Jay.

Thank you Robyn.

And a good day everyone. Thanks.

Thank you for joining us on this call.

I'll just make a few short remarks before handing the call over to I D.

We had an excellent third quarter.

With very strong performance across all key metrics.

For the quarter, we exceeded our long term averages on most financial measures.

Through the consistent execution of our strategy.

Our deep understanding of our markets and being able to anticipate shifting trends in our markets I expect this.

We continue as we close out 2023.

The current market conditions continues to provide us with the opportunity to clear.

The wall Street or broker.

Brokerage shouldn't see it shifting our focus to those lines and markets.

Well the highest smart Jos.

While always staying within our risk appetite.

It is this discipline and focus that is leading to the court system and it's quite a few of our results.

And six over the last several quarters, we've recorded combined ratios.

Low to mid seventies.

Core operating.

<unk> is well in excess of 20%.

And sometimes fixed pressure.

Yeah.

Oh did you say that he is currently one of the best performing specialty lines company.

This is the result of focus.

Experience.

Cohesive chief people and disturbed because you wouldn't exist.

For the.

So year to date, we have grown our book value per share by more than 20.

Sure.

We are committed to continuing to build value for all our shareholders, who have put their trust in <unk>.

Awesome.

Yeah.

We pick.

The.

Columbus City yesterday.

I'm very pleased with what we have been able to achieve.

Yeah.

I will now hand over to our lead who will take you through the results.

Provide more details on our outlook.

Or did it means there are bunch of C and D right.

I would have been on the call for any questions.

Thank you.

Thank you welcome and thank you all for joining us today.

I'll just start with a quick recap of the results for the quarter and the nine months and then move on to our markets.

What's it said you produced exceptional results for Q3.

So September <unk>.

73, 2% combined ratio with a core operating ROE of 31% for the quarter.

74, 9% combined ratio in our core operating Roe.

71, 4% for the nine months.

I said on last quarter's call that we don't expect to achieve mid seventy's combined ratios in auto.

70% locked up the quarter.

We've always said our long term averages are around the mid to high Eighty's combined ratio wise in the high teens from an ROE perspective.

And that's how we look at things over a long period of.

Time, and with just one one unfortunate together having.

Having said that we are very clearly rising.

The wave of some very favorable market conditions and all indications are that this will continue for the foreseeable future.

No just move on to some key highlights for the third quarter and the year to date.

Gross premium growth was.

So you saw that over 25% in Q3, leading to over more than a growth of more than 22% for the first nine months.

Again the growth in 'twenty three this year's it's concentrated in the short tail reinsurance segment.

And as we've said in previous quarters the loan segments remain.

A bit of pressure.

Specifically in the short tail segment.

We grew gross premiums by over 28% in Q3.

And 22% for the first nine months compared to the same periods last year.

Growth in the.

The third quarter was the most short tail lines, but most significantly energy construction.

Construction.

Interesting.

And I guess, where we are achieving rate improve at the renewal business continues to be more pronounced in our public key engineering.

Political violence portfolios.

Yeah.

The reinsurance Treaty business was also up.

Oh, one more than double that of Q3.

And the first nine months it would be continue.

<unk> continued to take advantage of the housing market, we've been speaking about.

Over here cumulative metric increases.

To exceed 25%.

And as you said at the beginning you have historically this book is comprised of about 5% of the overall our overall portfolio.

Year to date, it's around total about a half percent or 'twenty to 'twenty three we expect it to stabilize at around 10%.

As we continue to take advantage of the opportunities in this attack.

Attractive segments at the moment.

Of course, we do all of that whilst staying.

Staying within our defined risk appetite.

Moving on to investment income similar to the first half of 'twenty three showed significant improvement from Q3.

As a result of the rising interest rates and overall larger investment portfolio.

This resulted in a one four point improvement in behind you realize investment yields.

Three 9% for Q3.

The first nine months say it.

Very similarly.

With a one six point improvement can be.

I think so.

And you're willing to push the yield up to 33, 8%.

Specifically in our fixed income portfolio maintains the overall average credit rating of <unk>.

With a with an average duration of three one years.

More than likely we'll probably going to see that duration increase somewhat over the next.

A few quarters.

Net income for Q3 was $10 9 million.

Which was a decrease of about 62%.

It is a $22 6 billion.

Q3 last year.

You did see I wasn't for a press release that our net income was impacted by the movement of about $17 $2 billion and the fair value of warrants and earn out shares.

You recall that we executed a cash conversion of all outstanding warrants during the third quarter and they have now indeed listed so this is one of those one offs are lumpy.

Recurring.

Separately, because the ordinary shares which amounts to just over 3 million and have started testing levels.

Those are impacted by the loss of probably spud your I's couple of chairs when the fair value is calculated and that.

Runs through.

Net income as well.

So but for the first nine months net income was up.

<unk>.

27, 5%.

When compared to the St James a year ago.

But I would say that to a measure of our performance as core operating income.

Which increased almost 30% in Q3 and 29% for the first nine months with compared to the same periods.

Last year.

Just moving to the balance sheet total assets increased more than 10% to 1.75 billion.

Total equity increased almost 15% to a 417 billion for the year through September 30.

On the capital management front, we continued to repurchase common shares under our existing authorization.

The repurchase of 5 million authorized amount the specifics set out in our press release from last night.

We have around one 5 million shares left under the existing repurchase authorization.

And as I've mentioned, a moment ago, we executed the warrant exchange transaction for cash during Q3, the warrants to be listed on the fourth of October, which helps and simplifying our balance sheet and providing us with greater flexibility as we look to the future.

I've mentioned, our Rovs earlier for the third quarter and nine months Ah I would just add that we grew our book value.

Our year to date per share by more than 21% to $11.04.

The third piece of September.

So all in an excellent quarter and year to date and in 'twenty, three with plenty to be optimistic about.

For the remainder of the year and building it to 'twenty four.

Just moving on to the market, we're seeing continuation of the trends that we saw in the first house of the year.

There continues to be an abundance of profitable opportunities across our portfolio, particularly.

As we've seen recently in our short tail.

The reinsurance segments.

Within these segments, even within these segments are in rates and conditions vary by line and by territory.

In terms of the bright spots.

Earlier. These are property these are inappropriate T engineering.

Political violence lines within the short tail segment, but all the lines are holding up relatively well it would be exception of general aviation.

But overall and within the the short tail segment, we you've seen cumulative net rate increases of over 9%.

And this is fairly steady with what we've been seeing since the beginning of the year.

Again, there's a lot of variation by line of business.

For example properties.

Seeing overall increase of a little a little bit more than 15% with the higher rate increases in the U S lower levels of increases and somebody other than other regions and in some regions are.

What are you seeing reductions.

We are closely monitoring the.

Tragic events unfolding in Palestine and Israel.

Well, we do have some exposures in that region.

Don't expect any material losses arising from the situation as it stands now.

So all in all the landscape for short tail remains very encouraging.

We have lots of opportunity in stroke Grateful medicine.

Treaty reinsurance business, we saw she was to mitigate it.

Increases of more than 26% from Q3.

We definitely expect the strong momentum to continue as we head into the January 1st renewals.

There continues to be plenty of opportunity striking business maintained its portfolio.

Said earlier around the 10% of our overall overall book.

Yeah.

Story in the long tail segment is not dissimilar to what we've mentioned in the last.

A couple of quarters.

Rates continue to trend down.

Downward a.

But mostly in an orderly fashion.

Overall cumulative net rates remain about flat for the overall segment to marginally down.

But like other areas of our business there is much variation by line.

I noted in last quarter's call that most of these lines have had competitive rate increases well over 100% in the last three to four years.

Some excess of 150%.

So while rates are coming down or they're coming down from four.

You know decently high levels.

And as a result of luxury remain you.

You know more than adequate.

We've seen renewal rates, most pressured in D&O and their five financial institutions.

There's a great degree of margin compression.

And therefore, a higher degree of contraction in those books.

We will continue to.

To take a cautious and selective approach in this.

And just to this business.

Looking at our geographic markets, it's not surprising that the U S continues to outpace all other markers with rate increases of more than 20% from the lines. So we are writing.

<unk> reminds you that they are all short tailed.

In the first nine months of.

Of the year, we Britain close to 73 billion in gross paid them in the U S.

Which represents a growth of about almost 40% from the same period last year.

In the same period last year, and we expect to see further opportunities.

In 'twenty, four and 'twenty 'twenty four.

And in that area.

You'll recall.

Earlier this year, we acquired.

And MGA based in Oslo.

Our relationships there in the Nordic market and the product offering.

And our product offerings. So so.

That's.

Area too to a focus on pull forwards for US Latin America continues to show healthy rate momentum.

Well Asia is improving is still responding.

As impactful to us as we had anticipated and the middle East.

Where we've got a broad and diversified portfolio, representing less than 10% of our overall premiums market conditions are quite mixed with evidence of increasing competitive pressures.

But there are still pockets of opportunities, particularly in the engineering and construction across the G. C C.

In summary, we remain very optimistic with Dakota buckets overall and the opportunities for us for us to expand our portfolio.

We will continue as always to maintain our focus and remain selective so that we.

Continue on the very positive and profitable growth trajectory that we're on.

I would just like to take a moment to congratulate all of our people as ICI, we're now more than 400 people spread across eight offices around the world.

Our team remains steadfastly focused on the task at hand.

<unk> collaboration and cooperation underpinning consistent solid execution.

This is critical to our ability to achieve the results you're seeing from us to date and what is driving our successful track Records that's O G I.

So I will pause here and we'll turn it over for questions. Please operator, we're ready to take the first question.

We will now begin the question and answer session.

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There appears to be no questions at this time I'd like to turn the conference back over to management for Clos.

<unk> remarks.

Well, thank you all for joining us today.

Thank you for your continued support society I, if you have any additional questions. Please contact broken.

And she'd be happy to.

Have a good day everyone.

Yeah.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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