Q1 2024 International General Insurance Holdings Ltd Earnings Call
[music].
Operator: Good day, and welcome to the International General Insurance Holdings Limited's first quarter 2024 financial results conference call. All participants are in listen-only mode.
Good day and welcome to the International General Insurance Holdings, Limited's first quarter 'twenty 'twenty four financial results conference call.
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Operator: Please note, this event is being recorded. I would now like to turn the conference over to Robin Sitters, Head of Investor Relations. Please go ahead. Thank you, Debbie. And good morning.
Robyn Centers: Please note. This event is being recorded I would now like to turn the conference over to Robyn centers head of Investor Relations. Please go ahead.
Robin Sitters: Thank you, Debbie, and good morning. Welcome to today's conference call. Today we'll be discussing our first quarter 2024 results. You will have seen our press release that we issued after the market closed yesterday. We can also get a copy of the press release on the investor section of our website at www.iginsure.com. We've also posted a supplementary investor presentation, which can be found on our website as well, in the investor section on the presentations page. On today's call are Executive Chairman of IGI Wasif Jobshah, President and CEO Waleed Jobshah, and Chief Financial Officer Pervez Rizvi.
Robin Sitters: Thank you Debbie and good morning, welcome to today's conference call today, we'll be discussing our first quarter 'twenty 'twenty. Four result, you will see in our press release that we issued after market close yesterday.
Robin Sitters: We can also get a copy of the press release on the investors section of our website at <unk>.
Robin Sitters: Www Dot IV ensure dot com, we've also posted a supplementary investor presentation, which can be found on our website as well are also in the investors section on the presentations page.
Robin Sitters: On todays call are executive chairman with Ikea I lost a job site.
Robin Sitters: And C E O well leased jumpshot and Chief financial Officer for Best recipe.
Robin Sitters: As always, we'll begin the call with some high-level comments before I turn it over to Waleed to talk you through the key drivers of the results for the quarter and finish up with our views on market conditions and our outlook for the remainder of 2024. At that point, we'll open the call up for Q&A. Beforehand, I'll just go through the customary safe harbor language. Our speaker's remarks may contain forward-looking statements.
Waleed Jobshah: I always welcome will begin the call some high level color on what you want me to talk to you.
Robin Sitters: The key drivers of the results for the quarter and finished up with our views on the market conditions and our outlook for the remainder of 'twenty 'twenty four at that point, we will open the call up for Q&A.
Robin Sitters: Some of the forward-looking statements can be identified by the use of forward-looking words. However, we caution you that such forward-looking statements should not be regarded as a representation by us of whether the future plans, estimates, or expectations contemplated by us will, in fact, be achieved. Forward-looking 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 out in the company's annual report on Form 20-F for the year ended December 31st, 2023, and the company's reports on Form 6-K and other filings with the SEC, as well as our results press release issued yesterday.
Robin Sitters: Beforehand, I will just go through the customary safe Harbor language.
Robin Sitters: We undertake no obligation to update or revise publicly any forward-looking statements, which speak only as of the date they are made. During this call, we will use certain non-GAAP financial measures. For a reconciliation of the non-GAAP measures to the nearest GAAP measure, please see our earnings press release, which has been filed with the SEC, and it's also available on our website. With that,
Robin Sitters: Our speakers remarks may contain forward looking statements. Some of the 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 well in fact, you see forward looking statements involve risks uncertainties and assumptions actual.
Robin Sitters: Or results may differ materially from those projected in the forward looking statements due to a variety of factors, including the risk factors set out in the company's annual report on form 20-F for the year ended December 31st 2023.
Robin Sitters: In the company's reports on form 6K, and other filings with the SEC as well as our results press release issued yesterday.
Robin Sitters: We undertake no obligation to update or revise publicly any forward looking statements, which speak only as of the date. They are made.
Robin Sitters: During this call we will use certain non-GAAP financial measures for a reconciliation of non-GAAP measures to the nearest GAAP measure. Please see our earnings press release, which is filed with the SEC.
Robin Sitters: Our web site.
Robin Sitters: With that.
Robin Sitters: Okay.
Robin Sitters: Oh.
Robin Sitters: Thank you, Robin, and good day to everybody. Thank you for joining us on today's call. I'll just make a few short remarks before handing the call over to Ali.
Speaker Change: Thank you Rob.
Robin Sitters: Good day to everybody.
Robin Sitters: Yes.
Ali: Thank you for joining us.
Robin Sitters: Cool.
Ali: I'll just make.
Robin Sitters: Short remarks before handing the call over to Ali.
Wasif Jobshah: We had an excellent start to 2024, as you can see from our results that we issued last year. Once again, we posted a combined ratio on the 7th. I return on a ledger with your 27.6% and a core operating retail on average equity of $29,000.
Ali: We had an excellent start to.
Wasif Jobshah: Or as you can see from our results.
Wasif Jobshah: Once again, we posted a combined ratio.
Wasif Jobshah: Okay.
Wasif Jobshah: Seven 6%.
Ali: And the corporate team.
Wasif Jobshah: On average equity of 29.
Wasif Jobshah: We increased our book value per share by 1.5% on top of the more than 36% in 2023, where you can go into more detail on what's behind these numbers. As you know, our primary focus is managing the cycles that are inherent in our vision. One of the hallmarks of IJI is our deep technical and writing talent. People who understand the dynamics of their business, who have strong relationships, and who can anticipate shifting tides in their minds and respond accordingly.
Wasif Jobshah: We grew our book value per share by 1%.
Wasif Jobshah: More than Kansas.
Wasif Jobshah: Three.
Wasif Jobshah: What are you can go into more detail on what's behind these numbers.
Wasif Jobshah: As you know our primary focus is managing the cycles that are inherent in our business.
Wasif Jobshah: Wow.
Wasif Jobshah: One box.
Wasif Jobshah: Our technique.
Wasif Jobshah: Right.
Wasif Jobshah: People do understand.
Wasif Jobshah: Okay.
Wasif Jobshah: Oh.
Wasif Jobshah: Strong relationships and Duke.
Wasif Jobshah: Alright, and Denmark.
Wasif Jobshah: And a coffee.
Wasif Jobshah: Our business doesn't move along some different lines, and markets move at different times and at different paces, what's most important, at the end stage of our cycle. It is just that we maintain and move our capital to those areas with the strongest rate momentum and the highest market, and always remain within our risk appetite and tolerance. This is exactly what we are doing today.
Wasif Jobshah: Our business model.
Wasif Jobshah: Different line.
Wasif Jobshah: Markets more.
Wasif Jobshah: Times.
Wasif Jobshah: At different paces.
Wasif Jobshah: What's most important.
Kevin: Hi, Kevin.
Wasif Jobshah: It is Jeff we maintain all of the shipment.
Wasif Jobshah: Exactly.
Wasif Jobshah: Hey.
Wasif Jobshah: And more.
Wasif Jobshah: So those would.
Wasif Jobshah: Could be strong.
Wasif Jobshah: And highest margins.
Wasif Jobshah: And all of his work.
Speaker Change: Oh, sorry.
Wasif Jobshah: Yes.
Wasif Jobshah: This is exactly what we are moving.
Wasif Jobshah: Throughout our 22-year history, we have consistently demonstrated our ability to do this, while producing high-quality results entrusted to us by our shareholders. Our markets globally remain positive overall, more so in insurance and some of our core specialty lines, and a little more challenging in others. It is natural to see more competition in those lines where conditions are strong, and this kept on increasing. I'm confident 2024 will represent more opportunities for IJI to seize that will both expand and diversify our footprint and generate profitable results as we continue to build on our very solid foundation.
Wasif Jobshah: Well its two year history, we have posted.
Wasif Jobshah: Yeah.
Wasif Jobshah: Sure.
Wasif Jobshah: While producing quite well.
Wasif Jobshah: Yeah.
Wasif Jobshah: Okay.
Speaker Change: Oh My gosh.
Wasif Jobshah: Yes.
Wasif Jobshah: Our markets demand broadly positive more so.
Speaker Change: Yes sure.
Wasif Jobshah: Our core, especially as they are and it's even more challenging.
Wasif Jobshah: Yes.
Wasif Jobshah: It is natural to see more competition.
Wasif Jobshah: As far as where conditions are slow.
Wasif Jobshah: And this gets back to CPC.
Wasif Jobshah: As I've done before.
Wasif Jobshah: Suzanne.
Wasif Jobshah: More coaches for Archie Rbcs.
Wasif Jobshah: Yeah.
Wasif Jobshah: It's back in.
Wasif Jobshah: Diversify our book.
Wasif Jobshah: Sure.
Speaker Change: Thank you Eric.
Wasif Jobshah: Resolved.
Wasif Jobshah: We continue to build on.
Wasif Jobshah: Great.
Wasif Jobshah: Rich.
Wasif Jobshah: We will continue to actively and efficiently manage our health, deploying experts to underwriting opportunities and then returning excess capital to shareholders as we have demonstrated in recent quarters and years. Ow. I will now hand over to Waleed, who will discuss the first quarter results in more detail and talk about my condition and our outlook for the remainder of 2024. I remain on the call for any questions at the end.
Wasif Jobshah: We will continue to act.
Wasif Jobshah: Okay.
Waleed: The oil and gas.
Wasif Jobshah: Okay.
Waleed: And then you can.
Waleed: So Scott shareholders.
Wasif Jobshah: Great.
Wasif Jobshah: Sure.
Wasif Jobshah: Yes.
Wasif Jobshah:
Waleed: All of us.
Waleed: Now I'll hand over to Andy who will discuss.
Waleed: Quarterly results in more detail.
Waleed: Talk about market conditions.
Wasif Jobshah: Okay.
Waleed: Thank you chip.
Wasif Jobshah: Man.
Waleed: On the call for any questions.
Waleed: Hi, Dan.
Wasif Jobshah: Yes.
Waleed Jobshah: Good morning. Thank you all for joining us today. Thank you.
Waleed: Good morning, and thank you all for joining us today and thank you Walter.
Waleed Jobshah:
Waleed Jobshah: Awesome As I said, I mean we've had a very strong start to the year with really solid results We started the year with relatively healthy but some more challenging conditions. And it's fair to say that we are responding quickly and decisively to changes we're seeing in our farm. Today, this year, we've had a relatively active loss environment from a natural catastrophe perspective, and this has carried into the second quarter, with the earthquake in Taiwan and the flooding in Oman and the United Arab Emirates, along with some storms in the U.S. We also witnessed a major market loss, potentially in the billions of dollars and potentially the largest ever marine loss, when the container ship Penbin Dali collided with Colt Moore's Francis Scott Key Bridge, which resulted in its collapse.
Waleed Jobshah: As long as it's Ted.
Waleed Jobshah: A very strong start to the year with solid results.
Waleed Jobshah: When you started the year with relatively healthy, but some more challenging conditions. It is fair to say that we.
Waleed Jobshah: We are responding quickly and decisively changes C Corp.
Waleed Jobshah: Yeah.
Waleed Jobshah: Dave just you had a relatively active most environments.
Waleed Jobshah: Natural catastrophe perspective, and this is.
Waleed Jobshah: Carey into.
Waleed Jobshah: The second quarter.
Waleed Jobshah: The earthquake in Taiwan, and flooding in Oman and safety.
Waleed Jobshah: Yes.
Waleed Jobshah: Along with some storms in the U S.
Waleed Jobshah: We also witnessed the major market loss potentially.
Waleed Jobshah: Tens of dollars and potentially the largest ever marine loss.
Waleed Jobshah: The change of ship and being done.
Waleed Jobshah: These items with pulse wars.
Waleed Jobshah: Scott Key bridge.
Waleed Jobshah: This resulted in its.
Speaker Change: Hello apps.
Waleed Jobshah: And as we said in prior quarters, we're seeing an increasing degree of polarization and heightened tensions in many parts of the world. And we expect this to continue for the foreseeable future. We're working on some specific initiatives, taking steps to continue growing and strengthening our company, specifically our new Lloyds presence that we just announced this morning, further growing and diversifying our reinsurance portfolio, adding talent across our offices and teams, and expanding the geographic spread of our products. I'll elaborate on these a little bit more later.
Waleed Jobshah: And as we've said in prior quarters, we're seeing an increasing degree of polarization heightened tensions in many parts.
Waleed Jobshah: Parts of the World.
Waleed Jobshah: And we expect this to continue for the foreseeable future.
Waleed Jobshah:
Waleed Jobshah: We're working with some specific initiatives.
Waleed Jobshah: And they are taking to continue go in strengthening our company specifically, our new Lloyds presence that we just announced this morning.
Waleed Jobshah: Further growing and diversifying our reinsurance portfolio.
Waleed Jobshah: Across our offices and teams and expanding geographic spread of our products.
Waleed Jobshah: Great.
Waleed Jobshah: More later in the call.
Waleed Jobshah: So now I'll just give a quick recap of the results for the first quarter, and I'll talk more about our outlook for the market and for us for the remainder of 2024. As I said, our markets are still relatively healthy, although as we noted in prior quarters, we're seeing more competitive pressures, a mixed rating environment, and market conditions from an overall rating perspective. We're not seeing and consequently not benefiting from the larger ratings seen in recent years, but we are still within positive territories overall and across many of our businesses.
Waleed Jobshah: So now I'll just give a quick recap of the results for the.
Waleed Jobshah: The first quarter and I'll talk more about our outlook.
Waleed Jobshah: For the market.
Waleed Jobshah: For the remainder of the change in April.
Waleed Jobshah: As I said, our markets are still relatively healthy.
Waleed Jobshah: What we noted in prior quarters, we're seeing more competitive pressures mixed rating environment conditions market conditions.
Waleed Jobshah: From an overall rating perspective.
Waleed Jobshah: We're not seeing as a consequence.
Waleed Jobshah: Benefiting from the larger rate increases <unk> seen in recent years, but we are still within positive overall and across many of our business lines.
Waleed Jobshah: given the very healthy conditions at the start of last year. There's definitely a great degree of competition among existing players who want to show more growth and are expanding their risk appetites. But on the positive side, we're not really seeing this coming from new capital entering the market. It's more from existing players getting hungry.
Waleed Jobshah: Given the very healthy conditions at the start of last year.
Waleed Jobshah: Yeah, it's definitely a great degree of competition along existing players who are wanting to show more growth.
Waleed Jobshah: And are expanding their risk.
Waleed Jobshah: Risk appetites.
Waleed Jobshah: At this time.
Waleed Jobshah: Are you seeing is coming from new capital entering the market is more from existing players getting hungry.
Waleed Jobshah: For IGI, gross and premium growth in the first quarter was almost 4.5%. This is on top of the significant growth we saw in the same quarter last year. Similar to the past visits of the past several quarters, goals came from both the short-tail and reinsurance segments, but mostly from the reinsurance portfolio, which grew 21% compared to the first quarter of 23. In the short-tail segment, we're seeing good opportunities for growth as well, particularly in lines such as engineering, contingency, property, and marine cargo.
Waleed Jobshah: Alright.
Waleed Jobshah: Our grocery and premium growth in the first quarter.
Waleed Jobshah: Oh it was four 5%.
Waleed Jobshah: This is on top of the significant growth we saw the same quarter of last year.
Waleed Jobshah: Okay.
Waleed Jobshah: Several courses girls.
Waleed Jobshah: Coming from both the short tail reinsurance segments, but.
Waleed Jobshah: Mostly from the reinsurers.
Waleed Jobshah: Portfolio, which grew 21% compared to the first quarter.
Waleed Jobshah: In the short tail segment, we've seen good opportunities for growth as well, particularly in that in lines, such as engineering tangency property and marine cargo.
Waleed Jobshah: Gross premiums in the first quarter in this segment were up 2.8%, but were impacted by some timing issues, and I'm happy to expand on that in the Q&A. Long-tail segments saw some contraction in gross premium in the first quarter as rates and conditions are reaching levels where we are choosing not to renew some business at this time, given that our long-tailed bulk is different from many of our competitors. We all know we don't write any U.S. business letters.
Waleed Jobshah: Gross premiums in the first quarter in this segment were up one 8%.
Waleed Jobshah: But were impacted by some timing issues I don't have to expand on that in the queue.
Waleed Jobshah: M&A.
Waleed Jobshah: Long tail segment saw some contraction in gross premium in the first quarter as rates and conditions are reaching levels, where we were choosing to.
Waleed Jobshah: We have some good.
Waleed Jobshah: Non renew some business at this time.
Waleed Jobshah: Given that our long tail books is different to many of our competitors.
Waleed Jobshah: You all know we don't like in the U S business.
Waleed Jobshah: The pace of breaking decline and adequacy of business for us is a little more measured than the broad market commentary we've been hearing. The decline in gross premiums was also somewhat distorted as a result of our decision to put our IDI portfolio, the Inherent Defects portfolio, into runoff as returns were just not meeting our requirements. You'll recall the significant growth we've experienced in the segment over the years since about 2018, to take advantage of strong conditions and a healthy racing environment.
Speaker Change: The racing declining I, just don't see a business for us a little more measured than that Bruce.
Waleed Jobshah: Marc commentary we've been here.
Waleed Jobshah: The decline in gross premiums.
Waleed Jobshah: It was also somewhat distorted the result of our decision to put our ITI <unk> portfolio with the inherent defect portfolio into run off.
Waleed Jobshah: There's been times, where just don't meeting our requirements.
Waleed Jobshah: You'll recall the significant growth we've experienced in segments over the years since about 2018.
Waleed Jobshah: I want to take advantage of the strong conditions on a healthy basically Bob.
Waleed Jobshah: And now that those long-tail lines and several consecutive courses are breaking down, albeit from a quite high level, we have been and continue to take a more cautious tune. And that's all part of our food cycle.
Waleed Jobshah: And now that the long tail lines I had several consecutive quarters and embracing fine.
Waleed Jobshah: Albeit from yeah.
Waleed Jobshah: We have quantified that.
Waleed Jobshah: Yeah.
Waleed Jobshah: Continued to date.
Waleed Jobshah: Well of course shoe here.
Waleed Jobshah: And that's all part of our psychology.
Waleed Jobshah: Lastly, and I've said this many times before, one quarter is not a trend. We expect growth for the full year of 2024 to be in the high single digits to low double digits. There are still opportunities to grow, but maybe just perhaps less. I'll talk more later on, but I'll go.
Waleed Jobshah: Lastly, and I've said this many times just for one quarter is not a trend.
Waleed Jobshah: We expect goes for the full year.
Waleed Jobshah: 2024 to be in the high single digits to low double digits.
Waleed Jobshah: There's still opportunities to grow but.
Waleed Jobshah: Maybe just perhaps less of them compared to previous years.
Waleed Jobshah: I'll talk more later on.
Waleed Jobshah: And she says.
Waleed Jobshah: Specifically on the first quarter losses I mentioned a moment ago. I share those losses. They were relatively small and very manageable on the Baltimore Bridge.
Waleed Jobshah: Specifically on the first quarter losses, I mentioned, a moment ago.
Waleed Jobshah: Our share of those losses.
Waleed Jobshah: They were relatively small and very manageable.
Waleed Jobshah: We've taken a very conservative view on this based on our public exposure and fully reserved for this event in Q1, which we expect to be more than enough. Our combined ratio of 74.1% was well below our long-term average and excellent. This included eight points of higher favorable development than the favorable development reported in the first quarter of last year.
Waleed Jobshah: On the Baltimore Bridge, we've taken a very conservative view on this.
Waleed Jobshah: Oh, just based on our full disclosure and fully reserved for the spreads and coupons, which we expect to be more than that.
Waleed Jobshah: Our combined ratio of 74, 1% was well below our long term average and excellent yourself.
Waleed Jobshah: This included eight points of higher favorable development.
Waleed Jobshah: The favorable development reported in the first quarter of last year.
Waleed Jobshah: Net investment income, similar to several quarters, showed a significant improvement in Q1 when compared to the same period the year before. This resulted in a 0.7 point improvement in the annualized investment yield to 4.2% for the first vote. Specifically, in our fixed income portfolio, we maintain total gross average ratings at A, and average duration at 3.1. Net income for the first quarter was... Just under 38 million compared to just under 34 million in the first quarter a year ago.
Waleed Jobshah: Net investment income similar to.
Waleed Jobshah: Several quarters showed significant improvements in Q1.
Waleed Jobshah: When compared to the same period the year before.
Waleed Jobshah: This resulted in a 0.7 point, who listen the annualized investment yield.
Waleed Jobshah: Four 2% for the first vote.
Waleed Jobshah: Specifically.
Waleed Jobshah: Portfolio, we will maintain foldable fish coverage waiting at a average duration of three one years.
Waleed Jobshah: Net income for the first quarter.
Speaker Change: It was.
Waleed Jobshah: Just under 38 million to just under 34 million first quarter a year ago.
Waleed Jobshah: This increase was driven by a higher level of underwriting income on a larger portfolio, as well as a $3 million increase in net investment income, all of which were offset by $5.6 million of higher net forex sources and a higher general administrative expense, mostly relating to adding new tiles across rectangles. Core operating income, which we believe is a true measure of fundamental performance, was $40 million in the first quarter of this year, representing an increase of more than 35% versus $29 million in the first quarter of last year.
Waleed Jobshah: This increase was driven by higher level of underwriting income and a larger portfolio as well as the $3 million increase.
Waleed Jobshah: Okay.
Waleed Jobshah: All of those being offset by a $5 $6 million up higher than that.
Waleed Jobshah: Forex losses.
Waleed Jobshah: Hi, there general administrative expenses most of you raising to adding new talent across our teams.
Waleed Jobshah: Core operating income.
Waleed Jobshah: <unk>, which we believe is a truer measure our fundamental performance was.
Waleed Jobshah: It was $40 million in the first quarter.
Waleed Jobshah: Well this year.
Waleed Jobshah: Representing an increase of more than 35% versus $29 million in the first quarter of last year.
Waleed Jobshah: On the G&A expense ratio, which was 3.3 points higher in the first quarter when compared to the same period a year ago, we do expect it to be running a little higher in the near term as IGR continues to grow.
Waleed Jobshah: On the G&A expense ratio.
Waleed Jobshah: Which was three three points higher in the first quarter when compared to the same period a year ago.
Waleed Jobshah: We do expect it to be running a little higher in the near term as <unk> continues to grow in numbers. We're now.
Waleed Jobshah: We're now almost 425 people across the group, and in addition to supplementing talent across our offices, we've also been... taking the important step of replacing what were previously outsourced roles with dedicated in-house teams, providing greater control and efficiency. Turning to the balance sheet, total assets increased a little over 2% to $1.88 billion, and total equity increased a little over 3% to $557 million at the end of Q1. The second tranche of burn-out shares totaling $600,000, with a vesting threshold of $12.75, vested during the first quarter.
Waleed Jobshah: More than almost 425 people across the group.
Waleed Jobshah: In addition to something I think tests across our offices, we've also been.
Waleed Jobshah: Taking the important step of replacing what were previously outsourced roles with dedicated in house teams, providing greater control and efficiency of our stock.
Waleed Jobshah: Turning to the balance sheet total assets increased a little over 2% to $188 billion in total equity increased a little over 3% to $567 million at the end of Q1.
Waleed Jobshah: The second tranche of far enough shares totaling 600000.
Waleed Jobshah: Well, that's the threshold that was $12.75 vested during the first quarter.
Waleed Jobshah: In total today, 2 million earners are invested, and a little over $1 million remain with vesting thresholds of $14 and $15.25. On the capital management front, we continue to repurchase our common shares under our existing 5 million share repurchase authorization. And we now have around a million shares remaining under these. As always, as I mentioned a moment ago. Our priority is underwriting first, and where we have capital in excess of the opportunities to work in underwriting,
Waleed Jobshah: In total to date 2 million earn out shares that vested.
Waleed Jobshah: And a little over 1 billion remain.
Waleed Jobshah: With vesting thresholds of our $14 and $15.
Waleed Jobshah: On the capital management front, we continued to repurchase our common shares under our existing 5 million share repurchase authorization.
Waleed Jobshah: And we now have around 2 million shares remaining under the existing <unk>.
Waleed Jobshah: As always as Watson Watson.
Waleed Jobshah: I mentioned a moment ago.
Waleed Jobshah: Our priority is on the rise in the first and wherever you have capital in excess of the opportunity to work in underwriting.
Waleed Jobshah: We will return it to shareholders. You will recall we announced a special dividend of $0.60 per share alongside the regular quarterly dividend of $0.20 per share during the first quarter, which meant our equity was impacted by a payout of just under $24 million during Q1. Ultimately, we recorded the core operating ROVU.
Waleed Jobshah: We will return it to shareholders.
Waleed Jobshah: You will recall, we announced a special dividend per share alongside the regular quarterly dividend a penny per share during the first quarter.
Waleed Jobshah: Which meant our equity was impacted by a payout of just under $24 million during Q1.
Waleed Jobshah: Ultimately, we recorded a core operating Roe.
Waleed Jobshah: Just shy of 30% for the first quarter, compared to 27.9% for the same period last year. And we grew our book value per share by 1.5%, to $12.58. It's all in. Excuse me.
Waleed Jobshah: Just shy of 30% for the first quarter compared to 27, 9% in the same period last year.
Waleed Jobshah: As we grew our book value per share by one 5% $12.58.
Waleed Jobshah: At March 31st.
Waleed Jobshah: So all in.
Waleed Jobshah: Excuse me.
Waleed Jobshah: A very solid quarter and a start to gear up with a few moving pieces, but we continue to be optimistic about 2024. Just moving on to our markets for a bit, we're seeing a continuation of the trends that we saw during 2023. However, opportunities, though, are still very much prevailing across much of our portfolio. But momentum is... As I noted a moment ago, we expect to see a growth rate of around high single digits to low double digit percentages, which I'll say a few more words about in a moment. Overall, I think, you know, we're in that critical transitional phase where cycle management levels, levers, come into play. And this is where we are most effective.
Waleed Jobshah: A very solid quarter and a start to the year with a few moving pieces.
Waleed Jobshah: But we continue to be optimistic about 2024.
Waleed Jobshah: Just moving on to our market forbids we're seeing a continuation of the trends that we saw during 2023.
Waleed Jobshah: Opportunities, though are still very looked pretty good and of course once you block portfolio.
Waleed Jobshah: But the momentum is.
Waleed Jobshah: Uh huh.
Waleed Jobshah: As I noted a moment ago, we expect to see the growth rate of around high single digits to low level due to low double digit percentages.
Waleed Jobshah: Which I'll say a few more words about in a moment.
Waleed Jobshah: Overall, I think we're in that Chris.
Waleed Jobshah: Critical transitional phase where cycle management levels levers.
Waleed Jobshah: Come into play.
Waleed Jobshah: This is where we are most affected.
Waleed Jobshah: We are shifting or increasing our focus on those areas with better conditions, higher returns, or returns that meet our profitability and risk thresholds, and we're reducing or moving away from areas that no longer need them. This is exactly the type of market where we can demonstrate our strengths. As we've always said, we're very much technical underwriters here at RGI, and the conditions we're seeing today are all about technical underwriting and smart groups.
Waleed Jobshah: We are shifting or increasing our focus on those areas with better conditions higher returns.
Waleed Jobshah: Our returns that beat.
Waleed Jobshah: Our profitability and risk return thresholds.
Waleed Jobshah: And we're reducing our moving away from areas that no longer meet those thresholds.
Waleed Jobshah: This is exactly the type of market, where we can demonstrate our Australia.
Waleed Jobshah:
Waleed Jobshah: As we've always said we were very much technical xerox's Erith Archie I the conditions, we're seeing today.
Waleed Jobshah: All of us take with them on the right.
Waleed Jobshah: Smart grid and such.
Waleed Jobshah: When we think about the short-tail segment, we're most encouraged by opportunities in engineering, property, contingency, and marine cargo, but other lines like aviation and upstream energy are definitely more challenging. Engineering and construction continues to be a bright spot for us in many of our markets, including the Middle East and Asia, and we're expanding teams and our underwriting expertise across many of them, most recently in Malaysia, in Kuala Lumpur. As you know, we've entered the U.S. construction market, and we'll continue to build our presence there while always staying well within our risk appetite, and, of course, mindful of cat exposure.
Waleed Jobshah: What do we think about the short tail segment.
Waleed Jobshah: We're most encouraged by opportunities in engineering property contingency.
Waleed Jobshah: Marine cargo, but then others line, but then other lines like aviation upstream energy.
Waleed Jobshah: What would be more challenging.
Waleed Jobshah: Engineering.
Waleed Jobshah: Structure continues to be a bright spot for us in many of our markets, including the middle East and Asia.
Waleed Jobshah: And we're expanding teams.
Waleed Jobshah: Underwriting expertise across many offices most recently.
Waleed Jobshah: In Asia.
Waleed Jobshah: Yeah.
Waleed Jobshah: As you know we've entered the U S construction markets.
Waleed Jobshah: And we'll continue to build our presence there while always staying well within our risk appetite.
Waleed Jobshah: Of course mindful of our cash.
Waleed Jobshah: Exposures.
Waleed Jobshah: In our treaty reinsurance business, our reinsurance segment, we saw net rate improvements of more than 70% in the first quarter on the back of 25 plus percent increases last year. This is by far the most attractive area of our portfolio right now, and there continues to be plenty of opportunities to try and do business. And we, of course, are exploring ways to diversify this focus and expand, especially our specialty re-insurance footprint, which historically has not made up a significant proportion of our portfolio.
Waleed Jobshah: In our treaty reinsurance business, our reinsurance segment, we saw nice improvements of more than 70% in the first quarter on the back of.
Waleed Jobshah: 25, plus percent increases last year.
Waleed Jobshah: This is by far the most attractive area of our portfolio right now.
Waleed Jobshah: And there continues to be plenty of opportunities to try to do business.
Waleed Jobshah: And we of course are exploring ways to diversify this book.
Waleed Jobshah: And our expenses, especially all of our specialty.
Waleed Jobshah: Reinsurance footprint, which historically has not made up a significant proportion of our portfolio.
Waleed Jobshah: We expect this book of business to continue to grow in proportion to our overall..., hope for the foreseeable future as conditions remain. In the long-tail segment, where I reiterate, we don't write in the U.S. business. Rates continue to follow the past several quarters trending downwards, but mostly in an order.
Waleed Jobshah: We expect this a book of business to continue to grow in proportion to our overall.
Waleed Jobshah: Book for the foreseeable future as conditions remain positive.
Waleed Jobshah: Okay.
Waleed Jobshah: And the long tail segment.
Speaker Change: Well I mean, it's a race in the U S business.
Waleed Jobshah: Rates continue to follow the past several quarters are trending downwards, but mostly it is larger.
Waleed Jobshah: Overall, net trades remain broadly adequate, but again, like other areas of our business, there's much variation by line. And where rates are not adequate, we're walking away from it. And one thing I would note is that I would not expect to see much growth in this segment in 2021. Turning to our geographic markets, rates in the U.S. continue to outpace all other markets.
Waleed Jobshah: Overall net rates remain broadly adequate but again like in other areas of our business. There is much variation by line.
Waleed Jobshah: And where it makes I'm not adequate we're walking away from business.
Waleed Jobshah: And one thing I will notice I would not expect to huh.
Waleed Jobshah: See much growth in this segment in 2024.
Waleed Jobshah: Turning to our Oh geographic markets.
Waleed Jobshah: It's in the U S continue to outpace all other markets in the last part.
Waleed Jobshah: Again, all short-term lines, including property, energy, GDP, tariffs, and contingency. And this remains a big growth area for us. In the first quarter of the year, we wrote just over $34 million in gross payments in the U.S., and that represents about 35% growth over the same period. We expect to benefit from our entry into the U.S. construction market, as I noted earlier. But we're going at it cautiously, right, with small to medium-sized projects, with manageable policy periods, and managed cat exposures, quite different from the way we write about it internationally.
Waleed Jobshah: Again, all sorts catalyze truly property energy T V terror.
Waleed Jobshah: Contingency.
Waleed Jobshah: And this remains a big coronary parks.
Waleed Jobshah: In the first quarter of the year repurchasing just over $34 million in gross baby in the U S and that represents about 35% growth over the same period last year.
Waleed Jobshah: We expect to benefit from our entry into the U S. Construction market as I noted earlier.
Waleed Jobshah: Well, we're going at it cautiously rise in small to medium sized projects.
Waleed Jobshah: With a manageable policy theory, it's managed cat exposures.
Waleed Jobshah: By Mary Beth varying from the way, we bought the international construction.
Waleed Jobshah: In Europe, where we rolled over $22 million in Q1, versus about $19 million in the same quarter last year, we do expect to see further opportunities to show growth throughout the year, especially given our new hustle platform where we've hosted our underwriting team to expand our presence and relationships in the Nordic market, specifically focusing at this time on professional and financial life. I've covered other opportunities in other areas already, like engineering in the Middle East and Asia, so I'm not going to go back over that.
Waleed Jobshah: In Europe, our way.
Waleed Jobshah: We wrote over 22 million in Q1.
Waleed Jobshah: First is about 19 million in the same quarter last year.
Waleed Jobshah: We do expect to see further opportunities to show growth throughout the year.
Waleed Jobshah: Especially given our new muscle platform.
Waleed Jobshah: We've.
Waleed Jobshah: Bolstered our underwriting team.
Waleed Jobshah: To expand our presence and relationships in the Nordic markets.
Waleed Jobshah: Specifically focused at this time, all professional and financial lines.
Waleed Jobshah: I've covered all the opportunities all that was already like engineering and at least in Asia, So I'm not going to go.
Waleed Jobshah: Back over that.
Waleed Jobshah: I am particularly excited about our announcement this morning that we've established the presence of Lloyds, Lloyds of London with a company box, and we will begin trading tomorrow. We're offering a number of business, property, energy, contingency, political violence, ports and terminals, and marine cargo, as well as various long-tail lines, including marine liability, professional identity, and financial institution. Our underwriting teams will be there and will operate on a rotational basis. While our offices on Lime Street here in London are just a stone's throw away from the Lloyds Building, have a look at this tent. The London market at large offers us a significant opportunity for us to build on the profile of the President and, more importantly, benefit from the additional distribution opportunities that Lloyd brings. Everything we're doing today and the significant enhancements we have made over the past several years continue to strengthen our solid foundation.
Waleed Jobshah: I am, particularly excited about our announcement this morning.
Waleed Jobshah: Although we've established a presence at Lloyd's.
Waleed Jobshah: Lloyds of London, where the company box and we began trading tomorrow.
Waleed Jobshah: We're offering a number of lines of business.
Waleed Jobshah: Property energy contingency.
Waleed Jobshah: But until the violence ports and terminals.
Waleed Jobshah: And marine cargo as well as.
Waleed Jobshah: Various long tail lines, including marine liability question identity.
Waleed Jobshah: Financial institutions.
Waleed Jobshah: Our underwriting teams will be there and operate on a rotational basis.
Waleed Jobshah: While our offices our lives here in London, just a sole throw away from I'm always building.
Waleed Jobshah: Uh huh.
Waleed Jobshah: And as tenants.
Speaker Change: Oh I'm done I'm done.
Waleed Jobshah: Market at Lloyds.
Waleed Jobshah: Or is this a are.
Waleed Jobshah: Significant opportunities for us to build on the profile of the prices.
Waleed Jobshah: And then more importantly, benefiting from the additional distribution opportunities.
Waleed Jobshah: That's the only springs.
Waleed Jobshah: Everything we're doing today.
Waleed Jobshah: Difficult enhancements, we have made over the past several years.
Waleed Jobshah: Are what continue to strengthen our solid uptime.
Waleed Jobshah: H.
Waleed Jobshah: We've grown and diversified our company, focused on our core principles of selective and distant underwriting, dynamic cycle management, and cautious reserving, with the ultimate goal of protecting the profitability profile of our company and the capital that is entrusted to us. We've generated excellent results that will serve us well in the quarters and years ahead and allow us to continue to deliver on our promises to all states. So I'm going to pause here and we'll turn it over for questions. Operator, we're ready to take the first question.
Waleed Jobshah: We've grown and diversified our company forward.
Speaker Change: Because on a quote corporate as opposed to a selected vendors.
Waleed Jobshah: Rising.
Waleed Jobshah: Dynamic cycle management's been cautious reserving because the ultimate goal of protecting the profitability profile of our company.
Speaker Change: And the capital that is entrusted to us.
Waleed Jobshah: We've generated excellent results that will serve us well in the quarters and years ahead.
Waleed Jobshah: It allows us to continue to deliver on our promises to all stable.
Speaker Change: So I'm gonna.
Speaker Change: Pause here and we'll turn it over for questions.
Speaker Change: Operator, we're ready to take the first question. Please.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Alan Chen with RBC Capital Markets. Please go ahead.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Alan Chen: If you were using a speaker phone please pick up your handset before pressing the keys.
Operator: To withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our roster.
Alan Chen: Our first question comes from Alan Chan with RBC capital markets. Please go ahead.
Alan Chen: Hey, thanks. I'm on for Scott this morning. My first question will be on reserve. It looks like the reserve release in the first quarter was very strong. Can you maybe provide more color on the 19.4 point favorable development we see there?
Alan Chen: Hey, Thanks I'm on for Scott. This morning, My first question would be reserve it looks like the reserve release in the first quarter was very strong can you maybe provide more colors on the 19.4 points of favorable development, we see there and does that change your view on the reserve release for the next few quarters. Thanks.
Alan Chen: Yeah.
Waleed Jobshah: Hi Alan, thanks for the question. I think the reserve releases, yes, they were healthy in Q1. I think that's a reflection of our cautious, you know, approach to reserving, as we mentioned every quarter.
Alan Chen: Hi, Alan Thanks for the question.
Alan Chen: I think I think the reserve releases yesterday were healthy in Q1.
Alan Chen: That's sort of infection of our COO.
Alan Chen: Cautions you know.
Alan Chen: Our approach to reserving as I as we've mentioned every quarter.
Waleed Jobshah: This quarter, but it's also a reflection of the year that we had last year.
Alan Chen: But it's also a reflection of the year that we had last year.
Waleed Jobshah: 2023 was, you know, very much, one of the more benign years from a capped exposure perspective or capped loss perspective or severe capped loss perspective and also from a large loss perspective for us. So that has resulted in the release of this level of reserves. Our approach continues to be cautious, will always be, and in markets like this, we expect, you know, a continuation, very difficult to tell the level going forward, but...
Waleed Jobshah: Uh huh.
Waleed Jobshah: Plenty of 23 was.
Waleed Jobshah: You know very much.
Waleed Jobshah: You know one of the more benign year for awhile.
Waleed Jobshah: Cats exposure perspective, a pep talk to prospective or severe cashless perspective, but also even from a from a large loss perspective for us. So so so that has resulted in the release.
Waleed Jobshah: This level of reserves.
Waleed Jobshah: Our approach continues to be cautious we'll always be in.
Waleed Jobshah: Uh huh.
Waleed Jobshah: And most of it like this.
Speaker Change: Yeah, we expect.
Waleed Jobshah: A continuation of very difficult to tell the level going forward, but.
Waleed Jobshah: Bye-bye, you know, in an environment.
Waleed Jobshah: You know.
Waleed Jobshah: In an environment like this, releases are expected to continue.
Waleed Jobshah: In an environment like this releases are expected to continue.
Alan Chen: Okay, thanks. That's very helpful. And then my second question will be on the Showtel line.
Speaker Change: Okay. Thanks, that's very helpful. And then my second question would be on the Shoretel line, but it appears there's have been has been more competition in the space as you mentioned.
Alan Chen: It appears there has been more competition in this space, as you mentioned. And can you maybe expand more on the competitive landscape that you see there? And maybe you can touch on the reinsurance segment as well. Thanks. Thank you. Sorry, was that Shortell? Yeah, can you briefly maybe expand on the Shortel line and maybe talk about the competitive landscape that you see there, and then if you could also talk about the reinsurance segment as well, that would be helpful.
Alan Chen: Can you maybe expand more on the competitive landscape that you see there and maybe if you can touch on the reinsurance segment as well thanks.
Alan Chen: Yeah.
Alan Chen: Sorry, what was that short tail.
Shortell: Yeah can you briefly.
Alan Chen: Briefly maybe expand on the short tail line.
Alan Chen: And maybe talk about the competitive landscape that you see there and then if you could also talk about reinsurance segment as well that'd be helpful.
Waleed Jobshah: Yeah, yeah, absolutely. So I'll start with the short tail.
Shortell: Yeah, absolutely. So I'll start I'll start with me with the short tail. We've always said that there's been plenty of places to go there.
Speaker Change: Section of that as well.
Waleed Jobshah: We've always had, and in 2023, we'll have a reflection of that as well. You know, it's fairly mixed. It's mixed by line of business, by territory. Again, the U.S. is definitely the best area for short-term business for us, probably currently on the political violence side, and the cultural energy side. The rest are fairly modest.
Waleed Jobshah: It's it's fairly mixed it's mixed by line of business by territory again, the U S is definitely the best area for short term business for us.
Waleed Jobshah: But.
Waleed Jobshah: Or what was the commentary on the wireless side.
Waleed Jobshah: The onshore energy side.
Waleed Jobshah: The rest are fairly modest.
Waleed Jobshah: This segment so that's right.
Waleed Jobshah: Movements in Q1, it was just under 3% which is.
Waleed Jobshah: This segment saw a net rate movement in Q1 of just under 3%, which is marginal, in our opinion, and relatively flat. But areas such as, you know, aviation, We're definitely under a lot of pressure, and our vote is actually shrinking in that line of decision. If you look at, if you turn to reinsurance, I mean, this is, as we said in the call, this is by far the most exciting part of what we've done. We practically doubled our book last year, and that portfolio in the first quarter has grown by a further 21%. I think, you know, you're not getting the same level of rate increase and rate movement this year as you saw last year.
Waleed Jobshah: No.
Waleed Jobshah: Uh-huh margin of in our opinion and.
Waleed Jobshah: Relatively flat, but areas such as you know aviation.
Waleed Jobshah: Okay.
Waleed Jobshah: Or are definitely under a little pressure on our book is actually shrinking.
Waleed Jobshah: In that time.
Waleed Jobshah: If you look at if you turn to the reinsurance.
Waleed Jobshah: Probably the things I mean this is as we said on the Nicole this is by far the most exciting parts of booking two we practically doubled our both last year and in that portfolio in the first quarter and has grown by a further 20, 21%.
Waleed Jobshah: I think you know.
Waleed Jobshah: I'm getting the same level of rate increases in rate movement.
Waleed Jobshah: Uh huh.
Waleed Jobshah: This year as you saw last year. However.
Waleed Jobshah: However, the market looks to remain disciplined to a certain extent. Although, as we mentioned, after the year that the market and the industry did have last year, especially the reinsurance players, there is, you are seeing a lot more hunger this year than you did last year. And so people want a bigger piece of it. People are wanting a bigger slice of the pie. So that's just something we have to deal with.
Waleed Jobshah: That's the market looks to remain H b.
Waleed Jobshah: Disciplined to a certain extent, although as we mentioned I mean after the year that the market. She didn't happen last year, especially the reinsurance buyers. There is you are seeing a lot more hungry. This year than you did last year and so people want a bigger piece of it.
Waleed Jobshah: People are what is the bigger piece of the pie. So that's just something you have to deal with but you know the opportunities are abundant and T. Historically, our book of business, it's been more focused on that non marine.
Waleed Jobshah: But the opportunities are abundant, and there are plenty. Historically, our book of business has been more focused on non-marine property, including cat books. But we've now expanded that into areas such as political violence, aviation, and cyber. And we're looking to bring in and expand the team to further diversify and grow our specialty design portfolio, which, you know, historically has not made a big proportion of the overall budget. So definitely the most exciting part.
Waleed Jobshah:
Waleed Jobshah: Our property Cat book.
Waleed Jobshah: But we've now.
Waleed Jobshah: Did that into areas.
Waleed Jobshah: Such as you know.
Waleed Jobshah: Physical violence aviation.
Waleed Jobshah: Ciber.
Waleed Jobshah: And.
Waleed Jobshah: And.
Waleed Jobshah: And we're looking to bring now to bring in.
Waleed Jobshah: It's been expanded the team to further diversify and grow our specialty sports.
Waleed Jobshah: While you watch it.
Waleed Jobshah: Historically, it was always a big.
Waleed Jobshah: A portion of the overall book.
Waleed Jobshah: So definitely the most exciting parts of it.
Alan Chen: Got it. Thanks. Yeah, go ahead. Yes, thanks. If I can maybe ask one more question. So, it looks like the investment yield went up during the quarter, and I noticed that your cash balance went down by like $30 million. Can you provide additional details on where you deployed the...
Speaker Change: Got it thanks.
Speaker Change: If I can ask in this segment.
Speaker Change: Yeah go ahead.
Alan Chen: Thanks.
Alan Chen: Ken maybe ask one more so it looks like the investment in yellow went up during the quarter and I know I noticed that your cash balance went down by like $30 million can.
Alan Chen: Can you provide additional color on where you deploy the cash and what opportunities that you might see there. Thanks.
Waleed Jobshah: The cash balance is just a reflection of where we place the money from an investment perspective. I mean, our investment approach and appetite have not changed. We continue to focus on fixed deposits and fixed income, and fixed deposit portfolio. So it's just a matter of making sure any cash lying around is put to good use.
Alan Chen: Got it. Thanks for answering my question.
Speaker Change: The cash the cash balance is just a reflection of where we place the money from an investment perspective, I mean, our investment approach.
Alan Chen: Appetite changed we will continue to focus on on fixed deposits.
Alan Chen: And then once the unemployment.
Alan Chen: Fixed income fixed deposit.
Alan Chen: Portfolio.
Alan Chen: So it's just a matter of making sure any any cash lying around was put to good use.
Alan Chen: Got it thanks for answering my questions.
Speaker Change: Thank you.
Operator: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Speaker Change: This concludes our question and answer session.
Speaker Change: I would like to turn the conference back over to management for any closing remarks.
Waleed Jobshah: Thank you all for joining us today and thank you for your continued support of RGI. If you have any additional questions, please contact Robin, and she'll be happy to answer them. We look forward to speaking with you during the next portion of this call. We wish everybody a good day.
Speaker Change: Thank you and thank you all for joining us today and thank you for your continued support by geography.
Waleed Jobshah: If you have any additional questions. Please contact thrombin and she'll be happy to assist you.
Waleed Jobshah: We look forward to speaking with you on next sportswear Portuguese call.
Waleed Jobshah: We wish everybody a good day.
Waleed Jobshah: Okay.