Q2 2024 International General Insurance Holdings Ltd Earnings Call
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Operator: Good day and welcome to the International General Insurance Holdings Limited 2nd quarter earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your question, please press star, then two. Please note this event is being recorded.
Robyn Sidder: At this time, I'd like to turn the conference over to Robyn Sidder, head of investor relations.
Robyn Sidder: Please go ahead. Thank you, Alison, and good morning. Welcome to today's conference call. Today we'll be discussing our second quarter and half year 2024 financial results.
Robyn Sidder: You will be seeing our results press release, which we issued after the market closed yesterday. But if you'd like to copy the press release, you can find it on our website in the investor section at the WWW IG in short on. We've posted a supplementary financial a supplementary investor presentation as well, which can also be found on our website under the presentation page.
Robyn Sidder: On today's call, our executive chairman of IGI, WACIS Jopshay, president and CEO of Wally's Jopshay, and chief financial officer Perez-Rizzi. As always, WACIS will begin to call with high-level comments and then hand the call over to Wally to talk through the key drivers of our results through the second quarter's first half 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.
Robyn Sidder: I'll begin with some customary state carbon language. Our speakers' remarks today may contain forward-looking statements. Some of these 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 bias that the future climate estimate or expectations. These statements involve risk, uncertainties, and assumptions; actual events or results may differ materially from those projected in the form of statements due to a variety of factors, including the risk factors set forth in the company's annual report on 420S. For the year end of December 31st, 23, the company reports on Form 6-K and other filings with the SEC, as well as our results. Press release issues will get today evening.
Robyn Sidder: We undertake no obligation to update or revise publicly any board will be statements, which speak only as of the date they are made.
Robyn Sidder: During this call, we'll use certain non-GAAP financial measures. For a reconciliation of these measures to the nearest GAAP measure, please see our earnings relief, which has now been filed with the SEC and is available also on our website.
Francis Jepchai: With that, I'll turn the call over to our next chairman, Francis Jepchai. Thank you, Robin, and good day, everyone. Thank you for joining us on today's call.
Francis Jepchai: I'll just make a few short remarks before ending the call over to Alina. I'm pleased to report that IGI once again delivered excellent results in the second court to leave it to a very strong set of 2024. We report the annualized detail on average equity of 22.9% for the court and 25.2% for the half year. These are impressive numbers, especially given that our average equity increased by almost 30% in the year to June 30. So far in 2024, we have grown our book value per share, which is our most important measure, by 7.3%, and this is after paying regular court and dividends and extra ordinary cash dividend of 50 cents per share.
Francis Jepchai: I would also note that this is on the back of book value per share draw of more than 36% in 2023.
Francis Jepchai: Our promise to shareholders is to generate consistent and sustainable value over the long term. We do that first through our underwriting, where we believe we can generate the greatest returns. In the past five years, we have more than doubled our underwriting portfolio, significantly improving our diversification, along with the strength of our growing balance sheet, where we have doubled the size of our investment portfolio. We are more resilient ever, and that is showing in our results. Our value at IGI is in our ability to generate consistently high-quality results in any stage so that we continue to reward our shareholders who have put their trust in us and supporters.
Francis Jepchai: I will now hand over to a lead who will discuss the second quarter's out in more detail and talk about market conditions and our outlook for the remainder of 2024. I will remain on the call for any questions at the end.
Wally Jopshay: Good morning, everyone. Thank you, Arthur, and thank you all for joining us today. As Arthur said, we're in a great position as we continue through the second half of 2024. We've had another excellent quarter and a strong first half with very solid results. We're continuing to see relatively healthy conditions across much of our portfolio and pursuing opportunities to enhance our distribution to your abilities that both ultimately generate additional value. That is our primary goal and our promise to create opportunities that will generate consistent and sustainable value for the long term. And as we demonstrate over the past two decades, we do this throughout market cycles.
Speaker: We're continuing to see relatively healthy conditions across much of our portfolio and pursuing opportunities to enhance our distribution capabilities that will ultimately generate additional value. That is our primary goal and our promise, to create opportunities that will generate consistent and sustainable value for the long term. And as we've demonstrated over the past two decades, we do this throughout our work.
Continuing to see a relatively healthy conditions across much of our portfolio.
And pursuing opportunities to enhance our distribution capabilities to ultimately generate additional thought.
That is our primary goal and our promise to great opportunities that will generate consistent and sustainable value for the long term.
And as we've demonstrated over the past two decades, we do this through off market cycles.
In 2024, while conditions remained generally healthy there are areas of our portfolio, which continues to be a little bit more challenging.
Speaker: In 2024, while conditions remain generally healthy, there are areas of our portfolio which continue to be a little bit more challenging. Overall, market conditions for our short tail and reinsurance lines are the strongest, with a little more variation on the short tail. In our longer tail lines, conditions are a little tougher, but I'd say that the market is behaving in an orderly manner.
Wally Jopshay: In 2024, while conditions remain generally healthy, there are areas of our portfolio which continue to be a little bit more challenging. Over all market conditions for our short tail and reinsurance lines are stronger, with a little more variation on the short tail side. In our older tail lines, conditions are a little tougher, but I'd say that the market's behaving in an orderly manner. And there are some areas where the pace of breaking the client is actually slow. Broadly speaking, there's definitely more pressure in the environment, where many players in the market couldn't buy that. I mean, predominantly existing capacity.
Overall market conditions for our short tail in reinsurance lines with the strongest.
With a little more variation on the short tail side.
They don't all work their lives conditions are a little tougher, but I'd say that the market's behaving in a noisy manner and there are some areas where the pace of breaking decline has actually slowed.
Speaker: And there are some areas where the pace of breaking decline is actually slow. Broadly speaking, there's definitely a more prescient environment where many players in the market, and by that I mean predominantly existing capacity, are pushing for increased market share. And I'll talk about that a little more later in the talk.
Broadly speaking there definitely are more pressured environment, where many players in the market and by that I mean, the dominant key existing capacity.
Wally Jopshay: They're pushing for increased market share. And I'll talk about that little more later in the call.
They're pushing for increased market share.
And I'll talk about that a little more later in the call.
Wally Jopshay: So far this year, we've seen a more active growth environment overall, notably natural cat events like the earthquake in Taiwan, the flooding in Taiwan and in the UAE, as well as some offshore energy losses, that you see the impact of these in our sums. I'll give a quick recap of the results for the second quarter and half here. And then I'll talk more about what we're seeing in our markets and our outlook for the images. Growth for convenience growth in the second quarter of 2024 was 3% and 3.7% for the first half driven by growth in the short tail and re-insured segment.
Speaker: So far this year, we've seen a more active loss environment overall, notably natural catastrophes like the earthquake in Taiwan, the flooding in Oman and in the UAE, as well as some offshore energy losses, and you see the impact of these in our response. I'll give a quick recap of the results for the second quarter and half here, and then I'll talk more about what we're seeing in our markets and our outlook for the reserves. Gross food ingredient growth in the second quarter of 2024 was 3% and 3.7% for the first half, driven by growth in the short-term and re-insurance.
So far this year, we've seen a more active loss environment overall, notably natural cat events like the earthquake in Taiwan.
Speaker Change: <unk> Ah in Oman, UAE as well as some offshore energy losses, and you see the impact of these and ourselves.
Wally Jopshay: This is a little more disappointing than I would have expected, but to be clear, it's not that the business and the opportunity are there; it is that the underlying possibility of the business isn't meeting our requirements. This goes back to the point I made a moment ago on the increasing competitive pressures. If the profitability doesn't meet our requirements, we simply won't write it. It's a symbol that we said in last quarter's call that we expect growth in growth would be in the high-cangle digits to low-double digits for the year, but I think it's now more likely to be meant to possibly high-cangle the...
Speaker: This is a little more disappointing than I would have expected, but to be clear, it's not that the business and the opportunities aren't there; it's that the underlying possibility of the business isn't meeting our requirements. This goes back to the point I made a moment ago on the increasing competitive pressures. If the profitability doesn't meet our requirements, we simply won't write. It's as simple as that.
Speaker: We said in last quarter's call that we expect growth per annum to be in the high single digits to low double digits for the year, but I think it's now more likely to be mid to possibly high single digits. I'll talk more about this in a few moments. And as I said earlier, the second quarter was also a more active loss. Specifically in the short-sale segment, we're seeing good opportunities for new business, particularly on the engineering and onshore energy sides, but also contingency, marine cargo, and property. Gross premiums in the second quarter were up 8.5%. And it was up 6.1% for the first half.
Wally Jopshay: I'll talk more about this in a few moments, and as I said earlier, the second quarter was also a more active loss quarter. Specifically, in the short tail segment, we're seeing good opportunities for new business, particularly on the engineering and lunch or energy side, but also contingency in marine cargo and property. Gross payments in the second quarter were up 8.5%, and it's up 6.1% for the first half. Earns being, however, was up 6.3% and 11.9% for the second quarter in the first half. Respect. The reading insurance segment continues to perform well, with gross payments up 67.7% for the second quarter and 28.4% for the first half.
Speaker: EARN, however, was up 6.3% and 11.9% for the second quarter and first half, respectively. The reinsurance segment continues to perform well, with gross payments up 57.7% for the second quarter and 28.4% for the first half. Net premiums earned up almost 35% and just under 25, 29%, respectively for the same year. The long-tail segment continues to see some contraction in gross premium volume in the second quarter and first half, as rates and conditions in some lines have reached levels where we are choosing not to release.
Wally Jopshay: Net premiums earn up almost 35% and just 125-29% respectively for the same case. The long tail segment continues to see some contraction and gross premium volume in the second quarter and first half as raising conditions in some lines of reach levels where we are choosing to normally use them. That's not to say that there are opportunities to write new business. There are, and our enhanced distribution capabilities, which I'll talk about a little bit more in the moment, are helping. I would note the pace of raising the kind of pH we're slowing in some lines, such as, you know, just providing some context on our long tail portfolio.
Speaker: That's not to say that there aren't opportunities to write new business; there are, and our enhanced distribution capability, which I'll talk about a little bit more in a moment, is helping. I would know the pace of racing that used to be slow in some lines, such as D&O.
Speaker: Just providing some context on our Long-Tail portfolio; this is an international portfolio of D&O, financial institutions, professional indemnity, legal expenses with a little bit of third-party liability business only written in the Middle East and Africa. Our long-tail portfolio is broadly written on a claims-based basis. We don't write U.S. small-scale business in this portfolio, so the 10 on our book is relatively shorter and averages around 47. We've grown this portfolio significantly in recent years, taking advantage of the strong conditions, market conditions, and the healthy racing environment, as well as to add to the diversification of our portfolio. But I expect for the foreseeable future, as we are seeing several quarters of rating declines now, all these from very high levels.
Wally Jopshay: This is an international portfolio, D&O, financial institutions, professional identity, legal expenses, with an annual zero-third-party liability business, only rich in the Middle East and Africa. Our long tail portfolio was brought to the original claims made basis. We don't write US long tail business in the sport portfolio, so the channel on our book is relatively shorter and the average is around 47 years. We've grown the sport portfolio significantly in recent years, taking advantage of the strong conditions, market conditions, and the healthy raising environment, as well as the diversification of our portfolio. But I expect for the foreseeable future, as we've seen, several courses are raising the client now, or need for very high levels.
Wally Jopshay: We'll continue to take a more cautious view here, and that is all part and parcel of our, you know, sound of the gluten-site management. One final note on growth expectations, and I continue to say this: we are not a top-line company. Our focus is on the profitability of the business and creating a value. Specifically, on the second quarter of us, I mentioned the moment to go. I mean, our share of these losses was very manageable, and it illustrates the resilience we've created in a larger and more diversified portfolio. Our combined ratios of 81.2% and 77.7% for the second quarter in the first half are well below our long-term averages, and the next is results.
Speaker: We'll continue to take a more cautious view here, and that is all part and parcel of our sound and prudent site management. One final note on growth expectations. I continue to say this. We are not a top-line company; our focus is on the profitability of the business and creating value. Specifically, on the second quarter, as I mentioned a moment ago, our share of these losses was very manageable, illustrating the resilience we've created in a larger, more diversified portfolio. Our combined ratios of 81.2% and 77.7% for the second quarter and the first half are well below our long-term averages. And then the next slide, please.
Wally Jopshay: Investment income showed significant improvement in Q2, and in H1 of 2024, resulting in a 0.6-point improvement in the annualized investment year to 4.6% for the first half. Specifically, in our victim support for you will maintain the overall average credit rating at A in the average duration of 3.2 years. Next income for Q2 was 32.8 million, then 70.7 million for the first half, which is downslides for the prior year largely as a result of the greater cost of activity. We've seen in 2024, but certainly solid results. Core operating income, which we believe is a true measure of fundamental performance, was just over 33 million in Q2, and just over 73 million in the first half.
Speaker: Investment income showed significant improvement in Q2. Net income for Q2 was $32.8 million, then $70.7 million for the first half. For the six months to June 30th, co-operating income was up 8.6% from the first half of last year. And as you recall, as Bob mentioned, we paid a special cash dividend of $0.50 per share in April. Although I would note that they are a little more pronounced.
Wally Jopshay: For the six months to June 30th, core operating income is up 8.6% from the first half of last year, which itself was an exceptional year for us. Turning to the balance sheet, total assets increased on the 7% to 1.96 billion dollars, and total equity increased just under 9% to 548.2 million dollars at the end of June. On the capital management front, as you know, we increased our core share, repurchased our organization, 7.5 million shares. We repurchased a little over 6,000-6,000 shares in the second quarter, and just a little less than a million shares in the first half of the year, leaving approximately 2.8 million shares remaining at the end of June.
Wally Jopshay: We also announced an increase to our quarterly dividend to 2.5 cents per share per quarter, up from 1 cent per share per quarter. And as you recall, as what we mentioned, we paid a special cash dividend of 15 cents per share in the economy. Now, similarly, we recorded the core operating ROI of 23.2% per Q2, and 26% for the first half of 2024. Lastly, and most importantly, we grew our book value per share by 7.3% to 13.3% at the end of June.
Speaker Change: Sure.
Speaker Change: Lastly, and most importantly, we grew our book value per share by seven 3% to $13.31.
Speaker Change: The end of June.
Wally Jopshay: To all in, another excellent quarter and a half year. Moving on to our markets and our market for the remainder of the year, we're seeing a continuation of the trends that we've been talking about now for the last several quarters, although I would note that they are a little more pronounced. With increased capacity across the board, we've seen more competition in virtually all our markets. The sublayers continue to want to show growth and are pushing for increased market share and expanding their risk appetites. So, what is the speed for IGI? I broadly speaking, we're still seeing some good opportunities.
Speaker Change: So all in another excellent quarter and half year.
Speaker Change: Moving onto our markets that are out there for the remainder of the year.
Speaker Change: We're seeing a continuation of the trends that we've been talking about now for for the last several quarters, Although I would note that they are live more pronounced.
With increased capacity across the board, we're seeing more competition in virtually all of our markets but.
Speaker Change: Some players that can keep continue to want to show growth.
Speaker Change: For increased market share and expanding their risk appetite.
Speaker Change: So what does this mean for hei.
Speaker: So, what does this mean for IGI? Specifically in underwriting, we've bolstered our talent across the group to give us more direct access to targeting new business. We're already seeing tangible benefits in accessing business that we may not have seen otherwise. And these are the types of actions that we can and do take quickly and decisively to maximize our opportunities for profitable growth. You're hearing this in the commentary from other insurers and re-insurers.
Speaker Change: I mean broadly speaking, we're still seeing some.
Speaker Change: Some of those opportunities so we're pulling levers across our portfolio that are generating some some excellent new business.
Wally Jopshay: We're pulling levers across our portfolio that are generating some excellent new business. Specifically, in underwriting, we've bolstered our talent across the group to give us more direct access to the target in new business. We've hired people in specific regions or moving existing people between regions to take advantage of specific opportunities. And then, example, we've added engineering and construction underwriting capabilities that are quite a lot more office. Specifically, starting with opportunities out there. We've added financial professional life underwriters in our Oslo, Norway office to build that those capabilities in the north-eastern European market. You will recall our announcement that we have established a present employee to the company box.
Speaker Change: Specifically in underwriting we bolstered our talents across the group to give us more direct access and targeting new business.
Speaker Change: A depot in specific regions or multi existing people between regions to take advantage of.
Speaker Change: You know specific opportunities.
Speaker Change: As an example, we've added engineering and construction underwriting capabilities that are quite a bit of floor office space.
Speaker Change: It seems like he started opportunities out there, but we've added financial professional lives in devices that are Oslo, Norway office to built out those capabilities.
Speaker Change: Northern European markets.
Speaker Change: You will recall our announcement that we've established a presence at Lloyd's with the company box.
Wally Jopshay: We are already seeing tangible benefits in accessing business if we may not see it otherwise. And these are the types of actions that we can and do take quickly and effectively to maximize our opportunities, you know, for profitable growth. What's changed over the past three months since we last spoke to you is that there is increased capacity across the market. Some coming from New Capital and New Hensions like MGA's, but predominantly it's from existing players wanting a bigger piece of supply, and we're seeing that intensified. You're hearing this in the commentary on whether insurers and re-insurers; there's a scrum built to continue to show growth while rates remain strong in some areas. We're seeing greater compared to precious and domestic markets across the board.
Speaker Change: We're already seeing tangible benefits in accessing business, if we may not see otherwise.
Speaker Change: These are the types of actions that we can and do take quickly and decisively to maximize our opportunities for profitable growth.
Speaker Change: Whats changed over the past three months since we last spoke to you.
Speaker Change: That is that there is increased capacity across the market.
Speaker Change: Some coming from new capital and new entrants like M. G ace, but predominantly it's from existing players.
Speaker Change: One thing and a bigger piece of the pie.
Speaker Change: Seeing that intensified.
Speaker Change: You are hearing.
Speaker Change: Listen to commentary from other insurers and reinsurers.
Speaker Change: There's a scramble to continue to show growth while rates remained strongly somebody I guess, we're seeing greater competitive pressures and domestic markets across the board.
Speaker: This is scrambled to continue to show growth while rates remain strong in some areas, receiving greater competitive pressure from domestic markets across the board. We're focused on the profitability of the business we take on, no matter where we are on the planet. Our business is and has always been cyclical, where different lines and markets move at different times and at different paces. What's most important at any stage of any cycle is that we maintain our discipline, execute consistently, and move our capital to those areas with the strongest rate momentum and the highest return.
Wally Jopshay: This is an insanely good thing, and then we continue to say our primary objective is the bottom line. In creating value, we're not showing growth just for the sake of it. We're focused on the profitability of the business we take on, no matter where we are in the time. And we will not write businesses underneath our possibility targets and generate that before our shareholders. And this should not be seen as an activity. Our business is and has always been cyclical with different lines and markets with a different time at different places. This is nothing new to us.
Speaker Change: This isn't necessarily a good thing and I would continue to say our primary objective is the bottom line.
Speaker Change: Creating value and not showing growth just for the sake of.
We're focused on the profitability of the business, which they call no matter, where we are in the cycle.
Speaker Change: And we will not drive businesses, it doesn't meet our profitability targets and generate value for our shareholders.
Speaker Change: And this should not be seen as an active.
Speaker Change: Our business is and has always been cyclical where different lines as markets move at different times at different paces.
Speaker Change: This is nothing new to us we've been doing this for over two decades during which we've been through many market cycles and consistently produce results strong results and solid returns for our shareholders.
Wally Jopshay: We've been doing this for over two decades, during which we've been through many market cycles and consistently produced strong results and some returns for our shareholders. One of the hallmarks by July that deep technical underwriting talent, people who understand the dynamics of their business, who we have experience and strong relationships, and who can anticipate shifting types in their markets and respond to it. But it's more important at any stage or any cycle that we maintain our discipline, execute consistently, and move our capital to those areas with the strongest rate of momentum and the highest numbers.
Speaker Change: One of the hallmarks of by July the deep Tech.
Speaker Change: Technical underwriting talent people, who understand the dynamics of their business experience and strong relationships and who can anticipate shifting types in their markets and respond accordingly.
Speaker Change: But most importantly, any stage of any cycle that we maintain our discipline.
Speaker Change: Execute consistently.
Speaker Change: And move our capital to those areas with the strongest rate momentum and the highest margins.
Wally Jopshay: All while working within our well-defined risk appetite and tolerances. Throughout our history, we've clearly demonstrated our real do-this, producing high quality results and ultimately protecting share all the time. Now let's wear rear-to-date, everything's about technical underwriting discipline, intelligent risk selection. Looking at specific lines and markets, the headlines are similar to the last few quarters. Price pause continues to be re-insured, and some of the short-tailed lines while growth is increasingly challenging in other short-tailed lines and pretty much across our long-tail portfolio. It's not to say that opportunities for growth are not there; they are; they're just relatively harder to come by at rates and terms that are acceptable to us.
Speaker Change: All while working within our well defined risk appetite and tolerances.
Speaker: Throughout our history, we've clearly demonstrated our ability to do this, producing high-quality results and ultimately protecting shareholders. Looking at specific lines and markets, the headlines are similar to the last few quarters. In other lines, and where rates are coming down, it's mostly in an orderly fashion, property, but then you've got other lines that are more challenging. So, as I mentioned earlier, it's all about pulling the right levers at the right time so we maximize profitability and generate the most value. In the long-tail segment, the story is fairly similar to prior courses.
Speaker Change: Throughout our history.
Speaker Change: Clearly demonstrated our ability to do this producing high quality results.
Speaker Change: Hudson protecting shareholder.
Speaker Change: So that's where we are today.
Speaker Change: Everything's about technical underwriting discipline intelligent risk selection.
Speaker Change: Looking at specific lines and markets that had sort of a similar for the last few quarters.
Speaker Change: <unk> continued to be re insurers.
Speaker Change: And some of the short tail lines.
Speaker Change: While growth is increasingly challenging and other short tail lines and pretty much across our long tail portfolio.
Speaker Change: Not to say there are opportunities for growth out there. They are they're just ready to Z harder to come by.
Speaker Change: Rates are terms that are acceptable.
Speaker Change: Acceptable to them.
Speaker Change: Specifically in our short tail a segment grateful makes a remains broadly steady with.
Wally Jopshay: Specifically in our short-tailed segment, rate momentum remains broadly steady with what we saw in the first quarter, with lots of variation by line of jobs. We're seeing the most positive rate momentum and opportunity in parts of our marine portfolio for German, those cargo marine trades, as well as in the marine liabilities. In other lines and where rates are coming down closely in order to be fashion, there continues to be some good opportunities in engineering, contingency, and property, but then you've got other lines that are more challenging. Engineering and construction continues to be a right spot for us in many of our markets.
Speaker Change: And what we saw in the first quarter with lots of very little variation by line of jokes.
Speaker Change: We're seeing the most positive rate momentum and opportunity.
Speaker Change: Parts of our marine portfolio post the German those cargo marine trades.
Speaker Change: Well, it's been in the marine liability book.
Other lines are and where rates are coming down and it's mostly in an orderly fashion.
Speaker Change: There continues to be some good opportunities in engineering and contingency.
Speaker Change: But then you've got other lines that are.
Speaker Change: More towards you.
Speaker Change: Engineering and construction continues to be a bright spot for us.
Speaker Change: And in many of our markets.
Wally Jopshay: And we will continue to focus on those most attractive regions: the Middle East and Asia, as I said earlier, as well as the U.S. where we're building our presence of the relationships and climate. In our three-series insurance segment, we continue to see positive rate movement on the back of all upwards of 25 percent increases we saw last year. This continues to be the most attractive area of our portfolio right now when we expect to continue to see opportunities to write new business. The growth that we've shown in our three-series before the past 18 months is a good example of our ability to move our capital quickly and decidedly to those lines, those areas, with the highest margins.
Speaker Change: And we will continue to focus on those most attractive regions, the middle East and Asia as I said earlier as well as the U S, where we're building our presence and relationships.
Yeah.
Speaker Change: And our treaty reinsurance.
Speaker Change: Segment, we continued to see positive rate movement on the back of.
Speaker Change: Oh upwards of 25% increases we saw last year.
Speaker Change: This continues to be the most attractive area of our portfolio right now and we expect to continue to see opportunities to write new business.
Speaker Change: The growth that we've shown our treaty book over the past 18 months did a good example of our ability to move our capital quickly and decisively to those lines those areas with the highest margins.
Wally Jopshay: So, as I mentioned earlier, it's all about pulling the right levers at the right time, so we might want flexibility and generate the most value. In the long-term segment story, fairly similar to prior quarters, net rates overall remain broadly adequate, but continue to be fresh. We shouldn't expect to see any growth in this segment in 2024, although the build-up of our post-low office and our current employees is producing positive results.
Speaker Change: As I mentioned earlier, it's all about pulling the right levers at the right time, so we maximize profitability and generate the most value.
Speaker Change: In the long tail segment story is fairly similar to prior quarters.
Speaker Change: Net rates overall remain broadly adequate but continued to be freshmen.
Speaker Change: We shouldn't expect to see any growth in this segment in 2024.
Speaker Change: Although the Buildout of our Oslo office, and all kinds of Lloyds is producing.
Speaker Change: It takes us.
Speaker Change: Looking at our geographic pockets of the U S continues to be a growth area for us and we've increase.
Wally Jopshay: Looking at our geographic market, the U.S. continues to be a growth area for us and we increase our U.S. growth savings by over 47 percent in the first six months of the year compared to the same period last year, but this is also where we're seeing a rise in competitive pressures, mostly coming from the existing pair of hand-in-domestic markets, as I mentioned, previously. We're raising newcomers to the U.S. when we started writing business there in 2020. As you know, we're only writing short-term lines there, and earlier this year hinted the engineering and construction space writing small to medium-sized projects.
Speaker: Looking at our geographic markets, the U.S. continues to be a growth area for us, and we've increased our U.S. growth payments by over 47 percent in the first six months of the year compared to the same period last year. But this is also where we're seeing rising competitive pressures, mostly coming from existing fairs and domestic markets, as I mentioned. We're a relative newcomer to the US. We only started writing business there in 2020. As you know, we're only writing short deadlines there. Earlier this year, we entered the engineering construction space, writing small to medium-sized projects, looking to capitalize on those.
Speaker Change: We increased our U S gross premiums by over 47%.
Speaker Change: In the first six months of the year compared to same.
Speaker Change: Same period last year.
Speaker Change: But this is also where we're seeing rising competitive pressures, mostly coming from existing players in the domestic markets as I mentioned.
Speaker Change: Previously.
Speaker Change: And now we're at a relative newcomer to the U S. A we started writing business there in 2020.
Speaker Change: As you know, we're only writing short deadlines, there and earlier this year.
Speaker Change: Engineering and construction space like in small to medium sized projects.
Wally Jopshay: We continue to focus on property, energy, political violence, contingency, cargo business, and reinsurance, and to date, we've risen just over 73 million dollars of premium in the U.S., 55 percent of which is the EMS. In Europe, we're all around 17 million dollars in the second quarter and around just under 14 million in the first six months. We expect to see further opportunities for growth throughout the year as we continue in the mission earlier. We focus our efforts in the Nordic big measure with our platforms there. In the mean region and major, we continue to add talent on the ground across various lines of business opportunities there and looking to capitalize on those.
Speaker Change: We continue to focus on property energy political violence contingency carnival business and reinsurers and to date, we've reaching just over $73 million of premium a premium in the U S and 55% of which is Ah.
Speaker Change: Our E&S business.
Speaker Change: In Europe we.
Speaker Change: We're all around $17 million in the second quarter and around just under 14 million in the first six months.
Speaker Change: We expect to see further opportunities for growth and throughout the year.
Speaker Change: As we continue as I mentioned earlier, we focus our efforts in the north it mainland Europe.
Speaker Change: With our platform sale.
Speaker Change: In the Mena region in Asia, we continued to add titles on the ground across various lines of our business opportunities.
Speaker Change: There are.
Speaker Change: Looking to capitalize on those.
Speaker Change: So in conclusion.
Wally Jopshay: In conclusion, we continue to do what we're doing. We keep our focus charting on our core principles of selectiveness than on the writing, dynamic cycle management, and concerns of reserving, with the ultimate goal of protecting the responsibilities from part of our company and the capital that is interested. We continue to generate excellent returns that will serve us well in the courses and years ahead. And as we've done throughout our history, allow us to continue to deliver our promise to reward our shareholders by constantly building consistent and sustainable value.
Speaker Change: We continue to do what we're doing keep our focus sharply on a corporate suppose a selective and disciplined underwriting dynamic cycle management and conservative reserving with the ultimate goal of protecting the profitability profile of our company and the capital that is entrusted to us.
Speaker Change: We continue to generate excellent returns that will serve us well in the quarters and years ahead.
Speaker Change: And we've as we've done throughout.
Speaker Change: Our history and allow us to continue to deliver on our promise to reward our shareholders by Hudson and keep building consistent sustainable value.
Wally Jopshay: So I'll pause there, and we'll turn it over to questions.
Speaker Change: So I'll pause there.
Speaker Change: And we'll tell you spoke with your questions.
Operator: Operator, we're ready to take the first question. Thank you. And we will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.
Speaker Change: Operator, we're ready to take the first specialities.
Speaker Change: Yeah.
Speaker Change: Alright, Thank you and we will now begin the question and answer session.
Operator: Thank you. And we will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. Our first question today is,
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you are using a speaker phone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Scott Helena: At this time, we will pause for a moment to assemble our roster. Our first question today. We'll come from Scott, Helena, with RBC. Please go ahead.
Speaker Change: At this time, we will pause for a moment to assemble our roster.
Speaker Change: Okay.
Speaker Change: Our first question today.
Scott <unk>: Will come from Scott <unk> with RBC. Please go ahead.
Scott Helena: Yes. Hope everyone's doing well. Just a quick question here on the growth outlook that you provided: the mid to high single digits. It sounds like most of the growth is going to continue to come from the reinsurance and the short tail.
Scott <unk>: Yes.
Scott: Hope everyone's doing well just a quick question here on the the growth the growth outlook that you provided the mid to high single digit sounds like that's most of the brokers going to continue to come from the.
Speaker Change: The reinsurance and the Shoretel, but and you mentioned some of the opportunities, but anything you can touch on there as well as.
Wally Jopshay: But you mentioned some of the opportunities, but anything you can touch on there as well as the areas of long tail that are challenging in particular where you're pulling back from that maybe are different than a few quarters ago. It sounds like that will continue, but anything you can talk about in terms of just kind of good more detail on the growth outlook by segment and what you expect to see. Thanks, Scott. Thanks for the question. Yes, sure. I think what we're saying, what we've been saying today, is the line we've been saying for quite a few quarters now.
Speaker Change: The the areas of of long tail that are challenging in particular, where you're pulling back from that maybe are different than.
Scott <unk>: A few quarters ago, it sounds like that'll that'll continue but anything you can talk about in terms of just kind of give more.
Speaker Change: On the on the growth outlook by segment and then what you expect to see.
Scott <unk>: Yeah.
Scott <unk>: Thanks, Scott Thanks.
Speaker Change: Thanks for the question, Yes, sure I mean.
Scott <unk>: I think I think what we were saying what we see.
Scott <unk>: What we can say today is in line with what we've been saying for quite a few quarters now.
Scott <unk>: If we look at the long tail segment.
Wally Jopshay: If we look at the long tail segment, we announced earlier last year that we were two from the inherent defects class. So we're seeing that impact the overall numbers. And that was a pure underwriting probability decision. But in terms of mark conditions, you're seeing pretty much across all our subclasses or business lines within the segment come under pressure. The most pressure is probably on the DNO side and the financial situation side. But just trying to see more of that creep into the question of the disease as well. So, as I said earlier, this is not about volume for us; this is about profitability.
Scott <unk>: We announced earlier last year that we withdrew from.
Scott <unk>: They didn't have defects class. So we're seeing that impact the overall numbers and that was a pure underwriting profitability decision, but in terms of market conditions you're seeing.
Scott <unk>: Pretty much across all of our sub classes are business lines within the segment.
Scott <unk>: Come.
Scott <unk>: Under pressure.
Scott <unk>: The most pressure is probably on the D&O side.
Scott <unk>: And the financial institution side.
Scott <unk>: But you're starting to see more of that creep into the.
Scott <unk>: Special services as well so as I said earlier you know I mean this is this is not about volume for US. This is about profitability and so we will continue to take the measures that we believe are.
Wally Jopshay: And so we will continue to take the measures that we believe are necessary to protect that profitability and to continue to be able to generate results in line with what we've been delivering for the last many quarters. We're making sure it's definitely the right spot. And this is the area where we're putting a lot of focus on. We want to grow it more, and we are working on ways to take bigger advantage of this. Definitely the healthiest. segments within our overall portfolio. And you know, as long as that's for me in the case, we will continue to push as hard as we can in this area.
Scott <unk>: <unk> are necessary.
Scott <unk>: To protect our profitability and to continue to be able to generate results in line with what we've been.
Scott <unk>: Delivering four.
Scott <unk>: The last minute.
Scott <unk>: Many quarters.
Scott <unk>: Reinsurance is definitely the bright spot and this is the area, where we're putting a lot of focus on we want to grow as more and we are working on.
Scott <unk>: Ways to.
Scott <unk>: To take bigger advantage.
Scott <unk>: All of this.
Scott <unk>: Definitely the healthiest.
Speaker: segments within our overall portfolio, most of the short deadlines. So, looking forward, I don't think that's going to change, not in the near term, not for the rest of this year. The long tail will continue to be under pressure, and we'll push as much as we can, taking advantage of the conditions within reinsurance and within the attractive short term.
Scott <unk>: Segment within our overall portfolio.
Scott <unk>: And as long as that remains the case, we will continue to push as hard as we can in this area shoretel segments. It mixed bag.
Wally Jopshay: Short tail segments is mixed back. I mentioned field business lines on the call of engineering, contingency, the cargo, the marine elements, the main portfolio. Those are still behaving very well. And by and large, properties, it continues to be good. It was a night, you know, modest growth for us on property side. Onshore energy is driving good opportunities and still has the conditions on the flip side. Aviation is extremely challenging. That's a barrier where our hook has, which is quite significantly. And upstream energy, despite the losses in the market, doesn't seem to be reacting the way we would want the market to react.
Scott <unk>: I mentioned those business lines are on the call the engineering contingency the cargo in the marine.
Scott <unk>: Elements. The main portfolio those are still behaving very well and.
Scott <unk>: And by large property continues to be good.
Speaker Change: It was a nice you know.
Scott <unk>: Modest growth for us on property side onshore energy is is is is driving good opportunities instead of the conditions on the flipside aviation is extremely challenging.
Scott <unk>: And that's an area, where our book is fits us quite significantly.
Speaker Change: Uh huh.
Speaker Change: And upstream energy despite the losses in the market doesn't see the don't seem too too.
Speaker Change: We are reacting the way we.
Speaker Change: I would want them to go with what the market to react other market flattish so.
Wally Jopshay: Other markets flatish. So, you know, that's why you saw, you know, most of the short tail lines are either, you know, relatively stable the way they are or pushing up; the couple coming down. That's why you're seeing overall growth in that segment: reinsurance between insurance and long tail. We're seeing pressure across practically everything within. So looking forward, I don't think that's going to change. Nothing near term, not for the rest of this year. The long tail will continue to be on the pressure and will push as much as we can, taking advantage of the conditions within reinsurance and within the attractive short tail lines.
Speaker Change: You know that's why you saw.
Speaker Change: Most of the shorts Airlines.
Speaker Change: Or either.
Speaker Change: Relatively stable in the way they are all pushing up with a couple coming down that's why you're seeing overall growth in that segment reinsurance is reinsurance.
Speaker Change: Long tail, we're seeing pressure across but taking everything with it.
Speaker Change: So looking forwards.
Speaker Change: Don't think that's going to change, but the near term not for the rest of this year.
Speaker Change: The long tail will continue to be under pressure and we'll push as much as we can.
Speaker Change: Taking advantage of healthy conditions within reinsurance and within the attractive.
Speaker Change: Short tail.
Wally Jopshay: All right, that's great detail. I'm just switching over a little bit on the US business. The growth rate premiums you mentioned were up 47%. So it sounds like you're seeing a lot of opportunity there. But within the property market in the US, some people are talking about rates coming down a little bit and a little less opportunity. Just curious, the growth that you're seeing this year is how much of that is coming from some of the other lines you mentioned versus property and how you're viewing that relative to the rest of that US book. As you know, we've expanded our product suite as an engineering instruction.
Speaker Change: Alright, that's great detail that I've, just switching over a little bit on that the U S business. Our gross written premiums you mentioned were up 47%. So it sounds like youre seeing a lot of opportunity there but.
Speaker Change: Within the property market in the U S. Some people are talking about rates coming down a little bit and a little less opportunity.
Speaker Change: Just curious the growth that you're seeing this year is it how much of that is coming from some of the other lines, you mentioned versus property and how you're how you're viewing that relative to the rest of that U S book.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: Yeah.
Speaker: Yeah, as you know, we've expanded our product suite, adding engineering infrastructure, so that's delivering. Now, the pressures are that the market is probably stabilized, which means that the rating environment is still adequate, and is still healthy. You are seeing, as I mentioned on the call, players wanting a bigger piece of the pie, wanting a bigger market share, and some players out there are a lot more aggressive than others. But by and large, we're able to cut deals for ourselves that remain attractive, and we're able to cut deals on new business for ourselves that are attractive, allowing us to continue to grow.
Speaker Change: As you know and we've expanded our product suite and the engineered infrastructure. So that's delivering there.
Wally Jopshay: So that's delivering good opportunities, growth. Because our portfolio is relatively infant, yes, it's four years old, but we always said, whenever we enter a new market, we take it step by step, cautious and try to recall, you know, to grow the book and grow our portfolio in a controlled, measured fashion. For us, achieving that growth is not; we are seeing the pressures. Now the pressures are that the market is probably stabilized, which means that the rating environment is still adequate, still healthy. You are seeing, as I mentioned in the call, players wanting a bigger piece of the pie, wanting a bigger market share, and some players out there are a lot more aggressive than others.
Speaker Change: There's good opportunities grows.
Speaker Change: Because our portfolio is relatively against it.
Speaker Change: Yes, it's four years old, but you know.
Speaker Change: We always said whenever we enter a new market, we take it step by step cautious you know.
Speaker Change: And and and try to what he calls you know to grow the book.
Speaker Change: Grow our portfolios in a N.
Speaker Change: In a in a controllable and.
Speaker Change: And measured fashion.
Speaker Change: For us achieving that growth is it is not you me are seeing the pressures.
Speaker Change: Now the pressures are that the market has probably stabilized which means that the rating environment adequate still.
Speaker Change: Our healthy you are seeing as I mentioned on the call.
Speaker Change: I was wanting a bigger piece of the pie months do you think your market share and in some some players out there are a lot more aggressive than others.
Wally Jopshay: But by and large, we were able to cut deals for ourselves. The remain attractive, we were able to cut deals on new business for ourselves that are attracted by allowing us to continue to grow. We've grown the policy books, we've grown the potential energy books, we've grown the contingency, the treaty; it's across the board where we've been able to capitalize on opportunities. And you know, you know, the U.S. Underwriting season is pretty much over for us. You know, all gets underwritten in the first six months, seven months of the year. It'll be interesting to see whether the forecasters are arrived about the years I've went season, and then what impact that may have on the market goes forward.
Speaker Change: But by and large we're able to cut deals for ourselves that remain attractive we were.
Speaker Change: We're able to cut deals on new business for ourselves.
Speaker Change: Our attractive, allowing us to continue to grow.
Speaker: We've grown the property book, we've grown the energy book, we've grown the contingency, the treaty, it's across the board where we've been able to capitalize on opportunities. You know, the U.S. underwriting season is pretty much over for us. You know, it all gets underwritten in the first six months or seven months of the year. It'll be interesting to see whether the forecasters are right about this year's outwind season and what impact that may have on the market going forward.
Tracy: We've grown obviously, both with both the onshore energy both with Golden contingency that Tracy.
Tracy: If.
Tracy: You know, it's it's across the board wherever we've been able to capitalize on our opportunities.
Tracy: Opportunities.
Tracy: And you know.
Tracy: You know the U S underwriting season is pretty much over for us.
Tracy: You know, it's all gets underwritten in the first six months seven months of the year.
Speaker Change: It'll be interesting to see whether all the forecasters are right about this year's high wind season.
Tracy: What impact that may have on the market going forward.
Wally Jopshay: Got it.
Speaker Change: Got it and then just moving over to reserve development are you there.
Questioner: Got it. And then, just moving over to reserve development, your favorable reserve development has run at a really high level for the company for a while now. Just a little more detail on that, you know, kind of where that's coming from by segment, if there's any particular line that stands out, whether it's new years or accident years, just any context on why that's coming in so much better than expected would be helpful.
Wally Jopshay: And then just moving over to reserve development, your favourables are reserved development is running really high level for the company for a while now. Just a little more detail on that, you know, kind of where that's coming from by segment if there's any particular line that stands out whether it's New Years or Action Years, just any context on why that's coming in so much better than expected would be awful. I think it's similar to what we said in, you know, previous calls. You know, we think it very much is supposed to be reserving. And we'd rather, you know, we've been sent, we'd rather in service and we reserve to begin with rather than find ourselves in situations where we have to actually put more reserves in.
Speaker Change: Favorable reserve development is about run at really high level for the company for a while now.
Speaker Change: A little more detail on that you know kind of where that's coming from bye Bye Sag man. If there's any particular line that stands out whether it's new year's or accident years, just any context on why that's coming in so much better than I expected.
Speaker Change: It would be helpful.
Tracy: Yeah.
Tracy: I think similar to what we've said.
Tracy: The previous.
Tracy: Kohls.
Speaker Change: We take a very cautious approach to reserving.
Speaker Change: The reserving.
Tracy: And we'd rather.
Tracy: You know.
Speaker Change: We can simply we'd rather conservative conservatively reserved to begin with.
Tracy: Rather than find ourselves in situations, where we have to watch it.
Tracy: With more reserves in in terms of the releases.
Wally Jopshay: In terms of the releases, there is a specific year or that these releases are allocated to; it varies across, it goes back to many years, especially within the, obviously, the long-tailed lines. The short-tailed lines will be more on the 23 and 22 active in the years, but the releases were, you know, more on the long-tailed segment in this quarter for the most secure one, but there were releases across the board within short-tailed lines and regions. And that is a trend that, you know, given our reserving philosophy, is something that we, you know, would expect to see.
Tracy: There isn't a specific year or that these releases are allocated to it.
Tracy: It varies across and it goes back to many years, especially within the obviously the long tailed lines. The short their lines will be more of a 'twenty three in 'twenty two accident years.
Tracy: But the releases were.
Tracy: You know more on the long tail segment.
Tracy: In this quarter as opposed to Q1.
Tracy: But they were releases across the board within shortly at love field and regions.
Speaker: And that is a trend that, you know, given our reserving philosophy and given the healthy rates that we've been achieving and putting on our books over the last, you know, several years, your margins are going to be lower.
Tracy: And that is a trend that you.
Tracy: You know given our reserving philosophy.
Tracy:
Tracy: It's something that we are.
Tracy: Was expect to see.
Wally Jopshay: And given the healthy rates that we've been achieving, is putting on our books over the last, you know, several years, ultimately, you know, your margins would expect to be there. Okay, that's helpful.
Tracy: And given the healthy rates that we've been achieving is putting on our books over the last.
Tracy: Several years also the key you know your margins.
Tracy: Yeah.
Tracy: Oh.
Speaker: What do you call it? They would expect me to be here.
Tracy: What do you call Woods.
Tracy: We would expect it to be here.
Speaker Change: Okay. That's helpful. I just had one one last one you mentioned in the press release, some offshore energy losses in the quarter.
Questioner: Okay, that's helpful. I just had one last one.
Wally Jopshay: I just had one last one. You mentioned the press release, some offshore energy losses in the quarter. Anything, any further detail you can provide on that? Was it multiple losses and any kind of toll that you can quantify on that? That would be helpful. And assuming that's in cat losses, right, the cat loss toll, but anything more you can share on that. No, that actually losses were all risk losses. It wasn't a particular loss. It was a multitude of losses. And we've just noticed an increase in frequency of losses in that business line. And, you know, we're not out there on our own; others will, the homeworks look at them exposed to this.
Questioner: You mentioned in the press release some offshore energy losses in the quarter. Anything, any further detail you can provide on that? Was it multiple losses and any kind of total that you can quantify that would be helpful? I'm assuming that's in cat losses, right? the cat loss total, but anything more you can share on that?
Speaker Change: Anything you any any further detail you can provide on that was it was it multiple offers and any kind of total that you can quantify that that would be helpful. I'm, assuming that steps in cat losses, right to the cat loss totaled but anything more you can share on that.
Speaker Change: Yeah.
Speaker Change: No not the upstream losses were all risk classes.
Speaker Change: It wasn't a particular loss it was a a multitude of losses.
Speaker: I mean, we've just noticed an increase in the frequency of losses in that business line. You know, we're not out there on our own. Others will, the whole market will have been exposed to this, and they've predominantly been on the offshore construction side.
Speaker Change: We've just noticed an increase in frequency of losses in that business line.
Speaker Change: We're not there on our own or.
Speaker Change: Others will the whole market.
Speaker Change: Most of this.
Speaker Change:
Speaker Change: And they predominantly event on the offshore construction site.
Wally Jopshay: And they have predominantly been on the offshore construction site. Not as much from the operation. The operational look, while rates are under pressure and challenging, continues to perform well. The challenge is on the offshore construction side where we've seen that increased frequency and low frequency. All right. Thanks a lot for the answers. Thank you. Thanks, Scott.
Speaker Change: Not as much from the operation the operational book, while rates are under pressure.
Speaker Change: Challenging continues.
Speaker Change: To perform well, it's the challenges on the offshore construction side, where we've seen that increased frequency in Las Vegas.
Speaker Change: Alright.
Speaker Change: Thanks, a lot for the answers.
Thanks Scott.
Operator: Ladies and gentlemen, at this time we will conclude our question-and-answer session.
Speaker Change: Ladies and gentlemen at this time, we will conclude our question and answer session.
Wally Jopshay: I would like to turn the conference back over to management for any closing remarks. Thank you, Senator. Thank you all for joining us today. Thank you for your continued support by GI. If you have any questions, please get in touch with Roman, and she'll be happy to assist. We look forward to speaking to you on the next course called. Have a good day, everybody. Thank you.
Speaker Change: I would like to turn the conference back over to management for any closing remarks.
Speaker Change: Thank you Allison and thank you all for joining us today and thank you for your continued support of Hei.
Operator: If you have any additional questions, please get in touch with Robin, and she'll be happy to assist. And we look forward to speaking to you on the next great call. Have a good day, everybody. Thank you.
Speaker Change: Do you have any of the supply fifties get in touch with Robin and <unk>.
Speaker Change: You'll be happier.
Speaker Change: The system.
Speaker Change: We look forward to speaking to you on our next quarters call have a good day, everybody and thank you.
Operator: The conference has now concluded. Thank you for attending today's presentation. And you may now. This can.
Speaker Change: Oh, France is now concluded. Thank you for attending today's presentation and you may now disconnect.
Speaker Change: Yeah.