IGI Reports Preliminary Condensed Unaudited Financial Results for the Full Year 2019 and Issues Updated Business Outlook Guidance
DUBAI, United Arab Emirates, March 02, 2020 (GLOBE NEWSWIRE) — International General Insurance Holdings Limited (“IGI” or the “Company”) today reported preliminary condensed unaudited financial results for the full year 2019.
Highlights of full year 2019 unaudited results include:Reported IFRS profit after tax of $23.5 million for the year ended December 31, 2019, compared to $25.5 million for the year ended December 31, 2018Net written premiums of $252.1 million for the year ended December 31, 2019, compared to $203.4 million for the year ended December 31, 2018, reflecting year over year growth of 24%Total investment income, Net, of $10.7 million for the year ended December 31, 2019, compared to $9.1 million for the year ended December 31, 2018Increase in total book value per share to $2.33 at December 31, 2019 compared to $2.21 at December 31, 2018Total value creation of 8.8% (defined as growth in tangible book value per share plus dividends per share) for the year ended December 31, 2019Core operating income of $21.1 million for the year ended December 31, 2019, compared to $28.6 million for the year ended December 31, 2018Strong balance sheet supported by conservative capital and risk management and no financial leverageIGI Founder, Vice Chairman and CEO Mr. Wasef Jabsheh said, “2019 was a strong year of growth for our Company. Our results reflect IGI’s ability to quickly take advantage of hardening market conditions, increasing our net written premiums by 24% year-over-year. IGI experienced rate increases of approximately 13% year-over-year across our book of business in 2019. We are experiencing continued momentum in rates, and in the fourth quarter of 2019, rate increases were above 20% on average. Early indications in 2020 suggest pricing momentum is continuing to accelerate. We are seeing notable opportunities in most non-U.S. long-tail specialty lines, downstream energy risks, and specialty lines across the MENA region where there is increasing dislocation and where IGI is particularly well-positioned with a strong presence on the ground. We are optimistic that these market conditions will continue to provide us with more opportunities to leverage our market position to generate continued profitable growth.”“As part of our strategy to accelerate growth, we made the decision to pursue a listing on the Nasdaq Capital Market through a business combination with Tiberius Acquisition Corporation (NASDAQ: TIBR), a U.S.-based special purpose acquisition company. This transaction, combined with our demonstrated track record of generating consistently strong value for our shareholders, is precisely timed to allow us to deploy new capital to take advantage of rapidly improving rates and conditions across our markets. Our specialty insurance expertise in key lines and differentiated geographic presence in the right markets uniquely positions IGI to capitalize on the opportunities ahead of us. We anticipate that the transaction will close on March 17, 2020.”“As the founder of IGI – a company that was started in 2002 with an initial $25 million in capital – I could not be more proud of what we as a group have achieved, and the exciting future that lies ahead for us. We will strive to continue to generate consistently attractive risk-adjusted returns for our new shareholders, just as we have for those shareholders who have supported us for the past 18 years, while maintaining the key tenets of the culture that has made us successful since inception.”Underwriting ResultsGross written premiums were $349.2 million for the year ended December 31, 2019, compared to $301.6 million for the year ended December 31, 2018. The increase in gross written premiums was the result of a number of factors including new business generated, improved renewal pricing, and further refinement of our existing portfolio, all resulting from hardening markets and superior underwriting.The combined ratio for the year ended December 31, 2019 was 94%, compared to 89% for the year ended December 31, 2018. The increase in the combined ratio was driven by higher year-over-year attritional loss activity in our treaty book written on a net basis. Additionally, a higher proportion of attritional gross losses across the downstream energy and engineering books were below coverage thresholds for our reinsurance program during 2019 and there was a smaller benefit from prior year favorable development across the entire short-tail portfolio. Catastrophe loss events in 2019 were concentrated in the second half of the year and consisted of, among others, the Petronas explosion, Hurricane Dorian and Typhoons Hagibis and Faxai.Claims and claim expense ratios were 55% and 47% for the years ended December 31, 2019 and 2018, respectively. The claims and claim expense ratios included current accident year catastrophe losses of $16.1 million, or 7.5 points, for the year ended December 31, 2019, and current accident year catastrophe losses of $16.2 million, or 8.9 points, for the year ended December 31, 2018. Favorable development on reserves from prior accident years was 2.9 points for the year ended December 31, 2019, and 4.9 points for the year ended December 31, 2018.Investment ResultsTotal investment income, net, was $10.7 million and $9.1 million for the years ended December 31, 2019 and December 31, 2018, respectively, representing year over year growth of 17.6% and net investment yields of 1.8% and 1.7% for the same time periods. Cash and cash equivalents totaled $312.2 million at December 31, 2019, representing over 50% of the investment portfolio. The Company continues to look for opportunities to reposition its investment portfolio to enhance investment yields while maintaining a conservative portfolio consisting of high-quality fixed income securities.OtherProfit for the year ended December 31, 2019 was $23.6 million compared to $25.5 million for the year ended December 31, 2018.Core operating income was $21.1 million and $28.6 million for the years ended December 31, 2019 and December 31, 2018, respectively. The decrease in core operating income was primarily driven by a higher combined ratio as well as a $0.5 million revaluation loss on commercial properties owned by associates. Core operating return on average equity was 6.9% for the year ended December 31, 2019, and 9.5% for the year ended December 31, 2018.Book value per share was $2.33 at December 31, 2019, compared to $2.21 at December 31, 2018, representing growth of 5.4%. Pro-Forma book value per share is estimated to be $8.201 as a result of the business combination with Tiberius Acquisition Corporation.Business OutlookIn connection with the anticipated closing of the business combination with Tiberius on March 17, 2020, IGI is providing an updated look at current market conditions and business outlook:_____________________________1 Assumes no redemptions by Tiberius shareholders and an acquisition price of $387 million assuming 12/31/2019 book value of $317 million (after adding back IGI transaction expenses) and acquisition P/B multiple of 1.22x.Rate momentum is building in virtually all lines of business, with early indications that this is continuing in 2020.The investment portfolio currently remains conservatively positioned with over 50% in cash and call deposits ahead of a planned repositioning of the portfolio into highly-rated fixed income securities.IGI is anticipating that it will resume its long-term double-digit ROE track record during 2021 as it deploys fresh capital from the business combination into an improving market, and the current profitable business translates to reported results.IGI President Mr. Waleed Jabsheh said, “Looking ahead, we are ready to put fresh capital to work while maintaining the focused and disciplined underwriting that has been a hallmark of IGI since inception. As we think about opportunities in 2020, we are awaiting regulatory approval to write U.S. excess and surplus business in what is becoming a very attractive market; we are evaluating the possibilities of opening a subsidiary company in Belgium to capture opportunities in mainland Europe, post Brexit; and we are committed to maintaining and expanding our broad physical footprint advantage in the MENA and Asian regions, at a time when many of our competitors are reducing or exiting certain classes of business, or closing down operations located within the region.”To date, IGI has obtained all requisite insurance regulatory approvals for the business combination; 100% of IGI’s shareholders have approved the transaction; and IGI’s new parent holding company has announced a newly reconstituted majority-independent Board of Directors in preparation for the close of the business combination and subsequent Nasdaq Capital Markets public market listing.IGI intends to close the business combination on March 17, 2020, assuming receipt of Tiberius stockholder approval and the satisfaction of certain other closing conditions. Upon the closing of the business combination, the continuing public parent company will be International General Insurance Holdings Limited, organized in Bermuda, and the existing IGI will become a subsidiary of this Bermuda parent company. It is expected that the Bermuda parent company will be listed on NASDAQ under the ticker symbol “IGIC”.An updated investor presentation will be filed with the SEC (www.sec.gov) and posted by IGI and Tiberius on their respective websites www.iginsure.com and www.tiberiusco.com before the market opens on March 3, 2020.Summary of Operating ResultsThe Company’s operating results for the years ended December 31, 2019 and December 31, 2018 are summarized as follows:__________________________Represents net investment income and share of profit or loss from associates, net of (1) net realized gains/(losses) on investments, and (2) unrealized gains/(losses) on investments.Represents the sum of (1) other revenues, (2) other expenses and (3) impairment loss on insurance receivables.“Core operating income” is calculated as after-tax profit for the period after adjusting for non-recurring items, adding back net realized loss (gains) on investments, unrealized loss (gain) on revaluation of financial assets, fair value changes of held for trading investments, fair value gain on investment property, (loss) gain on foreign exchange and net impairment losses recognized in earnings. For a reconciliation of “core operating income,” a non-IFRS measure, and profit for the period, an IFRS measure, see “Non-IFRS Financial Measures — Core Operating Income.”The claims and claim expenses ratio represents net claims and claim adjustment expenses as a percentage of net premiums earned.The policy acquisition expenses ratio represents net policy acquisition expenses as a percentage of net premiums earned.The general and administrative expense ratio represents general and administrative expenses as a percentage of net premiums earned.The expense ratio is the sum of the policy acquisition expenses ratio and the general and administrative expenses ratio.The combined ratio is the sum of the claims and claim expenses ratio and the expense ratio.Includes cash and cash equivalents and term deposits.Includes investments, investment properties and investments in associates, calculated as follows:Represents gross outstanding claims, net of reinsurance share of outstanding claims.Represents gross unearned premiums, net of reinsurance share of unearned premiums.Book value per share is calculated by dividing total equity by the number of shares outstanding.Non-IFRS Financial MeasuresIn presenting our results, management has included and discussed certain non-IFRS financial measures. We believe that these non-IFRS measures, which may be defined and calculated differently by other companies, better explain and enhance an understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with IFRS.Total value creation
In addition to presenting book value per common share determined in accordance with IFRS, we believe that the key financial indicator for evaluating our performance and measuring the overall growth in value generated for shareholders is “total value creation,” a non-IFRS financial measure.
The following table presents a reconciliation of “book value per common share” to “total value creation.”Core operating incomeIn addition to presenting profit for the period determined in accordance with IFRS, we believe that showing “core operating income,” a non-IFRS financial measure, provides investors with a valuable measure of profitability and enables investors, rating agencies and other users of our financial information to more easily analyze our results in a manner similar to how management analyzes our underlying business performance.Core operating income is calculated by the addition or subtraction of certain income statement line items from profit for the period, the most directly comparable IFRS financial measure, as illustrated in the table below: