Good day, and welcome to the International General Insurance Holdings Limited Fourth Quarter and Full Year 2021 Financial Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

I would now like to turn the conference over to Robin Sidders, Head of Investor Relations. Please, go ahead..

Thank you and good morning, and welcome to today's conference call. Today, we'll be discussing our fourth quarter and full year 2021 financial results. You will have seen our results press release, which we issued last night after the market closed. If you'd like a copy of the press release, it's available in the -- on our website at www.iginsure.com.

We've also posted a supplementary investor presentation which can also be found on our website on the Presentations page in the Investors section. On today's call are Wasef Jabsheh, Chairman and CEO; Waleed Jabsheh, President; and Pervez Rizvi, Chief Financial Officer.

Wasef will begin the call with some high-level comments, before handing over to Waleed to talk you through the results for the fourth quarter and full year 2021 in more detail and also giving some insight into current market conditions and our outlook for the remainder of 2022. At this point, we'll open the call up for Q&A.

I'll begin with the customary disclaimer language. 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 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 31, 2020, the company's reports on Form 6-K and other filings with the SEC as well as our earnings press release issued yesterday evening.

We undertake no obligation to update or revise publicly any forward-looking statements, which speak only as of the date they are made. In addition, we use some non-IFRS financial measures in this conference call.

For a reconciliation of these measures to the nearest IFRS measures, please see our earnings release, which has been filed with the SEC and is available on our website. I'll now turn the call over to our Chairman and CEO, Wasef Jabsheh..

Thank you, Robin, and good day, everyone. Thank you for joining us on today's call. We ended 2021 with a very strong fourth quarter, making the year an excellent one on virtually all metrics, including record underwriting results and profit.

We grew our gross premiums by more than 16% on the back of roughly 34% growth in 2020 and have now comfortably crossed the $0.5 billion threshold. We generated a core operating earnings, return on average equity of 13.7% for the fourth quarter and 13.6% for the year, and we grew our book value per share more than 5%.

I would note that in the seven quarters of reporting as a public company, we have grown our book value per share by 19.2%. Stepping back for a moment, I want to comment on the track record we have built over the past two decades.

2021 marks 20 years since IGI was established in Amman, Jordan, with just three people and business predominantly centered around Middle East region, energy and engineering markets. Today, we are close to 300 people across six offices, writing more than 20 specialty lines of business in every major market worldwide. And in March 2020, we became a U.S.

publicly traded company listed on NASDAQ. Though we are still relatively new to the public company and insurance....

Pardon me this is the conference operator. It appears we've lost connection to the speaker line. Please hold while we reconnect. Thank you for your patience. We have reconnected the speaker line. At this time, I would like to turn the conference back over to Robin Sidders..

Apologies for this. We lost one of our lines. So Wasef, I'll just hand back over to Wasef who was starting to discuss the track record that we've built over the last 20 years. Wasef, over to you..

Thank you, Robin, and I also do apologize to everyone for what happened. But I'll just continue with what I was saying that I think stepping back for a moment, I won't comment on the track record we have built over the past decade.

2021 marks 20 years since IGI was established in Amman, Jordan, with just three people and business predominantly centered around Middle East region, energy and engineering markets. Today, we are close to 300 people across six offices and writing more than 20 specialty lines of business in every major market worldwide.

And in March 2020, we became a U.S. publicly traded company listed on NASDAQ. Though we are still relatively new to the public company and insurance industry landscape in United States, IGI has a long track record of underwriting excellence, profitable results and managing our business to generate long-term value for our shareholders.

In our 20 years, we have grown our company organically from $25 million in initial working capital and then over $10 million in gross premiums in our first year to over $400 million in shareholders' equity and over $545 million in gross premiums.

Our vision has always been to create solid and lasting company that is technically adept, service-oriented and preferred partner to our clients, shareholders and other stakeholders. I believe we have succeeded in realizing what we set out to do, but our work is going on, and there is always more to be done.

As we chart our course for the next 20 years, it is clear that recent events have changed some things fundamentally. We live in a world that is increasingly complex and risky. For us, reflecting back on our 20 years, the success we have achieved has solidified our belief that our strategy is the right one.

Our unique advantage is not just our small size, but also our history of experience and our specialized knowledge of international regional markets, marked by long-standing and deep relationships with our clients who know exactly what they can expect from us. Our structure allows us to be efficient and decisive.

We have a thoughtful, balanced and responsible approach to growth and a healthy respect for the risk we take and the inherent volatility of our business. It is this approach that has underpinned our success.

As an individual risk underwriter, we have demonstrated our ability to manage this cycle, growing our business wide, generating strong results when the market is right and slowing down while still maximizing profitability when the market weakens. We know our markets, but most importantly, we know who and what we are.

And we understand our capabilities and the experience and expertise that we have. During 2022 and in the years to come, we will continue to be responsible stewards of our shareholders' capital, while building on our solid foundation to deliver strong retail for all our stakeholders.

Now, Waleed can take you through the results for the quarter and year in detail. Please, Waleed, go ahead..

Thank you, Wasef, and thank you all for joining us today. As Wasef mentioned, we've had an excellent year in 2021, producing solid core underwriting results as we continue to build the high-quality, diversified book of business that not only supports our 20-year track record but lays a very strong foundation for the years ahead.

I'll start with a high-level recap of the numbers as you have the press release, and the story is fairly straightforward. Gross premiums written in the fourth quarter were solid at $163.5 million, representing growth of about 26.3% over the fourth quarter of 2020, which itself saw excellent production.

For the full year, we grew premiums by 16.8% to a record level of $545.6 million. While it's still early in 2022, we expect growth trends we saw over the past two years to continue in 2022. Growth in the fourth quarter was experienced in most lines as a result of increases in new and renewal business as well as increased rates.

In the Short-tail segment, we saw growth in every line of business with the exception of aviation, but particularly in engineering as well as in the U.S. Specifically in the U.S., we wrote $31.3 million of premium in 2021, which is an increase of more than 50% of what we wrote in 2020.

We see this as a strong growth opportunity for us in the years to come. In the Long-tail segment, we recorded growth in all lines with the exception of marine liability and financial institutions. The most significant growth in the Long-tail segment was in the casualty line, which, as we always said, is a non-U.S.

business and its predominantly professional indemnity and D&O. For the full year 2021, the most significant premium was achieved in the Short-tail segment, which accounted for approximately 52% of our overall portfolio. Growth for the full year was 18.7% and was primarily in the energy, property and engineering and construction lines.

And also in the marine and cargo and contingency lines, which are relatively new lines of business for IGI. We're continuing to see slowing in the pace of rate acceleration in this segment, although I would note that this is gradual.

The Long-tail segment, which accounted for approximately 44% of the portfolio, recorded an increase in gross written premium of 13.8% for the period. Growth was primarily driven by professional indemnity and D&O business, where rates remain up on average over 26%.

We're continuing to see some very good opportunities in these lines as capacity and market appetite remain relatively constrained. A large portion of our business in these lines is written on an excess basis and also on a claims-made basis. And it's worth reiterating that we do not price this business in the U.S. It's primarily made up of U.K.

business and to a lesser degree, business emanating from Europe and the Middle East. In our treaty reinsurance book, we wrote gross premiums of $4 million and $24 million in the fourth quarter and full year 2021, respectively. That represented increases of 42.9% and 24.4% for each periods.

The treaty reinsurance book accounted for approximately 4% of the overall portfolio. We reported record net underwriting income for both the fourth quarter of $30.6 million in the full year of $105.8 million in 2021. This compares with underwriting income of $14.7 million for the fourth quarter of 2020 and $77.4 million for the full year 2020.

Overall, the combined ratio was a healthy 83.8% for the fourth quarter of 2021 and 86.4% for the full year 2021.

As you saw from our press release, the claims and claims expense ratio improved 13 points in the fourth quarter and 2.5 points for the full year, reflecting increased net premiums earned throughout 2021, lower level of losses as well as favorable development from prior accident years in both the fourth quarter and the full year compared with unfavorable development in the fourth quarter of 2020, a favorable development for the full year of 2020.

Policy acquisition costs increased in both the fourth quarter and full year 2021 when compared to the same period in 2020 due to the increase in premiums written and earned in both periods.

However, the policy acquisition expense ratio improved by 2.4 points in the fourth quarter of '21 over the period -- over the prior year period and just shy of 1 point for the full year on a higher earned premium when compared to 2020.

General and administrative expenses were higher in both the fourth quarter and full year 2021, largely due to increased cost and salaries related to new hires and investment in technology infrastructure to support the company's growth as well as some nonrecurring legal and professional fees.

We are cognizant that expenses are likely to increase as we continue to grow. And we keep a close eye on this. Foreign currency movements for the fourth quarter and full year '21 are clearly set out in the results press release issued last night. So I'll turn to our investment portfolio.

You can find the breakdown and duration of the portfolio and the investor presentation for the fourth quarter and full year, which we have posted on our website. Growth in the investment portfolio for the full year was supported by an increase in net cash flow from operations.

Here, total investment income net increased by 23.5% for the full year 2021 to $14.2 million compared to $11.5 million for 2020 due to a higher volume of funds deployed, particularly in the fixed maturity bond portfolio.

Including the company's share of loss from associates and realized and unrealized mark-to-market movement, total investment income was a loss of $4 million for the fourth quarter of 2021 versus a gain of $4.5 million in the same quarter of 2020 respectively, and a gain of $8.8 million and $8.5 million for the full years 2021 and 2020 respectively.

The loss recorded in the fourth quarter relates to some investment properties that IGI owns a share of in Lebanon, where ongoing financial and economic turmoil has resulted in significant hyperinflationary pressures and currency devaluation which has caused a meaningful decline in the value of commercial real estate throughout the country.

As we said in our press release last night, this portion of our real estate holdings has now been written down by more than 50%; so we don't expect any further material impact from our Lebanon real estate holdings.

For the fourth quarter of 2021, total investment income net decreased by $1.2 million when compared to the same period in 2020, and the fourth quarter of 2021 included a reclassification of $1.6 million from interest income to other comprehensive income as a result of a management assessment or the effective interest rate calculation for the fixed maturity bond portfolio.

Income from the core interest-bearing portfolio was down by 33.1% in the fourth quarter of 2021, and up 16.3% for the full year when compared with the corresponding period in 2020. While the fourth quarter of 2021 included the reclassification of $1.6 million of interest income to other comprehensive income for the reasons I just described.

The increase in the full year of 2021 when compared to corresponding periods in 2020 was a result of an increase in the allocation to higher yielding bonds despite the decline in the yield on the term deposits portfolio.

The average yield on the fixed maturity bond portfolio was 1.5% for the fourth quarter of 2021 and 2.6% for the full year compared with 2.8% and 2.6% for the fourth quarter and full year of 2020.

The average yield on background deposits was 1.5% and 1.9% for the fourth quarter and full year 2021 compared with 2.2% and 2.5% for the fourth quarter and full year 2020.

Core operating income more than tripled to $13.6 million for the fourth quarter of 2021 compared to $4.5 million for the fourth quarter of 2020, an increase of roughly 50% for the full year 2021 to $53.1 million from $35.6 million for the full year 2020.

Core operating return average equity annualized was 13.7% for the fourth quarter of 2021 and 13.6% for the full year. Shareholders' equity was $401.9 million.

Book value per share was $8.83 at December 31, 2021, representing a 5.2% increase from December 31, 2020, and a 19.2% increase from March 31, 2020, which is the first relevant datapoint for book value per share since becoming a public company. So, all in all, an excellent year to mark our 20 years in the business.

Now, we'll spend some time discussing market conditions, our position in the market, and our outlook for the remainder of the year. We are well into the first quarter and indications so far have been positive across our portfolio.

The majority of our portfolio renewed during the first half of the year and, already we have taken advantage of new opportunities in all our segments. The U.S. and Europe are both growth markets for us, and we expect to see further expansion in both regions during 2022.

In the U.S., where we are only writing short-tail business, we saw 50% growth during 2021 when compared with 2020, and we expect a similar level of growth in 2022.

In Europe, where you'll recall that we established our European subsidiary in Malta last July, we're seeing significant opportunity in both, Northern and Western Europe, particularly on the long-tail lines which include PI and D&O, and to a lesser extent but still a meaningful extent, financial institutions.

We said that we expect a majority of the growth in the first few years to be primarily in the long-tail lines. On the short-tail side, we're seeing some opportunities in proxy engineering coming out of Western Europe. While 2021 was really the setup phase, 2022 will be a better measure of what we can achieve in Europe.

But to give you an indication, we should expect to see gross written premium production of around $25 million this year. In other short-tail line, the pace of rate acceleration has slowed but we continue to see rate increases across most lines of business within this segment, although this varies widely depending on the line of business.

In the long-tail lines, rate improvement continues to be significant although there are signs of weakening as well. In professional line, specifically, D&O, rates were up around 25% and more than 29% in professional indemnity.

Again, like most of the majority of our long-term portfolio was written on a claims made basis, and as we said several times before, we don't write any long-term business in the U.S. Our re-insurance portfolio, which is well-spent geographically, continues to see moderate rate improvements of over 9%.

It is too early for us to comment on what the impact will be from the current situation in Ukraine, as a result of the Russian invasion. It's also too early to comment on the impact of action taken against Russia, including sanctions.

What I can say is, we are closely monitoring the situation and are ready to respond immediately to any and all sanctions against Russia. Given our profile -- given our business profile and geographic footprint, we obviously do have some exposures in our portfolio that are likely to be impacted, mostly in our energy book, but these are not material.

We are looking at our investment portfolio, but again, we don't expect there to be any real impacts. Clearly, this is a very serious and fast evolving situation, and we are and will continue to keep on top of this and take the appropriate action as and when it is required.

Before we open the call up to questions, I just wanted to expand upon Wasef's comments at the beginning of the call. We have worked hard for the past 20 years focusing on our core strength and capabilities, and our results in 2021 focusing on our core strength and capabilities. And our results in 2021 clearly demonstrates the earnings power of IGI.

We are very much a technical underwriter, and this is backed by significant expertise and experience and a service-oriented culture.

We've been systematic in how we've grown our business, entering lines of business in the markets where we have proven capabilities, staying away from lines where we don't, and including those that are somewhat outside of our risk tolerances. Our growth is measured and thoughtful, not just growth for the sake of growth; this will not change.

Another important point is that our growth has been entirely organic and tightly controlled over the past 20 years. What that means is that we know what and where our exposures are.

And our flat operational structure and transparent and open communications allow us to respond quickly and decisively to any shift in market conditions so that we can successfully navigate market cycles.

We have proven our ability to manage the volatility and cyclicality of our business, and our track record with an average combined ratio capped at 90% demonstrates -- clearly demonstrates this. We are very proud of the results we've achieved in 2021, and also over the last 20 years.

And as Wasef said at the beginning of the call, we are confident about our future and the value that we expect to continue to generate for our shareholders in the years to come -- in the years to come. Lastly and before we open up the call to Q&A, I would note that typically our board meetings are held at the same time that we report our results.

And so, any announcements coming out of those meetings regarding dividends, for instance, are made around the same time as we report. Our board meeting -- our board is meeting later this month. So, any announcements will be made then. So, I'm going to pause there and we'll turn it over for questions.

Operator, we're ready to take the first question, please..

We will now begin the question-and-answer session. The first question today comes from Mark Dwelle with RBC Capital Markets. Please go ahead..

Hi. Yes, good morning. Just a couple of questions; you had a pretty thorough opening statement. You commented on the potential exposure into Russia and Ukraine, and I think you mentioned the energy area.

Could you just elaborate a little bit on what sort of exposure that is? I'm less concerned, particularly with your exact amount or anything like that and more just trying to understand what sort of exposures insurance companies have in general to that region and the situation that's unfolding?.

Thank you, Mark. Thanks for the question. As I mentioned earlier, it's mainly on the energy side. We have some exposures on the property engineering side as well. I mean, these exposures are physical damage, business interruption related; it's just like any other business within those portfolios except it's located in Russia.

The sanctions situation is evolving on a daily basis, the -- some of our client base has already been impacted by these sanctions, and as a result we've had to cease providing cover; some haven't but we're ready to take any action necessary. There is nothing unique about the covers that are provided.

I mean, the Russian market is a huge provider of business and premium to the global energy markets and the London market where I sit will be severely impacted by the business that will no longer flow to London. But they are pure upstream/downstream power, construction engineering risks that does cover physical damage and business interruption..

Thank you. That's helpful. Like everybody, we're just all trying to kind of get our arms around. Most of us have never seen a situation like this to understand what sort of exposures arises and how they unfold and play that overall successfully.

The second question that I had, you commented pretty thoroughly about the write-down of the real estate in Lebanon; I think I understand that. As far as the $20 million or so of value that remains, I guess I would infer that about half of that is the remaining value of the Lebanese holdings.

Where is the rest of it located? What countries?.

In terms of the real estate portfolio that we have, actually what remains as value on our books from the Lebanese real estate is about $5.7 million and the rest of that is actually predominantly our head office in Amman, Jordan. We own -- the company owns the building, we take up most of that space but we rent out a part of it as well.

So, that's pretty much what's left within the real estate portfolio..

Got it. Thank you. And then one last question, if I can. It looked like in the quarter, there was some additional development related to -- on catastrophes related to, I think, European flooding and maybe another event.

Can you just elaborate a little bit on what you were seeing there and how that loss is unfolding?.

Yes. I mean, when we reported Q3 results, obviously the floods had -- were very fresh in everybody's minds and the amount of information that was coming out was gradual. We had specific amounts applied to those -- to the floods.

We also had a -- obviously, a separate capped IBNR for the portfolio, which more than -- which at that time and continues to more than cover any development. There was development in our incurred numbers for the European floods over the quarter.

Our net losses from those currently stand at about $8.5 million but that is not -- I mean, no surprise or untoward sort of development, all within expectations for the overall portfolio..

Okay. Thanks. I'll jump out and let somebody else jump in..

Thank you, Mark..

This concludes our question-and-answer session. I would like to turn the call back over to management for any closing remarks..

Thank you, all, for joining us today. We really appreciate your continued support and we will continue building on our successes and continue generating value for you in future years. If you have any additional questions, please contact Robin , she'll be happy to assist you. I wish you all a good day. Thank you..

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