Good day, and welcome to the International General Insurance Holdings Limited Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

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

Thank you, Allison, and good morning. Welcome to today's conference call. Today we'll be discussing our second quarter and half year 2024 financial results.

You will have seen our results press release which we issued after the market closed yesterday, but if you'd like a copy of the press release, you can find it on our website in the Investors section at www.ignshore.com. We've posted a supplementary investor presentation as well, which can also be found on our website under the Presentations page.

On today's call are the Executive Chairman of IGI Wasef Jabsheh; President and CEO, Waleed Jabsheh, and Chief financial Officer, Pervez Rizvi.

As always, Wasef will begin the call with the high-level comments and then hand the call over to Waleed to talk through the key drivers of our results for the second quarter and 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.

I'll begin with some customary safe harbor 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 by us that the future plan, estimate or expectations contemplated by us will in fact be achieved. These statements involve risks, uncertainties and assumptions.

Actual events or results may differ materially from those projected in the forward-looking statements due to a variety of factors, including the risk factors set forth in the company's annual report on Form 20-F for the year ended December 31, '23.

The company's reports on Form 6-K and other filings with the SEC as well as our results 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. 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 release, which has now been filed with the SEC and is available also on our website. With that, I'll turn the call over to our Executive Chairman, Wasef Jabsheh..

Thank you, Robin, and good day, everyone. Thank you for joining us on today's call. I'll just make few short remarks before handing the call over to Waleed. I'm pleased to report that IGI once again delivered excellent results in the second quarter, leading to a very strong first half of 2024.

We reported annualized return on average equity of 22.9% for the quarter and 25.1% 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 '24 -- 2024, we have grown our book value per share, which is our most important measure by 7.3% and this is after paying regular quarterly dividends and an extraordinary cash dividend of $0.50 per share. I would also note that this is on the back of book value per share growth of more than 36% in 2023.

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 double the size of our investment portfolio. We are more resilient than 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 of the market cycle, so that we continue to reward our shareholders who have put their trust in us and supported us.

I will now hand over to Waleed, who will discuss the second quarter results 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..

Good morning, everyone. Thank you, Wasef and thank you all for joining us today. As Wasef 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 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 market cycles. 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 side. In our longer 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 decline is actually slow.

Broadly speaking, there's definitely a more pressure 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 call. So, far this year, we've seen a more active loss environment overall.

Notably natural events like the earthquake in Taiwan, flooding in Oman and in the UAE, as well as some offshore energy losses and you see the impact of these in our results.

I'll give a quick recap of the results for the second quarter and half year, and then I'll talk more about what we're seeing in our markets and our outlook for the remainder of the year. Gross written premium growth in the second quarter of 2024 was 3% and 3.7% for the first half, driven by growth in the short-tail and reinsurance segments.

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 profitability 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 as simple as that. We said in last quarter's call that we expect gross premium growth would 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 last quarter. Specifically, in the short-tail 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 up 6.1% for the first half, earned premium, 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 premiums 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 period. The long-tail segment continued 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 to non-reuse our business.

That's not to say that there aren't opportunities to write new business. There are, and our enhanced distribution capabilities, which I'll talk about a little bit more in a moment, are helping. I would note the pace of rating decline appears to be slowing in some lines, such as D&O, 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 claims made basis. We don't write U.S.

long-tail business in this portfolio, so the tail on our book is relatively shorter and averages around 47 years. We've grown this portfolio significantly in recent years, taking advantage of the strong conditions, market conditions and the healthy rating environment, as well as to add to the diversification of our portfolio.

But I expect for the foreseeable future and as we've seen several quarters of rating decline now, albeit from very high levels, we'll continue to take a more cautious view here. And that is all part and parcel of our sound and prudent cycle 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 value. Specifically, on the second-quarter losses I mentioned a moment ago, I mean, our share of these losses was very manageable and 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 and first half are well below our long-term averages and an excellent result. Investment income showed significant improvement in Q2 and in H1 of 2024, resulting in a 0.6 point improvement in the annualized investment yield to 4.6% for the first half.

Specifically, in our fixed income portfolio, we maintained the overall average credit rating of A and the average duration of 3.2 years. Net income for Q2 was $32.8 million and $70.7 million for the first half, which is down slightly from the prior year, largely as a result of the greater loss activity we've seen in 2024, but certainly solid results.

Core operating income, which we believe is a truer measure of fundamental performance was just over $33 million in Q2 and just over $73 million in the first half. For the six months to June 30, 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 just under 7% to $1.96 billion and total equity increased just under 9% to $588.2 million at the end of June. On the capital management front as you know, we increased our common share repurchase authorization 7.5 million shares.

We repurchased a little over 650,000 shares in the second quarter and just a little less than 1 million shares in the first half of the year, leaving approximately 2.8 million shares remaining at the end of June. We also announced an increase to our quarterly dividend to $0.025 per share per quarter, up from $0.01 per share per quarter.

And as you recall, as Wasef mentioned, we paid a special cash dividend of $0.50 share in April this year. Ultimately, we recorded a core operating ROE of 23.2% for Q2 and 26% for the first half of 2024. Lastly, and most importantly, we grew our book value per share by 7.3% to $13.31 at the end of June. So all in another excellent quarter and half year.

Moving on to our markets and our outlook 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're seeing more competition in virtually all our dockets as some players continue to want to show growth and are pushing for increased market share and expanding their risk appetite. So what does this mean for IGI? Broadly speaking, we're still seeing some good opportunities.

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 in targeting new business. We've hired people in specific regions or moved existing people between regions to take advantage of specific opportunities.

As an example, we've added engineering, construction underwriting capabilities in our Kuala Lumpur office, specifically target opportunities out there we've added financial professional license devices in our Oslo, Norway office to build out those capabilities and the Nordic and European markets.

You'll recall our announcement that we've established a presence of Lloyd's with the company box. We're already seeing tangible benefits in accessing business that we may not see otherwise. And these are the types of actions that we can and do take quickly and decisively to maximize our opportunities 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 entrants like MGAs, but predominantly it's from existing players wanting a bigger piece of the pie and we're seeing that intensify.

We're hearing this in the commentary from other insurers and reinsurers, there's a scramble to continue to show growth while rates remain strong in some areas, we're seeing greater competitive pressures in domestic markets across the board.

This isn't necessarily a good thing, and as I continue to say, our primary objective is the bottom line in creating value and 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 cycle.

And we will not write business that doesn't meet our profitability targets and generate value for our shareholders. And this should not be seen as a negative. Our business is and has always been cyclical, where different lines and markets move at different times, at different paces. 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 produced results -- strong results and solid returns for our shareholders. One of the hallmarks of IGI is deep technical underwriting talent.

People who understand the dynamics of their business, who have experience and strong relationships, and who can anticipate shifting ties in their markets and respond accordingly.

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 margins. All while working within our well defined risk appetite and tolerances.

Throughout our history, we've clearly demonstrated our ability to do this, producing high-quality results and ultimately protecting shareholder capital. That is where we are today. Everything about technical underwriting, discipline, intelligent risk selection. Looking at specific lines and markets, the headlines are similar to the last few quarters.

Price spots continue to be reinsurance and some of the short-tail lines, while growth is increasingly challenging in other short-tail lines and pretty much across our long-tail portfolio. Not to say that opportunities for growth are not there, they are. They're just relatively harder to come by at rates terms that are acceptable to us.

Specifically, in our short-tail segment rate momentum remains broadly steady with what we saw in the first quarter, with lots of variation by line and geography. We're seeing the most positive rate momentum and opportunity in parts of our marine portfolio for some terminals, cargo, marine trades, as well as in the marine liability profile.

In other lines and where rates are coming down closely in an orderly fashion. There continue to be some good opportunities in engineering, contingency and property but then you've got other lines that are more challenging.

Engineering construction continues to be a bright spot for us in many of our markets 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 in business life.

In our treaty reinsurance segment, we continue to see positive rate movement on the back of upwards of 25% increases we saw last year. 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.

The growth that we've shown in our treaty book over the past 18 months is a good example of our ability to move our capital quickly and decisively to those lines, those areas with the highest margins. 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 story is fairly similar to prior quarters. Net rates overall remain broadly adequate, but continue to be pressured. We shouldn't expect to see any growth in this segment in 2024, although the build out of our Oslo office and our presence at Lloyd's is producing positive results. Looking at our geographic markets, the U.S.

continues to be growth area for us and we've increased our U.S. gross premiums by over 47% in the first six months of the year compared to same period last year. But this is also where we're seeing rising competitive pressures, mostly coming from existing players and domestic markets, as I mentioned previously.

We're a relative newcomer to the U.S., when we started writing business there in 2020, as you know, we're only writing short deadlines there and earlier this year entered the engineering construction space, writing small to medium-sized projects.

We continue to focus on property, energy, political violence, contingency, cargo business and reinsurance. And to date, we've written just over $73 million of premium in the U.S., 55% of which is E&S business. In Europe, we rolled around $17 million in the second quarter and around just under $40 million in the first six months.

We expect to see further opportunities for growth throughout the year as we continue as I mentioned earlier, we focus our efforts in the Nordic and mainland Europe with our platforms there. In the MENA region in Asia, we continue to add talent on the ground across various lines of business opportunities still there and looking to capitalize on those.

So, in conclusion we continue to do what we're doing. We keep our focus sharply on our core principles of 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.

We continue to generate excellent returns that will serve us well in the quarters and years ahead, as we've done throughout our history and allow us to continue to deliver on our promise to reward our shareholders by ultimately building consistent and sustainable value. So, I'll pause there and we'll turn it over to questions.

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

[Operator Instructions]. Our first question today will come from Scott Heleniak with RBC. Please go ahead..

Just a quick question here on the growth outlook that you provided, the mid to high single-digits. Sounds like most of the growth is going to continue to come from the reinsurance and the short-tail. But -- and 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'll continue, but anything you can talk about in terms of, just kind of give more detail on the growth outlook by segment and what you expect to see..

Yes, sure. I think what we're saying -- what we've been saying today is in line with what we've been saying for quite a few quarters now. If we look at the long-tail segment, we announced earlier last year that we withdrew from the inherent 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 pretty much across all our subclasses or business lines within the segment come under pressure.

The most pressure is probably on the D&O side and the financial institution side, but you're starting to see more of that creep into the professional identity as well. So as I said earlier, this is not about volume for us, this is about profitability.

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. Reinsurance is definitely the brightest 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 segment within our overall portfolio. And as long as that remains the case, we will continue to push as hard as we can in this area. Short-tail segment is mixed bag.

I mentioned the business lines on the call the engineering, the contingency, the cargo, the marine elements of the marine portfolio. Those are still behaving very well and by and large property continues to be good, it was a nice -- modest growth for us on property side. Onshore energy is driving good opportunities and still healthy conditions.

On the flip side, aviation is extremely challenging and that's an area where our book has reduced 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. Other markets flattish.

So that's why you saw most of the short-tail lines are either relatively stable the way they are or pushing up with a couple coming down. That's why you're seeing overall growth in that segment. Reinsurance is reinsurance and long-tail, we're seeing pressure across practically everything within.

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-tail..

And then, just switching over a little bit on the U.S. business. Gross written 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 U.S., 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 it -- 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 U.S.

book?.

As you know, we've expanded our product suite, adding engineering and construction.

So that's delivering good opportunities growth, because our portfolio is relatively infant, I mean, 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 -- what do you call it? To grow the book, grow our portfolios in a controllable and 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 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 were able to cut deals for ourselves that remain attractive.

We are able to cut deals on new business for ourselves that are attractive, allowing us to continue to grow. We've grown the property book. We've grown the onshore energy book, we've grown the contingency, the treaty. It's across the board where we've been able to capitalize on opportunities. And in the U.S.

underwriting season is pretty much over for us. It all gets underwritten in the first six months, seven months of the year. It'll be interesting to see whether the forecasters are right about this year's win season and what impact that may have on the market going forward..

And then just moving over to reserve development. Your favorable reserve development has run at really high level for the company for a while now. Just a little more detail on that kind of where that's coming from by segment. If there's any particular line that stands out, whether it's new years or occupancy years.

Just any context on why that's coming in so much better than expected would be helpful..

I think similar to what we've said in previous calls, we take a very cautious approach to reserving. And we'd rather conservatively reserve to begin with rather than find ourselves in situations where we have to actually put more reserves in. In terms of the releases, there isn't a specific year that these releases are allocated to.

It varies across -- it goes back to many years, especially within the -- obviously the long-tail lines. The short-tail lines will be more on the '23 and '22 occupancy years. But the releases were more on the long-tail segment in this quarter as opposed to Q1. But there were releases across the board within short-tail, long-tail and reinsurance.

And that is a trend that, given our reserving philosophy is something that we would expect to see. And given the healthy rates that we've been achieving and putting on our books over the last several years, ultimately your margins --what do you call it would expectancy here..

I just had one last one. 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 of that? 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?.

No, the upstream losses were all risk losses. It wasn't a particular loss. It was a multitude of losses. I mean, we've just noticed an increase in the frequency of losses in that business line. 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, not as much on the operation. The operational book, whilst rates are under pressure and challenging, continues to perform well. It's the challenges on the offshore construction side where we've seen that increased frequency in Los Angeles..

Ladies and gentlemen, at this time, we will conclude our question-and-answer session. I would like to turn the conference back over to management for any closing remarks..

Thank you, Alison, and thank you all for joining us today. And thank you for your continued support of IGI. 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 quarter's call. Have a good day, everybody. Thank you..

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