International General Insurance(IGIC) - 2024 Q4 - Annual Report

Industry Competition and Market Conditions - The insurance and reinsurance industry is highly competitive, leading to potential reductions in premium rates and increased customer acquisition costs[34] - Market conditions may cause reinsurance to become more costly or unavailable, impacting the level of underwriting commitments[47] - The cyclicality of the insurance and reinsurance industry can lead to significant fluctuations in premium rates and operating results[41] - Consolidation in the insurance and reinsurance industry may increase competition, resulting in fewer submissions and less favorable policy terms[39] Catastrophic Events and Climate Change - Claims arising from catastrophic events are unpredictable and could severely impact financial results[24] - The company is exposed to risks associated with climate change, which may increase the frequency and severity of catastrophic events[26] - The frequency and severity of catastrophe events may increase due to changing climate conditions, impacting the company's ability to predict and model such events[97] - Climate change may lead to increased frequency and severity of weather-related catastrophes, potentially resulting in material catastrophe-related losses[100] Financial and Operational Risks - Insufficient loss reserves could negatively impact the company's financial results[26] - The availability of reinsurance may be limited, affecting the company's risk management strategies[47] - Changes in macroeconomic conditions, such as a prolonged recession, could adversely affect the company's business[30] - The company faces risks from unpredictable claims arising from natural catastrophes, with significant claims reported from events such as Hurricane Ian and the 2022 Australia floods, totaling $11.5 million in 2024[86] Regulatory and Compliance Challenges - The company is subject to extensive regulatory supervision across multiple jurisdictions, including the US, UK, and Bermuda, which may impact its business operations[54] - Compliance with legal and regulatory requirements may result in significant expenses, negatively impacting profitability[49] - Changes in laws or regulations could materially affect the company's business operations and financial condition[51] - The company may face challenges in maintaining necessary licenses and approvals in various jurisdictions, potentially at significant cost[50] Investment and Credit Risks - The company’s investment portfolio may be adversely affected by global climate change regulations, as there is a consensus that a significant percentage of existing fossil fuel reserves must remain unconsumed to meet international commitments[101] - The company is exposed to credit risk, particularly during economic downturns, which could lead to impairments and defaults on investments[157] - The company is subject to counterparty risk related to its investments, particularly in corporate bonds, which could lead to significant losses due to defaults[161] - The company selectively engages with reinsurers that have strong financial ratings, but market conditions can change their financial stability[205] Broker and Reinsurance Relationships - The company relies on brokers for business sourcing, and deteriorating relationships could adversely affect operations[26] - The top 5 international brokers generated 64% of the gross written premiums for the year ended December 31, 2024, and 63% for the year ended December 31, 2023[132] - The company's reinsurance program ceded 30% of gross written premiums (GWP) for the year ended December 31, 2024, and 28% for the year ended December 31, 2023[140] - The company’s reliance on ceding companies for reinsurance may introduce greater uncertainty in reserve estimations, impacting financial performance[122] Economic and Political Risks - Political initiatives to restrict free trade, such as Brexit, could adversely affect the insurance and reinsurance industry and the company's business[62] - Ongoing global economic uncertainties may materially and adversely affect the company's results of operations and financial position[65] - The long-term impact of the Russian invasion of Ukraine and subsequent sanctions remains uncertain, potentially affecting the company's business operations[130] Operational and Systemic Risks - The company relies on the ability to process a high volume of transactions daily, and any failure in operational systems could disrupt business operations[183] - The company has established a strong delegated authority risk management process, but there is no assurance that safeguards will fully protect against losses[136] - The company’s operations are vulnerable to data security risks, which could lead to significant financial losses and reputational damage[186] Future Capital and Liquidity Considerations - Regulatory capital requirements are subject to change and may become more stringent, impacting the company's ability to raise capital[210] - Failure to meet regulatory capital requirements could lead to intervention by regulators, potentially requiring the company to raise additional funds[211] - The company's future capital requirements depend on its ability to write new business and manage investments effectively[214] - The company may face liquidity shortfalls following large losses due to the timing of claims settlements and reinsurance recoveries[144]