International General Insurance(IGIC) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported an annualized return on average equity of 22.9% for Q2 and 25.1% for the first half of 2024, with average equity increasing by almost 30% year-over-year [5] - Book value per share grew by 7.3% to $13.31 at the end of June 2024, following a growth of over 36$32.8 million and $70.7 million for the first half, slightly down from the prior year due to increased loss activity [13] - Core operating income increased by 8.6$73 million [13] Business Line Data and Key Metrics Changes - Gross written premium growth was 3% in Q2 and 3.7% for the first half, driven by short-tail and reinsurance segments [9] - The reinsurance segment saw gross premiums up 57.7% in Q2 and 28.4% for the first half, with net premiums earned increasing by almost 35% [10] - The long-tail segment experienced contraction in gross premium volume, with rates and conditions leading to a cautious approach in underwriting [10][12] Market Data and Key Metrics Changes - The U.S. market saw gross premiums increase by over 47% in the first half of 2024 compared to the same period last year [23] - In Europe, the company rolled around $17 million in Q2 and just under$40 million in the first six months, with expectations for further growth [24] - The MENA region and Asia continue to present opportunities, with talent being added on the ground across various lines of business [24] Company Strategy and Development Direction - The company focuses on generating consistent and sustainable value through disciplined underwriting and capital allocation [7][19] - There is an emphasis on enhancing distribution capabilities and targeting new business opportunities, particularly in engineering and construction [16][21] - The company maintains a cautious approach to underwriting in the long-tail segment, prioritizing profitability over volume [27][29] Management's Comments on Operating Environment and Future Outlook - Management noted that while market conditions remain generally healthy, competitive pressures are increasing, particularly in domestic markets [15][18] - The company expects mid to possibly high single-digit growth in gross premiums for the year, down from previous expectations of high single-digits to low double-digits [9][28] - Management highlighted the importance of maintaining discipline in underwriting and focusing on profitability, especially in a competitive environment [18][19] Other Important Information - Total assets increased just under 7% to $1.96 billion, and total equity rose just under 9$588.2 million at the end of June [14] - The company increased its common share repurchase authorization by 7.5 million shares and repurchased approximately 650,000 shares in Q2 [14] Q&A Session Summary Question: Growth outlook and long-tail challenges - Management indicated that growth is expected primarily from reinsurance and short-tail segments, with long-tail segments facing pressure, particularly in D&O and financial institutions [26][27] Question: U.S. business growth and property market - The company noted that growth in the U.S. is driven by new lines such as engineering and construction, despite competitive pressures in the property market [30][31] Question: Favorable reserve development - Management explained that favorable reserve development is due to a cautious reserving approach, with releases occurring across both short-tail and long-tail segments [33][35] Question: Offshore energy losses - Management clarified that the offshore energy losses were due to increased frequency of losses in that business line, primarily on the offshore construction side [36]