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International General Insurance(IGIC) - 2023 Q4 - Earnings Call Transcript
IGICInternational General Insurance(IGIC)2024-03-13 15:45
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Financial Data and Key Metrics Changes - The company reported a record net income of 118.2millionforthefullyear2023,upfrom118.2 million for the full year 2023, up from 89.2 million in 2022, reflecting a significant increase of 32.5% [12] - Core operating return on average equity (ROE) reached 28.1% for the full year, the highest in the company's history [7][14] - Total assets increased by more than 16% to 1.84billion,whiletotalequityrosebyover311.84 billion, while total equity rose by over 31% to 540 million [27] Business Line Data and Key Metrics Changes - Gross written premium (GWP) growth for the full year was just over 18%, with a notable 6.5% growth in the fourth quarter [10] - The short tail segment saw a growth of over 38% in GWP for Q4 and over 26% for the full year compared to 2022 [54] - The reinsurance treaty business recorded cumulative net rate increases exceeding 25% in 2023, with this segment now representing 9% of the overall premium portfolio, nearly double from the previous year [55][19] Market Data and Key Metrics Changes - In the U.S., GWP was just over 94millionin2023,representingagrowthofabout4594 million in 2023, representing a growth of about 45% compared to 2022, with rate increases of almost 20% in short tail lines [22] - The European market also showed growth, with GWP increasing from about 62 million in 2022 to over 80millionin2023[1]−TheMiddleEastmarketconditionsaremixed,withcompetitivepressuresincreasingincertainlines,butopportunitiesremaininengineeringandconstructionacrosstheGCCcountries[36]CompanyStrategyandDevelopmentDirection−Thecompanyaimstomaintainastrong,diversified,andprofitableportfoliowhilemanagingcyclicalityandvolatility,focusingonlinesandmarketswiththestrongestmargins[2]−Thereisacommitmenttoreturnexcesscapitaltoshareholdersthroughdividendsandsharerepurchases,reflectingafocusonmaximizingshareholdervalue[27][23]−Thecompanyisoptimisticaboutfuturegrowthopportunities,particularlyintheU.S.andEurope,wherethebooksarerelativelyyoung[41]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedthatwhilecompetitionisincreasing,particularlyintheshorttailsegments,therearestillprofitableopportunitiesavailable[5][15]−Thelongtailsegmentisfacingchallengeswithdownwardtrendingrates,butoverallratesremainadequateacrosstheportfolio[20]−Managementexpressedconfidenceinthecompany′sabilitytonavigatechangingmarketconditionsandcontinuedeliveringvaluetoshareholders[37]OtherImportantInformation−Thecompanyrepurchased3.4millionsharesfor80 million in 2023 [1] - The Middle East market conditions are mixed, with competitive pressures increasing in certain lines, but opportunities remain in engineering and construction across the GCC countries [36] Company Strategy and Development Direction - The company aims to maintain a strong, diversified, and profitable portfolio while managing cyclicality and volatility, focusing on lines and markets with the strongest margins [2] - There is a commitment to return excess capital to shareholders through dividends and share repurchases, reflecting a focus on maximizing shareholder value [27][23] - The company is optimistic about future growth opportunities, particularly in the U.S. and Europe, where the books are relatively young [41] Management's Comments on Operating Environment and Future Outlook - Management noted that while competition is increasing, particularly in the short tail segments, there are still profitable opportunities available [5][15] - The long tail segment is facing challenges with downward trending rates, but overall rates remain adequate across the portfolio [20] - Management expressed confidence in the company's ability to navigate changing market conditions and continue delivering value to shareholders [37] Other Important Information - The company repurchased 3.4 million shares for 31.1 million and declared a special cash dividend of 0.50pershareinadditiontoaregularquarterlydividendof0.50 per share in addition to a regular quarterly dividend of 0.01 per share [7][13] - The company recorded a core operating income that more than doubled in Q4 and increased by 42.5% for the full year compared to the previous year [12] Q&A Session Summary Question: Growth trends in U.S., ENS, and Europe for short tail - Management indicated that while growth trends are promising, they expect less rate increase in 2024 compared to previous years due to increased competition [5] Question: Accident year loss ratio improvement - Management noted that the improvement was largely due to a benign loss year and a shift in focus towards areas with higher margins, particularly in reinsurance [29] Question: Factors leading to the special dividend - Management explained that the decision for a special dividend was based on exceeding expectations in returns and recognizing shareholder support, while maintaining adequate capital for growth [30][32]