New life for IGI

International General Insurance (IGI) has long harboured ambitions to grow its business. It knew that to do that it needed more capital. With that in mind, it had been surveying its options over a period of months, without finding anything that suited its requirements.

That all changed when it met Tiberius Acquisition Corp, a special purpose acquisition company (SPAC) that had been created with the sole purpose of finding a reinsurance company to invest in. IGI’s bankers had arranged for a meeting with Tiberius in early 2019, and the two sides spent many months getting to know each other, to establish whether a partnership was viable.

As it turned out, it was. IGI had been thinking about going public as long ago as 2005, when it raised capital via a private placement. The advent of the global financial crisis in 2008 caused the plan to be shelved.

Waleed Jabsheh, president of IGI, recalls: “We liked the idea of becoming a public company because it provided shareholder liquidity and gave us easier and cheaper access to capital—in both the equity and the debt markets.

“It was really a question of when, where and how we would do it. Listing in the US, and coming under the regulatory supervision of the SEC, which is one of the most stringent regulators in the world, was attractive because it gives extra confidence to all our stakeholders.”

Under the deal ICI established a new holding company in Bermuda, called International General Insurance Holdings. The Island was a natural choice. IGI is familiar with the place and the regulator, having had a presence there since 2007, when Bermuda was seen as the natural place to domicile a reinsurance business.

“Our presence in Bermuda will give investors extra comfort and confidence in the business,” says Jabsheh, given the international reputation enjoyed by the Bermuda Monetary Authority (BMA). While Bermuda was an obvious choice for the business in 2007, its reputation is even stronger now than it was then, Jabsheh adds.

The BMA approved the deal in January, with Tiberius stockholders giving their approval at a special meeting of stockholders on March 13. On March 18 trading in the common shares of International General Insurance Holdings began on the Nasdaq capital market.

IGI’s founder, chairman and chief executive officer, Wasef Jabsheh, father of Waleed, described it as a “defining and very exciting moment for IGI,” which he said positioned the company to prudently grow and compound tangible book value.

IGI shareholders exchanged 100 percent of the outstanding shares of the former IGI for common shares of IGI Holdings, plus an aggregate of $80 million. Each share of Tiberius common stock was exchanged for one IGI Holdings common share on March 17.

The transaction consideration payable to former IGI shareholders in connection with the business combination is $390.3 million.

The deal leaves the former Dubai-registered IGI as a wholly-owned subsidiary of the new public company, with Wasef Jabsheh becoming chairman of the board of IGI Holdings.

As part of the transaction, Tiberius and IGI raised approximately $146 million of gross equity capital, including non-redeeming Tiberius shareholders and equity raised in private placements. Approximately $40 million of equity capital was contributed to IGI’s balance sheet, to support IGI’s core specialty re/insurance business.

Meanwhile Tiberius, having fulfilled its purpose of partnering with a global reinsurer, was dissolved, after supplying two members to IGI’s board of directors—one of whom is independent.

Otherwise, IGI’s operation will remain largely the same. Its operational headquarters remain in Jordan, and it has offices in the UK, Casablanca, Dubai and Kuala Lumpur as well as Bermuda. IGI believes the breadth of its business gives it considerable diversification, both geographically and among its clients.

Good timing

While the combination agreement was a long time in the making, Waleed Jabsheh believes it was perfectly timed.

“The timing of the deal was really fortuitous for us,” he says. “The market has been hardening for the past 12 to 18 months, with rate increases almost across all classes of business we write, with the exception of terrorism/ political violence insurance.

“We expect that trend to continue throughout 2020 and into 2021. That creates a real growth opportunity. It is a great time to be raising capital, and we will be in a position to deliver good returns.”

IGI is already in 17 classes and subclasses of insurance, the latest addition being US excess and surplus (E&S), which it will begin writing from April 1. It will focus exclusively on short tail classes, particularly property and energy, including upstream and downstream energy and renewables.

Its presence in the US has also turned out to be very well timed, says Jabsheh.

“For a long time we shied away from the US market, but now, given the opportunities in the US E&S markets, we feel the time is right to get into it,” he says.

“We’ll do that in the same thoughtful way that we approach all our business. We see significant opportunities for organic growth there.”

Jabsheh believes the US market is no longer as competitive as it used to be, as a number of big re/insurers have pulled out of certain markets as they look to narrow their focus and improve their financial performance.

He acknowledges that the transition from a private to a public company, and to the US market where it will be subject to SEC oversight, will change the dynamics of the business. But he insists the underlying philosophy of the business will stay the same. And it is this philosophy that positions IGI for success in markets that many of its peers are pulling back from, he argues.

“What sets us apart is our philosophy,” Jabsheh says.

“We have a track record of doing business over the last 18 years that has enabled us to deliver consistently healthy returns, with on average 10 percent annual value creation for shareholders.

“We have a methodical and gradual approach, we are patient, our underwriting is disciplined. We are focused on the bottom line, never the top line. This has paid off for us and this is what we will continue to do. Just because we now have additional capital, it does not mean our philosophy will change.”

Jabsheh accepts it will be a challenge to preserve this philosophy as a public company. As a Nasdaq company it will release results twice a year, rather than quarterly, but life as a public company always increases pressure to deliver shorter-term performance.

However, Jabsheh notes, IGI has delivered fairly consistent returns even as a private company, and has always offered its private shareholders greater transparency than the minimum required. It has built up strong relationships with its investors, and he is confident it will continue to sell its new investors on the merits of its conservative and long-term ethos.

Jabsheh is confident about the business going forward. In US E&S specifically, rates have been hardening very considerably. “This is the most opportune moment to be entering that market in years,” he says.

IGI is not focused only on the US or E&S for growth. Jabsheh believes there are currently opportunities for a re/insurer such as IGI all over the world, and in a number of different product lines.

“There are dislocations across the insurance industry, in many classes and territories,” he says. “The Middle East certainly provides opportunities—we have seen at least one re/insurer pulling back from that market and there are rumours that others will follow.

“The region that is perhaps least dislocated is Asia, so while we expect to see growth there, it will probably be less than we see elsewhere.”