Short-tail insurance improvement drives IGI profit jump
Bermuda-based International General Insurance Holdings almost doubled its net income for the second quarter as short-tail insurance underwriting income and a turnround in investment income drove the improvement.
Gross written premiums rose almost 10.7% from $180.7 million in 2022 to $199.6 million and group underwriting income rose 26.4% to $50.2 million from $40.3 million.
The company turned around its investment income from a loss of $1.4 million to a gain of $14.4 million.
The company’s combined ratio edged down to 73.5% from 74.9%.
IGI chief executive officer Waleed Jabsheh said: “IGI produced another set of exceptional results across all key measures in the second quarter of 2023 as we continued to benefit from sustained hard market conditions in many of our reinsurance and short-tail lines, and a more favourable investment environment.
“This culminated in net income of $40.5 million, a 73.5% combined ratio, a 36.1% return on average equity and 34% core operating return on average equity in the second quarter. Most importantly, we grew book value per share by 9.3% in the three months ended June 30, and 20.3% for the first six months of 2023.”
He added: “We are seeing plenty of opportunities to continue to show profitable growth in reinsurance and many short-tail markets where we have deep expertise, while being cautious in other short-tail and long-tail lines where there is more competitive pressure and remaining focused on disciplined and selective underwriting.
“All indications are that the positive trends in many short-tail and reinsurance lines that we have experienced over the last several quarters will remain for at least the near-term and we look forward to building on this momentum in the quarters ahead and continuing to generate sustainable long-term value for our shareholders.”
IGI said the increase in net underwriting income was largely driven by higher net premiums earned, offsetting a higher level of net loss and loss adjustment expenses and net policy acquisition expenses.
In the short-tail segment, IGI recorded gross written premiums of $126.5 million, an increase of 11.7%. Underwriting income was $30.3 million, an increase of 62.9% compared to $18.6 million for the comparable quarter of 2022, driven by higher net premiums earned and improved rates in a number of lines.
The long-tail segment recorded gross written premiums for the second quarter of $62.7 million, an increase of 4.7% compared to $59.9 million. Net premiums earned were $41.9 million, a decrease of 2.1% compared to $42.8 million. Underwriting income was $15.9 million, a decrease of 21.7%, primarily due to a higher level of net loss and loss adjustment expenses and net policy acquisition expenses and a slightly lower level of net premiums earned in 2023.
In IGI’s reinsurance segment, which makes up about 5% of its premium, the company recorded gross written premiums of $10.4 million, an increase of 38.7%. Net premiums earned were $14.7 million, compared to $7.6 million. Underwriting income was $4 million for the second quarter of 2023, compared to $1.4 million.
“The improvement in underwriting income was the result of a 93.4% increase in net premiums earned due to improved pricing in reinsurance lines in the second quarter of 2023,” the company said.
IGI said the increase in investment income was due to growth in interest income, driven by the rise in interest rates and gain of $4.9 million in realised and unrealised gains compared to a loss of $6.2 million in 2022.