International General Insurance Holdings Ltd. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• IGI delivered excellent results for Q2 and first half of 2025, with net income of $34.1M in Q2 and $61.4M in first half. Annualized return on average equity was 20.8% in Q2 and 18.6% in first half.
• Foreign currency movements significantly impacted underwriting results, especially revaluation of non-U.S. dollar loss reserves affecting loss ratio, combined ratio, and core operating results.
• Balance sheet: Total assets increased by over 4% to ~$2.1B, investment income up, and share repurchases and dividends returned $77M to shareholders in first half.
• Market conditions: Elevated competitive pressure in some areas, but continued to seek profitable opportunities. Long-tail segment rates slowing in decline, short-tail lines facing tougher market, reinsurance segment still seeing opportunities within risk tolerances.

Segment Performance

• Short-tail segment: Gross premiums in Q2 2025 down 8.5%, first half down 4.2%. Earned premiums down 8.4% in Q2 and 6.9% in first half. Underwriting income up almost 21% in Q2, but down about 10 points in first half of 2025. New business opportunities in engineering, construction, marine lines, etc., with adequate rating environment but pressure in property and energy lines.
• Reinsurance segment: Q2 gross premiums flat, first half up ~33%. Earned premium up ~21% in Q2 and ~33% in first half. Underwriting income up almost 60% in Q2 and ~55% in first half, driven by focus on higher-margin reinsurance business.
• Long-tail segment: Q2 gross premiums down ~12%, first half down ~5%. Underwriting loss $3M in Q2 vs $15M profit last year; first half loss $10M vs $26M profit last year. Impacted by FX revaluation (most significant for this segment as majority business is in pounds), portfolio contraction due to competitive pressures, and higher losses (especially in professional indemnity portfolio).

Guidance

• Cautious approach in long-tail segment due to competitive pressures, but pace of rating decline has slowed. Seeking new opportunities and expanding footprint in specific markets (no appetite for U.S. liability business).
• Outlook on short-tail lines remains consistent with tougher market, but opportunities in specialist lines like construction, engineering, and some marine lines.
• Reinsurance segment expects muted growth in second half after major renewals, but continues to pursue distribution capability enhancements.

Risks

• Foreign currency fluctuations significantly impact underwriting results, particularly for long-tail segment with long-duration reserves held in non-U.S. dollars.
• Competitive pressures in certain segments (long-tail, short-tail property/energy) leading to rate declines and lower margins.
• Portfolio contraction in long-tail segment may impact top line, but aim is to improve profitability profile long-term.

Question and Answer

Q: Nic Iacoviello asked about net to gross retention on written premium basis being 64% in the quarter, down from 73% year-over-year. Waleed Jabsheh responded that it's more opportunistic, with higher facultative reinsurance buying in softer market and expansion in capabilities due to reinsurer support.

Q: Nic Iacoviello inquired about the non-renewed professional indemnity portfolio. Waleed Jabsheh said the net to gross figure was around 85% quota share, which has hovered between 60%-80% in recent years, and non-renewal is to improve overall profitability of the long-tail segment.