MARC has affirmed its insurer financial strength rating of AA+ with a stable outlook on International General Insurance Co Ltd (IGI).
The affirmed rating is mainly driven by IGI’s well-diversified underwriting portfolio across business lines and geographies as well as its strong capitalisation level to support growth. These strengths are underscored by a prudent approach to reserving policy. Key moderating factors are IGI’s modest size as reflected by its total asset size of US$1.05 billion as at end-2019 and the potential increase in investment risk arising from the impact of the COVID-19 pandemic. IGI has continued to record strong growth in recent years, registering an increase of 15.8% y-o-y in 2019 and 24.0% y-o-y in 1Q2020.
IGI’s parent company, International General Insurance Holdings Limited (IGIH) which is registered in Dubai International Financial Centre (DIFC) completed a business combination with Tiberius Acquisition Corporation (Tiberius), a special purpose acquisition corporation listed on the Nasdaq Capital Market (Nasdaq). This resulted in the formation of a new holding company, Bermuda based International General Insurance Holdings Ltd (IGIC), which took over the listing status of Tiberius on the Nasdaq. The Jabsheh family, founders of IGI, holds a strategic 29.4% interest in IGIC. The business combination has resulted in an additional USD$41 million in capital that would support IGIH’s growth. IGI’s capital base provides buffer to absorb any impact from business disruptions resulting from the COVID-19 pandemic. Its strong capital position is reflected by a regulatory solvency ratio of 243% as at end-2019 (2018: 287%).
During 1Q2020, IGI experienced unrealised losses of US$16.5 million on its investments and foreign exchange due to volatile market conditions. Going forward, some operational risk could increase arising from potential delays in investigations and settlements caused by a lack of accessibility to affected areas due to the pandemic. For 2019, net combined ratio rose to 92.1% (2018: 87.3%) on higher claims. Net profit was higher at US$32.6 million (2018: US$28.0 million) supported by the growth of investment income of US$13.3 million (2018: US$10.1 million). IGI recorded a higher return on equity of 9.7% for the year (2018: 8.9%).
IGI continues to maintain healthy cash and short-term deposits of US$312 million or 51.6% of the insurer’s investment portfolio and fixed-income portfolio comprising relatively high-quality securities of 35.0% as at end-2019.