MARC Ratings has affirmed its insurer financial strength rating of AA+ with a stable outlook on Bermuda-based International General Insurance Co Ltd (IGI). The rating is based on Malaysia’s national scale.
The rating affirmation reflects IGI’s healthy capitalisation level, prudent reserving approach, and resilient performance underpinned by a well-diversified underwriting portfolio across business lines and geographies. Moderating factors to the rating are IGI’s moderate size and exposure to regulatory risks in the different jurisdictions it operates in.
IGI’s gross written premiums (GWP) grew 21.6% y-o-y in 1H2023 to US$373.5 million. Growth in GWP was primarily driven by a shift towards short-tail lines, particularly in the energy, property, and treaty reinsurance lines. Short-tail insurance policies accounted for 58.4% of the insurer’s GWP in 1H2023 (average for 2019-2022: 53.8%). Meanwhile, its long-tail casualty lines made up 28.0% of its GWP. At the consolidated level, net profit rose by 68.3% y-o-y to US$74.4 million in 1H2023 on lower claims and higher net earned premiums, supported by rising premiums in a hard market cycle. IGI’s net combined ratio also improved to 79.5% at end-2022 (2021: 86.8%) and compared favourably against its peers (around 90%).
While its underlying underwriting performance has remained strong, IGI remains exposed to catastrophic events. However, exposure to catastrophe risk is mitigated through reinsurance. The rating agency also expects IGI’s vast industry knowledge and solid underwriting expertise to mitigate this risk. The insurer incurred only a minimal loss of US$2 million in relation to Hurricane Ian that hit the US and Cuba in late September 2022, which was adequately covered by its high capital surplus. According to IGI, the impact from the February 2023 earthquakes in Turkiye and Syria on the company was also insignificant as its exposure to the two countries is low. The insurer does not provide war coverage in relation to the Russia-Ukraine War. For 2022, IGI’s net incurred loss ratio stood at 41.9%.
IGI has a strong capital base, with a regulatory solvency ratio of 179% as at end-2022, well above the minimum 120% set by the Bermuda Monetary Authority. It had US$414 million in statutory and surplus capital as at end-2022. Its high cash and short-term deposit holdings of US$435.0 million or 43.9% of the insurer’s investment portfolio is also viewed positively. IGI’s liquidity position remains healthy with a liquid assets-to-net technical reserves ratio of 135.3% as at end-2022.
The credit quality of its fixed-income portfolio remained satisfactory with investment-grade securities — based on the international rating scale — accounting for 99.0% of the portfolio while securities rated A- or above constituted 69.1%; of this, high-quality securities rated AA- and above accounted for 10.9%.