Conference Transcript - IGIC 2026-06-10

Speaker 1

Good morning, everyone. I'm John McNamara from 3Part Advisors. Our next presentation is International General Insurance Holdings, or IGI. IGI is a specialty insurer and reinsurer underwriting diversified commercial lines globally. The company is also a client of 3Part Advisors, so if you would like to meet with the company separately, just get in touch with me. would be happy to facilitate that. With us from the company are Waleed Jabshay, President and CEO, and Robin Sitters, Head of IR. And with that, I'll turn it over to Waleed.

Waleed Jabsheh, CEO

Thank you, John. Good morning, everybody. As John said, this is a presentation for IGIC, International General Insurance. My name is Waleed Jabshay. I'm the President and CEO. I've been with the business from the day we started it back in 2002. Specialty insurer built essentially for long-term success and long-term value creation. It's a history built on a model of consistency, being consistent in the way we do business, being disciplined and managing what is a very cyclical environment or industry. just give you a few points a few minutes on the on the history um the executive chairman of the business was if jeb she who happens to be my father uh this is a family started business um has been in the business for for for almost 60 years now in the insurance and reinsurance sector predominantly out out of the middle east he has built companies throughout his career and decided to set IGI up almost a quarter of a century ago. At that point, I had been in the industry for a few years. I was working in Boston. And then when he decided to set up IGI, I moved back to Jordan, which is where we started the operation. Very modest beginnings. Initially, 25 million dollars of capital focused on a handful of lines of business commercial lines what we call facultative lines individually underwritten business very big focus on energy to begin with and all types of energy business offshore energy onshore energy power and renewables as well in addition we started off with construction engineering we started off with commercial property and we also were writing marine war a marine cargo and hull business as well i don't want to bore you with the gory details but fast forward now 24 years we're a global specialty insurer and reinsurer as i said we started with 25 million dollars of capital where our equity base is now just under 700 million that's without any of the uh returns to shareholders that we've distributed through various means we started off with a handful of lines of business we now write almost 25 different lines and sub lines i'll get onto that in a second we started with one office we now have eight offices soon to be nine all over the world situated positions in the geographical markets that we are and that you go and the regional hubs that we are interested in so we've got offices in asia we've got our our next office is going to be in india we made an announcement earlier this week we've got a couple of offices in the middle east one in dubai one in jordan office in africa in morocco and then you've got london as your underwriting hub and underwriting center europe is tackled with offices in Malta and Norway for their respective regions and finally we're a Bermudan entity domiciled in Bermuda the holding company and the main risk-bearing parent are Bermudian so we've got the office over there we're 500 group employees group wide we started with a handful and and if we just go back to the products we dissect we categorize our products into three different segments long tail short tail and reinsurance now the the whole the history of the business has been on on belief in diversification you're gonna hear me use that word a lot in the next 20-25 minutes diversification is key what we've done is we've you know gone from five a handful of lines to 25 different lines from a mainly sort of middle east africa asia focused portfolio to a truly global portfolio if we just if i mentioned the product lines quickly within the long tail segment one thing i have to make sure be clear on is we don't write any u.s liability business we stay away from that out of appetite out of not in focus whatsoever so within that it's more of a european middle east and african book of business that is focused predominantly on professional indemnity which is what over here no better known as errors and emissions insurance followed by directors and officers financial institutions business and a bit of legal expenses and warranty indemnity long tail book is about 25 but that shifts depending on where we see the cycle short tail lines energy is still one of the biggest especially combined mentioned the variations of energy property as well is about a hundred million dollar book for us construction engineering is a big line but what we've done over the years obviously is add lines of business you know we added we've added throughout the history a line of business on average every sort of 12 to 18 months so other lines within short tail include political violence general aviation contingency marine lines within that is ports and terminals marine liability marine cargo and then finally it's your reinsurance which is your portfolio driven what do you call it portfolio driven coverages and protections We transitioned to a public company back in 2020, but the story has been one of, if I can summarize it, the story has been one of very patient, methodical, step-by-step, disciplined, and 99% organic growth, which is essentially what the model is built on. The growth achieved the liberty without compromising any underwriting profitability, without compromising the bottom line and the strength of the bottom line. And that strength comes through the diversification, which I'll demonstrate as we go through some of the intricacies of a cycle. So it's been a consistent execution story and a consistent value creation story throughout the company's 24-year history, which has allowed us to position ourselves in terms of performance easily in the top quartile of the industry and arguably in the top 10-15%. And that is where I personally expect us to continue to be, regardless of where we are in the cycle. Now, if we talk about the cycle, I'll just briefly go through what happens. The industry is inherently very cyclical and is predominantly the cycle and where we are throughout the cycle is driven by supply and demand. Obviously, loss activity is what also drives that. But you see within the cycle, the rating environment and adequacy of the rates move up and down. So when you're in your euphoria stage, you're at the peak. You're exactly where you would love to be and continue to be at all times. But the reality is not that. Because the way the cycle works is when you are at the peak, everybody sees how well you're doing. Everybody sees how much the returns, and everybody starts piling in. And when they pile in, the way to build up a portfolio for themselves is to start undercutting and competing. So more capital flows into the industry, prices start coming down, down, down, down, bit by bit, until you get to a level where it becomes inadequate. Now, unfortunately, the nature of our business is the decisions that you make today are not felt. The ramifications of those decisions are not felt for at least a couple of years, and in some cases, a lot more than that, right? So it takes time for markets to react unless there is some sort of big event that has occurred. But by the time you do, that capital starts pulling out, and there's less supply of capacity. normally demand increases and as a result you're able to start pushing up your prices, there's less competition and it just goes round and round and round and ultimately what drives it is results when people are losing money they start pulling out, they realize the mistakes that they've done but then by the time they get to euphoria and experience euphoria for a little bit, they forget the pain that happened in the crunch stage and revert to the same old mistakes that they've always done in the past. And this is why that history of discipline, focus, just protecting the quality and the bottom line comes in. So how do we manage the cycle? I mean, IGI, and I say this proudly, and I say this in front of everybody and all investors that we record. If your measure of success of an insurance business is by its ability to grow top line year after year after year, then we are not your investment. Our focus and our priority is protecting the bottom line, underwriting to quality, understanding the cycle. If you understand the cycle, then you understand the competitive pressures and volatility that is inherent in our industry and in the cycle. And then you're able to react and mitigate and manage it. So we maintain underwriting discipline throughout market conditions, regardless of where we are in the cycle. Focus on portfolio quality over portfolio growth. The opportunities will come as we go through the cycle. The opportunities will present themselves and will come. You've just got to be patient and not follow the market and let the competition pressure you to start doing things that you know are not right. So active portfolio management, active and continued diversification. You have to be cycle aware, not cycle driven. You've got to manage the cycle. You can't have the cycle manage you. And at the end of the day, discipline, consistency, pulling the right levers at the right time. that's where your diversification helps you and shifting focus always to those areas that what do you call it that are perceived to be doing better know when to take you put your foot on the gas know when to take it off and and it's essentially growing at the right times right and my one of my uh uh favorite slides actually that um that uh we have in our quarterly uh investor decks and we mentioned in all our presentations and our sort of meetings is this one this one specifically um if you just just look at this just go back to the history of 2013 so the The last sort of 10, 12 years where you've been through a cycle and you've gone through the good times and the bad and the tougher times. So if we just go back, I don't want to spend too much time because I can go on forever talking about this. But if you go, if you just go back to 2014 to 2016, you see, and 17, very, very tough market conditions back then. Extremely difficult, extremely tough. And you've got to keep in mind that IGI was a fraction, probably a third, maybe max 40% of the size that it is today when it had to tackle this soft market, right? So at 14 to 16, you saw some contraction in the portfolio. You have to be okay with that. As an insurance, as a reinsurance player, reinsurance business, you have to be okay with it. Honestly, it's not rocket science what we do, and I'll get into that in a minute. So 14, 15, 16, we bought our time. 17 you know was was the growth for us more on the long tail side when we started seeing the business and the market develop but you see there was a big there was a spike in the combined ratio back in in 2017 because those were very heavy cat years hurricanes you know Harvey, Irma, Maria and other cat losses globally market average combined ratio about 130% that year we came in 105 Just going back to the top quartile, what do you call it, comment I made earlier. Now, in 2017-18, that's when you started to see the market harden, okay? Now, 25 different lines of business, global portfolio, not everything is going to move in the same direction at the same time. And that's where your diversification is so advantageous. So you notice the light blue is the long tail segment, the dark blue is the short tail, and the purple is the reinsurance. The hardening in 2018 and 2019 started in long tail. So that's what we leaned on, right? We pushed hard in long tail. We were seeing rate increases, improving conditions, narrowing coverage, the likes of what we haven't seen in 30 years or so. So we pushed hard and you can see how from 18, 19 up to 21, 22, how much the bar, the light blue bar increased. Again, shifting focus to those areas where we think there's going to be the best opportunities and taking advantage. That's how you manage the cycle. Although you're in a hard market here, you're still managing the cycle. Cycle management is not about soft market. It's about the entire cycle. and then around 2021 it's the short tail lines that you started seeing you know uh improving conditions on you started seeing stability in the in the uh in the long tail so it flattened out for the next couple of years but then you see the the dark blue line uh bars increasing increasing increasing again shifting focus we saw the the new opportunity is here move into it we also added new business lines after covid we added contingency contingency is your event cancellation cover we added and covid was your global cat loss for contingency completely obliterated the market so you knew there was going to be an opportunity within a year we had an underwriter a team being built out and now it's a 35 million dollar book that performs extremely well for us then we come to 2023 the you'll see that the the long tail market started softening so you see a shrinkage in the light blue bars stability in the short tail so not much difference in the dark blue but in 2023 the reinsurance market was turned topsy-turvy upside down because of the poor results they've had for many years before that and you can see how much the purple bars grew for us so again it's just shifting completely always you know it's not it's not about what when we look at how we want to grow what our portfolio looks like what it's gonna look like it's not about you know what you want it to look like what the market dictates what you wanted to look like depends on how you react you go after the business the best business where it is and that's what 25 different lines of business and a global portfolio give you the ability to do is pull the right levers at the right time know when to put your foot on the gas know when to take it off some of the differentiating factors of igi also include obviously we're bottom line focused we're not a top line company i'll scream it off the of the highest mountain so everybody is clear about that we have a single p l across the group eight offices nine offices it's it's all on the same balance sheet it's all the same capacity it's all the same capital we use our network to the group individuals within the company are rewarded based on group performance first and foremost so we do we work together as one team one unit to make sure we we carry out and make decisions that are best for the group it's a very flat management structure very flat structure completely enabling access to people uh quick decision making i mean instant instant access my office is an example it sits right in the middle of the underwriting floor everybody can walk in and out there's no um uh you know uh um egos or anything like that it's it's an open open and our floors are our offices are all you know uh open floor plans um um so it's a very collaborative very communicative uh uh culture and environment um as a family member you know there's significant family ownership remains i mean we we still are the biggest shareholders in the business upwards of 35 percent and the insider ownership is even you know decently reasonably higher and that gives strong alignment with uh with with all shareholders as well and the one thing i want to emphasize is we are a long-term focused business it's not we don't we we never look at it as what we can achieve now this quarter next quarter this year or next year the fact that the cycle is there tells you that your performance and you should expect your performance to change based on where you are in the cycle if you understand the business you understand that comment so what we do we don't give guidance we say this is what we think we can achieve over a cycle and that's based on what we have achieved in the past you know so you know overall we say we can deliver over a cycle good and bad combined ratios in the mid average combined ratios in the mid to high 80s average roes in the low to mid teens now the last few years have been phenomenal for us so our combined ratios have been in the high 70s low 80s and our roes have been in the low to mid 20s but that is not the new normal or i mean and that's where the understanding of the cycle comes and then it's active capital management as well you know we've always said if a capital management we have a buyback program we have dividend policy but we've always said it's a you know headlined with the uh what do you call it uh heading of underwriting first that's our management policy capital management policy first and foremost when the when the opportunities are there we will deploy the money into the business capture capitalize on the opportunities when the opportunities are are are are not there to the extent that we need them with our current capital base we we've always said and we always will will give the will give the capital back to shareholders and that could be in the form of dividends or what do you call it buybacks share buybacks so so far I mean since we since we announced the capital management strategy we've executed 700 million share buyback program already we're currently in the process of another five million share authorization out of which we've we've we've completed about 20 percent we've got ordinary dividends and special dividends and special dividends are normally assessed at the end of the year following you know the results but we just earlier this year distributed dollar 15 cents which was an increase in the 85 cents we did last year so all of these things have helped us build the track record that we have built have helped us achieve what we have achieved and will continue to help us you know deliver i think our global footprint is a competitive advantage competitive strength especially the way we do it we combine local knowledge with technical expertise and i think that's a trick that some people get it wrong our people are our biggest asset and it's it our business is still very much a personal business and so people in terms of relationships and people in terms of expertise the diversification again i continue to harp on it because it's key that diversification is strength diversification in our business lines diversification in our geographical exposures and diversity in our people having a global essentially network of offices and i say this every opportunity we get to continue and further that diversification in the right way, of course, we will take. And it's a very disciplined capital management strategy, as we said, and on the investment side, it's plain vanilla. Our approach to investment is we take risk on the underwriting side every day. We don't take risk on the investment side. So it's a very plain vanilla, conservative, mainly fixed income, cash, you know, term deposit portfolio. In terms of the future, again, we're driven by the cycle. You know, we can only influence maybe niche markets within certain countries. We're not big enough to be influencers. We're a rounding error to our larger competitors, you know, wherever they may be. But that, for us, is an advantage. So we continue discipline, continue growth, whereas ambitious is any other company to grow. So we're out there fighting, looking, trying to capitalize on the opportunities that are out there. India is one, is a new venture for us, and we're working on a couple of other things that hopefully would come to fruition. But ultimately, we'll make the right decisions, we'll maintain that discipline, and write the business only when it makes sense to us. And then you leverage wherever you see the opportunities. One of our advantages is our nimbleness, the levers that we have to pull, and our ability to go and access and pounce on business when we see fit. So in closing, I mean, IGI was built as a business to perform across the cycle, not just in one stage of the cycle. We're long-term focused. We're not top-line driven. We're not in a rush. It's been a story of step-by-step gradual methodical growth. You know, it's taken us 24 years to build a $700 million business. Some of these new startups built it in their first year. But that's the model. That's the appetite. That's the focus. It's not about size. It's not about speed. It's not a race. It's about building it and building it within your capabilities. And that's one thing we always tell our people. Understand who we are as a business. Understand what our capabilities are. Set your risk appetite. set your risk tolerances and be disciplined and you stick within them. Nobody is under pressure for top-line. It's when you don't achieve bottom-line that questions are asked. So ultimately our goal is to create value, continue to creating value and that's a promise I give to you as long as I am, as long as I stand where I do. And that's IGIC. Thank you very much. I'm happy to take any

Speaker 3

questions okay in terms of where we are in the cycle it varies by segment it

Waleed Jabsheh, CEO

varies by line of business right and that's what that diversity gives you when some lines are not doing great conditions are not cohesive you know for profitability then you've got the optionality with other lines so what I would say is probably that the long tail segment is probably in crunch it's been and you've seen our book reduced for the last three years and that's by design of of course, whereas some of our long tail lines are probably, and some of them are in short tail lines. In terms of reinsurance, you're probably in the middle of the green bit, the light green bit, but you're still at very adequate levels. The reinsurance market implemented lot of significant and positive change back in 23 and 24 and you're still seeing that it's more competitive on pricing now but not so not so much in terms of structural changes they've they've kept them uh which is more important than the price um now in terms of ai i think for us as a business in terms of the lines of business that we uh we're involved in you're talking about large commercial business you know portfolios ai is a is an efficiency drive for us it's not a it's not something that's going to stop making underwriting decisions for you is it disruptive to us not as much i would say as it is for personal lines sme commercial straightforward business i think that's where the the the threat is is more directed towards but in the future it's what do you call it it's it's obviously anything can can go in any direction but for us it's about AI and how we're using it and I'll be clear we're not pioneers in AI or driving AI in the industry or anything like that we're happy for the others to spend the tens and hundreds of millions of dollars and we'll we'll we'll we'll piggyback on on some of the stuff that they do but it's efficiency it's underwriting efficiency operational

Speaker 4

efficiency actuarial efficiency finance etc etc yes sir that's one of them yeah this simple answer no and the reason behind that is because of where we are

Waleed Jabsheh, CEO

in the cycle and the delusion little thinking of some of the competition and its drive to I think it will come but at the moment we're not seeing that where Where we are seeing that huge reaction is on the political violence side. Now, that's where losses arising from war would come out in terms of physical damage to energy facilities, et cetera, et cetera. Marine... Sorry? Yes, yes, yes. We do political violence. And if you looked at our Q1 results, we did report losses from the war in Q1. But that is now a very big opportunity, business-wise, of course, a very big opportunity because where there's dislocation, where there's uncertainty, that's where the opportunity comes. And so the market has completely transformed for political violence, especially for the Middle East, given the political situation. I think, I said it before, it's very much a people business. You know, so it's the people, it's the expertise, it's the network, it's your capabilities, your ability to compete, service. At the end of the day, the business that we write, it's not like I'm taking it away from a CHUB or an AIG and taking it all to myself. No, a large energy account, I will take the piece, the bit that I can take myself. So you'll have another 20, 30, 50 insurers and reinsurers participating and protecting that. So it's a subscription market type situation, and that is the case in most of the lines of business. So that's what makes the competition less. They still need you. And within the cycle, you cement your footprint in certain lines and certain geographies. Our local offices are 100% an advantage to us. The way we use it, the way we use them, the way we manage them, those domestic markets are getting stronger and stronger. They have been for the last 20 years. and so if you're not in those local market boots on the ground you're not seeing the spread of business that you should be seeing any other questions thank you very much thank you