Report ID 6053890029 Popularity 261 views 14 downloads 
Report Date Sep 2021 Product  
Company / Issuer International General Insurance Company Limited Sector Insurance Company
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Rating action     
MARC 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 continues to be driven by IGI’s well-diversified underwriting portfolio across business lines and geographies and a strong capitalisation level that remains supportive of growth. These strengths are underscored by a prudent approach to reserving policy. Key moderating factors to the rating are IGI’s moderate size with a total asset size of US$1.3 billion as at end-2020 and the potential increase in investment risk arising from volatile capital market conditions.

IGI is a specialty insurer with gross written premiums (GWP) standing at US$467.3 million as at end-2020. The insurer recorded strong growth of GWP in 2020, registering a 33.8% y-o-y increase (2019: 15.8%). The growth was mainly in the casualty line, which accounted for 34.9% of GWP and property at 15.0%. Notwithstanding the strong performance, IGI is exposed to catastrophic events although this is mitigated by its reinsurance strategy and management expertise to manage risk. This has been evident in the recent catastrophic flooding across parts of Europe where IGI has indicated that its exposure to the event is estimated at a modest USD7.9 million, which would be adequately covered by its high capital surplus. In regard to the impact from the COVID-19 pandemic, the insurer has not been affected by significant claims as its underwriting policies normally exclude non-physical damage business interruption coverage.

Net profit grew marginally y-o-y to US$33.3 million as the strong GWP growth was largely offset by the increase in expenses and claims during the period. Net combined ratio slightly improved to 89.9% (2019: 92.1%) while return on assets (ROA) and return on equity (ROE) were 2.8% and 9.7%. In March 2020, IGI completed a business combination which saw International General Insurance Holdings Ltd (IGIC) being listed on the Nasdaq Capital Market (Nasdaq) in the US. The institutionalising of the shareholding structure through the listing on Nasdaq has increased the group’s corporate profile. The Jabsheh family however remains the largest shareholder with 29.0% in the group following the listing. 

IGI has a strong capital base as reflected by a regulatory solvency ratio of 180% as at end-2020 compared to the minimum of 120% set by the Bermuda Monetary Authority (BMA) (the solvency calculation was changed in 2019 by BMA to increase the risk weightage). It comfortably met BMA’s minimum solvency margin with statutory capital and surplus at US$359 million as at end-2020 which suggests large headroom
against a more severe situation. IGI possesses a highly experienced management team with an average of 30 years’ experience in insurance, reinsurance and capital markets; and its underwriting personnel hail from different countries, which implies knowledge on services and products in their respective countries.

IGI continues to maintain healthy cash and short-term deposits of US$305.2 million or 39.4% of the insurer’s portfolio (2019: US$312.9 million, 51.6%). For IGI’s fixed-income portfolio, high-quality securities (international rating of AA and above) comprise 18.7% as at end-2020 (2019: 35.0%). Accordingly, IGI’s investment in BBB-rated bonds rose to 29.2% (2019: 18.6%). The shift is to seek higher yield in light of the low interest rate environment. IGI’s liquidity position remains healthy with liquid assets-to-net technical reserves ratio of 142.5% (2019: 141.3%).

Rating trajectory

Upside scenario     
Any upgrade would be guided by a sustained portfolio growth, and improvement in financial metrics and investment returns.

Downside scenario     
The rating action and/or outlook could be revised downwards in the event of unexpected large claims losses that are not adequately covered by reinsurance.

Key strengths
Well-diversified underwriting portfolio
Strong capitalisation and liquidity
Experienced management team

Key challenges
Moderate size
Operation and investment risk