INTERNATIONAL GENERAL INSURANCE COMPANY LIMITED - 2022 |
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| Report ID | 6053890046853 | Popularity | 494 views 13 downloads | |||||
| Report Date | Aug 2022 | Product | ||||||
| Company / Issuer | International General Insurance Company Limited | Sector | Insurance Company | |||||
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| Rationale |
Rating action 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. Rationale The rating affirmation continues to be driven by IGI’s well-diversified underwriting portfolio across business lines and countries, 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$1.5 billion as at end-2021 and the potential increase in investment risk arising from uncertain capital market conditions. IGI is a specialty insurer with gross written premiums (GWP) standing at US$545.6 million as at end-2021. The insurer recorded strong growth in GWP in 2021, registering a 16.8% y-o-y increase (2020: 33.8%). The growth continued to be driven by the casualty and engineering lines, which accounted for 34.8% and 5.7% of GWP. As a result, IGI recorded a strong 25.6% y-o-y increase in net profit to US$41.8 million during the year. Net combined ratio improved to 86.8% (2020: 89.9%) while return on assets (ROA) and return on equity (ROE) were 3.0% and 10.5%. Notwithstanding the strong performance, IGI remains exposed to catastrophic events, although this is mitigated by its reinsurance strategy and management expertise. This was evident in the recent catastrophic flooding across parts of Europe where the insurer losses from the event was only US$8.4 million; this was adequately covered by its high capital surplus. In relation to the ongoing Ukraine – Russia conflict, we understand the impact is not material given low exposure in its portfolio. IGI does not provide war coverage and has relatively little exposure in Ukraine. For 2021, IGI’s net incurred loss ratio stood at 51.0% (2020: 53.5%). IGI has a strong capital base as reflected by a regulatory solvency ratio of 161% as at end-2021 compared to the minimum of 120% set by the Bermuda Monetary Authority (BMA). It comfortably met BMA’s minimum solvency margin with statutory capital and surplus at US$378 million as at end-2021 (2020: US$359 million), which suggests large headroom against a more severe situation. IGI possesses a highly experienced underwriting and management team with an average of 30 years’ experience in insurance, reinsurance and capital markets; its underwriting personnel hail from different countries, bringing with them knowledge on services and products from their respective countries. IGI continues to maintain healthy cash and short-term deposits of US$421.8 million or 46.2% of the insurer’s portfolio (2020: US$305.2 million, 39.4%). For IGI’s fixed-income portfolio, holdings of high-quality securities (international rating of AA and above) stood lower at 5.7% as at end-2021 (2020: 18.7%). The proportion was lower in 2021 as about 88% of AAA-rated papers (US Treasuries) matured during the year and the proceeds were invested in A and BBB-rated bonds in search of higher investment returns. As such, A and BBB-rated bonds stood higher at 91.1% (2020: 77.8%). IGI’s liquidity position remains healthy with a liquid assets-to-net technical reserves ratio of 137.7% (2020: 142.5%). Rating trajectory Upside scenario Any upgrade would be guided by a sustained portfolio growth that improves its asset size, 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 underwriting and management team Key challenge • Operation and investment risk |
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