管理層發言
Good day, and welcome to the International General Insurance Holdings Limited Second Quarter 2026 Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the call over to Robin Sidders, Head of Corporate Relations. Please go ahead.
Thanks, Liza, and good morning. Welcome to today's conference call. Today, we'll be discussing financial results for the second quarter and first half 2026. You will have seen the press release we issued after the market closed yesterday. If you'd like a copy of it, it's on our website at www.iginsure.com. We've also posted a supplementary investor presentation, which can be found on our website in the Investor section on the main landing page. On today's call are Executive Chairman of IGI, Wasef Jabsheh; President and CEO, Waleed Jabsheh; and Chief Financial Officer, Pervez Rizvi. As always, Wasef will begin the call with some high-level comments before handing over to Waleed to talk through the key drivers of our results for the second quarter and first half and finish up with our views on market conditions and our outlook for the remainder of the year. At that point, we'll open the call up for Q&A. I'll just cover some customary safe harbor language to start with. Our speakers' remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by the use of forward-looking words. We caution you that such forward-looking statements should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will, in fact, be achieved. These forward-looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward-looking statements due to a variety of factors, including the risk factors set out in the company's annual report on Form 20-F for the year ended December 31, 2025, the company's reports on Form 6-K and other filings with the SEC as well as our results press release issued last evening. We undertake no obligation to update or revise publicly any forward-looking statements, which speak only as of the date they are made. During this call, we will use certain non-GAAP financial measures. For a reconciliation of these measures to the nearest GAAP measure, please see our earnings release, which has been filed with the SEC and is available on our website. With that, I'll turn the call over to our Executive Chairman, Wasef Jabsheh.
Thank you, Robin, and good day, everyone. Thank you for joining us on today's call. IGI delivered excellent underwriting and underlying results for both the second quarter and first half of 2026, and we continued to generate excellent returns for our shareholders. We delivered these results against a backdrop of war and conflict in the Middle East, global uncertainty and a softening market environment. Market conditions are currently more challenging and pricing has continued to decline in many lines. The pace of decline was quite rapid in some areas. The war-related losses that we experienced in the first half of 2026 are in aggregate likely to represent one of the largest net loss events in IGI history. Our ability to withstand loss events of this scale and still achieve a very healthy level of profit clearly demonstrates the resilience, strength and stability we have at IGI — not only the strength of our model, but the experience, focus and discipline of our people and the culture we have at IGI. Our purpose is to provide peace of mind in times of uncertainty. We support clients across many countries in the region, and our relationships here are some of the longest in our history. We are proud to be in a position of strength to support our clients and our people through these challenging times, not just in the Middle East, but across all our global markets. Our focus remains, as always, on risk-adjusted returns and active cycle management, no matter how volatile the world around us may be. For us, our strategy of having a diversified portfolio allows us to be more resilient and have plenty of optionality. This is what drives the consistency in our long-term track record of high-quality financial results and shareholder value creation. I will now hand over to Waleed to discuss the numbers in more detail and talk about our outlook. I will remain on the call for any questions at the end.
Thank you, Wasef. Good morning, everyone, and thank you all for joining us today. I'm also extremely pleased with our performance in Q2 and the first half of the year. In the face of sizable losses in one of our core regions, increasingly competitive market conditions and continued global uncertainty, our results clearly show that IGI is a strong, resilient and stable organization that can manage and mitigate volatility while continuing to execute our strategy and deliver excellent value for our stakeholders. The events of the first half of the year were unusual, not only because of the scale of the war-related losses, but because they affected Middle East countries that have generally been viewed as comparatively safe from this type of conflict-related impact. As Wasef noted, for IGI, the war losses in aggregate for the first six months of the year represent what's possibly the largest net loss event in IGI's history. In many ways, this was a real-life stress test of our strategy, of our underwriting model, of our risk management and of our balance sheet. I'm very pleased, though not surprised, that we performed so well and that our model and strategy were designed to perform. I'd like to make a few points before moving on to some of the specifics of the results for Q2 and H1. First, as we've already noted, the Middle East war-related losses in aggregate look like they will be the largest single event loss in IGI's almost 25-year history. We recorded net war losses in Q2 of almost $14 million, and for the first half, roughly $39 million, both direct and indirect losses. These losses are predominantly in our PV book. We mentioned in Q1 an indirect loss in our energy portfolio. These are war-related physical damage and business interruption losses and predominantly stem from our exposures in the UAE, Saudi Arabia, Bahrain and to a lesser extent Oman. As a reminder, and this should be fairly obvious, we don't have any exposure in countries that are sanctioned. The Middle East remains an important region for us, served by our operations in both Oman and Dubai. As you're all aware, IGI originated in Jordan. We have nine offices, with almost 300 of our people in Oman and much of our operational support headquartered here, and it's where both Wasef and I are speaking to you from today. This is the first time we've experienced major war losses in the Middle East, and I'm proud that we're able to support our clients in the region. Consistent with our disciplined approach, we've used the insights gained from these events to further reduce PV line sizes and exposures. On the flip side, as I said on last quarter's call, we've also taken advantage of the price correction in the Middle East to write new business at significantly improved pricing. Secondly, our ability to absorb shock losses was clearly demonstrated in the second quarter and half-year financial results that we're discussing today. IGI today is a much larger, much stronger, more resilient and more stable company than even five years ago. To be able to record one of, if not the single largest loss in our history in the first six months of the year, while posting a 92% combined ratio, a $42.5 million profit and returning over $72 million in capital to shareholders really speaks for itself. Lastly, and as we say on most of these calls, we all know our business is very cyclical. Our view of success is never based on a quarter-to-quarter basis or even on a year-over-year basis. The market is constantly changing, but our philosophy and our values remain the same. Success for us is determined by long-term, multiyear or over-the-cycle performance with some short-term volatility, which is the nature of our business and is to be expected. I'll talk more about specific market opportunities and our entry into the Indian market a little later. Turning specifically to the results of Q2 and H1 of the year, I'll focus on a few key points and the drivers behind the numbers. First, GWP was $201.7 million for Q2 and just under $400 million for the first half. This represents a 7.4% and 1.2% increase over the same periods last year. This primarily reflects the impact of around $10 million in new Indian business written subsequent to securing registration approval in June to open our office in GIFT City in India. Underwriting income was $29.5 million for Q2 and just over $67 million for the first half, which represents about a 6.7% increase over the first half of 2025. We posted a combined ratio of 95.1% for Q2. That included about 18.8 points of CAT losses, out of which 11 points are related to the war. That led to an ex-CAT accident year combined ratio of 74.9%, below the 76% posted for Q2 of last year. The combined ratio of 92.2% for the first half included 19 points of CAT losses, out of which 12 points were related to the war itself. That led to an ex-CAT accident year combined ratio of 86.2% compared to 84.1% for the first half of last year. I would note again that the additional indirect war losses recorded in the first half of around $10 million do not sit in the CAT line, and those amount to about an additional 4.5 points on the combined and loss ratios. These results show the strength and profitability of our underlying performance even in the face of these adverse and competitive conditions. Return on average equity was 12.6% and core operating return on average equity was 11.3% for the second quarter, and 12.3% and 12.5% for the first half, respectively. These are broadly in line with our long-term averages. Total value per share was $16.04 at the end of Q2, which includes total capital returned to shareholders of about $73 million in the first half of the year. That's made up of almost $55 million in dividends, including the special dividend declared in March of $1.15, and a further $18.2 million in share repurchases. Net premiums earned were $125 million and $236.2 million for Q2 and H1 of the year, respectively — increases of 8.7% and 3.7% over the same periods last year. The combined ratio of 95.1% for Q2, as mentioned earlier, includes 18.8 points of CAT losses, mainly from the Middle East war, and 1.4 points of unfavorable prior year reserve development, primarily related to our view of specific accounts or risks in our long-tail segment. Combined ratio of 92.2% for the first half of the year includes 19 points of CAT losses, again primarily as a result of the war, and 13 points of favorable prior year reserve development. During Q2 and the first six months of the year, currency revaluation movements were not a material feature compared to the prior year. All in, we delivered net income of just under $21 million or $0.49 per share for Q2 versus $34.1 million or $0.77 per share for Q2 of last year. For the first six months, we delivered net income of $42.5 million or $0.98 versus $61.4 million or $1.36 per share for the same period last year. Turning to our segment results: In the short-tail segment, conditions continue to be mixed with increases in some areas and decreases in others. Overall, written premiums were up in 2026 over both the second quarter and the first half of 2025, registering an increase of about 7% in Q2 over the same period last year. For the first half, gross premiums in this segment were up just over 2%. Net premiums earned were down slightly at 3% for Q2 but were up just over 4% for the first half. Rates remain generally adequate overall, but there is significant variation in adequacy from one line to another. Underwriting income for both Q2 and H1 was down substantially year-over-year due to the elevated level of loss activity, much related to the war, but still very healthy at $16 million for the second quarter and just over $25 million for the first half. In the Reinsurance segment, conditions are increasingly competitive, and underwriting income was impacted by the higher level of losses in the quarter. GWP was up for the quarter, largely due to the new Indian business written I mentioned before. Net premiums written were also up by just under 6% to just over $25 million. For the first half, both gross written premiums and net earned premiums were down, more so due to the nonrenewal of two sizable reinsurance programs in Q1, which we mentioned on last quarter's call. In the long-tail segment, gross premiums written in Q2 were fairly steady with the same period in 2025. On a net earned basis, premiums were up by over 33%, leading to an underwriting income of $5.5 million versus an underwriting loss of just under $3 million for Q2 of last year. For the first half, both gross written and net earned premiums were up 6.6% and 17.4%, driven by new business in most lines. Underwriting income for H1 increased substantially to just under $23 million versus an underwriting loss of just over $10 million for the same period in 2025. We remain cautiously optimistic about market conditions stabilizing somewhat in this segment after many sequential years of declining rates. Over the past few quarters, with better data and more experience from writing this business for more than a decade, we've taken the opportunity to reassess this portfolio and our view of the tail and have made some modest adjustments. Our approach to long-tail business is always on the side of conservatism. The reserve strengthening you saw in our press release of a modest $1.7 million, or about 1.5 points in the combined ratio in Q2, was specific to this portfolio. Again, nothing systemic — purely us taking a more prudent view of the early years of this business. For the first half of 2026, we released more than $30 million of prior year reserves across all our segments. Turning to the balance sheet: Total assets were just under $2.2 billion. Total investments and cash were just under $1.3 billion. Our allocation to fixed income securities, which makes up about 78% of our investments and cash portfolio, generated $14.5 million in the second quarter of investment income and $28.6 million in the first half, with a yield of 4.5% at the end of Q2, and we held duration steady at 3.5 years. In Q2, we repurchased a little over 205,000 common shares at an average price per share of $24.82. At the end of Q2, we had 3.9 million common shares remaining under our existing $5 million common share repurchase authorization. Total equity was just below $670 million at the end of the quarter, and that includes almost $73 million in share repurchases and common share dividends, including the special dividend I mentioned earlier. That compares to total equity of about $710 million at the end of 2025. Very strong fundamental results in Q2 and H1, especially considering the overall market softening and the heightened level of significant loss activity. I want to reiterate that IGI is a purely technical underwriting business. We generate returns through underwriting discipline, active capital management and cycle management. We don't rely on the investment portfolio to support returns when the underwriting cycle softens. Instead, our strategy relies on the significant diversification of our underwriting portfolio and our ability to execute through all market conditions and stages of the cycle. That's how we endure. As we approach our 25th anniversary year, it's fair to say the strategy has served us well. Turning to opportunities and market conditions, starting with the Middle East: We've taken advantage of significantly improved pricing and terms and grown our PV book by about 45% in Q2. The vast majority of this increase is due to significant pricing improvement, especially on the Middle East portfolio, but we've also written a lot of new business in these countries as well. As always, we are very selective in what we're willing to write. We've adjusted PV gross lines and gross line sizes, leading to reduced exposure in the region, and that's a continuous process. Our pricing correction has been long overdue in the PV line. We're seeing it on a direct basis and to a lesser extent on a reinsurance basis. We're optimistic that the improved pricing and policy structures will hold. New opportunities in the Middle East are focused predominantly on PV and marine lines and, to a lesser extent, reinsurance. Regarding India, this is a new market opportunity for us, one that we see as long term in one of the fastest-growing economies in the world, and we're excited about developing our presence there. In June, we announced that we secured registration approval for the setup of a branch office in GIFT City, India's first and only operational international financial services center. We're currently in the process of setting up and staffing the office. This is a meaningful milestone for IGI as it expands our global footprint, strengthens our presence in the Indian subcontinent and furthers our diversification and strategy of having physical presence with local talent in our key regions. We've already written around $10 million of GWP of new Indian business, predominantly in our treaty reinsurance book, focused on niches like cyber and surety. In other geographic regions — U.S., Europe, Asia Pacific — the story is similar to what we said on prior calls, and we continue to leverage our presence, experience and relationships for new opportunities. We are working on a number of initiatives that, if and when they're in place, will provide us with more non-correlated, diversified and profitable growth. Our upgrade from S&P last year to a full A rating can make a difference for us. Specific lines of business: starting with the treaty reinsurance portfolio, margins are still healthy, but competitive pressures are increasingly prevalent. Opportunities here are more concentrated in specialty treaty lines like marine, energy and PV. Continued softening is possible; whether further pressure continues will depend on loss activity for the remainder of the year. In our long-tail segment, we're seeing new opportunities and good deal flow, especially in niche segments like marine liability. This is an opportunity to capitalize on improved pricing and demand for capital that resulted from recent significant losses. We expect to grow and expand our direct marine liability book and have already seen some of that in 2026; renewal rates for the remainder of this year and into next year are widely expected to continue to improve. In the short-tail portfolio, we've covered PV. We're also seeing opportunities in certain marine lines like cargo, specifically cargo war and war on land arising from the conflict. The opportunity so far isn't as significant as anticipated at this stage, but we have taken advantage where appropriate. Our energy book and certain areas of our property book, two of our largest lines, are definitely much tougher than a year ago and even since the beginning of this year. Competitive pressures have further increased to the point of being irrational in some cases. We are cautiously optimistic we will see some stabilization in elements of our energy book, especially following some sizable losses in the downstream energy space. We continue to see healthy conditions in specialist lines like construction engineering with healthy levels of deal flow, particularly with increased infrastructure projects globally. In the Middle East, direct results of war and general uncertainty have led to some instances where projects are delayed and in some cases canceled. Contingency continues to be a bright spot. There are opportunities even in the current environment, and this is where our strategy and strengths matter most. Our significant diversification, the experience of our people and our relationship network provide us with optionality and several levers to work with. Our business continues to be very much a people business where relationships matter. We look forward to what's to come for the rest of this year and 2027, and we remain steadfastly focused on technical underwriting expertise, strong execution of our strategy, and capitalizing on the many opportunities that our strategy provides. Our performance in the first half of 2026 tells a clear story: more than $42 million in net income, healthy core margins, over $72 million returned to shareholders, and a new operation launched in India. These results demonstrate that even amid a softening market and extraordinary, unexpected loss events, this business continues to show real earnings power and genuine resilience. This is the foundation we've built on, and we remain committed to delivering peace of mind for our customers and superior value for our shareholders. I'm going to pause here, and we're ready to turn it over for questions. Operator, we're ready to take the first question, please.
分析師問答
Your first question comes from Rowland Mayor from RBC Capital Markets.
I wanted to quickly start on the Middle East growth opportunity during the conflict. Do you think the market has responded appropriately or have some of the global competitive pressures limited the pricing response in your opinion?
Thanks for the question. The war hasn't really impacted lines outside of those exposed to war. So PV definitely has seen a huge reaction. I mentioned on last quarter's call that we're seeing rate increases in some cases in the thousands of percent. I think the market overall has reacted well, but not necessarily consistently. When the ceasefire was announced, some elements of the market took a different approach and eased their underwriting requirements. What's happened since then has hopefully reemphasized that there remains a large element of uncertainty and volatility in the environment, and business needs to be underwritten with that in mind. That's exactly how we've been doing it. Thankfully, we don't have exposure to those marine war losses, which based on recent articles have been estimated between $1.5 billion to $2 billion. That's the trickiest part of the war-exposed book at the moment. Has the reaction been positive? Definitely. Has it been enough? In some cases, yes; in some cases, no. But we will stick to our underwriting discipline and manage exposures in the best way we see fit regardless of what others do. In terms of its impact on other lines of business such as property and construction, it has had no effect on those other lines — people are focusing on exposures the war impacts.
That's great. It appears it's been kind of 18 or 19 points of CAT losses this quarter. Have there been any larger losses in the third quarter? Or is it kind of a linear CAT loss expectation as the conflict continues?
Not to our knowledge. Despite targeted attacks since the ceasefire was announced and the MOU was agreed, there hasn't been the state of severe losses that you saw in March and April. Practically all of our reported losses have emanated from that period so far this year. It's not to say the situation can't deteriorate to those levels again, but it's been fairly quiet on the loss front since then.
If I could sneak in just one more: I wanted to ask on your approach to capital return. At the current valuation, would you start to shift some of the buybacks towards dividends due to the valuation?
We have the repurchase authorization in place. How much we buy, when we buy and at what price depends on various factors. The authorization is there and we will exercise it whenever we see fit. There will be levels at which we're not big fans of buying, and if that's the case, we will look to distribute returns in other forms, whether buybacks or dividends. That decision depends on the performance of the business.
And your next question comes from Rowland Mayor from RBC Capital Markets.
I was going to let someone else ask a question, but I'm back. Just quickly on the reserving action: could you help us understand the lines of business impacted and whether there is a change to the current year loss pick associated with it?
As I said on the call, it was driven by the more experience and data we have internally on specific lines, especially in the long-tail lines. The more data we have, the more informed and cautious we can be with reserving. It's relatively insignificant in the large scheme of things, but we felt it prudent to add some reserve after reviewing the tail. Overall we've released more than $30 million of prior year reserves so far this year. For the long-tail segment itself, it's pretty flat and in line with where we were at the end of last year. So there's nothing systemic — just a couple of losses where we felt it was prudent to take a more cautious approach.
And I'm assuming that's all IBNR at this point?
Pretty much, yes.
This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead.
Just a quick thank you to all of you for joining us today, and thanks for your continued support. As always, if you've got any additional questions, you can contact Robin and she'll be happy to assist. We look forward to speaking to you on next quarter's call. Have a good day, everyone. Thank you.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.