Targeting opportunities with the greatest margins
Waleed Jabsheh, president and CEO at IGI, outlines the group’s growth strategy.
What is IGI’s growth strategy?
From IGI’s beginnings as a single office with three employees, our story has always been one of thoughtful, organic growth. Since then the group has become a US publicly traded company with a market value in excess of $700mn and around 450 employees across eight offices worldwide.
Our strategy is straightforward: we focus on specialty risks with an “underwriting first” philosophy, as we believe that’s where we can achieve the best returns and maximise value for all our stakeholders. This has been reflected in our most recent results. We produced a combined ratio of 81 percent in the second quarter and 78 percent for the first six months of 2024, both well below our long-term averages.
These results followed a truly exceptional year for IGI in 2023. We opened our eighth regional office in Oslo, while continuing to build out our product offerings and skillsets in other offices – such as adding risk and actuarial talent to the Bermuda office. The company also completed a successful capital markets transaction and announced an extraordinary cash dividend. In total, we returned about $33mn to shareholders in the form of dividends and share repurchases. And given our successes in 2023, our board decided to pay an extraordinary dividend of $0.50 per share to reward our shareholders for their support.
In addition to taking advantage of opportunities to expand and diversify our business, IGI took actions to further strengthen our foundation to support and service our expanding business.
What is IGI’s business mix between insurance and reinsurance today?
Historically, reinsurance has represented around 5 percent of our business, while our short-tail and long-tail portfolios made up the other 95 percent. In 2023, given the significantly improved reinsurance market conditions, we took advantage of the opportunity and virtually doubled our reinsurance portfolio to around 10 percent overall, and we expect to see some further growth as long as these conditions persist.
The split between short-tail and long-tail business has typically been about two-thirds to one-third. Going forward, the long-tail segment’s overall share of the portfolio is decreasing as a reflection of challenging market conditions and dynamics. In this segment, renewal rates are still adequate but have trended downward in many lines and competition is intensifying. As a result, we have adopted a more cautious view over the past two years.
We continue to expand our short-tail portfolio, moving our capital to opportunities with the greatest margins.
The reinsurance market will be intensely focused in the coming weeks on the Atlantic hurricane season given the forecasts for above-average activity. After last year’s adjustments, the market appears to be in a good place, but a major industry event, or a series of events, could have an impact on rates in 2025 and beyond. We believe that IGI's portfolio is well-positioned to benefit from rising demand.
How is IGI’s US book faring?
In the first half of 2024, we wrote a little over $73mn in gross premiums, which represents growth of close to 50 percent year on year. The US continues to be a growth area for us, and we expect growth to remain very healthy throughout the remainder of 2024.
Currently we are writing all short-tail business, including property, energy, marine cargo, contingency, political violence as well as treaty reinsurance. Earlier this year, we also started writing engineering business focusing on small to mid-sized projects in the US.
We’ll continue to take advantage of the opportunities here, though we’re seeing rising competitive pressures, mostly coming from existing players and domestic markets who are pushing to increase share.
How is IGI tackling the renewal season?
IGI’s strength lies in our cycle management – our ability to be selective and disciplined and move our capital to those areas with the greatest risk-adjusted returns, while always focusing on the preservation of our capital.
Overall, our markets remain relatively stable and the rate environment broadly adequate, but we are seeing increasing competitive pressures where existing players are pushing to increase their market share. For IGI, this is where maintaining our discipline is critical. We are not afraid to walk away from business and we have and continue to do this in our long-tail portfolio. It’s all about the profitability of the business and not growing simply for the sake of showing growth.