International General Insurance Holdings Ltd.

IGIC Details

International General Insurance Holdings Ltd. (NASDAQ: IGIC) is primarily engaged in the business of insurance and reinsurance. It underwrites a portfolio of specialty risks, including energy, property, construction and engineering, ports and terminals, general aviation, political violence, casualty, financial institutions, marine liability, and treaty reinsurance in more than 200 countries and territories. IGIC's shares were listed on NASDAQ on March 18, 2020.

Latest News:

• Key Appointment: On January 31, 2022, IGIC appointed Stav Tsielepis as its Chief Risk Officer; Mr. Tsielepis will report to the executive team and be in charge of IGI's risk management framework, which includes the exposure management and capital modelling tasks. Mr. Tsielepis, who has 18 years of industry experience, joins from Arch Capital Group's London-based subsidiary Arch Insurance International, where he served as Chief Risk Officer and was responsible for critical projects such as implementing Brexit plans and collaborating closely with regulators such as the Central Bank of Ireland.

FY21 Results:

• Growth in Topline: The company reported a YoY growth of 16.76% in gross written premium to USD 545.6 million in FY21 (ended December 31, 2021) from USD 467.3 million in FY20, attributable to growth in gross written premium driven by the new business generated in all segments complemented by increasing rate on existing business.
• Increase in Profitability: In FY21, IGIC's net income increased to USD 43.6 million from USD 27.2 million in FY20.
• Improvement in Combined Ratio: The combined ratio (i.e., the sum of net claims and claim expense ratio and the expense ratio) for FY21 was 82.7%, compared to 86.7% for FY20.

Key Risk:

• Competition Risk: IGIC operates in the insurance and reinsurance industry. It competes directly with larger companies, resulting in fewer policies being underwritten, lower premium rates, higher customer acquisition and retention costs, and less favorable policy terms and conditions, moreover, there has been a lot of merger and acquisition activity in the insurance and reinsurance industry. Should this industry consolidate further, it could impair the financial and operational performance of the company.

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

IGIC's stock price has fallen 18.85% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 6.75 to USD 11.05. We have valued the stock using the Price/Book Value-based relative valuation methodology and arrived at a target price of USD 9.35.

Considering the correction in the stock price, robust financial performance, improvement in combined ratio, associated risks, and current valuation. We recommend a "Speculative Buy" rating on the stock at the current price of USD 7.49, up 0.54% as of March 07, 2022, at 03:06 PM ET.

Three-Year Technical Price Chart (as on March 07, 2022, at 03:06 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.