2019INTERNATIONAL GENERAL INSURANCE HOLDINGS LIMITEDANNUAL REPORT & ACCOUNTS IGINSURE.COM 1,381ftHIGH TELECOMMUNICATIONS TOWERKUALA LUMPUR TOWER2019ANNUAL REPORT & ACCOUNTS INTERNATIONAL GENERAL INSURANCE HOLDINGS LIMITED1,483ftHIGH88FLOORS38ELEVATORS EACH TOWERPETRONAS TOWERS 2019 ANNUAL REPORT
& ACCOUNTS
On March 18,
2020, IGI began
trading on the
Nasdaq Capital
Market under the
symbol IGIC
AM Best upgraded
our financial strength
rating (FSR) to A /
Stable. S&P Global
Ratings reaffirmed
our FSR rating
at A- / Stable
NASDAQ WAS THE WORLD’S FIRST ELECTRONIC STOCK
MARKET, AND REMAINS THE SECOND LARGEST
STOCK EXCHANGE, WITH IN EXCESS OF
$10 trillion
IN MARKET CAPITALIZATION
AND MORE THAN
3,500 LISTINGS
CONTENTS
ABOUT US
BOARD OF DIRECTORS
LETTER FROM THE
CHAIRMAN
1
3
5
FINANCIAL HIGHLIGHTS
9
FINANCIAL STATEMENTS
& ACCOUNTS
11
FORWARD LOOKING STATEMENTS DISCLOSURE
This Annual Report 2019 contains certain statements that are
“forward looking statements” within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. You
should not place undue reliance on such statements because
they are subject to numerous uncertainties and factors relating
to IGI’s operations and business environment, all of which are
difficult to predict and many of which are beyond IGI’s control.
Forward-looking statements include information concerning
IGI’s possible or assumed future results of operations, including
descriptions of our business strategy. These statements
are often, but not always, made through the use of words or
phrases such as “believe,” “anticipate,” “could,” “may,” “would,”
“should,” “intend,” “plan,” “potential,” “will,” “expect,” “believe,”
“continue,” “strategy,” “outlook” and similar expressions.
Such statements are qualified by the inherent risks and
uncertainties surrounding future expectations generally, and
may differ materially from actual future experience. For a
more detailed discussion of such risks and uncertainties, see
IGI’s annual report on Form 20-F for the year ended December
31, 2019, including those under “Risk Factors” therein, and
in the Company’s other filings with the SEC. IGI undertakes
no obligation to release publicly any updates or revisions
to any forward-looking statements to reflect any change
in its expectations or any change in events, conditions, or
circumstances on which any such statement is based.
ABOUT US
We are an international specialty insurance and reinsurance group, registered in
Bermuda and listed on Nasdaq Capital Markets under the symbol “IGIC”.
Established in 2001, we underwrite a diverse portfolio of specialty lines worldwide,
adhering to a careful and disciplined underwriting strategy that is underpinned by
deep technical expertise, strong client relationships, and an ability to quickly adapt to
changing market conditions. We maintain our operational headquarters in Amman,
Jordan, with offices in London, Dubai, Casablanca, and Kuala Lumpur. With our
strong market position and reputation as an expert in niche businesses in our core
geographies, we strive to deliver outstanding levels of service to clients and brokers.
OFFICE
LOCATIONS
1. BERMUDA
44 Church Street
Hamilton HM 12
Bermuda
3. LONDON
15-18 Lime Street
London EC3M 7AN
England
2. CASABLANCA
32-42, Bd Abdelmoumen
Residence Walili 25
4th Floor P.O. Box 20000
Casablanca
Morocco
4. AMMAN
74 Abdel Hamid Sharaf St.
P.O. Box 941428
Amman 11194
Jordan
3
5. DUBAI
Office 606, Level 6, Tower 1
Al Fattan Currency House
Dubai International
Financial Centre
P.O. Box 506646, Dubai
United Arab Emirates
7. KUALA LUMPUR
29th Floor, Menara TA One
Jalan P Ramlee 50250
Kuala Lumpur
Malaysia
6. LABUAN
Level 1, LOT 7, Block F
Saguking Commercial
Building
Jalan Patau – Patau
87000 Labuan
Malaysia
1
2
4
5
6
7
Treaty Reinsurance
General Aviation
Ports & Terminals
Political Violence
Property
Forestry
Engineering & Construction
Upstream Energy
Downstream Energy
Oil & Gas
Power & Renewables
Financial Institutions
Professional Indemnity
Directors & Officers Liability
Warranty & Indemnity
Legal Expenses
Surety Bonds
Intellectual Property
Marine Liability
Marine Trades
BUSINESS
LINES
General Third Party Liability
Inherent Defects
EMPIRE STATE BUILDING
1,454ft
HIGH
102
FLOORS
73
ELEVATORS
1
2
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
BOARD OF DIRECTORS
International General Insurance
Holdings Limited (Dubai)
MOHAMMAD ABU GHAZALEH
Chairman
(Chairman and CEO, Fresh Del
Monte Produce Inc. – Miami)
WASEF JABSHEH
CEO & Vice Chairman
KHALIFA AL MULHEM
Director
(Chairman, National Polypropylene
Company Limited – Saudi Arabia)
DAVID KING
Director
(Non-Executive Director of
the Board of Directors of Forex
Capital Markets Limited)
DAVID ANTHONY
Director
HANI JABSHEH
Director
(Co-founder Albawaba.com)
ANWAR AL JABRI
Director
(CEO Jabreen Capital – Oman)
BOARD OF DIRECTORS
International General Insurance
Holdings Ltd. (Bermuda)
(as of March 17, 2020)*
WASEF JABSHEH
Chairman
(CEO, International General
Insurance Holdings Ltd.)
DAVID ANTHONY
Independent Director
MICHAEL GRAY
Independent Director
WALEED JABSHEH
Director
(President, International General
Insurance Holdings Ltd.)
DAVID KING
Independent Director
WANDA MWAURA
Independent Director
ANDREW POOLE
Director
3
4
* On March 17, 2020, International General Insurance Holdings Limited and Tiberius Acquisition Corporation, a U.S.-based special purpose acquisition
company, successfully consummated a Business Combination between the two companies pursuant to a business combination agreement dated
October 10, 2019. As a result of the Business Combination, the Dubai-registered International General Insurance Holdings Limited became a wholly-
owned subsidiary of the new public company, registered in Bermuda, named International General Insurance Holdings Ltd.
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 In 2019, we
increased our
gross written
premiums by
15.8% to $349.3
million
“IGI has been built
on a foundation
of discipline, hard
work, focus, and
most importantly,
integrity.”
LETTER FROM THE CHAIRMAN
As I write to you, we are in the midst of one of the worst global disasters of
our time. Over the past few months, we have seen the COVID-19 pandemic
wreak havoc on our daily lives as governments, national health systems, and
businesses across the world implement strategies and procedures to contain
this deadly virus.
At IGI, our working life was upended
virtually overnight. In rapid succession,
each of our five offices closed and our
people were sent home. But our operations
have continued uninterrupted as we
efficiently and effectively activated our
business continuity plans across our group
of companies, prioritizing the health, safety
and well-being of all our people first,
while continuing to seamlessly serve our
customers and other stakeholders. For
all of us, the uncertainty of the past few
months is likely to prevail for some time,
making 2020 – our first year as a U.S.
publicly traded company with a new set of
stakeholders – a uniquely challenging year.
Having said that, I have never been more
confident that IGI will continue to prosper
and grow with the same values that have
made us successful from the beginning. IGI
has been built on a foundation of discipline,
hard work, focus, ingenuity, and most
importantly, integrity. Our 18-year history
and track record of growth, consistently
solid results, and strong shareholder value
creation speaks to who we are, how we do
business, and how we treat people. This
applies not only to our employees, but also
our customers, our shareholders, and all
our stakeholders.
2019 was in many ways a pivotal year for
us as we refined and strengthened our
operating model to make us ever more
efficient, more nimble, and more resilient in
an increasingly uncertain world. 2019 was
also the year during which we moved on
the decision to become a public company.
This is something we have considered for
several years as part of our strategy to
accelerate growth, increase liquidity, more
efficiently access capital, and enhance our
global reputation.
In October 2019, after several months of
discussion and analysis, we entered into
a business combination agreement with
Tiberius Acquisition Corporation, a U.S.-
based publicly traded special purpose
acquisition company listed on the Nasdaq
Capital Markets. On March 17, 2020,
after months of work and preparation, IGI
successfully became a public company,
and on March 18, 2020 began trading on
Nasdaq. This was a transformational step
for IGI, and it strengthened our capital
position and our access to capital should
we need it – all of which are ever more
important as we navigate the present
challenging global environment.
As the founder of IGI, I am particularly
proud of what we have achieved in the last
year, while maintaining the values and
principles that have made IGI successful
from the beginning. I am excited and
confident about our shared future. We will
continue to strive, as we always have, to be
a strong, reliable, and trusted partner for
all of our stakeholders.
2019 FINANCIAL RESULTS
Our results for 2019 were solid and reflect
IGI’s ability to quickly take advantage of
hardening market conditions. We increased
our gross written premiums by 15.8% to
$349.3 million in 2019. The growth in our
portfolio was the result of a number of
factors including new business generated
– particularly in our long-tail lines where
pricing continues to be strong – improved
renewal pricing, and further refinement
of our existing business, all resulting
from hardening markets and judicious
underwriting.
The combined ratio of 94.1% for 2019
reflects a higher level of attritional losses
in certain lines, a smaller benefit from
prior year favourable reserve development
across our short-tail portfolio, and the
increased proportion of long-tail business,
specifically U.K. financial and professional
lines business.
We continued to maintain a high level of
conservatism in our investment portfolio,
generating just short of a 2% investment
yield. We expect during 2020 to continue
to reposition the portfolio to generate
income from higher yields on fixed income
securities while maintaining our conservative
risk profile. Overall, and considering the
potential for distraction that comes with any
transaction, I am very pleased with our profit
level of US$23.6 million.
RESILIENCE IN UNCERTAIN TIMES
Throughout our 18-year history, IGI has
demonstrated time and again that it is a
committed industry partner. As a global (re)
insurance company, our mandate is simple
and clear: we exist to help society manage
risk. All of us in the industry, no matter
how big or how small, play a different role.
For IGI, that means leveraging our long-
standing relationships globally to serve
our customers, providing niche coverages
backed by a solid balance sheet and an
experienced management team.
We have made tremendous progress over
the past several years, particularly during
2019, preparing for IGI to become a publicly
traded company on a U.S. exchange.
Our financial strength rating (FSR) was
upgraded during the year by AM Best to “A”
(Excellent) with a stable outlook. Our S&P
Global Ratings FSR remains at “A-” with a
stable outlook. These ratings are particularly
important in this increasingly uncertain
world, and they reflect the strength and
resilience of our financial position.
We have enhanced and formalized our
Corporate Governance structure and put in
place a new majority independent Board of
Directors. We have always endeavoured to
be as transparent a company as possible,
even when we were not required to do
so. As a result, the additional disclosure
requirements associated with being a public
company were already largely in place.
Throughout the company, we continue
to attract talented and experienced
people across our operations, as even in
unprecedented times such as these, we have
an inspiring and rewarding place to work.
OUTLOOK FOR 2020 AND BEYOND
In spite of the current turbulence and
uncertainty in all our lives, the demand for
quality risk solutions is especially apparent
and continues to increase in virtually all our
markets. While in 2019 we experienced rate
increases of approximately 13% on average
across our portfolio, we have continued
to see some acceleration in 2020 and we
expect that will continue throughout the
year and into 2021.
We are seeing notable opportunities in
most non-U.S. long-tail specialty lines,
downstream energy risks, and specialty
lines across the MENA region where there
is increasing dislocation and where IGI is
particularly well-positioned with a strong
presence on the ground. Having successfully
been approved to write excess and surplus
business in some of our short-tail lines in
the U.S., we are seeing an abundance of
opportunity. We are optimistic that these
market conditions will continue to provide
us with more opportunities to leverage our
market position, and ultimately generate
continued profitable growth.
Rest assured that as we continue to grow,
we will do it in the same measured and
methodical way we have always done.
CORPORATE CITIZENSHIP
I believe that our responsibility goes well
beyond the business of IGI. The foundation
of our success for the past 18 years is
simple. It’s about doing the right thing for all
our people, and our communities. We have
5
6
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 LETTER FROM THE CHAIRMAN continued
done this by living a set of deeply embedded
values: “IGI: Innovative. Genuine. Integrity.”
Each of these traits personify who we are,
how we do business, and how we treat
people. We will continue to embrace these
values in everything we do.
We have a long history of investing in our
communities and supporting charitable
causes that align with IGI’s values, and
we give in many ways. During 2019,
we completed a five-year $1.25 million
commitment to The Hana Project, a
research program at the Department of
Neurological Science at the University
of California, San Francisco School of
Medicine focused exclusively on the
development of improved therapies for
glioblastoma patients.
Other community initiatives supported by IGI
include the Insurance Museum, a London-
based charity whose mission is to promote
understanding of the evolution and history
of the insurance industry; Haven House
Children’s Hospice in London, where we not
only provide financial support in a variety of
ways, we also provide help in person around
the facility; the Amman Opera Foundation,
where we support their opera program as
well as their student scholarship program;
and other educational initiatives including
providing scholarships to students to study
in the American University of Cairo and the
American University of Beirut.
With our company spread across many
regions and cultures, we are a diverse group
on many levels: gender, race, religion, age.
We value and embrace our differences and
focus on mutual respect, inclusion and
empowering our people. In this vein, IGI
supported Equal Playing Field’s “Festival of
Football” - aimed at raising awareness of
inequalities in sport and business. IGI sent
an all-female team to France to participate
in setting a Guinness World Record for the
longest football match. For the second year,
IGI supported the Lloyd’s of London “Dive In
Festival of Diversity” promoting diversity and
inclusion in insurance, and also supported
an affiliated “Dive In” event in southern
Jordan engaging women on their rights in
the workplace.
Already in 2020, we have seen a number of
our IGI employees volunteering in Jordan
to assist the government in providing
financial aid, food and medical supplies to
those in need during the continuing crisis
of the COVID-19 pandemic. Similarly, our
London employees have organized events to
provide much needed fundraising support
for our UK charities, which are being
significantly impacted by the postponement
of fundraising decisions and cancelation
of events.
FINALLY... THANK YOU
If there is one thing I am certain of in
these uncertain times, it is that we would
not have achieved the success we have,
nor become a listed company on Nasdaq,
without the loyalty and support of our many
stakeholders: our brokers and policyholders,
our clients, our shareholders – many of
whom have been with us from the beginning.
Most importantly, though, it is our people,
whose expertise, experience, dedication, and
resilience are at the core of our success. It is
our relationships that define us, and at IGI it
is what we value most.
I look forward to working with our new Board
of Directors to provide continued support
and stewardship throughout the current
challenging environment and for the
coming years.
Together, we look forward to serving our
newest shareholders and to generating
long-term value, just as we have since
our beginnings. In the face of the existing
uncertainty and turmoil, all of us at IGI
remain resolute in our commitment to do
what is right for all our stakeholders during
these difficult times.
Wasef Jabsheh, Chairman
“It is our people,
whose expertise,
experience,
dedication, and
resilience are at
the core of our
success.”
7
8
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 FINANCIAL HIGHLIGHTS
PROFIT FOR
THE YEAR
$23.6m
SHAREHOLDERS’
EQUITY
$312.1m
INVESTMENT
INCOME
$13.4m
TOTAL COMPREHENSIVE
INCOME
$26.9m
AM Best
A / Stable Outlook
S&P
A- / Stable Outlook
NET UNDERWRITING
PROFIT
$52.0m
GROSS WRITTEN
PREMIUM
$349.3m
9
10
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
FINANCIAL STATEMENTS & ACCOUNTS
Independent auditor’s report to the shareholders of
International General Insurance Holdings Limited
REPORT ON THE AUDIT OF THE
FINANCIAL STATEMENTS
OPINION
We have audited the accompanying
consolidated statements of financial
position of International General Insurance
Holdings Limited, a company organized
under the laws of the Dubai International
Financial Center (“IGI”) as of December 31,
2019 and 2018, the related consolidated
statements of income, comprehensive
income, changes in equity and cash flows for
each of the three years in the period ended
December 31, 2019, and the related notes
(collectively referred to as the “consolidated
financial statements”). In our opinion, the
consolidated financial statements present
fairly, in all material respects, the financial
position of the Company at December
31, 2019 and 2018, and the results of its
operations and its cash flows for each of the
three years in the period ended December
31, 2019, in conformity with International
Financial Reporting Standards (IFRS) as
issued by the International Accounting
Standards Board.
BASIS FOR OPINION
These financial statements are the
responsibility of the Company’s
management. Our responsibility is to
express an opinion on the Company’s
financial statements based on our audits.
We are a public accounting firm registered
with the Public Company Accounting
Oversight Board (United States) (PCAOB) and
are required to be independent with respect
to the Company in accordance with the U.S.
federal securities laws and the applicable
rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those
standards require that we plan and perform
the audit to obtain reasonable assurance
about whether the financial statements are
free of material misstatement, whether
due to error or fraud. The Company is not
required to have, nor were we engaged to
perform, an audit of its internal control over
financial reporting. As part of our audits we
are required to obtain an understanding of
internal control over financial reporting but
not for the purpose of expressing an opinion
on the effectiveness of the Company’s
internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures
to assess the risks of material misstatement
of the financial statements, whether due to
error or fraud, and performing procedures
that respond to those risks. Such procedures
included examining, on a test basis, evidence
regarding the amounts and disclosures
in the financial statements. Our audits
also included evaluating the accounting
principles used and significant estimates
made by management, as well as evaluating
the overall presentation of the financial
statements. We believe that our audits
provide a reasonable basis for our opinion
Ernst and Young LLP
We have served as the Company’s auditor
since 2019.
London, United Kingdom
April 14, 2020
In 2019, IGI’s
total assets
surpassed
$1 billion
Total equity
increased
3.6% in 2019 to
$312.1 million
Wind power supplied 15%
of the electricity consumed
in Europe in 2019
11
12
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2019 and 2018
ASSETS
Cash and cash equivalents
Term deposits
Insurance receivables
Investments
Investments in associates
Reinsurance share of outstanding claims
Reinsurance share of unearned premiums
Deferred excess of loss premiums
Deferred policy acquisition costs
Deferred tax assets
Other assets
Investment properties
Property, premises and equipment
Intangible assets
TOTAL ASSETS
Notes
3 (a)
3 (b)
4
5
6
7
8
9
10
27
11
12
13
14
The consolidated financial statements were approved by the Board of Directors on 9 April 2020.
2019
USD
2018
USD
Notes
2019
USD
2018
USD
192,459,867
184,732,364
LIABILITIES
LIABILITIES AND EQUITY
119,753,220
112,974,844
253,721,954
13,061,674
75,327,231
108,247,631
200,904,811
13,437,778
Gross outstanding claims
Gross unearned premiums
Insurance payables
Other liabilities
176,212,424
187,565,382
Deferred tax liabilities
33,916,549
15,172,707
41,713,289
-
7,754,225
25,712,312
12,734,842
3,885,894
32,566,847
12,448,671
36,403,831
638,841
5,061,050
30,655,214
12,216,997
2,935,750
1,009,073,801
903,142,398
Unearned commissions
TOTAL LIABILITIES
EQUITY
Issued share capital
Additional paid in capital
Treasury shares
Foreign currency translation reserve
Fair value reserve
Retained earnings
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
7
8
15
16
27
17
18
19
18
18
413,052,855
206,214,029
53,543,737
14,863,282
346,824
8,909,989
384,379,841
168,254,688
33,034,146
8,299,453
-
8,010,384
696,930,716
601,978,512
143,375,678
143,375,678
2,773,000
2,773,000
(20,102,500)
(15,050,000)
(332,785)
4,273,914
182,155,778
312,143,085
1,009,073,801
(294,929)
953,704
169,406,433
301,163,886
903,142,398
The consolidated financial statements were approved by the Board of Directors on 9 April 2020.
13
14
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended 31 December 2019, 2018 and 2017
For the years ended 31 December 2019, 2018 and 2017
2019
USD
2018
USD
2017
USD
2019
USD
2018
USD
2017
USD
349,291,905
301,618,486
275,102,191
PROFIT FOR THE YEAR
23,565,399
25,541,703
7,031,340
Gross written premiums
Reinsurers’ share of insurance premiums
NET WRITTEN PREMIUMS
Change in unearned premiums
Reinsurers’ share of change in unearned
premiums
Notes
8
8
8
(97,139,370)
(98,188,088)
(114,334,750)
252,152,535
203,430,398
160,767,441
(37,959,341)
(11,560,663)
(23,023,130)
1,349,702
(8,560,116)
8,988,473
OTHER COMPREHENSIVE INCOME TO BE RECLASSIFIED
TO PROFIT OR LOSS IN SUBSEQUENT PERIODS
Net change in fair value reserve during the year for available
for sale investments
Net change in fair value reserve during the year
for bonds at fair value through other comprehensive income
NET CHANGE IN UNEARNED PREMIUMS
(36,609,639)
(20,120,779)
(14,034,657)
Currency translation differences
–
–
4,514,533
4,208,620
(2,706,303)
–
(37,856)
(22,764)
(25,723)
29,903
(865,646)
(3,897,678)
93,529
–
–
Changes in allowance for expected credit losses transferred
to income statement
OTHER COMPREHENSIVE INCOME WHICH WILL NOT BE
RECLASSIFIED TO PROFIT OR LOSS IN SUBSEQUENT PERIODS
Net change in fair value reserve during the year for equities at
fair value through other comprehensive income
OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEAR
3,282,354
(6,599,801)
4,608,062
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
26,847,753
18,941,902
11,639,402
The attached notes from 1 to 31 form part of these consolidated financial statements.
NET PREMIUMS EARNED
Claims and claim adjustment expenses
Reinsurers’ share of claims
NET CLAIMS AND CLAIM ADJUSTMENT
EXPENSES
Commissions earned
Policy acquisition costs
NET POLICY ACQUISITION EXPENSES
NET UNDERWRITING RESULTS
General and administrative expenses
Net investment income
Share of loss from associates
Impairment loss on insurance receivables
Other revenues
Other expenses
Listing related expenses
Gain (loss) on foreign exchange
PROFIT BEFORE TAX
Income tax
PROFIT FOR THE YEAR
EARNINGS PER SHARE
Basic and diluted earnings per share
attributable to equity holders
8
7
7
17
10
21
22
6
4
23
23
24
27
29
215,542,896
183,309,619
146,732,784
(159,824,136)
(211,044,400)
(252,154,218)
41,760,648
125,756,899
165,223,681
(118,063,488)
(85,287,501)
(86,930,537)
13,930,139
16,817,154
16,709,347
(59,365,577)
(58,780,676)
(52,941,057)
(45,435,438)
(41,963,522)
(36,231,710)
52,043,970
56,058,596
23,570,537
(39,265,945)
(35,351,679)
(30,902,604)
13,374,076
10,310,296
12,564,842
(376,104)
(628,887)
1,428,265
(885,673)
(472,124)
902,750
992,218
(1,214,456)
856,540
(2,194,666)
(1,586,281)
(1,466,042)
(4,831,976)
-
5,704,249
(3,371,941)
25,252,982
25,603,944
(1,687,583)
(62,241)
-
2,615,883
7,016,918
14,422
23,565,399
25,541,703
7,031,340
0.17
0.18
0.05
The attached notes from 1 to 31 form part of these consolidated financial statements.
15
16
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
For the years ended 31 December 2019, 2018 and 2017
Notes
2019
USD
2018
USD
2017
USD
Notes
2019
USD
2018
USD
2017
USD
OPERATING ACTIVITIES
Profit before tax
ADJUSTMENTS FOR:
25,252,982
25,603,944
7,016,918
Term deposits
(44,425,989)
30,845,015
7,647,915
Insurance receivables
(3,523,360)
952,311
(29,939,360)
WORKING CAPITAL ADJUSTMENTS
Depreciation and amortization
13,14
1,955,458
1,359,960
1,485,134
Purchase of financial assets at FVTPL
(14,905,996)
(1,380,207)
–
(3,133,556)
Purchase of bonds through OCI
(109,954,776)
(36,245,111)
472,124
1,214,456
Proceeds from maturity of financial assets at amortized cost
500,000
500,000
3,000,000
Proceeds from sale/maturity of bonds at fair value through OCI
67,192,825
56,417,470
Proceeds from sale of financial assets at FVTPL
9,615,999
7,853,250
Gain on sale of available-for-sale investments
Impairment loss on insurance receivables
Impairment of investments available for sale
Loss (gain) on disposal of property, premises
and equipment
Realized gain on sale of financial assets at FVTPL
Fair value loss (gain) on investment properties
Realized gain on sale of investment properties
(Gain) loss on revaluation of financial assets at FVTPL
Loss on sale of bonds at fair value through OCI
Expected credit loss on financial assets
Gain on revaluation of held for trading investments
Share of profit or loss from associates
4
23
22
22
22
22
22
22
6
–
628,887
–
25,999
(946,952)
304,482
(678,516)
(1,590,964)
628,523
(35,591)
–
376,104
–
–
71,863
(18,967)
(2,048,908)
–
(93,934)
(18,148)
–
948,802
763,569
29,903
–
885,673
–
–
–
–
(95,582)
(992,218)
Net foreign exchange differences
(5,704,249)
3,371,941
(2,615,883)
CASH FROM OPERATIONS BEFORE WORKING
CAPITAL CHANGES
20,216,163
31,293,074
2,914,017
–
–
–
–
(49,829,438)
57,008,234
81,984
–
–
–
(973,363)
(43,526,311)
8,560,116
(836,017)
(8,988,473)
(2,733,686)
–
–
–
11,352,958
(1,349,702)
(2,724,036)
(5,309,458)
(3,487,866)
(4,629,717)
(2,693,175)
248,679
(745,281)
6,062,217
–
–
626,741
(264,111)
–
28,673,014
1,152,400
48,056,147
37,959,341
11,560,663
23,023,130
20,509,591
4,052,336
(928,745)
958,817
6,793,290
1,664,479
899,605
(2,343,635)
2,061,920
Purchase of available-for-sale investments
Proceeds from sale of available-for-sale investments
Proceeds from sale of trading securities
Reinsurance share of outstanding claims
Reinsurance share of unearned premiums
Deferred excess of loss premiums
Deferred policy acquisition costs
Other assets
Additions of investment property
Proceeds from sale of investment property
Gross outstanding claims
Gross unearned premiums
Insurance payables
Other liabilities
Unearned commissions
NET CASH FLOWS FROM OPERATING ACTIVITIES BEFORE TAX
21,402,276
104,146,851
12,966,761
INCOME TAX PAID
–
(56,456)
(4,946)
NET CASH FLOWS FROM OPERATING ACTIVITIES AFTER TAX
21,402,276
104,090,395
12,961,815
17
18
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
CONSOLIDATED STATEMENT OF CASH FLOWS continued
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the years ended 31 December 2019, 2018 and 2017
For the years ended 31 December 2019, 2018 and 2017
Notes
2019
USD
2018
USD
2017
USD
INVESTING ACTIVITIES
Purchases of property, premises and equipment
(443,305)
(414,716)
(448,954)
Proceeds from sale of premises and equipment
22,567
–
50,394
Purchases of intangible assets
(612,901)
(731,717)
(1,175,761)
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(1,033,639)
(1,146,433)
(1,574,321)
FINANCING ACTIVITIES
Dividends paid
Treasury shares
Lease liability payments
20
19
2
(10,816,054)
(4,091,271)
(11,470,054)
(5,052,500)
(15,050,000)
(606,232)
–
–
–
AS AT 1 JANUARY 2017
143,375,678
2,773,000
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid during the
year (note 20)
–
–
–
–
–
–
–
–
AS AT 31 DECEMBER 2017
143,375,678
2,773,000
Impact of adopting IFRS 9
–
–
Issued
share
capital
USD
Additional
paid in
capital
USD
Treasury
shares
USD
Foreign
currency
translation
reserve
USD
Fair value
reserve
USD
Retained
earnings
USD
Total
USD
–
–
–
–
–
–
–
–
–
–
–
(362,735)
9,693,936
145,750,726
301,230,605
–
–
7,031,340
7,031,340
93,529
4,514,533
–
4,608,062
93,529
4,514,533
7,031,340
11,639,402
–
–
(11,470,054)
(11,470,054)
(269,206)
14,208,469
141,312,012
301,399,953
–
(6,680,687)
6,643,989
(36,698)
(269,206)
7,527,782
147,956,001
301,363,255
–
–
25,541,703
25,541,703
(25,723)
(6,574,078)
–
(6,599,801)
(25,723)
(6,574,078)
25,541,703
18,941,902
(15,050,000)
–
–
–
–
–
–
(15,050,000)
(4,091,271)
(4,091,271)
NET CASH FLOWS USED IN FINANCING ACTIVITIES
(16,474,786)
(19,141,271)
(11,470,054)
AS AT 1 JANUARY 2018
143,375,678
2,773,000
NET CHANGE IN CASH AND CASH EQUIVALENTS
3,893,851
83,802,691
(82,560)
Profit for the year
Net foreign exchange differences
3,833,652
(3,220,822)
1,884,885
Cash and cash equivalents at the beginning of the year
184,732,364
104,150,495
102,348,170
CASH AND CASH EQUIVALENTS AT THE END OF
THE YEAR
3(a)
192,459,867
184,732,364
104,150,495
The attached notes from 1 to 31 form part of these consolidated financial statements.
Other comprehensive income
Total comprehensive income
Purchase of treasury shares
(note 19)
Dividends paid during the
year (note 20)
–
–
–
–
–
–
–
–
–
–
AS AT 31 DECEMBER 2018
143,375,678
2,773,000
(15,050,000)
(294,929)
953,704
169,406,433
301,163,886
Profit for the year
Other comprehensive
income
Total comprehensive
income
Purchase of treasury
shares (note 19)
Dividends paid during the
year (note 20)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23,565,399
23,565,399
(37,856)
3,320,210
–
3,282,354
(37,856)
3,320,210
23,565,399
26,847,753
(5,052,500)
–
–
–
–
–
–
(5,052,500)
(10,816,054)
(10,816,054)
AS AT 31 DECEMBER 2019
143,375,678
2,773,000
(20,102,500)
(332,785)
4,273,914
182,155,778
312,143,085
The attached notes from 1 to 31 form part of these consolidated financial statements.
19
20
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At 31 December 2019
1. CORPORATE INFORMATION
International General Insurance Holdings
Limited (“the Company”) is incorporated as a
company limited by shares under DIFC Law
No. 5 of 2019 on 7 May 2006 and is engaged
in the business of insurance and re-
insurance. The Company’s registered office
is at unit 1, Gate Village 01, P. O. Box 506646,
Dubai International Financial Centre.
The Company and its subsidiaries (together
“the Group”) operate in the United Arab
Emirates, Bermuda, United Kingdom, Jordan,
Morocco, Malaysia, and the Cayman Islands.
2. BASIS OF PREPARATION
The consolidated financial statements
have been prepared in accordance with
International Financial Reporting Standards
(IFRS) as issued by the International
Accounting Standards Board (IASB).
The consolidated financial statements have
been presented in United States Dollars
“USD” which is also the Group’s functional
currency.
The consolidated financial statements are
prepared on a going concern basis under
the historical cost convention modified to
include the measurement at fair value of
financial assets and investment properties
at fair value through profit or loss, and
financial assets at fair value through
other comprehensive income, financial
assets measured at fair value through
profit and loss include quoted funds,
alternative investments and quoted equities.
Financial assets at fair value through other
comprehensive income include quoted and
unquoted equities.
On 30 January 2020, the World Health
Organization declared the outbreak of
coronavirus (“COVID-19”) to be a public
health emergency of international concern.
This coronavirus outbreak has severely
restricted the level of economic activity
around the world. In response to this
coronavirus outbreak, the governments
of many countries, states, cities and other
geographic regions have taken preventative
or protective actions, such as imposing
restrictions on travel and business
operations and advising or requiring
individuals to limit or forego their time
outside of their homes.
The full extent to which the COVID-19
pandemic may impact Group’s results,
operations or liquidity is uncertain.
Management continues to monitor the
impact that the COVID-19 pandemic has on
21
the Group, the insurance industry and the
economies in which the Group operates.
Management has performed a COVID -
19 impact analysis as part of their going
concern assessment using information
available to the date of issue of these
financial statements. The analysis has
modelled a number of adverse scenarios to
assess the potential impact that COVID-19
may have on Group’s operations, liquidity,
solvency and capital position as well as a
reverse stress test to assess the stresses
the balance sheet has to endure before
there is a breach of the required solvency
ratio. These stresses included increased
counterparty defaults, falls in property
and equity values, credit spread widening,
currency movements and increases in the
value of claims. This analysis indicates
that the solvency position is and will
likely remain within the Group’s ‘Capital
Management Framework’ targets, allowing
the Group to exceed the regulatory capital
requirements without the need for mitigating
management actions. Management believe
the preparation of the financial statements
on a going concern basis remains
appropriate and the Group will be able to
meet its regulatory solvency requirements
and liabilities with sufficient liquidity for a
period of at least one year after the date of
the consolidated financial statements for the
year ended December 31, 2019.
BASIS OF CONSOLIDATION
The financial statements of the subsidiaries
are prepared for the same period and
amended where required to be compliant
with the Group’s accounting policies.
The consolidated financial statements
comprise the financial statements of
International General Insurance Holdings
Limited and its subsidiaries as at 31
December 2019. Control is achieved when
the Group is exposed, or has rights, to
variable returns from its involvement with
the investee and has the ability to affect
those returns through its power over the
investee. Specifically, the Group controls an
investee if and only if the Group has:
• Power over the investee (i.e. existing rights
that give it the current ability to direct the
relevant activities of the investee)
• Exposure, or rights, to variable returns
from its involvement with the investee, and
• The ability to use its power over the
investee to affect its returns.
When the Group has less than a majority of
the voting or similar rights of an investee,
the Group considers all relevant facts and
circumstances in assessing whether it has
power over an investee, including:
• The contractual arrangement with the
other vote holders of the investeee
• Rights arising from other contractual
arrangements
• The Group’s voting rights and potential
voting rights.
The Group reassesses whether or
not it controls an investee if facts and
circumstances indicate that there are
changes to one or more of the three
elements of control. Consolidation of a
subsidiary begins when the Group obtains
control over the subsidiary and ceases when
the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of
a subsidiary acquired or disposed of during
the year are included in the consolidated
financial statements from the date the Group
gains control until the date the Group ceases
to control the subsidiary.
When necessary, adjustments are made
to the financial statements of subsidiaries
to bring their accounting policies into line
with the Group’s accounting policies. All
intra-group assets and liabilities, equity,
income, expenses and cash flows relating to
transactions between members of the Group
are eliminated in full on consolidation.
A change in the ownership interest of a
subsidiary, without a change of control, is
accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
• Derecognizes the assets (including
goodwill) and liabilities of the subsidiary;
• Derecognizes the carrying amount of any
non-controlling interest;
• Derecognizes the cumulative translation
differences, recorded in equity, if any;
• Recognizes the fair value of the
consideration received;
• Recognizes the fair value of any
investment retained;
• Recognizes any surplus or deficit in profit
or loss; and
• Reclassifies the parent’s share of
components previously recognized in
other comprehensive income to the
statement of income or retained earnings,
as appropriate.
The Group has the following subsidiaries and branches:
Country of
incorporation
Activity
Ownership
Subsidiaries:
International General Insurance Underwriting
Jordan
Underwriting agency
North Star Underwriting Limited
United
Kingdom
Underwriting agency
2019
2018
100%
100%
100%
100%
International General Insurance Co. Ltd.
Bermuda
Reinsurance and insurance
100%
100%
The following entities are wholly owned
subsidiaries and branches by International
General Insurance Co. Ltd. Bermuda:
Subsidiaries:
International General Insurance Company
(UK) Limited
United
Kingdom
Reinsurance and insurance
100%
International General Insurance Company
Dubai Ltd.
United Arab
Emirates
Insurance intermediation
and insurance management
Specialty Malls Investment Co.
Jordan
IGI Services Limited
Cayman Islands
Real estate properties
development and lease
Owning and chartering
aircraft
100%
100%
100%
100%
100%
100%
100%
Branches:
International General Insurance Company Ltd.
Labuan – Branch
Malaysia
Reinsurance and insurance
100%
100%
Subsidiaries are fully consolidated from the
date of acquisition, being the date on which
the Group obtains control, and continue
to be consolidated until the date that such
control ceases.
CHANGES IN ACCOUNTING POLICIES
The accounting policies used in the
preparation of the consolidated financial
statements are consistent with those
used in the preparation of the annual
consolidated financial statements for the
year ended 31 December 2018 except for
the adoption of new standards effective as
at 1 January 2019 shown below:
New standards, interpretations and
amendments adopted by the Group
IFRS 16 Leases
IFRS 16 supersedes IAS 17 Leases, IFRIC
4 Determining whether an Arrangement
contains a Lease, SIC- 15 Operating
Leases-Incentives, and SIC-27 Evaluating
the Substance of Transactions Involving
the Legal Form of a Lease. The standard
sets out the principles for the recognition,
measurement, presentation and disclosure
of leases, and requires lessees to account
for most leases under a single on-balance
sheet model.
Lessor accounting under IFRS 16 is
substantially unchanged from IAS 17.
Lessors will continue to classify leases as
either operating or finance leases using
similar principles as in IAS 17. Therefore,
IFRS 16 did not have an impact for leases
where the Group is the lessor.
The Group adopted IFRS 16 using the
modified retrospective approach with
the date of initial application of 1 January
2019. Accordingly, prior year consolidated
financial statements were not restated.
The Group elected to use the transition
practical expedient allowing the standard
to be applied only to contracts that were
previously identified as leases applying
IAS 17 and IFRIC 4 at the date of initial
application. The Group also elected to
use the recognition exemptions for lease
contracts that, at the commencement date,
have a lease term of 12 months or less and
do not contain a purchase option (‘short-
term leases’), and lease contracts for which
the underlying asset is of low value (‘low-
value assets’).
22
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
The effect of adoption IFRS 16 is as follows:
Impact on the consolidated statement of financial position as at 1 January 2019:
b) Amounts recognized in the consolidated statement of financial position and income
Set out below are the carrying amounts of the Group’s right-of-use assets and lease liabilities and the movements during the year:
Property, premises and equipment
Right of use assets
Other liabilities
Lease liabilities
Total equity
2019
USD
1,715,606
1,715,606
–
The Group did not record any impact on the
retained earnings as the balances of the
prepaid rentals and accrued rentals were
not material, accordingly the impact was
calculated for the contracts starting from 1
January 2019.
The Group has lease contracts for
various items of plant and equipment.
Before the adoption of IFRS 16, the Group
classified each of its leases (as lessee)
at the inception date as either a finance
lease or an operating lease. A lease was
classified as a finance lease if it transferred
substantially all of the risks and rewards
incidental to ownership of the leased asset
to the Group; otherwise it was classified
as an operating lease. The Group has no
finance leases as at 1 January 2019.
In an operating lease, the leased property
was historically not capitalized, and the
lease payments were recognized as rent
expense in profit or loss on a straight-line
basis over the lease term. Any prepaid
rent and accrued rent were recognized
under prepaid expense in other assets
and accounts payable in other liabilities,
respectively.
Upon adoption of IFRS 16, the Group applied
a single recognition and measurement
approach for all leases, except for short-
term leases and leases of low-value assets.
The standard provides specific transition
requirements and practical expedients,
which has been applied by the Group.
• Leases previously accounted for as
operating leases
The Group recognized right-of-use assets
and lease liabilities for those leases
previously classified as operating leases,
except for short-term leases and leases
of low-value assets. Lease liabilities were
recognized based on the present value of the
remaining lease payments, discounted using
the incremental borrowing rate at the date of
initial application.
The Group also applied the available
practical expedients wherein it:
• Used a single discount rate to a portfolio
of leases with reasonably similar
characteristics
• Relied on its assessment of whether
leases are onerous immediately before the
date of initial application
• Applied the short-term leases exemptions
to leases with a lease term that ends
within 12 months at the date of initial
application
• Excluded the initial direct costs from the
measurement of the right-of-use asset at
the date of initial application
• Used hindsight in determining the lease
term where the contract contains options
to extend or terminate the lease
a) The lease liabilities as at 1 January 2019
can be reconciled to the operating lease
commitments as of 31 December 2018
as follows:
Operating lease commitments as at 31 December 2018
Weighted average incremental borrowing rate as at 1 January 2019
Discounted operating lease commitments at 1 January 2019
USD
1,994,122
4.3%
1,715,606
At 1 January 2019
Additions
Disposal - Net
Depreciation
Interest expense
Payments
At 31 December 2019
Current
Non – Current
Offices
USD
1,715,606
1,002,005
(687,775)
(516,175)
–
–
1,513,661
Lease liabilities
USD
1,715,606
1,002,005
(656,416)
–
108,426
(606,232)
1,563,389
521,687
1,041,702
c) Set out below are the new accounting
policies of the Group upon adoption of
IFRS 16, which have been applied from
the date of initial application:
Right-of-use assets
The Group recognizes right-of-use assets
at the commencement date of the lease (i.e.,
the date the underlying asset is available for
use). Right-of-use assets are measured at
cost, less any accumulated depreciation and
impairment losses, and are adjusted for any
remeasurement of lease liabilities.
The Group has included the right-of-use
assets arising from the lease contracts
within property, plant and premises in the
consolidated statement of financial position
(note 13).
The cost of right-of-use assets includes the
amount of lease liabilities recognized, initial
direct costs incurred, and lease payments
made at or before the commencement date
less any lease incentives received. Unless
the Group is reasonably certain to obtain
ownership of the leased asset at the end of
the lease term, the recognized right-of-use
assets are depreciated on a straight-line
basis over the shorter of its estimated useful
life and the lease term. Right-of-use assets
are subject to impairment.
Lease liabilities
At the commencement date of the lease,
the Group recognizes lease liabilities
measured at the present value of lease
payments to be made over the lease term.
The lease payments include fixed payments
(including in-substance fixed payments) less
any lease incentives receivable, variable
lease payments that depend on an index
or a rate, and amounts expected to be paid
under residual value guarantees. The lease
payments also include the exercise price
of a purchase option reasonably certain to
be exercised by the Group and payments of
penalties for terminating a lease, if the lease
term reflects the Group exercising the option
to terminate.
The variable lease payments that do not
depend on an index or a rate are recognized
as expense in the period on which the event
or condition that triggers the payment
occurs.
In calculating the present value of lease
payments, the Group uses the incremental
borrowing rate at the lease commencement
date if the interest rate implicit in the
lease is not readily determinable. After
the commencement date, the amount
of lease liabilities is increased to reflect
the accretion of interest and reduced for
the lease payments made. In addition,
the carrying amount of lease liabilities is
remeasured if there is a modification, a
change in the lease term, a change in the
in-substance fixed lease payments or a
change in the assessment to purchase the
underlying asset.
The Group has included the lease obligations
arising from the lease contracts within
the other liabilities in the consolidated
statement of financial position (note 16).
Short-term leases and leases of low-value
assets
The Group applies the short-term lease
recognition exemption to some of its short-
term leases (i.e., those leases that have a
lease term of 12 months or less from the
commencement date and do not contain a
purchase option). It also applies the lease of
low-value assets recognition exemption to
leases that are considered of low value (i.e.,
below USD 5,000). Lease payments on short-
term leases and leases of low- value assets
are recognized as an expense on a straight-
line basis over the lease term.
23
24
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
Significant judgement in determining
the lease term of contracts with renewal
options
Amendments to IFRS 10 and IAS 28: Sale or
Contribution of Assets between an Investor
and Its Associate or Joint Venture
The amendments address the conflict
between IFRS 10 and IAS 28 in dealing
with the loss of control of a subsidiary that
is sold or contributed to an associate or
joint venture. The amendments clarify that
the gain or loss resulting from the sale
or contribution of assets that constitute a
business, as defined in IFRS 3, between an
investor and its associate or joint venture, is
recognized in full. Any gain or loss resulting
from the sale or contribution of assets that
do not constitute a business, however, is
recognized only to the extent of unrelated
investors’ interests in the associate or joint
venture. The IASB has deferred the effective
date of these amendments indefinitely, but
an entity that early adopts the amendments
must apply them prospectively.
These amendments do not have any impact
on the Group’s financial statements.
Amendments to IAS 28: Long-term
interests in associates and joint ventures
The amendments clarify that an entity
applies IFRS 9 to long-term interests in
an associate or joint venture to which the
equity method is not applied but that, in
substance, form part of the net investment
in the associate or joint venture (long-term
interests). This clarification is relevant
because it implies that the expected credit
loss model in IFRS 9 applies to such long-
term interests.
The amendments also clarified that, in
applying IFRS 9, an entity does not take
account of any losses of the associate or
joint venture, or any impairment losses
on the net investment, recognized as
adjustments to the net investment in the
associate or joint venture that arise from
applying IAS 28 Investments in Associates
and Joint Ventures.
These amendments do not have any impact
on the Group’s consolidated financial
statements.
standard applies to all types of insurance
contracts (i.e. life, non-life, direct insurance
and re-insurance), regardless of the type of
entities that issue them, as well as to certain
guarantees and financial instruments with
discretionary participation features. The
standard general model is supplemented by
the variable fee approach and the premium
allocation approach.
IFRS 17 was to be effective for reporting
periods beginning on or after 1 January
2021, with comparative figures required. In
November 2018, the IASB recommended an
amendment to IFRS 17 to defer the effective
date to January 2022. In March 2020, the
IASB decided that the effective date of
the Standard will be deferred to annual
reporting periods beginning on or after 1
January 2023. Early application is permitted,
provided the entity also applies IFRS 9 and
IFRS 15 on or before the date it first applies
IFRS 17.
The Group is currently in process of
evaluating the potential impact of adopting
IFRS 17.
Summary of significant accounting policies
Cash and cash equivalents
Cash and cash equivalents consist of cash
on hand, bank balances, and short-term
deposits with an original maturity of three
months or less.
Term deposits
The term deposits are interest bearing
bank deposits with original maturity over 3
months and less than one year.
Insurance receivables
Insurance receivables are recognized when
due and are measured on initial recognition
at the fair value of the consideration received
or receivable. The Group uses a provision
matrix to calculate ECLs for insurance
receivables. The provision rates are based
on days past due and not due for groupings
of various policy holder’s segments that
have similar default loss - patterns.
Standards issued but not yet effective
IFRS 17 Insurance Contracts
IFRS 17 provides a comprehensive model for
insurance contracts covering the recognition
and measurement and presentation and
disclosure of insurance contracts and
replaces IFRS 4 -Insurance Contracts. The
Financial assets
a) Initial recognition and measurement
Financial assets are classified, at initial
recognition, as subsequently measured at
amortized cost, fair value through other
comprehensive income (OCI), and fair
value through profit or loss (FVTPL).
The Group determines the lease term as the
non-cancellable term of the lease, together
with any periods covered by an option to
extend the lease if it is reasonably certain
to be exercised, or any periods covered
by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has the option, under some of
its leases to lease the assets for additional
terms. The Group applies judgement in
evaluating whether it is reasonably certain to
exercise the option to renew.
The Group considers all relevant factors
that create an economic incentive for
it to exercise the renewal. After the
commencement date, the Group reassesses
the lease term if there is a significant event
or change in circumstances that is within its
control and affects its ability to exercise (or
not to exercise) the option to renew (e.g., a
change in business strategy).
The Group included the renewal period as
part of the lease term for leases of plant and
equipment due to the significance of these
assets to its operations. These leases have
a short non-cancellable period and there
will be a significant negative effect on the
Group’s operations if a replacement is not
readily available.
Amendments to IFRS 9: Prepayment
Features with Negative Compensation
Under IFRS 9, a debt instrument can be
measured at amortized cost or at fair value
through other comprehensive income,
provided that the contractual cash flows are
‘solely payments of principal and interest
on the principal amount outstanding’ (the
SPPI criterion) and the instrument is held
within the appropriate business model for
that classification. The amendments to
IFRS 9 clarify that a financial asset passes
the SPPI criterion regardless of the event
or circumstance that causes the early
termination of the contract and irrespective
of which party pays or receives reasonable
compensation for the early termination of
the contract.
These amendments do not have any impact
on the Group’s consolidated financial
statements.
25
The classification of financial assets
at initial recognition depends on the
financial asset’s contractual cash flow
characteristics and the Group’s business
model for managing them.
Financial instruments are initially
recognized on the trade date measured
at their fair value. Except for financial
assets and financial liabilities recorded
at FVTPL, transaction costs are added to
this amount.
The Group classifies all of its financial
assets based on the business model for
managing the assets and the asset’s
contractual terms. The categories include
the following:
• Amortized cost
• FVOCI
• FVTPL
i) Bonds and debt instruments
measured at amortized cost
Bonds and debt instruments are
held at amortized cost if both of the
following conditions are met:
• The instruments are held within a
business model with the objective
of holding the instrument to collect
the contractual cash flows.
• The contractual terms of the debt
instrument give rise on specified
dates to cash flows that are solely
payments of principal and interest
(SPPI) on the principal amount
outstanding.
The details of these conditions are
outlined below.
Business model assessment
The Group determines its business
model at the level that best reflects
how it manages groups of financial
assets to achieve its business
objective.
The Group holds financial assets
to generate returns and provide
a capital base to provide for
settlement of claims as they arise.
The Group considers the timing,
amount and volatility of cash flow
requirements to support insurance
liability portfolios in determining
the business model for the assets
as well as the potential to maximize
return for shareholders and future
business development.
The Group business model is not
assessed on an instrument-by-
instrument basis, but at a higher
level of aggregated portfolios that is
based on observable factors such as:
• How the performance of the
business model and the financial
assets held within that business
model are evaluated and reported
to the Group’s key management
personnel.
• The risks that affect the
performance of the business
model (and the financial assets
held within that business model)
and, in particular, the way those
risks are managed.
• How managers of the business are
compensated (for example,
whether the compensation is
based on the fair value of
the assets managed or on the
contractual cash flows collected).
• The expected frequency, value
and timing of asset sales are also
important aspects of the Group’s
assessment.
The business model assessment
is based on reasonably expected
scenarios without taking ‘worst
case’ or ‘stress case’ scenarios into
account. If cash flows after initial
recognition are realized in a way
that is different from the Group
original expectations, the Group
does not change the classification
of the remaining financial assets
held in that business model but
incorporates such information when
assessing newly originated or newly
purchased financial assets going
forward.
The SPPI test
As a second step of its classification
process the Group assesses the
contractual terms to identify whether
they meet the SPPI test.
‘Principal’ for the purpose of this
test is defined as the fair value of the
financial asset at initial recognition
and may change over the life of
the financial asset (for example, if
there are repayments of principal
or amortization of the premium/
discount).
The most significant elements of
interest within a debt arrangement
are typically the consideration for
the time value of money and credit
risk. To make the SPPI assessment,
the Group applies judgement and
considers relevant factors such as
the currency in which the financial
asset is denominated, and the period
for which the interest rate is set.
Bonds and debt instruments
measured at fair value through
other comprehensive income
The Group applies the new category
under IFRS 9 for debt instruments
measured at FVOCI when both of the
following conditions are met:
• The instrument is held within a
business model, the objective of
which is both collecting contractual
cash flows and selling financial
assets.
• The contractual terms of the
financial asset meet the SPPI test
These instruments largely comprise
debt instruments that had previously
been classified as available-for-
sale under IAS 39. Bonds and debt
instruments in this category are
those that are intended to be held
to collect contractual cash flows and
which may be sold in response to
needs for liquidity or in response to
changes in market conditions.
ii) Financial assets measured at fair
value through profit or loss (Quoted
funds, alternative investments and
quoted equities)
Financial assets in this category are
those assets which have been either
designated by management upon
initial recognition or are mandatorily
required to be measured at fair
value under IFRS 9. Management
designates an instrument as FVTPL
that otherwise meet the requirements
to be measured at amortized cost
or at FVOCI only if it eliminates, or
significantly reduces, an accounting
mismatch that would otherwise arise.
Financial assets with contractual
cash flows not representing solely
payment of principal and interest are
mandatorily required to be measured
at FVTPL.
26
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
Financial assets at FVTPL are
subsequently measured at fair
value. Changes in fair value are
recognized in the consolidated
statement of income. Interest income
is recognized using the effective
interest method.
Dividend income from equity
investments measured at FVTPL
is recognized in the consolidated
statement of income when the right
to the payment has been established.
iii) Financial assets measured at fair
value through other comprehensive
income (Quoted and unquoted
equities)
Financial assets measured at fair
value through other comprehensive
income include equities investments.
Equity investments classified as
financial assets measured at fair
value through other comprehensive
income are those, which are not
classified as financial assets
measured at fair value through profit
or loss.
iv) Reclassification of financial assets
and liabilities
The Group does not reclassify its
financial assets subsequent to their
initial recognition, apart from the
exceptional circumstances in which
the Group terminates a business
line or changes its business model
for managing financial assets. A
change in Group business model will
occur only when Group management
determines change as a result
of external or internal changes
which are significant to the Group
operations.
Reclassifications shall all be
recorded prospectively from the
reclassification date.
b) Subsequent measurement
For purposes of subsequent measurement,
financial assets in the scope of IFRS 9 are
classified in four categories:
• Financial assets at amortized cost
(bonds, debt instruments)
• Financial assets designated at fair
value through OCI with no recycling
of cumulative gains and losses upon
derecognition (equity instruments)
• Financial assets at fair value through
profit or loss.
i) Financial assets at amortized cost
(bonds, debt instruments)
The Group measures financial assets
at amortized cost if both of the
following conditions are met:
• The financial asset is held within
a business model with the
objective to hold financial assets
in order to collect contractual cash
flows, and
• The contractual terms of the
financial asset give rise on
specified dates to cash flows that
are solely payments of principal
and interest on the principal
amount outstanding.
Financial assets at amortized cost
are subsequently measured using
the effective interest (EIR) method
and are subject to impairment. Gains
and losses are recognized in the
consolidated statement of income
when the asset is derecognized,
modified, or impaired.
The Group’s debt instruments at
amortized cost includes investments
in unquoted debt instruments.
ii) Financial assets at fair value
through OCI (debt instruments)
The Group measures debt
instruments at fair value through
OCI if both of the following conditions
are met:
• The financial asset is held within
a business model with the
objective of both holding to collect
contractual cash flows and selling,
and,
• The contractual terms of the
financial asset give rise on
specified dates to cash flows that
are solely payments of principal
and interest on the principal
amount outstanding.
• Financial assets at fair value through
OCI with recycling of cumulative gains
and losses (bonds and debt instruments)
For debt instruments at fair value
through OCI, interest income, foreign
exchange revaluation and impairment
27
losses or reversals are recognized
in the statement of income and
computed in the same manner as
for financial assets measured at
amortized cost. The remaining fair
value changes are recognized in OCI.
Upon derecognition, the cumulative
fair value change recognized in
OCI is recycled to the consolidated
statement of income.
The Group’s debt instruments at
fair value through OCI includes
investments in quoted debt
instruments.
iii) Financial assets designated at
fair value through OCI (equity
instruments)
Upon initial recognition, the Group
can elect to classify irrevocably
its equity investments as equity
instruments designated at fair value
through OCI when they meet the
definition of equity under IAS 32
Financial Instruments: Presentation
and are not held for trading. The
classification is determined on an
instrument-by-instrument basis.
Gains and losses on these financial
assets are never recycled to the
consolidated statement of income.
Dividends are recognized as
investment income in the statement
of income when the right of payment
has been established, except when
the Group benefits from such
proceeds as a recovery of part of the
cost of the financial asset, in which
case, such gains are recorded in OCI.
Equity instruments designated at fair
value through OCI are not subject to
impairment assessment.
The Group elected to classify
irrevocably its unquoted equity
investments and some quoted equity
investments under this category.
iv) Financial assets at fair value
through profit or loss
Financial assets at fair value through
profit or loss include financial assets
held for trading, financial assets
designated upon initial recognition
at fair value through profit or loss,
or financial assets mandatorily
required to be measured at fair
value. Financial assets are classified
as held for trading if they are
acquired for the purpose of selling
or repurchasing in the near term.
Derivatives, including separated
embedded derivatives, are also
classified as held for trading unless
they are designated as effective
hedging instruments. Financial
assets with cash flows that are not
solely payments of principal and
interest are classified and measured
at fair value through profit or loss,
irrespective of the business model.
Notwithstanding the criteria for
debt instruments to be classified
at amortized cost or at fair value
through OCI, as described above,
debt instruments may be designated
at fair value through profit or loss
on initial recognition if doing so
eliminates, or significantly reduces,
an accounting mismatch.
Financial assets at fair value through
profit or loss are carried in the
consolidated statement of financial
position at fair value with net changes
in fair value recognized in the
statement of income.
This category includes quoted funds,
alternative investments and quoted
equity investments which the Group
had not irrevocably elected to classify
at fair value through OCI.
Dividends on quoted equity
investments are also recognized as
investment income in the statement
of income when the right of payment
has been established.
c) Derecognition
A financial asset (or, where applicable,
a part of a financial asset or part of
a group of similar financial assets) is
primarily derecognized (i.e., removed from
the Group’s consolidated statement of
financial position) when:
• The rights to receive cash flows from the
asset have expired, or
• The Group has transferred its rights
to receive cash flows from the asset
or has assumed an obligation to pay
the received cash flows in full without
material delay to a third party under
a ‘pass-through’ arrangement; and
either (a) the Group has transferred
substantially all the risks and rewards
of the asset, or (b) the Group has neither
transferred nor retained substantially all
the risks and rewards of the asset, but
has transferred control of the asset.
d) Impairment of financial assets in scope
of IFRS 9
The Group recognizes an allowance
for expected credit losses (ECLs) for
debt instruments not held at fair value
through profit or loss. ECLs are based on
the difference between the contractual
cash flows due in accordance with the
contract and all the cash flows that the
Group expects to receive, discounted
at an approximation of the original
effective interest rate. The expected
cash flows will include cash flows from
the sale of collateral held or other credit
enhancements that are integral to the
contractual terms, if any.
ECLs are recognized in two stages. For
credit exposures for which there has not
been a significant increase in credit risk
since initial recognition, ECLs are provided
for credit losses that result from default
events that are possible within the next
12-months (a 12-month ECL). For those
credit exposures for which there has
been a significant increase in credit risk
since initial recognition, a loss allowance
is required for credit losses expected
over the remaining life of the exposure,
irrespective of the timing of the default (a
lifetime ECL).
For debt instruments at fair value through
OCI, the Group applies the low credit
risk simplification. At every reporting
date, the Group evaluates whether the
debt instrument is considered to have
low credit risk using all reasonable and
supportable information that is available
without undue cost or effort. In making
that evaluation, the Group reassesses the
credit rating of the debt instrument. In
addition, the Group considers that there
has been a significant increase in credit
risk when contractual payments are more
than 30 days past due.
The Group’s debt instruments at fair
value through OCI comprise solely of
quoted bonds that are graded in the top
investment category by accredited rating
agencies and, therefore, are considered
to be low credit risk investments. It is
the Group’s policy to measure ECLs
on such instruments on a 12-month
basis. However, when there has been a
significant increase in credit risk since
origination, the allowance will be based
on the lifetime ECL. The Group uses the
ratings from accredited rating agencies to
monitor the changes in the credit ratings,
determine whether the debt instrument
has significantly increased in credit risk
and to estimate ECLs.
The ECLs for debt instruments measured
at FVOCI do not reduce the carrying
amount of these financial assets in the
statement of financial position, which
remains at fair value. Instead, an amount
equal to the allowance that would
arise if the assets were measured at
amortized cost is recognized in OCI with a
corresponding charge to the statement of
income. The accumulated gain recognized
in OCI is recycled to the statement of
income upon derecognition of the assets.
The Group considers a financial asset in
default when contractual payments are
30 days past due. However, in certain
cases, the Group may also consider a
financial asset to be in default when
internal or external information indicates
that the Group is unlikely to receive the
outstanding contractual amounts in full
before taking into account any credit
enhancements held by the Group.
A financial asset is written off when there
is no reasonable expectation of recovering
the contractual cash flows.
Financial assets are written off either
partially or in their entirety only when
the Group has stopped pursuing the
recovery. If the amount to be written off
is greater than the accumulated loss
allowance, the difference is first treated
as an addition to the allowance that is
then applied against the gross carrying
amount. Any subsequent recoveries are
credited to credit loss expense. There
were no write-offs over the periods
reported in these consolidated financial
statements.
For cash flow purposes the Group
classifies the cash flow for the
acquisition and disposal of financial
assets as operating cash flows, as
the purchases of these investments
is funded from the net cash flows
associated with the origination of
insurance and investment contracts and
payment of benefits and claims incurred
for such insurance contracts, which are
respectively treated under operating
activities.
28
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
Investments in associates
The Group’s investment in its associates
is accounted for using the equity method
of accounting. An associate is an entity in
which the Group has significant influence,
and which is neither a subsidiary nor a
joint venture.
The considerations made in determining
significant influence or joint control are
similar to those necessary to determine
control over subsidiaries. The Group’s
investment in its associates is accounted
for using the equity method.
Under the equity method, the investment
in the associate is carried in the
consolidated statement of financial
position at cost plus post-acquisition
changes in the Group’s share of net
assets of the associate. Goodwill relating
to an associate is included in the carrying
amount of the investment and is neither
amortized nor individually tested for
impairment.
The consolidated statement of income
reflects the share of the results of
operations of the associate. Where there
has been a change recognized directly
in the equity of the associate, the Group
recognizes its share of any changes and
discloses this, when applicable, in the
consolidated statement of changes in
equity. Profits or losses resulting from
transactions between the Group and the
associate are eliminated to the extent of
the interest in the associate.
The share of profit of the associate is
shown on the face of the consolidated
statement of income. This is profit
attributable to equity holders of the
associate and, therefore, is profit after
tax and non-controlling interests in the
subsidiaries of the associates.
The financial statements of the associate
are prepared for the same reporting
period as the Group. Where necessary,
adjustments are made to bring its
accounting policies in line with the
Group’s.
After application of the equity method,
the Group determines whether it is
necessary to recognize an additional
impairment loss on the Group’s
investments in associates. The Group
determines at each reporting date,
whether there is any objective evidence
that the investment in the associate is
29
impaired. If this is the case, the Group
calculates the amount of impairment as
the difference between the recoverable
amount of the associate and its carrying
value and recognizes the amount in the
‘share of profit of an associate’ in the
consolidated statement of income.
Upon loss of significant influence over
the associate, the Group measures and
recognizes any remaining investment at
its fair value. Any difference between the
carrying amount of the associate upon
loss of significant influence and the fair
value of the remaining investment and
proceeds from disposal is recognized in
consolidated statement of income.
Investment properties
Investment properties are measured
initially at cost, including transaction
costs. The carrying amount includes
the cost of replacing part of an existing
investment property at the time that cost
is incurred if the recognition criteria are
met; and excludes the costs of day to
day servicing of an investment property.
Subsequent to initial recognition,
investment properties are stated at fair
value, which reflects market conditions
at the reporting date. Gains or losses
arising from changes in the fair values of
investment properties are included in the
consolidated statement of income in the
period in which they arise.
The fair value of the investment
properties is determined by management
and in doing so management considers
the valuation performed by third parties
who are specialists in valuing these types
of investment properties.
Investment properties are derecognized
when either they have been disposed
of or when the investment property is
permanently withdrawn from use and no
future economic benefit is expected from
its disposal.
The difference between the net disposal
proceeds and the carrying amount
of the asset is recognized in the
consolidated statement of income in the
period of derecognition. The amount of
consideration to be included in the gain
or loss arising from the derecognition
of investment property is determined in
accordance with the requirements for
determining the transaction price in
IFRS 15.
Transfers are made to or from investment
property only when there is a change
in use. For a transfer from investment
property to owner occupied property, the
deemed cost for subsequent accounting is
the fair value at the date of change in use.
If owner occupied property becomes an
investment property, the Group accounts
for such property in accordance with the
policy stated under property, plant and
equipment up to the date of change in use.
Property, premises and equipment
Property, premises and equipment
are stated at cost less accumulated
depreciation and any impairment in value.
Depreciation is calculated on a straight-
line basis over the estimated useful lives
using the following estimated useful lives:
Office buildings
Aircraft
Office furniture
Computers
Equipment
Leasehold improvements
Vehicles
Right-of-use assets
Years
20
12.5
5
3
4
5
5
2-7
An item of property, plant and equipment
and any significant part initially
recognized, is derecognized upon disposal
or when no future economic benefits are
expected from its use or disposal. Any
gain or loss arising on derecognition of
the asset (calculated as the difference
between the net disposal proceeds and the
carrying amount of the asset) is included
in the consolidated statement of income
when the asset is derecognized.
The assets’ residual values, useful lives
and method of depreciation are reviewed
and adjusted if appropriate at each
financial year-end. Impairment reviews
take place when events or changes in
circumstances indicate that the carrying
value may not be recoverable. Impairment
losses are recognized in the consolidated
statement of income as an expense.
Intangible assets
Intangible assets acquired separately are
measured on initial recognition at cost.
The cost of intangible assets acquired in
a business combination is their fair value
at the date of acquisition. Following initial
recognition, intangible assets are carried
at cost less any accumulated amortization
and accumulated impairment losses.
The useful lives of intangible assets are
assessed as either finite or indefinite.
Intangible assets with finite lives are
amortized over the useful economic life
and assessed for impairment whenever
there is an indication that the intangible
asset may be impaired. The amortization
period and the amortization method for
an intangible asset with a finite useful life
are reviewed at least at the end of each
reporting period. Changes in the expected
useful life or the expected pattern of
consumption of future economic benefits
embodied in the asset are considered to
modify the amortization period or method,
as appropriate, and are treated as changes
in accounting estimates. The amortization
expense on intangible assets with finite
lives is recognized in the statement of
income in the expense category that
is consistent with the function of the
intangible assets.
An intangible asset is derecognized upon
disposal (i.e., at the date the recipient
obtains control) or when no future
economic benefits are expected from its
use or disposal. Any gain or loss arising
upon derecognition of the asset (calculated
as the difference between the net disposal
proceeds and the carrying amount of
the asset) is included in the consolidated
statement of income.
Intangible assets include computer
software and software licenses. These
intangible assets are amortized on a
straight-line basis over their estimated
economic useful lives of 5 years.
Work in progress assets
Work in progress assets are stated at
cost and include other direct costs and it
is not depreciated until it is available for
intended use.
Provisions
Provisions are recognized when the Group
has an obligation (legal or constructive) as
a result of a past event, and the costs to
settle the obligation are both probable and
able to be reliably measured.
Treasury shares
Own equity instruments that are
reacquired (treasury shares) are
recognized at cost and deducted from
equity. No gain or loss is recognized in
the statement of income on the purchase,
sale, issue or cancellation of the Group’s
own equity instruments. Any difference
between the carrying amount and the
consideration, if reissued, is recognized in
share premium.
Gross written premiums
Gross written premiums comprise the
total premiums receivable for the whole
period of cover provided by contracts
entered into during the accounting period.
They are recognized on the date on which
the policy commences. Premiums include
any adjustments arising in the accounting
period for premiums receivable in respect
of business written in prior accounting
periods. Rebates that form part of the
premium rate, such as no-claim rebates,
are deducted from the gross premium;
others are recognized as an expense.
Premiums also include estimates
for pipeline premiums, representing
amounts due on business written but
not yet notified. The Group generally
estimates the pipeline premium based
on management’s judgment and prior
experience.
Unearned premiums are those proportions
of premiums written in a year that relate
to periods of risk after the reporting date.
Unearned premiums are calculated on a
pro rata basis. The proportion attributable
to subsequent periods is deferred as a
provision for unearned premiums.
Reinsurance premiums
Reinsurance premiums comprise the total
premiums payable for the reinsurance
cover provided by retrocession contracts
entered into during the year and are
recognized on the date on which the
policy incepts.
Premiums include any adjustments arising
in the accounting period in respect of
reinsurance contracts incepting in prior
accounting periods.
Unearned reinsurance premiums are
those proportions of premiums written in
a year that relate to periods of risk after
the reporting date. Unearned reinsurance
premiums are deferred over the term of
the underlying direct insurance policies
for risks-attaching contracts and over
the term of the reinsurance contract for
losses occurring contracts.
Claims
Claims, comprising amounts payable to
contract holders and third parties and
related loss adjustment expenses, net of
salvage and other recoveries, are charged
to income as incurred. Claims comprise
the estimated amounts payable, in respect
of claims reported to the Group and
those not reported at the consolidated
statement of financial position date.
The Group generally estimates its claims
based on appointed loss adjusters or
leading underwriters’ recommendations.
In addition, a provision based on
management’s judgement and the Group’s
prior experience is maintained for the
cost of settling claims incurred but not
reported at the consolidated statement of
financial position date.
Policy acquisition costs and
commissions earned
Policy acquisition costs and commission
earned represent commissions paid and
received in relation to the acquisition and
renewal of insurance and retrocession
contracts which are deferred and
expensed over the same period over
which the corresponding premiums are
recognised in accordance with the earning
pattern of the underlying contract.
Liability adequacy test
At each statement of financial position
date, the Group assesses whether its
recognized insurance liabilities are
adequate using current estimates of
future cash flows under its insurance
contracts. If that assessment shows
that the carrying amount of its unearned
premiums (less related deferred policy
acquisition costs) is inadequate in light of
estimated future cash flows, the entire
deficiency is immediately recognized in
income and an unexpired risk provision
created.
The Group does not discount its liability
for unpaid claims as the Group measures
its insurance contract liabilities on an
undiscounted basis.
Reinsurance
The Group cedes insurance risk in the
normal course of business for all of
its businesses. Reinsurance assets
represent balances due from reinsurance
companies. Amounts recoverable from
reinsurers are estimated in a manner
consistent with the outstanding claims
provision or settled claims associated
with the reinsurer’s policies and are in
accordance with the related reinsurance
contract.
30
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
Reinsurance assets are reviewed for
impairment at each reporting date, or
more frequently, when an indication of
impairment arises during the reporting
year. Impairment occurs when there is
objective evidence as a result of an event
that occurred after initial recognition of
the reinsurance asset that the Group may
not receive all outstanding amounts due
under the terms of the contract and the
event has a reliably measurable impact on
the amounts that the Group will receive
from the reinsurer. The impairment loss is
recorded in the consolidated statement of
income.
Gains or losses on buying reinsurance are
recognized in the consolidated statement
of income immediately at the date of
purchase and are not amortized.
Ceded reinsurance arrangements do not
relieve the Group from its obligations to
policyholders.
The Group also assumes reinsurance
risk in the normal course of business
for non-life insurance contracts where
applicable. Premiums and claims on
assumed reinsurance are recognized as
revenue or expenses in the same manner
as they would be if the reinsurance were
considered direct business, taking into
account the product classification of the
reinsured business. Reinsurance liabilities
represent balances due to reinsurance
companies. Amounts payable are
estimated in a manner consistent with the
related reinsurance contract.
Premiums and claims are presented on a
gross basis for both ceded and assumed
reinsurance.
Reinsurance assets or liabilities are
derecognized when the contractual rights
are extinguished or expire or when the
contract is transferred to another party.
Reinsurance contracts that do not transfer
significant insurance risk are accounted
for directly through the statement of
financial position. These are deposit
assets or financial liabilities that are
recognized based on the consideration
paid or received less any explicit identified
premiums or fees to be retained by the
reinsured.
Excess of loss (XOL) reinsurance
The Group purchases reinsurance as part
of its risk mitigation programme. The
Group has a non–proportional excess–
31
of–loss reinsurance contracts designed
to mitigate the Group’s net exposure
of losses that exceed a specified limit
including catastrophe losses. These
contracts often specify a limit in losses for
which the reinsurer will be responsible.
This limit is agreed to in the reinsurance
contract and protects the Group from
dealing with an unlimited liability.
Retention limits for the excess–of–loss
reinsurance vary by line of business.
The XOL costs are determined at the
inception of the reinsurance contract
and are payable upfront in the form of
‘Minimum and Deposit Premium’ (MDP)
subject to premium adjustment at the end
of the contract period. Deferred excess of
loss premiums are those proportions of
premiums paid during the year that relate
to periods of risk after the reporting date.
Deferred premiums are calculated on a
pro rata basis.
Excess of loss reinsurance also includes
reinstatement premium and related cash
flows within the boundary of the initial
reinsurance contract arising from usage
of primary reinsurance coverage limit.
Reinstatement occurs at predetermined
rates without giving reinsurer any right
to exit or reprice the contract. This
implies expected cash flows related to the
reinstatement premium shall be within
the boundary of the initial reinsurance
contract and are not related to future
contracts.
Cash settled – Share based payment plan
A phantom share option plan linked to the
value of an ordinary share of the Group as
approved by the Board of Directors has
been declared during 2011. Value of an
ordinary share represents book value of
an ordinary share of Group determined
in the latest audited financial accounts as
on 31st December of each year prior to
exercise date. The scheme is applicable
to senior executives with more than 12
months service. The amount of bonus is
determined by reference to the increase
in the book value of shares covered
by the option. No shares are issued or
transferred to the option holder on the
exercise of the option.
The options vest equally over a span of
5 years from the grant date. The bonus
due amounts to the excess of book value
on vesting date over grant date plus an
additional 20% on the value of the excess.
Offsetting
Financial assets and financial liabilities
are offset, and the net amount reported
in the consolidated statement of financial
position only when there is a legally
enforceable right to offset the recognized
amounts and there is an intention to settle
on a net basis, or to realize the assets
and settle the liability simultaneously.
Income and expense are not offset in the
consolidated statement of income unless
required or permitted by any accounting
standard or interpretation.
Foreign currencies
The Group’s consolidated financial
statements are presented in United States
Dollars, which is also the functional
currency of the Group. Each entity in the
Group determines its own functional
currency and items included in the
financial statements of each entity are
measured using that functional currency.
Transactions and balances
Transactions in foreign currencies
are initially recorded by the Group
entities at their respective functional
currency rates prevailing at the date
of the transaction. Monetary assets
and liabilities denominated in foreign
currencies are retranslated at the
functional currency spot rate of exchange
ruling at the reporting date. All differences
are taken to the consolidated statement
of income. Non-monetary items that are
measured in terms of historical cost in
a foreign currency are translated using
the exchange rates as at the dates of
the initial transactions. Non-monetary
items measured at fair value in a foreign
currency are translated using the
exchange rates at the date when the fair
value is determined.
Group companies
The assets and liabilities of foreign
operations are translated into United
States Dollars at the rate of exchange
prevailing at the reporting date and their
statements of income are translated
at exchange rates prevailing at the
date of the transactions. The exchange
differences arising on the translation are
recognized in the consolidated statement
of comprehensive income. On disposal of a
foreign operation, the component of other
comprehensive income relating to that
particular foreign operation is recognized
in the consolidated statement of income.
Taxation
Dividend income
The charge or credit for taxation is based
upon the profit or loss for the year and
takes into account taxation deferred
because of temporary differences between
the treatment of certain items for taxation
and accounting purposes.
Current income tax
Current income tax assets and liabilities
for the current period are measured at the
amount expected to be recovered from
or paid to the taxation authorities. The
tax rates and tax laws used to compute
the amount are those that are enacted or
substantively enacted, at the reporting
date in the countries were the Group
operates and generates taxable income.
Deferred tax
Deferred tax is provided using the liability
method on temporary differences at the
reporting date between the tax bases of
assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax assets are recognized for all
deductible temporary differences, carry
forward of unused tax credits and unused
tax losses, to the extent that it is probable
that taxable profit will be available
against which the deductible temporary
differences, and the carry forward of
unused tax credit and unused tax losses
can be utilized.
The carrying amount of deferred tax
assets is reviewed at each reporting date
and reduced to the extent that it is no
longer probable that sufficient taxable
profit will be available to allow all or part
of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are
measured at the tax rates that are
expected to apply in the year when the
asset is realized or the liability is settled,
based on tax rates (and tax laws) that have
been enacted or substantively enacted at
the reporting date.
Interest income
Interest income included in investment
income is recognized as the interest
accrues using the effective interest
method, under which the rate used exactly
discounts estimated future cash receipts
through the expected life of the financial
asset to the net carrying amount of the
financial asset.
Dividend revenue included in investment
income is recognized when the right to
receive the payment is established.
Other revenues and expenses
Other revenues consist of chartered
flights revenues which are recognized
when the transportation is provided.
Related expenses are recognized in the
same period as the revenues to which
they relate.
Leasing (Prior to IFRS 16 adoption)
The Group has no finance lease
arrangements.
The determination of whether an
arrangement is a lease, or contains a
lease, is based on the substance of the
arrangement at the inception date and
requires an assessment of whether
the fulfilment of the arrangement is
dependent on the use of a specific
asset or assets and the arrangement
conveys a right to use the asset, even if
that right is not explicitly specified in an
arrangement.
Group as a lessee
Leases that do not transfer to the Group
substantially all the risks and benefits
incidental to ownership of the leased
items are operating leases. Operating
lease payments are recognized as an
expense in the income statement on a
straight-line basis over the lease term.
Contingent rentals are recognized as an
expense in the period in which they are
incurred.
Group as a lessor
Leases in which the Group does not
transfer substantially all of the risks
and benefits of ownership of the asset
are classified as operating leases. Initial
direct costs incurred in negotiating
an operating lease are added to the
carrying amount of the leased asset
and recognized over the lease term
on the same basis as rental income.
Rental income from operating leases is
recognized on a straight-line basis over
the term of lease.
Fair values
Fair value is the price that would
be received to sell an asset or paid
to transfer a liability in an orderly
transaction between market participants
at the measurement date. The fair
value measurement is based on the
presumption that the transaction to sell
the asset or transfer the liability takes
place either:
In the principal market for the asset or
liability, or
In the absence of a principal market, in
the most advantageous market for the
asset or liability
The principal or the most advantageous
market must be accessible to the Group.
The fair value of an asset or a liability is
measured using the assumptions that
market participants would use when
pricing the asset or liability, assuming
that market participants act in their
economic best interest.
A fair value measurement of a non-
financial asset takes into account a
market participant’s ability to generate
economic benefits by using the asset in
its highest and best use or by selling it
to another market participant that would
use the asset in its highest and best use.
The Group uses valuation techniques that
are appropriate in the circumstances and
for which sufficient data are available
to measure fair value, maximizing the
use of relevant observable inputs and
minimizing the use of unobservable
inputs.
All assets and liabilities for which fair
value is measured or disclosed in the
consolidated financial statements
are categorized within the fair value
hierarchy, described as follows, based on
the lowest level input that is significant to
the fair value measurement as a whole:
Level 1 – Quoted (unadjusted) market
prices in active markets for identical
assets or liabilities
Level 2 – Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable
Level 3 – Valuation techniques for which
the lowest level input that is significant
to the fair value measurement is
unobservable.
For assets and liabilities that are
recognized in the financial statements on
32
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
a recurring basis, the Group determines
whether transfers have occurred between
Levels in the hierarchy by re-assessing
categorization (based on the lowest level
input that is significant to the fair value
measurement as a whole) at the end of
each reporting period.
The Group’s management determines
the policies and procedures for both
recurring fair value measurement, such
as unquoted available for sale financial
assets.
At each reporting date, the management
analyses the movements in the values of
assets and liabilities which are required
to be re-measured or re-assessed as
per the Group’s accounting policies. For
this analysis, the management verifies
the major inputs applied in the latest
valuation by agreeing the information in
the valuation computation to contracts
and other relevant documents.
For the purpose of fair value disclosures,
the Group has determined classes of
assets and liabilities on the basis of the
nature, characteristics and risks of the
asset or liability and the level of the fair
value hierarchy as explained above.
Segment reporting
Reporting segments and segment
measures are explained and disclosed in
note 30 Segment information.
Listing related costs
Listing transaction related costs are
charged to the consolidated statement of
income as incurred.
Significant accounting judgements,
estimates and assumptions
The preparation of the Group’s
consolidated financial statements
requires management to make
judgements, estimates and assumptions
that affect the reported amounts of
revenues, expenses, assets and liabilities,
and the accompanying disclosures, and
the disclosure of contingent liabilities.
Uncertainty about these assumptions
and estimates could result in outcomes
that require a material adjustment to the
carrying amount of assets or liabilities
affected in future periods.
Judgements
In the process of applying the Group’s
accounting policies, management has
made the following judgements, apart
from those involving estimations, which
have the most significant effect in the
amounts recognized in the consolidated
financial statements:
Classification of investments
Financial assets are classified, at initial
recognition, as subsequently measured at
amortized cost, fair value through other
comprehensive income (OCI), and fair
value through profit or loss.
The classification of financial assets
at initial recognition depends on the
financial asset’s contractual cash flow
characteristics and the Group’s business
model for managing them.
Financial instruments are initially
recognized on the trade date measured
at their fair value. Except for financial
assets and financial liabilities recorded
at FVTPL, transaction costs are added to
this amount.
The Group classifies all its financial
assets based on the business model for
managing the assets and the asset’s
contractual terms. The categories include
the following:
• Amortized cost
• FVOCI
• FVTPL
Estimates and assumptions
The key assumptions concerning
the future and other key sources of
estimation uncertainty at the reporting
date, that have a significant risk of
causing a material adjustment to
the carrying amounts of assets and
liabilities within the next financial
year, are described below. The Group
based its assumptions and estimates
on parameters available when the
consolidated financial statements were
prepared. Existing circumstances and
assumptions about future developments,
however, may change due to market
changes or circumstances arising that
are beyond the control of the Group. Such
changes are reflected in the assumptions
when they occur.
Valuation of insurance contract
liabilities
Considerable judgement by management
is required in the estimation of amounts
due to contract holders arising from
claims made under insurance contracts.
Such estimates are necessarily based
on assumptions about several factors
involving varying, and possibly significant,
degrees of judgement and uncertainty
and actual results may differ from
management’s estimates resulting in
future changes in estimated liabilities.
In particular, estimates have to be made
both for the expected ultimate cost of
claims reported at the consolidated
statement of financial position date and
for the expected ultimate cost of claims
incurred but not yet reported (IBNR) at
the consolidated statement of financial
position date. The primary technique
adopted by management in estimating the
cost of notified and IBNR claims, is that
of using past claim settlement trends to
predict future claims settlement trends.
Claims requiring court or arbitration
decisions are estimated individually.
Independent loss adjustors normally
estimate property claims. Management
reviews its provisions for claims incurred,
and claims incurred but not reported, on
a quarterly basis.
Similar judgements, estimates and
assumptions are employed in the
assessment of adequacy of provisions
for unearned premiums. Judgement is
also required in determining whether the
pattern of insurance service provided
by a contract requires amortization of
unearned premiums on a basis other than
time apportionment.
Total carrying amount of insurance
contract liabilities as at year ended 31
December 2019 was USD 413,052,855
(2018: USD 384,379,841). As at 31
December 2019, gross incurred but not
reported claims (IBNR) amounted to USD
120,330,776 (2018: USD 98,609,584) out of
the total insurance contract liabilities.
Investment properties
Investment properties amounted to USD
25,712,312 as at 31 December 2019 (2018:
USD 30,655,214) are stated at fair value.
Management has determined the fair
value and in doing so has considered
Ultimate premiums
In addition to reported premium income,
the Group also includes an estimate for
pipeline premiums representing amount
due on business written but not yet
reported. This is based on management’s
judgement of market conditions
and historical data using premium
development patterns evident from active
underwriting years to predict ultimate
premiums trends at the close of the fiscal
period.
Estimated pipeline premiums as at year
ended 31 December 2019 USD 5,307,350
(2018: USD 5,242,979).
valuation performed by a third-party
specialist. The valuation model used was
in accordance with that recommended
by the International Valuation Standards
Committee. The investment properties
are valued using the sales comparison
approach. Under the sales comparison
approach, a property’s fair value
is estimated based on comparable
transactions. The sales comparison
approach is based upon the principle of
substitution under which a potential buyer
will not pay more for the property than it
will cost to buy a comparable substitute
property. The unit of comparison applied
by the Group is the price per square
meter (sqm).
Expected credit loss for insurance
receivables
The Group uses a provision matrix to
calculate ECLs for insurance receivables.
The provision rates are based on days
past due for groupings of various policy
holder’s segments that have similar
default patterns.
The provision matrix is initially based
on the Group’s historical observed
default rates. The Group will calibrate
the matrix to adjust the historical credit
loss experience with forward-looking
information. For instance, if forecast
economic conditions (i.e., gross domestic
product) are expected to deteriorate
over the next year which can lead to
an increased number of defaults in the
sector, the historical default rates are
adjusted. At every reporting date, the
historical observed default rates are
updated and changes in the forward-
looking estimates are analyzed.
The amount of ECLs is sensitive to
changes in circumstances and of forecast
economic conditions. The Group’s
historical credit loss experience and
forecast of economic conditions may also
not be representative of policy holder’s
actual default in the future.
In its ECL models, the Group relies on a
range of forward-looking information as
economic inputs, such as:
• Real GDP growth by region
• Projected GDP growth by region
In determining impairment of financial
assets, judgement is required in the
estimation of the amount and timing
of future cash flows as well as an
assessment of whether the credit risk
on the financial asset has increased
significantly since initial recognition
and incorporation of forward-looking
information in the measurement of ECL.
The Group considers insurance
receivables in default when contractual
payments are 360 days past due, and in
doing so management considers but does
not depend only on the age of the relevant
accounts receivable. The adequacy of
the Group’s past estimates as well as
the high turnover ratio of receivables
are also considered as main factors in
evaluating the collectability of insurance
receivables, especially in regions where
the Group has experienced historical
trends of slow collection such as the
Middle East and Africa. Even in such
regions, however, the Group has typically
ultimately recovered the due premiums
in full.
The Group has in place credit appraisal
policies for written business. The Group
monitors and follows up on receivables
for insurance transactions on an ongoing
basis. Wherever, as a result of this
formal chasing process, management
determines that the settlement of a
receivable is not probable, a notice of
cancellation (NOC) will be issued within
30–60 days from the premium past due
date. If the premium due is not paid
within the NOC period, the insurance
policy will be cancelled ab initio.
The Group does not pay claims on
policies where the policyholder is past
due on premium payments, except for
cases where the policyholder’s broker
confirms that the due premium is in the
process of being collected.
Total expected credit losses on
insurance receivables as at year ended
31 December 2019 was USD 6,393,719
(2018: USD 6,093,638).
33
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International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
3. CASH AT BANKS
(a) CASH AND CASH EQUIVALENTS
Cash and bank balances
Deposits with original maturities of three months or less
(b) TERM DEPOSITS
Total deposits
2019
USD
167,767,393
24,692,474
2018
USD
159,478,364
25,254,000
192,459,867
184,732,364
2019
USD
2018
USD
144,445,694
100,581,231
Less: Deposits with original maturities of three months or less - note 3 (a)
(24,692,474)
(25,254,000)
The deposits are denominated in US Dollars and dollar pegged currencies and are held for varying periods between one month to one year
depending on the immediate cash requirements of the Group.
2,968,273
228,948,106
21,805,575
253,721,954
119,753,220
75,327,231
Expected credit losses and impairment
(267,623)
–
4. INSURANCE RECEIVABLES
Receivables from insurance companies and intermediaries
119,368,563
114,341,269
Less: Expected credit losses on insurance receivables
(6,393,719)
(6,093,638)
2019
USD
2018
USD
31 December 2018
Unquoted bonds*
Quoted bonds
112,974,844
108,247,631
Quoted funds and alternative investments
The movement in the expected credit losses is as follows:
Opening balance
Provision for the year
Write-offs
Ending balance
2019
USD
6,093,638
628,887
(328,806)
6,393,719
2018
USD
5,621,514
472,124
-
6,093,638
Insurance receivables are non-interest bearing. The Group does not obtain collateral over insurance receivables.
5. INVESTMENTS
The details of the Group’s financial investments for the years 2019 and 2018 are as follows:
31 December 2019
Unquoted bonds*
Quoted bonds
Quoted funds and alternative investments
Quoted equities
Unquoted equities**
Amortized
Cost
USD
3,235,896
–
–
–
–
Fair value
through other
comprehensive
income
USD
–
208,525,361
Fair value
through
statement of
income
USD
Total
USD
–
–
3,235,896
208,525,361
–
8,261,033
8,261,033
14,628,558
13,544,542
28,173,100
5,794,187
–
–
5,794,187
(267,623)
Amortized
Cost
USD
3,737,287
–
–
–
–
Fair value
through other
comprehensive
income
USD
–
162,161,914
Fair value
through
statement of
income
USD
–
–
Total
USD
3,737,287
162,161,914
–
8,383,593
8,383,593
15,320,310
5,594,070
20,914,380
5,988,087
–
–
5,988,087
(280,450)
Quoted equities
Unquoted equities**
Expected credit losses and impairment
(280,450)
–
The movement on the expected credit losses and impairment provision for the bonds at amortized cost is as follows:
3,456,837
183,470,311
13,977,663
200,904,811
OPENING BALANCE
Release of provision for investment in debt securities
ENDING BALANCE
2019
USD
280,450
(12,827)
267,623
2018
USD
286,698
(6,248)
280,450
The reversal of allowance for bonds at FVTOCI for the year 2019 of USD 22,764 (note 22) does not change the carrying amount of these
investments (which are measured at fair value but gives rise to an equal and opposite gain in OCI).
35
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International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
* The Group has an investment in an unquoted bond denominated in JOD (USD pegged currency) issued by ‘Specialized Investment
Compound Co.’ a local company based in Jordan with a maturity date of 22nd February 2016. Said company is currently under
liquidation, due to which 85% of original bond holdings with nominal value amounted to USD 1,235,543 were not paid on that
maturity date.
These bonds are backed up by collateral in the form of real estate properties. However, the Group management has provided
USD 250,000 to cover any potential impairment in the value of the collateral held against said investment.
** The Group has two unquoted equity investments under level 3 designated at fair value through OCI valued at USD 5,261,387
(2018: USD 5,263,777) and USD 532,800 (2018: USD 724,310). As at 31 December 2018, the fair value of the unquoted equities was
recorded by adopting a market approach using the price of the most recent sale transaction as a basis to arrive at a value of these
investments. As at 31 December 2019, there was no information available about recent sale transactions. Accordingly, the Group has
used an alternative valuation technique called ‘multiples-based valuation’ whereby earnings-based multiples of comparable companies
as at 31 December 2019 were considered for the valuation. There are no active markets for these investments and the Group intends to
hold them for the long term.
The table below shows the sensitivity of the fair value of Level 3 financial assets as at 31 December 2019 and 2018:
2019
2018
%
Positive impact
USD
Negative impact
USD
+/- 10
573,974
(573,974)
+/- 10
598,808
(598,808)
Valuation variables
Market multiples applied
to a range of financial
performance measures ***
Price of most recent
sale transaction
*** As at 31 December 2019, the fair value measurement of the unquoted equity investment valued at USD 5,261,387 was based on a
combination of valuation multiples, with greater weight given to price to book value multiple. This has implied an equity value range
of USD 5,110,200 to USD 5,561,100.
6. INVESTMENTS IN ASSOCIATES
The Group holds 32.7% equity ownership interest in companies registered in Lebanon as shown below, the investments in associated
companies are accounted for using the equity method:
Country of
incorporation
Ownership
Star Rock SAL Lebanon
Sina SAL Lebanon
Silver Rock SAL Lebanon
Golden Rock SAL Lebanon
Movement on investments in associates is as follows:
Lebanon
Lebanon
Lebanon
Lebanon
2019
32.7%
32.7%
32.7%
32.7%
2019
USD
2018
32.7%
32.7%
32.7%
32.7%
2018
USD
Opening balance
13,437,778
14,323,451
Share of associated companies’ financial results
Investment properties fair value adjustment
Reversal of (provision) for contingent liabilities
Share of profit or loss from associates
(6,393)
(495,736)
126,025
(376,104)
36,917
(838,748)
(83,842)
(885,673)
13,061,674
13,437,778
37
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International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
The following tables include summarized information of the Group’s investments in associates for each year presented:
The following table includes summarized information of the Group’s share of (loss) profit from associates for years 2019, 2018 and 2017.
This information is presented on a 100% basis and reflects adjustments made by the Group to the associated companies own results in
applying the equity method of accounting. Adjustments to the carrying amount are recognized for changes in the Group’s proportionate
interest in the associates arising from changes in the associate’s equity that have not been recognized in the associate’s profit or loss.
Changes include those arising from the revaluation of investment properties of the associates and provisions related to the income tax and
social security contingencies that may arise on the associates.
2019
Current assets
Non-current assets
Current liabilities
Star Rock SAL
Lebanon
USD
Sina SAL
Lebanon
USD
Silver Rock SAL
Lebanon
USD
Golden Rock SAL
Lebanon
USD
Total
USD
62,359
49,224
61,267
779,871
952,721
4,970,390
3,782,149
5,405,404
33,355,443
47,513,386
(1,790,847)
(2,208,931)
(380,714)
(2,606,518)
(6,987,010)
NON-CURRENT LIABILITIES
(136,081)
(162,034)
(89,747)
(1,147,277)
(1,535,139)
NET ASSETS
3,105,821
1,460,408
4,996,210
30,381,519
39,943,958
Associates’ revenues and results:
2019
Star Rock SAL
Lebanon
USD
Sina SAL
Lebanon
USD
Silver Rock SAL
Lebanon
USD
Golden Rock SAL
Lebanon
USD
Total
USD
Revenues
Net (loss)
72,371
61,420
111,728
1,038,366
1,283,885
(206,916)
(115,357)
(97,781)
(730,110)
(1,150,164)
THE GROUP’S SHARE OF (LOSS)
(67,662)
(37,722)
(31,974)
(238,746)
(376,104)
Associates’ revenues and results:
2018
Star Rock SAL
Lebanon
USD
Sina SAL
Lebanon
USD
Silver Rock SAL
Lebanon
USD
Golden Rock SAL
Lebanon
USD
Total
USD
Revenues
Net (loss)
134,676
68,601
166,061
1,165,729
1,535,067
(245,495)
(240,228)
(236,524)
(1,986,234)
(2,708,481)
THE GROUP’S SHARE OF NET ASSETS
1,015,603
477,553
1,633,761
9,934,757
13,061,674
THE GROUP’S SHARE OF (LOSS)
(80,277)
(78,555)
(77,343)
(649,498)
(885,673)
2018
Current assets
Non-current assets
Current liabilities
Star Rock SAL
Lebanon
USD
Sina SAL
Lebanon
USD
Silver Rock SAL
Lebanon
USD
Golden Rock SAL
Lebanon
USD
Total
USD
44,491
46,225
116,287
587,531
794,534
5,205,244
3,926,427
5,610,302
34,766,783
49,508,756
(1,801,066)
(2,247,373)
(488,925)
(2,751,274)
(7,288,638)
NON-CURRENT LIABILITIES
(135,934)
(149,515)
(143,677)
(1,491,409)
(1,920,535)
NET ASSETS
3,312,735
1,575,764
5,093,987
31,111,631
41,094,117
THE GROUP’S SHARE OF NET ASSETS
1,083,265
515,275
1,665,735
10,173,503
13,437,778
Associates’ revenues and results:
2017
Star Rock SAL
Lebanon
USD
Sina SAL
Lebanon
USD
Silver Rock SAL
Lebanon
USD
Golden Rock SAL
Lebanon
USD
Total
USD
Revenues
Net profit
THE GROUP’S SHARE OF PROFIT
90,006
408,161
133,469
52,803
174,977
57,217
147,976
196,769
64,344
1,195,217
1,486,002
2,254,396
3,034,303
737,188
992,218
The associates’ main business is investing in investment properties. The investment properties of the associates are stated at fair value
to bring the associated companies accounting policies in line with the Group’s. The fair value of the investment properties has been
determined by management and in doing so has considered valuation performed by third party specialist. The valuation model used
was in accordance with that recommended by the International Valuation Standards Committee. The investment properties are valued
using the sales comparison approach. Under the sales comparison approach, a property’s fair value is estimated based on comparable
transactions. The sales comparison approach is based upon the principle of substitution under which a potential buyer will not pay more
for the property than it will cost to buy a comparable substitute property. The unit of comparison applied by the Group is the price per
square meter (sqm) which represents the significant unobservable input used in the valuation process.
All the investment properties generated rental income during the current year and the prior years.
39
40
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
7. OUTSTANDING CLAIMS
Movement in outstanding claims
AT THE BEGINNING OF THE YEAR
Reported claims
2019
Reinsurers’
share
USD
Gross
USD
Net
USD
Gross
USD
2018
Reinsurers’
share
USD
Net
USD
Gross
USD
2017
Reinsurers’
share
USD
285,770,257
(170,124,934)
115,645,323
303,254,937
(178,617,218)
124,637,719
244,216,392
(122,735,801)
Claims incurred but not reported
98,609,584
(17,440,448)
81,169,136
79,972,504
(7,974,801)
71,997,703
90,954,902
(20,329,907)
Net
USD
121,480,591
70,624,995
384,379,841
(187,565,382)
196,814,459
383,227,441
(186,592,019)
196,635,422
335,171,294
(143,065,708)
192,105,586
Claims paid
Provided during the year related to current accident year
(131,151,122)
150,799,594
53,113,606
(78,037,516)
(209,892,000)
124,783,536
(85,108,464)
(204,098,071)
(26,443,648)
124,355,946
196,708,805
(102,442,564)
94,266,241
278,298,318
121,697,370
(167,956,984)
(82,400,701)
110,341,334
Provided during the year related to previous accident years
9,024,542
(15,317,000)
(6,292,458)
14,335,595
(23,314,335)
(8,978,740)
(26,144,100)
2,733,303
(23,410,797)
At the end of the year
413,052,855
(176,212,424)
236,840,431
384,379,841
(187,565,382)
196,814,459
383,227,441
(186,592,019)
196,635,422
AT THE END OF THE YEAR
Reported claims
292,722,079
(163,190,980)
129,531,099
285,770,257
(170,124,934)
115,645,323
303,254,937
Claims incurred but not reported
120,330,776
(13,021,444)
107,309,332
98,609,584
(17,440,448)
81,169,136
79,972,504
(178,617,218)
(7,974,801)
124,637,719
71,997,703
413,052,855
(176,212,424)
236,840,431
384,379,841
(187,565,382)
196,814,459
383,227,441
(186,592,019)
196,635,422
41
42
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
CLAIMS DEVELOPMENT
The following tables show the estimate of cumulative incurred claims, including both reported claims and claims incurred but not reported
for each successive accident year at each statement of financial position date, together with cumulative payments to date.
AT END OF ACCIDENT YEAR
25,362,416
25,254,263
37,939,544
114,560,922
94,375,639
122,323,418
128,498,162
133,595,104
159,549,092
152,384,186
174,601,048
175,094,042
278,298,318
196,708,806
150,799,594
2005
USD
2006
USD
2007
USD
2008
USD
2009
USD
2010
USD
2011
USD
2012
USD
2013
USD
2014
USD
2015
USD
2016
USD
2017
USD
2018
USD
2019
USD
Total
USD
44,520,499
35,110,485
54,041,148
125,149,178
75,295,485
108,522,816
106,566,918
119,424,721
155,958,329
114,972,073
160,100,166
173,369,296
309,257,783
219,593,452
47,504,859
40,894,923
53,379,611
119,412,667
67,118,529
105,943,110
100,764,212
108,556,804
148,160,641
101,352,163
149,533,104
167,694,979
317,052,504
Three years later
47,354,940
39,641,082
53,971,648
121,676,478
68,496,704
100,572,066
110,286,014
110,046,062
142,309,348
92,846,420
145,920,851
158,572,219
One year later
Two years later
Four years later
Five years later
Six years later
Eight years later
Nine years later
Ten years later
46,829,976
37,331,379
53,468,989
119,839,220
68,217,208
99,513,334
114,464,267
103,996,492
133,916,518
88,210,215
142,926,388
46,391,258
37,665,596
53,393,860
113,090,591
67,908,658
101,599,381
110,266,231
104,540,662
132,991,755
85,621,385
47,224,929
36,800,576
50,534,739
112,125,348
67,807,370
100,198,544
111,774,284
103,167,021
130,843,807
Seven years later
46,211,206
35,600,935
49,718,456
110,400,053
67,613,678
100,302,961
110,644,445
97,917,558
46,232,192
35,318,464
49,552,802
110,588,511
68,114,668
100,073,144
111,028,275
46,224,784
34,796,272
49,374,891
111,162,234
68,950,049
100,119,899
45,737,657
34,609,372
49,361,720
111,371,580
68,881,829
Eleven years later
45,608,779
34,553,537
49,312,510
111,500,390
Twelve years later
45,609,384
34,422,917
49,303,976
Thirteen years later
45,602,039
34,377,940
Fourteen years later
45,613,014
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Current estimate of cumulative
claims incurred
45,613,014
34,377,940
49,303,976
111,500,390
68,881,829
100,119,899
111,028,275
97,917,558
130,843,807
85,621,385
142,926,388
158,572,219
317,052,504
219,593,452
150,799,594
1,824,152,230
Cumulative payments to date
45,612,133
33,701,658
49,301,701
110,725,084
67,854,039
99,582,296
102,709,727
94,781,375
128,732,202
82,445,136
135,516,537
149,115,128
224,833,333
68,579,482
17,609,544
1,411,099,375
TOTAL LIABILITY INCLUDED IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
413,052,855
8. UNEARNED PREMIUMS
Opening balance
Premiums written
Premiums earned
43
2019
Reinsurers’
share
USD
Gross
USD
Net
USD
Gross
USD
2018
Reinsurers’
share
USD
Net
USD
Gross
USD
2017
Reinsurers’
share
USD
Net
USD
168,254,688
(32,566,847)
135,687,841
156,694,025
(41,126,963)
115,567,062
133,670,895
(32,138,490)
101,532,405
349,291,905
(97,139,370)
252,152,535
301,618,486
(98,188,088)
203,430,398
275,102,191
(114,334,750)
160,767,441
(311,332,564)
95,789,668
(215,542,896)
(290,057,823)
106,748,204
(183,309,619)
(252,079,061)
105,346,277
(146,732,784)
206,214,029
(33,916,549)
172,297,480
168,254,688
(32,566,847)
135,687,841
156,694,025
(41,126,963)
115,567,062
44
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
9. DEFERRED EXCESS OF LOSS PREMIUMS
The movement in deferred excess of loss premiums in the consolidated statement of financial position is as follows:
11. OTHER ASSETS
Opening balance
Additions
Charged to consolidated income statement under reinsures’ share
of insurance premiums
2019
USD
2018
USD
2017
USD
12,448,671
11,612,654
8,878,968
37,491,753
24,945,436
28,664,368
(34,767,717)
(24,109,419)
(25,930,682)
ENDING BALANCE
15,172,707
12,448,671
11,612,654
10. DEFERRED POLICY ACQUISITION COSTS
2019
USD
2018
USD
2017
USD
Opening balance
36,403,831
32,915,965
28,286,248
Acquisition costs during the year
64,675,035
62,268,542
57,570,774
Charged to consolidated statement of income
(59,365,577)
(58,780,676)
(52,941,057)
ENDING BALANCE
41,713,289
36,403,831
32,915,965
Accrued interest income
Due from related party (note 26)
Prepaid expenses
Refundable deposits
Employees receivables
Funds held in trust accounts
Income tax receivables
Trade receivables
Others
2019
USD
2,580,091
1,855,461
1,303,352
119,020
60,199
1,518,041
132,722
6,707
178,632
2018
USD
1,830,722
-
1,284,738
221,779
445,374
1,006,735
187,604
9,366
74,732
7,754,225
5,061,050
The carrying values of the other assets above as at years ending 31 December 2019 and 2018 approximate fair value.
45
46
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
12. INVESTMENT PROPERTIES
The following table includes summarized information of the Group’s investment properties:
The sensitivity of the Group financial statements to the change in the price used for the valuation of the investment properties was as the following:
Opening balance
Additions
Sale of investment properties
Fair value adjustment (note 22)
ENDING BALANCE
Opening balance
Fair value adjustment (note 22)
ENDING BALANCE
2019
Commercial
building
USD
Land*
USD
Total
USD
20,312,477
10,342,737
30,655,214
–
–
745,281
745,281
(5,383,701)
(5,383,701)
(249,173)
(55,309)
(304,482)
20,063,304
5,649,008
25,712,312
2018
Commercial
building
USD
Land*
USD
Total
USD
20,218,543
10,342,737
30,561,280
93,934
–
93,934
20,312,477
10,342,737
30,655,214
Commercial building
2019
2018
Land
2019
2018
Price per
square meter
USD
Impact on statement
of income for the
increase in price per
square meter
USD
Impact on statement
of income for the
decrease in price per
square meter
USD
1,122
1,139
2,006,330
2,031,248
(2,006,330)
(2,031,248)
Price per
square meter
USD
Impact on statement
of income for the
increase in price per
square meter
USD
Impact on statement
of income for the
decrease in price per
square meter
USD
203
151
564,901
1,034,274
(564,901)
(1,034,274)
%
+/- 10
+/- 10
%
+/- 10
+/- 10
* Land amounting to USD 5,649,008 as at 31 December 2019 (2018: USD 10,342,737) is registered in the name of one of the Directors of
the Group. The Group has obtained a proxy over this investment property (note 26).
The fair value of investment properties has been determined by management and in doing so has considered a valuation performed by a
third parties who are specialists in valuing these types of investment properties. The valuation model used was in accordance with that
recommended by the International Valuation Standards Committee. The investment properties are valued using the sales comparison
approach. Under the sales comparison approach, a property’s fair value is estimated based on comparable transactions. The sales
comparison approach is based upon the principle of substitution under which a potential buyer will not pay more for the property than it
will cost to buy a comparable substitute property. The management believes that this valuation technique falls under level 3 of the fair
value hierarchy since investment properties market is not very active.
47
48
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
13. PROPERTY, PREMISES AND EQUIPMENT
Office
buildings
USD
Aircraft
USD
Office
furniture
USD
Computers
USD
Equipment
USD
Leasehold
improvements
USD
COST
At 1 January 2019
2,674,521
11,290,405
1,633,314
1,553,789
281,370
1,320,273
Impact of the IFRS 16 adoption (note 2)
–
–
–
–
–
–
ADJUSTED BALANCE
2,674,521
11,290,405
1,633,314
1,553,789
281,370
1,320,273
Additions
Disposals
3,614
–
–
–
19,152
–
122,981
(31,261)
9,698
(254)
163,318
(71,636)
Vehicles
USD
964,531
–
964,531
115,570
(69,322)
At 31 December 2019
2,678,135
11,290,405
1,652,466
1,645,509
290,814
1,411,955
1,010,779
DEPRECIATION
At 1 January 2019
Deprecation for the year
Disposals
At 31 December 2019
NET CARRYING AMOUNT
757,200
136,449
–
1,806,464
903,232
–
1,325,569
1,297,939
278,263
1,220,100
56,749
–
169,390
(31,261)
3,941
(95)
53,354
(23,231)
893,649
2,709,696
1,382,318
1,436,068
282,109
1,250,223
815,671
67,440
(69,320)
813,791
Work in
Progress
USD
–
–
–
8,972
–
8,972
–
–
–
–
Right of
use assets
USD
–
1,715,606
1,715,606
1,002,005
(792,544)
1,925,067
–
516,175
(104,769)
411,406
Total
USD
19,718,203
1,715,606
21,433,809
1,445,310
(965,017)
21,914,102
7,501,206
1,906,730
(228,676)
9,179,260
At 31 December 2019
1,784,486
8,580,709
270,148
209,441
8,705
161,732
196,988
8,972
1,513,661
12,734,842
COST
At 1 January 2018
Additions
2,669,763
11,290,405
4,758
–
At 31 December 2018
2,674,521
11,290,405
DEPRECIATION
At 1 January 2018
Deprecation for the year
At 31 December 2018
NET CARRYING AMOUNT
704,219
52,981
757,200
903,232
903,232
1,806,464
1,513,831
119,483
1,633,314
1,273,047
52,522
1,325,569
1,413,182
140,607
1,553,789
1,184,117
113,822
1,297,939
274,433
6,937
281,370
272,606
5,657
278,263
1,177,342
142,931
1,320,273
1,177,341
42,759
1,220,100
964,531
–
964,531
698,388
117,283
815,671
At 31 December 2018
1,917,321
9,483,941
307,745
255,850
3,107
100,173
148,860
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The depreciation of the aircraft for the year ended 31 December 2019 amounted to USD 903,232 (2018: USD 903,232) (2017: USD 903,232) was
allocated proportionally between the other expenses and general and administrative expenses based on the flight hours of chartered trips
and business-related trips.
49
19,303,487
414,716
19,718,203
6,212,950
1,288,256
7,501,206
12,216,997
50
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
The depreciation and amortization (note 14) charges for the year 2019, 2018 and 2017 were allocated as follows:
16. OTHER LIABILITIES
2019
USD
2018
USD
2017
USD
Property premises and equipment depreciation charge for the year
1,906,730
1,288,256
1,406,831
Intangible assets amortization charge for the year (note 14)
Aircraft depreciation allocated to listing transaction deferred
cost (note 11)
Aircraft depreciation allocated to other expenses (note 23)
Total depreciation and amortization allocated to G&A
48,728
(72,555)
(594,496)
1,288,407
71,704
–
(490,820)
869,140
78,303
–
(462,184)
1,022,950
Fully depreciated property, premises and equipment still in use amounted to USD 5,206,087 as at 31 December 2019 (2018: USD 4,337,158).
14. INTANGIBLE ASSETS
COST
2019
2018
Computer
software /
licenses
USD
Work in
progress*
USD
Computer
software /
licenses
USD
Work in
progress*
USD
Total
USD
Total
USD
Beginning balance
1,183,341
2,840,235
4,023,576
1,171,134
1,874,003
3,045,137
Additions
Ending balance
AMORTIZATION
Beginning balance
Additions
Ending balance
6,670
992,202
998,872
12,207
966,232
978,439
1,190,011
3,832,437
5,022,448
1,183,341
2,840,235
4,023,576
1,087,826
48,728
1,136,554
–
–
–
1,087,826
1,016,122
48,728
71,704
1,136,554
1,087,826
–
–
–
1,016,122
71,704
1,087,826
Accounts payable
Accrued expenses and other accruals
Listing related cost payables (note 24)
Lease liability
Income tax payable (note 27)
2019
USD
1,716,667
7,221,706
3,661,148
1,563,389
700,372
2018
USD
2,441,208
5,858,245
-
-
-
14,863,282
8,299,453
17. UNEARNED COMMISSIONS
The movement in unearned commissions in the consolidated statement of financial position is as follows:
As at 1 January
Commissions received
Commissions earned
As at 31 December
18. EQUITY
SHARE CAPITAL
2019
USD
2018
USD
2017
USD
8,010,384
10,354,019
8,292,099
14,829,744
14,473,519
18,771,267
(13,930,139)
(16,817,154)
(16,709,347)
8,909,989
8,010,384
10,354,019
Authorized shares (par value of USD 1 each)
175,000,000
175,000,000
Issued shares
143,375,678
143,375,678
2019
USD
2018
USD
NET CARRYING AMOUNT
53,457
3,832,437
3,885,894
95,515
2,840,235
2,935,750
* Work in progress balance represents the payments towards the purchase of new insurance software. The management expects that the
software will be installed during the first half of 2020, and the expected cost to complete the project is USD 225,375.
FAIR VALUE RESERVE
The movement of this item is as follows:
15. INSURANCE PAYABLES
Payables due to insurance companies and intermediaries
Reinsurers – amounts due in respect of ceded premium
2019
USD
2,610,528
50,933,209
53,543,737
2018
USD
233,316
32,800,830
33,034,146
51
2019
USD
2018
USD
2017
USD
Balance at the beginning of the year
953,704
14,208,469
9,693,936
Impact of adopting IFRS 9
Net change in fair value reserve during the year for bonds at fair
value through OCI
Net change in fair value reserve during the year for
equities at fair value through OCI
Net change in fair value reserve during the year
for available for sale investments
ECL (release) charge transferred to income statement
Balance at the end of the year
-
(6,680,687)
4,208,620
(2,706,303)
(865,646)
(3,897,678)
-
-
-
-
-
4,514,533
(22,764)
4,273,914
29,903
953,704
-
14,208,469
52
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
FOREIGN CURRENCY TRANSLATION RESERVE
The foreign currency translation reserve is used to record the exchange difference arising from the translation of the financial
statements of foreign subsidiaries to the Group’s functional currency.
22. NET INVESTMENT INCOME
19. TREASURY SHARES
The general shareholders meeting approved in its extraordinary meeting dated 24 November 2013 the purchase of the Group’s own
shares up to 15% of the issued shares and to be treated as treasury shares in accordance with the applicable DIFC laws and regulations.
Pursuant to the above authorization, 2,350,000 treasury shares were purchased during the year which were recorded at an amount of
USD 5,052,500 (2018: USD 15,050,000). Total treasury shares amount as at 31 December 2019 was USD 20,102,500 (2018: USD 15,050,000)
- (note 26).
Reconciliation of the outstanding number of shares is as follows
Interest income
Dividends from equities at FVTOCI
Dividends from equities at FVTPL
Dividends
Realized gains and losses on investments
2019
2018
Net gain on sale of available-for-sale investments
136,375,678
143,375,678
(2,350,000)
(7,000,000)
134,025,678
136,375,678
Realized loss on sale of bonds at FVTOCI
Realized gain on sale of FVTPL equities and mutual funds
Unrealized gains and losses on investments
2019
USD
2018
USD
2017
USD
10,866,051
9,698,069
8,632,460
721,240
391,222
–
–
342,800
701,076
–
–
(628,523)
946,952
(763,569)
2,048,908
–
–
1,490,607
3,133,556
–
–
At 1 January
Treasury shares purchased during the year
At 31 December
20. DIVIDENDS PAID
The Board of Directors resolved to pay the following dividends for the years 2019, 2018 and 2017:
– On 21 March 2019: USD 5,455,027 (Dividend per share excluding treasury shares: USD 0.040)
– On 22 August 2019: USD 5,361,027 (Dividend per share excluding treasury shares: USD 0.040)
– On 16 August 2018: USD 4,091,271 (Dividend per share excluding treasury shares: USD 0.030)
– On 9 March 2017: USD 5,735,027 (Dividend per share: USD 0.040)
– On 16 August 2017: USD 5,735,027 (Dividend per share: USD 0.040)
21. GENERAL AND ADMINISTRATIVE EXPENSES
Human resources expenses
26,700,229
23,448,838
21,350,467
2019
USD
2018
USD
2017
USD
Business promotion, travel and entertainment
Statutory, advisory and rating
Information technology and software
Office operation
Depreciation and amortization (note 13)
Interest expense arising from lease liabilities (note 2)
Bank charges
Board of directors’ expenses
3,339,568
3,463,139
1,871,641
1,459,670
1,288,407
108,426
136,569
898,296
3,492,472
3,040,841
1,838,585
1,783,868
869,140
–
153,055
724,880
3,002,921
1,811,372
1,542,740
1,491,240
1,022,950
–
129,750
551,164
39,265,945
35,351,679
30,902,604
Fair value changes of held for trading investments
–
–
95,582
Unrealized loss on revaluation of financial assets at FVTPL
1,590,964
(948,802)
Gains and losses from investments in properties
Realized gain on sale of investment properties
Fair value (loss) gain on investment properties (note 12)
Rental income
Impairment and expected credit losses on investments
Impairment on available for sale investments
Expected credit loss on financial assets at FVOCI
Release of expected credit loss on financial assets at
amortized cost
678,516
(304,482)
203,076
–
22,764
12,827
–
–
18,148
1,007,983
–
93,934
606,862
–
(71,863)
(29,903)
6,248
–
–
Investments custodian fees and other investments expenses
(1,126,531)
(1,445,327)
(1,741,631)
13,374,076
10,310,296
12,564,842
53
54
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
23. OTHER REVENUES (EXPENSES)
Other revenues:
Chartered flights revenue
Others
Other expenses:
Aircraft operational cost
Aircraft depreciation expense (note 13)
Loss on disposal of property, premises and equipment
2019
USD
2018
USD
1,428,265
902,750
–
–
1,428,265
902,750
2017
USD
837,712
18,828
856,540
(1,574,171)
(1,095,461)
(1,003,858)
(594,496)
(25,999)
(490,820)
(462,184)
–
–
(2,194,666)
(1,586,281)
(1,466,042)
24. LISTING TRANSACTION COSTS
Transaction costs incurred by the Group during 2019 mainly consist of professional fees (legal, accounting, etc.) and other
miscellaneous cost that are directly related to the listing transaction.
Transaction costs amounting to USD 4,831,976 were charged to the consolidated statement of income for the year ended
31 December 2019.
25. COMMITMENTS AND CONTINGENCIES
As of the date of the consolidated financial statements, the Group is contingently liable for the following:
• Letters of Credit amounting to USD 7,993,798 to the order of reinsurance companies for collateralizing insurance contract
liabilities in accordance with the reinsurance arrangements (31 December 2018: USD 7,335,896).
• Letter of Guarantee amounting to USD 318,780 to the order of Friends Provident Life Assurance Limited for collateralizing
rent payment obligation in one of the Group entity’s office premises (31 December 2018: USD 307,936).
• The Group has entered into operating leases contracts for its offices in the United Kingdom and the United Arab of
Emirates and Malaysia, with lease obligations between one and seven years.
Future minimum rentals payable under non-cancellable operating leases as at 31 December 2018 are as follows:
Within one year
More than one year to three years
More than three years to five years
More than five years
2018
USD
636,600
1,077,509
280,013
–
1,994,122
The Group has adopted IFRS 16 effective
1 January 2019, as a result the lease
obligations arising from the lease contracts
are currently recorded within the other
liabilities in the consolidated statement of
financial position (note 16).
LITIGATIONS
The Group is currently engaged in an
arbitration proceeding with certain
reinsurers represented by an underwriting
agent (“agent”) with respect to certain
matters related to the Group’s outward
reinsurance program for the years 2012
to 2017.
The Group commenced the arbitration
proceeding with the agent for these
reinsurers after they failed to make payment
of approximately USD 5.7 million which the
Group believes is due from them (based
on figures as at 30 June 2019). As at 31
December 2019, the Group is seeking to
recover approximately USD 6.9 million from
the reinsurers, plus interest and legal costs.
In response, the agent alleges that certain
matters were not adequately disclosed and
is seeking to avoid the policies. The Group
believes that the allegations are without
merit and will vigorously defend itself in this
matter. Accordingly, no provision for any
liability has been made in these financial
statements.
Were the policies in question to be
avoided, approximately USD 33.2 million
of premiums paid by the Group to the
reinsurers would be returned to the Group,
and the Group would similarly return
approximately USD 29.6 million of claims
previously paid by the reinsurers and
would not collect a further USD 6.9 million
which the Group believes is due from the
reinsurers as at 31 December 2019. In
addition, the Group would be unable to
make further recoveries under the policies
in respect of claims it is yet to pay and
would not be required to pay any further
premiums to the reinsurers.
26. RELATED PARTIES
Related parties represent major
shareholders, associates, directors and
key management personnel of the Group
and entities controlled, jointly controlled
or significantly influenced by such parties,
pricing policies and terms of these
transactions are approved by the Group’s
management.
• Compensation of key management
personnel of the Group, consisting of
salaries and benefits was USD 10,164,201
(2018: USD 10,072,656) (2017: USD
8,379,883). Out of the total amount of key
management personnel compensation,
an amount of USD 565,960 (2018: USD
423,547) (2017: USD 318,076) represents
long-term benefits. These long-term
benefits represent a phantom share
option plan linked to the value of an
ordinary share of the Group as approved
by the Board of directors during 2011. The
scheme is applicable to senior executives
responsible for the management, growth
and protection of business of the Group.
The amount of bonus is determined by
reference to the increase in the book value
of shares covered by the option. No shares
are issued or transferred to the option
holder on the exercise of the option. The
options vest equally over a span of five
years starting on the first anniversary
of Continued employment following the
date on which it is granted. The bonus
due amounts to the excess of book value
of shares on vesting date over grant
date as determined in the latest audited
financial statements as of 31 of December
of the year prior to vesting and grant date
respectively plus an additional 20% on the
value of the excess.
• The Group rented a boat for business
promotion from a company owned by
major shareholder, the total expense
charged to the general and administrative
expenses was USD 381,909 (2018: USD
211,058) (2017: USD 211,739). In addition
to this the Group has paid aircraft
management fees of USD 84,000 (2018:
USD 84,000) (2017: USD 168,221) to which
is owned by a major shareholder. As at 31
December 2019, there was an amount of
USD 196,214 payable to Arab Wings Co.
against a receivable of USD 111,227 as at
31 December 2018.
• During 2019, the Group entered into a
share buyback agreement with a director
and major shareholder whereby 2,350,000
treasury shares were purchased with
total amount of USD 5,052,500 (note
19). The above transaction arose as a
result of an advance of USD 5,000,000
for investment in a company where the
director and major shareholder has a
controlling interest. The investment was
not completed and in exchange for the
advanced funds, the Group purchased the
above treasury shares.
• The Group entities entered into a
service level agreement whereby IGI
Underwriting Jordan (IGIU) provides
administration, underwriting, claims
and financial services to International
General Insurance Co. Ltd. – Bermuda,
International General Insurance Co. Ltd. –
Labuan, International General Insurance
Company (Dubai) Ltd., and International
General Insurance Company (UK) Ltd.
Based on the service level agreement,
an agency fee expense is charged by
IGIU and attributable cost against these
services is charged back as general and
administrative expenses to IGIU from
these Group entities.
The transactions between the Group entities within the income statement represented by agency fees and costs recharged are as follows:
Agency fees due to International General Insurance Underwriting
Costs recharged back to International General Insurance
Underwriting
2019
USD
20,315,915
21,329,250
2018
USD
17,394,592
18,856,943
2017
USD
15,692,409
16,678,582
55
56
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
The transactions on page 56 and related amounts recorded in the Group entities’ balance sheets are eliminated in full in the
consolidated financial statements of the Group.
• Included within the investment properties (note 12) is land in the amount of USD 5,649,008 (2018: USD 10,342,737) registered in
the name of one of the Directors of the Group. The Group has obtained an irrevocable proxy over this investment property
• Balances due from key management personnel of the Group as at 31 December 2019 was USD 92,772 (2018: USD 465,550).
• As at 31 December 2019, listing transaction costs amounting to USD 1,855,461 (note 11) were incurred by the Group on behalf
of International General Insurance Holdings Ltd, Bermuda. This amount is directly related to the issuance of the new shares on
NASDAQ Capital Markets and accordingly will be allocated to the shareholders equity upon completion of the listing transaction.
27. TAXATION
The components of income tax expense are as follows:
CURRENT INCOME TAX:
Current income tax charge
Adjustments in respect of current income tax of prior years
DEFERRED TAX:
Origination and reversal of temporary differences
Effect of tax rate change
Adjustment in respect of prior years
INCOME TAX CHARGE/(CREDIT) FOR THE YEAR
2019
USD
704,258
–
1,246,525
(131,459)
(131,741)
1,687,583
2018
USD
9,275
47,182
8,181
(861)
(1,536)
62,241
The income tax expense appearing in the consolidated statement of income relate to the following subsidiaries:
Income tax expense for IGI Labuan – current year
Corporate tax for IGI Casablanca (Representative Office) –
current year
Corporate tax for IGI Casablanca (Representative Office) –
prior years
Income tax expense for IGI UK – current year
Income tax expense for IGI Underwriting – prior years
Addition (amortization) of deferred tax assets for IGI UK
INCOME TAX CHARGE/(CREDIT) FOR THE YEAR
2019
USD
–
3,885
–
700,373
–
983,325
1,687,583
2018
USD
5,063
4,212
4,212
–
42,970
5,784
62,241
2017
USD
4,946
(60,906)
(154,715)
116,864
79,389
(14,422)
2017
USD
4,946
–
–
(60,906)
–
41,538
(14,422)
57
• Effective 1 January 2019, the Labuan Business Activity Tax Law has been revised and accordingly, Labuan registered entities can
no longer elect to pay the RM20,000 flat tax rate and instead are subject to 3% tax on the audited net profits. In 2019, IGI Labuan
has recorded a net loss, and as a result no income tax has been accrued for the year. In 2018 and 2017, IGI Labuan elected to pay
a fixed income tax of RM20,000 equivalent to USD 5,063 (2017: USD 4,946) based on the old prevailing tax law applicable to that
financial year.
• IGI Casablanca – Representative Office has no income sources. According to Casablanca Finance City Tax Code, regional offices
are taxed at a rate of 10%. The taxable base is 5% of the operating cost.
• IGI UK and North Star Under Underwriting Limited are subject to corporate taxation in accordance with the UK Tax Law.
• IGI Underwriting is a tax-exempt company in Jordan as its main business activity is to act as an underwriting agent in respect
of insurance and reinsurance business written outside Jordan. The income accrued in prior year for IGI Underwriting was in
respect of interest income earned on the deposits placed with local banks in 2014 and 2015.
• International General Insurance Co. Ltd is a tax-exempt company according to the tax law in Bermuda.
• IGI Holdings and IGI Dubai are not subject to income tax according to the tax law in UAE.
Reconciliation of tax expense and the accounting profit multiplied by the applicable tax rate is as follows:
2019
USD
2018
USD
2017
USD
The Group profit before tax
25,252,982
25,603,944
7,016,918
Less: Profit related to non-taxable subsidiaries
(15,379,870)
(26,486,855)
(8,124,461)
Profit (Loss) before tax for IGI UK and North Star
Underwriting Limited – entities subject to corporate taxation
9,873,112
(882,911)
(1,107,543)
Profit (Loss) multiplied by the standard rate of tax in the UK of 19%
(2018:19%)
1,875,891
(167,753)
(213,202)
Net disallowed expenditure
Fixed asset temporary differences not recognized for
deferred tax
Other temporary differences not recognized for deferred tax
Adjustment in respect of prior years
IGI Labuan and IGI Casablanca current year tax charges
Effect of rate change to 17%
INCOME TAX CHARGE/(CREDIT) FOR THE YEAR
50,177
17,782
2,902
(131,527)
3,817
(131,459)
1,687,583
180,847
(10,827)
5,914
45,646
9,275
(861)
62,241
42,350
(5,796)
21,933
18,483
4,946
116,864
(14,422)
58
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
The following is the movement on the deferred tax assets (liabilities):
Balance at start of the year
Deferred tax prior year adjustment
Arising in year
Effect of rate change to 17%
Others
ENDING BALANCE
2019
638,841
131,741
(1,246,525)
131,459
(2,340)
(346,824)
2018
644,625
1,536
(8,181)
861
–
638,841
The deferred tax liabilities amounted to USD 346,824 (2018: USD 638,841 deferred tax asset) are in respect to an
adjustment processed to the income of one of the Group’s subsidiaries using prevailing tax rates.
28. RISK MANAGEMENT
The risks faced by the Group and the way
these risks are mitigated by management
are summarized below.
INSURANCE RISK
Insurance risk includes the risks of
inappropriate underwriting, ineffective
management of underwriting, inadequate
controls over exposure management
in relation to catastrophic events and
insufficient reserves for losses including
claims incurred but not reported.
To manage this risk, the Group’s
underwriting function is conducted in
accordance with a number of technical
analytical protocols which include defined
underwriting authorities, guidelines by
class of business, rate monitoring and
underwriting peer reviews.
The Group purchases reinsurance as part of
its risk mitigation programme. Reinsurance
ceded is placed on both a proportional and
non–proportional basis. The proportional
reinsurance is quota–share reinsurance
which is taken out to reduce the overall
exposure of the Group to certain classes of
business. Non–proportional reinsurance
is primarily excess–of–loss reinsurance
designed to mitigate the Group’s net
exposure to catastrophe losses and large
claims. Retention limits for the excess–of–
loss reinsurance vary by class of business.
Also, a significant portion of the reinsurance
is affected under the facultative reinsurance
contracts to cover a single risk exposure.
Amounts recoverable from reinsurers are
estimated in a manner consistent with the
outstanding claims provision and are in
accordance with the reinsurance contracts.
Although the Group has reinsurance
arrangements, it is not relieved of its direct
obligations to its policyholders and thus a
credit exposure exists with respect to ceded
insurance, to the extent that any reinsurer
is unable to meet its obligations assumed
under such reinsurance agreements.
The Group’s placement of reinsurance is
diversified such that it is neither dependent
on a single reinsurer nor are the operations
of the Group substantially dependent upon
any single reinsurance contract.
The Group has in place effective exposure
management systems. Aggregate exposure
is modelled and tested against different
stress scenarios to ensure adherence
to the Group’s overall risk appetite and
alignment with reinsurance programs and
underwriting strategies.
Loss reserve estimates are inherently
uncertain. Reserves for unpaid losses
are the largest single component of the
liabilities of the Group. Actual losses that
differ from the provisions, or revisions in
the estimates, can have a material impact
on future earnings and the statement of
financial position. The Group has an in house
experienced actuarial function reviewing
and monitoring the reserving policy and
its implementation at quarterly intervals.
They work closely with the underwriting and
claims team to ensure an understanding of
the Group’s exposure and loss experience.
In addition, the Group receives external
independent analysis of its reserve
requirements on an annual basis.
In order to minimize financial exposure
arising from large claims, the Group, in
the normal course of business, enters into
contracts with other parties for reinsurance
purposes. Such reinsurance arrangements
provide for greater diversification of
business, allow management to control
exposure to potential losses arising
from large risks, and provide additional
capacity for growth. A significant portion
of the reinsurance is affected under treaty,
facultative and excess-of-loss reinsurance
contracts.
59
GEOGRAPHICAL CONCENTRATION OF RISKS
The Group’s insurance risk based on geographical concentration of risk is illustrated in the table below:
2019
2018
2017
Gross written
premiums
USD
Concentration
percentage
%
Gross written
premiums
USD
Concentration
percentage
%
Gross written
premiums
USD
Concentration
percentage
%
Africa
Asia
Australasia
Caribbean
Islands
Central
America
Europe
16,492,171
32,809,456
15,185,489
8,334,322
37,731,495
37,327,933
Middle East
36,883,039
North America
4,281,472
South America
11,050,657
UK
115,863,288
Worldwide
33,332,583
349,291,905
5
9
4
2
11
11
11
1
3
33
10
13,601,315
27,841,670
12,636,310
15,098,606
26,696,686
34,470,850
32,381,500
859,731
26,356,474
76,717,981
34,957,363
301,618,486
5
9
4
5
9
11
11
0
9
25
12
14,797,102
33,939,858
8,410,387
10,514,780
35,560,075
32,179,912
36,116,774
1,038,139
33,380,259
42,887,109
26,277,796
275,102,191
5
12
3
4
13
12
13
1
12
15
10
60
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
LINE OF BUSINESS CONCENTRATION OF RISK
The Group’s insurance risk based on line of business concentration is illustrated in the table below:
2019
2018
2017
Gross written
premiums
USD
Concentration
percentage
%
Gross written
premiums
USD
Concentration
percentage
%
Gross written
premiums
USD
Concentration
percentage
%
Energy
Property
Ports &
Terminals
Casualty
Political
Violence
Financial
72,109,574
46,137,090
22,360,519
115,890,373
8,296,949
23,181,037
Reinsurance
17,985,942
Engineering
20,703,708
Aviation
19,182,776
Marine Liability
3,443,937
349,291,905
21
13
6
33
2
7
5
6
6
1
81,377,114
43,785,498
19,079,843
73,665,448
11,406,211
16,147,579
17,819,553
18,194,161
17,996,462
2,146,617
301,618,486
27
15
6
24
4
5
6
6
6
1
87,937,007
53,738,771
17,263,245
43,119,887
9,730,839
14,271,496
17,652,460
10,375,952
18,998,073
2,014,461
275,102,191
34
18
8
9
7
5
5
6
7
1
SENSITIVITIES
The analysis below shows the estimated
impact on gross and net insurance contracts
claims liabilities and on profit before tax,
of potential reserve deviations on ultimate
claims development at gross and net level
from that reported in the statement of
financial position as at 31 December 2019
and 2018.
In selecting the volatility factors, the
Group has illustrated the sensitivity of the
net claims to a standard variation in the
gross outstanding claims. The choices of
variation (7.5% and 5%) are illustrative but
are consistent with what the Group would
consider representative of a reasonable
potential for variation. The illustrated
variations do not represent limits of the
potential variation and actual variation could
significantly vary from the illustrated values.
Gross Loss
Sensitivity
Factor
%
Impact of
increase
on gross
outstanding
claims
USD
Impact of
decrease
on gross
outstanding
claims
USD
Impact of
increase
on net
outstanding
claims
USD
Impact of
decrease
on net
outstanding
claims
USD
Impact of
increase
on profit
before
tax
USD
Impact of
decrease
on profit
before
tax
USD
FINANCIAL RISK
The Group’s principal financial instruments are financial assets at fair value through OCI, financial assets at fair value through profit
or loss, financial assets at amortized cost, receivables arising from insurance, investments in associates, investment properties and
reinsurance contracts, and cash and cash equivalents.
The Group does not enter into derivative transactions.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk, market price risk
and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarized below.
INTEREST RATE RISK
Interest rate risk arises from the possibility that changes in interest rates will affect future profitability or the fair values of financial
instruments. The Group is exposed to interest rate risk on certain of its investments and cash and cash equivalents. The Group limits
interest rate risk by monitoring changes in interest rates in the currencies in which its cash and interest-bearing investments and
borrowings are denominated.
Details of maturities of the major classes of financial assets are as follows:
Less than
1 year
USD
1 to 5
years
USD
More than
5 years
USD
Non-interest-
bearing
items
USD
Effective
Interest Rate
on interest
bearing
assets
%
Total
USD
2019
Financial assets at FVTPL
–
–
–
21,805,575
21,805,575
Financial assets at FVOCI
55,678,030
148,657,894
4,189,437
20,422,745
228,948,106
Financial assets at
amortized cost
Cash, bank balances
and term deposits
2018
2,968,273
312,213,087
–
–
-
-
–
–
2,968,273
312,213,087
370,859,390
148,657,894
4,189,437
42,228,320
565,935,041
Financial assets at FVTPL
–
–
–
13,977,663
13,977,663
Financial assets at FVOCI
Financial assets at
amortized cost
Cash, bank balances
and term deposits
50,095,407
108,481,889
3,584,618
21,308,397
183,470,311
3,456,837
260,059,595
–
–
–
–
–
–
3,456,837
260,059,595
-
2.86
5.83
1.89
–
2.92
5.72
1.88
62
30,978,898
(30,978,898)
18.541,702
(18,539,427)
(18.541,702)
18,539,427
313,611,839
108,481,889
3,584,618
35,286,060
460,964,406
20,652,599
(20,652,599)
12,361,514
(12,359,238)
(12,361,514)
12,359,238
28,828,488
(28,828,488)
15,297,751
(15,295,476)
(15,297,751)
15,295,476
19,218,992
(19,218,992)
10,198,880
(10,196,605)
(10,198,880)
10,196,605
7.5
5
7.5
5
2019
2019
2018
2018
61
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
The following table demonstrates the sensitivity of statement of income to reasonably possible changes in interest rates, with all other
variables held constant.
The sensitivity of the income statement is the effect of the assumed changes in interest rates on the Group’s profit for the year, based on
the floating rate financial assets and financial liabilities held at 31 December.
2019
2018
Decrease
in basis points
Effect on profit
for the year
USD
- 25
- 50
- 25
- 50
(889,848)
(1,779,697)
(665,500)
(1,331,000)
The effect of increases in interest rates are expected to be equal and opposite to the effects of the decreases shown above.
FOREIGN CURRENCY RISK
Foreign currency risk is the risk that the
fair value of future cash flows of financial
instruments will fluctuate because of
changes in foreign currency exchange rates.
(GBP) and Euro (EUR). As a significant
portion of the Group’s transactions are
denominated in USD, this reduces currency
risk. Intra Group transactions are primarily
denominated in USD.
The Group is exposed to currency risk mainly
on insurance written premiums and incurred
claims that are denominated in a currency
other than the Group functional currency.
The currencies in which these transactions
are primarily denominated are Sterling
Part of the Group’s monetary assets and
liabilities are denominated in a currency
other than the functional currency of the
Group and are subject to risks associated
with currency exchange fluctuation. The
Group reduces some of this currency
exposure by maintaining some of its
bank balances in foreign currencies in
which some of its insurance payables are
denominated.
The following table demonstrates the
sensitivity to a reasonably possible change
in the USD exchange rate, with all other
variables held constant, of the Group’s profit
before tax (due to changes in the fair value of
monetary assets and liabilities).
2019
EUR
GBP
2018
EUR
GBP
Changes in
currency rate
to USD
%
Effect on
profit before
tax
USD
+5
+5
+5
+5
387,893
4,294,764
65,440
1,857,406
The effect of decreases in exchange rates are expected to be equal and opposite to the effects of the increases shown above.
CREDIT RISK
Credit risk is the risk that one party to a
financial instrument will fail to discharge an
obligation and cause the other party to incur
a financial loss. The Group is exposed to
credit risk primarily from unpaid insurance
receivables and fixed income instruments.
The Group has in place credit appraisal
policies and procedures for inward business
and receivables from insurance transactions
are monitored on an ongoing basis to
restrict the Group’s exposure to doubtful
debts.
The Group has in place security standards
applicable to all reinsurance purchases
and monitors the financial status of all
reinsurance debtors at regular intervals.
cause them to fall below the Group’s security
standards. If this occurs, management takes
appropriate action to mitigate any loss to the
Group.
The Group’s portfolio of fixed income
investments is managed in accordance
with the investment policy established by
the board of directors which has various
credit standards for investments in fixed
income securities.
Reinsurance and fixed income investments
are monitored for the occurrence of a
downgrade or other changes that might
The Group’s bank balances are maintained
with a range of international and local
banks in accordance with limits set by the
board of directors. There are no significant
concentrations of credit risk within the
Group. The table below provides information
regarding the credit risk exposure of the
Group by classifying assets according to the
Group’s credit rating of counterparties:
Investment
grade
USD
Non-investment
grade
(satisfactory)
USD
In course of
collection
USD
Total
USD
2019
FVOCI - debts securities
206,996,681
Financial Assets at amortized cost
Insurance receivables
Reinsurance share of
outstanding claims
Deferred excess of loss premiums
Cash, bank balances and
term deposits
–
–
175,446,814
–
248,057,682
1,528,680
1,982,377
65,835,667
765,610
15,172,707
64,155,405
–
208,525,361
985,896
47,139,177
–
–
–
2,968,273
112,974,844
176,212,424
15,172,707
312,213,087
630,501,177
149,440,446
48,125,073
828,066,696
Investment
grade
USD
Non-investment
grade
(satisfactory)
USD
2018
FVOCI - debts securities
158,945,525
Financial Assets at amortized cost
Insurance receivables
Reinsurance share of
outstanding claims
Deferred excess of loss premiums
Cash, bank balances and
term deposits
–
–
186,061,539
–
184,747,414
3,216,389
2,469,549
60,880,815
1,503,843
12,448,671
75,312,181
In course of
collection
USD
–
987,288
47,366,816
–
–
–
Total
USD
162,161,914
3,456,837
108,247,631
187,565,382
12,448,671
260,059,595
529,754,478
155,831,448
48,354,104
733,940,030
63
64
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
For assets to be classified as ‘past due and impaired’ contractual payments are in arrears for more than 30 days for the debt instruments
and 360 days for insurance receivables an impairment adjustment is recorded in the consolidated statement of income for this or when
collectability of the amount is otherwise assessed as being doubtful. When the credit exposure is adequately secured, arrears more than
360 days might still be classified as ‘past due but not impaired’, with no impairment adjustment recorded.
The schedule below shows the distribution of bonds and debt securities with fixed interest rate according to the international agencies
classification:
Rating grade
Bonds
USD
Unquoted bonds
USD
Total
USD
44,953,920
4,610,576
2,926,031
7,530,619
9,408,620
2,394,194
18,340,787
1,514,025
28,935,441
5,435,133
32,466,296
8,975,157
16,038,586
14,521,672
1,396,365
7,333,329
215,930
1,528,680
208,525,361
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,968,273
2,968,273
44,953,920
4,610,576
2,926,031
7,530,619
9,408,620
2,394,194
18,340,787
1,514,025
28,935,441
5,435,133
32,466,296
8,975,157
16,038,586
14,521,672
1,396,365
7,333,329
215,930
4,496,953
211,493,634
2019
AAA
AA+
AA
Aa2
AA-
Aa3
A+
A1
A
A2
A-
A3
BBB+
BBB
Baa2
BBB-
BB-
Not rated
TOTAL
65
Rating grade
Bonds
USD
Unquoted bonds
USD
Total
USD
2018
AAA
AA+
Aa1
AA
Aa2
AA-
Aa3
A+
A1
A
A2
A-
A3
BBB+
Baa1
BBB
Baa2
BBB-
BB-
Not rated
TOTAL
2,353,731
4,771,755
755,556
7,124,087
7,876,959
17,408,093
5,527,355
15,840,316
12,009,630
19,653,276
9,512,157
11,914,322
10,679,082
13,216,017
1,744,245
14,273,503
1,385,487
2,899,954
203,749
3,012,640
162,161,914
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,456,837
3,456,837
2,353,731
4,771,755
755,556
7,124,087
7,876,959
17,408,093
5,527,355
15,840,316
12,009,630
19,653,276
9,512,157
11,914,322
10,679,082
13,216,017
1,744,245
14,273,503
1,385,487
2,899,954
203,749
6,469,477
165,618,751
66
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
The schedule below shows the geographical distribution of bonds and debt securities with fixed interest rate:
Country
2019
Australia
Bahrain
Bermuda
Canada
Cayman Island
China
Europe
Finland
France
Germany
Global
Hong Kong
Japan
Jordan
KSA
Kuwait
Mexico
Netherlands
Norway
Pacific basin
Qatar
South Korea
Spain
Switzerland
UAE
UK
USA
TOTAL
67
Country
2018
Australia
Bahrain
Canada
China
Europe
Finland
France
Germany
Global
Hong Kong
Italy
Japan
Jordan
KSA
Kuwait
Mexico
Netherlands
Norway
Pacific basin
Qatar
South Korea
UAE
UK
USA
TOTAL
Total
USD
1,053,150
215,930
765,533
9,163,712
639,879
8,539,950
3,181,652
1,034,800
1,241,762
14,714,236
990,623
1,219,991
7,865,806
2,968,273
2,349,245
1,019,590
1,098,251
1,869,264
750,045
3,002,430
8,098,357
5,127,002
544,876
332,394
5,691,518
13,490,596
114,524,769
211,493,634
Total
USD
3,207,541
203,750
9,769,854
5,477,734
1,407,141
1,016,430
1,947,095
15,825,716
910,686
1,183,742
1,602,864
11,252,935
3,456,838
2,262,838
978,170
1,015,749
1,844,370
2,239,722
3,466,916
5,048,451
5,497,709
12,683,997
8,195,522
65,122,981
165,618,751
68
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
MARKET PRICE RISK
Market price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices (other than those
arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual security, or its
issuer, or factors affecting all securities traded in the market.
The Group’s equity price risk exposure relates to financial assets whose values will fluctuate as a result of changes in market prices.
The following table demonstrates the sensitivity of the profit for the period and the cumulative changes in fair value to reasonably possible
changes in equity prices, with all other variables held constant. The effect of decreases in equity prices is expected to be equal and opposite
to the effect of the increases shown.
LIQUIDITY RISK
Liquidity risk is the risk that the Group will not be able to meet its commitments associated with insurance contracts and financial
liabilities as they fall due.
The Group continually monitors its cash and investments to ensure that the Group meets its liquidity requirements. The Group’s asset
allocation is designed to enable insurance liabilities to be met with current assets.
All liabilities are non-interest bearing liabilities.
The table below summarizes the maturity profile of the Group’s financial liabilities at 31 December based on contractual undiscounted
payments:
2019
Amman Stock Exchange
Saudi Stock Exchange
Qatar Stock Exchange
Abu Dhabi Security Exchange
New York Stock Exchange
Kuwait Stock Exchange
London Stock Exchange
Other quoted
2018
Amman Stock Exchange
Saudi Stock Exchange
Qatar Stock Exchange
Abu Dhabi Security Exchange
New York Stock Exchange
Kuwait Stock Exchange
Other quoted
Change in
equity price
USD
Effect on profit
for the year
USD
+5%
+5%
+5%
+5%
+5%
+5%
+5%
+5%
58,438
–
23,830
61,470
123,518
–
342,797
480,226
Change in
equity price
USD
Effect on profit
for the year
USD
+5%
+5%
+5%
+5%
+5%
+5%
+5%
60,718
–
25,369
57,175
109,111
–
446,510
Effect on
equity
USD
58,438
616,969
23,830
61,470
161,258
2,978
342,797
553,966
Effect on
equity
USD
60,718
665,120
25,369
57,175
147,031
2,012
507,473
2019
Gross outstanding claims
Gross unearned premiums
Insurance payables
Other liabilities
Deferred tax liabilities
Unearned commissions
TOTAL LIABILITIES
2018
Gross outstanding claims
Gross unearned premiums
Insurance payables
Other liabilities
Unearned commissions
TOTAL LIABILITIES
The Group also has unquoted investments carried at fair value determined based on valuation techniques as per level 3 of fair
value hierarchy.
The Group limits market risk by maintaining a diversified portfolio and by monitoring of developments in equity markets.
Less than
one year
USD
More than
one year
USD
Total
USD
172,243,041
240,809,814
413,052,855
159,660,497
46,553,532
206,214,029
53,543,737
13,821,580
346,824
7,531,178
–
1,041,702
–
1,378,811
53,543,737
14,863,282
346,824
8,909,989
407,146,857
289,783,859
696,930,716
166,052,091
218,327,750
384,379,841
135,380,101
33,034,146
8,299,453
7,030,172
32,874,587
168,254,688
–
–
980,212
33,034,146
8,299,453
8,010,384
349,795,963
252,182,549
601,978,512
69
70
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
MATURITY ANALYSIS OF ASSETS AND LIABILITIES
The table below shows analysis of assets and liabilities analyzed according to when they are expected to be recovered or settled:
ASSETS
Cash, bank balances and term deposits
Insurance receivables
Investments
Investments in associates
Reinsurance share of outstanding claims
Reinsurance share of unearned premiums
Deferred excess of loss premiums
Deferred policy acquisition costs
Other assets
Investment properties
Property, premises and equipment
Intangible assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Liabilities
Gross outstanding claims
Gross unearned premiums
Insurance payables
Other liabilities
Deferred tax liabilities
Unearned commissions
Total liabilities
Equity
Share capital
Contributed capital
Treasury shares
Foreign currency translation reserve
Fair value reserve
Retained earnings
Total equity
31 December 2019
Less than
one year
USD
312,213,087
110,218,900
More than
one year
USD
–
2,755,944
58,452,403
152,847,331
–
81,410,140
30,226,280
15,172,707
28,369,829
7,754,225
–
–
–
–
94,802,284
3,690,269
–
13,343,460
–
–
12,734,842
3,885,894
No term
USD
Total
USD
–
–
42,422,220
13,061,674
–
–
–
–
–
25,712,312
–
–
312,213,087
112,974,844
253,721,954
13,061,674
176,212,424
33,916,549
15,172,707
41,713,289
7,754,225
25,712,312
12,734,842
3,885,894
643,817,571
284,060,024
81,196,206
1,009,073,801
172,243,041
240,809,814
159,660,497
46,553,532
53,543,737
13,821,580
346,824
7,531,178
–
1,041,702
–
1,378,811
407,146,857
289,783,859
–
–
–
–
–
–
–
413,052,855
206,214,029
53,543,737
14,863,282
346,824
8,909,989
696,930,716
–
–
–
–
–
–
–
–
–
–
–
–
–
–
143,375,678
143,375,678
2,773,000
2,773,000
(20,102,500)
(20,102,500)
(332,785)
4,273,914
182,155,778
312,143,085
(332,785)
4,273,914
182,155,778
312,143,085
TOTAL LIABILITIES AND EQUITY
407,146,857
289,783,859
312,143,085
1,009,073,801
ASSETS
Cash, bank balances and term deposits
Insurance receivables
Investments
Investments in associates
Reinsurance share of outstanding claims
Reinsurance share of unearned premiums
Deferred excess of loss premiums
Deferred policy acquisition costs
Deferred tax assets
Other assets
Investment properties
Property, premises and equipment
Intangible assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Liabilities
Gross outstanding claims
Gross unearned premiums
Insurance payables
Other liabilities
Unearned commissions
Total liabilities
Equity
Share capital
Contributed capital
Treasury shares
Foreign currency translation reserve
Fair value reserve
Retained earnings
Total equity
31 December 2018
Less than
one year
USD
More than
one year
USD
No term
USD
Total
USD
260,059,595
105,760,142
53,552,244
–
92,844,864
29,777,293
12,448,671
27,945,967
–
5,061,050
–
–
–
–
2,487,489
112,066,507
–
94,720,518
2,789,554
–
8,457,864
638,841
–
–
12,216,997
2,935,750
–
–
35,286,060
13,437,778
–
–
–
–
–
–
30,655,214
–
–
260,059,595
108,247,631
200,904,811
13,437,778
187,565,382
32,566,847
12,448,671
36,403,831
638,841
5,061,050
30,655,214
12,216,997
2,935,750
587,449,826
236,313,520
79,379,052
903,142,398
166,052,091
218,327,750
135,380,101
33,034,146
8,299,453
7,030,172
32,874,587
–
–
980,212
349,795,963
252,182,549
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
384,379,841
168,254,688
33,034,146
8,299,453
8,010,384
601,978,512
143,375,678
143,375,678
2,773,000
2,773,000
(15,050,000)
(15,050,000)
(294,929)
953,704
169,406,433
301,163,886
301,163,886
(294,929)
953,704
169,406,433
301,163,886
903,142,398
TOTAL LIABILITIES AND EQUITY
349,795,963
252,182,549
71
72
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
CAPITAL MANAGEMENT
The Group manages its capital by ‘Enterprise
Risk Management’ techniques, using a
dynamic financial analysis model. The Asset
Liability match is reviewed and monitored
on a regular basis to maintain a strong
credit rating and healthy capital adequacy
ratios to support its business objectives and
maximize shareholders’ value.
Adjustments to capital levels are made in
light of changes in market conditions and
risk characteristics of the Group’s activities.
Capital comprises issued share capital,
additional paid in capital, treasury shares,
foreign currency translation reserve, fair
value reserve, and retained earnings and
is measured at USD 312,143,085 as at 31
December 2019 (2018: USD 301,163,886).
The capital requirements imposed on the
Groups regulated entities are as follows:
International General Insurance Co. Ltd.
(Bermuda)
The Bermuda Insurance Act 1978 and
Related Regulations (the Act) requires the
Company to meet a minimum solvency
margin. The Company has met the
minimum solvency margin requirement at
31 December 2019 and 2018. In addition, a
minimum liquidity ratio must be maintained
whereby relevant assets, as defined by the
Act, must exceed 75% of relevant liabilities.
This ratio was met at 31 December 2019
and 2018.
Under the Insurance Act, the Company is
subject to capital requirements calculated
using the Bermuda Solvency and Capital
Requirement model (“BSCR model”), which
is a standardized statutory risk-based
capital model used to measure the risk
associated with the Company’s assets,
liabilities and premiums. Under the BSCR
model, the Company’s required statutory
capital and surplus is referred to as the
enhanced capital requirement (“ECR”). The
Company is required to calculate and submit
the ECR to the BMA annually. Following
receipt of the submission of the Company’s
ECR, the BMA has the authority to impose
additional capital requirements or capital
add-ons, if it deems necessary. If an insurer
fails to maintain or meet its ECR, the BMA
may take various degrees of regulatory
action. As at 31 December 2019 and 2018,
the Company met its ECR.
International General Insurance Company
(UK) Ltd.
The Company is authorized by the Prudential
Regulation Authority and regulated by
the Financial Services Authority and the
Prudential Regulation Authority and is
subject to insurance solvency regulations
which specify the minimum amount and type
of capital that must be held in addition to the
insurance liabilities.
Since 1 January 2016 the Company has
been subject to the Solvency II regime and
is required to meet a Solvency Coverage
Ratio (SCR) which is calibrated to seek to
ensure a 99.5% confidence of the ability to
meet its obligations over a 12-month time
horizon. The Company calculates its SCR
in accordance with the standard formula
prescribed in the Solvency II regulations as
the assumptions underlying the standard
formula are considered to be a good fit for
the Company’s risk profile.
The Company has met all requirements for
the years 2019 and 2018.
International General Insurance Company
Ltd. Labuan Branch
The Branch is subjected to minimum capital
requirements under the Labuan Financial
Services and Securities Act 2010.
The Branch monitors and ensures its capital
is within the minimum solvency margins
requirements under the Labuan Financial
Services and Securities Act 2010 at all times.
If there are any, large event which will affect
the Branch’s ability to maintain solvency
margins requirements, the Branch will
notify the head office to cash call in advance.
As at 31 December 2019 and 2018, the
Branch met the minimum solvency margin
requirements.
FAIR VALUE
The Group uses the following hierarchy
for determining and disclosing the fair
value of financial instruments by valuation
techniques:
Level 1: Quoted (unadjusted) prices in active
markets for identical assets or liabilities;
Level 2: Other techniques for which all
inputs which have a significant effect on the
recorded fair value are observable, either
directly or indirectly; and
Level 3: Techniques which use inputs which
have a significant effect on the recorded
fair value that are not based on observable
market data.
FVTPL
Quoted equities at FVOCI
Quoted bonds at FVOCI
Unquoted equities at FVOCI *
Investment properties
FVTPL
Quoted equities at FVOCI
Quoted bonds at FVOCI
Unquoted equities at FVOCI *
Investment properties
Level 1
USD
21,805,575
14,628,558
208,525,361
–
–
244,959,494
Level 1
USD
13,977,663
15,320,310
162,161,914
–
–
191,459,887
* Reconciliation of fair value of the unquoted equities under level 3 fair value hierarchy is as follows:
Balance at the beginning of the year
Total gains and (losses) recognized in OCI
Balance at the end of the year
–
–
–
–
–
–
–
–
–
–
–
–
31 December 2019
Level 2
USD
Level 3
USD
31 December 2018
Level 2
USD
Level 3
USD
5,794,187
5,794,187
25,712,312
25,712,312
31,506,499
276,465,993
Total
USD
21,805,575
14,628,558
208,525,361
Total
USD
13,977,663
15,320,310
162,161,914
–
–
–
–
–
–
5,988,087
5,988,087
30,655,214
30,655,214
36,643,301
228,103,188
2019
USD
2018
USD
5,988,087
4,436,160
(193,900)
1,551,927
5,794,187
5,988,087
73
74
International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
29. EARNINGS PER SHARE
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent (after adjusting for interest on the
convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in the basic and diluted EPS calculations:
Profit for the year attributable to the equity holders
of parent (USD)
Weighted average number of shares during the year –
basic and diluted
2019
2018
23,565,399
25,541,703
2017
7,031,340
135,161,942
138,320,733
143,375,678
Basic and diluted earnings per share
0.17
0.18
0.05
30. SEGMENT INFORMATION
The Group’s chief operating decision maker (“CODM”) is the Executive Committee, which periodically reviews financial information at the
business line level. Thus, each of the business lines in which the Group operates are considered operating segments.
The Group has aggregated operating segments into the following reporting segments for the purposes of its consolidated financial
statements:
1. Specialty Long tail (comprising business lines with underwriting risks assumed in form of liability insurance and of a long-term nature
with respect to related claims).
2. Specialty Short tail (comprising business lines with underwriting risks assumed in the form of property and specialty line insurance and
of short-term nature with respect to related claims).
3. Reinsurance which covers the inward reinsurance treaty and is a single operating segment
The Group is of the view that the quantitative and qualitative aspects of the aggregated operating segments are similar in nature for all
periods presented. In evaluating the appropriateness of aggregating operating segments, the key indicators considered included but
were not limited to: (i) nature of products, (ii) similarities of customer base, products, underwriting processes and outward reinsurance
processes, (iii) regulatory environments and (iv) distribution methods.
Segment performance is evaluated based on net underwriting results and is measured consistently with the overall net underwriting
results in the consolidated financial statements.
The Group also has general and administrative expenses, net investment income, gain/loss on foreign exchange, other expenses/revenues
and tax expense. These financial items are presented under “Corporate and Other” in the tables below as the Group does not allocate them
to individual reporting segments.
a) Segment disclosure for the Group’s consolidated operations is as follows:
2019
Specialty
Long tail
USD
Specialty
Short tail
USD
Reinsurance
USD
Sub Total
USD
Corporate
and Other
USD
Total
USD
Underwriting revenues
Gross written premiums
142,515,347
188,790,616
17,985,942
349,291,905
Reinsurer’s share of
insurance premiums
(22,541,384)
(74,597,986)
–
(97,139,370)
Net written premiums
119,973,963
114,192,630
17,985,942
252,152,535
–
–
–
349,291,905
(97,139,370)
252,152,535
Net change in unearned
premiums
(23,523,415)
(12,839,449)
(246,775)
(36,609,639)
–
(36,609,639)
Net premiums earned
96,450,548
101,353,181
17,739,167
215,542,896
Underwriting deductions
Net policy acquisition
expenses
Net claims and claim
adjustment expenses
(21,280,118)
(21,159,319)
(2,996,001)
(45,435,438)
(58,799,478)
(44,725,627)
(14,538,383)
(118,063,488)
Net underwriting results
16,370,952
35,468,235
204,783
52,043,970
–
–
–
–
215,542,896
(45,435,438)
(118,063,488)
52,043,970
General and administrative
expenses
Net investment income
Share of loss from associates
Impairment loss on
insurance receivables
Other revenues
Other expenses
Listing related expenses
Gain on foreign exchange
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(39,265,945)
(39,265,945)
13,374,076
13,374,076
(376,104)
(376,104)
(628,887)
(628,887)
1,428,265
1,428,265
(2,194,666)
(2,194,666)
(4,831,976)
(4,831,976)
5,704,249
5,704,249
Profit (loss) before tax
16,370,952
35,468,235
204,783
52,043,970
(26,790,988)
25,252,982
Income tax
–
–
–
–
(1,687,583)
(1,687,583)
Profit for the year
16,370,952
35,468,235
204,783
52,043,970
(28,478,571)
23,565,399
75
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International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
2018
2017
Specialty
Long tail
USD
Specialty
Short tail
USD
Reinsurance
USD
Sub Total
USD
Corporate
and Other
USD
Total
USD
Specialty
Long tail
USD
Specialty
Short tail
USD
Reinsurance
USD
Sub Total
USD
Corporate
and Other
USD
Total
USD
Underwriting revenues
Underwriting revenues
Gross written premiums
91,959,644
191,839,289
17,819,553
301,618,486
Reinsurer’s share of
insurance premiums
47,803
(98,235,891)
–
(98,188,088)
Net written premiums
92,007,447
93,603,398
17,819,553
203,430,398
–
–
–
301,618,486
(98,188,088)
Gross written premiums
59,405,845
198,043,886
17,652,460
275,102,191
Reinsurer’s share of
insurance premiums
(9,930,020)
(104,404,730)
–
(114,334,750)
203,430,398
Net written premiums
49,475,825
93,639,156
17,652,460
160,767,441
–
–
–
275,102,191
(114,334,750)
160,767,441
Net change in unearned
premiums
(22,096,205)
2,001,935
(26,509)
(20,120,779)
–
(20,120,779)
Net change in unearned
premiums
(11,126,468)
(2,329,012)
(579,177)
(14,034,657)
–
(14,034,657)
Net premiums earned
69,911,242
95,605,333
17,793,044
183,309,619
Underwriting deductions
Net policy acquisition
expenses
Net claims and claim
adjustment expenses
(16,150,853)
(22,762,489)
(3,050,180)
(41,963,522)
(37,305,026)
(36,564,914)
(11,417,561)
(85,287,501)
Net underwriting results
16,455,363
36,277,930
3,325,303
56,058,596
–
–
–
–
183,309,619
Net premiums earned
38,349,357
91,310,144
17,073,283
146,732,784
(41,963,522)
(85,287,501)
56,058,596
Underwriting deductions
Net policy acquisition
expenses
Net claims and claim
adjustment expenses
(10,692,254)
(22,923,009)
(2,616,447)
(36,231,710)
(14,344,990)
(60,486,788)
(12,098,759)
(86,930,537)
Net underwriting results
13,312,113
7,900,347
2,358,077
23,570,537
–
–
–
–
146,732,784
(36,231,710)
(86,930,537)
23,570,537
General and administrative
expenses
Net investment income
Share of loss from associates
Impairment loss on
insurance receivables
Other revenues
Other expenses
Loss on foreign exchange
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(35,351,679)
(35,351,679)
General and administrative
expenses
10,310,296
10,310,296
Net investment income
(885,673)
(885,673)
Share of loss from associates
(472,124)
(472,124)
902,750
902,750
(1,586,281)
(1,586,281)
Impairment loss on
insurance receivables
Other revenues
Other expenses
(3,371,941)
(3,371,941)
Gain on foreign exchange
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(30,902,604)
(30,902,604)
12,564,842
12,564,842
992,218
992,218
(1,214,456)
(1,214,456)
856,540
856,540
(1,466,042)
(1,466,042)
2,615,883
2,615,883
Profit (loss) before tax
16,455,363
36,277,930
3,325,303
56,058,596
(30,454,652)
25,603,944
Profit (loss) before tax
13,312,113
7,900,347
2,358,077
23,570,537
(16,553,619)
7,016,918
Income tax
–
–
–
–
(62,241)
(62,241)
Income tax
–
–
–
–
14,422
14,422
Profit for the year
16,455,363
36,277,930
3,325,303
56,058,596
(30,516,893)
25,541,703
Profit for the year
13,312,113
7,900,347
2,358,077
23,570,537
(16,539,197)
7,031,340
77
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International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
At 31 December 2019
NOTES
At 31 December 2019
b) Non – current operating assets information by geography for years ended 31 December 2019 and 2018 are as follows:
Middle East
North Africa
UK
Asia
2019
USD
2018
USD
40,581,053
45,333,446
25,093
1,622,236
104,666
65,715
406,262
2,538
42,333,048
45,807,961
Non-current assets for this purpose consist of property, plant and equipment, investment properties and intangible assets.
31. SUBSEQUENT EVENTS
On 30 January 2020, the World Health Organization declared the outbreak of coronavirus (“COVID-19”) to be a public health emergency of
international concern. COVID-19 is considered to be a non-adjusting post balance sheet event and as such no adjustments have been made
to the valuation of assets and liabilities as at 31 December 2019.
As at 31 March 2020, the Group had experienced falls in equity values and credit spread widening on its bond portfolio, the impact of which
has reduced the Group’s solvency, but which remains well within the Group’s capital management policy. For further discussion concerning
the management’s assessment of COVID-19 impact on the Group refer to note 2.
On 17 March 2020, the definitive business combination agreement between the Group and Tiberius Acquisition Corporation (NASDAQ: TIBR)
(“Tiberius”), a publicly traded special purpose acquisition company, and certain related parties, was effective. As a result of the completion
of the Business Combination, International General Insurance Holdings Ltd., Bermuda (“IGI Holdings”) became a new public company listed
on the Nasdaq Capital Market under the symbol “IGIC” and owned by the former stockholders of Tiberius and the former shareholders of
the Group and each of the Group and Tiberius became subsidiaries of International General Insurance Holdings Ltd. (Bermuda)..
There have been no other material events between 31 December 2019 and the date of this report which are required to be disclosed.
79
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International General Insurance Holdings Limited Annual Report & Accounts 2019International General Insurance Holdings Limited Annual Report & Accounts 2019 International General Insurance Holdings Limited
Annual Report & Accounts 2019
NOTES
At 31 December 2019
81
82
International General Insurance Holdings Limited Annual Report & Accounts 2019At 31 December 2019NOTESSHAREHOLDER INFORMATIONREGISTERED ADDRESSClarendon House2 Church StreetHamilton HM 11BermudaINVESTOR RELATIONS Contact: Robin SiddersHead of Investor RelationsT: +44 (0) 20 7220 0100E: robin.sidders@iginsure.comIndependent Registered Public Accounting Firm Ernst & Young LLP 1 More London Place London SE1 2AF Transfer AgentContinental Stock Transfer & Trust Company1 State StreetNew York, New York 10004-1561MARKET INFORMATIONThe common shares and warrants for International General Insurance Holdings Ltd. are listed on the Nasdaq Capital Market under the symbols IGIC and IGICW respectively.ADDITIONAL INFORMATIONCopies of IGI’s Annual Report, Forms 20-F, or other reports filed or furnished with the Securities and Exchange Commission, are available on the Company website at www.iginsure.com, or can be mailed by requesting a hard copy from the Head of Investor Relations at robin.sidders@iginsure.com.For more information visit: www.iginsure.com/investors