International General Insurance: Underwriting Discipline and Reinsurance Growth Drive Resilience in Volatile Markets

In a market environment rattled by geopolitical tensions, climate volatility, and macroeconomic uncertainty, International General Insurance Holdings Ltd (IGIC) has emerged as a paradoxical standout: a company that delivered a 94.4% combined ratio in Q1 2025—despite soaring catastrophe losses—while returning $43.5 million to shareholders and growing its reinsurance segment by 43.7%. This article dissects why IGIC’s fundamentals position it as a compelling buy for investors seeking underwriting discipline and structural growth in the specialty insurance sector.

The Resilience Engine: Diversification Amid Catastrophes

The 94.4% combined ratio in Q1 2025—up from 74.1% in Q1 2024—is often cited as a “miss,” but this overlooks the extraordinary headwinds IGI navigated. The company absorbed $28.2 million in catastrophe losses (tripling year-on-year), including wildfires in California, earthquakes in Taiwan, and a UK infrastructure breach. Yet its currency-adjusted resilience reveals operational mastery:
- The raw combined ratio worsened by 20.3 points, but foreign exchange gains (a $7.2 million net gain) reduced the effective impact to 13-14 points.
- The accident year combined ratio (excluding CAT) improved to 92.3%, underscoring underwriting discipline outside of unpredictable shocks.

This highlights a critical thesis: IGIC’s diversification strategy—spanning 25+ specialty lines and 200+ markets—buffers it from single-event risks, while its geographic and product spread creates a self-insuring portfolio.

Shareholder Returns Signal Confidence, Not Fragility

While headlines focused on the Q1 earnings “miss,” the data tells a different story. Despite the $10.6 million drop in net income, IGI returned $43.5 million to shareholders in Q1 2025:
- $39.7 million in dividends, including a special $0.85/share dividend, reflecting management’s confidence in capital generation.
- $3.8 million in share repurchases, with $7.5 million remaining under its buyback authorization.

This contrasts sharply with peers like Markel (MKL) or Validus (VRX), which have reduced shareholder returns during soft markets. IGI’s “capital first” philosophy—prioritizing disciplined underwriting and excess cash returns—aligns with long-term value creation.

The Reinsurance Segment: A Growth Catalyst Ignored by the Market

The reinsurance division’s 43.7% surge in gross written premiums (GWP) to $70 million is a linchpin of IGIC’s future. While the segment’s 94.4% combined ratio reflects industry-wide CAT pressures, its underwriting income grew 52.9% to $10.4 million, driven by:
1. Strategic risk selection: Focusing on high-margin, risk-adjusted opportunities in U.S. property and European casualty.
2. Diversified risk exposure: 34% of total GWP, with no single region exceeding 15% of reinsurance premiums.
3. Reinsurance buying discipline: Using facultative treaties to mitigate tail risks while maintaining capital efficiency.

This segment’s scalability is underappreciated. With global reinsurance rates up 5-7% in hard markets, IGI’s underwriting capacity and specialty expertise position it to capitalize on a cycle favoring disciplined players.

Currency-Adjusted Resilience: A 6-7pt Advantage Over Peers

The $7.2 million net foreign exchange gain in Q1 2025—versus a $4.3 million loss in 2024—highlights management’s success in hedging currency exposures. This contrasts with peers like XL Catlin (XTL), which reported significant forex losses in Q1 2025.

IGIC’s diversified currency base (39% USD, 17% EUR, 15% Middle Eastern currencies) creates a natural hedge, while its dynamic hedging strategy for large exposures ensures volatility is managed. This “hidden” margin protection is a key competitive advantage in a dollar-dominated sector.

Why Buy IGIC Now?

The market has penalized IGIC for its Q1 CAT-driven results, but this creates an asymmetric opportunity:
- Valuation: IGIC trades at 0.7x price-to-book, below its 10-year average of 1.0x and peers like Markel (MKL) (1.5x) or Axis Capital (AXS) (1.3x).
- Margin Stability: The 92.3% accident year ratio suggests margins will rebound as CAT losses normalize.
- Undervalued Growth: The reinsurance segment’s 43.7% GWP growth and $13.6 million investment income (up 15%) signal a balance sheet primed for expansion.

Conclusion: A Buy for the Next Cycle

International General Insurance is a counter-cyclical play in an industry prone to overreaction to short-term shocks. Its diversified underwriting, currency-hedged balance sheet, and reinsurance tailwinds position it to outperform peers as CAT losses normalize and reinsurance rates firm.

Actionable Takeaway:
- Buy IGIC at current valuations (0.7x P/B) for 30-50% upside in 12-18 months as margins recover and growth compounds.
- Hold for the long term: The company’s 10-year track record of 14% ROE and 6.8% CAGR in book value suggests structural upside.

In a market of volatility, IGIC offers defensive resilience and offensive growth—a rare combination in specialty insurance.

Disclosure: This analysis is based on publicly available data. Consult your financial advisor before making investment decisions.