IGI Holdings (IGIC) Q3 2026 Earnings Call Transcript

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DATE

Wednesday, Nov. 4, 2026

CALL PARTICIPANTS

• Head of Corporate Relations - Robin Sidders
• Executive Chairman - Wasef Jabsheh
• President and CEO - Waleed Jabsheh
• Chief Financial Officer - Pervez Rizvi

TAKEAWAYS

• Gross Written Premiums -- $119.6 million for the third quarter, representing an 8.9% decrease year over year as management executed a strategy focused on rate adequacy over volume.
• Net Premiums Earned -- $124.5 million for the third quarter, increasing 8.5% year over year due to the earning of premiums from prior underwriting periods.
• Combined Ratio -- 85.7% for the third quarter, compared to 76.5% in the prior-year period, reflecting elevated catastrophe losses.
• Net Income -- $28.0 million for the third quarter, or $0.66 per share, compared to $33.5 million, or $0.75 per share, in the third quarter of 2025.
• Core Operating Return on Average Equity -- 16.9% for the third quarter, compared to 22.9% in the same period last year.
• Catastrophe Losses -- 6.9 points in the third quarter, including 2.6 points related to the war in the Middle East.
• Favorable Prior Year Reserve Development -- 7.1 points in the third quarter, which partially mitigated the impact of elevated loss activity.
• Net Policy Acquisition Expense Ratio -- 19.4% for the third quarter, compared to 15.9% in the prior-year period, driven by higher gross commission expenses and lower realized foreign exchange gains.
• Underwriting Income -- $43.0 million for the third quarter, compared to $51.4 million in the third quarter of 2025.
• Short-tail Segment Underwriting Income -- $20.3 million for the third quarter, reflecting the impact of war-related losses in a core operating region.
• Reinsurance Segment Underwriting Income -- $12.7 million for the third quarter, a 22% increase over the same period in 2025 driven by higher gross written and net earned premiums.
• Long-tail Segment Underwriting Income -- $10.0 million for the third quarter, supported by a 15% increase in net earned premiums.
• Political Violence Portfolio Growth -- 50% during the period, as management capitalized on improved pricing and strengthened terms and conditions in the Middle East.
• Marine Liability Portfolio -- Tripled in size during the first nine months of 2026, driven by increased demand and improved pricing following the Baltimore Bridge loss.
• Share Repurchases -- 148,000 common shares in the third quarter at an average price of $24.68, with 3.8 million shares remaining under the existing authorization.
• Capital Returned to Shareholders -- $79.8 million during the first nine months of 2026, comprised of $57.9 million in dividends and $21.9 million in share repurchases.
• Investment Income -- $14.2 million for the third quarter, compared to $13.1 million in the prior-year period, generated from a portfolio with a 4.4% yield.
• Fixed Income Portfolio Duration -- 3.7 years at the end of the third quarter, representing a slight increase from 3.5 years at the end of the second quarter.
• Total Assets -- $2.11 billion at September 30, 2026, with total investments and cash of $1.28 billion.
• Book Value Per Share -- $15.99 at the end of the third quarter, a 5.4% decline from December 31, 2025, primarily due to negative mark-to-market movements on the bond portfolio totaling $44.0 million.
• Nine-Month Gross Written Premiums -- $518.5 million, a 1.4% decline compared to the first nine months of 2025.
• Nine-Month Combined Ratio -- 90.1%, which included 14.8 points of catastrophe losses and 10.9 points of favorable reserve development.
• Nine-Month Net Income -- $70.5 million, or $1.65 per share, compared to $94.9 million, or $2.14 per share, for the first nine months of 2025.
• Ten-Year Average Core Return on Equity -- 14.5% for the period from 2016 to 2025, demonstrating the company's historical profitability across cycles.
• Ten-Year Average Combined Ratio -- 87.1% for the period from 2016 to 2025, compared to the industry average of 91.1% for the same period.

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RISKS

• Waleed Jabsheh stated, "Conditions, as I said, are getting tougher in our short tail segment with rate reductions and decreases in most lines of business," noting a shift in market discipline.
• Waleed Jabsheh warned, "Pressure on property rates specifically is driving overall reinsurance pricing pressure," as competitive dynamics impact the property and energy books.
• Waleed Jabsheh noted that rate reductions of approximately 15% are occurring in the commercial property book, particularly in the United States and international markets.

SUMMARY

International General Insurance Holdings Ltd. (NASDAQ:IGIC) reported third-quarter results characterized by increased catastrophe loss activity and shifting market cycles that impacted headline earnings. Management stated that while certain specialty lines such as political violence and marine liability remained attractive, rate pressure accelerated in the core energy and property segments. The company continued its strategy of disciplined capital management, returning approximately $80 million to shareholders through dividends and share repurchases during the first nine months of the year. Strategic focus remained on global diversification, including the launch of a new cyber-focused platform in Bermuda and the expansion of the company's regional presence in India.

• The company launched Cypher Underwriting in Bermuda, a specialty treaty MGA focused on cyber reinsurance where IGI holds a 60% ownership stake.
• Waleed Jabsheh stated, "We are expecting the team to be fully in place by the end of January," regarding the build-out of the company's new platform in India's GIFT City.
• Management reported that pricing significantly improved and terms strengthened for political violence insurance in the Middle East following recent regional conflicts.
• Waleed Jabsheh stated, "This year, we experienced the single largest loss event in our history," referring to the impact of the war in the Middle East on the company's financials.
• The company tripled its direct marine liability book during the first nine months of 2026, capitalizing on improved pricing and demand following the Baltimore Bridge loss.
• Waleed Jabsheh indicated that the company's credit rating upgrade to A (Stable) by S&P and A (Excellent) by A.M. Best has opened new opportunities for 2027 and onward.

INDUSTRY GLOSSARY

• GIFT City: Gujarat International Finance Tec-City, a financial hub and special economic zone in India where IGI has established a new underwriting platform.
• MGA: Managing General Agent, an agency with underwriting authority from an insurer; IGI owns 60% of the Cypher Underwriting MGA.
• PV: Political Violence, a specialty insurance line covering risks such as war, terrorism, and civil unrest.
• Treaty Reinsurance: A contract where a reinsurer agrees to cover a specific portfolio of risks from a primary insurer.
• Specialty Long-tail: Insurance lines, such as professional indemnity, where claims may be reported or settled many years after the policy period.
• Specialty Short-tail: Insurance lines, such as property and energy, where claims are typically reported and settled relatively quickly.
• Ceded Premium: The portion of gross premiums an insurance company pays to a reinsurer to share its risk.
• Net IBNR: Incurred But Not Reported reserves, representing the estimated value of claims that have occurred but have not yet been reported to the insurer.

Full Conference Call Transcript

Operator: Good day, welcome to the International General Insurance Holdings Limited Third Quarter 26 Financial Results Conference Call. All participants are in listen only mode. After today's presentation, there will be an opportunity to ask. Please note this event is being recorded. I would now like to turn the conference over to Robin Sidders, Head of Corporate Relations. Please go ahead.

Robin Sidders: Thank you, Tandy, and good morning, and welcome to today's conference call. We will be discussing financial results for the third quarter and 9 months of 2026. You will have seen our results press release which we issued after the market closed yesterday. If you would like a copy of the press release, it is available in the Investors section of our website at iginsure.com. We have also posted a supplementary investor presentation, which can be found on our website in the Investors section. under Presentations. On today's call, our Executive Chairman of IGI, Wasef Jabsheh; President and CEO, Waleed Jabsheh; and Chief Financial Officer, Pervez Rizvi.

As always, Wasef will begin the call with some high level comments before handing over to Waleed to talk you through the key drivers of our results for the third quarter and first 9 months of 26 and finish up with our views on the market and our outlook for the remainder of the year and into 2027. At that point, we will open the call up for Q&A. I will begin with the customary Safe Harbor language. Our speakers' remarks may contain forward looking statements Some of the forward looking statements can be identified by the use of forward looking words.

We caution you such forward looking statements should not be regarded as a representation by us that the future plans, estimate or expectations contemplated by us will in fact be achieved. Forward looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward looking statements due to a variety of factors including the risk factors set out in the company's annual report on Form 20-F for the year ended 12/31/2025, the company's reports on Form 6-K and other filings with the SEC, as well as our results press release issued yesterday.

We undertake no obligation to update or revise publicly any forward looking statements which speak only as of the date they are made. During this call, we will use certain non GAAP financial measures. For a reconciliation of those non GAAP financial measures to the nearest GAAP measure, please see our earnings release which has been filed with the SEC and is available on our website. With that, I will turn the call over to our Executive Chairman, Wasef Jabsheh.

Wasef Salim Jabsheh: Thank you, Robin. And good day, everyone. Thank you for joining us on today's call. IGI generated strong profitability in both the third quarter and first 9 months of 2026. Culminating returns on average shareholders' equity of 16.9%, and 13.8%, respectively. We delivered these results while returning close to $80 million to shareholders in dividends and share buybacks. Market conditions continue to be more challenging than a year ago. And the pace of deterioration in some areas accelerating. More broadly speaking, we are seeing an unprecedented level of global uncertainty and instability. At IGI, our purpose is to provide peace of mind in terms of uncertainty.

Our people their experience and expertise demonstrated over almost 25 years have built a level of resilience in IGI that will continue to serve us well in the years ahead. Our focus remains as always on risk adjusted returns and active cycle management. We have executed our strategy consistently and have built IGI into a strong and dependable partner to our clients. We have significant diversification which provides us plenty of optionality throughout market cycles. This is what drives the consistency in our long term track record of high quality financial results and shareholder value creation. I will now hand over to Waleed to discuss the numbers in more detail and talk about our outlook.

And I remain on the call for any questions at the end.

Waleed Wasef Jabsheh: Good morning, everyone. Thank you all for joining us and thanks, Wasef. Now, we are very quickly approaching the end of the year and the beginning of, 2027. Which, as Wasef alluded to, will be the year that we celebrate our 25th anniversary since starting operations in Jordan back in 2002. I just want to reflect for a moment on what this year has meant for us at IGI. And all that we have achieved. I am very particularly pleased with our performance so far in 2026. We have delivered excellent results and have clearly demonstrated the strength, the stability, and resilience of our company. This year, we experienced the single largest loss event in our history.

With the war in the Middle East. And this occurred in 1 of our core regions, where about 2-thirds of our people are based across our offices in Amman and Dubai. We came together as a company working together, supporting each other, and supporting our clients. Some of whom represent the longest standing relationships we have. it is the culture we foster. How much has changed in 25 years, and that is not-- that is a good thing. The foundation we have built at IGI ensures we are prepared to face a changing landscape. Now these are clearly very challenging times for insurance and reinsurance markets alike.

This is only heightened by the increasing level of uncertainty and stability that we are seeing across the globe. For IGI, our structure and our strategy are specifically designed to manage and mitigate volatility as much as possible. Navigating difficult market conditions is nothing new for us. We have experienced soft markets and tough times both as a company and as an industry in the past. And about 10 years ago, back in 2017, we were in the, throes of a soft market. I mean, that year, we experienced 1 of the heaviest lost years for natural catastrophes in the industry's history. That was the year of. You will recall hurricanes Harvey, Irma, and Maria.

In the same year, there were also a number of other natural catastrophes. Our financial results that year were significant by these events, and that was the 1 year in the past 10 years where we reported combined ratio above 100%. We came in at around 105%. Now, you may think I am rambling on, but now I say this-- I say all this to make the distinction between IGI 10 years ago and IGI today. I mean, we were less than half the size we are today in terms of gross written premium. We were a predominantly short tail company. And we had significantly less diversification both from product and geography perspectives.

Today, we are now writing around 25 lines of business serviced from our 9 offices worldwide, including our latest platform in India. For a company of our size, this is a significant and quite unique level of diversification. And this is our strength. Where 1 line or 1 territory is under pressure, others may be heading in the opposite direction. So this diversification gives us the levers that we have spoken about in previous quarters to work with. Every line, every region, where we are operating in has its own experts, people who are experienced, people who have been through soft market cycles, and people understand the dynamics in their-- of their business and their market.

Add to that the fact that we have tripled the size of our balance sheet over the past 10 years. And we have built significant strength, stability, and resilience in our company. And we have achieved all this by design. Slowly, methodically, and purposefully. I will talk a little later more about specific market conditions, opportunities we are seeing specifically, those arising from our entry into the Indian market and also the launch of our MGA platform in Bermuda, Cypher Underwriting. But specifically to the results for the third quarter and the first 9 months, let me focus on some of the key points. Growth in premiums came in at just under $120 million for the third quarter.

And just under $520 million for the first 9 months of the year, which represents an 8.9% and 1.4% decline over the same periods last year. I would note that in spite of increasingly challenging market conditions, top line is holding up relatively well. So this level of decline is not concerning, at all. Just really means that we are executing our strategy as we should. Net premiums earned were just under $125 million. and $360 million for the third quarter and first 9 months, respectively. That represents an increase of 8.5% and 5.3%. Respectively, over the same periods. Last year. Underwriting income also holding up by, like $43 million for Q3. $110 million for the first 9 months.

The combined ratio of 85.7% for the third quarter includes 6.9 points of cat losses, now 2.6 points of that related to the war and then 7.1 points of favorable prior year reserve development. The combined ratio of 90.1% for the first 9 months includes 14.8 points of cat losses, Again, primarily related to the war in the Middle East, And just under 11 points, of favorable prior year reserve development. A quick note or a quick point on the increase in the net policy acquisition expense ratio, which went from 15.9% to 19.4% in Q3, because the comparison is a is a bit distorted by 2 things.

1, the lower realized foreign exchange gains and 2, higher gross commission expenses across all segments in 2026. So on an FX neutral basis, it would have been 18.4% for the third quarter of 25. versus 19.4% for the current-year third quarter. Now this was specific to the third quarter comparison. The 9 month periods are more in line. Just turning to our segment results. Conditions, as I said, are getting tougher in our short tail segment with rate reductions and decreases in most lines of business. But while the top line overall is down in the segment in both Q3 and the first 9 months. Net earned premiums were up 2.8% and 3.7% over the same periods, respectively.

Now there is quite a lot of variation in the level of adequacy from 1 line to another. Underwriting income for both Q3 and the first 9 months of the year was down. Year over year due to the elevated loss activity most of which is war related but still came in healthy at $20.3 million for the third quarter. And over $45 million for the first 9 months. And this is what really speaks to how we manage risk and the resilience we have built in our business. In the reinsurance segment, underwriting income improved to $12.7 million in Q3, representing an increase of over 22% over the same period in 2025.

Now we have stated before this is a segment where we have taken a number of actions to add to our capabilities and product offering. Now both gross written and net earned premiums were up in the quarter. Versus Q3 last year. But for the first 9 months, both gross written and net earned premiums were down. Primarily due to the nonrenewal of sizable reinsurance programs in the first quarter of the year. Which we have mentioned on previous calls. Underwriting income in the segment was broadly stable for the first 9 months. When compared to the same period of last year.

In the long tail segment, gross premiums written in the third quarter were fairly steady with the same period in 2025. But on a net earned basis, premiums were up almost 15% leading to underwriting income of about $10 million. For the first 9 months, both gross written and net earned premiums were up 4.3% and 16.4% respectively, driven by new business in most of our lines in the segment. Underwriting income for the first 9 months increased substantially, to just under $33 million. versus $1 million for the same period last year. But I would note here that the 2025 underwriting income in this segment was quite considerably negatively impacted by the FX movement.

So if we want to compare on a like for like basis, we are talking about $32.9 million as a profit compared to 2018 around $18 million last year, which is still quite a significant improvement. You will also note a fairly big reduction in the level of ceded premium in this segment. Both the third quarter, but especially for the first 9 months. that is mainly driven by the nonrenewal of the large professional indemnity binder, which we spoke about last year. And the sizable quota share reinsurance program that set behind that. So overall, in conclusion for this segment, we continue to be cautiously optimistic about market conditions stabilizing from here.

Now all in, we delivered net income of $28 million or $0.66 per share for Q3 this year. versus $33.5 million or $0.75 per share for Q3 last year. For the first 9 months, net income was $70.5 million or $1.65 per share versus $94.9 million or $2.14 per share. Last year. Return on average equity was just under 17%, and core operating return on average equity was the same at 16.9%. And that is for Q3. For the first 9 months, return on average equity and corporate return on average equity came in at 13.7% and 13.8% respectively, all in line with our long term averages. Now turning to the balance sheet, total assets were $2.11 billion.

Total investments in cash, $1.28 billion. Our allocation to fixed income securities which are 78% of our investments in cash, portfolio generated $14.2 million and $42.8 million in investment income in Q3 and the first 9 months respectively with a yield of 4.4% as of the end of Q3. We also pushed the duration out slightly to 3.7 years from 3.5 at the end of last quarter. During the third quarter, we repurchased a little over 148 thousand common shares at an average price per share of $24.68.

Year to date, we have purchased just under 900 thousand shares at an average price of $24.37 At the end of Q3, we had 3.8 million common shares remaining under our existing 5 million common share repurchase authorization. Total equity was just over $663 million at the end of Q3. Compared to $710 million at the end of 2025. Now that includes capital return to shareholders of just under $80 million comprised of about $58 million in dividends, including the special we distributed earlier in the year in April of $1.15 and a further roughly $22 million in share repurchases. Should also note that total equity was impacted by negative mark to market movements on the bond portfolio.

Amounting to about $44 million for the first 9 months and $29 million for the third quarter alone. And just a reminder here again that we hold our portfolio to maturity. Book value per share was $15.99. At the end of Q3. Now that is a decline of 5.4% from December or end of last year. Primarily due to the negative mark to market movements I just mentioned. So as I said at the outset, very strong fundamental results in the third and first 9 months. Especially considering the overall market softening and the heightened level of loss activity in the first 6 months of the year. And more broadly, the greater level of economic and geopolitical uncertainty.

Now this provides a good point for me to turn to our view of the markets. And the opportunities that we are seeing If we start with the reinsurance portfolio-- treated reinsurance portfolio, margins there are still relatively healthy but competitive pressures, as I am sure you are all aware, are becoming increasingly prevalent. Pressure on property rates specifically is driving overall reinsurance pricing pressure. The opportunities in this segment more concentrated on the specialty treaty lines. Such as, marine energy, PB, terror, Now these are areas where there have been significant risk and war losses. And then also, of course, cyber is another area where we have been adding to our capabilities.

Now on that note, just over a month ago, we announced the launch of Cypher underwriting, Cypher is a specialty treaty, MGA, focused on cyber. It will be run out of Bermuda, and IGI owns 60% of. This is for us very much a long term play. Our entry now positions us well in the market. As market conditions in cyber stabilize and improve, And like everything we do, we will grow this book cautiously. Since our announcement, Cypher has secured all the necessary regulatory approvals and begun operations. Cypher is led by Ari Chatterjee, who is a cyber reinsurance specialist and who is helped to set market standards on data and policy wordings.

Now the initial focus for Cypher is on addressing the growing demand for cyber reinsurance with lead underwriting capabilities targeting high growth emerging risks. This is a very exciting development for IGI, and it adds to our growing treaty capabilities and the overall diversification of our portfolios. But I echo what I said earlier will be growing this book very cautiously. Another avenue for treaty growth, is our new India platform in GIFT City, which we announced back in June. Now with India being 1 of the fastest growing economies in the world, opportunities here not just in India, but the whole Indian Subcontinent are quite abundant. Especially in specialist niche areas like cyber, surety, and liability business.

But this also provides an opportunity to market a slew of other lines of business within our portfolio, including construction and engineering, which we already write there as well as ports and terminals, marine cargo, PV, and some professional lines also. Now we have assembled a strong local team with deep knowledge of the Indian market. Strong understanding of how business is conducted, We are expecting the team to be fully in place by the end of January. But most will be in place by November. Obviously, with recent regulatory changes, there is a significant advantage to being on the ground here. We will be considered a preferred market.

Now this is very much consistent with our approach across all our markets. And that is combining IGI's technical expertise with disciplined underwriting with local talent cultural compatibility, and fluency. Now to the markets for short tail lines. We continue to see opportunities in the PV line coming out of the Middle East. Following the war. And we have grown our PV portfolio by about 50%. So it is important to note, and I have said this before, it is coming from a relatively modest base. Now not only has pricing significantly improved, but terms and conditions have also strengthened across the markets we write and the GCC region especially.

But as we said on prior calls, it is important to note that we have adjusted our own PV gross line size sizes leading to reduced ore exposure over this time period. A positive note, we are definitely seeing more discipline in the markets there. However, it is still somewhat disappointing that the market corrections so far have been limited to the Middle East and not the broader PV markets. But we expect we may see some broader improvements to come given the rising stability in the world. Just as an example, we have all seen what is been taking place in a number of countries in Europe over the last several weeks.

Elsewhere, we are also seeing opportunities in certain marine lines. Like cargo, specifically cargo war and war on land. Also as a result of the conflict as well as marine trades. Now while the opportunity is not significant, so far, we have taken advantage where appropriate. And in the more specialist lines, like in construction engineering, we are seeing healthy conditions and deal flow. We are still seeing an increase in infrastructure projects globally. Some slowdown in certain parts of the world. But still very positive in regard, and contingency also continues to develop for us. Now that leaves our 2 biggest lines. Property and energy. And that is where we are seeing the most pressure.

First, on the commercial property side, continues to be the rates continue to be relatively adequate even though we are seeing reductions, of about 15% or so across the board. Rates on the international property book are definitely holding up better than the U.S. But from both angles, it is clearly tougher now than it was a year ago. Similarly, in the energy book, Rates are coming down quite rapidly despite an abundance of loss activity both on the downstream side, power and renewable side, and the upstream side. Now we have seen some signs of pushback from the market following these losses.

Not enough to really get too optimistic, but we are hopeful this could be the signs of the tide turning. In our long tail segment, we continue to see new opportunities and good deal flow in professional indemnity. As well as some of the more niche segments of this business. Like marine liability, which we have talked about in prior calls. Now this is. With respect to marine liability, this is very clearly an opportunity for us. To capitalize on improved pricing and demand that resulted from the Baltimore Bridge loss. So we expect to continue to grow our direct marine liability book. We have actually already tripled the size of that book so far this year.

And it is widely expected that renewal rates for 2027 will remain healthy and attractive. As far as the geographic regions go, we have already covered the Middle East and India for the U.S., Europe, and Asia, the story is similar to what we said on previous calls. And we are continuing as always to leverage our presence, our expertise and our relationships for new opportunities. So our markets are in transition. And are continuing to evolve Some in good ways and others not in such good ways. As we all know, this is the nature of our business. But at IGI, we will continue to do what we do best.

We have outstanding teams with deep technical expertise, We are disciplined in our risk management. We execute consistently, and we have significant portfolio diversification. Now this high performance culture along with our long standing values, principles, and entrepreneurial spirit always guided us and continue to be central to our business and our track record of success. And I will be very clear on this. We do not and we will not compromise these under pressure. it is this that provides us a solid foundation for sustained strong performance and value creation. Over almost a quarter, of a century now, we have built an impressive track record, 1 that clearly demonstrates the excellent earnings power of our business.

We have the experience, and we have built a level of resilience in IGI that will continue to drive our success forward for the benefit of all our stakeholders. So we look forward to what is to come for what is left of 2026 and to celebrating our 25th anniversary year next year, and we remain steadfastly focused on protecting our existing portfolio and capitalizing on the many opportunities that our strategy provides. And I am going to pause here, and we will turn it over for questions, please. Operator, we are ready to take the first question.

Operator: We will now begin the question and answer session. The first question comes from Michael Phillips of Oppenheimer. Go ahead please.

Michael Phillips: Walid, just a quick numbers question to make sure I heard you correctly on the pack expense ratio. Did you say 18.4% for the quarter excluding FX impact?

Waleed Wasef Jabsheh: Yes, that is right. For quarter third quarter last Yes. Correct.

Michael Phillips: Thank you. Then I guess on the commission piece of that then, was there anything anomalous just to the quarter or is that increase there more because of changing mix of the business?

Waleed Wasef Jabsheh: I think it is a bit of both, Mike, because the business mix is changing slightly. Not enough to really move it that much for the quarter. But, definitely, the business mix will impact that. But then also, it is the market conditions as well. I mean, as you are aware, in hard markets, we can push acquisition cost down. And vice versa in softer markets, and clients will push acquisition costs up. So the simple answer is it is a combination of both. Yep. Okay.

Michael Phillips: Thanks. And I guess on the short tail lines, it sounds like your commentary sort of sound like even last quarter, there is been some industry losses in energy. I think you said downstream last quarter, but despite that, there is still not been a turn. So maybe, I guess, what we are seeing with short tail this quarter might be kind of what we should expect to see in the near term horizon?

Waleed Wasef Jabsheh: I think it is safe to say that in the near term horizon, that statement would be accurate. And I am talking predominantly from a top line perspective. I think we. You know, our underwriting strategy and reinsurance purchasing strategy is modified depending on where we are in the cycle. And that should mitigate some of or hopefully mitigate, the deteriorating impact of deteriorating market conditions. But these are volatile lines of business. And we will manage our exposures to ensure that we mitigate that volatility as much as possible. But there is no doubt that the rates have been reducing those lines of business for a couple of years now.

And we do not see the market, changing its tone or tune in any meaningful way, at least not yet. Okay.

Michael Phillips: Thanks, Waleed. Maybe just 1 more. it is been about a year since your upgrade, I think, almost a year ago. Because of that, are you seeing more at bats, if you will, because of the upgrade and if you are, does that business look any different than what you would have seen otherwise maybe in terms of size or mix or returns or anything? it is definitely helped. I will be honest with you. It has not been life changing for us. But it is definitely helped. it is opened up opportunities for us to explore. We have capitalized on some of those opportunities, but has not been significant.

That said, we are working on opportunities that have arisen now as a result of our upgrade that could be more meaningful as of 2027 and onward. So, but it is definitely lifted the profile. Opened up new doors, both to clients, cedents, and then obviously also to new business lines. Okay. Thanks, Waleed. Congrats on the great results in a tough environment. Appreciate your time.

Waleed Wasef Jabsheh: Thank you, Mike.

Operator: The next question comes from Rowland Mayor of RBC Capital Markets. Go ahead please.

Rowland Mayor: Thank you, and good morning or I guess good afternoon over there, Waleed. I wanted to quickly start on the PV exposure in Europe. Should we expect some losses there in the fourth quarter? Do you not carry much Mainland Europe exposure?

Waleed Wasef Jabsheh: No. We do not anticipate much. To be totally honest with you, the events in Europe are more on the strike, civil commotion side, which tend to be covered under property placements, actually, more often than not in Europe. Our European book is predominantly pure terrorism book. So that would not. These events would not fall under that type of coverage. So, no, we do not anticipate anything coming out of it for us.

Rowland Mayor: Thank you. And I guess just moving on to Cipher. Could you maybe walk through how that product will be structured or positioned And then you gave the ownership percentage, but how much of the capacity are you providing to Cipher?

Waleed Wasef Jabsheh: So with Cypher, it is a good question, Roland. With Cypher, Ari, who I mentioned, in the call, is. Just to give some background, is somebody that we have known, someone that we have known and supported for many years prior to partnering up with him. The opportunity. So we are familiar with his underwriting philosophy and approach, and we are familiar-- obviously, we know what his results have been like. have been like. he is built portfolios in the past that we have supported and backed and done very well out of. So when the opportunity came to partner up with him, and to do this in a more meaningful way, you know, we jumped on the opportunity.

And we are now almost ready and set to go. Now in terms of exposures and building the portfolio, and the capacity that is to be provided to Cypher. This is an exclusive relationship. We are the sole carrier for Cypher, at least for the time being. And conversely, Cypher will be the sole underwriter for us in these lines of business. So we will be the primary carrier. We are out there putting together a retro program, to protect this portfolio. Now the more support we can get, the more capacity. Gross capacity we can deploy.

So for us, it is not just simply you know, by creating Cypher and IGI MGA, which sits under IGI managing agencies We sort of segment out the fee generating income side of the, of the business. it is a multipronged approach. First and foremost, we love the guy. We love how he underwrites. We love his book. So we. that is that is that is the driver behind the partnership. But then as the putting it under an MGA umbrella, We generate fees from the MGA Large retro program behind it. We generate fees from the retro program as well, plus we benefit from the hopefully positive profitable results of the underwriting portfolio.

I foresee that to be the landscape for Cypher and IGI. For at least the first couple of years. And then you know, the business can develop into expanding into other lines of business, other niche areas. That potentially we could bring outside capacity to get involved. But the whole real intention behind or big part of it is that we own a portfolio it is written on IGI paper. And then we distribute it to others who want a piece of the action.

Rowland Mayor: that is super helpful. Thank you. And then if I could sneak in 1 more big picture question. Could you maybe talk about how interest rates impact your target combined ratios Do you fully separate the margin decision from investments? Or do some of the long tail lines need to factor in the investment income component?

Waleed Wasef Jabsheh: Fully and completely separated. Roland. So I do not have an answer to that question. We have. We. Investment income is completely separate from any of our underwriting results, and we do not underwrite based on what the, you know, investment environment is or how much investment income we anticipate we can we can generate.

Rowland Mayor: I guess just on that, do you think your peers are doing the same and. Or do you think we are starting to see some cash flow underwriting return to the market with interest rates where they are?

Waleed Wasef Jabsheh: I have no idea, Honestly, I have no idea.

Rowland Mayor: It was worth a try. Thank you for the answers. Congrats on almost 25 years.

Waleed Wasef Jabsheh: Thank you, Rowland. Thank you. Appreciate it.

Operator: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Waleed Wasef Jabsheh: I just want to thank you all for joining us today, and thank you, as always, for your continued support. If you have any additional questions, you can contact Robin, and she will be happy to assist And ahead of next quarter's call, I wish you all a merry Christmas and a happy New Year. Look forward to speaking to you in the New Year. Have a good day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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