Exhibit 99.1
INTERNATIONAL GENERAL INSURANCE HOLDINGS LTD.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2021 (UNAUDITED)
International General Insurance Holdings Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2021 and 31 December 2020
| Notes | 30 June 2021 | 31 December 2020 | ||||||||||
| USD ’000 | USD ’000 | |||||||||||
| Unaudited | Audited | |||||||||||
| ASSETS | ||||||||||||
| Cash and cash equivalents | 3 | (a) | ||||||||||
| Term deposits | 3 | (b) | ||||||||||
| Insurance receivables | ||||||||||||
| Investments | 4 | |||||||||||
| Investments in associates | 5 | |||||||||||
| Reinsurance share of outstanding claims | 6 | |||||||||||
| Reinsurance share of unearned premiums | ||||||||||||
| Deferred excess of loss premiums | ||||||||||||
| Deferred policy acquisition costs | ||||||||||||
| Other assets | ||||||||||||
| Investment properties | 7 | |||||||||||
| Property, premises and equipment | 8 | (a) | ||||||||||
| Intangible assets | 8 | (b) | ||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||
| LIABILITIES | ||||||||||||
| Gross outstanding claims | 6 | |||||||||||
| Gross unearned premiums | ||||||||||||
| Insurance payables | ||||||||||||
| Other liabilities | ||||||||||||
| Derivative financial liability | 9 | |||||||||||
| Deferred tax liabilities | ||||||||||||
| Unearned commissions | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| EQUITY | ||||||||||||
| Common shares at par value | 10 | |||||||||||
| Share premium | 19 | |||||||||||
| Foreign currency translation reserve | ( | ) | ( | ) | ||||||||
| Fair value reserve | ||||||||||||
| Retained earnings | ||||||||||||
| TOTAL EQUITY | ||||||||||||
| TOTAL EQUITY AND LIABILITIES | ||||||||||||
The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements
2
International General Insurance Holdings Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the periods ended 30 June 2021 and 2020 (Unaudited)
| Notes | For the six months ended 30 June | |||||||||||
| 2021 | 2020 | |||||||||||
| USD ’000 | USD ’000 | |||||||||||
| (Restated)* | ||||||||||||
| Gross written premiums | ||||||||||||
| Reinsurers’ share of insurance premiums | ( | ) | ( | ) | ||||||||
| Net written premiums | ||||||||||||
| Change in unearned premiums | ( | ) | ( | ) | ||||||||
| Reinsurers’ share of change in unearned premiums | ||||||||||||
| Net change in unearned premiums | ( | ) | ( | ) | ||||||||
| Net premiums earned | ||||||||||||
| Claims and claim adjustment expenses | 6 | ( | ) | ( | ) | |||||||
| Reinsurers’ share of claims | 6 | |||||||||||
| 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 | 13 | |||||||||||
| Share of profit (loss) from associates | ( | ) | ||||||||||
| Impairment loss on insurance receivables | ( | ) | ( | ) | ||||||||
| Other revenues | ||||||||||||
| Other expenses | ( | ) | ( | ) | ||||||||
| Listing related costs | 19 | ( | ) | |||||||||
| Change in fair value of derivative financial liability | 2,9 | ( | ) | |||||||||
| Loss on foreign exchange | ( | ) | ( | ) | ||||||||
| Profit before tax | ||||||||||||
| Income tax | ( | ) | ( | ) | ||||||||
| Profit for the period | ||||||||||||
| Earnings per share | ||||||||||||
| Basic and diluted earnings per share attributable to equity holders | 15 | |||||||||||
| * |
The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements
3
International General Insurance Holdings Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the periods ended 30 June 2021 and 2020 (Unaudited)
| For the six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| (Restated) | ||||||||
| Profit for the period | ||||||||
| Other comprehensive income to be reclassified to profit or loss in subsequent periods | ||||||||
| Net change in fair value reserve during the period for bonds at fair value through other comprehensive income | ( | ) | ||||||
| Currency translation difference | ( | ) | ||||||
| Changes in allowance for expected credit losses transferred to interim condensed consolidated statement of income | ||||||||
| Other comprehensive income which will not be reclassified to profit or loss in subsequent periods | ||||||||
| Net change in fair value reserve during the period for equities at fair value through other comprehensive income | ( | ) | ||||||
| Other comprehensive (loss) income for the period | ( | ) | ||||||
| Total comprehensive income for the period | ||||||||
The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements
4
International General Insurance Holdings Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the periods ended 30 June 2021 and 2020 (Unaudited)
| Notes | For the six months ended
30 June | |||||||||||
| 2021 | 2020 | |||||||||||
| USD ’000 | USD ’000 | |||||||||||
| Operating Activities | (Restated) | |||||||||||
| Profit for the period before tax | ||||||||||||
| Adjustments for: | ||||||||||||
| Impairment loss on insurance receivables | ||||||||||||
| Loss on sale of premises and equipment | ||||||||||||
| Depreciation | 8 | (a) | ||||||||||
| Amortization | 8 | (b) | ||||||||||
| Net share of (profit) loss from associates | 5 | ( | ) | |||||||||
| Lease interest expense | 8 | (a) | ||||||||||
| Realized loss on sale of bonds at FVTOCI | 13 | |||||||||||
| Realized gain on sale of equities and mutual funds at FVTPL | 13 | ( | ) | ( | ) | |||||||
| Realized loss on sale of investment properties | 13 | |||||||||||
| Unrealized loss on investment properties | 13 | |||||||||||
| Expected credit loss on financial assets at FVOCI | 13 | |||||||||||
| Expected credit loss on financial assets at amortized cost | 13 | |||||||||||
| Unrealized (gain) loss on revaluation of financial assets at FVTPL | 13 | ( | ) | |||||||||
| Share-based payment expense – restricted shares awards | 11 | |||||||||||
| Change in fair value of derivative financial liability | ( | ) | ||||||||||
| Loss on foreign exchange | ||||||||||||
| Cash from operations before working capital changes | ||||||||||||
| Term deposits | ( | ) | ( | ) | ||||||||
| Insurance receivables | ( | ) | ( | ) | ||||||||
| Purchase of investments | ( | ) | ( | ) | ||||||||
| Proceeds from sale and maturity of investments | ||||||||||||
| Reinsurance share of outstanding claims | ||||||||||||
| Reinsurance share of unearned premiums | ( | ) | ( | ) | ||||||||
| Deferred excess of loss premiums | ||||||||||||
| Deferred policy acquisition costs | ( | ) | ( | ) | ||||||||
| Other assets | ( | ) | ( | ) | ||||||||
| Additions to investment properties | ( | ) | ( | ) | ||||||||
| Proceeds from sale of investment properties | ||||||||||||
| Gross outstanding claims | ||||||||||||
| Gross unearned premiums | ||||||||||||
| Insurance payables | ||||||||||||
| Other liabilities | ( | ) | ( | ) | ||||||||
| Unearned commissions | ||||||||||||
| Income tax paid | ( | ) | ( | ) | ||||||||
| Net cash from (used in) operating activities | ( | ) | ||||||||||
| Investing Activities | ||||||||||||
| Acquisition of a subsidiary, net of cash acquired | 20 | ( | ) | |||||||||
| Purchase of premises and equipment | 8 | (a) | ( | ) | ( | ) | ||||||
| Purchase of intangible assets | 8 | (b) | ( | ) | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||||
| Financing Activities | ||||||||||||
| Cash injection in connection with Business Combination | 19 | |||||||||||
| Consideration paid to shareholders as deemed settlement for shares | 19 | ( | ) | |||||||||
| Dividends paid | ( | ) | ||||||||||
| Lease liabilities payments | ( | ) | ( | ) | ||||||||
| Net cash (used in) from financing activities | ( | ) | ||||||||||
| Net change in cash and cash equivalents | ( | ) | ||||||||||
| Net foreign exchange differences | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents at the beginning of the period | 3 | |||||||||||
| Cash and cash equivalents at the end of the period | 3 | |||||||||||
The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements
5
International General Insurance Holdings Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the periods ended 30 June 2021 and 2020 (Unaudited)
| Issued share capital | Common shares at par value | Additional paid in capital | Share premium | Warrants | Treasury shares | Foreign currency translation reserve | Fair value reserve | Retained earnings | Total | |||||||||||||||||||||||||||||||
| USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | |||||||||||||||||||||||||||||||
| As at 1 January 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Profit for the period | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with Business Combination (note 19) - at par value of USD 0.01 | ||||||||||||||||||||||||||||||||||||||||
| Issuance of Warrants in connection with Business Combination (note 19) | ||||||||||||||||||||||||||||||||||||||||
| Consideration paid to shareholders as deemed settlement for shares (note 19) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Business Combination elimination adjustments (note 19) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| As at 30 June 2020 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Impact of restatement (note 2) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| As at 30 June 2020 (restated) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| As at 1 January 2021 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Profit for the period | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Total comprehensive income | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Issuance of restricted shares awards (note 11) | ||||||||||||||||||||||||||||||||||||||||
| Cash dividends (note 12) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| As at 30 June 2021 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements
6
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2020
1. CORPORATE INFORMATION
International General Insurance Holdings Ltd. (“the Company”) is an exempted limited liability company registered and incorporated in Bermuda under the Companies Act of 1981 on 28 October 2019. The principal activities of the Company are to invest in companies engaged in the business of insurance and reinsurance. The Company’s registered office is at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda.
On 17 March 2020, the definitive business agreement between International General Insurance Holdings Limited - Dubai (“IGI”) and Tiberius Acquisition Corp. (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, the Company 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 IGI and each of IGI and Tiberius became the Company’s subsidiaries.
The transaction is accounted for as a continuation of IGI. Under this method of accounting, while the Company is the legal acquirer of both IGI and Tiberius, IGI has been identified as the accounting acquirer of Tiberius for accounting purposes. This determination was primarily based on IGI comprising the ongoing operations of the combined company, IGI’s senior management comprising the senior management of the combined company, and the former owners and management of IGI having control of the Board of Directors of the Company following the consummation of the transaction by virtue of being able to appoint a majority of the directors of the combined company.
As Tiberius does not meet the definition of a business as defined in IFRS 3 - Business Combinations (“IFRS 3”), the purchase of the shares of the former owners of Tiberius is not within the scope of IFRS 3 and is accounted for as a share-based payment transaction in accordance with IFRS 2 - Share-based payments (“IFRS 2”). Hence, the transaction was accounted for as the continuance of IGI with recognition of the identifiable assets acquired and the liabilities assumed of Tiberius at fair value. Operations prior to the transaction are those of IGI from an accounting point of view (note 19).
The Company and its subsidiaries (together “the Group”) operate in Bermuda, United Kingdom, Jordan, Morocco, Malaysia, United Arab Emirates and the Cayman Islands.
The interim condensed consolidated financial statements were authorized for issue in accordance with a resolution of the Board of Directors on 18 October 2021.
2. BASIS OF PREPARATION
The interim condensed consolidated financial statements for the six months ended 30 June 2021 have been prepared in accordance with IAS 34 - Interim Financial Reporting.
The interim condensed consolidated financial statements have been presented in United States Dollars “USD” which is also the Group’s functional currency. All values are rounded to the nearest thousand (USD ’000), except when otherwise indicated.
The interim condensed consolidated financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual consolidated financial statements as at 31 December 2020. In addition, results for the six months ended 30 June 2021 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2021.
The interim condensed 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.
7
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
2. BASIS OF PREPARATION (continued)
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.
Following measures announced by local governments in March 2020, the Company implemented aspects of the Group’s business continuity plan (BCP), specifically requiring staff at all levels and in all functions to work remotely wherever practicable, and to limit the need for gatherings of staff so far as possible. The Group’s IT facilities have ensured that all of the Group’s operations have been maintained allowing the Group to function as normal. The Company expects that these operational changes will continue to be required until all employees are allowed to return to their offices in accordance with local government advice.
The full extent to which the COVID-19 pandemic may impact the Group’s results, operations or liquidity is uncertain. Management continues to monitor the impact that the COVID-19 pandemic has on the Group, the insurance industry and the economies in which the Group operates.
The stress testing conducted periodically by management since the onset of the COVID-19 pandemic indicated that the impact of COVID-19 on the Group would be manageable and not give rise to a need for management actions to protect its regulatory capital position.
The analysis and monitoring to date confirmed that the Group’s underwriting portfolio is not materially exposed to the classes of business which are largely impacted by COVID-19. This assessment is supported by the fact that as of June 30, 2021, management’s best estimates of the specific reserves in respect of COVID-19 related claims are not considered to be significant.
The Group also writes professional indemnity coverage within the casualty line of business within our specialty long-tail segment which includes a portfolio of insurance brokers on which the Group has received notifications in respect of business interruption coverage. This portfolio is predominantly written on an excess layer basis with high attachment points and, although this portfolio accounts for the majority of the COVID-19 notifications received to date, the notifications to date are considered precautionary on the part of the broker. We are not exposed to those classes of insurance most directly impacted by COVID-19 (such as life, health, travel, contingent business interruption and event cancellation). In addition, although a number of business classes including property, engineering, and ports and terminals in our specialty short-tail segment provide business interruption coverage, this coverage requires underlying insured property damage or breakdown in order to trigger a loss. One small exception is limited exposure to hotels where business interruption cover has been provided on the basis of covering “murder, suicide, loss of attraction, human infectious & contagious diseases.” The Group is less likely to have exposure in this area because these coverages are heavily sub-limited and in most cases attach at a high excess.
With respect to claims administration, the Group has not evidenced a discernible impact on the reporting and settlement of claims, as the third-party loss adjusters and other appointed experts, in conjunction with the Group’s inhouse claims function, have demonstrated an ability to adapt effectively to the virtual world in servicing claims.
In
addition, the combination of a modest allocation to equities and the high quality and diversified nature of the Group’s bonds and
term deposits has resulted in a minor negative mark to market adjustment in its investment portfolio. However, a material fair value
revaluation loss close to
8
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
2. BASIS OF PREPARATION (continued)
Basis of consolidation
The interim condensed consolidated financial statements comprise the financial statements of International General Insurance Holdings Ltd. and its subsidiaries as at 30 June 2021. 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 investee |
| ● | Rights arising from other contractual arrangements |
| ● | The Group’s voting rights and potential voting rights |
The Group re-assesses 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 statement of comprehensive income 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 recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. |
9
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
2. BASIS OF PREPARATION (continued)
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.
The Group has the following subsidiaries and branches:
| Country of incorporation | Activity | Ownership | ||||||||||
30 June 2021 | 31 December 2020 | |||||||||||
| International General Insurance Holdings Limited | % | % | ||||||||||
| Tiberius Acquisition Corporation | % | % | ||||||||||
| The following entities are wholly owned by the subsidiary International General Insurance Holdings Limited: | ||||||||||||
| I.G.I Underwriting /Jordan “Exempted” | % | % | ||||||||||
| North Star Underwriting Limited | % | % | ||||||||||
| International General Insurance Co. Ltd. | % | % | ||||||||||
| The following entities are wholly owned subsidiaries and branches by International General Insurance Co. Ltd. Bermuda: | ||||||||||||
| Subsidiaries: | ||||||||||||
| International General Insurance Company (UK) Limited | % | % | ||||||||||
| International General Insurance Company (Dubai) Ltd. | % | % | ||||||||||
| International General Insurance Company (Europe) SE* | % | |||||||||||
| Specialty Malls Investment Company | % | % | ||||||||||
| IGI Services Ltd | % | % | ||||||||||
| Branches: | ||||||||||||
| International General Insurance Company Ltd. - Labuan Branch | % | % | ||||||||||
| * | International General Insurance Company (Europe) SE was acquired by the Group on 25 June 2021 (note 20). |
10
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
2. BASIS OF PREPARATION (continued)
Restatement of Prior Period Comparative Figures
On 12 April 2021, the SEC released a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the “SEC Staff Statement”). The SEC Staff Statement highlighted potential accounting implications of certain terms that are common in warrants issued in connection with the initial public offerings of Special Purpose Acquisition Companies (“SPACs”).
After considering the SEC Staff Statement and taking account of the circumstances of the transaction with Tiberius, the Group reevaluated its accounting treatment of the Public Warrants and Private Warrants (the “Warrants”) issued in connection with the initial public offering of Tiberius Acquisition Corp. (“Tiberius”) which were originally recorded as an equity instrument in the Group’s consolidated financial statements as a result of the Business Combination that occurred on 17 March 2020 (note 19). Accordingly, management has now accounted for the Warrants under IAS 32 ‘Financial Instruments’ rather than IFRS 2 ’Share-based Payment’ and concluded that the warrants agreement governing the Group’s Warrants includes contingent settlement provisions that provide potential changes and variability to the settlement amounts of the Warrants, dependent on the characteristics of the Warrants holder and the occurrence of some uncertain future events that are not within the control of the Group. In accordance with IAS 32, a contract to issue a variable number of shares fails to meet the definition of equity and must instead be classified as a derivative liability and measured at fair value with subsequent changes in fair value recorded in the interim condensed consolidated statement of income at the end of each reporting period. Based on this re-evaluation, management concluded that the Warrants represent a derivative liability that were deemed to have been issued upon consummation of the Business Combination.
Due to this misstatement, management decided to
restate the Group’s comparative figures for the six months ended 30 June 2020. As a result, the Warrants are now classified as a
liability at fair value on the Group’s interim condensed consolidated statement of financial position as at 30 June 2020 and the
change in the fair value of such liability in each period is recognised as a gain or loss in the Group’s interim condensed consolidated
statements of income for the six months ended 30 June 2020.
For the six months ended 30 June 2020, a fair
value gain of USD
There was no impact on cash from operating, financing or investing activities in the interim condensed consolidated statement of cash flows for the six months ended 30 June 2020.
The following table reflects the impact of the restatement adjustments to the specific line items presented in the Group’s previously reported interim condensed consolidated financial statements for the six months ended 30 June 2020. The amounts as previously reported were derived from the Group’s original interim condensed consolidated financial statements.
11
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
| 30 June 2020 | ||||||||||||
| As previously reported | Restatement adjustments | As restated | ||||||||||
| USD ’000 | USD ’000 | USD ’000 | ||||||||||
| Interim condensed consolidated statements of financial position | ||||||||||||
| Equity: | ||||||||||||
| Warrants | ( | ) | ||||||||||
| Share premium | ||||||||||||
| Retained earnings | ||||||||||||
| Total equity | ( | ) | ||||||||||
| Liabilities: | ||||||||||||
| Derivative financial liability | ||||||||||||
| Total liabilities | ||||||||||||
| Interim condensed consolidated statement of income | ||||||||||||
| Change in fair value of derivative financial liability | ||||||||||||
| Profit before tax | ||||||||||||
| Profit for the period | ||||||||||||
| Basic and dilutive earnings per share (USD) | ||||||||||||
| Interim condensed consolidated statement of comprehensive income | ||||||||||||
| Total comprehensive income for the period | ||||||||||||
Changes in accounting policies
The accounting policies used in the preparation of the interim condensed consolidated financial statements are consistent with those used in the preparation of the annual consolidated financial statements for the year ended 31 December 2020.
There are no new standards or amendments effective in 2021 that have a material impact on the Group’s interim condensed consolidated financial statements.
(a) CASH AND CASH EQUIVALENTS
30 June 2021 | 31 December 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| Cash and bank balances* | ||||||||
| Deposits with original maturities of three months or less | ||||||||
| * | This
item includes cash in the amount of USD |
(b) TERM DEPOSITS
30 June 2021 | 31 December 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| Deposits with original maturities over three months and less than one year | ||||||||
| Deposits with original maturities over one year | ||||||||
The
deposits are denominated in US Dollars and other US Dollars pegged currencies. All deposits earned interest in the range between
12
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
4. INVESTMENTS
| 30 June 2021 | ||||||||||||||||
| Amortized Cost | Fair value through other comprehensive income | Fair value through profit or loss | Total | |||||||||||||
| USD ’000 | USD ’000 | USD ’000 | USD ’000 | |||||||||||||
| Unquoted bonds* | ||||||||||||||||
| Quoted bonds | ||||||||||||||||
| Quoted funds and alternative investments | ||||||||||||||||
| Quoted equities** | ||||||||||||||||
| Unquoted equities*** | ||||||||||||||||
| Expected credit losses and impairment | ( | ) | ( | ) | ||||||||||||
| 31 December 2020 | ||||||||||||||||
| Amortized Cost | Fair value through other comprehensive income | Fair value through profit or loss | Total | |||||||||||||
| USD ’000 | USD ’000 | USD ’000 | USD ’000 | |||||||||||||
| Unquoted bonds* | ||||||||||||||||
| Quoted bonds | ||||||||||||||||
| Quoted funds and alternative investments | ||||||||||||||||
| Quoted equities** | ||||||||||||||||
| Unquoted equities*** | ||||||||||||||||
| Expected credit losses and impairment | ( | ) | ( | ) | ||||||||||||
The movement on the expected credit losses and impairment provision for the bonds at amortized cost is as follows:
30 June 2021 | 31 December 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| Opening balance | ||||||||
| Addition of provision for investment in debt securities | ||||||||
| Ending balance | ||||||||
The
addition of allowance for bonds at FVTOCI for the period ended 30 June 2021 of USD
| * | The Group has an investment in an unquoted bond denominated in JOD (USD pegged currency) issued by ’Specialized Investment Compound Co. |
13
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
4. INVESTMENTS (continued)
These
bonds are backed up by collateral in the form of real estate properties. However, the Group management has provided USD
| ** | In
2020, the Group has sold part of its holdings in a quoted equity at fair value through OCI to take advantage of the increase in the market
value of the investee. The quoted equities were purchased in 2011 and held as a long-term investment. Upon disposal, the fair value of
the sold shares was USD |
| *** | The Group has two unquoted equity investments under level 3 designated at fair value through OCI valued at USD |
As
at 30 June 2021 and 31 December 2020, the Group has measured the fair value of the unquoted investment valued at USD
As
at 30 June 2021, the Group has measured the fair value of the unquoted investment valued at USD
There are no active markets for these investments.
The table below shows the sensitivity of the fair value of Level 3 financial assets as at 30 June 2021 and 30 June 2020:
| % | Positive impact | Negative impact | Valuation variables | |||||||||||
| USD ’000 | USD ’000 | |||||||||||||
| 30 June 2021 | ( | ) | ||||||||||||
| 30 June 2020 | ( | ) | ||||||||||||
| **** |
14
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
5. INVESTMENTS IN ASSOCIATES
The
Group holds
| Country of incorporation | Ownership | |||||||||
30 June 2021 | 31 December 2020 | |||||||||
| Star Rock SAL Lebanon | % | % | ||||||||
| Sina SAL Lebanon | % | % | ||||||||
| Silver Rock SAL Lebanon | % | % | ||||||||
| Golden Rock SAL Lebanon | % | % | ||||||||
Movement on investments in associates is as follows:
30 June 2021 | 31 December 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| Opening balance | ||||||||
| Share of associated companies’ financial results | ( | ) | ||||||
| Investment properties’ fair value adjustment | ( | ) | ( | ) | ||||
| Foreign exchange gain arising from revaluation of associated companies | ||||||||
| Reversal of provision for contingent liabilities | ||||||||
| Share of profit (loss) from associates | ( | ) | ||||||
The associates’ main business is investing in investment properties located in Beirut, Lebanon. The investment properties of the associates are stated at fair value to bring the associated companies’ accounting policies in line with that of the Group’s. The fair values of the investment properties have been determined by management and in doing so, management 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 period and the prior years.
The sensitivity of the Group’s interim condensed consolidated statement of income for the six months periods ended 30 June 2021 and 2020 to the change in the price used for the valuation of the investment properties owned by the associates was as follows:
| % | Impact on interim condensed consolidated statement of income for the increase in price per square meter | Impact on interim condensed consolidated statement of income for the decrease in price per square meter | ||||||||
| USD ’000 | USD ’000 | |||||||||
| 30 June 2021 | ( | ) | ||||||||
| 30 June 2020 | ( | ) | ||||||||
15
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
6. OUTSTANDING CLAIMS
Movement in outstanding claims
| 30 June 2021 | 31 December 2020 | |||||||||||||||||||||||
| Gross | Reinsurers’ share | Net | Gross | Reinsurers’ share | Net | |||||||||||||||||||
| USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | |||||||||||||||||||
| At the beginning of the period / year | ||||||||||||||||||||||||
| Reported claims | ( | ) | ( | ) | ||||||||||||||||||||
| Claims incurred but not reported | ( | ) | ( | ) | ||||||||||||||||||||
| ( | ) | ( | ) | |||||||||||||||||||||
| Claims paid | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Provided during the period / year related to current accident year | ( | ) | ( | ) | ||||||||||||||||||||
| Provided during the period / year related to previous accident years | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| At the end of the period / year | ( | ) | ( | ) | ||||||||||||||||||||
| At the end of the period / year | ||||||||||||||||||||||||
| Reported claims | ( | ) | ( | ) | ||||||||||||||||||||
| Claims incurred but not reported | ( | ) | ( | ) | ||||||||||||||||||||
| ( | ) | ( | ) | |||||||||||||||||||||
7. INVESTMENT PROPERTIES
The following table includes summarized information of the Group’s investment properties:
| 30 June 2021 | ||||||||||||
| Commercial building | Lands* | Total | ||||||||||
| USD ’000 | USD ’000 | USD ’000 | ||||||||||
| Opening balance | ||||||||||||
| Additions | ||||||||||||
| Sale of investment properties | ( | ) | ( | ) | ||||||||
| Fair value adjustment | ( | ) | ( | ) | ||||||||
| Ending balance | ||||||||||||
| 31 December 2020 | ||||||||||||
| Commercial building | Lands* | Total | ||||||||||
| USD ’000 | USD ’000 | USD ’000 | ||||||||||
| Opening balance | ||||||||||||
| Additions | ||||||||||||
| Sale of investment properties | ( | ) | ( | ) | ||||||||
| Fair value adjustment | ( | ) | ( | ) | ( | ) | ||||||
| Foreign currency adjustment | ( | ) | ( | ) | ||||||||
| Ending balance | ||||||||||||
| * | Lands
amounting to USD |
16
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
7. INVESTMENT PROPERTIES (continued)
In
2021, the Group sold a number of plots with total carrying value of USD
The fair values of investment properties have been determined by management and in doing so has considered a valuation performed by 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.
The sensitivity of the Group’s interim condensed consolidated statement of income for the six months periods ended 30 June 2021 and 2020 to the change in the price used for the valuation of the investment properties was as follows:
| % | Average price per square meter | Impact on interim condensed consolidated statement of income for the increase in price per square meter | Impact on interim condensed consolidated statement of income for the decrease in price per square meter | |||||||||||
| USD | USD ’000 | USD ’000 | ||||||||||||
| Commercial building | ||||||||||||||
| 30 June 2021 | ( | ) | ||||||||||||
| 30 June 2020 | ( | ) | ||||||||||||
| % | Average price per square meter | Impact on interim condensed consolidated statement of income for the increase in price per square meter | Impact on interim condensed consolidated statement of income for the decrease in price per square meter | |||||||||||
| USD | USD ’000 | USD ’000 | ||||||||||||
| Lands | ||||||||||||||
| 30 June 2021 | ( | ) | ||||||||||||
| 30 June 2020 | ( | ) | ||||||||||||
8 (a). PROPERTY, PREMISES AND EQUIPMENT
The
additions to the property and equipment during the six-months period ended 30 June 2021 were USD
Pursuant to the application of IFRS 16 -Lease,
the Group has recognized a total amount of USD
17
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
8 (b). INTANGIBLE ASSETS
The additions to the intangible assets during
the six-months period ended 30 June 2021 were USD
9. DERIVATIVE FINANCIAL LIABILITY
In connection with the Business Combination (note
19), the Group issued
No Public or Private Warrants have been exercised or redeemed since originally issued and until the date of these interim condensed consolidated financial statements.
Upon initial recognition, the fair value of the Warrants has been determined
using a combination of a market approach and valuation technique performed by an independent third-party valuation specialist (for further
details refer to note 19). Based on that, the estimated fair value of the Warrants was USD
As at 30 June 2021 and 31 December 2020, the Warrants were valued using the market quoted price on Nasdaq.
The table below illustrates the movement on the Warrants during the period / year:
30 June 2021 | 31 December 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| Fair value of Warrants at the beginning of the period / Initial recognition of Warrants at the close of the Business Combination - now reclassified from equity to a liability | ||||||||
| Change in fair value for the period / year | ||||||||
| Fair value of Warrants at the end of the period / year | ||||||||
18
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
10. COMMON SHARES
Under the Amended and Restated Bye-laws, the authorized
share capital of the Group consists of
In connection with the finalization of the purchase
price under the Business Combination Agreement, all escrow shares were released from escrow and
The following table sets out the number of common shares issued and outstanding as at 30 June 2021 and 31 December 2020:
| 30 June 2021 | ||||||||
| No. of shares | Par value | |||||||
| USD ’000 | ||||||||
| Common shares (par value of USD 0.01) | ||||||||
| Earnout shares* (par value of USD 0.01) | ||||||||
| Restricted shares awards (par value of USD 0.01) (note 11) | ||||||||
| 31 December 2020 | ||||||||
| No. of shares | Par value | |||||||
| USD ’000 | ||||||||
| Common shares (par value of USD 0.01) | ||||||||
| Earnout shares* (par value of USD 0.01) | ||||||||
| Restricted shares awards (par value of USD 0.01) (note 11) | ||||||||
| * | The Earnout Shares are subject to vesting at stock prices ranges from
USD |
19
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
11. SHARE-BASED PAYMENTS
On 3 June 2020, the Board of Directors approved the Group’s share-based employee compensation plan, the 2020 Omnibus Incentive Plan (“the Plan”). Under the Plan, the following awards may be granted:
| - | Options to buy Common Shares (“Stock Options”), which may be either incentive stock options (“Incentive Stock Options” or “ISOs”) qualified under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options (“Non-Qualified Stock Options” or “NQSOs”), which do not satisfy the requirements of Incentive Stock Options; |
| - | Share appreciation rights (“SARs”) (including tandem, non-tandem and limited SARs); |
| - | Restricted shares awards (“Restricted Shares Awards”); |
| - | Performance awards denominated in Common Shares or cash (“Performance Awards”); |
| - | Other share-based awards (“Other Share-Based Awards”), including but not limited to restricted share units (“RSUs”); and |
| - | Other cash-based awards (“Other Cash-Based Awards”). |
On 30 September 2020, the Board of Directors approved
the grant of
| Grant date | |
| First vesting date (tranche 1) | |
| Second vesting date (tranche 2) | |
| Third vesting date (tranche 3) | |
| Total number of restricted shares awards | |
| Number of restricted shares awards vesting each period | |
| Grant date fair value (USD) |
On 16 February 2021, the Board of Directors approved
the grant of
| Grant date | |
| First vesting date (tranche 1) | |
| Second vesting date (tranche 2) | |
| Third vesting date (tranche 3) | |
| Total number of restricted shares awards | |
| Number of restricted shares awards vesting each period | |
| Grant date fair value (USD) |
On 31 March 2021, the Board of Directors approved
the grant of
| Grant date | |
| First vesting date (tranche 1) | |
| Second vesting date (tranche 2) | |
| Third vesting date (tranche 3) | |
| Total number of restricted shares awards | |
| Number of restricted shares awards vesting each period | |
| Grant date fair value (USD) |
20
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
11. SHARE-BASED PAYMENTS (continued)
Grant date fair values represent the closing quoted prices of the Company’s share on Nasdaq on the dates when awards were officially communicated to the participants and shall be applicable for all the three vesting tranches.
Participant’s continued service with the Company or any of its Subsidiaries on each applicable vesting date is the only vesting condition to be met. There is no other performance related condition attached to the vesting of shares.
The movement on the number of restricted shares during the period / year is as follows:
| 30 June 2021 | 31 December 2020 | |||||||
| Balance at 1 January | ||||||||
| Restricted shares granted | ||||||||
| Restricted shares vested | ( | ) | ||||||
| Restricted shares forfeited | ( | ) | ||||||
| Balance at end of the period / year | ||||||||
The Company has applied the graded vesting method in recognition of share-based payment expense. Accordingly, the Company has assessed the expected length of service period from date of shares grant until end of each vesting period respectively and considered this to determine proportionate earnout shares at 30 June 2021 and 31 December 2020 attributed to each vesting tranche.
Number of earnout shares to be considered for accounting purposes at year end for each tranche are as follow:
| Grant | Days from grant date | Earn out shares from first vesting (tranche 1) | Earn out shares from second vesting (tranche 2) | Earn out shares from third vesting (tranche 3) | Total | |||||||||||||||||
30 June 2021 | 30 September 2020 grant | |||||||||||||||||||||
| 16 February 2021 grant | ||||||||||||||||||||||
| 31 March 2021 grant | ||||||||||||||||||||||
| Total | ||||||||||||||||||||||
| 31 December 2020 | 30 September 2020 grant | |||||||||||||||||||||
Accordingly, total earnout shares of
21
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
12. CASH DIVIDENDS
Cash dividends declared and paid:
The Board of Directors resolved to pay the following dividends for the period ended 30 June 2021:
| - | On 25 March 2021: USD |
There were no dividends paid or declared during the six months period ended 30 June 2020.
There are no cash dividends declared but not paid as at 30 June 2021 and 31 December 2020.
13. Net INVESTMENT InCOME
For the six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| Interest income | ||||||||
| Dividends from equities at FVTOCI | ||||||||
| Dividends from equities at FVTPL | ||||||||
| Realized gains and losses on investments | ||||||||
| Realized loss on sale of bonds at FVTOCI | ( | ) | ( | ) | ||||
| Realized gain on sale of equities and mutual funds at FVTPL | ||||||||
| Unrealized gains and losses on investments | ||||||||
| Unrealized gain (loss) on revaluation of financial assets at FVTPL | ( | ) | ||||||
| Gains and losses from investment properties | ||||||||
| Realized loss on sale of investment properties | ( | ) | ( | ) | ||||
| Unrealized loss on investment properties | ( | ) | ( | ) | ||||
| Rental income | ||||||||
| Expected credit losses on investments | ||||||||
| Expected credit loss on financial assets at FVOCI | ( | ) | ( | ) | ||||
| Expected credit loss on financial assets at amortized cost | ( | ) | ||||||
| Investments custodian fees and other investments expenses | ( | ) | ( | ) | ||||
22
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
14. Related party transactions
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 for the period
ended 30 June 2021, consisting of salaries and benefits was USD |
Post completion of the Business Combination, the Group has reviewed its list of ‘key management personnel’ in accordance with IAS 24 (Related Party Disclosures) requirements and accordingly considered the persons who were named as executive officers of the company in its SEC filings as ‘Key management personnel’. Those officers have the authority and responsibility for planning, directing, and controlling the activities of the Group. In addition, they represent the Group’s executive committee which acts in the capacity of chief operating decision maker (note 18).
| ◾ | The Group has paid aircraft management fees and chartering revenues
commission in the amount of USD |
| ◾ | No balances from key management personnel of the Group were due as at 30 June 2021 and 31 December 2020. |
| ◾ | Included within the investment properties (note 7) are lands with a total amount of USD |
| ◾ | In connection with the Business Combination (note 19) the Group issued |
15. EaRNINGS PER SHARE
Basic earnings per share represents the profits attributable to the ordinary shareholders divided by the weighted average number of common shares outstanding during the periods.
Diluted earnings per share represents the profits attributable to the ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
As at 30 June 2021, part of the restricted shares awards were unvested. However, since these shares contain a nonforfeitable rights to dividends, whether paid or unpaid, they are considered as participating securities and hence included in the computation of both basic and diluted earnings per share.
23
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
15. EaRNINGS PER SHARE (continued)
At the closing of the Business Combination, the
Group issued
The following table shows the calculation of the basic and diluted earnings per share for the six months ended 30 June 2021 and 2020.
| For the six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| (Restated) | ||||||||
| Profit for the period (USD ’000) | ||||||||
| Less: profit attributable to the Earnout Shares (USD ’000) | ( | ) | ( | ) | ||||
| Less: profit attributable to the restricted shares awards (note 11) (USD ’000) | ( | ) | ||||||
| Net profit available to common shareholders (USD ’000) | ||||||||
| Weighted average number of shares – basic and diluted | ||||||||
| Basic and diluted earnings per share (USD) | ||||||||
16. COMMITMENTS AND CONTINGENCIES
As at 30 June 2021, the Group is contingently liable for the following:
| ◾ | Letters of Credit amounting to USD | |
| ◾ | Letter of Guarantee amounting to USD |
Litigation
The Group was engaged in an arbitration proceeding at 31 December 2020 with certain reinsurers represented by an underwriting agent (“agent”) with respect to certain matters related to the Group’s outward reinsurance programme 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
Before the start of the final hearing in April 2021, the matters under arbitration were resolved (and the arbitration discontinued) between the Group and reinsurers. The outward reinsurance policies remain in full force and effect. The resolution has no material impact on the Group’s business, results of operations or financial condition.
24
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
17. 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.
For assets and liabilities that are recognized in the financial statements on 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.
| 30 June 2021 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| USD ’000 | USD ’000 | USD ’000 | USD ’000 | |||||||||||||
| Assets measured at fair value: | ||||||||||||||||
| FVTPL | ||||||||||||||||
| Quoted equities at FVOCI | ||||||||||||||||
| Quoted bonds at FVOCI | ||||||||||||||||
| Unquoted equities at FVOCI* | ||||||||||||||||
| Investment properties | ||||||||||||||||
| Liabilities measured at fair value: | ||||||||||||||||
| Derivative financial liability | ||||||||||||||||
| 31 December 2020 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| USD ’000 | USD ’000 | USD ’000 | USD ’000 | |||||||||||||
| Assets measured at fair value: | ||||||||||||||||
| FVTPL | ||||||||||||||||
| Quoted equities at FVOCI | ||||||||||||||||
| Quoted bonds at FVOCI | ||||||||||||||||
| Unquoted equities at FVOCI* | ||||||||||||||||
| Investment properties | ||||||||||||||||
| Liabilities measured at fair value: | ||||||||||||||||
| Derivative financial liability | ||||||||||||||||
| * | Reconciliation of fair value of the unquoted equities under level 3 fair value hierarchy is as follows: |
| 30 June 2021 | 31 December 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| Balance at the beginning of the period / year | ||||||||
| Purchases | ||||||||
| Total losses recognized in OCI | ( | ) | ||||||
| Balance at the end of the period / year | ||||||||
25
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
18. Segment Reporting
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 interim condensed 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 a 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 interim condensed consolidated financial statements.
The Group also has general and administrative expenses, net investment income, gain/loss on foreign exchange, other expenses/revenues, change in fair value of derivative financial liability 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.
26
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
18. Segment Reporting (continued)
| a) | Segment disclosure for the Group’s consolidated operations is as follows: |
| For the period ended 30 June 2021 | ||||||||||||||||||||||||
| Specialty Long tail | Specialty Short tail | Reinsurance | Sub Total | Corporate and Other | Total | |||||||||||||||||||
| USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | |||||||||||||||||||
| Underwriting revenues | ||||||||||||||||||||||||
| Gross written premiums | ||||||||||||||||||||||||
| Reinsurer’s share of insurance premiums | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Net written premiums | ||||||||||||||||||||||||
| Net change in unearned premiums | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Net premiums earned | ||||||||||||||||||||||||
| Underwriting deductions | ||||||||||||||||||||||||
| Net policy acquisition expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Net claims and claim adjustment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Net underwriting results | ||||||||||||||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ||||||||||||||||||||
| Net investment income | ||||||||||||||||||||||||
| Share of profit from associates | ||||||||||||||||||||||||
| Impairment loss on insurance receivables | ( | ) | ( | ) | ||||||||||||||||||||
| Other revenues | ||||||||||||||||||||||||
| Other expenses | ( | ) | ( | ) | ||||||||||||||||||||
| Change in fair value of derivative financial liability | ( | ) | ( | ) | ||||||||||||||||||||
| Loss on foreign exchange | ( | ) | ( | ) | ||||||||||||||||||||
| Profit (loss) before tax | ( | ) | ||||||||||||||||||||||
| Income tax | ( | ) | ( | ) | ||||||||||||||||||||
| Profit (loss) for the period | ( | ) | ||||||||||||||||||||||
27
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
18. Segment Reporting (continued)
| For the period ended 30 June 2020 | ||||||||||||||||||||||||
| Specialty Long tail | Specialty Short tail | Reinsurance | Sub Total | Corporate and Other | Total | |||||||||||||||||||
| USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | USD ’000 | |||||||||||||||||||
| Underwriting revenues | ||||||||||||||||||||||||
| Gross written premiums | ||||||||||||||||||||||||
| Reinsurer’s share of insurance premiums | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Net written premiums | ||||||||||||||||||||||||
| Net change in unearned premiums | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Net premiums earned | ||||||||||||||||||||||||
| Underwriting deductions | ||||||||||||||||||||||||
| Net policy acquisition expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Net claims and claim adjustment 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 | ( | ) | ( | ) | ||||||||||||||||||||
| Change in fair value of derivative financial liability | - | - | - | - | ||||||||||||||||||||
| Listing related cost | ( | ) | ( | ) | ||||||||||||||||||||
| Loss on foreign exchange | ( | ) | ( | ) | ||||||||||||||||||||
| Profit (loss) before tax | ( | ) | ||||||||||||||||||||||
| Income tax | ( | ) | ( | ) | ||||||||||||||||||||
| Profit (loss) for the period (restated) | ( | ) | ||||||||||||||||||||||
| b) | Non – current operating assets information by geography as at 30 June 2021 and 31 December 2020 are as follows: |
30
June | 31 December 2020 | |||||||
| USD ’000 | USD ’000 | |||||||
| Middle East | ||||||||
| North Africa | ||||||||
| UK | ||||||||
| Asia | ||||||||
Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, investment properties and intangible assets.
28
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
19. Business COMBination
On 17 March 2020, the definitive business agreement between International General Insurance Holdings Limited - Dubai (“IGI”) and Tiberius Acquisition Corp. (NASDAQ: TIBR) (“Tiberius”), a publicly traded special purpose acquisition company, and certain related parties, was effective (the “Business Combination”). As a result of the completion of the Business Combination, the Company became a new public company owned by the former stockholders of Tiberius and the former shareholders of IGI. Consequently, IGI and Tiberius became the Company’s subsidiaries.
Furthermore, in accordance with the Business Combination,
USD
At the closing of the Business Combination, the Company:
| 1) |
In connection with the finalization of the purchase price under the Business Combination Agreement, all escrow shares issued to former shareholders of IGI were released from escrow and 8,555 shares were cancelled. Following the cancellation, the Group has 48,438,751 shares outstanding (including the 3,012,500 unvested shares).
Simultaneously with the execution of the Business
Combination, out of total Earnout Shares issued to Tiberius founder shareholders,
The following table sets out the number of common shares issued in connection with the Business Combination:
| No. of shares | Par value of 0.01 USD | |||||||
| USD ’000 | ||||||||
| Common shares issued to former shareholders of IGI | ||||||||
| Common shares issued to former stockholders of Tiberius * | ||||||||
| Unvested shares transferred to certain former shareholders of IGI | ||||||||
| Unvested Tiberius Founder shares | ||||||||
| * | This item includes |
29
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
19. BUSINESS COMBINATION (continued)
| 2) |
| 3) | Eliminated IGI issued share capital in the amount of USD |
| 4) | Eliminated IGI treasury shares in the amount of USD |
| 5) | Eliminated IGI additional paid in capital in the amount of USD |
| 6) | Adjusted the share premium as a result of the issuance of the common shares and warrants. |
Accounting for the Business Combination
The transaction was accounted for as a continuation of International General Insurance Holdings Limited - Dubai (“IGI”). Under this method of accounting, while the Company is the legal acquirer of both IGI and Tiberius, IGI has been identified as the accounting acquirer of Tiberius for accounting purposes. This determination was primarily based on IGI comprising the ongoing operations of the combined company, IGI senior management comprising the senior management of the combined company, and the former owners and management of IGI having control of the Board of Directors following the consummation of the transaction by virtue of being able to appoint a majority of the directors of the combined company. As Tiberius does not meet the definition of a business as defined in IFRS 3 - Business Combinations (“IFRS 3”), the purchase of the shares of the former owners of Tiberius is not within the scope of IFRS 3 and is accounted for as a share-based payment transaction in accordance with IFRS 2- Share-based payments (“IFRS 2”). Hence, the transaction was accounted for as the continuance of IGI with recognition of the identifiable assets acquired and the liabilities assumed of Tiberius at fair value. Operations prior to the transaction are those of IGI from an accounting point of view.
Fair value measurement of the equity instruments issued in connection with the Business Combination
In connection with the business combination, equity instruments that were issued as a share-based consideration to Tiberius were as follows:
| (a) | Quoted common shares |
| (b) | Founder shares subject to a one year lock-up restriction |
| (c) | Earnout shares subject to vesting at differential price range |
30
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
19. BUSINESS COMBINATION (continued)
Under IFRS 2, fair values of above-mentioned equity instruments issued to Tiberius was compared to fair value of Tiberius identifiable net assets acquired (representing net cash received by IGI and its former shareholders net of the liabilities assumed by IGI in the form of the Public Warrants which represent financial instruments issued to former stockholders of Tiberius) in order to determine gain or loss on acquisition on 17 March 2020 (the valuation date).
In order to assess the appropriateness of using the closing quoted market price of Tiberius common stock on Nasdaq as a representative of the fair value of the common shares on the valuation date, management has performed liquidity assessment of Tiberius stock prior to the Business Combination from 11 March 2020 (being the last date of redemption rights available to Tiberius shareholders) until the valuation date.
Management does not consider the quoted Tiberius price to be an appropriate representation of fair value based on the illiquidity observed in the quoted price over the period.
Instead, management has appointed an independent third-party valuation specialist to perform a valuation using a market approach to estimate the fair value of equity instruments issued to Tiberius’s stockholders. Accordingly, as an alternative valuation technique, IGI Common Shares (“Common Shares”) were valued using a market multiples approach, namely ‘Price- To- Book ratio’ multiples benchmarked against ‘Return on Equity’ and consequentially corroborated using ‘Price -To- Earnings’ multiples of each comparable company.
For the shares that are subject to one-year transfer restriction, fair value is determined after applying a lock-in discount to the fair value determined for the common shares.
For purposes of determining the fair value of the Earnout Shares, a ‘Monte Carlo’ simulation approach was adopted to address the uncertainty of the time at which the shares will vest. In addition, this approach considers the share price as at the closing date, the threshold price, expected volatility (estimated using historical share price movements of comparable companies), expected dividend yield, the risk-free rate, and the earnout period.
Based on the above, the following table summarizes the fair value of the equity instruments issued to Tiberius stockholders at the close of the Business Combination based on a market approach valuation:
| Equity Instruments | No. of shares/warrants | Fair value per share/warrant | Fair value | |||||||||
| USD | USD ’000 | |||||||||||
| Common shares | ||||||||||||
| Vested Founder shares subject to a one year lock-up restriction post Business Combination closing date | ||||||||||||
| Unvested Tiberius Founder shares | ||||||||||||
| Total Value of Consideration | ||||||||||||
31
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
19. BUSINESS COMBINATION (continued)
Under IFRS 2, the transaction was measured at the fair value of the common shares deemed to have been issued by IGI for the ownership interest in the Company to be the same as if the transaction had taken the legal form of IGI acquiring 100% of Tiberius. The difference between the fair value equity instruments (common shares) “Value of Consideration” issued by IGI to Tiberius and the fair value of the later identifiable net assets acquired (representing net cash received by IGI and its former shareholders net liabilities assumed by IGI in the form of the Public Warrants which represent financial instruments issued to former stockholders of Tiberius) represents a bargain purchase. However, since the transaction is accounted for under IFRS 2 and the outcome of fair value measurement represents a ‘bargain’ and not an ‘expense’, there is no listing expense to be recognized for the services received by IGI in connection with the transaction.
Using the fair valuation of the Common Shares (discussed above) as an input, the Public Warrants were valued as ‘American-style’ call options using a binomial tree approach on the valuation date.
The details of Tiberius net assets acquired are shown below:
| Description | USD ’000 | |||
| Cash proceeds received | ||||
| Less: liabilities assumed in the form of the Public Warrants ( | ( | ) | ||
| Net assets acquired | ||||
The following table illustrates the difference between the total Value of Consideration and net assets acquired at the closing date of the Business Combination.
| Description | USD ’000 | |||
| Value of Consideration | ||||
| Less: net assets acquired | ( | ) | ||
| Bargain | ( | ) | ||
Listing Related Expenses
During the period ended 30 June 2020, the Group
incurred listing expenses in the amount of USD
32
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2021
20. ACQUISITION OF A SUBSIDIARY
Following the United Kingdom’s (“UK”) decision to withdraw from the European Union (“EU”) (“Brexit”), the U.K. began a process of “onshoring” EU legislation whereby the UK replicated EU law in UK legislation and regulation and then amended it so that it would be operationally effective following the end of the Brexit transition period on December 31, 2020. As an automatic consequence of the UK’s departure from the EU’s single market, passporting rights to and from the UK ended at the end of the transition period. Passporting is the exercise of the right available to a firm authorised in one European Economic Area (“EEA”) member state to carry on certain activities covered by an EU single market directive in another EEA member state, on the basis of its home state authorisation. For firms based in the UK, this means the loss of access to EU markets. As of the end of the transition period, the Group’s subsidiary in UK has lost its passporting rights in the EU, such that it can no longer write insurance business in EEA countries under the “freedom of services” regime or write insurance business through a place of business in an EEA member state under the “freedom of establishment” regime using the rights contained in the European Council’s Solvency II Directive.
As a result, and in order for the Group to continue
write insurance business in the EU, the Group acquired
The acquisition agreement of R&Q Epsilon Insurance
Company SE was fully executed on 25 June 2021 (the “Acquisition Date”) for a purchase consideration of USD
The Group accounted for the acquisition of R&Q Epsilon under IFRS 3 “Business Combinations”.
Subsequently, on 13 July 2021, the Malta Financial Services Authority (“MFSA”) authorised IGIE to write insurance and reinsurance business.
21. subsequent events
There have been no material events between 30 June 2021 and the date of this report which are required to be disclosed.
33