Exhibit 99.1
INTERNATIONAL GENERAL INSURANCE HOLDINGS LTD.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
30 June 2022 (UNAUDITED)
1
International General Insurance Holdings Ltd.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022 and 31 December 2021
| Notes | 30 June 2022 | 31 December 2021 | ||||||||
| 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 | ||||||||||
| Deferred tax assets | ||||||||||
| 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 | ||||||||||
| Treasury shares | 10 | ( | ) | - | ||||||
| Foreign currency translation reserve | ||||||||||
| Fair value reserve | ( | ) | ||||||||
| Retained earnings | ||||||||||
| TOTAL EQUITY | ||||||||||
| TOTAL EQUITY AND LIABILITIES | ||||||||||
The attached notes from 1 to 20 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 2022 and 2021 (Unaudited)
| Notes | For the six months ended 30 June | |||||||||
| 2022 | 2021 | |||||||||
| USD ’000 | USD ’000 | |||||||||
| 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 (loss) profit from associates | ( | ) | ||||||||
| Impairment loss on insurance receivables | ( | ) | ( | ) | ||||||
| Other revenues | ||||||||||
| Other expenses | ( | ) | ( | ) | ||||||
| Change in fair value of derivative financial liability | 9 | ( | ) | |||||||
| Loss on foreign exchange | ( | ) | ( | ) | ||||||
| Profit before tax | ||||||||||
| Income tax | ( | ) | ||||||||
| Profit for the period | ||||||||||
Earnings
per share | 15 | |||||||||
The attached notes from 1 to 20 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 2022 and 2021 (Unaudited)
| For the six months ended 30 June | ||||||||
| 2022 | 2021 | |||||||
| USD ’000 | USD ’000 | |||||||
| 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 | ( | ) | ||||||
| Realized gain on sale of equities at fair value through other comprehensive income | ||||||||
| Other comprehensive loss for the period | ( | ) | ( | ) | ||||
| Total comprehensive income for the period | ||||||||
The attached notes from 1 to 20 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 2022 and 2021 (Unaudited)
| Notes | For the six months ended 30 June | |||||||||
| 2022 | 2021 | |||||||||
| USD ’000 | USD ’000 | |||||||||
| Operating Activities | ||||||||||
| Profit for the period before tax | ||||||||||
| Adjustments for: | ||||||||||
| Impairment loss on insurance receivables | ||||||||||
| Gain (loss) on sale of premises and equipment | ( | ) | ||||||||
| Depreciation | 8 (a) | |||||||||
| Amortization | 8 (b) | |||||||||
| Net share of loss (profit) from associates | 5 | ( | ) | |||||||
| Lease interest expense | 8 (a) | |||||||||
| Realized loss on sale of bonds at FVTOCI | 13 | - | ||||||||
| Realized loss (gain) on sale of financial assets at FVTPL | 13 | ( | ) | |||||||
| Realized loss on sale of investment properties | 13 | |||||||||
| Fair value loss on investment properties | 13 | |||||||||
| Expected credit loss on financial assets | 13 | |||||||||
| Loss (gain) on revaluation of financial assets at FVTPL | 13 | ( | ) | |||||||
| Interest income | 13 | ( | ) | ( | ) | |||||
| Share-based payment expense | 11 | |||||||||
| Change in fair value of derivative financial liability | ( | ) | ||||||||
| Net foreign exchange differences | ||||||||||
| 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 | ( | ) | ( | ) | ||||||
| Interest received | ||||||||||
| 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 (used in) from operating activities | ( | ) | ||||||||
| Investing Activities | ||||||||||
| Acquisition of a subsidiary, net of cash acquired | 19 | - | ( | ) | ||||||
| Proceeds from sale of premises and equipment | - | |||||||||
| Purchase of premises and equipment | 8 (a) | ( | ) | ( | ) | |||||
| Purchase of intangible assets | 8 (b) | ( | ) | ( | ) | |||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||
| Financing Activities | ||||||||||
| Dividends paid | 12 | ( | ) | ( | ) | |||||
| Treasury shares | 10 | ( | ) | |||||||
| Lease liabilities payments | ( | ) | ( | ) | ||||||
| Net cash used in 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 20 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 2022 and 2021 (Unaudited)
Common shares at par value | Share premium | 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 | ||||||||||||||||||||||
| As at 1 January 2021 | ( | ) | ||||||||||||||||||||||||||
| Profit for the period | ||||||||||||||||||||||||||||
| Other comprehensive income | ( | ) | ( | ) | ||||||||||||||||||||||||
| Total comprehensive income | ( | ) | ||||||||||||||||||||||||||
| Issuance of restricted share awards (note 11) | - | |||||||||||||||||||||||||||
| Cash dividends (note 12) | ( | ) | ( | ) | ||||||||||||||||||||||||
| As at 30 June 2021 | ( | ) | ||||||||||||||||||||||||||
| As at 1 January 2022 | ||||||||||||||||||||||||||||
| Profit for the period | ||||||||||||||||||||||||||||
| Other comprehensive income | ( | ) | ( | ) | ||||||||||||||||||||||||
| Total comprehensive income | ( | ) | ||||||||||||||||||||||||||
| Issuance of restricted share awards (note 11) | ||||||||||||||||||||||||||||
| Purchase of treasury shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Cash dividends (note 12) | ( | ) | ( | ) | ||||||||||||||||||||||||
| As at 30 June 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
The attached notes from 1 to 20 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 2022
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 was accounted for as a continuation of IGI. Under this method of accounting, while the Company was the legal acquirer of both IGI and Tiberius, IGI had 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 did 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 was not within the scope of IFRS 3 and was 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 were those of IGI from an accounting point of view.
The Company and its subsidiaries (together “the Group”) operate in the Bermuda, United Kingdom, Jordan, Morocco, Malaysia, Malta, 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 XXXX August 2022.
2. BASIS OF PREPARATION
The interim condensed consolidated financial statements for the six months ended 30 June 2022 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 2021. In addition, results for the six months ended 30 June 2022 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2022.
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 2022
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 2022. 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.
8
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
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 2022 | 31 December 2021 | |||||||||||
| 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 | % | % | ||||||||||
| * |
9
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
2. BASIS OF PREPARATION (continued)
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 2021.
There are no new standards or amendments effective in 2022 that have a material impact on the Group’s interim condensed consolidated financial statements.
3. CASH AT BANKS
(a) CASH AND CASH EQUIVALENTS
30 June 2022 | 31 December 2021 | |||||||
| USD ’000 | USD ’000 | |||||||
| Cash and bank balances* | ||||||||
| Deposits with original maturities of three months or less | ||||||||
| * |
(b) TERM DEPOSITS
30 June 2022 | 31 December 2021 | |||||||
| 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
10
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
| 30 June 2022 | ||||||||||||||||
| 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 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 | ( | ) | ( | ) | ||||||||||||
| * | The Group has an investment in an unquoted bond denominated in JOD (USD pegged currency) issued by ’Specialized Investment Compound Co.
This bond is backed up by collateral in the form of real estate properties. However, the Group management has provided USD |
| ** | The Group has two unquoted equity investments under level 3 designated at fair value through OCI valued at USD
As at 30 June 2022 and 31 December 2021, the Group has measured the fair value of the unquoted investment valued at USD |
There are no active markets for these investments.
11
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
4. INVESTMENTS (continued)
The movement on the expected credit losses and impairment provision for the bonds at amortized cost is as follows:
30 June 2022 | 31 December 2021 | |||||||
| USD ’000 | USD ’000 | |||||||
| Opening balance | ||||||||
| (Release) addition of provision for investment held at amortized cost | ( | ) | ||||||
| Ending balance | ||||||||
The addition of allowance for bonds at FVTOCI
for the period ended 30 June 2022 of USD
The table below shows the sensitivity of the fair value of Level 3 financial assets as at 30 June 2022 and 30 June 2021:
| % | Positive impact | Negative impact | Valuation variables | |||||||||
| USD ’000 | USD ’000 | |||||||||||
| 30 June 2022 | ( | ) | ||||||||||
| 30 June 2021 | ( | ) | ||||||||||
| *** | As at 30 June 2021, the fair value measurement of the unquoted equity investment valued at USD |
5. INVESTMENTS IN ASSOCIATES
The Group holds
| Country of incorporation | Ownership | |||||||||
30 June 2022 | 31 December 2021 | |||||||||
| Star Rock SAL Lebanon | % | % | ||||||||
| Sina SAL Lebanon | % | % | ||||||||
| Silver Rock SAL Lebanon | % | % | ||||||||
| Golden Rock SAL Lebanon | % | % | ||||||||
12
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
5. INVESTMENTS IN ASSOCIATES (continued)
Movement on investments in associates is as follows:
30 June 2022 | 31 December 2021 | |||||||
| USD ’000 | USD ’000 | |||||||
| Opening balance | ||||||||
| Opening balance adjustments for hyperinflation and effect of movements in exchange rates recognised in other comprehensive income | ||||||||
| Adjusted opening balance | ||||||||
| Share of associated companies’ financial results | ( | ) | ( | ) | ||||
| Investment properties fair value adjustment | ( | ) | ||||||
| Share of loss from associates | ( | ) | ( | ) | ||||
| Ending balance | ||||||||
The inflation in Lebanon has increased significantly in prior years, and the underlying quantitative and qualitative indicators following the deteriorating economic conditions and currency controls support the conclusion that Lebanon is a hyperinflationary economy.
Accordingly, for the purpose of the Group’s interim condensed consolidated financial statements, the associates’ financial statements (which are based on historical cost approach, except for the investment properties which are measured at fair value) have been adjusted to be expressed in terms of the measuring unit current at the end of the reporting period by applying a general price index.
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.
The real estate market in Lebanon has changed significantly since the onset of the financial crisis that affected the country. Due to the relatively limited information available under the prevailing market conditions, and as a result of artificial demand created by investors outside the professional real estate development industry, who primarily aim to divest from cash assets into more secure holdings, prices found on the market are uncertain. Furthermore, since the majority of property owners are only accepting payments in US Dollars and not in local Lebanese currency, demand for commercial buildings has dropped considerably. Accordingly, prices found on the market at 30 June 2022, including achieved sales prices, are only indicative and may not hold if the market were to be corrected.
All the investment properties generated rental income during the current year and the prior years, except for Sina SAL which did not generate rental income during the six months ended 30 June 2022.
13
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
5. INVESTMENTS IN ASSOCIATES (continued)
The sensitivity of the Group’s interim condensed consolidated statement of income for the six months periods ended 30 June 2022 and 2021 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 change in price per square meter | ||||||||||
| % | Increase | Decrease | ||||||||
| USD ’000 | USD ’000 | |||||||||
| 30 June 2022 | ( | ) | ||||||||
| 30 June 2021 | ( | ) | ||||||||
6. OUTSTANDING CLAIMS
Movement in outstanding claims
| 30 June 2022 | 31 December 2021 | |||||||||||||||||||||||
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 2022 | ||||||||||||
| Commercial building | Lands* | Total | ||||||||||
| USD ’000 | USD ’000 | USD ’000 | ||||||||||
| Opening balance | ||||||||||||
| Additions | ||||||||||||
| Sale of investment properties | ( | ) | ( | ) | ||||||||
| Fair value adjustment | ( | ) | ( | ) | ( | ) | ||||||
| Ending balance | ||||||||||||
14
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
7. INVESTMENT PROPERTIES (continued)
| 31 December 2021 | ||||||||||||
| Commercial building | Lands* | Total | ||||||||||
| USD ’000 | USD ’000 | USD ’000 | ||||||||||
| Opening balance | ||||||||||||
| Additions | ||||||||||||
| Sale of investment properties | ( | ) | ( | ) | ||||||||
| Transfer to property, premises and equipment | ( | ) | ( | ) | ||||||||
| Fair value adjustment | ( | ) | ( | ) | ( | ) | ||||||
| Ending balance | ||||||||||||
| * |
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 2022 and 2021 to the change in the price used for the valuation of the investment properties was as follows:
| Impact on interim condensed consolidated statement of income for the change in price per square meter | ||||||||||||||
| % | Average price per square meter | Increase | Decrease | |||||||||||
| USD | USD ’000 | USD ’000 | ||||||||||||
| Commercial building | ||||||||||||||
| 30 June 2022 | ( | ) | ||||||||||||
| 30 June 2021 | ( | ) | ||||||||||||
15
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
7. INVESTMENT PROPERTIES (continued)
| Impact on interim condensed consolidated statement of income for the change in price per square meter | ||||||||||||||
| % | Average price per square meter | Increase | Decrease | |||||||||||
| USD | USD ’000 | USD ’000 | ||||||||||||
| Lands | ||||||||||||||
| 30 June 2022 | ( | ) | ||||||||||||
| 30 June 2021 | ( | ) | ||||||||||||
8 (a). PROPERTY, PREMISES AND EQUIPMENT
The additions to the property and equipment during
the six-months period ended 30 June 2022 were USD
Pursuant to IFRS 16 ‘Lease’, the Group
has recognized a total amount of USD
8 (b). INTANGIBLE ASSETS
The additions to the intangible assets during the
six-months period ended 30 June 2022 were USD
9. DERIVATIVE FINANCIAL LIABILITY
In connection with the Business Combination completed on 17 March 2020
(see note 1), the Group issued
No Public or Private Warrants (together, the “Warrants”) have been exercised or redeemed since originally issued and until the date of these interim condensed consolidated financial statements.
Upon initial recognition on 17 March 2020, the fair value of the Warrants
has been determined using a combination of a market approach and valuation technique used by an independent third-party valuation specialist.
Based on that, the estimated fair value of the Warrants was USD
The Private Warrants are registered for resale on the Group’s registration statement on Form F-3 and are freely tradable into the public market if holders want to sell them.
The Public Warrants and Private Warrants broadly have similar terms.
16
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
9. DERIVATIVE FINANCIAL LIABILITY (continued)
There are no restrictions on the transfer of the Private Warrants. Accordingly, the Private Warrants are valued using the price as deemed equivalent to the fair value of the Public Warrants listed on Nasdaq.
The table below illustrates the movement on the Warrants during the period / year:
30 June 2022 | 31 December 2021 | |||||||
| USD ’000 | USD ’000 | |||||||
| Fair value of Warrants at the beginning of the period / year | ||||||||
| Change in fair value for the period / year | ( | ) | ( | ) | ||||
| Fair value of Warrants at the end of the period / year | ||||||||
10. EQUITY
Common shares
According to the Company’s Bye-laws, the authorized share capital
of the Group consists of
The following table sets out the number of common shares issued and outstanding as at 30 June 2022 and 31 December 2021:
| 30 June 2022 | ||||||||
| No. of shares | Par value | |||||||
| USD ’000 | ||||||||
| Common shares (par value of USD | ||||||||
| Earnout shares* (par value of USD | ||||||||
| Restricted share awards (par value of USD | ||||||||
| Common shares issued | ||||||||
| 31 December 2021 | ||||||||
| No. of shares | Par value | |||||||
| USD ’000 | ||||||||
| Common shares (par value of USD | ||||||||
| Earnout shares* (par value of USD | ||||||||
| Restricted share awards (par value of USD | ||||||||
| Common shares issued and outstanding | ||||||||
| * | The earnout shares are subject to vesting at stock prices ranges from USD |
Treasury shares
On 23 May 2022, the Group announced that the Board of Directors has approved a repurchase authorization of up to 5 million of its issued and outstanding common shares. This authorization, which does not have an expiration date, replaced the Group’s prior authorization of an aggregate consideration of up to USD 5,000 thousand, which was terminated. As at 30 June 2022, the Group repurchased 15,665 shares with a cost of USD 118 thousand.
17
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
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 share awards (“Restricted Share 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”). |
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 2022 | 31 December 2021 | |||||||
| 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 2022 and 31 December 2021 attributed to each vesting tranche.
Number of earnout shares to be considered for accounting purposes at period / year end for each tranche are as follow:
| Earn out shares | ||||||||||||||||||||||
| Grant | Days from grant date | From first vesting (tranche 1) | From second vesting (tranche 2) | From third vesting (tranche 3) | Total | |||||||||||||||||
| 30 September 2020 grant | - | ( | ) | |||||||||||||||||||
| 16 February 2021 grant | ||||||||||||||||||||||
| 30 June 2022 | 31 March 2021 grant | |||||||||||||||||||||
| 9 February 2022 grant | ||||||||||||||||||||||
| 24 March 2022 grant | ||||||||||||||||||||||
| Total | ||||||||||||||||||||||
| 7 October 2020 grant | ||||||||||||||||||||||
| 31 December 2021 | 16 February 2021 grant | |||||||||||||||||||||
| 31 March 2021 grant | ||||||||||||||||||||||
| Total | ||||||||||||||||||||||
Accordingly, total earnout shares of
18
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
12. CASH DIVIDENDS
Cash dividends declared and paid:
The Board of Directors resolved to pay the following dividends for the periods ended 30 June 2022 and 2021:
| - | On 19 May 2022: USD |
| - | On 24 March 2022: USD |
| - | On 25 March 2021: USD |
There are no cash dividends declared but not paid as at 30 June 2022 and 31 December 2021.
13. Net INVESTMENT InCOME
For the six months ended 30 June | ||||||||
| 2022 | 2021 | |||||||
| 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 (loss) gain on sale of equities and mutual funds at FVTPL | ( | ) | ||||||
| Unrealized gains and losses on investments | ||||||||
| Unrealized (loss) gain 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 | ( | ) | ( | ) | ||||
| Reversal of expected credit loss on financial assets at amortized cost | - | |||||||
| Investments custodian fees and other investments expenses | ( | ) | ( | ) | ||||
19
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
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 2022, consisting of salaries and benefits was USD |
| ▪ | The Group has paid aircraft management fees and chartering revenues
commission in the amount of USD |
| ▪ | Included within the investment properties (see note 7) are lands with
a total amount of USD |
| ▪ | In connection with the Business Combination, the Group issued |
| ▪ | On 24 March 2022, the Board of Directors approved the grant of |
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 2022, the earnout shares and restricted share 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.
20
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
15. EaRNINGS PER SHARE (continued)
The following table shows the calculation of the basic and diluted earnings per share for the six months ended 30 June 2022 and 2021.
| For the six months ended 30 June | ||||||||
| 2022 | 2021 | |||||||
| Profit for the period (USD ’000) | ||||||||
| Less: profit attributable to the earnout shares (USD ’000) | ||||||||
| Less: profit attributable to the restricted share awards (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 2022, the Group is contingently liable for the following:
| ▪ | Letters of Credit amounting to USD |
| ▪ | Letter of Guarantee amounting to USD |
21
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
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 2022 | ||||||||||||||||
| 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 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 | - | |||||||||||||||
Quoted bonds at fair value through other comprehensive
income amounting to USD
As at 31 December 2021, the management has refined
the criteria for financial assets being allocated to level 1, accordingly, USD
As at 30 June 2022 and 31 December 2021, derivative financial liability was categorized at level 2 due to lack of sufficient trading volume at period and year end, respectively.
There were no transfers into or out of level 3 during the six months period ended 30 June 2022 and year ended 31 December 2021.
22
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
17. Fair value (continued)
| * | Reconciliation of fair value of the unquoted equities under level 3 fair value hierarchy is as follows: |
| 30 June 2022 | 31 December 2021 | |||||||
| USD ’000 | USD ’000 | |||||||
| Balance at the beginning of the period / year | ||||||||
| Total gains recognized in OCI | ||||||||
| Balance at the end of the period / year | ||||||||
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.
23
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
18. Segment Reporting (continued)
| a) | Segment disclosure for the Group’s consolidated operations is as follows: |
| For the period ended 30 June 2022 | ||||||||||||||||||||||||
| 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 | ( | ) | ||||||||||||||||||||||
24
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
18. Segment Reporting (continued)
| 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 loss 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 | ( | ) | ||||||||||||||||||||||
| b) | Non–current operating assets information by geography as at 30 June 2022 and 31 December 2021 are as follows: |
30 June 2022 | 31 December 2021 | |||||||
| USD ’000 | USD ’000 | |||||||
| Middle East | ||||||||
| North Africa | ||||||||
| UK | ||||||||
| Asia | ||||||||
| Europe | ||||||||
| North America | ||||||||
Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, investment properties and intangible assets.
25
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
19. 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.
In response to Brexit, the Group developed a contingency plan to ensure that it will be able to continue to provide insurance services throughout Europe despite Brexit. To that end, the Group submitted an application and scheme of operations to the Malta Financial Services Authority in November 2020. The application can be used as a change of control application or a full new licensing application.
In continuation to the above, the Group acquired
The strategy to purchase R&Q Epsilon, as opposed to incorporating a new subsidiary from afresh, was based on operational factors. R&Q Epsilon already had an operational UK based bank account and, given the requirement to use the Xchanging payment platform for broker-based business (especially where the Group is co-ensuring the European risks on global business), it was necessary for the Group to have an account for IGI Europe with a bank that is part of the LIPS (LPC Irrevocable Payment Scheme).
The acquisition agreement of R&Q Epsilon Insurance
Company SE (former company) 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”.
The book and fair values of the identifiable assets and liabilities of International General Insurance Company (Europe) SE as at the date of acquisition were:
| Book value | Fair value recognized on acquisition | |||||||
| USD ’000 | USD ’000 | |||||||
| Assets | ||||||||
| Insurance receivables and other assets | ||||||||
| Bank Balances | ||||||||
| Liabilities | ||||||||
| Insurance payables and other liabilities | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
| Total identifiable net assets at fair value | ||||||||
| Goodwill arising on acquisition | ||||||||
| Purchase consideration transferred | ||||||||
26
International General Insurance Holdings Ltd.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 June 2022
19. ACQUISITION OF A SUBSIDIARY (continued)
The movement on the goodwill during the year is as follows
31 December 2021 | ||||
| USD ’000 | ||||
| Balance at the beginning of the year | ||||
| Goodwill arising from acquisition of a subsidiary | ||||
| Impairment loss | ( | ) | ||
| Balance at the end of the year | ||||
Goodwill arising on acquisition of former company was fully impaired since the regulatory approval to write business was granted solely on the strength of IGI Europe’s application and business plan submitted to Malta Financial Services Authority.
From the date of acquisition until 31 December 2021, International General Insurance Company (Europe) SE contributed USD 9,768 thousand of gross written premiums and USD 1,181 thousand of net loss to profit before tax of the Group.
Analysis of cash flows on acquisition:
| USD ’000 | ||||
| Net cash acquired with the subsidiary | ||||
| Cash paid | ( | ) | ||
| Net cash flow on acquisition | ( | ) | ||
On 13 July 2021, the Malta Financial Services Authority (“MFSA”) authorised IGI Europe to write insurance and reinsurance business.
As at 30 June 2021 (the end of the first reporting period), the Group had provisionally accounted for the acquisition of R&Q Epsilon and accordingly determined that the fair value of the net assets and liabilities was approximately equivalent to the book value. Nonetheless, in accordance with the one-year measurement period permitted under IFRS 3, the Group had reassessed the provisional carrying amount of net identified asset and liabilities of R&Q Epsilon at 31 December 2021 and accordingly reflected the new information obtained about facts and circumstances that were in existence at the Acquisition Date as illustrated above.
20. subsequent events
There have been no material events between 30 June 2022 and the date of this report which are required to be disclosed.
27