MENA And Asia-Pacific Expansion Will Create Lasting Market Opportunity

Key Takeaways

• Expansion into infrastructure, engineering, and emerging markets is diversifying the premium base and driving sustainable revenue growth.
  
• Strong underwriting discipline, portfolio management, and digital initiatives are supporting superior margins, efficient capital use, and earnings stability.
  
• Heightened competition, currency volatility, and strategic portfolio contractions threaten revenue growth and profitability, while increased reinsurance use may further constrain income in a soft market.

Catalysts

International General Insurance Holdings Ltd.

• IGI is leveraging opportunities in global infrastructure and engineering projects, particularly in construction and marine lines, which are seeing robust activity across its key geographies; this is poised to boost gross written premiums and sustain revenue growth over the long term.
  
• The company's ongoing expansion into emerging markets such as MENA, Asia-Pacific, and Europe-supported by local talent and presence-is increasing insurance penetration and diversifying its premium base, providing significant headroom for future top-line revenue and earnings growth.
  
• Prudent underwriting discipline and proactive cycle/portfolio management-evidenced by actions such as exiting unprofitable professional indemnity lines-are likely to maintain IGI's low loss ratios and support superior underwriting margins, positively impacting net margins and earnings stability.
  
• The strategic focus on growing and diversifying the reinsurance segment, especially in higher-margin lines like marine and energy, is improving capital efficiency and producing smoother, more resilient revenue streams, which should enhance return on equity (ROE) and earnings consistency.
  
• IGI's digital expansion initiatives and pursuit of enhanced distribution capabilities (including new digital solutions and MGA partnerships) are set to accelerate premium growth and scale, supporting both revenue and operating margin improvements over time.

International General Insurance Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming International General Insurance Holdings's revenue will grow by 7.8% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 23.3% today to 21.8% in 3 years time.
• Analysts expect earnings to reach $146.2 million (and earnings per share of $3.29) by about August 2028, up from $124.7 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.6x on those 2028 earnings, up from 8.4x today. This future PE is lower than the current PE for the US Insurance industry at 14.4x.
• Analysts expect the number of shares outstanding to decline by 2.49% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.7%, as per the Simply Wall St company report.

International General Insurance Holdings Future Earnings Per Share Growth

Risks

• Persistent competitive pressures in key segments-including short-tail and long-tail lines-are resulting in decreased gross premiums (down 8.7% in Q2) and could continue to erode top-line revenue growth as rivals, including large multinational carriers and MGAs, aggressively pursue market share and drive down pricing and margins.
  
• Pronounced foreign currency volatility, especially the impact of GBP/USD movements on the long-tail segment-where nearly half of reserves are held and most business is transacted in pounds-has recently distorted underwriting results; ongoing currency mismatches and revaluations may increase earnings unpredictability and compress net margins.
  
• Contraction and non-renewal of underperforming books, such as the professional indemnity portfolio, while positive for profitability discipline, will materially reduce gross premiums written (e.g., $60 million reduction), potentially impacting scale, revenue growth, and longer-term earnings generation unless offset by new profitable business.
  
• Continued softening or rate deterioration in long-tail lines and growing rate competition in property and energy lines threaten underwriting margins and profitability, especially if IGI cannot consistently find offsetting growth in healthier specialist or emerging lines.
  
• Increasing outwards reinsurance purchases and higher use of quota share arrangements (net/gross retention down from 73% to 64% YoY) may result in a smaller proportion of premiums retained for IGI, reducing net earned premiums and potentially constraining net income growth if the softer market conditions persist.

Valuation

• The analysts have a consensus price target of $32.0 for International General Insurance Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $670.3 million, earnings will come to $146.2 million, and it would be trading on a PE ratio of 11.6x, assuming you use a discount rate of 10.7%.
• Given the current share price of $24.26, the analyst price target of $32.0 is 24.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.