International General Insurance : INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Form 6-K

Published: 2021-10-20 06:41:06 ET IGIC

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

31 December

2020

The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements

International General Insurance Holdings Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the periods ended 30 June 2021 and 2020 (Unaudited)

The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements

International General Insurance Holdings Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the periods ended 30 June 2021 and 2020 (Unaudited)

The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements

International General Insurance Holdings Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the periods ended 30 June 2021 and 2020 (Unaudited)

The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements

International General Insurance Holdings Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the periods ended 30 June 2021 and 2020 (Unaudited)

The attached notes from 1 to 21 form part of these interim condensed consolidated financial statements

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.

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 5% and 9% from the previous year end was recorded against investment properties owned directly in Jordan and through associates in Lebanon, respectively, which is in line with the overall correction seen in the regional commercial real estate valuations post pandemic.

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:

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 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:

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:

30 June

2021

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. The correction of this misstatement resulted in a decrease in equity as at 30 June 2020 by USD 5,863 thousand and increase in liabilities with the same amount.

For the six months ended 30 June 2020, a fair value gain of USD 3,347 thousand was also recognised in the interim condensed consolidated statement of income in the restated interim condensed consolidated financial statements with a consequent increase in the amount of the retained earnings in equity. Basic and diluted earnings per share for the prior period were also restated and the amount of the correction made was an increase of USD 0.07 per share to both basic and diluted earnings per share.

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.

International General Insurance Holdings Ltd.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2021

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

(b) TERM DEPOSITS

30 June

2021

The deposits are denominated in US Dollars and other US Dollars pegged currencies. All deposits earned interest in the range between 0.03%-4.5% (31 December 2020: 0.2%-4.5%) and are held for varying periods between one month to less than 5 years (31 December 2020: between one month to less than 5 years) depending on the immediate cash requirements of the Group.

International General Insurance Holdings Ltd.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2021

4. INVESTMENTS

The movement on the expected credit losses and impairment provision for the bonds at amortized cost is as follows:

30 June

2021

The addition of allowance for bonds at FVTOCI for the period ended 30 June 2021 of USD 32 thousand (note 13) does not change the carrying amount of these investments (which are measured at fair value but gives rise to an equal and opposite gain in OCI).

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 397 thousand to cover any potential impairment in the value of the collateral held against said investment by discounting the expected future cash flows generated from the underlying bond collaterals which mainly represent rental income.

As at 30 June 2021 and 31 December 2020, the Group has measured the fair value of the unquoted investment valued at USD 6,427 thousand (31 December 2020: USD 6,314 thousand) by adopting a market valuation approach namely 'multiples-based valuation' whereby earnings-based multiples of comparable companies were considered for the valuation.

As at 30 June 2021, the Group has measured the fair value of the unquoted investment valued at USD 434 thousand (31 December 2020: USD 434 thousand), by adopting a market valuation approach namely 'multiples-based valuation' whereby earnings-based multiples of comparable companies were considered for the valuation. For the year ended 31 December 2020, the Group has measured the fair value of the unquoted investment by considering an official sale offer received subsequent to year-end, which did not materialize in 2021.

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:

International General Insurance Holdings Ltd.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2021

5. INVESTMENTS IN ASSOCIATES

The Group holds 32.7% equity ownership interest in companies registered in Lebanon as shown below, the investments in associated companies are accounted for using the equity method:

30 June

2021

Movement on investments in associates is as follows:

30 June

2021

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:

International General Insurance Holdings Ltd.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2021

6. OUTSTANDING CLAIMS

Movement in outstanding claims

7. INVESTMENT PROPERTIES

The following table includes summarized information of the Group's investment properties:

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 432 thousand (30 June 2020: USD 1,277 thousand) and recognized a loss of USD 1 thousand (30 June 2020: loss of USD 41 thousand).

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.

8 (a). PROPERTY, PREMISES AND EQUIPMENT

The additions to the property and equipment during the six-months period ended 30 June 2021 were USD 267 thousand (30 June 2020: USD 115 thousand). The depreciation expense for the six-months period ended 30 June 2021 was USD 634 thousand (30 June 2020: USD 632 thousand).

Pursuant to the application of IFRS 16 -Lease, the Group has recognized a total amount of USD 3,101 thousand as a right-of-use assets for the leased offices (31 December 2020: USD 2,914 thousand). During the period ended 30 June 2021, interest expense amounted to USD 91 thousand (30 June 2020: USD 49 thousand) and depreciation expense of USD 565 thousand (30 June 2020: USD 278 thousand) was recognized for the leased assets.

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 1,420 thousand (30 June 2020: USD 6 thousand). The amortization expense for the six-months period ended 30 June 2021 was USD 672 thousand (30 June 2020: USD 213 thousand).

9. DERIVATIVE FINANCIAL LIABILITY

In connection with the Business Combination (note 19), the Group issued 17,250,000 warrants, including (i) 12,750,000 warrants issued to former stockholders of Tiberius (the "Public Warrants") and (ii) 4,500,000 warrants that were issued in exchange for 4,000,000 Tiberius warrants transferred to Wasef Jabsheh and 500,000 Tiberius warrants transferred to Argo Re Ltd., a Bermuda exempted company (the "Private Warrants").

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 9,210 thousand.

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

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 750,000,000 common shares, par value USD 0.01 per share, and 100,000,000 preference shares, par value USD 0.01 per share. As at 31 December 2019 as well as immediately prior to the closing of the Business Combination on 17 March 2020 (the "Closing"), the Company was authorized to issue 1,000 common shares, USD 0.01 par value per share and 1,000 preference shares, USD 0.01 par value per share, and there was one common share issued and outstanding and no preference shares issued and outstanding. As at 17 March 2020, subsequent to the Closing, and as at 31 December 2020, the authorized share capital was increased and there were 48,447,306 common shares issued and outstanding (including 3,012,500 common shares ("Earnout Shares") subject to vesting but which are issued and outstanding for purposes of voting and receipt of dividends), and no preference shares issued and outstanding. All of the issued and outstanding common shares are fully paid.

In connection with the finalization of the purchase price under the Business Combination Agreement, all escrow shares were released from escrow and 8,555 shares were cancelled.

The following table sets out the number of common shares issued and outstanding as at 30 June 2021 and 31 December 2020:

The Earnout Shares are subject to vesting at stock prices ranges from USD 11.50 to USD 15.25. The Earnout Shares are considered outstanding shares and have dividend and voting rights. However, the Earnout Shares are non-transferable by their holders until they vest and, if the Earnout Shares do not vest on or prior to 17 March 2028, they will be cancelled by the Company.

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:

Restricted shares awards ("Restricted Shares Awards");

Performance awards denominated in Common Shares or cash ("Performance Awards");

On 30 September 2020, the Board of Directors approved the grant of 134,500 restricted shares (the "Restricted Shares Awards") to certain participants (designated employees) with the following salient features:

On 16 February 2021, the Board of Directors approved the grant of 180,000 restricted shares to certain participants (designated employees) with the following salient features:

On 31 March 2021, the Board of Directors approved the grant of 132,190 restricted shares to Wasef Jabsheh (designated employee) with the following salient features:

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:

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:

30 June 2021

Accordingly, total earnout shares of 97,593 at 30 June 2021 (31 December 2020: 57,039) are measured at the shares grant date fair value to arrive at expense recognized for the share based payment. For the period ended 30 June 2021, share-based payments expense of USD 779 thousand (30 June 2020: Nil) was recorded in the interim condensed consolidated statement of income with a corresponding credit to common shares and share premium as shown in the interim condensed consolidated statement of changes in equity.

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:

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

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.

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).

No balances from key management personnel of the Group were due as at 30 June 2021 and 31 December 2020.

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.

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 17,250,000 warrants, including (i) 12,750,000 warrants issued to former stockholders of Tiberius and (ii) 4,500,000 warrants that were issued in exchange for 4,000,000 Tiberius warrants transferred to Wasef Jabsheh and 500,000 Tiberius warrants transferred to Argo Re Ltd., a Bermuda exempted company (note 19). The Warrants were not included in the calculation of the diluted earnings per share, as the average market price of ordinary shares during the period has not exceeded the exercise price of the Warrants and therefore their effect would be antidilutive.

The following table shows the calculation of the basic and diluted earnings per share for the six months ended 30 June 2021 and 2020.

16. COMMITMENTS AND CONTINGENCIES

As at 30 June 2021, the Group is contingently liable for the following:

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 5.7 million which the Group believes is due from them (based on figures as at 30 June 2019). As at 31 December 2020, the Group was seeking to recover approximately USD 15.3 million from the reinsurers, plus interest and legal costs. In response, the agent alleged that certain matters were not adequately disclosed and was seeking to void the policies. The Group believes that the allegations were without merit and committed to vigorously defend itself in this matter. Accordingly, no provision for any liability was recorded in the prior year consolidated financial statements as at 31 December 2020. The arbitration hearing was scheduled for April 2021.

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.

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.

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:

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.

International General Insurance Holdings Ltd.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2021

18. Segment Reporting (continued)

International General Insurance Holdings Ltd.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2021

18. Segment Reporting (continued)

30 June 2021

Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, investment properties and intangible assets.

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 80,000 thousand of the transaction consideration was paid in cash to IGI former shareholders and accounted for as an adjustment against share premium in the consolidated statement of changes in equity.

At the closing of the Business Combination, the Company:

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, 1,170,348 shares were transferred to certain former shareholders of IGI.

The following table sets out the number of common shares issued in connection with the Business Combination:

International General Insurance Holdings Ltd.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At 30 June 2021

19. BUSINESS COMBINATION(continued)

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:

Earnout shares subject to vesting at differential price range

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:

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:

The following table illustrates the difference between the total Value of Consideration and net assets acquired at the closing date of the Business Combination.

Listing Related Expenses

During the period ended 30 June 2020, the Group incurred listing expenses in the amount of USD 3,366 thousand which mainly consist of professional fees (legal, accounting, etc.) and other miscellaneous costs that are directly related to the listing transaction.

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 100% of the voting shares of R&Q Epsilon Insurance Company SE ("R&Q Epsilon"), a non-listed company based in Malta engaged in the business of insurance in certain classes of general insurance business. Simultaneously, with the execution of the acquisition agreement, the new subsidiary was renamed International General Insurance Company (Europe) SE ("IGIE").

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 6,200 thousand.

The Group accounted for the acquisition of R&Q Epsilon under IFRS 3 "Business Combinations".

As at the Acquisition Date, the book value of the net assets and liabilities of R&Q Epsilon was USD 6,200 thousand consisting of cash at banks of USD 6,054 and the remaining USD 146 thousand represents deferred tax assets and insurance receivables, net of other payable balances. As at 30 June 2021 (the end of the first reporting period), the Group has 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 will reassess the provisional carrying amount of net identified asset and liabilities of R&Q Epsilon and will accordingly reflect any new information obtained about facts and circumstances that were in existence at the Acquisition Date.

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.

Disclaimer

International General Insurance Holdings Ltd. published this content on 20 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 October 2021 10:40:00 UTC.