# IGI: a 92.2% combined ratio that leans on one quarter of reserve releases IGIC, Nasdaq. Published October 21, 2026. Price as of the October 20, 2026 regular session close. Values in US dollars. ## Verdict: HOLD at $24.81 At $24.81 the shares trade 9.8% above my Base value of $22.59, a downside of 9.0%. International General Insurance (IGI) is a good specialty underwriter with no financial debt, but the price already assumes a return on equity of about 15.4% in the long run, against the 14.0% in my Base. The first half combined ratio of 92.2% hides a second quarter of 95.1%, and the half depends on $30.6 million of favorable reserve development that arrived in the first quarter. Confidence is C and the required margin of safety is 40%, which puts the maximum buy price at $13.55. Hold for holders, watchlist for new money. Third quarter results on November 3 are not in this analysis. - Bear value: $12.04 - Base value: $22.59 - Bull value: $32.33 - Downside to base value: -9.0% - Maximum buy price: $13.55 - Required margin of safety: 40% - Price to reported book value: 1.55 times - Combined ratio, first half 2026: 92.2% - Long-run return implied by the price: 15.4% on equity - Modeled annual return, five years: 8.7% - Business quality: 72/100 - Valuation score: 49/100 - Confidence: 16/25, grade C IGI reported a combined ratio of 92.2% for the first half of 2026. The second quarter on its own was 95.1%, and reserves for earlier years moved the wrong way by $1.7 million. The half year looks better because of the first quarter: $30.6 million of favorable reserve development for the six months, which means about $32.3 million came in the first three months (my arithmetic). A reserve release is real profit, but it is not something you can price in every quarter. At $24.81, the October 20, 2026 regular session close, the shares trade 9.8% above my triangulated Base value of **$22.59**, a downside of 9.0%. The Bear value is $12.04, 51.5% below the price, and the Bull value of $32.33 is 30.3% above it. Confidence is grade C (16/25), the required margin of safety (MOS) is 40%, and the maximum buy price is **$13.55**. The price is a little above Base and far above the buy ceiling, so the verdict is Hold. Valuation route: a Bermuda based specialty insurer with a property and casualty reinsurance unit, valued on common book value and the return that book can sustain, not on free cash flow, because claims reserves and regulated capital decide what can be paid out. Primary method (70% weight): a price to book that follows the return on equity as it recovers to a normal level. Secondary method (30%): a 10 times earnings multiple on normalized earnings after a three-year transition. A reserve stressed net asset test is a downside check and carries no weight. Classification: quality growth, 8 of 12 on the insurance scorecard. ## What IGI is International General Insurance writes specialty insurance and reinsurance: energy, property, marine, political violence and other lines where pricing is by expertise, not by volume. The supplied analysis puts long-tail, short-tail and reinsurance business at 23%, 57% and 20% of first half written premiums. It invests the premiums it holds until claims are paid. At June 30 it had $1,091.7 million of investments and no financial debt, so the leverage in this business is in its insurance liabilities, not its borrowings. The first half was flat on the top line. Gross premiums written were $398.9 million against $394.3 million a year earlier, and net premiums earned were $236.2 million against $227.8 million. Net income to shareholders fell to $42.5 million from $61.4 million, and diluted earnings per share were $0.98 against $1.36. Book value per share was $16.04 at June 30, down from $16.91 at the end of 2025, even though the company earned money, because it returned more capital than it earned. The founder family owned 37.6% at June 30, according to the supplied analysis. The business has a record to look at. Book value per share rose from $8.39 at the end of 2020 to $16.91 at the end of 2025, a compound rate of 15.0% a year. The question is not whether IGI can underwrite. It is how much of the recent return was the cycle: war and catastrophe losses were heavy in the first half (19.0 points of the combined ratio), and reserve releases were generous (13.0 points). ## The latest results | $ million unless stated | Second quarter 2026 | Second quarter 2025 | First half 2026 | First half 2025 | | --- | --- | --- | --- | --- | | Net income | 20.9 | 34.1 | 42.5 | 61.4 | | Diluted earnings per share | $0.49 | $0.77 | $0.98 | $1.36 | | Combined ratio | 95.1% | 90.5% | 92.2% | 92.4% | | Net premiums earned | 125.0 | 115.0 | 236.2 | 227.8 | | Gross premiums written | 201.7 | 187.8 | 398.9 | 394.3 | | Catastrophe and war losses | 23.5 (18.8%) | 10.4 (9.0%) | 44.8 (19.0%) | 38.6 (16.9%) | | Prior-year reserve development | 1.7 unfavorable | 6.3 unfavorable | 30.6 favorable | 19.6 favorable | | Core return on equity, annualized (non-GAAP) | 11.3% | 13.9% | 12.5% | 12.8% | Core return on equity is the company's own measure, and I do not value it. The second quarter is the more honest read of current underwriting: a 95.1% combined ratio with heavy war and catastrophe losses and no reserve cushion. Over the half year, 13.0 points of the ratio came from reserve releases and 19.0 points from catastrophe and war losses, and I treat the two separately below. The company reports third quarter results after the US close on November 3, with a call on November 4 at 9:00 am New York time (3:00 pm in Prague). None of it is in this analysis. ## Which number to value Free cash flow means little for an insurer: operating cash flow rises when premiums are collected before claims are paid, and that cash is held against future claims. I value common shareholders' book value and the return it can earn. The first half bridge in equity, in $ million: 710.1 at the start, plus 42.5 of net income, less 15.0 of other comprehensive loss, plus 4.2 of share plan movements, less 18.2 of buybacks and 54.7 of dividends, equals 668.9. The ending figure, the net income, the buybacks and the dividends I confirmed in the filing. The opening balance and the other two movements come from the supplied analysis and reconcile exactly to the ending figure. The line that matters is the last two. Dividends and buybacks together were $72.9 million against net income of $42.5 million. Part of the dividends were special: the quarterly ordinary rate was 5 cents and then 7.5 cents, which comes to 12.5 cents in the half, while total dividends paid per share were $1.275, so about $1.15 a share was an extra distribution (supplied analysis, not re-read). Returning surplus capital can be right, but it explains why book value fell while the company earned money. The first half underwriting profit also needs care. Segment underwriting income was $67.2 million before $49.0 million of corporate expenses, so the all-in underwriting profit was $18.2 million, a combined ratio of 92.31% on the statement figures against the company's 92.2%. The small difference is a presentation matter I could not fully reconcile. I use the company's ratio, and every forecast ratio below already includes corporate costs, so they are not deducted a second time. ## Shares, book value and capital | Share count, June 30 | Shares | | --- | --- | | Vested common shares | 41,694,029 | | Unvested restricted share awards | 744,532 | | Unvested employee share purchase plan shares | 28,140 | | Valuation share count | 42,466,701 | Equity of $668.9 million divided by 41.69 million vested shares gives the reported $16.04, so the count reconciles. The share bridge itself comes from the supplied analysis. The reported figure leaves out the unvested awards, which carry dividend and voting rights, so I divide by all 42.47 million claims: $15.75 at June 30. Market value at $24.81 is $1,053.6 million on that count. The balance sheet is simple. There is no financial debt. Gross claims reserves were $842.9 million and $239.6 million of that is recoverable from reinsurers, so net reserves are $603.3 million. Cash was $197.2 million, plus $18.9 million of restricted cash. Group eligible capital was $713.1 million against a required $302.8 million at the end of 2025, a ratio of 236%, and the ratings from AM Best and S&P are A with a stable outlook (all from the supplied analysis, and year-end, not June or October). I do not add cash or investments on top of book: they are what the book already contains. My valuation date is October 21, not June 30, so I move book forward. Annualized first half earnings of $85.05 million for 113 days is $26.3 million, less the $3.2 million September dividend, which gives estimated equity of **$692.1 million**, or **$16.30** a share. That is an estimate and not an October balance sheet: I assume no buybacks, no change in unrealized gains and no reserve surprises since June. A $20 million adverse change would lower the Base to $22.33. The company bought back 750,534 shares in the first half at an average of $24.30, about 1.5 times the $16.04 book value at the time. That can be a good use of money only if the shares were worth more than that. It reduces book per share by itself, and I give it no credit as accretion. ## What the business can earn in a normal year The first step is to strip the first half down and rebuild it. Start with the 92.2% reported ratio, take out the 13.0 points of reserve releases and add back the 19.0 points of catastrophe and war losses, and you get an accident-year ratio of 86.2% before large losses are budgeted. Then I put back a catastrophe budget and part of the releases. | Combined ratio step | Points | | --- | --- | | First half reported | 92.2% | | Remove favorable reserve releases | +13.0 | | Remove observed catastrophe and war losses | -19.0 | | Current accident-year ratio, rounded | 86.2% | | Add a recurring catastrophe budget (my estimate) | +9.0 | | Less a normal reserve release (my estimate) | -5.7 | | Base normalized all-in combined ratio, reached in year 3 | 89.5% | The 86.2% is a diagnostic built from rounded figures and still contains ordinary large losses. It is not a forecast. The Base keeps a catastrophe load of 9.0 points and assumes releases fall to 5.7 points, so it never removes every bad year while keeping every good one. Long-tail lines were slightly adverse in the first half, and the releases came mostly from other lines (supplied analysis). | Years 1, 2 and 3, $ million | Bear | Base | Bull | | --- | --- | --- | --- | | Net premiums earned | 450 / 455 / 460 | 480 / 500 / 525 | 510 / 540 / 580 | | All-in combined ratio | 100% / 98% / 96% | 92% / 90% / 89.5% | 88% / 86% / 85% | | Recurring investment income | 53.0 / 53.5 / 54.0 | 57 / 59 / 62 | 60 / 64 / 68 | | Net other expense | 6.0 / 6.0 / 6.0 | 5.0 / 5.2 / 5.46 | 5.0 / 5.3 / 5.62 | | Net income after 5% tax | 44.65 / 53.77 / 63.08 | 85.88 / 98.61 / 106.08 | 110.39 / 127.59 / 141.91 | Base year 3 is 525 x (1 - 89.5%) + 62 - 5.46, taxed at 5%, or $106.08 million: $2.50 per share, a 13.9% return on the book at that point. Recurring investment income was $28.6 million in the first half, and I assume no gains from marks. The tax rate is my estimate and above the very low reported rate; I test 10% below. All the figures are my estimates and not guidance. ## The primary valuation: price to book with a return transition The method follows book value for five years. Each year, earnings equal the return on equity times opening book. Part is retained, 5% of opening book, to support growth in premiums and investments, and the rest is what could be paid out. After year five the business earns a normal return forever, and the exit price to book is (terminal return - growth) / (cost of equity - growth). In my Base the terminal return is 14%, growth is 3% and the cost of equity is 11%, which is my assumption and not a universal hurdle. The exit multiple is 1.375 times book. | Base case year | Opening equity | Net income | Return on equity | Retained | Payout capacity | Per share | Closing book per share | | --- | --- | --- | --- | --- | --- | --- | --- | | 1 | 692.09 | 85.88 | 12.4% | 34.60 | 51.28 | $1.21 | $17.11 | | 2 | 726.69 | 98.61 | 13.6% | 36.33 | 62.28 | $1.47 | $17.97 | | 3 | 763.03 | 106.08 | 13.9% | 38.15 | 67.93 | $1.60 | $18.87 | | 4 | 801.18 | 111.39 | 13.9% | 40.06 | 71.33 | $1.68 | $19.81 | | 5 | 841.24 | 116.96 | 13.9% | 42.06 | 74.89 | $1.76 | $20.80 | The exit price at the end of year five, October 2031, is $28.60 (1.375 times $20.80, rounded), a future figure and not today's value. Discounted at 11%, the payouts are worth $5.60 and the exit $16.97, so the primary Base is **$22.57**. The payouts are what the capital could support, not a promised dividend. The exit carries 75.2% of the value, which is the main weakness of this method: most of what you pay for is the return IGI earns after the fifth year. Rebuilding the same answer as opening book plus discounted excess returns gives the same value. The Bear path (reserve strengthening of 5% on net claims reserves at the start, which is $30.17 million or $0.71 a share, weak pricing, terminal return 9.2%) is worth $11.95. The Bull path (terminal return 17%, growth 3.5%) is worth $31.49. ## The secondary valuation: 10 times normal earnings The second method takes the earnings path above. At the end of year three I put 10 times the following year's earnings per share of $2.62, which is $26.23, add the first three years of payout capacity and discount everything at 11%. The result is **$22.63**. A multiple of 10 assumes modest growth, a positive underwriting margin and no return to peak returns. It is my choice and not a peer median: I use 9 times for the Bear and 11.5 times for the Bull. This is not an independent check. It uses the same view of combined ratios, investment income and capital retention as the primary method, so when the two agree at $22.57 and $22.63, it shows my assumptions are consistent and not that they are right. For a check that needs no forecast of returns, I use net assets. Estimated book of $16.30 a share, less a 5% strengthening of net claims reserves, is **$15.59**. A 10% strengthening gives $14.88. There is no tax shield and no credit for the franchise, so this tests asset coverage, not what the business is worth. It is not a floor under the share price. ## A price check against history | Year end | Price to book | | --- | --- | | 2021 | 0.99 | | 2022 | 0.96 | | 2023 | 1.01 | | 2024 | 1.61 | | 2025 | 1.50 | These ratios come from a data aggregator and the denominators may differ from mine, so they are context. The median is 1.01 and the average of the last two years is 1.555. On my estimated book of $16.30 those would be $16.46 and $25.34, which shows why history is not a method: the market only started paying 1.5 times book after the 2023 results. Today's price is 1.55 times reported June book, 1.58 times the full-claim book and 1.52 times my estimated current book. History gets no weight. Book value grew 15.0% a year from 2020 to 2025. The company's own tangible book plus dividends chart rises from $10.20 to $21.86 over the same window, 16.5% a year, but I did not rebuild its convention. The growth-adjusted check is conditional. A third-party forecast page, last updated October 14, shows adjusted earnings per share of $2.32 for 2026 and $3.04 for 2027, growth of 31.0%, a forward multiple of 8.16 and a PEG of 0.26. I do not use it: it is calendar-year, it appears to rest on one analyst, its definition of earnings differs from mine, and a low PEG after a year of heavy war losses mostly reflects the rebound, not durable growth. For an insurer, free cash flow growth does not apply. My own equivalent, earnings per share in my Base, grows 8.0% a year from $2.02 in year 1 to $2.75 in year 5 with a flat share count. ## Triangulating the values | Value per share today | Bear | Base | Bull | Weight | | --- | --- | --- | --- | --- | | Price to book with return transition | $11.95 | $22.57 | $31.49 | 70% | | Transitioned earnings times a multiple | $12.26 | $22.63 | $34.32 | 30% | | Triangulated value | $12.04 | $22.59 | $32.33 | 100% | The Base methods differ by about 0.3%, far under the 20% warning level, and that earns no confidence bonus because the two share their drivers. I gave the book method 70% because for a property and casualty insurer capital and reserves are the binding constraint, and the earnings method 30% because it rebuilds the earnings directly. The weights are my judgment and were not tuned to the price. Equal weights give $22.60 and the primary alone gives $22.57. The Bear of $12.04 is 51.5% below the price and 23% below the reserve stressed net assets of $15.59. It is a bad outcome, not a limit on losses. I give no probabilities to the three cases and report no probability weighted value. ## What the price already assumes | Question at $24.81 | Answer | | --- | --- | | Terminal return on equity needed if my five-year path holds (primary method alone) | 15.4%, against 14.0% in Base | | Return on equity needed if book earned it forever (static, 11% cost of equity, 3% growth) | 15.2% | | Exit multiple needed at the end of year 3 on year-4 earnings | 11.14 times, against 10 | | Year-4 earnings per share needed at 10 times | $2.92, against $2.62 in Base | These are not demanding or distressed assumptions. The market is paying for a recovery toward mid to high teens returns, which IGI has delivered before, and an investor who believes in a sustained return in that range can reasonably value the shares above my Base. The price needs 11% more earnings in year four than I assume, not the full Bull. This is a decomposition of the price, not a prediction that the assumptions will hold. ## Bear, Base and Bull | | Bear | Base | Bull | | --- | --- | --- | --- | | Opening capital adjustment | -$30.2 million | None | None | | Capital growth, years 1 to 5 | 2% | 5% | 7% | | Earnings growth, years 4 and 5 | 2% | 5% | 7% | | Terminal return / growth | 9.2% / 2.0% | 14.0% / 3.0% | 17.0% / 3.5% | | Cost of equity | 11% | 11% | 11% | | Exit multiple on year-4 earnings | 9 times | 10 times | 11.5 times | | Value per share today | $12.04 | $22.59 | $32.33 | | Against $24.81 | -51.5% | -9.0% | +30.3% | The Bear combines a 5% reserve strengthening on past claims with weaker pricing and higher loss costs on new business. The two are separate exposures, so the same charge is not hidden in the forecast. The Base assumes catastrophes improve but stay budgeted and reserve releases fall. The Bull assumes stronger underwriting and new market access, such as the June 2026 India license, support high-teen returns, with the terminal return fading below the best explicit years. The share count, cost of equity and tax rate are the same in all three. No acquisition drives any case. ## Sensitivity and the case that flips the verdict | Triangulated value, Base | Cost of equity 10% | Cost of equity 11% | Cost of equity 12% | | --- | --- | --- | --- | | Terminal return 12% | $22.62 | $20.43 | $18.70 | | Terminal return 14% | $25.20 | $22.59 | $20.53 | | Terminal return 16% | $27.78 | $24.75 | $22.37 | The inputs that matter most are the terminal return (9% to 17%), the cost of equity (10% to 12%), the all-in combined ratio (85% to 96%), the size of the reserve release (0 to 8 points around 5.7) and the book value at the valuation date (plus or minus $20 million). One input at a time: | Changed estimate | Value | Against $24.81 | Cap at 40% margin | | --- | --- | --- | --- | | Cost of equity 8% | $33.40 | +34.6% | $20.04 | | Cost of equity 10% | $25.20 | +1.6% | $15.12 | | Cost of equity 12% | $20.53 | -17.2% | $12.32 | | Terminal return 12% | $20.43 | -17.7% | $12.26 | | Terminal return 16% | $24.75 | -0.2% | $14.85 | | Combined ratio 3 points worse, terminal return unchanged | $20.63 | -16.9% | $12.38 | | Combined ratio 3 points worse, kept through the terminal | $18.51 | -25.4% | $11.10 | | Combined ratio 5 points worse, kept through the terminal | $15.79 | -36.4% | $9.47 | | Earnings 20% lower, terminal return also 20% lower | $16.84 | -32.1% | $10.10 | | Earnings 40% lower, terminal return also 40% lower | $11.08 | -55.3% | $6.65 | | 5% more share claims, no proceeds | $21.51 | -13.3% | $12.91 | | Book value at the valuation date $20 million lower | $22.33 | -10.0% | $13.40 | | $20 million more buybacks (shares, book and earnings reduced) | $22.36 | -9.9% | $13.42 | | Bull economics at a 10% cost of equity | $36.29 | +46.3% | $21.77 | The label moves between fairly valued and undervalued or overvalued with one reasonable change, which is why the Base should be read as a range of about $20.50 to $25.20 for a cost of equity between 12% and 10%. What does not move is the action for new money: even the most generous case here, the Bull at a 10% cost of equity, has a cap of $21.77, below the price. For an existing holder, a combined ratio that stays 3 points worse through the cycle would push the value to $18.51, and that is the point where the analysis would turn from Hold toward Reduce, subject to updated capital. ## How the buy price is set Confidence C calls for a margin of safety of 35% to 50%. I use 40%, which fits a real operating record with material reserve and valuation uncertainty, and add nothing on top: catastrophe and pricing cycles, past reserves, terminal persistence and data gaps are already in the scenarios, the confidence score and the sensitivity table, and charging them again would count one risk twice. The maximum buy price is $22.59 x (1 - 40%) = **$13.55**, within a range of $12.32 to $15.12 for a cost of equity of 12% to 10%. It is a decision reference, not an order to place. Three numbers answer different questions: what the shares are worth ($22.59), the return from buying at $24.81 and following the primary Base path for five years (8.7% a year, a modeled outcome and not a promise) and the price that gives a 15% annual return on the same path ($19.27). The 15% is an illustration, not a requirement I know you have, and it does not replace value or margin of safety. A price of $19.27 for a 15% return next to a buy price of $13.55 looks odd, and it is meant to: the return depends on payouts and a terminal return that could be wrong, while the margin of safety pays for that. ## The dividend The ordinary dividend was raised from 5 cents to 7.5 cents a quarter on May 14, 2026. The latest declaration, of 7.5 cents, was on August 3 with a record date of August 18 and payment on September 2. That is 30 cents a year, a yield of 1.2% at $24.81 before tax. Against $85.88 million of Base earnings in year one, the ordinary dividend is about 14.8%, so coverage is not the issue. The special distributions are different. In the first half, dividends and buybacks together exceeded net income, and I do not annualize that into a yield. Repeating it without replenishing surplus would reduce book value. The September payment is already out of the valuation date book, so a new buyer does not receive it. For income this is a small yield; IGI is a total return holding. ## Reasons to own - **Specialist underwriting that has earned its return.** It has produced returns above the cost of equity without financial debt, and book value per share rose 15.0% a year from 2020 to 2025. - **A balance sheet with no borrowing.** The company has no financial debt, a disclosed capital buffer and A ratings with stable outlooks. - **Investment income that cushions a bad year.** $28.6 million of recurring investment income in the half is steady income against the volatility of claims. - **Alignment.** A founder stake of 37.6% means the family shares in the economics, although it also concentrates control. - **A Bull case with room.** It is worth $32.33, and the price does not need it: it needs 15.4% terminal returns, not 17%. ## Main risks - **War and catastrophe accumulation.** Energy, property, marine and political violence lines can lose on the same event, so diversification across lines is less than it looks. - **Reserve releases that mask current economics.** A lower combined ratio can coexist with weaker accident-year results. The second quarter showed a small adverse move. - **Long-tail claims.** Inflation and litigation show up late, and a single half year cannot prove reserve adequacy. - **Reinsurance and retention.** Retention of written premium rose to 76.1% from 70.6% (supplied analysis), which can raise earnings but also raises net exposure. - **Softer pricing.** More premium at lower returns than the cost of equity destroys value. - **Capital returns and regulation.** Dividends and buybacks can be delayed or cut, and capital held in regulated subsidiaries is not all distributable. - **Liability duration.** Asset duration is 3.5 years and credit quality averages A, but I could not verify the duration of the liabilities, so I cannot say the match is adequate. - **Liquidity and control.** Modest trading volume and family influence can widen costs and minority risk. - **Model risk.** The terminal value carries 75.2% of the primary value and both methods share their inputs. - **Currency.** A Czech investor also bears the dollar to koruna rate. I embed no exchange rate view. ## Management execution Management's record can be read in book value per share, which rose from $8.39 in 2020 to $16.91 in 2025, and in selective non-renewal of portfolios that did not meet its pricing, which explains part of the recent flat premiums. I score management credibility 15/20: execution 4/5, capital allocation 4/5, disclosure 4/5, alignment 3/5. Capital returns above earnings are defensible from surplus but not repeatable. The buybacks at about $24.30 were near the current price and about 1.5 times book, so I give no automatic credit for them. I could not verify a multi-year record of delivery against guidance or any acquisition record, and the absence of numeric guidance is not penalized. ## Stock Analyza scorecard | Business quality | Points | Maximum | | --- | --- | --- | | Underwriting franchise and pricing | 14 | 20 | | Return versus cost of capital | 14 | 20 | | Balance sheet and resilience | 13 | 15 | | Earnings and reserve quality | 10 | 15 | | Growth and reinvestment runway | 9 | 15 | | Management and capital allocation | 8 | 10 | | Dilution and governance | 4 | 5 | | Total | 72 | 100 | On the insurance scorecard IGI scores 8/12, quality growth: 1/2 for the return spread (14% against an 11% cost of equity is 3 points, not 5), 2/2 for book value growth, 0/2 for earnings per share growth because I do not extrapolate a volatile cycle, 1/1 for solvency and ratings, 1/1 for underwriting economics, 2/2 for repeat renewals and 1/2 for the runway. That is below the threshold for a compounder. The valuation score is 49/100: 22/40 for the discount to value, 6/20 for protection against the Bear, 7/15 for agreement between methods with a penalty for shared inputs, 5/10 for history, 5/10 for what the price implies and 4/5 for data quality. ## Confidence score | Component | Points of 5 | | --- | --- | | Data quality and provenance | 4 | | Business predictability | 3 | | Valuation robustness | 3 | | Accounting transparency | 4 | | Scenario dispersion | 2 | | Total, grade C (13 to 17) | 16 of 25 | The October share count, current group capital and the true size of reserve cushions are not known to me. Those estimated inputs cap the grade even though the interim figures reconcile. ## What I would watch from here ### Supports the thesis - An all-in combined ratio at or below 90% with an ex-catastrophe, pre-release ratio at or below 87%, and favorable reserve development that is modest and not concentrated in long-tail lines. - Normalized return on equity of 14% or more with a group solvency ratio of 200% or more on a comparable definition, and A ratings with stable outlooks. - Share claims flat or declining, and ordinary dividends covered with surplus retained. ### Watch closely - A combined ratio of 90% to 97%, or profit that depends heavily on releases above 8 points. - Return on equity of 11% to 14%, a solvency ratio of 150% to 200% or no timely update, or a negative rating outlook. - More capital returned than generated, or net share growth above 2% without a clear cause. ### Breaks the thesis - A combined ratio above 100% for a sustained period, or adverse reserve development above 3% of opening net reserves in a year. - Return on equity below 11% through the cycle, a solvency ratio below 150% or a rating downgrade with capital strain. - Share growth above 5% without matching value, or external capital needed to maintain returns. ## The most important thesis breakers - **Reserves.** Sustained adverse development combined with a return on equity below the cost of equity. - **Pricing.** A combined ratio 3 or more points worse than my Base through the cycle, which takes the value to about $18.51. - **Capital.** A fall in solvency or a downgrade that limits business and distributions. ## Stress test and independent check I rebuilt the model from its stated inputs with separate code and reproduced: the opening equity of $692.09 million and $16.30 a share; the five-year Base table and the $22.57 primary value with its $28.60 exit and $5.60 and $16.97 components; the Bear and Bull values of $11.95 and $31.49; the earnings paths for all three cases; the $22.63, $12.26 and $34.32 secondary values; the $22.59, $12.04 and $32.33 blends; the 8.7% five-year return and the $19.27 entry for 15%; the reverse results of 15.4%, 11.14 times and $2.92; the sensitivity grid and most of the single-input rows; the reserve stressed net assets of $15.59 and $14.88; and the 1.2% dividend yield and 14.8% payout. I found no construction error. Two rows differ slightly. With my own way of scaling the terminal return, a persistent 3 and 5 point rise in the combined ratio gives $18.49 and $15.76, not $18.51 and $15.79, which is the same answer to within a few cents. A third row I could not reproduce: the analysis shows $29.40 for holding the published 2027 earnings estimate of $3.04 flat through the first three years, and my mapping gives $26.24. Both are above Base and neither changes the action, but I left that row out of the tables. From the company's documents and the market I confirmed the second quarter and first half results, the combined ratios, the catastrophe and reserve figures, book value of $16.04 and $16.91, the equity, assets, liabilities, cash, restricted cash, investments, gross and recoverable reserves, the absence of debt, net income, dividends paid of $54.7 million, the buyback of 750,534 shares at $24.30, the 5 cents to 7.5 cents dividend increase of May 14, the September 2 payment, and the November 3 reporting date with the November 4 call. The $24.81 price is the October 20 close, up 1.22% from $24.51 on October 19, and the broker screenshot shows the same figure. I found no company news for the week. I could not re-read some inputs, so they come from the supplied analysis: the share bridge, the opening equity and other movements in the equity bridge, the split between ordinary and special dividends, the 23%, 57% and 20% premium mix, the 37.6% family stake, the 76.1% retention, the December 2025 capital figures and ratings, the five-year price to book history, the book value series for 2020 and the company's tangible book chart. The share bridge reconciles to the reported $16.04. I then ran two tests of my own, the first two rows below, because I thought the 5% tax rate and the 5.7 points of releases were the most generous assumptions. The last two are from the original model. | Test | Triangulated value | Cap at 40% margin | Effect | | --- | --- | --- | --- | | Tax 10% instead of 5% | $21.87 | $13.12 | Hold, margin unmet | | No reserve releases at all (combined ratio 5.7 points worse) | $18.86 | $11.32 | Hold turns toward Reduce | | Bull economics at a 10% cost of equity | $36.29 | $21.77 | Still below the price | | 5% more share claims | $21.51 | $12.91 | No change to the action | The strongest case against Hold is that the first half was depressed by unusual war losses, so a strong underwriter earns more than my Base. That case gives the Bull at 10% cost of equity, $36.29, and I keep it in the table at full size. My answer is that the price already pays for a good part of it: it needs 11% more year-four earnings than I assume. The strongest case against owning at all is that releases hide weaker pricing, which is the 5-point deterioration at $15.79 and the Bear at $12.04. The main data limits: I do not know October book value, the share count, current group capital or the independent view of reserves, and I could not verify liability duration. These are why Confidence is C. ## Final verdict: hold at $24.81 IGI is a better business than a P/E screen implies: it has no debt, a record of book value growth and a founding family that owns 37.6% of it. But the price of $24.81 is 1.5 times book and already needs a 15.4% long-run return on equity. My Base is 9.0% lower than the price, and a margin of safety of 40% would require a price of $13.55. A new purchase is not supported by this model at today's price. **Verdict: HOLD at $24.81, watchlist for new money. Triangulated Base value $22.59, downside 9.0%, Confidence C (16/25), required margin of safety 40%, maximum buy price $13.55.** For holders this means keeping the position and reading the November 3 report for book value, reserves and the capital position, because a combined ratio that stays 3 points worse would move the case toward Reduce. For new money it means waiting for a lower price or for evidence of higher sustainable returns. The 92.2% is the number on the press release. The 95.1% and the $1.7 million adverse move are the ones to read on November 3. ## More analyses on Patreon This analysis is free. Premium members get every in-depth analysis, the full archive and a vote on which stocks get analyzed next: https://www.patreon.com/stockanalyza ## Sources Primary sources include IGI's [interim consolidated financial statements for June 30, 2026](https://www.sec.gov/Archives/edgar/data/1794338/000179433826000021/igic-20260630_d2.htm), the [management discussion](https://www.sec.gov/Archives/edgar/data/1794338/000179433826000021/igic-20260630xex992.htm), the [second quarter and first half 2026 results](https://www.businesswire.com/news/home/20260804354735/en/IGI-Reports-Second-Quarter-and-First-Six-Months-of-2026-Unaudited-Financial-Results-and-Declares-Ordinary-Common-Share-Dividend) and the [company's PDF of the same release](https://www.iginsure.com/media/gn3h1uag/q2-2026-financial-results-press-release_final_august-4.pdf), the [second quarter investor presentation](https://www.iginsure.com/media/hqdfndwc/igi-q2-2026-investor-presentation_final_august-4.pdf), the [2025 annual report on Form 20-F](https://www.sec.gov/Archives/edgar/data/1794338/000179433826000012/igic-20251231.htm), the [2025 Group Financial Condition Report](https://www.iginsure.com/media/mitb0ocy/igi-group-2025-ye-financial-condition-report.pdf) and [Bermuda report](https://www.iginsure.com/media/hk2mxb25/igi-bermuda-2025-ye-financial-condition-report_final-for-publication.pdf), the [dividend increase](https://www.iginsure.com/news/igi-announces-increase-in-quarterly-ordinary-common-share-dividend-2/), the [S&P rating announcement](https://www.iginsure.com/news/igi-s-financial-strength-rating-upgraded-to-a-strong-stable-by-sp-global-ratings/), the [investor news index](https://www.iginsure.com/investors/financials/) for the India license and the [third quarter reporting date](https://www.iginsure.com/news/igi-to-release-third-quarter-and-nine-months-2026-financial-results-on-november-3-2026/). Historical price to book ratios come from [a data aggregator](https://stockanalysis.com/stocks/igic/financials/ratios/). The earnings estimates used as a diagnostic come from a third-party [forecast page](https://stockanalysis.com/stocks/igic/forecast/) last updated October 14, were not an input to any value, and their basis could not be verified. The reference market price is $24.81, the October 20, 2026 regular session close, from the [stockanalysis.com price history](https://stockanalysis.com/stocks/igic/history/), which also gives the October 19 close of $24.51. Per share values use 42.467 million economic shares. The normalized combined ratio, catastrophe and reserve assumptions, the tax rate, the cost of equity, the return path, terminal assumptions and multiples are analytical estimates, not company guidance. **Disclaimer.** This analysis is provided solely for research and educational purposes. It is not personalized investment, financial, legal or tax advice. Values are estimates, not forecasts or trading instructions. IGI is exposed to war and catastrophe losses, reserve development on long-tail business, reinsurance credit, softening insurance prices, capital held in regulated subsidiaries, and concentrated family ownership. Investors can lose part or all of their invested capital. Method: Master Investment Analysis Framework v3.4. Approach: price to book with a transition of return on equity, cross-checked with normalized earnings and a reserve stressed net asset test. Confidence: C/16. Data checks: passed with warnings. Conditional research only. Open data gaps: book value and share count after June 30, current group capital, an independent view of reserves and liability duration.