Ep316 Waleed Jabsheh CEO IGI: Don't tie your hands

0:02I'm Mark Gagan and you're listening to The Voice of Insurance podcast, produced in association with Advantage Go, now part of Sapiens. Pick and choose your own best of breed insurtech and data providers with the Sapiens Advantage Go ecosystem. There's a lot of received wisdom in our industry. You know, the sorts of things that we tell each other often enough that we all begin to accept them as true without really questioning the assumptions behind them with any rigour. Here are three common ones. You have to have meaningful scale if you want to get involved in your insurance or open up operations in the London market or the US.

0:40This podcast is with the leader of a business that is a repudiation of most of the canons contained in the book of received insurance wisdom. He leads a business that has grown to write around$700 million in gross premiums across a broad base, diversified by line and geography in both insurance and reinsurance, while maintaining a very healthy profitability throughout the cycle. Waleed Jubsher is the CEO of IGI, and this podcast highlights the very singular path that IGI has trodden on its way to success. What emerges in this detailed discussion is in many ways a picture of a bold and ambitious company with representation in all the major global insurance jurisdictions.

1:20But it's also a company that is, at its core, relatively conservative, looking to play in areas it knows and understands well, and leaving the unknown territories of the bleeding edge for others to explore and map out before it takes a view. IGI is still very much a family firm, but it's also one that is publicly traded and listed in the US. Any apparent contradiction in the above is explained by Waleed in this broad and deep interview in which we are treated to a very strong common sense analysis of the opportunities and threats facing the global insurance and reinsurance market of today. Waleed is very calm and unambiguous in his style and makes for an excellent interviewee.

1:59I can highly recommend a listen. Enjoy the podcast. Waleed, welcome back to The Voice of Insurance. Thank you. Thank you, Mark. Always great to talk to you and be back on the podcast. I was just looking back through the archive and it's just over four years since we last spoke. Back then, I don't think I used to get people to do this. And I think it's a nice thing to do. Before, I would just go straight into the questions. But before I do that, I'd like you to quickly introduce yourself to the audience and run us through your career today. And I'll ask you that question that we all ask each other in insurance.

2:30We ask each other how we got into insurance is often a good icebreaker. Yeah, no, absolutely. I mean, for me, it's a fairly relatively straightforward story, right? I mean, I've been in the business now since 1998. So coming up on 30 years. I spent the vast majority of my career with IGI. I've been involved with the company since inception, which was back at the beginning of 2002. For the first four years of my career, I was working in the US for a reinsurance MGA in Massachusetts, doing reinsurance lines that we don't touch here at IGI. Yeah, what was that? Was it all facultative? No, it was all reinsurance program business related to workers' compensation and employers' Well, it sounds like that was a very good schooling in perhaps some of the lines not to do.

3:17Yes. Some of the lines not to do, but I believe that all lines, if done correctly, will do well. Sometimes, yes, late 90s, workers' comm, reinsurance. You think, yes, some of that wasn't being done correctly at that point, was it? That's what you truly call long-tail business, right? Which is not really what falls within the IGI appetite per se. And purely US liability in long-tail business, which is something that we at IGI don't do. so yeah so i've spent the majority of my career now coming on 25 years at igi and it's been a wonderful experience wonderful ride wonderful journey and looking forward to the next hopefully 25 years you're up to date yes what's the progress since we last spoke obviously that has been a fantastic journey you've been on all that time if you can bring us up to date on where igi is now yeah i mean since we spoke which has been a few years A lot's happened at IGI.

4:10Obviously, the market back then when we last spoke was a lot more positive than it is today. But we took advantage of that hard market and our diversification has played well for us. We went public also in 2020. So when we last spoke, we were public for a couple of years. Now it's been six years and we've made great strides. As a business, we've grown. The last hard market has really benefited us significantly, writing almost 25 different lines and sublines, global footprint. We've grown our portfolio to just under$700 million. When we last spoke, it was probably around the$400 million mark there or thereabouts.

4:49We've expanded into new business lines. We've expanded operations. So as I said, we're writing almost 25 different lines and sublines. We've got nine offices worldwide, the latest of which we just announced a couple of months ago. in India, in Gift City, which now we're working on. The license has been granted and we've started writing business and we're setting up the physical operation and filling the roles that we need to fill. And we'll just keep going step by step. It's definitely a more challenging market today. So growth is not as straightforward and easy to achieve as it has been. But that's our industry, right?

5:27Very cyclical. We've been through this before. we've been through the hard stages of the cycle and the soft stages of the cycle and what comes in between and we've navigated and navigated it well before and we'll do the same this time around but it really has been great as a company as well as a public company for our investors the market has finally started to appreciate the value in this business and you've seen that reflected in appreciation of the stock price and our market cap today is hovering around 1.2 billion dollars the last time we spoke it was probably less than half of that yeah or even a third of that so we've made good strides we've made really good strides and we're a patient business and we focus on what we know and what we believe in and strong believers it will come in due course in time no need to rush especially not in this business yes absolutely so the state of that market obviously now you've got that diversification you've got multiple lines multiple platforms, different ways of accessing the business in different forms.

6:30It's difficult to generalize, but we know it's generally softer than it was when we last spoke. But how would you characterize the market generally? I think definitely soft and getting softer and softer. In some areas, I think the softness is a lot more pronounced than in others. Very difficult sometimes to get your head around why the behavior in the marketplace is as severe as it is in terms of competing for the business. That said, it wasn't something we didn't expect. The cycle lasts for a certain period of time. You get signals to indicate when that cycle looks like it's going to be turning.

7:05And we had, in my opinion, and maybe because of our diversification, where some of our segments moved in different directions at different times, but we did have a prolonged hard market, I felt at least for IGI, given the opportunities that we were able to capitalize on between 2018 and up to 23, 24, 25. So it's not unexpected. I think the market, as always, loses sight and forgets potentially, you know, how bad the bad times were. And they take action to turn it around. They have a couple of good years, two, three good years. And no doubt they've been great for the industry as a whole since 2023.

7:46but I think the level especially in some areas of decline in the rating environment is too quick and inevitably will come back and be painful for a lot of players and that's where I see things at least. That said I think there are still opportunities out there in some areas you've got rating conditions market conditions that we believe are still very much adequate in other areas there's environment where there is much less adequacy so you've got to manage the portfolio you and manage your exposures and pull certain levers in order to mitigate and navigate the environment. So it sounds like it's not a market where you can just grow and obviously you can't just grow and expect to keep up.

8:26Obviously you've been posting fantastic numbers combined ratios with an eight in front of them rather than a nine even. Yeah. So the mission now more to protect that profitability rather than to grow. I'll be honest with you in our last underwriting committee meeting with all our underwriters over here the one thing I did say to them is protect what you have built because you work so hard to build a portfolio to build a business and just the simple cyclical nature of our industry we work in the business of taking risk taking on exposure we're going to pay the claims when they happen and there's no doubt obviously that when market conditions and the rating environment becomes inadequate then it's just a matter of time before that catches up with you and your results and if you don't maintain that level of discipline and that level of patience and that acceptance of the fact that if I don't grow, that's not an issue, that's not a problem.

9:17If you don't do all of these things, in our opinion, then the hurt and the pain at the end of that soft market is going to be a lot more impactful and a lot more difficult to recover from. Yeah. And in terms of that kind of, I suppose we call that defensive underwriting, sometimes, of course, in the business of insurance, one of the other things is you'd spend years and years getting access to that business, finally being allowed to actually see some of the business that you really want. And then you finally get on it. You have a hard market. Fantastic. And then the market softens, but you want to keep that business, even though you know it's probably going to have to get a discount.

9:50How do you do that without losing touch with some of that portfolio that you've spent so long trying to get access to? Listen, at the end of the day, the metrics have to stack up. Obviously, there's an element of your client base that you will stick with, not at any cost and at all costs, But you would normally do what you can't stick with because you see that as the anchor of your portfolio in a sense, right? But at the end of the day, when you have to say no, you have to say no, even if it is a client that you find to be valuable, important, etc, etc. If you lose that ability, this is where you start getting things wrong.

10:24This is where you start getting hurt. So it's that discipline and the mantra of business at any price or any cost. You've got to throw that out the window. At the end of the day, we have a business to run. and we try to be as reasonable as we can with our clients in a hard market. And I think vice versa, we expect the same. And your best clients will understand that as well. So like I said earlier, we're the ones that end up paying claims. And we operate in some very volatile lines of business. Severity of claims in those lines of business is more common. At the end of the day, if you're not getting the right bang for your buck, then you need to be able to ask yourself whether this is business I should stick with or not.

11:07And when it's clear that you shouldn't, then you shouldn't. And so within that, you've got that great diversification geographically and by line. Where are you seeing, and you already alluded to this, that of course the cycle, we can't describe the market in one word, because of course the cycle times itself in very different ways. There are cycles within cycles and different classes behave in different ways. So where within the world that you're looking at, are you seeing the best opportunities? Are there still areas that are still good? I think the reinsurance space is still attractive. Yes, it's under a bit of pressure at the moment, but it's coming off very high levels.

11:43And I think the rating adequacy in that market is still very much stable or very much acceptable. And I think it depends which segment of the reinsurance market we're talking about as well. I think marine lines are still very much attractive for us. I mean, we're big in the ports and terminal space. the marine trade space, as well as the marine cargo. And our marine cargo book is very focused and targeted in terms of what we write. And we found that in those areas, rates are definitely holding up a lot better than others. Contingency has been a great line of business for us. Construction engineering, again, global portfolio, rates have held up better.

12:19So big portfolio for us. We're still seeing attractive opportunities there. And then maybe if you want to call it the elephant in the room is political violence. And following the spate of losses from the Middle East, obviously, in the first six months of the year, and still the volatile environment persistent there, unfortunately, situations like these bring opportunities. Yes, losses are there. We've paid our fair share of those losses, or are paying our fair share of those losses as well. But on the back of that becomes a big opportunity. On that specifically, how's the market reacted to those Gulf losses?

12:55I think initially, Mark, the market didn't know necessarily how to react, understandably, because obviously when the conflict started at the end of February, beginning of March, we didn't know where this was going to go and what the true sort of landscape looked like. And so for the first month of the war, there wasn't a lot of business being necessarily done. It took the market, I think, a few weeks to get to grips with how they want to react to this and how they want to manage their exposures and portfolios. going forward. Initially, I think the market reaction was solid. I think the conundrum that the market faced is being able to provide a product to clients where terms were acceptable to them, but at the same time where it was affordable to the client base as well.

13:41So initially we saw strong, strong reaction by the market. Some clients just simply could not afford that type of reaction. After the MOU was signed between the US and Iran, I think some people took their foot off the gas in terms of pushing the higher rates and started competing a bit more, which was disappointing to see because from what we hear, this is going to be, or so far, estimated to be about a two and a half to three billion dollar loss to the PV market, which is devastating for the market for that size. What is that in terms of its size? Is that a year's premium or is that more? I think it's about a year's premium.

14:17That's assuming nothing else in the world happens, right? And something we should probably not do, given the state of the world. A hundred percent. And if you look at the last few years, I mean, the PV market in recent years, extremely, extremely competitive and definitely and arguably priced below adequacy. But if you just look at the last few years, you've had some major events in this space, right? The war this year, you had the Ukraine, Russia war when it started, you had the South African riots, And then you've had your general SRCC sort of losses here and there, the more attritional side of things.

14:52So it hasn't really fared well. It's been a mixed sort of reaction. And we expected and were hoping that not only would the reaction to the losses from the war impact the Middle Eastern business, of course, but it would also have an impact on the global PV landscape. not to the same extent that it would have on the Middle East, but still to a certain extent. And if anything, all it's done is really much bottomed out or flattened the rating environment internationally. Now, let's see. I think you had the MOU agreed, there was a lull, and then there was an uptick back in targeting missile targets going across to various countries and back, which resulted in more losses.

15:35I think that's focused the mind a bit, But I can see and have seen some naivety in the way the market has approached the environment there. And I'm very much of the opinion that, you know, we're not out of the woods yet. Obviously, you can see there's political stalemates in the region and distrust and lack of cooperation, lack of wanting to come to agreements on. And I think we're not out of the woods and think this war of attrition sort of situation could continue for a very long time. So PB underwriters and the PB market needs strongly to be aware of this and not take their eye off the ball.

16:12But you're out there, you are in the market, you haven't lost your appetite because of this. Absolutely not. No. There's a saying that the war underwriters make the most money in times of war. So yes, there's been some pain, there's been some losses. That could have come from any other line of business as well at the same time, right? So no, we're very much committed to the class of business, to the line of business. We're very much committed to the region and supporting our clients there. And I think there is an opportunity, a big opportunity for the underwriters if they play it right. Rewinding a bit back to that big picture stuff, what often happens when the market softens?

16:48One of the reasons why the market has softened is because it's so well capitalized. It's much better capitalized than it was when we last spoke with all the retained profits and obviously a little bit of new capital coming in as well. often what happens now in the playbook when profitable growth is not necessarily available just via standard underwriting to look to M &A for growth is that something do you think is likely to be happening now I mean history tells you yes right I think growth is a lot more challenging obviously not just for us for the entire industry a lot more challenging than was last year or two years ago and I think assuming the industry has another positive year results wise and returns wise then i fully expect it to be even more challenging next year and that's what we need to prepare ourselves for as a market and history tells you that when companies and the industry finds it challenging to grow organically then alternative is for mna yeah and i believe there has been an uptick in mna activity over the last nine to twelve months and i would expect that to continue if not intensify well it obviously these days i mean you've got a solid base you've got your own currency, in your stock listing.

17:59So would you be ruling yourselves out of this? It hasn't necessarily been a major part of your playbook to date, but now you're getting to this level of maturity. Is it something you would rule out? I would never say we'd rule out, right? I mean, I don't necessarily like to set things in stone per se and say, yeah, we'll never do this or we'll never do that. You got to keep an open mind to everything. We're not an acquisitive business or an inquisitive company by culture or nature. Historically, we've made two very, very small acquisitions, one of which I wouldn't even call an acquisition. So we've always been of the mindset that if we want to go into something, if we want to do something, we'd rather do it ourselves, build it ourselves, do it organically, so we have full control right from the beginning in the way it's done and how a portfolio or a business is built.

18:48That said, never say never, right? I mean, if the right opportunity comes along where we believe it's that beneficial to the overall business and complementary to the business, then we will always consider it. But it's more likely that we will not be an M &A approach company than being one. Yeah. You mentioned before about reinsurance having grown that and being still happy with the rate adequacy there. So it sounds like in the overall balance of the book going forward, would it be right to assume that reinsurance will continue to rise as a proportion of your book? I would say so. I don't think it will continue to rise necessarily at the pace that it's risen since 2023.

19:272023 was transformational in a sense. I hate to use that word, but in the changes that happen in the market and it allowed those that were there in strong positions to really take full advantage and grow their portfolios. I think for us reinsurance will continue to grow again not at the pace it has grown but as I said earlier I think their opportunities are there and if it ends up softening faster or more than we anticipated and we don't see that growth opportunity there then we won't take it and that's the beauty of diversity in your portfolio. We took advantage of the long tail market when it hardened between 18 and 21.

20:03We took advantage of the short tail lines between 20 and 23. And then we took advantage of the reinsurance from 23 to 25. And so we were able to grow the business across various segments over that span of six or seven years. If the opportunity is there in reinsurance, which we believe it is, at least in the near term, then we're going to go for it. if it's not there then we'll take our full of the gas and we'll slow down and we'll focus on the areas that we think are going to be the most profitable for us but for example our indian initiative in gift city that's very much focused on specialty reinsurance for us i think i'm going to have to do a whole program on gift city because there's a huge amount of movement obviously in my whole career we've been reporting on the indian market on it opening up and of course it's been such a slow process it's been one of those stories that's been on the back burner for so long and it seems with the gift city it seems that this is a really interesting opportunity isn't it but i suppose that that will be for another day i should probably do a documentary on gift city and what it's all about and what the attractions are it is very interesting mark honestly but it's a tricky market it's not an easy market to navigate around and it falls right into our philosophy of having boots on the ground and local talent to capture the opportunities within those markets.

21:22And I think India requires that probably more than any other local office that we have, where it's cultural compatibility, understanding who to do business with, who not to do business with, where that good business is, and then having those relationships locally and connections to be able to capture those opportunities from within. And when I mentioned the initial focus is going to be very much on specialty reinsurance lines is because of the people that we've partnered up with locally to develop that business. Just to go back with that construction of your portfolio, it sounds like you don't come with this preset idea of how the portfolio is going to be constructed.

22:00You have the portfolio ends up being what it is based on the rational decisions you've made from the ground up, that you look at what's in front of you. If it's good in reinsurance, you will do more reinsurance. If it's good in short tail, you will do more short tail. So therefore, your portfolio will end up being more short tail. And the same if longer tail is better, then you will be doing more of that. It sounds like you don't come with a preordained structure of what the ideal portfolio might look like. You underwrite what is the best opportunity in front of you today, and then the portfolio ends up being what it is.

22:31Absolutely. I think if you hold yourself to a certain construct of your portfolio and say to yourself, I have to stick to that, then all you're doing is tying your hands. Our market changes and can change frequently and rapidly. Opportunities will change. We plan for the next 12 months, making assumptions on how the market is going to be, how the market conditions are going to pan out throughout that time period. But most of the time, we're not entirely accurate, right? Things will change and can change in our industry. And so you have to be in a position where you can modify and alter your strategy and your direction your focus based on what you're seeing on the ground and based on where you're seeing the best opportunities and we've always said that our ability to shift focus to those areas and that's what that diversification gives you diversification by line of business diversification by geography nine offices worldwide underwriting resource across the piece local talent boots on the ground gives us that intel to see where the best opportunities are and to be able to shift focus to those opportunities.

23:44And hence how what I mentioned earlier about the various segments and the market conditions in those segments, capitalizing on those opportunities when we see them. So if we take long tail business, for example, we really put our foot on the gas in long tail business between 2018 to sort of 2021. the rate increases that we were achieving were spectacular and our underwriters who've been in the market for more than 30 years were saying we've never seen a market like this before so you take that opportunity and at one point our long tail segment made up almost 40 percent of our overall portfolio today the long tail segment now from 23 sort of onwards the long tail segment had been softening so the rating environment was getting worse and worse we all know that and our book as a result has shrunk we've pulled back we've walked away from a lot of business and now that segment makes up less than 25 of our overall portfolio so you shift focus you took advantage of the opportunity you know the cyclical nature of our business you know that opportunity is not going to last forever take advantage of it for as long as it lasts and when you need to pull back pull back and then you'll find opportunities elsewhere and that's where Shorttail came in in the early 20s and then reinsurance from 23 to 25 and still for us very much an opportunity.

25:09When we were last speaking I remember you were setting up your US operation how's that experience been obviously biggest market in the world obviously opportunities everywhere and obviously things to avoid how's that experience been? It's been really good to be totally honest with you I mean you know we went in in 2020 into the US markets initially writing property and energy business. And now we've expanded those in addition to construction business contingency, PV as well, and marine cargo. And you notice that all those are purely short tail lines. We have absolutely no appetite for any long tail business in the US.

25:44We say that as often as we can. I mean, energy and property naturally are the biggest portfolios within our overall U.S. book. That makes up about just under 15 % of the overall business. But the U.S. market, we went in in true IGI fashion. We're not there to make a splash. We're not there to build a portfolio as big as possible, as quickly as possible. We took our time and just built a portfolio year after year. And now we'll probably say we've got about$100 million, just over$100 million of business that we write in the U.S., Which is nothing, honestly. But I think it's just testament to the way we do things and the discipline that we exercise in approaching and building a portfolio in a market that can be very harmful, very dangerous as well.

26:32So we're very happy with the portfolio that we've built. The market definitely is more challenging now. And if you look at geographically where we're probably seeing the most pressure, it is in the US. and as a result we need to be cautious we need to be disciplined in how we continue to navigate that market and wait for the next opportunity i think also for us our u.s book has been entirely underwritten by our underwriters here in london i think over time i wouldn't be surprised if we were to have a physical presence an office somewhere in the u.s at some point in order to better capture, obviously, those opportunities as well.

27:15And the wonderful thing about the size of the US market is, of course,$100 million. There's a lot of money to anybody, but it's not meaningful in the terms of the size of the US market. But of course, it can be very meaningful to you and to anybody. Yeah, absolutely. It's meaningful to us, but I think we haven't scratched the surface in the US, right? I mean, there's so much more that we can do, but we'll do it at our own pace, at the right time, with the right opportunities. And when the market turns, there's no doubt that that book will grow significantly for us. Well, Willid, I'll get my apologies in if this is a boring question for you, because it's probably you get asked this all the time.

27:48Given the evolution of your business and a large correlation that you probably have and an affinity with the kind of classes of business that are predominant in the Lloyd's market, is the Lloyd's market an option, an entry into the Lloyd's market? Is that still a possibility or is that something you still rule out? I think you ruled it out last time we spoke. We've never ruled it out, Mark. Yeah. I think probably, yeah, I can't remember. I'll look at the exact words, but yes. Yeah, yeah. Yeah, and just like I said, you know, we never say never to acquisitions or anything like that. You never say never to Lloyd's or any opportunity, really.

28:19You've always got to keep an open mind. And Lloyd's is a great institution. We have a company box there now, which obviously doesn't give us the benefits of being technically in Lloyd's, but it gives us benefits nonetheless. Lloyd's is always an option, but there are challenges that come with entering Lloyd's, navigating in Lloyd's, operating in Lloyd's. there are currently no plans for us to set up or considering any sort of significant setup there but again never say never i think at the right time with the right opportunities with the right market conditions lloyd is a great place to be but it comes with its challenges and we have to be ready for those challenges let's talk about some more big picture stuff all the big things that have been happening in the aggregate since we last spoke every form of digitized facilitized algorithmic etc underwriting broker facility smart follow even more modern versions of consortia digitalization and automation of now a growing part of the follow market within the global syndicated markets which you operate what's your long-term view about this it certainly seems to be something which is a permanent feature something it's not some cyclical thing it's a seems to be a secular permanent change in the structure of the global syndicated market something around which I suppose everybody has to have thoughts and a long-term strategy.

29:41So what's your thinking around it? How to best position IGI in that world, in a world in which a lot of those brokers are going to be having their big lead line, a kind of ballast follow facility, and then something fairly digital on the middle as well, filling in the middle of the slip? I think the level and the magnitude of these facilities, the broker facilities, consortias etc etc i think that goes up and down with the cycle as well right yeah i know there's definitely cyclical elements to it but one of the things i would say when i talk to those brokers all the top 10 brokers in london have got some kind of facility if they haven't got one they're about to get one or that they're certainly planning on doing more if they've got one as well they'll say to me of course back in the old days yeah we know the late 90s back in those days of course we had facilities and they kind of got burned in the soft market and then quietly got put away during the harder market.

30:33And then they came back again when the market softened again, and nobody seemed to have learned the lesson. These days, it's a fundamental pillar of my business as a broker, because it is improving my margin. It is increasing my productivity, allowing my brokers to do more business, allowing me to be a better broking business and get better deals for my clients and focus on those lead terms much more. And so they'd say, these days, you can't just allow a facility to fall by the wayside anymore, because it has to become a permanent pillar so that's what the broker would say so what do you say back to them depends on the price yeah the appetite the performance right i mean at the end of the day we don't participate in any of these large broker facilities we can't plain and simple we cannot it's too much delegation you're so far away from your client base you're so far away from your exposures and supporting these types of facilities when they go wrong they will go wrong they will go wrong in a bad way, which for a company like us and of our size could be a lot more harmful than some of these larger multi-billion dollar companies that can absorb those types of hits.

31:41We've never been a huge fan of giving our pen away. We do give our pen away, but under very strict guidelines, defined structures, and we support facilities, but when they're more focused, line-specific, territory specific and that makes up about 20 to 25 percent of our overall portfolio but at the end of the day i think when the market gets really challenging and i mean we see what these facilities do we see the terms being offered by these facilities and trust me it's only a matter of time even the brokers are telling you underwriters didn't learn from their previous lessons these facilities were there, they blew up, fell by the wayside.

32:26Now they're back because it's a soft market, because people are hungry, because the market is hungry, because they're looking for growth. Can't you underwrite them like anything else? You know, you can be on them when the market's hard. You know, look at it like a proportional treaty. Look at the numbers, look at what's in there. Look at the diversification you get. And of course, you can come off when the markets go soft. You can, but it depends what your appetite is, right? I mean, if you ask me, do we support any treaties on the reinsurance side that are multi-class, worldwide, global, and pretty much can do whatever they want to do in them?

32:57No, the answer is simple. It's a plain no. It's just too much of a big pot to know really what's in there. Yeah. Talking to fellow underwriters in the market who have been involved in these types of facilities, they're the first ones to admit, we don't know what we're signing up for. We know that it's not a pure underwriting decision because you're so far away from it. A lot of it is top line related commercial decisions that make you end up supporting these things. But I go back to it again. IGR can't afford to support these types of facilities because when they go wrong, if they go wrong and they will go wrong at some point, just like a portfolio that we can underwrite in-house.

33:40But when they do go wrong, it can inflict a lot more pain and suffering on us than it can on multi-billion dollar competitors that was a really good conversation and in that you already mentioned about mgas so generally with mgas and more program type business it sounds like again as long as it's very specific as long as it's giving you access to something that you probably can't access otherwise an aggregating smaller business it's something that you entertain because it's a reasonable percentage of your portfolio but much more on that scale where you know who the underwriter is you know exactly what they're writing and you know why you're supporting them because they're accessing business or they know about a line of business that you don't know about or that you want to learn about or it's in a geography where you can't access absolutely i think you have to be careful mgas are an important part of the market and they bring value i do believe that a lot of mgas do bring a lot of value to carriers i think we need to be careful and cautious with who you partner up with and for us it's about knowing the mga knowing the people behind it the underwriters their philosophy we've supported a lot of mgas throughout our history with underwriters that we've dealt with and known in the past so know very well the portfolios that they write have to be complementary to what we do don't give your pen away to somebody that competes with you and writes the same business that your underwriters already write and when When you support MGA is you have to maintain a level of control over the underwriting, the structure, how they're remunerated, how they're rewarded.

35:11It has to be tied in with the underwriting results more so than just GWP. And then the nature of some of our lines, they are very much facilitized. We do most of our MGA relationships lie within marine cargo contingency, professional indemnity as well, political violence. You've got niche, domestic, SME businesses, all tends to be facilitated. And so with the right opportunities, we're more than happy to support MGAs. But you've got to be careful with which MGAs and how you do it. And we've got a dedicated authority team internally that manages those relationships, due diligence, auditing, et cetera, et cetera.

35:54So it's not just about the support of the MGA, but the follow-up and the oversight and the partnership that you create with that MGA over time that then gives you that confidence in the overall arrangement. We couldn't be sitting in 2026 and not talk about AI as something that's certainly a phenomenon that's exploded on our consciousness, particularly probably about two and a half, three years ago when suddenly it was everywhere. What have you found to be the best use cases for AI in your business? I mean, for us, it's about efficiency. It's about better decision making, it's not about making decisions for you.

36:28So we're not, and I said this, I get asked about AI almost in every conversation we have, whether it be with reporters, investors, rating agencies, regulators, et cetera. We're not pioneers. We're not going to be pioneers in AI and advancement of the technology within our industry. We will be measured in our approach and focus on where we think AI could benefit IGI the most. And where we've seen so far is in obviously efficiencies and operations, whether it be back office, finance, legal, compliance as well. In underwriting, it's definitely an advantage. If you use AI properly, it shortens the amount of time you need to underwrite a specific policy, especially in some of our more complex lines of business.

37:14But it doesn't make the decision for you. And I'm a strong believer at the end of the day, underwriters need to make those decisions and need to make them with their minds and not with the computers that they use and the programs and software that they interact with. So we're very much, as I said, not pioneers in this. We'll do whatever we can at the moment to benefit our business. And we've done that and continue to do so. We'll let the others make those big investments. So we won't expect to see a sort of agentic IGI interacting automatically with a big broker's a gentic broking operation from now on.

37:49We certainly wouldn't expect to see that at all. Not in the near term. So you're seeing it much more in terms of improving productivity, reading through 157 inspection reports and summarize some of those things and flag up some of the obvious anomalies and get that data in good shape and avoid all the requeering and all the other things that waste a lot of our time and add to our expense ratio unnecessarily. I mean, yes. And that's a good tool for analysis as well, right? So you can use it for whatever you want. that's the beauty of it depends on the tool that you use so to make more educated decisions you know more efficient decisions but at the same time you've got to be careful because you've got to make sure that the information that you're getting is also reliable and accurate enough to make those sound decisions and it depends what question you ask because if you frame a question one way it tends to sort of agree with you and then you frame it another way and it says if you're asking it to sort of rule on some sort of dilemma, it tends to take a cue from however you phrase the question.

38:46Yeah, you've got to challenge it, Brian. You've got to challenge it. What about AI now as an emerging casualty peril? When I talk to some of the most sort of very, very innovative people, very interesting people getting early stage investment, they're looking at AI as an emerging peril, as something to be ensured. How do you think this is going to go? Are we going to end up with an exclusion, a general exclusion, the sort of thing where it's going to be a main treaty exclusion on all liability business, and then therefore have to become a standalone class, i.e. to be written affirmatively on its own.

39:19What do you think is going to happen with all this? I mean, there are others who would say, we can't exclude it because it's impractical to exclude it because it's so embedded in everything that we do already. So if a loss happened at a law firm or something, you wouldn't be able to spend that much time proving whether it was the lawyer who made a mistake or it was the AI that the lawyer was using that made a mistake. And in the end, ultimately, what you're ensuring is there was a mistake made, and there was damage, either financial or otherwise, made to a third party. And therefore, you should pay the claim and not worry about, obviously, you can work out, you need to ask about their risk management around the use of AI.

39:52But it's so embedded that you couldn't exclude it. And of course, at some point, AI will become, if it becomes better at correcting itself than humans are, you've been more worried about the good old fashioned human E &O, rather than you will be about the AI, you know, because AI will be learning from its mistakes, unlike humans. I'll be honest with you, Mark, I don't think anybody knows the answer to that. I think it's like a watch and see type of thing. It's not something you're going to be getting excited about wanting to get involved with the cutting edge of casualty here? No, absolutely not.

40:23And I think time will tell how this product and this coverage emerges and how it gets covered and where it gets covered etc etc i think it's sort of like an unknown in a sense you know when cybers first started coming to the market it was the big unknown and not everybody had the appetite for it and not everybody knew necessarily how to underwrite it you get better over time experience etc etc and i think ai is going to be one of those things i don't necessarily think it's going to be an easy one to crack in the near term there will be lessons learned along the way that's not there's I suppose like with cyber so you're much more of a watch and see but you then after time you've got more comfortable didn't you and then you did get involved with cyber.

41:03Were you stuck on the reinsurance side? Are you doing cyber on the other side as well or not? No we're not. A little bit on reinsurance yeah? We do a bit on reinsurance. We stayed away from cyber for many years because of the unknown because of the uncertainty around it and and then obviously for us when we got more in-house expertise on cyber from a reinsurance basis as well and we saw that market turning that's when we decided to step in the beauty of doing it on a reinsurance basis is that you partner up again with people that have been writing this for a long time have a strong track record similar to an mga type scenario and have a portfolio of business that has stood its ground for many years and with reinsurance as well you know exactly what your downside is your armageddon scenario is so you can manage your exposures to it a lot more knowing that in the Armageddon scenario as I mentioned you know what your loss can amount to.

42:01Over time we all became more comfortable with it and of course there was a huge amount more work was put into the modeling and to the understanding of what the worst case scenario is and of course what an event might look like etc so at that point you became more comfortable and you thought yes I can participate. Yeah and again managing your exposures managing your downside knowing exactly what the worst case scenario is provides a lot of comfort and then doing it on a direct basis doesn't give you that level of certainty you know depends on how you protect your portfolio of course but at the same time doing it on a direct basis requires a much bigger investment infrastructure people underwriters claims crisis control etc etc that we haven't been in position to do just yet the last question.

42:45Obviously, IGI is very much a family company, but you also, you've been publicly listed now since 2020. How do you square the circle in terms of the difference between being a family company, but also being a very public company at the same time? Are there any conflicts in that? Obviously, being public is a lot different than being private. The sense of family is all about culture. And it was something that was very much in our minds when we went public, knowing that we were private before, family business, family culture, our team. We are, consider our employees across now almost 500 of us as a family, as the IGI family.

43:28And when we went public, we were very, not concerned, but aware that obviously things, dynamics within a business change when you move to being a public company, especially a public company in the US. so we made it the point to try to shield our employees from public company status as much as possible and for them not to feel much change within the business itself now when we went public we were in terms of headcount we were less than half of what we are today so the additional challenges as you grow also in headcount is to maintain that and at the end i strongly believe It's down to how you treat people, how you show value, how you show ethics, morals in the business.

44:15We still refer to our business as a family business, even though we are public. And we refer to our employees as the IGI family. And public or private, again, it gets back to culture and the environment that you wish to nourish within the business itself and within the offices and the operations. And we're a tight-knit business. Our offices work together. Our offices operate on the same P &L. We cooperate, we use and rely on each other to access as much business, the best business in the best possible way. And that's where our people work together. And I think the model helps maintain that sense of family and type of culture within the business.

44:54That's very important. It's not easy. I'm not going to beat around the bush. It comes with its challenges for sure. As you grow, it becomes more challenging. Being public, definitely also more challenging. But at the end of the day, it's how you treat people. and how you make sure your people treat each other, for them to be comfortable in the environment that they operate in and work in, and wanting to wake up in the morning looking forward to coming into the office. Well, I'm already looking forward to our next meeting, Waleed, and there'll be more to talk about, I'm sure. I'll try and make sure it's not four years for the next one, because I think you're moving pretty fast, and obviously the market's always changing.

45:30So it only remains to me to thank you so much for coming on the show. I've really enjoyed talking to you. Thank you so much. I appreciate it, Mark. Thank you very much for having me back on. I look forward to the next one. Excellent. Thank you. Well, I hope you enjoyed today's episode. If you did, don't forget to subscribe or leave a like or a review or recommendation on whatever podcast platform you used to access this program. These really help get the word out. Before we go, just a quick reminder that advertising slots are available here and in other places in the Voice of Insurance podcasts.

46:02Podcasting is the fastest growing medium and attracts a high quality audience of key decision makers. It's also an intimate medium where you, the listener, are right in the room with me and the interview subjects. Needless to say, that means it's a great way of getting your message out directly to an audience because you know you've got their full attention. It's also very cost effective. So get in touch with Mark at thevoiceofinsurance.com to find out how you could be speaking directly to the industry. The Voice of Insurance is produced in association with Advantage Go. Release your underwriters to underwrite with Advantage Go's underwriting platform.

46:44Voice of Insurance is produced by me, Mark Gagan. Music was written by Anna Gagan and produced by Carlos Gagan. Check out more podcasts and written comment pieces