AM Best has revised its outlook to positive from stable for International General Insurance Holdings and its subsidiaries, saying the Bermudian-based specialty insurer and reinsurer is expected to maintain strong results even as underwriting conditions soften.

The rating agency affirmed the A (excellent) financial-strength rating of IGI Co, the group’s Bermuda underwriting subsidiary, along with its “a” long-term issuer credit rating. The financial-strength-rating outlook remains stable.

AM Best also affirmed IGI Holdings’ “bbb” long-term issuer credit rating while revising its outlook to positive.

The outlook change indicates that AM Best sees potential for a future credit-rating upgrade if IGI keeps outperforming peers during a softer stage of the insurance cycle.

AM Best said IGI’s balance sheet is underpinned by the strongest level of risk-adjusted capitalisation under its Best’s Capital Adequacy Ratio model, along with strong liquidity, a conservative investment portfolio and no debt leverage.

The agency said the group’s five-year weighted average return on equity was 20 per cent between 2021 and 2025, while its combined ratio was marginally above 80 per cent over the period. A combined ratio below 100 per cent means underwriting profitability.

The assessment follows a more difficult first half for IGI, when losses tied largely to the Middle East conflict contributed to one of the largest single-event loss experiences in the company’s history.

Even so, the group reported $42.5 million of net income for the six months to June 30 and a combined ratio of 92.2 per cent. Gross written premiums rose to $398.9 million from $394.3 million a year earlier.

AM Best said it expected IGI to hold onto profitability through selective underwriting and stable investment income. It also pointed to the group’s diversified international platform, including a reinsurance branch established in India this year, as it pursues modest growth.

IGI, which is listed on Nasdaq, is due to report third-quarter and nine-month results on November 3.