Global Indemnity Group, LLC (NYSE:GBLI) (the “Company”) today
reported net loss available to shareholders for the twelve months
ended December 31, 2022, of $1.3 million compared to net income
available to shareholders of $28.9 million for the corresponding
period in 2021. Adjusted operating income, which excludes realized
gains and losses, the results of Exited Lines, and the write-off of
debt issuance costs on the early retirement of debt, was $19.5
million for the twelve months ended December 31, 2022, compared to
$14.6 million for the twelve months ended December 31, 2021.
Selected Operating and Balance Sheet
Information Consolidated Results Including Continuing Lines
and Exited Lines (Dollars in millions, except per share
data)
For the Twelve Months
Ended December 31,
2022
2021
Gross Written Premiums
$
727.6
$
682.1
Net Written Premiums
$
591.3
$
580.1
Net Earned Premiums
$
602.5
$
595.6
Net income (loss) available to
shareholders
$
(1.3
)
$
28.9
Net income from Continuing Lines
$
4.9
$
46.0
Net loss from Exited Lines (1)
$
(6.2
)
$
(17.1
)
Net income (loss) available to
shareholders per share
$
(0.09
)
$
1.97
Adjusted operating income
$
19.5
$
14.6
Adjusted operating income per share
$
1.30
$
0.97
Combined ratio analysis:
Loss ratio
59.6
%
64.7
%
Expense ratio
39.2
%
37.4
%
Combined ratio
98.8
%
102.1
%
(1)
Underwriting loss from Exited
Lines, net of tax.
As of
December 31,
2022
As of
September 30,
2022
As of
June 30,
2022
As of
March 31,
2022
As of
December 31,
2021
Book value per share (1)
$
44.87
$
43.76
$
43.68
$
45.78
$
48.44
Book value per share plus cumulative
dividends and excluding AOCI
$
52.98
$
51.61
$
50.01
$
50.91
$
52.00
Shareholders’ equity (2)
$
626.2
$
643.6
$
641.3
$
669.7
$
706.6
Cash and invested assets (3)
$
1,342.6
$
1,356.1
$
1,326.5
$
1,464.6
$
1,532.0
Shares Outstanding (in millions)
13.9
14.6
14.6
14.5
14.5
(1)
Net of cumulative Company
distributions/dividends to common shareholders totaling $5.00 per
share, $4.75 per share, $4.50 per share, $4.25 per share and $4.00
per share as of December 31, 2022, September 30, 2022, June 30,
2022, March 31, 2022 and December 31, 2021, respectively.
(2)
Shareholders’ equity includes $4 million
of series A cumulative fixed rate preferred shares.
(3)
Including receivable/(payable) for
securities sold/(purchased).
Selected Financial Data and Business Updates for the Twelve
Months Ended December 31, 2022:
- Gross written premiums, net written premiums, and net earned
premiums excluding the Exited Lines (“Continuing Lines”), increased
17.3%, 18.7% and 27.2%, respectively. Consolidated gross written
premiums, net written premiums, and net earned premiums increased
6.7%, 1.9% and 1.2%, respectively.
- Underwriting income – For the Continuing Lines business,
underwriting income was $16.2 million in 2022 compared to $11.3
million in 2021. Consolidated underwriting income (loss) was $8.3
million in 2022 compared to ($10.4) million in 2021.
- The combined ratio for Continuing Lines was 97.1% for the
twelve months ended December 31, 2022 (Loss Ratio 59.9% and Expense
Ratio 37.2%).
- Lower Catastrophes – Strategy to lower catastrophe exposure
resulted in catastrophe losses for Continuing Lines of $11.0
million for the twelve months ended December 31, 2022 compared to
$19.4 million in 2021.
- The Company sold its Farm, Ranch & Stable business to
Everett Cash Mutual for $30.0 million. GBLI retained $45.0 million
of capital supporting this business as well as the unearned premium
reserves of approximately $40.0 million.
- Investment income – $27.6 million in 2022 ($33.6 million
excluding alternative investments) compared to $37.0 million in
2021 ($26.2 million excluding alternative investments). The
decrease was primarily due to decreased returns from alternative
investments and a smaller investment asset base due to the early
retirement of $130 million of subordinated debt in April 2022. This
decrease was partially offset by an increase in yield within the
fixed maturities portfolio due to the rise in rates.
- Book yield on the portfolio increased from 2.2% at December 31,
2021 to 3.5% at December 31, 2022.
- Due to rising interest rates and other macro-economic
considerations, the Company exited an alternative investment which
primarily invested in bank loans rated B and BB.
- Duration of the fixed income portfolio at December 31, 2022 was
1.7 years compared to duration of 3.0 years at December 31, 2021,
and 4.5 years at June 2021.
- Realized gains/(losses) – ($32.9) million in 2022 compared to
$15.9 million in 2021. Realized losses in 2022 were attributable
primarily to the Company shortening duration of its fixed income
investment portfolio as well as accelerating future maturities. At
current interest rates, GBLI anticipates that it will recover these
losses in 2024.
- The net loss for the twelve months ended December 31, 2022 of
$1.3 million was primarily the result of substantially shortening
the duration of the Company’s fixed income securities in its
investment portfolio, the impact of exiting an alternative
investment, and the write off of debt issuance costs related to the
redemption of $130 million of subordinated debt in April 2022
offset by the gain realized on the sale of the Farm, Ranch &
Stable business.
- Book value per share – Decrease of $3.57 per share from $48.44
at December 31, 2021 to $44.87 at December 31, 2022 primarily due
to rising interest rates, which the Company anticipates will be
recovered in 2024 due to the 1.7 year duration of the Company’s
fixed income investment portfolio. In addition to realized losses,
shareholders’ equity includes $49.5 million of net after-tax
unrealized fixed income losses most of which the Company
anticipates will be recovered by the end of 2024 given current
interest rates.
- Book value per share including cumulative dividends and
excluding accumulated other comprehensive income increased $0.98
per share from $52.00 at December 31, 2021 to $52.98 at December
31, 2022.
- Book value per share increased $1.11 per share from $43.76 at
September 30, 2022 to $44.87 at December 31, 2022 primarily due to
the stock repurchase program initiated in the fourth quarter of
2022. Under this program, the Company repurchased 907,082 shares
from third parties for an aggregate amount of $21.9 million, or
$24.17 per share through December 31, 2022. The Company is
authorized to repurchase up to $60 million of its class A common
shares.
- The Company incurred a total of $5.5 million in restructuring
charges in the fourth quarter of 2022 and the first quarter of
2023, which the Company anticipates will result in $16.0 million of
recurring annual expense savings beginning in 2023.
Global Indemnity Group, LLC’s Business Segment Information
Twelve Months Ended December 31, 2022 and 2021
Twelve Months Ended December
31, 2022
(Dollars in thousands)
Continuing
Lines
Exited
Lines
Total
Revenues:
Gross written premiums
$
559,736
$
167,867
$
727,603
Net written premiums
$
542,393
$
48,938
$
591,331
Net earned premiums
$
519,240
$
83,231
$
602,471
Other income
947
515
1,462
Total revenues
520,187
83,746
603,933
Losses and Expenses:
Net losses and loss adjustment
expenses
310,774
48,454
359,228
Acquisition costs and other
underwriting expenses
193,192
43,189
236,381
Income (loss) from segments
$
16,221
$
(7,897
)
$
8,324
Combined ratio analysis:
Loss ratio
59.9
%
58.2
%
59.6
%
Expense ratio
37.2
%
51.9
%
39.2
%
Combined ratio
97.1
%
110.1
%
98.8
%
Twelve Months Ended December
31, 2021
(Dollars in thousands)
Continuing
Lines
Exited
Lines
Total
Revenues:
Gross written premiums
$
477,242
$
204,880
$
682,122
Net written premiums
$
456,795
$
123,273
$
580,068
Net earned premiums
$
408,166
$
187,444
$
595,610
Other income
933
882
1,815
Total revenues
409,099
188,326
597,425
Losses and Expenses:
Net losses and loss adjustment
expenses
250,240
134,724
384,964
Acquisition costs and other
underwriting expenses
147,575
75,266
222,841
Income (loss) from segments
$
11,284
$
(21,664
)
$
(10,380
)
Combined ratio analysis:
Loss ratio
61.3
%
71.9
%
64.7
%
Expense ratio
36.2
%
40.2
%
37.4
%
Combined ratio
97.5
%
112.1
%
102.1
%
Global Indemnity Group, LLC’s Gross Written and Net Written
Premiums Results by Segment for the Twelve Months Ended December
31, 2022 and 2021
Twelve Months Ended December
31,
Gross Written Premiums
Net Written Premiums
2022
2021
%
Change
2022
2021
%
Change
Commercial Specialty
$
401,025
$
373,552
7.4
%
$
383,682
$
353,105
8.7
%
Reinsurance Operations
158,711
103,690
53.1
%
158,711
103,690
53.1
%
Continuing Lines
559,736
477,242
17.3
%
542,393
456,795
18.7
%
Exited Lines
167,867
204,880
(18.1
%)
48,938
123,273
(60.3
%)
Total
$
727,603
$
682,122
6.7
%
$
591,331
$
580,068
1.9
%
Commercial Specialty: Gross written premiums and net
written premiums increased 7.4% and 8.7%, respectively, for the
twelve months ended December 31, 2022 as compared to the same
period in 2021. The growth in gross written premiums and net
written premiums was primarily driven by increased pricing from
both rate and exposure growth.
Reinsurance Operations: Gross written premiums and net
written premiums both increased 53.1% for the twelve months ended
December 31, 2022 as compared to the same period in 2021. The
growth in gross written premiums and net written premiums was
primarily due to organic growth of existing casualty treaties.
Exited Lines: Gross written premiums and net written
premiums decreased 18.1% and 60.3%, respectively, for the twelve
months ended December 31, 2022 as compared to the same period in
2021. The decrease in gross written premiums and net written
premiums was primarily due to selling the manufactured home &
dwelling and farm businesses as well as exiting lines unrelated to
the Company’s continuing businesses.
Global Indemnity Group, LLC’s Combined Ratio for the Twelve
Months Ended December 31, 2022 and 2021
For the Continuing Lines business, the combined ratio was 97.1%
for the twelve months ended December 31, 2022, (Loss Ratio 59.9%
and Expense Ratio 37.2%) as compared to 97.5% (Loss Ratio 61.3% and
Expense Ratio 36.2%) for the twelve months ended December 31, 2021.
The consolidated combined ratio was 98.8% for the twelve months
ended December 31, 2022, (Loss Ratio 59.6% and Expense Ratio 39.2%)
as compared to 102.1% (Loss Ratio 64.7% and Expense Ratio 37.4%)
for the twelve months ended December 31, 2021.
- For the Continuing Lines business, the accident year casualty
loss ratio improved by 0.3 points to 61.1% in 2022 from 61.4% in
2021. The consolidated accident year casualty loss ratio improved
by 0.2 points to 60.6% in 2022 from 60.8% in 2021. The improvement
in the Continuing Lines accident year casualty loss ratio is
primarily due to a change in the mix of business partially offset
by higher claims severity within Commercial Specialty. The
improvement in the consolidated accident year casualty loss ratio
is primarily due to lower claims severity in the Farm, Ranch &
Stable business lines as well as a change in the mix of business
partially offset by higher claims severity within Commercial
Specialty.
- For the Continuing Lines business, the accident year property
loss ratio improved by 2.2 points to 58.7% in 2022 from 60.9% in
2021. The consolidated accident year property loss ratio improved
by 3.9 points to 61.6% in 2022 from 65.5% in 2021. The improvement
in the Continuing Lines accident year property loss ratio is
primarily due to lower catastrophe claims frequency and severity
partially offset by higher non-catastrophe claims severity. The
improvement in the consolidated accident year property loss ratio
is primarily due to lower catastrophe claims frequency and severity
partially offset by higher non-catastrophe claims frequency and
severity.
GLOBAL INDEMNITY GROUP, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars and shares in
thousands, except per share data)
For the Twelve Months
Ended December 31,
2022
2021
Gross written premiums
$
727,603
$
682,122
Net written premiums
$
591,331
$
580,068
Net earned premiums
$
602,471
$
595,610
Net investment income
27,627
37,020
Net realized investment gains (losses)
(32,929
)
15,887
Other income
31,365
29,751
Total revenues
628,534
678,268
Net losses and loss adjustment
expenses
359,228
384,964
Acquisition costs and other underwriting
expenses
236,381
222,841
Corporate and other operating expenses
24,421
27,179
Interest expense
3,004
10,481
Loss on extinguishment of debt
3,529
-
Income before income taxes
1,971
32,803
Income tax expense
2,821
3,449
Net income (loss)
(850
)
29,354
Less: Preferred stock distributions
440
440
Net income (loss) available to common
shareholders
$
(1,290
)
$
28,914
Per share data:
Net income (loss) available to common
shareholders
Basic
$
(0.09
)
$
2.00
Diluted (1)
$
(0.09
)
$
1.97
Weighted-average number of shares
outstanding
Basic
14,482
14,427
Diluted (1)
14,482
14,664
Cash distributions declared per common
share
$
1.00
$
1.00
Combined ratio analysis: (2)
Loss ratio
59.6
%
64.7
%
Expense ratio
39.2
%
37.4
%
Combined ratio
98.8
%
102.1
%
(1)
For the twelve months ended December 31, 2022, weighted-average
shares outstanding – basic was used to calculate diluted earnings
per share due to a net loss for the period.
(2)
The loss ratio, expense ratio and combined ratio are GAAP
financial measures that are generally viewed in the insurance
industry as indicators of underwriting profitability. The
loss ratio is the ratio of net losses and loss adjustment expenses
to net earned premiums. The expense ratio is the ratio of
acquisition costs and other underwriting expenses to net earned
premiums. The combined ratio is the sum of the loss and
expense ratios.
GLOBAL INDEMNITY GROUP, LLC
CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
ASSETS
December 31, 2022
December 31, 2021
Fixed Maturities:
Available for sale, at fair value
(amortized cost: 2022 - $1,301,723 and
2021 - $1,193,746; net
of allowance for expected credit losses
of: $0 in 2022 and 2021)
$
1,248,198
$
1,201,866
Equity securities, at fair value
17,520
99,978
Other invested assets
38,176
152,651
Total investments
1,303,894
1,454,495
Cash and cash equivalents
38,846
78,278
Premium receivables, net of allowance for
expected credit losses of
$3,322 at December 31, 2022 and $2,996 at
December 31, 2021
168,743
128,444
Reinsurance receivables, net of allowance
for expected credit losses of
$8,992 at December 31, 2022 and 2021
85,721
99,864
Funds held by ceding insurers
19,191
27,958
Deferred federal income taxes
46,677
37,329
Deferred acquisition costs
64,894
60,331
Intangible assets
14,810
20,261
Goodwill
4,820
5,398
Prepaid reinsurance premiums
17,421
53,494
Lease right of use assets
11,739
16,051
Other assets
23,597
30,906
Total assets
$
1,800,353
$
2,012,809
LIABILITIES AND SHAREHOLDERS’
EQUITY
Liabilities:
Unpaid losses and loss adjustment
expenses
$
832,404
$
759,904
Unearned premiums
269,353
316,566
Ceded balances payable
17,241
35,340
Payable for securities purchased
66
794
Contingent commissions
8,816
7,903
Debt
-
126,430
Lease liabilities
15,701
19,079
Other liabilities
30,543
40,172
Total liabilities
1,174,124
1,306,188
Shareholders’ equity:
Series A cumulative fixed rate preferred
shares, $1,000 par value;
100,000,000 shares authorized, shares
issued and outstanding:
4,000 and 4,000 shares, respectively,
liquidation preference:
$1,000 and $1,000 per share,
respectively
4,000
4,000
Common shares: no par value; 900,000,000
common shares authorized;
class A common shares issued: 10,876,041
and 10,574,589,
respectively; class A common shares
outstanding:10,073,660 and
10,557,093, respectively; class B common
shares issued and
outstanding: 3,793,612 and 3,947,206,
respectively
-
-
Additional paid-in capital (1)
451,305
447,406
Accumulated other comprehensive income,
net of taxes
(43,058
)
6,404
Retained earnings (1)
233,468
249,301
Class A common shares in treasury, at
cost: 802,381 and 17,496 shares, respectively
(19,486
)
(490
)
Total shareholders’ equity
626,229
706,621
Total liabilities and shareholders’
equity
$
1,800,353
$
2,012,809
(1)
Since the Company’s initial public offering in 2003, the Company
has returned $583 million to shareholders, including $510 million
in share repurchases and $73 million in
dividends/distributions.
GLOBAL INDEMNITY GROUP, LLC SELECTED
INVESTMENT DATA (Dollars in millions)
Market Value as of
December 31, 2022
December 31, 2021
Fixed maturities
$
1,248.2
$
1,201.9
Cash and cash equivalents
38.8
78.3
Total bonds and cash and cash
equivalents
1,287.0
1,280.2
Equities and other invested assets
55.7
252.6
Total cash and invested assets, gross
1,342.7
1,532.8
Payable for securities purchased
(0.1
)
(0.8
)
Total cash and invested assets, net
$
1,342.6
$
1,532.0
Total Investment Return
(1)
For the Twelve Months
Ended December 31,
2022
2021
Net investment income
$ 27.6
$ 37.0
Net realized investment gains (losses)
(32.9
)
15.9
Net unrealized investment losses
(61.6
)
(34.4
)
Net realized and unrealized investment
return
(94.5
)
(18.5
)
Total investment return
$ (66.9
)
$ 18.5
Average total cash and invested assets
$ 1,437.3
$ 1,490.9
Total investment return %
(4.7
%)
1.2
%
(1)
Amounts in this table are shown
on a pre-tax basis.
GLOBAL INDEMNITY GROUP, LLC SUMMARY
OF ADJUSTED OPERATING INCOME (Dollars and shares in thousands,
except per share data)
For the Twelve Months
Ended December 31,
2022
2021
Adjusted operating income, net of
tax
$
19,452
$
14,640
Adjustments:
Underwriting loss from Exited Lines
(6,239
)
(17,115
)
Adjusted operating income (loss) including
Exited Lines, net of tax (1)
13,213
(2,475
)
Net realized investment gains (losses)
(26,985
)
15,399
Net gain from sale of renewal rights
16,451
16,430
Loss on extinguishment of debt
(3,529
)
-
Net income (loss)
$
(850
)
$
29,354
Weighted average shares outstanding –
basic
14,482
14,427
Weighted average shares outstanding –
diluted
14,644
14,664
Adjusted operating income per share –
basic (2)
$
1.31
$
0.98
Adjusted operating income per share –
diluted (2)
$
1.30
$
0.97
(1)
Adjusted operating income (loss) including Exited Lines, net of
tax, excludes preferred shareholder distributions of $0.44 million
for each of the twelve months ended December 31, 2022 and 2021,
respectively.
(2)
The adjusted operating income per share calculation is net of
preferred shareholder distributions of $0.44 million for each of
the twelve months ended December 31, 2022 and 2021,
respectively.
Note Regarding Adjusted Operating Income
Adjusted operating income, a non-GAAP financial measure, is
equal to net income (loss) excluding after-tax net realized
investment gains (losses) and other unique charges not related to
operations. Adjusted operating income is not a substitute for net
income (loss) determined in accordance with GAAP, and investors
should not place undue reliance on this measure.
About Global Indemnity Group, LLC and its
subsidiaries
Global Indemnity Group, LLC (NYSE:GBLI), through its several
direct and indirect wholly owned subsidiary insurance companies,
provides both admitted and non-admitted specialty property and
specialty casualty insurance coverages and individual policyholder
coverages in the United States, as well as reinsurance worldwide.
Global Indemnity Group, LLC’s Continuing Lines segments are
Commercial Specialty and Reinsurance Operations. The Exited Lines
segment is comprised of business which the Company has decided it
will no longer write.
Forward-Looking Information
The forward-looking statements contained in this press release1
do not address a number of risks and uncertainties including
COVID-19. Investors are cautioned that Global Indemnity’s actual
results may be materially different from the estimates expressed
in, or implied, or projected by, the forward looking statements.
These statements are based on estimates and information available
to us at the time of this press release. All forward-looking
statements in this press release are based on information available
to Global Indemnity as of the date hereof. Please see Global
Indemnity’s filings with the Securities and Exchange Commission for
a discussion of risks and uncertainties which could impact the
Company and for a more detailed explication regarding
forward-looking statements. Global Indemnity does not assume any
obligation to update the forward-looking statements provided to
reflect events that occur or circumstances that exist after the
date on which they were made.
1 Disseminated pursuant to the "safe harbor" provisions of
Section 21E of the Security Exchange Act of 1934.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230308005618/en/
Stephen W. Ries Head of Investor Relations (610) 668-3270
sries@gbli.com
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