Global Indemnity Group, LLC (NYSE:GBLI) (the “Company”) today
reported net income available to shareholders for the three months
ended March 31, 2023, of $2.4 million compared to net loss
available to shareholders of $14.9 million for the corresponding
period in 2022. Adjusted operating income, which excludes realized
gains and losses and the results of Exited Lines, was $3.4 million
for the three months ended March 31, 2023, compared to $3.8 million
for the three months ended March 31, 2022.
Selected Operating and Balance
Sheet Information
Consolidated Results Including
Continuing Lines and Exited Lines
(Dollars in millions, except per
share data)
For the Three Months
Ended March 31,
2023
2022
Gross Written Premiums
$
123.0
$
191.0
Net Written Premiums
$
115.9
$
159.5
Net Earned Premiums
$
140.1
$
148.8
Net income (loss) available to
shareholders
$
2.4
$
(14.9
)
Net income (loss) from Continuing
Lines
$
2.1
$
(16.8
)
Net income from Exited Lines (1)
$
0.3
$
1.9
Net income (loss) available to
shareholders per share
$
0.17
$
(1.03
)
Adjusted operating income
$
3.4
$
3.8
Adjusted operating income per share
$
0.24
$
0.25
Combined ratio analysis:
Loss ratio
62.8
%
56.9
%
Expense ratio
38.2
%
38.1
%
Combined ratio
101.0
%
95.0
%
(1)
Underwriting loss from Exited Lines, net
of tax.
As of
March 31,
2023
As of
December 31,
2022
Book value per share (1)
$
45.68
$
44.87
Book value per share plus cumulative
dividends and excluding AOCI
$
53.46
$
52.98
Shareholders’ equity (2)
$
628.2
$
626.2
Cash and invested assets (3)
$
1,347.1
$
1,342.6
Shares Outstanding (in millions)
13.7
13.9
(1) Net of cumulative Company
distributions to common shareholders totaling $5.25 per share and
$5.00 per share as of March 31, 2023 and December 31, 2022,
respectively.
(2) Shareholders’ equity includes $4
million of series A cumulative fixed rate preferred shares.
(3) Including receivable/(payable) for
securities sold/(purchased).
Business Highlights
- Commercial Specialty, excluding terminated business1
2, performed as follows:
- Package Specialty E&S, the Company’s primary division
within its Commercial Specialty segment, increased gross written
premiums by 18.7% to $57.3 million in 2023 from $48.2 million in
2022 driven by new agency appointments, strong rate increases as
well as exposure growth in both property and general
liability.
- Targeted Specialty E&S decreased gross written premiums by
9.8% to $36.8 million in 2023 from $40.8 million in 2022 driven by
actions taken to improve underwriting results by not renewing
underperforming business.
- Commercial Specialty’s gross written, which includes Package
Specialty E&S and Targeted Specialty E&S, grew by
5.7%.
- The Company added 9 new agent office appointments in the first
three months of 2023, increasing the size of its national agency
force to 365.
- Commercial Specialty incurred an accident year gross casualty
loss ratio of 56.2% in both 2023 and 2022. The average accident
year gross casualty loss ratio over the past five years was
55.2.
- Commercial Specialty incurred an accident year gross property
loss ratio of 65.2% which is 12 points higher than both 2022 and
the average accident year gross property loss ratio over the past
five years.
- The increase in the accident year gross property loss ratio is
primarily due to higher non-catastrophe claims severity mainly due
to fire losses at vacant properties in the Los Angeles area. As the
growing homeless population sought shelter from low winter
temperatures and high levels of rainfall, fires were set in
commercial vacant buildings.
- The Company has taken underwriting action to address exposure
in light of the evolving conditions in Los Angeles and other urban
areas.
- Since March 31, 2023, the severity of property losses has been
much lower than the losses experienced in the first three months of
2023.
- Net investment income increased 82.2% to $12.0 million in 2023
from $6.6 million in 2022.
- The increase in net investment income was primarily due to the
strategies employed by the Company to take advantage of rising
interest rates, which resulted in a 56% increase in book yield on
the fixed income portfolio to 3.6% at March 31, 2023 from 2.3% at
March 31, 2022, while the average maturity of these securities was
shortened to 2.5 years at March 31, 2023 from 5.1 years at March
31, 2022.
- Approximately $900 million, or 72%, of the Company’s fixed
income portfolio will mature over the next two years, positioning
the Company to continue to increase book yield by investing
maturities in higher yielding bonds.
- Book value per share increased $0.81 per share, or 1.8%, to
$45.68 at March 31, 2023 from $44.87 at December 31, 2022.
- The Company expects to generate between $415 million and $430
million of Gross Written Premium in its Commercial Specialty
segment for the full year 2023.
1 Reflecting the Company's focus on “Main
Street Specialty E&S” clients and continuing efforts to
terminate business that does not meet the Company's underwriting
criteria, which are continuously refined. References to gross
written premiums and loss ratios in this Business Highlights
section that exclude terminated business within the Commercial
Specialty segment contained in Continuing lines do not include (i)
terminated gross written premiums within Package Specialty E&S
of $1.1 million in 2023 and $3.2 million in 2022 in habitational
lines in New York City and (ii) terminated gross written premiums
within Targeted Specialty E&S of $0.4 million in 2023 and $10.7
million in 2022 concentrated in a large corporate restaurant
account.
2 Represents Non-GAAP financial measures
or ratios. See “Reconciliation of Non-GAAP Financial Measures and
Ratios” at the end of this press release.
Global Indemnity Group, LLC’s Business Segment Information
for the Three Months Ended March 31, 2023 and 2022
For the Three Months Ended
March 31, 2023
(Dollars in thousands)
Continuing Lines
Exited Lines
Total
Revenues:
Gross written premiums
$
118,924
$
4,061
$
122,985
Net written premiums
$
114,650
$
1,211
$
115,861
Net earned premiums
$
128,029
$
12,043
$
140,072
Other income
258
77
335
Total revenues
128,287
12,120
140,407
Losses and Expenses:
Net losses and loss adjustment
expenses
81,382
6,619
88,001
Acquisition costs and other
underwriting expenses
48,342
5,136
53,478
Income (loss) from segments
$
(1,437)
$
365
$
(1,072)
Combined ratio analysis:
Loss ratio
63.6%
55.0%
62.8%
Expense ratio
37.8%
42.6%
38.2%
Combined ratio
101.4%
97.6%
101.0%
For the Three Months Ended
March 31, 2022
(Dollars in thousands)
Continuing Lines
Exited Lines
Total
Revenues:
Gross written premiums
$
143,844
$
47,139
$
190,983
Net written premiums
$
139,159
$
20,323
$
159,482
Net earned premiums
$
125,495
$
23,328
$
148,823
Other income
239
200
439
Total revenues
125,734
23,528
149,262
Losses and Expenses:
Net losses and loss adjustment
expenses
74,718
9,977
84,695
Acquisition costs and other
underwriting expenses
45,487
11,205
56,692
Income from segments
$
5,529
$
2,346
$
7,875
Combined ratio analysis:
Loss ratio
59.5%
42.8%
56.9%
Expense ratio
36.2%
48.0%
38.1%
Combined ratio
95.7%
90.8%
95.0%
Global Indemnity Group, LLC’s Gross Written and Net Written
Premiums Results by Segment for the Three Months Ended March 31,
2023 and 2022
Three Months Ended March
31,
Gross Written Premiums
Net Written Premiums
2023
2022
%
Change
2023
2022
%
Change
Commercial Specialty
$ 95,508
$ 102,848
(7.1%)
$ 91,234
$ 98,163
(7.1%)
Reinsurance Operations
23,416
40,996
(42.9%)
23,416
40,996
(42.9%)
Continuing Lines
118,924
143,844
(17.3%)
114,650
139,159
(17.6%)
Exited Lines
4,061
47,139
(91.4%)
1,211
20,323
(94.0%)
Total
$ 122,985
$ 190,983
(35.6%)
$ 115,861
$ 159,482
(27.4%)
Commercial Specialty: Gross written premiums and net
written premiums both decreased 7.1% for the three months ended
March 31, 2023 as compared to the same period in 2022. The decrease
in gross written premiums and net written premiums was primarily
driven by the non-renewal of a restaurant book of business as well
as actions taken to improve underwriting results by nonrenewing
underperforming business partially offset by increased pricing.
Package Specialty E&S, the Company’s primary division within
its Commercial Specialty segment, increased gross written premiums
excluding terminated business2 by 18.7% to $57.3 million in 2023
from $48.2 million in 2022 driven by new agency appointments,
strong rate increases as well as exposure growth in both property
and general liability.
Targeted Specialty E&S, a division within the Company’s
Commercial Specialty segment, decreased gross written premiums
excluding terminated business2 by 9.8% to $36.8 million in 2023
from $40.8 million in 2022 driven by actions taken to improve
underwriting results by not renewing underperforming business.
Reinsurance Operations: Gross written premiums and net
written premiums both decreased 42.9% for the three months ended
March 31, 2023 as compared to the same period in 2022. The
reduction in gross written premiums and net written premiums was
primarily due to the non-renewal of a casualty treaty.
Exited Lines: Gross written premiums and net written
premiums decreased 91.4% and 94.0%, respectively, for the three
months ended March 31, 2023 as compared to the same period in 2022.
The decrease in gross written premiums and net written premiums was
primarily due to selling the manufactured home & dwelling and
farm businesses in 2022.
Global Indemnity Group, LLC’s Combined Ratio for the Three
Months Ended March 31, 2023 and 2022
For the Continuing Lines business, the combined ratio was 101.4%
for the three months ended March 31, 2023, (Loss Ratio 63.6% and
Expense Ratio 37.8%) as compared to 95.7% (Loss Ratio 59.5% and
Expense Ratio 36.2%) for the three months ended March 31, 2022. The
consolidated combined ratio was 101.0% for the three months ended
March 31, 2023, (Loss Ratio 62.8% and Expense Ratio 38.2%) as
compared to 95.0% (Loss Ratio 56.9% and Expense Ratio 38.1%) for
the three months ended March 31, 2022.
- For the Continuing Lines business, the accident year casualty
loss ratio increased by 1.3 points to 59.8% in 2023 from 58.5% in
2022. The consolidated accident year casualty loss ratio increased
by 1.7 points to 60.1% in 2023 from 58.4% in 2022. The increase in
the Consolidated and Continuing Lines accident year casualty loss
ratio is primarily due to higher claims severity within Commercial
Specialty.
- For the Continuing Lines business, the accident year property
loss ratio increased by 11.9 points to 68.7% in 2023 from 56.8% in
2022. The consolidated accident year property loss ratio increased
by 8.3 points to 68.3% in 2023 from 60.0% in 2022. The increase in
the Consolidated and Continuing Lines accident year property loss
ratio is primarily due to higher non-catastrophe claims severity
mainly due to fire losses.
### Note: Tables Follow
GLOBAL INDEMNITY GROUP,
LLC
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(Dollars and shares in thousands,
except per share data)
For the Three Months
Ended March 31,
2023
2022
Gross written premiums
$
122,985
$
190,983
Net written premiums
$
115,861
$
159,482
Net earned premiums
$
140,072
$
148,823
Net investment income
12,008
6,592
Net realized investment losses
(1,520
)
(25,385
)
Other income
354
426
Total revenues
150,914
130,456
Net losses and loss adjustment
expenses
88,001
84,695
Acquisition costs and other underwriting
expenses
53,478
56,692
Corporate and other operating expenses
6,368
4,660
Interest expense
-
2,595
Income (loss) before income taxes
3,067
(18,186
)
Income tax expense (benefit)
573
(3,413
)
Net income (loss)
2,494
(14,773
)
Less: Preferred stock distributions
110
110
Net income (loss) available to common
shareholders
$
2,384
$
(14,883
)
Per share data:
Net income (loss) available to common
shareholders
Basic
$
0.17
$
(1.03
)
Diluted (1)
$
0.17
$
(1.03
)
Weighted-average number of shares
outstanding
Basic
13,671
14,515
Diluted (1)
13,929
14,515
Cash distributions declared per common
share
$
0.25
$
0.25
Combined ratio analysis: (2)
Loss ratio
62.8
%
56.9
%
Expense ratio
38.2
%
38.1
%
Combined ratio
101.0
%
95.0
%
(1)
For the three months ended March 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
(Unaudited) March 31,
2023
December 31, 2022
Fixed Maturities:
Available for sale, at fair value
(amortized cost: 2023 - $1,300,148 and
2022 - $1,301,723; net
of allowance for expected credit losses
of: $0 in 2023 and 2022)
$
1,257,357
$
1,248,198
Equity securities, at fair value
17,342
17,520
Other invested assets
37,669
38,176
Total investments
1,312,368
1,303,894
Cash and cash equivalents
35,737
38,846
Premium receivables, net of allowance for
expected credit losses of
$3,379 at March 31, 2023 and $3,322 at
December 31, 2022
154,624
168,743
Reinsurance receivables, net of allowance
for expected credit losses of
$8,992 at March 31, 2023 and December 31,
2022
86,772
85,721
Funds held by ceding insurers
17,339
19,191
Deferred federal income taxes
44,489
47,099
Deferred acquisition costs
58,354
64,894
Intangible assets
14,721
14,810
Goodwill
4,820
4,820
Prepaid reinsurance premiums
14,224
17,421
Lease right of use assets
11,265
11,739
Other assets
22,565
23,597
Total assets
$
1,777,278
$
1,800,775
LIABILITIES AND SHAREHOLDERS’
EQUITY
Liabilities:
Unpaid losses and loss adjustment
expenses
$
857,520
$
832,404
Unearned premiums
241,945
269,353
Ceded balances payable
5,997
17,241
Payable for securities purchased
1,008
66
Contingent commissions
3,772
8,816
Lease liabilities
15,042
15,701
Other liabilities
23,756
30,965
Total liabilities
1,149,040
1,174,546
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: 10,928,380
and 10,876,041,
respectively; class A common shares
outstanding: 9,872,697 and
10,073,660, respectively; class B common
shares issued and
outstanding: 3,793,612 and 3,793,612,
respectively
-
-
Additional paid-in capital (1)
452,385
451,305
Accumulated other comprehensive income,
net of taxes
(34,615
)
(43,058
)
Retained earnings (1)
232,506
233,468
Class A common shares in treasury, at
cost: 1,055,683 and 802,381 shares, respectively
(26,038
)
(19,486
)
Total shareholders’ equity
628,238
626,229
Total liabilities and shareholders’
equity
$
1,777,278
$
1,800,775
(1)
Since the Company’s initial public
offering in 2003, the Company has returned $594 million to
shareholders, including $517 million in share repurchases and $77
million in dividends/distributions.
GLOBAL INDEMNITY GROUP, LLC
SELECTED INVESTMENT DATA
(Dollars in millions)
Market Value as of
(Unaudited) March 31,
2023
December 31, 2022
Fixed maturities
$
1,257.4
$
1,248.2
Cash and cash equivalents
35.7
38.8
Total bonds and cash and cash
equivalents
1,293.1
1,287.0
Equities and other invested assets
55.0
55.7
Total cash and invested assets, gross
1,348.1
1,342.7
Payable for securities purchased
(1.0
)
(0.1
)
Total cash and invested assets, net
$
1,347.1
$
1,342.6
Total Investment Return
(1)
For the Three Months Ended
March 31, (unaudited)
2023
2022
Net investment income
$
12.0
$
6.6
Net realized investment losses
(1.5
)
(25.4
)
Net unrealized investment gains
(losses)
10.5
(23.8
)
Net realized and unrealized investment
return
9.0
(49.2
)
Total investment return
$
21.0
$
(42.6
)
Average total cash and invested assets
$
1,344.9
$
1,498.3
Total investment return %
1.6
%
(2.8
%)
(1)
Amounts in this table are shown on a
pre-tax basis.
GLOBAL INDEMNITY GROUP,
LLC
SUMMARY OF ADJUSTED OPERATING
INCOME
(Unaudited)
(Dollars and shares in thousands,
except per share data)
For the Three Months Ended
March 31
2023
2022
Adjusted operating income, net of
tax
$
3,428
$
3,803
Adjustments:
Underwriting income from Exited Lines
288
1,853
Adjusted operating income including Exited
Lines, net of tax (1)
3,716
5,656
Net realized investment losses
(1,222
)
(20,429
)
Net income (loss)
$
2,494
$
(14,773
)
Weighted average shares outstanding –
basic
13,671
14,515
Weighted average shares outstanding –
diluted
13,929
14,701
Adjusted operating income per share –
basic (2)
$
0.24
$
0.25
Adjusted operating income per share –
diluted (2)
$
0.24
$
0.25
(1)
Adjusted operating income including Exited
Lines, net of tax, excludes preferred shareholder distributions of
$0.11 million for each of the three months ended March 31, 2023 and
2022, respectively.
(2)
The adjusted operating income per share
calculation is net of preferred shareholder distributions of $0.11
million for each of the three months ended March 31, 2023 and 2022,
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 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.
Reconciliation of non-GAAP financial measures and
ratios
The table below, which contains incurred losses and loss
adjustment expenses for the Commercial Specialty segment within
Continuing Lines, reconciles the non-GAAP measures or ratios, which
excludes the impact of prior accident year adjustments and ceded
losses and loss adjustment expenses, to its most directly
comparable GAAP measure or ratio. The Company believes the non-GAAP
measures or ratios are useful to investors when evaluating the
Company's underwriting performance as trends within Commercial
Specialty may be obscured by prior accident year adjustments and
ceded losses and loss adjustment expenses. These non-GAAP measures
or ratios should not be considered as a substitute for its most
directly comparable GAAP measure or ratio and does not reflect the
overall underwriting profitability of the Company.
For the Three Months Ended
March 31,
2023
2022
Losses $
Loss Ratio
Losses $
Loss Ratio
Casualty
Gross losses and loss adjustment expenses
excluding terminated business (1)
$28,810
56.2%
$27,508
56.2%
Gross losses and loss adjustment expenses
on terminated business (1)
4,342
91.7%
5,127
59.7%
Gross losses and loss adjustment expenses
(1)
$33,152
59.2%
$ 32,635
56.7%
Ceded losses and loss adjustment
expenses
(415)
(366)
Net losses and loss adjustment expenses
(2)
$32,737
59.0%
$ 32,269
56.8%
Property
Gross losses and loss adjustment expenses
excluding terminated business (1)
$26,497
65.2%
$20,211
53.2%
Gross losses and loss adjustment expenses
on terminated business (1)
57
8.2%
40
6.8%
Gross losses and loss adjustment expenses
(1)
$ 26,554
64.3%
$ 20,251
52.5%
Ceded losses and loss adjustment
expenses
(650)
(747)
Net losses and loss adjustment expenses
(2)
$ 25,904
68.7%
$ 19,504
56.8%
Commercial
Specialty
Gross losses and loss adjustment expenses
excluding terminated business (1)
$55,307
60.2%
$47,719
54.9%
Gross losses and loss adjustment expenses
on terminated business (1)
4,399
81.2%
5,167
56.3%
Gross losses and loss adjustment expenses
(1)
$ 59,706
61.4%
$ 52,886
55.0%
Ceded losses and loss adjustment
expenses
(1,065)
(1,113)
Net losses and loss adjustment expenses
(2)
$ 58,641
62.9%
$ 51,773
56.8%
(1)
Non-GAAP measure / ratio
(2)
Most directly comparable GAAP measure /
ratio
The table below, which contains gross written premiums for the
Commercial Specialty segment within Continuing Lines, reconciles
the non-GAAP measures, which excludes the impact of terminated
business, to its most directly comparable GAAP measure. The Company
believes the non-GAAP measures are useful to investors when
evaluating the Company's underwriting performance as trends within
Commercial Specialty may be obscured by the terminated business.
These non-GAAP measures should not be considered as a substitute
for its most directly comparable GAAP measure and does not reflect
the overall underwriting profitability of the Company.
For the Three Months
Ended March 31,
2023
2022
Package Specialty E&S
Gross written premiums excluding
terminated business (1)
$
57,277
$
48,249
Gross written premiums from terminated
business
1,058
3,152
Total gross written premiums (2)
$
58,335
$
51,401
Targeted Specialty E&S
Gross written premiums excluding
terminated business (1)
$
36,778
$
40,761
Gross written premiums from terminated
business
395
10,686
Total gross written premiums (2)
$
37,173
$
51,447
Commercial Specialty
Gross written premiums excluding
terminated business (1)
$
94,055
$
89,010
Gross written premiums from terminated
business
1,453
13,838
Total gross written premiums (2)
$
95,508
$
102,848
(1)
Non-GAAP measure / ratio
(2)
Most directly comparable GAAP measure /
ratio
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 release3
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.
[3] 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/20230509006242/en/
Stephen W. Ries Head of Investor Relations (610) 668-3270
sries@gbli.com
Global Indemnity (NYSE:GBLI)
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