Global Indemnity Announces that Multiple Parties Have Expressed Preliminary Interest in Acquiring or Merging with Penn-America or Global Indemnity
June 09 2023 - 1:07PM
Business Wire
Global Indemnity Announces That It Increased Its Existing
Share Buy Back Authorization to $135 Million
Global Indemnity Group, LLC (NYSE:GBLI) (“Global Indemnity” or
the “Company”) announced that in recent days, multiple parties
indicated preliminary interest in exploring an acquisition of or
merger with Penn-America, Global Indemnity's insurance group, or an
acquisition of or merger with Global Indemnity itself. While the
Company is responding to certain of these preliminary indications
of interest, there is no assurance that an acceptable transaction
will result from such engagement. The Company does not intend to
make any further public comment regarding the process unless or
until it has been completed or suspended. Attached is the
“Chairman’s Letter to Shareholders” that accompanied the Company’s
2022 Annual Report, which was distributed in late April 2023.
During the pendency of the foregoing, but subject to material
developments, Global Indemnity intends to continue to buy back
shares pursuant to its previously announced authorization. In
addition, the Company’s Board of Directors approved an increase in
the existing share buyback authorization amount to $135 million.
The timing and actual number of shares repurchased, if any, will
depend on a variety of factors, including price, general business
and market conditions, and alternative investment opportunities.
Share repurchases under the authorization may be made through a
variety of methods, which may include open market purchases,
privately negotiated transactions or any other method or
combination of methods. The share repurchase program, however, does
not obligate Global Indemnity to acquire any amount of its common
shares, and the repurchase program may be suspended or discontinued
at any time at the Company's discretion.
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.
For more information, visit the Company’s website at
www.gbli.com.
Forward-Looking Information
The forward-looking statements contained in this press release
do not address a number of risks and uncertainties. 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 Securities Exchange Act of 1934.
DEAR FELLOW SHAREHOLDERS
April 28, 2023
Over the past five years, Global Indemnity’s
core Commercial Specialty lines within Penn-America Group increased
gross written premium by over 80% from $222 million in 2018 to $401
million in 2022 while also bettering the property &
casualty insurance industry’s loss ratio by 19 percentage points
(53% on average from 2018 to 2022 compared to 72% for the industry
over the same period). The Company’s growth over this period was
fueled by a 60% increase in premiums written by Penn-America
Group’s historic agency partners, as well as by the contribution of
new agency partners, which wrote $100 million in premium in 2022
alone. The capital to support the Company’s substantial growth was
self-funded, including by redeploying capital that
previously supported (i) two property exposed personal lines
businesses spun off in 2021 and 2022 and (ii) three large
international reinsurance treaties exited in the wake of Global
Indemnity’s redomestication (completed in late 2020).
Also, beginning in 2021 and continuing
through 2022, the Company dramatically repositioned its $1.4
billion investment portfolio to take full advantage of what the
Company believed at the time would be future dramatic increases in
interest rates, which did, in fact, occur. In this regard, the
average years to maturity of the Company’s fixed income investment
securities, which stood at 7.3 years at year-end 2020, was reduced
to 2.2 years at year-end 2022.
The repositioning of the Company’s investment
portfolio has already reaped great rewards. Investment Income from
the Company’s fixed income portfolio increased 28% to $33.6 million
in 2022, and the book yield on the Company’s fixed income portfolio
increased a whopping 60% to 3.5%. Additional increases in
investment income and book yield are anticipated based upon the
current configuration of the Company’s investment portfolio.
Further, the Company’s short-dated investment portfolio is expected
to generate approximately $900 million of cashflow in 2023 and 2024
due to the higher yields and the substantially shortened maturities
now embedded in the Company’s repositioned investment
portfolio.
The repositioning of the investment portfolio
did not come without near term cost, however. In 2022, the Company
incurred $101 million of realized and unrealized portfolio losses
in respect of its fixed income securities, which losses overwhelmed
the Company’s robust underwriting income and resulted in the
Company’s 2022 bottom line net loss of $0.85 million. However, the
great news here is that all of the $101 million of realized and
unrealized investment losses booked in 2022 are expected to be
fully recovered in 2023 and 2024 due to the higher yields
and the substantially shortened maturities now embedded in the
Company’s repositioned investment portfolio.
This year will mark the twentieth anniversary
of Global Indemnity’s initial public offering and my service as the
Company’s Chairman. Our focus on creating long-term value for our
owners has remained our singular goal. Over the past 19 years,
Global Indemnity generated $631 million of operating cash flow and
returned $583 million to shareholders via dividends and share
buybacks, while also retiring all Company debt, growing book value
by over 80%, and growing book value per share by over 200%
(inclusive of dividends and adjustment for the Company’s 2009
equity offering). Global Indemnity’s growth was achieved despite
the unprecedented 14 consecutive years of Federal Reserve mandated
zero to negative (post inflation) interest rates on investment
grade fixed income securities, which is the primary component (the
lifeblood) of a property & casualty insurance company’s
earnings.
On behalf of the Board, I thank you for your
continued support and look forward to rewarding your faith in us in
the year ahead—and for many more to come.
Very truly yours,
Saul A Fox, Chairman Global Indemnity
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version on businesswire.com: https://www.businesswire.com/news/home/20230609005370/en/
Media Stephen W. Ries Head of Investor Relations (610)
668-3270 sries@gbli.com
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