Global Indemnity Group, LLC Reports First Quarter 2023 Results

About this update from Global Indemnity Group, Llc

WILMINGTON, Del. --(BUSINESS WIRE)-- 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 business 1 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 [email protected] Source: Global Indemnity Group, LLC

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