Global Indemnity Group, LLC Reports Year Ended 2022 Results

About this update from Global Indemnity Group, Llc

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

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