Global Indemnity Group, LLC Reports Second Quarter 2021 Results

Global Indemnity Limited
14 min read
0
In this article:

BALA CYNWYD, Pa., Aug. 04, 2021 (GLOBE NEWSWIRE) -- Global Indemnity Group, LLC (NASDAQ:GBLI) (the “Company”) today reported net income available to shareholders of $11.7 million for the six months ended June 30, 2021 compared to net loss available to shareholders of ($7.0) million for the corresponding period in 2020. Adjusted operating income was $4.0 million for the six months ended June 30, 2021 compared to $17.5 million for the corresponding period in 2020, which period included a $19.9 million release of prior year reserves as compared to a $2.1 million increase in prior year reserves in the current period. Gross Written Premiums increased 5.8% to $338.8 million for the six months ended June 30, 2021, including 9.4% growth in the Company’s core Commercial Specialty business segment. Gross Written Premiums of $338.8 million is the highest in any six month period since the Company became publicly traded.

Selected Operating and Balance Sheet Information
(Dollars in millions, except per share data)

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,

2021

2020

2021

2020

Gross Written Premiums

$

175.2

$

164.5

$

338.8

$

320.3

Net Written Premiums

$

160.7

$

147.3

$

308.3

$

286.4

Net income (loss) available to shareholders

$

6.3

$

37.6

$

11.7

$

(7.0

)

Net income (loss) available to shareholders per share

$

0.43

$

2.61

$

0.80

$

(0.49

)

Adjusted operating income

$

2.7

$

7.5

$

4.0

$

17.5

Adjusted operating income per share

$

0.18

$

0.52

$

0.28

$

1.22

Combined ratio analysis:

Loss ratio

60.9

%

47.4

%

62.0

%

50.6

%

Expense ratio

38.3

%

37.8

%

38.2

%

38.4

%

Combined ratio

99.2

%

85.2

%

100.2

%

89.0

%


As of
June 30,
2021

As of
March 31,
2021

As of
December 31,
2020

Book value per share (1)

$

48.79

$

48.00

$

49.62

Shareholders’ equity (2)

$

709.6

$

696.5

$

718.3

Cash and invested assets (3)

$

1,476.2

$

1,429.3

$

1,449.9

(1) Net of cumulative Company distributions/dividends to common shareholders totaling $3.50 per share, $3.25 per share, and $3.00 per share as of June 30, 2021, March 31, 2021, and December 31, 2020, 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 for the Three Months Ended June 30, 2021:

  • Gross written premiums and net written premiums increased 6.5% and 9.1%, respectively.

  • Underwriting income – $1.8 million in 2021 compared to $21.7 million in 2020. Excluding prior year loss development, underwriting income increased to $7.3 million in 2021 from $2.4 million in 2020 due to lower property catastrophe losses partially offset by higher severity on casualty and non-catastrophe property claims. 2020 included a reduction of overall prior accident year loss reserves of $19.3 million. 2021 included strengthening of prior accident year loss reserves of $5.5 million primarily due to an increase in severity from a 2018 Hurricane Michael claim.

  • Investment income (loss) – $10.6 million in 2021 compared to ($2.4) million in 2020. The increase was primarily due to increased returns from alternative investments partially offset by a decrease in yield within the fixed maturities portfolio.

  • Realized gains – $3.8 million in 2021 compared to $38.5 million in 2020. Realized gains in the 2nd quarter of 2020 reflected a recovery related to the changes in fair value on equity securities previously impacted by the disruption in the global financial markets as a result of COVID-19.

  • Tax expense - $0.8 million in 2021 compared to $7.0 million in 2020.

Selected Financial Data for the Six Months Ended June 30, 2021:

  • Gross written premiums and net written premiums increased 5.8% and 7.7%, respectively.

  • Underwriting income – $0.3 million in 2021 compared to $32.3 million in 2020. Excluding prior year loss development, underwriting income decreased to $2.4 million in 2021 from $12.4 million in 2020 due to higher severity on casualty and non-catastrophe property claims partially offset by lower property catastrophe losses. 2020 included a reduction of overall prior accident year loss reserves of $19.9 million. 2021 included reserve strengthening of $2.1 million primarily due to an increase of approximately $8 million from a 2018 Hurricane Michael claim.

  • Investment income – $20.5 million in 2021 compared to $7.8 million in 2020. The increase was primarily due to increased returns from alternative investments offset by a decrease in yield within the fixed maturities portfolio.

  • Realized gains/(loss) – $7.7 million in 2021 compared to ($29.7) million in 2020. Realized losses in 2020 were primarily due to the impact of changes in fair value on equity securities and derivatives due to disruption in the global financial markets experienced during the first quarter of 2020 as a result of COVID-19.

  • Tax expense/(benefit) - $0.6 million in 2021 compared to ($5.0) million in 2020.

About Global Indemnity Group, LLC and its subsidiaries

Global Indemnity Group, LLC (NASDAQ: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 four primary segments are:

  • Commercial Specialty

  • Specialty Property

  • Farm, Ranch & Stable

  • Reinsurance Operations

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.

Global Indemnity Group, LLC’s Combined Ratio for the Three and Six Months Ended June 30, 2021 and 2020

For the three months ended June 30, 2021, the Company recorded a combined ratio of 99.2% (Loss Ratio 60.9% and Expense Ratio 38.3%) as compared to 85.2% (Loss Ratio 47.4% and Expense Ratio 37.8%) for the three months ended June 30, 2020.

  • The Company’s accident year casualty loss ratio increased by 6.8 points to 58.9% in 2021 from 52.1% in 2020 primarily due to higher claim frequency.

  • The Company’s accident year property loss ratio improved by 11.3 points to 55.6% in 2021 from 66.9% in 2020 primarily due to lower catastrophe claim frequency and severity within Insurance Operations partially offset by higher claim severity of non-catastrophe property claims.

For the six months ended June 30, 2021, the Company recorded a combined ratio of 100.2% (Loss Ratio 62.0% and Expense Ratio 38.2%) as compared to 89.0% (Loss Ratio 50.6% and Expense Ratio 38.4%) for the six months ended June 30, 2020.

  • The Company’s accident year casualty loss ratio increased by 2.6 points to 58.3% in 2021 from 55.7% in 2020 primarily due to higher claim frequency.

  • The Company’s accident year property loss ratio increased by 5.1 points to 63.9% in 2021 from 58.8% in 2020 primarily due to higher claim severity for non-catastrophe property claims within Insurance Operations partially offset by lower catastrophe claim frequency and severity.

Global Indemnity Group, LLC’s Gross Written and Net Written Premiums Results by Segment for the Three and Six Months Ended June 30, 2021 and 2020

Three Months Ended June 30,

Gross Written Premiums

Net Written Premiums

2021

2020

%
Change

2021

2020

%
Change

Commercial Specialty

$

96,680

$

87,297

10.7

%

$

88,332

$

77,880

13.4

%

Specialty Property

33,013

37,978

(13.1

%)

29,749

33,075

(10.1

%)

Farm, Ranch & Stable

20,851

23,222

(10.2

%)

17,880

20,257

(11.7

%)

Reinsurance Operations

24,692

16,052

53.8

%

24,692

16,052

53.8

%

Total

$

175,236

$

164,549

6.5

%

$

160,653

$

147,264

9.1

%


Six Months Ended June 30,

Gross Written Premiums

Net Written Premiums

2021

2020

%
Change

2021

2020

%
Change

Commercial Specialty

$

184,012

$

168,128

9.4

%

$

166,847

$

150,363

11.0

%

Specialty Property

66,371

73,221

(9.4

%)

59,448

63,082

(5.8

%)

Farm, Ranch & Stable

41,853

45,355

(7.7

%)

35,483

39,362

(9.9

%)

Reinsurance Operations

46,558

33,569

38.7

%

46,558

33,569

38.7

%

Total

$

338,794

$

320,273

5.8

%

$

308,336

$

286,376

7.7

%

Commercial Specialty: Gross written premiums and net written premiums increased 10.7% and 13.4%, respectively, for the three months ended June 30, 2021 as compared to the same period in 2020. Gross written premiums and net written premiums increased 9.4% and 11.0%, respectively, for the six months ended June 30, 2021 as compared to the same period in 2020. The growth in gross written premiums and net written premiums was primarily driven by organic growth in the Company’s excess and surplus lines business from existing agents, increased pricing, and several new programs partially offset by actions taken to reduce risk and increase profitability within Property Brokerage.

Specialty Property: Gross written premiums and net written premiums decreased by 13.1% and 10.1%, respectively, for the three months ended June 30, 2021 as compared to the same period in 2020. Gross written premiums and net written premiums decreased 9.4% and 5.8%, respectively, for the six months ended June 30, 2021 as compared to the same period in 2020. The decreases are primarily due to a continued reduction of both catastrophe-exposed business and business not providing an adequate return on capital.

Farm, Ranch & Stable: Gross written premiums and net written premiums decreased by 10.2% and 11.7%, respectively, for the three months ended June 30, 2021 as compared to the same period in 2020. Gross written premiums and net written premiums decreased 7.7% and 9.9%, respectively, for the six months ended June 30, 2021 as compared to the same period in 2020. The decrease in gross written premiums and net written premiums was primarily due to an effort to reduce exposure in catastrophe prone areas to improve overall profitability.

Reinsurance Operations: Gross written premiums and net written premiums both increased 53.8% for the three months ended June 30, 2021, as compared to the same period in 2020. Gross written premiums and net written premiums both increased 38.7% for the six months ended June 30, 2021 as compared to the same period in 2020. The growth was primarily organic growth of an existing casualty treaty and the assumption of three smaller casualty treaties.


GLOBAL INDEMNITY GROUP, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in thousands, except per share data)

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,

2021

2020

2021

2020

Gross written premiums

$

175,236

$

164,549

$

338,794

$

320,273

Net written premiums

$

160,653

$

147,264

$

308,336

$

286,376

Net earned premiums

$

149,408

$

141,847

$

293,108

$

286,315

Net investment income (loss)

10,633

(2,359

)

20,469

7,770

Net realized investment gains (losses)

3,833

38,507

7,652

(29,655

)

Other income

521

766

898

931

Total revenues

164,395

178,761

322,127

265,361

Net losses and loss adjustment expenses

90,938

67,297

181,721

144,944

Acquisition costs and other underwriting expenses

57,213

53,578

111,977

109,990

Corporate and other operating expenses

6,329

8,618

10,605

12,841

Interest expense

2,696

4,712

5,291

9,577

Income (loss) before income taxes

7,219

44,556

12,533

(11,991

)

Income tax expense (benefit)

844

7,005

641

(4,964

)

Net income (loss)

6,375

37,551

11,892

(7,027

)

Less: Preferred stock distributions

110

-

220

-

Net income (loss) available to common shareholders

$

6,265

$

37,551

$

11,672

$

(7,027

)

Per share data:

Net income (loss) available to common shareholders

Basic

$

0.43

$

2.63

$

0.81

($

0.49

)

Diluted (1)

$

0.43

$

2.61

$

0.80

($

0.49

)

Weighted-average number of shares outstanding

Basic

14,412

14,276

14,397

14,263

Diluted (1)

14,682

14,389

14,651

14,263

Cash dividends/distributions declared per common share

$

0.25

$

0.25

$

0.50

$

0.50

Combined ratio analysis: (2)

Loss ratio

60.9

%

47.4

%

62.0

%

50.6

%

Expense ratio

38.3

%

37.8

%

38.2

%

38.4

%

Combined ratio

99.2

%

85.2

%

100.2

%

89.0

%

(1) For the six months ended June 30, 2020, weighted-average number of 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)
June 30, 2021

December 31, 2020

Fixed Maturities:

Available for sale, at fair value
(amortized cost: 2021 - $1,150,603 and 2020 - $1,149,009; net
of allowance for expected credit losses of: $0 in 2021 and 2020)

$

1,174,097

$

1,191,186

Equity securities, at fair value

90,669

98,990

Other invested assets

166,003

97,018

Total investments

1,430,769

1,387,194

Cash and cash equivalents

49,105

67,359

Premiums receivable, net of allowance for expected credit losses of

$2,822 at June 30, 2021 and $2,900 at December 31, 2020

123,932

109,431

Reinsurance receivables, net of allowance for expected credit losses of

$8,992 at June 30, 2021 and December 31, 2020

90,247

88,708

Funds held by ceding insurers

33,793

45,480

Deferred federal income taxes

37,169

34,265

Deferred acquisition costs

69,061

65,195

Intangible assets

20,698

20,962

Goodwill

6,521

6,521

Prepaid reinsurance premiums

15,141

12,881

Lease right of use assets

19,979

21,077

Other assets

40,902

45,835

Total assets

$

1,937,317

$

1,904,908

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:

Unpaid losses and loss adjustment expenses

$

697,618

$

662,811

Unearned premiums

308,984

291,495

Ceded balances payable

14,339

8,943

Payable for securities purchased

3,707

4,667

Contingent commissions

6,420

10,832

Debt

126,359

126,288

Lease liabilities

21,566

22,950

Other liabilities

48,759

58,598

Total liabilities

1,227,752

1,186,584

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: 10,532,270 and 10,263,722,

respectively; class A common shares outstanding: 10,515,177 and

10,263,722, respectively; class B common shares issued and

outstanding: 3,947,206 and 4,133,366, respectively

-

-

Additional paid-in capital (1)

447,804

445,051

Accumulated other comprehensive income, net of taxes

18,968

34,308

Retained earnings (1)

239,272

234,965

Class A common shares in treasury, at cost: 17,093 and 0 shares, respectively

(479

)

-

Total shareholders’ equity

709,565

718,324

Total liabilities and shareholders’ equity

$

1,937,317

$

1,904,908

(1) Since the Company’s initial public offering in 2003, the Company repurchased 20.2 million shares for a total of $488 million. These share repurchases are reflected by a $488 million reduction of the Company’s additional paid-in capital and retained earnings as of June 30, 2021 and December 31, 2020. Retained earnings are also net of $51 million and $43 million of cumulative historic Company dividends/distributions to shareholders as of June 30, 2021 and December 31, 2020, respectively.


GLOBAL INDEMNITY GROUP, LLC
SELECTED INVESTMENT DATA
(Dollars in millions)

Market Value as of

(Unaudited)
June 30, 2021

December 31, 2020

Fixed maturities

$

1,174.1

$

1,191.2

Cash and cash equivalents

49.1

67.4

Total bonds and cash and cash equivalents

1,223.2

1,258.6

Equities and other invested assets

256.7

196.0

Total cash and invested assets, gross

1,479.9

1,454.6

Payable for securities purchased

(3.7

)

(4.7

)

Total cash and invested assets, net

$

1,476.2

$

1,449.9


Total Investment Return (1)

For the Three Months Ended June 30,
(unaudited)

For the Six Months Ended June 30,
(unaudited)

2021

2020

2021

2020

Net investment income (loss)

$

10.6

$

(2.4

)

$

20.4

$

7.8

Net realized investment gains (losses)

3.8

38.5

7.7

(29.7

)

Net unrealized investment (losses)

11.3

26.3

(18.9

)

22.2

Net realized and unrealized investment gains (losses)

15.1

64.8

(11.2

)

(7.5

)

Total net investment income and gains

$

25.7

$

62.4

$

9.2

$

0.3

Average total cash and invested assets

$

1,452.8

$

1,592.0

$

1,463.0

$

1,620.2

Total investment return %

1.8

%

3.9

%

0.6

%

0.0

%

(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 June 30,

For the Six Months
Ended June 30,

2021

2020

2021

2020

Adjusted operating income, net of tax

$

2,702

$

7,480

$

4,045

$

17,529

Adjustments:

Net realized investment gains (losses)

3,563

30,071

7,627

(24,556

)

Net income (loss) available to common shareholders

$

6,265

$

37,551

$

11,672

$

(7,027

)

Weighted average shares outstanding – basic

14,412

14,276

14,397

14,263

Weighted average shares outstanding – diluted

14,682

14,389

14,651

14,409

Adjusted operating income per share – basic

$

0.19

$

0.52

$

0.28

$

1.23

Adjusted operating income per share – diluted

$

0.18

$

0.52

$

0.28

$

1.22

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.

Contact:

Media
Stephen W. Ries
Head of Investor Relations
(610) 668-3270
sries@global-indemnity.com


Advertisement

Recommended Stories