GBLI: UPDATE: The company hosted an investor event on September 21st in New York City which updated analysts and investors on the current state of the company.
NYSE:GBLI
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Global Indemnity Group (NYSE:GBLI) hosted an in-person investor meeting in New York City on September 21st which covered a wide range of topics including portfolio shifts, strategic vision, and investment policy actions.
The company is actively moving from a holding company comprised of different entities to one focused branded company with businesses whose names are representative and connected to the company and the GBLI brand. This allows the company to improve trading relationships across multiple constituencies including brokers, partners and customers. This shared brand recognition allows the company to execute as one entity and expand product offerings and solutions, as well as improve the customer experience.
The company reiterated its strong growth in its core businesses as well as the move to more casualty-based business and the reduction of its property-based lines. To that end, its continuing lines businesses increased revenues 30.4% through the 1st six months of 2022 and the mix of casualty business increased from 42% in 2020 to 72% in the 1st six months of 2022 (continuing lines).
Business portfolio changes were also discussed which mentioned the creation of three new core lines that include Professional, Environmental, and Excess Casualty. These three businesses have already generated $8 million in Gross Written Premiums. Recent sold or exited lines include the Farm, Ranch & Equine business, Personal/Mobile Home lines, and Property Brokerage (in excess of $10 million). As a result, the company’s CAT volatility was greatly reduced. Gross Average Annual Loss was reduced from $56.3 million in 2020 to $10.4 million as of the end of the 2nd quarter. This reduction in CAT exposure has also reduced the company’s reinsurance spending by approximately $14 million.
The company provided details on its advanced technology capabilities that are driving profitable growth. These include ISO-based products that are coupled with proprietary customizations such as precision-level pricing that is aligned to census block and is calculated at the point of sale. The company employs fully integrated 3rd party data that helps with reduced firearm claims, exposure verification for property values, sales and payroll figures. The company also utilizes drones to provide “roof scores” used to identify increased hazards. In addition, artificial intelligence tools are used in identify classes of business and census block data to help underwriters proactively address important trends.
Global Indemnity discussed dramatic actions that were taken in 2021 and early 2022 in order to reposition the investment portfolio in anticipation of rising interest rates and volatility in financial markets. The company sold its common stock portfolio throughout the 1st quarter of 2022 and also sold its low-quality bank loan portfolio in the 2nd quarter of 2022. The duration of the fixed income portfolio was lowered from 4.6 years in May 2021 to 1.7 years in June 2022. This short-duration portfolio is well positioned to diminish losses from interest rate increases as well as generate cash flows to redeploy at higher prevailing rates. This short duration portfolio gives the company a competitive advantage as the average peer duration is approximately 3.7 years (AFG, ARGO, JRVR, KNSL, RLI, SIGI, WRB).
The company continues to maintain a conservative balance sheet with a short-duration portfolio that matches well with the loss reserve duration of 2.2 years. 96% of the fixed income portfolio is invested in assets with an average credit rating of “AA-“. The remaining is invested in alternative investments (4%) and preferred stocks (1%).
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