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Global Indemnity Group, LLC Reports First Quarter 2021 Results

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BALA CYNWYD, Pa., May 05, 2021 (GLOBE NEWSWIRE) -- Global Indemnity Group, LLC (NASDAQ:GBLI) (the “Company”) today reported net income available to shareholders of $5.4 million for the three months ended March 31, 2021 compared to net loss available to shareholders of $44.6 million for the corresponding period in 2020. Adjusted operating income was $1.3 million for the three months ended March 31, 2021 compared to $10.0 million for the corresponding period in 2020.

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

For the Three Months
Ended March 31,

2021

2020

Gross Written Premiums

$

163.6

$

155.7

Net Written Premiums

$

147.7

$

139.1

Net income (loss) available to shareholders

$

5.4

$

(44.6

)

Net income (loss) available to shareholders per share

$

0.37

$

(3.13

)

Adjusted operating income

$

1.3

$

10.0

Adjusted operating income per share

$

0.09

$

0.70

Combined ratio analysis:

Loss ratio

63.1

%

53.7

%

Expense ratio

38.1

%

39.0

%

Combined ratio

101.2

%

92.7

%


As of
March 31,
2021

As of
December 31,
2020

Book value per share (1)

$

48.00

$

49.62

Shareholders’ equity (2)

$

696.5

$

718.3

Cash and invested assets (3)

$

1,429.3

$

1,449.9

(1) Net of cumulative Company distributions/dividends to common shareholders totaling $3.25 per share and $3.00 per share as of 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 March 31, 2021:

  • Underwriting income/(loss) – ($1.4) million in 2021 compared to $10.6 million in 2020. The decrease in underwriting income is primarily due to catastrophes, mainly from Texas winter storms, as well as an increase in the frequency and severity of property non-catastrophe losses.

  • Gross written premiums and net written premiums increased 5.0% and 6.2%, respectively.

  • Investment income – $9.8 million in 2021 compared to $10.1 million in 2020. The reduction in investment income is primarily due to a decrease in yield within the fixed maturities portfolio, a smaller investment portfolio primarily due to retiring $100 million of subordinated debt and $74 million of margin debt in August 2020, partially offset by increased returns from alternative investments.

  • Realized gains/(loss) – $3.8 million in 2021 compared to ($68.2) 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 benefit - $0.2 million in 2021 compared to $12.0 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 Months Ended March 31, 2021 and 2020

For the three months ended March 31, 2021, the Company recorded a combined ratio of 101.2% (Loss Ratio 63.1% and Expense Ratio 38.1%) as compared to 92.7% (Loss Ratio 53.7% and Expense Ratio 39.0%) for the three months ended March 31, 2020.

  • The Company’s accident year casualty loss ratio improved by 1.5 points to 57.6% in 2021 from 59.1% in 2020 primarily due to lower claim frequency and severity.

  • The Company’s accident year property loss ratio increased by 21.3 points to 72.1% in 2021 from 50.8% in 2020 primarily due to higher catastrophe claims frequency as a result of the Texas winter storms within Insurance Operations as well as an increase in property claims frequency and severity within Commercial Specialty.

Global Indemnity Group, LLC’s Gross Written and Net Written Premiums Results by Segment for the Three Months Ended March 31, 2021 and 2020

Three Months Ended March 31,

Gross Written Premiums

Net Written Premiums

2021

2020

%
Change

2021

2020

%
Change

Commercial Specialty

$

87,332

$

80,831

8.0

%

$

78,515

$

72,483

8.3

%

Specialty Property

33,358

35,243

(5.3

%)

29,699

30,007

(1.0

%)

Farm, Ranch & Stable

21,002

22,133

(5.1

%)

17,603

19,105

(7.9

%)

Reinsurance Operations

21,866

17,517

24.8

%

21,866

17,517

24.8

%

Total

$

163,558

$

155,724

5.0

%

$

147,683

$

139,112

6.2

%

Commercial Specialty: Gross written premiums and net written premiums increased 8.0% and 8.3%, respectively, for the three months ended March 31, 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 5.3% and 1.0%, respectively, for the three months ended March 31, 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 5.1% and 7.9% for the three months ended March 31, 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 increased 24.8% and 24.8% for the three months ended March 31, 2021, as compared to the same period in 2020. The growth was primarily organic growth of an existing casualty treaty and the assumption of two 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 March 31,

2021

2020

Gross written premiums

$

163,558

$

155,724

Net written premiums

$

147,683

$

139,112

Net earned premiums

$

143,700

$

144,468

Net investment income

9,836

10,129

Net realized investment gains (losses)

3,819

(68,162

)

Other income

377

165

Total revenues

157,732

86,600

Net losses and loss adjustment expenses

90,783

77,647

Acquisition costs and other underwriting expenses

54,764

56,412

Corporate and other operating expenses

4,276

4,223

Interest expense

2,595

4,865

Income (loss) before income taxes

5,314

(56,547

)

Income tax benefit

(203

)

(11,969

)

Net income (loss)

5,517

(44,578

)

Less: Preferred stock distributions

110

-

Net income (loss) available to common shareholders

$

5,407

$

(44,578

)

Per share data:

Net income (loss) available to common shareholders

Basic

$

0.38

$

(3.13

)

Diluted (1)

$

0.37

$

(3.13

)

Weighted-average number of shares outstanding

Basic

14,380

14,250

Diluted (1)

14,641

14,250

Cash dividends/distributions declared per common share

$

0.25

$

0.25

Combined ratio analysis: (2)

Loss ratio

63.1

%

53.7

%

Expense ratio

38.1

%

39.0

%

Combined ratio

101.2

%

92.7

%


(1)

For the three months ended March 31, 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)
March 31, 2021

December 31, 2020

Fixed Maturities:

Available for sale, at fair value

(amortized cost: 2021 - $1,202,472 and 2020 - $1,149,009; net

of allowance for expected credit losses of: $0 in 2021 and 2020)

$

1,214,622

$

1,191,186

Equity securities, at fair value

83,449

98,990

Other invested assets

95,522

97,018

Total investments

1,393,593

1,387,194

Cash and cash equivalents

47,465

67,359

Premiums receivable, net of allowance for expected credit losses of

$2,772 at March 31, 2021 and $2,900 at December 31, 2020

116,707

109,431

Reinsurance receivables, net of allowance for expected credit losses of

$8,992 at March 31, 2021 and December 31, 2020

85,431

88,708

Funds held by ceding insurers

36,689

45,480

Deferred federal income taxes

40,158

34,265

Deferred acquisition costs

65,698

65,195

Intangible assets

20,830

20,962

Goodwill

6,521

6,521

Prepaid reinsurance premiums

14,414

12,881

Other assets

70,140

66,912

Total assets

$

1,897,646

$

1,904,908

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:

Unpaid losses and loss adjustment expenses

$

675,908

$

662,811

Unearned premiums

297,012

291,495

Ceded balances payable

10,301

8,943

Payable for securities purchased

11,718

4,667

Contingent commissions

4,479

10,832

Debt

126,324

126,288

Other liabilities

75,447

81,548

Total liabilities

1,201,189

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: 10,303,832 and 10,263,722

respectively; class A common shares outstanding: 10,293,839 and

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

outstanding: 4,133,366 and 4,133,366, respectively

-

-

Additional paid-in capital (1)

446,199

445,051

Accumulated other comprehensive income, net of taxes

9,853

34,308

Retained earnings (1)

236,688

234,965

Class A common shares in treasury, at cost: (9,993) and 0 shares, respectively

(283

)

-

Total shareholders’ equity

696,457

718,324

Total liabilities and shareholders’ equity

$

1,897,646

$

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 March 31, 2021 and December 31, 2020. Retained earnings are also net of $47 million and $43 million of cumulative historic Company dividends/distributions to shareholders as of March 31, 2021 and December 31, 2020, respectively.



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

Market Value as of

(Unaudited)
March 31, 2021

December 31, 2020

Fixed maturities

$

1,214.6

$

1,191.2

Cash and cash equivalents

47.5

67.4

Total bonds and cash and cash equivalents

1,262.1

1,258.6

Equities and other invested assets

178.9

196.0

Total cash and invested assets, gross

1,441.0

1,454.6

Payable for securities purchased

(11.7

)

(4.7

)

Total cash and invested assets, net

$

1,429.3

$

1,449.9


Total Investment Return (1)

For the Three Months Ended March 31,
(unaudited)

2021

2020

Net investment income

$

9.8

$

10.1

Net realized investment gains (losses)

3.8

(68.2

)

Net unrealized investment (losses)

(30.1

)

(4.1

)

Net realized and unrealized investment (losses)

(26.3

)

(72.3

)

Total net investment income and gains (losses)

$

(16.5

)

$

(62.2

)

Average total cash and invested assets

$

1,439.6

$

1,578.8

Total investment return %

(1.1)

%

(3.9

%)

(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,

2021

2020

Adjusted operating income, net of tax

$

1,343

$

10,049

Adjustments:

Net realized investment gains (losses)

4,064

(54,627

)

Net income (loss) available to common shareholders

$

5,407

$

(44,578

)

Weighted average shares outstanding – basic

14,380

14,250

Weighted average shares outstanding – diluted

14,641

14,418

Adjusted operating income per share – basic

$

0.09

$

0.71

Adjusted operating income per share – diluted

$

0.09

$

0.70

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