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Global Indemnity Limited Reports 2016 Financial Results

GEORGE TOWN, Cayman Islands, March 02, 2017 (GLOBE NEWSWIRE) -- Global Indemnity Limited (GBLI) today reported net income for the year ended December 31, 2016 of $49.9 million or $2.84 per share.  Operating income was $35.8 million for the year ended December 31, 2016. As of December 31st, book value per share was $45.42, an increase of 5.7 %, compared to book value per share of $42.98 at December 31, 2015.

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

    For the Twelve Months 
Ended December 31,
    As of
December 31, 
    2016    2015     2016    2015
                   
Gross Premiums Written   $ 565.8   $ 590.2   Book value per share $   45.42   $   42.98
Net Premiums Written   $ 470.9   $ 501.2   Shareholders` equity $   798.0   $   749.9
            Cash and invested assets (1) $ 1,498.1   $ 1,516.3
Net income   $   49.9   $   41.5          
Net income per share   $  2.84   $  1.69   (1) Including receivable/(payable) for securities sold/(purchased)
                   
Operating income   $   35.8   $   44.0          
Operating income per share   $   2.04   $   1.80          
                   
Combined ratio analysis:                  
  Loss ratio     56.4     54.6          
  Expense ratio     42.0     39.9          
  Combined ratio     98.4     94.5          
                   
           

About Global Indemnity Limited and its subsidiaries

Global Indemnity Limited (GBLI), through its several direct and indirect wholly owned subsidiary insurance and reinsurance companies, provides both admitted and non-admitted specialty property and casualty insurance coverages and individual policyholder coverages in the United States, as well as reinsurance worldwide.  Global Indemnity Limited`s three primary segments are:

  • United States Based Commercial Lines Operations
     
  • United States Based Personal Lines Operations
     
  • Bermuda Based Reinsurance Operations

For more information, visit the Global Indemnity Limited`s website at http://www.globalindemnity.ky.

Forward-Looking Information

The forward-looking statements contained in this press release [1] do not address a number of risks and uncertainties.  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 the Global Indemnity as of the date hereof. The foregoing review of factors that could cause actual financial or operating performance to differ materially from expectations is not exhaustive. 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 Limited`s Combined Ratio for the Twelve Months Ended December 31, 2016 and 2015

The combined ratio is a key measure of insurance profitability.  The components comprising the combined ratio are as follows:

  Twelve Months Ended 
December 31,
  2016     2015  
Loss Ratio:      
Current Accident Year      
  Excluding Catastrophes 50.5     50.0  
  Catastrophes 18.1     11.5  
  Current Accident Year 68.6     61.5  
Changes to Prior Accident Year (12.2 )   (6.9 )
Loss Ratio - Calendar Year 56.4     54.6  
Expense Ratio 42.0     39.9  
Combined Ratio 98.4     94.5  

For the twelve months ended December 31st, the calendar year loss ratio increased by 1.8 points to 56.4  in 2016 from 54.6 in 2015.

For the twelve months ended December 31, 2016, the current accident year loss ratio increased by 7.1 points to 68.6 in 2016 compared to 61.5 for the same period in 2015.

  • The current accident year property loss ratio increased 9.8 points to 69.2 in 2016 from 59.4 in 2015 primarily due to higher catastrophe losses experienced during the fourth accident quarter of 2016, particularly from the Tennessee Wildfires.
     
  • The current accident year casualty loss ratio improved by 1.4 points to 66.9 in 2016 from 68.3 in 2015. This improvement is mainly due to a decrease in reported claim frequency reflecting the milder winter experienced in 2016. 
     
  • Calendar year results for the twelve months ended December 31, 2016 include a 12.2 point reduction in the loss ratio related to prior accident years, which was primarily driven by lower than expected claims frequency and severity experienced across multiple prior accident years within Commercial Lines, primarily related to general liability, and less than expected emergence on property catastrophe treaties within the Reinsurance Operations. 

For the twelve months ended December 31st, the expense ratio increased from 39.9 in 2015 to 42.0 in 2016.

The increase is primarily due to the reduction in earned premiums in 2016 as a result of the quota share arrangement and the purchase of additional reinsurance put in place to mitigate catastrophe exposure as well as the 2015 expense ratio benefitting from accounting adjustments related to the purchase of American Reliable.

Global Indemnity Limited`s Gross and Net Premiums Written Results by Segment

  Twelve Months Ended December 31,
  Gross Premiums Written   Net Premiums Written
    2016     2015     2016     2015  
Commercial Lines Operations $   205,120   $   214,218   $   184,911   $   197,526  
Personal Lines Operations   300,888     326,282     226,228     254,035  
Reinsurance Operations   59,837     49,733     59,801     49,683  
Total $ 565,845   $ 590,233   $ 470,940   $ 501,244  

Commercial Lines Operations: Gross premiums written and net premiums written decreased 4.2% and 6.4%, respectively, for the twelve months ended December 31, 2016 as compared to the same period in 2015. The decline in gross premiums written was mainly due to non-renewal of a program.  This decline in gross premiums written as well as ceding more premiums in an effort to reduce exposure to catastrophes and large losses contributed to the decrease in net premiums written.

Personal Lines Operations:  For the twelve months ended December 31, 2016, gross premiums written and net premiums written decreased 7.8% and 10.9%, respectively, as compared to the same period in 2015. Gross premiums written include business written by American Reliable that is ceded to insurance entities owned by Assurant under a 100% quota share reinsurance agreement in the amount of $35.3 million and $55.8 million for the twelve months ended December 31, 2016 and 2015, respectively.  Excluding the business that is ceded 100% to insurance entities owned by Assurant, gross premiums written decreased by 1.8% for the twelve months ended December 31, 2016 as compared to 2015. The reduction in net premiums written is due to purchasing additional reinsurance to reduce catastrophe exposure.

Reinsurance Operations: For the twelve months ended December 31, 2016, gross premiums written and net premiums written increased 20.3% and 20.4%, respectively, as compared to the same period in 2015 primarily due to a new treaty written in the fourth quarter of 2016. 

Note: Tables Follow

GLOBAL INDEMNITY LIMITED 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(Dollars and shares in thousands, except per share data)
 
  For the Three Months 
Ended December 31,
  For the Twelve Months 
Ended December 31,
  (Unaudited)       (Unaudited)    
   2016    2015    2016      2015  
               
Gross premiums written $   136,591   $   130,701   $   565,845     $   590,233  
               
Net premiums written $   113,707   $   106,638   $   470,940     $   501,244  
               
Net premiums earned $   109,472   $   123,222   $   468,465     $   504,143  
Net investment income   8,880     8,375     33,983       34,609  
Net realized investment gains (losses)   30,778     3,842     21,721       (3,374 )
Other income (1)   742     992     10,345       3,400  
  Total revenues   149,872     136,431     534,514       538,778  
               
Net losses and loss adjustment expenses   48,946     48,498     264,003       275,368  
Acquisition costs and other underwriting expenses   47,889     51,185     196,650       201,303  
Corporate and other operating expenses   4,274     5,007     17,338       24,448  
Interest expense   2,228     2,278     8,905       4,913  
  Income before income taxes   46,535     29,463     47,618       32,746  
Income tax expense (benefit)   8,162     2,159     (2,250 )     (8,723 )
  Net income $ 38,373   $ 27,304   $ 49,868     $ 41,469  
               
Weighted average shares outstanding-basic   17,264     20,695     17,247       24,254  
               
Weighted average shares outstanding-diluted   17,597     20,957     17,547       24,506  
               
Net income per share - basic $   2.22   $   1.32   $   2.89     $   1.71  
               
Net income per share - diluted $   2.18   $   1.30   $   2.84     $   1.69  
               
Combined ratio analysis: (2)              
Loss ratio   44.7     39.4     56.4       54.6  
Expense ratio   43.7     41.5     42.0       39.9  
Combined ratio   88.4     80.9     98.4       94.5  
 
(1)  On September 30, 2016, the Company sold all the outstanding shares of capital stock of one of its wholly owned subsidiaries, United National Specialty Insurance Company, to an unrelated party and recognized a pretax gain of $6.9 million.  This transaction will not have an impact on the Company`s ongoing business operations. Business previously written by United National Specialty Insurance Company has been and will be written by other companies within the Company`s U.S. Insurance Operations. 
 
(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 premiums earned.  The expense ratio is the ratio of acquisition costs and other underwriting expenses to net premiums earned.  The combined ratio is the sum of the loss and expense ratios.



GLOBAL INDEMNITY LIMITED
CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands)
 
 

ASSETS
  (Unaudited)
December 31, 2016
  December 31, 2015
Fixed Maturities:        
  Available for sale securities, at fair value (amortized cost: 2016 - $1,241,339 and 2015 - $1,308,333)   $ 1,240,031     $  1,306,149  
Equity securities:        
  Available for sale, at fair value (cost: 2016 - $119,515 and 2015 - $100,157)     120,557       110,315  
Other invested assets     66,121       32,592  
      Total investments     1,426,709       1,449,056  
         
Cash and cash equivalents     75,110       67,037  
Premiums receivable, net     92,094       89,245  
Reinsurance receivables, net     143,774       115,594  
Funds held by ceding insurers     13,114       16,037  
Deferred federal income taxes     40,957       34,687  
Deferred acquisition costs     57,901       56,517  
Intangible assets     23,079       23,607  
Goodwill     6,521       6,521  
Prepaid reinsurance premiums     42,583       44,363  
Receivable for securities sold     -       172  
Federal income taxes receivable     -       4,828  
Other assets     51,104       49,630  
      Total assets   $ 1,972,946     $  1,957,294  
         
LIABILITIES AND SHAREHOLDERS` EQUITY        
Liabilities:        
Unpaid losses and loss adjustment expenses   $   651,042     $   680,047  
Unearned premiums     286,984       286,285  
Ceded balances payable     14,675       4,589  
Contingent commissions     9,454       11,069  
Debt     163,143       172,034  
Payable for Securities     3,717       -  
Federal income taxes payable     219       -  
Other liabilities     45,761       53,344  
      Total liabilities     1,174,995       1,207,368  
         
Shareholders` equity:        
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 13,436,548 and 16,424,546 respectively; A ordinary shares outstanding: 13,436,548 and 13,313,751, respectively; B ordinary  shares issued and outstanding: 4,133,366 and 4,133,366, respectively     2       3  
Additional paid-in capital     430,283       529,872  
Accumulated other comprehensive income, net of taxes     (618 )     4,078  
Retained earnings     368,284       318,416  
A ordinary shares in treasury, at cost: 0 and 3,110,795 shares, respectively     -       (102,443 )
      Total shareholders` equity     797,951       749,926  
         
      Total liabilities and shareholders` equity   $ 1,972,946     $ 1,957,294  

 

GLOBAL INDEMNITY LIMITED
SELECTED INVESTMENT DATA
 (Dollars in millions)
   
  Market Value as of
  (Unaudited) 
December 31, 2016
  December 31, 2015
       
Fixed maturities $ 1,240.0     $ 1,306.1
Cash and cash equivalents   75.1       67.0
Total bonds and cash and cash equivalents   1,315.1       1,373.1
Equities and other invested assets   186.7       143.0
Total cash and invested assets, gross   1,501.8       1,516.1
Receivable (payable) for securities sold/(purchased)     (3.7 )       0.2
Total cash and invested assets, net  $ 1,498.1     $ 1,516.3

 

    (Unaudited)
Twelve Months Ended 
December 31, 2016 
(a)
     
Net investment income   $   34.0  
     
Net realized investment gains     21.7  
Net change in unrealized investment gains and losses     (8.2 )
Net realized and unrealized investment returns     13.5  
     
    Total investment return   $    47.5  
     
    Average total cash and invested assets   $  1,507.2  
     
    Total investment return %       3.1 %
 
(a)  Amounts in this table are shown on a pre-tax basis.


            

GLOBAL INDEMNITY LIMITED
SUMMARY OF OPERATING INCOME
(Unaudited) 
(Dollars and shares in thousands, except per share data)
 
   
  For the Three Months
Ended December 31,
  For the Twelve Months
Ended December 31,
 
    2016     2015     2016     2015    
                 
Operating income $   18,444   $   24,596   $   35,781   $   44,026    
Adjustments:                
Net realized investment gains/(losses), net of tax   19,929     2,708     14,087     (2,557 )  
                 
Net income $   38,373   $   27,304   $   49,868   $   41,469    
                 
Weighted average shares outstanding -  basic   17,264     20,695     17,247     24,254    
                 
Weighted average shares outstanding -  diluted   17,597     20,957     17,547     24,506    
                 
Operating income per share - basic $   1.07   $   1.19   $   2.07   $   1.82    
                 
Operating income per share - diluted $   1.05   $   1.17   $   2.04   $   1.80    
                 

Note Regarding Operating Income

Operating income, a non-GAAP financial measure, is equal to net income excluding after-tax net realized investment gains (losses). Operating income is not a substitute for net income determined in accordance with GAAP, and investors should not place undue reliance on this measure.

Media Stephen W. Ries Senior Corporate Counsel (610) 668-3270 sries@global-indemnity.com



This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Global Indemnity Limited via GlobeNewswire

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