Global Indemnity Group, LLC Reports Third Quarter 2022 Results

• Growth in Gross Written Premium - An increase of 13.0% and 23.0% in gross written premiums for Continuing Lines for the three and nine months ended September 30, 2022, respectively, compared to the corresponding periods in 2021.
• The combined ratio for Continuing Lines was 96.9% for the three months ended September 30, 2022 (Loss Ratio 58.3% and Expense Ratio 38.6%) and 96.0% for the nine months ended September 30, 2022 (Loss Ratio 58.4% and Expense Ratio 37.6%).
• Lower Catastrophes – Strategy to lower catastrophe exposure resulted in catastrophe losses for Continuing Lines of $9.3 million for the nine months ended September 30, 2022 compared to $20.5 million in 2021. Losses related to hurricane Ian are estimated to be $1.5 million.
• Farm, Ranch and Stable renewal rights sold for $30.0 million to Everett Cash Mutual to reinsure 100% of the business effective August 8, 2022. Everett Cash Mutual will also purchase American Reliable for book value which is expected to be $10 million at the time of close, which, subject to regulatory approvals and customary closing conditions, is expected to close in or before the first quarter of 2023. Impairments and third party legal and advisory expenses of $9.2 million related to these transactions were recorded in the third quarter. Farm, Ranch and Stable is now included in Exited Lines.
• Investment income for the three months ended September 30, 2022, was $8.4 million compared to $9.3 million for the three months ended September 30, 2021. Investment income, excluding alternative investments was $9.5 million for the three months ended September 30, 2022, compared to $6.3 million for the three months ended September 30, 2021. Investment income for the nine months ended September 30, 2022 was $16.9 million compared to $29.8 million for the nine months ended September 30, 2021. Investment income, excluding alternative investments was $22.8 million for the nine months ended September 30, 2022, compared to $20.0 million for the nine months ended September 30, 2021.
  • Duration of the fixed income portfolio at September 30, 2022 was 1.7 years compared to duration of 3.0 years at December 31, 2021 and book yield on the portfolio increased from 2.2% at December 31, 2021 to 3.1% at September 30, 2022. In reducing duration and increasing yield, GBLI realized losses $33.1 million for the nine months ended September 30, 2022. However, the Company had realized gains of $2.2 million for the third quarter of 2022.
• The Company generated net income to shareholders of $23.6 million, or $1.60 per share, for the three months ended September 30, 2022, compared to net loss available to shareholders of $7.8 million, or $0.54 per share, for the corresponding period in 2021. Net loss for the nine months ended September 30, 2022, was $3.5 million, or $0.24 per share, compared to net income available to shareholders of $3.8 million, or $0.26 per share, for the corresponding period in 2021. The net loss for the nine months ended September 30, 2022 of $3.5 million was primarily the result of substantially shortening the duration of the Company’s fixed income securities in its investment portfolio, the impact of an underperforming alternative investment, and the write off of debt issuance costs related to debt redemption of $130 million in April 2022 partially offset by proceeds of $30.0 million from the sale of Farm, Ranch & Stable renewal rights.
• Book value increased $2.3 million from $641.3 million at June 30, 2022 to $643.6 million at September 30, 2022. Book value decreased $63.0 million from $706.6 million at December 31, 2021 to $643.6 million at September 30, 2022. Book value per share increased to $43.76 from $43.68 at June 30, 2022 and decreased from $48.44 at December 31, 2021 to $43.76 at September 30, 2022.

Other Items:

• On October 21, 2022 Joseph W. Brown was appointed as Chief Executive Officer. Mr. Brown has served as a GBLI director since December 2015 and will remain on GBLI’s board of directors. Mr. Brown also has close to 50 years of insurance industry experience, including prior tenures as a director, chairman, and chief executive officer of MBIA, Inc., chairman of the board of Safeco, chairman of the board of Talegen Holdings, Inc., chairman of Noblr, Inc. and president and chief executive officer of Fireman’s Fund Insurance Company.
• On October 21, 2022 GBLI also announced a stock repurchase program beginning in the fourth quarter of 2022. Repurchases of up to $32 million of GBLI’s currently outstanding A Common Shares have been authorized. The authorization to repurchase expires on December 31, 2027.
• Effective October 21, 2022, Jason B. Hurwitz rejoined the Company’s Board of Directors.
• Effective November 1, 2022, James R. Holt, Jr. ceased to be a Fox Paine Entities’ appointed member of the Company’s Board of Directors.
• Effective November 1, 2022, Gary Tolman became a Fox Paine Entities’ appointed member of the Company’s Board of Directors.

WILMINGTON, Del.--(BUSINESS WIRE)--
Global Indemnity Group, LLC (NYSE:GBLI) (the “Company”) today reported adjusted operating income, which excludes realized gains and losses, the results of Exited Lines, the loss on the extinguishment of debt, and the impact of the sale of the Farm, Ranch & Stable renewal rights, of $12.5 million for the nine months ended September 30, 2022, compared to $12.0 million for the nine months ended September 30, 2021. Adjusted operating income, was $5.3 million for the three months ended September 30, 2022, compared to $0.6 million for the corresponding period in 2021. Net loss available to shareholders for the nine months ended September 30, 2022, was $3.5 million compared to net income available to shareholders of $3.8 million for the corresponding period in 2021. Net income available to shareholders for the three months ended September 30, 2022 was $23.6 million, compared to net loss available to shareholders of $7.8 million for the corresponding period in 2021.

Selected Operating and Balance Sheet
Consolidated Results Including Continuing Lines and Exited Lines
(Dollars in millions, except per share data)
	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2022				2021				2022				2021
Gross Written Premiums	$	175.8			$	174.3			$	563.6			$	513.1
Net Written Premiums	$	142.8			$	162.3			$	469.5			$	470.6
Net Earned Premiums	$	153.6			$	157.6			$	458.2			$	450.7
Net income (loss) available to shareholders	$	23.6			$	(7.8	)		$	(3.5	)		$	3.8
Net income (loss) from Continuing Lines	$	23.4			$	(0.1	)		$	(1.9	)		$	18.7
Net income (loss) from Exited Lines (1)	$	0.2			$	(7.7	)		$	(1.6	)		$	(14.9	)
Net income (loss) available to shareholders per share	$	1.60			$	(0.54	)		$	(0.24	)		$	0.26
Adjusted operating income	$	5.3			$	0.6			$	12.5			$	12.0
Adjusted operating income per share	$	0.35			$	0.03			$	0.83			$	0.80
Combined ratio analysis:
Loss ratio		57.6	%			69.3	%			58.0	%			64.5	%
Expense ratio		39.6	%			37.6	%			39.0	%			38.0	%
Combined ratio		97.2	%			106.9	%			97.0	%			102.5	%
(1) Underwriting income (loss) from Exited Lines, net of tax.

Global Indemnity Group, LLC’s Business Segment Information for the Three and Nine Months Ended September 30, 2022 and 2021

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.

Selected Financial Data for the Three Months Ended September 30, 2022:

• Gross written premiums, net written premiums, and net earned premiums excluding the Exited Lines (“Continuing Lines”), increased 13.0%, 13.9% and 20.3%, respectively. Consolidated gross written premiums, net written premiums, and net earned premiums increased/(decreased) 0.9%, (12.0%), and (2.5%), respectively.
• Underwriting income (loss) – For the Continuing Lines business, underwriting income was $4.4 million in 2022 compared to underwriting loss of $0.7 million in 2021.
  • Excluding prior year development, underwriting income (loss) from Continuing Lines was $2.9 million compared to ($2.8) million in 2021.
  • Consolidated underwriting income (loss) was $4.7 million in 2022 compared to ($10.5) million in 2021.
• Investment income – $8.4 million in 2022 ($9.5 million excluding alternatives investments) compared to $9.3 million in 2021 ($6.3 million excluding alternative investments). The decrease was primarily due to decreased returns from alternative investments and a decrease in dividend income as a result of the liquidation of the Company’s common stock portfolio during the first quarter of 2022. This reduction in investment income was partially offset by an increase in investment income from fixed maturities.
• Realized gains/(losses) – $2.2 million in 2022 compared to ($0.3) million in 2021.
• Book value per share – Increase of $0.08 per share. Gain on sale of Farm, Ranch & Stable renewals rights was offset by the impact of rising interest rates.
• Tax expense/(benefit) – $7.4 million tax expense in 2022 compared to ($1.8) million tax benefit in 2021.

Selected Financial Data for the Nine Months Ended September 30, 2022:

• Gross written premiums, net written premiums, and net earned premiums excluding the Exited Lines (“Continuing Lines”), increased 23.0%, 24.5% and 28.5%, respectively. Consolidated gross written premiums, net written premiums, and net earned premiums increased/(decreased) 9.8%, (0.2%), and 1.6%, respectively.
• Underwriting income – For the Continuing Lines business, underwriting income was $16.8 million in 2022 compared to $8.7 million in 2021.
  • Excluding prior year development, underwriting income (loss) from Continuing Lines was $14.6 million compared to $3.5 million in 2021.
  • Consolidated underwriting income (loss) was $14.8 million in 2022 compared to ($10.2) million in 2021.
• Investment income – $16.9 million in 2022 ($22.8 million excluding alternative investments) compared to $29.8 million in 2021 ($20.0 million excluding alternative investments). The decrease was primarily due to decreased returns from alternative investments and a decrease in dividend income as a result of the liquidation of the Company’s common stock portfolio during the first quarter of 2022. This reduction in investment income was partially offset by an increase in investment income from fixed maturities.
• Realized gains/(losses) – ($33.1) million in 2022 compared to $7.3 million in 2021. Realized losses in 2022 were primarily due to the Company selling certain securities to offset anticipated rising interest rates by shortening duration and accelerating future maturities.
• Book value per share – Decrease of $4.68 per share mainly due to rising interest rates. In addition to realized losses, shareholders’ equity includes $51.7 million of net after-tax unrealized losses.
• Tax expense/(benefit)– $3.4 million tax expense in 2022 compared to ($1.1) million tax benefit in 2021.

Global Indemnity Group, LLC’s Gross Written and Net Written Premiums Results by Segment for the Three and Nine Months Ended September 30, 2022 and 2021

Commercial Specialty: Gross written premiums and net written premiums increased 2.7% and 3.3%, respectively, for the three months ended September 30, 2022 as compared to the same period in 2021. Gross written premiums and net written premiums increased 9.8% and 10.8%, respectively, for the nine months ended September 30, 2022 as compared to the same period in 2021. The growth in gross written premiums and net written premiums was primarily driven by organic growth in existing programs, increased pricing, and several new lines and programs. This growth in premiums was partially offset by actions taken within Commercial Specialty to improve underwriting results by not renewing underperforming business.

Reinsurance Operations: Gross written premiums and net written premiums both increased 47.0% for the three months ended September 30, 2022 as compared to the same period in 2021. Gross written premiums and net written premiums both increased 72.7% for the nine months ended September 30, 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 32.4% and 91.9%, respectively, for the three months ended September 30, 2022 as compared to the same period in 2021. Gross written premiums and net written premiums decreased 21.8% and 66.7%, respectively, for the nine months ended September 30, 2022 as compared to the same period in 2021. The decrease in gross written premiums and net written premiums was primarily due to exiting lines of business unrelated to the Company’s continuing businesses.

Global Indemnity Group, LLC’s Combined Ratio for the Three and Nine Months Ended September 30, 2022 and 2021

For the Continuing Lines business, the combined ratio was 96.9% for the three months ended September 30, 2022, (Loss Ratio 58.3% and Expense Ratio 38.6%) as compared to 100.8% (Loss Ratio 64.9% and Expense Ratio 35.9%) for the three months ended September 30, 2021. The consolidated combined ratio was 97.2% for the three months ended September 30, 2022, (Loss Ratio 57.6% and Expense Ratio 39.6%) as compared to 106.9% (Loss Ratio 69.3% and Expense Ratio 37.6%) for the three months ended September 30, 2021.

• For the continuing lines business, the accident year casualty loss ratio improved by 3.9 points to 60.0% in 2022 from 63.9% in 2021. The consolidated accident year casualty loss ratio improved by 3.8 points to 59.2% in 2022 from 63.0% in 2021. The improvement in the continuing lines accident year casualty loss ratio is primarily due to lower claims frequency as well as a change in the mix of business. The improvement in the consolidated accident year casualty loss ratio is primarily due to lower claims frequency and severity as well as a change in the mix of business.
  

• For the continuing lines business, the accident year property loss ratio improved by 14.1 points to 58.1% in 2022 from 72.2% in 2021. The consolidated accident year property loss ratio improved by 17.6 points to 60.1% in 2022 from 77.7% in 2021. The improvement in the continuing lines and the consolidated accident year property loss ratio is primarily due to lower catastrophe claims frequency.

For the Continuing Lines business, the combined ratio was 96.0% for the nine months ended September 30, 2022, (Loss Ratio 58.4% and Expense Ratio 37.6%) as compared to 97.3% (Loss Ratio 61.0% and Expense Ratio 36.3%) for the nine months ended September 30, 2021. The consolidated combined ratio was 97.0% for the nine months ended September 30, 2022, (Loss Ratio 58.0% and Expense Ratio 39.0%) as compared to 102.5% (Loss Ratio 64.5% and Expense Ratio 38.0%) for the nine months ended September 30, 2021.

• For the continuing lines business, the accident year casualty loss ratio improved by 1.2 points to 59.5% in 2022 from 60.7% in 2021. The consolidated accident year casualty loss ratio improved by 0.9 points to 59.1% in 2022 from 60.0% in 2021. The improvement in the continuing lines accident year casualty loss ratio is primarily due to lower claims frequency as well as a change in the mix of business. The improvement in the consolidated accident year casualty loss ratio is primarily due to lower claims frequency and severity as well as a change in the mix of business.
  

• For the continuing lines business, the accident year property loss ratio improved by 9.0 points to 57.3% in 2022 from 66.3% in 2021. The consolidated accident year property loss ratio improved by 6.5 points to 62.0% in 2022 from 68.5% in 2021. The improvement in the continuing lines accident year property loss ratio is primarily due to lower catastrophe claims frequency 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.

Note: Tables Follow

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.

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Media

Stephen W. Ries
Head of Investor Relations

(610) 668-3270

[email protected]

Source: Global Indemnity Group, LLC