Global Indemnity Group, LLC Reports First Quarter 2021 Results

Rhea-AI Summary

Global Indemnity Group reported a turnaround in net income available to shareholders, achieving $5.4 million for Q1 2021, compared to a loss of $44.6 million in Q1 2020. While gross written premiums rose 5.0% to $163.6 million, adjusted operating income fell to $1.3 million from $10.0 million year-over-year, driven by underwriting losses attributed to recent catastrophes. A slight decrease in investment income to $9.8 million and realized gains of $3.8 million contrasted with significant losses in the previous year.

Positive

• Net income available to shareholders improved to $5.4 million from a loss of $44.6 million year-over-year.
• Gross written premiums increased by 5.0% to $163.6 million.

Negative

• Adjusted operating income decreased to $1.3 million from $10.0 million in the prior year.
• Underwriting losses were reported at $(1.4) million, down from $10.6 million in 2020, impacted by catastrophic events.

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

FAQ

What was Global Indemnity Group's net income for Q1 2021?

Global Indemnity Group reported a net income available to shareholders of $5.4 million for Q1 2021.

How did gross written premiums change for Global Indemnity Group in Q1 2021?

Gross written premiums increased by 5.0% to $163.6 million in Q1 2021.

What was the adjusted operating income for Global Indemnity Group in Q1 2021?

The adjusted operating income for Q1 2021 was $1.3 million.

What were the underwriting income results for Global Indemnity Group in Q1 2021?

Underwriting income for Q1 2021 was reported at $(1.4) million, a decrease from $10.6 million in Q1 2020.

How did realized gains in Q1 2021 compare to Q1 2020 for Global Indemnity Group?

Realized gains for Q1 2021 were $3.8 million, compared to losses of $(68.2) million in Q1 2020.