Global Indemnity Group, LLC Reports Second Quarter 2024 Results and AM Best Affirmation of A (Excellent) Rating

Rhea-AI Summary

Global Indemnity Group (NYSE:GBLI) reported strong financial results for the first half of 2024, with net income available to shareholders increasing 83% to $21.2 million or $1.55 per share. Key highlights include:

- Operating income up 51% to $20.6 million
- Book value per share increased to $48.56
- Investment income rose 18% to $29.8 million
- Current accident year underwriting income increased to $8.7 million
- Penn-America segment posted $9.9 million underwriting income
- Catastrophe losses declined 36% to $6.8 million

Additionally, AM Best affirmed GBLI's A (Excellent) rating for its U.S. insurance subsidiaries, citing the company's strongest level of risk-adjusted capitalization and consistently profitable commercial specialty segment.

Positive

• Net income available to shareholders increased 83% to $21.2 million
• Operating income increased 51% to $20.6 million
• Investment income rose 18% to $29.8 million
• Current accident year underwriting income increased to $8.7 million from $3.2 million
• Penn-America segment posted $9.9 million of underwriting income (combined ratio of 94.8%)
• Catastrophe losses declined 36% to $6.8 million
• AM Best affirmed A (Excellent) rating for U.S. insurance subsidiaries

Negative

• Non-Core Operations segment reported an underwriting loss of $1.5 million

Insights

Financial Analyst

Global Indemnity Group's Q2 2024 results show strong financial performance. Net income available to shareholders increased 83% to $21.2 million, or $1.55 per share. This significant growth is a positive indicator for investors.

The company's improved underwriting performance is noteworthy. Current accident year underwriting income increased to $8.7 million in 2024 from $3.2 million in 2023. The Penn-America segment's underwriting income of $9.9 million and a combined ratio of 94.8% demonstrate solid operational efficiency.

The increase in investment income by 18% to $29.8 million, driven by a higher book yield on the bond portfolio, indicates effective asset management in a rising interest rate environment. This contributes positively to the company's overall financial health.

Insurance Industry Expert

The affirmation of Global Indemnity Group's A (Excellent) rating by AM Best is a significant vote of confidence in the company's financial strength. This rating reflects the company's strongest level of risk-adjusted capitalization, conservative investment portfolio and prudent reserving practices.

The company's diverse business mix and multiple distribution channels are strategic advantages. The consistent profitability of the Penn-America segment, focusing on small-to-middle market customers, demonstrates a strong market position in a competitive niche.

The 36% reduction in catastrophe losses to $6.8 million is particularly noteworthy, suggesting improved risk management practices. However, investors should monitor the slight increase in the expense ratio, which rose from 37.3% to 39.2%, as this could impact profitability if the trend continues.

Market Research Analyst

Global Indemnity's results reveal interesting market trends. The 18% growth in InsurTech premiums to $26.3 million indicates a successful adaptation to digital transformation in the insurance industry. This growth, driven by organic agency expansion and new products, positions the company well in the evolving insurance landscape.

The 12% increase in Wholesale Commercial policy premiums, excluding audit premiums, coupled with a 9% aggregate premium rate increase, suggests a hardening market in this segment. This trend could lead to improved profitability if managed effectively.

The significant growth in Assumed Reinsurance from $4.2 million to $9.4 million due to new treaties indicates an expanding risk appetite and diversification strategy. While this can boost growth, it's important to monitor the associated risk exposure carefully.

WILMINGTON, Del.--(BUSINESS WIRE)-- Global Indemnity Group, LLC (NYSE:GBLI) (the “Company”) today reported an increase of 83% in net income available to shareholders to $21.2 million or $1.55 per share for the six months ended June 30, 2024 compared to $11.6 million or $0.84 per share for the same period in 2023.

On August 1, 2024, AM Best affirmed Global Indemnity Group, LLC’s A (Excellent) rating for its U.S. insurance subsidiaries and released:

• "AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issue Credit Ratings (Long-Term ICR) of “a” (Excellent) of the U.S. operating subsidiaries of Global Indemnity Group, LLC (Global Indemnity) (Delaware) [NYSE: GBLI]."
• "The balance sheet strength assessment reflects Global Indemnity’s risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by a conservative investment portfolio, generally conservative reserving practices, as well as the added financial flexibility through its parent’s access to capital markets."
• "Penn-America, the group’s core commercial specialty segment, which focuses on small-to middle-market customers, has been consistently profitable."
• "Global Indemnity is composed of several long-standing and well-recognized franchises that provide a diverse mix of business through multiple distribution channels.”

Highlights for the Six Months Ended June 30, 2024

• Net income available to shareholders increased 83% to $21.2 million or $1.55 per share in 2024 compared to $11.6 million or $0.84 per share in 2023.
• Operating income increased 51% to $20.6 million in 2024 compared to $13.7 million in 2023.
• Book value per share increased to $48.56 at June 30, 2024 from $47.53 at December 31, 2023; increased 3.6% including dividends paid of $0.70 per share in 2024.
• Investment income increased 18% to $29.8 million in 2024 compared to $25.2 million in 2023 due to an increase in book yield on the Company’s bond portfolio from 3.8% at June 30, 2023 to 4.5% at June 30, 2024.
• Annualized investment return was 5.2% for 2024 for the first six months of 2024.
• GBLI’s current accident year underwriting income increased to $8.7 million for 2024 compared with $3.2 million in 2023 driven by:
  • The Company’s Penn-America segment that posted $9.9 million of underwriting income (combined ratio of 94.8%), higher than 2023 underwriting income of $6.3 (combined ratio of 96.8%) driven by improved non-catastrophe and catastrophe property results.
  • GBLI's catastrophe losses declined 36%; $6.8 million in 2024 from $10.6 million in 2023.
• Penn-America gross written premiums, excluding programs terminated in 2023 increased 7% to $194.6 million compared to $182.3 million in 2023.
  • InsurTech grew 18% to $26.3 million in 2024 compared with $22.3 million in 2023 from organic agency growth, new agency appointments and new products.
  • Wholesale Commercial's policy premiums, excluding audit premiums, is higher by 12% in 2024 driven by aggregate premium rate increase of 9%.
  • Assumed Re increased from $4.2 million in 2023 to $9.4 million in 2024 due to new treaties commencing in both 2023 and 2024.
• Prior accident year loss development was slightly favorable at $0.1 million for the first six months of 2024.

Selected Operating and Balance Sheet Information (Dollars in millions, except per share data)
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Consolidated:
Net income available to shareholders		$	10.0			$	9.2			$	21.2			$	11.6
Net income available to shareholders per share		$	0.73			$	0.67			$	1.55			$	0.84
Operating income		$	9.9			$	10.0			$	20.6			$	13.7
Operating income per share		$	0.72			$	0.72			$	1.49			$	0.98
Underwriting income, current accident year		$	3.5			$	3.7			$	8.7			$	3.2
Underwriting income		$	3.5			$	4.3			$	8.8			$	3.2
Gross written premiums		$	100.7			$	110.1			$	194.2			$	233.1
Investment income		$	15.3			$	13.2			$	29.8			$	25.2
Annualized investment return			5.0	%			2.8	%			5.2	%			4.5	%
Combined ratio analysis:
Loss ratio			57.8	%			60.5	%			56.5	%			61.7	%
Expense ratio			38.8	%			36.4	%			39.2	%			37.3	%
Combined ratio			96.6	%			96.9	%			95.7	%			99.0	%
Combined ratio, current accident year			96.7	%			97.3	%			95.8	%			99.1	%
Penn-America Segment:
Underwriting income, current accident year		$	4.2			$	7.1			$	9.9			$	6.3
Underwriting income		$	4.7			$	6.1			$	10.3			$	3.0
Penn-America gross written premiums (1)		$	100.6			$	91.5			$	194.6			$	182.3
Combined ratio analysis:
Loss ratio			57.2	%			56.6	%			56.0	%			60.9	%
Expense ratio			38.0	%			37.1	%			38.6	%			37.7	%
Combined ratio			95.2	%			93.7	%			94.6	%			98.6	%
Combined ratio, current accident year			95.7	%			92.6	%			94.8	%			96.8	%

		As of June 30, 2024				As of March 31, 2024				As of December 31, 2023
Consolidated:
Book value per share		$	48.56			$	48.18			$	47.53
Book value per share plus cumulative dividends and excluding AOCI		$	56.58			$	56.00			$	55.22
Shareholders’ equity		$	667.5			$	659.5			$	648.8
Cash and invested assets		$	1,435.2			$	1,417.3			$	1,390.4
Shares Outstanding (in millions)			13.7				13.6				13.6
(1) Excludes $3.6 million and $8.2 million of gross written premiums in 2023 terminated programs for the three and six months ended June 30, 2023, respectively.

GLOBAL INDEMNITY GROUP, LLC CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars and shares in thousands, except per share data)
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Gross written premiums		$	100,706			$	110,100			$	194,194			$	233,085
Net written premiums		$	97,751			$	105,996			$	189,836			$	221,857
Net earned premiums		$	92,814			$	129,156			$	189,393			$	269,228
Net investment income			15,311				13,216				29,831				25,224
Net realized investment gains (losses)			205				(761	)			1,052				(2,281	)
Other income			357				282				702				636
Total revenues			108,687				141,893				220,978				292,807
Net losses and loss adjustment expenses			53,662				78,082				107,046				166,083
Acquisition costs and other underwriting expenses			35,968				47,101				74,237				100,579
Corporate and other operating expenses			6,366				4,990				12,739				11,358
Interest expense			17				12				17				12
Income before income taxes			12,674				11,708				26,939				14,775
Income tax expense			2,581				2,371				5,480				2,944
Net income			10,093				9,337				21,459				11,831
Less: Preferred stock distributions			110				110				220				220
Net income available to common shareholders		$	9,983			$	9,227			$	21,239			$	11,611
Per share data:
Net income available to common shareholders
Basic		$	0.73			$	0.68			$	1.56			$	0.86
Diluted		$	0.73			$	0.67			$	1.55			$	0.84
Weighted-average number of shares outstanding
Basic			13,610				13,478				13,594				13,574
Diluted			13,678				13,708				13,659				13,794
Cash distributions declared per common share		$	0.35			$	0.25			$	0.70			$	0.50
Combined ratio analysis:
Loss ratio			57.8	%			60.5	%			56.5	%			61.7	%
Expense ratio			38.8	%			36.4	%			39.2	%			37.3	%
Combined ratio			96.6	%			96.9	%			95.7	%			99.0	%

GLOBAL INDEMNITY GROUP, LLC CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
		(Unaudited) June 30, 2024				December 31, 2023
ASSETS
Fixed maturities:
Available for sale, at fair value (amortized cost: $1,362,384 and $1,322,092; net of allowance for expected credit losses of $0 at June 30, 2024 and December 31, 2023)		$	1,340,046			$	1,293,793
Equity securities, at fair value			14,657				16,508
Other invested assets			33,710				38,236
Total investments			1,388,413				1,348,537
Cash and cash equivalents			46,731				38,037
Premium receivables, net of allowance for expected credit losses of
$4,043 at June 30, 2024 and $4,796 at December 31, 2023			80,587				102,158
Reinsurance receivables, net of allowance for expected credit losses of
$8,992 at June 30, 2024 and December 31, 2023			75,643				80,439
Funds held by ceding insurers			27,114				16,989
Deferred federal income taxes			30,201				36,802
Deferred acquisition costs			41,109				42,445
Intangible assets			14,280				14,456
Goodwill			4,820				4,820
Prepaid reinsurance premiums			3,498				4,958
Receivable for securities			65				3,858
Federal income tax receivable			899				—
Lease right of use assets			8,978				9,715
Other assets			16,211				26,362
Total assets		$	1,738,549			$	1,729,576
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses		$	844,206			$	850,599
Unearned premiums			181,834				182,852
Ceded balances payable			948				2,642
Federal income tax payable			—				1,595
Contingent commissions			3,599				5,632
Lease liabilities			11,448				12,733
Other liabilities			29,024				24,770
Total liabilities		$	1,071,059			$	1,080,823
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 per share 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: 11,158,442 and 11,042,670, respectively;
class A common shares outstanding: 9,870,674 and 9,771,429, respectively;
class B common shares issued and outstanding: 3,793,612 and 3,793,612, respectively			—				—
Additional paid-in capital (1)			457,550				454,791
Accumulated other comprehensive income (loss), net of tax			(18,051	)			(22,863	)
Retained earnings (1)			256,683				244,988
Class A common shares in treasury, at cost: 1,287,768 and 1,271,241 shares, respectively			(32,692	)			(32,163	)
Total shareholders’ equity			667,490				648,753
Total liabilities and shareholders’ equity		$	1,738,549			$	1,729,576
(1) Since the Company’s initial public offering in 2003, the Company has returned $619 million to shareholders, including $522 million in share repurchases and $97 million in dividends/distributions.

Segment Data for the Six Months Ended June 30, 2024 and 2023 (Dollars in millions)
Underwriting Income for the Six Months Ended June 30,
		Penn-America								Non-Core Operations								Consolidated
		2024				2023				2024				2023				2024				2023
Revenues:
Gross written premiums		$	194.6			$	190.4			$	(0.4	)		$	42.7			$	194.2			$	233.1
Net written premiums		$	190.2			$	182.8			$	(0.4	)		$	39.1			$	189.8			$	221.9
Net earned premiums		$	178.5			$	183.3			$	10.9			$	85.9			$	189.4			$	269.2
Underwriting income (loss), current accident year		$	9.9			$	6.3			$	(1.2	)		$	(3.1	)		$	8.7			$	3.2
Underwriting income (loss)		$	10.3			$	3.0			$	(1.5	)		$	0.2			$	8.8			$	3.2
Combined ratio analysis:
Loss ratio
Current accident year			56.3	%			59.3	%			61.1	%			66.8	%			56.6	%			61.7	%
Prior accident year			(0.3	%)			1.6	%			3.2	%			(3.5	%)			(0.1	%)			0.0	%
Calendar year loss ratio			56.0	%			60.9	%			64.3	%			63.3	%			56.5	%			61.7	%
Expense ratio			38.6	%			37.7	%			49.6	%			36.6	%			39.2	%			37.3	%
Combined ratio			94.6	%			98.6	%			113.9	%			99.9	%			95.7	%			99.0	%
Combined ratio, current accident year			94.8	%			96.8	%			110.7	%			103.8	%			95.8	%			99.1	%

Gross Written Premiums for the Six Months Ended June 30,
		2024				2023			% Change
Penn-America:
Wholesale Commercial		$	124.9			$	121.0		3	%
InsurTech			26.3				22.3		18	%
Assumed Reinsurance			9.4				4.2		123	%
			160.6				147.5		9	%
Programs			34.0				42.9		(21	%)
Penn-America			194.6				190.4		2	%
Non-Core Operations			(0.4	)			42.7		(101	%)
Total		$	194.2			$	233.1		(17	%)

GLOBAL INDEMNITY GROUP, LLC SELECTED INVESTMENT DATA (Dollars in millions)
		Market Value as of
		(Unaudited) June 30, 2024				December 31, 2023
Fixed maturities		$	1,340.0			$	1,293.8
Cash and cash equivalents			46.7				38.0
Total bonds and cash and cash equivalents			1,386.7				1,331.8
Equities and other invested assets			48.4				54.7
Total cash and invested assets, gross			1,435.1				1,386.5
Receivable for securities			0.1				3.9
Total cash and invested assets, net		$	1,435.2			$	1,390.4

		Total Pre-Tax Investment Return
		For the Three Months Ended June 30, (Unaudited)								For the Six Months Ended June 30, (Unaudited)
		2024				2023				2024				2023
Net investment income		$	15.3			$	13.2			$	29.8			$	25.2
Net realized investment gains (losses)			0.2				(0.8	)			1.1				(2.3	)
Net unrealized investment gains (losses)			2.4				(3.1	)			5.9				7.4
Net realized and unrealized investment return			2.6				(3.9	)			7.0				5.1
Total investment return		$	17.9			$	9.3			$	36.8			$	30.3
Average total cash and invested assets		$	1,426.3			$	1,345.2			$	1,412.8			$	1,343.0
Total annualized investment return %			5.0	%			2.8	%			5.2	%			4.5	%

SUMMARY OF OPERATING INCOME (Dollars and shares in thousands, except per share data)
		For the Three Months Ended June 30, (Unaudited)							For the Six Months Ended June 30, (Unaudited)
		2024			2023				2024			2023
Operating income, net of tax (1)		$	9,935		$	9,976			$	20,628		$	13,692
Net realized investment gains (losses)			158			(639	)			831			(1,861	)
Net income		$	10,093		$	9,337			$	21,459		$	11,831
Weighted average shares outstanding – diluted			13,678			13,708				13,659			13,794
Operating income per share – diluted (2)		$	0.72		$	0.72			$	1.49		$	0.98
(1) Operating income, net of tax, excludes preferred shareholder distributions of $0.1 million for each of the three months ended June 30, 2024 and 2023 and $0.2 million for each of the six months ended June 30, 2024 and 2023.
(2) The operating income per share calculation is net of preferred shareholder distributions of $0.1 million for each of the three months ended June 30, 2024 and 2023 and $0.2 million for each of the six months ended June 30, 2024 and 2023.

Note Regarding Operating Income

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

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. The insurance companies manage the distribution of the Company's core product offerings through Penn-America. The Company also has a Non-Core Operations segment that contains lines of business that have been de-emphasized or are no longer being written.

For more information, visit the Company’s website at www.gbli.com.

Forward-Looking Information

The forward-looking statements contained in this press release³ 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 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.

[3] Disseminated pursuant to the "safe harbor" provisions of Section 21E of the Security Exchange Act of 1934.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240805496163/en/

Stephen W. Ries

Head of Investor Relations

(610) 668-3270

sries@gbli.com

Source: Global Indemnity Group, LLC

FAQ

What was Global Indemnity Group's (GBLI) net income for the first half of 2024?

Global Indemnity Group (GBLI) reported net income available to shareholders of $21.2 million or $1.55 per share for the six months ended June 30, 2024.

How did GBLI's investment income perform in the first half of 2024?

GBLI's investment income increased 18% to $29.8 million in the first half of 2024 compared to $25.2 million in the same period of 2023.

What was the combined ratio for GBLI's Penn-America segment in the first half of 2024?

The Penn-America segment posted a combined ratio of 94.6% for the six months ended June 30, 2024.

How did GBLI's catastrophe losses change in the first half of 2024 compared to 2023?

GBLI's catastrophe losses declined 36% to $6.8 million in the first half of 2024 from $10.6 million in the same period of 2023.

What rating did AM Best affirm for Global Indemnity Group's U.S. insurance subsidiaries?

AM Best affirmed the Financial Strength Rating of A (Excellent) for Global Indemnity Group's U.S. insurance subsidiaries.