DUBLIN, Ireland, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Global Indemnity plc GBLI today reported net income for the nine months ended September 30, 2016 of $11.5 million or $0.66 per share and operating income of $17.3 million or $0.99 per share. As of September 30th, book value per share was $44.55, an increase of 3.7% 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 Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Gross Premiums Written | $ | 133.6 | $ | 150.1 | $ | 429.3 | $ | 459.5 | |||||||
| Net Premiums Written | $ | 115.1 | $ | 122.5 | $ | 357.2 | $ | 394.6 | |||||||
| Net income | $ | 9.5 | $ | (3.7 | ) | $ | 11.5 | $ | 14.2 | ||||||
| Net income (loss) per share | $ | 0.54 | $ | (0.15 | ) | $ | 0.66 | $ | 0.55 | ||||||
| Operating income | $ | 8.3 | $ | 3.7 | $ | 17.3 | $ | 19.4 | |||||||
| Operating income per share | $ | 0.47 | $ | 0.15 | $ | 0.99 | $ | 0.76 | |||||||
| Combined ratio analysis: | |||||||||||||||
| Loss ratio | 60.3 | 62.3 | 59.9 | 59.6 | |||||||||||
| Expense ratio (1) | 40.3 | 40.8 | 41.4 | 39.4 | |||||||||||
| Combined ratio | 100.6 | 103.1 | 101.3 | 99.0 | |||||||||||
| (1) The expense ratio for the three months and nine months ended September 30, 2015 benefited approximately 0.8 points and 1.4 points, respectively, from a purchase accounting adjustment related to the purchase of American Reliable Insurance Company. | |||||||||||||||
| As of September 30, 2016 | As of June 30, 2016 | ||||||
| Book value per share | $ | 44.55 | $ | 43.91 | |||
| Shareholders' equity | $ | 782.4 | $ | 770.7 | |||
| Cash and invested assets (2) | $ | 1,528.2 | $ | 1,533.0 | |||
| (2) Including receivable/(payable) for securities sold/(purchased) | |||||||
About Global Indemnity plc and its subsidiaries
Global Indemnity plc 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 plc'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 plc website at http://www.globalindemnity.ie.
Forward-Looking Information
The forward-looking statements contained in this press release1 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. Factors that could cause actual results to differ materially from those contemplated in the forward-looking statements include, but are not limited to, the risk that there may be difficulties in the continued integration of American Reliable business, which could result in a failure to realize the potential benefits of the acquisition, and the risk that American Reliable's or Global Indemnity's prospective insurance premiums, investment yield, or net earnings are less than anticipated (including as a result of unexpected events, competition, costs, charges or outlays whether as a consequence of the transaction or otherwise). 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 additional risks and uncertainties which could impact the company and for a more detailed explication regarding forward-looking statements.
1 Disseminated pursuant to the "safe harbor" provisions of Section 21E of the Security Exchange Act of 1934.
Global Indemnity plc's Combined Ratio for the Three and Nine Months Ended September 30, 2016 and 2015
The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Loss Ratio: | |||||||||||||||
| Current Accident Year | |||||||||||||||
| Excluding Catastrophes | 56.0 | 54.2 | 53.0 | 50.5 | |||||||||||
| Catastrophes | 12.2 | 14.9 | 13.9 | 13.6 | |||||||||||
| Current Accident Year | 68.2 | 69.1 | 66.9 | 64.1 | |||||||||||
| Changes to Prior Accident Year | (7.9 | ) | (6.8 | ) | (7.0 | ) | (4.5 | ) | |||||||
| Loss Ratio – Calendar Year | 60.3 | 62.3 | 59.9 | 59.6 | |||||||||||
| Expense Ratio | 40.3 | 40.8 | 41.4 | 39.4 | |||||||||||
| Combined Ratio | 100.6 | 103.1 | 101.3 | 99.0 | |||||||||||
For the three months ended September 30th, the calendar year loss ratio improved by 2.0 points to 60.3 in 2016 from 62.3 in 2015.
For the three months ended September 30, 2016, the current accident year loss ratio improved to 68.2 compared to 69.1 for the same period in 2015.
- The current accident year property loss ratio improved by 2.6 point to 66.0 in 2016 from 68.6 in 2015 primarily due to the decrease in the severity of catastrophes experienced in 2016.
- The current accident year casualty loss ratio increased by 3.5 points to 74.2 in 2016 from 70.7 in 2015 primarily due to an increase in loss severity in the agriculture line.
Calendar year results for the three months ended September 30, 2016 include a 7.9 point reduction in the loss ratio related to prior accident years. This 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, as well as a reduction related to the Company's property treaties within the Reinsurance Operations.
For the three months ended September 30th, the expense ratio improved from 40.8 in 2015 to 40.3 in 2016.
The improvement in the expense ratio is due to efficiencies realized from the integration of American Reliable into the Company's U.S. Insurance Operations.
For the nine months ended September 30th, the calendar year loss ratio increased by 0.3 points to 59.9 in 2016 from 59.6 in 2015.
For the nine months ended September 30, 2016, the current accident year loss ratio increased by 2.8 points to 66.9 compared to 64.1 for the same period in 2015.
- The current accident year property loss ratio increased 4.1 points to 66.5 in 2016 from 62.4 in 2015 primarily due to higher losses from convective storms in 2016 as opposed to 2015.
- The current accident year casualty loss ratio improved by 1.6 points to 67.8 in 2016 from 69.4 in 2015. This improvement is mainly due to a decrease in reported claim frequency reflecting the milder winter experienced in 2016 offset by an increase in loss severity in the agriculture line.
Calendar year results for the nine months ended September 30, 2016 include a 7.0 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 nine months ended September 30th, the expense ratio increased from 39.4 in 2015 to 41.4 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 2015 expense ratio benefitting from accounting adjustments related to the purchase of American Reliable.
Global Indemnity plc's Gross and Net Premiums Written Results by Segment
| (Dollars in thousands) | Three Months Ended September 30, | ||||||||||||||
| Gross Premiums Written | Net Premiums Written | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Commercial Lines Operations | $ | 50,214 | $ | 52,920 | $ | 45,754 | $ | 49,325 | |||||||
| Personal Lines Operations | 73,557 | 87,349 | 59,499 | 63,302 | |||||||||||
| Reinsurance Operations | 9,798 | 9,879 | 9,798 | 9,870 | |||||||||||
| Total | $ | 133,569 | $ | 150,148 | $ | 115,051 | $ | 122,497 | |||||||
| Nine Months Ended September 30, | |||||||||||||||
| Gross Premiums Written | Net Premiums Written | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Commercial Lines Operations | $ | 157,335 | $ | 161,746 | $ | 141,764 | $ | 149,647 | |||||||
| Personal Lines Operations | 236,978 | 249,564 | 180,542 | 196,785 | |||||||||||
| Reinsurance Operations | 34,941 | 48,222 | 34,927 | 48,174 | |||||||||||
| Total | $ | 429,254 | $ | 459,532 | $ | 357,233 | $ | 394,606 | |||||||
Commercial Lines Operations: Gross premiums written and net premiums written decreased 5.1% and 7.2%, respectively, for the three months ended September 30, 2016, and decreased 2.7% and 5.3%, respectively, for the nine months ended September 30, 2016 as compared to the same periods in 2015. The decline in premiums is primarily due to limiting catastrophe exposure in certain areas.
Personal Lines Operations: For the three and nine months ended September 30, 2016, gross premiums written decreased 15.8% and 5.0%, respectively, and net premiums written decreased by 6.0% and 8.3%, respectively, as compared to the same periods 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 $7.3 million and $18.7 million for the three months ended September 30, 2016 and 2015, respectively, and $30.9 million and $41.7 million for the nine months ended September 30, 2016 and 2015, respectively. Excluding the business that is ceded 100% to insurance entities owned by Assurant, gross premiums written decreased by 3.5% and 0.8% for the three and nine months ended September 30, 2016, respectively, and net premiums written decreased by 6.0% and 8.3% for the three and nine months ended September 30, 2016, respectively. The reduction in net premiums written is due to purchasing additional reinsurance to reduce catastrophe exposure.
Reinsurance Operations: For the three months ended September 30, 2016, gross premiums written and net premiums written decreased 0.8% and 0.7%, respectively, as compared to the same period in 2015. For the nine months ended September 30, 2016, gross premiums written and net premiums written both decreased 27.5% compared to the same period in 2015. The decline was primarily due to one treaty being non-renewed in 2016 in an effort to reduce catastrophe exposure.
Note: Tables Follow
| GLOBAL INDEMNITY PLC | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (Dollars and shares in thousands, except per share data) | ||||||||||||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Gross premiums written | $ | 133,569 | $ | 150,148 | $ | 429,254 | $ | 459,532 | ||||||||
| Net premiums written | $ | 115,051 | $ | 122,497 | $ | 357,233 | $ | 394,606 | ||||||||
| Net premiums earned | $ | 119,553 | $ | 124,707 | $ | 358,993 | $ | 380,921 | ||||||||
| Net investment income | 8,795 | 8,852 | 25,103 | 26,234 | ||||||||||||
| Net realized investment gains (losses) | 1,928 | (10,778 | ) | (9,057 | ) | (7,216 | ) | |||||||||
| Other income (1) | 7,852 | 1,279 | 9,603 | 2,408 | ||||||||||||
| Total revenues | 138,128 | 124,060 | 384,642 | 402,347 | ||||||||||||
| Net losses and loss adjustment expenses | 72,162 | 77,691 | 215,057 | 226,870 | ||||||||||||
| Acquisition costs and other underwriting expenses | 48,129 | 50,934 | 148,761 | 150,118 | ||||||||||||
| Corporate and other operating expenses | 5,006 | 3,567 | 13,064 | 19,441 | ||||||||||||
| Interest expense | 2,233 | 1,595 | 6,677 | 2,635 | ||||||||||||
| Income (loss) before income taxes | 10,598 | (9,727 | ) | 1,083 | 3,283 | |||||||||||
| Income tax expense (benefit) | 1,063 | (5,981 | ) | (10,412 | ) | (10,882 | ) | |||||||||
| Net income (loss) | $ | 9,535 | $ | (3,746 | ) | $ | 11,495 | $ | 14,165 | |||||||
| Weighted average shares outstanding–basic | 17,255 | 25,464 | 17,241 | 25,453 | ||||||||||||
| Weighted average shares outstanding–diluted | 17,540 | 25,464 | 17,516 | 25,685 | ||||||||||||
| Net income (loss) per share – basic | $ | 0.55 | $ | (0.15 | ) | $ | 0.67 | $ | 0.56 | |||||||
| Net income (loss) per share – diluted (2) | $ | 0.54 | $ | (0.15 | ) | $ | 0.66 | $ | 0.55 | |||||||
| Combined ratio analysis: (3) | ||||||||||||||||
| Loss ratio | 60.3 | 62.3 | 59.9 | 59.6 | ||||||||||||
| Expense ratio | 40.3 | 40.8 | 41.4 | 39.4 | ||||||||||||
| Combined ratio | 100.6 | 103.1 | 101.3 | 99.0 | ||||||||||||
| (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) For the quarter ended September 30, 2015, diluted loss per share is the same as basic loss per share since there was a net loss for the period. | ||||||||||||||||
| (3) 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 PLC | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Dollars in thousands) | ||||||||||
| ASSETS | (Unaudited) September 30, 2016 | December 31, 2015 | ||||||||
| Fixed Maturities: | ||||||||||
| Available for sale securities, at fair value (amortized cost: 2016 - $1,297,465 and 2015 - $1,308,333) | $ | 1,310,957 | $ | 1,306,149 | ||||||
| Equity securities: | ||||||||||
| Available for sale, at fair value (cost: 2016 - $102,899 and 2015 - $100,157) | 122,779 | 110,315 | ||||||||
| Other invested assets | 32,635 | 32,592 | ||||||||
| Total investments | 1,466,371 | 1,449,056 | ||||||||
| Cash and cash equivalents | 63,779 | 67,037 | ||||||||
| Premiums receivable, net | 86,469 | 89,245 | ||||||||
| Reinsurance receivables, net | 108,452 | 115,594 | ||||||||
| Funds held by ceding insurers | 19,356 | 16,037 | ||||||||
| Federal income taxes receivable | 4,656 | 4,828 | ||||||||
| Deferred federal income taxes | 39,337 | 34,687 | ||||||||
| Deferred acquisition costs | 55,141 | 56,517 | ||||||||
| Intangible assets | 23,211 | 23,607 | ||||||||
| Goodwill | 6,521 | 6,521 | ||||||||
| Prepaid reinsurance premiums | 38,401 | 44,363 | ||||||||
| Receivable for securities sold | - | 172 | ||||||||
| Other assets | 70,121 | 49,630 | ||||||||
| Total assets | $ | 1,981,815 | $ | 1,957,294 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
| Liabilities: | ||||||||||
| Unpaid losses and loss adjustment expenses | $ | 664,382 | $ | 680,047 | ||||||
| Unearned premiums | 278,561 | 286,285 | ||||||||
| Ceded balances payable | 11,718 | 4,589 | ||||||||
| Payables for securities purchased | 1,921 | - | ||||||||
| Contingent commissions | 9,392 | 11,069 | ||||||||
| Debt | 173,162 | 172,034 | ||||||||
| Other liabilities | 60,236 | 53,344 | ||||||||
| Total liabilities | 1,199,372 | 1,207,368 | ||||||||
| Shareholders' equity: | ||||||||||
| Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued:16,568,674 and 16,424,546 respectively; A ordinary shares outstanding: 13,429,780 and 13,313,751, respectively; B ordinary shares issued and outstanding: 4,133,366 and 4,133,366, respectively | 3 | 3 | ||||||||
| Additional paid-in capital | 532,498 | 529,872 | ||||||||
| Accumulated other comprehensive income, net of taxes | 23,279 | 4,078 | ||||||||
| Retained earnings | 329,911 | 318,416 | ||||||||
| A ordinary shares in treasury, at cost: 3,138,894 and 3,110,795 shares, respectively | (103,248 | ) | (102,443 | ) | ||||||
| Total shareholders' equity | 782,443 | 749,926 | ||||||||
| Total liabilities and shareholders' equity | $ | 1,981,815 | $ | 1,957,294 | ||||||
| GLOBAL INDEMNITY PLC | ||||||||
| SELECTED INVESTMENT DATA | ||||||||
| (Dollars in millions) | ||||||||
| Market Value as of | ||||||||
| (Unaudited) | ||||||||
| September 30, 2016 | December 31, 2015 | |||||||
| Fixed maturities | $ | 1,311.0 | $ | 1,306.1 | ||||
| Cash and cash equivalents | 63.7 | 67.0 | ||||||
| Total bonds and cash and cash equivalents | 1,374.7 | 1,373.1 | ||||||
| Equities and other invested assets | 155.4 | 143.0 | ||||||
| Total cash and invested assets, gross | 1,530.1 | 1,516.1 | ||||||
| Receivable/(payable) for securities sold (purchased) | (1.9 | ) | 0.2 | |||||
| Total cash and invested assets, net | $ | 1,528.2 | $ | 1,516.3 | ||||
| (Unaudited) | (Unaudited) | |||||||
| Three Months Ended September 30, 2016 (a) | Nine Months Ended September 30, 2016 (a) | |||||||
| Net investment income | $ | 8.8 | $ | 25.1 | ||||
| Net realized investment gains (losses) | 1.9 | (9.1 | ) | |||||
| Net change in unrealized investment gains | 2.1 | 25.4 | ||||||
| Net realized and unrealized investment returns | 4.0 | 16.3 | ||||||
| Total investment return | $ | 12.8 | $ | 41.4 | ||||
| Average total cash and invested assets (b) | $ | 1,530.6 | $ | 1,522.2 | ||||
| Total investment return % annualized | 3.3 | % | 3.6 | % | ||||
| (a) Amounts in this table are shown on a pre-tax basis. | ||||||||
| (b) Simple average of beginning and end of period, net of payable/receivable for securities. | ||||||||
GLOBAL INDEMNITY PLC
SUMMARY OF OPERATING INCOME (LOSS)
(Unaudited)
(Dollars and shares in thousands, except per share data)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Operating income (loss) | $ | 8,262 | $ | 3,699 | $ | 17,337 | $ | 19,430 | |||||||||
| Adjustments: | |||||||||||||||||
| Net realized investment gains (losses), net of tax | 1,273 | (7,445 | ) | (5,842 | ) | (5,265 | ) | ||||||||||
| Net income (loss) | $ | 9,535 | $ | (3,746 | ) | $ | 11,495 | $ | 14,165 | ||||||||
| Weighted average shares outstanding – basic | 17,255 | 25,464 | 17,241 | 25,453 | |||||||||||||
| Weighted average shares outstanding – diluted | 17,540 | 25,464 | 17,516 | 25,685 | |||||||||||||
| Operating income (loss) per share – basic | $ | 0.48 | $ | 0.15 | $ | 1.01 | $ | 0.76 | |||||||||
| Operating income (loss) per share – diluted (1) | $ | 0.47 | $ | 0.15 | $ | 0.99 | $ | 0.76 | |||||||||
| (1) For the quarter ended September 30, 2015, diluted operating income per share and basic operating income per share were the same due to a net loss for the period. | |||||||||||||||||
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.
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