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Global Indemnity Limited Reports First Quarter 2018 Financial Results

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GEORGE TOWN, Cayman Islands, May 08, 2018 (GLOBE NEWSWIRE) -- Global Indemnity Limited (NASDAQ:GBLI) today reported net income for the three months ended March 31, 2018 of $5.7 million or $0.40 per share. Adjusted operating income, which excludes after-tax realized gains and expenses related to the restructuring of debt, was $11.5 million or $0.81 per share. The combined ratio was 93.6%, a 2.8 point improvement over the same period in 2017. Investment income for the first quarter of 2018 was $11.4 million, an increase of 31.9% compared to the first quarter of 2017. Book value per share decreased by 2.1% to $49.53 at March 31, 2018 compared to December 31, 2017 mainly due to unrealized losses on the investment portfolio.  During the first quarter of 2018, the Company also declared, and paid, a $0.25 per share dividend to shareholders.

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

    For the Three Months
Ended March 31,
  As of
March 31,
  As of
December 31,
    2018   2017   2018   2017
                 
Gross Premiums Written   $ 124.2     $ 123.8   Book value per share $   49.53   $   50.57
Net Premiums Written   $ 107.9     $ 111.5   Shareholders' equity $    703.8   $   718.4
          Cash and invested assets (1) $ 1,541.9   $ 1,535.4
Net income   $  5.7     $   12.3          
Net income per share   $  0.40     $  0.70   (1) Including receivable/(payable) for securities sold/(purchased)
           
Adjusted operating income   $  11.5     $   11.8          
Adjusted operating income per share  

$
0.81    

$
0.67          
                 
Combined ratio analysis:                
Loss ratio     51.9 %     55.3 %        
Expense ratio     41.7 %     41.1 %        
Combined ratio     93.6 %     96.4 %        
 

About Global Indemnity Limited and its subsidiaries

Global Indemnity Limited (NASDAQ: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 Three Months Ended March 31, 2018 and 2017

The combined ratio improved to 93.6% (Loss Ratio 51.9% and Expense Ratio 41.7%) for the three months ended March 31, 2018 compared to 96.4% (Loss Ratio 55.3% and Expense Ratio 41.1%) for the three months ended March 31, 2017.

  • The current accident year property loss ratio improved by 7.6 points to 57.2% in 2018 from 64.8% in 2017, primarily due to lower claims frequency for catastrophe losses within both Commercial Lines and Personal Lines.
     
  • The current accident year casualty loss ratio improved by 5.1 points to 57.8% in 2018 from 62.9% in 2017 primarily due to lower reported claims frequency within Personal Lines.

Calendar year results for the three months ended March 31, 2018 include a 5.5 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, lower than expected claims frequency and severity primarily in the agricultural reserve category related to the 2015 and 2017 accident years within Personal Lines, as well as a reduction related to the Company's property treaties for multiple prior accident years within the Reinsurance Operations. 

Global Indemnity Limited's Gross and Net Premiums Written Results by Segment for the Three Months Ended March 31, 2018 and 2017

  Three Months Ended March 31,
  Gross Premiums Written   Net Premiums Written
   2018     2017    2018    2017
Commercial Lines Operations $   53,773     $   45,911   $    48,306   $    41,115
Personal Lines Operations     61,032         60,966     49,255       54,583
Reinsurance Operations     10,309         15,823       10,309       15,808
Business Fronted for Assurant   (867 )     1,051     -     -
Total $   124,247     $   123,751   $   107,870   $    111,506
 

Commercial Lines Operations: Gross premiums written and net premiums written increased 17.1% and 17.5%, respectively, for the three months ended March 31, 2018 as compared to the same period in 2017.  This increase is mainly due to rate increases, new programs, and increased interactions with agents.

Personal Lines Operations:  Gross premiums written increased 0.1% and net premiums written decreased 9.8% for the three months ended March 31, 2018 as compared to the same period in 2017. The decrease in net premiums written was primarily due to additional premiums being ceded due to the Property Catastrophe Quota Share Treaty that became effective on April 15, 2017. 

Reinsurance Operations: Gross premiums written and net premiums written both decreased 34.8% for the three months ended March 31, 2018, as compared to the same period in 2017, mainly due to the cancellation of a treaty.

Note: Tables Follow

 
GLOBAL INDEMNITY LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in thousands, except per share data)
 
 

 
For the Three Months
Ended March 31,
    2018       2017  
       
Gross premiums written $   124,247     $   123,751  
       
Net premiums written $   107,870     $   111,506  
       
Net premiums earned $   108,002     $   113,126  
Net investment income   11,404       8,644  
Net realized investment gains (losses)   (316 )     775  
Other income   554       1,368  
  Total revenues   119,644       123,913  
       
Net losses and loss adjustment expenses   56,072       62,561  
Acquisition costs and other underwriting expenses   45,003       46,551  
Corporate and other operating expenses   9,260       3,054  
Interest expense   4,861       2,467  
  Income before income taxes   4,448       9,280  
Income tax benefit   (1,253 )     (3,002 )
  Net income $   5,701     $   12,282  
       
Weighted average shares outstanding–basic   14,055       17,316  
       
Weighted average shares outstanding–diluted   14,286       17,646  
       
Net income per share – basic $   0.41     $  0.71  
       
Net income per share – diluted $   0.40     $  0.70  
       
Combined ratio analysis: (1)      
Loss ratio   51.9 %     55.3 %
Expense ratio   41.7 %     41.1 %
Combined ratio   93.6 %     96.4 %
 

(1) 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)
March 31, 2018
  December 31, 2017
Fixed Maturities:        
  Available for sale securities, at fair value
(amortized cost: 2018 - $1,281,954 and 2017 - $1,243,144)
  $ 1,262,996     $ 1,241,437  
Equity securities:        
  At fair value (cost: 2018 - $133,911 and 2017 - $124,915)     133,911       140,229  
Other invested assets     82,159       77,820  
    Total investments     1,479,066       1,459,486  
         
Cash and cash equivalents     73,522       74,414  
Premiums receivable, net     77,274       84,386  
Reinsurance receivables, net     97,647       105,060  
Funds held by ceding insurers     49,096       45,300  
Federal income taxes receivable     10,157       10,332  
Receivable for securities sold     -       1,543  
Deferred federal income taxes     30,502       26,196  
Deferred acquisition costs     61,425       61,647  
Intangible assets     22,417       22,549  
Goodwill     6,521       6,521  
Prepaid reinsurance premiums     24,642       28,851  
Other assets     31,445       75,384  
  Total assets   $   1,963,714     $   2,001,669  
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Liabilities:        
Unpaid losses and loss adjustment expenses   $    615,125     $   634,664  
Unearned premiums     281,062       285,397  
Federal income taxes payable     -       -  
Ceded balances payable     11,928       10,851  
Payables for securities purchased     10,729       -  
Contingent commissions     3,892       7,984  
Debt     286,567       294,713  
Other liabilities     50,659       49,666  

 
Total liabilities     1,259,962       1,283,275  
         
Shareholders' equity:        
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares
   authorized; A ordinary shares issued:10,150,130 and 10,102,927
   respectively; A ordinary shares outstanding: 10,075,346 and
   10,073,376, respectively; B ordinary  shares issued and outstanding:
   4,133,366 and 4,133,366, respectively
    2       2  
Additional paid-in capital     435,066       434,730  
Accumulated other comprehensive income, net of taxes     (16,531 )     8,983  
Retained earnings     288,187       275,838  
A ordinary shares in treasury, at cost: 74,784 and 29,551 shares, respectively     (2,972 )     (1,159 )
  Total shareholders' equity     703,752       718,394  
         
  Total liabilities and shareholders' equity   $   1,963,714     $   2,001,669  
   



 

 
GLOBAL INDEMNITY LIMITED
SELECTED INVESTMENT DATA
(Dollars in millions)
 
    Market Value as of
    (Unaudited)
March 31, 2018
  December 31, 2017
         
Fixed maturities   $ 1,263.0     $ 1,241.4
Cash and cash equivalents     73.5       74.4
Total bonds and cash and cash equivalents     1,336.5       1,315.8
Equities and other invested assets     216.1       218.1
Total cash and invested assets, gross     1,552.6       1,533.9
Receivable (payable) for securities sold/(purchased)     (10.7 )     1.5
Total cash and invested assets, net    $ 1,541.9     $ 1,535.4
 


 
    (Unaudited)
Three Months Ended
March 31, 2018
(a)
     
   Net investment income   $    11.4  
     
   Net realized investment losses     (0.3 )
   Net change in unrealized investment gains (losses)     (17.6 )
   Net realized and unrealized investment returns     (17.9 )
     
     Total investment return   $   (6.5 )
     
     Average total cash and invested assets   $   1,538.7  
     
     Total investment return % annualized     (1.7 %)
 

(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 March 31,
  2018   2017
       
Adjusted operating income, net of tax $   11,546     $   11,764
Adjustments:      
Net realized investment gains/(losses)   (251 )     518
Expenses related to the restructuring of debt   (5,594 )     -
       
Net income $   5,701     $   12,282
       
Weighted average shares outstanding – basic   14,055       17,316
       
Weighted average shares outstanding – diluted   14,286       17,646
       
Adjusted operating income per share – basic $   0.82     $   0.68
       
Adjusted operating income per share – diluted $   0.81     $   0.67
 

Note Regarding Adjusted Operating Income

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

Contact:

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

 

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