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Global Indemnity Limited Reports Second Quarter 2018 Financial Results

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GEORGE TOWN, Cayman Islands, Aug. 07, 2018 (GLOBE NEWSWIRE) -- Global Indemnity Limited (NASDAQ:GBLI) today reported net income for the six months ended June 30, 2018 of $12.9 million or $0.90 per share. Adjusted operating income, which excludes after-tax realized gains and expenses related to the restructuring of debt, was $22.8 million or $1.60 per share. The combined ratio was 93.5%, a 2.0 point improvement over the same period in 2017, and investment income was $22.4 million, an increase of 27.9% compared to the same period in 2017. For the first six months of 2018, gross written premiums excluding discontinued lines increased 11.7% compared to the same period in 2017. Book value per share decreased by 2.3% to $49.41 at June 30, 2018 compared to December 31, 2017 mainly due to unrealized losses on the fixed income portfolio due to rising interest rates.  During the first six months of 2018, the Company declared and paid dividends of $0.50 per share to shareholders.

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

    For the Six Months
Ended June 30,
  As of
June 30,
  As of
December 31,
    2018   2017   2018   2017
                 
Gross Premiums Written   $  283.1     $ 267.6   Book value per share $   49.41   $ 50.57
Net Premiums Written   $  244.3     $ 235.3   Shareholders' equity $   702.4   $ 718.4
          Cash and invested assets (1) $ 1,551.7   $ 1,535.4
Net income   $  12.9     $   22.4          
Net income per share   $  0.90     $   1.27   (1) Including receivable/(payable) for securities sold/(purchased)
           
Adjusted operating income   $  22.8     $ 22.2          
Adjusted operating income per share   $ 1.60     $ 1.26          
                 
Combined ratio analysis:                
Loss ratio      51.8 %     54.6 %        
Expense ratio     41.7 %     40.9 %        
Combined ratio     93.5 %     95.5 %        
 

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 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 Six Months Ended June 30, 2018 and 2017                                                                                                                                               
The combined ratio improved to 93.5% (Loss Ratio 51.8% and Expense Ratio 41.7%) for the six months ended June 30, 2018 compared to 95.5% (Loss Ratio 54.6% and Expense Ratio 40.9%) for the six months ended June 30, 2017.

  • The current accident year property loss ratio improved by 7.6 points to 59.3% in 2018 from 66.9% in 2017 primarily due to lower claims frequency for catastrophe losses within Personal Lines.
     
  • The current accident year casualty loss ratio improved by 6.7 points to 57.5% in 2018 from 64.3% in 2017 primarily due to lower reported claims frequency within Personal Lines.

Calendar year results for the six months ended June 30, 2018 include $15.5 million in favorable development, which was driven by lower than expected claims severity experienced across multiple prior accident years within Commercial Lines and 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 Six Months Ended June 30, 2018 and 2017

  Six Months Ended June 30,
  Gross Premiums Written   Net Premiums Written
  2018   2017   2018   2017
Commercial Lines Operations $   123,746     $   102,663   $   109,656   $   90,554
Personal Lines Operations     130,566         130,347     104,062       111,372
Reinsurance Operations     30,608         33,393       30,606       33,377
Business Fronted for Assurant   (1,856 )     1,242     -     -
Total $   283,064     $   267,645   $   244,324   $    235,303
                         

Commercial Lines Operations: Gross premiums written and net premiums written increased 20.5% and 21.1%, respectively, for the six months ended June 30, 2018 as compared to the same period in 2017.  This increase is driven by rate increases, some new programs and increased interactions with agents.

Personal Lines Operations:  Gross premiums written increased by 0.2% and net premiums written decreased 6.6%, respectively, for the six months ended June 30, 2018 as compared to the same period in 2017. The decrease in net premiums written was primarily due to additional premiums being ceded that became effective on April 15, 2017. 

Reinsurance Operations: Gross premiums written and net premiums written both decreased 8.3% for the six  months ended June 30, 2018, as compared to the same period in 2017, mainly due to the non-renewal of a treaty partially offset by growth in other treaties.
            
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 June 30,
  For the Six Months
Ended June 30,
  2018   2017   2018   2017
Gross premiums written $   158,817     $   143,894     $   283,064     $   267,645  
               
Net premiums written $   136,454     $   123,797     $   244,324     $   235,303  
               
Net premiums earned $   113,917     $   107,073     $   221,919     $   220,199  
Net investment income   10,954       8,840       22,358       17,484  
Net realized investment gains (losses)   2,830       (662 )     2,514       113  
Other income   324       1,782       878       3,150  
Total revenues   128,025       117,033       247,669       240,946  
               
Net losses and loss adjustment  expenses   58,861       57,700       114,933       120,261  
Acquisition costs and other underwriting expenses   47,513       43,457       92,516       90,008  
Corporate and other operating expenses (1)   10,918       3,361       20,178       6,415  
Interest expense   4,940       4,762       9,801       7,229  
Income before income taxes   5,793       7,753       10,241       17,033  
Income tax benefit   (1,399 )     (2,336 )     (2,652 )     (5,338 )
Net income $ 7,192     $ 10,089     $ 12,893     $ 22,371  
               
Weighted average shares outstanding–basic   14,092       17,336       14,074       17,326  
               
Weighted average shares outstanding–diluted   14,335       17,691       14,308       17,671  
               
Net income per share – basic $ 0.51     $ 0.58     $ 0.92     $ 1.29  
               
Net income per share – diluted $ 0.50     $ 0.57     $ 0.90     $ 1.27  
               
Combined ratio analysis: (2)              
Loss ratio   51.7       53.9       51.8       54.6  
Expense ratio   41.7       40.6       41.7       40.9  
Combined ratio   93.4       94.5       93.5       95.5  

(1) Corporate and other operating expenses include $7.0 million and $13.3 million of expenses related to the restructuring of debt for the three and six months ending June 30, 2018, respectively.
(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 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)
June 30, 2018
  December 31, 2017
Fixed Maturities:        
  Available for sale securities, at fair value (amortized cost: 2018 - $1,308,735 and 2017 - $1,243,144)   $ 1,283,870     $ 1,241,437  
Equity securities:        
  At fair value (cost: 2018 - $137,789 and 2017 - $124,915)     137,789       140,229  
Other invested assets     83,499       77,820  
  Total investments     1,505,158       1,459,486  
         
Cash and cash equivalents     47,138       74,414  
Premiums receivable, net     92,567       84,386  
Reinsurance receivables, net     96,568       105,060  
Funds held by ceding insurers     52,110       45,300  
Federal income taxes receivable     9,991       10,332  
Receivable for securities sold     -       1,543  
Deferred federal income taxes     32,843       26,196  
Deferred acquisition costs     65,504       61,647  
Intangible assets     22,285       22,549  
Goodwill     6,521       6,521  
Prepaid reinsurance premiums     25,237       28,851  
Other assets     25,897       75,384  
  Total assets   $ 1,981,819     $ 2,001,669  
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Liabilities:        
Unpaid losses and loss adjustment expenses   $ 613,670     $ 634,664  
Unearned premiums     304,188       285,397  
Ceded balances payable     21,848       10,851  
Payables for securities purchased     553       -  
Contingent commissions     6,496       7,984  
Debt     287,324       294,713  
Other liabilities     45,323       49,666  
  Total liabilities     1,279,402       1,283,275  
         
Shareholders' equity:        
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued:10,157,242 and 10,102,927 respectively; A ordinary shares outstanding: 10,082,458 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     436,035       434,730  
Accumulated other comprehensive income, net of taxes     (22,475 )     8,983  
Retained earnings     291,827       275,838  
A ordinary shares in treasury, at cost: 74,784 and 29,551 shares, respectively     (2,972 )     (1,159 )
  Total shareholders' equity     702,417       718,394  
         
  Total liabilities and shareholders' equity   $ 1,981,819     $ 2,001,669  


GLOBAL INDEMNITY LIMITED
SELECTED INVESTMENT DATA
 (Dollars in millions)

    Market Value as of
    (Unaudited)
June 30, 2018
  December 31, 2017
         
Fixed maturities   $ 1,283.9     $ 1,241.4
Cash and cash equivalents     47.1       74.4
Total bonds and cash and cash equivalents     1,331.0       1,315.8
Equities and other invested assets     221.3       218.1
Total cash and invested assets, gross     1,552.3       1,533.9
Receivable (payable) for securities sold/(purchased)     (0.6 )     1.5
Total cash and invested assets, net    $ 1,551.7     $ 1,535.4


 
    (Unaudited)
Six Months Ended
June 30, 2018
(a)
     
Net investment income   $    22.4  
     
Net realized investment gains     2.5  
Net change in unrealized investment losses     (24.3 )
Net realized and unrealized investment returns     (21.8 )
     
Total investment return   $    0.6  
     
Average total cash and invested assets   $   1,543.6  
     
Total investment return % annualized     0.1 %

(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 June 30,
  For the Six Months
Ended June 30,
  2018   2017   2018
  2017
                             
Adjusted operating income, net of tax $   11,279     $   10,451     $   22,824     $   22,215
Adjustments:                            
Net realized investment gains (losses)   2,202       (362 )     1,952       156
Expenses related to the restructuring of debt   (6,289 )     -         (11,883 )     -
                             
Net income $    7,192     $  10,089     $    12,893     $  22,371
                             
Weighted average shares outstanding – basic   14,092       17,336       14,074       17,326
                             
Weighted average shares outstanding – diluted   14,335       17,691       14,308       17,671
                             
Adjusted operating income per share – basic $    0.80     $  0.60     $  1.62     $  1.28
                             
Adjusted operating income per share – diluted  $  0.79     $  0.59     $    1.60     $    1.26
                             

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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