GBLI Global Indemnity Plc

Global Indemnity Limited Reports Third Quarter 2018 Financial Results

Global Indemnity Limited Reports Third Quarter 2018 Financial Results

GEORGE TOWN, Cayman Islands, Nov. 07, 2018 (GLOBE NEWSWIRE) -- Global Indemnity Limited (NASDAQ:GBLI) today reported net income for the nine months ended September 30, 2018 of $16.6 million or $1.16 per share, an increase of $3.2 million or 23.6% compared to the same period of 2017. Adjusted operating income, which excludes after-tax realized gains and expenses related to the restructuring of debt, was $22.4 million or $1.56 per share. The combined ratio was 98.3%, a 4.4 point improvement over the same period in 2017, and investment income was $34.1 million, an increase of 23.5% compared to the same period in 2017. For the first nine months of 2018, gross written premiums excluding discontinued lines increased 10.5% compared to the same period in 2017. Book value per share decreased by 2.4% to $49.38 at September 30, 2018 compared to December 31, 2017 mainly due to a change in the market value of investment grade, relatively short duration fixed income securities, primarily U.S.Treasury, U.S. government agency, U.S. municipal, and 'Fortune 50' U.S. corporate obligations. During the first nine months of 2018, the Company declared and paid dividends of $0.75 per share to shareholders.

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

Ended September 30,
 As of

September 30,
 As of

December 31,
 2018 2017 2018 2017
        
Gross Premiums Written$418.7  $393.7 Book value per share$49.38 $50.57
Net Premiums Written$360.6  $344.3 Shareholders’ equity$702.3 $718.4
    Cash and invested assets (1)$1,532.2 $1,535.4
Net income$16.6  $13.4     
Net income per share$1.16  $0.76 (1) Including receivable/(payable) for securities sold/(purchased)
     
Adjusted operating income$22.4  $14.0     
Adjusted operating income per share$1.56  $0.79     
        
Combined ratio analysis:       
Loss ratio 57.1%  61.6%    
Expense ratio 41.2%  41.1%    
Combined ratio 98.3%  102.7%    
            

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 .

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 Nine Months Ended September 30, 2018 and 2017

The combined ratio decreased to 98.3% (Loss Ratio 57.1% and Expense Ratio 41.2%) for the nine months ended September 30, 2018 compared to 102.7% (Loss Ratio 61.6% and Expense Ratio 41.1%) for the nine months ended September 30, 2017.

  • The current accident year property loss ratio improved by 8.2 points to 67.0% in 2018 from 75.2% in 2017 primarily due to lower catastrophe losses in both the U.S. Insurance Operations and Reinsurance Operations.

     
  • The current accident year casualty loss ratio improved by 4.1 points to 60.7% in 2018 from 64.8% in 2017 primarily due to lower reported claims frequency and severity within Personal Lines.

Calendar year results for the nine months ended September 30, 2018 include $27.5 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 Nine Months Ended September 30, 2018 and 2017
              
 Nine Months Ended September 30,
 Gross Premiums Written  Net Premiums Written
 2018 2017 2018 2017
Commercial Lines Operations$186,906  $155,555  $165,806 $136,868
Personal Lines Operations 192,771   191,857   154,145  161,142
Reinsurance Operations 39,965   45,372   39,959  45,344
Runoff 887   1,100   647  994
Business Fronted for Assurant (1,859)  (185)  -  -
Total$418,670  $393,699  $360,557 $344,348
              

Commercial Lines Operations: Gross premiums written and net premiums written increased 20.2% and 21.1%, respectively, for the nine months ended September 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 0.5% and net premiums written decreased by 4.3% for the nine months ended September 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 11.9% for the nine months ended September 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 September 30,
 For the Nine Months

Ended September 30,
 2018 2017 2018 2017
Gross premiums written$135,606  $126,054  $418,670  $393,699 
        
Net premiums written$116,233  $109,045  $360,557  $344,348 
        
Net premiums earned$120,528  $108,619  $342,447  $328,818 
Net investment income 11,750   10,134   34,108   27,618 
Net realized investment gains (losses) 5,319   (963)  7,833   (850)
Other income 411   2,294   1,289   5,444 
Total revenues 138,008   120,084   385,677   361,030 
        
Net losses and loss adjustment  expenses 80,493   82,395   195,426   202,656 
Acquisition costs and other underwriting expenses 48,680   45,002   141,196   135,010 
Corporate and other operating expenses (1) 3,475   4,630   23,653   11,045 
Interest expense 4,924   4,836   14,725   12,065 
Income (loss) before income taxes 436   (16,779)  10,677   254 
Income tax benefit (3,292)  (7,855)  (5,944)  (13,193)
Net income (loss)$ 3,728  $ (8,924) $ 16,621  $ 13,447 
        
Weighted average shares outstanding–basic 14,100   17,343   14,083   17,332 
        
Weighted average shares outstanding–diluted 14,347   17,343   14,321   17,685 
        
Net income (loss) per share – basic $ 0.26  $ (0.51) $ 1.18  $ 0.78 
        
Net income (loss) per share – diluted (2)$ 0.26  $ (0.51) $ 1.16  $ 0.76 
        
Combined ratio analysis: (3)       
Loss ratio 66.8   75.9   57.1   61.6 
Expense ratio 40.4   41.4   41.2   41.1 
Combined ratio 107.2   117.3   98.3   102.7 
                



(1) Corporate and other operating expenses include $13.3 million of expenses related to the restructuring of debt for the nine months ending September 30, 2018.
(2) For the quarter ended September 30, 2017, 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 LIMITED

CONSOLIDATED BALANCE SHEETS

 (Dollars in thousands)
     
ASSETS (Unaudited)

September 30, 2018
 December 31, 2017
Fixed Maturities:    
Available for sale securities, at fair value

(amortized cost: 2018 - $1,299,656 and 2017 - $1,243,144)
 $1,273,681  $1,241,437 
Equity securities:    
At fair value (cost: 2018 - $137,554 and 2017 - $124,915)  137,554   140,229 
Other invested assets  85,268   77,820 
Total investments  1,496,503   1,459,486 
     
Cash and cash equivalents  40,646   74,414 
Premiums receivable, net  84,641   84,386 
Reinsurance receivables, net  96,534   105,060 
Funds held by ceding insurers  50,805   45,300 
Federal income taxes receivable  10,758   10,332 
Receivable for securities sold  -   1,543 
Deferred federal income taxes  35,675   26,196 
Deferred acquisition costs  64,538   61,647 
Intangible assets  22,152   22,549 
Goodwill  6,521   6,521 
Prepaid reinsurance premiums  22,976   28,851 
Other assets  26,297   75,384 
Total assets $1,958,046  $2,001,669 
     
LIABILITIES AND SHAREHOLDERS’ EQUITY    
Liabilities:    
Unpaid losses and loss adjustment expenses $608,607  $634,664 
Unearned premiums  297,630   285,397 
Ceded balances payable  16,612   10,851 
Payables for securities purchased  4,942   - 
Contingent commissions  8,076   7,984 
Debt  282,086   294,713 
Other liabilities  37,767   49,666 
Total liabilities  1,255,720   1,283,275 
     
Shareholders’ equity:    
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued:10,164,291 and 10,102,927 respectively; A ordinary shares outstanding: 10,089,507 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  437,124   434,730 
Accumulated other comprehensive income, net of taxes  (23,829)  8,983 
Retained earnings  292,001   275,838 
A ordinary shares in treasury, at cost: 74,784 and 29,551 shares, respectively  (2,972)  (1,159)
Total shareholders’ equity  702,326   718,394 
     
Total liabilities and shareholders’ equity $1,958,046  $2,001,669 
         



        
GLOBAL INDEMNITY LIMITED

SELECTED INVESTMENT DATA

 (Dollars in millions)
   
  Market Value as of
  (Unaudited)

September 30, 2018
 December 31, 2017
     
Fixed maturities $1,273.7  $1,241.4
Cash and cash equivalents  40.6   74.4
Total bonds and cash and cash equivalents  1,314.3   1,315.8
Equities and other invested assets  222.8   218.1
Total cash and invested assets, gross  1,537.1   1,533.9
Receivable (payable) for securities sold/(purchased)  (4.9)  1.5
Total cash and invested assets, net $1,532.2  $1,535.4
        



     
  (Unaudited)

Nine Months Ended September 30, 2018(a)
   
Net investment income $34.1 
   
Net realized investment gains  7.8 
Net change in unrealized investment losses  (25.8)
Net realized and unrealized investment returns  (18.0)
   
Total investment return $16.1 
   
Average total cash and invested assets $1,533.8 
   
Total investment return % annualized  1.4%
     

(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 September 30,
 For the Nine Months

Ended September 30,
 2018 2017 2018 2017
        
Adjusted operating income (loss), net of tax$   (417) $  (8,246) $  22,408  $  13,969 
Adjustments:       
Net realized investment gains (losses) 4,145   (678)  6,096   (522)
Expenses related to the restructuring of debt -   -   (11,883)  - 
        
Net income (loss)$   3,728  $  (8,924) $  16,621  $  13,447 
        
Weighted average shares outstanding – basic 14,100   17,343   14,083   17,332 
        
Weighted average shares outstanding – diluted 14,347   17,343   14,321   17,685 
        
Adjusted operating income (loss) per share –  

  basic
$  (0.03) $  (0.48) $  1.59  $  0.81 
        
Adjusted operating income (loss) per share –

  diluted (1) 
$  (0.03) $  (0.48) $  1.56  $   0.79 
        

Note Regarding Adjusted Operating Income (Loss)

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

(1) For the quarter ended September 30, 2017, diluted loss per share is the same as basic loss per share since there was a net loss for the period.



Contact:

 
 Media

Stephen W. Ries

Senior Corporate Counsel

(610) 668-3270

EN
07/11/2018

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