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Global Indemnity Limited Reports Second Quarter 2017 Financial Results

GEORGE TOWN, Cayman Islands, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Global Indemnity Limited (NASDAQ:GBLI) today reported net income for the six months ended June 30, 2017 of $22.4 million or $1.27 per share, and operating income of $22.2 million or $1.26 per share. As of June 30th, book value per share was $47.13, an increase of 3.8% compared to book value per share of $45.42 at December 31, 2016.

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,
     2017    2016      2017      2016
                 
Gross Premiums Written   $ 267.6   $ 295.7 Book value per share $   47.13   $   45.42
Net Premiums Written   $ 235.3   $ 242.2 Shareholders’ equity $   827.7   $   798.0
          Cash and invested assets (1) $ 1,631.9   $ 1,498.1
Net income   $   22.4   $    2.0        
Net income per share   $   1.27   $   0.11 (1) Including receivable/(payable) for securities sold/(purchased)
           
Operating income   $   22.2   $    9.1        
Operating income per share   $   1.26   $   0.52        
                 
Combined ratio analysis:                
Loss ratio     54.6     59.7        
Expense ratio     40.9     42.0        
Combined ratio     95.5     101.7        
                     

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 http://www.globalindemnity.ky.

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. 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 Six Months Ended June 30, 2017 and 2016                                                                                

The combined ratio is a key measure of insurance profitability.  The components comprising the combined ratio are as follows:

    Six Months Ended
June 30,
    2017    2016 
Loss Ratio:        
Current Accident Year        
  Excluding Catastrophes   51.3     51.5  
  Catastrophes   14.9     14.7  
  Current Accident Year   66.2     66.2  
Changes to Prior Accident Year   (11.6  )
   (6.5  )
Loss Ratio – Calendar Year   54.6     59.7  
Expense Ratio   40.9     42.0  
Combined Ratio   95.5     101.7  
             

For the six months ended June 30th, the calendar year loss ratio improved by 5.1 points to 54.6% in 2017 from 59.7% in 2016.

For the six months ended June 30th, the current accident year loss ratio was 66.2% in both 2017 and 2016.   

  • The current accident year property loss ratio increased 0.2 points to 66.9% in 2017 from 66.7% in 2016 primarily due to higher catastrophe losses from convective storms in 2017 in the agriculture product in Personal Lines offset almost entirely by an improvement in the Commercial Lines’ current accident year property loss ratio due to lower claim frequency and severity.
     
  • The current accident year casualty loss ratio improved by 0.2 points to 64.3% in 2017 from 64.5% in 2016.

Calendar year results for the six months ended June 30, 2017 include a 11.6 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 case incurred emergence primarily related to the 2016 accident year within Personal Lines as well as a reduction related to the Company’s property treaties within the Reinsurance Operations. 

For the six months ended June 30th, the expense ratio improved from 42.0% in 2016 to 40.9% in 2017.

The improvement in the expense ratio is primarily due to receiving a federal excise tax refund related to prior years as well as a reduction in compensation expense.

Global Indemnity Limited’s Gross and Net Premiums Written Results by Segment for the Six Months Ended June 30, 2017 and 2016

   
  Six Months Ended June 30,
  Gross Premiums Written   Net Premiums Written
   2017    2016    2017    2016  
Commercial Lines Operations $   102,663   $   106,181   $   90,554   $   95,125  
Personal Lines Operations     131,589       164,361       111,372       121,928  
Reinsurance Operations      33,393       25,143       33,377       25,129  
Total $   267,645   $   295,685   $   235,303   $   242,182  
                         

Commercial Lines Operations: Gross premiums written and net premiums written decreased 3.3% and 4.8%, respectively, for the six months ended June 30, 2017 as compared to the same period in 2016.  The decline in gross premiums written is mainly due to the discontinuance of one unprofitable program partially offset by the introduction of a new program.  Excluding the terminated unprofitable program, gross premiums written increased by 5% compared to the same period in 2016.  Net premiums written were also impacted by these changes as well as purchasing additional property reinsurance that became effective on April 15, 2017.    

Personal Lines Operations:  Gross premiums written and net premiums written decreased 19.9% and 8.7%, respectively, for the six months ended June 30, 2017 as compared to the same period in 2016. 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 $1.2 million and $23.6 million for the six months ended June 30, 2017 and 2016, respectively.  Excluding the business that is ceded 100% to insurance entities owned by Assurant, gross premiums written decreased by 7.4% for the six months ended June 30, 2017 as compared to 2016. The decrease in gross and net written premiums was primarily due to a targeted reduction of catastrophe exposed business as well as underwriting actions taken to improve profitability.  

Reinsurance Operations: Gross premiums written and net premiums written increased 32.8% for the six months ended June 30, 2017 as compared to the same period in 2016. This increase is mainly due to a new mortgage insurance treaty written in the fourth quarter of 2016.

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,
   2017      2016      2017      2016  
Gross premiums written $   143,894     $   154,319     $   267,645     $   295,685  
               
Net premiums written $   123,797     $   125,310     $   235,303     $   242,182  
               
Net premiums earned $   107,073     $   117,804     $   220,199     $   239,440  
Net investment income   8,840       6,562       17,484       16,308  
Net realized investment gains (losses)   (662 )     (3,492 )     113       (10,985 )
Other income   1,782       795       3,150       1,751  
  Total revenues   117,033       121,669       240,946       246,514  
               
Net losses and loss adjustment  expenses   57,700       78,111       120,261       142,895  
Acquisition costs and other underwriting expenses   43,457       48,542       90,008       100,632  
Corporate and other operating expenses   3,361       4,255       6,415       8,058  
Interest expense   4,762       2,229       7,229       4,444  
  Income (loss) before income taxes   7,753       (11,468 )     17,033       (9,515 )
Income tax benefit   (2,336 )     (6,303 )     (5,338 )     (11,475 )
  Net income (loss) $ 10,089     $ (5,165 )   $ 22,371     $ 1,960  
               
Weighted average shares outstanding–basic   17,336       17,244       17,326       17,234  
               
Weighted average shares outstanding–diluted   17,691       17,244       17,671       17,485  
               
Net income (loss) per share – basic $ 0.58     $ (0.30 )   $ 1.29     $ 0.11  
               
Net income (loss) per share – diluted (1) $ 0.57     $ (0.30 )   $ 1.27     $ 0.11  
               
Combined ratio analysis: (2)              
Loss ratio   53.9       66.3       54.6       59.7  
Expense ratio   40.6       41.2       40.9       42.0  
Combined ratio   94.5       107.5       95.5       101.7  

(1) For the quarter ended June 30, 2016, diluted loss per share is the same as basic loss per share since there was a net loss for the period.

(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, 2017
  December 31, 2016
Fixed Maturities:        
  Available for sale securities, at fair value
(amortized cost: 2017 - $1,336,457 and 2016 - $1,241,339)
  $ 1,338,974     $   1,240,031  
Equity securities:        
  Available for sale, at fair value
(cost: 2017 - $124,424 and 2016 - $119,515)
    130,516       120,557  
Other invested assets     72,298       66,121  
    Total investments     1,541,788       1,426,709  
         
Cash and cash equivalents     96,464       75,110  
Premiums receivable, net     86,235       92,094  
Reinsurance receivables, net     107,452       143,774  
Funds held by ceding insurers     38,267       13,114  
Deferred federal income taxes     43,995       40,957  
Deferred acquisition costs     61,748       57,901  
Intangible assets     22,814       23,079  
Goodwill     6,521       6,521  
Prepaid reinsurance premiums     32,048       42,583  
Other assets     67,022       51,104  
  Total assets   $   2,104,354     $   1,972,946  
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Liabilities:        
Unpaid losses and loss adjustment expenses   $   615,763     $   651,042  
Unearned premiums     291,549       286,984  
Federal income taxes payable     299       219  
Ceded balances payable     14,795       14,675  
Payables for securities purchased     6,325       3,717  
Contingent commissions     4,663       9,454  
Debt     296,238       163,143  
Other liabilities     47,048       45,761  

 
Total liabilities     1,276,680       1,174,995  
         
Shareholders’ equity:        
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued:                
  13,456,489 and 13,436,548 respectively; A ordinary shares outstanding: 13,426,938 and 13,436,548,                
  respectively; B ordinary  shares issued and outstanding: 4,133,366 and 4,133,366, respectively     2       2  
Additional paid-in capital     432,190       430,283  
Accumulated other comprehensive income, net of taxes     5,986       (618 )
Retained earnings     390,655       368,284  
A ordinary shares in treasury, at cost: 29,551 and 0 shares, respectively     (1,159 )     -  
  Total shareholders’ equity     827,674       797,951  
         
  Total liabilities and shareholders’ equity   $   2,104,354     $ 1,972,946  


 
GLOBAL INDEMNITY LIMITED
SELECTED INVESTMENT DATA
 (Dollars in millions)
 
    Market Value as of
    (Unaudited)
June 30, 2017
  December 31, 2016
         
Fixed maturities   $ 1,339.0     $ 1,240.0  
Cash and cash equivalents     96.4       75.1  
Total bonds and cash and cash equivalents     1,435.4       1,315.1  
Equities and other invested assets     202.8       186.7  
Total cash and invested assets, gross     1,638.2       1,501.8  
Payable for securities purchased     (6.3 )       (3.7 )
Total cash and invested assets, net    $ 1,631.9     $ 1,498.1  


 
 
  (Unaudited)
Six Months Ended
 June 30, 2017
(a)
     
Net investment income   $  17.5  
     
Net realized investment gains     0.1  
Net change in unrealized investment gains     9.1  
Net realized and unrealized investment returns     9.2  
     
  Total investment return   $   26.7  
     
  Average total cash and invested assets (b)   $   1,565.0  
     
  Total investment return % annualized     3.4 %

(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 LIMITED
SUMMARY OF OPERATING INCOME (LOSS)
(Unaudited) 
(Dollars and shares in thousands, except per share data)
 
  For the Three Months
Ended June 30,

  For the Six Months
Ended June 30,
   2017     2016    2017
   2016 
               
Operating income (loss) $   10,451     $   (2,915 )   $   22,215   $   9,076  
Adjustments:              
Net realized investment gains (losses), net of tax   (362 )     (2,250 )     156     (7,116 )
               
Net income (loss) $   10,089     $   (5,165 )   $   22,371   $   1,960  
               
Weighted average shares outstanding – basic   17,336       17,244       17,326     17,234  
               
Weighted average shares outstanding – diluted   17,691       17,244       17,671     17,485  
               
Operating income (loss) per share – basic $   0.60     $   (0.17 )   $   1.28   $   0.53  
               
Operating income (loss) per share – diluted (1) $   0.59     $   (0.17 )   $   1.26   $   0.52  
               

Note Regarding Operating Income (loss)

Operating income (loss), a non-GAAP financial measure, is equal to net income (loss) excluding after-tax net realized investment gains (losses). 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 June 30, 2016, 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	
sries@global-indemnity.com

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