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Global Indemnity Limited Reports Third Quarter 2017 Financial Results

/EIN News/ -- GEORGE TOWN, Cayman Islands, Nov. 08, 2017 (GLOBE NEWSWIRE) -- Global Indemnity Limited (NASDAQ:GBLI) today reported net income for the nine months ended September 30, 2017 of $13.4 million or $0.76  per share, an increase of $1.9 million or 17% compared to the same period of 2016. Operating income was $14.0 million or $0.79 per share for the period ending September 30, 2017, and book value per share was $46.91 as of September 30, 2017, an increase of 3.3% 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 Nine Months
Ended September 30,
  As of
September 30,
  As of
December 31,
    2017     2016    2017   2016
                 
Gross Premiums Written   $ 393.7     $ 429.3 Book value per share $   46.91   $   45.42
Net Premiums Written   $ 344.3     $ 357.2 Shareholders’ equity $   823.9   $   798.0
          Cash and invested
assets (1)
$ 1,628.1   $ 1,498.1
Net income   $   13.4     $   11.5        
Net income per share   $   0.76     $   0.66 (1) Including receivable/(payable) for securities sold/(purchased)
           
Operating income   $   14.0     $   17.3        
Operating income per share   $   0.79     $   0.99        
                 
Combined ratio analysis:                
Loss ratio     61.6       59.9        
Expense ratio     41.1       41.4        
Combined ratio     102.7       101.3        
Impact of hurricanes
Harvey, Irma and Maria
    (9.3 )     -        
Combined ratio excluding
hurricanes Harvey, Irma and
Maria
     
93.4
      101.3        
 


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 Nine Months Ended September 30, 2017 and 2016                                                                                    

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

 
    Nine Months Ended
September 30,
    2017   2016
Loss Ratio:        
Current Accident Year        
    Excluding Catastrophes   52.1     53.0  
    Catastrophes   20.1     13.9  
    Current Accident Year   72.2     66.9  
Changes to Prior Accident Year   (10.6 )
  (7.0 )
Loss Ratio – Calendar Year   61.6     59.9  
Expense Ratio   41.1     41.4  
Combined Ratio   102.7     101.3  
 

                                                 
The combined ratio increased 1.4 points to 102.7% for the nine months ended September 30, 2017 compared to 101.3% for the nine months ended September 30, 2016. Excluding hurricanes Harvey, Irma, and Maria, the combined ratio would have been 93.4%.

For the nine months ended September 30th, the calendar year loss ratio increased by 1.7 points to 61.6% in 2017 from 59.9% in 2016. Excluding hurricanes Harvey, Irma, and Maria, the calendar year loss ratio for the nine month ended September 30, 2017 would have been 52.3%.

For the nine months ended September 30th, the current accident year loss ratio increased by 5.3 points in 2017 to 72.2% compared to 66.9% for the same period in 2016.   

  • The current accident year property loss ratio increased 8.7 points to 75.2% in 2017 from 66.5% in 2016 primarily due to higher catastrophe losses within the Company’s U.S. Insurance Operations and Reinsurance Operations.  Hurricanes Harvey, Irma and Maria impacted U.S. Insurance Operations by $12.9 million and Reinsurance Operations by $17.7 million and increased the property loss ratio by 13.0%.  
     
  • The current accident year casualty loss ratio improved by 3.0 points to 64.8% in 2017 from 67.8% in 2016. The improvement in the loss ratio reflects lower reported claims frequency in 2017.

Calendar year results for the nine months ended September 30, 2017 include a 10.6 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 2015 and 2016 accident years within Personal Lines as well as a reduction related to the Company’s property treaties within the Reinsurance Operations. 

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

   
  Nine Months Ended September 30,
  Gross Premiums Written   Net Premiums Written
  2017     2016   2017   2016  
Commercial Lines Operations $   155,555     $   142,865   $   136,868   $   128,164  
Personal Lines Operations     191,857         204,164       161,142       178,736  
Reinsurance Operations     45,372         34,941       45,344       34,927  
Runoff   1,100       16,374     994     15,406  
Business Fronted for Assurant   (185 )     30,910     -     -  
Total $   393,699     $   429,254   $   344,348   $   357,233  
   

Commercial Lines Operations: Gross premiums written increased 8.9% and net premiums written increased 6.8% compared to the same period in 2016 mainly due to the introduction of a new program as well as increased production within two existing programs.    

Personal Lines Operations:  Gross premiums written and net premiums written decreased 6.0% and 9.8%, respectively, for the nine months ended September 30, 2017 as compared to the same period in 2016. The decrease in gross premiums written was primarily due to a targeted reduction of catastrophe exposed business.  Net premiums written were also impacted by this change as well as ceding additional premiums under property catastrophe treaties.

Reinsurance Operations: Gross premiums written and net premiums written increased 29.9% and 29.8% for the nine months ended September 30, 2017, respectively, as compared to the same period in 2016 mainly due to a new 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 September 30,
  For the Nine Months
Ended September 30,
  2017     2016   2017     2016  
Gross premiums written $   126,054     $   133,569   $   393,699     $   429,254  
               
Net premiums written $   109,045     $   115,051   $   344,348     $   357,233  
               
Net premiums earned $   108,619     $   119,553   $   328,818     $   358,993  
Net investment income   10,134       8,795     27,618       25,103  
Net realized investment gains (losses)   (963 )     1,928     (850 )     (9,057 )
Other income   2,294       7,852     5,444       9,603  
   Total revenues   120,084       138,128     361,030       384,642  
               
Net losses and loss adjustment  expenses   82,395       72,162     202,656       215,057  
Acquisition costs and other underwriting expenses   45,002       48,129     135,010       148,761  
Corporate and other operating expenses   4,630       5,006     11,045       13,064  
Interest expense   4,836       2,233     12,065       6,677  
   Income (loss) before income taxes   (16,779 )     10,598     254       1,083  
Income tax expense (benefit)   (7,855 )     1,063     (13,193 )     (10,412 )
   Net income (loss) $ (8,924 )   $ 9,535   $ 13,447     $ 11,495  
               
Weighted average shares outstanding–basic   17,343       17,255     17,332       17,241  
               
Weighted average shares outstanding–diluted   17,343       17,540     17,685       17,516  
               
Net income (loss) per share – basic $ (0.51 )   $ 0.55   $ 0.78     $ 0.67  
               
Net income (loss) per share – diluted (1) $ (0.51 )   $ 0.54   $ 0.76     $ 0.66  
               
Combined ratio analysis: (2)              
Loss ratio   75.9       60.3     61.6       59.9  
Expense ratio   41.4       40.3     41.1       41.4  
Combined ratio   117.3       100.6     102.7       101.3  
 

(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.
 
(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)
September 30, 2017
  December 31, 2016
Fixed Maturities:        
    Available for sale securities, at fair value
(amortized cost: 2017 - $1,355,690 and 2016 - $1,241,339)
  $ 1,360,163     $   1,240,031  
Equity securities:        
  Available for sale, at fair value
(cost: 2017 - $124,064 and 2016 - $119,515)
    133,462       120,557  
Other invested assets     73,553       66,121  
      Total investments     1,567,178       1,426,709  
         
Cash and cash equivalents     60,087       75,110  
Premiums receivable, net     84,462       92,094  
Reinsurance receivables, net     123,769       143,774  
Funds held by ceding insurers     40,274       13,114  
Receivable for securities sold     785       -  
Deferred federal income taxes     50,549       40,957  
Deferred acquisition costs     62,297       57,901  
Intangible assets     22,682       23,079  
Goodwill     6,521       6,521  
Prepaid reinsurance premiums     30,827       42,583  
Other assets     81,259       51,104  
  Total assets   $   2,130,690     $   1,972,946  
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Liabilities:        
Unpaid losses and loss adjustment expenses   $   649,726     $   651,042  
Unearned premiums     290,760       286,984  
Federal income taxes payable     533       219  
Ceded balances payable     12,867       14,675  
Payables for securities purchased     -       3,717  
Contingent commissions     5,552       9,454  
Debt     298,935       163,143  
Other liabilities     48,404       45,761  

 
Total liabilities     1,306,777       1,174,995  
         
Shareholders’ equity:        
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares
   authorized; A ordinary shares issued:13,458,465 and 13,436,548
   respectively; A ordinary shares outstanding: 13,428,914 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     433,254       430,283  
Accumulated other comprehensive income, net of taxes     10,085       (618 )
Retained earnings     381,731       368,284  
A ordinary shares in treasury, at cost: 29,551 and 0 shares,
   respectively
    (1,159 )     -  
  Total shareholders’ equity     823,913       797,951  
         
  Total liabilities and shareholders’ equity   $   2,130,690     $ 1,972,946  
   



 
GLOBAL INDEMNITY LIMITED
SELECTED INVESTMENT DATA
(Dollars in millions)
     
    Market Value as of
    (Unaudited)
September 30, 2017
  December 31, 2016
         
Fixed maturities   $ 1,360.2   $ 1,240.0  
Cash and cash equivalents     60.1     75.1  
Total bonds and cash and cash equivalents     1,420.3     1,315.1  
Equities and other invested assets     207.0     186.7  
Total cash and invested assets, gross     1,627.3     1,501.8  
Receivable (payable) for securities sold/(purchased)     0.8       (3.7 )
Total cash and invested assets, net    $ 1,628.1   $ 1,498.1  


  (Unaudited)
Nine Months Ended
September 30, 2017
(a)
   
Net investment income $ 27.6  
   
Net realized investment losses   (0.8 )
Net change in unrealized investment gains   14.7  
Net realized and unrealized investment returns   13.9  
   
Total investment return $ 41.5  
   
Average total cash and invested assets $ 1,587.6  
   
Total investment return % annualized   3.5 %
 
(a) Amounts in this table are shown on a pre-tax basis.


 
GLOBAL INDEMNITY LIMITED
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,

 
  2017     2016   2017
    2016  
               
Operating income (loss) $   (8,246 )   $   8,262   $   13,969     $   17,337  
Adjustments:              
Net realized investment gains (losses), net of tax   (678 )     1,273     (522 )     (5,842 )
               
Net income (loss) $   (8,924 )   $   9,535   $   13,447     $   11,495  
               
Weighted average shares outstanding – basic   17,343       17,255     17,332       17,241  
               
Weighted average shares outstanding – diluted   17,343       17,540     17,685       17,516  
               
Operating income (loss) per share – basic $   (0.48 )   $   0.48   $   0.81     $   1.01  
               
Operating income (loss) per share – diluted (1) $   (0.48 )   $   0.47   $   0.79     $   0.99  
               

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 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
sries@global-indemnity.com


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