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Global Indemnity Limited Reports Second Quarter 2019 Financial Results

/EIN News/ -- GEORGE TOWN, Cayman Islands, Aug. 07, 2019 (GLOBE NEWSWIRE) -- Global Indemnity Limited (NASDAQ:GBLI) today reported net income for the six months ended June 30, 2019 of $34.3 million or $2.39 per share, an increase of $21.4 million or 165.7%, compared to the same period in 2018. Gross Premiums Written increased by 13.6% to $321.5 million for the six months ended June 30, 2019, compared to $283.1 million for the same period in 2018. The combined ratio for the first six months of 2019 was 91.4%, a 2.1 point improvement over the same period in 2018 and total investment return was 5.1%.  Book value per share increased by 10.2% (net of Company dividends of $0.50 per share to shareholders) during the six months, from $44.21 per share at December 31, 2018 to $48.70 per share at June 30, 2019.

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

  For the Six Months
Ended June 30,
  As of
June 30,
  As of
December 31,
    2019       2018         2019       2018
               
Gross Premiums Written $   321.5     $  283.1   Book value per share (1) $   48.70   $   44.21
Net Premiums Written $   282.5     $  244.3   Shareholders’ equity $   694.5   $   629.1
        Cash and invested assets (2) $ 1,556.1   $ 1,510.2
Net income $  34.3     $  12.9          
Net income per share $   2.39     $  0.90   (1) Net of cumulative Company dividends to shareholders totaling $1.50 per share and $1.00 per share as of June 30, 2019 and December 31, 2018, respectively.
(2) Including receivable/(payable) for securities sold/(purchased)
       
Combined ratio analysis:      
Loss ratio    51.3 %      51.8 %
Expense ratio     40.1 %       41.7 %
Combined ratio     91.4 %       93.5 %

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 specialty casualty insurance coverages and individual policyholder coverages in the United States, as well as reinsurance worldwide.  Global Indemnity Limited’s four primary segments are:

  • United States Based Commercial Specialty
     
  • United States Based Specialty Property
     
  • United States Based Farm, Ranch, & Stable
     
  • Bermuda Based Reinsurance

The Company’s Commercial Specialty segment was formerly known as Commercial Lines. During the 1st quarter of 2019, the Company re-evaluated its Personal Lines segment and determined that Personal Lines should be bifurcated into two reportable segments: Specialty Property and Farm, Ranch, & Stable.

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. 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, 2019 and 2018

For the six months ended June 30, 2019, the Company recorded a combined ratio of 91.4% (Loss Ratio 51.3% and Expense Ratio 40.1%) compared to 93.5% (Loss Ratio 51.8% and Expense Ratio 41.7%)  for the six months ended June 30, 2018.             

  • The current accident year property loss ratio improved by 1.7 points to 57.6% in 2019 from 59.3% in 2018 primarily due to lower claims frequency and severity in the U.S. Insurance Operations.
     
  • The current accident year casualty loss ratio was 58.0% compared to 57.5% in 2018.

Calendar year results for the six months ended June 30, 2019 include $16.1 million in favorable loss development mainly from the U.S. Insurance Operations. 
              
Global Indemnity Limited’s Gross and Net Premiums Written Results by Segment for the Six Months Ended June 30, 2019 and 2018

  Six Months Ended June 30,
  Gross Premiums Written   Net Premiums Written
    2019     2018   %
Change
    2019     2018   %
Change
Commercial Specialty $   141,292   $   123,746   14.2 %   $   122,277   $   109,656   11.5 %
Specialty Property     86,160       88,374   (2.5 %)     73,040     69,519   5.1 %
Farm, Ranch, & Stable   44,462     40,336   10.2 %     37,567     34,543   8.8 %
Reinsurance     49,608       30,608   62.1 %     49,601       30,606   62.1 %
Total $ 321,522   $   283,064   13.6 %   $ 282,485   $ 244,324   15.6 %

Commercial Specialty Operations: Gross premiums written and net premiums written increased 14.2% and 11.5%, respectively, for the six months ended June 30, 2019 as compared to the same period in 2018.  This increase is primarily driven by new programs and increases in excess & surplus lines submissions.

Specialty Property Operations:  Gross premiums written decreased by 2.5% and net premiums written increased by 5.1% for the six months ended June 30, 2019 as compared to the same period in 2018. The decrease in gross premiums written was primarily due to a continued reduction of catastrophe exposed business.  As a result of reducing its catastrophe exposure, Specialty Property ceded less premiums to reinsurers, which contributed to the growth in net premiums written. 

Farm, Ranch, & Stable Operations:  Gross premiums written increased by 10.2% and net premiums written increased by 8.8% for the six months ended June 30, 2019 as compared to the same period in 2018. The increase in gross and net premiums written was primarily due to an increase in pricing as well as new agent appointments. 

Reinsurance Operations: Gross premiums written and net premiums written both increased 62.1% for the six months ended June 30, 2019, as compared to the same period in 2018, mainly due to entering a new casualty treaty during 2019 and rate increases within the property catastrophe line of business.

            
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,
    2019     2018       2019     2018  
Gross premiums written $   179,321   $   158,817     $   321,522   $   283,064  
               
Net premiums written $   159,069   $   136,454     $   282,485   $   244,324  
               
Net premiums earned $   128,201   $   113,917     $   250,290   $   221,919  
Net investment income   13,826     10,954       21,045     22,358  
Net realized investment gains   3,590     2,830       13,980     2,514  
Other income   522     324       1,010     878  
  Total revenues   146,139     128,025       286,325     247,669  
               
Net losses and loss adjustment  expenses (1)   70,075     58,861       128,396     114,933  
Acquisition costs and other underwriting expenses   50,534     47,513       100,277     92,516  
Corporate and other operating expenses   4,639     10,918       7,844     20,178  
Interest expense   5,042     4,940       10,065     9,801  
  Income before income taxes   15,849     5,793       39,743     10,241  
Income tax expense (benefit)   1,186     (1,399 )     5,480     (2,652 )
  Net income $ 14,663   $ 7,192     $ 34,263   $ 12,893  
               
Weighted average shares outstanding–basic   14,187     14,092       14,171     14,074  
               
Weighted average shares outstanding–diluted   14,331     14,335       14,325     14,308  
               
Net income per share – basic $ 1.03   $ 0.51     $ 2.42   $ 0.92  
               
Net income per share – diluted $ 1.02   $ 0.50     $ 2.39   $ 0.90  
               
Cash dividends declared per share $   0.25   $   0.25     $   0.50   $    0.50  
               
Combined ratio analysis: (2)              
Loss ratio   54.6     51.7       51.3     51.8  
Expense ratio   39.4     41.7       40.1     41.7  
Combined ratio   94.0     93.4       91.4     93.5  

(1) Includes loss reductions related to prior years of $8.2 million and $9.6 million for the three months ended June 30, 2019 and 2018, respectively and $16.1 million and $15.5 million for the six months ended June 30, 2019 and 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, 2019
  December 31, 2018
Fixed Maturities:        
  Available for sale securities, at fair value
(amortized cost: 2019 - $1,175,646 and 2018 - $1,257,830)
  $ 1,196,276     $ 1,235,155  
Equity securities, at fair value     262,029       124,747  
Other invested assets     51,472       50,753  
    Total investments     1,509,777       1,410,655  
         
Cash and cash equivalents     56,215       99,497  
Premiums receivable, net     120,649       87,679  
Reinsurance receivables, net     66,398       114,418  
Funds held by ceding insurers     41,588       49,206  
Federal income taxes receivable     11,134       10,866  
Receivable for securities sold     -       15  
Deferred federal income taxes     37,425       48,589  
Deferred acquisition costs     69,047       61,676  
Intangible assets     21,755       22,020  
Goodwill     6,521       6,521  
Prepaid reinsurance premiums     19,244       20,594  
Other assets     55,719       28,530  
  Total assets   $   2,015,472     $   1,960,266  
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Liabilities:        
Unpaid losses and loss adjustment expenses   $   608,773     $   680,031  
Unearned premiums     312,758       281,912  
Ceded balances payable     17,459       14,994  
Payables for securities purchased     9,849       -  
Contingent commissions     8,103       10,636  
Debt     292,106       288,565  
Other liabilities     71,912       55,069  

 
Total liabilities     1,320,960       1,331,207  
         
Shareholders’ equity:        
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued:10,239,520 and 10,171,954, respectively; A ordinary shares outstanding: 10,129,071 and 10,095,312, respectively; B ordinary  shares issued and outstanding: 4,133,366 and 4,133,366, respectively     2       2  
Additional paid-in capital (1)     439,707       438,182  
Accumulated other comprehensive income (loss), net of taxes     16,542       (21,231 )
Retained earnings (1)     242,234       215,132  
A ordinary shares in treasury, at cost: 110,449 and 76,642 shares, respectively     (3,973 )     (3,026 )
  Total shareholders’ equity     694,512       629,059  
         
  Total liabilities and shareholders’ equity   $   2,015,472     $   1,960,266  

(1) Since the Company’s initial public offering in 2003, the Company repurchased 20.2 million shares for a total of $488 million. These share repurchases are reflected by a $488 million reduction of the Company’s additional paid-in capital and retained earnings as of June 30, 2019 and December 31, 2018. Retained earnings are also net of $21 million and $14 million of cumulative historic Company dividends to shareholders as of June 30, 2019 and December 31, 2018, respectively.



GLOBAL INDEMNITY LIMITED
SELECTED INVESTMENT DATA
 (Dollars in millions)

    Market Value as of
    (Unaudited)
June 30, 2019
  December 31, 2018
         
Fixed maturities   $ 1,196.3     $ 1,235.2
Cash and cash equivalents     56.2       99.5
Total bonds and cash and cash equivalents     1,252.5       1,334.7
Equities and other invested assets     313.5       175.5
Total cash and invested assets, gross     1,566.0       1,510.2
Payable for securities purchased     (9.9 )     -
Total cash and invested assets, net    $ 1,556.1     $ 1,510.2

             

  Total Investment Return (1)
 

 
For the Three Months Ended June 30,
(unaudited)
  For the Six Months Ended June 30,
(unaudited)
    2019       2018       2019       2018  
               
Net investment income $    13.8     $    11.0     $   21.0     $    22.4  
               
Net realized investment gains   3.6       2.8       14.0       2.5  
Net unrealized investment gains   17.1       (6.6 )     43.4       (24.3 )
Net realized and unrealized investment gains   20.7       (3.8 )     57.4       (21.8 )
               
Total net investment income and gains $    34.5     $    7.2     $   78.4     $   0.6  
               
Average total cash and invested assets $  1,537.3     $   1,546.8     $   1,533.2     $   1,543.6  
               
Total investment return %   2.2 %     0.5 %     5.1 %     0.0 %

(1) Amounts in this table are shown on a pre-tax basis.


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

             

 

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