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Global Indemnity Limited Reports Third Quarter 2018 Financial Results

/EIN News/ -- 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 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 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
sries@global-indemnity.com

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