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Global Indemnity Group, LLC Reports Year Ended 2020 Results

Global Indemnity Limited
·12-min read

BALA CYNWYD, Pa., March 08, 2021 (GLOBE NEWSWIRE) -- Global Indemnity Group, LLC (NASDAQ:GBLI) (the “Company”) today reported a net loss available to shareholders of $21.2 million for the year ended December 31, 2020 compared to net income available to shareholders of $70.0 million for the corresponding period in 2019. Adjusted operating income was $12.4 million for the year ended December 31, 2020 compared to $41.4 million for the corresponding period in 2019.

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

For the Twelve Months
Ended December 31,

2020

2019

Gross Written Premiums

$

606.6

$

636.9

Net Earned Premiums

$

567.7

$

525.3

Net income (loss) available to shareholders

$

(21.2

)

$

70.0

Net income (loss) available to shareholders per share

$

(1.48

)

$

4.88

Adjusted operating income

$

12.4

$

41.4

Adjusted operating income per share

$

0.86

$

2.89

Combined ratio analysis:

Loss ratio

59.2

%

52.5

%

Expense ratio

38.0

%

39.7

%

Combined ratio

97.2

%

92.2

%


As of
December 31,
2020

As of
December 31,
2019

Book value per share (1)

$

49.62

$

50.82

Shareholders’ equity (2)

$

718.3

$

726.8

Cash and invested assets (3)

$

1,449.9

$

1,607.0

(1) Net of cumulative Company dividends to common shareholders totaling $3.00 per share and $2.00 per share as of December 31, 2020 and December 31, 2019, respectively.

(2) December 31, 2020 shareholders’ equity includes $4 million of series A cumulative fixed rate preferred shares.

(3) Including receivable/(payable) for securities sold/(purchased).

Selected Financial Data for the Twelve Months Ended December 31, 2020:

  • Underwriting income - $17.9 million in 2020 compared to $43.3 million in 2019. The decrease is primarily due to an increase in the frequency and severity of catastrophes.

  • Investment Income - $28.4 million in 2020 compared to $42.1 million in 2019. In 2020, alternative investments performed poorly in the early part of the year and book yields on the fixed income portfolio have declined.

  • Realized gains/(loss) – ($14.7) million in 2020 related to derivatives and sales of equity securities in early 2020 partly offset by fixed income gains compared to $35.3 million in 2019.

  • Corporate expenses - $42.0 million in 2020 compared to $18.9 million in 2019 mainly due to expenses incurred related to the redomestication of the Company completed on August 28, 2020.

  • Loss on extinguishment of debt – $3.1 million of prepaid debt issuance costs were written off when $100 million of subordinated debt was retired on August 15, 2020.

  • Tax benefit/(expense) - $8.1 million in 2020 compared to ($11.7) million in 2019.

About Global Indemnity Group, LLC and its subsidiaries

Global Indemnity Group, LLC (NASDAQ:GBLI), through its several direct and indirect wholly owned subsidiary insurance 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 Group, LLC’s four primary segments are:

  • Commercial Specialty

  • Specialty Property

  • Farm, Ranch & Stable

  • Reinsurance Operations

Forward-Looking Information

The forward-looking statements contained in this press release1 do not address a number of risks and uncertainties including COVID-19. 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 Group, LLC’s Combined Ratio for the Twelve Months Ended December 31, 2020 and 2019

For the twelve months ended December 31, 2020, the Company recorded a combined ratio of 97.2% (Loss Ratio 59.2% and Expense Ratio 38.0%) as compared to 92.2% (Loss Ratio 52.5% and Expense Ratio 39.7%) for the twelve months ended December 31, 2019.

  • The Company’s accident year casualty loss ratio was 57.0% in 2020 and 2019.

  • The Company’s accident year property loss ratio increased by 10.6 points to 70.1% in 2020 from 59.5% in 2019 primarily as a result of an increase in frequency and severity of catastrophes.

Global Indemnity Group, LLC’s Gross Written and Net Earned Premiums Results by Segment for the Twelve Months Ended December 31, 2020 and 2019

Twelve Months Ended December 31,

Gross Written Premiums

Net Earned Premiums

2020

2019

%
Change

2020

2019

%
Change

Commercial Specialty

$

321,879

$

297,332

8.3

%

$

285,694

$

237,758

20.2

%

Specialty Property

138,401

163,503

(15.4

%)

131,474

140,232

(6.2

%)

Farm, Ranch & Stable

85,646

87,745

(2.4

%)

76,166

71,312

6.8

%

Reinsurance Operations

60,677

88,281

(31.3

%)

74,365

75,960

(2.1

%)

Total

$

606,603

$

636,861

(4.8

%)

$

567,699

$

525,262

8.1

%

Commercial Specialty: Gross written premiums and net earned premiums increased 8.3% and 20.2%, respectively, for the twelve months ended December 31, 2020 as compared to the same period in 2019. The growth in gross written premiums and net earned premiums was primarily driven by organic growth in the Company’s excess and surplus lines business from existing agents as well as increased pricing, and several new programs.

Specialty Property: Gross written premiums and net earned premiums decreased by 15.4% and 6.2%, respectively, for the twelve months ended December 31, 2020 as compared to the same period in 2019. The decreases are primarily due to a continued reduction of catastrophe exposed business.

Farm, Ranch & Stable: Gross written premiums decreased 2.4% and net earned premiums increased 6.8% for the twelve months ended December 31, 2020 as compared to the same period in 2019. The decrease in gross written premiums was primarily due to an effort to reduce exposure in catastrophe prone areas to improve overall profitability. The increase in net earned premiums was primarily due to an increase in pricing and new agent appointments.

Reinsurance Operations: Gross written premiums and net earned premiums decreased 31.3% and 2.1% for the twelve months ended December 31, 2020, as compared to the same period in 2019. The decrease in gross written premiums and net earned premiums was primarily due to the non-renewal of its property catastrophe treaties partially offset by the growth of a casualty treaty entered into during 2019.

Note: Tables Follow

GLOBAL INDEMNITY GROUP, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share data)

For the Twelve Months
Ended December 31,

2020

2019

Gross written premiums

$

606,603

$

636,861

Net written premiums

$

548,167

$

562,089

Net earned premiums

$

567,699

$

525,262

Net investment income

28,392

42,052

Net realized investment gains (losses)

(14,662

)

35,342

Other income

2,118

1,816

Total revenues

583,547

604,472

Net losses and loss adjustment expenses

336,201

275,402

Acquisition costs and other underwriting expenses

215,607

208,403

Corporate and other operating expenses

41,998

18,888

Interest expense

15,792

20,022

Loss on extinguishment of debt

3,060

-

Income (loss) before income taxes

(29,111

)

81,757

Income tax expense (benefit)

(8,105

)

11,742

Net income (loss)

(21,006

)

70,015

Less: Preferred stock distributions

152

-

Net income (loss) available to common shareholders

$

(21,158

)

$

70,015

Per share data:

Net income (loss) available to common shareholders

Basic

$

(1.48

)

$

4.93

Diluted (1)

$

(1.48

)

$

4.88

Weighted-average number of shares outstanding

Basic

14,291

14,192

Diluted (1)

14,291

14,335

Cash dividends/distributions declared per common share

$

1.00

$

1.00

Combined ratio analysis: (2)

Loss ratio

59.2

%

52.5

%

Expense ratio

38.0

%

39.7

%

Combined ratio

97.2

%

92.2

%

(1) For the twelve months ended December 31, 2020, weighted-average number of shares outstanding – basic was used to calculate diluted earnings per share due to 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 earned premiums. The expense ratio is the ratio of acquisition costs and other underwriting expenses to net earned premiums. The combined ratio is the sum of the loss and expense ratios.

GLOBAL INDEMNITY GROUP, LLC
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

ASSETS

December 31, 2020

December 31, 2019

Fixed Maturities:

Available for sale, at fair value
(amortized cost: 2020 - $1,149,009 and 2019 - $1,231,568; net of allowance of: 2020 - $0)

$

1,191,186

$

1,253,159

Equity securities, at fair value

98,990

263,104

Other invested assets

97,018

47,279

Total investments

1,387,194

1,563,542

Cash and cash equivalents

67,359

44,271

Premiums receivable, net of allowance for credit losses of $2,900 at December 31, 2020

109,431

118,035

Reinsurance receivables, net of allowance for credit losses of $8,992 at December 31, 2020

88,708

83,938

Funds held by ceding insurers

45,480

48,580

Federal income taxes receivable

-

10,989

Deferred federal income taxes

34,265

31,077

Deferred acquisition costs

65,195

70,677

Intangible assets

20,962

21,491

Goodwill

6,521

6,521

Prepaid reinsurance premiums

12,881

16,716

Other assets

66,912

60,048

Total assets

$

1,904,908

$

2,075,885

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:

Unpaid losses and loss adjustment expenses

$

662,811

$

630,181

Unearned premiums

291,495

314,861

Ceded balances payable

8,943

20,404

Payable for securities purchased

4,667

850

Contingent commissions

10,832

11,928

Debt

126,288

296,640

Other liabilities

81,548

74,212

Total liabilities

1,186,584

1,349,076

Shareholders’ equity:

Series A cumulative fixed rate preferred shares, $1,000 par value; 100,000,000 shares authorized, shares issued and outstanding:

4,000 and 0 shares, respectively, liquidation preference: $1,000 per share and $0, respectively

4,000

-

Common shares, par value: no par at December 31, 2020 and $0.0001 at December 31, 2019, 900,000,000 common shares authorized;

class A common shares issued: 10,263,722 and 10,282,277 respectively; class A common shares outstanding: 10,263,722 and

10,167,056, respectively; class B common shares issued and outstanding: 4,133,366 and 4,133,366, respectively

-

2

Additional paid-in capital (1)

445,051

442,403

Accumulated other comprehensive income, net of taxes

34,308

17,609

Retained earnings (1)

234,965

270,768

Class A common shares in treasury, at cost: 0 and 115,221 shares, respectively

-

(3,973

)

Total shareholders’ equity

718,324

726,809

Total liabilities and shareholders’ equity

$

1,904,908

$

2,075,885

(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 December 31, 2020 and December 31, 2019. Retained earnings are also net of $43 million and $29 million of cumulative historic Company dividends/distributions to shareholders as of December 31, 2020 and December 31, 2019, respectively.


GLOBAL INDEMNITY GROUP, LLC
SELECTED INVESTMENT DATA
(Dollars in millions)

Market Value as of

December 31, 2020

December 31, 2019

Fixed maturities

$

1,191.2

$

1,253.2

Cash and cash equivalents

67.4

44.3

Total bonds and cash and cash equivalents

1,258.6

1,297.5

Equities and other invested assets

196.0

310.4

Total cash and invested assets, gross

1,454.6

1,607.9

Payable for securities purchased

(4.7

)

(0.9

)

Total cash and invested assets, net

$

1,449.9

$

1,607.0


Total Investment Return (1)

For the Twelve Months Ended December 31,

2020

2019

Net investment income

$

28.4

$

42.1

Net realized investment gains (losses)

(14.7

)

35.3

Net unrealized investment gains

21.8

44.6

Net realized and unrealized investment gains

7.1

79.9

Total net investment income and gains

$

35.5

$

122.0

Average total cash and invested assets

$

1,528.4

$

1,558.6

Total investment return %

2.3

%

7.8

%

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

GLOBAL INDEMNITY GROUP, LLC
SUMMARY OF ADJUSTED OPERATING INCOME
(Dollars and shares in thousands, except per share data)

For the Twelve Months
Ended December,

2020

2019

Adjusted operating income, net of tax

$

12,418

$

41,439

Adjustments:

Net realized investment gains (losses)

(12,395

)

28,576

Expenses related to redomestication

(21,181

)

-

Net income (loss) available to common shareholders

$

(21,158

)

$

70,015

Weighted average shares outstanding – basic

14,291

14,192

Weighted average shares outstanding – diluted

14,458

14,335

Adjusted operating income per share – basic

$

0.87

$

2.92

Adjusted operating income per share – diluted

$

0.86

$

2.89

Note Regarding Adjusted Operating Income

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

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