Global Indemnity Group, LLC (NYSE:GBLI, Financial) (the “Company”) today reported net income available to shareholders for the six months ended June 30, 2023, of $11.6 million compared to net loss available to shareholders of $27.2 million for the corresponding period in 2022. Net income available to shareholders for the three months ended June 30, 2023 was $9.2 million, compared to net loss available to shareholders of $12.3 million for the corresponding period in 2022. Adjusted operating income, which excludes realized gains and losses and the results of Exited Lines, was $10.3 million for the six months ended June 30, 2023, compared to $8.0 million for the six months ended June 30, 2022. Adjusted operating income was $6.9 million for the three months ended June 30, 2023, compared to $4.2 million for the corresponding period in 2022.
Selected Operating and Balance Sheet Information Consolidated Results Including Continuing Lines and Exited Lines (Dollars in millions, except per share data) | ||||||||||||||||
For the Three Months Ended
| For the Six Months Ended
| |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Gross Written Premiums | $ | 110.1 | $ | 196.8 | $ | 233.1 | $ | 387.8 | ||||||||
Net Written Premiums | $ | 106.0 | $ | 167.2 | $ | 221.9 | $ | 326.6 | ||||||||
Net Earned Premiums | $ | 129.2 | $ | 155.7 | $ | 269.2 | $ | 304.6 | ||||||||
Net income (loss) available to shareholders | $ | 9.2 | $ | (12.3 | ) | $ | 11.6 | $ | (27.2 | ) | ||||||
Net income (loss) from Continuing Lines | $ | 6.1 | $ | (7.9 | ) | $ | 8.2 | $ | (24.6 | ) | ||||||
Net income (loss) from Exited Lines (1) | $ | 3.1 | $ | (4.4 | ) | $ | 3.4 | $ | (2.6 | ) | ||||||
Net income (loss) available to shareholders per share | $ | 0.67 | $ | (0.84 | ) | $ | 0.84 | $ | (1.87 | ) | ||||||
Adjusted operating income | $ | 6.9 | $ | 4.2 | $ | 10.3 | $ | 8.0 | ||||||||
Adjusted operating income per share | $ | 0.50 | $ | 0.28 | $ | 0.73 | $ | 0.53 | ||||||||
Combined ratio analysis: | ||||||||||||||||
Loss ratio | 60.5 | % | 59.5 | % | 61.7 | % | 58.2 | % | ||||||||
Expense ratio | 36.5 | % | 39.2 | % | 37.4 | % | 38.7 | % | ||||||||
Combined ratio | 97.0 | % | 98.7 | % | 99.1 | % | 96.9 | % | ||||||||
| (1) Underwriting income (loss) from Exited Lines, net of tax. | ||||||||||||||||
As of
| As of
| As of
| ||||||||||
Book value per share (1) | $ | 46.03 | $ | 45.68 | $ | 44.87 | ||||||
Book value per share plus cumulative dividends and excluding AOCI | $ | 54.28 | $ | 53.46 | $ | 52.98 | ||||||
Shareholders’ equity (2) | $ | 626.4 | $ | 628.2 | $ | 626.2 | ||||||
Cash and invested assets (3) | $ | 1,343.4 | $ | 1,347.1 | $ | 1,342.6 | ||||||
Shares Outstanding (in millions) | 13.5 | 13.7 | 13.9 | |||||||||
| (1) Net of cumulative Company distributions to common shareholders totaling $5.50 per share, $5.25 per share and $5.00 per share as of June 30, 2023, March 31, 2023, and December 31, 2022, respectively. |
| (2) Shareholders’ equity includes $4 million of series A cumulative fixed rate preferred shares. |
| (3) Including receivable/(payable) for securities sold/(purchased). |
Business Highlights
- Underwriting income was $4.3 million for the three months ended June 30, 2023 compared to $2.1 million for the same period in 2022 and $3.2 million for the six months ended June 30, 2023 compared to $10.0 million for the same period in 2022. The Company's underwriting results for the second quarter of 2023 significantly improved from the first quarter of 2023. In particular, Commercial Specialty's accident year loss ratio, which was 62.9% for the first three months of 2023 due to fire losses in vacant properties, improved to 57.5%.
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Commercial Specialty, excluding terminated business1 2, performed as follows:
- Package Specialty E&S, the Company’s primary division within its Commercial Specialty segment, increased gross written premiums by 13.0% to $62.6 million for the three months ended June 30, 2023 from $55.4 million for the same period in 2022 and increased 15.7% to $119.9 million for the six months ended June 30, 2023 from $103.7 million for the same period in 2022 driven by new agency appointments, strong rate increases as well as exposure growth in both property and general liability.
- Targeted Specialty E&S decreased gross written premiums by 28.4% to $32.6 million for the three months ended June 30, 2023 from $45.5 million for the same period in 2022 and decreased 19.6% to $69.3 million for the six months ended June 30, 2023 from $86.2 million for the same period in 2022 driven by actions taken to improve underwriting results through increased rates, reduced exposures to catastrophe prone business and non-renewal of underperforming business.
- Commercial Specialty incurred accident year gross casualty loss ratios of 54.6% and 55.4% for the three and six months ended June 30, 2023, respectively, which are 2.9 points and 1.5 points, respectively, lower than the same periods in 2022. The average accident year gross casualty loss ratio over the past five years was 55.2.
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Commercial Specialty incurred accident year gross property loss ratios of 54.6% and 60.0% for the three and six months ended June 30, 2023, respectively, which are 2.3 points and 7.3 points, respectively, higher than the same periods in 2022. The average accident year gross property loss ratio over the past five years was 53.0.
- The severity of property losses has been much lower in the three months ended June 30, 2023 than the losses experienced in the first three months of 2023 which were impacted by fire losses in vacant commercial buildings. The accident year gross property loss ratio improved by 10.6 points from March 2023.
- Catastrophe losses were $4.1 million or 4.4% of net earned property premium in the three months ended June 30, 2023 compared to $3.1 million or 3.2% of net earned property premium in the same period in 2022.
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Net investment income increased to $13.2 million for the three months ended June 30, 2023 from $1.9 million for the three months ended June 30, 2022 and increased to $25.2 million for the six months ended June 30, 2023 from $8.5 million for the six months ended June 30, 2022.
- The increase in net investment income was primarily due to the strategies employed by the Company in April 2022 to take advantage of rising interest rates, which resulted in a 65% increase in book yield over time on the fixed income portfolio to 3.8% at June 30, 2023 from 2.3% at March 31, 2022, while the average duration of these securities was shortened to 1.4 years at June 30, 2023 from 3.3 years at March 31, 2022.
- Approximately $900 million of cash flow, or 70%, of the Company’s fixed income portfolio, will be generated from maturities and investment income between June 30, 2023 and December 31, 2023, positioning the Company to continue to increase book yield by investing maturities in higher yielding bonds.
- The Company renewed its property catastrophe excess of loss reinsurance treaty on June 1, 2023 at a cost reduction of 49% compared to the prior year. This decline in the Company’s cost of reinsurance is due largely to the Company’s reduction in its probable maximum loss from natural catastrophes of approximately 75% over the last 5 years and by 40% over the past year, which allowed less limit to be purchased, and increasing retention from $15 million to $25 million.
- Book value per share increased $1.16 per share, or 2.6%, to $46.03 at June 30, 2023 from $44.87 at December 31, 2022.
| 1 Reflecting the Company's focus on “Main Street Specialty E&S” clients and continuing efforts to terminate business that does not meet the Company's underwriting criteria, which are continuously refined. References to gross written premiums and loss ratios in this Business Highlights section that exclude terminated business within the Commercial Specialty segment contained in Continuing Lines do not include (i) terminated gross written premiums within Package Specialty E&S of $2.9 million for the three months ended June 30, 2022 and $1.1 million and $6.0 million for the six months ended June 30, 2023 and 2022, respectively, in habitational lines in New York City and (ii) terminated gross written premiums within Targeted Specialty E&S of $0.2 million and $1.3 million for the three months ended June 30, 2023 and 2022, respectively, and $0.6 million and $12.0 million for the six months ended June 30, 2023 and 2022, respectively, concentrated in a large corporate restaurant account. |
| 2 Represents Non-GAAP financial measures or ratios. See “Reconciliation of Non-GAAP Financial Measures and Ratios” at the end of this press release. |
Global Indemnity Group, LLC’s Business Segment Information for the Three and Six Months Ended June 30, 2023 and 2022
For the Three Months Ended June 30, 2023 | ||||||||||||
Continuing
| Exited Lines | Total | ||||||||||
(Dollars in thousands) | ||||||||||||
Revenues: | ||||||||||||
Gross written premiums | $ | 110,191 | $ | (91 | ) | $ | 110,100 | |||||
Net written premiums | $ | 106,740 | $ | (744 | ) | $ | 105,996 | |||||
Net earned premiums | $ | 122,993 | $ | 6,163 | $ | 129,156 | ||||||
Other income | 275 | 26 | 301 | |||||||||
Total revenues | 123,268 | 6,189 | 129,457 | |||||||||
Losses and Expenses: | ||||||||||||
Net losses and loss adjustment expenses | ||||||||||||
Current accident year | 72,197 | 5,834 | 78,031 | |||||||||
Prior accident year | 5,977 | (5,926 | ) | 51 | ||||||||
Total net losses and loss adjustment expenses | 78,174 | (92 | ) | 78,082 | ||||||||
Acquisition costs and other underwriting expenses | 44,709 | 2,392 | 47,101 | |||||||||
Income (loss) from segments | $ | 385 | $ | 3,889 | $ | 4,274 | ||||||
Combined ratio analysis: | ||||||||||||
Loss ratio | ||||||||||||
Current accident year | 58.7 | % | 94.7 | % | 60.5 | % | ||||||
Prior accident year | 4.9 | % | (96.2 | %) | — | |||||||
Calendar year loss ratio | 63.6 | % | (1.5 | %) | 60.5 | % | ||||||
Expense ratio | 36.4 | % | 38.8 | % | 36.5 | % | ||||||
Combined ratio | 100.0 | % | 37.3 | % | 97.0 | % | ||||||
