Global Indemnity Limited Reports Third Quarter 2018 Financial Results
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 .
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 |
