Global Indemnity Group, LLC Reports Third Quarter 2020 Results

BALA CYNWYD, Pa., Nov. 09, 2020 (GLOBE NEWSWIRE) — Global Indemnity Group, LLC (NASDAQ:GBLI) (the “Company”) today reported a net loss of $22.2 million for the nine months ended September 30, 2020 compared to net income of $41.0 million for the corresponding period in 2019. Adjusted operating income was $16.8 million for the nine months ended September 30, 2020 compared to $31.7 million for the corresponding period in 2019.Selected Operating and Balance Sheet Information
(Dollars in millions, except per share data)
Selected Financial Data for the Three Months Ended September 30, 2020:Underwriting income / (loss) – ($9.5) million in 2020 mainly due to catastrophes compared to $6.6 million in 2019.Investment Income – $11.7 million in 2020 compared to $11.3 million in 2019. In 2020 lower yields on fixed income were offset by improved performance on alternative investments.Realized gains / (loss) – $7.3 million in 2020 compared to ($2.7) million in 2019.Corporate expenses – $21.2 million in 2020 compared to $3.9 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 – $3.2 million in 2020 compared to $0.3 million in 2019.Selected Financial Data for the Nine Months Ended September 30, 2020:Underwriting income – $22.8 million in 2020 compared to $29.3 million in 2019.Investment Income – $19.5 million in 2020 compared to $32.4 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) – ($22.3) million in 2020 due to common stock sales in early 2020 and interest rate hedges compared to $11.3 million in 2019.Corporate expenses – $34.0 million in 2020 compared to $11.7 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) – $8.2 million in 2020 compared to ($5.2) million in 2019.About Global Indemnity Group, LLC and its subsidiariesGlobal 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 SpecialtySpecialty PropertyFarm, Ranch, & StableReinsurance OperationsForward-Looking InformationThe forward-looking statements contained in this press release¹do 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 Three and Nine Months Ended September 30, 2020 and 2019        For the three months ended September 30, 2020, the Company recorded a combined ratio of 107.2% (Loss Ratio 69.2% and Expense Ratio 38.0%) as compared to 95.2% (Loss Ratio 55.2% and Expense Ratio 40.0%) for the three months ended September 30, 2019.
  The accident year casualty loss ratio increased 3.4 points to 58.3% in 2020 as compared to 54.9% in 2019 primarily as a result of an increase in the Reinsurance Operations’ casualty loss ratio due to the addition of a new casualty reinsurance treaty.The Company’s accident year property loss ratio increased by 27.0 points to 90.3% in 2020 from 63.3% in 2019 primarily as a result of an increase in frequency and severity of catastrophe claims including the impact of Hurricane Laura and the Midwest Derecho. This increase was partially offset by reductions in frequency and severity on non-catastrophe claims.
For the nine months ended September 30, 2020, the Company recorded a combined ratio of 95.0% (Loss Ratio 56.7% and Expense Ratio 38.3%) as compared to 92.8% (Loss Ratio 52.7% and Expense Ratio 40.1%) for the nine months ended September 30, 2019.The accident year casualty loss ratio improved 0.4 points to 56.5% in 2020 as compared to 56.9% in 2019 primarily as a result of lower claims frequency and severity within the Insurance Operations partially offset by an increase in the Reinsurance Operations’ casualty loss ratio due to the addition of a new casualty reinsurance treaty.The Company’s accident year property loss ratio increased by 9.7 points to 69.2% in 2020 from 59.5% in 2019 primarily as a result of an increase in frequency and severity of catastrophe claims including the impact of Hurricane Laura and the Midwest Derecho. This increase was partially offset by reductions in frequency and severity on non-catastrophe claims.
Global Indemnity Group, LLC’s Gross Written and Net Earned Premiums Results by Segment for the Three and Nine Months Ended September 30, 2020 and 2019
Commercial Specialty: Gross written premiums and net earned premiums increased 2.5% and 21.4%, respectively, for the three months ended September 30, 2020 as compared to the same period in 2019. Gross written premiums and net earned premiums increased 13.4% and 22.0%, respectively, for the nine months ended September 30, 2020 as compared to the same period in 2019. The increases are primarily driven by organic growth in our 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 18.5% and 9.2%, respectively, for the three months ended September 30, 2020 as compared to the same period in 2019. Gross written premiums and net earned premiums decreased by 16.2% and 5.3%, respectively, for the nine months ended September 30, 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 9.2% and net earned premiums increased 8.7% for the three months ended September 30, 2020 as compared to the same period in 2019. Gross written premiums decreased 1.6% and net earned premiums increased 9.2%, respectively, for the nine months ended September 30, 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 26.9% and 22.9% for the three months ended September 30, 2020, as compared to the same period in 2019. Gross written premiums decreased 30.8% and net earned premiums increased 10.7% for the nine months ended September 30, 2020, as compared to the same period in 2019. The decrease in gross written premiums as well as the decrease in net earned premiums for the three months ended September 30, 2020 was primarily due to the non-renewal of property catastrophe treaties. The increase in net earned premiums for the nine months ended September 30, 2020 was primarily due to the growth of the new casualty treaty entered into during 2019.             
GLOBAL INDEMNITY GROUP, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in thousands, except per share data)⁽¹⁾ For the three and nine months ended September 30, 2020, weighted–average number of shares outstanding – basic was used to calculate diluted earnings per share due to a net loss for these periods.
GLOBAL INDEMNITY GROUP, LLC
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)⁽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 September 30, 2020 and December 31, 2019. Retained earnings are also net of $40 million and $29 million of cumulative historic Company dividends to shareholders as of September 30, 2020 and December 31, 2019, respectively.

GLOBAL INDEMNITY GROUP, LLC
SELECTED INVESTMENT DATA
(Dollars in millions)
⁽¹⁾ Amounts in this table are shown on a pre-tax basis.GLOBAL INDEMNITY GROUP, LLC
SUMMARY OF ADJUSTED OPERATING INCOME (LOSS)
(Unaudited)
(Dollars and shares in thousands, except per share data)⁽¹⁾ For the three months ended September 30, 2020, weighted-average number of shares outstanding – basic was used to calculate adjusted operating income per share – diluted due to a net loss for the period.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 gains (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.