Global Indemnity Limited Reports First Quarter 2017 Financial Results
May 08 2017 - 4:12PM
Global Indemnity Limited (NASDAQ:GBLI) today reported net income
for the three months ended March 31, 2017 of $12.3 million or $0.70
per share, and operating income of $11.8 million or $0.67 per
share. As of March 31st, book value per share was $46.44, an
increase of 2.3% compared to book value per share of $45.42 at
December 31, 2016.
Selected Operating and Balance Sheet Data
(Dollars in millions, except per share data)
|
|
|
For the Three Months Ended
March 31, |
|
|
As of March
31, |
|
As of December 31, |
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Premiums Written |
|
$ |
123.8 |
|
$ |
141.4 |
|
Book
value per share |
$ |
46.44 |
|
|
$ |
45.42 |
|
Net
Premiums Written |
|
$ |
111.5 |
|
$ |
116.9 |
|
Shareholders’ equity |
$ |
815.2 |
|
|
$ |
798.0 |
|
|
|
|
|
|
|
Cash and
invested assets(1) |
$ |
1,621.8 |
|
|
$ |
1,498.1 |
|
Net
income |
|
$ |
12.3 |
|
$ |
7.1 |
|
|
|
|
|
|
|
|
|
Net
income per share |
|
$ |
0.70 |
|
$ |
0.41 |
|
(1) Including receivable/(payable) for securities
sold/(purchased) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
11.8 |
|
$ |
12.0 |
|
|
|
|
|
|
|
|
|
Operating
income per share |
|
$ |
0.67 |
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined
ratio analysis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
ratio |
|
|
55.3 |
|
|
53.3 |
|
|
|
|
|
|
|
|
|
Expense
ratio |
|
|
41.1 |
|
|
42.8 |
|
|
|
|
|
Combined
ratio |
|
|
96.4 |
|
|
96.1 |
|
|
|
|
|
|
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 release1
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 the 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 Three
Months Ended March 31, 2017 and 2016
The combined ratio is a key measure of insurance
profitability. The components comprising the combined ratio
are as follows:
|
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
Loss Ratio: |
|
|
|
Current Accident Year |
|
|
|
Excluding
Catastrophes |
49.5 |
|
|
49.2 |
|
Catastrophes |
14.8 |
|
|
9.5 |
|
Current
Accident Year |
64.3 |
|
|
58.7 |
|
Changes to Prior Accident Year |
(9.0 |
) |
|
(5.4 |
) |
Loss Ratio – Calendar Year |
55.3 |
|
|
53.3 |
|
Expense Ratio |
41.1 |
|
|
42.8 |
|
Combined Ratio |
96.4 |
|
|
96.1 |
|
|
For the three months ended March 31st,
the calendar year loss ratio increased by 2.0 points to 55.3 in
2017 from 53.3 in 2016 and the expense ratio improved by 1.7
points.
For the three months ended March 31, 2017, the current accident
year loss ratio increased by 5.6 points in 2017 to 64.3 compared to
58.7 for the same period in 2016.
- The current accident year property loss ratio increased by 7.7
points to 64.8 in 2017 from 57.1 in 2016 primarily due to higher
losses in the agriculture reserve category from convective storms
within the Personal Lines Operations in 2017 partially offset by
lower claims frequency and severity within the Commercial Lines
Operations in 2017.
- The current accident year casualty loss ratio improved by 0.7
points to 62.9 in 2017 from 63.6 in 2016 primarily due to a
decrease in reported claims frequency in 2017.
Calendar year results for the three months ended March 31, 2017
include a 9.0 point reduction in the loss ratio related to prior
accident years. This was primarily driven by lower than
expected claims severity experienced in Commercial Lines across
multiple prior accident years and lower than expected case incurred
emergence experienced in Personal Lines, as well as a reduction
related to the Company’s property treaties within the Reinsurance
Operations.
For the three months ended March 31st,
the expense ratio improved from 42.8 in 2016 to 41.1 in
2017.
The improvement in the expense ratio is primarily due to a
reduction in compensation cost and lower acquisition costs.
Global Indemnity Limited’s Gross and Net Premiums
Written Results by Segment
|
|
Three Months Ended March 31, |
|
Gross Premiums
Written |
|
Net Premiums
Written |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Commercial Lines
Operations |
$ |
45,911 |
|
$ |
48,480 |
|
$ |
41,115 |
|
$ |
42,966 |
Personal Lines
Operations |
$ |
62,017 |
|
$ |
80,151 |
|
$ |
54,583 |
|
$ |
61,171 |
Reinsurance
Operations |
$ |
15,823 |
|
$ |
12,735 |
|
$ |
15,808 |
|
$ |
12,735 |
Total |
$ |
123,751 |
|
$ |
141,366 |
|
$ |
111,506 |
|
$ |
116,872 |
|
Commercial Lines Operations: For the three
months ended March 31, 2017, gross premiums written and net
premiums written both decreased 5.3% and 4.3%, respectively,
compared to the same period in 2016. The reduction in gross
premiums and net premiums written was primarily due to the
discontinuance of one unprofitable program.
Personal Lines Operations: Gross premiums
written include business written by American Reliable that is ceded
to insurance entities owned by Assurant under a 100% quota share
reinsurance agreement in the amount of $1.1 million and $13.4
million for the three months ended March 31, 2017 and 2016,
respectively. Excluding the business that is ceded 100% to
insurance entities owned by Assurant, gross premiums written
decreased by 8.6% for the three months ended March 31, 2017 as
compared to 2016. The decrease in gross and net written premiums
was primarily due to a targeted reduction of catastrophe exposed
business. For the three months ended March 31, 2017, gross
premiums written, including business that is ceded to insurance
entities owned by Assurant, decreased 22.6% and net premiums
written decreased 10.8% compared to the same period in 2016.
Reinsurance Operations: For the
three months ended March 31, 2017, gross premiums written and net
premiums written increased 24.2% and 24.1%, respectively, as
compared to the same period in 2016. This increase in gross and net
premiums written is mainly due to a new treaty written in the
fourth quarter of 2016 partially offset by a slight reduction in
property writings.
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
March 31, |
|
2017 |
|
2016 |
|
|
|
|
Gross
premiums written |
$ |
123,751 |
|
|
$ |
141,366 |
|
|
|
|
|
Net
premiums written |
$ |
111,506 |
|
|
$ |
116,872 |
|
|
|
|
|
Net
premiums earned |
$ |
113,126 |
|
|
$ |
121,636 |
|
Net
investment income |
|
8,644 |
|
|
|
9,746 |
|
Net
realized investment gains (losses) |
|
775 |
|
|
|
(7,493 |
) |
Other
income |
|
1,368 |
|
|
|
956 |
|
Total revenues |
|
123,913 |
|
|
|
124,845 |
|
|
|
|
|
Net
losses and loss adjustment expenses |
|
62,561 |
|
|
|
64,784 |
|
Acquisition costs and other underwriting expenses |
|
46,551 |
|
|
|
52,090 |
|
Corporate
and other operating expenses |
|
3,054 |
|
|
|
3,803 |
|
Interest
expense |
|
2,467 |
|
|
|
2,215 |
|
Income before income taxes |
|
9,280 |
|
|
|
1,953 |
|
Income
tax benefit |
|
(3,002 |
) |
|
|
(5,172 |
) |
Net income |
$ |
12,282 |
|
|
$ |
7,125 |
|
|
|
|
|
Weighted
average shares outstanding–basic |
|
17,316 |
|
|
|
17,224 |
|
|
|
|
|
Weighted
average shares outstanding–diluted |
|
17,646 |
|
|
|
17,444 |
|
|
|
|
|
Net income per share – basic |
$ |
0.71 |
|
|
$ |
0.41 |
|
|
|
|
|
Net income per share – diluted |
$ |
0.70 |
|
|
$ |
0.41 |
|
|
|
|
|
Combined ratio analysis: (1) |
|
|
|
Loss
ratio |
|
55.3 |
|
|
|
53.3 |
|
Expense
ratio |
|
41.1 |
|
|
|
42.8 |
|
Combined
ratio |
|
96.4 |
|
|
|
96.1 |
|
|
|
|
|
|
|
|
|
(1)
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)March 31,
2017 |
|
December 31, 2016 |
Fixed
Maturities: |
|
|
|
|
|
Available
for sale securities, at fair value (amortized cost: 2017 -
$1,309,245 and 2016 - $1,241,339) |
|
$ |
1,309,753 |
|
|
$ |
1,240,031 |
|
Equity
securities: |
|
|
|
|
|
Available
for sale, at fair value (cost: 2017 - $122,559 and 2016 -
$119,515) |
|
|
128,705 |
|
|
|
120,557 |
|
Other
invested assets |
|
|
64,213 |
|
|
|
66,121 |
|
|
Total investments |
|
|
1,502,671 |
|
|
|
1,426,709 |
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
127,543 |
|
|
|
75,110 |
|
Premiums
receivable, net |
|
|
80,727 |
|
|
|
92,094 |
|
Reinsurance
receivables, net |
|
|
106,432 |
|
|
|
143,774 |
|
Funds held
by ceding insurers |
|
|
31,862 |
|
|
|
13,114 |
|
Deferred
federal income taxes |
|
|
41,989 |
|
|
|
40,957 |
|
Deferred
acquisition costs |
|
|
58,090 |
|
|
|
57,901 |
|
Intangible
assets |
|
|
22,946 |
|
|
|
23,079 |
|
Goodwill |
|
|
6,521 |
|
|
|
6,521 |
|
Prepaid
reinsurance premiums |
|
|
33,108 |
|
|
|
42,583 |
|
Other
assets |
|
|
60,496 |
|
|
|
51,104 |
|
|
Total assets |
|
$ |
2,072,385 |
|
|
$ |
1,972,946 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Unpaid
losses and loss adjustment expenses |
|
$ |
622,088 |
|
|
$ |
651,042 |
|
Unearned
premiums |
|
|
275,884 |
|
|
|
286,984 |
|
Ceded
balances payable |
|
|
7,550 |
|
|
|
14,675 |
|
Payables
for securities purchased |
|
|
8,387 |
|
|
|
3,717 |
|
Contingent
commissions |
|
|
3,553 |
|
|
|
9,454 |
|
Debt |
|
|
296,454 |
|
|
|
163,143 |
|
Federal
income taxes payable |
|
|
220 |
|
|
|
219 |
|
Other
liabilities |
|
|
43,082 |
|
|
|
45,761 |
|
|
Total liabilities |
|
|
1,257,218 |
|
|
|
1,174,995 |
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Ordinary
shares, $0.0001 par value, 900,000,000 ordinary shares authorized;
A ordinary shares issued:13,449,721 and 13,436,548 respectively; A
ordinary shares outstanding: 13,420,756 and 13,436,548,
respectively; B ordinary shares issued and outstanding:
4,133,366 and 4,133,366, respectively |
|
|
2 |
|
|
|
2 |
|
Additional
paid-in capital |
|
|
431,404 |
|
|
|
430,283 |
|
Accumulated
other comprehensive income, net of taxes |
|
|
4,332 |
|
|
|
(618 |
) |
Retained
earnings |
|
|
380,566 |
|
|
|
368,284 |
|
A ordinary
shares in treasury, at cost: 28,965 and 0 shares, respectively |
|
|
(1,137 |
) |
|
|
- |
|
|
Total shareholders’
equity |
|
|
815,167 |
|
|
|
797,951 |
|
|
|
|
|
|
|
Total liabilities and
shareholders’ equity |
|
$ |
2,072,385 |
|
|
$ |
1,972,946 |
|
GLOBAL INDEMNITY LIMITED |
SELECTED INVESTMENT DATA |
(Dollars in millions) |
|
|
|
Market Value as of |
|
|
(Unaudited) March 31,
2017 |
|
December 31, 2016 |
|
|
|
|
|
Fixed maturities |
|
$ |
1,309.8 |
|
|
$ |
1,240.0 |
|
Cash and cash
equivalents |
|
|
127.5 |
|
|
|
75.1 |
|
Total
bonds and cash and cash equivalents |
|
|
1,437.3 |
|
|
|
1,315.1 |
|
Equities and other
invested assets |
|
|
192.9 |
|
|
|
186.7 |
|
Total
cash and invested assets, gross |
|
|
1,630.2 |
|
|
|
1,501.8 |
|
Payable for securities
purchased |
|
|
(8.4 |
) |
|
|
(3.7 |
) |
Total
cash and invested assets, net |
|
$ |
1,621.8 |
|
|
$ |
1,498.1 |
|
|
|
(Unaudited)Three Months
EndedMarch 31, 2017 (a) |
|
|
|
Net investment
income |
|
$ |
8.6 |
|
|
|
|
Net realized investment
gains |
|
|
0.8 |
|
Net change in
unrealized investment gains |
|
|
7.0 |
|
Net realized and
unrealized investment returns |
|
|
7.8 |
|
|
|
|
Total
investment return |
|
$ |
16.4 |
|
|
|
|
Average
total cash and invested assets (b) |
|
$ |
1,560.0 |
|
|
|
|
Total
investment return % annualized |
|
|
4.2 |
% |
|
(a)
Amounts in this table are shown on a pre-tax basis. |
(b)
Simple average of beginning and end of period, net of
payable/receivable for securities. |
|
GLOBAL INDEMNITY LIMITED |
SUMMARY OF OPERATING INCOME |
(Unaudited) |
(Dollars and shares in thousands, except per share
data) |
|
|
For the Three MonthsEnded
March 31, |
|
2017 |
|
2016 |
|
|
|
|
Operating
income |
$ |
11,764 |
|
|
$ |
11,991 |
|
Adjustments: |
|
|
|
Net realized investment
gains/(losses), net of tax |
|
518 |
|
|
|
(4,866 |
) |
|
|
|
|
Net
income |
$ |
12,282 |
|
|
$ |
7,125 |
|
|
|
|
|
Weighted average shares
outstanding – basic |
|
17,316 |
|
|
|
17,224 |
|
|
|
|
|
Weighted average shares
outstanding – diluted |
|
17,646 |
|
|
|
17,444 |
|
|
|
|
|
Operating
income per share – basic |
$ |
0.68 |
|
|
$ |
0.70 |
|
|
|
|
|
Operating
income per share – diluted |
$ |
0.67 |
|
|
$ |
0.69 |
|
|
|
|
|
Note Regarding Operating Income
Operating income, a non-GAAP financial measure,
is equal to net income excluding after-tax net realized investment
gains (losses). Operating income is not a substitute for net income
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
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