GBLI Global Indemnity Group LLC

Global Indemnity Limited (NASDAQ:GBLI) today reported net income for the nine months ended September 30, 2017 of $13.4 million or $0.76  per share, an increase of $1.9 million or 17% compared to the same period of 2016. Operating income was $14.0 million or $0.79 per share for the period ending September 30, 2017, and book value per share was $46.91 as of September 30, 2017, an increase of 3.3% 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 Nine MonthsEnded September 30,							As ofSeptember 30,			As ofDecember 31,
		2017				2016			2017			2016
Gross Premiums Written		$	393.7			$	429.3	Book value per share	$	46.91		$	45.42
Net Premiums Written		$	344.3			$	357.2	Shareholders’ equity	$	823.9		$	798.0
								Cash and investedassets (1)	$	1,628.1		$	1,498.1
Net income		$	13.4			$	11.5
Net income per share		$	0.76			$	0.66	(1) Including receivable/(payable) for securities sold/(purchased)
Operating income		$	14.0			$	17.3
Operating income per share		$	0.79			$	0.99
Combined ratio analysis:
Loss ratio			61.6				59.9
Expense ratio			41.1				41.4
Combined ratio			102.7				101.3
Impact of hurricanesHarvey, Irma and Maria			(9.3	)			-
Combined ratio excludinghurricanes Harvey, Irma andMaria			93.4				101.3

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 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 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 Nine Months Ended September 30, 2017 and 2016                                                                                    

The combined ratio is a key measure of insurance profitability.  The components comprising the combined ratio are as follows:

		Nine Months Ended September 30,
		2017			2016
Loss Ratio:
Current Accident Year
Excluding Catastrophes		52.1			53.0
Catastrophes		20.1			13.9
Current Accident Year		72.2			66.9
Changes to Prior Accident Year		(10.6	)		(7.0	)
Loss Ratio – Calendar Year		61.6			59.9
Expense Ratio		41.1			41.4
Combined Ratio		102.7			101.3

                                                  The combined ratio increased 1.4 points to 102.7% for the nine months ended September 30, 2017 compared to 101.3% for the nine months ended September 30, 2016. Excluding hurricanes Harvey, Irma, and Maria, the combined ratio would have been 93.4%.

For the nine months ended September 30th, the calendar year loss ratio increased by 1.7 points to 61.6% in 2017 from 59.9% in 2016. Excluding hurricanes Harvey, Irma, and Maria, the calendar year loss ratio for the nine month ended September 30, 2017 would have been 52.3%.

For the nine months ended September 30th, the current accident year loss ratio increased by 5.3 points in 2017 to 72.2% compared to 66.9% for the same period in 2016.   

• The current accident year property loss ratio increased 8.7 points to 75.2% in 2017 from 66.5% in 2016 primarily due to higher catastrophe losses within the Company’s U.S. Insurance Operations and Reinsurance Operations.  Hurricanes Harvey, Irma and Maria impacted U.S. Insurance Operations by $12.9 million and Reinsurance Operations by $17.7 million and increased the property loss ratio by 13.0%.   
• The current accident year casualty loss ratio improved by 3.0 points to 64.8% in 2017 from 67.8% in 2016. The improvement in the loss ratio reflects lower reported claims frequency in 2017.

Calendar year results for the nine months ended September 30, 2017 include a 10.6 point reduction in the loss ratio related to prior accident years, which was primarily driven by lower than expected claims frequency and severity experienced across multiple prior accident years within Commercial Lines, lower than expected case incurred emergence primarily related to the 2015 and 2016 accident years within Personal Lines as well as a reduction related to the Company’s property treaties within the Reinsurance Operations. 

Global Indemnity Limited’s Gross and Net Premiums Written Results by Segment for the Nine Months Ended September 30, 2017 and 2016

	Nine Months Ended September 30,
	Gross Premiums Written							Net Premiums Written
	2017				2016			2017			2016
Commercial Lines Operations	$	155,555			$	142,865		$	136,868		$	128,164
Personal Lines Operations		191,857				204,164			161,142			178,736
Reinsurance Operations		45,372				34,941			45,344			34,927
Runoff		1,100				16,374			994			15,406
Business Fronted for Assurant		(185	)			30,910			-			-
Total	$	393,699			$	429,254		$	344,348		$	357,233

Commercial Lines Operations: Gross premiums written increased 8.9% and net premiums written increased 6.8% compared to the same period in 2016 mainly due to the introduction of a new program as well as increased production within two existing programs.    

Personal Lines Operations:  Gross premiums written and net premiums written decreased 6.0% and 9.8%, respectively, for the nine months ended September 30, 2017 as compared to the same period in 2016. The decrease in gross premiums written was primarily due to a targeted reduction of catastrophe exposed business.  Net premiums written were also impacted by this change as well as ceding additional premiums under property catastrophe treaties.

Reinsurance Operations: Gross premiums written and net premiums written increased 29.9% and 29.8% for the nine months ended September 30, 2017, respectively, as compared to the same period in 2016 mainly due to a new treaty written in the fourth quarter of 2016.

Note: Tables Follow

Global Indemnity LimitedConsolidated Statements of Operations(Unaudited)(Dollars and shares in thousands, except per share data)
	For the Three MonthsEnded September 30,							For the Nine Months Ended September 30,
	2017				2016			2017				2016
Gross premiums written	$	126,054			$	133,569		$	393,699			$	429,254
Net premiums written	$	109,045			$	115,051		$	344,348			$	357,233
Net premiums earned	$	108,619			$	119,553		$	328,818			$	358,993
Net investment income		10,134				8,795			27,618				25,103
Net realized investment gains (losses)		(963	)			1,928			(850	)			(9,057	)
Other income		2,294				7,852			5,444				9,603
Total revenues		120,084				138,128			361,030				384,642
Net losses and loss adjustment  expenses		82,395				72,162			202,656				215,057
Acquisition costs and other underwriting expenses		45,002				48,129			135,010				148,761
Corporate and other operating expenses		4,630				5,006			11,045				13,064
Interest expense		4,836				2,233			12,065				6,677
Income (loss) before income taxes		(16,779	)			10,598			254				1,083
Income tax expense (benefit)		(7,855	)			1,063			(13,193	)			(10,412	)
Net income (loss)	$	(8,924	)		$	9,535		$	13,447			$	11,495
Weighted average shares outstanding–basic		17,343				17,255			17,332				17,241
Weighted average shares outstanding–diluted		17,343				17,540			17,685				17,516
Net income (loss) per share – basic	$	(0.51	)		$	0.55		$	0.78			$	0.67
Net income (loss) per share – diluted (1)	$	(0.51	)		$	0.54		$	0.76			$	0.66
Combined ratio analysis: (2)
Loss ratio		75.9				60.3			61.6				59.9
Expense ratio		41.4				40.3			41.1				41.4
Combined ratio		117.3				100.6			102.7				101.3

(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. (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 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 LIMITEDCONSOLIDATED BALANCE SHEETS(Dollars in thousands)
ASSETS				(Unaudited)September 30, 2017				December 31, 2016
Fixed Maturities:
	Available for sale securities, at fair value(amortized cost: 2017 - $1,355,690 and 2016 - $1,241,339)			$	1,360,163			$	1,240,031
Equity securities:
	Available for sale, at fair value(cost: 2017 - $124,064 and 2016 - $119,515)				133,462				120,557
Other invested assets					73,553				66,121
		Total investments			1,567,178				1,426,709
Cash and cash equivalents					60,087				75,110
Premiums receivable, net					84,462				92,094
Reinsurance receivables, net					123,769				143,774
Funds held by ceding insurers					40,274				13,114
Receivable for securities sold					785				-
Deferred federal income taxes					50,549				40,957
Deferred acquisition costs					62,297				57,901
Intangible assets					22,682				23,079
Goodwill					6,521				6,521
Prepaid reinsurance premiums					30,827				42,583
Other assets					81,259				51,104
		Total assets		$	2,130,690			$	1,972,946
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses				$	649,726			$	651,042
Unearned premiums					290,760				286,984
Federal income taxes payable					533				219
Ceded balances payable					12,867				14,675
Payables for securities purchased					-				3,717
Contingent commissions					5,552				9,454
Debt					298,935				163,143
Other liabilities					48,404				45,761
		Total liabilities			1,306,777				1,174,995
Shareholders’ equity:
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares   authorized; A ordinary shares issued:13,458,465 and 13,436,548   respectively; A ordinary shares outstanding: 13,428,914 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					433,254				430,283
Accumulated other comprehensive income, net of taxes					10,085				(618	)
Retained earnings					381,731				368,284
A ordinary shares in treasury, at cost: 29,551 and 0 shares,   respectively					(1,159	)			-
		Total shareholders’ equity			823,913				797,951
		Total liabilities and shareholders’ equity		$	2,130,690			$	1,972,946

GLOBAL INDEMNITY LIMITEDSELECTED INVESTMENT DATA(Dollars in millions)
		Market Value as of
		(Unaudited)September 30, 2017			December 31, 2016
Fixed maturities		$	1,360.2		$	1,240.0
Cash and cash equivalents			60.1			75.1
Total bonds and cash and cash equivalents			1,420.3			1,315.1
Equities and other invested assets			207.0			186.7
Total cash and invested assets, gross			1,627.3			1,501.8
Receivable (payable) for securities sold/(purchased)			0.8			(3.7	)
Total cash and invested assets, net		$	1,628.1		$	1,498.1

	(Unaudited)Nine Months EndedSeptember 30, 2017 (a)
Net investment income	$	27.6
Net realized investment losses		(0.8	)
Net change in unrealized investment gains		14.7
Net realized and unrealized investment returns		13.9
Total investment return	$	41.5
Average total cash and invested assets	$	1,587.6
Total investment return % annualized		3.5	%
(a) Amounts in this table are shown on a pre-tax basis.

GLOBAL INDEMNITY LIMITEDSUMMARY OF OPERATING INCOME (LOSS)(Unaudited) (Dollars and shares in thousands, except per share data)
	For the Three MonthsEnded September 30,								For the Nine MonthsEnded September 30,
	2017				2016				2017					2016
Operating income (loss)	$	(8,246	)		$	8,262			$	13,969				$	17,337
Adjustments:
Net realized investment gains (losses), net of tax		(678	)			1,273				(522		)			(5,842	)
Net income (loss)	$	(8,924	)		$	9,535			$	13,447				$	11,495
Weighted average shares outstanding – basic		17,343				17,255				17,332					17,241
Weighted average shares outstanding – diluted		17,343				17,540				17,685					17,516
Operating income (loss) per share – basic	$	(0.48	)		$	0.48			$	0.81				$	1.01
Operating income (loss) per share – diluted (1)	$	(0.48	)		$	0.47			$	0.79				$	0.99

Note Regarding Operating Income (loss)

Operating income (loss), a non-GAAP financial measure, is equal to net income (loss) excluding after-tax net realized investment gains (losses). 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:MediaStephen W. RiesSenior Corporate Counsel(610) 668-3270sries@global-indemnity.com