Global Indemnity Plc Reports Second Quarter 2016 Financial Results

DUBLIN, Ireland, Aug. 04, 2016 (GLOBE NEWSWIRE) -- Global Indemnity plc (NASDAQ:GBLI) today reported net income for the six months ended June 30, 2016 of $2.0 million or $0.11 per share and operating income of $9.1 million or $0.52 per share. As of June 30 th, book value per share was $43.91, an increase of 2.2% compared to book value per share of $42.98 at December 31, 2015.

Selected Operating and Balance Sheet Data (Dollars in millions, except per share data)
    For the Six Months Ended June 30,     As of  June 30,     As ofDecember 31,  
      2016       2015       2016     2015  
                         
Gross Premiums Written   $ 295.7     $ 309.4     Book value per share $   43.91     $   42.98  
Net Premiums Written   $ 242.2     $ 272.1     Shareholders' equity $   770.7     $   749.9  
            Cash and invested assets(2)   $ 1,533.0     $ 1,516.3  
Net income   $    2.0     $   17.9            
Net income per share   $   0.11     $   0.70     (2) Including receivable/(payable) for securities sold/(purchased)
                   
Operating income   $    9.1     $   15.7            
Operating income per share   $   0.52     $   0.61            
                   
Combined ratio analysis:                  
  Loss ratio     59.7       58.2            
  Expense ratio (1)     42.0       38.7            
  Combined ratio     101.7       96.9            
                   
(1) The expense ratio in 2016 was approximately 1.5 points higher in 2016 primarily due to purchasing additional catastrophe reinsurance, while the 2015 ratio benefitted approximately 1.7 points from a purchase accounting adjustment. Excluding these factors, the expense ratio was consistent year-over-year.

About Global Indemnity plc and its subsidiaries

Global Indemnity plc (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 plc'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 plc website at http://www.globalindemnity.ie.

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. Factors that could cause actual results to differ materially from those contemplated in the forward-looking statements include, but are not limited to, the risk that there may be difficulties in the continued integration of American Reliable business, which could result in a failure to realize the potential benefits of the acquisition, and the risk that American Reliable' s or Global Indemnity's prospective insurance premiums, investment yield, or net earnings are less than anticipated (including as a result of unexpected events, competition, costs, charges or outlays whether as a consequence of the transaction or otherwise).  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 additional risks and uncertainties which could impact the company and for a more detailed explication regarding forward-looking statements.  

1   Disseminated pursuant to the "safe harbor" provisions of Section 21E of the Security Exchange Act of 1934.

Global Indemnity plc's Combined Ratio for the Six Months Ended June 30, 2016

The combined ratio is a key measure of insurance profitability.  The components comprising the combined ratio, by reportable business segment, for the six months ended June 30, 2016 are as follows:
             
    Commercial Lines   Personal Lines   ReinsuranceOperations
Loss Ratio   57.3   65.0   39.4
Expense Ratio   41.2   43.4   37.7
Combined Ratio   98.5   108.4   77.1
             

Loss Ratio:

Commercial Lines Operations:

The calendar year loss ratio for the Company's Commercial Lines was 57.3% for 2016 compared with 59.4% for 2015, an improvement of 2.1 points. The improvement was primarily due to lower than expected claims severity experienced across multiple prior accident years, primarily in liability lines. The current accident year loss ratio increased 5.2 points from 65.0% in 2015 to 70.2% in 2016 primarily due to catastrophes.  

Personal Lines Operations:

The 2016 loss ratio was 65.0%, compared to 62.7% for the comparable period of 2015, primarily due to an increase in catastrophe losses. There were no adjustments to prior accident years for 2016 or 2015.

Reinsurance Operations:

The loss ratio for the Company's Reinsurance Operations was 39.4% for 2016 compared with 31.8% for 2015. The current accident year loss ratio increased 11.2 points from 43.3% for the six months ended June 30, 2015 to 54.5% for the six months ended June 30, 2016, primarily due to catastrophic events in the second quarter of 2016. The improvement in the loss ratio related to prior years was driven by less than anticipated case incurred emergence on property catastrophe treaties.

Expense ratio:

For the six months ended June 30, the total expense ratio increased from 38.7% in 2015 to 42.0% in 2016. 1.7% of the increase is due to acquisition accounting adjustments related to the purchase of American Reliable Insurance Company in 2015.  The remainder of the increase in the 2016 expense ratio was primarily due to a reduction in earned premium as a result of the Company reducing catastrophe exposure and purchasing additional reinsurance.

Global Indemnity plc's Gross and Net Premiums Written Results by Segment
   
  Six Months Ended June 30,
  Gross Premiums Written   Net Premiums Written
    2016       2015       2016       2015    
Commercial Lines Operations $   107,121     $   108,826     $   96,010     $   100,322    
Personal Lines Operations   163,421       162,215       121,043       133,483    
Reinsurance Operations   25,143       38,343       25,129       38,304    
Total $   295,685     $ 309,384     $   242,182     $ 272,109    
                                 

Gross premiums written and net premiums written decreased 4.4% and 11.0%, respectively, compared to the same period in 2015.

Commercial Lines Operations: For the six months ended June 30, 2016, gross premiums written and net premiums written decreased 1.6% and 4.3%, respectively, compared to the same period in 2015. The reduction in net premiums written was primarily due to purchasing additional reinsurance to reduce catastrophe exposure.

Personal Lines Operations:  For the six months ended June 30, 2016, gross premiums written increased 0.7% and net premiums written decreased 9.3% compared to the same period in 2015. The reduction in net premiums written is due to purchasing additional reinsurance to reduce catastrophe exposure.

Reinsurance Operations: For the six months ended June 30, 2016, gross premiums written and net premiums written both decreased 34.4% compared to the same period in 2015. This decrease is mainly due to a treaty being non-renewed in 2016 in an effort to reduce catastrophe exposure.  In addition, the property catastrophe reinsurance marketplace continues to be very competitive due to excess capital.

Note: Tables Follow
 
 
Global Indemnity plc
Consolidated Statements of Operations
(Unaudited)
(Dollars and shares in thousands, except per share data)
 
  For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2016       2015       2016       2015  
Gross premiums written $   154,319     $   166,515     $   295,685     $   309,384  
               
Net premiums written $   125,310     $   146,005     $   242,182     $   272,109  
               
Net premiums earned $   117,804     $   128,877     $   239,440     $   256,214  
Net investment income   6,562       9,141       16,308       17,382  
Net realized investment gains (losses)   (3,492 )     6,532       (10,985 )     3,562  
Other income   795       577       1,751       1,129  
  Total revenues   121,669       145,127       246,514       278,287  
               
Net losses and loss adjustment expenses   78,111       79,560       142,895       149,179  
Acquisition costs and other underwriting expenses   48,542       50,926       100,632       99,184  
Corporate and other operating expenses   4,255       4,334       8,058       15,874  
Interest expense   2,229       535       4,444       1,040  
  Income (loss) before income taxes   (11,468 )     9,772       (9,515 )     13,010  
Income tax benefit   (6,303 )     (1,345 )     (11,475 )     (4,901 )
  Net income (loss) $ (5,165 )   $ 11,117     $ 1,960     $ 17,911  
               
Weighted average shares outstanding-basic   17,244       25,455       17,234       25,447  
               
Weighted average shares outstanding-diluted (1)   17,244       25,681       17,485       25,660  
               
Net income (loss) per share - basic $ (0.30 )   $ 0.44     $ 0.11     $ 0.70  
               
Net income (loss) per share - diluted $ (0.30 )   $ 0.43     $ 0.11     $ 0.70  
               
Combined ratio analysis (2):              
Loss ratio   66.3       61.7       59.7       58.2  
Expense ratio   41.2       39.5       42.0       38.7  
Combined ratio   107.5       101.2       101.7       96.9  

  (1 ) For the quarter ended June 30, 2016, 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 PLC
CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands)
 
  ASSETS   (Unaudited) June 30, 2016   December 31, 2015
Fixed Maturities:        
  Available for sale securities, at fair value(amortized cost: 2016 - $1,292,785 and 2015 - $1,308,333)   $   1,306,955     $   1,306,149  
Equity securities:        
  Available for sale, at fair value(cost: 2016 - $101,867 and 2015 - $100,157)     119,008       110,315  
Other invested assets     35,798       32,592  
    Total investments     1,461,761       1,449,056  
         
Cash and cash equivalents     70,647       67,037  
Premiums receivable, net     90,275       89,245  
Reinsurance receivables, net     115,365       115,594  
Funds held by ceding insurers     19,927       16,037  
Federal income taxes receivable     4,840       4,828  
Deferred federal income taxes     41,028       34,687  
Deferred acquisition costs     56,051       56,517  
Intangible assets     23,342       23,607  
Goodwill     6,521       6,521  
Prepaid reinsurance premiums     49,763       44,363  
Receivable for securities sold     561       172  
Other assets     66,013       49,630  
  Total assets   $ 2,006,094     $ 1,957,294  
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Liabilities:        
Unpaid losses and loss adjustment expenses   $   683,850     $   680,047  
Unearned premiums     294,426       286,285  
Ceded balances payable     12,386       4,589  
Contingent commissions     9,498       11,069  
Debt     174,211       172,034  
Other liabilities     60,974       53,344  
  Total liabilities     1,235,345       1,207,368  
         
Shareholders' equity:        
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 16,559,872 and 16,424,546 respectively; A ordinary shares outstanding: 13,420,978 and 13,313,751, respectively; B ordinary  shares issued and outstanding: 4,133,366 and 4,133,366, respectively     3       3  
Additional paid-in capital     531,542       529,872  
Accumulated other comprehensive income, net of taxes     22,076       4,078  
Retained earnings     320,376       318,416  
A ordinary shares in treasury, at cost: 3,138,894 and 3,110,795 shares, respectively     (103,248 )     (102,443 )
  Total shareholders' equity     770,749       749,926  
         
  Total liabilities and shareholders' equity   $ 2,006,094     $ 1,957,294  

 
 
GLOBAL INDEMNITY PLC
SELECTED INVESTMENT DATA
 (Dollars in millions)
 
    Market Value as of
    (Unaudited) June 30, 2016   December 31, 2015
         
Fixed maturities   $ 1,307.0     $ 1,306.1  
Cash and cash equivalents     70.6       67.0  
Total bonds and cash and cash equivalents     1,377.6       1,373.1  
Equities and other invested assets     154.8       143.0  
Total cash and invested assets, gross     1,532.4       1,516.1  
Receivable/(payable) for securities sold (purchased)     0.6         0.2  
Total cash and invested assets, net    $ 1,533.0     $ 1,516.3  
                 

    (Unaudited) Three Months EndedJune 30, 2016 (a)   (Unaudited) Six Months EndedJune 30, 2016 (a)
         
Net investment income   $   6.6     $    16.3  
         
Net realized investment losses     (3.5 )     (11.0 )
Net change in unrealized investment gains     11.5       23.3  
Net realized and unrealized investment returns     8.0       12.3  
         
  Total investment return   $   14.6     $   28.6  
         
  Average total cash and invested assets   $   1,519.6     $   1,524.6  
         
  Total investment return % annualized     3.8 %     3.8 %

(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 PLC
SUMMARY OF OPERATING INCOME (LOSS)
(Unaudited)
(Dollars and shares in thousands, except per share data)
 
  For the Three Months Ended June 30,   For the Six Months Ended June 30,
    2016       2015       2016       2015  
               
Operating income (loss) $    (2,915 )   $   6,913     $   9,076     $   15,731  
Adjustments:              
Net realized investment gains (losses), net of tax   (2,250 )     4,204       (7,116 )     2,180  
               
Net income (loss) $   (5,165 )   $   11,117     $   1,960     $    17,911  
               
Weighted average shares outstanding -  basic   17,244       25,455       17,234       25,447  
               
Weighted average shares outstanding -  diluted (1)   17,244       25,681       17,485       25,660  
               
Operating income (loss) per share - basic $    (0.17 )   $    0.27     $    0.53     $  0.62  
               
Operating income (loss) per share - diluted $    (0.17 )   $  0.27     $   0.52     $   0.61  
               

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.
  (1 ) For the quarter ended June 30, 2016, diluted loss per share is the same as basic loss per share since there was a net loss for the period.
   
Contact:         MediaStephen RiesSenior Corporate Counsel(610) 668-3270           sries@global-indemnity.com

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