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SYS-CON MEDIA Authors: SmartBear Blog, Liz McMillan, Kevin Jackson, Peter Silva, Greg Wind

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Global Indemnity plc Reports Second Quarter 2014 Financial Results

DUBLIN, Ireland, Aug. 6, 2014 /PRNewswire/ -- Global Indemnity plc (NASDAQ: GBLI) today reported net income for the three months ended June 30, 2014 of $33.2 million or $1.31 per share compared to net income of $8.7 million or $0.34 per share at June 30, 2013. Net income for the six months ended June 30, 2014 was $42.0 million or $1.66 per share compared to net income of $21.0 million or $0.84 per share at June 30, 2013. As of June 30th, book value per share was $35.43, an increase of 1.8% compared to book value per share of $34.82 at March 31, 2014, and an increase of 2.3% compared to book value per share of $34.65 at December 31, 2013.

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Selected Operating and Balance Sheet Data (Dollars in millions, except per share data)


For the Three Months

Ended June 30,


For the Six Months

Ended June 30,


2014


2013


2014


2013









Gross Premiums Written

$

82.9


$

84.2


$

160.1


$

159.2

Net Premiums Written

$

76.4


$

78.3


$

149.2


$

149.8









Net income

$

33.2


$

8.7


$

42.0


$

21.0

Net income per share

$

1.31


$

0.34


$

1.66


$

0.84









Operating income

$

8.8


$

6.8


$

18.5


$

15.4

Operating income per share

$

0.35


$

0.27


$

0.73


$

0.61









Combined ratio analysis:








Loss ratio


58.0



59.5



57.5



58.2

Expense ratio


41.2



41.7



40.2



42.7

Combined ratio


99.2



101.2



97.7



100.9


As of

June 30,

2014


As of

March 31,

2014


As of

December 31,

2013







Book value per share

$ 35.43


$ 34.82


$ 34.65

Shareholders' equity

$ 896.8


$ 880.8


$ 873.3

Cash and invested assets (1)

$ 1,602.5


$ 1,552.8


$ 1,568.1







(1) Including receivable/(payable) for securities sold/(purchased)

Cynthia Y. Valko, Chief Executive Officer, commented: "For the first six months of 2014, despite numerous weather related losses suffered by clients as a result of this year's unusually harsh winter, Global Indemnity continued to enhance profitability, as reflected by its 98% combined ratio and 20% increase in Operating Income (which excludes the company's substantial realized and unrealized investment portfolio capital gains). While premium revenue from small business property and general liability lines increased 10% and program lines grew by 7%, overall revenue growth was muted as a result of challenging competitive pressures, particularly in respect of catastrophe exposed property risks."

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 in the United States, as well as reinsurance worldwide. Global Indemnity plc's two primary segments are:

  • United States Based Insurance Operations
  • Bermuda Based Reinsurance Operations

For more information, visit the Global Indemnity plc website at http://www.globalindemnity.ie.

Teleconference and Webcast for Interested Parties

Cynthia Valko, Chief Executive Officer of Global Indemnity plc, and Thomas McGeehan, Chief Financial Officer of Global Indemnity plc, will conduct a teleconference for interested parties on August 7, 2014 at 8:30 a.m. Eastern Time to discuss the second quarter 2014 results.

To participate in the teleconference, please telephone (800) 288-8967 (U.S. and Canada) or (612) 332-0523 (International) and you will be greeted by an operator. Please reference Global Indemnity plc Earnings Release Call or the host Cynthia Valko.

The teleconference is being webcast by AT&T and can be accessed at the company's website at www.globalindemnity.ie. Please access the site at least 15 minutes prior to the teleconference to register, click on the Webcast link, enter Conference ID number 333025 and click GO. Please download and install any necessary software.

The teleconference will be available for replay beginning at 10:30 a.m. Eastern Time on August 7, 2014 until 11:59 p.m. August 7, 2015. To listen to the replay, please telephone (800) 475-6701 (U.S. and Canada) or (320) 365-3844 (International) then enter 333025.

Forward-Looking Information

Forward-looking statements contained in this press release are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. We caution investors that our actual results may be materially different from the estimates expressed in, or implied, or projected by, the forward looking statements. Please see our periodic reports filed with the Securities and Exchange Commission for a discussion of the risks and uncertainties which may affect us and for a more detailed discussion of our cautionary note regarding forward-looking statements.

Global Indemnity plc's Combined Ratio for the Six Months Ended June 30, 2014 and 2013

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


Three Months Ended

June 30,


Six Months Ended

June 30,


2014


2013


2014


2013

Loss Ratio:








Current Accident Year








Excluding Catastrophes

44.4


46.1


47.4


49.7

Catastrophes

19.7


14.6


14.7


11.4

Current Accident Year

64.1


60.7


62.1


61.1

Changes to Prior Accident Year

(6.1)


(1.2)


(4.6)


(2.9)

Loss Ratio – Calendar Year

58.0


59.5


57.5


58.2

Expense Ratio

41.2


41.7


40.2


42.7

Combined Ratio

99.2


101.2


97.7


100.9

For the three months ended June 30th, the calendar year loss ratio decreased by 1.5 points to 58.0 in 2014 from 59.5 in 2013.

For the three months ended June 30, 2014, the current accident year loss ratio increased to 64.1 compared to 60.7 for the same period in 2013. Excluding catastrophes, the current accident year loss ratio decreased 1.7 points, from 46.1 in 2013 to 44.4 in 2014.

  • The current accident year property loss ratio increased 6.9 points to 58.6 in 2014 from 51.7 in 2013. Excluding catastrophes the current accident year property loss ratio decreased 0.6 points, from 29.9 in 2013 to 29.3 in 2014.
  • The current accident year casualty loss ratio decreased 2.0 points to 75.3 in 2014 from 77.3 in 2013.

Calendar year results for the three months ended include a 6.1 point reduction in the loss ratio related to prior accident years, which was primarily driven by better than expected emergence in the professional and general liability lines.

For the three months ended June 30th, the expense ratio decreased from 41.7 in 2013 to 41.2 in 2014.

The decrease is primarily due to growth in earned premium volume in the Insurance Operations.

For the six months ended June 30th, the calendar year loss ratio decreased by 0.7 points to 57.5 in 2014 from 58.2 in 2013.

For the six months ended June 30, 2014, the current accident year loss ratio increased 1.0 points to 62.1 compared to 61.1 for the same period in 2013. Excluding catastrophes, the current accident year loss ratio decreased 2.3 points, from 49.7 in 2013 to 47.4 in 2014.

  • The current accident year property loss ratio increased 2.8 points to 56.6 in 2014 from 53.8 in 2013. Excluding catastrophes the current accident year property loss ratio decreased 1.7 points, from 36.3 in 2013 to 34.6 in 2014.
  • The current accident year casualty loss ratio decreased 1.4 points to 73.3 in 2014 from 74.7 in 2013.

Calendar year results for the six months ended include a 4.6 point reduction in the loss ratio related to prior accident years, which was primarily driven by better than expected emergence in the professional and general liability lines.

For the six months ended June 30th, the expense ratio decreased from 42.7 in 2013 to 40.2 in 2014.

The decrease in the expense ratio is primarily due to growth in earned premium volume in both the Insurance and Reinsurance Operations.

Global Indemnity plc's Gross and Net Premiums Written Results by Segment

(Dollars in thousands)

Three Months Ended June 30,


Gross Premiums Written


Net Premiums Written


2014


2013


2014


2013

Insurance Operations

$ 60,556


$ 61,879


$ 55,039


$ 56,387

Reinsurance Operations

22,349


22,366


21,333


21,959

Total

$ 82,905


$ 84,245


$ 76,372


$ 78,346


Six Months Ended June 30,


Gross Premiums Written


Net Premiums Written


2014


2013


2014


2013

Insurance Operations

$ 113,548


$ 112,967


$ 103,695


$ 104,015

Reinsurance Operations

46,554


46,217


45,538


45,809

Total

$ 160,102


$ 159,184


$ 149,233


$ 149,824

Insurance Operations: For the three months ended June 30, 2014, gross premiums written and net premiums written decreased 2.1% and 2.4%, respectively, compared to the same period in 2013. Excluding commercial auto business ($0.7 million in 2014), gross premiums written and net premiums written increased approximately 5.0% compared to the same period in 2013. Growth was realized in small business, property brokerage, and programs.

For the six months ended June 30, 2014, gross premiums written increased 0.5% and net written premiums decreased by 0.3% compared to the same period in 2013. Excluding commercial auto business ($2.0 million in 2014), gross premiums written and net premiums written increased approximately 6.0% compared to the same period in 2013. Growth was realized in small business and programs.

Reinsurance Operations: For the three months ended June 30, 2014, gross premiums written and net premiums written decreased 0.1% and 2.9%, respectively, compared to the same period in 2013.

For the six months ended June 30, 2014, gross premiums written increased 0.7% and net written premiums decreased 0.6% compared to the same period in 2013.

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,


2014


2013


2014


2013

Gross premiums written

$ 82,905


$ 84,245


$ 160,102


$ 159,184









Net premiums written

$ 76,372


$ 78,346


$ 149,233


$ 149,824









Net premiums earned

$ 66,017


$ 58,671


$ 133,561


$ 114,667

Net investment income

7,677


9,765


15,961


19,799

Net realized investment gains

39,881


2,806


39,068


8,563

Other income (loss)

155


247


323


301

Total revenues

113,730


71,489


188,913


143,330









Net losses and loss adjustment expenses

38,270


34,924


76,842


66,712

Acquisition costs and other underwriting expenses

27,171


24,472


53,656


48,949

Corporate and other operating expenses

3,172


2,472


6,133


4,817

Interest expense

319


1,181


510


2,354

Income before income taxes

44,798


8,440


51,772


20,498

Income tax expense (benefit)

11,590


(224)


9,741


(531)

Net income

$ 33,208


$ 8,664


$ 42,031


$ 21,029









Weighted average shares outstanding–basic

25,128


25,050


25,121


25,052









Weighted average shares outstanding–diluted

25,313


25,119


25,302


25,121









Net income per share – basic

$ 1.32


$ 0.35


$ 1.67


$ 0.84









Net income per share – diluted

$ 1.31


$ 0.34


$ 1.66


$ 0.84









Combined ratio analysis:








Loss ratio

58.0


59.5


57.5


58.2

Expense ratio

41.2


41.7


40.2


42.7

Combined ratio

99.2


101.2


97.7


100.9

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, 2014


December 31, 2013

Fixed Maturities:






Available for sale securities, at fair value

(amortized cost: 2014 - $1,187,660 and 2013 - $1,187,685)


$ 1,205,713


$ 1,204,364

Equity securities:






Available for sale, at fair value

(cost: 2014 - $95,021 and 2013 - $191,425)


125,010


254,070

Other invested assets:






Available for sale securities, at fair value

(cost: 2014 - $15,040 and 2013 - $3,065)


15,034


3,489


Total investments


1,345,757


1,461,923






Cash and cash equivalents


118,353


105,492

Premiums receivable, net


70,459


49,888

Reinsurance receivables, net


182,042


197,887

Funds held by ceding insurers


25,822


18,662

Deferred federal income taxes


13,891


4,206

Deferred acquisition costs


26,864


22,177

Intangible assets


17,813


17,990

Goodwill


4,820


4,820

Prepaid reinsurance premiums


6,486


5,199

Receivable for securities sold


138,359


723

Other assets


27,021


22,812


Total assets


$ 1,977,687


$ 1,911,779






LIABILITIES AND SHAREHOLDERS' EQUITY





Liabilities:





Unpaid losses and loss adjustment expenses


$ 754,595


$ 779,466

Unearned premiums


133,589


116,629

Federal income taxes payable


6,610


1,595

Ceded balances payable


5,896


5,177

Contingent commissions


10,622


12,677

Margin borrowing facility


142,560


100,000

Other liabilities


26,987


22,955


Total liabilities


1,080,859


1,038,499






Shareholders' equity:





Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares

authorized; A ordinary shares issued: 16,313,147 and 16,200,406

respectively; A ordinary shares outstanding: 13,248,332 and

13,141,035, respectively; B ordinary shares issued and outstanding:

12,061,370 and 12,061,370, respectively


3


3

Additional paid-in capital


518,336


516,653

Accumulated other comprehensive income, net of taxes


34,001


54,028

Retained earnings


445,892


403,861

A ordinary shares in treasury, at cost: 3,064,815 and 3,059,371 shares, respectively


(101,404)


(101,265)


Total shareholders' equity


896,828


873,280







Total liabilities and shareholders' equity


1,977,687


$ 1,911,779








GLOBAL INDEMNITY PLC

SELECTED INVESTMENT DATA

(Dollars in millions)




Market Value as of


(Unaudited)

June 30, 2014


December 31, 2013





Fixed Maturities

$ 1,205.7


$ 1,204.4

Cash and cash equivalents

118.4


105.5

Total bonds and cash and cash equivalents

1,324.1


1,309.9

Equities and other invested assets

140.0


257.5

Total cash and invested assets, gross

1,464.1


1,567.4

Receivable / (payable) for securities

138.4


0.7

Total cash and invested assets, net

$ 1,602.5


$ 1,568.1


(Unaudited)

Three Months Ended

June 30, 2014 (a)


(Unaudited)

Six Months Ended

June 30, 2014 (a)





Net investment income

$ 7.7


$ 16.0





Net realized investment gains

39.9


39.1

Net unrealized investment loss

(29.2)


(31.8)

Net realized and unrealized investment returns

10.7


7.3





Total investment return

$ 18.4


$ 23.3





Average total cash and invested assets (b)

$ 1,577.6


$ 1,585.3





Total investment return % annualized

4.7%


2.9%









(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


(Unaudited)


(Dollars and shares in thousands, except per share data)








For the Three Months

Ended June 30,


For the Six Months

Ended June 30,



2014


2013


2014


2013











Operating income

$ 8,758


$ 6,840


$ 18,522


$ 15,377


Adjustments:









Net realized investment gains, net of tax

24,450


1,824


23,509


5,652


Total after-tax adjustments

24,450


1,824


23,509


5,652











Net income

$ 33,208


$ 8,664


$ 42,031


$ 21,029











Weighted average shares outstanding – basic

25,128


25,050


25,121


25,052











Weighted average shares outstanding – diluted

25,313


25,119


25,302


25,121











Operating income per share – basic

$ 0.35


$ 0.27


$ 0.74


$ 0.61











Operating income per share – diluted

$ 0.35


$ 0.27


$ 0.73


$ 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.

 

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