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8-K - FORM 8-K - Global Indemnity Group, LLCd772255d8k.htm

Exhibit 99.1

 

LOGO

PRESS RELEASE

 

For release:    August 6, 2014
Contact:    Media
   Linda Hohn
   Associate General Counsel
   (610) 660-6862
   lhohn@global-indemnity.com

Global Indemnity plc Reports Second Quarter 2014 Financial Results.

Dublin, Ireland (August 6, 2014) – 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.

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.”

 

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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.

 

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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.

 

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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.

###

Note: Tables Follow

 

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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.

 

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GLOBAL INDEMNITY PLC

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     (Unaudited)
June 30, 2014
    December 31, 2013  

ASSETS

    

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   
  

 

 

   

 

 

 

 

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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.

 

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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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