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8-K - FORM 8-K - Global Indemnity Group, LLCd623462d8k.htm

Exhibit 99.1

 

LOGO

PRESS RELEASE

 

For release:    November 5, 2013
Contact:    Media
   Linda Hohn
   Associate General Counsel
   (610) 660-6862
   lhohn@global-indemnity.com

Global Indemnity plc Reports Third Quarter 2013 Financial Results.

Dublin, Ireland (November 5, 2013) – Global Indemnity plc (NASDAQ:GBLI) today reported net income for the nine months ended September 30, 2013 of $28.0 million or $1.11 per share. As of September 30th, book value per share was $33.30, an increase of 3.6% compared to book value per share of $32.15 at December 31, 2012.

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

 

     For the Nine Months
Ended September 30,
          As of
September 30,
     As of
December 31,
 
     2013      2012           2013      2012  

Gross Premiums Written

   $ 228.0       $ 182.3      

Book value per share

   $ 33.30       $ 32.15   

Net Premiums Written

   $ 213.9       $ 162.9      

Shareholders’ equity

   $ 838.9       $ 806.6   
        

Cash and invested assets

   $ 1,548.9       $ 1,534.0   

Net income

   $ 28.0       $ 30.4            

Net income per share

   $ 1.11       $ 1.11            

Operating income

   $ 21.3       $ 24.9            

Operating income per share

   $ 0.85       $ 0.91            

During the nine months ended September 30, 2013, the Company incurred a prepayment charge related to the retirement of debt, and a premium deficiency charge. During the nine months ended September 30, 2012, the Company received the benefit of a limited partnership distribution and net losses and loss adjustment expenses and acquisition costs and other underwriting expenses were also lower than they otherwise would have been as a result of premium deficiency charges recorded in 2011. Excluding these non-routine events, results would have been as follows;

 

     Net Income     Operating Income  
     For the Nine Months
Ended September 30,
    For the Nine Months
Ended September 30,
 
(Dollars in millions, except per share data)    2013     2012     2013     2012  

Net/Operating income

   $ 28.0      $ 30.4      $ 21.3      $ 24.9   

Prepayment charge

     2.9        —          2.9        —     

Limited partnership distribution

     —          (4.3     —          (4.3

Impact of 2011 premium deficiency

     —          (8.0     —          (8.0

Impact of 2013 premium deficiency

     1.2        —          1.2        —     

Tax effect assuming applicable statutory rates

     (1.2     0.8        (1.2     0.8   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net/operating income

   $ 30.9      $ 18.9      $ 24.2      $ 13.4   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted per share amounts

   $ 1.23      $ 0.69      $ 0.96      $ 0.49   

See the notes following the “Summary of Operating Income” table for information regarding the presentation of income excluding non-routine events

Cynthia Y. Valko, Chief Executive Officer, commented: “Global’s insurance and reinsurance premium volume grew by a combined 25% during the first three quarters of 2013 (as compared to 2012). Moreover, the company significantly enhanced operating profitability during the first nine months of 2013 recording a combined ratio1 of 99% (vs. 108% during the 2012 comparable period) as a result of better underwriting, better pricing, and better weather (absence of a major North American hurricane).”

 

1  See the notes on the bottom of the “Consolidated Statements of Operations” table regarding the Combined Ratio

 

 

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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.

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 Nine Months Ended September 30, 2013 and 2012

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

 

     Nine Months Ended
September 30,
 
     2013     2012  

Loss Ratio:

    

Current Accident Year

    

Excluding Catastrophes

     49.1        57.9   

Catastrophes

     10.7        7.6   
  

 

 

   

 

 

 

Current Accident Year

     59.8        65.5   

Changes to Prior Accident Year

     (2.8     (1.6
  

 

 

   

 

 

 

Loss Ratio – Calendar Year

     57.0        63.9   

Expense Ratio

     43.0        39.5   
  

 

 

   

 

 

 

Combined Ratio

     100.0        103.4   
  

 

 

   

 

 

 

For the nine months ended September 30th, the calendar year loss ratio decreased by 6.9 points to 57.0 in 2013 from 63.9 in 2012.

Excluding the impact of the 2011 premium deficiency charges, the loss ratio for the nine months ended September 30, 2013 and 2012 was 57.0% and 66.2%.

 

    Excluding catastrophes, the current accident year loss ratio decreased by 8.8 points to 49.1 in 2013 from 57.9 in 2012.

 

    Excluding catastrophes, the property loss ratio decreased 8.0 points to 33.9 in 2013 from 41.9 in 2012. Including catastrophes, the property loss ratio decreased 5.7 points to 50.4 in 2013 from 56.1 in 2012.

 

    Excluding the impact of 2011 premium deficiency charges, the casualty loss ratio decreased 3.6 points from 81.1 to 77.5 in 2013.

 

    Current year results include a 2.8 point reduction in the loss ratio related to prior accident years. This decrease was primarily driven by better than expected development from accident year 2012 catastrophes as well as lower than expected non-catastrophe severity in property lines.

For the nine months ended September 30th, the expense ratio increased from 39.5 in 2012 to 43.0 in 2013.

 

    Excluding the impact of premium deficiency charges, the expense ratio for the nine months ended September 30, 2013 and 2012 was 42.3 and 41.7, respectively.

 

 

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

 

(Dollars in thousands)    Three Months Ended September 30,  
     Gross Premiums Written      Net Premiums Written  
     2013      2012      2013      2012  

Insurance Operations

   $ 59,747       $ 51,205       $ 54,995       $ 45,710   

Reinsurance Operations

     9,038         5,744         9,035         5,745   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 68,785       $ 56,949       $ 64,030       $ 51,455   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Nine Months Ended September 30,  
     Gross Premiums Written      Net Premiums Written  
     2013      2012      2013      2012  

Insurance Operations

   $ 172,714       $ 151,410       $ 159,010       $ 132,490   

Reinsurance Operations

     55,255         30,929         54,844         30,381   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 227,969       $ 182,339       $ 213,854       $ 162,871   
  

 

 

    

 

 

    

 

 

    

 

 

 

Insurance Operations: For the three and nine months ended September 30, 2013, gross premiums written increased 16.7% and 14.1%, respectively, and net premiums written increased 20.3% and 20.0%, respectively, compared to the same periods in 2012. These were primarily driven by an increase in the Company’s small business binding authority lines. Written premium increases were also realized in property brokerage, programs, and other lines. Net written premiums also increased as a result of an increase in retention in property excess of loss and property catastrophe.

Reinsurance Operations: For the three and nine months ended September 30, 2013, gross premiums written increased 57.3% and 78.7%, respectively, and net premiums written increased 57.3% and 80.5%, respectively, compared to the same periods in 2012. These increases were primarily due to several new treaties written during 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 September 30,
     For the Nine Months
Ended September 30,
 
     2013     2012      2013     2012  

Gross premiums written

   $ 68,785      $ 56,949       $ 227,969      $ 182,339   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net premiums written

   $ 64,030      $ 51,455       $ 213,854      $ 162,871   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net premiums earned

   $ 64,469      $ 55,329       $ 179,136      $ 177,658   

Net investment income

     8,486        14,777         28,285        37,265   

Net realized investment gains

     1,641        3,211         10,204        6,913   

Other income (loss)

     183        101         484        (291
  

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

     74,779        73,418         218,109        221,545   

Net losses and loss adjustment expenses

     35,483        35,407         102,195        113,574   

Acquisition costs and other underwriting expenses

     28,028        23,223         76,977        70,150   

Corporate and other operating expenses

     2,627        2,039         7,444        6,863   

Interest expense

     3,585        1,265         5,939        4,213   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income before income taxes

     5,056        11,484         25,554        26,745   

Income tax expense (benefit)

     (1,892     1,571         (2,423     (3,634
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

   $ 6,948      $ 9,913       $ 27,977      $ 30,379   
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding – basic

     25,082        25,392         25,066        27,263   
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding – diluted

     25,189        25,413         25,151        27,281   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income per share – basic

   $ 0.28      $ 0.39       $ 1.12      $ 1.11   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income per share – diluted

   $ 0.28      $ 0.39       $ 1.11      $ 1.11   
  

 

 

   

 

 

    

 

 

   

 

 

 

Combined ratio analysis: (1)

         

Loss ratio (2)

     55.1        64.0         57.0        63.9   

Expense ratio (3)

     43.5        42.0         43.0        39.5   
  

 

 

   

 

 

    

 

 

   

 

 

 

Combined ratio (4)

     98.6        106.0         100.0        103.4   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(1) The loss ratio, expense ratio and combined ratio are non-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.
(2) Excluding the impact of the 2011 premium deficiency charges, the loss ratio was 64.2% and 66.2% for the three months and nine months ended September 30, 2012, respectively.
(3) Excluding the impact of the 2011 and 2013 premium deficiency charges, the expense ratio was 41.0% and 42.7% for the three months ended September 30, 2013 and 2012, respectively. Excluding the impact of 2011 and 2013 premium deficiency charges, the expense ratio was 42.3% and 41.7% for the nine months ended September 30, 2013 and 2012, respectively.
(4) Excluding the impact of the 2011 and 2013 premium deficiency charges, the combined ratio was 96.1% and 107.0% for the three months ended September 30, 2013 and 2012, respectively. Excluding the impact of the 2011 and 2013 premium deficiency charges, the combined ratio was 99.4% and 107.9% for the nine months ended September 30, 2013 and 2012, respectively.

 

 

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GLOBAL INDEMNITY PLC

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     (Unaudited)
September 30, 2013
    December 31, 2012  

ASSETS

    

Fixed Maturities:

    

Available for sale securities, at fair value (amortized cost: 2013 – $1,175,002 and 2012 – $1,187,094)

   $ 1,196,275      $ 1,229,322   

Equity securities:

    

Available for sale, at fair value (cost: 2013 – $175,125 and 2012 – $167,179)

     233,415        197,075   

Other invested assets:

    

Available for sale securities, at fair value (cost: 2013 – $3,065 and 2012 – $3,049)

     3,269        3,132   
  

 

 

   

 

 

 

Total investments

     1,432,959        1,429,529   

Cash and cash equivalents

     115,953        104,460   

Premiums receivable, net

     40,132        37,752   

Reinsurance receivables, net

     221,751        241,827   

Funds held by ceding reinsurers

     30,825        7,410   

Deferred federal income taxes

     6,338        10,824   

Deferred acquisition costs

     24,178        18,265   

Intangible assets

     18,078        18,343   

Goodwill

     4,820        4,820   

Prepaid reinsurance premiums

     5,227        5,945   

Federal income taxes receivable

     3,830        6,844   

Other assets

     14,339        17,684   
  

 

 

   

 

 

 

Total assets

   $ 1,918,430      $ 1,903,703   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Liabilities:

    

Unpaid losses and loss adjustment expenses

   $ 823,063      $ 879,114   

Unearned premiums

     128,113        94,114   

Ceded balances payable

     5,093        4,201   

Contingent commissions

     9,652        9,911   

Payable for securities purchased

     4,882        2,634   

Margin borrowing facility

     65,009        —     

Notes and debentures payable

     20,619        84,929   

Other liabilities

     23,096        22,182   
  

 

 

   

 

 

 

Total liabilities

     1,079,527        1,097,085   
  

 

 

   

 

 

 

Shareholders’ equity:

    

Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 16,190,894 and 16,087,939 respectively; A ordinary shares outstanding: 13,132,133 and 13,030,938, respectively; B ordinary shares issued and outstanding: 12,061,370 and 12,061,370, respectively

     3        3   

Additional paid-in capital

     515,545        512,304   

Accumulated other comprehensive income, net of taxes

     54,456        53,350   

Retained earnings

     370,148        342,171   

A ordinary shares in treasury, at cost: 3,058,761 and 3,057,001 shares, respectively

     (101,249     (101,210
  

 

 

   

 

 

 

Total shareholders’ equity

     838,903        806,618   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,918,430      $ 1,903,703   
  

 

 

   

 

 

 

 

 

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GLOBAL INDEMNITY PLC

SELECTED INVESTMENT DATA

(Dollars in millions)

 

     Market Value as of  
     (Unaudited)
September 30, 2013
    December 31, 2012  

Fixed Maturities

   $ 1,196.3      $ 1,229.3   

Cash and cash equivalents

     116.0        104.5   
  

 

 

   

 

 

 

Total bonds and cash and cash equivalents

     1,312.3        1,333.8   

Equities and other invested assets

     236.7        200.2   
  

 

 

   

 

 

 

Total cash and invested assets, gross

     1,549.0        1,534.0   

Receivable / (payable) for securities

     (4.9     (2.6
  

 

 

   

 

 

 

Total cash and invested assets, net

   $ 1,544.1      $ 1,531.4   
  

 

 

   

 

 

 
     (Unaudited)
Three Months Ended
September 30, 2013
(a)
    (Unaudited)
Nine Months Ended
September 30, 2013
(a)
 

Net investment income

   $ 8.5      $ 28.3   
  

 

 

   

 

 

 

Net realized investment gains

     1.6        10.2   

Net unrealized investment gain

     10.5        7.3   
  

 

 

   

 

 

 

Net realized and unrealized investment returns

     12.1        17.5   
  

 

 

   

 

 

 

Total investment return

   $ 20.6      $ 45.8   
  

 

 

   

 

 

 

Average total cash and invested assets (b)

   $ 1,535.6      $ 1,537.7   
  

 

 

   

 

 

 

Total investment return % annualized

     5.4     4.0

 

(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 September 30,
     For the Nine Months
Ended September 30,
 
     2013      2012      2013      2012  

Operating income (1)

   $ 5,944       $ 7,621       $ 21,321       $ 24,856   

Adjustments:

           

Net realized investment gains, net of tax

     1,004         2,292         6,656         5,523   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total after-tax adjustments

     1,004         2,292         6,656         5,523   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 6,948       $ 9,913       $ 27,977       $ 30,379   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding – basic

     25,082         25,392         25,065         27,263   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding – diluted

     25,189         25,413         25,151         27,281   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income per share – basic

   $ 0.24       $ 0.30       $ 0.85       $ 0.91   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income per share – diluted

   $ 0.24       $ 0.30       $ 0.85       $ 0.91   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Please see page 1 of this release for a discussion of events impacting operating income.

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.

Note Regarding Presentation of Income Excluding Non-Routine Events

The presentation of income excluding non-routine events, including adjusted net income, adjusted operating income and adjusted per share amounts metrics, is a non-GAAP financial measure. These metrics were presented to show comparable results between periods without the impact of non-routine events. It 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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