Attached files
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| 8-K - FORM 8-K - GLOBAL INDEMNITY PLC - Global Indemnity Group, LLC | d878040d8k.htm |
Exhibit 99.1
PRESS RELEASE
| For release: | February 26, 2015 | |
| Contact: | Media | |
| Stephen Ries | ||
| Senior Corporate Counsel | ||
| (610) 668-3270 | ||
| sries@global-indemnity.com | ||
Global Indemnity plc Reports 2014 Financial Results.
Dublin, Ireland (February 26, 2015) – Global Indemnity plc (NASDAQ:GBLI) today reported net income for the year ended December 31, 2014 of $62.9 million or $2.48 per share. As of December 31st, book value per share was $35.86, an increase of 3.5% 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 Twelve Months Ended December 31, |
As of December 31, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| Gross Premiums Written |
$ | 291.3 | $ | 290.7 | Book value per share |
$ | 35.86 | $ | 34.65 | |||||||||
| Net Premiums Written |
$ | 273.2 | $ | 272.0 | Shareholders’ equity |
$ | 908.3 | $ | 873.3 | |||||||||
| Cash and invested assets (1) |
$ | 1,611.8 | $ | 1,568.1 | ||||||||||||||
| Net income |
$ | 62.9 | $ | 61.7 | ||||||||||||||
| Net income per share |
$ | 2.48 | $ | 2.45 | (1) Including receivable/(payable) for securities sold/(purchased) |
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| Operating income |
$ | 43.2 | $ | 40.5 | ||||||||||||||
| Operating income per share |
$ | 1.71 | $ | 1.61 | ||||||||||||||
| Combined ratio analysis: |
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| Loss ratio |
51.2 | 53.5 | ||||||||||||||||
| Expense ratio |
40.8 | 42.5 | ||||||||||||||||
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| Combined ratio |
92.0 | 96.0 | ||||||||||||||||
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Cynthia Y. Valko, Chief Executive Officer, commented: “I am pleased with our final results for 2014. Global Indemnity had excellent underwriting results turning in a calendar year combined ratio of 92.0%. Gross premiums written were up 5.9% over 2013, excluding commercial auto. However, the current low yield environment continues to constrain investment and net income. Global Indemnity’s portfolio is primarily comprised of high quality, short and mid-term duration fixed income assets. As a result, it is imperative we continue to focus on quality underwriting and pricing while managing expenses.
I am also very excited about the January 1, 2015 acquisition of American Reliable. We had been searching for the appropriate opportunity for some time, and the addition of American Reliable appears to be the right complement to the Global Indemnity family of companies. American Reliable is a specialty provider of personal lines and agricultural insurance, including equine, farm, & ranch, that expands the number of products that we provide. In 2014, American Reliable wrote $266 million of business. When combined with Global Indemnity’s US Insurance Operations, domestic writings are expected to more than double in 2015. On the acquisition date, combined cash and invested assets of Global Indemnity increased by $134 million, net of the amount paid to acquire American Reliable. Integration efforts are going well and we expect to realize the related synergies of the combined companies during 2015.”
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 February 27, 2015 at 8:30 a.m. Eastern Time to discuss 2014 results.
To participate in the teleconference, please telephone (877) 777-1968 (U.S. and Canada) or (612) 332-7516 (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 354441 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 February 27, 2015 until 11:59 p.m. February 27, 2016. To listen to the replay, please telephone (800) 475-6701 (U.S. and Canada) or (320) 365-3844 (International) then enter 354441.
Forward-Looking Information
The forward-looking statements contained in this press release1 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 integrating the businesses of American Reliable, which could result in a failure to realize the potential benefits of the acquisition, the risk that the transaction proves disruptive to the operations of American Reliable or Global Indemnity, 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 the Private Securities Litigation Reform Act of 1995. |
Global Indemnity plc’s Combined Ratio for the Twelve Months Ended December 31, 2014 and 2013
The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:
| Twelve Months Ended December 31, |
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| 2014 | 2013 | |||||||
| Loss Ratio: |
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| Current Accident Year |
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| Excluding Catastrophes |
46.4 | 47.7 | ||||||
| Catastrophes |
10.9 | 8.9 | ||||||
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| Current Accident Year |
57.3 | 56.6 | ||||||
| Changes to Prior Accident Year |
(6.1 | ) | (3.1 | ) | ||||
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| Loss Ratio – Calendar Year |
51.2 | 53.5 | ||||||
| Expense Ratio |
40.8 | 42.5 | ||||||
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| Combined Ratio |
92.0 | 96.0 | ||||||
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For the twelve months ended December 31st, the calendar year loss ratio improved by 2.3 points to 51.2 in 2014 from 53.5 in 2013.
Calendar year results for the twelve months ended December 31, 2014 include a 6.1 point improvement in the loss ratio related to prior accident years, which was primarily driven by lower than excepted severity in the U.S. Insurance Operations professional lines.
For the twelve months ended December 31, 2014, the current accident year loss was 57.3 compared to 56.6 for the same period in 2013. Excluding catastrophes, the current accident year loss ratio improved by 1.3 points, from 47.7 in 2013 to 46.4 in 2014.
| • | The current accident year property loss ratio increased 4.2 points to 48.1 in 2014 from 43.9 in 2013. Excluding catastrophes, the current accident year property loss ratio increased by 1.8 points, from 30.3 in 2013 to 32.1 in 2014. |
| • | The current accident year casualty loss ratio improved by 4.2 points to 76.7 in 2014 from 80.9 in 2013. |
For the twelve months ended December 31st, the expense ratio decreased 1.7 points from 42.5 in 2013 to 40.8 in 2014.
The improvement in the expense ratio is primarily due to the growth in earned premium volume in 2014 as well as the impact of the premium deficiency charge of $1.7 million recognized in 2013.
Global Indemnity plc’s Gross and Net Premiums Written Results by Segment
| Twelve Months Ended December 31, | ||||||||||||||||
| Gross Premiums Written | Net Premiums Written | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Insurance Operations |
$ | 229,978 | $ | 232,373 | $ | 212,965 | $ | 213,705 | ||||||||
| Reinsurance Operations |
61,275 | 58,350 | 60,216 | 58,279 | ||||||||||||
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| Total |
$ | 291,253 | $ | 290,723 | $ | 273,181 | $ | 271,984 | ||||||||
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Insurance Operations: For the twelve months ended December 31, 2014, gross premiums written and net premiums written decreased 1.0% and 0.3%, respectively, compared to the same period in 2013. Excluding commercial auto business ($3.2 million and $3.0 million in gross premiums written and net premiums written, respectively, in 2014), gross premiums written and net premiums written increased approximately 6.1% and 7.2%, respectively, compared to the same period in 2013. Growth was primarily realized in small business.
Reinsurance Operations: For the twelve months ended December 31, 2014, gross premiums written and net premiums written increased 5.0% and 3.3%, respectively, compared to the same period in 2013. This increase is mainly due to a change in the Company’s quota share participation on several property treaties as well as several new professional treaties.
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Note: Tables Follow
GLOBAL INDEMNITY PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share data)
| For the Three Months Ended December 31, |
For the Twelve Months Ended December 31, |
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| (Unaudited) | (Unaudited) | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Gross premiums written |
$ | 64,053 | $ | 62,754 | $ | 291,253 | $ | 290,723 | ||||||||
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| Net premiums written |
$ | 60,686 | $ | 58,130 | $ | 273,181 | $ | 271,984 | ||||||||
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| Net premiums earned |
$ | 66,930 | $ | 69,586 | $ | 268,519 | $ | 248,722 | ||||||||
| Net investment income |
6,333 | 8,924 | 28,821 | 37,209 | ||||||||||||
| Net realized investment gains (losses) |
(4,366 | ) | 17,208 | 35,860 | 27,412 | |||||||||||
| Other income |
106 | 5,307 | 555 | 5,791 | ||||||||||||
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| Total revenues |
69,003 | 101,025 | 333,755 | 319,134 | ||||||||||||
| Net losses and loss adjustment expenses |
24,065 | 30,796 | 137,561 | 132,991 | ||||||||||||
| Acquisition costs and other underwriting expenses |
28,505 | 28,674 | 109,619 | 105,651 | ||||||||||||
| Corporate and other operating expenses |
4,945 | 4,170 | 14,559 | 11,614 | ||||||||||||
| Interest expense |
194 | 230 | 822 | 6,169 | ||||||||||||
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| Income before income taxes |
11,294 | 37,155 | 71,194 | 62,709 | ||||||||||||
| Income tax expense |
230 | 3,442 | 8,338 | 1,019 | ||||||||||||
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| Net income |
$ | 11,064 | $ | 33,713 | $ | 62,856 | $ | 61,690 | ||||||||
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| Weighted average shares outstanding–basic |
25,147 | 25,094 | 25,132 | 25,073 | ||||||||||||
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| Weighted average shares outstanding–diluted |
25,353 | 25,218 | 25,331 | 25,174 | ||||||||||||
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| Net income per share – basic |
$ | 0.44 | $ | 1.34 | $ | 2.50 | $ | 2.46 | ||||||||
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| Net income per share – diluted |
$ | 0.44 | $ | 1.34 | $ | 2.48 | $ | 2.45 | ||||||||
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| Combined ratio analysis: |
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| Loss ratio |
36.0 | 44.3 | 51.2 | 53.5 | ||||||||||||
| Expense ratio |
42.6 | 41.2 | 40.8 | 42.5 | ||||||||||||
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| Combined ratio |
78.6 | 85.5 | 92.0 | 96.0 | ||||||||||||
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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) December 31, 2014 |
December 31, 2013 | ||||||
| Fixed Maturities: |
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| Available for sale securities, at fair value |
$ | 1,283,475 | $ | 1,204,364 | ||||
| Equity securities: |
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| Available for sale, at fair value |
122,048 | 254,070 | ||||||
| Other invested assets: |
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| Available for sale securities, at fair value |
33,663 | 3,489 | ||||||
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| Total investments |
1,439,186 | 1,461,923 | ||||||
| Cash and cash equivalents |
172,519 | 105,492 | ||||||
| Premiums receivable, net |
56,586 | 49,888 | ||||||
| Reinsurance receivables, net |
125,718 | 197,887 | ||||||
| Funds held by ceding insurers |
25,176 | 18,662 | ||||||
| Deferred federal income taxes |
20,250 | 4,206 | ||||||
| Deferred acquisition costs |
25,238 | 22,177 | ||||||
| Intangible assets |
17,636 | 17,990 | ||||||
| Goodwill |
4,820 | 4,820 | ||||||
| Prepaid reinsurance premiums |
4,725 | 5,199 | ||||||
| Receivable for securities sold |
60 | 723 | ||||||
| Federal income taxes receivable |
3,139 | — | ||||||
| Other assets |
34,980 | 22,812 | ||||||
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| Total assets |
$ | 1,930,033 | $ | 1,911,779 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Liabilities: |
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| Unpaid losses and loss adjustment expenses |
$ | 675,472 | $ | 779,466 | ||||
| Unearned premiums |
120,815 | 116,629 | ||||||
| Federal income taxes payable |
— | 1,595 | ||||||
| Ceded balances payable |
2,800 | 5,177 | ||||||
| Contingent commissions |
12,985 | 12,677 | ||||||
| Margin borrowing facility |
174,673 | 100,000 | ||||||
| Other liabilities |
34,998 | 22,955 | ||||||
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| Total liabilities |
1,021,743 | 1,038,499 | ||||||
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| Shareholders’ equity: |
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| Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 16,331,577 and 16,200,406 respectively; A ordinary shares outstanding: 13,266,762 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 |
519,590 | 516,653 | ||||||
| Accumulated other comprehensive income, net of taxes |
23,384 | 54,028 | ||||||
| Retained earnings |
466,717 | 403,861 | ||||||
| A ordinary shares in treasury, at cost: 3,064,815 and 3,059,371 shares, respectively |
(101,404 | ) | (101,265 | ) | ||||
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| Total shareholders’ equity |
908,290 | 873,280 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,930,033 | $ | 1,911,779 | ||||
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GLOBAL INDEMNITY PLC
SELECTED INVESTMENT DATA
(Dollars in millions)
| Market Value as of | ||||||||
| (Unaudited) December 31, 2014 |
December 31, 2013 | |||||||
| Fixed Maturities |
$ | 1,283.5 | $ | 1,204.4 | ||||
| Cash and cash equivalents |
172.5 | 105.5 | ||||||
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| Total bonds and cash and cash equivalents |
1,456.0 | 1,309.9 | ||||||
| Equities and other invested assets |
155.7 | 257.5 | ||||||
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| Total cash and invested assets, gross |
1,611.7 | 1,567.4 | ||||||
| Receivable for securities sold |
0.1 | 0.7 | ||||||
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| Total cash and invested assets, net |
$ | 1,611.8 | $ | 1,568.1 | ||||
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| (Unaudited) Twelve Months Ended December 31, 2014 (a) |
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| Net investment income |
$ | 28.8 | ||
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| Net realized investment gains |
35.9 | |||
| Net change in unrealized investment gains / losses |
(45.9 | ) | ||
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| Net realized and unrealized investment returns |
(10.0 | ) | ||
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| Total investment return |
$ | 18.8 | ||
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| Average total cash and invested assets (b) |
$ | 1,590.0 | ||
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| Total investment return % |
1.2 | % | ||
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| (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 December 31, |
For the Twelve Months Ended December 31, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Operating income |
$ | 14,574 | $ | 19,132 | $ | 43,194 | $ | 40,453 | ||||||||
| Adjustments: |
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| Net realized investment gains (losses), net of tax |
(3,510 | ) | 11,223 | 19,662 | 17,879 | |||||||||||
| Gain on disposition of subsidiary, net of tax |
— | 3,358 | — | 3,358 | ||||||||||||
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| Total after-tax adjustments |
(3,510 | ) | 14,581 | 19,662 | 21,237 | |||||||||||
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| Net income |
$ | 11,064 | $ | 33,713 | $ | 62,856 | $ | 61,690 | ||||||||
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| Weighted average shares outstanding – basic |
25,147 | 25,094 | 25,132 | 25,073 | ||||||||||||
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| Weighted average shares outstanding – diluted |
25,353 | 25,218 | 25,331 | 25,174 | ||||||||||||
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| Operating income per share – basic |
$ | 0.58 | $ | 0.76 | $ | 1.72 | $ | 1.61 | ||||||||
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| Operating income per share – diluted |
$ | 0.57 | $ | 0.76 | $ | 1.71 | $ | 1.61 | ||||||||
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Note Regarding Operating Income
Operating income, a non-GAAP financial measure, is equal to net income excluding after-tax net realized investment gains (losses) and after-tax gain on disposition of subsidiary. Operating income is not a substitute for net income determined in accordance with GAAP, and investors should not place undue reliance on this measure.