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| 8-K - FORM 8-K - Global Indemnity Group, LLC | d523654d8k.htm |
Exhibit 99.1
PRESS RELEASE
| For release: | February 28, 2018 | |
| Contact: | Media | |
| Stephen W. Ries | ||
| Senior Corporate Counsel | ||
| (610) 668-3270 | ||
| sries@global-indemnity.com | ||
Global Indemnity Limited Reports 2017 Financial Results.
George Town, Cayman Islands (February 28, 2018) – Global Indemnity Limited (NASDAQ:GBLI) today reported a net loss for the year ended December 31, 2017 of $9.6 million. Excluding losses related to the Texas and Florida hurricanes, the California wildfires, and a one-time tax charge related to the “Tax Cuts and Jobs Act of 2017”, net income would have been $53.5 million. Adjusted operating income, which excludes after-tax realized gains and the one-time tax charge, was $7.2 million. During the fourth quarter of 2017 the Company exercised its right to redeem 3,397,031 of its A ordinary shares (having an aggregate book value of $159.4 million or $46.91 per share as of September 30, 2017) for aggregate consideration of $83.0 million or $24.24 per share. Primarily as a result of the redemption, book value per share increased by 11.3% from $45.42 per share at December 31, 2016 to $50.57 per share at December 31, 2017.
Selected Operating and Balance Sheet Data (Dollars in millions, except per share data)
| For the Twelve Months Ended December 31, |
As of December 31, |
As of December 31, |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Gross Premiums Written (1) |
$ | 516.3 | $ | 565.8 | Book value per share | $ | 50.57 | $ | 45.42 | |||||||||
| Net Premiums Written |
$ | 450.2 | $ | 470.9 | Shareholders’ equity | $ | 718.4 | $ | 798.0 | |||||||||
| Cash and invested assets (3) | $ | 1,535.4 | $ | 1,498.1 | ||||||||||||||
| Net income (loss) |
$ | (9.6 | ) | $ | 49.9 | |||||||||||||
| Net income (loss) per share |
$ | (0.55 | ) | $ | 2.84 | (3) Including receivable/(payable) for securities sold/(purchased) |
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| Adjusted operating income (2) |
$ | 7.2 | $ | 35.8 | ||||||||||||||
| Adjusted operating income per share (2) |
$ | 0.41 | $ | 2.04 | ||||||||||||||
| Combined ratio analysis: |
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| Loss ratio |
61.5 | % | 56.4 | % | ||||||||||||||
| Expense ratio |
41.9 | % | 42.0 | % | ||||||||||||||
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| Combined ratio |
103.4 | % | 98.4 | % | ||||||||||||||
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| Impact of hurricanes Harvey, Irma and Maria, and the 2017 California wildfires |
(12.9 | %) | ||||||||||||||||
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| Combined ratio excluding hurricanes Harvey, Irma and Maria, and the 2017 California wildfires |
90.5 | % | ||||||||||||||||
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| (1) | Gross Premiums Written include business fronted for Assurant, Inc. of $(1.3) million in 2017 and $35.3 million in 2016 |
| (2) | Adjusted operating income excludes after-tax realized gains and the tax charge related to the enactment of the Tax Cuts and Jobs Act of 2017 |
About Global Indemnity Limited and its subsidiaries
Global Indemnity Limited (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 Limited’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 Limited’s website at http://www.globalindemnity.ky.
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. These statements are based on estimates and information available to us at the time of this press release. All forward-looking statements in this press release are based on information available to the Global Indemnity as of the date hereof. 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 risks and uncertainties which could impact the company and for a more detailed explication regarding forward-looking statements. Global Indemnity does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
| 1 | Disseminated pursuant to the “safe harbor” provisions of Section 21E of the Security Exchange Act of 1934. |
Global Indemnity Limited’s Combined Ratio for the Twelve Months Ended December 31, 2017 and 2016
The combined ratio was 103.4% (Loss Ratio 61.5% and Expense Ratio 41.9%) for the twelve months ended December 31, 2017 compared to 98.4% (Loss Ratio 56.4% and Expense Ratio 42.0%) for the twelve months ended December 31, 2016. Excluding hurricanes Harvey, Irma, and Maria, and the California wildfires, the combined ratio would have been 90.5%.
| • | Excluding Hurricanes Harvey, Irma and Maria, and the California wildfires, the current accident year property loss ratio would have been 57.9%. |
| • | The current accident year casualty loss ratio improved 0.8 points to 66.1% in 2017 from 66.9% in 2016 primarily due to lower reported claims frequency. |
Calendar year results for the twelve months ended December 31, 2017 include a 12.3 point reduction in the loss ratio related to prior accident years, which was primarily driven by lower than expected claims frequency and severity experienced across multiple prior accident years within Commercial Lines, lower than expected case incurred emergence primarily related to the 2016 accident year within Personal Lines, as well as a reduction related to the Company’s property treaties for multiple prior accident years within the Reinsurance Operations.
Global Indemnity Limited’s Gross and Net Premiums Written Results by Segment for the Twelve Months Ended December 31, 2017 and 2016
| Twelve Months Ended December 31, | ||||||||||||||||
| Gross Premiums Written | Net Premiums Written | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Commercial Lines Operations |
$ | 212,471 | $ | 188,571 | $ | 186,322 | $ | 169,291 | ||||||||
| Personal Lines Operations |
250,044 | 263,714 | 208,776 | 224,484 | ||||||||||||
| Reinsurance Operations |
53,887 | 59,837 | 53,933 | 59,801 | ||||||||||||
| Runoff |
1,270 | 18,389 | 1,149 | 17,364 | ||||||||||||
| Business Fronted for Assurant |
(1,338 | ) | 35,334 | — | — | |||||||||||
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| Total |
$ | 516,334 | $ | 565,845 | $ | 450,180 | $ | 470,940 | ||||||||
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Commercial Lines Operations: Gross premiums written and net premiums written increased 12.7% and 10.1%, respectively, for the twelve months ended December 31, 2017 as compared to the same period in 2016. This increase is mainly due to the introduction of several new programs and organic growth in other lines.
Personal Lines Operations: Gross premiums written and net premiums written decreased 5.2% and 7.0%, respectively, for the twelve months ended December 31, 2017 as compared to the same period in 2016. The decrease in gross premiums written was primarily due to a targeted reduction of catastrophe exposed business.
Reinsurance Operations: Gross premiums written and net premiums written decreased 9.9% and 9.8% for the twelve months ended December 31, 2017, respectively, as compared to the same period in 2016 mainly due to a reduction in premiums written related to a mortgage insurance treaty.
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Note: Tables Follow
GLOBAL INDEMNITY LIMITED
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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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Gross premiums written |
$ | 122,635 | $ | 136,591 | $ | 516,334 | $ | 565,845 | ||||||||
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| Net premiums written |
$ | 105,832 | $ | 113,707 | $ | 450,180 | $ | 470,940 | ||||||||
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| Net premiums earned |
$ | 109,216 | $ | 109,472 | $ | 438,034 | $ | 468,465 | ||||||||
| Net investment income |
11,705 | 8,880 | 39,323 | 33,983 | ||||||||||||
| Net realized investment gains |
2,426 | 30,778 | 1,576 | 21,721 | ||||||||||||
| Other income |
1,138 | 742 | 6,582 | 10,345 | ||||||||||||
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| Total revenues |
124,485 | 149,872 | 485,515 | 534,514 | ||||||||||||
| Net losses and loss adjustment expenses |
66,556 | 48,946 | 269,212 | 264,003 | ||||||||||||
| Acquisition costs and other underwriting expenses |
48,723 | 47,889 | 183,733 | 196,650 | ||||||||||||
| Corporate and other operating expenses |
14,669 | 4,274 | 25,714 | 17,338 | ||||||||||||
| Interest expense |
4,841 | 2,228 | 16,906 | 8,905 | ||||||||||||
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| Income (loss) before income taxes |
(10,304 | ) | 46,535 | (10,050 | ) | 47,618 | ||||||||||
| Income tax expense (benefit) |
12,694 | 8,162 | (499 | ) | (2,250 | ) | ||||||||||
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| Net income (loss) |
$ | (22,998 | ) | $ | 38,373 | $ | (9,551 | ) | $ | 49,868 | ||||||
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| Weighted average shares outstanding–basic |
17,240 | 17,264 | 17,309 | 17,247 | ||||||||||||
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| Weighted average shares outstanding–diluted |
17,240 | 17,597 | 17,309 | 17,547 | ||||||||||||
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| Net income (loss) per share – basic |
$ | (1.33 | ) | $ | 2.22 | ($ | 0.55 | ) | $ | 2.89 | ||||||
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| Net income (loss) per share – diluted (1) |
$ | (1.33 | ) | $ | 2.18 | ($ | 0.55 | ) | $ | 2.84 | ||||||
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| Combined ratio analysis: (2) |
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| Loss ratio |
60.9 | % | 44.7 | % | 61.5 | % | 56.4 | % | ||||||||
| Expense ratio |
44.6 | % | 43.7 | % | 41.9 | % | 42.0 | % | ||||||||
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| Combined ratio |
105.5 | % | 88.4 | % | 103.4 | % | 98.4 | % | ||||||||
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| (1) | For the three months and twelve months ended December 31, 2017, 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 LIMITED
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| December 31, 2017 | December 31, 2016 | |||||||
| ASSETS |
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| Fixed Maturities: |
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| Available for sale securities, at fair value (amortized cost: 2017 - $1,243,144 and 2016 - $1,241,339) |
$ | 1,241,437 | $ | 1,240,031 | ||||
| Equity securities: |
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| Available for sale, at fair value (cost: 2017 - $124,915 and 2016 - $119,515) |
140,229 | 120,557 | ||||||
| Other invested assets |
77,820 | 66,121 | ||||||
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| Total investments |
1,459,486 | 1,426,709 | ||||||
| Cash and cash equivalents |
74,414 | 75,110 | ||||||
| Premiums receivable, net |
84,386 | 92,094 | ||||||
| Reinsurance receivables, net |
105,060 | 143,774 | ||||||
| Funds held by ceding insurers |
45,300 | 13,114 | ||||||
| Federal income taxes receivable |
10,332 | — | ||||||
| Receivable for securities sold |
1,543 | — | ||||||
| Deferred federal income taxes |
26,196 | 40,957 | ||||||
| Deferred acquisition costs |
61,647 | 57,901 | ||||||
| Intangible assets |
22,549 | 23,079 | ||||||
| Goodwill |
6,521 | 6,521 | ||||||
| Prepaid reinsurance premiums |
28,851 | 42,583 | ||||||
| Other assets |
75,384 | 51,104 | ||||||
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| Total assets |
$ | 2,001,669 | $ | 1,972,946 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Liabilities: |
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| Unpaid losses and loss adjustment expenses |
$ | 634,664 | $ | 651,042 | ||||
| Unearned premiums |
285,397 | 286,984 | ||||||
| Federal income taxes payable |
— | 219 | ||||||
| Ceded balances payable |
10,851 | 14,675 | ||||||
| Payables for securities purchased |
— | 3,717 | ||||||
| Contingent commissions |
7,984 | 9,454 | ||||||
| Debt |
294,713 | 163,143 | ||||||
| Other liabilities |
49,666 | 45,761 | ||||||
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| Total liabilities |
1,283,275 | 1,174,995 | ||||||
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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:10,068,842 and 13,436,548 respectively; A ordinary shares outstanding: 10,039,291 and 13,436,548, respectively; B ordinary shares issued and outstanding: 4,133,366 and 4,133,366, respectively |
2 | 2 | ||||||
| Additional paid-in capital |
434,730 | 430,283 | ||||||
| Accumulated other comprehensive income, net of taxes |
8,983 | (618 | ) | |||||
| Retained earnings |
275,838 | 368,284 | ||||||
| A ordinary shares in treasury, at cost: 29,551 and 0 shares, respectively |
(1,159 | ) | — | |||||
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| Total shareholders’ equity |
718,394 | 797,951 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 2,001,669 | $ | 1,972,946 | ||||
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GLOBAL INDEMNITY LIMITED
SELECTED INVESTMENT DATA
(Dollars in millions)
| Market Value as of | ||||||||
| December 31, 2017 | December 31, 2016 | |||||||
| Fixed maturities |
$ | 1,241.4 | $ | 1,240.0 | ||||
| Cash and cash equivalents |
74.4 | 75.1 | ||||||
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| Total bonds and cash and cash equivalents |
1,315.8 | 1,315.1 | ||||||
| Equities and other invested assets |
218.1 | 186.7 | ||||||
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| Total cash and invested assets, gross |
1,533.9 | 1,501.8 | ||||||
| Receivable (payable) for securities sold/(purchased) |
1.5 | (3.7 | ) | |||||
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| Total cash and invested assets, net |
$ | 1,535.4 | $ | 1,498.1 | ||||
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| Twelve Months Ended December 31, 2017 (a) |
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| Net investment income |
$ | 39.3 | ||
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| Net realized investment gains |
1.6 | |||
| Net change in unrealized investment gains |
14.4 | |||
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| Net realized and unrealized investment returns |
16.0 | |||
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| Total investment return |
$ | 55.3 | ||
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| Average total cash and invested assets |
$ | 1,597.5 | ||
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| Total investment return % |
3.5 | % | ||
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| (a) | Amounts in this table are shown on a pre-tax basis. |
GLOBAL INDEMNITY LIMITED
SUMMARY OF ADJUSTED OPERATING INCOME (LOSS)
(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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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Adjusted operating income (loss) |
$ | (6,796 | ) | $ | 18,444 | $ | 7,173 | $ | 35,781 | |||||||
| Adjustments: |
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| Net realized investment gain, net of tax |
1,322 | 19,929 | 800 | 14,087 | ||||||||||||
| Deferred Tax writedown due to enactment of the Tax Cuts and Jobs Act of 2017 |
(17,524 | ) | — | (17,524 | ) | — | ||||||||||
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| Net income (loss) |
$ | (22,998 | ) | $ | 38,373 | $ | (9,551 | ) | $ | 49,868 | ||||||
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| Weighted average shares outstanding – basic |
17,240 | 17,264 | 17,309 | 17,247 | ||||||||||||
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| Weighted average shares outstanding – diluted |
17,240 | 17,597 | 17,680 | 17,547 | ||||||||||||
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| Adjusted operating income (loss) per share – basic |
$ | (0.39 | ) | $ | 1.07 | $ | 0.41 | $ | 2.07 | |||||||
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| Adjusted operating income (loss) per share – diluted (1) |
$ | (0.39 | ) | $ | 1.05 | $ | 0.41 | $ | 2.04 | |||||||
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Note Regarding Adjusted Operating Income (loss)
Adjusted Operating income (loss), a non-GAAP financial measure, is equal to net income (loss) excluding after-tax net realized investment gain and other unique charges not related to operations. Adjusted operating income (loss) is not a substitute for net income (loss) determined in accordance with GAAP, and investors should not place undue reliance on this measure.
| (1) | For the three months ended December 31, 2017, diluted loss per share is the same as basic loss per share since there was a net loss for the period. |