Global Indemnity plc Reports Third Quarter 2013 Financial Results.

DUBLIN, Nov. 5, 2013 /PRNewswire/ -- 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.    

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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 ratio[1] 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

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.    

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.

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

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.


 

GLOBAL INDEMNITY PLC

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)






 

ASSETS


(Unaudited)

September 30, 2013


December 31, 2012

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








 

 


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.

 

 

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.

Contact: Media
Linda Hohn
Associate General Counsel
(610) 660-6862
lhohn@global-indemnity.com 

SOURCE Global Indemnity plc



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