Global Indemnity plc Reports Second Quarter 2010 Financial Results

DUBLIN, Aug. 3 /PRNewswire-FirstCall/ -- Global Indemnity plc (Nasdaq: GBLI) today reported net income for the three months ended June 30, 2010 of $24.5 million or $0.81 per share compared to net income of $16.3 million or $0.64 per share for the same period in 2009.  Results for the six months ended June 30, 2010 include net income of $43.4 million or $1.44 per share compared to net income of $23.4 million or $1.09 per share for the same period of 2009.  Operating income for the three months ended June 30, 2010 was $20.7 million or $0.69 per share compared to operating income of $12.7 million or $0.50 per share for the same period of 2009.  Operating income for the six months ended June 30, 2010 was $28.6 million or $0.95 per share compared to operating income of $26.2 million or $1.22 per share for the same period of 2009.

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Operating income, a non-GAAP financial measure, is equal to net income excluding after-tax net realized investment gains / (losses).  A reconciliation of operating income is set forth at the end of this press release.

Selected Financial Data for the Three Months Ended June 30, 2010:

• Net income of $24.5 million or $0.81 per share.
• Operating income of $20.7 million or $0.69 per share.
• Gross premiums written of $92.1 million.
• Current accident year combined ratio of 101.9.  
• Calendar year combined ratio of 82.5.
• After tax investment return of 2.9%, including $3.8 million of realized investment gains, net of tax.    
• Shareholders' equity growth of 2.6%.
• Book value per share growth of 2.4%.

Selected Financial Data for the Six Months Ended June 30, 2010:

• Net income of $43.4 million or $1.44 per share.
• Operating income of $28.6 million or $0.95 per share.
• Gross premiums written of $184.9 million.
• Current accident year combined ratio of 102.7.  
• Calendar year combined ratio of 91.9.
• After tax investment return of 4.1%, including $14.8 million of realized investment gains, net of tax.    
• Shareholders' equity growth of 4.8%.
• Book value per share growth of 4.6%.

Global Indemnity plc's Combined Ratio for the Three Months Ended June 30, 2010 and 2009

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

For the three months ended June 30th, the calendar year loss ratio decreased by 15.2 points to 43.7 points in 2010 from 58.9 points in 2009.

• The current accident year loss ratio increased by 3.1 points to 64.9 points in 2010 from 61.8 in 2009.  
  • The property loss ratio increased by 8.4 points to 60.3 points in 2010 from 51.9 points in 2009 primarily due to increased frequency of storms and higher reinsurance costs.
  • The casualty loss ratio improved 0.8 points to 68.5 points in 2010 from 69.3 points in 2009 due primarily to the growth and improved performance of the casualty business in reinsurance operations and improved performance of the casualty business in insurance operations.
• Current year results include an 18.3 point reduction in the loss ratio due to better than anticipated emergence of $15.8 million of loss and loss adjustment expenses in the insurance operation's casualty lines.  

For the three months ended June 30th, the expense ratio decreased from 40.1 points in 2009 to 38.8 points in 2010.

• The expense ratio decrease is mainly attributable to an increase in business from reinsurance operations, which has a lower expense ratio than insurance operations.

Insurance Operations:  Gross premiums written for the three months ended June 30, 2010 decreased 15.3%, and net premiums written for the three months ended June 30, 2010 decreased 16.6%, compared to the same period in 2009.  The reduction in gross premium is comprised mainly of the following:

• $3.4 million due to terminated programs and agents.
• Price decreases in aggregate of approximately 2.7%.  
• Continued soft market conditions.

Reinsurance Operations:  Gross premiums written for the three months ended June 30, 2010 increased 62.4%, and net premiums written increased 63.3%, compared to the same period in 2009.  The increase in gross and net premiums written is primarily due to new excess of loss and quota share treaties.  

For the six months ended June 30th, the calendar year loss ratio decreased by 8.7 points to 51.2 points in 2010 from 59.9 points in 2009.

• The current accident year loss ratio increased by 2.2 points to 64.0 points in 2010 from 61.8 in 2009.  
  • The property loss ratio increased by 6.4 points to 58.6 points in 2010 from 52.2 points in 2009 primarily due to increased frequency of storms and higher reinsurance costs.
  • The casualty loss ratio improved 0.6 points to 68.1 points in 2010 from 68.7 points in 2009 due primarily to the growth and improved performance of the casualty business in reinsurance operations and improved performance of the casualty business in insurance operations.
• Current year results include a 10.9 point reduction in the loss ratio due to better than anticipated emergence of $17.9 million primarily in the insurance operation's casualty lines and $0.8 million in the reinsurance operations property lines.  

For the six months ended June 30th, the expense ratio increased from 39.7 points in 2009 to 40.7 points in 2010.

• The expense ratio increase is mainly attributable to a decline in net premiums earned and the incurrence of infrastructure costs related to new product development, information technology upgrades, and redomestication expenses, partially offset by an increase in business from reinsurance operations, which has a lower expense ratio than insurance operations.

Insurance Operations:  Gross premiums written for the six months ended June 30, 2010 decreased 17.6%, and net premiums written for the six months ended June 30, 2010 decreased 19.1%, compared to the same period in 2009.  The reduction in gross premium is comprised mainly of the following:

• $6.5 million due to terminated programs and agents.
• Price decreases in aggregate of approximately 2.5%.  
• Continued soft market conditions.

Reinsurance Operations:  Gross premiums written for the six months ended June 30, 2010 increased 37.6%, and net premiums written increased 37.5%, compared to the same period in 2009.  The increase in gross and net premiums written is primarily due to new excess of loss and quota share treaties.  

Note: Tables Follow

In computing the basic and diluted weighted share counts the number of shares outstanding prior to May 5, 2009 (the date that the common stock was issued in conjunction with the stockholders' rights offering) was adjusted by a factor of 1.114 to reflect the impact of a bonus element associated with the rights offering in accordance with GAAP.  

Per share amounts have been restated to reflect the 1-for-2 stock exchange effective July 2, 2010 when the Company completed its redomestication to Ireland.

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.

Share amounts have been restated to reflect the 1-for-2 stock exchange effective July 2, 2010 when the Company completed its redomestication to Ireland.

In computing the basic and diluted weighted share counts the number of shares outstanding prior to May 5, 2009 (the date that the common stock was issued in conjunction with the stockholders' rights offering) was adjusted by a factor of 1.114 to reflect the impact of a bonus element associated with the rights offering in accordance with GAAP.  

Per share amounts have been restated to reflect the 1-for-2 stock exchange effective July 2, 2010 when the Company completed its redomestication to Ireland.

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.

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 nonadmitted specialty property and casualty insurance coverages in the United States, as well as reinsurance throughout the world.  Global Indemnity plc's five principal divisions include:

• United States Based Insurance Operations:
  • Penn-America, which includes property and general liability products for small commercial businesses distributed through a select network of wholesale general agents with specific binding authority;
  • United National, which includes property, general liability, and professional lines products distributed through program administrators with specific binding authority;
  • Diamond State, which includes property, general liability, and professional lines products distributed through wholesale brokers and program administrators with specific binding authority;
  • CompGlobal, which provides workers' compensation insurance.
• International Reinsurance Operations:
  • Wind River Reinsurance Company, Ltd., a Bermuda based treaty and facultative reinsurer of excess and surplus lines and specialty property and casualty insurance.

For more information, visit the Global Indemnity plc website at http://www.globalindemnity.ie.

Teleconference and Webcast for Interested Parties

Larry A. Frakes, President and 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 4, 2010 at 8:30 a.m. Eastern Time to discuss the second quarter 2010 results.  

To participate in the teleconference, please telephone (800) 230-1059 (U.S. and Canada) or (612) 234-9959 (International) and you will be greeted by an operator.  Please reference Global Indemnity plc Earnings Release Call or reference Larry Frakes.

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, download and install any necessary software. The webcast is also being distributed over AT&T's Audio-Only Web ConferenceCast.  To access live or archived event, please use this URL: http://205.144.147.162/cgi-bin/confCast, Conference ID#: 165712 and click GO.

The teleconference will be available for replay beginning at 10:30 a.m. Eastern Time on August 4, 2010 until 11:59 p.m. September 4, 2010. To listen to the replay, please telephone (800) 475-6701 (U.S. and Canada) or (320) 365-3844 (International) then enter 165712.

Forward-Looking Information

Forward-looking statements contained in this press release are made under "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. The types of risks and uncertainties which may affect the Company are set forth in its periodic reports filed with the Securities and Exchange Commission.

SOURCE Global Indemnity plc