Global Indemnity plc Reports Second Quarter 2010 Financial Results
By Global Indemnity Plc, PRNEMonday, August 2, 2010
DUBLIN, August 4, 2010 - Global Indemnity plc (Nasdaq: GBLI) today reported net income for the
three months ended June 30, 2010 of US$24.5 million or US$0.81 per share
compared to net income of US$16.3 million or US$0.64 per share for the same
period in 2009. Results for the six months ended June 30, 2010 include net
income of US$43.4 million or US$1.44 per share compared to net income of
US$23.4 million or US$1.09 per share for the same period of 2009. Operating
income for the three months ended June 30, 2010 was US$20.7 million or
US$0.69 per share compared to operating income of US$12.7 million or US$0.50
per share for the same period of 2009. Operating income for the six months
ended June 30, 2010 was US$28.6 million or US$0.95 per share compared to
operating income of US$26.2 million or US$1.22 per share for the same period
of 2009.
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(All amounts in U.S. dollars unless otherwise noted.)
(Dollars in millions, except per
share data) For the Three Months
Ended June 30,
--------------
2010 2009
---- ----
Net income $24.5 $16.3
Net income per share $0.81 $0.64
Operating income $20.7 $12.7
Operating income per share $0.69 $0.50
(Dollars in millions, except per
share data) For the Six Months
Ended June 30,
2010 2009
---- ----
Net income $43.4 $23.4
Net income per share $1.44 $1.09
Operating income $28.6 $26.2
Operating income per share $0.95 $1.22
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.
(Dollars in millions, except per share
amounts) As of As of
June 30, March 31,
2010 2010
---- ----
Book value per share $28.73 $28.05
Shareholders' equity $872.3 $850.6
Cash and invested assets $1,683.5 $1,731.1
(Dollars in millions, except per share
amounts) As of
December 31,
2009
----
Book value per share $27.48
Shareholders' equity $832.0
Cash and invested assets $1,731.3
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:
Three Months Ended June 30,
----------------------------
2010 2009
---- ----
Loss Ratio:
Current Accident Year 64.9 61.8
Changes to Prior Accident Year (21.2) (2.9)
----- ----
Loss Ratio - Calendar Year 43.7 58.9
Expense Ratio 38.8 40.1
---- ----
Combined Ratio 82.5 99.0
---- ----
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.
Global Indemnity plc's Three Months Ended June 30, 2010 and 2009 Gross
and Net Premiums Written Results by Business Unit
(Dollars in thousands) Three Months Ended June 30,
Gross Premiums Written
----------------------
2010 2009
---- ----
Insurance Operations $61,531 $72,687
Reinsurance Operations 30,519 18,793
------ ------
Total $92,050 $91,480
======= =======
(Dollars in thousands) Three Months Ended June 30,
Net Premiums Written
--------------------
2010 2009
---- ----
Insurance Operations $49,011 $58,791
Reinsurance Operations 30,512 18,687
------ ------
Total $79,523 $77,478
======= =======
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.
Global Indemnity plc's Combined Ratio for the Six 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:
Six Months Ended June 30,
-------------------------
2010 2009
---- ----
Loss Ratio:
Current Accident Year 64.0 61.8
Changes to Prior Accident Year (12.8) (1.9)
----- ----
Loss Ratio - Calendar Year 51.2 59.9
Expense Ratio 40.7 39.7
---- ----
Combined Ratio 91.9 99.6
==== ====
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.
Global Indemnity plc's Six Months Ended June 30, 2010 and 2009 Gross and
Net Premiums Written Results by Business Unit
(Dollars in thousands) Six Months Ended June 30,
Gross Premiums Written
----------------------
2010 2009
---- ----
Insurance Operations $115,602 $140,307
Reinsurance Operations 69,301 50,361
------ ------
Total $184,903 $190,668
======== ========
(Dollars in thousands) Six Months Ended June 30,
Net Premiums Written
--------------------
2010 2009
---- ----
Insurance Operations $92,489 $114,260
Reinsurance Operations 68,515 49,831
------ ------
Total $161,004 $164,091
======== ========
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
Global Indemnity plc
Consolidated Statements of Operations
(Unaudited)
(Dollars and shares in thousands, except per share data)
For the Three Months
Ended June 30,
--------------
2010 2009
---- ----
Gross premiums written $92,050 $91,480
======= =======
Net premiums written $79,523 $77,478
======= =======
Net premiums earned $74,702 $74,732
Investment income, net 13,941 16,605
Net realized investment gains (losses) 5,597 5,398
Other income 342 -
--- ---
Total revenues 94,582 96,735
Net losses and loss adjustment expenses 32,675 44,047
Acquisition costs and other underwriting
expenses 29,008 29,972
Corporate and other operating expenses 5,063 3,663
Interest expense 1,833 1,832
----- -----
Income before income taxes 26,003 17,221
Income tax expense 1,491 2,758
----- -----
Net income before equity in net income
(loss) of partnership 24,512 14,463
Equity in net income (loss) of
partnership, net of tax - 1,798
--- -----
Net income $24,512 $16,261
======= =======
Weighted average shares outstanding-basic 30,207 25,401
====== ======
Weighted average shares
outstanding-diluted 30,237 25,420
====== ======
Net income per share - basic $0.81 $0.64
===== =====
Net income per share - diluted $0.81 $0.64
===== =====
Combined ratio analysis:
Loss ratio 43.7 58.9
Expense ratio 38.8 40.1
---- ----
Combined ratio 82.5 99.0
==== ====
For the Six Months
Ended June 30,
--------------
2010 2009
---- ----
Gross premiums written $184,903 $190,668
======== ========
Net premiums written $161,004 $164,091
======== ========
Net premiums earned $145,490 $153,272
Investment income, net 28,520 38,782
Net realized investment gains (losses) 19,801 (3,198)
Other income 342 -
--- ---
Total revenues 194,153 188,856
Net losses and loss adjustment expenses 74,464 91,787
Acquisition costs and other underwriting
expenses 59,156 60,786
Corporate and other operating expenses 9,959 7,638
Interest expense 3,572 3,686
Income before income taxes 47,002 24,959
Income tax expense 3,560 3,481
----- -----
Net income before equity in net income
(loss) of partnership 43,442 21,478
Equity in net income (loss) of
partnership, net of tax (29) 1,933
--- -----
Net income $43,413 $23,411
======= =======
Weighted average shares outstanding-basic 30,196 21,482
====== ======
Weighted average shares
outstanding-diluted 30,219 21,499
====== ======
Net income per share - basic $1.44 $1.09
===== =====
Net income per share - diluted $1.44 $1.09
===== =====
Combined ratio analysis:
Loss ratio 51.2 59.9
Expense ratio 40.7 39.7
---- ----
Combined ratio 91.9 99.6
==== ====
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.
GLOBAL INDEMNITY PLC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
As of
ASSETS June 30,
2010
----
Bonds:
Available for sale securities, at fair value $1,480,834
(amortized cost: 2010 -$1,427,771 and 2009 -
$1,423,052)
Preferred shares:
Available for sale securities, at fair value 2,098
(cost: 2010 - $930 and 2009 - $1,509)
Common shares:
Available for sale securities, at fair value 89,029
(cost: 2010 - $86,838 and 2009 - $50,709)
Other invested assets:
Available for sale securities, at fair value
(cost: 2010 - $4,255 and 2009 - $4,323)
Securities classified as trading, at fair value 5,390
(cost: 2010 - $1,100 and 2009 - $1,145) -----
1,100
-----
Total investments 1,578,451
Cash and cash equivalents 105,097
Agents' balances 70,483
Reinsurance receivables 485,636
Federal income taxes receivables 3,795
Deferred federal income taxes 16,134
Deferred acquisition costs 34,727
Goodwill 4,820
Intangible assets 19,271
Prepaid reinsurance premiums 11,727
Other assets 26,076
------
Total assets $2,356,217
----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses $1,168,759
Unearned premiums 142,278
Ceded balances payable 4,769
Contingent commissions 5,927
Notes and debentures payable 121,427
Payable for securities 8,968
Other liabilities 31,821
------
Total liabilities 1,483,949
---------
Shareholders' equity:
Common shares, $0.0001 par value, 450,000,000 common
shares authorized; Class A common shares issued:
21,340,929 and 21,243,345 respectively; Class A
common shares outstanding: 18,302,169 and 18,215,239,
respectively; Class B common shares issued and
outstanding: 12,061,372 and 12,061,372, respectively 3
Additional paid-in capital 621,294
Accumulated other comprehensive income 43,702
Class A common shares in treasury, at cost: 3,038,760
and 3,028,106 shares, respectively (100,883)
Retained earnings 308,152
-------
Total shareholders' equity 872,268
-------
Total liabilities and shareholders' equity $2,356,217
----------
As of
ASSETS December 31,
2009
----
Bonds:
Available for sale securities, at fair value $1,471,572
(amortized cost: 2010 -$1,427,771 and 2009 -
$1,423,052)
Preferred shares:
Available for sale securities, at fair value 2,599
(cost: 2010 - $930 and 2009 - $1,509)
Common shares:
Available for sale securities, at fair value 63,057
(cost: 2010 - $86,838 and 2009 - $50,709)
Other invested assets:
Available for sale securities, at fair value
(cost: 2010 - $4,255 and 2009 - $4,323)
Securities classified as trading, at fair value 6,854
(cost: 2010 - $1,100 and 2009 - $1,145) -----
1,145
-----
Total investments 1,545,227
Cash and cash equivalents 186,087
Agents' balances 69,711
Reinsurance receivables 543,351
Federal income taxes receivables 3,521
Deferred federal income taxes 13,819
Deferred acquisition costs 33,184
Goodwill -
Intangible assets 9,236
Prepaid reinsurance premiums 16,546
Other assets 25,098
------
Total assets $2,445,780
----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses $1,257,741
Unearned premiums 131,582
Ceded balances payable 16,009
Contingent commissions 11,169
Notes and debentures payable 121,569
Payable for securities 37,258
Other liabilities 38,476
------
Total liabilities 1,613,804
---------
Shareholders' equity:
Common shares, $0.0001 par value, 450,000,000 common
shares authorized; Class A common shares issued:
21,340,929 and 21,243,345 respectively; Class A
common shares outstanding: 18,302,169 and 18,215,239,
respectively; Class B common shares issued and
outstanding: 12,061,372 and 12,061,372, respectively 3
Additional paid-in capital 619,473
Accumulated other comprehensive income 48,481
Class A common shares in treasury, at cost: 3,038,760
and 3,028,106 shares, respectively (100,720)
Retained earnings 264,739
-------
Total shareholders' equity 831,976
-------
Total liabilities and shareholders' equity $2,445,780
----------
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.
GLOBAL INDEMNITY PLC
SELECTED INVESTMENT DATA
(Unaudited)
(Dollars in millions)
Market Value as of
June 30, 2010 Dec 31, 2009
------------- ------------
Fixed Maturities $1,480.8 $1,471.6
Cash and cash equivalents 105.1 186.1
----- -----
Total bonds and cash and cash equivalents 1,585.9 1,657.7
Equities and other invested assets 97.6 73.6
---- ----
Total cash and invested assets $1,683.5 $1,731.3
======== ========
June 30, 2010 (a)
-----------------
Three Months Six Months
Ended Ended
------------- -----------
Net investment income $11.8 $24.1
----- -----
Net realized investment gain 3.8 14.8
Net unrealized investment (loss) (3.5) (4.6)
Net realized and unrealized
investment 0.3 10.2
--- ----
Total investment return $12.1 $34.3
===== =====
Average total cash and invested
assets (b) $1,684.8 $1,684.3
======== ========
Total investment return % annualized 2.9% 4.1%
(a) Amounts in this table are shown on an after-tax basis.
(b) Simple average of beginning and end of period, net of payable for
securities.
GLOBAL INDEMNITY PLC
SUMMARY OF OPERATING INCOME
(Unaudited)
(Dollars and shares in thousands, except per share data)
For the Three Months
Ended June 30,
--------------
2010 2009
---- ----
Operating income $20,711 $12,712
Adjustments:
Net realized investment gains (losses),
net of tax 3,801 3,549
Total after-tax adjustments 3,801 3,549
----- -----
Net income $24,512 $16,261
======= =======
Weighted average shares outstanding -
basic 30,207 25,401
====== ======
Weighted average shares outstanding -
diluted 30,237 25,420
====== ======
Operating income per share - basic $0.69 $0.50
===== =====
Operating income per share - diluted $0.68 $0.50
===== =====
For the Six Months
Ended June 30,
--------------
2010 2009
---- ----
Operating income $28,619 $26,183
Adjustments:
Net realized investment gains (losses),
net of tax 14,794 (2,772)
Total after-tax adjustments 14,794 (2,772)
------ ------
Net income $43,413 $23,411
======= =======
Weighted average shares outstanding -
basic 30,196 21,482
====== ======
Weighted average shares outstanding -
diluted 30,219 21,499
====== ======
Operating income per share - basic $0.95 $1.22
===== =====
Operating income per share - diluted $0.95 $1.22
===== =====
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
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 +1-800-230-1059
(U.S. and Canada) or +1-612-234-9959 (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: 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 +1-800-475-6701 (U.S. and Canada) or
+1-320-365-3844 (International) then enter 165712.
Forward-Looking Informatio
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.
Contact: Media
Linda Hohn
Associate General Counsel
+1-610-660-6862
lhohn@global-indemnity.com
Linda Hohn, Associate General Counsel, Global Indemnity plc, +1-610-660-6862, lhohn at global-indemnity.com
Tags: August 4, Dublin, Global Indemnity Plc, ireland
