Global Indemnity plc Reports Third Quarter 2010 Financial Results & Profitability Enhancement Initiative
By Global Indemnity Plc, PRNEMonday, November 8, 2010
DUBLIN, November 9, 2010 - Global Indemnity plc (Nasdaq: GBLI) today reported net income for the
three months ended September 30, 2010 of $19.8 million or $0.65 per share and
for the nine months of $63.2 million or $2.09 per share. As of September 30,
book value per share increased to $30.01 or by 12.3% on an annualized basis
from $27.48 per share at December 31, 2009. The Company also announced an
initiative to enhance profitability and earnings through reducing its U.S.
based census by approximately 25%, closing underperforming U.S. facilities,
and supplementing staffing in Bermuda and in Ireland.
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Selected Operating and Balance Sheet Data
(Dollars in millions,
except per share data) For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2010 2009 2010 2009
---- ---- ---- ----
Gross Premiums Written $86.20 $75.80 $271.10 $266.50
Net Premiums Written $73.20 $62.90 $234.20 $227.00
Net income $19.80 $27.40 $63.20 $50.80
Net income per share $0.65 $0.91 $2.09 $2.08 (a)
Operating income $18.50 $22.60 $47.10 $48.80
Operating income per
share $0.61 $0.75 $1.56 $2.00 (a)
(Dollars in millions,
except per As of As of As of As of
share amounts) September 30, June 30, March 31, December 31,
2010 2010 2010 2009
---- ---- ---- ----
Book value per share $30.01 $28.73 $28.05 $27.48
Shareholders' equity $911.2 $872.3 $850.6 $832.0
Cash and invested assets $1,709.6 $1,683.5 $1,731.1 $1,731.3
(a) On May 5, 2009 shares were issued in conjunction with the Rights
Offering. If the rights offering was completed on January 1, 2009, net income
per share would have been $1.69 and Operating income per share would have
been $1.62.
Larry A. Frakes, President and Chief Executive Officer, stated, "In the
face of a very competitive commercial lines property & casualty market, the
company continued to build shareholder value, as indicated by the 12.3%
annualized rate of growth in book value per share for the nine months ended
September 30 as well as our first growth in premiums since 2006. These
results were achieved while maintaining strict underwriting discipline and
reducing fixed income volatility in our investment portfolio." Mr. Frakes
added, "In addition, post the end of the quarter, on November 4, the company
implemented its Profitability Enhancement Initiative that is expected to
increase annual pre-tax earnings starting in 2011 by approximately $9.0 to
$11.3 million at the cost of a one-time after tax charge to year end 2010
earnings of approximately $4.3 million to $6.5 million."
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 throughout
the world. Global Indemnity plc's two primary divisions are:
- United States Based Insurance Operations
- Ireland & Bermuda Based Reinsurance Operations
For more information, visit the Global Indemnity plc website at
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. These statements
include statements regarding expected costs and savings resulting from our
Profitability Enhancement Initiative. Such costs include severance, contract
terminations, lease abandonment, fixed asset write-offs and other charges and
could include unanticipated costs. We caution investors that our actual costs
and savings 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 Three and Nine Months Ended
September 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 Nine Months Ended
September 30, September 30,
------------------ -----------------
2010 2009 2010 2009
---- ---- ---- ----
Loss Ratio:
Current Accident
Year 64.0 55.6 64.0 59.8
Changes to Prior
Accident Year (21.5) (2.2) (15.6) (2.0)
----- ---- ----- ----
Loss Ratio - Calendar
Year 42.5 53.4 48.4 57.8
Expense Ratio 40.7 37.8 40.7 39.1
---- ---- ---- ----
Combined Ratio 83.2 91.2 89.1 96.9
For the three months ended September 30th, the calendar year loss ratio
decreased by 10.9 points to 42.5 in 2010 from 53.4 in 2009.
- The current accident year loss ratio increased by 8.4 points
to 64.0 in 2010 from 55.6 in 2009.
- The property loss ratio increased by 15.5 points to 55.0 in
2010 from 39.5 in 2009 primarily due to increased catastrophe
related losses from our reinsurance operations and increased
reinsurance costs in our insurance operations.
- The casualty loss ratio increased 3.5 points to 72.0 in 2010
from 68.5 in 2009.
- Current year results include a 21.5 point reduction in the loss
ratio related to prior accident years due to a reduction of $16.9
million of loss and loss adjustment expenses in the insurance
operation's property and casualty lines, partially offset by a $1.8
million increase in the reinsurance operation's casualty lines.
For the three months ended September 30th, the expense ratio increased
from 37.8 in 2009 to 40.7 in 2010.
- The expense ratio increase is mainly attributable to a
decrease in net premiums earned, partially offset by an increase in
business from reinsurance operations, which has a lower expense ratio
than insurance operations. In addition, the third quarter of 2009
included a reduction in employee incentive expenses.
For the nine months ended September 30th, the calendar year loss ratio
decreased by 9.4 points to 48.4 in 2010 from 57.8 in 2009.
- The current accident year loss ratio increased by 4.2 points
to 64.0 in 2010 from 59.8 in 2009.
- The property loss ratio increased by 9.5 points to 57.4 in
2010 from 47.9 in 2009 primarily due to increased catastrophe
related losses from our reinsurance operations and increased
reinsurance costs in our insurance operations.
- The casualty loss ratio increased 0.7 points to 69.3 in 2010
from 68.6 in 2009.
- Current year results include a 15.6 point reduction in the loss
ratio related to prior accident years due to a reduction of $34.8
million of loss and loss adjustment expenses primarily in the insurance
operation's casualty lines, partially offset by an increase of $1.0
million in the reinsurance operation's casualty lines.
For the nine months ended September 30th, the expense ratio increased
from 39.1 in 2009 to 40.7 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 and information technology
upgrades, partially offset by an increase in business from reinsurance
operations, which has a lower expense ratio than insurance operations.
Global Indemnity plc's Three Months Ended September 30, 2010 and 2009
Gross and Net Premiums Written Results by Business Unit
(Dollars in thousands)
Three Months Ended September 30,
Gross Premiums Written Net Premiums Written
---------------------- --------------------
2010 2009 2010 2009
---- ---- ---- ----
Insurance
Operations $66,213 $67,368 $53,185 $54,510
Reinsurance
Operations 20,022 8,438 20,021 8,422
Total $86,235 $75,806 $73,206 $62,932
======= ======= ======= =======
Insurance Operations: Gross premiums written for the three months ended
September 30, 2010 decreased 1.7%, and net premiums written for the three
months ended September 30, 2010 decreased 2.4%, compared to the same period
in 2009. The decrease in gross premium is mainly due to price decreases of
approximately 2.0%.
Reinsurance Operations: Gross premiums written for the three months ended
September 30, 2010 increased 137.3%, and net premiums written increased
137.7%, 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 Nine Months Ended September 30, 2010 and 2009
Gross and Net Premiums Written Results by Business Unit
(Dollars in thousands) Nine Months Ended September 30,
Gross Premiums Written Net Premiums Written
---------------------- --------------------
2010 2009 2010 2009
---- ---- ---- ----
Insurance Operations $181,815 $207,675 $145,674 $168,770
Reinsurance Operations 89,323 58,799 88,536 58,253
Total $271,138 $266,474 $234,210 $227,023
======== ======== ======== ========
Insurance Operations: Gross premiums written for the nine months ended
September 30, 2010 decreased 12.5%, and net premiums written for the nine
months ended September 30, 2010 decreased 13.7%, compared to the same period
in 2009. The decrease in gross premium is comprised mainly of the following:
- $10.0 million due to terminated programs and agents.
- Price decreases in aggregate of approximately 2.3%.
- Continued soft market conditions.
Reinsurance Operations: Gross premiums written for the nine months ended
September 30, 2010 increased 51.9%, and net premiums written increased 52.0%,
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.
Larry A. Frakes, President & Chief Executive Officer, stated, "We are
pleased with the production from our U.S. insurance operations and our
Bermuda reinsurance operations. The initiatives that we have put in place in
the US are taking hold. While we continue to face strong competition,
especially in the small business binding arena, we are realizing growth from
our brokerage operations. Over the last several years, we have grown our
reinsurance operation at Wind River. Wind River has strategic relationships
with a select group of clients and distributors. The book is well balanced
geographically and by product line. We remain very optimistic about our
growth prospects."
Global Indemnity plc
Consolidated Statements of Operations
(Unaudited)
(Dollars and shares in thousands, except per share data)
For the Three Months For the Nine Months
-------------------- -------------------
Ended September 30, Ended September 30,
------------------- -------------------
2010 2009 2010 2009
---- ---- ---- ----
Gross premiums
written $86,235 $75,806 $271,138 $266,474
======= ======= ======== ========
Net premiums
written $73,206 $62,932 $234,210 $227,023
======= ======= ======== ========
Net premiums
earned $70,089 $72,893 $215,579 $226,165
Investment
income, net 14,089 15,267 42,609 54,049
Net realized
investment
gains 1,818 6,613 21,619 3,415
Other income 173 - 515 -
--- --- --- ---
Total revenues 86,169 94,773 280,322 283,629
Net losses and
loss adjustment
expenses 29,789 38,887 104,253 130,674
Acquisition
costs and other
underwriting
expenses 28,541 27,564 87,697 88,350
Corporate and
other operating
expenses 5,106 4,676 15,065 12,314
Interest expense 1,825 1,776 5,397 5,462
----- -----
Income before
income taxes 20,908 21,870 67,910 46,829
Income tax
expense
(benefit) 1,146 (2,673) 4,706 808
----- ------ ----- ---
Net income
before equity
in net income
of partnership 19,762 24,543 63,204 46,021
Equity in net
income (loss)
of partnership,
net of tax - 2,809 (29) 4,742
--- ----- --- -----
Net income $19,762 $27,352 $63,175 $50,763
======= ======= ======= =======
Weighted average
shares
outstanding-basic
(1) (2) 30,274 30,145 30,222 24,403
====== ====== ====== ======
Weighted average
shares
outstanding-diluted
(1) (2) 30,308 30,156 30,246 24,423
====== ====== ====== ======
Net income per
share - basic
(2) $0.65 $0.91 $2.09 $2.08
===== ===== ===== =====
Net income per
share - diluted
(2) $0.65 $0.91 $2.09 $2.08
===== ===== ===== =====
Combined ratio
analysis: (3)
Loss ratio 42.5 53.4 48.4 57.8
Expense ratio 40.7 37.8 40.7 39.1
---- ---- ---- ----
Combined ratio 83.2 91.2 89.1 96.9
(1) 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.
(2) Shares outstanding and 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.
(3) 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 As of
ASSETS ----- -----
September December
30, 31,
---------- --------
2010 2009
---- ----
Fixed Maturities:
Available for sale securities, at fair
value $1,477,061 $1,471,572
(amortized cost: 2010 -$1,409,580 and
2009 -$1,423,050)
Preferred shares:
Available for sale securities, at fair
value 2,408 2,599
(cost: 2010 - $930 and 2009 - $1,509)
Common shares:
Available for sale securities, at fair
value 130,472 63,057
(cost: 2010 -$117,654 and 2009 -
$50,709)
Other invested assets:
Available for sale securities, at fair
value 4,115 6,854
(cost: 2010 - $4,255 and 2009 - $4,323)
Securities classified as trading, at fair
value 1,100 1,145
(cost: 2010 - $1,100 and 2009 - $1,145) ----- -----
Total investments 1,615,156 1,545,227
Cash and cash equivalents 94,397 186,087
Agents' balances 68,600 69,711
Reinsurance receivables 463,111 543,351
Federal income taxes receivables 7,785 3,521
Deferred federal income taxes 6,926 13,819
Deferred acquisition costs 36,095 33,184
Goodwill 4,820 -
Intangible assets 19,177 9,236
Prepaid reinsurance premiums 12,064 16,546
Other assets 24,898 25,098
------ ------
Total assets $2,353,029 $2,445,780
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment
expenses $1,120,463 $1,257,741
Unearned premiums 145,733 131,582
Ceded balances payable 5,175 16,009
Contingent commissions 6,720 11,169
Notes and debentures payable 121,356 121,569
Payable for securities 10,857 37,258
Other liabilities 31,491 38,476
------ ------
Total liabilities 1,441,795 1,613,804
--------- ---------
Shareholders' equity:
Common shares, $0.0001 par value,
900,000,000 common shares authorized;
Class A common shares issued: 21,340,821
and 21,243,345 respectively; Class A
common shares outstanding: 18,302,058
and 18,215,239, respectively; Class B
common shares issued and outstanding:
12,061,370 and 12,061,370, respectively 3 3
Additional paid-in capital 621,965 619,473
Accumulated other comprehensive income 62,235 48,481
Class A common shares in treasury, at
cost: 3,038,763 and 3,028,106 shares,
respectively (100,883) (100,720)
Retained earnings 327,914 264,739
------- -------
Total shareholders' equity 911,234 831,976
------- -------
Total liabilities and shareholders'
equity $2,353,029 $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
Sept 30, Dec 31,
2010 2009
--------- -------
Fixed Maturities $1,477.1 $1,471.6
Cash and cash equivalents 94.4 186.1
---- -----
Total bonds and cash and cash
equivalents 1,571.5 1,657.7
Equities and other invested assets 138.1 73.6
----- ----
Total cash and invested assets $1,709.6 $1,731.3
======== ========
September 30, 2010 (a)
----------------------
Three Months Nine Months
Ended Ended
Net investment income $12.0 $36.1
----- -----
Net realized investment gains 1.3 16.0
Net unrealized investment gains 18.3 13.8
Net realized and unrealized
investment returns 19.6 29.8
---- ----
Total investment return $31.6 $65.9
===== =====
Average total cash and invested
assets (b) $1,686.6 $1,696.4
======== ========
Total investment return %
annualized 7.5% 5.2%
(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 For the Nine Months
-------------------- -------------------
Ended September 30, Ended September 30,
------------------- -------------------
2010 2009 2010 2009
---- ---- ---- ----
Operating income $18,490 $22,590 $47,109 $48,773
Adjustments:
Net realized
investment gains,
net of tax 1,272 4,762 16,066 1,990
Total after-tax
adjustments 1,272 4,762 16,066 1,990
----- ----- ------ -----
Net income $19,762 $27,352 $63,175 $50,763
======= ======= ======= =======
Weighted average
shares outstanding
- basic (1) (2) 30,274 30,145 30,222 24,403
====== ====== ====== ======
Weighted average
shares outstanding
- diluted (1) (2) 30,308 30,156 30,246 24,423
====== ====== ====== ======
Operating income
per share - basic
(2) $0.61 $0.75 $1.56 $2.00
===== ===== ===== =====
Operating income
per share -
diluted (2) $0.61 $0.75 $1.56 $2.00
===== ===== ===== =====
(1) 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.
(2) Shares outstanding and 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.
Contact:
Media
Linda Hohn
Associate General Counsel
+1-610-660-6862
lhohn@global-indemnity.com
Media, Linda Hohn, Associate General Counsel, Global Indemnity, +1-610-660-6862, lhohn at global-indemnity.com
Tags: Dublin, Global Indemnity Plc, ireland, November 9
