Global Indemnity plc Reports First Quarter 2011 Financial Results
DUBLIN, May 5, 2011 /PRNewswire/ -- Global Indemnity plc (NASDAQ: GBLI) today reported net income for the three months ended March 31, 2011 of $13.8 million or $0.45 per share. As of March 31st, book value per share increased to $30.96 or 1.2% from $30.59 per share at December 31, 2010.
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Selected Operating and Balance Sheet Data (Dollars in millions, except per share data)
For the Three Months Ended March 31, --------------- 2011 2010 ---- ---- Gross Premiums Written $87.7 $92.9 Net Premiums Written $83.1 $81.5 Net income $13.8 $18.9 Net income per share $0.45 $0.63 Operating income $5.0 $7.9 Operating income per share $0.17 $0.26 As of As of March 31, December 31, 2011 2010 ------------------------- Book value per share $30.96 $30.59 Shareholders' equity $941.4 $928.7 Cash and invested assets $1,739.3 $1,717.2
Larry A. Frakes, President & Chief Executive Officer stated, "We continue to see improvements in the fundamentals of our business. We experienced written premium growth in our core US Insurance Operations of 4.4% in the quarter over the same period in 2010. Our brokerage property and casualty lines continued to grow while we also saw positive premium production from our agency businesses. Production trends in our Penn-America small business unit, while still down, were markedly improved from the 1st quarter of 2010. The Profitability Enhancement executed in the 4th quarter of 2010 is contributing to the 3.3 point decrease in our operating expenses. We also saw an additional $2.1 million reduction in corporate expenses again related to our expense control efforts and the completion of our re-domestication to Ireland in 2010. Operating cash flow of $7.2 million was an $18 million improvement over the same period last year. Our 1st quarter results were impacted by major worldwide catastrophes. Our Wind River Reinsurance Operations incurred $8.8 million in losses from the Japan earthquake and $3.0 million from the New Zealand earthquake. Even with these events, shareholders' equity increased by $12.7 million or 1.4% and book value per share grew at 1.2%".
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 - 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 Three Months Ended March 31, 2011 and 2010
The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:
Three Months Ended March 31, ------------------ 2011 2010 ---- ---- Loss Ratio: Current Accident Year Excluding Catastrophes 65.5 57.1 Catastrophes 18.3 5.9 ---- --- Current Accident Year 83.8 63.0 Changes to Prior Accident Year (7.0) (4.0) ---- ---- Loss Ratio - Calendar Year 76.8 59.0 Expense Ratio 39.3 42.6 ---- ---- Combined Ratio 116.1 101.6 ===== =====
For the three months ended March 31st, the calendar year loss ratio increased by 17.8 points to 76.8 in 2011 from 59.0 in 2010.
- Excluding catastrophes, the current accident year loss ratio increased by 8.4 points to 65.5 in 2011 from 57.1 in 2010. - Excluding catastrophes, the property loss ratio increased from 41.3 in the first quarter of 2010 to 53.0 in the first quarter of 2011. Severity from fire losses and a tornado contributed to the increase. Including catastrophes, the property loss ratio increased by 39.6 points to 95.9 in 2011 from 56.3 in 2010. This increase was driven primarily from catastrophe losses in our Reinsurance Operations including $3.0 million and $8.8 million related to earthquakes in New Zealand and Japan, respectively. - The casualty loss ratio increased 7.3 points to 74.7 in 2011 from 67.4 in 2010. The increase is attributable to changes in the mix of business from our Reinsurance Operations, a large loss in professional lines from a class of business that we are exiting, and increased loss trends in several of our casualty classes. - Current year results include a 7.0 point reduction in the loss ratio related to prior accident years. For 2011 we reduced prior accident years by $5.3 million primarily relating to general liability within our Insurance Operations for accident years 2004 through 2010, offset partially by an increase to prior accident year 2010 at our Reinsurance Operations within the general liability, auto liability and workers' compensation lines.
For the three months ended March 31st, the expense ratio decreased from 42.6 in 2010 to 39.3 in 2011.
- The expense ratio decreased from 42.6 in 2010 to 39.3 in 2011 primarily due to lower employee costs from our previously disclosed Profit Enhancement Initiative and a decrease in contingent commissions related to increases in loss ratios described above. - Corporate expenses also decreased $2.1 million on a quarter over quarter basis. The decrease is due to completing the redomestication to Ireland and the Profit Enhancement Initiative.
Global Indemnity plc's three months ended March 31, 2011 and 2010 Gross and Net Premiums Written Results by Business Unit
(Dollars in thousands) Three Months Ended March 31, Gross Premiums Written ---------------------- 2011 2010 ---- ---- Insurance Operations $56,467 $54,071 Reinsurance Operations 31,199 38,782 Total $87,666 $92,853 ======= ======= Net Premiums Written -------------------- 2011 2010 ---- ---- Insurance Operations $52,411 $43,478 Reinsurance Operations 30,697 38,003 Total $83,108 $81,481 ======= =======
Insurance Operations: For the three months ended March 31, 2011, gross premiums written increased 4.4%, and net premiums written increased 20.5%, compared to the same period in 2010. The increase in gross premiums is mainly due to growth in Diamond State's property and casualty brokerage units, Collectibles Insurance Services LLC, which was acquired in April of 2010, and our Vacant Express product, offset partially by decreases in Penn-America. However, we are seeing signs that the small business market where Penn-America competes is improving. The increase in net written premiums is primarily due to the cancellation of a property quota share reinsurance treaty effective January 1, 2011 and an increase in retention related to the US property excess of loss treaty which renewed on January 1, 2011.
Reinsurance Operations: For the three months ended March 31, 2011, gross premiums written decreased 19.6%, and net premiums written decreased 19.2%, compared to the same period in 2010. Timing of new treaties and non-renewals can cause gross premiums written to vary widely in this segment. The decrease in gross and net premiums written is primarily due to cancellations of non-standard auto and workers' compensation treaties in 2011 that were not replaced, offset partially by several new casualty treaties written in 2011.
GLOBAL INDEMNITY PLC CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars and shares in thousands, except per share data) For the Three Months Ended March 31, --------------- 2011 2010 ---- ---- Gross premiums written $87,666 $92,853 ======= ======= Net premiums written $83,108 $81,481 ======= ======= Net premiums earned $75,969 $70,788 Investment income, net 14,414 14,579 Net realized investment gains 11,997 14,204 Other income 11,669 - ------ --- Total revenues 114,049 99,571 Net losses and loss adjustment expenses 58,342 41,789 Acquisition costs and other underwriting expenses 29,852 30,148 Corporate and other operating expenses 2,780 4,896 Interest expense 1,752 1,739 ----- ----- Income before income taxes 21,323 20,999 Income tax expense 7,591 2,069 ----- ----- Net income before equity in net income (loss) of partnership 13,732 18,930 Equity in net income (loss) of partnership, net of tax 53 (29) --- --- Net income $13,785 $18,901 ======= ======= Weighted average shares outstanding-basic (1) 30,301 30,185 ====== ====== Weighted average shares outstanding-diluted (1) 30,338 30,204 ====== ====== Net income per share - basic (1) $0.45 $0.63 ===== ===== Net income per share - diluted (1) $0.45 $0.63 ===== ===== Combined ratio analysis: (2) Loss ratio 76.8 59.0 Expense ratio 39.3 42.6 ---- ---- Combined ratio 116.1 101.6 (1) Shares outstanding and per share amounts for 2010 have been restated to reflect the 1-for-2 stock exchange effective July 2, 2010 when the Company completed its redomestication to Ireland. (2) 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 and shares in thousands, except per share data) ASSETS As of As of March 31, December 31, 2011 2010 ---- ---- Fixed Maturities: Available for sale securities, at fair value $1,457,717 $1,444,392 (amortized cost: 2011 -$1,414,836 and 2010 -$1,393,655) Preferred shares: Available for sale securities, at fair value 2,346 2,252 (cost: 2011 - $930 and 2010 - $930) Common shares: Available for sale securities, at fair value 154,325 145,274 (cost: 2011 -$126,691 and 2010 -$120,674) Other invested assets: Available for sale securities, at fair value (cost: 2011 - $14,126 and 2010 - $4,255) Securities classified as trading, at fair value 16,724 4,268 (cost: 2011 - $0 and 2010 - $1,112) ------ ----- - 1,112 --- ----- Total investments 1,631,112 1,597,298 Cash and cash equivalents 108,170 119,888 Accounts receivable, net 68,097 56,657 Reinsurance receivables 390,574 422,844 Deferred federal income taxes 8,044 6,926 Deferred acquisition costs 38,037 35,344 Goodwill 4,820 4,820 Intangible assets 18,987 19,082 Prepaid reinsurance premiums 8,046 11,104 Other assets 25,911 20,720 ------ ------ Total assets $2,301,798 $2,294,683 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Unpaid losses and loss adjustment expenses $1,035,088 $1,052,743 Unearned premiums 139,957 135,872 Federal income taxes payable 8,128 55 Ceded balances payable 9,531 12,376 Contingent commissions 4,819 9,260 Notes and debentures payable 121,214 121,285 Payable for securities 10,916 4,768 Other liabilities 30,780 29,655 ------ ------ Total liabilities 1,360,433 1,366,014 --------- --------- Shareholders' equity: Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; Class A ordinary shares issued: 21,388,550 and 21,340,821 respectively; Class A ordinary shares outstanding: 18,341,910 and 18,300,544, respectively; Class B ordinary shares issued and outstanding: 12,061,370 and 12,061,370, respectively 3 3 Additional paid-in capital 623,181 622,725 Accumulated other comprehensive income 55,787 57,211 Class A ordinary shares in treasury, at cost: 3,046,640 and 3,040,277 shares, respectively (101,033) (100,912) Retained earnings 363,427 349,642 ------- ------- Total shareholders' equity 941,365 928,669 ------- ------- Total liabilities and shareholders' equity $2,301,798 $2,294,683 ========== ==========
GLOBAL INDEMNITY PLC SELECTED INVESTMENT DATA (Unaudited) (Dollars in millions) Market Value as of ------------------ March 31, 2011 Dec. 31, 2010 -------------- ------------- Fixed Maturities $1,457.7 $1,444.4 Cash and cash equivalents 108.2 119.9 ----- ----- Total bonds and cash and cash equivalents 1,565.9 1,564.3 Equities and other invested assets 173.4 152.9 ----- ----- Total cash and invested assets $1,739.3 $1,717.2 ======== ======== Three Months Ended March 31, 2011 (a) Net investment income $12.5 ----- Net realized investment gains 8.8 Net unrealized investment losses (1.4) Net realized and unrealized investment returns 7.4 --- Total investment return $19.9 ===== Average total cash and invested assets (b) $1,720.4 ======== Total investment return % annualized 4.6% (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 March 31, --------------- 2011 2010 ---- ---- Operating income $5,030 $7,908 Adjustments: Net realized investment gains, net of tax 8,755 10,993 Total after-tax adjustments 8,755 10,993 ----- ------ Net income $13,785 $18,901 ======= ======= Weighted average shares outstanding - basic (1) 30,301 30,185 ====== ====== Weighted average shares outstanding - diluted (1) 30,338 30,204 ====== ====== Operating income per share - basic (1) $0.17 $0.26 ===== ===== Operating income per share - diluted (1) $0.17 $0.26 ===== ===== (1) Shares outstanding and per share amounts for 2010 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
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