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Global Indemnity plc Reports Third Quarter 2012 Financial Results

DUBLIN, Nov. 7, 2012 /PRNewswire/ -- Global Indemnity plc (NASDAQ:GBLI) today reported net income for the three months ended September 30, 2012 of $9.9 million or $0.39 per share and net income for the nine months ended September 30, 2012 of $30.4 million or $1.11 per share. As of September 30th, book value per share was $32.02, an increase of 2.7% compared to book value per share of $31.19 at June 30, 2012, and an increase of 10.2% compared to book value per share of $29.06 at December 31, 2011. The Company also repurchased 266 thousand of its shares in the open market for $5.5 million during the quarter.

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Selected Operating and Balance Sheet Data (Dollars in millions, except per share data)



For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,


2012


2011


2012


2011









Gross Premiums Written

$  56.9


$     73.1


$182.3


$   255.7

Net Premiums Written

$  51.5


$     64.9


$162.9


$   234.4









Net income (loss)

$    9.9


$  (33.4)


$  30.4


$  (14.8)

Net income (loss) per share

$  0.39


$  (1.10)


$  1.11


$  (0.49)









Operating income (loss)

$    7.6


$  (34.0)


$  24.9


$  (30.4)

Operating income (loss) per share

$  0.30


$  (1.12)


$  0.91


$  (1.00)






As of
September 30,
2012

As of
June 30,
2012


As of
March 31,
2012


As of
December 31,
2011(1)








Book value per share

$    32.02

$    31.19


$    30.19


$    29.06

Shareholders' equity

$    807.4

$    795.2


$    859.4


$    839.1

Cash and invested assets

$ 1,565.8

$ 1,572.8


$ 1,666.7


$ 1,647.7


(1)  Retrospective adoption of new accounting guidance limiting acquisition costs that can be deferred decreased shareholders' equity by $2.6 million or $0.09 per share



Cynthia Y. Valko, Chief Executive Officer, stated, "Book value per share has increased 10.2% since 2011 primarily due to growing more profitable lines, exiting unprofitable classes of business, and share repurchases.  We are working closely with our agents and are investing in our business to further enhance the value proposition.  In regard to Hurricane Sandy, which struck on October 29, 2012 (approximately a month after the close of the Third Quarter), the Company does not yet have a reliable estimate of the storm's impact on its financial results."

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 and Nine Months Ended September 30, 2012 and 2011

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



Three Months Ended
September 30,


Nine Months Ended
September 30,


2012


2011


2012


2011

Loss Ratio:








Current Accident Year








  Excluding Catastrophes

54.5


86.8


57.9


73.7

  Catastrophes

10.7


21.7


7.6


19.1

  Current Accident Year

65.2


108.5


65.5


92.8

Changes to Prior Accident Year

(1.2)


3.3


(1.6)


(3.5)

Loss Ratio – Calendar Year

64.0


111.8


63.9


89.3

Expense Ratio

42.0


43.2


39.5


40.2

Combined Ratio

106.0


155.0


103.4


129.5




For the three months ended September 30th, the calendar year loss ratio decreased by 47.8 points to 64.0 in 2012 from 111.8 in 2011.

  • Excluding catastrophes, the current accident year loss ratio decreased by 32.3 points to 54.5 in 2012 from 86.8 in 2011.  
    • Excluding catastrophes, the property loss ratio decreased from 50.0 in the third quarter of 2011 to 38.4 in the third quarter of 2012 mainly due to decreased severity from fire losses and severe weather during 2012.  Including catastrophes, the property loss ratio decreased by 42.0 points to 56.8 in 2012 from 98.8 in 2011.
    • The casualty loss ratio decreased 39.4 points to 76.9 in 2012 from 116.3 in 2011.  The decrease is mainly attributable to actions taken to improve profitability that were implemented in the latter half of 2011.
  • Current year results include a 1.2 point reduction in the loss ratio related to prior accident years.  This decrease was mainly related to Insurance Operations and resulted primarily from favorable emergence in professional liability lines partially offset by increases to auto liability lines in both Insurance and Reinsurance Operations.

For the three months ended September 30th, the expense ratio decreased from 43.2 in 2011 to 42.0 in 2012.

  • The expense ratio decreased from 43.2 in 2011 to 42.0 in 2012 primarily due to changes in the mix of business in the Reinsurance Operations.
  • Corporate expenses decreased $1.0 million on a quarter over quarter basis mainly due to a decrease in outside legal and other professional fees.  

For the nine months ended September 30th, the calendar year loss ratio decreased by 25.4 points to 63.9 in 2012 from 89.3 in 2011.

  • Excluding catastrophes, the current accident year loss ratio decreased by 15.8 points to 57.9 in 2012 from 73.7 in 2011.  
    • Excluding catastrophes, the property loss ratio decreased from 47.1 in the third quarter of 2011 to 41.9 in the third quarter of 2012 mainly due to decreased severity from fire losses and severe weather during 2012.  Including catastrophes, the property loss ratio decreased by 35.0 points to 56.1 in 2012 from 91.1 in 2011.
    • The casualty loss ratio decreased 17.9 points to 76.1 in 2012 from 94.0 in 2011.  The decrease is mainly attributable to actions taken to improve profitability that were implemented in the latter half of 2011.
  • Current year results include a 1.6 point reduction in the loss ratio related to prior accident years. This decrease was primarily related to Insurance Operations and resulted primarily from favorable emergence in general and professional liability lines partially offset by increases to property and marine lines in Insurance Operations and auto liability lines in both Insurance and Reinsurance Operations.

For the nine months ended September 30th, the expense ratio decreased from 40.2 in 2011 to 39.5 in 2012.

  • The expense ratio remained consistent, decreasing marginally from 40.2 in 2011 to 39.5 in 2012 primarily due to changes in the mix of business in the Reinsurance Operations.
  • Corporate expenses decreased $4.0 million mainly due to a decrease in outside legal and other professional fees.

Global Indemnity plc's three months ended September 30, 2012 and 2011 Gross and Net Premiums Written Results by Business Unit


(Dollars in thousands)

Three Months Ended September 30,


Gross Premiums Written


Net Premiums Written


2012


2011


2012


2011

Insurance Operations

$  51,205


$  55,260


$   45,710


$   47,102

Reinsurance Operations

5,744


17,832


5,745


17,832

Total

$ 56,949


$ 73,092


$ 51,455


$ 64,934




Insurance Operations:  For the three months ended September 30, 2012, gross premiums written decreased 7.3%, and net premiums written decreased 3.0%, compared to the same period in 2011.  In the second half of 2011 the Company began exiting certain unprofitable classes of business which contributed to the decrease.  This was partially offset by increases in the Company's small business, commercial auto and vacant property classes.

Reinsurance Operations:  For the three months ended September 30, 2012, gross and net premiums written decreased 67.8% compared to the same period in 2011.  The decrease was primarily due to the cancellation of several unprofitable treaties during 2012.  

Global Indemnity plc's nine months ended September 30, 2012 and 2011 Gross and Net Premiums Written Results by Business Unit


(Dollars in thousands)

Nine Months Ended September 30,


Gross Premiums Written


Net Premiums Written


2012


2011


2012


2011

Insurance Operations

$  151,410


$  182,102


$   132,490


$   161,333

Reinsurance Operations

30,929


73,618


30,381


73,116

Total

$ 182,339


$ 255,720


$ 162,871


$ 234,449




Insurance Operations:  For the nine months ended September 30, 2012, gross premiums written decreased 16.9%, and net premiums written decreased 17.9%, compared to the same period in 2011.  In the second half of 2011 the Company began exiting certain unprofitable classes of business which contributed to the decrease.  This was partially offset by increases in the Company's small business, property brokerage and commercial auto classes.

Reinsurance Operations:  For the nine months ended September 30, 2012, gross premiums written decreased 58.0%, and net premiums written decreased 58.4%, compared to the same period in 2011.  The decrease was primarily due to the cancellation of several unprofitable treaties during 2012.

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,


2012


2011


2012


2011

Gross premiums written

$  56,949


$  73,092


$  182,339


$  255,720









Net premiums written

$  51,455


$  64,934


$  162,871


$  234,449









Net premiums earned

$  55,329


$  77,090


$  177,658


$  231,114

Investment income, net

14,777


12,880


37,265


41,224

Net realized investment gains

3,211


1,288


6,913


21,671

Other income (loss)

101


372


(291)


12,539

    Total revenues

73,418


91,630


221,545


306,548









Net losses and loss adjustment expenses

35,407


86,234


113,574


206,329

Acquisition costs and other underwriting expenses

23,223


33,327


70,150


92,810

Corporate and other operating expenses

2,039


3,067


6,863


10,869

Interest expense

1,265


1,525


4,213


5,020

    Income (loss) before income taxes

11,484


(32,523)


26,745


(8,480)

Income tax expense (benefit)

1,571


899


(3,634)


6,401

Net income (loss) before equity in net income of partnership

9,913


(33,422)


30,379


(14,881)

Equity in net income of partnership, net of tax

-


-


-


53

    Net income (loss)

$ 9,913


$ (33,422)


$ 30,379


$ (14,828)









Weighted average shares outstanding–basic

25,392


30,338


27,263


30,321









Weighted average shares outstanding–diluted

25,413


30,353


27,281


30,342









Net income (loss) per share – basic

$    0.39


$    (1.10)


$    1.11


$    (0.49)









Net income (loss) per share – diluted

$    0.39


$    (1.10)


$    1.11


$    (0.49)









Combined ratio analysis: (1)








Loss ratio

64.0


111.8


63.9


89.3

Expense ratio

42.0


43.2


39.5


40.2

Combined ratio

106.0


155.0


103.4


129.5


(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.



GLOBAL INDEMNITY PLC
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

ASSETS


(Unaudited)
September 30,
2012


December 31,
2011 (1)

Fixed Maturities:






Available for sale securities, at fair value

(amortized cost: 2012 - $1,212,179 and 2011 - $1,258,533)


$ 1,259,845


$ 1,296,885

Equity securities:






Available for sale, at fair value

(cost: 2012 - $165,095 and 2011 - $155,390)


194,553


168,361

Other invested assets:






Available for sale securities, at fair value

(cost: 2012 - $3,049 and 2011 - $4,150)



2,937




6,617


     Total investments


1,457,335


1,471,863






Cash and cash equivalents


108,490


175,860

Premiums receivable, net


42,439


47,844

Reinsurance receivables


273,993


287,986

Deferred federal income taxes


5,352


14,642

Deferred acquisition costs


19,438


21,564

Intangible assets


18,431


18,704

Goodwill


4,820


4,820

Prepaid reinsurance premiums


6,390


6,555

Receivable for securities sold


-


1,484

Federal income taxes receivable


8,600


2,223

Other assets


19,059


19,371


Total assets


$ 1,964,347


$ 2,072,916






LIABILITIES AND SHAREHOLDERS' EQUITY





Liabilities:





Unpaid losses and loss adjustment expenses


$    923,778


$    971,377

Unearned premiums


99,087


114,041

Ceded balances payable


3,050


8,887

Contingent commissions


7,843


7,473

Payable for securities purchased


16,089


-

Notes and debentures payable


84,929


103,000

Other liabilities


22,184


29,075


Total liabilities


1,156,960


1,233,853






Shareholders' equity:





Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 16,208,439 and 21,429,683 respectively; A ordinary shares outstanding: 13,151,919 and 16,810,678, respectively; B ordinary  shares issued and outstanding: 12,061,370 and 12,061,370, respectively


3


3

Additional paid-in capital


514,124


621,917

Accumulated other comprehensive income, net of taxes


56,667


40,174

Retained earnings


337,792


307,413

A ordinary shares in treasury, at cost: 3,056,520 and 4,619,005 shares, respectively


(101,199)


(130,444)


Total shareholders' equity


807,387


839,063







Total liabilities and shareholders' equity


$ 1,964,347


$ 2,072,916


(1)  Retrospective adoption of new accounting guidance limiting acquisition costs that can be deferred decreased deferred acquisition costs by $4.0 million and shareholders' equity by $2.6 million



GLOBAL INDEMNITY PLC
SELECTED INVESTMENT DATA
(Dollars in millions)



Market Value as of


(Unaudited)
September 30, 2012



December 31, 2011





Fixed Maturities

$ 1,259.8


$ 1,296.9

Cash and cash equivalents

108.5


175.8

Total bonds and cash and cash equivalents

1,368.3


1,472.7

Equities and other invested assets

197.5


175.0

Total cash and invested assets, gross

1,565.8


1,647.7

Receivable / (payable) for securities

(16.1)


1.5

Total cash and invested assets, net  

$ 1,549.7


$ 1,649.2






(Unaudited)
Three Months Ended
September 30, 2012 (a)


(Unaudited)
Nine Months Ended
September 30, 2012 (a)





Net investment income (b)

$      14.8


$      37.3





Net realized investment gains

3.2


6.9

Net unrealized investment gain

11.4


23.2

Net realized and unrealized investment returns

14.6


30.1





  Total investment return

$      29.4


$      67.4





  Average total cash and invested assets (c)

$ 1,556.5


$ 1,599.5





  Total investment return % annualized

7.5%


5.6%


(a)  Amounts in this table are shown on a pre-tax basis.
(b)  Quarter to date and year to date results include $4.3 million and $4.5 million, respectively, of partnership distributions.
(c)  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,


2012


2011


2012


2011









Operating income (loss)

$  7,621


$  (34,017)


$  24,856


$  (30,388)

Adjustments:








Net realized investment gains, net of tax

2,292


595


5,523


15,560









Total after-tax adjustments

2,292


595


5,523


15,560









Net income (loss)

$    9,913


$  (33,422)


$  30,379


$  (14,828)









Weighted average shares outstanding –  basic

25,392


30,338


27,263


30,321









Weighted average shares outstanding –  diluted

25,413


30,353


27,281


30,342









Operating income (loss) per share – basic

$    0.30


$    (1.12)


$    0.91


$    (1.00)









Operating income (loss) per share – diluted

$    0.30


$    (1.12)


$    0.91


$    (1.00)












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.

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