Global Indemnity plc Reports First Quarter 2012 Financial Results
DUBLIN, May 3, 2012 /PRNewswire/ -- Global Indemnity plc (NASDAQ:GBLI) today reported net income for the three months ended March 31, 2012 of $10.9 million or $0.38 per share. As of March 31st, book value per share increased to $30.19 or 3.9% from $29.06 per share at December 31, 2011.
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Selected Operating and Balance Sheet Data (Dollars in millions, except per share data)
For the Three Months Ended March 31, | ||||
2012 | 2011 | |||
Gross Premiums Written | $ 57.8 | $ 87.7 | ||
Net Premiums Written | $ 50.3 | $ 83.1 | ||
Net income | $ 10.9 | $ 14.3 | ||
Net income per share | $ 0.38 | $ 0.47 | ||
Operating income | $ 9.1 | $ 5.6 | ||
Operating income per share | $ 0.32 | $ 0.18 | ||
As of | As of | |||
Book value per share | $ 30.19 | $ 29.06 | ||
Shareholders' equity | $ 859.4 | $ 839.1 | ||
Cash and invested assets | $ 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 | |
'Selected Financial Data for the Three Months Ended March 31, 2012:
- Shareholders' equity growth of 2.4% - Book value per share growth of 3.9%.
- Repurchased 0.5 million shares during the 1st quarter of 2012 for $8.8 million
- Gross and net written premium decline is attributable to exiting certain unprofitable classes in US Insurance Operations and non-renewing treaties in Reinsurance Operations that did not meet return hurdles partially offset by increases in the Company's small business, property brokerage and commercial auto classes.
- Combined ratio of 101.1 points
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. Investors should take caution that actual results may be materially different from the estimates expressed in, or implied, or projected by, the forward looking statements. Please see the Company's periodic reports filed with the Securities and Exchange Commission for a discussion of the risks and uncertainties which may affect it and for a more detailed discussion of the cautionary note regarding forward-looking statements.
Global Indemnity plc's Combined Ratio for the Three Months Ended March 31, 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 March 31, | ||||
2012 | 2011 | |||
Loss Ratio: | ||||
Current Accident Year | ||||
Excluding Catastrophes | 63.0 | 65.5 | ||
Catastrophes | 4.5 | 18.3 | ||
Current Accident Year | 67.5 | 83.8 | ||
Changes to Prior Accident Year | (2.3) | (7.0) | ||
Loss Ratio – Calendar Year | 65.2 | 76.8 | ||
Expense Ratio | 35.9 | 38.7 | ||
Combined Ratio | 101.1 | 115.5 | ||
For the three months ended March 31st, the calendar year loss ratio decreased by 11.6 points to 65.2 points in 2012 from 76.8 points in 2011.
- Excluding catastrophes, the current accident year loss ratio decreased by 2.5 points to 63.0 points in 2012 from 65.5 points in 2011.
- Excluding catastrophes, the property loss ratio decreased from 53.0 points in the first quarter of 2011 to 48.9 points in the first quarter of 2012. Including catastrophes, the property loss ratio decreased by 37.9 points to 58.0 points in 2012 from 95.9 points in 2011. Catastrophe losses in the first quarter of 2011 were $13.9 million mainly due to earthquakes in New Zealand and Japan and floods in Australia. Catastrophe losses in the first quarter of 2012 were $2.9 million.
- The casualty loss ratio increased 1.7 points to 76.4 points in 2012 from 74.7 points in 2011.
- Current year results include a 2.3 point reduction in the loss ratio related to prior accident years. For 2012 the Company reduced prior accident year reserves by $1.5 million primarily relating to a better than expected emergence of $2.5 million in the General Liability lines of the U.S. Insurance Operations, offset partially by a single Property Brokerage claim of $0.6 million and a single loss on Marine Program of $0.5 million.
For the three months ended March 31st, the expense ratio decreased from 38.7 points in 2011 to 35.9 points in 2012.
- The decrease in the expense ratio was due to savings realized from the profit enhancement initiative executed in 2010 and 2011 and a reduction in amortization expense in 2012 due to premium deficiency charges recognized in 2011.
Global Indemnity plc's three months ended March 31, 2012 and 2011 Gross and Net Premiums Written Results by Business Unit
(Dollars in thousands) | Three Months Ended March 31, | |||||||
Gross Premiums Written | Net Premiums Written | |||||||
2012 | 2011 | 2012 | 2011 | |||||
Insurance Operations | $ 47,834 | $ 56,467 | $ 40,906 | $ 52,411 | ||||
Reinsurance Operations | 9,924 | 31,199 | 9,375 | 30,697 | ||||
Total | $ 57,758 | $ 87,666 | $ 50,281 | $ 83,108 | ||||
Insurance Operations: For the three months ended March 31, 2012, gross premiums written decreased 15.3%, and net premiums written decreased 22.0%, 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 in gross premiums written. This was partially offset by increases in the small business, property brokerage and commercial auto products. Rate increases are being realized in the property brokerage and commercial auto products. The decrease in net premiums written was primarily due to the decrease in gross premiums written and a one-time reduction to ceded written premiums in 2011 related to the cancellation of a property quota share reinsurance treaty effective January 1, 2011.
Reinsurance Operations: For the three months ended March 31, 2012, gross premiums written decreased 68.2%, and net premiums written decreased 69.5% compared to the same period in 2011 as a result of non-renewing treaties that did not meet return hurdles.
# # #
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 March 31, | ||||
2012 | 2011 | |||
Gross premiums written | $ 57,758 | $ 87,666 | ||
Net premiums written | $ 50,281 | $ 83,108 | ||
Net premiums earned | $ 64,470 | $ 75,969 | ||
Investment income, net | 11,417 | 14,414 | ||
Net realized investment gains | 1,761 | 11,997 | ||
Other income (loss) | (352) | 11,792 | ||
Total revenues | 77,296 | 114,172 | ||
Net losses and loss adjustment expenses | 42,009 | 58,342 | ||
Acquisition costs and other underwriting expenses | 23,167 | 29,394 | ||
Corporate and other operating expenses | 2,488 | 2,903 | ||
Interest expense | 1,478 | 1,752 | ||
Income before income taxes | 8,154 | 21,781 | ||
Income tax expense (benefit) | (2,708) | 7,524 | ||
Net income before equity in net income of partnership | 10,862 | 14,257 | ||
Equity in net income of partnership, net of tax | - | 53 | ||
Net income | $ 10,862 | $ 14,310 | ||
Weighted average shares outstanding–basic | 28,617 | 30,301 | ||
Weighted average shares outstanding–diluted | 28,639 | 30,338 | ||
Net income per share – basic | $ 0.38 | $ 0.47 | ||
Net income per share – diluted | $ 0.38 | $ 0.47 | ||
Combined ratio analysis: (1) | ||||
Loss ratio | 65.2 | 76.8 | ||
Expense ratio | 35.9 | 38.7 | ||
Combined ratio | 101.1 | 115.5 | ||
(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) | December 31, 2011(1) | ||||
Fixed Maturities: | ||||||
Available for sale securities, at fair value | $ 1,370,032 | $ 1,296,885 | ||||
Equity securities: | ||||||
Available for sale, at fair value | 187,542 | 168,361 | ||||
Other invested assets: | ||||||
Available for sale securities, at fair value | 8,632 | 6,617 | ||||
Total investments | 1,566,206 | 1,471,863 | ||||
Cash and cash equivalents | 100,519 | 175,860 | ||||
Premiums receivable, net | 47,081 | 47,844 | ||||
Reinsurance receivables | 282,901 | 287,986 | ||||
Deferred federal income taxes | 6,035 | 14,642 | ||||
Deferred acquisition costs | 19,469 | 21,564 | ||||
Intangible assets | 18,609 | 18,704 | ||||
Goodwill | 4,820 | 4,820 | ||||
Prepaid reinsurance premiums | 6,948 | 6,555 | ||||
Receivable for securities sold | - | 1,484 | ||||
Federal income taxes receivable | 7,620 | 2,223 | ||||
Other assets | 20,652 | 19,371 | ||||
Total assets | $ 2,080,860 | $ 2,072,916 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Liabilities: | ||||||
Unpaid losses and loss adjustment expenses | $ 960,924 | $ 971,377 | ||||
Unearned premiums | 100,242 | 114,041 | ||||
Ceded balances payable | 6,651 | 8,887 | ||||
Contingent commissions | 5,079 | 7,473 | ||||
Payable for securities purchased | 21,078 | - | ||||
Notes and debentures payable | 102,929 | 103,000 | ||||
Other liabilities | 24,577 | 29,075 | ||||
Total liabilities | 1,221,480 | 1,233,853 | ||||
Shareholders' equity: | ||||||
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 19,456,411 and 21,429,683 respectively; A ordinary shares outstanding: 16,400,471 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 | 584,428 | 621,917 | ||||
Accumulated other comprehensive income, net of taxes | 57,861 | 40,174 | ||||
Retained earnings | 318,275 | 307,413 | ||||
A ordinary shares in treasury, at cost: 3,055,940 and 4,619,005 shares, respectively | (101,187) | (130,444) | ||||
Total shareholders' equity | 859,380 | 839,063 | ||||
Total liabilities and shareholders' equity | $ 2,080,860 | $ 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 | ||||
Market Value as of | ||||
(Unaudited) March 31, 2012 | December 31, 2011 | |||
Fixed Maturities | $ 1,370.0 | $ 1,296.9 | ||
Cash and cash equivalents | 100.5 | 175.8 | ||
Total bonds and cash and cash equivalents | 1,470.5 | 1,472.7 | ||
Equities and other invested assets | 196.2 | 175.0 | ||
Total cash and invested assets, gross | 1,666.7 | 1,647.7 | ||
Receivable / (payable) for securities | (21.1) | 1.5 | ||
Total cash and invested assets, net | $ 1,645.6 | $ 1,649.2 | ||
(Unaudited) Three Months Ended March 31, 2012 (a) | ||
Net investment income | $ 11.4 | |
Net realized investment gains | 1.8 | |
Net unrealized investment gains | 23.7 | |
Net realized and unrealized investment returns | 25.5 | |
Total investment return | $ 36.9 | |
Average total cash and invested assets (b) | $ 1,647.4 | |
Total investment return % annualized | 9.0% | |
(a) Amounts in this table are shown on a pre-tax basis. | ||
GLOBAL INDEMNITY PLC SUMMARY OF OPERATING INCOME (Unaudited) (Dollars and shares in thousands, except per share data) | ||||
For the Three Months Ended March 31, | ||||
2012 | 2011 | |||
Operating income | $ 9,081 | $ 5,555 | ||
Adjustments: | ||||
Net realized investment gains, net of tax | 1,781 | 8,755 | ||
Total after-tax adjustments | 1,781 | 8,755 | ||
Net income | $ 10,862 | $ 14,310 | ||
Weighted average shares outstanding – basic | 28,617 | 30,301 | ||
Weighted average shares outstanding – diluted | 28,639 | 30,338 | ||
Operating income per share – basic | $ 0.32 | $ 0.18 | ||
Operating income per share – diluted | $ 0.32 | $ 0.18 | ||
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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