Global Indemnity plc Reports First Quarter 2014 Financial Results
DUBLIN, May 5, 2014 /PRNewswire/ -- Global Indemnity plc (NASDAQ:GBLI) today reported net income for the three months ended March 31, 2014 of $8.8 million or $0.35 per share. As of March 31st, book value per share was $34.82, an increase of 0.5% compared to book value per share of $34.65 at December 31, 2013.
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Selected Operating and Balance Sheet Data (Dollars in millions, except per share data)
For the Three Months Ended March 31, | As of March 31, | As of December 31, | ||||||||
2014 | 2013 | 2014 | 2013 | |||||||
Gross Premiums Written | $ 77.2 | $ 74.9 | Book value per share | $ 34.82 | $ 34.65 | |||||
Net Premiums Written | $ 72.9 | $ 71.5 | Shareholders' equity | $ 880.8 | $ 873.3 | |||||
Cash and invested assets | $ 1,559.4 | $ 1,567.4 | ||||||||
Net income | $ 8.8 | $ 12.4 | ||||||||
Net income per share | $ 0.35 | $ 0.49 | ||||||||
Operating income | $ 9.8 | $ 8.5 | ||||||||
Operating income per share | $ 0.39 | $ 0.34 | ||||||||
Cynthia Y. Valko, Chief Executive Officer, commented: "Operating income has increased 14% compared to 2013. Premium growth was realized in both Insurance Operations and Reinsurance Operations. The loss ratio has improved due to improved underwriting and pricing and the expense ratio has declined as earned premiums increased. We have continued to realize price increases in most lines; however, we are seeing price pressure in larger property accounts and in the property catastrophe market. The overall combined ratio improved to 96% compared to 101% for the same period in 2013.
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 worldwide. Global Indemnity plc's two primary segments 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, 2014 and 2013
The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:
Three Months Ended | |||||
2014 | 2013 | ||||
Loss Ratio: | |||||
Current Accident Year | |||||
Excluding Catastrophes | 50.4 | 53.1 | |||
Catastrophes | 9.8 | 8.4 | |||
Current Accident Year | 60.2 | 61.5 | |||
Changes to Prior Accident Year | (3.1) | (4.7) | |||
Loss Ratio – Calendar Year | 57.1 | 56.8 | |||
Expense Ratio | 39.2 | 43.7 | |||
Combined Ratio | 96.3 | 100.5 | |||
For the three months ended March 31st, the accident year loss ratio decreased by 1.3 points to 60.2 in 2014 from 61.5 in 2013.
For the three months ended March 31, 2014, the current accident year loss ratio improved to 60.2 compared to 61.5 for the same period in 2013. The property loss ratio decreased 1.3 points to 54.6 in 2014 from 55.9 in 2013. The casualty loss ratio decreased 0.6 points to 71.4 in 2014 from 72.0 in 2013.
Total calendar year results in 2014 include a 3.1 point reduction in the loss ratio related to prior accident years, which was primarily driven by better than expected emergence in the professional and general liability lines.
For the three months ended March 31st, the expense ratio decreased from 43.7 in 2013 to 39.2 in 2014.
The decrease is primarily due to growth in earned premiums in both the Insurance and Reinsurance Operations.
Global Indemnity plc's Gross and Net Premiums Written Results by Segment
(Dollars in thousands) | Three Months Ended March 31, | |||||||
Gross Premiums Written | Net Premiums Written | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Insurance Operations | $ 52,992 | $ 51,088 | $ 48,656 | $ 47,628 | ||||
Reinsurance Operations | 24,205 | 23,851 | 24,205 | 23,850 | ||||
Total | $ 77,197 | $ 74,939 | $ 72,861 | $ 71,478 | ||||
Insurance Operations: For the three months ended March 31, 2014, gross premiums written and net premiums written increased 3.7% and 2.2%, respectively, compared to the same period in 2013 primarily due to growth in small business binding authority lines.
Reinsurance Operations: For the three months ended March 31, 2014, gross premiums written and net premiums written both increased 1.5%, compared to the same periods in 2013.
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, | ||||
2014 | 2013 | |||
Gross premiums written | $ 77,197 | $ 74,939 | ||
Net premiums written | $ 72,861 | $ 71,478 | ||
Net premiums earned | $ 67,544 | $ 55,996 | ||
Net investment income | 8,284 | 10,034 | ||
Net realized investment gains (losses) | (813) | 5,757 | ||
Other income (loss) | 168 | 54 | ||
Total revenues | 75,183 | 71,841 | ||
Net losses and loss adjustment expenses | 38,572 | 31,788 | ||
Acquisition costs and other underwriting expenses | 26,485 | 24,477 | ||
Corporate and other operating expenses | 2,961 | 2,345 | ||
Interest expense | 191 | 1,173 | ||
Income before income taxes | 6,974 | 12,058 | ||
Income tax (benefit) | (1,849) | (307) | ||
Net income | $ 8,823 | $ 12,365 | ||
Weighted average shares outstanding–basic | 25,123 | 25,055 | ||
Weighted average shares outstanding–diluted | 25,279 | 25,099 | ||
Net income per share – basic | $ 0.35 | $ 0.49 | ||
Net income per share – diluted | $ 0.35 | $ 0.49 | ||
Combined ratio analysis: (1) | ||||
Loss ratio | 57.1 | 56.8 | ||
Expense ratio | 39.2 | 43.7 | ||
Combined ratio | 96.3 | 100.5 | ||
(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) March 31, 2014 | December 31, 2013 | |||||
Fixed Maturities: | |||||||
Available for sale securities, at fair value (amortized cost: 2014 - $1,180,713 and 2013 - $1,187,685) | $ 1,196,858 | $ 1,204,364 | |||||
Equity securities: | |||||||
Available for sale, at fair value (cost: 2014 - $197,088 and 2013 - $191,425) | 257,940 | 254,070 | |||||
Other invested assets: | |||||||
Available for sale securities, at fair value (cost: 2014 - $5,167 and 2013 - $3,065) | 5,364 | 3,489 | |||||
Total investments | 1,460,162 | 1,461,923 | |||||
Cash and cash equivalents | 99,223 | 105,492 | |||||
Premiums receivable, net | 57,853 | 49,888 | |||||
Reinsurance receivables, net | 198,967 | 197,887 | |||||
Funds held by ceding insurers | 23,764 | 18,662 | |||||
Federal income taxes receivable | 422 | - | |||||
Deferred federal income taxes | 6,444 | 4,206 | |||||
Deferred acquisition costs | 24,237 | 22,177 | |||||
Intangible assets | 17,901 | 17,990 | |||||
Goodwill | 4,820 | 4,820 | |||||
Prepaid reinsurance premiums | 4,840 | 5,199 | |||||
Receivable for securities sold | - | 723 | |||||
Other assets | 25,456 | 22,812 | |||||
Total assets | $ 1,924,089 | $ 1,911,779 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Liabilities: | |||||||
Unpaid losses and loss adjustment expenses | $ 779,047 | $ 779,466 | |||||
Unearned premiums | 121,588 | 116,629 | |||||
Federal income taxes payable | - | 1,595 | |||||
Ceded balances payable | 2,719 | 5,177 | |||||
Contingent commissions | 11,819 | 12,677 | |||||
Payable for securities purchased | 6,595 | - | |||||
Margin borrowing facility | 100,000 | 100,000 | |||||
Other liabilities | 21,520 | 22,955 | |||||
Total liabilities | 1,043,288 | 1,038,499 | |||||
Shareholders' equity: | |||||||
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 16,298,226 and 16,200,406 respectively; A ordinary shares outstanding: 13,233,411 and 13,141,035, respectively; B ordinary shares issued and outstanding: 12,061,370 and 12,061,370, respectively | 3 | 3 | |||||
Additional paid-in capital | 517,466 | 516,653 | |||||
Accumulated other comprehensive income, net of taxes | 52,052 | 54,028 | |||||
Retained earnings | 412,684 | 403,861 | |||||
A ordinary shares in treasury, at cost: 3,064,815 and 3,059,371 shares, respectively | (101,404) | (101,265) | |||||
Total shareholders' equity | 880,801 | 873,280 | |||||
Total liabilities and shareholders' equity | 1,924,089 | $ 1,911,779 | |||||
GLOBAL INDEMNITY PLC | ||||
SELECTED INVESTMENT DATA | ||||
(Dollars in millions) | ||||
Market Value as of | ||||
(Unaudited) March 31, 2014 | December 31, 2013 | |||
Fixed Maturities | $ 1,196.9 | $ 1,204.4 | ||
Cash and cash equivalents | 99.2 | 105.5 | ||
Total bonds and cash and cash equivalents | 1,296.1 | 1,309.9 | ||
Equities and other invested assets | 263.3 | 257.5 | ||
Total cash and invested assets, gross | 1,559.4 | 1,567.4 | ||
Receivable / (payable) for securities | (6.6) | 0.7 | ||
Total cash and invested assets, net | $ 1,552.8 | $ 1,568.1 | ||
(Unaudited) Three Months Ended March 31, 2014 (a) | ||
Net investment income | $ 8.3 | |
Net realized investment gains (losses) | (0.8) | |
Net unrealized investment gains (losses) | (2.6) | |
Net realized and unrealized investment returns | (3.4) | |
Total investment return | $ 4.9 | |
Average total cash and invested assets (b) | $ 1,560.5 | |
Total investment return % | 0.3% | |
(a) Amounts in this table are shown on a pre-tax basis.
(b) 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 March 31, | ||||
2014 | 2013 | |||
Operating income | $ 9,764 | $ 8,537 | ||
Adjustments: | ||||
Net realized investment gains (losses), net of tax | (941) | 3,828 | ||
Total after-tax adjustments | (941) | 3,828 | ||
Net income | $ 8,823 | $ 12,365 | ||
Weighted average shares outstanding – basic | 25,123 | 25,055 | ||
Weighted average shares outstanding – diluted | 25,279 | 25,099 | ||
Operating income per share – basic | $ 0.39 | $ 0.34 | ||
Operating income per share – diluted | $ 0.39 | $ 0.34 | ||
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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