Global Indemnity plc Reports Fourth Quarter 2010 Financial Results

DUBLIN, Feb. 16, 2011 /PRNewswire/ -- Global Indemnity plc (Nasdaq: GBLI) today reported net income excluding the impact of its previously disclosed Profitability Enhancement Initiative for the three months ended December 31, 2010 of $26.8 million or $0.88 per share ($21.7 million including the Profitability Enhancement Initiative charges or $0.72 per share) and for the twelve months of $90.0 million or $2.97 per share ($84.9 million including the Profitability Enhancement Initiative charges or $2.80 per share). As of December 31, book value per share increased to $30.59 or 11.3% from $27.48 per share at December 31, 2009.  

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Larry A. Frakes, President & Chief Executive Officer stated, "While continuing to experience the prolonged "soft" property & casualty market, the Company succeeded in growing book value by 11.3% over the course of 2010.  The company also generated a modest increase in premiums; its first increase in premiums of any amount since 2006.  The company's operating results were achieved while adhering to disciplined pricing practices and core underwriting guidelines as well as maintaining a relatively short duration fixed income portfolio enhanced by increased investments in floating rate commercial loans and common stocks. Finally, as previously announced, in December 2010, the Company incurred a one-time after-tax charge of $5.1 million to fund its Profit Enhancement Initiative that is expected to increase annual pretax earnings in 2011 by approximately $10.8 million and $0.29 per share."

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 http://www.globalindemnity.ie.

Teleconference and Webcast for Interested Parties

Larry A. Frakes, President and Chief Executive Officer of Global Indemnity plc, and Thomas McGeehan, Chief Financial Officer of Global Indemnity plc, will conduct a teleconference for interested parties on February 17, 2011 at 8:30 a.m. Eastern Time to discuss the fourth quarter 2010 results.  

To participate in the teleconference, please telephone (866) 254-5941 (U.S. and Canada) or (612) 332-0718 (International) and you will be greeted by an operator.  Please reference Global Indemnity plc 4th Quarter 2010 Earnings Call.

The teleconference is being webcast by AT&T and can be accessed at the Company's website at www.globalindemnity.ie.  Please access the site at least 15 minutes prior to the teleconference to register, download and install any necessary software. The webcast is also being distributed over AT&T's Audio-Only Web ConferenceCast.  To access live or archived event, please use this URL: http://205.144.147.162/cgi-bin/confCast, Conference ID#: 192718 and click GO.

The teleconference will be available for replay beginning at 10:30 a.m. Eastern Time on February 17, 2011 until 11:59 p.m. March 17, 2011. To listen to the replay, please telephone (800) 475-6701 (U.S. and Canada) or (320) 365-3844 (International) then enter 192718.

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.    

Note: Tables Follow

Global Indemnity plc's Combined Ratio for the Three and Twelve Months Ended December 31, 2010 and 2009

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

For the three months ended December 31st, the calendar year loss ratio decreased by 14.6 points to 36.7 in 2010 from 51.3 in 2009.

• The current accident year loss ratio increased by 8.0 points to 65.3 in 2010 from 57.3 in 2009.  
  • 1.3 points of the increase related to restructuring charges from our Profitability Enhancement Initiative.
  • The property loss ratio increased by 4.5 points to 46.4 in 2010 from 41.9 in 2009.  2009 had little catastrophe activity and 2009 accident year loss estimates were lowered during the 4th quarter of 2009.  Our 2010 results include $0.6 million of losses related to the Australian floods in December. Our U.S. Insurance Operations were impacted by higher reinsurance costs in 2010.
  • The casualty loss ratio increased 7.2 points to 75.0 in 2010 from 67.8 in 2009.   Our U.S. Operations experienced increases due to premium price changes, loss trend and higher average severity of losses from our professional and commercial automobile lines. Our Reinsurance Operations experienced higher losses mainly from its non-standard automobile treaties.
• Current year results include a 22.6 point improvement in the loss ratio related to prior accident years.  For 2010 we reduced prior accident years by $20.4 million relating mainly to casualty lines across accident years 2002 to 2008.

For the three months ended December 31st, the expense ratio increased from 41.8 in 2009 to 42.8 in 2010.

• The impact of restructuring costs from our Profitability Enhancement Initiative was 6.2 points.  
• Excluding restructuring costs, the expense ratio decreased from 41.8 in 2009 to 36.6 in 2010 mainly from lower employee costs from our Profitability Enhancement Initiative and reduction in estimates for liabilities related to insurance assessments and allowances for doubtful accounts on receivables offset partially by aggregate decrease in net earned premium.

For the twelve months ended December 31st, the calendar year loss ratio decreased by 10.8 points to 45.4 in 2010 from 56.2 in 2009.

• The current accident year loss ratio increased by 5.1 points to 64.3 in 2010 from 59.2 in 2009.  
  • 0.3 points of the increase related to restructuring charges from our Profitability Enhancement Initiative.
  • The property loss ratio increased by 7.4 points to 53.9 in 2010 from 46.5 in 2009.  Our reinsurance operations experienced higher catastrophe losses in 2010 compared to 2009 resulting mainly from New Zealand earthquakes, Perth hail storms and Australian floods in December. Our U.S. Insurance Operations were impacted by higher reinsurance costs in 2010.
  • The casualty loss ratio increased 1.9 points to 70.3 in 2010 from 68.4.  Our U.S. Operations experienced increases due to premium price changes, loss trend and higher average severity of losses from our professional and commercial automobile lines. Our Reinsurance Operations experienced higher losses mainly from its non-standard automobile treaties.
• Current year results include a 15.9 point improvement in the loss ratio related to prior accident years.  For 2010, we reduced prior accident years by $54.1 million relating mainly to casualty lines across accident years 2002 to 2008.

For the twelve months ended December 31st, the expense ratio increased from 39.8 in 2009 to 41.2 in 2010.

• The impact of restructuring costs from our Profitability Enhancement Initiative was 1.5 points.  
• Excluding restructuring costs, the expense ratio decreased from 39.8 in 2009 to 39.7 in 2010.

Insurance Operations:  For the three months ended December 31, 2010, gross premiums written increased 5.6%, and net premiums written increased 1.8%, compared to the same period in 2009.  The increase in gross premiums is mainly due to growth in our casualty brokerage operations offset partially by declines in Penn-America and price decreases in aggregate of approximately 3.0%.  Net written premiums include a $1.5 million restructure charge resulting from our Profit Enhancement Initiative.

Reinsurance Operations:  For the three months ended December 31, 2010, gross premiums written decreased 22.9%, and net premiums written decreased 17.8%, compared to the same period in 2009.  The decrease in gross and net premiums written is primarily due to timing as gross premiums are up 37.4% for the year.

Insurance Operations: For the twelve months ended December 31, 2010, gross premiums written decreased 8.4%, and net premiums written decreased 10.2%, compared to the same period in 2009.  The decrease in gross premiums is mainly due to declines in Penn-America and price decreases in aggregate of approximately 3.0% offset partially by growth in our casualty brokerage operations.  Net written premiums include a $1.5 million charge resulting from our Profit Enhancement Initiative.

Reinsurance Operations:  Gross premiums written for the twelve months ended December 31, 2010 increased 37.4%, and net premiums written increased 38.1%, compared to the same period in 2009.  The increase in gross and net premiums written is primarily due to an increase in the number of excess of loss and quota share treaties.

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.

SOURCE Global Indemnity plc