DUBLIN, Nov. 9, 2010 /PRNewswire-FirstCall/ -- Global Indemnity plc (Nasdaq: GBLI) today reported net income for the three months ended September 30, 2010 of $19.8 million or $0.65 per share and for the nine months of $63.2 million or $2.09 per share. As of September 30, book value per share increased to $30.01 or by 12.3% on an annualized basis from $27.48 per share at December 31, 2009. The Company also announced an initiative to enhance profitability and earnings through reducing its U.S. based census by approximately 25%, closing underperforming U.S. facilities, and supplementing staffing in Bermuda and in Ireland.
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Selected Operating and Balance Sheet Data
(Dollars in millions, except per share data) |
For the Three Months |
For the Nine Months |
|||||||
2010 |
2009 |
2010 |
2009 |
||||||
Gross Premiums Written |
$86.20 |
$75.80 |
$271.10 |
$266.50 |
|||||
Net Premiums Written |
$73.20 |
$62.90 |
$234.20 |
$227.00 |
|||||
Net income |
$19.80 |
$27.40 |
$63.20 |
$50.80 |
|||||
Net income per share |
$0.65 |
$0.91 |
$2.09 |
$2.08 |
(a) |
||||
Operating income |
$18.50 |
$22.60 |
$47.10 |
$48.80 |
|||||
Operating income per share |
$0.61 |
$0.75 |
$1.56 |
$2.00 |
(a) |
||||
(Dollars in millions, except per share amounts) |
As of September 30, 2010 |
As of June 30, 2010 |
As of March 31, 2010 |
As of December 31, 2009 |
|
Book value per share |
$ 30.01 |
$ 28.73 |
$ 28.05 |
$ 27.48 |
|
Shareholders' equity |
$ 911.2 |
$ 872.3 |
$ 850.6 |
$ 832.0 |
|
Cash and invested assets |
$ 1,709.6 |
$ 1,683.5 |
$ 1,731.1 |
$ 1,731.3 |
|
- On May 5, 2009 shares were issued in conjunction with the Rights Offering. If the rights offering was completed on January 1, 2009, net income per share would have been $1.69 and Operating income per share would have been $1.62.
Larry A. Frakes, President and Chief Executive Officer, stated, "In the face of a very competitive commercial lines property & casualty market, the company continued to build shareholder value, as indicated by the 12.3% annualized rate of growth in book value per share for the nine months ended September 30 as well as our first growth in premiums since 2006. These results were achieved while maintaining strict underwriting discipline and reducing fixed income volatility in our investment portfolio." Mr. Frakes added, "In addition, post the end of the quarter, on November 4, the company implemented its Profitability Enhancement Initiative that is expected to increase annual pre-tax earnings starting in 2011 by approximately $9.0 to $11.3 million at the cost of a one-time after tax charge to year end 2010 earnings of approximately $4.3 million to $6.5 million."
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.
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.
Global Indemnity plc's Combined Ratio for the Three and Nine Months Ended September 30, 2010 and 2009
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, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
Loss Ratio: |
|||||||||
Current Accident Year |
64.0 |
55.6 |
64.0 |
59.8 |
|||||
Changes to Prior Accident Year |
(21.5) |
(2.2) |
(15.6) |
(2.0) |
|||||
Loss Ratio – Calendar Year |
42.5 |
53.4 |
48.4 |
57.8 |
|||||
Expense Ratio |
40.7 |
37.8 |
40.7 |
39.1 |
|||||
Combined Ratio |
83.2 |
91.2 |
89.1 |
96.9 |
|||||
For the three months ended September 30th, the calendar year loss ratio decreased by 10.9 points to 42.5 in 2010 from 53.4 in 2009.
- The current accident year loss ratio increased by 8.4 points to 64.0 in 2010 from 55.6 in 2009.
- The property loss ratio increased by 15.5 points to 55.0 in 2010 from 39.5 in 2009 primarily due to increased catastrophe related losses from our reinsurance operations and increased reinsurance costs in our insurance operations.
- The casualty loss ratio increased 3.5 points to 72.0 in 2010 from 68.5 in 2009.
- Current year results include a 21.5 point reduction in the loss ratio related to prior accident years due to a reduction of $16.9 million of loss and loss adjustment expenses in the insurance operation's property and casualty lines, partially offset by a $1.8 million increase in the reinsurance operation's casualty lines.
For the three months ended September 30th, the expense ratio increased from 37.8 in 2009 to 40.7 in 2010.
- The expense ratio increase is mainly attributable to a decrease in net premiums earned, partially offset by an increase in business from reinsurance operations, which has a lower expense ratio than insurance operations. In addition, the third quarter of 2009 included a reduction in employee incentive expenses.
For the nine months ended September 30th, the calendar year loss ratio decreased by 9.4 points to 48.4 in 2010 from 57.8 in 2009.
- The current accident year loss ratio increased by 4.2 points to 64.0 in 2010 from 59.8 in 2009.
- The property loss ratio increased by 9.5 points to 57.4 in 2010 from 47.9 in 2009 primarily due to increased catastrophe related losses from our reinsurance operations and increased reinsurance costs in our insurance operations.
- The casualty loss ratio increased 0.7 points to 69.3 in 2010 from 68.6 in 2009.
- Current year results include a 15.6 point reduction in the loss ratio related to prior accident years due to a reduction of $34.8 million of loss and loss adjustment expenses primarily in the insurance operation's casualty lines, partially offset by an increase of $1.0 million in the reinsurance operation's casualty lines.
For the nine months ended September 30th, the expense ratio increased from 39.1 in 2009 to 40.7 in 2010.
- The expense ratio increase is mainly attributable to a decline in net premiums earned and the incurrence of infrastructure costs related to new product development and information technology upgrades, partially offset by an increase in business from reinsurance operations, which has a lower expense ratio than insurance operations.
Global Indemnity plc's Three Months Ended September 30, 2010 and 2009 Gross and Net Premiums Written Results by Business Unit
(Dollars in thousands) |
Three Months Ended September 30, |
|||||||
Gross Premiums Written |
Net Premiums Written |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
Insurance Operations |
$ 66,213 |
$ 67,368 |
$ 53,185 |
$ 54,510 |
||||
Reinsurance Operations |
20,022 |
8,438 |
20,021 |
8,422 |
||||
Total |
$ 86,235 |
$ 75,806 |
$ 73,206 |
$ 62,932 |
||||
Insurance Operations: Gross premiums written for the three months ended September 30, 2010 decreased 1.7%, and net premiums written for the three months ended September 30, 2010 decreased 2.4%, compared to the same period in 2009. The decrease in gross premium is mainly due to price decreases of approximately 2.0%.
Reinsurance Operations: Gross premiums written for the three months ended September 30, 2010 increased 137.3%, and net premiums written increased 137.7%, compared to the same period in 2009. The increase in gross and net premiums written is primarily due to new excess of loss and quota share treaties.
Global Indemnity plc's Nine Months Ended September 30, 2010 and 2009 Gross and Net Premiums Written Results by Business Unit
(Dollars in thousands) |
Nine Months Ended September 30, |
|||||||
Gross Premiums Written |
Net Premiums Written |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
Insurance Operations |
$ 181,815 |
$ 207,675 |
$ 145,674 |
$ 168,770 |
||||
Reinsurance Operations |
89,323 |
58,799 |
88,536 |
58,253 |
||||
Total |
$ 271,138 |
$ 266,474 |
$ 234,210 |
$ 227,023 |
||||
Insurance Operations: Gross premiums written for the nine months ended September 30, 2010 decreased 12.5%, and net premiums written for the nine months ended September 30, 2010 decreased 13.7%, compared to the same period in 2009. The decrease in gross premium is comprised mainly of the following:
- $10.0 million due to terminated programs and agents.
- Price decreases in aggregate of approximately 2.3%.
- Continued soft market conditions.
Reinsurance Operations: Gross premiums written for the nine months ended September 30, 2010 increased 51.9%, and net premiums written increased 52.0%, compared to the same period in 2009. The increase in gross and net premiums written is primarily due to new excess of loss and quota share treaties.
Larry A. Frakes, President & Chief Executive Officer, stated, "We are pleased with the production from our U.S. insurance operations and our Bermuda reinsurance operations. The initiatives that we have put in place in the US are taking hold. While we continue to face strong competition, especially in the small business binding arena, we are realizing growth from our brokerage operations. Over the last several years, we have grown our reinsurance operation at Wind River. Wind River has strategic relationships with a select group of clients and distributors. The book is well balanced geographically and by product line. We remain very optimistic about our growth prospects."
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, |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
Gross premiums written |
$ 86,235 |
$ 75,806 |
$ 271,138 |
$ 266,474 |
||||
Net premiums written |
$ 73,206 |
$ 62,932 |
$ 234,210 |
$ 227,023 |
||||
Net premiums earned |
$ 70,089 |
$ 72,893 |
$ 215,579 |
$ 226,165 |
||||
Investment income, net |
14,089 |
15,267 |
42,609 |
54,049 |
||||
Net realized investment gains |
1,818 |
6,613 |
21,619 |
3,415 |
||||
Other income |
173 |
- |
515 |
- |
||||
Total revenues |
86,169 |
94,773 |
280,322 |
283,629 |
||||
Net losses and loss adjustment expenses |
29,789 |
38,887 |
104,253 |
130,674 |
||||
Acquisition costs and other underwriting expenses |
28,541 |
27,564 |
87,697 |
88,350 |
||||
Corporate and other operating expenses |
5,106 |
4,676 |
15,065 |
12,314 |
||||
Interest expense |
1,825 |
1,776 |
5,397 |
5,462 |
||||
Income before income taxes |
20,908 |
21,870 |
67,910 |
46,829 |
||||
Income tax expense (benefit) |
1,146 |
(2,673) |
4,706 |
808 |
||||
Net income before equity in net income of partnership |
19,762 |
24,543 |
63,204 |
46,021 |
||||
Equity in net income (loss) of partnership, net of tax |
- |
2,809 |
(29) |
4,742 |
||||
Net income |
$ 19,762 |
$ 27,352 |
$ 63,175 |
$ 50,763 |
||||
Weighted average shares outstanding–basic (1) (2) |
30,274 |
30,145 |
30,222 |
24,403 |
||||
Weighted average shares outstanding–diluted (1) (2) |
30,308 |
30,156 |
30,246 |
24,423 |
||||
Net income per share – basic (2) |
$ 0.65 |
$ 0.91 |
$ 2.09 |
$ 2.08 |
||||
Net income per share – diluted (2) |
$ 0.65 |
$ 0.91 |
$ 2.09 |
$ 2.08 |
||||
Combined ratio analysis: (3) |
||||||||
Loss ratio |
42.5 |
53.4 |
48.4 |
57.8 |
||||
Expense ratio |
40.7 |
37.8 |
40.7 |
39.1 |
||||
Combined ratio |
83.2 |
91.2 |
89.1 |
96.9 |
||||
1) In computing the basic and diluted weighted share counts the number of shares outstanding prior to May 5, 2009 (the date that the common stock was issued in conjunction with the stockholders' rights offering) was adjusted by a factor of 1.114 to reflect the impact of a bonus element associated with the rights offering in accordance with GAAP. 2) Shares outstanding and per 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. 3) 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 in thousands) |
|||||||
ASSETS |
As of September 30, 2010 |
As of December 31, 2009 |
|||||
Fixed Maturities: |
|||||||
Available for sale securities, at fair value (amortized cost: 2010 - $1,409,580 and 2009 - $1,423,050) |
$ 1,477,061 |
$ 1,471,572 |
|||||
Preferred shares: |
|||||||
Available for sale securities, at fair value (cost: 2010 - $930 and 2009 - $1,509) |
2,408 |
2,599 |
|||||
Common shares: |
|||||||
Available for sale securities, at fair value (cost: 2010 - $117,654 and 2009 - $50,709) |
130,472 |
63,057 |
|||||
Other invested assets: |
|||||||
Available for sale securities, at fair value (cost: 2010 - $4,255 and 2009 - $4,323) |
4,115 |
6,854 |
|||||
Securities classified as trading, at fair value (cost: 2010 - $1,100 and 2009 - $1,145) |
1,100 |
1,145 |
|||||
Total investments |
1,615,156 |
1,545,227 |
|||||
Cash and cash equivalents |
94,397 |
186,087 |
|||||
Agents' balances |
68,600 |
69,711 |
|||||
Reinsurance receivables |
463,111 |
543,351 |
|||||
Federal income taxes receivables |
7,785 |
3,521 |
|||||
Deferred federal income taxes |
6,926 |
13,819 |
|||||
Deferred acquisition costs |
36,095 |
33,184 |
|||||
Goodwill |
4,820 |
- |
|||||
Intangible assets |
19,177 |
9,236 |
|||||
Prepaid reinsurance premiums |
12,064 |
16,546 |
|||||
Other assets |
24,898 |
25,098 |
|||||
Total assets |
$ 2,353,029 |
$ 2,445,780 |
|||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
Liabilities: |
|||||||
Unpaid losses and loss adjustment expenses |
$ 1,120,463 |
$ 1,257,741 |
|||||
Unearned premiums |
145,733 |
131,582 |
|||||
Ceded balances payable |
5,175 |
16,009 |
|||||
Contingent commissions |
6,720 |
11,169 |
|||||
Notes and debentures payable |
121,356 |
121,569 |
|||||
Payable for securities |
10,857 |
37,258 |
|||||
Other liabilities |
31,491 |
38,476 |
|||||
Total liabilities |
1,441,795 |
1,613,804 |
|||||
Shareholders' equity: |
|||||||
Common shares, $0.0001 par value, 900,000,000 common shares authorized; Class A common shares issued: 21,340,821 and 21,243,345 respectively; Class A common shares outstanding: 18,302,058 and 18,215,239, respectively; Class B common shares issued and outstanding: 12,061,370 and 12,061,370, respectively |
3 |
3 |
|||||
Additional paid-in capital |
621,965 |
619,473 |
|||||
Accumulated other comprehensive income |
62,235 |
48,481 |
|||||
Class A common shares in treasury, at cost: 3,038,763 and 3,028,106 shares, respectively |
(100,883) |
(100,720) |
|||||
Retained earnings |
327,914 |
264,739 |
|||||
Total shareholders' equity |
911,234 |
831,976 |
|||||
Total liabilities and shareholders' equity |
$ 2,353,029 |
$ 2,445,780 |
|||||
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. |
|||||||
GLOBAL INDEMNITY PLC SELECTED INVESTMENT DATA (Unaudited) (Dollars in millions) |
|||||
Market Value as of |
|||||
Sept 30, 2010 |
Dec 31, 2009 |
||||
Fixed Maturities |
$ 1,477.1 |
$ 1,471.6 |
|||
Cash and cash equivalents |
94.4 |
186.1 |
|||
Total bonds and cash and cash equivalents |
1,571.5 |
1,657.7 |
|||
Equities and other invested assets |
138.1 |
73.6 |
|||
Total cash and invested assets |
$ 1,709.6 |
$ 1,731.3 |
|||
September 30, 2010 (a) |
||||
Three Months Ended |
Nine Months Ended |
|||
Net investment income |
$ 12.0 |
$ 36.1 |
||
Net realized investment gains |
1.3 |
16.0 |
||
Net unrealized investment gains |
18.3 |
13.8 |
||
Net realized and unrealized investment returns |
19.6 |
29.8 |
||
Total investment return |
$ 31.6 |
$ 65.9 |
||
Average total cash and invested assets (b) |
$ 1,686.6 |
$ 1,696.4 |
||
Total investment return % annualized |
7.5% |
5.2% |
||
(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 September 30, |
For the Nine Months Ended September 30, |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
Operating income |
$ 18,490 |
$ 22,590 |
$ 47,109 |
$ 48,773 |
||||
Adjustments: |
||||||||
Net realized investment gains, net of tax |
1,272 |
4,762 |
16,066 |
1,990 |
||||
Total after-tax adjustments |
1,272 |
4,762 |
16,066 |
1,990 |
||||
Net income |
$ 19,762 |
$ 27,352 |
$ 63,175 |
$ 50,763 |
||||
Weighted average shares outstanding – basic (1) (2) |
30,274 |
30,145 |
30,222 |
24,403 |
||||
Weighted average shares outstanding – diluted (1) (2) |
30,308 |
30,156 |
30,246 |
24,423 |
||||
Operating income per share – basic (2) |
$ 0.61 |
$ 0.75 |
$ 1.56 |
$ 2.00 |
||||
Operating income per share – diluted (2) |
$ 0.61 |
$ 0.75 |
$ 1.56 |
$ 2.00 |
||||
1) In computing the basic and diluted weighted share counts the number of shares outstanding prior to May 5, 2009 (the date that the common stock was issued in conjunction with the stockholders' rights offering) was adjusted by a factor of 1.114 to reflect the impact of a bonus element associated with the rights offering in accordance with GAAP. 2) Shares outstanding and per 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.
Contact: |
|
Media |
|
Linda Hohn |
|
Associate General Counsel |
|
(610) 660-6862 |
|
SOURCE Global Indemnity plc
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