Global Indemnity plc Reports First Quarter 2016 Financial Results

DUBLIN, Ireland, May 05, 2016 (GLOBE NEWSWIRE) -- Global Indemnity plc (NASDAQ:GBLI) today reported net income for the three months ended March 31, 2016 of $7.1 million or $0.41 per share, compared to net income of $6.8 million or $0.26 per share for the same period of 2015.  Operating income was $12.0 million or $0.69 per share for the three months ended March 31, 2016 compared to $8.8 million or $0.34 per share for the first quarter of 2015. As of March 31^st, book value per share was $43.66, an increase of 1.6% compared to book value per share of $42.98 at December 31, 2015.

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

Cynthia Y. Valko, Chief Executive Officer, commented: "I am pleased that our focus on profitable growth has resulted in year over year growth in net income and operating income. Premiums at American Reliable grew 4.7% compared to the prior year, and all of our operating segments were profitable in the first quarter of 2016. While the overall combined ratio reflects continued profitability, our combined ratio is slightly higher than the same period of 2015 due to a higher expense ratio. The increase in the expense ratio was primarily due to a reduction in earned premiums, which was the result of the Company reducing the amount of catastrophe business it writes and purchasing additional reinsurance.  As the year continues, we expect the expense ratio to improve due to the completion of the integration of American Reliable."

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 and individual policyholder coverages in the United States, as well as reinsurance worldwide.  Global Indemnity plc's three primary segments are:

• United States Based Commercial Lines Operations
   
• United States Based Personal Lines Operations
   
• Bermuda Based Reinsurance Operations

For more information, visit the Global Indemnity plc website at http://www.globalindemnity.ie.

Forward-Looking Information

The forward-looking statements contained in this press release¹ do not address a number of risks and uncertainties.  Investors are cautioned that Global Indemnity's actual results may be materially different from the estimates expressed in, or implied, or projected by, the forward looking statements. Factors that could cause actual results to differ materially from those contemplated in the forward-looking statements include, but are not limited to, the risk that there may be difficulties in the continued integration of American Reliable business, which could result in a failure to realize the potential benefits of the acquisition, and the risk that American Reliable' s or Global Indemnity's prospective insurance premiums, investment yield, or net earnings are less than anticipated (including as a result of unexpected events, competition, costs, charges or outlays whether as a consequence of the transaction or otherwise).  The foregoing review of factors that could cause actual financial or operating performance to differ materially from expectations is not exhaustive. Please see Global Indemnity's filings with the Securities and Exchange Commission for a discussion of additional risks and uncertainties which could impact the company and for a more detailed explication regarding forward-looking statements.  

¹ Disseminated pursuant to the "safe harbor" provisions of Section 21E of the Security Exchange Act of 1934.

Global Indemnity plc's Combined Ratio for the Three Months Ended March 31, 2016

The combined ratio is a key measure of insurance profitability.  The components comprising the combined ratio, by reportable business segment, for the three months ended March 31, 2016 are as follows:                                                                    

Loss Ratio:

Commercial Lines Operations:

The loss ratio for the Company's Commercial Lines was 52.8% for 2016 compared with 58.4% for 2015.  The loss ratio for the three months ended March 31, 2016 was lower than the comparable period in 2015 due to lower than anticipated claims severity in general liability and lower than expected case incurred emergence on non-catastrophe property claims. The current accident year loss ratio increased 2.2 points from 62.4% in 2015 to 64.6% in 2016.  This increase was primarily due to two large property brokerage fire losses in 2016 offset by lower severity in catastrophe claims.

Personal Lines Operations:

The loss ratio for the Company's Personal Lines was consistent year over year. The 2016 loss ratio was 56.7% compared with 56.6% for 2015. There were no adjustments to prior accident years.

Reinsurance Operations:

The loss ratio for the Company's Reinsurance Operations was 37.7% for 2016 compared with 31.1% for 2015. The increase in the loss ratio was primarily due to the Company reducing the amount of catastrophe business it writes. The 2016 loss ratio includes an improvement of 8.2 points due to reductions in prior accident year loss reserves resulting from ultimate losses being lower than expected for property lines. The current accident year loss ratio increased 3.7 points from 42.2% in 2015 to 45.9% in 2016 due to the reduction in catastrophe business written as well as a change in business mix. Professional liability premiums increased slightly, which historically have a higher loss ratio than property treaties. 

Expense ratio:

For the three months ending March 31, the total expense ratio increased from 37.9% in 2015 to 42.8% in 2016. The increase in the 2016 expense ratio was primarily due to a reduction in earned premium as a result of the Company reducing catastrophe exposure and purchasing additional reinsurance.

Global Indemnity plc's Gross and Net Premiums Written Results by Segment

Gross premiums written and net premiums written decreased 1.1% and 7.3%, respectively, compared to the same period in 2015.

Commercial Lines Operations: For the three months ended March 31, 2016, gross premiums written and net premiums written both decreased 1.4% and 4.5%, respectively, compared to the same period in 2015. The reduction in net premiums written was primarily due to ceding at a higher rate as a result of increasing property reinsurance.

Personal Lines Operations:  For the three months ended March 31, 2016, gross premiums written increased 8.6% and net premiums written decreased 0.1% compared to the same period in 2015. $3.3 million of the increase in gross premiums written relates to business that is ceded to insurance entities owned by American Reliable's former parent, Assurant, under a 100% quota share reinsurance agreement. Excluding the portion of gross premiums written that were ceded to affiliates of Assurant, gross premiums written increased $3.0 million or 4.7% compared to 2015. The increase in gross premiums written not ceded to affiliates of Assurant was offset by an increase in catastrophe reinsurance.

Reinsurance Operations: For the three months ended March 31, 2016, gross premiums written and net premiums written decreased 35.9% and 35.8%, respectively, compared to the same period in 2015. This decrease in gross and net premiums written is mainly due to a reduction in catastrophe exposure. In addition, the property catastrophe reinsurance marketplace continues to be very competitive due to excess capital. 

Note: Tables Follow

The loss ratio, expense ratio and combined ratio are 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.
            

(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.

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 
Stephen Ries
Senior Corporate Counsel 
(610) 668-3270           
sries@global-indemnity.com