Global Indemnity Group(US:GBLI)2025-03-11 21:09PART I Business Global Indemnity operates as a specialty property and casualty insurer through core Penn-America and Non-Core segments, recently reorganized, holding an 'A' (Excellent) AM Best rating - The company operates through two segments: Penn-America (core products) and Non-Core Operations (de-emphasized or discontinued business). Penn-America's gross premiums written were $400.0 million in 202420 - In December 2024, the company executed a significant internal reorganization, creating Penn-America Underwriters, LLC for distribution and services, and placing its five specialty insurance companies under Belmont Holdings GX, Inc. to improve capital efficiency1617 Penn-America Gross Written Premiums by Division (in thousands) | Business Division | 2024 | 2023 | 2022 | |-----------------------|--------------|--------------|---------------| | Wholesale Commercial | $248,600 | $234,941 | $219,688 | | Specialty Products | $69,612 | $72,535 | $121,838 | | InsurTech | $56,341 | $48,309 | $40,977 | | Assumed Reinsurance | $25,423 | $13,875 | $5,464 | | Total | $399,976 | $369,660 | $387,967 | Investment Portfolio Summary (Fair Value, in thousands) | Investment Type | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | |-------------------------|----------------|----------------|----------------| | Total fixed maturities | $1,381,908 | $1,293,793 | $1,248,198 | | Equity securities | $12,284 | $16,508 | $17,520 | | Other invested assets | $29,413 | $38,236 | $38,176 | | Cash and cash equivalents| $17,009 | $38,037 | $38,846 | | Total | $1,440,614 | $1,386,574 | $1,342,740 | - The company's insurance subsidiaries are assigned a financial strength rating of "A" (Excellent) by AM Best, indicating an excellent ability to meet ongoing obligations to policyholders9596 Risk Factors The company faces risks from restructuring, loss reserving uncertainty, disasters, cybersecurity, investment volatility, and concentrated ownership - The recent restructuring initiative may not produce anticipated benefits and could lead to unintended consequences, such as the loss of key personnel or harmed relationships with agents122 - A significant risk is that actual claims payments may exceed established loss reserves, which are based on estimates and inherently uncertain, potentially leading to adverse effects on financial condition125127 - The company is exposed to cybersecurity risks, including security breaches or cyber-attacks on its own or third-party systems, which could disrupt business, damage its reputation, and cause financial losses140144146 - The company's investment performance is subject to adverse capital market developments, including interest rate fluctuations, liquidity risk, and credit/default risk, which could negatively impact financial results152 - Fox Paine Entities beneficially own shares representing approximately 83.8% of the company's total voting power, giving them control over matters requiring shareholder approval, which may create conflicts of interest with other shareholders182 - As a publicly traded partnership, shareholders may be subject to U.S. federal, state, and local income taxes on their share of the company's taxable income, regardless of whether they receive cash distributions195 Unresolved Staff Comments The company reports that it has no unresolved staff comments from the SEC - None217 Cybersecurity The company manages cybersecurity through its Enterprise Risk Management framework, led by the CISO, with no material impact to date - Cybersecurity risk management is incorporated within the company's Enterprise Risk Management framework, led by the Senior Vice President of Operations219 - The Chief Information Security Officer (CISO) has primary responsibility for managing cybersecurity risks and provides quarterly reports to the Enterprise Risk Management Committee of the Board of Directors224225228 - The company engages external experts, such as cybersecurity assessors and consultants, to assess and test its risk mitigation tools and security measures220221 - To date, the company believes that risks from identified cybersecurity threats have not materially affected and are not reasonably likely to materially affect the company's business strategy, results of operations, or financial condition223 Properties The company's principal offices are in Bala Cynwyd, Pennsylvania, with other leases terminated as employees transition to remote work - The company's principal executive offices are in leased space in Bala Cynwyd, Pennsylvania230 - The company is terminating leases in Omaha, Nebraska; Cavan, Ireland; and Scottsdale, Arizona, as employees at these locations have transitioned to remote work230 Legal Proceedings The company is involved in ordinary course legal proceedings, not expecting material adverse effects, but anticipates disputes with runoff reinsurers - The company is involved in various legal proceedings in the ordinary course of business but does not expect them to have a material adverse effect on its financial condition231 - The company anticipates continued litigation and arbitration proceedings and notes a higher potential for disputes with reinsurers in runoff232 Mine Safety Disclosures This item is not applicable to the company - None233 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Global Indemnity's Class A shares trade on NYSE, with an active share repurchase program and future dividends subject to Board discretion and regulatory restrictions - The Board of Directors authorized a share repurchase program of up to $135 million, which expires on December 31, 2027. As of March 11, 2025, $101.0 million remained available for repurchases191244 - During the year ended December 31, 2023, the company repurchased 1,357,082 shares for an aggregate amount of $34.0 million, at an average price of $25.05 per share246 - Future dividends are subject to the discretion of the Board of Directors and are dependent on the ability of its insurance subsidiaries to pay dividends, which is subject to significant regulatory restrictions248249 Five-Year Cumulative Total Return Comparison | Index | 12/31/19 | 12/31/20 | 12/31/21 | 12/31/22 | 12/31/23 | 12/31/24 | |------------------------|----------|----------|----------|----------|----------|----------| | Global Indemnity | $100.0 | $96.5 | $84.8 | $78.7 | $108.8 | $121.5 | | NASDAQ Insurance Index | $100.0 | $100.9 | $114.3 | $116.5 | $126.1 | $156.5 | | NASDAQ Composite Index | $100.0 | $143.6 | $174.4 | $116.6 | $167.3 | $215.2 | [Reserved] This item is not applicable - Not applicable250 Management's Discussion and Analysis of Financial Condition and Results of Operations In 2024, Global Indemnity's net income rose to $43.2 million, driven by strong underwriting and investment income, reflecting core business focus 2024 Financial Highlights | Metric | 2024 | 2023 | |-----------------------------|-----------------------|-----------------------| | Net Income | $43.2 million | $25.4 million | | Diluted EPS | $3.12 | $1.83 | | Underwriting Income | $17.8 million | $3.0 million | | Penn-America GWP | $400.0 million (+8.2%)| $369.7 million | | Net Investment Income | $62.4 million (+12.5%)| $55.4 million | | Shareholders' Equity | $689.1 million (+6.2%)| $648.8 million | | Book Value per Common Share | $49.98 (+5.2%) | $47.51 | - The liability for unpaid losses and loss adjustment expenses is a critical accounting estimate, requiring significant judgment. As of December 31, 2024, gross reserves were $800.4 million and net reserves were $739.6 million264279 Consolidated Underwriting Ratios | Ratio | 2024 | 2023 | 2022 | |-----------------|---------|---------|---------| | Loss Ratio | 56.6% | 61.1% | 59.6% | | Expense Ratio | 39.0% | 38.6% | 39.2% | | Combined Ratio | 95.6% | 99.7% | 98.8% | - The Penn-America segment's accident year combined ratio improved to 94.4% in 2024 from 95.2% in 2023, driven by better property results. The segment's accident year underwriting income increased 19.3% to $22.1 million316327328 - The company's liquidity is strong, with sources of funds including premiums, investment income, and dividends from insurance subsidiaries. The holding company has no direct operations and relies on these subsidiary cash flows to meet its obligations, including shareholder distributions and share repurchases362364368 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate and credit risk, managed through high-quality, short-duration fixed-income investments and strong counterparty selection - The company's primary market risk exposures are interest rate risk and credit risk associated with its investment portfolio418 Interest Rate Sensitivity Analysis (as of Dec 31, 2024) | Basis Point Change | Change in Market Value (in thousands) | % Change | |--------------------|---------------------------------------|----------| | (200) | $19,736 | 1.4% | | (100) | $9,885 | 0.7% | | 100 | ($9,913) | (0.7%) | | 200 | ($19,822) | (1.4%) | - Credit risk is managed by investing in high-quality debt instruments and limiting exposure to any single issuer. The company also mitigates credit risk from its general agencies and reinsurers through contractual terms and by dealing with financially strong counterparties423425426 Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements, with an unqualified auditor's opinion, highlighting unpaid losses and loss adjustment expenses as a critical audit matter - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting436437 - The auditor identified the Valuation of Unpaid Losses and Loss Adjustment Expenses as a Critical Audit Matter due to the significant estimation uncertainty and complex judgments involved440441 Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | |-------------------------|--------------|--------------| | Total Investments | $1,423,605 | $1,348,537 | | Total Assets | $1,731,253 | $1,729,576 | | Unpaid Losses & LAE | $800,391 | $850,599 | | Total Liabilities | $1,042,104 | $1,080,823 | | Total Shareholders' Equity | $689,149 | $648,753 | Consolidated Statement of Operations Highlights (in thousands) | Account | 2024 | 2023 | 2022 | |-------------------------|--------------|--------------|--------------| | Net Earned Premiums | $376,992 | $473,357 | $602,471 | | Total Revenues | $441,187 | $528,129 | $628,534 | | Net Losses & LAE | $213,190 | $289,153 | $359,228 | | Net Income (Loss) | $43,241 | $25,429 | ($850) | - Subsequent to year-end, on March 6, 2025, the company issued 550,000 class A-2 common shares to Fox Paine & Company, LLC as an advisory fee for services related to the internal corporate reorganization710711712 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None717 Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with no material weaknesses or changes - Management, including the Principal Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of December 31, 2024717 - Management's assessment concluded that the company's internal control over financial reporting was effective as of December 31, 2024, with no material weaknesses identified721 - There were no changes in internal control over financial reporting during the fourth quarter of 2024 that materially affected, or are reasonably likely to materially affect, these controls723 Other Information This section details the March 6, 2025 issuance of 550,000 Class A-2 common shares to Fox Paine & Company, LLC as an advisory fee for reorganization services - On March 6, 2025, the company issued 550,000 class A common shares designated as class A-2 common shares to Fox Paine & Company, LLC as payment for services related to the company's internal reorganization733 - The class A-2 shares represent an interest in the company's profits above a threshold amount of $475.3 million and have specific distribution rights in the event of a Change of Control Transaction733 Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This item is not applicable to the company - Not applicable735 PART III Directors, Executive Officers, and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - The information required for this item is incorporated by reference from the Registrant's Proxy Statement for the 2025 Annual Meeting of Shareholders737 Executive Compensation Information regarding executive compensation is incorporated by reference from the 2025 Proxy Statement - The information required for this item is incorporated by reference from the Registrant's Proxy Statement for the 2025 Annual Meeting of Shareholders740 Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters Information regarding security ownership is incorporated by reference from the 2025 Proxy Statement - The information required for this item is incorporated by reference from the Registrant's Proxy Statement for the 2025 Annual Meeting of Shareholders741 Certain Relationships and Related Transactions, and Director Independence Information regarding related party transactions and director independence is incorporated by reference from the 2025 Proxy Statement - The information required for this item is incorporated by reference from the Registrant's Proxy Statement for the 2025 Annual Meeting of Shareholders742 Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement - The information required for this item is incorporated by reference from the Registrant's Proxy Statement for the 2025 Annual Meeting of Shareholders743 PART IV Exhibits and Financial Statement Schedules This section lists all financial statements, schedules, and exhibits filed with the report, including governance documents and certifications - This section lists all financial statements, schedules, and exhibits filed with the report, including governance documents like the LLC Agreement, material contracts, and required certifications746747 Form 10-K Summary The company indicates that there is no Form 10-K summary - None750