Global Indemnity Group (NYSE:GBLI) Q3 2025 Earnings Call October 30, 2025 11:00 AM ET Speaker2Ladies and gentlemen, thank you for standing by. My name is Kelvin and I will be your conference operator today. At this time I would like to welcome everyone to the Global Indemnity Group Q3 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply pre ...

Financial Data and Key Metrics Changes - The accident year combined ratio improved to 94.6%, resulting in an underwriting profit of $5,600,000, a significant increase from $96,700,000 recorded last year [6] - Net income for the quarter was $10,300,000, consistent with last year's results of $10,100,000 [12][13] - Book value per share increased from $47.85 at March 31 to $48.35 at June 30 [12] Business Line Data and Key Metrics Changes - Gross premiums grew 18% over 2024, reaching $109,900,000, excluding terminated contracts [7][16] - Wholesale commercial premiums increased by 8% to $69,100,000, with average rate increases of about 4% [17] - Bacon Express premiums grew 27% to $12,400,000, driven by organic growth [18] Market Data and Key Metrics Changes - The overall premium growth outlook for 2025 is positive, with expectations of 10% growth [19] - The non-cat loss ratio improved to 50.1 in 2025 from 54.1 in 2024, indicating better underwriting performance [15] Company Strategy and Development Direction - The company is investing in technology and expanding underwriting capabilities through organic growth and selective acquisitions [10] - A new policy rating and issuance system is expected to be rolled out to agency partners in early 2026 [8] Management Comments on Operating Environment and Future Outlook - Management noted that while there are growth opportunities in certain segments, there are also emerging price competition in small commercial lines [23] - The company expects to maintain solid premium pricing in line with loss inflation [19] Other Important Information - The company received approval for $100,000,000 in dividends from its insurance subsidiaries to bolster liquidity [9] - Discretionary capital was reported at $265,000,000, supporting growth in the Agency and Insurance Services segment [20] Q&A Session Summary Question: What is the nature of the corporate expenses related to business development? - Management explained that they are looking to expand agency operations and have been reviewing various opportunities, which involves some due diligence costs [22] Question: What is the outlook for the overall E&S market? - Management indicated that while there are growth opportunities in certain segments, there is increased price competition in small commercial lines [23] Question: Will administrative expenses continue to grow? - Management stated that while they are engaging outside contractors for reviews, any significant increase in expenses would likely coincide with closing transactions [28][30] Question: What is the exposure to new fires in California? - Management confirmed that initial reserves for California wildfires have remained stable, with no significant new exposure identified [31] Question: What are the return on equity targets for the next few years? - Management expects returns on equity to reach around 12% for the insurance operations and 8% to 9% for the holding company, with a focus on reducing the expense ratio [34][35]

Financial Data and Key Metrics Changes - The net loss for the first quarter was $4 million, which included $15.6 million in losses from California wildfires, resulting in a net income of $8.2 million excluding these losses compared to $11.4 million in the same period last year [13] - Book value per share decreased from $49.98 at year-end to $47.85 at March 31, primarily due to stock compensation and comprehensive loss [13] - Investment income increased by 2% to $14.8 million from a year ago, with a current book yield on the fixed income portfolio at 4.5% [14][15] Business Line Data and Key Metrics Changes - Consolidated gross premiums increased by 6% to $98.7 million in 2025 compared to $93.5 million in 2024, with a 16% increase in gross written premiums excluding terminated products [19][20] - The Agency and Insurance Services segment generated income of $1.8 million before tax for the quarter, while the consolidated accident year combined ratio was 111.5, improving to 94.8% when excluding wildfire losses [16][18] Market Data and Key Metrics Changes - The underlying core growth excluding terminated products was 16%, with rate increases and exposure growth modestly exceeding estimates of social and price inflation trends [6][9] - The company anticipates annual average catastrophic losses of $17 million, with the recent Los Angeles wildfires exceeding previous models for wildfire risk [10][11] Company Strategy and Development Direction - The company has completed a strategic restructuring to facilitate efficient and controlled rapid product expansion, with expectations for growth fueled by organic growth and focused acquisitions [7][8] - The focus remains on long-term value creation for shareholders, with investments directed towards the new Pan America underwriter operation rather than share repurchases [33][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving premium growth of at least 10% for 2025, with expectations for improved underwriting performance in the latter part of the year [22] - The company is adopting a defensive strategy in investments due to fluctuating interest rates and is closely monitoring potential fraud claims amid economic downturns [38][39] Other Important Information - The company has maintained staff numbers slightly below 2023 levels while managing expenses, with a target to reduce the expense ratio to 37% or lower in the long term [11][12] - Discretionary capital was reported at $251 million as of March 31, which supports growth investments [22] Q&A Session Summary Question: Can the expense ratio drop below 40% in the next two or three quarters? - Management expects the expense ratio to be in the 39% to 40% range for this year, with the targeted 37% achievable in 2026 or 2027 [27] Question: Why issue stock to insiders instead of repurchasing shares? - The decision to issue shares was based on a contractual obligation to compensate for Project Manifest, with the board believing that investing in operations will create more long-term value [33] Question: Will there be more losses from the LA fire? - Most of the losses have been paid out, and management does not expect any material changes in the reported numbers [37] Question: How will economic factors impact claims and profitability? - Management is focused on monitoring potential fraud claims and premium payment interruptions, emphasizing that insurance operates similarly over the long term despite short-term economic fluctuations [39] Question: Should corporate expenses trend back to prior levels post-Q1? - Corporate expenses are expected to trend back towards historical levels, but potential acquisitions may introduce additional expenses [50]

Financial Data and Key Metrics Changes - The net loss for Q1 2025 was $4 million, which included $15.6 million in pre-tax losses from California wildfires, resulting in a net income of $8.2 million when excluding these losses, compared to $11.4 million in the same period last year [13] - Book value per share decreased from $49.98 at year-end to $47.85 at March 31, primarily due to the comprehensive loss of $500,000 and stock compensation [13][22] - Investment income increased by 2% to $14.8 million from a year ago, with a current book yield on the fixed income portfolio at 4.5% [14] Business Line Data and Key Metrics Changes - Consolidated gross premiums increased by 6% to $98.7 million in 2025 compared to $93.5 million in 2024, with gross written premiums excluding terminated products increasing by 16% to $98.4 million [19] - The Agency and Insurance Services segment generated income of $1.8 million before tax for the quarter, while the consolidated accident year combined ratio was 111.5, improving to 94.8% when excluding wildfire losses [16][18] - The Wholesale Commercial segment grew by 6% to $64.9 million, while Insurtech grew by 20% to $15 million [20] Market Data and Key Metrics Changes - The company anticipates an annual average of $17 million from all catastrophic losses, with the recent Los Angeles wildfires exceeding previous models for wildfire risk [10][11] - The company expects premium growth of at least 10% for 2025, with underwriting performance expected to improve in the last three quarters compared to the same period in 2024 [21][22] Company Strategy and Development Direction - The company has completed a strategic restructuring to facilitate efficient product expansion, with plans for organic growth and targeted acquisitions over the next few years [7][12] - The focus remains on long-term growth rather than short-term stock price boosts, with the board prioritizing investments in operations over share repurchases [32][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying trends despite reported numbers falling short of targets, indicating strong potential for shareholder value growth [12] - The company is adopting a defensive strategy in investments due to fluctuating interest rates and is closely monitoring potential fraud claims amid economic downturns [38] Other Important Information - The company has maintained staff numbers slightly below 2023 levels while growing the business at double-digit rates [11] - Discretionary capital was reported at $251 million as of March 31, which is intended to support growth initiatives [22] Q&A Session Summary Question: Can the expense ratio drop below 40% in the next two or three quarters? - Management expects the expense ratio to be in the 39% to 40% range for this year, with the targeted 37% being a longer-term goal [26] Question: Why issue stock to insiders instead of repurchasing shares? - The decision to issue shares was based on a contractual obligation to compensate for advisory services related to Project Manifest, with the board believing that investing in operations will create more long-term value [31][32] Question: Will there be more losses from the LA fire? - Most of the losses have been paid out, and management does not expect any material changes to the reported numbers [36] Question: How might economic factors impact claims and profitability? - Management is focused on monitoring interest rates and potential fraud claims, emphasizing that insurance operates similarly over the long term despite short-term fluctuations [38] Question: What was the tangible book value dilution from the shares issued? - The per share impact was reported as 1.74 [39] Question: Will corporate expenses trend back to prior levels post-Q1? - Corporate expenses are expected to trend back towards historical levels, but potential acquisitions may introduce additional expenses [48][50]