Global Indemnity Group(GBLI) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income for the first half of 2024 was $21.5 million, up from$ 11.8 million in 2023, reflecting improved underwriting and investment performance [11] - Book value per share increased from $47.53 at year-end to$ 48.56 at June 30, 2024, including dividends paid of $0.70 per share [11] - Return to shareholders was 3.6% for the first half of 2024 [11] Business Line Data and Key Metrics Changes - Penn-America segment recorded a 6-month combined ratio of 94.8%, driven by solid casualty and property loss ratios [6] - Consolidated accident year underwriting income improved to$ 8.7 million in 2024 from $3.2 million in 2023, with a combined ratio of 95.8% compared to 99.1% in 2023 [14] - Gross written premiums for Penn-America increased from$ 190.4 million in 2023 to $194.6 million in 2024, a 7% increase when excluding terminated programs [18] Market Data and Key Metrics Changes - The wholesale commercial segment grew 3% to$ 124.9 million, with underlying policy year trends indicating a growth rate of 12% [19] - InsurTech segment grew 18% to $26.3 million, driven by organic growth and new agency appointments [19] - Assumed reinsurance gross written premiums grew from$ 4.3 million in 2023 to $9.4 million in 2024 [20] Company Strategy and Development Direction - The company aims for annual business growth of around 10%, a combined ratio in the low 90s, and insurance expenses managed at 36% to 37% [4] - A digital transformation of the technology infrastructure is underway to enhance competitiveness [7] - The company is focusing on expanding its reinsurance operations, expecting growth of 30% to 40% per year over the next few years [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term growth targets despite challenges in certain business segments [4] - The company anticipates continued favorable investment returns due to repositioning its investment portfolio [9] - Management noted that the current market conditions allow for modest rate increases, supporting long-term loss ratio results [8] Other Important Information - The company has maintained a strong balance sheet, with an A rating from AM Best [10] - Discretionary capital is estimated at around$ 125 million, with expectations for year-over-year growth of about $30 million [38] Q&A Session Summary Question: Can you describe the reinsurance efforts and how you are executing them? - Management indicated a shift towards reinsuring insurance carriers directly, expanding the number of treaties and expecting significant growth in this area [23] Question: What is the nature of the reinsurance products being offered? - The focus is primarily on ENSE products, avoiding large weather-related exposures [25] Question: Can you comment on the James River Ventures? - Management refrained from commenting on specific agreements but noted a desire to deploy excess capital through potential M&A activities [27] Question: Why are expenses expected to take a year or two to align with targets? - Management explained that maintaining staffing levels is crucial for customer service, and a combination of premium growth and inflation will influence expense ratios [36] Question: What is the current position regarding discretionary capital? - Management confirmed that discretionary capital is around$ 125 million, with a focus on maintaining strong capital adequacy [38] Question: What are the thoughts on stock buybacks? - Management is considering options for returning capital to shareholders, including potential tender offers or special dividends if capital cannot be effectively deployed [41]