Form 8-K Global Indemnity plc For: May 11

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 11, 2015

 

 

Global Indemnity plc

(Exact name of registrant as specified in its charter)

 

 

 

Ireland		001-34809		98-0664891
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

25/28 North Wall Quay Dublin 1 Ireland		None
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +(353) (0) 1 649 2000

Not Applicable

Former name or former address, if changed since last report

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Condition.

On May 11, 2015, Global Indemnity plc (the “Company”) issued a press release announcing the Company’s financial results for its first quarter ended March 31, 2015.

The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

 

Item 9.01

Financial Statements and Exhibits

 

(d)

Exhibits

 

99.1		Press Release dated May 11, 2015.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				Global Indemnity plc
May 11, 2015				By:		/s/ Thomas M. McGeehan
						Name:		Thomas M. McGeehan
						Title:		Chief Financial Officer

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release dated May 11, 2015

Exhibit 99.1

 

 

PRESS RELEASE

 

For release:   Contact:		May 11, 2015   Media Stephen Ries Senior Corporate Counsel (610) 668-3270 [email protected]

Global Indemnity plc Reports First Quarter 2015 Financial Results.

Dublin, Ireland (May 11, 2015) – Global Indemnity plc (NASDAQ: GBLI) today reported net income for the three months ended March 31, 2015 of $6.8 million or $0.26 per share. As of March 31^st, book value per share was $36.02, an increase of 0.4% compared to book value per share of $35.86 at December 31, 2014.

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

 

 

Cynthia Y. Valko, Chief Executive Officer, commented: “The first quarter of 2015 is the start of an exciting new chapter for Global Indemnity. In addition to Global’s specialty commercial lines and reinsurance product offerings, the American Reliable acquisition, which closed January 1, both broadens our underwriting competencies and expands our distribution relationships enabling us to now provide specialty and agricultural products to the personal lines segment. After three months, the operating and financial impact of the acquisition on our consolidated results is significant. For the first quarter of 2015: Net Written Premiums increased 73% over the comparable prior year period, Operating Income increased 45% (before acquisition costs), and the combined ratio improved to 92.6%. Over the next 24 months, as Global’s and American Reliable’s operations are more fully integrated, we anticipate that additional revenue and expense synergies will emerge, which will further enhance our overall profitability.”

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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 integrating the businesses of American Reliable, which could result in a failure to realize the potential benefits of the acquisition, the risk that the transaction proves disruptive to the operations of American Reliable or Global Indemnity, 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.

Disseminated pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

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Global Indemnity plc’s Combined Ratio for the Three Months Ended March 31, 2015 and 2014

The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:

 

		Three Months Ended March 31,
		2015				2014
Loss Ratio:
Current Accident Year
Excluding Catastrophes			48.5				50.4
Catastrophes			8.9				9.8
Current Accident Year			57.4				60.2
Changes to Prior Accident Year			(2.7	)			(3.1	)
Loss Ratio – Calendar Year			54.7				57.1
Expense Ratio			37.9				39.2
Combined Ratio			92.6				96.3

For the three months ended March 31^st, the calendar year loss ratio improved by 2.4 points to 54.7 in 2015 from 57.1 in 2014.

Calendar year results for the three months ended March 31, 2015 include a 2.7 point improvement in the loss ratio related to prior accident years, which was primarily driven by lower than expected severity in property lines.

For the three months ended March 31, 2015, the current accident year loss ratio was 57.4 compared to 60.2 for the same period in 2014. Excluding catastrophes, the current accident year loss ratio improved by 1.9 points, from 50.4 in 2014 to 48.5 in 2015.

 

•

The current accident year property loss ratio increased 0.5 points to 55.1 in 2015 from 54.6 in 2014.

 

•

The current accident year casualty loss ratio improved by 5.6 points to 65.8 in 2015 from 71.4 in 2014.

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

 

		Three Months Ended March 31,
		Gross Premiums Written								Net Premiums Written
		2015				2014				2015				2014
Commercial Lines Operations		$	49,793			$	52,992			$	45,622			$	48,656
Personal Lines Operations			73,211				—				60,656				—
Reinsurance Operations			19,865				24,205				19,826				24,205
Total		$	142,869			$	77,197			$	126,104			$	72,861

Commercial Lines Operations: For the three months ended March 31, 2015, gross premiums written and net premiums written both decreased 6% compared to the same period in 2014. The decrease is primarily the result of reducing property concentration exposure in the small business book.

Personal Lines Operations: Personal lines is a new segment for the Company resulting from the acquisition of American Reliable during the first quarter of 2015.

Gross premiums written include $10.1 million of business that is currently written by American Reliable Insurance Company but was not included as part of the acquisition. This premium is 100% ceded to insurance entities owned by the former parent. Net premiums written increased by 2.0% compared to the same period in 2014.

Reinsurance Operations: For the three months ended March 31, 2015, gross premiums written and net premiums written both decreased 18%, compared to the same period in 2014. The decrease in gross and net premiums written is due to competition in the property catastrophe reinsurance marketplace.

###

Note: Tables Follow

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GLOBAL INDEMNITY PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars and shares in thousands, except per share data)

 

		For the Three Months Ended March 31,
		2015				2014
Gross premiums written		$	142,869			$	77,197
Net premiums written		$	126,104			$	72,861
Net premiums earned		$	127,337			$	67,544
Net investment income			8,241				8,284
Net realized investment losses			(2,970	)			(813	)
Other income			552				168
Total revenues			133,160				75,183
Net losses and loss adjustment expenses			69,619				38,572
Acquisition costs and other underwriting expenses			48,258				26,485
Corporate and other operating expenses			11,540				2,961
Interest expense			505				191
Income before income taxes			3,238				6,974
Income tax benefit			(3,556	)			(1,849	)
Net income (1)		$	6,794			$	8,823
Weighted average shares outstanding – basic			25,449				25,123
Weighted average shares outstanding – diluted			25,642				25,279
Net income per share – basic		$	0.27			$	0.35
Net income per share – diluted		$	0.26			$	0.35
Combined ratio analysis: (2)
Loss ratio			54.7				57.1
Expense ratio			37.9				39.2
Combined ratio			92.6				96.3

 

(1)	Excluding the acquisition expenses of American Reliable Insurance Company, net income would have been $12.2 million

(2)

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.

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GLOBAL INDEMNITY PLC

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

		(Unaudited) March 31, 2015				December 31, 2014
ASSETS
Fixed Maturities:
Available for sale securities, at fair value (amortized cost: 2015 – $1,560,440 and 2014 – $1,272,948)		$	1,577,337			$	1,283,475
Equity securities:
Available for sale, at fair value (cost: 2015 – $100,818 and 2014 – $99,297)			121,456				122,048
Other invested assets:
Available for sale securities, at fair value (cost: 2015 – $28,887 and 2014 – $33,174)			29,992				33,663
Total investments			1,728,785				1,439,186
Cash and cash equivalents			67,142				58,823
Restricted Cash			—				113,696
Premiums receivable, net			96,814				56,586
Reinsurance receivables, net			145,581				125,718
Funds held by ceding insurers			23,794				25,176
Deferred federal income taxes			25,910				20,250
Deferred acquisition costs			39,228				25,238
Intangible assets			38,694				17,636
Goodwill			7,011				4,820
Prepaid reinsurance premiums			39,800				4,725
Receivable for securities sold			—				60
Federal income taxes receivable			2,023				3,139
Other assets			59,118				34,980
Total assets		$	2,273,900			$	1,930,033
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses		$	770,119			$	675,472
Unearned premiums			283,385				120,815
Ceded balances payable			12,509				2,800
Contingent commissions			11,953				12,985
Margin borrowing facility			207,245				174,673
Payable for securities purchased			13,595				—
Other liabilities			48,310				34,998
Total liabilities			1,347,116				1,021,743
Shareholders’ equity:
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 16,743,896 and 16,331,577 respectively; A ordinary shares outstanding: 13,667,782 and 13,266,762, respectively; B ordinary shares issued and outstanding: 12,061,370 and 12,061,370, respectively			3				3
Additional paid-in capital			527,286				519,590
Accumulated other comprehensive income, net of taxes			27,705				23,384
Retained earnings			473,511				466,717
A ordinary shares in treasury, at cost: 3,076,114 and 3,064,815 shares, respectively			(101,721	)			(101,404	)
Total shareholders’ equity			926,784				908,290
Total liabilities and shareholders’ equity		$	2,273,900			$	1,930,033

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GLOBAL INDEMNITY PLC

SELECTED INVESTMENT DATA

(Dollars in millions)

 

		Market Value as of
		(Unaudited) March 31, 2015				December 31, 2014
Fixed maturities		$	1,577.3			$	1,283.5
Cash and cash equivalents			67.1				172.5
Total bonds and cash and cash equivalents			1,644.4				1,456.0
Equities and other invested assets			151.5				155.7
Total cash and invested assets, gross			1,795.9				1,611.7
Receivable/payable for securities sold (purchased)			(13.6	)			0.1
Total cash and invested assets, net		$	1,782.3			$	1,611.8

 

		(Unaudited) Three Months Ended March 31, 2015 (a)
Net investment income		$	8,241
Net realized investment losses			(2,970	)
Net change in unrealized investment gains / losses			4,597
Net realized and unrealized investment returns			1,627
Total investment return		$	9,868
Total investment return % annualized			2.2	%
Average total cash and invested assets		$	1,764,110

 

(a)	Amounts in this table are shown on a pre-tax basis.

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GLOBAL INDEMNITY PLC

SUMMARY OF OPERATING INCOME

(Unaudited)

(Dollars and shares in thousands, except per share data)

 

		For the Three Months Ended March 31,
		2015				2014
Operating income		$	8,818			$	9,764
Adjustments:
Net realized investment (losses), net of tax			(2,024	)			(941	)
Total after-tax adjustments			(2,024	)			(941	)
Net income		$	6,794			$	8,823
Weighted average shares outstanding – basic			25,449				25,123
Weighted average shares outstanding – diluted			25,642				25,279
Operating income per share – basic		$	0.35			$	0.39
Operating income per share – diluted		$	0.34			$	0.39

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.

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