NYSE:GBLI
READ THE FULL GBLI RESEARCH REPORT
1st Quarter 2025 Financial Results
Global Indemnity Group (NYSE:GBLI) reported 1st quarter 2025 financial and operating results that showed the effects of the California wildfire losses which totaled $15.6 million ($12.2 million after-tax). Gross written premiums were $98.7 million and the net loss for the quarter was ($4.1) million, or ($0.30) per share. Excluding the impact of the California wildfires, net income was $8.1 million or $0.58 per share.
Underwriting income (current accident year) was a loss of ($10.3) million in the 1st quarter compared to $5.3 million in the prior year period. Excluding the impact of the California wildfires, underwriting income (current accident year) was the same as the prior year period at $5.3 million.
Net investment income increased 2.0% in the 1st quarter of 2025 to $14.8 million compared to $14.5 million in the prior year period. Book yield on the investment portfolio increased to 4.5% at the end of the 1st quarter of 2025. Annualized investment return was 5.4% for 2025. As a result of the current low duration on fixed income securities, the company has approximately $700 million of investments maturing throughout the rest of 2025 that are expected to be reinvested in longer maturity bonds to improve overall investment returns.
New Organizational Structure
Under Project Manifest, the company implemented an extensive internal business reorganization that positioned the company for growth and enhanced operational efficiency, increased statutory capital, and more efficient capital management resulting from de-stacking of the insurance companies.
As a result of this reorganization, the reportable segments are now structured under two holding companies:
- Penn-America Underwriters, LLC consists of:
(i) three agencies: 1) Penn-America Insurance Services, LLC, 2) J.H. Ferguson, LLC, which includes the Vacant Express division, and 3) Collectibles Insurance Services, LLC that source, underwrite, and service policies.
(ii) two strategic insurance product and service businesses: 1) Liberty Insurance Adjustment Agency, Inc. a claims adjustment and claims service business and 2) Kaleidoscope Insurance Technologies, Inc., a proprietary insurance software and services provider.
- Belmont Holdings GX, Inc. includes five state-regulated insurance carriers: 1) Penn-Patriot Insurance Company, 2) Diamond State Insurance Company, 3) Penn-Star Insurance Company, 4) Penn-America Insurance Company, and 5) United National Insurance Company. These are all rated “A” (Excellent) by AM Best.
Segment Review
For financial reporting purposes, the company realigned the composition of its reportable segments to reflect changes in how they now manage its operations:
Agency and Insurance Services – This consists of Penn-America Underwriters, LLC described above.
Belmont Insurance Companies (Core (“Belmont Core”)) – This was previously known as the Penn-America segment and consists of insurance company operations for ongoing direct insurance products and assumed reinsurance products, which are offered in the excess and surplus lines marketplace.
Belmont Insurance Companies (Non-Core (“Belmont Non-Core”)) – This was previously known as the Non-Core Operations segment and consists of insurance company operations for lines of business that have been de-emphasized or are no longer being written. The primary activities of Belmont Non-Core are servicing the run-off of polices/treaties, adjusting claims and estimating loss reserves on de-emphasized and terminated business.
Direct written premium produced for Belmont Core decreased (4.0%). In the aggregate, direct written premiums for Wholesale Commercial and InsurTech grew by 8.6%. This growth was driven by premium rate increases, new agency appointments, organic growth of existing agents, and new products. Direct written premiums for Specialty Products declined by 57.0% due to terminating products not meeting profitability expectations. Excluding terminated business, growth in gross written premiums would have been 7.3%.
Combined Ratios
The consolidated combined ratio for the 1st quarter was 111.7% (Loss Ratio 71.7% and Expense Ratio 40.2%) as compared to 94.9% (Loss Ratio 55.3% and Expense Ratio 39.6%) for the prior year period.
The higher loss ratio was primarily due to the California Wildfires. The current accident year combined ratio, excluding the impact of the California Wildfires of 16.7 points, was 94.8% in the 1st quarter compared to 94.9% for the same period in 2024.
Fee Business
The company has been making a concerted effort to grow non-risk revenues in terms of fee income generation. This can come in the form of commission, service, policy and installment fees. Commission and service fee income are separated for segment purposes but consolidated within the Belmont operations. Policy and installment fees are a separate line item and reported under Other Income. We project policy and installment fees (Other Income) will be approximately $1.8 million in 2025.
Valuation and Estimates
GBLI book value per share decreased to $47.85 as of March 31, 2025 compared to $49.98 as of December 31, 2024. This was due to the total company net loss as a result of the California Wildfire losses, issuance of new A-2 shares, and payment of dividends.
On March 6, 2025, the Board of Directors approved a dividend of $0.35 per common share which was paid on March 28, 2025. The current dividend yield is approximately 4.91%.
We adjust our 2025 total revenue estimate to $465.6 million which includes $400.9 million in Net Earned Premiums and $62.5 million in Investment Income. Our 2025 EPS estimate is adjusted to $2.04. As the consolidated expense ratio continues to drift down, we believe EPS of over $4.00 can be achieved in the next 2-3 years.
Management stated its long-term financial goals which are:
1) Grow the overall business at a rate of 10% or higher,
2) Achieve a combined ratio in the low 90’s,
3) Manage the expense ratio to a competitive level of 36%-37%.
GBLI stock is currently selling at 57.8% of book value based on March 31, 2025 shareholders’ equity. We separate our price target into near-term and long-term objectives. Our near-term target is $47.00 which assumes GBLI stock will trade near book value per share. We maintain our long-term price target of $55.00 per share based on the stock selling at a small premium to future book value per share.
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