# Global Indemnity Group, LLC: Form 10-Q for the period ended Mar 31, 2024

- Company: [Global Indemnity Group, LLC](/companies/gbli.md) (CIK 1494904)
- Form: 10-Q
- Filed: 2024-05-08
- Accepted by EDGAR: May 8, 2024, 15:53 ET
- Period: 2024-03-31
- Accession: 0000950170-24-055565
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1494904/000095017024055565/gbli-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1494904/000095017024055565/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $112.3m | us-gaap:Revenues |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $2.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $11.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.82 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.83 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 13,687,412 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $22.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $4.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2024-01-01 to 2024-03-31 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $38.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2024-03-31 | $1.73bn | us-gaap:Assets |
| Total liabilities | at 2024-03-31 | $1.07bn | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-31 | $659.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 39,004 characters.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes of the Company included elsewhere in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to the Company’s plans and strategy, constitutes forward-looking statements that involve risks and uncertainties. Please see "Cautionary Note Regarding Forward-Looking Statements" at the end of this Item 2 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained herein. For more information regarding the Company’s business and operations, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

### Financial Highlights

### 2024 First Quarter Results of Operations

- Net income of $11.4 million, or $0.82 per share diluted, in 2024 is $8.9 million higher than the same period in 2023.
- Net earned premiums of $96.6 million (Property: 41% and Casualty: 59%) in 2024 is lower than net earned premiums of $140.1 million (Property 33% and Casualty 67%) in 2023 primarily due to the run off of Non-Core business.
- Underwriting income was $5.3 million in 2024 which is better than a $1.1 million loss for the same period in 2023 due to strong underwriting results on the Company's property business.
- Penn-America accident year combined ratio was 94.0% in 2024 compared to 101.2% for the same period in 2023. Consolidated accident year combined ratio was 94.9% in 2024 compared to 100.6% for the same period in 2023.
- Net investment income of $14.5 million in 2024 was 21% better than the same period in 2023. Book yield on the fixed maturities portfolio was 4.3% and 3.6% at March 31, 2024 and 2023, respectively
- Operating cash flows was $22.7 million in 2024 compared to $5.3 million for the same period in 2023.

### 2024 First Quarter Consolidated Financial Condition

- Total investments, including receivable for securities matured, of $1.4 billion at March 31, 2024 increased 2% compared to December 31, 2023; fixed maturities and cash comprise 96% of total investments.
- Total assets of $1.7 billion at March 31, 2024 and December 31, 2023.
- No debt at March 31, 2024 and December 31, 2023.
- Since the Company's initial public offering in 2003, the total capital returned to shareholders was $614.4 million, comprising $522.2 million of share repurchases and $92.2 million of distributions / dividends. This includes $4.9 million of distributions during 2024.
- Shareholders' equity increased 1.7% from December 31, 2023 to $659.5 million at March 31, 2024.
- Dividends paid per share increased 40% to $0.35 in 2024 compared to the same period in 2023.
- Book value per common share increased 1.4% from December 31, 2023 to $48.18 at March 31, 2024.

### Results of Operations

The Company realized net income of $11.4 million and $2.5 million during the quarters ended March 31, 2024 and 2023, respectively.

Net investment income increased by $2.5 million during the quarter ended March 31, 2024 as compared to the same period in 2023. This increase in net investment income was primarily due to strategies employed by the Company to take advantage of rising interest rates which resulted in a 19% increase in book yield on the fixed maturities portfolio to 4.3% at March 31, 2024 from 3.6% at March 31, 2023. The weighted average duration of the fixed maturities portfolio was 1.1 years as of March 31, 2024.

The Company generated strong underwriting income of $5.3 million for the quarter ended March 31, 2024 compared to an underwriting loss of $1.1 million for the same period in 2023. This improvement is primarily driven by strong property results during the quarter ended March 31, 2024.

The following table summarizes the Company’s results for the quarters ended March 31, 2024 and 2023:

*(Dollars in thousands)*

|  | Quarters Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Gross written premiums | $93,488 | $122,985 |
| Net written premiums | $92,085 | $115,861 |
| Net earned premiums | $96,579 | $140,072 |
| Other income | 345 | 354 |
| Total revenues | 96,924 | 140,426 |
| Losses and expenses: |  |  |
| Net losses and loss adjustment expenses | 53,384 | 88,001 |
| Acquisition costs and other underwriting expenses | 38,269 | 53,478 |
| Underwriting income (loss) | 5,271 | (1,053) |
| Net investment income | 14,520 | 12,008 |
| Net realized investment gains (losses) | 847 | (1,520) |
| Corporate and other operating expenses | (6,373) | (6,368) |
| Income before income taxes | 14,265 | 3,067 |
| Income tax expense | 2,899 | 573 |
| Net income | $11,366 | $2,494 |
| Underwriting Ratios: |  |  |
| Loss ratio (1): | 55.3% | 62.8% |
| Expense ratio (2) | 39.6% | 38.2% |
| Combined ratio (3) | 94.9% | 101.0% |

(1) The loss ratio is a GAAP financial measure that is generally viewed in the insurance industry as an indicator of underwriting profitability and is calculated by dividing net losses and loss adjustment expenses by net earned premiums.

(2) The expense ratio is a GAAP financial measure that is calculated by dividing the sum of acquisition costs and other underwriting expenses by net earned premiums.

(3) The combined ratio is a GAAP financial measure and is the sum of the Company’s loss and expense ratios.

### Premiums

The following table summarizes the change in premium volume by business segment:

*(Dollars in thousands)*

| Gross written premiums (1) | Quarters Ended March 31, 2024 | 2023 | % Change |
| --- | ---: | ---: | ---: |
| Penn-America | $94,048 | $95,412 | (1.4%) |
| Non-Core Operations | (560) | 27,573 | (102.0%) |
| Total gross written premiums | $93,488 | $122,985 | (24.0%) |
| Ceded written premiums |  |  |  |
| Penn-America | $1,452 | $4,264 | (65.9%) |
| Non-Core Operations | (49) | 2,860 | (101.7%) |
| Total ceded written premiums | $1,403 | $7,124 | (80.3%) |
| Net written premiums (2) |  |  |  |
| Penn-America | $92,596 | $91,148 | 1.6% |
| Non-Core Operations | (511) | 24,713 | (102.1%) |
| Total net written premiums | $92,085 | $115,861 | (20.5%) |
| Net earned premiums |  |  |  |
| Penn-America | $89,132 | $90,612 | (1.6%) |
| Non-Core Operations | 7,447 | 49,460 | (84.9%) |
| Total net earned premiums | $96,579 | $140,072 | (31.1%) |

(1) Gross written premiums represent the amount received or to be received for insurance policies written without reduction for reinsurance costs, ceded premiums or other deductions.

(2) Net written premiums equal gross written premiums less ceded written premiums.

(3) External business only, excluding business assumed from affiliates.

Gross written premiums decreased by 24.0% for the quarter ended March 31, 2024 as compared to same period in 2023. The decrease in gross written premiums is mainly due to a reduction in premiums within Non-Core Operations for lines of business that have been de-emphasized or no longer written. In addition, within Penn-America, the gross written premiums for Programs decreased primarily due to actions taken in 2023 to improve underwriting results through increased rates and form changes. These reductions in premiums were partially offset by continued growth of 7.1% in aggregate for Penn-America's Wholesale Commercial, InsurTech, and Assumed Reinsurance divisions. The growth in Wholesale Commercial and InsurTech is driven by new agency appointments, organic growth of existing agents, and new products. The growth in Assumed Reinsurance is primarily due to three new treaties entered into during 2023 and increased participation on one treaty.

### Net Retention

The ratio of net written premiums to gross written premiums is referred to as the Company’s net premium retention. The Company’s net premium retention is summarized by segments as follows:

*(Dollars in thousands)*

|  | Quarters Ended March 31, 2024 | 2023 | Point Change |
| --- | ---: | ---: | ---: |
| Penn-America | 98.5% | 95.5% | 3.0 |
| Non-Core Operations | 91.3% | 89.6% | 1.7 |
| Total | 98.5% | 94.2% | 4.3 |

The net premium retention for the quarter ended March 31, 2024 increased by 4.3 points as compared to the same period in 2023. Penn-America's retention increased by 3.0 points primarily due to the termination of two quota share agreements and lower cost on the Company's catastrophe reinsurance treaty. Cessions on Non-Core Operations were significantly reduced due to sale of manufactured home and dwelling business in 2021 and the Farm, Ranch and Stable business in 2022. See Note 2 of the notes to the consolidated financial statements in Item 8 of Part II of the Company’s 2023 Annual Report on Form 10-K for additional information on the sale of renewal rights related to the Company’s manufactured and dwelling homes business and the Company's Farm, Ranch & Stable business.

### Net Earned Premiums

Net earned premiums within the Penn-America segment decreased by 1.6% for the quarter ended March 31, 2024 as compared to the same period in 2023 primarily due to the reduction in premiums written for Programs as a result of underwriting actions taken in 2023 to improve underwriting profitability partially offset by continued premium growth in Penn-America's Wholesale Commercial, InsurTech, and Assumed Reinsurance divisions. Property net earned premiums were $39.9 million and $37.6 million for the quarters ended March 31, 2024 and 2023, respectively. Casualty net earned premiums were $49.2 million and $53.0 million for the quarters ended March 31, 2024 and 2023, respectively.

Net earned premiums within the Non-Core Operations segment decreased by 84.9% for the quarter ended March 31, 2024 as compared to the same period in 2023 primarily due to the non-renewal of a casualty treaty as well as a reduction in earned premiums due to the sale of Farm, Ranch & Stable renewal rights on August 8, 2022. Property net earned premiums were less than $0.1 million and $8.8 million for the quarters ended March 31, 2024 and 2023, respectively. Casualty net earned premiums were $7.4 million and $40.7 million for the quarters ended March 31, 2024 and 2023, respectively.

### Reserves

Amounts recorded for unpaid losses and loss adjustment expenses represent management’s best estimate at March 31, 2024. Management’s best estimate is as of a particular point in time and is based upon known facts, the Company’s actuarial analyses, current law, and the Company’s judgment. This resulted in carried gross and net reserves of $853.6 million and $781.8 million, respectively, as of March 31, 2024. A breakout of the Company’s gross and net reserves, as of March 31, 2024, is as follows:

*(Dollars in thousands)*

|  | Gross Reserves Case | IBNR (1) | Total |
| --- | ---: | ---: | ---: |
| Penn-America | $132,147 | $296,078 | $428,225 |
| Non-Core Operations | 118,526 | 306,851 | 425,377 |
| Total | $250,673 | $602,929 | $853,602 |

*(Dollars in thousands)*

|  | Net Reserves (2) Case | IBNR (1) | Total |
| --- | ---: | ---: | ---: |
| Penn-America | $131,735 | $284,913 | $416,648 |
| Non-Core Operations | 84,746 | 280,394 | 365,140 |
| Total | $216,481 | $565,307 | $781,788 |

(1) Losses incurred but not reported, including the expected future emergence of case reserves.

(2) Does not include reinsurance receivables on paid losses.

Each reserve category has an implicit frequency and severity for each accident year as a result of the various assumptions made. If the actual levels of loss frequency and severity are higher or lower than expected, the ultimate losses will be different than management’s best estimate. For most of its reserve categories, the Company believes that frequency can be predicted with greater accuracy than severity. Therefore, the Company believes management’s best estimate is more likely influenced by changes in severity than frequency. The following table, which the Company believes reflects a reasonable range of variability around its best estimate based on historical loss experience and management’s judgment, reflects the impact of changes (which could be favorable or unfavorable) in frequency and severity on the Company’s current accident year net loss estimate of $53.4 million for claims occurring during the quarter ended March 31, 2024:

|  | Severity Change |  |  |  |  |
| ---: | ---: | ---: | ---: | ---: | ---: |
| **(Dollars in thousands)** | **-10%** | **-5%** | **0%** | **5%** | **10%** |
| **Frequency Change** **-5%** | (7,741) | (5,205) | (2,669) | (133) | 2,402 |
| **-3%** | (6,780) | (4,191) | (1,601) | 988 | 3,577 |
| **-2%** | (6,299) | (3,683) | (1,068) | 1,548 | 4,164 |
| **-1%** | (5,819) | (3,176) | (534) | 2,109 | 4,751 |
| **0%** | (5,338) | (2,669) | — | 2,669 | 5,338 |
| **1%** | (4,858) | (2,162) | 534 | 3,230 | 5,926 |
| **2%** | (4,377) | (1,655) | 1,068 | 3,790 | 6,513 |
| **3%** | (3,897) | (1,148) | 1,601 | 4,351 | 7,100 |
| **5%** | (2,936) | (133) | 2,669 | 5,472 | 8,274 |

The Company’s net reserves for losses and loss adjustment expenses of $781.8 million as of March 31, 2024 relate to multiple accident years. Therefore, the impact of changes in frequency and severity for more than one accident year could be higher or lower than the amounts reflected above.

### Underwriting Results

### Penn-America

The components of income (loss) from the Company’s Penn-America segment and corresponding underwriting ratios are as follows:

*(Dollars in thousands)*

|  | Quarters Ended March 31, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Gross written premiums | $94,048 | $95,412 | (1.4%) |
| Net written premiums | $92,596 | $91,148 | 1.6% |
| Net earned premiums | $89,132 | $90,612 | (1.6%) |
| Other income | 339 | 267 | 27.0% |
| Total revenues | 89,471 | 90,879 | (1.5%) |
| Losses and expenses: |  |  |  |
| Net losses and loss adjustment expenses | 48,909 | 59,278 | (17.5%) |
| Acquisition costs and other underwriting expenses | 34,927 | 34,709 | 0.6% |
| Underwriting income (loss) | $5,635 | $(3,108) | 281.3% |

| Underwriting Ratios: Loss ratio: |  |  |  |
| --- | ---: | ---: | ---: |
| Current accident year | 54.8% | 63.0% | (8.2) |
| Prior accident year | 0.1% | 2.4% | (2.3) |
| Calendar year loss ratio | 54.9% | 65.4% | (10.5) |
| Expense ratio | 39.2% | 38.3% | 0.9 |
| Combined ratio | 94.1% | 103.7% | (9.6) |
| Accident year combined ratio (1) | 94.0% | 101.2% |  |

(1) The accident year combined ratio excludes the impact of prior accident year losses and loss adjustment expenses and prior accident year contingent commission expenses.

### Premiums

See “Results of Operations” above for a discussion on consolidated premiums.

### Other Income

Other income was $0.3 million for each of the quarters ended March 31, 2024 and 2023. Other income is primarily comprised of fee income.

### Loss Ratio

The calendar year loss ratio for the quarter ended March 31, 2024 was 54.9% and includes an increase of less than $0.1 million, or 0.1 percentage points related to reserve development on prior accident years. The calendar year loss ratio for the quarter ended March 31, 2023 was 65.4% and includes an increase of $2.2 million, or 2.4 percentage points related to reserve development on prior accident years. Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

The current accident year loss ratio improved by 8.2 points from 63.0% for the quarter ended March 31, 2023 to 54.8% for the quarter ended March 31, 2024. The current accident year losses and loss ratio is summarized as follows:

*(Dollars in thousands)*

| Property losses | Quarters Ended March 31, 2024 | 2023 | % Change | Quarters Ended March 31, 2024 | 2023 | Point Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Non-catastrophe | $16,730 | $22,526 | (25.7%) | 41.9% | 59.9% | (18.0) |
| Catastrophe | 3,269 | 3,305 | (1.1%) | 8.2% | 8.8% | (0.6) |
| Property losses | 19,999 | 25,831 | (22.6%) | 50.1% | 68.7% | (18.6) |
| Casualty losses | 28,869 | 31,244 | (7.6%) | 58.6% | 58.9% | (0.3) |
| Total accident year losses | $48,868 | $57,075 | (14.4%) | 54.8% | 63.0% | (8.2) |

- The current accident year non-catastrophe property loss ratio improved by 18.0 points during the quarter ended March 31, 2024 as compared to the same period in 2023 mainly reflecting lower claims severity in the first accident quarter compared to last year.
- The current accident year catastrophe loss ratio improved by 0.6 points during the quarter ended March 31, 2024 as compared to the same period in 2023 recognizing lower claims frequency in the first accident quarter compared to last year.
- The current accident year casualty loss ratio improved by 0.3 points during the quarter ended March 31, 2024 as compared to the same period in 2023.

### Expense Ratios

The expense ratio for the Company’s Penn-America segment increased by 0.9 points from 38.3% for the quarter ended March 31, 2023 to 39.2% for the quarter ended March 31, 2024 primarily due to a reduction in earned premiums.

### Reconciliation of non-GAAP financial measures and ratios

The table below reconciles the non-GAAP measures or ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends within Penn-America may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company.

*(Dollars in thousands)*

| Property | Quarters Ended March 31, 2024 Losses | Loss Ratio | 2023 Losses | Loss Ratio |
| --- | ---: | ---: | ---: | ---: |
| Non catastrophe property losses and ratio excluding the effect of prior accident year (1) | $16,730 | 41.9% | $22,526 | 59.9% |
| Effect of prior accident year | 105 | 0.3% | (1,562) | (4.2%) |
| Non catastrophe property losses and ratio (2) | $16,835 | 42.2% | $20,964 | 55.7% |
| Catastrophe losses and ratio excluding the effect of prior accident year (1) | $3,269 | 8.2% | $3,305 | 8.8% |
| Effect of prior accident year | (44) | (0.1%) | 977 | 2.6% |
| Catastrophe losses and ratio (2) | $3,225 | 8.1% | $4,282 | 11.4% |
| Total property losses and ratio excluding the effect of prior accident year (1) | $19,999 | 50.1% | $25,831 | 68.7% |
| Effect of prior accident year | 61 | 0.2% | (585) | (1.6%) |
| Total property losses and ratio (2) | $20,060 | 50.3% | $25,246 | 67.1% |
| **Casualty** |  |  |  |  |
| Total casualty losses and ratio excluding the effect of prior accident year (1) | $28,869 | 58.6% | $31,244 | 58.9% |
| Effect of prior accident year | (20) | (—%) | 2,788 | 5.3% |
| Total casualty losses and ratio (2) | $28,849 | 58.6% | $34,032 | 64.2% |
| **Total** |  |  |  |  |
| Total net losses and loss adjustment expense and total loss ratio excluding the effect of prior accident year (1) | $48,868 | 54.8% | $57,075 | 63.0% |
| Effect of prior accident year | 41 | 0.1% | 2,203 | 2.4% |
| Total net losses and loss adjustment expense and total loss ratio (2) | $48,909 | 54.9% | $59,278 | 65.4% |

(1) Non-GAAP measure / ratio

(2) Most directly comparable GAAP measure / ratio

### Non-Core Operations

The components of income (loss) from the Company’s Non-Core Operations segment and corresponding underwriting ratios are as follows:

*(Dollars in thousands)*

|  | Quarters Ended March 31, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Gross written premiums | $(560) | $27,573 | (102.0%) |
| Net written premiums | $(511) | $24,713 | (102.1%) |
| Net earned premiums | $7,447 | $49,460 | (84.9%) |
| Other income | 6 | 87 | (93.1%) |
| Total revenues | 7,453 | 49,547 | (85.0%) |
| Losses and expenses: |  |  |  |
| Net losses and loss adjustment expenses | 4,475 | 28,723 | (84.4%) |
| Acquisition costs and other underwriting expenses | 3,342 | 18,769 | (82.2%) |
| Underwriting income (loss) | $(364) | $2,055 | (117.7%) |
| Underwriting Ratios: |  |  |  |
| Loss ratio: |  |  |  |
| Current accident year | 60.6% | 62.5% | (1.9) |
| Prior accident year | (0.5%) | (4.4%) | 3.9 |
| Calendar year loss ratio | 60.1% | 58.1% | 2.0 |
| Expense ratio | 44.9% | 37.9% | 7.0 |
| Combined ratio | 105.0% | 96.0% | 9.0 |
| Accident year combined ratio (1) | 105.5% | 99.7% |  |

(1) The accident year combined ratio excludes the impact of prior accident year losses and loss adjustment expenses and prior accident year contingent commission expenses.

### Premiums

See “Results of Operations” above for a discussion on consolidated premiums.

### Other Income

The Company recognized income of less than $0.1 million for each of the quarters ended March 31, 2024 and 2023. Other income is primarily comprised of fee income net of bank fees.

### Loss Ratio

The calendar year loss ratio for the quarter ended March 31, 2024 was 60.1% and includes a decrease of less than $0.1 million, or 0.5 percentage points related to reserve development on prior accident years. The calendar year loss ratio for the quarter ended March 31, 2023 was 58.1% and includes a decrease of $2.2 million, or 4.4 percentage points related to reserve development on prior accident years. Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

The current accident year loss ratio improved by 1.9 points from 62.5% for the quarter ended March 31, 2023 to 60.6% for the quarter ended March 31, 2024. The current accident year losses and loss ratio is summarized as follows:

*(Dollars in thousands)*

| Property losses | Quarters Ended March 31, 2024 | 2023 | % Change | Quarters Ended March 31, 2024 | 2023 | Point Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Non-catastrophe | $17 | $3,703 | (99.5%) | 27.1% | 42.1% | (15.0) |
| Catastrophe | 4 | 2,165 | (99.8%) | 6.5% | 24.6% | (18.1) |
| Property losses | 21 | 5,868 | (99.6%) | 33.6% | 66.7% | (33.1) |
| Casualty losses | 4,494 | 25,058 | (82.1%) | 60.9% | 61.6% | (0.7) |
| Total accident year losses | $4,515 | $30,926 | (85.4%) | 60.6% | 62.5% | (1.9) |

- The property loss ratio decreased by 33.1 points during the quarter ended March 31, 2024 as compared to the same period in 2023 reflecting a significant reduction in premiums and current accident year losses due to exiting various lines of business.
- The current accident year casualty loss ratio improved by 0.7 points during the quarter ended March 31, 2024 as compared to the same period in 2023 reflecting mix of business changes.

### Expense Ratio

The expense ratio for the Company’s Non-Core Operations increased by 7.0 points from 37.9% for the quarter ended March 31, 2023 to 44.9% for the quarter ended March 31, 2024 primarily due to lower earned premiums as a result of exiting various lines of business.

### Reconciliation of non-GAAP financial measures and ratios

The table below reconciles the non-GAAP measures or ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends within Non-Core Operations may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company.

*(Dollars in thousands)*

| Property | Quarters Ended March 31, 2024 Losses | Loss Ratio | 2023 Losses | Loss Ratio |
| --- | ---: | ---: | ---: | ---: |
| Non catastrophe property losses and ratio excluding the effect of prior accident year (1) | $17 | 27.1% | $3,703 | 42.1% |
| Effect of prior accident year | (241) | (388.7%) | (885) | (10.1%) |
| Non catastrophe property losses and ratio (2) | $(224) | (361.6%) | $2,818 | 32.0% |
| Catastrophe losses and ratio excluding the effect of prior accident year (1) | $4 | 6.5% | $2,165 | 24.6% |
| Effect of prior accident year | (14) | (22.6%) | 621 | 7.1% |
| Catastrophe losses and ratio (2) | $(10) | (16.1%) | $2,786 | 31.7% |
| Total property losses and ratio excluding the effect of prior accident year (1) | $21 | 33.6% | $5,868 | 66.7% |
| Effect of prior accident year | (255) | (411.3%) | (264) | (3.0%) |
| Total property losses and ratio (2) | $(234) | (377.7%) | $5,604 | 63.7% |
| **Casualty** |  |  |  |  |
| Total casualty losses and ratio excluding the effect of prior accident year (1) | $4,494 | 60.9% | $25,058 | 61.6% |
| Effect of prior accident year | 215 | 2.9% | (1,939) | (4.8%) |
| Total casualty losses and ratio (2) | $4,709 | 63.8% | $23,119 | 56.8% |
| **Total** |  |  |  |  |
| Total net losses and loss adjustment expense and total loss ratio excluding the effect of prior accident year (1) | $4,515 | 60.6% | $30,926 | 62.5% |
| Effect of prior accident year | (40) | (0.5%) | (2,203) | (4.4%) |
| Total net losses and loss adjustment expense and total loss ratio (2) | $4,475 | 60.1% | $28,723 | 58.1% |

(1) Non-GAAP measure / ratio

(2) Most directly comparable GAAP measure / ratio

### Unallocated Corporate Items

The Company’s fixed income portfolio, excluding cash, continues to maintain high quality with an AA- average rating and a duration of 1.1 years.

### Net Investment Income

*(Dollars in thousands)*

|  | Quarters Ended March 31,% 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Gross investment income (1) | $15,023 | $12,380 | 21.3% |
| Investment expenses | (503) | (372) | 35.2% |
| Net investment income | $14,520 | $12,008 | 20.9% |

(1) Excludes realized gains and losses

Net investment income increased by 20.9% for the quarter ended March 31, 2024 as compared to the same period in 2023. This increase in net investment income was primarily due to strategies employed by the Company to take advantage of rising interest rates which resulted in a 19% increase in book yield on the fixed maturities portfolio to 4.3% at March 31, 2024 from 3.6% at March 31, 2023.

At March 31, 2024, the Company held asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations with a market value of $335.0 million. Excluding the asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations, the average duration of the Company’s fixed maturities portfolio was 0.9 years as of March 31, 2024, compared with 1.4 years as of March 31, 2023. Changes in interest rates can cause principal payments on certain investments to extend or shorten which can impact duration. The Company’s embedded book yield on its fixed maturities, not including cash, was 4.3% as of March 31, 2024, compared to 3.6% as of March 31, 2023. The embedded book yield on the $23.1 million of taxable municipal bonds in the Company’s portfolio was 2.9% at March 31, 2024, compared to an embedded book yield of 3.1% on the Company’s taxable municipal bonds of $31.9 million at March 31, 2023.

### Net Realized Investment Gains (Losses)

The components of net realized investment gains (losses) for the quarters ended March 31, 2024 and 2023 were as follows:

*(Dollars in thousands)*

|  | Quarters Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Equity securities | $872 | $(914) |
| Fixed maturities | (25) | (606) |
| Net realized investment gains (losses) | $847 | $(1,520) |

See Note 3 of the notes to the consolidated financial statements in Item 1 of Part I of this report for an analysis of total investment return on a pre-tax basis for the quarters ended March 31, 2024 and 2023.

### Corporate and Other Operating Expenses

Corporate and other operating expenses consist of outside legal fees, other professional fees, directors’ fees, management fees & advisory fees, salaries and benefits for holding company personnel, development costs for new products, impairment losses, and taxes incurred which are not directly related to operations. Corporate and other operating expenses were $6.4 million during each of the quarters ended March 31, 2024 and 2023, respectively.

### Income Tax Expense

Income tax expense was $2.9 million for the quarter ended March 31, 2024 compared with income tax expense of $0.6 million for the quarter ended March 31, 2023. The increase in income tax expense is primarily due to higher taxable income in the Company's U.S. Subsidiaries during the quarter ended March 31, 2024 as compared to the same period in 2023.

See Note 6 of the notes to the consolidated financial statements in Item 1 of Part I of this report for a comparison of income tax between periods.

### Net Income

The factors described above resulted in net income of $11.4 million and $2.5 million for the quarters ended March 31, 2024 and 2023, respectively.

### Critical Accounting Estimates and Policies

The Company’s consolidated financial statements are prepared in conformity with GAAP, which require it to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

The most critical accounting policies involve significant estimates and include those used in determining the liability for unpaid losses and loss adjustment expenses, recoverability of reinsurance receivables, investments, fair value measurements, goodwill and intangible assets, deferred acquisition costs, and taxation. For a detailed discussion on each of these policies, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes to any of these policies or underlying methodologies during the current year.

### Liquidity and Capital Resources

### Sources and Uses of Funds

Global Indemnity Group, LLC is a holding company. Its principal asset is its ownership of the shares of its direct and indirect subsidiaries, including those of its insurance companies: United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, Penn-Star Insurance Company, and Penn-Patriot Insurance Company.

Global Indemnity Group, LLC’s current short term and long term liquidity needs include but are not limited to the payment of corporate expenses, distributions to shareholders, and share repurchases. The Company also has commitments in the form of operating leases, commitments to fund limited liability investments, and unpaid losses and loss expense obligations. In order to meet its current short term and long term needs, Global Indemnity Group, LLC’s principal sources of cash includes investment income, dividends from subsidiaries, other permitted disbursements from its direct and indirect subsidiaries, reimbursement for equity awards granted to employees and intercompany borrowings. The principal sources of funds at these direct and indirect subsidiaries include underwriting operations, investment income, proceeds from sales and redemptions of investments, capital contributions, intercompany borrowings, and dividends from subsidiaries. Funds are used principally by these operating subsidiaries to pay claims and operating expenses, to make intercompany debt payments, to purchase investments, and to make distribution payments. In addition, the Company periodically reviews opportunities related to business acquisitions, and as a result, liquidity may be needed in the future.

GBLI Holdings, LLC is a holding company which is a wholly-owned subsidiary of Penn-Patriot Insurance Company. GBLI Holdings, LLC’s principal asset is its ownership of the shares of its direct and indirect subsidiaries which include United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, and Penn-Star Insurance Company. GBLI Holdings, LLC is dependent on dividends from its subsidiaries as well as reimbursements from its subsidiaries for utilization of net operating losses and other tax attributes in order to meet its corporate expense obligations and intercompany financing obligations.

As of March 31, 2024, the Company also had future funding commitments of $14.2 million related to investments that are currently in their harvest period and it is unlikely that a capital call will be made.

The future liquidity of Global Indemnity Group, LLC is dependent on the ability of its subsidiaries to generate income to pay dividends and to pay intercompany debt due to Global Indemnity Group, LLC. The future liquidity of GBLI Holdings, LLC is dependent on the ability of its subsidiaries to generate income to pay dividends as well as receiving reimbursements from its subsidiaries for utilization of net operating losses. Global Indemnity Group, LLC and GBLI Holdings, LLC’s insurance companies are restricted by statute as to the amount of dividends that they may pay without the prior approval of regulatory authorities. The dividend limitations imposed by state laws are based on the statutory financial results of each insurance company that are determined by using statutory accounting practices that differ in various respects from accounting principles used in financial statements prepared in conformity with GAAP. See “Regulation - Statutory Accounting Principles” in Item 1 of Part I of the Company’s 2023 Annual Report on Form 10-K. Key differences relate to, among other items, deferred acquisition costs, limitations on deferred income taxes, reserve calculation assumptions and surplus notes. See Note 21 of the notes to the consolidated financial statements in Item 8 of Part II of the Company’s 2023 Annual Report on Form 10-K for further information on dividend limitations related to the Insurance Companies. There were no dividends declared or paid during the quarter ended March 31, 2024.

### Cash Flows

Sources of operating funds consist primarily of net written premiums and investment income. Funds are used primarily to pay claims and operating expenses and to purchase investments. As a result of the distribution policy, funds may also be used to pay distributions to shareholders of the Company.

The Company’s reconciliation of net income to net cash provided by operations is generally influenced by the following:

- the fact that the Company collects premiums, net of commissions, in advance of losses paid;
- the timing of the Company’s settlements with its reinsurers; and
- the timing of the Company’s loss payments.

Net cash provided by operating activities was $22.7 million and $5.3 million for the quarters ended March 31, 2024 and 2023, respectively. The increase in operating cash flows of approximately $17.4 million from the prior year was primarily a net result of the following items:

*(Dollars in thousands)*

|  | Quarters Ended March 31, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Net premiums collected | $101,493 | $120,397 | $(18,904) |
| Net losses paid | (47,606) | (63,936) | 16,330 |
| Underwriting and corporate expenses | (43,187) | (64,116) | 20,929 |
| Net investment income | 11,976 | 12,981 | (1,005) |
| Net cash provided by operating activities | $22,676 | $5,326 | $17,350 |

See the consolidated statements of cash flows in the consolidated financial statements in Item 1 of Part I of this report for details concerning the Company’s investing and financing activities.

### Liquidity

The Board of Directors approved a distribution payment of $0.35 per common share to all shareholders of record on the close of business on March 21, 2024. Distributions paid to common shareholders were $4.8 million during the quarter ended March 31, 2024. In addition, distributions of $0.1 million were paid to Global Indemnity Group, LLC’s preferred shareholder during the quarter ended March 31, 2024.

### Investment Portfolio

On July 31, 2023, the Company provided the Global Debt Fund, LP with a formal withdrawal request to fully redeem the partnership interest. Partial redemption proceeds of $4.3 million were received during the quarter ended March 31, 2024. The Global Debt Fund, LP had a fair market value of $21.4 million at March 31, 2024.

Other than the items discussed in the preceding paragraphs, there have been no material changes to the Company’s liquidity during the quarter ended March 31, 2024. Please see Item 7 of Part II in the Company’s 2023 Annual Report on Form 10-K for information regarding the Company’s liquidity.

### Capital Resources

There have been no material changes to the Company’s capital resources during the quarter ended March 31, 2024. Please see Item 7 of Part II in the Company’s 2023 Annual Report on Form 10-K for information regarding the Company’s capital resources.

### Off Balance Sheet Arrangements

The Company has no off balance sheet arrangements.

### Cautionary Note Regarding Forward-Looking Statements

Some of the statements under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report may include forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934, as amended, that reflect the Company’s current views with respect to future events and financial performance. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, expectations or consequences of identified transactions or natural disasters, and statements about the future performance, operations, products and services of the companies.

The Company’s business and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. See “Risk Factors” in Item 1A of Part I in the Company’s 2023 Annual Report on Form 10-K for risks, uncertainties and other factors that could cause actual results and experience to differ from those projected. The Company’s forward-looking statements speak only as of the date of this report or as of the date they were made. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

## Market risk

As filed, 1,067 characters.

Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in interest rates, equity prices, credit risk, illiquidity, foreign exchange rates and commodity prices. The Company’s consolidated balance sheets includes the estimated fair values of assets that are subject to market risk. The Company’s primary market risks are interest rate risk and credit risks associated with investments in fixed maturities, equity price risk associated with investments in equity securities, and foreign exchange risk associated with premium received that is denominated in foreign currencies. The Company has no commodity risk.

There have been no material changes to the Company’s market risk since December 31, 2023. The Company’s investment grade fixed income portfolio continues to maintain high quality with an AA- average rating and a duration of 1.1 years.

Please see Item 7A of Part II in the Company’s 2023 Annual Report on Form 10-K for information regarding the Company’s market risk.

## Controls and procedures

As filed, 1,791 characters.

### Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2024. Based upon that evaluation, and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2024, the design and operation of the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

## Risk factors

As filed, 291 characters.

The Company’s results of operations and financial condition are subject to numerous risks and uncertainties described in Item 1A of Part I in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on March 15, 2024. The risk factors identified therein have not materially changed.

Filed May 8, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-055565. Last ingested by Listed: Nov 4, 2026, 08:22 ET. No prices; not investment advice.