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): August 6, 2013
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) |
Registrants 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)) |
Item 2.02 | Results of Operations and Financial Condition. |
On August 6, 2013, Global Indemnity plc (the Company) issued a press release announcing the Companys financial results for its second quarter ended June 30, 2013.
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 August 6, 2013. |
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 | ||||||||
August 6, 2013 | By: | /s/ Thomas M. McGeehan | ||||||
Name: | Thomas M. McGeehan | |||||||
Title: | Chief Financial Officer |
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | Press Release dated August 6, 2013 |
Exhibit 99.1
PRESS RELEASE
For release: | August 6, 2013 | |
Contact: | Media | |
Linda Hohn | ||
Associate General Counsel | ||
(610) 660-6862 | ||
lhohn@global-indemnity.com |
Global Indemnity plc Reports Second Quarter 2013 Financial Results.
Dublin, Ireland (August 6, 2013) Global Indemnity plc (NASDAQ:GBLI) today reported net income for the three months ended June 30, 2013 of $8.7 million or $0.34 per share and six months ended June 30, 2013 of $21.0 million or $0.84 per share. As of June 30th, book value per share was $32.74, a decrease of 0.5% compared to book value per share of $32.91 at March 31, 2013, and an increase of 1.8% compared to book value per share of $32.15 at December 31, 2012.
Selected Operating and Balance Sheet Data (Dollars in millions, except per share data)
For the Three
Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Gross Premiums Written |
$ | 84.2 | $ | 67.6 | $ | 159.2 | $ | 125.4 | ||||||||
Net Premiums Written |
$ | 78.3 | $ | 61.1 | $ | 149.8 | $ | 111.4 | ||||||||
Net income |
$ | 8.7 | $ | 9.6 | $ | 21.0 | $ | 20.5 | ||||||||
Net income per share |
$ | 0.34 | $ | 0.35 | $ | 0.84 | $ | 0.72 | ||||||||
Operating income (1) |
$ | 6.8 | $ | 8.2 | $ | 15.4 | $ | 17.2 | ||||||||
Operating income per share |
$ | 0.27 | $ | 0.29 | $ | 0.61 | $ | 0.61 |
(1) | Excluding the impact of premium deficiencies recorded in 2011 which resulted in 2012 operating income being higher than it otherwise would have been, the three and six months ended June 30, 2012 operating income was $7.1 million, or $0.26 per share, and $13.9 million, or $0.49 per share, respectively. |
As of June 30, 2013 |
As of March 31, 2013 |
As of December 31, 2012 |
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Book value per share |
$ | 32.74 | $ | 32.91 | $ | 32.15 | ||||||
Shareholders equity |
$ | 824.0 | $ | 827.6 | $ | 806.6 | ||||||
Cash and invested assets |
$ | 1,522.0 | $ | 1,539.4 | $ | 1,534.0 |
Cynthia Y. Valko, Chief Executive Officer, commented: I continue to be pleased with Globals development since coming on board in September 2011, including the depth and breadth of our underwriting, product, and client service teams. On a normalized basis (excluding the impact of premium deficiencies), Global generated a 100.9 combined ratio for the first six months of 2013, a marked 7.5 point improvement over 2012. Moreover, during this same period Global increased its premium volume by an impressive 34.5%. Globals primary insurance operations, Penn America, United National and Diamond State, grew practically all of their several business lines while enhancing rates and terms. Wind River, Globals reinsurance division, also experienced fine underwriting results while significantly increasing its revenue as it expanded certain key treaty relationships. Despite the recent spike in interest rates and falling bond market, Globals investment portfolio, 84% of which is invested in bonds and other fixed income instruments, produced a 3.3% return for the first six months of 2013. Quite importantly, A.M. Best, the insurance industrys most trusted and influential rating agency, also recently affirmed Globals A (Excellent) qualitative assessment rating across all of the Companys primary domestic and international reinsurance businesses, operations, and divisions.
1
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 in the United States, as well as reinsurance throughout the world. Global Indemnity plcs two primary divisions are:
| United States Based Insurance Operations |
| Bermuda Based Reinsurance Operations |
For more information, visit the Global Indemnity plc website at http://www.globalindemnity.ie.
Teleconference and Webcast for Interested Parties
Cynthia Valko, Chief Executive Officer of Global Indemnity plc, and Thomas McGeehan, Chief Financial Officer of Global Indemnity plc, will conduct a teleconference for interested parties on August 7, 2013 at 8:30a.m. Eastern Time to discuss the second quarter 2013 results.
The Company will release its earnings after the close of business on August 6, 2013.
To participate in the teleconference, please telephone (800) 230-1085 (U.S. and Canada) or (612) 288-0337 (International) and you will be greeted by an operator. Please reference Global Indemnity plc Earnings Release Call or the host Cynthia Valko.
The teleconference is being webcast by AT&T and can be accessed at the companys website at www.globalindemnity.ie. Please access the site at least 15 minutes prior to the teleconference to register, click on the Webcast link, enter Conference ID number 299415 and click GO. Please download and install any necessary software.
The teleconference will be available for replay beginning at 10:30 a.m. Eastern Time on August 7, 2013 until 11:59 p.m. on August 7, 2014. To listen to the replay, please telephone (800) 475-6701 (U.S. and Canada) or (320) 365-3844 (International) then enter 299415.
Forward-Looking Information
Forward-looking statements contained in this press release are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. We caution investors that our actual results may be materially different from the estimates expressed in, or implied, or projected by, the forward looking statements. Please see our periodic reports filed with the Securities and Exchange Commission for a discussion of the risks and uncertainties which may affect us and for a more detailed discussion of our cautionary note regarding forward-looking statements.
2
Global Indemnity plcs Combined Ratio for the Three and Six Months Ended June 30, 2013 and 2012
The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:
Three Months Ended June 30, |
Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Loss Ratio: |
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Current Accident Year |
||||||||||||||||
Excluding Catastrophes |
46.1 | 55.6 | 49.7 | 59.5 | ||||||||||||
Catastrophes |
14.6 | 8.0 | 11.4 | 6.1 | ||||||||||||
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Current Accident Year |
60.7 | 63.6 | 61.1 | 65.6 | ||||||||||||
Changes to Prior Accident Year |
(1.2 | ) | (1.1 | ) | (2.9 | ) | (1.7 | ) | ||||||||
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Loss Ratio Calendar Year |
59.5 | 62.5 | 58.2 | 63.9 | ||||||||||||
Expense Ratio |
41.7 | 41.1 | 42.7 | 38.4 | ||||||||||||
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Combined Ratio |
101.2 | 103.6 | 100.9 | 102.3 | ||||||||||||
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For the three months ended June 30th, the calendar year loss ratio decreased by 3.0 points to 59.5 in 2013 from 62.5 in 2012.
Excluding the impact of premium deficiencies, the loss ratio for the three months ended June 30, 2012 was 64.5.
| Excluding catastrophes, the current accident year loss ratio decreased by 9.5 points to 46.1 in 2013 from 55.6 in 2012. |
| Excluding catastrophes, the property loss ratio decreased 9.2 points from 38.5 in the second quarter of 2012 to 29.3 in the second quarter of 2013. Including catastrophes, the property loss ratio decreased by 1.9 points to 51.6 in 2013 from 53.5 in 2012. |
| Excluding the impact of premium deficiencies, the casualty loss ratio decreased 1.5 points from 79.5 to 78.0 in 2013. |
| Current year results include a 1.2 point reduction in the loss ratio related to prior accident years. This decrease was primarily driven by better than expected emergence in casualty lines and lower than expected severity in property lines. |
For the three months ended June 30th, the expense ratio increased from 41.1 in 2012 to 41.7 in 2013.
| The expense ratio increased primarily due to the impact of premium deficiencies. Excluding the impact of premium deficiencies, the expense ratio for the three months ended June 30, 2012 was 43.2. |
For the six months ended June 30th, the calendar year loss ratio decreased by 5.7 points to 58.2 in 2013 from 63.9 in 2012.
Excluding the impact of premium deficiencies, the loss ratio for the six months ended June 30, 2012 was 67.2.
| Excluding catastrophes, the current accident year loss ratio decreased by 9.8 points to 49.7 in 2013 from 59.5 in 2012. |
| Excluding catastrophes, the property loss ratio decreased from 43.7 in 2012 to 36.3 in 2013. Including catastrophes, the property loss ratio decreased by 2.0 points to 53.8 in 2013 from 55.8 in 2012. |
| Excluding the impact of premium deficiencies, the casualty loss ratio decreased 7.8 points to 74.7 in 2013 from 82.5 in 2012. |
| Current year results include a 2.9 point reduction in the loss ratio related to prior accident years. This decrease was primarily driven by better than expected emergence in casualty and property lines. |
For the six months ended June 30th, the expense ratio increased from 38.4 in 2012 to 42.7 in 2013.
| The expense ratio increased primarily due to an increase in contingent commissions as a result of profitable treaties written in the Reinsurance Operations as well as the impact of premium deficiencies. Excluding the impact of premium deficiencies, the expense ratio for the six months ended June 30, 2012 was 41.2. |
3
Global Indemnity plcs Gross and Net Premiums Written Results by Segment
(Dollars in thousands) | Three Months Ended June 30, | |||||||||||||||
Gross Premiums Written | Net Premiums Written | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Insurance Operations |
$ | 61,879 | $ | 52,371 | $ | 56,387 | $ | 45,874 | ||||||||
Reinsurance Operations |
22,366 | 15,261 | 21,959 | 15,261 | ||||||||||||
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Total |
$ | 84,245 | $ | 67,632 | $ | 78,346 | $ | 61,135 | ||||||||
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Six Months Ended June 30, | ||||||||||||||||
Gross Premiums Written | Net Premiums Written | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Insurance Operations |
$ | 112,967 | $ | 100,205 | $ | 104,015 | $ | 86,780 | ||||||||
Reinsurance Operations |
46,217 | 25,185 | 45,809 | 24,636 | ||||||||||||
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Total |
$ | 159,184 | $ | 125,390 | $ | 149,824 | $ | 111,416 | ||||||||
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Insurance Operations: For the three and six months ended June 30, 2013, gross premiums written increased 18.2% and 12.7%, respectively, and net premiums written increased 22.9% and 19.9%, respectively, compared to the same periods in 2012. These were primarily driven by an increase in the Companys small business line. Written premium increases were also realized in property brokerage, programs, and other lines. Net written premiums also increased as a result of the Company retaining more of its direct business.
Reinsurance Operations: For the three and six months ended June 30, 2013, gross premiums written increased 46.6% and 83.5%, respectively, and net premiums written increased 43.9% and 85.9%, respectively, compared to the same periods in 2012. These increases were primarily due to several new treaties written during 2013.
# # #
Note: Tables Follow
4
GLOBAL INDEMNITY PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in thousands, except per share data)
For the Three Months Ended June, |
For the Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Gross premiums written |
$ | 84,245 | $ | 67,632 | $ | 159,184 | $ | 125,390 | ||||||||
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Net premiums written |
$ | 78,346 | $ | 61,135 | $ | 149,824 | $ | 111,416 | ||||||||
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Net premiums earned |
$ | 58,671 | $ | 57,859 | $ | 114,667 | $ | 122,329 | ||||||||
Net investment income |
9,765 | 11,071 | 19,799 | 22,488 | ||||||||||||
Net realized investment gains |
2,806 | 1,941 | 8,563 | 3,702 | ||||||||||||
Other income (loss) |
247 | (40 | ) | 301 | (392 | ) | ||||||||||
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Total revenues |
71,489 | 70,831 | 143,330 | 148,127 | ||||||||||||
Net losses and loss adjustment expenses |
34,924 | 36,158 | 66,712 | 78,167 | ||||||||||||
Acquisition costs and other underwriting expenses |
24,472 | 23,760 | 48,949 | 46,927 | ||||||||||||
Corporate and other operating expenses |
2,472 | 2,336 | 4,817 | 4,824 | ||||||||||||
Interest expense |
1,181 | 1,470 | 2,354 | 2,948 | ||||||||||||
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Income before income taxes |
8,440 | 7,107 | 20,498 | 15,261 | ||||||||||||
Income tax benefit |
(224 | ) | (2,497 | ) | (531 | ) | (5,205 | ) | ||||||||
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Net income |
$ | 8,664 | $ | 9,604 | $ | 21,029 | $ | 20,466 | ||||||||
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Weighted average shares outstandingbasic |
25,050 | 27,830 | 25,052 | 28,223 | ||||||||||||
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Weighted average shares outstandingdiluted |
25,119 | 27,836 | 25,121 | 28,237 | ||||||||||||
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Net income per share basic |
$ | 0.35 | $ | 0.35 | $ | 0.84 | $ | 0.73 | ||||||||
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Net income per share diluted |
$ | 0.34 | $ | 0.35 | $ | 0.84 | $ | 0.72 | ||||||||
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Combined ratio analysis: (1) |
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Loss ratio (2) |
59.5 | 62.5 | 58.2 | 63.9 | ||||||||||||
Expense ratio (3) |
41.7 | 41.1 | 42.7 | 38.4 | ||||||||||||
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Combined ratio (4) |
101.2 | 103.6 | 100.9 | 102.3 | ||||||||||||
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(1) | The loss ratio, expense ratio and combined ratio are non-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. |
(2) | Excluding the impact of premium deficiencies, the loss ratio was 64.5% and 67.2% for the quarter and six months ended June 30, 2012, respectively. |
(3) | Excluding the impact of premium deficiencies, the expense ratio was 43.2% and 41.2% for the quarter and six months ended June 30, 2012, respectively. |
(4) | Excluding the impact of premium deficiencies, the combined ratio was 107.7% and 108.4% for the quarter and six months ended June 30, 2012, respectively. |
5
GLOBAL INDEMNITY PLC
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited) June 30, 2013 |
December 31, 2012 | |||||||
ASSETS |
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Fixed Maturities: |
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Available for sale securities, at fair value (amortized cost: 2013 - $1,163,532 and 2012 - $1,187,094) |
$ | 1,184,738 | $ | 1,229,322 | ||||
Equity securities: |
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Available for sale, at fair value (cost: 2013 - $174,693 and 2012 - $167,179) |
222,583 | 197,075 | ||||||
Other invested assets: |
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Available for sale securities, at fair value (cost: 2013 - $3,059 and 2012 - $3,049) |
3,226 | 3,132 | ||||||
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Total investments |
1,410,547 | 1,429,529 | ||||||
Cash and cash equivalents |
111,440 | 104,460 | ||||||
Premiums receivable, net |
74,027 | 45,162 | ||||||
Reinsurance receivables, net |
232,645 | 241,827 | ||||||
Receivable for securities |
5,160 | | ||||||
Deferred federal income taxes |
10,445 | 10,824 | ||||||
Deferred acquisition costs |
25,980 | 18,265 | ||||||
Intangible assets |
18,166 | 18,343 | ||||||
Goodwill |
4,820 | 4,820 | ||||||
Prepaid reinsurance premiums |
5,248 | 5,945 | ||||||
Federal income taxes receivable |
1,393 | 6,844 | ||||||
Other assets |
14,951 | 17,684 | ||||||
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Total assets |
$ | 1,914,822 | $ | 1,903,703 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Liabilities: |
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Unpaid losses and loss adjustment expenses |
$ | 844,918 | $ | 879,114 | ||||
Unearned premiums |
128,572 | 94,114 | ||||||
Ceded balances payable |
4,628 | 4,201 | ||||||
Contingent commissions |
7,302 | 9,911 | ||||||
Payable for securities purchased |
| 2,634 | ||||||
Notes and debentures payable |
84,929 | 84,929 | ||||||
Other liabilities |
20,523 | 22,182 | ||||||
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Total liabilities |
1,090,872 | 1,097,085 | ||||||
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Shareholders equity: |
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Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 16,164,587 and 16,087,939 respectively; A ordinary shares outstanding: 13,105,826 and 13,030,938, respectively; B ordinary shares issued and outstanding: 12,061,370 and 12,061,370, respectively |
3 | 3 | ||||||
Additional paid-in capital |
514,422 | 512,304 | ||||||
Accumulated other comprehensive income, net of taxes |
47,574 | 53,350 | ||||||
Retained earnings |
363,200 | 342,171 | ||||||
A ordinary shares in treasury, at cost: 3,058,761 and 3,057,001 shares, respectively |
(101,249 | ) | (101,210 | ) | ||||
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Total shareholders equity |
823,950 | 806,618 | ||||||
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Total liabilities and shareholders equity |
$ | 1,914,822 | $ | 1,903,703 | ||||
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6
GLOBAL INDEMNITY PLC
SELECTED INVESTMENT DATA
(Dollars in millions)
Market Value as of | ||||||||
(Unaudited) June 30, 2013 |
December 31, 2012 | |||||||
Fixed Maturities |
$ | 1,184.7 | $ | 1,229.3 | ||||
Cash and cash equivalents |
111.4 | 104.5 | ||||||
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Total bonds and cash and cash equivalents |
1,296.1 | 1,333.8 | ||||||
Equities and other invested assets |
225.8 | 200.2 | ||||||
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Total cash and invested assets, gross |
1,521.9 | 1,534.0 | ||||||
Receivable / (payable) for securities |
5.2 | (2.6 | ) | |||||
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Total cash and invested assets, net |
$ | 1,527.1 | $ | 1,531.4 | ||||
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(Unaudited) Three Months Ended June 30, 2013 (a) |
(Unaudited) Six Months Ended June 30, 2013 (a) |
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Net investment income |
$ | 9.8 | $ | 19.8 | ||||
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Net realized investment gains |
2.8 | 8.6 | ||||||
Net unrealized investment loss |
(15.4 | ) | (3.2 | ) | ||||
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Net realized and unrealized investment returns |
(12.6 | ) | 5.4 | |||||
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Total investment return |
$ | (2.8 | ) | $ | 25.2 | |||
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Average total cash and invested assets (b) |
$ | 1,532.6 | $ | 1,529.3 | ||||
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Total investment return % annualized |
(0.7 | %) | 3.3 | % |
(a) | Amounts in this table are shown on a pre-tax basis. |
(b) | Simple average of beginning and end of period, net of payable/receivable for securities. |
7
GLOBAL INDEMNITY PLC
SUMMARY OF OPERATING INCOME
(Unaudited)
(Dollars and shares in thousands, except per share data)
For the Three
Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Operating income (1) |
$ | 6,840 | $ | 8,154 | $ | 15,377 | $ | 17,235 | ||||||||
Adjustments: |
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Net realized investment gains, net of tax |
1,824 | 1,450 | 5,652 | 3,231 | ||||||||||||
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Total after-tax adjustments |
1,824 | 1,450 | 5,652 | 3,231 | ||||||||||||
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Net income |
$ | 8,664 | $ | 9,604 | $ | 21,029 | $ | 20,466 | ||||||||
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Weighted average shares outstanding basic |
25,050 | 27,830 | 25,052 | 28,223 | ||||||||||||
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Weighted average shares outstanding diluted |
25,119 | 27,836 | 25,121 | 28,237 | ||||||||||||
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Operating income per share basic |
$ | 0.27 | $ | 0.29 | $ | 0.61 | $ | 0.61 | ||||||||
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Operating income per share diluted |
$ | 0.27 | $ | 0.29 | $ | 0.61 | $ | 0.61 | ||||||||
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(1) | Excluding the impact of premium deficiencies recorded in 2011 which resulted in 2012 operating income being higher than it otherwise would have been, the three and six months ended June 30, 2012 operating income was $7.1 million, or $0.26 per share, and $13.9 million, or $0.49 per share, respectively. |
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.
8
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