8-K

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 7, 2020

Global Indemnity Limited

(Exact name of registrant as specified in its charter)

Cayman Islands	001-34809	98-1304287
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
27 Hospital Road George Town, Grand Cayman KY1-9008, Cayman Islands		None
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (345) 949-0100

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
A Ordinary Shares	GBLI	NASDAQ Global Select Market
7.75% Subordinated Notes due 2045	GBLIZ	NASDAQ Global Select Market
7.875% Subordinated Notes due 2047	GBLIL	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

On May 7, 2020, Global Indemnity Limited (the “Company”) issued a press release announcing the Company’s financial results for the quarter ended March 31, 2020.

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 7, 2020.

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 Limited
May 7, 2020	By:	/s/  Thomas M. McGeehan
		Name:	Thomas M. McGeehan
		Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

PRESS RELEASE

For release:	May 7, 2020
Contact:	Media
	Stephen W. Ries
	Senior Corporate Counsel
	(610) 668-3270 sries@global-indemnity.com

Global Indemnity Limited Reports First Quarter 2020 Results

George Town, Cayman Islands (May 7, 2020) – Global Indemnity Limited (NASDAQ:GBLI) today reported that for the three months ended March 31, 2020, the Company’s Gross Written Premiums increased 9.5% to $155.7 million and Net Written Premiums increased 12.7% to $139.1 million. Adjusted Operating Income for the quarter declined by $1.6 million, or 13.2%, to $10.0 million as compared to the first quarter of 2019, which quarter included a $7.9 million release of excess reserves as compared to a $0.6 million release in the current quarter. The Company’s Combined Ratio for the period was 92.7%. The Company’s $1.6 billion Investment Portfolio declined $56.4 million, or 3.5%, over the quarter as a result of the steep (approx. 20%) decline in U.S. equity markets related to the Covid-19 pandemic. As a result, the Company incurred a $44.6 million net loss for the quarter and a 6.8% pre-dividend decline in book value per share from $50.82 at December 31, 2019, to $47.12 at March 31, 2020. In light of the Covid-19 pandemic, the Company also reported that all of its in force business interruption insurance coverages contain a specific exclusion in respect of virus and bacteria.

Selected Operating and Balance Sheet Information

(Dollars in millions, except per share data)

	For the Three Months Ended March 31,
	2020			2019
Gross Written Premiums	$	155.7		$	142.2
Net Written Premiums	$	139.1		$	123.4
Net income (loss)	$	(44.6	)	$	19.6
Net income (loss) per share	$	(3.13	)	$	1.37
Adjusted operating income (1)	$	10.0		$	11.6
Adjusted operating income per share	$	0.70		$	0.81
Combined ratio analysis:
Loss ratio		53.7	%		47.8	%
Expense ratio		39.0	%		40.7	%
Combined ratio		92.7	%		88.5	%

(1) Net Income exclusive of investment portfolio gains and losses.

	As of March 31,		As of December 31,
	2020		2019
Book value per share (2)	$	47.12	$	50.82
Shareholders’ equity	$	674.6	$	726.8
Cash and invested assets (3)	$	1,550.6	$	1,607.0

(2) Net of cumulative Company dividends to shareholders totaling $2.25 per share and $2.00 per share as of March 31, 2020 and December 31, 2019, respectively.

(3) Including receivable/(payable) for securities sold/(purchased)

About Global Indemnity Limited and its subsidiaries

Global Indemnity Limited (NASDAQ:GBLI), through its several direct and indirect wholly owned subsidiary insurance and reinsurance companies, provides both admitted and non-admitted specialty property and specialty casualty insurance coverages and individual policyholder coverages in the United States, as well as reinsurance worldwide. Global Indemnity Limited’s four primary segments are:

• United States Based Commercial Specialty

• United States Based Specialty Property

• United States Based Farm, Ranch, & Stable

• Bermuda Based Reinsurance

For more information, visit the Global Indemnity Limited’s website at http://www.globalindemnity.ky.

Forward-Looking Information

The forward-looking statements contained in this press release¹ do not address a number of risks and uncertainties including COVID-19. 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. These statements are based on estimates and information available to us at the time of this press release. All forward-looking statements in this press release are based on information available to Global Indemnity as of the date hereof. Please see Global Indemnity’s filings with the Securities and Exchange Commission for a discussion of risks and uncertainties which could impact the company and for a more detailed explication regarding forward-looking statements. Global Indemnity does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

[1] Disseminated pursuant to the “safe harbor” provisions of Section 21E of the Security Exchange Act of 1934.

Global Indemnity Limited’s Combined Ratio for the Three Months Ended March 31, 2020 and 2019

For the three months ended March 31, 2020, the Company recorded a combined ratio of 92.7% (Loss Ratio 53.7% and Expense Ratio 39.0%) as compared to 88.5% (Loss Ratio 47.8% and Expense Ratio 40.7%) for the three months ended March 31, 2019.

• The Company’s accident year property loss ratio for the period of 50.8% improved by 1.8 points from the 2019 first quarter primarily as a result of a reductions in claims frequency and severity within the Specialty Property and Farm, Ranch, and Stable segments.

• The accident year casualty loss ratio for the period of 59.1% as compared to 58.1% in the comparable 2019 period reflects the addition of a new casualty reinsurance treaty.

Global Indemnity Limited’s Gross and Net Written Premiums Results by Segment for the Three Months Ended March 31, 2020 and 2019

	Three Months Ended March 31,
	Gross Written Premiums							Net Written Premiums
	2020		2019		% Change			2020		2019		% Change
Commercial Specialty	$	80,831	$	64,213		25.9	%	$	72,483	$	55,170		31.4	%
Specialty Property		35,243		39,674		(11.2	%)		30,007		33,212		(9.7	%)
Farm, Ranch, & Stable		22,133		20,765		6.6	%		19,105		17,492		9.2	%
Reinsurance		17,517		17,549		(0.2	%)		17,517		17,542		(0.1	%)
Total	$	155,724	$	142,201		9.5	%	$	139,112	$	123,416		12.7	%

Commercial Specialty Operations: Gross written premiums and net written premiums increased 25.9% and 31.4%, respectively, for the three months ended March 31, 2020 as compared to the same period in 2019. This increase is primarily driven by organic growth from existing agents, increased pricing, and several new programs.

Specialty Property Operations: Gross written premiums and net written premiums decreased by 11.2% and 9.7% for the three months ended March 31, 2020 as compared to the same period in 2019. The decreases are primarily due to a continued reduction of catastrophe exposed business.

Farm, Ranch, & Stable Operations: Gross written premiums increased by 6.6% and net written premiums increased by 9.2% for the three months ended March 31, 2020 as compared to the same period in 2019. The increase in gross and net written premiums was primarily due to an increase in pricing.

Reinsurance Operations: Gross written premiums and net written premiums decreased 0.2% and 0.1%, respectively, for the three months ended March 31, 2020, as compared to the same period in 2019, which was primarily due to the non-renewal of property catastrophe treaties offset by the growth of the new casualty treaty entered into during 2019.

###

Note: Tables Follow

GLOBAL INDEMNITY LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

	For the Three Months Ended March 31,
	2020			2019
Gross written premiums	$	155,724		$	142,201
Net written premiums	$	139,112		$	123,416
Net earned premiums	$	144,468		$	122,089
Net investment income		10,129			7,219
Net realized investment gains (losses)		(68,162	)		10,390
Other income		165			488
Total revenues		86,600			140,186
Net losses and loss adjustment expenses (1)		77,647			58,321
Acquisition costs and other underwriting expenses		56,412			49,743
Corporate and other operating expenses		4,223			3,205
Interest expense		4,865			5,023
Income (loss) before income taxes		(56,547	)		23,894
Income tax expense (benefit)		(11,969	)		4,294
Net income (loss)	$	(44,578	)	$	19,600
Weighted average shares outstanding–basic		14,250			14,154
Weighted average shares outstanding–diluted		14,250			14,315
Net income (loss) per share – basic	$	(3.13	)	$	1.38
Net income (loss) per share – diluted (2)	$	(3.13	)	$	1.37
Cash dividends declared per share	$	0.25		$	0.25
Combined ratio analysis: (3)
Loss ratio		53.7	%		47.8	%
Expense ratio		39.0	%		40.7	%
Combined ratio		92.7	%		88.5	%

(1) Includes loss reductions related to prior years of $0.6 million and $7.9 million for the three months ended March 31, 2020 and 2019, respectively.

(2) For the quarter ended March 31, 2020, weighted average shares outstanding – basic was used to calculate diluted earnings per share due to a net loss for the period.

(3) 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 earned premiums. The expense ratio is the ratio of acquisition costs and other underwriting expenses to net earned premiums. The combined ratio is the sum of the loss and expense ratios.

GLOBAL INDEMNITY LIMITED

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	(Unaudited) March 31, 2020			December 31, 2019
ASSETS
Fixed Maturities:
Available for sale securities, at fair value (amortized cost: 2020 - $1,252,931 and 2019 - $1,231,568; net of allowance of: 2020 - $0)	$	1,271,706		$	1,253,159
Equity securities, at fair value		174,386			263,104
Other invested assets		47,308			47,279
Total investments		1,493,400			1,563,542
Cash and cash equivalents		59,751			44,271
Premiums receivable, net of allowance for expected credit losses of $2,746 at March 31, 2020		115,331			118,035
Reinsurance receivables, net of allowance for expected credit losses of $8,992 at March 31, 2020		83,074			83,938
Funds held by ceding insurers		47,096			48,580
Federal income taxes receivable		5,510			10,989
Deferred federal income taxes		42,117			31,077
Deferred acquisition costs		69,615			70,677
Intangible assets		21,359			21,491
Goodwill		6,521			6,521
Prepaid reinsurance premiums		15,512			16,716
Other assets		69,218			60,048
Total assets	$	2,028,504		$	2,075,885
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses	$	639,468		$	630,181
Unearned premiums		308,301			314,861
Ceded balances payable		23,932			20,404
Payables for securities purchased		2,585			850
Contingent commissions		5,841			11,928
Debt		294,784			296,640
Other liabilities		78,957			74,212
Total liabilities		1,353,868			1,349,076
Shareholders’ equity:
Ordinary shares, $0.0001 par value, 900,000,000 ordinary shares authorized; A ordinary shares issued: 10,305,404 and 10,282,277, respectively; A ordinary shares outstanding: 10,185,459 and 10,167,056, respectively; B ordinary shares issued and outstanding: 4,133,366 and 4,133,366, respectively		2			2
Additional paid-in capital (1)		443,641			442,403
Accumulated other comprehensive income, net of taxes		12,560			17,609
Retained earnings (1)		222,549			270,768
A ordinary shares in treasury, at cost: 119,945 and 115,221 shares, respectively		(4,116	)		(3,973	)
Total shareholders’ equity		674,636			726,809
Total liabilities and shareholders’ equity	$	2,028,504		$	2,075,885

(1) Since the Company’s initial public offering in 2003, the Company repurchased 20.2 million shares for a total of $488 million. These share repurchases are reflected by a $488 million reduction of the Company’s additional paid-in capital and retained earnings as of March 31, 2020 and December 31, 2019. Retained earnings are also net of $32 million and $29 million of cumulative historic Company dividends to shareholders as of March 31, 2020 and December 31, 2019, respectively.

GLOBAL INDEMNITY LIMITED

SELECTED INVESTMENT DATA

(Dollars in millions)

	Market Value as of
	(Unaudited) March 31, 2020			December 31, 2019
Fixed maturities	$	1,271.7		$	1,253.2
Cash and cash equivalents		59.8			44.3
Total bonds and cash and cash equivalents		1,331.5			1,297.5
Equities and other invested assets		221.7			310.4
Total cash and invested assets, gross		1,553.2			1,607.9
Payable for securities purchased		(2.6	)		(0.9	)
Total cash and invested assets, net	$	1,550.6		$	1,607.0

	Total Investment Return (1)
	For the Three Months Ended March 31, (unaudited)
	2020			2019
Net investment income	$	10.1		$	7.2
Net realized investment gains (losses)		(68.2	)		10.4
Net unrealized investment gains (losses)		(4.1	)		26.3
Net realized and unrealized investment gains (losses)		(72.3	)		36.7
Total net investment income and gains (losses)	$	(62.2	)	$	43.9
Average total cash and invested assets	$	1,578.8		$	1,514.3
Total investment return %		(3.9	%)		2.9	%

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

GLOBAL INDEMNITY LIMITED

SUMMARY OF ADJUSTED OPERATING INCOME

(Unaudited)

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

	For the Three Months Ended March 31,
	2020			2019
Adjusted operating income, net of tax	$	10,049		$	11,580
Adjustments:
Net realized investment gains (losses)		(54,627	)		8,020
Net income (loss)	$	(44,578	)	$	19,600
Weighted average shares outstanding – basic		14,250			14,154
Weighted average shares outstanding – diluted		14,418			14,315
Adjusted operating income per share – basic	$	0.71		$	0.82
Adjusted operating income per share – diluted	$	0.70		$	0.81

Note Regarding Adjusted Operating Income

Adjusted operating income, a non-GAAP financial measure, is equal to net income (loss) excluding after-tax net realized investment gains (losses) and other unique charges not related to operations. Adjusted operating income is not a substitute for net income (loss) determined in accordance with GAAP, and investors should not place undue reliance on this measure.