Global Indemnity PLC (market cap: $410.92M) reported its Q1 2025 earnings, revealing a net loss primarily due to significant wildfire-related costs. Despite this setback, the company continues to focus on strategic restructuring and expects future growth. The stock saw a slight decline in pre-market trading following the earnings announcement. According to InvestingPro data, the company maintains a healthy dividend yield of 4.83% and trades at an attractive P/E ratio of 9.18x.
Key Takeaways
- Global Indemnity reported a net loss of $4 million for Q1 2025.
- Wildfire losses amounted to $15.6 million pretax.
- The company launched new strategic initiatives and product lines.
- Investment income increased by 2% to $14.8 million.
- Consolidated gross premiums rose by 6% to $98.7 million.
Company Performance
Global Indemnity’s performance in Q1 2025 was overshadowed by a net loss of $4 million, largely driven by $15.6 million in wildfire-related losses. Without these losses, the company would have reported a net income of $8.2 million. Despite the challenges, the company saw a 6% increase in consolidated gross premiums, reaching $98.7 million, and a modest 2% rise in investment income to $14.8 million.
Financial Highlights
- Revenue: $14.4 million (actual for Q1 2025)
- Net loss: $4 million
- Wildfire losses: $15.6 million pretax
- Investment income: $14.8 million, up 2%
- Consolidated gross premiums: $98.7 million, up 6%
- Book value per share decreased from $49.98 to $47.85
Earnings vs. Forecast
Global Indemnity’s earnings per share (EPS) fell short of expectations, with an actual EPS of -$0.30 compared to a forecasted $0.10. This represents a significant miss, largely attributed to unexpected wildfire losses. The revenue figure was reported at $14.4 million for the quarter.
Market Reaction
Following the earnings announcement, Global Indemnity’s stock experienced a slight decline in pre-market trading, dropping by 0.62% to $28.82. This decline places the stock closer to its 52-week low of $28.15, amidst broader market trends that have seen modest fluctuations in the insurance sector. InvestingPro analysis suggests the stock is currently undervalued, with two key ProTips indicating the stock is in oversold territory and trading at a low P/E ratio relative to near-term earnings growth. (Discover 5 more exclusive ProTips and comprehensive valuation metrics with InvestingPro’s detailed research report, part of their coverage of 1,400+ US stocks.)
Outlook & Guidance
Looking ahead, Global Indemnity anticipates premium growth of at least 10% in 2025, with improved underwriting performance expected in the remaining quarters. The company plans to expand its product offerings through organic growth and potential acquisitions, while continuing to manage catastrophe exposures, particularly in wildfire-prone areas. InvestingPro’s Financial Health Score rates the company as "GOOD" with a score of 2.68, suggesting solid fundamentals despite recent challenges. The platform’s comprehensive analysis reveals the company has maintained profitability over the last twelve months, with analysts projecting continued profitability for the current fiscal year.
Executive Commentary
Jay Brown, CEO, emphasized the company’s long-term growth strategy, stating, "Our insurance operations have been building momentum to consistently achieve both long term growth and profitability metrics." CFO Brian Reilly reiterated the company’s growth expectations, noting, "We continue to expect premium growth of at least 10%."
Risks and Challenges
- Catastrophe exposure, particularly wildfires, remains a significant risk.
- Maintaining competitive expense ratios amid inflationary pressures.
- The challenge of achieving projected premium growth in a competitive market.
- Potential regulatory changes affecting the insurance industry.
- Economic uncertainties that could impact investment income.
Q&A
During the earnings call, analysts inquired about the company’s expense ratio, which is expected to remain between 39-40% in 2025. Questions also focused on the strategic restructuring under Project Manifest and the issuance of 550,000 A2 shares to Fox Payne for advisory services. Management defended its capital retention strategy, emphasizing its focus on long-term growth.
Full transcript - Global Indemnity PLC (GBLI) Q1 2025:
Kayla, Conference Operator: Thank you for standing by. My name is Kayla, I will be your conference operator today. At this time, I’d like to welcome everyone to the Global Indemnity Group First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.
We will also be taking questions from the webcast. I would now like to turn the call over to Evan Kasowitz, President of Belmont Holdings. You may begin.
Evan Kasowitz, President of Belmont Holdings, Global Indemnity Group: Thank you, operator. Today’s conference call is being recorded. GBLI’s remarks may contain forward looking statements. Some of the forward looking statements can be identified by the use of forward looking words, including without limitation, beliefs, expectations or estimates. We caution you that such forward looking statements should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will in fact be achieved.
Please refer to our annual report on Form 10 ks and our other filings with the SEC for descriptions of the business environment in which we operate and the important factors that may materially affect our results. Global Indemnity Group LLC is not under any obligation and expressly disclaims any such obligation to update or alter its forward looking statements whether as a result of new information, future events or otherwise. It is now my pleasure to turn the call over to Mr. Jay Brown, Chief Executive of Global Indemnity.
Jay Brown, Chief Executive, Global Indemnity Group: Thank you, Evan. Good morning and thank you all for joining us for the GBLI first quarter update on our 2025 financial and operational results. Consistent with our past calls, I will first provide a few overview comments to put this quarter into context. Then our Chief Financial Officer, Brian Reilly, will expand on this quarter’s financial numbers for our insurance and investment operations. When I joined the company two point five years ago, we established a tactical plan to maximize long term value for our shareholders.
First, we assessed our product offerings and then spent a few months refocusing our insurance business around those core products that had consistently been underwritten profitably. 2023 was a realignment and transition year as we underwent the expense restructuring to match our slim down product offerings and design a long term competitive IT architecture. These efforts started to pay off in 2024 as we grew our core business consistent with our long term goals, hit our underwriting targets and deployed the first components of our proprietary underwriting and policy management software. Our insurance operations have been building momentum to consistently achieve both long term growth and profitability metrics to create value for our shareholders. This momentum continued in the first quarter as our underlying core growth excluding terminated products was 16% and our underwriting results excluding the California wildfires slightly out past last year at a combined ratio of 94.8.
I will come back to the wildfires in a few moments which obviously depressed first quarter completely. Having stabilized our operations to achieve appropriate growth and underwriting results for existing products, we completed our project manifest strategic restructuring at the end of twenty twenty four to facilitate efficient and controlled rapid product expansion. We anticipate that this expansion will occur over the next few years fueled by a mixture of both organic growth, incubated new teams and coupled with some focused purchases of existing distribution operations. As noted on our last call, we have begun to build out our agency and insurance services group with the hiring of Praveen Reddy and he has now started to recruit a few key additional members to facilitate execution of this next stage of growth for GBLI. Given the completion of the legal restructuring at the end of last year, this quarter marks the first time we will start to report on our numbers consistent with the new structure.
As we have not yet added any new products or established new carrier relationships, the results in the short term will not show any meaningful benefits from our new structure. Brian will provide more detailed comments on both overall insurance operations and the first breakdown by the new segments. Turning to a couple of key performance indicators. Our rate increases and exposure growth continued to modestly exceed our estimates of social and price inflation trends. This will continue to be a key objective for 2025 given the ongoing uncertainty on the national price inflation front.
Also our estimates for the prior year’s loss results remain stable with virtually no difference between calendar and accident year numbers. Our reserve margins also remain solid with no change in margin estimated at quarter end from last year end. Our ongoing efforts to manage catastrophe exposures for our property segments experienced a bit of a disappointment with a $15,000,000 catastrophic loss from the recent Los Angeles wildfires. Virtually all of our loss occurred in the Palisades fire with almost no loss in the Eaton fire. Given the industry impact of the LA fires, our result was modestly below our property share in California, albeit still very significant for a company of our size in a calendar quarter.
Although we expect an annual average of $17,000,000 from all catastrophic losses given our current book of business in a calendar year, the sheer magnitude of this catastrophic loss in the Palisades fire exceeded the different models we have used for wildfires in the more moderate wildfire risk locations like the Palisades in the LA Basin. Like most industry players, we are rethinking the validity of past severity model estimates for wildfire cat exposures and have already taken steps to further reduce our property exposures to wildfires. We continue to manage internal expenses a bit higher than our long term targets in order to provide the best service for our customers. As noted in the past quarters, we have maintained staff numbers just slightly below twenty twenty three as we grow our business at double digit levels and keep expense growth at half of those growth rates. While the expense ratio for the existing business is trending in the right direction with a twenty twenty four ratio of approximately 38, Corporate expenses associated with project manifest and the build out of our agency and insurance services staff escalated that ratio by a couple of points in the first quarter.
Although we expect to make additional investments in people over the next couple of years, we still have not lost sight of our long term expense objective and we’ll continue to work to get expense ratios down to 37% or lower. In conclusion, our reported numbers clearly fell short of our targets, but the underlying trends remain strong and point to significant shareholder value growth going forward. I’ll now turn the call over to Brian.
Brian Reilly, Chief Financial Officer, Global Indemnity Group: Thank you, Jay. The net loss of $4,000,000 for the first quarter includes losses from California wildfires of $15,600,000 pretax or $12,200,000 after tax. Excluding the California wildfire losses, net income would have been $8,200,000 for the first quarter compared to $11,400,000 in the same period last year. Including a $3,500,000 of unrealized gains on the bond portfolio, comprehensive loss was $500,000 for the quarter. Book value per share decreased from $49.98 at year end to $47.85 at March 31, driven by $500,000 of comprehensive loss, which equates to about $04 $5,000,000 of dividends at $0.35 per share, with the remainder from stock compensation for the successful completion of Project Manifest.
Let me add a little color on investments and underwriting performance. Starting with investments. Investment income increased 2% to $14,800,000 from a year ago. Cash flows and maturities of bonds totaling $685,000,000 yielding 4.75% were reinvested at an average yield of 4.86%. Current book yield on the fixed income portfolio is now 4.5% with a duration of one point three years at March 31, compared to 4.4% and a duration of zero point eight years at 12/31/2024.
For further comparison, the book yield was 2.2% with a duration of three point two years at 12/31/2021 before the company took action in early twenty twenty two to sell longer dated securities and shortened duration. The average credit quality of the fixed income portfolio remains at AA minus. As a result of that low duration, we have $700,000,000 of investments maturing in the remainder of 2025. Overall, we are well positioned to take advantage of further opportunities to improve yield on the fixed income portfolio. As for underwriting performance, in the first quarter of twenty twenty five, we changed how we manage our segments and we now have three segments: one, Agency and Insurance Services two, Belmont Core and three, Belmont Non Core.
Our new segment, Agency and Insurance Services, consists of our three agencies that produce direct business, our technology company and our claims services company. The Agency and Insurance Services segment generated income on affiliated agreements of $1,800,000 before tax for the quarter. Belmont Core, previously referred to as PEN America and Belmont Non Core, previously referred to as simply Non Core, makes up our insurance company operations. Since the Belmont Non Core business is having a diminishing impact on overall results, I will comment on consolidated underwriting results. Current accident year loss was $10,300,000 for the first quarter due to the previously mentioned California wildfire losses of 15,600,000.0 Excluding California wildfires, underwriting income would have been in line with 24,000,000 at $5,300,000 in 2025.
The consolidated accident year combined ratio was 111.5 in 2025. Excluding the wildfires, it was 94.8% compared to 94.9% in 2024. The current next year expense ratio was 40% for twenty twenty five percent compared to 39.6% in 2024. Expenses remain elevated, as Jay mentioned, here in the short run as we run off our non core businesses and invest in our new agency operations. Longer term, we expect improvement in the expense ratio targeting 37.
Percent. As Jay mentioned, our calendar year results are virtually the same as our accident results. Looking at prior year losses, book reserves remain solidly above current actuarial indications. Turning to premiums. Consolidated gross premiums increased 6% to $98,700,000 in 2025 compared to $93,500,000 in 2024.
Excluding terminated products, gross written premiums increased 16% to $98,400,000 in 2025 compared to $85,000,000 in 2024. Let me add a little color at the divisional level, starting with Wholesale Commercial, which focuses on Main Street small business grew 6% to $64,900,000 compared to $61,100,000 in 2024. Excluding premium audit in these calendar year numbers, the underlying policy or premium trends are best indicator of growth was 14% and includes rate increases of 5%. Insurtech, which consists of vacant express and collectibles, grew 20% to $15,000,000 in 2025 compared to $12,500,000 in 2024. First, Vacant Express grew 23 to $10,900,000 driven by organic growth from existing agents and agency appointments.
Collectibles grew 12% to $4,100,000 compared to $3,600,000 and includes rate increases of 4%. Our assumed business gross written premiums grew to $10,900,000 in 2025 compared to $2,900,000 in 2024, resulting from eight new treaties added during 2024 and one new treaty added here in 2025. Specialty Products, excluding terminated products, was $7,600,000 compared to $8,600,000 in 2024. We signed on three new products in 2025 that are expected to contribute premiums starting in the second quarter of twenty twenty five. Despite the impacts of the California wildfires, our outlook for 2025 is very positive.
We continue to expect premium growth of at least 10%. Our underwriting performance for the last three quarters of twenty twenty five is expected to improve compared to the same period in 2024. Booked reserves remain solidly above our actuarial indications. We believe premium pricing is continuing to track with loss inflation. Discretionary capital, which we consider the amount of consolidated equity in excess of that required to maintain the strongest levels with our A rating agencies is $251,000,000 at March 31.
And as Jay noted, this will support the efforts to invest in the growth of Pan American underwriters. Lastly, our investment portfolio is well positioned to invest in longer term longer duration maturities at higher yields. Thank you. We will now take your questions.
Kayla, Conference Operator: And our first question comes from the line of Ross Haberman with RLH Investments. Your line is open.
Ross Haberman, Analyst, RLH Investments: Good morning, gentlemen. Thanks for taking the call. Could you go back to the expense ratio you said? Do you think we can get down below 40 in the next two or three quarters, or or is that gonna be a 2026 event? Thank you.
Brian Reilly, Chief Financial Officer, Global Indemnity Group: Let’s see. I’d say longer long term, that 37 we targeted is is into that ’26, ’20 ’7 range. I would expect this year to be in that 39 to 40 range this year.
Ross Haberman, Analyst, RLH Investments: And just one technical question. I thought the shares were up by roughly half a million shares. I guess you call it a two. Could you explain that? What where does how did that go come about and where were those issued?
Thank you.
Jay Brown, Chief Executive, Global Indemnity Group: Sure. There was 550,000 Aytu shares issued to Fox Payne as a fee for their advice and counsel and implementation of Project Manifest at the end of last year. Those shares were issued in the first quarter, which is why they’re appearing for the first time this quarter.
Ross Haberman, Analyst, RLH Investments: And their and the voting rights to that are similar to the a more? Just give us a why were they characterized characterized as as a two as opposed to just regular a?
Jay Brown, Chief Executive, Global Indemnity Group: They have a different form in terms of their voting rights and dividend rights similar to a shares, but the difference is they only have value in the event there is a value creation greater than the existing book value at the time they were issued. And it’s a little complicated, but essentially, if the company were to be sold, you have to achieve everybody else has to get paid the amount first, and then a two gets paid after that. So it’s a form of it’s kind of a it’s kind of a combination of a restricted stock and an option and that you have to hit a certain target in order for the value to be created.
Evan Kasowitz, President of Belmont Holdings, Global Indemnity Group: Thank you.
Kayla, Conference Operator: Wonderful. And our next question comes from the webcast from Joel Starca. Book value per share declined from $49.98 at December 31 to $47.85 at March 31, primarily because you increased your common shares outstanding by 4.4% in one quarter by issuing stock compensation to the board chairman’s private equity firm. Can you explain why you’re issuing stock to insiders rather than repurchasing stock when you’re trading at roughly 60% of book value?
Jay Brown, Chief Executive, Global Indemnity Group: Sure. There’s really you’re buried two different questions there. The decision to issue shares to Fox Payne was a result of a request under the contract that Fox Payne has with Global that a fee be paid for the creation and implementation of Project Manifest. Our conflicts committee of the board evaluated that request and made a determination based with the assistance of outside legal and financial advice that that compensation for that advice would be paid in terms of the shares that are described in our 10 ks and in our 10 Q, which are the A2 shares, the 550,000. In terms of the second part of the question which is why aren’t we buying back shares at 60% of book value.
I think the reason for that as we’ve said in the past is our Board currently feels that we can create more long term value by investing in our operations, particularly in the new Pan America underwriter operation, which is designed to create additional growth and profits for Global Indemnity. And that’s a decision our Board has made and has continued to reinforce at this point in time that that’s where we’re going to be investing funds going forward.
Kayla, Conference Operator: And a follow-up for Joel’s question. Also, you explain why you’re retaining $251,000,000 of excess capital when you’re shrinking book value per share earning an inadequate return on equity and trading at 60% of book value? By retaining that 251,000,000, you’re turning it into a hundred and 51,000,000 of market value. Wouldn’t it be smarter to return that excess capital to shareholders through share repurchases or dividends? And wouldn’t doing that improve your return on equity and your price to book value multiple?
I assume that the board chairman’s private equity firm came up with a plan to deploy that excess capital or that excess capital to generate a double digit return on equity.
Jay Brown, Chief Executive, Global Indemnity Group: To think carefully about I think I’ve answered most of that question in terms of how the board made its decision. I’m not going to argue with alternatives of buying back shares at a huge discount to book value as potentially being a short term boost to shareholder value. But our Board has made the decision that they are focused on long term growth and not looking to pop the stock price in the short term. So they believe that that capital will be invested and will generate double digit returns over the long term.
Kayla, Conference Operator: And our next question is from Stefano Latapai. Can we expect more or can we expect any more losses from the LA fire or has all been paid?
Jay Brown, Chief Executive, Global Indemnity Group: It hasn’t all been paid, but the majority of it has been paid out. But our estimates are very solid at this point in time. So we don’t expect any material change in the numbers that we reported in the first quarter results.
Kayla, Conference Operator: And our next question is from Joe Nguyen. Given the increased tariffs and a looming economic recession, how might these microeconomic factors impact claim volumes, underwriting profitability and investment income for our portfolio? And what financial operational strategy should we consider strengthening our resilience in the upcoming market?
Jay Brown, Chief Executive, Global Indemnity Group: I think there’s two parts of the impact of the economics on our company. The first impact, is really on the fluctuating interest rates that are dramatically fluctuating from day to day in some cases, but certainly from quarter to quarter. And it’s the reason we have chosen as a company to remain extremely short duration in fixed income. We’re definitely playing a defensive strategy waiting for the horizon to be clear in terms of making long term investments. And that’s kind of on the investment side.
In terms of the short term impact on claims, the biggest thing that we worry about in economic depression or when economics turn down for the country is probably more watching carefully for fraud claims and particularly any interruption in people making their premium payments that are due to us. But insurance is a long term game and the reality is it operates pretty much the same way over a long term and we have to be able to handle the ups and downs of short term economic fluctuations.
Kayla, Conference Operator: And our next question comes from Michael O’Brien. What was the tangible book value dilution for the 550,000 shares issued to Fox Payne on 03/06/2025?
Brian Reilly, Chief Financial Officer, Global Indemnity Group: Yes. The per share impact was 1.74
Kayla, Conference Operator: And our next question is going to come from the line of Tom Kerr with Zacks Research. Your line is open.
Tom Kerr, Analyst, Zacks Research: Good morning, guys. Just a couple of quick financials. Most of my questions have been answered. On the SG and A, you said that was high because of Project Manifest. Does that maintain those levels throughout the year as you invest in that project?
Brian Reilly, Chief Financial Officer, Global Indemnity Group: No. Tom, the first quarter includes $2,700,000 related to the a two shares that’s not gonna repeat, you know, as related to those adviser fees. So so, no, I don’t expect those to repeat at the same levels. But as Jay mentioned, we are we will be investing. So there will be some elevated costs compared to last year.
Tom Kerr, Analyst, Zacks Research: Does the investment in Project Manifest happen in the other line items? Or is it based on the SG and A?
Brian Reilly, Chief Financial Officer, Global Indemnity Group: That’s in the corporate expense line item.
Tom Kerr, Analyst, Zacks Research: Okay. For the expense ratio, right. Okay. Last question was can you refresh our memory when the specialty products terminated business anniversaries and you have apples to apples comparison? When will that happen?
Jay Brown, Chief Executive, Global Indemnity Group: We had a very large program was terminated at year end, and it was instantaneous. And so essentially, it’ll be a full twelve month rollout, and the apples and apples comparison will occur starting January next year.
Evan Kasowitz, President of Belmont Holdings, Global Indemnity Group: Got it. I thought it
Tom Kerr, Analyst, Zacks Research: was earlier than that. Sorry about that. I think that’s all I have for today. You
Jay Brown, Chief Executive, Global Indemnity Group: are correct. There were some earlier terminated programs that go back a few years and then we’re running off. But we did have the most significant one was one that got terminated at the end of last year.
Evan Kasowitz, President of Belmont Holdings, Global Indemnity Group: Got it. That’s what I was thinking of.
Tom Kerr, Analyst, Zacks Research: Okay. Thank you. That’s all I have.
Kayla, Conference Operator: And your next question comes from the line of Chris Corienda. If the shares issued to Fox Payne are some combination of restricted stock and the option in the event of a sale of the business, why is the book value calculated including all of the a two Fox Payne shares? Doesn’t that understate the current book value?
Jay Brown, Chief Executive, Global Indemnity Group: That’s a very good question, Brian. It’s really an accounting question in terms of how how it gets included in the
Brian Reilly, Chief Financial Officer, Global Indemnity Group: book value. Yeah. In the in the numerator, the book value is only, the dividend portion of the the value, which is 2,600,000.0. The additional 8,300,000.0 is the option value. So that, from an accounting perspective, is not recognized in as an expense with the reciprocating increased equity until there’s a change in control.
And as Jay mentioned, the only way that ultimately that the $8.02 is is liquidated is upon a change of control event, which is sale of the company or substantial part of the company.
Kayla, Conference Operator: And your next question comes from the line of Justin Sanders. Should we expect corporate expenses to trend back towards prior year levels post Q1 and the expense impact of Project Manifest? Or should we model it higher for the mentioned growth initiatives?
Jay Brown, Chief Executive, Global Indemnity Group: I think in terms of a run rate, it will trend back towards what we have spent historically. But to the extent we actually which we expect we will make potentially purchasing some target operations, there will be expenses associated with those transactions. And so and they would be identified and separated out at the time of the transaction. But we’d be able to essentially give you that number as it occurs. But as of right now, there’s nothing in our forecast that’s planned for.
So we will essentially trend back to our historical numbers for corporate expenses.
Kayla, Conference Operator: And there are no further questions at this time. Evan Kasowitz, I’ll turn the call back over to you.
Evan Kasowitz, President of Belmont Holdings, Global Indemnity Group: Thank you again. This concludes our twenty twenty five first quarter earnings call. We look forward to speaking with you again.
Kayla, Conference Operator: This concludes today’s conference call. You may now disconnect.
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