By Thomas Kerr, CFA

NYSE:GBLI

READ THE FULL GBLI RESEARCH REPORT

Project Manifest

On January 1, 2025, Global Indemnity (NYSE:GBLI) announced that it had completed an extensive reorganization of its business under the project name Project Manifest. This reorganization is a significant milestone that positions the company for enhanced operational efficiency and growth.

• The Penn-America business divisions (Wholesale Commercial, Vacant Express, Collectibles and Specialty Products) will become separate and distinct businesses to improve branding, attract talent and expand relationships with their distribution partners.

• The company will also establish separate businesses for technology (Kaleidoscope Insurance Technologies) and claim services (Liberty Insurance Adjustment Agency). These businesses will continue to support Penn-America and create the foundation to offer products and services to other insurance industry participants.

• De-stacking the insurance companies will result in an increased consolidated surplus of the insurance companies and allows for more efficient management of capital and liquidity.

This allows the company to move capital or surpluses in a more efficient, flattened type structure. This compares to the prior structure which was more of a vertical organization that was less efficient.

For now, the reportable segments will remain Penn-America and Non-Core Operations with gross premium growth in Penn-America separated by Wholesale Commercial, InsurTech, Assumed Reinsurance, and Specialty Products.

Valuation and Estimates

GBLI book value per share increased to $49.88 as of September 30, 2024. On September 19, 2024, the Board of Directors approved a dividend of $0.35 per common share which was paid on October 7, 2024. The current dividend yield is approximately 3.92%.

Our 2024 total revenue estimate is adjusted to $447.1 million which includes $381.1 million in Net Earned Premiums and $64.3 million in Investment Income. Our 2024 EPS estimate is adjusted to $3.25. As the consolidated combined expense ratio continues to drift down, we believe EPS can increase to approximately $3.48 in 2025.

Management stated its long-term financial goals which are:

1) Grow the overall business at a rate of 10% or higher,

2) Achieve a combined ratio in the low 90’s,

3) Manage the expense ratio to a competitive level of 36%-37%.

GBLI stock is currently selling at 69.3% of book value based on September 30, 2024 shareholders’ equity. We separate our price target into near-term and long-term objectives. Our near-term target is $50.00 which assumes GBLI stock will trade near book value per share. We maintain our long-term price target of $55.00 per share based on the stock selling at a small premium to future book value per share.

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