• Net Income: $43.2 million in 2024, up from $25.4 million in 2023.
• Book Value per Share: Increased from $47.53 at year-end 2023 to $49.98 at December 31, 2024.
• Return to Shareholders: 8.1% for 2024, including dividends paid of $1.40 per share.
• Investment Income: Increased 13% to $62.4 million from the previous year.
• Gross Premiums: Consolidated gross premiums were $389.8 million in 2024, down from $416.4 million in 2023.
• Penn-America Gross Written Premium: Increased 12% to $395.1 million in 2024.
• Underwriting Income: Consolidated accident year underwriting income was $18.8 million in 2024, up from $14.3 million in 2023.
• Combined Ratio: Consolidated accident year combined ratio improved to 95.4% in 2024 from 97.3% in 2023.
• Catastrophe Losses: Total cat losses for 2024 were down roughly 26% from 2023, with $15 million from Los Angeles wildfires.
• Cash Flow and Maturities: $1.1 billion in fixed income securities yielding 4.36% reinvested at an average yield of 4.87%.
• Discretionary Capital: Increased to $255 million at December 31, 2024, from $200 million at December 31, 2023.

• Warning! GuruFocus has detected 4 Warning Sign with GBLI.

Release Date: March 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Global Indemnity Group LLC (NYSE:GBLI) achieved a 12% increase in gross premiums for the Penn-America segment, driven by strong growth in InsurTech and wholesale commercial divisions.
• The company reported a full-year underwriting result of 94.4% for the Penn-America segment, an improvement from the previous year's 95.2%.
• Net income increased significantly to $43.2 million in 2024, up from $25.4 million in 2023, supported by higher investment income and improved underwriting performance.
• Investment income rose by 13% to $62.4 million, with strategic reinvestment in higher-yielding securities contributing to this growth.
• The assumed reinsurance operation experienced substantial growth, with gross written premiums increasing by 83% in its second full year of operations.

Negative Points

• The company faced $15 million in catastrophic losses from the Los Angeles wildfires, which exceeded their model estimates for wildfire exposures.
• Internal expenses remain higher than long-term targets, with the Penn-America expense ratio at 38.1%, indicating room for improvement.
• Despite efforts to manage catastrophe exposures, the company still expects an annual average of around $17 million in cat losses.
• The regulatory environment in California has stalled rate increases for certain products, posing challenges for adequate pricing.
• Corporate expenses increased by $5 million due to professional fees related to Project Manifest, impacting overall cost management.

Q & A Highlights

Q: Real quick on the California fires, was that just the underwriting type issues? Or have you guys been trying to get rate increases and deal with that issue? A: We've had an outstanding rate increase for our vacant express probably for a year plus at this point in time. Like most carriers, it just stalled completely in the regulatory environment. But otherwise, it's a sizable loss for us, involving very few properties, less than 10 overall.

Q: Could you provide a little more color on the reinsurance segment and that growth in that? And what is the plan? Could that continue its strong growth in 2025? A: Yes, our growth there is significant. We have 16 treaties at this point, roughly $45 million in force, and we expect a nice increase in '25 and '26. We'll evaluate our other lines of business and capital allocation to decide on further growth.

Q: On the project manifest, do you see any benefits yet on the destocking of the organization in terms of ability to move capital between organizations? Has that kind of started yet? A: Yes, we picked up dividends to the holding company, about $50 million. Our statutory surplus is around $500 million, which gives us more capacity in the insurance market.

Q: With $255 million in discretionary capital, any portion of that could be used to buy back the stock at a discount to book value? A: Of course, it could be used to buy back stock at a discount. However, the Board is more enthusiastic about adding additional products and underwriting types through Penn-America. We expect better returns from growing our insurance business in the short term.

Q: Could you tell us what your total exposure is in California? And is it on the direct commercial side or mostly on the reinsurance side? A: Our total exposure in California is about 6 basis points of the total property market. It was all on our direct book, not on any assumed reinsurance.

Q: Regarding Project Manifest, GBLI has tried growth strategies in the past and failed. Can you explain why your growth strategy will work this time? A: Our new structure allows us to bring in additional underwriting teams coupled with technology investments. Previously, teams operated in a manual environment without tech support. Now, our technology investments create a platform for offering new products to existing and new partners. We also brought in a new individual with experience in products we don't currently offer.

Q: Is there room to reduce the expense ratio without compromising underwriting quality? Any uses for excess capital, maybe a special dividend? A: We don't currently plan any special dividends. There is room to reduce the expense ratio as we run off terminated business. We aim to bring the expense ratio down another 1 to 1.5 points over the next couple of years.

Q: Anything abnormal in the Q4 corporate and other operating expenses wraps to $7 million for the Q? A: Yes, corporate expenses are up $5 million due to professional fees related to Project Manifest and implementation.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.