GBLI - Earnings call transcript Q2 2022 | Global Indemnity Group, LLC

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Operator

Good day, and welcome to the Global Indemnity Group LLC's Second Quarter 2022 Earnings Conference Call. I would now like to introduce Stephen W. Ries, Head of Investor Relations.

Stephen Ries

Thank you, operator. Today's conference call is being recorded. forward-looking contain may remarks statements. GBLI's

in which of update annual forward-looking the filings Group the estimates that business operate or and forward-looking Some description report a expressly Executive for XX-K important the or new as representation be environment our should over affect otherwise. you other GBLI. by will, by obligation its can to on with of statements, that Global or any in of factors events estimates. my achieved. Chief of be forward-looking call materially turn as is caution that expectations the Indemnity our disclaims the use future under beliefs, results. Charlton, of the Please words, a we identified limitation, statements may contemplated any by or to the statements including, result Form It regarded David forward-looking obligation such We a not us information, now be to Mr. expectations pleasure refer not made SEC is future us plans, LLC whether fact, to and our such and without alter

David Charlton

call. Thank morning. for Thank Well, you, Steve. good joining our you earnings

growing to and casualty on further business. solutions Everett capital farm business middle our market of million this very on These am the Company farm acquire is Tom of Everett great profitable Cash that and the our businesses. Insurance announced to rights million Officer; attendance. found free surplus pleased I and focused $XX from Specialty we to GBLI's transactions our In of addition to farm Stephen will up such company our Ries, the Oltman, sale strategy over Cash $XX Jonathan the American insurance in for we McGeehan, and of Commercial to Yesterday, President Chief Mutual. providing Reliable focus Financial small equity a Operations, also industry. renewal and sale are Insurance supporting

discuss Now let's our results.

compared grew XXXX. The The premium increase For ratio income months XX.X%. our gross and XX.X% continuing the Commercial business results. and six of rate first had our our growth also written lines. Underwriting by good to Reinsurance to combined continuing lines is organic due increases in Specialty lines, of was

to note strategy our I $XX.X incurred in lines X in is to for mix business $XX.X pleased very compared book million compared to Specialty $X.X volatility to casualty-earned XXXX. XXXX am in to Our in $XX.X lines The were Commercial that XXXX. reduce are working. losses our of premium of for XXXX. casualty. the million Catastrophes now million continuing cat significantly. months entire Cats million down first has shifted XX.X% was were

binding XX% in X.X%. This just Penn-America Commercial X%. Our another by to $XXX.X small change by grew to adds segment Specialty growth Penn-America million, is million. rate rate, business, obtained our which $XXX.X grew driven XX.X% increases of exposure

programs. in and Our we XX.X% rate program $XX.X market continue written change, X%, XX.X%. E&S growth When million strong to strong we gross also commercial on premium remains for exposure was The rate generating in increases will push business, include division of rate. realized of up

$XX.X by of gross Our premium generating business million. XX%, InsurTech written grew

insurance online well allows to Our InsurTech solution insurers as agents directly as obtain quickly.

for We of continued one brought are most and the and excited our about see have business we this profitability. to leadership growth opportunities significant

into process in solutions distribution investing We embedding to the business. and technology, drive this state-of-the-art the committed expanding online to are sales

are and professional businesses, casualty, environmental three excess now growing premium. over steadily Our $X see of together other million and new

each pleased and partners. while with early to support plans. I'm continue business on are from writing. days, And across team We X still key of distribution strong building our of their track is teams hires out are very country All the exceeding the receive quality the

our Reinsurance on exited. quota The the have growth continue to book $XX.X Running of fourth rates. written. great to coming reinsurance. quarter be we was Our premiums rate million Exited funds of $XX.X casualty where have smaller share from compared increases written the sold that results Gross now our also the treaty well and in business longer premium and several be a other we invest tail excess million higher is the market in XXXX. part primarily casualty grow business Operations helps we well business. business our It recently portfolio treaties in interest largest as as Lines these time can include and specialty strong. It's includes property investment professional focused XXXX of as casualty to were the as farm this at

premiums volatility. Now market Cash provide be prospectively sold, flexibility written XXXX. Everett after will and the net any is taking very August investment that farm XXX% liquidity, assumes of efforts to significant farm risk enhance or we're buffer XXXX, Mutual X, written on low. for In policy

almost X/X quarter, currently investment investments During securities portfolio rate of to is the in invested with de-risk portfolio floating rate to a and the fixed widening. duration treasuries had exposure of resets. portfolio. X.X years and less securities, The approximately of investments X.X our of portfolio selling duration X/X the income with liquid comprise Cash years. second by spread the we greater continued that is

X.XX% greater redeployed to is from investments proceeds have deploy shorter-term yield Book years. on that the back sales positioned The We've than X%. two average at are deploying funds March X.XX%. into funds currently We was the durations with are higher-yielding than that into of investments. been yields end been less well 'XX, the are

questions. take will your We now

Operator

Partners. question & Anthony Instructions] Dowling our take Mottolese We'll with from [Operator

Anthony Mottolese

on on well? My ops, I was the in the provided results. and that year consolidated you first provide you quarter. a continuing basis just development know to I question, as looking clarify cats Could prior the

Thomas McGeehan

was million That's accident a million the Sure. our I year. and -- $X.X basis consolidated in -- to a income underwriting basis. X year $X.X -- on our on mean on second income, just on compared underwriting current last

Anthony Mottolese

what the provide also was impact on you could basis? cat the consolidated And

Thomas McGeehan

I'm sorry, question. I your missed

Anthony Mottolese

Sorry, catastrophes. the natural

Thomas McGeehan

Commercial -- million -- $XX.X and they business, We continuing losses of in on million. we book which most noted our business entire were were that be the our Lines continuing Yes. will $X.X David's business, our script, cat for

Anthony Mottolese

All must right. I $XX.X million. misheard have

follow-up to what had I So of you after-tax the also then gain share questions American expected sale some also the related just Reliable. will Could be? guys

Thomas McGeehan

American million. our million have in are We're expenses, point at still or will we Included $XX looking surplus Reliable sales of at the of sale these proceeds but total the expect is the $XX sale.

business. been some There before So at be will expenses assets supporting look we we this expenses, million. at $XX as that are have

will legal assets, incurred costs And software little some a of that bit intangible professional write-offs fees of lease So goodwill, banking and fees be cost. were the services investment some and from there we obviously that my the we third those Right on are final million numbers approximately will $X to quarter we now, estimate develop provided. analysis, costs and that's our have in numbers. total, of but further as subject

$XX an pretax right of estimate I'm approximately a on million. now, So at basis looking

Anthony Mottolese

All really on areas do or business? see portfolio, helpful. That's more as your casualty business the looking at And anticipate disposals right. focus you further you any other

Thomas McGeehan

a of decision done the first to to we've -- during had duration five position we a portfolio. over security And that It's made years. quarter, exit had lot an any long-term the awful No.

as in identified type investment second not might less fund investments we That this one And seeing impacted subject as spreads had the liquid the they interest We that risk floated rate -- spread portfolio. about fund. the $XXX and rates invested securities. investments results they loans which million bank the investment had were to quarter, of action, believed -- that rates took bank we widened, a widening particular investments that well During in fund on but we those environment. interest statement. the income lower-rated our increased, look in had also of further we of in were perform as that our increase, that you're throughout We And the floater, loans. they our was unfortunately, income,

So our those alternative believe, portfolio, well included we divested $XXX of just things extremely we about million. all of things is And I of noted, quarter, during the now, right that second that investment positioned. the

are -- yield. our David mentioned We book

The sheet of the Our is stocks. at it's mainly preferred equity than that years, see duration balance -- X.X face years. really on exposure less is the two you

be So right is well as can as it environment. we positioned portfolio as -- move rate think for our now, we rising this in ahead

Anthony Mottolese

good of information. lot a was That

to of the does or load this the related sale, company? the reduce cat profile expected further P&L Lastly, and the --

Thomas McGeehan

a Yes, book. absolutely. agriculture I book was mean the largely property

our driven So exposure subject other business coastal more yes, to it be decrease. of might that driven. cat absolutely some will than But is Midwest

David Charlton

Yes.

business, farm when When driven of the look we And I sale why by bit we AAL on just estimate adding little sold a farm, reduced XX%. business. of premium the farm was at property. we looked the the we think by was after XX%

there. And was in not also another We like auto had casualty insurance. It's product commercial we're adversely, XX% some only targeting.

our it core So we decision meet made that did did. of the business and really not why definition a we

Anthony Mottolese

last one internal question. that? provide your the your you E&S to growth on has been focus competitively in you Have Could I price had the know market. growing then in the any achieve And more targets. color

David Charlton

across able I increasing Yes, rate opposite. business. to We've exactly get lines been the really say would of

and books we're -- increase increase other rate at programs, The seeing looking to But the earlier -- we're in is million. our getting this when really exposure area last we an up you we've increase look getting. $X.X and time audit seeing talked is the $X.X We're year, our Penn-America audit area been from that the we're about at million quite third up about premium.

of So the top premium premium rate is we're well then getting increasing. as on and audit from all

Anthony Mottolese

year? new is investment question, guess I it this an what rate earlier on update And on was Okay. where versus the you portfolio the could my last provide money

Thomas McGeehan

Sure.

actually been have are north X%. little We we've -- deploying yields a been of that achieving

Operator

from We'll Zacks Tom with Research. take next our question Investment Kerr

Thomas Kerr

individual back the the lines. Specialty Can and you go to Commercial

you of in were any ones, mentioned Within disappointed or thought I believe. all the other there, in some you across there that Penn-America be But the lines laggards ones better and there? could strength

David Charlton

in and is to, areas has much by run over has been is that area, the where all out. casualty building significantly. programs InsurTech, we Penn-America off which mean, for across No. the very is that been side mentioned the us decrease brokerage, we we that down -- the the Where area about and it the business a $XX good profitable is in which I business so feel the design and was The reinsurance that decrease biggest Commercial really we line, Specialty want really in new is been property we growth has million, we're strong.

solid quarter on was board. really across the it So a

Thomas Kerr

stated the shortening duration the read most activities. the Okay. Great. in... previously And I investment -- then your that with back Is part, think portfolio, if all answer done I on for just you're correct,

Thomas McGeehan

we're happy portfolio take but think the where would needed be Well, market actions I won't looking we believe the now, right are portfolio, I noted, we today. always right? environment. reposition at At where needs are, for we that with portfolio we action would and believe it. to our to we're say done, the be it I if moment, the we And But position the

Thomas Kerr

from Or how does sort is at And there are guys look itself? equities reentry waiting into Or would that an of work? you investment prices? you something just back to process, for

Thomas McGeehan

the lot extremely a go times we year, as January This been of being to at and back million, after proceeds. that And portfolio and January, we debt right decision had several saw use equities out because $XX us I of our the about We've If absolutely we there's volatile. this last time equities of equity couple pay volatility subordinated the of decision down over to Again, helped in years. a we dropped. made those of equities there. year, it exit. April. in was was It a And that environment

And the it get year, is we right answer this time so out. that was the thought to Tom,

sheet, the we advisors, as consider only right As stock. now, said, it's forward, And that to would. are exposure providing time the information us. on they our our right to work that it's if back we we primarily time, into But investment we go equity with balance at and preferred equities, the I believe get we

Thomas Kerr

Got it.

conversations, that. manages who a sorry in missed And the effort, our that investment portfolio? if Or Officer? previous team there entire is but Investment a I this Is Chief

Thomas McGeehan

it's manage managers really and [indiscernible]. entire not advisers, investment Chief a external that for three Officer three have in-house, but have do have Investment We our portfolio, good we overseen. except We

Thomas Kerr

take my a So focused. in many That's markets midterm? into real And near that it. of but more economy do how of exactly or question or kind right. you or is, not question customers so think do that what recession question picture sure got small is about even big go you into general end account how to that or the Yes, recession businesses? price that manage or a next we I'm since at guys if

David Charlton

is inflation, social businesses small at of the don't little were are book inflationary with Yes. bit the becoming a we for at insurance. we -- products we portfolio. the we much the the we're look business part lot is but market, pressure that obviously, when very of We area on a a and on $X I then of differently. a of especially we're pain mean, smaller about recession, casualty million auto limits insurance Where hits in we're look that have fortunate. nice different very manage rest marketplace. under, our really side. our We're and [indiscernible] part inflation, property and And the where in personal focused on our seeing most the not But seeing that

there well. we're somewhat So inflated as

we're emphasized we definitely eye to sure it. on we've so increase outpace we inflation. rate the keeping why but that to make And -- get to need much rate an that's So that continue

Thomas Kerr

sense. current run more was XX% down that? The financial was makes of think Or or couple that it It rate? so. is corporate I expenses, the What A questions.

Thomas McGeehan

-- Well, And our quarter, quarter expenses. kept had you'll -- retention against this quarter, workforce include $X.X million received we the was entire Yes. last we credit employee employed. throughout XX-Q, corporate this this our that this expenses year in corporate COVID, an for offset and filed see we

David Charlton

significantly reinsurance. On cats saving our with this I'd reduction, saved XX% year. number. the significant we're that, cat we're a It's rate, we saving on add -- to

Thomas Kerr

Okay.

million, that means below next look true annualized if well or rate So even run into rate a on to $XX you still year? million going run be is to $XX

Thomas McGeehan

American Well, quarter, again, with to some the going in Reliable Tom, expenses because the transaction. you're see of this transaction increase

what in years, couple to What in the six months, a expect. and some. $XX million we special something. of expenses. not last again, way you're And I'll every Closing first credit rate usually we deal, we'll of, noted the lot this have whole do seeing that we've million So run includes year, $X.X for that corporate the is million $XX call of it, corporate a would

corporate of second of amount the will rate, higher. the expenses year the in So the be half

Thomas Kerr

it. Got

it color capital allocation sense. Okay. going And that? corporate Or That just decision makes million a any then on off allocation $XXX the or is debt, decision?

Thomas McGeehan

capital. rate capital allocation was year. And last No, in -- of we had up a in best just we our -- capital. good to our it that the specialty of way deploy ahead, and we sold debt. about eliminate was interest under we the that X%. some a It as thought to fourth time, was point debt rights an our decision had thinking quarter And looked are freed At subordinated always property renewal decision

Thomas Kerr

for question last The sense. Makes me.

don't the if in sense Lines? Just I know eliminates to to Exited or all sale, business going farm not not. that's the and be clear that be on the farm makes agriculture that

David Charlton

all That's then that the so be we'll and unearned of runs until -- biz as X, only then we on over. then XXX% off. obviously will premium August new the they take And that the part the correct. the reinsured remaining be And will of farm -- have

Thomas Kerr

last fall, X% years? it. were and Or Are Day next premium you still coming you the are is time but the in more question. Got goals the foresee with Analyst that those range at discussion? question up, over set growth. This good guys objectives All Okay. be to that changing? to Do of those right. that in this five the X% Last performance an X%,

David Charlton

to Investor think journey, talked X-year we And takes it's right look journey. Day, -- the -- a when we time. five-year that that a And changed businesses, don't not period. five-year I trying about over those Yes. our new you at it's at it's way. building do We're

we're I company, a so casualty we're actually the to property good are volatility. track. from earlier, transitioning area, that a our which think a I ahead really that that And feel company And about of reduces we our on bit mentioned in little plans as

XX% casualty our premium good pretty And so being for feel first earned months. in the we X about

we're So we feel on plan. the that executing

Operator

does conclude Stephen closing question-and-answer to I back that like would call session. Ries remarks. to over the for or any And the additional turn

Stephen Ries

for Thank third today. to the Thank after you, you look operator. We quarter. forward everybody, you, us speaking joining to

Operator

And that concludes participation, today's and now presentation. Thank for disconnect. you your you may

Stephen Ries	Head-Investor Relations
David Charlton	Chief Executive Officer
Thomas McGeehan	Chief Financial Officer
Jonathan Oltman	President of Insurance Operations
Anthony Mottolese	Dowling & Partners
Thomas Kerr	Zacks Investment Research

Global Indemnity (GBLI) 13 Aug 222022 Q2 Earnings call transcript