Global Indemnity Group, LLC

Good day and welcome to Global Indemnity Group LLC's 2021 Earnings Conference Call. I would now like to introduce Stephen W. Reese, Head of Investor Relations.

Thank you, Operator. Today's conference call is being recorded. GVOI'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-K and other filings made with the SEC for a description 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 it is as a result of new information, future events, or otherwise. It is now my pleasure to turn the call over to Mr. David Charlton, Chief Executive of GBLI.

Thank you, Steve. Well, good morning. Thank you for joining our earnings call. Reiner Maurer, our Chief Operating Officer. Jonathan Altman, President of Insurance Operations. Tom McGeehan, our chief financial officer, and Steve Reese, head of investor relations, are joining me for this call. After I complete my remarks, Tom will provide additional updates. I will conclude with my closing remarks, and then we will open it up for Q&A. It has been a little less than one year since I started at Global Indemnity, and I am pleased with the progress we have made to date. I firmly believe that the greatest differentiator and key to our success is is consistently recruiting, retaining, and developing talent. In 2021, we hired 15 new leaders and 16 new underwriters and product managers. We've been winning the war for talent in a highly competitive market for people. This talented team of people is buying in and excited by our vision for global indemnity. Our excess and surplus lines businesses are growing. selling manufactured homes and dwelling lowered our volatility and freed up capital that can be deployed to other lines. Our casualty business, as a percentage of total business written, is increasing. Our three new businesses, environmental, excess casualty, and professional, are all up and running. We are actively quoting and writing business. I would like to first speak to growth in our core ongoing businesses. Gross written premium from these core lines grew by 22% to $569 million. Gross written premium growth from all lines was 12.5%. Three units saw substantial growth. PEN America binding grew 15% to $204 million. Programs grew 25% to $152 million. and casualty reinsurance grew by 92% to $106 million. These businesses all had a strong combination of organic growth along with rate increases. We expect to see continued progress from these lines in 2022. This momentum will be supplemented by production from our three new business lines. The ongoing business combined ratio in 2021 is 98.9% compared to 91.8 percent in 2020. Excluding prior year development, underwriting income from continuing lines increased to 8.8 million compared to 7.9 million in 2020. Prior year development was driven by Hurricane Michael and two programs that we have since terminated. While 98.9 percent is profitable, I expect that future results will be better. The investments we have made in people, products, and processes will drive performance going forward. We are continuing to increase rates in all our businesses, and when necessary, will terminate businesses that fail to provide adequate returns. From 2017 to 2021, gross written premium from core ongoing businesses grew from $289 million to $569 million. a compound annual growth rate of 18.4%. The combined ratio on the core ongoing business was 93% over the same time period. The exited lines had a combined ratio of 117.1% from 2017 to 2021. Farm, ranch, and stable growth stream premium of $81.7 million was down approximately $4 million compared to 2020, due to corporate efforts to reduce business that is cat-exposed or is not providing an adequate return. The combined ratio not including fee income was 100.2%. Reinsurance continues to perform well. Gross return premium was $106.5 million in 2021 compared to $55.6 million in 2020. This is due to the increasing participation in a casualty quota share treaty that Global has assumed for several years that continues to obtain strong rate in a hard casualty market. In addition, we wrote several smaller casualty trees in 2021 and maintained our excess professional reinsurance business. Reinsurance's combined ratio in 2021 was 97.4% compared to 97.3% in 2020. We specifically saw the impact of inflation in the fourth quarter of 2021 on our property claims. We are addressing this by taking double digit increases on this part of our portfolio in addition to the rate we are taking across all lines. Global Indemnity finished the year with net income of $29.4 million. Investment income and investment gains are up significantly compared to 2020. Tom McGeehan is now going to provide some additional details on our results and investments.