Global Indemnity Group, LLC

Good morning and welcome to the Global Indemnity Group 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Thank you. Stephen Reese, Head of Investor Relations. You may begin your conference.

Thank you, Operator. Today's conference call is being recorded. GBI'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, but 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 our other filings made with the SEC for 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 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 Officer of GBLI.

Thank you, Steve. Good morning and thanks to everyone for taking the time to join us on the call this morning. I will first provide an update on what has transpired at Global since our last call. This will then be followed by Tom McGeehan, our CFO, providing a detailed explanation of how our results for fourth quarter and full year were compiled, how they compare to prior year, and some of the implications for future results based on the actions we have recently taken. We will then take questions. Looking back to last November, just a week after I joined the company, I will admit that the amount of change that I have now brought to the organization has been far greater than I expected at that time. As documented at our investor day last fall, 2022 was planned as a major expansion of GBLI's product offerings with both new lines of business and new products added to our existing product lines. As we began the process of evaluating our business plans for 2023, including the major dependencies on technology that needed to be either acquired and or developed, it became clear that we needed to stand back and assess with our board what was best for our shareholders over the next few years. In December, the GBLI board was presented with a three-year business technology plan that highlighted the significant technology and staff costs and risks associated with the planned expansion of our product offerings. Following that meeting, my management team put together a radically different business plan that substantially reduced the risk and costs associated with what would have been a dramatic change to our historical positive position in the excess and surplus lines business. The first decision was to immediately exit four businesses that we had launched in the fall of 2021 under prior management, property brokerage, professional liability, excess casualty, and environmental. In January, we terminated all of the staff associated with these four lines. This decision was based on the economic assessment that we would not achieve break-even for another four to five years due to the fact that our 18-month project with a third-party technology vendor was, in my opinion, an absolute failure and we would essentially be starting back from scratch. In addition to that decision, we also fundamentally altered our appetite in the Bermuda insurance and reinsurance space and decided not to renew a large casualty retrocession treaty and a large book of high-access professional liability business. None of these decisions had anything to do with disappointing underwriting results in these lines. It was simply an assessment of our overall costs and use of capital. As a result of these decisions on the overall expense of running GBLI, we had a significant staff and expense reduction in early February to bring our overall headcount back to where it was in 2015 prior to the American Reliable Acquisition. We have now realigned our resources to what is needed for our ongoing business including a defined plan to manage those activities associated with the business lines that we have exited in the past 18 months. The net result of these changes is that we are now back to our historical core business, which has performed over time consistent with our goal to produce combined ratios in the low to mid 90s with consistent profitable growth for our shareholders. There are a few key differences from where we were positioned just a year ago. First, we expect to generate excess capital starting immediately in contrast to our belief a year ago that we would probably need to add capital over the next few years to fuel our growth. Second, the actions we took over the past 18 months to shorten the duration of our investment portfolio from almost five years to under 1.7 years, and to liquidate our publicly traded equity portfolio, has already started to bear significant value for our owners. We expect that our investment income in the coming year will be almost double what it was in the prior 12 months. Third, our transition from an insurance company with a significant property exposure to catastrophic risk and the associated reinsurance cost is now complete as we have achieved our goal of a 70-30 casualty property mix with much greater geographical dispersion on our remaining property risks. Importantly, in 2022, we returned approximately $34 million to our shareholders by way of dividends and share buybacks. After the end of the year during the first quarter, we purchased another 250,000 shares this year, leaving around 32 million in remaining buyback authorization. Before I turn it over to Tom, I will repeat what I said on our last results call. My objective for 2023 is to get our company being valued above book value in recognition that our insurance operations are adding value to my fellow owners. As such, my relentless daily focus as CEO will continue to be to work with both the board and the management team to make that happen in the near term. With that, I will now turn it over to Tom.