Global Indemnity Group, LLC

Hello, thank you for standing by. My name is Jeremy, and I will be your conference operator today. At this time, I would like to welcome everyone to the GBLI first quarter 2023 earnings 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 would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star and the number one. I would now like to turn the call over to Stephen Reese. You may begin.

Thank you, Jeremy. Today's conference call is being recorded. Devaluized 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 our other findings 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 Global Indemnity.

Thank you, Steve. Good morning and thank everyone for taking the time this morning to join us for our quarterly results call. Before I turn it over to our Chief Financial Officer, Tom McGeehan, who will provide a detailed explanation of our first quarter financial results, I would like to briefly reiterate the background on the pivotal changes that have been implemented to position GBLI going forward. It's been six months since I joined the company as CEO, and although a lot has transpired during that time period, it has really been a continuation of a process that began in 2021 to alter the composition of our company to improve the returns for our shareholders. In 2021, we were successful in selling the renewal rights to our manufactured home and dwelling business. and significantly reduced the amount of our property brokerage unit. This was followed in 2022 by the sale of the renewal rights to our farm, ranch, and stable business, and at year end, the sale of the American Reliable Legal Entity. As previously reported, these exits contributed $43 million to the bottom line and freed up a substantial amount of capital. Also at year end 2022, we made the decision to exit our involvement in the four wholesale brokerage operations we had established earlier that year and eliminated all of the staff associated with those operations. In addition, we significantly reduced our appetite for retrocession reinsurance business. As Tom will explain in a few minutes, that although overall reported business written is down consistent with our plan resulting from these decisions, we are seeing double-digit growth tracking our long-term objectives in most of our commercial specialty operations. As a result of exiting businesses that comprised close to one half of our top line premium written only two years ago, It was then necessary to significantly restructure our internal costs, some of which occurred in the fourth quarter of 2022 and the remainder in the first quarter of this year. We established a very simple set of expense objectives that will be needed to produce underwriting combined ratios in the low 90s for our remaining businesses, consistent with the loss ratios we have achieved over the past five years. Our first quarter results are consistent with our goal to have underwriting expenses under 38% this year and then below 36% within two more years. As Tom will highlight, although we are on target with both our growth objectives and our expensive targets, we had a big miss in the property loss ratio in the first 90 days of the year. due to a limited number of significant fire losses. Not a great start to the year, but our casualty loss ratio remains on target as we continue to achieve adequate rate increases. Let me provide a bit more detail on the specifics of the fire losses. The source of these type of fires first showed up a bit in the fourth quarter and then jumped way up in the first quarter. virtually all of the higher than expected losses came in the vacant commercial property portion of our business. This was a big deviation from our decades-long, extremely profitable business that we've experienced in this class of business. As we analyze the common characteristics of these losses, The combination of extreme homelessness and cold weather on the West Coast jumped out as the root cause. We are now on top of this situation and are making the appropriate underwriting criteria and pricing to accommodate the demographic and wellness uncertainties that are present in certain U.S. metropolitan markets. In addition to the changes we have made in our insurance operations that I just articulated, our board quickly reacted to the emergence of a significant inflation that occurred post-pandemic after the administration change. As we have previously reported, our decision to dramatically shorten our portfolio duration to around 1.5 years is now bearing fruit with investment income almost doubling in comparison to the first quarter a year ago. We remain convinced that our company is now positioned to continue to generate excess capital over the next couple of years. We bought back 250,000 shares in the first quarter and another 200,000 shares in April and have about 26 million remaining in our share buyback authorization. We expect that our financial ability to buy back shares will continue to expand as we meet our combined ratio targets over the next couple of years. While I am generally satisfied with our progress in my first six months, I was very disappointed with our property loss ratio that popped in the first quarter. I fully expect we will see improvement as the remainder of the year unfolds. With that, I'll turn it over to Tom.