Global Indemnity Group, LLC

Hello and welcome to the GBLI 2Q 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. And if you would like to ask a question during this time, simply press star one on your telephone keypad. I will now turn the conference over to Mr. Steve Reese. Please go ahead.

Thank you, Sarah. Today's conference call is being recorded. GBLI'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 our other filings 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. Now, my pleasure to turn the call over to Mr. Jay Brown, Chief Executive Officer of Global Indemnity.

Thank you, Steve. Good morning and thanks to everyone on the call for taking the time this morning to join us for our second quarter results discussion. Before we review our results for the quarter, let me address the elephant in the room. As we stated in our June 9th press release, the company is engaged in conversations that could potentially lead to a transaction to sell a portion of our insurance operations or the entire company. These conversations are continuing and as stated in our press release, we do not intend to make any further comments unless or until it has been completed or suspended. As such, we will not be making any further comments today. That said, let's turn to the results for the second quarter. As we noted in our last two calls, the significant restructuring that has occurred in the prior two quarters does not make direct comparisons to prior year overall results somewhat difficult. Our ongoing operating segments are primarily commercial specialty and to a much lesser extent reinsurance operations. I will focus my comments on commercial specialty results as this is the portion of our operation which will dictate future underwriting results. Following my comments, Tom will address all the financial aspects of our GAAP results. The long-term operating metrics we are focused on for ongoing commercial are loss and loss expense ratios consistent with our long-term average in the mid-50s, an expense ratio of below 38% this year, trending to 36% in a couple of years, a combined ratio in the low 90s, and growth averaging 10%. I am very encouraged by our second quarter accident year results, albeit we still have some work to do. For the second quarter, our accident year loss and loss expense ratio was 57.5%. Our expense ratio was 36.2%, and the combined ratio was 93.7%. In addition, despite the high industry catastrophic losses in the quarter, our ongoing efforts to increase the proportion of our business that's casualty and continue to manage our catastrophic property exposures, we only incurred 4.1 million in CAT losses, which are reflected in the 57.5% loss and loss expense ratio I referenced above. All accident all excellent profitability figures, which are consistent with our metrics. But unfortunately, our core business had a very disappointing growth of minus 6% in the second quarter. The lack of growth was all driven by just one of our three divisions. This division targets specific agents with concentrated books of single class business or substantial re-underwriting and pricing actions resulted in a loss of significant amount of premium of $15 million compared to the same period in 2022. In sharp contrast, our core package recipe business grew 13%, and our retail-focused bacon express and collectible business grew 14%. As an insurance underwriter, we are consistently focused faced with balancing profitable pricing and underwriting with our growth objectives. Given our overarching objective to be a consistent, profitable underwriter, this is one of those periods where we sacrificed some unprofitable business to benefit the bottom line. Tom will provide more details, but our decision to play defense on interest rates by dramatically shortening the duration of our bond portfolio starting 18 months ago, is really beginning to pay dividends as our investment book yield is rising every month with investment income coming in at 13 million for the quarter, roughly double that of a year ago. With 800 million of our investment portfolio maturing in the next six quarters, we fully expect this number should keep rising every quarter. During the quarter, we increased the board authorized share repurchase from 60 million to 135 million. Because of the extremely small volume of shares traded each day, our repurchase efforts are focused on reverse inquiry opportunities. During the quarter, we repurchased 200,000 shares at an average price of $28. and have 101 million remaining available for share repurchases. Standing back, this is a pretty good quarter, but we obviously have more work to do to both achieve these profitability results on a consistent basis, quarter after quarter, with higher growth to deliver an acceptable return for our shareholders. Tom?