Global Indemnity Group, LLC

Thank you for standing by. My name is Danica and I'll be your conference operator today. At this time, I would like to welcome everyone to the GBLI third 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, press star one again. Thank you. I would now like to turn the call over to Steve Reese, Head of Investor Relations. Please go ahead.

Thank you, Danica. 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 validation, 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 descriptions 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 was 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 thanks to everyone for joining us this morning for our third quarter results call. Before I provide some commentary on our 2023 results, let me address an obvious topic. As we have previously disclosed, the company has been engaged in conversations that could potentially lead to a transaction to sell a portion of our insurance operations for the entire company. GBLI has now retained an investment banker, Tony Orsano of Insurance Advisory Partners, to assist the company in evaluating the efficacy of any potential transaction. We expect this process will likely conclude in the next few months. Given where we are in the process, we will not say anything more today or respond to any questions on this during this call. As we have noticed in our previous calls this year, the significant restructuring that occurred at the beginning of 2023 continues to make direct comparisons to prior year prior year overall results somewhat difficult. Our ongoing operating segments are primarily commercial specialty and, to a lesser extent, reinsurance operations. I will focus my comments on commercial specialty, year-to-date accident year results, and then Tom will address all the financial aspects of our GAAP results. As a reminder, The long-term operating metrics we are focused on for commercial specialty are loss and loss expense ratios, consistent with our long-term average in the mid-50s, an expense ratio of below 38% for this year, trending to 36% in a couple of years, and a combined ratio in the low 90s and growth averaging 10%. Although we continue to make good progress against our growth objectives, we are still observing some continued negative effects from our restructuring efforts, primarily in our targeted specialty class-specific segment where our priority focus on profitability has caused a drop in gross written premium through the first nine months of 32%. Offsetting the results, were more than satisfactory growth of 12% in packaged specialty and 17% in insure tech, both of which are consistent with our long-term growth objectives. Turning to our nine-month accident year results for our continuing lines, we recorded a 97.6% combined ratio comprised of a loss and loss expense ratio of 60.2% and expense ratio of 37.4%. Our third quarter results were similar with a combined ratio of 97.8% comprised of a loss and loss expense ratio of 59.3 and an expense ratio of 38.5. Although we are on target for expense dollars, the premium shortfall in targeted class specific means that going forward, we have a bit more work to do to achieve our long-term 36% expense ratio objective. In terms of loss and loss expense ratio, the 60.2% ratio is falling short of our long-term target due to a combination of high catastrophe losses about two points higher than expected year to date, and continued loss emergence for terminated casualty business in packaged specialty and targeted specialty class-specific, causing another couple of points below target. We continue to achieve strong pricing of 9% in packaged specialty and 10% in targeted specialty class-specific, which is in line with our expectation and exceeds expected loss trends. Although Tom will report on all of our gap results, I will share the observation that the same terminated business that has hurt our 2023 accident year results was the source of reserve strengthening that we have experienced this year in commercial specialty. The net effect on calendar year loss ratio was 12 million in the third quarter and 19 million through nine months which translates into 10.7 points in the quarter and 5.3 points year-to-date. Although this strengthening was offset by the release of some redundancy in exited lines, it reinforces the decisions we have made to exit these specific books of business. Tom will provide more details, but our decision to play defense on interest rates by dramatically shorting the duration of our bond portfolio starting 21 months ago, continues to pay dividends. Our investment yield is rising every month with overall investment income coming in at 14 million for the quarter and 39 million year to date, more than double that from a year ago. With a current book yield of 4%, a duration of 1.2 years, and $800 million of cash flow from the investment portfolio in the next five quarters, we fully expect that this number should keep rising every quarter. While we continue to make progress against our longer-term goals, both the overall accident year and calendar underwriting results of our continuing operations fell modestly short of our objectives. The underlying profitability of our continuing book of business cements my view that better results will be forthcoming in the future. I will now turn it over to our CFO, Tom McGeehan, before taking any questions.