Global Indemnity Group, LLC · NASDAQ:GBLI
Global Indemnity — Investor Day (September 2022)
40 slides from Global Indemnity's investor day presentation, Sep 21, 2022
Slide 1: 2022 Investor Day
2022 Investor Day
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation may include forward-looking statements, both with respect to Global Indemnity Group, LLC (the "Company”) and its industry, that reflect our current views with respect to future events and financial performance. These statements are made pursuant to the saf
Slide 3: Today's Agenda
Today’s Agenda Chairman’s Presentation Saul Fox Chairman Execution of Strategic Vision David Charlton Chief Executive Penn-America Binding Stan Lam SVP, Penn-America Binding Financials Thomas McGeehan Chief Financial Officer Questions and Answers Stephen Ries Head of Investor Relations INVESTMENT UP
Slide 4: Today's Presenters
Today’s Presenters Saul Fox David Charlton Stan Lam Thomas McGeehan Chairman Chief Executive SVP, Chief Financial Officer Penn-America INVESTMENT UPDATE | SEPTEMBER 2022 | 4
Slide 5: Saul Fox, Chairman
Saul Fox CHAIRMAN INVESTMENT UPDATE | SEPTEMBER 2022 | 5
Slide 6: Corporate Strategy: GBLI Repositioned
Corporate Strategy: GBLI Repositioned Completed a 5-year transformation of GBLI from a complex, offshore, property-catastrophe-oriented insurer subject to considerable earnings volatility to a streamlined primarily casualty lines E&S domestic carrier • Since 2017 Actions Net Written Premium of o She
Slide 7: Corporate Strategy: GBLI Transformation
Corporate Strategy: GBLI Transformation Sale of American Reliable Manufactured Home & Dwelling Farm, Ranch & Equine Renewal Rights Sale of $95 million of Renewal Rights Sale of $81 million of Premiums Premiums • Sold Renewal Rights to $95 million of • Sold Renewal Rights to $81 million of premiums t
Slide 8: Reduced CAT Volatility
Reduced CAT Volatility Probable Maximum Loss Average Catastrophe Loss (PML) 1 in 250 Ratio 2017 to 2021 ($ millions) $247.0 28.1% 80 % Reduction 22 Points Lower $51.2 6.0% 2017 2022 Exited Lines Continuing Lines INVESTMENT UPDATE | SEPTEMBER 2022 | 8
Slide 9: GBLI Continuing Lines – Gross Written Premium
GBLI Continuing Lines – Gross Written Premium Peer Companies Continuing Lines Exited Lines ($ millions) ($ millions) ($ millions) $488.0 $488.0 $303.4 $5,071.0 Down 36% CAGR 10.6% CAGR 22.9% $194.7 $3,392.0 $213.0 $213.0 2017 2021 2017 2017 2021 2017 2021 2021 Minimal earnings drag expected in 2023
Slide 10: GBLI Continuing Lines – 5 Year Average Combined Ratio
GBLI Continuing Lines – 5 Year Average Combined Ratio Calendar Year Combined Ratio Accident Year Combined Ratio $488.0 116.4% 113.4% 96.3% 96.2% 94.0% 88.4% $213.0 2017 2021 Continuing Exited Lines Continuing Peer Exited Lines Peer Lines Lines Companies Companies Solid track record of loss reserve A
Slide 11: Returned to Shareholders
Returned to Shareholders Since September 2003 Returned to Shareholders • Fox Paine & Company acquired control ($ millions) on September 5, 2003 • From 2003 – December 31, 2021, the $582.0 $525.0 company generated $582 million of Aggregate Net Income • $525 million or 90% of Aggregate Net Income has
Slide 12: David Charlton, Chief Executive
David Charlton CHIEF EXECUTIVE INVESTMENT UPDATE | SEPTEMBER 2022 | 12
Slide 13: Execution of Strategic Vision
Execution of Strategic Vision Best in class specialty insurance company focused on small to ` middle market business achieving steady growth and a consistent combined ratio in the low 90’s. INVESTMENT UPDATE | SEPTEMBER 2022 | 13
Slide 14: Corporate Strategy
Corporate Strategy Be the best-in-class specialty insurance company focused on small to middle market business achieving steady growth and a consistent combined ratio in the low 90s. Where We Play How We Win Our Capabilities • Casualty business with a • Retaining and hiring talented • Strong Claims,
Slide 15: Hiring Talented People Building Leadership Depth Across Our Company
Hiring Talented People Building Leadership Depth Across Our Company GBLI has hired over 21 experienced Executives since April 2021 Chief Executive Chief Operating SVP, Human SVP, Innovation & Chief Information SVP, Management SVP, Environmental Officer Resources Automation Officer & Professional Lia
Slide 16: Historical One GBLI Today
Historical One GBLI Today Actively moving from a holding company comprised of different entities to One Company with businesses whose names are representative and connected to GBLI. ONE Global Indemnity • Stronger trading relationships across multiple businesses with key brokers, partners, and custo
Slide 17: Execution of Strategic Vision
Execution of Strategic Vision Grow Historically Profitable Core Business Continuing Lines net written premium up 30.4% through June 2022 as compared to the first six months of 2021 INVESTMENT UPDATE | SEPTEMBER 2022 | 17
Slide 18: Execution of our Strategic Vision Roadmap
Execution of our Strategic Vision Roadmap Move towards a mix of 70% Casualty / 30% Property to reduce volatility and CAT losses 72% Casualty Company Mix of Business Trend Property Casualty 120% 100% 80% 42% 51% 60% 72% 40% 58% 49% 20% 0% 28% 2020 2021 1st 6 Months 2022 Continuing Lines INVESTMENT
Slide 19: Build Three New Core Businesses
Build Three New Core Businesses Professional Products Launched • Employment Practices Liability Environmental Products Launched • Contractors Pollution & Excess Casualty Products Launched • Manufacturing Professional • Construction • Non-Profit D&O/EPL • Practice • Real Estate • Private Compan
Slide 20: Make non-Core Businesses "Core" or Sell
Make non-Core Businesses “Core” or Sell Sold Farm, Ranch, and Sold Personal Lines/Mobile Home Exit Property Brokerage over $10 Million Equine Total Insured Value (TIV) • CAT exposed business with 9 out of • 50% of all Property Brokerage business was • Property and the 10 largest states for mob
Slide 21: Reduced CAT Volatility
Reduced CAT Volatility Reduced CAT Volatility Gross Average Annual Loss (AAL) in 2020 was $56.3 million, after our actions in 2020, 2021, and 2022 including repositioning the Reinsurance portfolio to be casualty-focused, reducing Property Brokerage appetite, the sale of Personal Lines, and Farm, R
Slide 22: Reinsurance Savings
Reinsurance Savings Reinsurance Costs as a Percentage of Direct Written 2022 Total Annual Premium Reinsurance Savings is $14M By reducing our Property CAT exposure 12.00% GBLI saved 10.00% • $3M in our Per-Risk treaty through By reducing our CAT 8.00% By reducing our CAT these actions 6.00% 11.7% •
Slide 23: Upcoming Key Initiatives
Upcoming Key Initiatives Middle Market Wholesale MGA InsurTech and Communications Business Program Administration Alternative and Brand Distribution Distribution • Build out a Middle Market • Corporate marketing • Our Insurtech business • Increase penetration business focused on and business enables
Slide 24: Stan Lam, Penn-America
Stan Lam PENN-AMERICA INVESTMENT UPDATE | SEPTEMBER 2022 | 24
Slide 25: Penn-America
Penn-America Strategy Written Premium • Consistent Underwriting Profitability $M o Average Combined Ratio in the low 90’s $214.8 • Small Commercial Business 13.2 % CAGR $193.9 o Core lines of coverage for small business customers: Property, General Liability, Inland- Marine, Commercial Excess Liabil
Slide 26: Penn-America
Penn-America Strategy • National Brand, Specialty in Nature o Distribution through 100+ specialty E&S wholesalers Non-admitted products available in all 50 states plus Washington, DC o “Service-Minded, Solution-Driven” o 3 regions, each led by a regional leader o Centralized renewal underwriting a
Slide 27: Utilizing Data and Analytics for Profitable Growth
Utilizing Data and Analytics for Profitable Growth Strategy • Analytics Driving Profitable Growth o ISO-based products coupled with proprietary customization: Precision-level pricing aligned to census block is calculated at point of sale o Fully integrated 3rd party data leading to: Reduced fire
Slide 28: Rate and Exposure Growth Outpace Inflation
Rate and Exposure Growth Outpace Inflation Strategy Penn-America Premium Audit Recoveries • 18 consecutive quarters of rate increases o +8.2% Rate increase so far in 2022 $7,000,000 o +5.1% Exposure increase so far in 2022 $6,000,000 • Approximately 60% of Penn-America’s casualty business is rated b
Slide 29: Tom McGeehan, Chief Financial Officer
Tom McGeehan CHIEF FINANCIAL OFFICER INVESTMENT UPDATE | SEPTEMBER 2022 | 29
Slide 30: GBLI Board: Objectives
GBLI Board: Objectives 2022-26 Net Written Net Written Premium of Net Written Premium of Premium CAGR Continuing Business Continuing Business 8.00% 24 % CAGR $554.0 $289.3 7.00% $220.3 $462.0 6.00% $356.0 $308.7 $228.4 $192.8 Board Board Board Objective Objective Objective - Low - Middle - High 6M 2
Slide 31: GBLI Board: Objectives
GBLI Board: Objectives On track to meet GBLI Board Objectives 2022-2026 Average Return Operating Income Average ROE from 2022 to on Equity Return on Equity 2026 is expected to be 10.8% 8.30% due to: 12.50% • Growth of Core 9.92% Businesses 8.37% • Improvement in Insurance Group Combined Ratio with l
Slide 32: Investment Portfolio at June 30, 2022
Investment Portfolio at June 30, 2022 Global Indemnity took dramatic action in mid-year 2021 and early 2022 in order to reposition its investment portfolio in anticipation of rising interest rates and volatility in financial markets Investment Portfolio • Sold its common stock portfolio early in the
Slide 33: Duration Shortening - Through June 30, 2022
Duration Shortening - Through June 30, 2022 Significant actions were taken to enhance liquidity, provide investment flexibility, and buffer market volatility Fixed Income Portfolio Duration Book Yield Duration in Years Book Yield % 2.62% 4.6 2.34% 2.30% 3.2 Collectibles Insurance Services Collec
Slide 34: Investment Returns Compared to Peer Companies
Investment Returns Compared to Peer Companies GBLI’s returns reflect the actions taken to shorten duration and sell common stocks Six Months Ended June 30, 2022 0.0% 1Q22 for WR Berkley includes -2.0% a gain of $251 -4.0% million from the sale of a real -6.0% estate investment in -8.0% Collectible
Slide 35: Asset Mix Compared to Peer Companies
Asset Mix Compared to Peer Companies GBLI’s bond portfolio has a shorter duration than peer companies it also has less common stock exposure than peer companies June 30, 2022 GBLI is monitoring Equity Markets and will consider increasing exposures to common stock when market conditions improve Sourc
Slide 36: Duration Shortening: Cash Flow Projections
Duration Shortening: Cash Flow Projections Projected Cash Flows August 31, 2022 Fixed Income Year Yield 800 Portfolio Investment Funds that freed up 2022 2.84% income was from Octagon and 600 Guggenheim were 2023 3.09% divided by invested in 2-year US Treasuries that 400 2024 3.38% average increase
Slide 37: Conservative Balance Sheet/Asset & Liability Management
Conservative Balance Sheet/Asset & Liability Management GBLI takes a conservative approach to managing its Assets and Liabilities Well-Matched Assets & Liabilities • AM Best, the preeminent insurance industry rating 2.2 agency, in its May 19, 2022, press release confirming Global Indemnity’s ‘A’ Exc
Slide 38: Strong Capital Position and Balance Sheet
Strong Capital Position and Balance Sheet Capital supports the business and provides returns to shareholders Even with the market turbulence of 2022, Global Indemnity has maintained capital to $679 Million support future growth Discretionary Strong Balance Sheet: Capital • A Rated by AM Best Estimat
Slide 39: GBLI Creating Value
GBLI Creating Value • High-quality Investment Portfolio o Short duration bond portfolio Shift to casualty is generating $$$ • Robust Enterprise Risk Process significant operating cash flows Strong of catastrophe •• Reduction exposure by selling non- o No common stock ` exposure underwriting core b
Slide 40: Thank You
Thank You INVESTMENT UPDATE | SEPTEMBER 2022 | 40
Global Indemnity Group — Investor Day (September 2022) on 6ix