Rooted in its Formative Years Global Indemnity Group's origins can be traced back to 2003 when it was formed as a publicly traded insurance and reinsurance holding company. Originally known as Global Indemnity Limited and incorporated in the Cayman Islands, the company underwent a significant transformation in 2020. On August 28, 2020, Global Indemnity Group, LLC completed a redomestication transaction, replacing Global Indemnity Limited as the ultimate parent company of the Global Indemnity group of companies. This strategic move repositioned the company with its headquarters in Wilmington, Delaware.
The company's insurance operations are conducted through several subsidiaries, including United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, Penn-Star Insurance Company, and Penn-Patriot Insurance Company. Global Indemnity Group manages the distribution of its core product offerings through its Penn-America segment, while also maintaining a Non-Core Operations segment that contains lines of business that have been de-emphasized or are no longer being written.
Weathering Global Challenges Global Indemnity Group's resilience has been tested by various global events and economic conditions. In 2020, the COVID-19 pandemic posed significant challenges to the insurance industry, as the sudden and unprecedented nature of the crisis resulted in increased claims and disruptions to normal business operations. However, Global Indemnity Group's proactive risk management strategies and disciplined underwriting practices enabled it to navigate these turbulent times with minimal impact on its financial performance.
Navigating the Evolving Regulatory Landscape The insurance industry is subject to a complex and ever-changing regulatory environment, which requires companies to continuously adapt their processes and policies. Global Indemnity Group has consistently demonstrated its ability to stay ahead of the curve, ensuring compliance with the latest industry regulations while maintaining its competitive edge.
In 2022, the company underwent a strategic restructuring, refocusing its efforts on its core product offerings and exiting certain non-core business lines. This decisive move strengthened the company's market presence and enhanced its ability to effectively serve its target clientele. The restructuring plan, which was initiated in the fourth quarter of 2022 and completed in the first quarter of 2023, incurred costs of $5.4 million but was deemed necessary to improve the company's operational efficiency and market focus.
Diversified Product Portfolio and Geographic Reach Global Indemnity Group's product portfolio spans a diverse range of specialty insurance and reinsurance solutions, catering to the unique needs of its clients. The company's offerings include property, casualty, professional liability, and specialty lines, among others. This diversification not only mitigates risk but also provides the company with the flexibility to capitalize on emerging opportunities across various sectors.
Global Indemnity Group operates through two main business segments: Penn-America and Non-Core Operations. The Penn-America segment offers specialty property and casualty products designed for Global Indemnity's Wholesale Commercial, Programs, InsurTech, and Assumed Reinsurance product offerings. This segment generated the majority of the company's gross written premiums, with $194.60 million in the first six months of 2024, up 2.2% from the same period in 2023.
The Non-Core Operations segment contains lines of business that have been de-emphasized or are no longer being written by the company. Gross written premiums in this segment were $406 million in the first six months of 2024, up from $42.65 million in the same period in 2023, primarily due to the non-renewal of a casualty treaty as well as the sale of the Farm, Ranch & Stable renewal rights in August 2022.
Leveraging Technology for Competitive Edge In recent years, Global Indemnity Group has made strategic investments in technology to enhance its operational efficiency and customer experience. The company has embarked on a multi-year initiative to transform its technology platforms, transaction and information software, and data storage systems. These advancements have enabled the company to streamline its processes, improve decision-making, and better serve its clients.
Financials Global Indemnity Group's financial performance has been consistently strong, with the company reporting net income of $25.43 million in 2023 and $19.5 million in 2022. The company's sound underwriting practices and disciplined approach to capital management have contributed to its robust financial position.
For the most recent fiscal year (2023), Global Indemnity Group reported revenue of $528.13 million, net income of $25.43 million, and operating cash flow (OCF) and free cash flow (FCF) of $42.89 million each. In the most recent quarter (Q3 2024), the company reported revenue of $111,761,000, net income of $12,760,000, and OCF and FCF of $15,316,000 each.
The company has demonstrated strong growth across its core business lines, with Wholesale Commercial, InsurTech, and Assumed Reinsurance divisions growing 14% in the first nine months of 2024 compared to the prior year period. This growth aligns with the company's previously set goals of growing their insurance business at a compound annual growth rate of at least 10%.
Global Indemnity Group's focus on its core Penn-America segment and the runoff of the Non-Core Operations has resulted in a consolidated accident year combined ratio improvement to 95.8% in the first six months of 2024 from 99.1% in the same period in 2023. The Penn-America segment reported an underwriting income of $10.31 million in the first six months of 2024, up from $3.02 million in the prior year period. The Non-Core Operations segment reported an underwriting income of $1.50 million in the first six months of 2024 compared to $178,000 in the prior year period.
Liquidity As of December 31, 2023, Global Indemnity Group's total assets stood at $1.73 billion, with a well-capitalized balance sheet that includes $648.75 million in shareholders' equity. The company's investment portfolio, which is primarily composed of high-quality fixed-income securities, has generated stable investment income, further strengthening its financial resilience.
Global Indemnity Group maintains a strong liquidity position with no outstanding debt, resulting in a debt-to-equity ratio of 0. As of December 31, 2023, the company had $38.04 million in cash and cash equivalents. The company's discretionary capital increased to $240 million at the end of the third quarter of 2024, up from $200 million at the end of 2023, providing support for growth in the Penn-America segment and other corporate opportunities.
Responsible Risk Management and Industry Recognition Global Indemnity Group's commitment to responsible risk management has earned it industry recognition. In 2024, the company's U.S. operating subsidiaries were assigned an "A" (Excellent) Financial Strength Rating by AM Best, a leading credit rating agency for the insurance industry. This accolade reflects the company's sound underwriting practices, prudent risk management, and overall financial stability.
The company's underwriting performance has shown improvement, with the current accident year loss ratio for Penn-America improving by 3.0 points to 56.3% in the first six months of 2024 compared to 59.3% in the same period in 2023. This was driven by an 8.4 point improvement in the non-catastrophe property loss ratio and a 1.5 point improvement in the catastrophe loss ratio. The Non-Core Operations segment also saw an improvement in its current accident year loss ratio, decreasing by 5.7 points to 61.1% in the first six months of 2024 compared to 66.8% in the same period in 2023.
Looking Ahead: Capitalizing on Evolving Market Opportunities As the insurance industry continues to navigate the challenges posed by global economic conditions, regulatory changes, and technological advancements, Global Indemnity Group remains well-positioned to capitalize on emerging opportunities. The company's diversified product portfolio, robust financial position, and technological capabilities position it as a resilient and adaptable player in the market.
Global Indemnity Group's outlook for the full year 2024 and 2025 is very positive, citing continued strong performance in the core Penn-America segment and a well-positioned investment portfolio. The company is on track to meet or exceed its previously communicated goals, including growing their insurance business at a compound annual growth rate of at least 10%, achieving a combined ratio in the low 90s, and managing insurance expenses to a competitive level of 36% to 37%.
With a seasoned management team and a clear strategic vision, Global Indemnity Group is poised to continue its growth trajectory, delivering value to its shareholders and clients alike. As the company navigates the evolving industry landscape, investors can take comfort in its proven track record of resilience and its unwavering commitment to providing innovative and tailored risk management solutions.