Global Indemnity Group, LLC Q2 FY2025 earnings call

• Quarterly results are comparable to positive insurance operating and investment trends of past several quarters. Accident year combined ratio improved from 96.7% last year to 94.6% this year with underwriting profit of $5.6 million.
• Excluding terminated contracts, gross premium grew 18% in Q2 2025 over Q2 2024, with solid growth in Vacant Express, collectibles, wholesale, commercial and assumed reinsurance.
• Technology infrastructure revamp is on track: design and coding of Kaleidoscope policy rating, quoting and issuance system for wholesale commercial package policies to be tested by year-end and rolled out to agency partners early in 2026; internal data migrated to modern data lake in cloud.
• Requested and received approval for $100 million in aggregate dividends from insurance subsidiaries in July 2025 to bolster liquidity for growth in Agency and Insurance Services segment.
• Will continue to profitably grow existing businesses, invest in technology, expand underwriting capabilities through organic growth and pursue selective add-on acquisitions.

For the second quarter of 2025, the accident year combined ratio was 94.6% producing an underwriting profit of $5.6 million. The short duration investment portfolio delivered $14.7 million in stable results with an annualized investment return of 4.9%. Excluding terminated contracts, gross premium grew 18% over the second quarter of 2024. At the divisional level, wholesale commercial focusing on Main Street small business grew 8% to $69.1 million with average rate increases of about 4%. Vacant Express grew 27% to $12.4 million driven by organic growth from existing agents and agency appointments. Collectibles grew 4% to $4.2 million predominantly driven by rate. Assumed reinsurance gross premiums, excluding noncore business, grew 86% to $12 million. Specialty Products, excluding terminated products, was $12.3 million in the second quarter of 2025 compared to $9.3 million in the same period last year. Revenue contribution percentages would need to be calculated based on total premiums, but key absolute figures are as above.

• For the first 6 months of 2025, underwriting income ex impact of California wildfires was $10.9 million compared to $8.7 million in the same period last year. Underlying underwriting performance for the last half of 2025 is expected to improve compared to the same period in 2024.
• Expect premium growth of 10%.
• Discretionary capital is $265 million at June 30, 2025, supporting growth in Agency and Insurance Services segment.
• Investment portfolio is well positioned to invest in longer duration maturities and higher yields.

• In the small commercial segment, starting to see a bit more headwinds and price competition than in the last 2 years, though still expecting 8%-10% growth in that segment this year and possibly the same next year.
• Uncertainty regarding exposure to new California fires as of now, but initial reserves established at the end of the first quarter have maintained with very little movement.

Q: A quick question on the corporate expenses. I think you said business development fees to find new opportunities. What is that exactly?

A: We're looking to expand our agency operations with additional underwriting capabilities. And so we've been reviewing a number of different opportunities in the market. We probably looked at a half a dozen to a dozen some of which involve us spending some money to do some due diligence. We haven't yet gotten any conclusions on those at this point in time.

Q: Any comment on the overall E&S market? Where do you see cycle weakness and that sort of stuff?

A: It's a tricky question because it differs depending on which segment you're looking at. Our Vacant Express segment, for example, continues to have real growth opportunities because of what's going on in the property market around the country. But in small commercial, we're starting to see a little bit more headwinds than probably we saw the last 2 years. We continue to be pleased with the level of premium we're obtaining for the business we're writing. But we are seeing a little bit more price competition than we probably saw for the last 2 years.

Q: Do you still have any substantial business in California across the portfolio?

A: Yes. As mentioned in our last call is that we have business in California, across all of our businesses, we are currently moving some of that from an admitted product to a non-admitted product.

Q: Do you see further growth from the level we saw quarter as you look for other lines of business?

A: Yes. If you -- we've engaged a couple of outside contractors to help with our internal staff to review financials for different things we're looking at. That expense would not create anything. But if we actually get to the point of closing on any transactions, you'll probably see a potential bumps and expenses when that occurs. We're not planning on any big expenditures, but we're doing it incrementally. And if there's any substantial change in the current level, it probably will be a company by actually closing on a transaction and we'll obviously discuss that at that time.

Q: Can you provide a tangible return on equity target a few years out? What kind of loss and expense ratios would that imply?

A: Sure. It's it depends on what level you're looking at our return on equity. If we're looking at Belmont, which is our -- essentially our balance sheet company and its holding company, we would expect that the returns there will get into the 12% range in the next couple of years. That's kind of the insurance operation underwriting side. I would say, when you then look at the other side and the holding company expenses, we're probably going to continue to target at 8% to 9%. The loss ratio that we need for that we're actually at the right loss ratio. What we really need to see is our expense ratio come down another 2 points, and that should put us pretty close to those targets.