Global Indemnity Group, LLC Q3 FY2025 earnings call

• Positive insurance and investment trends continued. Accident year combined ratio 90.4% was the best in several years with underwriting profit $10.2 million. Short duration investment portfolio net investment income up 9% but had mark-to-market loss. • Corporate expenses increased due to investments in Agency and Insurance Services segment. • Project Kaleidoscope team revamping tech and data infrastructure on track, plans to have existing products on new system by 2026. • Rebranded Agency and Insurance Services to Katalyx, acquired Sayata for AI-enabled distribution. • Board moved stock listing to NASDAQ.

Accident year combined ratio was 90.4%, generating an underwriting profit of $10.2 million, a significant improvement from 93.5% last year. Short duration investment portfolio had net investment income of $17.9 million, a 9% increase from prior year, but had a modest short-term mark-to-market loss. Wholesale Commercial (Penn-America) grew 10% to $67.9 million with a 4% average rate increase. Vacant Express and Collectibles grew 5% to $16.4 million. Assumed Reinsurance gross premiums excluding noncore business grew 58% to $15.6 million. Specialty Products excluding terminated products remained flat at $8.6 million.

• Expect premium growth of 10% for full year 2025. • Underwriting income ex California wildfires first quarter up from $15.3 million to $21.2 million for first 9 months of 2025. • Anticipate fourth quarter underwriting performance to improve vs 2024. • Discretionary capital at $273 million at Sept 30. • Investment portfolio well positioned for longer duration maturities at higher yields.

• Competition increasing, especially emerging as they sell new products to new customers. • Investment portfolio shift may lead to more mark-to-market changes.

Q: Could you go back to the investment losses of $4 million you took in the quarter and sort of give us an explanation of why you decided to take -- realize the loss? And will there be similar type of losses in the next couple of quarters as you say, as you restructure and/or sell some of your bond portfolio?

A: Yes. Ross, to be clear, the loss was not realized in the form of a sale. It's a fair value decline on $25 million in equities that we invested in the third quarter. We view it as short term.

Q: You mentioned competition is increasing. Can you give us any more color on that, where it's happening and why it's happening now?

A: For our current product lines, which are basically focused on small commercial or very small personal collections, et cetera, in our Collectibles business or Vacant Express, we don't see the kind of competition you'd see in larger premium where it starts earlier. We're just beginning to see some of that pressure emerge as we're selling new products to new customers. It's a little bit -- I would say it's a little bit more competitive than last year.

Q: One great way to get your message out and show that you believe there is real value in your stock would be able to implement and execute on a buyback program. Any thoughts?

A: The -- I think we've been pretty consistent for the last 2 or 3 quarters that given the amount of money we're investing to restructure our organization, the reorganization we began at the beginning of the year, we think we're going to have a significant amount of growth going into '26 and '27. As such, the Board has made the decision, at least in the short term, meaning in the next 3, 4, 5 quarters that we're going to deploy our capital into those growth opportunities rather than buy back stock.