GBLI

Overall Financial Performance

• Q2 2026 net income was $11.1 million, up 8% YoY; H1 2026 net income was $15.3 million, up from $6.4 million H1 2025.
• Accident year combined ratio was 94.7% in Q2 2026 and 94.8% H1 2026, with underwriting income of $5.8 million (Q2, +3% YoY) and $11.2 million (H1, +3% YoY), modestly ahead of 2025 results. Loss ratio was 53.8% in Q2, a 1.8 point YoY improvement driven by favorable catastrophe experience.
• Investment income was $16.4 million in Q2 2026, including a $2.3 million positive mark-to-market reversal on a limited partnership holding. Excluding this adjustment, Q2 investment income was $14.1 million, down from $15.3 million YoY due to increased allocation to U.S. Treasuries. The current fixed income portfolio book yield is 4.42%, with average duration of 1.08 years and AA- average credit quality.
• Discretionary capital (equity in excess of rating agency requirements) totaled $302 million as of June 30, 2026.

Operational Initiatives

• Expense ratio is currently elevated at 40.9%, approximately 4.5 points above long-term targets, due to investments in the Catalix, Kaleidoscope technology platforms, and new venture development. Total operating expense spending remains aligned with 2026 full-year plans.
• CIATA, the digital small commercial distribution platform, saw 8.5% growth in submissions, expanded carrier participation, and launched XS Cyber. Automation initiatives reduced average daily ticket volume by over 22%, improving operational efficiency.
• New growth ventures including aging services and specialty casualty have recruited leadership teams, with product development on track to launch by the end of 2026.
• Valiant Re continues to expand thoughtfully, adding new property quota share relationships while exiting underperforming treaties to maintain underwriting discipline.
• Technology deployment: The PEN America Pro platform build is nearly complete, targeted for September 2026 launch. The Kaleidoscope platform will next expand to Bacon Express and Collectibles in 2026, with broader application to new ventures and partner API connectivity planned for 2027.

Market Positioning

• The executive and environmental risk (ENS) market has become more competitive as admitted capacity expands and rate growth moderates. Management remains disciplined, prioritizing profitability over volume growth and focusing expansion on less cyclical portfolio segments including Valiant Re, Collectibles, and the new venture pipeline.
• Legacy programs in specialty products face pressure from competing admitted carriers and managing general agents (MGAs), but management sees opportunities in retained programs and new program launches planned for late 2026.

• Management maintains full-year 2026 guidance for Belmont Core gross written premium growth of 15% over 2025 levels, expecting strong double-digit growth in the second half of 2026 to offset modest first-half growth.
• The fixed income portfolio book yield is expected to reach 4.9% by the end of 2026, driven by continued reinvestment of maturities at higher prevailing yields.
• The elevated expense ratio is expected to decline rapidly through 2027, returning to the long-term target range of ~36% by the second half of 2028, an eight-quarter rollout from the start of platform investment.
• Excess discretionary capital is expected to be fully deployed over a 2 to 2.5 year ramp via organic product expansion, with adjusted return on equity (excluding excess capital) currently near 13%.

Belmont Core (the firm's core insurance segment) posted gross written premium (GWP) of $117 million in Q2 2026, up 7% year-over-year (YoY), and $214 million for the first half (H1) 2026, up 3% YoY. Segment breakdown:

• Pet America: Q2 GWP was not separately disclosed, grew 2% YoY after a 5% decline in Q1 2026, representing 0% of overall Belmont Core growth contribution in the quarter relative to Valiant Re's 79% growth.
• Valiant Re: Q2 GWP of $21.5 million, up 79% YoY; H1 GWP of $32.7 million, up 43% YoY. Three new treaties added in Q2, bringing total active treaties to 22.
• Bacon Express: Q2 GWP of $13.1 million, up 6% YoY; H1 GWP of $24.5 million, up 5% YoY, achieved despite challenging property market conditions and exiting the California-admitted property product line.
• Collectibles: Q2 GWP of $4.8 million, up 14% YoY; H1 GWP of $9.4 million, up 13% YoY, with strong underwriting results.
• Specialty Products: Q2 GWP of $7.8 million, down 36% YoY; H1 GWP of $15.5 million, down 21% YoY. Excluding terminated business, ongoing program GWP declined only 1% YoY.

• Rising competition in the ENS market has moderated rate momentum, creating pressure to chase unprofitable volume if underwriting discipline is not maintained.
• Legacy specialty programs face ongoing competitive pressure from admitted carriers and MGAs, leading to near-term premium declines in the segment.
• Current investment positioning is concentrated in short-duration U.S. Treasuries, which leaves the portfolio exposed to unhedged inflation risk if inflation pressures persist.
• Large-scale technology platform deployment creates near-term elevated operating expenses that will pressure profitability through 2027 before operating leverage improvements are realized.

Q: When will the elevated expense ratio return to normal long-term levels, and what does the timeline look like? / A: Management confirms expense reduction will accelerate rapidly in 2027, with the ratio expected to return to the target ~36% range by the second half of 2028. This follows an eight-quarter rollout of platform investments that began two years prior, with expenses now leveling off before starting to decline as a percentage of premium.

Q: What is the current status of AI adoption across the business, and where is it being deployed? / A: All employees are currently undergoing AI upskilling, and small-scale efficiency gains have already been achieved. Larger AI tools for underwriting decision support and claims settlement accuracy are still in testing, with full deployment scheduled for 2027 after the Kaleidoscope platform rollout is complete. Management expects AI to be fully integrated across the business within 1-2 years.

Q: What is the timeline and expected ROE for deployment of the firm's $302 million in excess discretionary capital? / A: When adjusting for excess capital and its associated investment income, the core operating business already generates an adjusted ROE of nearly 13%. Management plans to deploy all excess capital organically via expansion of existing and new products over a 2 to 2.5 year ramp-up period. The board has not approved a share buyback program as of Q2 2026.

Q: Does Global Indemnity have any direct or indirect exposure to risks from the ongoing Middle East conflict? / A: Management confirms the firm's entire current business portfolio is 100% domestic to the United States, with no material exposure to the Middle East conflict.