What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-08 · 120 added, 84 removed, 276 unchanged (43% of the section changed)

5 unchanged sentences

Financial Highlights

2024 First Quarter Results of Operations

Results of Operations for Six Months

• Net income of $21.5 million, or $1.55 per share diluted, in 2024 is $9.6 million higher than the same period in 2023.

2 unchanged sentences

58%) in 2024 is lower than net earned premiums of $269.2 million (Property 32% and Casualty 68%) in 2023 primarily due to the run off of Non-Core business.

• Underwriting income was $5.3 million in 2024 which is better than a $1.1 million loss for the same period in 2023 due to strong underwriting results on the Company's property business.

• Underwriting income was $8.8 million in 2024 which is higher than $3.2 million in underwriting income for the same period in 2023 due to strong underwriting results for the Company's Penn-America segment.

• Penn-America accident year combined ratio was 94.8% in 2024 compared to 96.8% for the same period in 2023.

1 unchanged sentence

• Net investment income of $29.8 million in 2024 was 18.3% better than the same period in 2023.

Book yield on the fixed maturities portfolio was 4.3% and 3.6% at March 31, 2024 and 2023, respectively

Book yield on the fixed maturities portfolio increased to 4.5% at June 30, 2024 from 3.8% at June 30, 2023.

• Operating cash flows was $36.9 million in 2024 compared to $14.2 million for the same period in 2023.

2024 First Quarter Consolidated Financial Condition

• Total investments, including receivable for securities matured, of $1.4 billion at March 31, 2024 increased 2% compared to December 31, 2023;

2024 Second Quarter Consolidated Financial Condition

• On August 1, 2024, AM Best affirmed the Financial Strength Rating of A (Excellent) for the U.S.

operating subsidiaries of Global Indemnity Group, LLC.

• Total cash and investments of $1.4 billion at June 30, 2024 increased 3.2% compared to December 31, 2023;

fixed maturities and cash comprise 97% of total investments.

• Total assets of $1.7 billion at March 31, 2024 and December 31, 2023.

• No debt at March 31, 2024 and December 31, 2023.

• Total assets of $1.7 billion at June 30, 2024 and December 31, 2023.

• No debt at June 30, 2024 and December 31, 2023.

• Since the Company's initial public offering in 2003, the total capital returned to shareholders was $619.3 million, comprising $522.2 million of share repurchases and $97.1 million of distributions / dividends.

This includes $9.8 million of distributions during 2024.

• Shareholders' equity increased 1.7% from December 31, 2023 to $659.5 million at March 31, 2024.

• Shareholders' equity increased 2.9% from December 31, 2023 to $667.5 million at June 30, 2024.

• Dividends paid per share increased 40% to $0.70 in 2024 compared to the same period in 2023.

• Book value per common share increased 1.4% from December 31, 2023 to $48.18 at March 31, 2024.

• Book value per common share increased 2.2% from December 31, 2023 to $48.56 at June 30, 2024.

Results of Operations

The Company realized net income of $11.4 million and $2.5 million during the quarters ended March 31, 2024 and 2023, respectively.

Net investment income increased by $2.5 million during the quarter ended March 31, 2024 as compared to the same period in 2023.

This increase in net investment income was primarily due to strategies employed by the Company to take advantage of rising interest rates which resulted in a 19% increase in book yield on the fixed maturities portfolio to 4.3% at March 31, 2024 from 3.6% at March 31, 2023.

The weighted average duration of the fixed maturities portfolio was 1.1 years as of March 31, 2024.

The Company generated strong underwriting income of $5.3 million for the quarter ended March 31, 2024 compared to an underwriting loss of $1.1 million for the same period in 2023.

This improvement is primarily driven by strong property results during the quarter ended March 31, 2024.

The following table summarizes the Company’s results for the quarters ended March 31, 2024 and 2023:

The Company realized net income of $10.1 million and $9.3 million during the quarters ended June 30, 2024 and 2023, respectively, and realized net income of $21.5 million and $11.8 million during the six months ended June 30, 2024 and 2023, respectively.

Net investment income increased by $2.1 million and $4.6 million during the quarter and six months ended June 30, 2024 as compared to the same periods in 2023.

This increase in net investment income was primarily due to strategies employed by the Company to take advantage of rising interest rates which resulted in a 18% increase in book yield on the fixed maturities portfolio to 4.5% at June 30, 2024 from 3.8% at June 30, 2023.

The weighted average duration of the fixed maturities portfolio was 1.0 years as of June 30, 2024.

The Company generated underwriting income of $8.8 million for the six months ended June 30, 2024 compared to underwriting income of $3.2 million for the same period in 2023.

This increase in underwriting income is driven by strong underwriting results within the Company's Penn-America segment mainly due to a 3.0 point improvement in its current accident year loss ratio.

Underwriting income for the quarter was $3.5 million in 2024 compared to $4.3 million in 2023.

This decrease was predominantly due to a decline in earned premium volume related to Non-Core Operations.

Overall, the combined ratio for the quarter improved to 96.6 in 2024 from 96.9 in 2023.

The following table summarizes the Company’s results for the quarters and six months ended June 30, 2024 and 2023:

Quarters Ended

Six Months Ended

(Dollars in thousands)

6 unchanged sentences

Acquisition costs and other underwriting expenses

Underwriting income (loss)

Underwriting income

Net investment income

1 unchanged sentence

Corporate and other operating expenses

Interest expense

Income before income taxes

9 unchanged sentences

Quarters Ended

Six Months Ended

(Dollars in thousands)

13 unchanged sentences

(2) Net written premiums equal gross written premiums less ceded written premiums.

(3) External business only, excluding business assumed from affiliates.

Gross written premiums decreased by 24.0% for the quarter ended March 31, 2024 as compared to same period in 2023.

Gross written premiums decreased by 8.5% and 16.7% for the quarter and six months ended June 30, 2024 as compared to same periods in 2023.

The decrease in gross written premiums is mainly due to a reduction in premiums within Non-Core Operations for lines of business that have been de-emphasized or no longer written.

In addition, within Penn-America, the gross written premiums for Programs decreased primarily due to actions taken in 2023 to improve underwriting results through increased rates and form changes.

These reductions in premiums were partially offset by continued growth of 7.1% in aggregate for Penn-America's Wholesale Commercial, InsurTech, and Assumed Reinsurance divisions.

The growth in Wholesale Commercial and InsurTech is driven by new agency appointments, organic growth of existing agents, and new products.

The growth in Assumed Reinsurance is primarily due to three new treaties entered into during 2023 and increased participation on one treaty.

These reductions in premiums were partially offset by continued growth of 10.5% and 8.8% in aggregate for Penn-America's Wholesale Commercial, InsurTech, and Assumed Reinsurance divisions during the quarter and six months ended June 30, 2024, respectively.

The growth in Wholesale Commercial and InsurTech is driven by premium rate increases, new agency appointments, organic growth of existing agents, and new products.

The growth in Assumed Reinsurance is primarily due to new treaties entered into during 2023 and 2024 and increased participation or organic growth from existing treaties.

Net Retention

2 unchanged sentences

Quarters Ended

Six Months Ended

(Dollars in thousands)

Non-Core Operations

The net premium retention for the quarter ended March 31, 2024 increased by 4.3 points as compared to the same period in 2023.

Penn-America's retention increased by 3.0 points primarily due to the termination of two quota share agreements and lower cost on the Company's catastrophe reinsurance treaty.

Cessions on Non-Core Operations were significantly reduced

due to sale of manufactured home and dwelling business in 2021 and the Farm, Ranch and Stable business in 2022.

The net premium retention for the quarter and six months ended June 30, 2024 increased by 0.8 points and 2.6 points, respectively, as compared to the same periods in 2023.

Penn-America's retention increased by 0.7 points and 1.7 points for the quarter and six months ended June 30, 2024, respectively, primarily due to the termination of two quota share agreements and lower cost on the Company's catastrophe reinsurance treaty.

Cessions on Non-Core Operations were significantly reduced due to sale of manufactured home and dwelling business in 2021 and the Farm, Ranch and Stable business in 2022.

See Note 2 of the notes to the consolidated financial statements in Item 8 of Part II of the Company’s 2023 Annual Report on Form 10-K for additional information on the sale of renewal rights related to the Company’s manufactured and dwelling homes business and the Company's Farm, Ranch & Stable business.

Net Earned Premiums

Net earned premiums within the Penn-America segment decreased by 1.6% for the quarter ended March 31, 2024 as compared to the same period in 2023 primarily due to the reduction in premiums written for Programs as a result of underwriting actions taken in 2023 to improve underwriting profitability partially offset by continued premium growth in Penn-America's Wholesale Commercial, InsurTech, and Assumed Reinsurance divisions.

Property net earned premiums were $39.9 million and $37.6 million for the quarters ended March 31, 2024 and 2023, respectively.

Casualty net earned premiums were $49.2 million and $53.0 million for the quarters ended March 31, 2024 and 2023, respectively.

Net earned premiums within the Non-Core Operations segment decreased by 84.9% for the quarter ended March 31, 2024 as compared to the same period in 2023 primarily due to the non-renewal of a casualty treaty as well as a reduction in earned premiums due to the sale of Farm, Ranch & Stable renewal rights on August 8, 2022.

Property net earned premiums were less than $0.1 million and $8.8 million for the quarters ended March 31, 2024 and 2023, respectively.

Casualty net earned premiums were $7.4 million and $40.7 million for the quarters ended March 31, 2024 and 2023, respectively.

Amounts recorded for unpaid losses and loss adjustment expenses represent management’s best estimate at March 31, 2024.

Net earned premiums within the Penn-America segment decreased by 3.6% and 2.6% for the quarter and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 primarily due to the reduction in premiums written for Programs as a result of underwriting actions taken in 2023 to improve underwriting profitability partially offset by continued premium growth in Penn-America's InsurTech and Assumed Reinsurance divisions.

Property net earned premiums were $39.1 million and $35.4 million for the quarters ended June 30, 2024 and 2023, respectively, and $79.0 million and $73.0 million for the six months ended June 30, 2024 and 2023, respectively.

Casualty net earned premiums were $50.2 million and $57.2 million for the quarters ended June 30, 2024 and 2023, respectively, and $99.5 million and $110.3 million for the six months ended June 30, 2024 and 2023, respectively.

Net earned premiums within the Non-Core Operations segment decreased by 90.5% and 87.3% for the quarter and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 primarily due to the non-renewal of a casualty treaty as well as a reduction in earned premiums due to the sale of Farm, Ranch & Stable renewal rights on August 8, 2022.

There were no property earned premiums for the quarter and six months ended June 30, 2024.

Property earned premiums were $4.4 million and $13.2 million for the quarter and six months ended June 30, 2023, respectively.

Casualty net earned premiums were $3.6 million and $32.1 million for the quarters ended June 30, 2024 and 2023, respectively, and $10.9 million and $72.8 million for the six months ended June 30, 2024 and 2023, respectively.

Amounts recorded for unpaid losses and loss adjustment expenses represent management’s best estimate at June 30, 2024.

Management’s best estimate is as of a particular point in time and is based upon known facts, the Company’s actuarial analyses, current law, and the Company’s judgment.

This resulted in carried gross and net reserves of $853.6 million and $781.8 million, respectively, as of March 31, 2024.

A breakout of the Company’s gross and net reserves, as of March 31, 2024, is as follows:

This resulted in carried gross and net reserves of $844.2 million and $773.8 million, respectively, as of June 30, 2024.

A breakout of the Company’s gross and net reserves, as of June 30, 2024, is as follows:

Gross Reserves

10 unchanged sentences

Therefore, the Company believes management’s best estimate is more likely influenced by changes in severity than frequency.

The following table, which the Company believes reflects a reasonable range of variability around its best estimate based on historical loss experience and management’s judgment, reflects the

impact of changes (which could be favorable or unfavorable) in frequency and severity on the Company’s current accident year net loss estimate of $53.4 million for claims occurring during the quarter ended March 31, 2024:

The following table, which the Company believes reflects a reasonable range of variability around its best estimate based on historical loss experience and management’s judgment, reflects the impact of changes (which could be favorable or unfavorable) in frequency and severity on the Company’s current accident year net loss estimate of $107.1 million for claims occurring during the six months ended June 30, 2024:

Severity Change

1 unchanged sentence

Frequency Change

The Company’s net reserves for losses and loss adjustment expenses of $781.8 million as of March 31, 2024 relate to multiple accident years.

The Company’s net reserves for losses and loss adjustment expenses of $773.8 million as of June 30, 2024 relate to multiple accident years.

Therefore, the impact of changes in frequency and severity for more than one accident year could be higher or lower than the amounts reflected above.

Underwriting Results

The components of income (loss) from the Company’s Penn-America segment and corresponding underwriting ratios are as follows:

The components of income from the Company’s Penn-America segment and corresponding underwriting ratios are as follows:

Quarters Ended

Six Months Ended

(Dollars in thousands)

16 unchanged sentences

See “Results of Operations” above for a discussion on consolidated premiums.

Other income was $0.3 million for each of the quarters ended March 31, 2024 and 2023.

Other income was $0.3 million for each of the quarters ended June 30, 2024 and 2023 and $0.7 million and $0.5 million for six months ended June 30, 2024 and 2023, respectively.

Other income is primarily comprised of fee income.

The calendar year loss ratio for the quarter ended March 31, 2024 was 54.9% and includes an increase of less than $0.1 million, or 0.1 percentage points related to reserve development on prior accident years.

The calendar year loss ratio for the quarter ended March 31, 2023 was 65.4% and includes an increase of $2.2 million, or 2.4 percentage points related to reserve development on prior accident years.

The calendar year loss ratio for the quarter and six months ended June 30, 2024 was 57.2% (includes a decrease of $0.5 million, or 0.5 percentage points), and was 56.0% (includes a decrease of $0.4 million, or 0.3 percentage points), respectively, related to reserve development on prior accident years.

The calendar year loss ratio for the quarter and six months ended June 30, 2023 was 56.6% (includes an increase of $0.9 million, or 1.0 percentage points), and was 60.9% (includes an increase of $3.1 million, or 1.6 percentage points), respectively, related to reserve development on prior accident years.

Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

The current accident year loss ratio improved by 8.2 points from 63.0% for the quarter ended March 31, 2023 to 54.8% for the quarter ended March 31, 2024.

The current accident year loss ratio increased by 2.1 points from 55.6% for the quarter ended June 30, 2023 to 57.7% for the quarter ended June 30, 2024 and improved by 3.0 points from 59.3% for the six months ended June 30, 2023 to 56.3% for the six months ended June 30, 2024.

The current accident year losses and loss ratio is summarized as follows:

(Dollars in thousands)

Quarters Ended

(Dollars in thousands)

Property losses

3 unchanged sentences

Total accident year losses

• The current accident year non-catastrophe property loss ratio improved by 18.0 points during the quarter ended March 31, 2024 as compared to the same period in 2023 mainly reflecting lower claims severity in the first accident quarter compared to last year.

• The current accident year catastrophe loss ratio improved by 0.6 points during the quarter ended March 31, 2024 as compared to the same period in 2023 recognizing lower claims frequency in the first accident quarter compared to last year.

• The current accident year casualty loss ratio improved by 0.3 points during the quarter ended March 31, 2024 as compared to the same period in 2023.

• The current accident year non-catastrophe property loss ratio increased by 1.7 points during the quarter ended June 30, 2024 as compared to the same period in 2023 reflecting higher claims severity in the calendar quarter compared to last year.

• The current accident year catastrophe loss ratio improved by 2.5 points during the quarter ended June 30, 2024 as compared to the same period in 2023 recognizing lower claims frequency in the calendar quarter compared to last year.

• The current accident year casualty loss ratio increased by 4.3 points during the quarter ended June 30, 2024 as compared to the same period in 2023 primarily due to higher claims severity in the calendar quarter compared to last year.

Six Months Ended

(Dollars in thousands)

Property losses

Non-catastrophe

Property losses

Casualty losses

Total accident year losses

• The current accident year non-catastrophe property loss ratio improved by 8.4 points during the six months ended June 30, 2024 as compared to the same period in 2023 reflecting lower claims frequency and severity in the first six months compared to last year.

• The current accident year catastrophe loss ratio improved by 1.5 points during the six months ended June 30, 2024 as compared to the same period in 2023 recognizing lower claims frequency in the first six months compared to last year.

• The current accident year casualty loss ratio increased by 2.0 points during the six months ended June 30, 2024 as compared to the same period in 2023 due to higher claims severity in the first six months compared to last year.

Expense Ratios

The expense ratio for the Company’s Penn-America segment increased by 0.9 points from 38.3% for the quarter ended March 31, 2023 to 39.2% for the quarter ended March 31, 2024 primarily due to a reduction in earned premiums.

The expense ratio for the Company’s Penn-America segment increased by 0.9 points from 37.1% for the quarter ended June 30, 2023 to 38.0% for the quarter ended June 30, 2024 and increased by 0.9 points from 37.7% for the six months ended June 30, 2023 to 38.6% for the six months ended June 30, 2024.

The increase in the expense ratio is predominantly due to a reduction of earned premiums in 2024 as well as a one time recovery of expenses related to employee medical benefits in 2023 which did not repeat.

Reconciliation of non-GAAP financial measures and ratios

3 unchanged sentences

Quarters Ended

Six Months Ended

(Dollars in thousands)

19 unchanged sentences

Quarters Ended

Six Months Ended

(Dollars in thousands)

14 unchanged sentences

Accident year combined ratio (1)

NM - not meaningful

(1) The accident year combined ratio excludes the impact of prior accident year losses and loss adjustment expenses and prior accident year contingent commission expenses.

See “Results of Operations” above for a discussion on consolidated premiums.

The Company recognized income of less than $0.1 million for each of the quarters ended March 31, 2024 and 2023.

The Company recognized income of less than $0.1 million for each of the quarters ended June 30, 2024 and 2023 and income of less than $0.1 million and $0.1 million for the six months ended June 30, 2024 and 2023, respectively.

Other income is primarily comprised of fee income net of bank fees.

The calendar year loss ratio for the quarter ended March 31, 2024 was 60.1% and includes a decrease of less than $0.1 million, or 0.5 percentage points related to reserve development on prior accident years.

The calendar year loss ratio for the quarter ended March 31, 2023 was 58.1% and includes a decrease of $2.2 million, or 4.4 percentage points related to reserve development on prior accident years.

The calendar year loss ratio for the quarter and six months ended June 30, 2024 was 73.3% (includes an increase of $0.4 million, or 11.1 percentage points), and was 64.3% (includes an increase of $0.3 million, or 3.2 percentage points), respectively, related to reserve development on prior accident years.

The calendar year loss ratio for the quarter and six months ended June 30, 2023 was 70.3% (includes a decrease of $0.8 million, or 2.3 percentage points), and was 63.3% (includes a decrease of $3.0 million, or 3.5 percentage points), respectively, related to reserve development on prior accident years.

Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

The current accident year loss ratio improved by 1.9 points from 62.5% for the quarter ended March 31, 2023 to 60.6% for the quarter ended March 31, 2024.

The current accident year loss ratio improved by 10.4 points from 72.6% for the quarter ended June 30, 2023 to 62.2 for the quarter ended June 30, 2024 and improved by 5.7 points from 66.8% for the six months ended June 30, 2023 to 61.1% for the six months ended June 30, 2024.

The current accident year losses and loss ratio is summarized as follows:

Quarters Ended

(Dollars in thousands)

Quarters Ended March 31,

Property losses

3 unchanged sentences

Total accident year losses

• The property loss ratio decreased by 33.1 points during the quarter ended March 31, 2024 as compared to the same period in 2023 reflecting a significant reduction in premiums and current accident year losses due to exiting various lines of business.

• The current accident year casualty loss ratio improved by 0.7 points during the quarter ended March 31, 2024 as compared to the same period in 2023 reflecting mix of business changes.

Six Months Ended

(Dollars in thousands)

Property losses

Non-catastrophe

Property losses

Casualty losses

Total accident year losses

• The current accident year casualty loss ratio improved by 9.4 points and 4.4 points during the quarter and six months ended June 30, 2024, respectively, as compared to the same periods in 2023 reflecting mix of business changes.

Expense Ratio

The expense ratio for the Company’s Non-Core Operations increased by 7.0 points from 37.9% for the quarter ended March 31, 2023 to 44.9% for the quarter ended March 31, 2024 primarily due to lower earned premiums as a result of exiting various lines of business.

The expense ratio for the Company’s Non-Core Operations increased by 24.9 points from 34.9% for the quarter ended June 30, 2023 to 59.8% for the quarter ended June 30, 2024 and increased by 13.0 points from 36.6% for the six months ended June 30, 2023 to 49.6% for the six months ended June 30, 2024 primarily due to lower earned premiums as a result of exiting various lines of business.

Reconciliation of non-GAAP financial measures and ratios

3 unchanged sentences

Quarters Ended

Six Months Ended

(Dollars in thousands)

14 unchanged sentences

Total net losses and loss adjustment expense and total loss ratio (2)

NM - not meaningful

(1) Non-GAAP measure / ratio

4 unchanged sentences

Quarters Ended

Six Months Ended

(Dollars in thousands)

3 unchanged sentences

(1) Excludes realized gains and losses

Net investment income increased by 20.9% for the quarter ended March 31, 2024 as compared to the same period in 2023.

At March 31, 2024, the Company held asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations with a market value of $335.0 million.

Excluding the asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations, the average duration of the Company’s fixed maturities portfolio was 0.9 years as of March 31, 2024, compared with 1.4 years as of March 31, 2023.

Net investment income increased by 15.9% and 18.3% for the quarter and six months ended June 30, 2024, respectively, as compared to the same periods in 2023.

At June 30, 2024, the Company held asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations with a market value of $303.7 million.

Excluding the asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations, the average duration of the Company’s fixed maturities portfolio was 0.8 years as of June 30, 2024, compared with 1.2 years as of June 30, 2023.

Changes in interest rates can cause principal payments on certain investments to extend or shorten which can impact duration.

The Company’s embedded book yield on its fixed maturities, not including cash, was 4.3% as of March 31, 2024, compared to 3.6% as of March 31, 2023.

The embedded book yield on the $23.1 million of taxable municipal bonds in the Company’s portfolio was 2.9% at March 31, 2024, compared to an embedded book yield of 3.1% on the Company’s taxable municipal bonds of $31.9 million at March 31, 2023.

The Company’s embedded book yield on its fixed maturities, not including cash, was 4.5% as of June 30, 2024, compared to 3.8% as of June 30, 2023.

The embedded book yield on the $19.4 million of taxable municipal bonds in the Company’s portfolio was 2.9% at June 30, 2024, compared to an embedded book yield of 3.0% on the Company’s taxable municipal bonds of $30.6 million at June 30, 2023.

Net Realized Investment Gains (Losses)

The components of net realized investment gains (losses) for the quarters ended March 31, 2024 and 2023 were as follows:

The components of net realized investment gains (losses) for the quarters and six months ended June 30, 2024 and 2023 were as follows:

Quarters Ended

Six Months Ended

(Dollars in thousands)

2 unchanged sentences

Net realized investment gains (losses)

See Note 3 of the notes to the consolidated financial statements in Item 1 of Part I of this report for an analysis of total investment return on a pre-tax basis for the quarters ended March 31, 2024 and 2023.

See Note 3 of the notes to the consolidated financial statements in Item 1 of Part I of this report for an analysis of total investment return on a pre-tax basis for the quarters and six months ended June 30, 2024 and 2023.

Corporate and Other Operating Expenses

Corporate and other operating expenses consist of outside legal fees, other professional fees, directors’ fees, management fees & advisory fees, salaries and benefits for holding company personnel, development costs for new products, impairment losses, and taxes incurred which are not directly related to operations.

Corporate and other operating expenses were $6.4 million during each of the quarters ended March 31, 2024 and 2023, respectively.

Corporate and other operating expenses consist of outside legal fees, other professional fees, directors’ fees, management fees and advisory fees, salaries and benefits for holding company personnel, development costs for new products, impairment losses, and taxes incurred which are not directly related to operations.

Corporate and other operating expenses were $6.4 million and $5.0 million during the quarters ended June 30, 2024 and 2023, respectively, and $12.7 million and $11.4 million during the six months ended June 30, 2024 and 2023, respectively.

This increase was primarily due to an increase in professional fees.

Income Tax Expense

Income tax expense was $2.9 million for the quarter ended March 31, 2024 compared with income tax expense of $0.6 million for the quarter ended March 31, 2023.

The increase in income tax expense is primarily due to higher taxable income in the Company's U.S.

Subsidiaries during the quarter ended March 31, 2024 as compared to the same period in 2023.

Income tax expense was $2.6 million and $2.4 million for the quarters ended June 30, 2024 and 2023, respectively, and $5.5 million and $2.9 million for the six months ended June 30, 2024 and 2023, respectively.

The increase in income tax expense is primarily due to higher taxable income during the quarter and six months ended June 30, 2024 as compared to the same periods in 2023.

See Note 6 of the notes to the consolidated financial statements in Item 1 of Part I of this report for a comparison of income tax between periods.

The factors described above resulted in net income of $11.4 million and $2.5 million for the quarters ended March 31, 2024 and 2023, respectively.

The factors described above resulted in net income of $10.1 million and $9.3 million for the quarters ended June 30, 2024 and 2023, respectively, and net income of $21.5 million and $11.8 million for the six months ended June 30, 2024 and 2023, respectively.

Critical Accounting Estimates and Policies

18 unchanged sentences

GBLI Holdings, LLC is dependent on dividends from its subsidiaries as well as reimbursements from its subsidiaries for utilization of net operating losses and other tax attributes in order to meet its corporate expense obligations and intercompany financing obligations.

As of March 31, 2024, the Company also had future funding commitments of $14.2 million related to investments that are currently in their harvest period and it is unlikely that a capital call will be made.

As of June 30, 2024, the Company also had future funding commitments of $14.2 million related to one of the Company's investments in a limited partnership.

Since the investment period has concluded, the Company does not expect any capital calls will be made prospectively.

The future liquidity of Global Indemnity Group, LLC is dependent on the ability of its subsidiaries to generate income to pay dividends and to pay intercompany debt due to Global Indemnity Group, LLC.

The future liquidity of GBLI Holdings, LLC is dependent on the ability of its subsidiaries to generate income to pay dividends as well as receiving reimbursements from its subsidiaries for utilization of net operating losses.

Global Indemnity Group, LLC and GBLI Holdings, LLC’s insurance

companies are restricted by statute as to the amount of dividends that they may pay without the prior approval of regulatory authorities.

Global Indemnity Group, LLC and GBLI Holdings, LLC’s insurance companies are restricted by statute as to the amount of dividends that they may pay without the prior approval of regulatory authorities.

The dividend limitations imposed by state laws are based on the statutory financial results of each insurance company that are determined by using statutory accounting practices that differ in various respects from accounting principles used in financial statements prepared in conformity with GAAP.

2 unchanged sentences

See Note 21 of the notes to the consolidated financial statements in Item 8 of Part II of the Company’s 2023 Annual Report on Form 10-K for further information on dividend limitations related to the Insurance Companies.

There were no dividends declared or paid during the quarter ended March 31, 2024.

There were no dividends declared or paid by the Company's insurance subsidiaries during the quarter and six months ended June 30, 2024.

Sources of operating funds consist primarily of net written premiums and investment income.

5 unchanged sentences

• the timing of the Company’s loss payments.

Net cash provided by operating activities was $22.7 million and $5.3 million for the quarters ended March 31, 2024 and 2023, respectively.

Net cash provided by operating activities was $36.9 million and $14.2 million for the six months ended June 30, 2024 and 2023, respectively.

The increase in operating cash flows of approximately $22.8 million from the prior year was primarily a net result of the following items:

Quarters Ended

Six Months Ended

(Dollars in thousands)

3 unchanged sentences

Net investment income

Net federal income taxes paid

Interest paid

Net cash provided by operating activities

See the consolidated statements of cash flows in the consolidated financial statements in Item 1 of Part I of this report for details concerning the Company’s investing and financing activities.

The Board of Directors approved a distribution payment of $0.35 per common share to all shareholders of record on the close of business on March 21, 2024.

Distributions paid to common shareholders were $4.8 million during the quarter ended March 31, 2024.

In addition, distributions of $0.1 million were paid to Global Indemnity Group, LLC’s preferred shareholder during the quarter ended March 31, 2024.

The Board of Directors approved a distribution payment of $0.35 per common share to all shareholders of record on the close of business on March 21, 2024 and June 21, 2024.

Distributions paid to common shareholders were $9.8 million during the six months ended June 30, 2024.

In addition, distributions of $0.2 million were paid to Global Indemnity Group, LLC’s preferred shareholder during the six months ended June 30, 2024.

Investment Portfolio

On July 31, 2023, the Company provided the Global Debt Fund, LP with a formal withdrawal request to fully redeem the partnership interest.

Partial redemption proceeds of $4.3 million were received during the quarter ended March 31, 2024.

The Global Debt Fund, LP had a fair market value of $21.4 million at March 31, 2024.

Other than the items discussed in the preceding paragraphs, there have been no material changes to the Company’s liquidity during the quarter ended March 31, 2024.

Partial redemption proceeds of $4.3 million were received during the six months ended June 30, 2024.

The Global Debt Fund, LP had a fair market value of $21.6 million at June 30, 2024.

Other than the items discussed in the preceding paragraphs, there have been no material changes to the Company’s liquidity during the quarter and six months ended June 30, 2024.

Please see Item 7 of Part II in the Company’s 2023 Annual Report on Form 10-K for information regarding the Company’s liquidity.

Capital Resources

There have been no material changes to the Company’s capital resources during the quarter ended March 31, 2024.

There have been no material changes to the Company’s capital resources during the quarter and six months ended June 30, 2024.

Please see Item 7 of Part II in the Company’s 2023 Annual Report on Form 10-K for information regarding the Company’s capital resources.

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis