Global Indemnity Group, LLC 10-Q

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes of the Company included elsewhere in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to the Company’s plans and strategy, constitutes forward-looking statements that involve risks and uncertainties. Please see "Cautionary Note Regarding Forward-Looking Statements" at the end of this Item 2 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained herein. For more information regarding the Company’s business and operations, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In the first quarter of 2025, the Company realigned the composition of its reportable segments to reflect changes in how the Company now manages its operations. The Company changed the level at which its chief operating decision maker (“CODM”), the Chief Executive Officer of Global Indemnity Group, LLC, regularly reviews operating results and allocate resources to now include Agency and Insurance Services. As a result of these changes, the Company has three reportable segments: • Agency and Insurance Services consists of (i) three agencies: Penn-America Insurance Services, LLC, J.H. Ferguson and Associates, LLC, which includes the Vacant Express division, and Collectibles Insurance Services, LLC that source, underwrite, and service policies and (ii) two strategic insurance product and service businesses: Liberty Insurance Adjustment Agency, Inc., a claims adjustment and claims service business, and Kaleidoscope Insurance Technologies, Inc., a proprietary insurance software and services provider. • Belmont Insurance Companies - Core (“Belmont Core”) , previously known as the Penn-America segment, consists of insurance company operations for ongoing direct insurance products and assumed reinsurance products, which are offered in the excess and surplus lines marketplace. • Belmont Insurance Companies - Non-Core (“Belmont Non-Core”) , previously known as the Non-Core Operations segment, consists of insurance company operations for lines of business that have been de-emphasized or are no longer being written. The primary activities of Belmont Non-Core are servicing the run-off of polices/treaties, adjusting claims and estimating loss reserves on de-emphasized and terminated business. Segment results for the quarter and six months ended June 30, 2024 have been recast to conform to the new reportable segments. Financial Highlights 2025 Second Quarter Results of Operations • Gross written premiums increased 6.1% to $106.8 million. • Current accident year underwriting income increased 61% to $5.6 million for 2025 compared to $3.5 million of underwriting income for the same period in 2024. • Net investment income of $14.7 million in 2025 was 3.9% lower than the same period in 2024 due to loss from investment in limited partnerships of $0.6 million. Net investment income from the Company's fixed maturities portfolio increased 2.3% to $15.3 million. Book yield on the fixed maturities portfolio increased to 4.54% at June 30, 2025 from 4.49% at March 31, 2025. • Current accident year combined ratio was 94.6% in 2025 compared to 96.7% for the same period in 2024. • Net income of $10.3 million, or $0.71 per share diluted, in 2025 compared to $10.1 million, or $0.73 per share diluted, for the same period in 2024. 32 2025 Second Quarter Consolidated Financial Condition • Total cash and investments of $1.4 billion at June 30, 2025 and December 31, 2024; fixed maturities and cash comprise 98% of total investments. • Total assets of $1.7 billion at June 30, 2025 and December 31, 2024. • No debt at June 30, 2025 and December 31, 2024. • Since the Company's initial public offering in 2003, the total capital returned to shareholders was $639.3 million, comprising $522.2 million of share repurchases and $117.1 million of distributions / dividends. This includes $10.2 million of distributions during 2025. • Shareholders' equity increased by $6.1 million to $695.3 million at June 30, 2025 from $687.1 million at March 31, 2025. • Book value per common share increased to $48.35 at June 30, 2025 from $47.85 at March 31, 2025. Results of Operations The following table summarizes the Company’s results for the quarters and six months ended June 30, 2025 and 2024: Quarters Ended June 30, % Six Months Ended June 30, % (Dollars in thousands) 2025 2024 Change 2025 2024 Change Gross written premiums $ 106,801 $ 100,706 6.1 % $ 205,476 $ 194,194 5.8 % Net written premiums $ 103,914 $ 97,751 6.3 % $ 199,778 $ 189,836 5.2 % Net earned premiums $ 95,146 $ 92,814 2.5 % $ 188,462 $ 189,393 (0.5 %) Other income 540 357 51.3 % 957 702 36.3 % Total revenues 95,686 93,171 2.7 % 189,419 190,095 (0.4 %) Losses and expenses: Net losses and loss adjustment expenses 52,948 53,662 (1.3 %) 119,686 107,046 11.8 % Acquisition costs and other underwriting expenses 36,915 35,968 2.6 % 74,422 74,237 0.2 % Underwriting income (loss) 5,823 3,541 64.4 % (4,689 ) 8,812 (153.2 %) Net investment income 14,707 15,311 (3.9 %) 29,489 29,831 (1.1 %) Net realized investment gains 127 205 (38.0 %) 263 1,052 (75.0 %) Corporate expenses (7,528 ) (6,383 ) 17.9 % (17,028 ) (12,756 ) 33.5 % Income before income taxes 13,129 12,674 3.6 % 8,035 26,939 (70.2 %) Income tax expense (2,785 ) (2,581 ) 7.9 % (1,680 ) (5,480 ) (69.3 %) Net income $ 10,344 $ 10,093 2.5 % $ 6,355 $ 21,459 (70.4 %) Underwriting Ratios: Loss ratio (1) : 55.6 % 57.8 % 63.5 % 56.5 % Expense ratio (2) 38.8 % 38.8 % 39.5 % 39.2 % Combined ratio (3) 94.4 % 96.6 % 103.0 % 95.7 % (1) The loss ratio is a GAAP financial measure that is generally viewed in the insurance industry as an indicator of underwriting profitability and is calculated by dividing net losses and loss adjustment expenses by net earned premiums. (2) The expense ratio is a GAAP financial measure that is calculated by dividing the sum of acquisition costs and other underwriting expenses by net earned premiums. (3) The combined ratio is a GAAP financial measure and is the sum of the Company’s loss and expense ratios. 33 Premiums The following table summarizes the change in premium volume by reportable segment: Quarters Ended June 30, Belmont Core Belmont Non-Core Total (Dollars in thousands) 2025 2024 2025 2024 2025 2024 Direct written premiums (1) $ 97,774 $ 94,057 $ 31 $ 11 $ 97,805 $ 94,068 Assumed written premiums (2) 12,045 6,495 (3,049 ) 143 8,996 6,638 Gross written premiums (3) $ 109,819 $ 100,552 $ (3,018 ) $ 154 $ 106,801 $ 100,706 Net written premiums (4) $ 106,873 $ 97,602 $ (2,959 ) $ 149 $ 103,914 $ 97,751 Six Months Ended June 30, Belmont Core Belmont Non-Core Total (Dollars in thousands) 2025 2024 2025 2024 2025 2024 Direct written premiums (1) $ 185,240 $ 185,189 $ 118 $ 103 $ 185,358 $ 185,292 Assumed written premiums (2) 22,968 9,411 (2,850 ) (509 ) 20,118 8,902 Gross written premiums (3) $ 208,208 $ 194,600 $ (2,732 ) $ (406 ) $ 205,476 $ 194,194 Net written premiums (4) $ 202,507 $ 190,198 $ (2,729 ) $ (362 ) $ 199,778 $ 189,836 (1) Direct written premiums represent the amount received or to be received for insurance policies written, without reduction for reinsurance costs, ceded premiums or other deductions. (2) Assumed written premiums represent the amount received or to be received for assumed reinsurance treaties, without reduction for reinsurance costs, ceded premiums or other deductions. (3) Gross written premiums equal the sum of direct and assumed written premiums. (4) Net written premiums equal gross written premiums less ceded written premiums. Gross written premiums increased by 6.1% to $106.8 million for the quarter ended June 30, 2025 compared to $100.7 million for the same period in 2024 and increased 5.8% to $205.5 million for the six months ended June 30, 2025 compared to $194.2 million for the same period in 2024. Direct written premium produced by the Agency and Insurance Services segment for Belmont Core: Quarters Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2025 2024 % Change 2025 2024 % Change Wholesale Commercial $ 69,075 $ 63,877 8.1 % $ 133,957 $ 124,932 7.2 % Vacant Express 12,370 9,731 27.1 % 23,291 18,585 25.3 % Collectibles 4,186 4,014 4.3 % 8,285 7,668 8.0 % Direct written premiums excluding specialty products 85,631 77,622 10.3 % 165,533 151,185 9.5 % Specialty Products 12,143 16,435 (26.1 %) 19,707 34,004 (42.0 %) Total direct written premiums $ 97,774 $ 94,057 4.0 % $ 185,240 $ 185,189 0.0 % • In the aggregate, direct written premiums for Wholesale Commercial, Vacant Express, and Collectibles grew by 10.3% and 9.5% for the quarter and six months ended June 30, 2025, respectively, as compared to same periods in 2024. This growth was driven by premium rate increases, new agency appointments, organic growth of existing agents, and new products. • Direct written premiums for Specialty Products declined by 26.1% and 42.0% for the quarter and six months ended June 30, 2025, respectively, as compared to same periods in 2024 due to terminating products not meeting profitability expectations. Excluding terminated business, growth in direct written premiums would have been 32.4% and 20.4% for the quarter and six months ended June 30, 2025, respectively. 34 Assumed written premium produced by the Belmont segments: Quarters Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2025 2024 % Change 2025 2024 % Change Belmont Core $ 12,045 $ 6,495 85.5 % $ 22,968 $ 9,411 144.1 % Belmont Non-Core (3,049 ) 143 NM (2,850 ) (509 ) NM Total assumed written premiums $ 8,996 $ 6,638 35.5 % $ 20,118 $ 8,902 126.0 % NM - not meaningful • Belmont Core's assumed business grew to $12.0 million and $23.0 million for the quarter and six months ended June 30, 2025, respectively, from $6.5 million and $9.4 million for the same period in 2024 due to new treaties incepting during 2024 and 2025. • Belmont Non-Core's business represents run-off premium from non-renewed treaties. 35 Underwriting Income (Loss) The components of income (loss) from the Company’s reportable segments and corresponding underwriting ratios are as follows: Quarters Ended June 30, Agency and Insurance Services Belmont Core Belmont Non-Core Eliminations Total (Dollars in thousands) 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 Revenues: Net earned premiums $ — $ — $ 97,513 $ 89,353 $ (2,367 ) $ 3,461 $ — $ — $ 95,146 $ 92,814 Commission and service fee income (1) 14,851 — — — — — (14,851 ) — — — Policy and installment fee income 499 — — 344 41 13 — — 540 357 Total revenues 15,350 — 97,513 89,697 (2,326 ) 3,474 (14,851 ) — 95,686 93,171 Losses and expenses: Net losses and loss adjustment expenses — — 56,109 51,126 (2,829 ) 2,536 (332 ) — 52,948 53,662 Net commission expenses — — 34,079 20,589 (780 ) 1,094 (11,456 ) — 21,843 21,683 Other underwriting expenses 13,042 — 4,591 13,309 502 976 (3,063 ) — 15,072 14,285 Total losses and expenses 13,042 — 94,779 85,024 (3,107 ) 4,606 (14,851 ) — 89,863 89,630 Underwriting income (loss) $ 2,308 $ — $ 2,734 $ 4,673 $ 781 $ (1,132 ) $ — $ — $ 5,823 $ 3,541 Underwriting Ratios: Loss ratio: Current accident year 56.1 % 57.7 % 62.3 % 62.2 % 55.6 % 57.9 % Prior accident year 1.4 % (0.5 %) 57.2 % 11.1 % — (0.1 %) Calendar year loss ratio 57.5 % 57.2 % 119.5 % 73.3 % 55.6 % 57.8 % Expense ratio 39.7 % 38.0 % 11.8 % 59.8 % 38.8 % 38.8 % Combined ratio 97.2 % 95.2 % 131.3 % 133.1 % 94.4 % 96.6 % Accident year combined ratio 95.7 % 95.7 % 63.6 % 122.0 % 94.6 % 96.7 % (1) Consists of intersegment revenues, which are eliminated in consolidation. The Company generated underwriting income of $5.8 million for the quarter ended June 30, 2025 compared to $3.5 million of underwriting income for the same period in 2024. The current accident year combined ratio improved 2.1 points to 94.6% for the quarter ended June 30, 2025 from 96.7% for the same period in 2024. • Net earned premiums within the Belmont Core segment increased by 9.1% to $97.5 million for the quarter ended June 30, 2025 compared to $89.4 million for the same period in 2024 due to growth in its gross written premiums. Property net earned premiums were $40.4 million and $39.1 million for the quarters ended June 30, 2025 and 2024, respectively. Casualty net earned premiums were $57.1 million and $50.2 million for the quarters ended June 30, 2025 and 2024, respectively. • Agency and Insurance Services segment recorded $11.5 million of commission income on direct premiums produced for Belmont Core and $3.4 million of service fee income for technology and claims services provided to Belmont Core and Non-Core segments during the quarter ended June 30, 2025. There were no revenues for 36 2024 since these affiliated agreements incepted on January 1, 2025. The commission and service fee income for the Agency and Insurance Services segment are eliminated in the Company's Consolidated Financial Statements. • Policy and installment fee income was $0.5 million and $0.4 million for the quarters ended June 30, 2025 and 2024, respectively. • The current accident year loss ratio improved by 2.3 points to 55.6% for the quarter ended June 30, 2025 compared to 57.9% for the same period in 2024 primarily driven by an improvement in the non-catastrophe property loss ratio. • Net losses and loss adjustment expenses related to prior accident years were less than $0.1 million for the quarters ended June 30, 2025 and 2024. Please see Note 6 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. Six Months Ended June 30, Agency and Insurance Services Belmont Core Belmont Non-Core Eliminations Total (Dollars in thousands) 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 Revenues: Net earned premiums $ — $ — $ 189,773 $ 178,485 $ (1,311 ) $ 10,908 $ — $ — $ 188,462 $ 189,393 Commission and service fee income (1) 28,900 — — — — — (28,900 ) — — — Policy and installment fee income 886 — — 683 71 19 — — 957 702 Total revenues 29,786 — 189,773 179,168 (1,240 ) 10,927 (28,900 ) — 189,419 190,095 Losses and expenses: Net losses and loss adjustment expenses — — 122,561 100,035 (2,210 ) 7,011 (665 ) — 119,686 107,046 Net commission expenses — — 66,483 41,480 (279 ) 3,626 (22,027 ) — 44,177 45,106 Other underwriting expenses 25,674 — 9,577 27,345 1,202 1,786 (6,208 ) — 30,245 29,131 Total losses and expenses 25,674 — 198,621 168,860 (1,287 ) 12,423 (28,900 ) — 194,108 181,283 Underwriting income (loss) $ 4,112 $ — $ (8,848 ) $ 10,308 $ 47 $ (1,496 ) $ — $ — $ (4,689 ) $ 8,812 Underwriting Ratios: Loss ratio: Current accident year 63.9 % 56.3 % 63.0 % 61.1 % 63.5 % 56.6 % Prior accident year 0.7 % (0.3 %) 105.6 % 3.2 % — (0.1 %) Calendar year loss ratio 64.6 % 56.0 % 168.6 % 64.3 % 63.5 % 56.5 % Expense ratio 40.1 % 38.6 % (70.4 %) 49.6 % 39.5 % 39.2 % Combined ratio 104.7 % 94.6 % 98.2 % 113.9 % 103.0 % 95.7 % Accident year combined ratio 104.0 % 94.8 % (15.8 %) 110.7 % 103.0 % 95.8 % (1) Consists of intersegment revenues, which are eliminated in consolidation. Underwriting loss of $4.7 million for the six months ended June 30, 2025 includes net losses and loss adjustment expenses related to California Wildfires in January 2025 ("California Wildfires"), totaling $15.7 million, compared to $8.8 million of underwriting income for the same period in 2024. Excluding California Wildfires, the underwriting income was $11.0 million for the six months ended June 30, 2025. The current accident year combined ratio, excluding the impact of the 37 California Wildfires of 8.3 points, was 94.7% for the six months ended June 30, 2025 compared to 95.8% for the same period in 2024. • Net earned premiums within the Belmont Core segment increased by 6.3% to $189.8 million for the six months ended June 30, 2025 compared to $178.5 million for the same period in 2024 due to growth in its gross written premiums. Property net earned premiums were $78.1 million and $79.0 million for the six months ended June 30, 2025 and 2024, respectively. Casualty net earned premiums were $111.7 million and $99.5 million for the six months ended June 30, 2025 and 2024, respectively. • Agency and Insurance Services segment recorded $22.0 million of commission income on direct premiums produced for Belmont Core and $6.9 million of service fee income for technology and claims services provided to Belmont Core and Non-Core segments for the six months ended June 30, 2025. There were no revenues for 2024 since these affiliated agreements incepted on January 1, 2025. The commission and service fee income for the Agency and Insurance Services segment are eliminated in the Company's Consolidated Financial Statements. • Policy and installment fee income was $1.0 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively. • The current accident year loss ratio increased by 6.9 points to 63.5% for the six months ended June 30, 2025 compared to 56.6% for the same period in 2024 driven by the California Wildfires which impacted the current accident year loss ratio by 8.3 points. • Net losses and loss adjustment expenses related to prior accident years were less than $0.1 million for the six months ended June 30, 2025 and 2024. Please see Note 6 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 net losses and loss adjustment expenses and loss ratio are summarized as follows: Quarters Ended June 30, Quarters Ended June 30, (Dollars in thousands) 2025 2024 % Change 2025 2024 Point Change Property Non-catastrophe $ 16,206 $ 18,500 (12.4 %) 40.0 % 47.4 % (7.4 ) Catastrophe 5,202 3,523 47.7 % 12.9 % 9.0 % 3.9 Total property 21,408 22,023 (2.8 %) 52.9 % 56.4 % (3.5 ) Casualty 31,538 31,721 (0.6 %) 57.7 % 59.0 % (1.3 ) Total accident year $ 52,946 $ 53,744 (1.5 %) 55.6 % 57.9 % (2.3 ) • The current accident year non-catastrophe property loss ratio improved by 7.4 points during the quarter ended June 30, 2025 as compared to the same period in 2024 driven by lower claims frequency. • The current accident year catastrophe loss ratio increased by 3.9 points during the quarter ended June 30, 2025 as compared to the same period in 2024 recognizing higher claims severity. • The current accident year casualty loss ratio improved by 1.3 points during the quarter ended June 30, 2025 mainly driven by improved pricing from rate increases in 2024. Six Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2025 2024 % Change 2025 2024 Point Change Property losses Non-catastrophe $ 33,174 $ 35,247 (5.9 %) 42.4 % 44.6 % (2.2 ) Catastrophe 23,069 6,796 239.4 % 29.5 % 8.6 % 20.9 Property losses 56,243 42,043 33.8 % 71.9 % 53.2 % 18.7 Casualty losses 63,438 65,084 (2.5 %) 57.5 % 59.0 % (1.5 ) Total accident year losses $ 119,681 $ 107,127 11.7 % 63.5 % 56.6 % 6.9 38 • The current accident year non-catastrophe property loss ratio was 42.4% for the six months ended June 30, 2025 compared to 44.6% for the same period in 2024, an improvement of 2.2 points driven by lower claims frequency. • The current accident year catastrophe net losses and loss adjustment expenses increased to $23.1 million for the six months ended June 30, 2025 compared to $6.8 million for the same period in 2024. Excluding the California Wildfires, catastrophe net losses and loss adjustment expenses would have been $7.4 million or a loss ratio of 9.4% for the six months ended June 30, 2025 compared to $6.8 million of catastrophe net losses and loss adjustment expenses or an 8.6% catastrophe loss ratio for the same period in 2024. • The current accident year casualty loss ratio improved by 1.5 points for the six months ended June 30, 2025 mainly driven by improved pricing from rate increases in 2024. The following table summarizes the components of the expense ratio for the quarters and six months ended June 30, 2025 and 2024: Quarters Ended June 30, Point Six Months Ended June 30, Point 2025 2024 Change 2025 2024 Change Net commission expenses 23.0 % 23.4 % (0.4 ) 23.4 % 23.8 % (0.4 ) Other underwriting expenses 15.8 % 15.4 % 0.4 16.1 % 15.4 % 0.7 Expense Ratio 38.8 % 38.8 % 0.0 39.5 % 39.2 % 0.3 • The increase in the expense ratio for the six months ended June 30, 2025 is primarily due to decline in earned premiums within Belmont Non-Core partially offset by a decrease in the commission expense ratio due to mix of business. Net investment income Net investment income decreased 3.9% to $14.7 million for the quarter ended June 30, 2025 from $15.3 million for the same period in 2024 and decreased 1.1% to $29.5 million for the six months ended June 30, 2025 from $29.8 million for the same period in 2024 mainly driven by performance in limited partnerships offset by improved yield on fixed maturities. Quarters Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2025 2024 Change 2025 2024 Change Fixed maturities $ 15,315 $ 14,977 338 $ 30,183 $ 28,900 1,283 Limited partnerships (608 ) 334 (942 ) (694 ) 931 (1,625 ) Net investment income $ 14,707 $ 15,311 (604 ) $ 29,489 $ 29,831 (342 ) • Net investment income from the Company’s fixed maturities portfolio increased 2.3% and 4.4% for the quarter and six months ended June 30, 2025, respectively, as compared to the same periods in 2024 due to an improved yield. The book yield on the Company’s fixed maturities portfolio was 4.54% and 4.47% as of June 30, 2025 and June 30, 2024, respectively. During the six months ended June 30, 2025, approximately $400 million of the fixed maturities portfolio was reinvested at 5.5%, consisting of high quality corporates and structured securities. As a result of this strategy, duration increased to 1.2 as of June 30, 2025 compared to duration of 0.8 as of December 31, 2024. • Income from limited partnerships declined to a loss of $0.7 million for the six months ended June 30, 2025 compared to a gain of $0.9 million for the same period in 2024 mainly due to the decline in fair value in one of the Company's limited partnership investments. 39 The Company's fixed maturities portfolio continues to maintain high quality with an AA- average rating and consist of the following: (Dollars in thousands) June 30, 2025 December 31, 2024 Structured bonds (1) $ 437,323 $ 259,915 Other fixed maturities 326,640 246,747 U.S. treasuries 572,381 875,246 Total fixed maturities $ 1,336,344 $ 1,381,908 (1) Structured bonds include asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations. Excluding the structured bonds, the average duration of the Company’s fixed maturities portfolio was 0.6 years as of June 30, 2025, compared with 0.5 years as of December 31, 2024. Structured bonds are subject to conditional prepayment rates whereas the remaining bonds have a set maturity date. Changes in interest rates can cause principal payments on structured bonds to extend or shorten which can impact duration. Net Realized Investment Gains The components of net realized investment gains for the quarters and six months ended June 30, 2025 and 2024 were as follows: Quarters Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2025 2024 2025 2024 Equity securities $ 161 $ 212 $ 284 $ 1,084 Fixed maturities (34 ) (7 ) (21 ) (32 ) Net realized investment gains $ 127 $ 205 $ 263 $ 1,052 See Note 2 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, 2025 and 2024. Corporate Expenses Corporate 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 expenses increased $1.1 million to $7.5 million for the quarter ended June 30, 2025 from $6.4 million for the same period in 2024 primarily due to an increase in professional fees related to Company’s newly formed agency and insurance services companies. Corporate expenses increased $4.3 million to $17.0 million for the six months ended June 30, 2025 compared to $12.8 million for the same period in 2024 primarily driven by $2.9 million of advisory fees consisting mainly of stock compensation approved and granted by the Board of Directors to Fox Paine & Company, LLC in the first quarter of 2025 related to the Company’s internal reorganization and employee costs and professional fees related to investment in the Company’s newly formed agency and insurance services companies. See Note 8 of the notes to the consolidated financial statements in Item 1 of Part I of this report for additional information on the advisory fee. Income Tax Expense Income tax expense was $2.8 million on net income before tax of $13.1 million for the quarter ended June 30, 2025. This compares to income tax expense of $2.6 million on net income before tax of $12.7 million for the same period in 2024. Income tax expense was $1.7 million on net income before tax of $8.0 million for the six months ended June 30, 2025. This compares to income tax expense of $5.5 million on net income before tax of $26.9 million for the same period in 2024. 40 See Note 5 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. Net Income The Company had net income of $10.3 million during the quarter ended June 30, 2025 compared to net income of $10.1 million for the same period in 2024. The Company had net income of $6.4 million during the six months ended June 30, 2025. Excluding the California Wildfires net losses and loss adjustment expenses of $12.2 million after tax, net income would have been $18.8 million for the six months ended June 30, 2025 compared to net income of $21.5 million for the same period in 2024. Reserves Amounts recorded for unpaid losses and loss adjustment expenses represent management’s best estimate at June 30, 2025. 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 reserves of $776.1 million and $800.4 million as of June 30, 2025 and December 31, 2024, respectively, and net reserves of $716.6 million and $739.6 million as of June 30, 2025 and December 31, 2024, respectively. A breakout of the Company’s gross and net reserves is as follows: June 30, 2025 Gross Reserves Net Reserves (2) (Dollars in thousands) Case IBNR (1) Total Case IBNR (1) Total Belmont Core $ 151,344 $ 299,491 $ 450,835 $ 150,705 $ 290,806 $ 441,511 Belmont Non-Core 109,274 216,018 325,292 73,667 201,471 275,138 Total $ 260,618 $ 515,509 $ 776,127 $ 224,372 $ 492,277 $ 716,649 December 31, 2024 Gross Reserves Net Reserves (2) (Dollars in thousands) Case IBNR (1) Total Case IBNR (1) Total Belmont Core $ 146,261 $ 298,925 $ 445,186 $ 146,197 $ 289,955 $ 436,152 Belmont Non-Core 104,145 251,060 355,205 67,055 236,430 303,485 Total $ 250,406 $ 549,985 $ 800,391 $ 213,252 $ 526,385 $ 739,637 (1) Net losses and loss adjustment expenses incurred but not reported, including the expected future emergence of case reserves. (2) Does not include reinsurance receivables on paid net losses and loss adjustment expenses. Gross and net reserves related to Belmont Non-Core are declining as it services the run-off of policies/treaties on de-emphasized and terminated business. Each reserve category has an implicit frequency and severity for each accident year as a result of the various assumptions made. If the actual levels of frequency and severity are higher or lower than expected, the ultimate net losses and loss adjustment expenses will be different than management’s best estimate. For most of its reserve categories, the Company believes that frequency can be predicted with greater accuracy than severity. 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 experience and management’s judgment, reflects the impact of changes (which could be favorable or unfavorable) in frequency and severity 41 on the Company’s current accident year net losses and loss adjustment expenses estimate of $119.7 million for claims occurring during the six months ended June 30, 2025: Severity Change (Dollars in thousands) -10% -5% 0% 5% 10% Frequency Change -5% (17,354 ) (11,669 ) (5,984 ) (299 ) 5,386 -3% (15,199 ) (9,395 ) (3,590 ) 2,214 8,019 -2% (14,122 ) (8,258 ) (2,394 ) 3,471 9,335 -1% (13,045 ) (7,121 ) (1,197 ) 4,727 10,652 0% (11,968 ) (5,984 ) — 5,984 11,968 1% (10,891 ) (4,847 ) 1,197 7,241 13,285 2% (9,814 ) (3,710 ) 2,394 8,497 14,601 3% (8,737 ) (2,573 ) 3,590 9,754 15,918 5% (6,582 ) (299 ) 5,984 12,267 18,551 The Company’s net reserves for losses and loss adjustment expenses of $716.6 million as of June 30, 2025 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. 42 Reconciliation of non-GAAP financial measures and ratios The tables below reconcile the non-GAAP financial measures or ratios, which excludes the impact of prior accident year adjustments and the California Wildfires, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP financial measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends in the Company's segments may be obscured by prior accident year adjustments and the California Wildfires. These non-GAAP financial measures or ratios should not be considered as a substitute for the most directly comparable GAAP measures or ratios and do not reflect the overall underwriting profitability of the Company. Quarters Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (Dollars in thousands) Net losses and loss adjustment expenses Loss Ratio Net losses and loss adjustment expenses Loss Ratio Net losses and loss adjustment expenses Loss Ratio Net losses and loss adjustment expenses Loss Ratio Property Non catastrophe property excluding the effect of prior accident year (1) $ 16,206 40.0 % $ 18,500 47.4 % $ 33,174 42.4 % $ 35,247 44.6 % Effect of prior accident year (5,619 ) (13.9 %) (851 ) (2.2 %) (6,179 ) (7.9 %) (987 ) (1.2 %) Non catastrophe property (2) $ 10,587 26.1 % $ 17,649 45.2 % $ 26,995 34.5 % $ 34,260 43.4 % Catastrophe excluding the effect of prior accident year (1) $ 5,202 12.9 % $ 3,523 9.0 % $ 23,069 29.5 % $ 6,796 8.6 % Effect of prior accident year (377 ) (0.9 %) 426 1.1 % (634 ) (0.8 %) 368 0.5 % Catastrophe (2) $ 4,825 12.0 % $ 3,949 10.1 % $ 22,435 28.7 % $ 7,164 9.1 % Total property excluding the effect of prior accident year (1) $ 21,408 52.9 % $ 22,023 56.4 % $ 56,243 71.9 % $ 42,043 53.2 % Effect of prior accident year (5,996 ) (14.8 %) (425 ) (1.1 %) (6,813 ) (8.7 %) (619 ) (0.7 %) Total property (2) $ 15,412 38.1 % $ 21,598 55.3 % $ 49,430 63.2 % $ 41,424 52.5 % Casualty Total casualty excluding the effect of prior accident year (1) $ 31,538 57.7 % $ 31,721 59.0 % $ 63,438 57.5 % $ 65,084 59.0 % Effect of prior accident year 5,998 10.9 % 343 0.6 % 6,818 6.2 % 538 0.5 % Total casualty (2) $ 37,536 68.6 % $ 32,064 59.6 % $ 70,256 63.7 % $ 65,622 59.5 % Total Total property and casualty excluding the effect of prior accident year (1) $ 52,946 55.6 % $ 53,744 57.9 % $ 119,681 63.5 % $ 107,127 56.6 % Effect of prior accident year 2 — (82 ) (0.1 %) 5 — (81 ) (0.1 %) Total property and casualty (2) $ 52,948 55.6 % $ 53,662 57.8 % $ 119,686 63.5 % $ 107,046 56.5 % (1) Non-GAAP financial measure / ratio. (2) Most directly comparable GAAP measure / ratio. 43 Reconciliation of non-GAAP financial measures and ratios continued Six Months Ended June 30, (Dollars in thousands) 2025 2024 Current accident year underwriting income excluding California Wildfires Underwriting income (loss) (1) $ (4,689 ) $ 8,812 Effect of prior accident year (53 ) (81 ) Current accident year underwriting income (loss) (2) (4,742 ) 8,731 California Wildfires net losses and loss adjustment expenses 15,684 — Current accident year underwriting income excluding California Wildfires (2) $ 10,942 $ 8,731 Net income excluding California Wildfires Net income (loss) (1) $ 6,355 $ 21,459 California Wildfires net losses and loss adjustment expenses (net of tax) (3) 12,406 — Net income excluding California Wildfires (2) $ 18,761 $ 21,459 Underwriting income excluding California Wildfires net losses and loss adjustment expenses Underwriting income (loss) (1) $ (4,689 ) $ 8,812 California Wildfires net losses and loss adjustment expenses 15,684 — Underwriting income excluding California Wildfires (2) $ 10,995 $ 8,812 Current accident year catastrophe net losses and loss adjustment expenses excluding California Wildfires Current accident year catastrophe net losses and loss adjustment expenses (4) $ 23,069 $ 6,796 California Wildfires net losses and loss adjustment expenses (15,684 ) — Current accident year catastrophe net losses and loss adjustment expenses excluding California Wildfires (2) $ 7,385 $ 6,796 Current accident year combined ratio excluding California Wildfires Combined ratio (1) 103.0 % 95.7 % Effect of prior accident year — 0.1 % Current accident year combined ratio (2) 103.0 % 95.8 % Impact of California Wildfires (8.3 %) — Current accident year combined ratio excluding California Wildfires (2) 94.7 % 95.8 % Current accident year catastrophe loss ratio excluding California Wildfires (2) Current accident year catastrophe loss ratio (4) 29.5 % 8.6 % Impact of California Wildfires (20.1 %) — Current accident year catastrophe loss ratio excluding California Wildfires (2) 9.4 % 8.6 % (1) Most directly comparable GAAP measure / ratio. (2) Non-GAAP financial measure / ratio. (3) Represents net losses and loss adjustment expenses of $15.7 million less tax benefit of $3.3 million. (4) See previous table for reconciliation of non-GAAP financial measures or ratios for current accident year catastrophe net losses and loss adjustment expenses. 44 Critical Accounting Estimates and Policies The Company’s consolidated financial statements are prepared in conformity with GAAP, which require it to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. The most critical accounting policies involve significant estimates and include those used in determining the liability for unpaid losses and loss adjustment expenses, recoverability of reinsurance receivables, investments, fair value measurements, goodwill and intangible assets, deferred acquisition costs, and taxation. For a detailed discussion on each of these policies, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to any of these policies or underlying methodologies during the current year. Liquidity and Capital Resources Sources and Uses of Funds Global Indemnity Group, LLC is a holding company. Its principal assets are its ownership in the shares of (i) Belmont Holdings GX, Inc., an insurance holding company that owns the following insurance companies: United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, Penn-Star Insurance Company, and Penn-Patriot Insurance Company, and (ii) Penn-America Underwriters, LLC, an agency and specialized service holding company. Global Indemnity Group, LLC’s current short-term and long-term liquidity needs include but are not limited to the payment of corporate expenses, distributions to shareholders, and share repurchases. In order to meet its current short-term and long-term needs, its principal sources of cash include investment income, interest and principal payments on intercompany debt with Belmont Holdings GX, Inc., and reimbursement for equity awards granted to employees of Belmont Holdings GX, Inc. and Penn-America Underwriters, LLC. Penn-America Underwriters, LLC consists of three insurance agencies, two insurance service companies, and one service company whose current short-term and long-term liquidity needs include but are not limited to the payment of corporate expenses, operating expenses, capital expenditures in developing information technology platforms, and payment for equity awards granted to its employees by Global Indemnity Group, LLC. In order to meet its current short-term and long-term needs, its principal sources of cash include fees from third parties, commissions / service fees from Belmont Holdings GX, Inc., and capital contributions from Global Indemnity Group, LLC. Belmont Holdings GX, Inc.’s current short-term and long-term liquidity needs include but are not limited to the payment of corporate expenses, payment of interest and principal on intercompany debt, and payment for equity awards granted to its employees by Global Indemnity Group, LLC. In order to meet its current short-term and long-term needs, its principal sources of cash include dividends from insurance company subsidiaries and investment income. The insurance companies’ current short-term and long-term liquidity needs include but are not limited to the payment of claims, commissions, operating expenses, federal taxes, and dividends. Its principal sources of funds include cash from direct and assumed business written, investment income, and proceeds from sales and maturities of investments. The Company continuously reviews and assesses the short-term and long-term needs of each of its holding companies, service companies, and insurance companies. In addition, the Company periodically reviews opportunities related to business acquisitions and as a result, liquidity needs may arise in the future. Belmont Holdings GX, Inc. is dependent on dividends from its insurance subsidiaries which 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. See “Regulation - Statutory Accounting Principles” in Item 1 of Part I of the Company’s 2024 Annual Report on Form 10-K. Key differences relate to, among other items, deferred acquisition costs, limitations on deferred income taxes, reserve calculation assumptions and surplus notes. See Note 21 of the notes to the consolidated financial statements in Item 8 of Part II of the Company’s 2024 Annual Report on Form 10-K for further information on 45 dividend limitations related to the insurance companies. Extraordinary dividends of $100.0 million, in aggregate, were declared by the Company's insurance subsidiaries for distribution to Belmont Holdings GX, Inc. in June 2025. The dividends by the Company’s insurance subsidiaries were approved by the respective departments of insurance in Pennsylvania, Indiana and Virginia in July 2025. These dividends will be paid in the third quarter of 2025. Cash Flows Sources of operating cash consist primarily of net written premiums and investment income which are used to pay claims, underwriting expenses and corporate expenses. Operating cash flows are generally used for investing and financing activities. Funds may be used to pay distributions to the Company’s shareholders. Net cash provided by operating activities was $9.4 million and $36.9 million for the six months ended June 30, 2025 and 2024, respectively, consisting of the following: Six Months Ended June 30, (Dollars in thousands) 2025 2024 Change Net premiums collected $ 210,884 $ 199,646 $ 11,238 Net losses and loss adjustment expenses paid (150,544 ) (108,643 ) (41,901 ) Underwriting and corporate expenses (90,537 ) (72,568 ) (17,969 ) Net investment income 41,607 21,010 20,597 Net federal income taxes paid (2,012 ) (2,494 ) 482 Interest paid — (17 ) 17 Net cash provided by operating activities $ 9,398 $ 36,934 $ (27,536 ) • The decline in cash flows of $27.5 million in 2025 compared to the same period in 2024 is primarily driven by an increase in current accident year catastrophe property net losses and loss adjustment expenses paid and increase in prior accident year casualty net losses and loss adjustment expenses paid from the Belmont Non-Core Casualty lines of business. The reconciliation of net income to net cash provided by operating activities is generally influenced by the following: • the timing of the Company’s collection of premiums and payment of commissions; • the timing of the Company’s settlements with its reinsurers; and • the timing of the Company’s payments of net losses and loss adjustment expenses. 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. Liquidity The Board of Directors approved quarterly distribution payments of $0.35 per common share to all shareholders of record on the close of business on March 21, 2025 and June 20, 2025. Distributions paid to common shareholders were $10.0 million during the six months ended June 30, 2025. In addition, distributions of $0.2 million were paid to Global Indemnity Group, LLC’s preferred shareholder during the six months ended June 30, 2025. 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 $4.4 million were received during the quarter and six months ended June 30, 2025. The Global Debt Fund, LP had a fair market value of $12.5 million at June 30, 2025. 46 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, 2025. Please see Item 7 of Part II in the Company’s 2024 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 and six months ended June 30, 2025. Please see Item 7 of Part II in the Company’s 2024 Annual Report on Form 10-K for information regarding the Company’s capital resources. Off Balance Sheet Arrangements The Company has no off balance sheet arrangements. Cautionary Note Regarding Forward-Looking Statements Some of the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report are forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934, as amended. These forward-looking statements reflect the Company’s current views as of the date of this report. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology, and include discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, expectations or consequences of identified transactions or natural disasters, and statements about the future performance, operations, products and services of the companies. The forward-looking statements contained in this report are primarily based on the Company’s current expectations and projections about future events and trends that it believes may affect the Company’s business, financial condition, results of operations, prospects, business strategy and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, including, but not limited to, the impact of legislative or regulatory actions, the impact of natural or man-made disasters, the sufficiency of the Company’s reserves, the impact of emerging claims issues, adverse capital market developments impacting investment performance, ability to effectively start-up or integrate new product opportunities, adverse effect of cyber-attacks, and other factors described in the section captioned “Risk Factors” in Item 1A of Part I in the Company’s 2024 Annual Report on Form 10-K. These risks are not exhaustive, and new risks and uncertainties emerge from time to time. It is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. The Company cannot provide assurance that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Forward-looking statements are inherently uncertain and investors are cautioned not to unduly rely upon such statements. The Company’s forward-looking statements speak only as of the date of this report or as of the date they were made. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. Item 3. QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in interest rates, equity prices, credit risk, illiquidity, foreign exchange rates and commodity prices. The Company’s consolidated balance sheets include the estimated fair values of assets that are subject to market risk. The Company’s primary market risks are interest rate risk and credit risks associated with investments in fixed maturities, equity price risk associated with investments in equity securities, and foreign exchange risk associated with premium received that is denominated in foreign currencies. The Company has no commodity risk. 47 There have been no material changes to the Company’s market risk since December 31, 2024. The Company’s investment grade fixed income portfolio continues to maintain high quality with an AA- average rating and a duration of 1.2 years. Please see Item 7A of Part II in the Company’s 2024 Annual Report on Form 10-K for information regarding the Company’s market risk.