Global Indemnity Group, LLC 10-Q

Item 1. Financial Statements GLOBAL INDEMNITY GROUP, LLC Consolidated Balance Sheets (In thousands, except share amounts) (Unaudited) March 31, 2022 December 31, 2021 ASSETS Fixed maturities: Available for sale, at fair value (amortized cost: $ 1,145,141 and $ 1,193,746 ; net of allowance for expected credit losses of $ 0 at March 31, 2022 and December 31, 2021) $ 1,129,276 $ 1,201,866 Equity securities, at fair value 22,822 99,978 Other invested assets 147,490 152,651 Total investments 1,299,588 1,454,495 Cash and cash equivalents 157,896 78,278 Premium receivables, net of allowance for expected credit losses of $ 2,937 at March 31, 2022 and $ 2,996 at December 31, 2021 134,278 128,444 Reinsurance receivables, net of allowance for expected credit losses of $ 8,992 at March 31, 2022 and December 31, 2021 99,678 99,864 Funds held by ceding insurers 26,644 27,958 Deferred federal income taxes 45,410 37,329 Deferred acquisition costs 65,333 60,331 Intangible assets 20,164 20,261 Goodwill 5,398 5,398 Prepaid reinsurance premiums 52,619 53,494 Receivable for securities sold 7,080 — Lease right of use assets 15,607 16,051 Other assets 29,801 30,906 Total assets $ 1,959,496 $ 2,012,809 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Unpaid losses and loss adjustment expenses $ 770,332 $ 759,904 Unearned premiums 326,350 316,566 Ceded balances payable 13,247 35,340 Payable for securities purchased — 794 Contingent commissions 4,958 7,903 Debt 126,465 126,430 Lease liabilities 18,589 19,079 Other liabilities 29,900 40,172 Total liabilities $ 1,289,841 $ 1,306,188 Commitments and contingencies (Note 10) — — Shareholders’ equity: Series A cumulative fixed rate preferred shares, $ 1,000 par value; 100,000,000 shares authorized, shares issued and outstanding: 4,000 and 4,000 shares, respectively, liquidation preference: $ 1,000 per share and $ 1,000 per share, respectively 4,000 4,000 Common shares: no par value; 900,000,000 common shares authorized; class A common shares issued: 10,614,555 and 10,574,589 respectively; class A common shares outstanding: 10,592,278 and 10,557,093 , respectively; class B common shares issued and outstanding: 3,947,206 and 3,947,206 , respectively — — Additional paid-in capital 448,266 447,406 Accumulated other comprehensive income (loss), net of tax ( 12,772 ) 6,404 Retained earnings 230,771 249,301 Class A common shares in treasury, at cost: 22,277 and 17,496 shares, respectively ( 610 ) ( 490 ) Total shareholders’ equity 669,655 706,621 Total liabilities and shareholders’ equity $ 1,959,496 $ 2,012,809 See accompanying notes to consolidated financial statements. 3 GLOBAL INDEMNITY GROUP, LLC Consolidated Statements of Operations (In thousands, except shares and per share data) (Unaudited) Quarters Ended March 31, 2022 2021 Revenues: Gross written premiums $ 190,983 $ 163,558 Net written premiums $ 159,482 $ 147,683 Net earned premiums $ 148,823 $ 143,700 Net investment income 6,592 9,836 Net realized investment gains (losses) ( 25,385 ) 3,819 Other income 426 377 Total revenues 130,456 157,732 Losses and Expenses: Net losses and loss adjustment expenses 84,695 90,783 Acquisition costs and other underwriting expenses 56,692 54,764 Corporate and other operating expenses 4,660 4,276 Interest expense 2,595 2,595 Income (loss) before income taxes ( 18,186 ) 5,314 Income tax benefit ( 3,413 ) ( 203 ) Net income (loss) $ ( 14,773 ) $ 5,517 Less: preferred stock distributions 110 110 Net income (loss) available to common shareholders $ ( 14,883 ) $ 5,407 Per share data: Net income (loss) available to common shareholders (1) Basic $ ( 1.03 ) $ 0.38 Diluted $ ( 1.03 ) $ 0.37 Weighted-average number of shares outstanding Basic 14,514,950 14,380,423 Diluted 14,514,950 14,640,658 Cash distributions declared per common share $ 0.25 $ 0.25 (1) For the quarter ended March 31, 2022, “weighted average shares outstanding – basic” was used to calculate “diluted earnings per share” due to a net loss for the period. See accompanying notes to consolidated financial statements. 4 GLOBAL INDEMNITY GROUP, LLC Consolidated Statements of Comprehensive Income (Loss) (In thousands) (Unaudited) Quarters Ended March 31, 2022 2021 Net income (loss) $ ( 14,773 ) $ 5,517 Other comprehensive income (loss), net of tax: Unrealized holding losses ( 42,372 ) ( 25,178 ) Reclassification adjustment for losses included in net income (loss) 23,085 816 Unrealized foreign currency translation gains (losses) 111 ( 93 ) Other comprehensive loss, net of tax ( 19,176 ) ( 24,455 ) Comprehensive loss, net of tax $ ( 33,949 ) $ ( 18,938 ) See accompanying notes to consolidated financial statements. 5 GLOBAL INDEMNITY GROUP, LLC Consolidated Statements of Changes in Shareholders’ Equity (In thousands, except share amounts) (Unaudited) Quarters Ended March 31, 2022 2021 Number of Series A Cumulative Fixed Rate Preferred Shares Number at beginning and end of period 4,000 4,000 Number of class A common shares issued: Number at beginning of period 10,574,589 10,263,722 Common shares issued under share incentive plans, net of forfeitures 15,156 20,104 Common shares issued to directors 24,810 20,006 Number at end of period 10,614,555 10,303,832 Number of class B common shares issued: Number at beginning and end of period 3,947,206 4,133,366 Par value of Series A Cumulative Fixed Rate Preferred Shares Balance at beginning and end of period $ 4,000 $ 4,000 Additional paid-in capital: Balance at beginning of period $ 447,406 $ 445,051 Share compensation plans 860 1,148 Balance at end of period $ 448,266 $ 446,199 Accumulated other comprehensive income (loss), net of deferred income tax: Balance at beginning of period $ 6,404 $ 34,308 Other comprehensive income (loss): Change in unrealized holding gains (losses) ( 19,287 ) ( 24,362 ) Unrealized foreign currency translation gains (losses) 111 ( 93 ) Other comprehensive income (loss) ( 19,176 ) ( 24,455 ) Balance at end of period $ ( 12,772 ) $ 9,853 Retained earnings: Balance at beginning of period $ 249,301 $ 234,965 Net income (loss) ( 14,773 ) 5,517 Preferred share distributions ( 110 ) ( 110 ) Distributions to shareholders ($ 0.25 per share per quarter in 2022 and 2021) ( 3,647 ) ( 3,684 ) Balance at end of period $ 230,771 $ 236,688 Number of treasury shares: Number at beginning of period 17,496 — Class A common shares purchased 4,781 9,815 Forfeited shares — 178 Number at end of period 22,277 9,993 Treasury shares, at cost: Balance at beginning of period $ ( 490 ) $ — Class A common shares purchased, at cost ( 120 ) ( 283 ) Balance at end of period $ ( 610 ) $ ( 283 ) Total shareholders’ equity $ 669,655 $ 696,457 See accompanying notes to consolidated financial statements. 6 GLOBAL INDEMNITY GROUP, LLC Consolidated Statements of Cash Flows (In thousands) (Unaudited) Quarters Ended March 31, 2022 2021 Cash flows from operating activities: Net income (loss) $ ( 14,773 ) $ 5,517 Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Amortization and depreciation 1,605 1,956 Amortization of debt issuance costs 35 35 Restricted stock and stock option expense 860 1,148 Deferred federal income taxes ( 3,413 ) ( 203 ) Amortization of bond premium and discount, net 1,461 1,395 Net realized investment (gains) losses 25,385 ( 3,819 ) (Income) loss from equity method investments, net of distributions 483 ( 584 ) Changes in: Premium receivables, net ( 5,834 ) ( 7,276 ) Reinsurance receivables, net 186 3,277 Funds held by ceding insurers 1,455 8,672 Unpaid losses and loss adjustment expenses 10,428 13,097 Unearned premiums 9,784 5,517 Ceded balances payable ( 22,093 ) 1,358 Other assets and liabilities ( 8,559 ) ( 10,329 ) Contingent commissions ( 2,945 ) ( 6,353 ) Deferred acquisition costs ( 5,002 ) ( 503 ) Prepaid reinsurance premiums 875 ( 1,533 ) Net cash provided by (used for) operating activities ( 10,062 ) 11,372 Cash flows from investing activities: Proceeds from sale of fixed maturities 140,150 364,277 Proceeds from sale of equity securities 86,173 37,475 Proceeds from maturity of fixed maturities 16,312 28,721 Proceeds from other invested assets 4,679 2,080 Amounts received (paid) in connection with derivatives 2,567 ( 262 ) Purchases of fixed maturities ( 145,955 ) ( 441,964 ) Purchases of equity securities ( 10,362 ) ( 17,566 ) Net cash provided by (used for) investing activities 93,564 ( 27,239 ) Cash flows from financing activities: Distributions paid to common shareholders ( 3,654 ) ( 3,634 ) Distributions paid to preferred shareholders ( 110 ) ( 110 ) Purchases of class A common shares ( 120 ) ( 283 ) Net cash used for financing activities ( 3,884 ) ( 4,027 ) Net change in cash and cash equivalents 79,618 ( 19,894 ) Cash and cash equivalents at beginning of period 78,278 67,359 Cash and cash equivalents at end of period $ 157,896 $ 47,465 See accompanying notes to consolidated financial statements. 7 GLOBAL INDEMNITY GROUP, LLC 1. Principles of Consolidation and Basis of Presentation Global Indemnity Group, LLC (“Global Indemnity” or “the Company”), a Delaware limited liability company formed on June 23, 2020 , replaced Global Indemnity Limited, incorporated in the Cayman Islands as an exempted company with limited liability, as the ultimate parent company of the Global Indemnity group of companies as a result of a redomestication transaction completed on August 28, 2020 . Global Indemnity Group, LLC’s class A common shares are publicly traded on the New York Stock Exchange under the ticker symbol GBLI. Global Indemnity Group, LLC’s predecessors have been publicly traded since 2003. See Note 2 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2021 Annual Report on Form 10-K for additional information regarding the redomestication. On October 26, 2021, the Company sold the renewal rights related to its manufactured and dwelling homes products which was part of the Specialty Property segment. The Company previously decided to cease writing certain Property Brokerage business which was part of the Commercial Specialty segment, as well as exit certain property and catastrophe lines within the Reinsurance Operations segment. Based on the decisions to exit these lines of business, the Company changed the way it manages and analyzes its operating results. The chief operating decision makers, the Chief Executive as well as the Chief Operating Officer, decided they will be reviewing the specific results of the exited lines separately. The chief operating decision makers also determined that the small amount of specialty property business that remained from the Specialty Property segment would be included as programs in the Commercial Specialty segment for purpose of reviewing results and allocating resources. The Reinsurance Operations segment will continue to write casualty and professional treaties as well as individual excess policies. The Farm, Ranch & Stable segment was not impacted by these decisions and will continue to be reported as a segment. Accordingly, the Company will have four reportable segments: Commercial Specialty, Reinsurance Operations, Farm, Ranch & Stable, and Exited Lines. Management believes these segments will allow users of the Company’s financial statements to better understand the Company's performance, better assess prospects for future net cash flows and to make more informed judgments about the Company as a whole. The segment results for the quarter ended March 31, 2021 have been revised to reflect these changes. See Note 13 for additional information regarding segments. Global Indemnity Group, LLC is a holding company that is classified as a publicly traded partnership for U.S. federal income tax purposes and meets the qualifying income exception to maintain partnership status. Global Indemnity Group, LLC owns all shares of its direct and indirect subsidiaries, including those of its insurance companies: United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, Penn-Star Insurance Company, Penn-Patriot Insurance Company, and American Reliable Insurance Company. The insurance companies’ primary activity is providing insurance products across a distribution network that includes binding authority, program, brokerage and reinsurance. The insurance companies are managed through four business segments: Commercial Specialty, Reinsurance Operations, Farm, Ranch & Stable, and Exited Lines. The Company’s Commercial Specialty segment offers specialty property and casualty insurance products in the excess and surplus lines marketplace. The Company manages Commercial Specialty by differentiating them into four product classifications: 1) Penn-America, which markets property and general liability products to small commercial businesses through a select network of wholesale general agents with specific binding authority; 2) United National, which markets insurance products for targeted insured segments, including specialty products, such as property, general liability, and professional lines through program administrators with specific binding authority; 3) Diamond State, which markets property, casualty, and professional lines products, which are developed by the Company’s underwriting department by individuals with expertise in those lines of business, through wholesale brokers and also markets through program administrators having specific binding authority; and 4) Vacant Express, which primarily insures dwellings which are currently vacant, undergoing renovation, or are under construction and is marketed through aggregators, brokers, and retail agents. The Company has also created several start-up business lines which distribute professional, environmental, and excess casualty products. These product classifications comprise the Company’s Commercial Specialty business segment and are not considered individual business segments because each product has similar economic characteristics, distribution, and coverage. The Company’s Reinsurance Operations segment provides reinsurance solutions through brokers and primary writers including insurance and reinsurance companies. The Company’s Farm, Ranch & Stable segment provides specialized property and casualty coverage including Commercial Farm Auto and Excess/Umbrella Coverage for the agriculture industry as well as specialized insurance products for the equine mortality and equine major medical industry. These insurance products are sold through wholesalers and retail agents, with a selected number having specific binding authority. Exited Lines represents lines of business that are no longer being written or are in runoff. Exited Lines includes specialty personal lines property and casualty products such as manufactured home, dwelling, motorcycle, watercraft and certain homeowners business, certain business within Property 8 GLOBAL INDEMNITY GROUP, LLC Brokerage, and property and catastrophe reinsurance treaties. Collectively, the Company’s insurance subsidiaries are licensed in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. The Commercial Specialty and Farm, Ranch & Stable segments comprise the Company’s Insurance Operations (“Insurance Operations”). The interim consolidated financial statements are unaudited, but have been prepared in conformity with United States of America generally accepted accounting principles (“GAAP”), which differs in certain respects from those principles followed in reports to insurance regulatory authorities. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The unaudited consolidated financial statements include all adjustments that are, in the opinion of management, of a normal recurring nature and are necessary for a fair statement of results for the interim periods. Results of operations for the quarters ended March 31, 2022 and 2021 are not necessarily indicative of the results of a full year. The accompanying notes to the unaudited consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s 2021 Annual Report on Form 10-K. The consolidated financial statements include the accounts of Global Indemnity Group, LLC and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 2 . Investments The amortized cost and estimated fair value of the Company’s fixed maturities securities were as follows as of March 31, 2022 and December 31, 2021: (Dollars in thousands) Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value As of March 31, 2022 Fixed maturities: U.S. treasuries $ 137,804 $ — $ 153 $ ( 1,490 ) $ 136,467 Agency obligations 1,336 — — — 1,336 Obligations of states and political subdivisions 47,470 — 214 ( 588 ) 47,096 Mortgage-backed securities 226,077 — 695 ( 1,279 ) 225,493 Asset-backed securities 164,308 — 132 ( 3,385 ) 161,055 Commercial mortgage-backed securities 134,669 — 113 ( 2,074 ) 132,708 Corporate bonds 293,615 — 722 ( 6,118 ) 288,219 Foreign corporate bonds 139,862 — 237 ( 3,197 ) 136,902 Total fixed maturities $ 1,145,141 $ — $ 2,266 $ ( 18,131 ) $ 1,129,276 9 GLOBAL INDEMNITY GROUP, LLC (Dollars in thousands) Amortized Cost Allowance for Expected Credit Losses Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value As of December 31, 2021 Fixed maturities: U.S. treasuries $ 149,934 $ — $ 603 $ ( 419 ) $ 150,118 Agency obligations 5,697 — 1 ( 68 ) 5,630 Obligations of states and political subdivisions 53,637 — 1,385 ( 301 ) 54,721 Mortgage-backed securities 250,007 — 2,618 ( 2,284 ) 250,341 Asset-backed securities 172,916 — 700 ( 974 ) 172,642 Commercial mortgage-backed securities 135,017 — 2,503 ( 627 ) 136,893 Corporate bonds 288,866 — 5,571 ( 2,054 ) 292,383 Foreign corporate bonds 137,672 — 2,370 ( 904 ) 139,138 Total fixed maturities $ 1,193,746 $ — $ 15,751 $ ( 7,631 ) $ 1,201,866 As of March 31, 2022 and December 31, 2021, the Company’s investments in equity securities consist of the following: (Dollars in thousands) March 31, 2022 December 31, 2021 Common stock $ 873 $ 75,987 Preferred stock 21,949 23,991 Total $ 22,822 $ 99,978 Excluding U.S. treasuries, limited liability companies, and limited partnerships, the Company did not hold any debt or equity investments in a single issuer in excess of 2.1 % and 2.0 % of shareholders' equity at March 31, 2022 and December 31, 2021, respectively. The amortized cost and estimated fair value of the Company’s fixed maturities portfolio classified as available for sale at March 31, 2022, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. (Dollars in thousands) Amortized Cost Estimated Fair Value Due in one year or less $ 55,361 $ 55,403 Due in one year through five years 347,255 339,895 Due in five years through ten years 178,800 176,877 Due in ten years through fifteen years 8,449 8,322 Due after fifteen years 30,222 29,523 Mortgage-backed securities 226,077 225,493 Asset-backed securities 164,308 161,055 Commercial mortgage-backed securities 134,669 132,708 Total $ 1,145,141 $ 1,129,276 10 GLOBAL INDEMNITY GROUP, LLC The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses that are not deemed to have credit losses, categorized by the period that the securities were in a continuous loss position as of March 31, 2022. The fair value amounts reported in the table are estimates that are prepared using the process described in Note 4. Less than 12 months 12 months or longer Total (Dollars in thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fixed maturities: U.S. treasuries $ 56,292 $ ( 1,418 ) $ 927 $ ( 72 ) $ 57,219 $ ( 1,490 ) Agency obligations 300 — — — 300 — Obligations of states and political subdivisions 13,251 ( 588 ) — — 13,251 ( 588 ) Mortgage-backed securities 42,236 ( 1,147 ) 2,712 ( 132 ) 44,948 ( 1,279 ) Asset-backed securities 107,065 ( 2,592 ) 16,896 ( 793 ) 123,961 ( 3,385 ) Commercial mortgage-backed securities 96,794 ( 1,936 ) 1,239 ( 138 ) 98,033 ( 2,074 ) Corporate bonds 147,000 ( 5,584 ) 5,794 ( 534 ) 152,794 ( 6,118 ) Foreign corporate bonds 78,946 ( 3,091 ) 1,210 ( 106 ) 80,156 ( 3,197 ) Total fixed maturities $ 541,884 $ ( 16,356 ) $ 28,778 $ ( 1,775 ) $ 570,662 $ ( 18,131 ) The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses that are not deemed to have credit losses, categorized by the period that the securities were in a continuous loss position as of December 31, 2021. The fair value amounts reported in the table are estimates that are prepared using the process described in Note 4. Less than 12 months 12 months or longer Total (Dollars in thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fixed maturities: U.S. treasuries $ 114,894 $ ( 390 ) $ 970 $ ( 29 ) $ 115,864 $ ( 419 ) Agency obligations 5,380 ( 68 ) — — 5,380 ( 68 ) Obligations of states and political subdivisions 13,346 ( 301 ) — — 13,346 ( 301 ) Mortgage-backed securities 143,674 ( 2,222 ) 3,009 ( 62 ) 146,683 ( 2,284 ) Asset-backed securities 102,309 ( 703 ) 10,662 ( 271 ) 112,971 ( 974 ) Commercial mortgage-backed securities 50,448 ( 466 ) 1,286 ( 161 ) 51,734 ( 627 ) Corporate bonds 129,146 ( 1,954 ) 2,633 ( 100 ) 131,779 ( 2,054 ) Foreign corporate bonds 67,915 ( 893 ) 412 ( 11 ) 68,327 ( 904 ) Total fixed maturities $ 627,112 $ ( 6,997 ) $ 18,972 $ ( 634 ) $ 646,084 $ ( 7,631 ) The Company regularly performs various analytical valuation procedures with respect to its investments, including reviewing each available for sale debt security in an unrealized loss position to assess whether the decline in fair value below amortized cost basis has resulted from a credit loss or other factors. In assessing whether a credit loss exists, the Company compares the present value of the cash flows expected to be collected from the security to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis of the security, a credit loss exists and an allowance for expected credit losses is recorded. Subsequent changes in the allowances are recorded in the period of change as either credit loss expense or reversal of credit loss expense. Any impairments related to factors other than credit losses and the intent to sell are recorded through other comprehensive income, net of taxes. 11 GLOBAL INDEMNITY GROUP, LLC For fixed maturities, the factors considered in reaching the conclusion that a credit loss exists include, among others, whether: (1) the extent to which the fair value is less than the amortized cost basis; (2) the issuer is in financial distress; (3) the investment is secured; (4) a significant credit rating action occurred; (5) scheduled interest payments were delayed or missed; (6) changes in laws or regulations have affected an issuer or industry; (7) the investment has an unrealized loss and was identified by the Company’s investment manager as an investment to be sold before recovery or maturity; (8) the investment failed cash flow projection testing to determine if anticipated principal and interest payments will be realized; and (9) changes in US Treasury rates and/or credit spreads since original purchase to identify whether the unrealized loss is simply due to interest rate movement. According to accounting guidance for debt securities in an unrealized loss position, the Company is required to assess whether it has the intent to sell the debt security or more likely than not will be required to sell the debt security before the anticipated recovery. If either of these conditions is met, any allowance for expected credit losses is written off and the amortized cost basis is written down to the fair value of the fixed maturity security with any incremental impairment reported in earnings. That new amortized cost basis shall not be adjusted for subsequent recoveries in fair value. The Company elected the practical expedient to exclude accrued interest from both the fair value and the amortized cost basis of the available for sale debt securities for the purposes of identifying and measuring an impairment and to not measure an allowance for expected credit losses for accrued interest receivables. Accrued interest receivable is written off through net realized investment gains (losses) at the time the issuer of the bond defaults or is expected to default on payment. The Company made an accounting policy election to present the accrued interest receivable balance with other assets on the Company’s consolidated statements of financial position. Accrued interest receivable related to fixed maturities was $ 5.5 million and $ 5.2 million as of March 31, 2022 and December 31, 2021, respectively. The following is a description, by asset type, of the methodology and significant inputs that the Company used to measure the amount of credit loss recognized in earnings, if any: U.S. treasuries – As of March 31, 2022, gross unrealized losses related to U.S. treasuries were $ 1.490 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, macroeconomic and market analysis is conducted in evaluating these securities. Consideration is given to the interest rate environment, duration and yield curve management of the portfolio, sector allocation and security selection. Based on the analysis performed, the Company did not recognize a credit loss on U.S. treasuries during the period. Agency obligations – As of March 31, 2022, gross unrealized losses related to agency obligations were less than $ 0.001 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, macroeconomic and market analysis is conducted in evaluating these securities. Consideration is given to the interest rate environment, duration and yield curve management of the portfolio, sector allocation and security selection. Based on the analysis performed, the Company did not recognize a credit loss on agency obligations during the period. Obligations of states and political subdivisions – As of March 31, 2022, gross unrealized losses related to obligations of states and political subdivisions were $ 0.588 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, elements that may influence the performance of the municipal bond market are considered in evaluating these securities such as investor expectations, supply and demand patterns, and current versus historical yield and spread relationships. The analysis relies on the output of fixed income credit analysts, as well as dedicated municipal bond analysts who perform extensive in-house fundamental analysis on each issuer, regardless of their rating by the major agencies. Based on the analysis performed, the Company did not recognize a credit loss on obligations of states and political subdivisions during the period. 12 GLOBAL INDEMNITY GROUP, LLC Mortgage-backed securities (“MBS”) – As of March 31, 2022, gross unrealized losses related to mortgage-backed securities were $ 1.279 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, mortgage-backed securities are modeled to project principal losses under downside, base, and upside scenarios for the economy and home prices. The primary assumption that drives the security and loan level modeling is the Home Price Index (“HPI”) projection. These forecasts incorporate not just national macro-economic trends, but also regional impacts to arrive at the most granular and accurate projections. These assumptions are incorporated into the model as a basis to generate delinquency probabilities, default curves, loss severity curves, and voluntary prepayment curves at the loan level within each deal. The model utilizes HPI-adjusted current loan to value, payment history, loan terms, loan modification history, and borrower characteristics as inputs to generate expected cash flows and principal loss for each bond under various scenarios. Based on the analysis performed, the Company did not recognize a credit loss on mortgage-backed securities during the period. Asset backed securities (“ABS”) - As of March 31, 2022, gross unrealized losses related to asset backed securities were $ 3.385 million. The weighted average credit enhancement for the Company’s asset backed portfolio is 33.3 . This represents the percentage of pool losses that can occur before an asset backed security will incur its first dollar of principal losses. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, every ABS transaction is analyzed on a stand-alone basis. This analysis involves a thorough review of the collateral, prepayment, and structural risk in each transaction. Additionally, the analysis includes an in-depth credit analysis of the originator and servicer of the collateral. The analysis projects an expected loss for a deal given a set of assumptions specific to the asset type. These assumptions are used to calculate at what level of losses the deal will incur its first dollar of principal loss. The major assumptions used to calculate this ratio are loss severities, recovery lags, and no advances on principal and interest. Based on the analysis performed, the Company did not recognize a credit loss on asset backed securities during the period. Commercial mortgage-backed securities (“CMBS”) - As of March 31, 2022, gross unrealized losses related to the CMBS portfolio were $ 2.074 million. The weighted average credit enhancement for the Company’s CMBS portfolio is 41.1 . This represents the percentage of pool losses that can occur before a commercial mortgage-backed security will incur its first dollar of principal loss. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, a loan level analysis is utilized where every underlying CMBS loan is re-underwritten based on a set of assumptions reflecting expectations for the future path of the economy. Each loan is analyzed over time using a series of tests to determine if a credit event will occur during the life of the loan. Inherent in this process are several economic scenarios and their corresponding rent/vacancy and capital market states. The five primary credit events that frame the analysis include loan modifications, term default, balloon default, extension, and ability to pay off at balloon. The resulting output is the expected loss adjusted cash flows for each bond under the base case and distressed scenarios. Based on the analysis performed, the Company did not recognize a credit loss on commercial mortgage-backed securities during the period. Corporate bonds - As of March 31, 2022, gross unrealized losses related to corporate bonds were $ 6.118 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, analysis for this asset class includes maintaining detailed financial models that include a projection of each issuer’s future financial performance, including prospective debt servicing capabilities, capital structure composition, and the value of the collateral. The analysis incorporates the macroeconomic environment, industry conditions in which the issuer operates, the issuer’s current competitive position, its vulnerability to changes in the competitive and regulatory environment, issuer liquidity, issuer commitment to bondholders, issuer creditworthiness, and asset protection. Part of the process also includes running downside scenarios to evaluate the expected likelihood of default as well as potential losses in the event of default. Based on the analysis performed, the Company did not recognize a credit loss on corporate bonds during the period. Foreign bonds – As of March 31, 2022, gross unrealized losses related to foreign bonds were $ 3.197 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, detailed financial models are maintained that include a projection of each issuer’s future financial performance, including prospective debt servicing capabilities, capital structure composition, and the value of the collateral. The analysis incorporates the macroeconomic environment, industry conditions in which the issuer operates, the issuer’s current competitive position, its vulnerability to changes in the competitive and regulatory environment, issuer liquidity, issuer commitment to bondholders, issuer creditworthiness, and asset protection. Part of the process also includes running downside scenarios to evaluate the expected likelihood of default as well as potential losses in the event of default. Based on the analysis performed, the Company did not recognize a credit loss on foreign bonds during the period. 13 GLOBAL INDEMNITY GROUP, LLC The Company has evaluated its investment portfolio and has determined that an allowance for expected credit losses on its investments is not required. The Company recorded the following impairments on its investment portfolio for the quarters ended March 31, 2022 and 2021 and are related to securities in an unrealized loss position where the Company had an intent to sell the securities: Quarters ended March 31, (Dollars in thousands) 2022 2021 Fixed maturities: Impairment related to intent to sell ( 25,525 ) — Total $ ( 25,525 ) $ — In response to a rising interest rate environment, the Company took action early in April 2022 to shorten the duration of its fixed maturities portfolio. The Company identified fixed maturities securities with a weighted average life of five years or greater as having an intent to sell. These securities had a fair market value of $ 365.3 million and a book value of $ 390.8 million at March 31, 2022 prior to impairment. Most of the proceeds from the sale of these securities will be reinvested into fixed income investments with maturities of two years and less. Accumulated Other Comprehensive Income (Loss), Net of Tax Accumulated other comprehensive income, net of tax, as of March 31, 2022 and December 31, 2021 was as follows: (Dollars in thousands) March 31, 2022 December 31, 2021 Net unrealized gains (losses) from: Fixed maturities $ ( 15,865 ) $ 8,120 Foreign currency fluctuations ( 4 ) ( 145 ) Deferred taxes 3,097 ( 1,571 ) Accumulated other comprehensive income (loss), net of tax $ ( 12,772 ) $ 6,404 The following tables present the changes in accumulated other comprehensive income, net of tax, by components, for the quarters ended March 31, 2022 and 2021: Quarter Ended March 31, 2022 (Dollars In Thousands) Unrealized Gains and Losses on Available for Sale Securities Foreign Currency Items Accumulated Other Comprehensive Income (Loss) Beginning balance, net of tax $ 6,519 $ ( 115 ) $ 6,404 Other comprehensive income (loss) before reclassification, before tax ( 52,749 ) 141 ( 52,608 ) Amounts reclassified from accumulated other comprehensive income, before tax 28,764 — 28,764 Other comprehensive income (loss), before tax ( 23,985 ) 141 ( 23,844 ) Income tax benefit 4,697 ( 29 ) 4,668 Ending balance, net of tax $ ( 12,769 ) $ ( 3 ) $ ( 12,772 ) 14 GLOBAL INDEMNITY GROUP, LLC Quarter Ended March 31, 2021 (Dollars In Thousands) Unrealized Gains and Losses on Available for Sale Securities Foreign Currency Items Accumulated Other Comprehensive Income Beginning balance, net of tax $ 34,181 $ 127 $ 34,308 Other comprehensive income before reclassification, before tax ( 31,186 ) ( 118 ) ( 31,304 ) Amounts reclassified from accumulated other comprehensive income, before tax 1,159 — 1,159 Other comprehensive income, before tax ( 30,027 ) ( 118 ) ( 30,145 ) Income tax benefit 5,665 25 5,690 Ending balance, net of tax $ 9,819 $ 34 $ 9,853 The reclassifications out of accumulated other comprehensive income for the quarters ended March 31, 2022 and 2021 were as follows: Amounts Reclassified from Accumulated Other Comprehensive Income (Dollars in thousands) Quarters Ended March 31, Details about Accumulated Other Comprehensive Income Components Affected Line Item in the Consolidated Statements of Operations 2022 2021 Unrealized gains and losses on available for sale securities Other net realized investment (gains) losses $ 28,764 $ 1,159 Income tax expense (benefit) ( 5,679 ) ( 343 ) Total reclassifications, net of tax $ 23,085 $ 816 Net Realized Investment Gains (Losses) The components of net realized investment gains (losses) for the quarters ended March 31, 2022 and 2021 were as follows: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Fixed maturities: Gross realized gains $ 206 $ 3,378 Gross realized losses ( 28,970 ) ( 4,537 ) Net realized gains (losses) ( 28,764 ) ( 1,159 ) Equity securities: Gross realized gains 1,806 5,673 Gross realized losses ( 3,151 ) ( 1,305 ) Net realized gains (losses) ( 1,345 ) 4,368 Derivatives: Gross realized gains 6,088 2,353 Gross realized losses ( 1,364 ) ( 1,743 ) Net realized gains (losses) (1) 4,724 610 Total net realized investment gains (losses) $ ( 25,385 ) $ 3,819 (1) Includes periodic net interest settlements related to the derivatives of $ 1.4 million for the quarters ended March 31, 2022 and 2021, respectively. 15 GLOBAL INDEMNITY GROUP, LLC The following table shows the calculation of the portion of realized gains and losses related to equity securities held as of March 31, 2022 and 2021: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Net gains (losses) recognized during the period on equity securities $ ( 1,345 ) $ 4,368 Less: net gains (losses) recognized during the period on equity securities sold during the period 11,114 1,376 Unrealized gains (losses) recognized during the reporting period on equity securities $ ( 12,459 ) $ 2,992 The proceeds from sales and redemptions of available for sale and equity securities resulting in net realized investment gains (losses) for the quarters ended March 31, 2022 and 2021 were as follows: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Fixed maturities $ 140,150 $ 364,277 Equity securities 86,173 37,475 Net Investment Income The sources of net investment income for the quarters ended March 31, 2022 and 2021 were as follows: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Fixed maturities $ 6,404 $ 6,827 Equity securities 334 675 Cash and cash equivalents 32 50 Other invested assets 426 2,997 Total investment income 7,196 10,549 Investment expense ( 604 ) ( 713 ) Net investment income $ 6,592 $ 9,836 The Company’s total investment return on a pre-tax basis for the quarters ended March 31, 2022 and 2021 were as follows: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Net investment income $ 6,592 $ 9,836 Net realized investment gains (losses) ( 25,385 ) 3,819 Change in unrealized holding gains (losses) ( 23,844 ) ( 30,145 ) Net realized and unrealized investment returns ( 49,229 ) ( 26,326 ) Total investment return $ ( 42,637 ) $ ( 16,490 ) Total investment return % (1) ( 2.8 %) ( 1.1 %) Average investment portfolio (2) $ 1,498,272 $ 1,439,613 (1) Not annualized. ( 2 ) Average of total cash and invested assets, net of receivable/payable for securities purchased and sold, as of the beginning and end of the period. As of March 31, 2022, the Company owned fixed maturity securities with a market value of $ 0.2 million that were non-income producing for the preceding twelve months. As of December 31, 2021, the Company did no t own any fixed maturity securities that were non-income producing for the preceding twelve months. 16 GLOBAL INDEMNITY GROUP, LLC Insurance Enhanced Asset-Backed and Credit Securities As of March 31, 2022, the Company held insurance enhanced bonds with a market value of approximately $ 22.6 million which represented 1.5 % of the Company’s total cash and invested assets, net of payable/ receivable for securities purchased and sold. The insurance enhanced bonds are comprised of $ 10.0 million of municipal bonds, $ 4.8 million of commercial mortgage-backed securities, and $ 7.8 million of collateralized mortgage obligations. The financial guarantors of the Company’s $ 22.6 million of insurance enhanced commercial-mortgage-backed, municipal securities, and collateralized mortgage obligations include Municipal Bond Insurance Association ($ 0.3 million), Assured Guaranty Corporation ($ 7.9 million), Federal Home Loan Mortgage Corporation ($ 12.6 million), and Ambac Financial Group ($ 1.8 million). The Company had no direct investments in the entities that have provided financial guarantees or other credit support to any security held by the Company at March 31, 2022. Bonds Held on Deposit Certain cash balances, cash equivalents, and bonds available for sale were deposited with various governmental authorities in accordance with statutory requirements, were held as collateral, or were held in trust. The fair values were as follows as of March 31, 2022 and December 31, 2021: Estimated Fair Value (Dollars in thousands) March 31, 2022 December 31, 2021 On deposit with governmental authorities $ 25,472 $ 26,093 Held in trust pursuant to third party requirements 112,367 119,513 Letter of credit held for third party requirements 1,187 2,512 Total $ 139,026 $ 148,118 Variable Interest Entities A Variable Interest Entity (“VIE”) refers to an investment in which an investor holds a controlling interest that is not based on the majority of voting rights. Under the VIE model, the party that has the power to exercise significant management influence and maintain a controlling financial interest in the entity’s economics is said to be the primary beneficiary, and is required to consolidate the entity within their results. Other entities that participate in a VIE, for which their financial interests fluctuate with changes in the fair value of the investment entity’s net assets but do not have significant management influence and the ability to direct the VIE’s significant economic activities are said to have a variable interest in the VIE but do not consolidate the VIE in their financial results. The Company has variable interests in four VIE’s for which it is not the primary beneficiary. These investments are accounted for under the equity method of accounting as their ownership interest exceeds 3 % of their respective investments. The carrying value of one of the Company’s VIE’s, which invests in distressed securities and assets, was $ 6.4 million and $ 8.6 million as of March 31, 2022 and December 31, 2021, respectively. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $ 20.7 million and $ 22.8 million at March 31, 2022 and December 31, 2021, respectively. The carrying value of a second VIE that also invests in distressed securities and assets was $ 0.3 million at March 31, 2022 and December 31, 2021, respectively. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $ 17.3 million at March 31, 2022 and December 31, 2021, respectively. The carrying value and maximum exposure to loss of a third VIE that invests in Real Estate Investment Trust (“REIT”) qualifying assets was $ 9.7 million and $ 11.7 million as of March 31, 2022 and December 31, 2021, respectively. The carrying value and maximum exposure to loss of a fourth VIE, which invests in a broad portfolio of non-investment grade loans, was $ 105.4 million and $ 106.2 million as of March 31, 2022 and December 31, 2021, respectively. The Company’s investment in VIEs is included in other invested assets on the consolidated balance sheets with changes in carrying value recorded in the consolidated statements of operations. 17 GLOBAL INDEMNITY GROUP, LLC 3 . Derivative Instruments Derivatives are used by the Company to reduce risks from changes in interest rates and limit exposure to severe equity market changes. The Company has interest rate swaps with terms to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company has also used exchange-traded futures contracts, which give the holder the right and obligation to participate in market movements at a future date, to allow the Company to react faster to market conditions. When using derivatives, the Company posts collateral and settles variation margin in cash on a daily basis equal to the amount of the derivatives’ change in value. The Company accounts for the interest rate swaps and futures as non-hedge instruments and recognizes the fair value of the interest rate swaps in other assets or other liabilities on the consolidated balance sheets with the changes in fair value recognized as net realized investment gains or losses in the consolidated statements of operations. The Company is ultimately responsible for the valuation of the interest rate swaps. To aid in determining the estimated fair value of the interest rate swaps, the Company relies on the forward interest rate curve and information obtained from a third party financial institution. The following table summarizes information on the location and the gross amount of the derivatives on the consolidated balance sheets as of March 31, 2022 and December 31, 2021: (Dollars in thousands) March 31, 2022 December 31, 2021 Derivatives Not Designated as Hedging Instruments under ASC 815 Balance Sheet Location Notional Amount Fair Value Notional Amount Fair Value Interest rate swap agreements Other assets/liabilities $ 213,022 $ ( 2,307 ) $ 213,022 $ ( 8,395 ) Total (1) $ 213,022 $ ( 2,307 ) $ 213,022 $ ( 8,395 ) (1) The derivatives are held by GBLI Holdings, LLC and are guaranteed by Global Indemnity Group, LLC The following table summarizes the net gains (losses) included in the consolidated statements of operations for changes in the fair value of the derivatives and the periodic net interest settlements under the derivatives for the quarters ended March 31, 2022 and 2021: Quarters Ended March 31, (Dollars in thousands) Consolidated Statements of Operations Line 2022 2021 Interest rate swap agreements Net realized investment gains (losses) $ 4,724 $ 929 Futures contracts on bonds Net realized investment gains (losses) — ( 319 ) Total $ 4,724 $ 610 As of March 31, 2022 and December 31, 2021, the Company is due $ 2.4 million and $ 1.8 million, respectively, for funds it needed to post to execute the swap transaction and $ 5.1 million and $ 9.8 million, respectively, for margin calls made in connection with the interest rate swaps. These amounts are included in other assets on the consolidated balance sheets. 4 . Fair Value Measurements The accounting standards related to fair value measurements define fair value, establish a framework for measuring fair value, outline a fair value hierarchy based on inputs used to measure fair value, and enhance disclosure requirements for fair value measurements. These standards do not change existing guidance as to whether or not an instrument is carried at fair value. The Company has determined that its fair value measurements are in accordance with the requirements of these accounting standards. 18 GLOBAL INDEMNITY GROUP, LLC The Company’s invested assets and derivative instruments are carried at their fair value and are categorized based upon a fair value hierarchy: • Level 1 – inputs utilize quoted prices (unadjusted) in active markets for identical assets that the Company has the ability to access at the measurement date. • Level 2 – inputs utilize other than quoted prices included in Level 1 that are observable for similar assets, either directly or indirectly. • Level 3 – inputs are unobservable for the asset, and include situations where there is little, if any, market activity for the asset. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset. The following table presents information about the Company’s invested assets and derivative instruments measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. Fair Value Measurements As of March 31, 2022 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Fixed maturities: U.S. treasuries $ 136,467 $ — $ — $ 136,467 Agency obligations — 1,336 — 1,336 Obligations of states and political subdivisions — 47,096 — 47,096 Mortgage-backed securities — 224,515 978 225,493 Commercial mortgage-backed securities — 132,708 — 132,708 Asset-backed securities — 159,891 1,164 161,055 Corporate bonds — 286,339 1,880 288,219 Foreign corporate bonds — 136,902 — 136,902 Total fixed maturities 136,467 988,787 4,022 1,129,276 Equity securities — 22,556 266 22,822 Total assets measured at fair value $ 136,467 $ 1,011,343 $ 4,288 $ 1,152,098 Liabilities: Derivative instruments $ — $ 2,307 $ — $ 2,307 Total liabilities measured at fair value $ — $ 2,307 $ — $ 2,307 19 GLOBAL INDEMNITY GROUP, LLC Fair Value Measurements As of December 31, 2021 (Dollars in thousands) Level 1 Level 2 Level 3 Total Assets: Fixed maturities: U.S. treasuries $ 150,118 $ — $ — $ 150,118 Agency obligations — 5,630 — 5,630 Obligations of states and political subdivisions — 54,721 — 54,721 Mortgage-backed securities — 250,341 — 250,341 Commercial mortgage-backed securities — 136,893 — 136,893 Asset-backed securities — 171,686 956 172,642 Corporate bonds — 290,807 1,576 292,383 Foreign corporate bonds — 139,138 — 139,138 Total fixed maturities 150,118 1,049,216 2,532 1,201,866 Equity securities 75,750 23,991 237 99,978 Total assets measured at fair value $ 225,868 $ 1,073,207 $ 2,769 $ 1,301,844 Liabilities: Derivative instruments $ — $ 8,395 $ — $ 8,395 Total liabilities measured at fair value $ — $ 8,395 $ — $ 8,395 The securities classified as Level 1 in the above table consist of U.S. treasuries and equity securities actively traded on an exchange. The securities classified as Level 2 in the above table consist of fixed maturities, equity securities, and derivative instruments. Based on the typical trading volumes and the lack of quoted market prices for fixed maturities, security prices are derived through recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. If there are no recent reported trades, matrix or model processes are used to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Included in the pricing of asset-backed securities, collateralized mortgage obligations, and mortgage-backed securities are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment speeds previously experienced at the interest rate levels projected for the underlying collateral. The estimated fair value of the derivative instruments, consisting of interest rate swaps, is obtained from a third party financial institution that utilizes observable inputs such as the forward interest rate curve. The investments classified as Level 3 in the above table consist of fixed maturities and equity securities with unobservable inputs. 20 GLOBAL INDEMNITY GROUP, LLC The following table presents changes in Level 3 investments measured at fair value on a recurring basis for the quarters ended March 31, 2022 and 2021: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Beginning balance $ 2,769 $ — Total gains (realized / unrealized): Included in accumulated other comprehensive income ( 8 ) ( 39 ) Included in earnings attributable to realized ( 68 ) Transfers into level 3 250 — Transfers out of level 3 — — Amortization of bond premium and discount, net — — Purchases 1,424 2,242 Sales ( 79 ) — Ending balance $ 4,288 2,203 Gains (losses) included in earnings attributable to the change in unrealized gains (losses) related to assets still held at end of reporting period $ ( 5 ) $ — For the Company’s material debt arrangements, the current fair value of the Company’s debt at March 31, 2022 and December 31, 2021 was as follows: March 31, 2022 December 31, 2021 (Dollars in thousands) Carrying Value Fair Value Carrying Value Fair Value 7.875% Subordinated Notes due 2047 (1) $ 126,465 $ 126,309 $ 126,430 $ 129,238 Total $ 126,465 $ 126,309 $ 126,430 $ 129,238 (1) As of March 31, 2022 and December 31, 2021, the carrying value and fair value of the 7.875 % Subordinated Notes due 2047 are net of unamortized debt issuance cost of$ 3.5 million and $ 3.6 million, respectively. The subordinated notes due 2047 are publicly traded instruments and are classified as Level 1 in the fair value hierarchy. Fair Value of Alternative Investments Other invested assets consist of limited liability companies and limited partnerships whose carrying value approximates fair value. The following table provides the fair value and future funding commitments related to these investments at March 31, 2022 and December 31, 2021. March 31, 2022 December 31, 2021 (Dollars in thousands) Fair Value Future Funding Commitment Fair Value Future Funding Commitment European Non-Performing Loan Fund, LP (1) $ 6,440 $ 14,214 $ 8,636 $ 14,214 Distressed Debt Fund, LP (2) 303 17,000 349 17,000 Mortgage Debt Fund, LP (3) 9,687 — 11,707 — Credit Fund, LLC (4) 105,400 — 106,162 — Global Debt Fund, LP (5) 25,660 — 25,797 — Total $ 147,490 $ 31,214 $ 152,651 $ 31,214 21 GLOBAL INDEMNITY GROUP, LLC ( 1 ) This limited partnership invests in distressed securities and assets through senior and subordinated, secured and unsecured debt and equity, in both public and private large-cap and middle-market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. ( 2 ) This limited partnership invests in stressed and distressed securities and structured products. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. ( 3 ) This limited partnership invests in REIT qualifying assets such as mortgage loans, investor property loans, and commercial mortgage loans. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. (4) This limited liability company invests in a broad portfolio of non-investment grade loans, secured and unsecured corporate debt, credit default swaps, reverse repurchase agreements and synthetic indices. The Company does have the ability to sell its interest by providing notice to the fund. ( 5 ) This limited partnership invests in performing, stressed or distressed securities and loans across the global fixed income markets. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets. Limited Liability Companies and Limited Partnerships with ownership interest exceeding 3% The Company uses the equity method to account for investments in limited liability companies and limited partnerships where its ownership interest exceeds 3 %. The equity method of accounting for an investment in limited liability companies and limited partnerships requires that its cost basis be updated to account for the income or loss earned on the investment. In the Fair Value of Alternative Investments table above, all of the investments, except for the Credit Fund, LLC, are booked on a one quarter lag due to non-availability of data at the time the financial statements are prepared. Information for the Credit Fund, LLC is received on a timely basis and is included in current results. The investment income (loss) associated with the limited liability companies and limited partnerships whose ownership interest exceeds 3 % is reflected in the consolidated statements of operations in the amounts of $( 0.1 ) million and $ 3.0 million for the quarters ended March 31, 2022 and 2021, respectively. Pricing The Company’s pricing vendors provide prices for all investment categories except for investments in limited liability companies and limited partnerships. Two primary vendors are utilized to provide prices for equity and fixed maturity securities. The following is a description of the valuation methodologies used by the Company’s pricing vendors for investment securities carried at fair value: • Equity security prices are received from primary and secondary exchanges. • Corporate and agency bonds are evaluated by utilizing a spread to a benchmark curve. Bonds with similar characteristics are grouped into specific sectors. Inputs for both asset classes consist of trade prices, broker quotes, the new issue market, and prices on comparable securities. • Data from commercial vendors is aggregated with market information, then converted into an option adjusted spread (“OAS”) matrix and prepayment model used for collateralized mortgage obligations (“CMO”). CMOs are categorized with mortgage-backed securities in the tables listed above. For asset-backed securities, spread data is derived from trade prices, dealer quotations, and research reports. For both asset classes, evaluations utilize standard inputs plus new issue data, and collateral performance. The evaluated pricing models incorporate cash flows, broker quotes, market trades, historical prepayment speeds, and dealer projected speeds. • For obligations of state and political subdivisions, an attribute-based modeling system is used. The pricing model incorporates trades, market clearing yields, market color, and fundamental credit research. • U.S. treasuries are evaluated by obtaining feeds from a number of live data sources including primary and secondary dealers as well as inter-dealer brokers. • For mortgage-backed securities, various external analytical products are utilized and purchased from commercial vendors. 22 GLOBAL INDEMNITY GROUP, LLC The Company performs certain procedures to validate whether the pricing information received from the pricing vendors is reasonable, to ensure that the fair value determination is consistent with accounting guidance, and to ensure that its assets are properly classified in the fair value hierarchy. The Company’s procedures include, but are not limited to: • Reviewing periodic reports provided by the Investment Manager that provides information regarding rating changes and securities placed on watch. This procedure allows the Company to understand why a particular security’s market value may have changed or may potentially change. • Understanding and periodically evaluating the various pricing methods and procedures used by the Company’s pricing vendors to ensure that investments are properly classified within the fair value hierarchy. • On a quarterly basis, the Company corroborates investment security prices received from its pricing vendors by obtaining pricing from a second pricing vendor for a sample of securities. During the quarters ended March 31, 2022 and 2021, the Company has not adjusted quotes or prices obtained from the pricing vendors. 5 . Allowance for Expected Credit Losses - Premium Receivables and Reinsurance Receivables For premium receivables, the allowance is based upon the Company’s ongoing review of key aspects of amounts outstanding, including but not limited to, length of collection periods, direct placement with collection agencies, solvency of insured or agent, terminated agents, and other relevant factors. The following table is an analysis of the allowance for expected credit losses related to the Company's premium receivables for the quarters ended March 31, 2022 and 2021: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Beginning balance $ 2,996 $ 2,900 Current period provision for expected credit losses 83 88 Write-offs ( 142 ) ( 216 ) Ending balance $ 2,937 $ 2,772 For reinsurance receivables, the allowance is based upon the Company’s ongoing review of key aspects of amounts outstanding, including but not limited to, length of collection periods, disputes, applicable coverage defenses, insolvent reinsurers, financial strength of solvent reinsurers based on AM Best Ratings and other relevant factors. The following table is an analysis of the allowance for expected credit losses related to the Company's reinsurance receivables for the quarters ended March 31, 2022 and 2021: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Beginning balance $ 8,992 $ 8,992 Current period provision for expected credit losses — — Write-offs — — Recoveries of amounts previously written off — — Ending balance $ 8,992 $ 8,992 6 . Income Taxes Global Indemnity Group, LLC is a publicly traded partnership for U.S. federal income tax purposes and meets the qualifying income exception to maintain partnership status. As a publicly traded partnership, Global Indemnity Group, LLC is generally not subject to federal income tax and most state income taxes. However, income earned by the subsidiaries of Global Indemnity Group, LLC is subject to corporate tax in the United States and certain foreign jurisdictions. 23 GLOBAL INDEMNITY GROUP, LLC As of March 31, 2022, the statutory income tax rates of the countries where the Company conducts or conducted business are 21 % in the United States, 0 % in Bermuda, and 25 % on non-trading income, 33 % on capital gains and 12.5 % on trading income in the Republic of Ireland. The statutory income tax rate of each country is applied against the expected annual taxable income of the Company in each country to estimate the annual income tax expense. The Company’s income (loss) before income taxes is derived from its U.S. subsidiaries for the quarters ended March 31, 2022 and 2021. The following table summarizes the components of income tax benefit: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Deferred income tax benefit: U.S. Federal $ ( 3,413 ) $ ( 203 ) Total deferred income tax benefit ( 3,413 ) ( 203 ) Total income tax expense benefit $ ( 3,413 ) $ ( 203 ) The weighted average expected tax provision has been calculated using income (loss) before income taxes in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate. The following table summarizes the differences between the tax provision for financial statement purposes and the expected tax provision at the weighted average tax rate: Quarters Ended March 31, 2022 2021 (Dollars in thousands) Amount % of Pre- Tax Income Amount % of Pre- Tax Income Expected tax provision at weighted average tax rate $ ( 3,819 ) 21.0 % $ 1,116 21.0 % Adjustments: Dividend exclusion ( 22 ) 0.1 ( 17 ) ( 0.3 ) Parent income treated as partnership for tax 243 ( 1.3 ) ( 1,367 ) ( 25.7 ) Other 185 ( 1.0 ) 65 1.2 Effective income tax benefit $ ( 3,413 ) 18.8 % $ ( 203 ) ( 3.8 %) The effective income tax benefit rate for the quarter ended March 31, 2022 was 18.8 % compared to an effective income tax benefit rate of 3.8 % for the quarter ended March 31, 2021. The difference between 2022 and 2021 is due to a decline in net income at Global Indemnity Group, LLC which is treated as a partnership for tax. The Company has a net operating loss (“NOL”) carryforward of $ 21.8 million as of March 31, 2022, which begins to expire in 2036 based on when the original NOL was generated. The Company’s NOL carryforward as of December 31, 2021 was $ 28.6 million. 24 GLOBAL INDEMNITY GROUP, LLC 7 . Liability for Unpaid Losses and Loss Adjustment Expenses Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Balance at beginning of period $ 759,904 $ 662,811 Less: Ceded reinsurance receivables 94,443 82,158 Net balance at beginning of period 665,461 580,653 Incurred losses and loss adjustment expenses related to: Current year 87,758 94,194 Prior years ( 3,063 ) ( 3,411 ) Total incurred losses and loss adjustment expenses 84,695 90,783 Paid losses and loss adjustment expenses related to: Current year 13,315 21,719 Prior years 59,703 53,230 Total paid losses and loss adjustment expenses 73,018 74,949 Net balance at end of period 677,138 596,487 Plus: Ceded reinsurance receivables 93,194 79,421 Balance at end of period $ 770,332 $ 675,908 When analyzing loss reserves and prior year development, the Company considers many factors, including the frequency and severity of claims, loss trends, case reserve settlements that may have resulted in significant development, and any other additional or pertinent factors that may impact reserve estimates. During the first quarter of 2022, the Company decreased its prior accident year loss reserves by $ 3.1 million, which consisted of a $ 0.3 million increase related to Commercial Specialty, a $ 0.4 million decrease related to Farm, Ranch & Stable, and a $ 3.0 million decrease related to Exited Lines. The $ 0.3 million increase of prior accident year loss reserves related to Commercial Specialty primarily consisted of the following: • Property: A $ 0.2 million increase primarily recognizes higher than expected claims severity in the 2015 through 2017 and 2020 accident years, partially offset by a decrease in the 2018 and 2021 accident years. • General Liability: A $ 0.1 million increase primarily in accident years prior to 2005 and the 2010, 2018 and 2020 accident years mainly reflects higher than expected claims severity, mostly offset by decreases in the 2006, 2007, 2011 and 2013 accident years. • Professional: A $ 0.1 million decrease mainly in the 2019 and 2020 accident years. The $ 0.4 million reduction of prior accident year loss reserves related to Farm, Ranch & Stable primarily consisted of the following: • Property: A $ 0.2 million reduction primarily reflects lower than expected claims severity in the 2018 and 2019 accident years, partially offset by an increase in the 2021 accident year. • Liability: A $ 0.2 million decrease in the 2019 accident year reflecting a lower than expected claims severity. The $ 3.0 million reduction of prior accident year loss reserves related to Exited Lines consisted of the following: • Property: A $ 0.5 million decrease primarily reflects reductions in the specialty property lines, mainly in the 2016, 2018 and 2021 accident years, partially offset by an increase in the 2019 accident year. • General Liability: A $ 0.3 million reduction was from the specialty property lines, primarily in the 2017, 2020, and 2021 accident years partially offset by increases in the 2019 accident year. 25 GLOBAL INDEMNITY GROUP, LLC • Reinsurance: A $ 2.2 million decrease was primarily from one treaty and in the 2017 through 2021 accident years based on the reported information from the cedant. During the first quarter of 2021, the Company reduced its prior accident year loss reserves by $ 3.4 million, which consisted of a $ 2.6 million decrease related to Commercial Specialty, a $ 0.7 million decrease related to Farm, Ranch & Stable, and a $ 0.1 million decrease related to Exited Lines. The $ 2.6 million decrease of prior accident year loss reserves related to Commercial Specialty primarily consisted of the following: • Property: A $ 2.4 million decrease primarily in the 2017 and 2019 through 2020 accident years mainly recognizing better than expected claims severity. • Professional: A $ 0.2 million decrease primarily in the 2019 and 2020 accident years mainly reflecting lower than anticipated claims severity. The $ 0.7 million reduction of prior accident year loss reserves related to Farm, Ranch & Stable primarily consisted of the following: • Property: A $ 0.7 million decrease in total reflects subrogation recoveries of $ 1.1 million in the catastrophe reserve category from the California Thomas wildfire loss in the 2017 accident year and a decrease of $ 0.5 million in the 2019 accident year primarily recognizing a lower than expected claims severity. These decreases were partially offset by increases in the 2018 and 2020 accident years mainly due to higher than anticipated claims severity . The $ 0.1 million decrease of prior accident year loss reserves related to Exited Lines primarily consisted of the following: • General Liability: A $ 1.2 million reduction mostly in the 2018 accident year primarily reflects lower than anticipated claims severity. • Property: A $ 1.8 million increase reflects an increase of $ 2.4 million for Hurricane Michael, partially offset by reductions in specialty property mainly in the 2016 through 2019 accident years. • Reinsurance: A $ 0.6 million decrease was primarily based on a review of the experience reported from cedants. There was a $ 0.6 million decrease in the property lines mainly in the 2011 and 2017 through 2018 accident years, partially offset by an increase in the 2010 and 2019 accident years. In total, the property catastrophe segments decreased $ 2.6 million and the other property segments increased $ 2.0 million . 8 . Shareholders’ Equity The following table provides information with respect to the class A common shares that were surrendered or repurchased during the quarter ended March 31, 2022: Period (1) Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs January 1-31, 2022 4,781 (2) $ 25.13 — — Total 4,781 $ 25.13 — — (1) Based on settlement date. (2) Surrendered by employees as payment of taxes withheld on the vesting of restricted stock and/or restricted stock units. 26 GLOBAL INDEMNITY GROUP, LLC The following table provides information with respect to the class A common shares that were surrendered or repurchased during the quarter ended March 31, 2021: Period (1) Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs January 1-31, 2021 6,720 (2) $ 28.59 — — March 1-31, 2021 3,095 (2) $ 29.40 — — Total 9,815 $ 28.85 — — (1) Based on settlement date. (2) Surrendered by employees as payment of taxes withheld on the vesting of restricted stock and/or restricted stock units. There were no class B common shares that were surrendered or repurchased during the quarters ended March 31, 2022 or 2021. As of March 31, 2022, Global Indemnity Group, LLC’s class A common shares were held by approximately 165 shareholders of record. There were three holders of record of Global Indemnity Group, LLC’s class B common shares, all of whom are affiliated investment funds of Fox Paine & Company, LLC, as of March 31, 2022. Global Indemnity Group, LLC’s preferred shares were held by 1 holder of record, an affiliate of Fox Paine & Company, LLC, as of March 31, 2022. Please see Note 15 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2021 Annual Report on Form 10-K for more information on the Company’s repurchase program. Distributions Distribution payments of $ 0.25 per common share were declared during the quarter ended March 31, 2022 as follows: Approval Date Record Date Payment Date Total Distributions Declared (Dollars in thousands) March 3, 2022 March 21, 2022 March 31, 2022 $ 3,597 Various (1) Various Various 50 Total $ 3,647 (1) Represents distributions declared on unvested shares, net of forfeitures. Distribution payments of $ 0.25 per common share were declared during the quarter ended March 31, 2021 as follows: Approval Date Record Date Payment Date Total Distributions Declared (Dollars in thousands) February 14, 2021 March 22, 2021 March 31, 2021 $ 3,570 Various (1) Various Various 114 Total $ 3,684 (1) Represents distributions declared on unvested shares, net of forfeitures. Accrued distributions on unvested shares, which were included in other liabilities on the consolidated balance sheets were $ 0.9 million as of both March 31, 2022 and December 31, 2021. Accrued preferred distributions were less than $ 0.1 million as of both March 31, 2022 and December 31, 2021 and were included in other liabilities on the consolidated balance sheets. Please see Note 15 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2021 Annual Report on Form 10-K for more information on the Company’s distribution program. 27 GLOBAL INDEMNITY GROUP, LLC 9 . Related Party Transactions Fox Paine Entities Pursuant to Global Indemnity Group, LLC’s Limited Liability Company Agreement (“LLCA”), Fox Paine Capital Fund II International, L.P. and certain of its affiliates (the “Fox Paine Funds”), together with Fox Mercury Investments, L.P. and certain of its affiliates (the “FM Entities”), and Fox Paine & Company LLC (collectively, the “Fox Paine Entities”) currently constitute a Class B Majority Shareholder (as defined in the LLCA) and, as such, have the right to appoint a number of Global Indemnity Group, LLC’s directors equal in aggregate to the pro rata percentage of the voting power in Global Indemnity Group, LLC beneficially held by the Fox Paine Entities, rounded up to the nearest whole number of directors. The Fox Paine Entities beneficially own shares representing approximately 82.9 % of the voting power of Global Indemnity Group, LLC as of March 31, 2022. The Fox Paine Entities control the appointment or election of all of Global Indemnity Group, LLC’s Directors due to the LLCA and their controlling share ownership. Global Indemnity Group, LLC’s Chairman is the chief executive and founder of Fox Paine & Company, LLC. On August 27, 2020, Global Indemnity Group, LLC issued and sold to Wyncote LLC, an affiliate of Fox Paine & Company, LLC, 4,000 Series A Cumulative Fixed Rate Preferred Interests at a price of $ 1,000 per Series A Preferred Interest, for the aggregate purchase price of $ 4,000,000 . While these preferred interests are non-voting, the preferred shareholders are entitled to appoint two additional members to Global Indemnity Group, LLC’s Board of Directors whenever the “Unpaid Targeted Priority Return” with respect to the preferred interests exceed zero immediately following six or more “Distribution Dates”, whether or not such Distribution Dates occur consecutively . Global Indemnity Group, LLC’s Board of Directors is obligated to take, and cause Global Indemnity Group, LLC’s officers to take, any necessary actions to effectuate such appointments, including expanding the size of the Board of Directors, in connection with any exercise of the foregoing provisions. Management fee expense of $ 0.7 million was incurred during each of the quarters ended March 31, 2022 and 2021. Prepaid management fees, which were included in other assets on the consolidated balance sheets, were $ 1.2 million and $ 1.9 million as of March 31, 2022 and December 31, 2021, respectively. In addition, Fox Paine & Company, LLC may also propose and negotiate transaction fees with the Company subject to the provisions of the Company’s related party transaction and conflict matter policies, including approval of Global Indemnity Group, LLC’s Conflicts Committee of the Board of Directors, for those services from time to time. Each of the Company’s transactions with Fox Paine & Company, LLC are reviewed and approved by either Global Indemnity Group, LLC’s Conflicts Committee, which is composed of independent directors, and the Board of Directors (other than Saul A. Fox, Chairman of the Board of Directors of Global Indemnity Group, LLC and Chief Executive of Fox Paine & Company, LLC, who is not a member of the Conflicts Committee and recused himself from the Board of Directors’ deliberations related to fees paid to Fox Paine & Company, LLC or its affiliates). 1 0 . Commitments and Contingencies Legal Proceedings The Company is, from time to time, involved in various legal proceedings in the ordinary course of business. The Company maintains insurance and reinsurance coverage for such risks in amounts that it considers adequate. However, there can be no assurance that the insurance and reinsurance coverage that the Company maintains is sufficient or will be available in adequate amounts or at a reasonable cost. The Company does not believe that the resolution of any currently pending legal proceedings, either individually or taken as a whole, will have a material adverse effect on its business, results of operations, cash flows, or financial condition. There is a greater potential for disputes with reinsurers who are in runoff. Some of the Company’s reinsurers’ have operations that are in runoff, and therefore, the Company closely monitors those relationships. The Company anticipates that, similar to the rest of the insurance and reinsurance industry, it will continue to be subject to litigation and arbitration proceedings in the ordinary course of business. 28 GLOBAL INDEMNITY GROUP, LLC Commitments In 2014, the Company entered into a $ 50 million commitment to purchase an alternative investment vehicle which is comprised of European non-performing loans. As of March 31, 2022, the Company has funded $ 35.8 million of this commitment leaving $ 14.2 million as unfunded. Since the investment period has concluded, the Company expects minimal capital calls will be made prospectively. In 2017, the Company entered into a $ 50 million commitment to purchase an alternative investment vehicle comprised of stressed and distressed securities and structured products. As of March 31, 2022, the Company has funded $ 33.0 million of this commitment leaving $ 17.0 million as unfunded. Since the investment period has concluded, the Company expects minimal capital calls will be made prospectively. In 2021, the Company entered into a $ 25 million commitment to purchase an alternative investment vehicle comprised of performing, stressed or distressed securities and loans across the global fixed income markets. As of March 31, 2022, the Company has fully funded this commitment. Other Commitments The Company is party to a Management Agreement, as amended, with Fox Paine & Company, LLC, whereby in connection with certain management services provided to it by Fox Paine & Company, LLC, the Company agreed to pay an annual management fee to Fox Paine & Company, LLC. See Note 9 above for additional information pertaining to this management agreement. COVID-19 There is risk that legislation could be passed or there could be a court ruling which would require the Company to cover business interruption claims regardless of terms, exclusions including the virus exclusions contained within the Company’s Commercial Specialty and Farm, Ranch & Stable policies, or other conditions included in policies that would otherwise preclude coverage. 1 1 . Share-Based Compensation Plans Options During the first quarter of 2021, the Company granted 140,000 Performance-Based Options under the Plan. The Performance-Based Options vest in 33 % increments over a three-year period subject to the achievement of certain underwriting results and expire ten years after the grant date or the occurrence of certain events specified in the agreement, whichever is earlier. Of these options, 46,667 options, which were due to vest on April 1, 2022, were recorded as forfeitures in the year ended December 31, 2021 as a result of not meeting performance requirements related to 2021. No stock options were awarded during the quarter ended March 31, 2022. 300,000 unvested stock options were forfeited during the quarter ended March 31, 2021. No unvested stock options were forfeited during the quarter ended March 31, 2022. Restricted Shares / Restricted Stock Units There were no restricted class A common shares or restricted stock units granted to key employees during the quarters ended March 31, 2022 and 2021. There were 26,080 and 20,437 restricted stock units that vested during the quarters ended March 31, 2022 and 2021, respectively. Upon vesting, the restricted stock units converted to restricted class A common shares. 29 GLOBAL INDEMNITY GROUP, LLC During the quarters ended March 31, 2022 and 2021, the Company granted 24,810 and 20,006 class A common shares, respectively, at a weighted average grant date value of $ 25.64 and $ 28.32 per share, respectively, to non-employee directors of the Company under the Plan. Of the shares granted during the quarters ended March 31, 2022 and 2021, the vesting of 7,313 and 4,903 shares, respectively, is deferred until January 1, 2024 or a change of control, whichever is earlier. The remaining shares granted to non-employee directors of the Company in 2022 and 2021 were fully vested but are subject to certain restrictions. 1 2 . Earnings Per Share Earnings per share have been computed using the weighted average number of common shares and common share equivalents outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share: Quarters Ended March 31, (Dollars in thousands, except share and per share data) 2022 2021 Numerator: Net income (loss) $ ( 14,773 ) $ 5,517 Less: preferred stock distributions 110 110 Net income (loss) available to common shareholders $ ( 14,883 ) $ 5,407 Denominator: Weighted average shares for basic earnings per share 14,514,950 14,380,423 Non-vested restricted stock — 10,065 Non-vested restricted stock units — 137,839 Options — 112,331 Weighted average shares for diluted earnings per share (1) 14,514,950 14,640,658 Earnings per share - Basic $ ( 1.03 ) $ 0.38 Earnings per share - Diluted $ ( 1.03 ) $ 0.37 (1) For the quarter ended March 31, 2022, “weighted average shares outstanding – basic” was used to calculate “diluted earnings per share” due to a net loss for the period. If the Company had not incurred a loss in the quarter ended March 31, 2022, 14,701,350 weighted average shares would have been used to compute the diluted loss per share calculation. In addition to the basic shares, weighted average shares for the diluted calculation would have included 91,435 shares of non-vested restricted stock units and 94,965 share equivalents for options. The weighted average shares outstanding used to determine dilutive earnings per share does not include 393,333 shares and 540,000 shares for the quarters ended March 31, 2022 and 2021, respectively, which were deemed to be anti-dilutive. 1 3 . Segment Information On October 26, 2021, the Company sold the renewal rights related to its manufactured and dwelling homes products which was part of the Specialty Property segment. The Company previously decided to cease writing certain Property Brokerage business which was part of the Commercial Specialty segment, as well as exit certain property and catastrophe lines within the Reinsurance Operations segment. Based on the decisions to exit these lines of business, the Company changed the way it manages and analyzes its operating results. The chief operating decision makers, the Chief Executive as well as the Chief Operating Officer, decided they will be reviewing the specific results of the Exited Lines separately. The chief operating decision makers also determined that the small amount of specialty property business that remained from the Specialty Property segment would be included as programs in the Commercial Specialty segment for purpose of reviewing results and allocating resources. The Reinsurance Operations segment will continue to write casualty and professional treaties as well as individual excess policies. The Farm, Ranch & Stable segment was not impacted by these decisions and will continue to be reported as a segment. Accordingly, the Company has four reportable segments: Commercial Specialty, Reinsurance 30 GLOBAL INDEMNITY GROUP, LLC Operations, Farm, Ranch & Stable, and Exited Lines. Management believes these segments will allow users of the Company’s financial statements to better understand the Company's performance, better assess prospects for future net cash flows and to make more informed judgments about the Company as a whole. The segment results for the quarter ended March 31, 2021 have been revised to reflect these changes. The Company manages its business through four business segments. Commercial Specialty offers specialty property and casualty products designed for product lines such as Small Business Binding Authority, Property Brokerage, and Programs. Reinsurance Operations provides reinsurance solutions through brokers and primary writers including insurance and reinsurance companies. Farm, Ranch & Stable offers specialized property and casualty coverage including Commercial Farm Auto and Excess/Umbrella Coverage for the agriculture industry as well as specialized insurance products for the equine mortality and equine major medical industry. Exited Lines represents lines of business that are no longer being written or are in runoff. The following are tabulations of business segment information for the quarters ended March 31, 2022 and 2021: Quarter Ended March 31, 2022 (Dollars in thousands) Commercial Specialty Reinsurance Operations (1) Farm, Ranch & Stable Exited Lines Total Revenues: Gross written premiums $ 104,266 $ 41,445 $ 22,676 $ 22,596 $ 190,983 Net written premiums $ 98,313 $ 41,445 $ 19,012 $ 712 $ 159,482 Net earned premiums $ 91,763 $ 34,963 $ 17,643 $ 4,454 $ 148,823 Other income (loss) 259 ( 20 ) 38 162 439 Total revenues 92,022 34,943 17,681 4,616 149,262 Losses and Expenses: Net losses and loss adjustment expenses 52,053 21,457 10,958 227 84,695 Acquisition costs and other underwriting expenses 33,689 12,177 6,814 4,012 56,692 Income (loss) from segments $ 6,280 $ 1,309 $ ( 91 ) $ 377 $ 7,875 Unallocated Items: Net investment income 6,592 Net realized investment loss ( 25,385 ) Other loss ( 13 ) Corporate and other operating expenses ( 4,660 ) Interest expense ( 2,595 ) Loss before income taxes ( 18,186 ) Income tax benefit 3,413 Net loss $ ( 14,773 ) Segment assets $ 967,718 $ 267,466 $ 142,492 $ 250,735 $ 1,628,411 Corporate assets 331,085 Total assets $ 1,959,496 (1) External business only, excluding business assumed from affiliates. 31 GLOBAL INDEMNITY GROUP, LLC Quarter Ended March 31, 2021 (Dollars in thousands) Commercial Specialty Reinsurance Operations (1) Farm, Ranch & Stable Exited Lines Total Revenues: Gross written premiums $ 89,334 $ 21,951 $ 21,002 $ 31,271 $ 163,558 Net written premiums $ 82,172 $ 21,951 $ 17,603 $ 25,957 $ 147,683 Net earned premiums $ 78,692 $ 16,798 $ 18,141 $ 30,069 $ 143,700 Other income (loss) 244 ( 56 ) 34 186 408 Total revenues 78,936 16,742 18,175 30,255 144,108 Losses and Expenses: Net losses and loss adjustment expenses 49,790 10,875 11,801 18,317 90,783 Acquisition costs and other underwriting expenses 29,052 5,779 6,986 12,947 54,764 Income (loss) from segments $ 94 $ 88 $ ( 612 ) $ ( 1,009 ) $ ( 1,439 ) Unallocated Items: Net investment income 9,836 Net realized investment gains 3,819 Other loss ( 31 ) Corporate and other operating expenses ( 4,276 ) Interest expense ( 2,595 ) Income before income taxes 5,314 Income tax benefit 203 Net income $ 5,517 Segment assets $ 845,760 $ 165,672 $ 146,777 $ 365,866 $ 1,524,075 Corporate assets 373,571 Total assets $ 1,897,646 (1) External business only, excluding business assumed from affiliates. 1 4 . New Accounting Pronouncements The Company did not adopt any new accounting pronouncements during the quarter ended March 31, 2022. Please see Note 24 of the notes to the consolidated financial statements in Item 8 Part II of the Company’s 2021 Annual Report on Form 10-K for more information on accounting pronouncements issued but not yet adopted. 1 5 . Subsequent Events Redemption of 7.875% Subordinated Notes due 2047 (“2047 Notes”) On April 15, 2022, the Company redeemed the entire $ 130 million in aggregate principal amount of the outstanding 2047 Notes plus accrued and unpaid interest on the 2047 Notes redeemed to, but not including, the Redemption Date of April 15, 2022 . Board of Directors Effective April 13, 2022, James D. Wehr is no longer a Designated Director of the Company’s Board of Directors and his service to the Company’s Board of Directors ended on the same date. 32 GLOBAL INDEMNITY GROUP, LLC