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, 2021. Recent Developments Distributions The Board of Directors approved a distribution payment of $0.25 per common share to all shareholders of record on the close of business on March 21, 2022. Distributions paid to common shareholders were $3.7 million during the quarter ended March 31, 2022. In addition, distributions of $0.1 million were paid to Global Indemnity Group, LLC’s preferred shareholder during the quarter ended March 31, 2022. Board of Directors Effective January 1, 2022, Bruce R. Lederman ceased to be a Fox Paine Entities’ appointed member of the Company’s Board of Directors. Effective January 22, 2022, Jason B. Hurwitz ceased to be a Fox Paine Entities’ appointed member of the Company’s Board of Directors. Effective February 9, 2022, James R. Holt, Jr. became a Fox Paine Entities’ appointed member of the Company’s Board of Directors. Mr. Holt is a member of the Audit Committee, the Nomination, Compensation & Governance Committee, the Enterprise Risk Management Committee, and the Technology Committee. 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. Redemption of Debt 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. COVID-19 The global outbreak of COVID-19 continues to present significant risks to the Company. The COVID-19 pandemic may affect the Company’s operations indefinitely. The Company may experience reductions in premium volume, delays in the collection of premiums, and increases in COVID-19 related claims. Any resulting volatility in the global financial markets may negatively impact the market value of the Company’s investment portfolio and may result in net realized investment losses as well as a decline in the liquidity of the investment portfolio. All of these factors may have far reaching impacts on the Company’s business, operations, and financial results and conditions, directly and indirectly, including without limitation impacts on the health of the Company’s management and employees, distribution, marketing, customers and agents, and on the overall economy. The scope and nature of these impacts, most of which are beyond the Company’s control, continue to evolve and such effects could exist for an extended period of time even after the pandemic ends. 33 GLOBAL INDEMNITY GROUP, LLC Overview The Company’s Commercial Specialty segment sells its property and casualty insurance products through a group of approximately 195 professional general agencies that have limited quoting and binding authority, as well as a number of wholesale insurance brokers who in turn sell the Company’s insurance products to insureds through retail insurance brokers. Commercial Specialty operates predominantly in the excess and surplus lines marketplace. The Company manages its Commercial Specialty segment via product classifications. These product classifications are: 1) Penn-America, which includes property and general liability products for small commercial businesses sold through a select network of wholesale general agents with specific binding authority; 2) United National, which includes property, general liability, and professional lines products sold through program administrators with specific binding authority; 3) Diamond State, which includes property, casualty, and professional lines products sold through wholesale brokers and program administrators with specific binding authority; and 4) Vacant Express, which primarily insures dwellings which are currently vacant, undergoing renovation, or are under construction and is sold through aggregators, brokers, and retail agents. The Company has also created several start-up business lines which distribute professional, environmental, and excess casualty products. The Company’s Reinsurance Operations provides reinsurance solutions through brokers and primary writers including insurance and reinsurance companies. It uses its capital capacity to write niche and casualty-focused treaties and business which meet the Company’s risk tolerance and return thresholds. The Company’s Farm, Ranch & Stable segment, primarily via American Reliable, 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 a group of approximately 240 agents, primarily comprised of wholesalers and retail agents, with a selected number having specific binding authority. The Company’s Exited Lines segment 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 Brokerage, and property and catastrophe reinsurance treaties. These insurance products were distributed through a group of approximately 205 wholesale general agents, wholesale insurance brokers, program administrators, and retail agents. The Company derives its revenues primarily from premiums paid on insurance policies that it writes and from income generated by its investment portfolio, net of fees paid for investment management services. The amount of insurance premiums that the Company receives is a function of the amount and type of policies it writes, as well as prevailing market prices. The Company’s expenses include losses and loss adjustment expenses, acquisition costs and other underwriting expenses, corporate and other operating expenses, interest, investment expenses, and income taxes. Losses and loss adjustment expenses are estimated by management and reflect the Company’s best estimate of ultimate losses and costs arising during the reporting period and revisions of prior period estimates. The Company records its best estimate of losses and loss adjustment expenses considering both internal and external actuarial analyses of the estimated losses the Company expects to incur on the insurance policies it writes. The ultimate losses and loss adjustment expenses will depend on the actual costs to resolve claims. Acquisition costs consist principally of commissions and premium taxes that are typically a percentage of the premiums on the insurance policies the Company writes, net of ceding commissions earned from reinsurers. Other underwriting expenses consist primarily of personnel expenses and general operating expenses related to underwriting activities. Corporate and other operating expenses are comprised primarily of outside legal fees, other professional and accounting fees, directors’ fees, management fees & advisory fees, and salaries and benefits for company personnel whose services relate to the support of corporate activities. Interest expense is primarily comprised of amounts due on outstanding debt. 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. 34 GLOBAL INDEMNITY GROUP, LLC 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, 2021. There have been no significant changes to any of these policies or underlying methodologies during the current year. Results of Operations The following table summarizes the Company’s results for the quarters ended March 31, 2022 and 2021: Quarters Ended March 31, % (Dollars in thousands) 2022 2021 Change Gross written premiums $ 190,983 $ 163,558 16.8 % Net written premiums $ 159,482 $ 147,683 8.0 % Net earned premiums $ 148,823 $ 143,700 3.6 % Other income 439 408 7.6 % Total revenues 149,262 144,108 3.6 % Losses and expenses: Net losses and loss adjustment expenses 84,695 90,783 (6.7 %) Acquisition costs and other underwriting expenses 56,692 54,764 3.5 % Underwriting income (loss) 7,875 (1,439 ) NM Net investment income 6,592 9,836 (33.0 %) Net realized investment gains (losses) (25,385 ) 3,819 NM Other loss (13 ) (31 ) 58.1 % Corporate and other operating expenses (4,660 ) (4,276 ) 9.0 % Interest expense (2,595 ) (2,595 ) — Income (loss) before income taxes (18,186 ) 5,314 NM Income tax benefit (3,413 ) (203 ) NM Net income (loss) $ (14,773 ) $ 5,517 NM Underwriting Ratios: Loss ratio (1) : 56.9 % 63.1 % Expense ratio (2) 38.1 % 38.1 % Combined ratio (3) 95.0 % 101.2 % NM – not meaningful (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. 35 GLOBAL INDEMNITY GROUP, LLC Premiums The following table summarizes the change in premium volume by business segment: Quarters Ended March 31, (Dollars in thousands) 2022 2021 % Change Gross written premiums (1) Commercial Specialty $ 104,266 $ 89,334 16.7 % Reinsurance Operations (3) 41,445 21,951 88.8 % Farm, Ranch & Stable 22,676 21,002 8.0 % Continuing Lines 168,387 132,287 27.3 % Exited Lines 22,596 31,271 (27.7 %) Total gross written premiums $ 190,983 $ 163,558 16.8 % Ceded written premiums Commercial Specialty $ 5,953 $ 7,162 (16.9 %) Reinsurance Operations (3) — — — Farm, Ranch & Stable 3,664 3,399 7.8 % Continuing Lines 9,617 10,561 (8.9 %) Exited Lines 21,884 5,314 NM Total ceded written premiums $ 31,501 $ 15,875 98.4 % Net written premiums (2) Commercial Specialty $ 98,313 $ 82,172 19.6 % Reinsurance Operations (3) 41,445 21,951 88.8 % Farm, Ranch & Stable 19,012 17,603 8.0 % Continuing Lines 158,770 121,726 30.4 % Exited Lines 712 25,957 (97.3 %) Total net written premiums $ 159,482 $ 147,683 8.0 % Net earned premiums Commercial Specialty $ 91,763 $ 78,692 16.6 % Reinsurance Operations (3) 34,963 16,798 108.1 % Farm, Ranch & Stable 17,643 18,141 (2.7 %) Continuing Lines 144,369 113,631 27.1 % Exited Lines 4,454 30,069 (85.2 %) Total net earned premiums $ 148,823 $ 143,700 3.6 % (1) Gross 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) Net written premiums equal gross written premiums less ceded written premiums. (3) External business only, excluding business assumed from affiliates. Gross written premiums increased by 16.8% for the quarter ended March 31, 2022 as compared to same period in 2021. The increase in gross written premiums is mainly due to the continued growth of existing programs, increased pricing, and several new programs within Commercial Specialty, the organic growth of existing casualty treaties within Reinsurance Operations, and growth of mortality business and increased pricing within Farm, Ranch & Stable partially offset by a reduction in premiums within Exited Lines. 36 GLOBAL INDEMNITY GROUP, LLC Underwriting Ratios Quarters Ended March 31, Point 2022 2021 Change Loss ratio Commercial Specialty 56.7 % 63.3 % (6.6 ) Reinsurance Operations 61.4 % 64.7 % (3.3 ) Farm, Ranch & Stable 62.1 % 65.1 % (3.0 ) Continuing Lines 58.5 % 63.8 % (5.3 ) Exited Lines 5.0 % 61.0 % (56.0 ) Total loss ratio 56.9 % 63.1 % (6.2 ) Expense ratio Commercial Specialty 36.7 % 36.9 % (0.2 ) Reinsurance Operations 34.8 % 34.4 % 0.4 Farm, Ranch & Stable 38.6 % 38.5 % 0.1 Continuing Lines 36.5 % 36.8 % (0.3 ) Exited Lines 90.1 % 43.1 % 47.0 Total expense ratio 38.1 % 38.1 % — Combined ratio Commercial Specialty 93.4 % 100.2 % (6.8 ) Reinsurance Operations 96.2 % 99.1 % (2.9 ) Farm, Ranch & Stable 100.7 % 103.6 % (2.9 ) Continuing Lines 95.0 % 100.6 % (5.6 ) Exited Lines 95.1 % 104.1 % (9.0 ) Total combined ratio 95.0 % 101.2 % (6.2 ) Net Retention The ratio of net written premiums to gross written premiums is referred to as the Company’s net premium retention. The Company’s net premium retention is summarized by segments as follows: Quarters Ended March 31, Point (Dollars in thousands) 2022 2021 Change Commercial Specialty 94.3 % 92.0 % 2.3 Reinsurance Operations 100.0 % 100.0 % — Farm, Ranch & Stable 83.8 % 83.8 % — Continuing Lines 94.3 % 92.0 % 2.3 Exited Lines 3.2 % 83.0 % (79.8 ) Total 83.5 % 90.3 % (6.8 ) The net premium retention for the quarter ended March 31, 2022 decreased by 6.8 points as compared to the same period in 2021. The reduction in retention is primarily driven by the Company entering into an agreement effective November 30, 2021 where American Family Mutual Insurance Company agreed to reinsure 100% of the Company’s unearned premium reserves of the same types as the policies included in the sale of the renewal rights of the Company’s manufactured and dwelling homes products that were in force as of November 30, 2021. See Note 3 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 on this reinsurance agreement as well as the sale of renewal rights related to the Company’s manufactured and dwelling home products. Net Earned Premiums Net earned premiums within the Commercial Specialty segment increased by 16.6% for the quarter ended March 31, 2022 as compared to the same period in 2021. The increase in net earned premiums was primarily due to a growth in premiums 37 GLOBAL INDEMNITY GROUP, LLC written as a result of organic growth from existing agents, pricing increases, and several new programs. Property net earned premiums were $ 3 5.5 million and $ 37.1 million for the quarter s ended March 31, 2022 and 2021 , respectively . Casualty net earned premiums were $ 56.3 million and $ 41.6 million for the quarters ended March 31, 2022 and 2021 , respectively. Net earned premiums within the Reinsurance Operations segment increased by 108.1% for the quarter ended March 31, 2022 as compared to the same period in 2021 primarily due to organic growth of existing casualty treaties. Property net earned premiums were less than $0.1 million for the quarter ended March 31, 2022. There was no property net earned premiums for the quarter ended March 31, 2021. Casualty net earned premiums were $34.9 million and $16.8 million for the quarters ended March 31, 2022 and 2021, respectively. Net earned premiums within the Farm, Ranch & Stable segment decreased by 2.7% for the quarter ended March 31, 2022 as compared to the same periods in 2021. The decrease in net earned premiums was primarily due to the continued reduction of catastrophe exposed business in prior periods. Property net earned premiums were $13.3 million and $13.6 million for the quarters ended March 31, 2022 and 2021, respectively. Casualty net earned premiums were $4.3 million and $4.6 million for the quarters ended March 31, 2022 and 2021, respectively. Net earned premiums within the Exited Lines segment decreased by 85.2% for the quarter ended March 31, 2022 as compared to the same periods in 2021 primarily due to the sale of the renewal rights related to the Company’s manufactured and dwelling home products on October 26, 2021. The decrease in net earned premiums is also due to exiting lines of business unrelated to the company’s continuing businesses. Property net earned premiums were $4.3 million and $28.3 million for the quarters ended March 31, 2022 and 2021, respectively. Casualty net earned premiums were $0.1 million and $1.7 million for the quarters ended March 31, 2022 and 2021, respectively. Reserves Management’s best estimate at March 31, 2022 was recorded as the loss reserve. Management’s best estimate is as of a particular point in time and is based upon known facts, the Company’s actuarial analyses, current law, and the Company’s judgment. This resulted in carried gross and net reserves of $770.3 million and $677.1 million, respectively, as of March 31, 2022. A breakout of the Company’s gross and net reserves, as of March 31, 2022, is as follows: Gross Reserves (Dollars in thousands) Case IBNR (1) Total Commercial Specialty $ 154,338 $ 311,048 $ 465,386 Reinsurance Operations 6,275 116,552 122,827 Farm, Ranch & Stable 13,446 33,730 47,176 Continuing Lines 174,059 461,330 635,389 Exited Lines 71,755 63,188 134,943 Total $ 245,814 $ 524,518 $ 770,332 Net Reserves (2) (Dollars in thousands) Case IBNR (1) Total Commercial Specialty $ 129,971 $ 279,718 $ 409,689 Reinsurance Operations 6,275 116,552 122,827 Farm, Ranch & Stable 10,734 24,778 35,512 Continuing Lines 146,980 421,048 568,028 Exited Lines 53,640 55,470 109,110 Total $ 200,620 $ 476,518 $ 677,138 (1) Losses incurred but not reported, including the expected future emergence of case reserves. (2) Does not include reinsurance receivable on paid losses. 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 loss frequency and severity are higher or lower than expected, the ultimate losses 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 38 GLOBAL INDEMNITY GROUP, LLC influenced by changes in severity than frequency. The following table, which the Company believes reflects a reasonable range of variability around its best estimate based on historical loss experience and management’s judgment, reflects the impact of changes (which could be favorable or unfavorable) in frequency and severity on the Company’s current accident year net loss estimate of $87.8 million for claims occurring during the quarter ended March 31, 2022 : Severity Change (Dollars in thousands) -10% -5% 0% 5% 10% Frequency Change -5% (12,731 ) (8,561 ) (4,390 ) (220 ) 3,951 -3% (11,151 ) (6,892 ) (2,634 ) 1,624 5,883 -2% (10,360 ) (6,058 ) (1,756 ) 2,546 6,848 -1% (9,570 ) (5,224 ) (878 ) 3,468 7,814 0% (8,780 ) (4,390 ) — 4,390 8,780 1% (7,990 ) (3,556 ) 878 5,312 9,746 2% (7,200 ) (2,722 ) 1,756 6,234 10,712 3% (6,409 ) (1,888 ) 2,634 7,156 11,677 5% (4,829 ) (220 ) 4,390 9,000 13,609 The Company’s net reserves for losses and loss adjustment expenses of $677.1 million as of March 31, 2022 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. 39 GLOBAL INDEMNITY GROUP, LLC Underwriting Results Commercial Specialty The components of income and loss from the Company’s Commercial Specialty segment and corresponding underwriting ratios are as follows: Quarters Ended March 31, % (Dollars in thousands) 2022 2021 Change Gross written premiums $ 104,266 $ 89,334 16.7 % Net written premiums $ 98,313 $ 82,172 19.6 % Net earned premiums $ 91,763 $ 78,692 16.6 % Other income 259 $ 244 6.1 % Total revenues 92,022 78,936 16.6 % Losses and expenses: Net losses and loss adjustment expenses 52,053 49,790 4.5 % Acquisition costs and other underwriting expenses 33,689 29,052 16.0 % Underwriting income (loss) $ 6,280 $ 94 NM Quarters Ended March 31, Point 2022 2021 Change Underwriting Ratios: Loss ratio: Current accident year 56.4 % 66.6 % (10.2 ) Prior accident year 0.3 % (3.3 %) 3.6 Calendar year loss ratio 56.7 % 63.3 % (6.6 ) Expense ratio 36.7 % 36.9 % (0.2 ) Combined ratio 93.4 % 100.2 % (6.8 ) NM – not meaningful 40 GLOBAL INDEMNITY GROUP, LLC Reconciliation of non-GAAP financial measures and ratios The table below reconciles the non-GAAP measures or ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends within Commercial Specialty may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company. Quarters Ended March 31, 2022 2021 (Dollars in thousands) Losses Loss Ratio Losses Loss Ratio Property Non catastrophe property losses and ratio excluding the effect of prior accident year (1) $ 17,580 49.5 % $ 20,572 55.4 % Effect of prior accident year (757 ) (2.1 %) (1,538 ) (4.1 %) Non catastrophe property losses and ratio (2) $ 16,823 47.4 % $ 19,034 51.3 % Catastrophe losses and ratio excluding the effect of prior accident year (1) $ 2,233 6.3 % $ 8,718 23.5 % Effect of prior accident year 981 2.8 % (906 ) (2.4 %) Catastrophe losses and ratio (2) $ 3,214 9.1 % $ 7,812 21.1 % Total property losses and ratio excluding the effect of prior accident year (1) $ 19,813 55.8 % $ 29,290 78.9 % Effect of prior accident year 224 0.7 % (2,444 ) (6.5 %) Total property losses and ratio (2) $ 20,037 56.5 % $ 26,846 72.4 % Casualty Total casualty losses and ratio excluding the effect of prior accident year (1) $ 31,963 56.8 % $ 23,094 55.6 % Effect of prior accident year 53 0.1 % (150 ) (0.4 %) Total casualty losses and ratio (2) $ 32,016 56.9 % $ 22,944 55.2 % Total Total net losses and loss adjustment expense and total loss ratio excluding the effect of prior accident year (1) $ 51,776 56.4 % $ 52,384 66.6 % Effect of prior accident year 277 0.3 % (2,594 ) (3.3 %) Total net losses and loss adjustment expense and total loss ratio (2) $ 52,053 56.7 % $ 49,790 63.3 % (1) Non-GAAP measure / ratio (2) Most directly comparable GAAP measure / ratio Premiums See “Result of Operations” above for a discussion on consolidated premiums. Other Income Other income was $0.3 million and $0.2 million for the quarters ended March 31, 2022 and 2021, respectively. Other income is primarily comprised of fee income. 41 GLOBAL INDEMNITY GROUP, LLC Loss Ratio The current accident year losses and loss ratio is summarized as follows: Quarters Ended March 31, % (Dollars in thousands) 2022 2021 Change Property losses Non-catastrophe $ 17,580 $ 20,572 (14.5 %) Catastrophe 2,233 8,718 (74.4 %) Property losses 19,813 29,290 (32.4 %) Casualty losses 31,963 23,094 38.4 % Total accident year losses $ 51,776 $ 52,384 (1.2 %) Quarters Ended March 31, Point 2022 2021 Change Current accident year loss ratio: Property Non-catastrophe 49.5 % 55.4 % (5.9 ) Catastrophe 6.3 % 23.5 % (17.2 ) Property loss ratio 55.8 % 78.9 % (23.1 ) Casualty loss ratio 56.8 % 55.6 % 1.2 Total accident year loss ratio 56.4 % 66.6 % (10.2 ) The current accident year non-catastrophe property loss ratio improved by 5.9 points during the quarter ended March 31, 2022 as compared to the same period in 2021 reflecting lower claims frequency in the first accident quarter compared to last year. The current accident year catastrophe loss ratio improved by 17.2 points during the quarter ended March 31, 2022 as compared to the same period in 2021 recognizing much lower claims frequency in the first accident quarter compared to last year. The current accident year casualty loss ratio increased by 1.2 points during the quarter ended March 31, 2022 as compared to the same period in 2021 reflecting slightly higher claims frequency in the first accident quarter compared to last year. The calendar year loss ratio for the quarter ended March 31, 2022 includes an increase of $0.3 million, or 0.3 percentage points related to reserve development on prior accident years. The calendar year loss ratio for the quarter ended March 31, 2021 includes an decrease of $2.6 million, or 3.3 percentage points related to reserve development on prior accident years. Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development. Expense Ratios The expense ratio for the Company’s Commercial Specialty segment improved by 0.2 points from 36.9% for the quarter ended March 31, 2021 to 36.7% for the quarter ended March 31, 2022. The improvement in the expense ratio is primarily due to higher earned premiums. COVID-19 COVID-19’s lasting impacts could result in declines in business, non-payment of premiums, and increases in claims that could adversely affect Commercial Specialty’s business, financial condition, and results of operation. There is continued 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 policies, or other conditions included in these policies that would otherwise preclude coverage. 42 GLOBAL INDEMNITY GROUP, LLC Reinsurance Operations The components of income from the Company’s Reinsurance Operations segment and corresponding underwriting ratios are as follows: Quarters Ended March 31, % (Dollars in thousands) 2022 (1) 2021 (1) Change Gross written premiums $ 41,445 $ 21,951 88.8 % Net written premiums $ 41,445 $ 21,951 88.8 % Net earned premiums $ 34,963 $ 16,798 108.1 % Other loss (20 ) (56 ) (64.3 %) Total revenues 34,943 16,742 108.7 % Losses and expenses: Net losses and loss adjustment expenses 21,457 10,875 97.3 % Acquisition costs and other underwriting expenses 12,177 5,779 110.7 % Underwriting income $ 1,309 $ 88 NM Quarters Ended March 31, Point 2022 2021 Change Underwriting Ratios: Loss ratio: Current accident year (2) 61.4 % 64.7 % (3.3 ) Prior accident year — % — % — Calendar year loss ratio (3) 61.4 % 64.7 % (3.3 ) Expense ratio 34.8 % 34.4 % 0.4 Combined ratio 96.2 % 99.1 % (2.9 ) (1) External business only, excluding business assumed from affiliates (2) Non-GAAP ratio (3) Most directly comparable GAAP ratio NM – not meaningful 43 GLOBAL INDEMNITY GROUP, LLC Reconciliation of non-GAAP financial ratios The table above reconciles the non-GAAP ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP ratio. The Company believes the non-GAAP ratios are useful to investors when evaluating the Company's underwriting performance as trends within Reinsurance Operations may be obscured by prior accident year adjustments. These non-GAAP ratios should not be considered as a substitute for its most directly comparable GAAP ratio and does not reflect the overall underwriting profitability of the Company. Premiums See “Result of Operations” above for a discussion on consolidated premiums. Other Loss Other loss was less than $0.1 million and $0.1 million for the quarters ended March 31, 2022 and 2021, respectively. Other income is primarily comprised of foreign exchange gains and losses. Loss Ratio The current accident year loss ratio improved by 3.3 points during the quarter ended March 31, 2022 as compared to the same period in 2021 reflecting a mix of business change and growth in a treaty that has a lower expected loss ratio than last year. The calendar year loss ratios for the quarters ended March 31, 2022 and 2021 does not include any adjustment related to reserve development on prior accident years. Expense Ratios The expense ratio for the Company’s Reinsurance Operations segment increased 0.4 points from 34.4% for the quarter ended March 31, 2021 to 34.8% for the quarter ended March 31, 2022 primarily due to an increase in commission expense which was partially offset by a reduction in the expense ratio as a result of a growth in net earned premiums. COVID-19 COVID-19’s lasting impacts could result in declines in business, non-payment of premiums, and increases in claims that could adversely affect Reinsurance Operations’ business, financial condition, and results of operation. 44 GLOBAL INDEMNITY GROUP, LLC Farm, Ranch & Stable The components of loss from the Company’s Farm, Ranch & Stable segment and corresponding underwriting ratios are as follows: Quarters Ended March 31, % (Dollars in thousands) 2022 2021 Change Gross written premiums $ 22,676 $ 21,002 8.0 % Net written premiums $ 19,012 $ 17,603 8.0 % Net earned premiums $ 17,643 $ 18,141 (2.7 %) Other income 38 34 11.8 % Total revenues 17,681 18,175 (2.7 %) Losses and expenses: Net losses and loss adjustment expenses 10,958 11,801 (7.1 %) Acquisition costs and other underwriting expenses 6,814 6,986 (2.5 %) Underwriting loss $ (91 ) $ (612 ) (85.1 %) Quarters Ended March 31, Point 2022 2021 Change Underwriting Ratios: Loss ratio: Current accident year 64.1 % 69.2 % (5.1 ) Prior accident year (2.0 %) (4.1 %) 2.1 Calendar year loss ratio 62.1 % 65.1 % (3.0 ) Expense ratio 38.6 % 38.5 % 0.1 Combined ratio 100.7 % 103.6 % (2.9 ) 45 GLOBAL INDEMNITY GROUP, LLC Reconciliation of non-GAAP financial measures and ratios The table below reconciles the non-GAAP measures or ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends within Farm, Ranch & Stable may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company. Quarters Ended March 31, 2022 2021 (Dollars in thousands) Losses Loss Ratio Losses Loss Ratio Property Non catastrophe property losses and ratio excluding the effect of prior accident year (1) $ 7,426 55.8 % $ 5,967 44.0 % Effect of prior accident year (220 ) (1.7 %) 315 2.3 % Non catastrophe property losses and ratio (2) $ 7,206 54.1 % $ 6,282 46.3 % Catastrophe losses and ratio excluding the effect of prior accident year (1) $ 1,833 13.8 % $ 4,127 30.4 % Effect of prior accident year (7 ) (0.1 %) (1,045 ) (7.7 %) Catastrophe losses and ratio (2) $ 1,826 13.7 % $ 3,082 22.7 % Total property losses and ratio excluding the effect of prior accident year (1) $ 9,259 69.6 % $ 10,094 74.4 % Effect of prior accident year (227 ) (1.8 %) (730 ) (5.4 %) Total property losses and ratio (2) $ 9,032 67.8 % $ 9,364 69.0 % Casualty Total casualty losses and ratio excluding the effect of prior accident year (1) $ 2,057 47.5 % $ 2,452 53.6 % Effect of prior accident year (131 ) (3.0 %) (15 ) (0.3 %) Total casualty losses and ratio (2) $ 1,926 44.5 % $ 2,437 53.3 % Total Total net losses and loss adjustment expense and total loss ratio excluding the effect of prior accident year (1) $ 11,316 64.1 % $ 12,546 69.2 % Effect of prior accident year (358 ) (2.0 %) (745 ) (4.1 %) Total net losses and loss adjustment expense and total loss ratio (2) $ 10,958 62.1 % $ 11,801 65.1 % (1) Non-GAAP measure / ratio (2) Most directly comparable GAAP measure / ratio Premiums See “Result of Operations” above for a discussion on consolidated premiums. Other Income Other income was less than $0.1 million in each of the quarters ended March 31, 2022 and 2021. Other income is primarily comprised of fee income. 46 GLOBAL INDEMNITY GROUP, LLC Loss Ratio The current accident year losses and loss ratio is summarized as follows: Quarters Ended March 31, % (Dollars in thousands) 2022 2021 Change Property losses Non-catastrophe $ 7,426 $ 5,967 24.5 % Catastrophe 1,833 4,127 (55.6 %) Property losses 9,259 10,094 (8.3 %) Casualty losses 2,057 2,452 (16.1 %) Total accident year losses $ 11,316 $ 12,546 (9.8 %) Quarters Ended March 31, Point 2022 2021 Change Current accident year loss ratio: Property Non-catastrophe 55.8 % 44.0 % 11.8 Catastrophe 13.8 % 30.4 % (16.6 ) Property loss ratio 69.6 % 74.4 % (4.8 ) Casualty loss ratio 47.5 % 53.6 % (6.1 ) Total accident year loss ratio 64.1 % 69.2 % (5.1 ) The current accident year non-catastrophe property loss ratio increased by 11.8 points during the quarter ended March 31, 2022 as compared to the same period in 2021 due to higher claims frequency and severity in the first accident quarter compared to last year. The current accident year catastrophe loss ratio improved by 16.6 points during the quarter ended March 31, 2022 as compared to the same period in 2021 recognizing much lower claims frequency in the first accident quarter compared to last year. The current accident year casualty loss ratio improved by 6.1 points during the quarter ended March 31, 2022 as compared to the same period in 2021 reflecting lower claims severity in the first accident quarter compared to last year. The calendar year loss ratio for the quarter ended March 31, 2022 includes a decrease of $0.4 million, or 2.0 percentage points related to reserve development on prior accident years. The calendar year loss ratio for the quarter ended March 31, 2021 includes a decrease of $0.7 million, or 4.1 percentage points related to reserve development on prior accident years. Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development. Expense Ratios The expense ratio for the Company’s Farm, Ranch & Stable Segment increased by 0.1 points from 38.5% for the quarter ended March 31, 2021 to 38.6% for the quarter ended March 31, 2022. COVID-19 There is continued 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 Farm, Ranch & Stable policies, or other conditions included in these policies that would otherwise preclude coverage. COVID-19’s lasting impacts could result in declines in business, non-payment of premiums, and increases in claims that could adversely affect Farm, Ranch & Stable’s business, financial condition, and results of operation. 47 GLOBAL INDEMNITY GROUP, LLC Exited Lines The components of income from the Company’s Exited Lines segment and corresponding underwriting ratios are as follows: Quarters Ended March 31, % (Dollars in thousands) 2022 2021 Change Gross written premiums $ 22,596 $ 31,271 (27.7 %) Net written premiums $ 712 $ 25,957 (97.3 %) Net earned premiums $ 4,454 $ 30,069 (85.2 %) Other income 162 186 (12.9 %) Total revenues 4,616 30,255 (84.7 %) Losses and expenses: Net losses and loss adjustment expenses 227 18,317 (98.8 %) Acquisition costs and other underwriting expenses 4,012 12,947 (69.0 %) Underwriting income $ 377 $ (1,009 ) (137.4 %) Quarters Ended March 31, Point 2022 2021 Change Underwriting Ratios: Loss ratio: Current accident year 72.0 % 61.2 % 10.8 Prior accident year (67.0 %) (0.2 %) (66.8 ) Calendar year loss ratio 5.0 % 61.0 % (56.0 ) Expense ratio 90.1 % 43.1 % 47.0 Combined ratio 95.1 % 104.1 % (9.0 ) NM – not meaningful 48 GLOBAL INDEMNITY GROUP, LLC Reconciliation of non-GAAP financial ratios The table below reconciles the non-GAAP measures or ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends within Exited Lines may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company. Quarters Ended March 31, 2022 2021 (Dollars in thousands) Losses Loss Ratio Losses Loss Ratio Property Non catastrophe property losses and ratio excluding the effect of prior accident year (1) $ 2,589 60.2 % $ 13,370 47.2 % Effect of prior accident year (1,317 ) (30.6 %) 1,726 6.1 % Non catastrophe property losses and ratio (2) $ 1,272 29.6 % $ 15,096 53.3 % Catastrophe losses and ratio excluding the effect of prior accident year (1) $ 238 5.5 % $ 4,065 14.4 % Effect of prior accident year (1,349 ) (31.3 %) (562 ) (2.0 %) Catastrophe losses and ratio (2) $ (1,111 ) (25.8 %) $ 3,503 12.4 % Total property losses and ratio excluding the effect of prior accident year (1) $ 2,827 65.7 % $ 17,435 61.6 % Effect of prior accident year (2,666 ) (61.9 %) 1,164 4.1 % Total property losses and ratio (2) $ 161 3.8 % $ 18,599 65.7 % Casualty Total casualty losses and ratio excluding the effect of prior accident year (1) $ 382 256.2 % $ 954 54.7 % Effect of prior accident year (316 ) (211.8 %) (1,236 ) (70.9 %) Total casualty losses and ratio (2) $ 66 44.4 % $ (282 ) (16.2 %) Total Total net losses and loss adjustment expense and total loss ratio excluding the effect of prior accident year (1) $ 3,209 72.0 % $ 18,389 61.2 % Effect of prior accident year (2,982 ) (67.0 %) (72 ) (0.2 %) Total net losses and loss adjustment expense and total loss ratio (2) $ 227 5.0 % $ 18,317 61.0 % (1) Non-GAAP measure / ratio (2) Most directly comparable GAAP measure / ratio Premiums See “Result of Operations” above for a discussion on consolidated premiums. Other Income Other income was $0.2 million for each of the quarters ended March 31, 2022 and 2021. Other income is primarily comprised of fee income. 49 GLOBAL INDEMNITY GROUP, LLC Loss Ratio The current accident year losses and loss ratio is summarized as follows: Quarters Ended March 31, % (Dollars in thousands) 2022 2021 Change Property losses Non-catastrophe $ 2,589 $ 13,370 (80.6 %) Catastrophe 238 4,065 (94.1 %) Property losses 2,827 17,435 (83.8 %) Casualty losses 382 954 (60.0 %) Total accident year losses $ 3,209 $ 18,389 (82.5 %) Quarters Ended March 31, Point 2022 2021 Change Current accident year loss ratio: Property Non-catastrophe 60.2 % 47.2 % 13.0 Catastrophe 5.5 % 14.4 % (8.9 ) Property loss ratio 65.7 % 61.6 % 4.1 Casualty loss ratio 256.2 % 54.7 % 201.5 Total accident year loss ratio 72.0 % 61.2 % 10.8 The current accident year non-catastrophe property loss ratio increased by 13.0 points during the quarter ended March 31, 2022 as compared to the same period in 2021 recognizing higher claims frequency in the specialty property lines and higher claims severity in the property brokerage lines. The current accident year catastrophe loss ratio improved by 8.9 points during the quarter ended March 31, 2022 as compared to the same period in 2021 recognizing lower claims frequency in the specialty property lines and lower claims frequency and severity in the property brokerage lines. The current accident year casualty loss ratio increased by 201.5 points during the quarter ended March 31, 2022 as compared to the same period in 2021 which reflects that the premium has been running off and is down to $0.1 million in net earned premiums in the quarter. The calendar year loss ratio for the quarter ended March 31, 2022 includes a decrease of $3.0 million, or 67.0 percentage points related to reserve development on prior accident years. The calendar year loss ratio for the quarter ended March 31, 2021 includes a decrease of $0.1 million, or 0.2 percentage points related to reserve development on prior accident years. Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development. Expense Ratio The expense ratio for the Company’s Exited Lines increased by 47.0 points from 43.1% for the quarter ended March 31, 2021 to 90.1% for the quarter ended March 31, 2022 primarily due to the reduction in earned premiums resulting from the runoff of lines of business that the Company is no longer writing. COVID-19 COVID-19’s lasting impacts could result in declines in business, non-payment of premiums, and increases in claims that could adversely affect the Exited Lines’ business, financial condition, and results of operation. 50 GLOBAL INDEMNITY GROUP, LLC Unallocated Corporate Items The Company’s fixed income portfolio, excluding cash, continues to maintain high quality with an A average rating and a duration of 3.0 years. Net Investment Income Quarters Ended March 31, % (Dollars in thousands) 2022 2021 Change Gross investment income (1) $ 7,196 $ 10,549 (31.8 %) Investment expenses (604 ) (713 ) (15.3 %) Net investment income $ 6,592 $ 9,836 (33.0 %) (1) Excludes realized gains and losses Gross investment income decreased by 31.8% for the quarter ended March 31, 2022 as compared to the same period in 2021 primarily due to decreased returns from alternative investments and a decrease in dividend income as a result of the liquidation of the Company’s common stock portfolio during the quarter. Investment expenses decreased by 15.3% for the quarter ended March 31, 2022 as compared to the same period in 2021 due to decreased investment management expenses as a result of the liquidation of the Company’s common stock portfolio during the quarter. At March 31, 2022, the Company held agency mortgage-backed securities with a market value of $129.2 million. Excluding the agency mortgage-backed securities, the average duration of the Company’s fixed maturities portfolio was 3.2 years as of March 31, 2022, compared with 4.9 years as of March 31, 2021. Including cash and short-term investments, the average duration of the Company’s fixed maturities portfolio, excluding agency mortgage-backed securities, was 2.8 years and 4.7 years as of March 31, 2022 and March 31, 2021, respectively. Changes in interest rates can cause principal payments on certain investments to extend or shorten which can impact duration. The Company’s embedded book yield on its fixed maturities, not including cash, was 2.6% as of March 31, 2022, compared to 2.3% as of March 31, 2021. The embedded book yield on the $47.0 million of taxable municipal bonds in the Company’s portfolio, was 3.2% at March 31, 2022, compared to an embedded book yield of 3.0% on the Company’s taxable municipal bonds of $63.7 million at March 31, 2021. 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 Equity securities $ (1,345 ) $ 4,368 Fixed maturities (3,239 ) (1,159 ) Derivatives 4,724 610 Other-than-temporary impairment losses (25,525 ) — Net realized investment gains (losses) $ (25,385 ) $ 3,819 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 are being reinvested into fixed income investments with maturities of two years and less. 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 ended March 31, 2022 and 2021. 51 GLOBAL INDEMNITY GROUP, LLC Corporate and Other Operating Expenses Corporate and other operating expenses consist of outside legal fees, other professional fees, directors’ fees, management fees & advisory fees, salaries and benefits for holding company personnel, development costs for new products, and taxes incurred which are not directly related to operations. Corporate and other operating expenses were $4.7 million and $4.3 million during the quarters ended March 31, 2022 and 2021, respectively. The increase in corporate expenses was primarily due to an increase in compensation cost. Interest Expense Interest expense was $2.6 million during each of the quarters ended March 31, 2022 and 2021. Income Tax Benefit Income tax benefit was $3.4 million and $0.2 million for the quarters ended March 31, 2022 and 2021, respectively. The increase in the income tax benefit is primarily due to the net realized investment losses recognized due to the impairment of the investment portfolio as discussed above in the net realized investment gains (losses) section. See Note 6 of the notes to the consolidated financial statements in Item 1 of Part I of this report for a comparison of income tax between periods. Net Income (Loss) The factors described above resulted in a net loss of $14.8 million and net income of $5.5 million for the quarters ended March 31, 2022 and 2021, respectively. Liquidity and Capital Resources Sources and Uses of Funds Global Indemnity Group, LLC is a holding company. Its principal asset is its ownership of the 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. Global Indemnity Group, LLC’s short term and long term liquidity needs include but are not limited to the payment of corporate expenses, debt service payments, distributions to shareholders, and share repurchases. The Company also has commitments in the form of operating leases, commitments to fund limited liability investments, subordinated notes, and unpaid losses and loss expense obligations. In order to meet its short term and long term needs, Global Indemnity Group, LLC’s principal sources of cash includes investment income, dividends from subsidiaries, other permitted disbursements from its direct and indirect subsidiaries, reimbursement for equity awards granted to employees and intercompany borrowings. The principal sources of funds at these direct and indirect subsidiaries include underwriting operations, investment income, proceeds from sales and redemptions of investments, capital contributions, intercompany borrowings, and dividends from subsidiaries. Funds are used principally by these operating subsidiaries to pay claims and operating expenses, to make debt payments, fund margin requirements on interest rate swap agreements, to purchase investments, and to make distribution payments. In addition, the Company periodically reviews opportunities related to business acquisitions and as a result, liquidity may be needed in the future. GBLI Holdings, LLC is a holding company which is a wholly-owned subsidiary of Penn-Patriot Insurance Company. GBLI Holdings, LLC’s principal asset is its ownership of the shares of its direct and indirect subsidiaries which include United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, Penn-Star Insurance Company, and American Reliable Insurance Company. GBLI Holdings, LLC is dependent on dividends from its subsidiaries to meet its debt obligations as well as corporate expense obligations. As of March 31, 2022, the Company also had future funding commitments of $31.2 million related to investments that are currently in their harvest period and it is unlikely that a capital call will be made. 52 GLOBAL INDEMNITY GROUP, LLC The future liquidity of both Global Indemnity Group, LLC and GBLI Holdings, LLC is dependent on the ability of its subsidiaries to pay dividends. Global Indemnity Group, LLC and GBLI Holdings, LLC’s insurance companies are restricted by statute as to the amount of dividends that they may pay without the prior approval of regulatory authorities. The dividend limitations imposed by state laws are based on the statutory financial results of each insurance company that are determined by using statutory accounting practices that differ in various respects from accounting principles used in financial statements prepared in conformity with GAAP. See “Regulation - Statutory Accounting Principles” in Item 1 of Part I of the Company’s 2021 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 2021 Annual Report on Form 10-K for further information on dividend limitations related to the Insurance Companies. During the quarter ended March 31, 2022, the United National insurance companies, Penn-America insurance companies, and American Reliable Insurance Company declared dividends in the amount of $4.5 million, $7.5 million, and $22.5 million, respectively. These dividends were in April, 2022. Cash Flows Sources of operating funds consist primarily of net written premiums and investment income. Funds are used primarily to pay claims and operating expenses and to purchase investments. As a result of the distribution policy, funds may also be used to pay distributions to shareholders of the Company. The Company’s reconciliation of net income (loss) to net cash provided by (used for) operations is generally influenced by the following: • the fact that the Company collects premiums, net of commissions, in advance of losses paid; • the timing of the Company’s settlements with its reinsurers; and • the timing of the Company’s loss payments. Net cash provided by (used for) operating activities was ($10.1) million and $11.4 million for the quarters ended March 31, 2022 and 2021, respectively. The decrease in operating cash flows of approximately $21.4 million from the prior year was primarily a net result of the following items: Quarters Ended March 31, (Dollars in thousands) 2022 2021 Change Net premiums collected $ 132,367 $ 148,915 $ (16,548 ) Net losses paid (74,081 ) (74,409 ) 328 Underwriting and corporate expenses (74,087 ) (69,968 ) (4,119 ) Net investment income 8,299 9,360 (1,061 ) Interest paid (2,560 ) (2,526 ) (34 ) Net cash provided by (used for) operating activities $ (10,062 ) $ 11,372 $ (21,434 ) 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 COVID-19 The Company’s liquidity could be negatively impacted by the cancellation, delays, or non-payment of premiums related to the ongoing COVID-19 pandemic and its lasting impacts. There is continued 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 which would negatively impact liquidity. In addition, the liquidity of the Company’s investment portfolio could be negatively impacted by disruption experienced in global financial markets. Management is taking actions it considers prudent to minimize the impact on the 53 GLOBAL INDEMNITY GROUP, LLC Company’s liquidity. However, given the ongoing uncertainty surrounding the duration, magnitude and geographic reach of COVID-19, the Company is regularly evaluating the impact of COVID-19 on its liquidity. Distributions The Board of Directors approved a distribution payment of $0.25 per common share to all shareholders of record on the close of business on March 21, 2022. Distributions paid to common shareholders were $3.7 million during the quarter ended March 31, 2022. In addition, distributions of $0.1 million were paid to Global Indemnity Group, LLC’s preferred shareholder during the quarter ended March 31, 2022. Redemption of Debt 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. The funds to redeem the debt were primarily obtained through the sale of the Company’s equity portfolio in the amount of $75.9 million, $32.0 million in dividends from insurance company subsidiaries, $18.4 million from distributions received from private equity investments, and the remainder from its subsidiary, GBLI Holdings, LLC. Investment Portfolio Due to shortening duration, significantly more of the investment portfolio will mature annually. Other than the items discussed in the preceding paragraphs, there have been no material changes to the Company’s liquidity during the quarter ended March 31, 2022. Please see Item 7 of Part II in the Company’s 2021 Annual Report on Form 10-K for information regarding the Company’s liquidity. Capital Resources 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 are being reinvested into fixed income investments with maturities of two years and less. Other than the item discussed in the preceding paragraph, there have been no material changes to the Company’s capital resources during the quarter ended March 31, 2022. Please see Item 7 of Part II in the Company’s 2021 Annual Report on Form 10-K for information regarding the Company’s capital resources. Co-obligor Financial Information The Company is providing the following information in compliance with Rule 13-01 of Regulation S-X, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” with respect to the Company’s 7.875% Subordinated Notes due in 204 7 (“2047 Notes”). Global Indemnity Group, LLC (parent co-obligor) and GBLI Holdings, LLC (subsidiary co-obligor) are co-obligors of the 2047 Notes. GBLI Holdings, LLC is a wholly-owned indirect subsidiary of Global Indemnity Group, LLC. The 2047 Notes are subordinated unsecured obligations and rank (i) senior to the companies’ existing and future capital stock, (ii) senior in right of payment to the companies’ future junior subordinated debt, (iii) equally in right of payment with any existing unsecured, subordinated debt that the companies have issued or may issue in the future that ranks equally with the 2047 Notes, and (iv) subordinate in right of payment to any of the companies’ future senior debt. In addition, the 2047 Notes are structurally subordinated to all existing and future indebtedness, liabilities and other obligations of Global Indemnity Group, LLC’s subsidiaries, except for GBLI Holdings, LLC. GBLI Holdings, LLC is a subordinated co-obligor with respect to the 2047 Notes with the same obligations and duties as Global Indemnity Group, LLC under the Indenture (including the due and punctual performance and observance of all of the covenants and conditions to be performed by Global Indemnity Group, LLC, including, without limitation, the obligation to pay the principal of, and interest on, the 2047 Notes when due whether at maturity, by acceleration, redemption or otherwise), and with the same rights, benefits and privileges of Global Indemnity Group, LLC thereunder. Notwithstanding the 54 GLOBAL INDEMNITY GROUP, LLC foregoing, GBLI Holdings, LLC's obligations (including the obligation to pay the principal of and interest in respect of the 2047 Notes) are subject to subordination to all monetary obligations or liabilities of GBLI Holdings, LLC owing to any regulated reinsurance or insurance company that is a direct or indirect subsidiary of Global Indemnity Group, LLC , in addition to indebtedness of GBLI Holdings, LLC for borrowed money. If Global Indemnity Group, LLC pays any amount with respect to the subordinated note obligations, Global Indemnity Group, LLC is entitled to be reimbursed by GBLI Holdings, LLC within 10 business days after a demand is made to GBLI Holding, LLC by Global Indemnity Group, LLC . The following tables present summarized financial information for Global Indemnity Group, LLC (Parent co-obligor) and GBLI Holdings, LLC (Subsidiary co-obligor) on a combined basis after transactions and balances within the combined entities have been eliminated. Parent and Subsidiary Co-obligors The following table presents the summarized balance sheet information as of March 31, 2022 and December 31, 2021. (Dollars in thousands) March 31, 2022 December 31, 2021 Intercompany note receivable $ — $ — Intercompany receivables 852 1,079 Investments 155,848 246,863 Total assets excluding investment in subsidiaries 324,722 308,541 Intercompany note payable 2,800 2,800 Intercompany payables 15,542 15,567 Total liabilities 158,459 165,711 The following table presents the summarized statement of operations information for the quarter ended March 31, 2022. (Dollars in thousands) Total revenue $ 2,784 Intercompany interest income — Intercompany interest expense 2 Loss before income taxes (1) (4,386 ) Net loss (1) (3,881 ) (1) excludes equity in the earnings of a subsidiary 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 may include forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934, as amended, that reflect the Company’s current views with respect to future events and financial performance. 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 Company’s business and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. See “Risk Factors” in Item 1A of Part I in the Company’s 2021 Annual Report on Form 10-K for risks, uncertainties and 55 GLOBAL INDEMNITY GROUP, LLC other factors that could cause actual results and experience to differ from those projected. 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 QUALITATIVE DISCLOSURES ABOUT MARKET RISK For the quarter ending March 31, 2022, global equities fell approximately 5.0% with U.S. equities outperforming, losing approximately 4.6%. Most assets experienced elevated volatility over the quarter as Russia’s invasion of Ukraine and the subsequent imposition of financial sanctions added stress to already fragile global supply chains and raised concerns over commodity supplies. This amplified inflationary fears and contributed to more hawkish stances from central banks, higher global yields and flattening curves. U.S. fixed income lost approximately 5.9% with the average spread moving wider during the quarter. In the U.S., yields rose and the curve inverted along several key tenors as the Federal Reserve hiked interest rates by approximately 25 basis points and signaled larger hikes going forward. Unemployment remains at very low levels and the consumer balance sheet is strong, two factors that should help mitigate the stresses of higher inflation and rising rates. During the 1 st quarter of 2022, portfolio purchases were focused within US Treasury, agency, and investment grade credit securities. These purchases were funded primarily through cash inflows, sales of US Treasury, agency, and investment grade credit securities, as well as maturities and paydowns. During the first quarter, the portfolio’s allocation to investment grade credit increased, while the portfolio’s exposure to Asset Backed, MBS, and US Treasuries decreased. During the 2 nd quarter of 2022, in response to a rising interest rate environment, the Company took action 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. Most of the proceeds from the sale of these securities are being reinvested into fixed income investments with maturities of two years and less. Other than the changes described in the preceding paragraph, there have been no other material changes to the Company’s market risk since December 31, 2021. Please see Item 7A of Part II in the Company’s 2021 Annual Report on Form 10-K for information regarding the Company’s market risk. Item 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded , processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2022. Based upon that evaluation, and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2022, the design and operation of the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level. Changes in Internal Control over Financial Reporting There have been no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting. 56 GLOBAL INDEMNITY GROUP, LLC PART II-OTHER INFORMATION Item 1. 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 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. Item 1A. Risk Factors The Company’s results of operations and financial condition are subject to numerous risks and uncertainties described in Item 1A of Part I in the Company’s 2021 Annual Report on Form 10-K, filed with the SEC on March 16, 2022. The risk factors identified therein have not materially changed.