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Date

Tuesday, March 10, 2026 at 11 a.m. ET

Call participants

  • Chief Executive Officer — Jay Brown
  • Chief Financial Officer — Brian Riley
  • President — Evan Kasowitz

Takeaways

  • Accident quarter combined ratio -- 89.3% for the quarter, improving from 96.6% in the comparable period, enabling an $11 million underwriting profit.
  • Net investment income -- $15.3 million, down from $16.1 million, generated from a portfolio with an average duration of one year and AA- credit quality.
  • Prior-year loss reserve adjustment -- $9 million increase represents one point two percent of year-end carried reserves, attributed to adverse development from terminated programs and New York City habitational risks.
  • Core Belmont gross written premium growth -- Nine percent increase driven by seventy-seven percent growth in assumed reinsurance, sixteen percent in Vacant Express, eight percent in Collectibles, and three percent in PennAmerica wholesale.
  • Overall reported premium -- Flat due to continued reduction of underperforming specialty programs, offsetting core growth.
  • PennAmerica premium growth -- Three percent increase for the year, down from eight percent growth over the first nine months, primarily due to reduced new business in the fourth quarter following greater E&S and admitted market competition.
  • Expense ratio -- "A little over forty. Forty and a half," according to Brian Riley, with elevated expenses expected to remain throughout 2026, and improvement anticipated in 2027.
  • Digital transformation progress -- Ninety-eight percent of data center servers migrated to cloud configuration, and all internal data moved to a cloud-based lakehouse, with full integration of three direct product groups targeted by year-end.
  • Operating income (excluding California wildfire) -- $40.2 million versus $42.9 million, reflecting steady profitability after excluding significant catastrophe losses.
  • Investment portfolio yield -- Four point four percent current book yield on fixed income, unchanged from the previous year, and an average duration of one year.
  • Belmont core assumed reinsurance premiums -- Seventy-seven percent growth to $45 million, following the addition of seven new treaties in both 2024 and 2025, now totaling seventeen in-force treaties.
  • Discretionary capital -- $284 million at year-end, identified as capital above requirements for strongest rating agency levels.
  • Return on equity target -- CEO Jay Brown stated, "Book value before we pay dividends should increase a minimum of six percent to seven percent a year with our current structure" for 2026 and 2027.
  • Private equity exposure -- No direct holdings; approximately $20 million invested in private credit funds, which experienced disappointment and a "free fall" over the prior three to four weeks according to Jay Brown.
  • Specialty products book trimming -- Over two-thirds of the specialty products book was reduced over two years, with management expecting stable to moderately growing premiums in this segment in 2026.
  • Nasdaq listing rationale -- CEO Brown said, "We should get better trading volumes, but I do not think we have seen that quite yet," referencing the recent exchange change.
  • Acquisition activity -- The company actively reviewed potential acquisitions for its distribution platform (Cadillacs), and for new MGAs, though the majority of management focus remains on organic growth within existing business lines.
  • Retention rate -- PennAmerica retention finished at seventy percent, indicating customer stability despite new business headwinds.
  • Dividend-adjusted book value -- Book value per share, including dividends, increased one percent over the last year, which management characterized as "an unacceptable return."

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Risks

  • PennAmerica reported "a major drop in new business submissions resulting in a very weak fourth quarter," driven by intensified competition in both E&S and admitted property markets.
  • Expense ratio remains "A little over forty," with Jay Brown stating elevated expenses will likely persist through 2026, with improvement expected only in 2027.
  • Private credit investments, approximately $20 million, experienced recent poor performance and market volatility, with CEO Brown noting disappointment and ongoing pain in these holdings.
  • Dividend-adjusted book value per share rose one percent, which Jay Brown directly called "an unacceptable return," highlighting ongoing profitability challenges.

Summary

Global Indemnity Group (GBLI 3.57%) achieved its first sub-ninety percent accident quarter combined ratio in several years, signifying a material improvement in underwriting profitability. Management disclosed a renewed commitment to technology transformation, with substantial progress in cloud migration and the integration of core product groups, which is expected to enable scalable growth. The company’s investment income remained stable despite volatility and realized losses in private credit holdings, with a short-duration, high-quality portfolio supporting defensiveness. Strategic capital deployment is a leading priority, as $284 million in discretionary capital remains on the balance sheet, and management targets a six percent to seven percent annual increase in book value pre-dividend. Premium growth varied significantly by segment, with reinsurance and select core business lines expanding, while PennAmerica faced material pressure from heightened industry competition.

  • Management plans to focus primarily on organic expansion, but remains open to acquisitions or new MGA relationships if aligned with underwriting standards.
  • Integration of IT platforms and product channels is projected to increase scale and efficiency, potentially enabling thirty percent to fifty percent higher premium volume with minimal staffing growth, as described by CEO Brown.
  • Core underwriting strength is offset by explicit management concerns around expense levels and market share slippage in competitive lines, which could constrain near-term profitability improvement.

Industry glossary

  • Kaleidoscope platform: Internal cloud-based technology stack and data integration solution referenced by management to streamline underwriting, quoting, and service processes.
  • MGA (Managing General Agent): A specialized insurance intermediary with authority to underwrite and manage insurance business on behalf of carriers.
  • E&S (Excess and Surplus): Insurance coverage for risks not eligible for standard (admitted) markets, typically involving higher risk or custom products, distributed through wholesale channels.
  • Cadillacs: The company's distribution platform designed to support business growth and M&A activities, referenced as separate from the insurance-derived operations of Belmont.
  • Belmont: The core insurance operating business of GBLI, housing insurance portfolios and excess capital.
  • Lakehouse: A cloud-based data architecture combining data lake and data warehouse features for centralized, scalable data management.

Full Conference Call Transcript

Jay Brown: Good morning, and thank you for joining us for the Global Indemnity Group, LLC Year End 2025 Results Conference Call. With me today are Evan Kasowitz and Brian Riley, our Chief Financial Officer. Following our usual format, I will first provide an overview of my assessments of both the fourth quarter and the full year's results. Then our CFO, Brian Riley, will provide the highlights of our financial and operating results. Following Brian's comments, we look forward to your questions. This quarter’s results continued a very strong underlying positive insurance operating trend that we have seen for the last several quarters.

Our accident quarter combined ratio of 89.3% produced an underwriting profit of $11 million, a very nice increase over the 96.6% we recorded in the fourth quarter last year. This was our first sub-90% quarterly accident year combined ratio in the past several years, reflecting both exceptional property results for non-cat losses and solid casualty results. Our short-duration investment portfolio delivered acceptable net investment income results at $15.3 million, down a tad from the prior period of $16.1 million. As Brian will provide more details on the investment portfolio, I would just observe that we are sitting at an extremely short duration of one year with very high-quality fixed income investments.

Given where we are in a very uncertain world today, I am personally happy that we are playing defense and have the ability to redeploy into a more attractive portfolio once things settle down. As we noted in our press release, excluding the largest-ever California wildfire loss that we experienced in the first quarter, our quarterly year-to-date accident results improved each quarter, with a sequence of 94.8%, 94.7%, 93.2%, and 92.2% for the full year. Even including the wildfire losses that occurred in the first quarter, we still had an okay full-year accident result of 96.2%. I would also note that we did make a modest adjustment to prior-year loss reserves in the fourth quarter of $9 million.

That is about 1.2% of year-end carried reserves. The adverse development continues, as it has over the past few years, to be largely attributed to the accident years 2020, 2021, and 2022. These are the three years where we had an extraordinarily poor loss experience in a couple of programs, both since terminated, and our New York City habitational risk. We continue to grow our ongoing book of business, which we label as core Belmont, at 9%. The press release mentioned our overall reported premium growth was flat, as we continue to trim back our remaining underperforming specialty programs.

I will note that the 9% growth was driven by a 77% growth in our assumed reinsurance book, 16% in Vacant Express, 8% in collectibles, and 3% in PennAmerica wholesale. The modest 3% growth in Penn was a disappointment given that we had grown at 8% for the first nine months of 2025. This was driven by a major drop in new business submissions resulting in a very weak fourth quarter, as we observed a major shift in the level of price competition in the E&S wholesale space. This heightened competition has been fueled by both our existing E&S competitors and the admitted market coming back into the property markets in a big way.

Given the work we have put into improving our current products and the discipline to trim everything that did not meet our underwriting criteria, we feel very strongly that we should now see Belmont core gross premiums grow in the 15% to 20% range or more in 2026. As we expected, our restructuring expenses remain high. This is due to the combination of, number one, our ongoing investments in completing year two of the three-year digital transformation of our technology stack that includes software, infrastructure, and data, and number two, our investment in talent to grow our Cadillacs distribution platform. I recognize that this focused combination along with normal operating costs leaves our overall expenses too high.

As such, we are deeply focused on minimizing the effect on our competitiveness within each product channel. Having established that our kaleidoscope platform is working for our first two deployed products exactly as envisioned two years ago, building on this momentum, we are confident that all three of our existing direct product groups—that would be wholesale commercial, Vacant Express, and collectibles—will be fully integrated on the platform by year-end. Not only will our customers see a difference in both our service levels and responsiveness, but our organization will finally be structured to benefit from scale over the next few years.

In addition to the progress we have made in our software development, 98% of our data center servers have now been moved into our cloud configuration, with the remaining few servers scheduled to move midyear. As we have previously communicated, all our internal data has now been moved to a modern cloud-based fabric lakehouse. We are currently running a large number of our existing reporting packages against both the old and the new data sources to verify that the mapping is 100% reconciled. Equally important, the data has been structured and stored to prepare us for the significant number of emerging AI projects that are being identified across all aspects of our company.

Reflecting on the last three years of significant IT and our renewed focus on core business, it can be challenging to see just how far we have come. However, our ongoing commitment to underwriting excellence has resulted in an exceptionally attractive book of in-force business. As the year progresses, expect to start seeing the business rationale for our digital transformation unfold in real time. I want to reaffirm my personal belief in the strength of our existing core business. With our reorganized structure and the strategic efforts we have been putting in place, I am very confident that we are well positioned to deliver substantial value to our owners in the near future.

At this point, I will turn it over to Brian.

Brian Riley: Thank you, Jay. The underwriting results, as Jay mentioned, improved steadily since the California wildfire event that resulted in a $15.7 million underwriting loss that contributed four points to the combined ratio and a $12 million loss after tax. Given that, I will focus my discussion on operating income, excluding the impact of the California wildfires, to describe year-over-year performance. Operating income, which excludes the after-tax impact of unrealized losses on equity securities, was $40.2 million compared to $42.9 million in 2024. Starting with investments, investment income was up slightly to $62.7 million from $62.4 million in 2024, mostly in line with growth in average cash and investments as average yield remained steady at 4.4%.

Growth in the investment portfolio was stunted by runoff of our loss reserves in our Belmont non-core segment, which declined by $67 million to $237 million at year-end. The current book yield on the fixed income portfolio is 4.4%, with an average duration of approximately one year, almost unchanged since 12/31/2024. The average credit quality of the fixed income portfolio remains at AA-. Second, corporate expenses were higher by $6 million, resulting from personnel costs and professional fees for the build-out of Cadillacs and mergers and acquisition activity. Lastly, calendar year underwriting income increased by about $5 million, a one-point improvement in the combined to 94.6% compared to 95.6% in 2024. This consists of a few notable components.

First, current accident year underwriting income improved by $13.9 million, as the current accident year combined ratio of 92.2% was better than 2024 by 3.2 points. Our loss ratio was better than 2024 by 4.1 points, driven by both property and casualty. Property was 44.8%, 9.3 points better than 2024. Casualty was 57.6%, better than 2024 by around one point. As Jay mentioned, our expense ratio continues to be elevated, about one point higher than 2024, for investment in personnel to build out Cadillacs. Partially offsetting the strong current accident year results was an increase to prior accident years' losses of $9 million.

As Jay mentioned, this increase was driven by accident years 2020, 2021, and 2022, a couple terminated programs, and New York habitational business, mainly severity driven. Turning to premiums, Belmont core gross written premiums were $401 million compared to $400 million in 2024. Excluding terminated products, gross written premiums increased 9% to $401 million compared to $367 million in 2024. Let me add a little color at the divisional level. Penn America finished the year up 3% at $256 million, lower than growth of 8% through the first nine months, mainly due to the decline in new business in the fourth quarter due to increased competition in the E&S marketplace as well as competition from the admitted market.

Retention, however, remains strong at 70%. Collectibles finished the year up 8%, and Vacant Express finished the year up 16%, driven by continued agency expansion. Belmont core assumed reinsurance gross written premiums grew 77% to $45 million, resulting from seven new treaties we added during 2024, and seven new treaties added in 2025, increasing our in-force treaties to 17 as of year-end. Specialty products, excluding programs terminated during 2024, ended the year flat at $37 million. In summary, although we are seeing increased competition in the marketplace, we are optimistic given our underwriting performance trends over the last three accident years. Our investment portfolio remains positioned to invest in longer-duration maturities at higher yields.

Booked reserves remain solidly above current actuarial indications. And last, discretionary capital, which we consider to be the amount of consolidated equity in excess of that required to maintain the strongest levels for the rating agencies, is $284 million at year-end. Thank you. We will now open for questions.

Operator: Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press 11 on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press 11 again. Our first question for today comes from the line of Tom Kerr from Zacks SCR. Your question, please.

Tom Kerr: Good morning, guys. Did you give an expense ratio for the fourth quarter? What would that be?

Jay Brown: Go ahead. Brian is looking for a second. It is—

Brian Riley: A little over 40. Forty and a half.

Tom Kerr: Okay. And just a big picture on the expense ratio again. You said it is going to be elevated. Does it drift down towards the end of the year finally, or is it more level in 2027 is going to see the big improvement in expense ratios?

Jay Brown: I think 2026 will be pretty level with that. We will start to see some improvement starting in 2027.

Tom Kerr: Okay. And on the competition, maybe give your big-picture thoughts on just the overall cycle, the competition. You mentioned it is just in E&S, but is there other stuff going on broad-based in the P&C world that is seeing softening? Their turn or whatever you want to call it.

Jay Brown: Sure. I do not know if it is my sixth or seventh cycle in fifty years. But they all seem to have similar ingredients. We seem to, as an industry, be very uncomfortable making money. And when we make a lot of money, and particularly when we do not have a lot of cat loss, the market reacts much, much quicker than it used to just simply because information systems are better today. The market is more responsive. I think in the fourth quarter the concentrated change in the property markets, driven by not only our own excellent results but everybody's excellent results, has caused the admitted market to come back in, and a significant drop in actual available premium.

Now, when we look out and talk to our various wholesale partners and look at their numbers, obviously it is not the same across the board, but there was a big change in the fourth quarter. And so I think we are looking at headwinds going into 2026. We are working very quickly to map against what we had been offering in the fourth quarter into the first quarter and making adjustments in real time to try and match up against our competition where we feel comfortable we could still make money. But this is a big change in the cycle, not to be underestimated. It is very different. It is concentrated for us in the wholesale market.

But we see a little bit of the effect in Vacant Express, obviously, also too.

Tom Kerr: Okay. Great. Two more quick ones. Did the specialty products premiums— is that an inflection point where it is going to be stable, or is that where you want to be, or is there more declines do you think this year?

Brian Riley: Short term, I think it is pretty stable, with some, again, starting with a little more growth in 2027.

Tom Kerr: Okay.

Jay Brown: We trimmed out more than two-thirds of the book in the last two years. The really bad ones went away right away when I first got here. And we picked up a few more that we identified that had issues and have gotten rid of them in the past twelve months. We ended the year with programs that we are 100% comfortable with going forward. So we do expect to see some organic growth in that area in 2026.

Tom Kerr: Got it. Last one is that you guys switched to the Nasdaq, I think, four months ago maybe. Any benefits to that or any good reasons or benefits from switching from the New York Stock Exchange to the Nasdaq?

Jay Brown: Well, as advertised, we should get better trading volumes, but I do not think we have seen that quite yet. So we are hoping to see a little bit more activity for both buyers and sellers because our actual public market has been so thin in trading volumes. It has been hard for buyers to determine to buy a big chunk or sellers to move on from owning our stock. And so we are hoping the volumes pick up a bit and that they get a better execution on both sides.

Tom Kerr: Got it. Well, thanks. I will get back in the queue.

Operator: Thank you. And our next question comes from the line of Ross Haberman from ILH Investments. Your question, please.

Ross Haberman: Good morning, gentlemen. How are you? Could you talk about— do you have any exposure, one, on the private equity side? There has been a lot of discussion about that in the last couple of months. And any reinsurance exposure to what is happening in the Middle East? Thanks.

Jay Brown: Thank goodness, not to any of our knowledge do we have any exposure to what is happening directly in the Middle East. In terms of private equity, do you mean on the investment side?

Ross Haberman: Yes.

Jay Brown: We do not hold any direct private equity. We do have some small investments in some private credit funds, I think of roughly about $20 million at this point in time.

Ross Haberman: And what is your thought going forward with those funds? Are you comfortable with them? Think you are going to exit? What is your thought going forward with those funds?

Jay Brown: You know, four or five months into it, I would have to say we are disappointed. The hard question is always should I be a buyer or a seller at this point in time. Our investment portfolio is managed by a subcommittee of the board, and they spent a fair amount of time discussing it at last week's board meeting. So it is individual discussions. There is a difference between the four different BDCs that we own. And so we are hopeful that whatever pain we felt in that is behind us. But, as you know, it has been a bit of a free fall for the last three or four weeks.

Ross Haberman: Yes. I have seen that. Last question. I did see you took some realized losses, about $3.66 million last year. Was that related to the private debt, or can you tell us a little bit about what that was from?

Brian Riley: Ross, that is exactly it. It is realized gains on the income statement, but unrealized in the sense that they are mark-to-market and we are still holding them.

Ross Haberman: And, again, that is related to the $20 million gross exposure you are saying?

Brian Riley: Yes. Exactly.

Ross Haberman: Okay. And final question. Going back to the prior questioner, he talked about your overhead and expense ratio. Should that be moderating, I should say, over the next couple quarters, or should we see the level of expense that we saw in this fourth quarter, again, ex that $9 million, I guess, adjustment you mentioned?

Jay Brown: Our existing book continues to perform very well—our in-force loss portfolio book and our loss reserves and our existing in-force premium. We do not see any major changes happening in that in the near term. I do think that it is hard to count on the kind of exceptional year we had to be duplicated back-to-back. But certainly, through whatever we are, two months and a few days into the first part of the year, our property book continues to perform well, and our casualty looks good.

Operator: Thank you. I am not showing any further questions from the phone lines at this time. We will now move to our web questions.

Evan Kasowitz: Thank you, Jonathan. We have one web question from Joel Straca. Book value per share, including the dividend, grew 1% last year. That is obviously an unacceptable return. What return on equity do you expect in 2026 and 2027, and how does that compare to your cost of equity?

Jay Brown: Tough question. I would say book value before we pay dividends should increase a minimum of 6% to 7% a year with our current structure, and that would be the same for both of the next two years. We are carrying an extraordinary level of excess capital. Brian actually added a different way of thinking about our return on the underlying insurance business and investment business. Taking out all of the excess, you see a return that is in the low to mid-teens. That is the underlying book of business we are managing, and we have to deal with our cost structure and our excess capital.

We believe the opportunity is emerging very quickly to deploy that excess capital in our business. We have structured our IT investments such that we could add products very easily. We can increase our writings 30%, 40%, 50% without any real substantial change—I mean, infinitesimal change—in our staffing under the new system that we have been building. And so we are really poised to be able to deliver much better returns.

And I would share your conclusion that the return over the last couple years has been unacceptable, and certainly something that we spend an enormous amount of time discussing in the boardroom about why we have had those numbers produced, and that is not something we are proud of, and it is something we expect to do better going forward.

Operator: We have a follow-up question from the line of Tom Kerr from Zacks SCR.

Tom Kerr: Hello? Okay. Sorry. Just one final question, and this would not be a— 58% of book value, I think, as of today, $284 million discretionary capital. I do not think anybody is saying buy $284 million in share buybacks. But any updated comment on share buybacks from three months ago when we had the last call?

Evan Kasowitz: No.

Jay Brown: And just to elaborate, our board continues to believe the investment we have been making in our company will lead us to a real opportunity going forward to put that capital to work either through additional product inside our existing channels or adding additional arms to our company. And so it is a tough call, and I would agree with what you are saying that it looks like a lot of capital, and it is something that we want to redeploy.

Tom Kerr: Got it. Thanks for the answer.

Operator: Thank you. And our next question is a follow-up from the line of Ross Imprimient from RL RLH Investments. Your question, please.

Ross Imprimient: Sorry, Jay. Just one final question along the lines you were talking about. Are you actively looking to buy new lines of business as part of the expansion or as part of the organic growth plan? And would that include, if you found small public and or private businesses, are you actively looking in that direction as part of your expansion plans? Thanks.

Jay Brown: Let me remind you that a year ago, a little bit over a year ago, we split the company into a distribution platform, Cadillacs, and Belmont Insurance, which is our insurance platform. Belmont, obvious, is where the excess capital sits. And so they are open for more business, entertaining additional programs or individual MGAs that might approach them with existing books of business that would meet Belmont's appetite. On the Cadillac side, we spent most of last year looking at an enormous number of possible acquisitions, some of which would have involved Belmont underwriting the business, most of which would have been coming with other capacity.

And as we have looked at those, we obviously did not find a large number of acquisitions, so we continue to sit with a large amount of excess capital. But we have been active and open for business. Our best growth, the most predictable growth, and the best way to continue is to grow our existing business. And so I would say 85% to 90% of our focus as a management team is to continue to execute what we have been doing well for the past two or three years in our core business. If that continues to perform well, it is easier then to add business to that as we go forward. Thanks again.

Operator: Thank you. This does conclude the question-and-answer session of today's program. I would like to hand the program back to Evan for any further remarks.

Evan Kasowitz: Thank you again. This concludes our 2025 fourth quarter earnings call. We look forward to speaking with you about our first quarter 2026 results.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.