Executive Summary

Q2 2024 delivered solid underwriting and investment results: total revenues were $108.7M, diluted EPS was $0.73, and the consolidated combined ratio held at 96.6% as property losses improved; Penn‑America posted a 95.2% combined ratio in the quarter .
Investment income rose to $15.3M (+16% YoY) with book yield at 4.5% and portfolio duration ~1.0 year, positioning GBLI to redeploy large second‑half maturities into higher‑yielding assets, a key tailwind for NII into 2025 .
AM Best affirmed GBLI’s A (Excellent) ratings and “strongest” balance sheet strength (BCAR), reinforcing capital adequacy and consistency of earnings; quarterly distribution was maintained at $0.35/share in Q2 .
Management reiterated long‑term targets (≈10% growth, low‑90s combined ratio, 36–37% expense ratio); expense ratio remains elevated as GBLI invests in service levels and digital transformation—near‑term headwind but strategic for growth .
Consensus estimates (S&P Global) were unavailable at time of request; no beat/miss assessment provided. Values retrieved from S&P Global were unavailable due to access limits.*

What Went Well and What Went Wrong

What Went Well

Property loss performance improved materially; Penn‑America’s accident‑year loss ratio was 56.3% for 1H (vs 59.3% LY) and property non‑cat loss ratio fell to 44.5% (vs 52.9% LY), reducing catastrophe impact and driving combined ratio improvement .
Investment portfolio repositioning continues to pay off; book yield reached 4.5% with duration ~1.0 year, and $423M of investments mature in H2 2024, offering reinvestment optionality into higher yields or longer maturities post‑election .
Assumed reinsurance and InsurTech grew strongly (1H GWP +123% and +18%, respectively); management added six new reinsurance treaties in Q2 and sees 30–40% annual growth for several years in niche lines aligned with GBLI’s expertise .

Quotes

“Book yields on our portfolio have continued to increase since the beginning of the year and now sit at 4.5%… duration… now at just 1.0 years” – CEO Jay Brown .
“We signed on 6 new treaty store in the second quarter… expect to continue to grow that business probably going up 30% to 40% per year…” – CEO Jay Brown .

What Went Wrong

Expense ratio remains above target (Q2 38.8% vs long‑term goal 36–37%) due to strategic staffing and technology investment; management expects it to take “another couple of years” to hit targets as earned premium rebuilds .
Total GWP declined YoY (Q2 $100.7M vs $110.1M) and 1H total GWP down 17% due to runoff in non‑core business; Programs also lagged (1H −21%) despite progress adding new treaties .
Rate environment tempering from recent highs; while still modestly above loss inflation, pricing tailwinds are less pronounced than prior years, limiting near‑term margin expansion upside .

Financial Results

Consolidated Financials (Sequential and YoY)

Metric	Q2 2023	Q1 2024	Q2 2024
Total Revenues ($USD Millions)	$141.9	$112.3	$108.7
Net Investment Income ($USD Millions)	$13.2	$14.5	$15.3
Gross Written Premiums ($USD Millions)	$110.1	$93.5	$100.7
Net Income to Common ($USD Millions)	$9.23	$11.26	$9.98
Diluted EPS ($)	$0.67	$0.82	$0.73
Loss Ratio (%)	60.5%	55.3%	57.8%
Expense Ratio (%)	36.4%	39.6%	38.8%
Combined Ratio (%)	96.9%	94.9%	96.6%

Notes: EPS and net income reflect preferred distributions; combined ratio is sum of loss and expense ratios .

Segment Performance – Penn-America (Quarterly)

Metric	Q2 2023	Q1 2024	Q2 2024
Gross Written Premiums ($USD Millions)	$91.5	$94.0	$100.6
Underwriting Income ($USD Millions)	$6.1	$5.6	$4.7
Accident-Year Underwriting Income ($USD Millions)	$7.1	$5.7	$4.2
Combined Ratio (%)	93.7%	94.1%	95.2%
Loss Ratio (%)	56.6%	54.9%	57.2%
Expense Ratio (%)	37.1%	39.2%	38.0%

Selected KPIs and Balance Sheet

Metric	FY 2023 (Dec 31)	Q1 2024 (Mar 31)	Q2 2024 (Jun 30)
Book Value / Share ($)	$47.53	$48.18	$48.56
Shareholders’ Equity ($USD Millions)	$648.8	$659.5	$667.5
Cash & Invested Assets ($USD Millions)	$1,390.4	$1,417.3	$1,435.2
Shares Outstanding (Millions)	13.6	13.6	13.7
Quarterly Distribution per Share ($)	$0.25 (Q1 precedent)	$0.35 (paid)	$0.35 (paid Jun 28)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Long‑term premium growth	Multi‑year	≈10% annual growth (Q1 reiteration)	≈10% annual growth; wholesale/InsurTech/assumed reinsurance tracking toward YE target	Maintained
Combined ratio	Multi‑year	“Low‑90s” target (Q1 reiteration)	“Low‑90s” target; Penn‑America at 94.8% YTD	Maintained
Expense ratio	Multi‑year	36–37% target; will take years given earned premium mix	36–37% target; current ~38.6% YTD; expect 1–2 years to reach target	Maintained, timing emphasized
Wholesale Commercial growth	CY 2024	~10% full‑year expected (Q1)	>8% full‑year expected (Q2 elaboration)	Refined (slightly tempered)
Assumed reinsurance expansion	Multi‑year	“Significant growth” in 2024	6 Q2 treaty adds; plan 30–40% annual growth for 3–4 years	Raised specificity
Digital platform rollout	2H 2024 / 2025	Investment continuing	Initial releases for wholesale binding go live in 2H 2024; broader rollout in 2025	Formalized timing
Capital deployment (buybacks/tender/special)	Ongoing	Evaluating buybacks and special dividend; ~$200M excess capital	~$125M deployable to maintain top ratings; tender/special dividend under consideration if organic/M&A uses don’t arise	Clarified rating‑constrained deployable amount

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2024)	Current Period (Q2 2024)	Trend
Expense ratio trajectory	Above target due to staffing/digital; improvement expected through 2026	38.6% YTD; 1–2 years to reach 36–37% as earned premium rebuilds	Improving gradually
Property/cat loss performance	Non‑cat property loss ratio improved; cat losses modest	Property non‑cat loss ratio improved; cat ratio down to 8.6% YTD; overall accident‑year LR 56.3%	Improving
Reinsurance strategy	Pivot to direct insurer treaties; expected 2024 growth	6 new treaties in Q2; aiming for 30–40% growth annually for 3–4 years	Expanding
Program division	Work in progress, lagging growth	Flat YTD (exited programs); 4 new programs expected over 6–12 months	Stabilizing
Investment portfolio	Book yield 4.3%; duration ~1.06; large maturities in 2024	Book yield 4.5%; duration ~1.0; $423M maturing in H2; redeployment optionality	Strengthening
Capital deployment	~$200M excess capital; considering buybacks/special dividend	~$125M deployable at strongest rating; tender/special dividend considered if no better uses	More conservative under ratings lens
Ratings/macro	—	AM Best affirmed A; BCAR strongest; rate increases tempered vs prior years	Supportive but normalizing pricing

Management Commentary

Strategy and goals: “Growing our business at around 10% per annum; achieving a combined ratio in the low 90s; and… expenses to 36% to 37%” – CEO Jay Brown .
Technology investment: “Investing heavily in a full digital transformation… releases… go into production… in the second half of this year” – CEO Jay Brown .
Investment positioning: “Book yields… now sit at 4.5%… duration… 1.0 years… well positioned to redeploy… into longer‑dated, higher‑yielding investments as we get past the election and enter 2025” – CEO Jay Brown .
Underwriting performance: “Penn‑America’s accident combined ratio is 94.8%… property catastrophic losses dropped by 35% from last year” – CEO Jay Brown .
Capital and ratings: AM Best affirmed A (Excellent) and assessed BCAR at the strongest level, citing conservative investments and reserving .

Q&A Highlights

Reinsurance build‑out: GBLI shifted from retrocession to reinsuring direct insurers in niche lines similar to its direct underwriting; doubled treaties in 18 months and targets 30–40% annual growth for 3–4 years .
Expense ratio path: Fixed vs variable cost structure implies improvement as earned premium grows; aiming to move fixed costs from ~13 points to ~11 with double‑digit premium growth and 4–5% cost inflation .
Discretionary capital: ~ $125M deployable to maintain top rating; longer‑standing ~$200M figure reflects operating at 10% below highest capital levels; buybacks/tender/special dividend remain under consideration .
Social inflation and reserves: Long‑term casualty trend assumptions raised 2–3 pts to 6–7%; margin expanded last two quarters; exposure reduced in problematic programs (e.g., NY habitational) .
M&A/buybacks: No comment on specific James River questions; buybacks/tender offer remain options if organic/M&A deployment is not attractive .

Estimates Context

Consensus EPS and revenue estimates from S&P Global were unavailable at the time of request due to access limits; as such, we cannot formally assess Q2 2024 beat/miss versus Wall Street expectations.*
Reported diluted EPS was $0.73 and revenues $108.7M for Q2 2024; if estimates become available, we would update the comparison and implications .

Key Takeaways for Investors

Underwriting improvement driven by property non‑cat and lower cat losses is sustainable if rates remain modestly above loss inflation; watch Penn‑America combined ratio trajectory toward low‑90s .
Investment income should benefit from $423M H2 maturities and higher reinvestment yields; book yield already at 4.5% with short duration—key driver of EPS in 2H24/2025 .
Expense ratio is the primary headwind; expect gradual improvement over 4–8 quarters as earned premium recovers and digital investments scale, with 36–37% target reiterated .
Reinsurance expansion is a growth lever with favorable risk selection (low large weather exposure), targeting 30–40% annual growth; monitor treaty additions and margins .
Capital deployment is a potential catalyst (tender or special dividend) if organic/M&A opportunities don’t materialize; ratings considerations imply ~$125M deployable to maintain strongest capital levels .
AM Best A affirmation and “strongest” BCAR underpin balance sheet quality and funding flexibility—positive for counterparties and growth .
Near‑term trading: positive bias on earnings quality and NII momentum; medium‑term thesis hinges on expense ratio normalization, digital platform rollout, and scaling reinsurance/programs .

Footnote: *Consensus estimates from S&P Global were not retrievable due to API limits at time of request; therefore, no beat/miss determination is provided.

Global Indemnity Group, LLC (GBLI)·Q2 2024 Earnings Summary