Ladies and gentlemen, thank you for standing by. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Indemnity Group 2024 EAR News Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed with the number one on your telephone keypad. If you would like to withdraw your question, press star one again. We will also be taking questions from the webcast. If you would like to submit a question via the web, please use the Q&A button located at the bottom right side of your webcast screen. Thank you. I would now like to call over to Evan Kasiewicz. Please go ahead.

Thank you operator. Today's conference call is being recorded. GBLI's remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by by the use of forward-looking words, including without limitation, beliefs, expectations, or estimates. We caution you that such forward-looking statements should not be regarded as a representation by us that the future plans, estimates, or expectations contemplated by us will, in fact, be achieved. Please refer to our annual report on Form 10-K and our other filings of the SEC for descriptions of the business environment in which we operate and the important factors that may materially affect our results. Global Indemnity Group LLC is not under any obligation and expressly disclaims any such obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. It is now my pleasure to turn the call over to Mr. Jay Brown, Chief Executive of Global Indemnity.

Thank you, Evan. Good morning and thank you all for joining us for the GBLI year-end update on our 2024 financial and operational results. Consistent with our past calls, I will first provide a few overview comments on the ongoing results in our PEN America segment. Given the fact that year-end numbers are consistent with prior quarters, I will keep my comments to a minimum. Then our Chief Financial Officer, Brian Riley, will expand on the 2024 financial highlights for both our insurance operations and the holding company. It gives me great pleasure to report that the GBLI team achieved solid insurance results consistent with the goals we had established for 2024. They continue building momentum to consistently hit the long-term metrics for revenue growth and underwriting profits that we had established a great value for our shareholders. Pan America insurance revenue momentum, as measured by gross premium, maintained the pattern we saw in the third quarter with total premium, excluding terminated programs, having finished up 12% through 2024. This was driven by the excellent 17% growth we achieved in InsurTech, coupled with 12% in our largest division, Wholesale Commercial. Our assumed reinsurance operation finished up 83% in its second full year of operations. We expect these segment-wide positive trends to continue in 2025. Turning to insurance underwriting performance, I am very delighted to report a full year 94.4 percent underwriting results for the PEN America segment. This result was modestly better than the 95.2 percent we recorded in 2023. The good results continue for both our casualty and property coverages. Importantly, our rate increases continue to modestly exceed our own estimates of inflation trends. This will continue to be a key objective for 2025 given the continued uncertainty on the national inflation front. Also, our estimates for the past year results remain stable with virtually no difference between calendar and accident year numbers. Our reserve margins remain solid with modest improvement recorded throughout the year. The ongoing efforts to manage catastrophe exposures for our property segments continued to be reflected in our modest losses from catastrophes in 2024. Total cat losses for the full year were down roughly 26% from 2023. I will note that we experienced 15 million in cat catastrophic losses from the recent Los Angeles wildfires. Given the magnitude of the L.A. fires, this result was modestly below our property market share in California, albeit still significant for a company of our size. Although we expect an annual average of around $17 million from CAT losses given our current book of business, the sheer magnitude of this single loss exceeded the different models we have used for wildfires in the L.A. basin. Like most industry players, we are rethinking the validity of our past severity model estimates for wildfire cat exposures. We continue to manage internal expenses a bit higher than our long-term targets to provide the best service to our customers. As noted in past quarters, we have maintained PEN America staff numbers just slightly below 2023 as we grow our business at double-digit levels and keep expense growth at roughly half of that growth rate. Our PEN America expense ratio is starting to trend in the right direction with the 2024 ratio of 38.1%, but we still have significant work to do in order to get this down to 37% or lower. As noted last quarter, a key factor in growing our business is attaining outstanding underwriting results, achieving competitive expense levels, and utilizing technology effectively across all dimensions. We have just completed the first full year of a multi-year effort to transform our technology platforms, transactions, and information software and data storage. These investments are well underway, with our transition to the cloud about 75% completed, with the remaining migration to be completed in 2025. As I mentioned last quarter, the first transactional application went live in September, and we are now processing all aspects of our wholesale commercial excess liability policies in the new technology environment. We recently added similar capabilities for special events in Wholesale Commercial and are on schedule to add transaction processing for all the remaining products for Wholesale Commercial this year. An additional module is in development which is focused on our agents, underwriters, and operations staff. They will receive an integrated underwriting workstation in the next few months to improve the time to handle referral business and service for our wholesale commercial agents. As a follow-up to my comments from last quarter, the decision to focus on the underwriting areas where we can excel has begun to pay dividends. We completed a legal and operational transformation that was announced in January labeled Project Manifest. One of the main objectives of this project was to enhance our ability to attract additional talent to complement our existing teams. These efforts will provide the expertise needed to accelerate our ability to use our growing excess capital in order to expand our product offerings for both existing and new customers. I am very, very pleased that we kicked off this talent expansion with the hiring of Praveen Reddy to head up Penn American Underwriters LLC, which is comprised of all of our existing underwriting and service teams. Praveen joined us last week and has begun his efforts to rapidly expand our current product offerings. I am thankful that we have the support of the full board and Fox Payne as our financial advisor to affect these structural changes, which I personally believe will yield significant future results for our company. Equally important, I remain blessed to benefit from the superb effort of all the managers teachers and staff at Global. We are all looking forward to 2025 and beyond as we enhance and implement our tactical and strategic plans. Brian?

Thank you, Jay. My commentary will focus on full-year results. Of course, we can answer any questions you may have on fourth quarter numbers. The net income was $43.2 million compared to $25.4 million in 2023. The combination of net income and a $12 million increase in market value of the fixed income portfolio, both value per share increased from $47.53 a year-end in 2023 to $49.98 on December 31st, including defense paid in 2024 of $1.40 per share. Return to shareholders was 8.1% for 2024. For 2024, both underwriting income and investment forms began to contribute to the improvement in net income, starting with investments. Investment income increased 13% to $62.4 million from a year ago. Actions taken since early 22 to sell longer-dated securities in short duration have translated into much higher current book yields. Cash flows and maturities of fixed income securities of $1.1 billion, yielding 4.36%, were reinvested in an average yield of 4.87%. Current book yield on the fixed income portfolio is now 4.4 percent with the duration of 0.8 years at december 31st 2024. comparatively at december 31 2023 book yield was four percent with the duration of 1.1 years at the end of december 22 book yield was 3.5 percent with duration of 1.7 years And at December 31st, 2021, book yield was 2.2% of the duration of 3.2 years. The average credit quality of the fixed income portfolio remains at AA minus. As a result of the low duration, we have $1 billion of investments maturing in 2025. We expected a significant amount of those maturities to be reinvested on longer matured, ensuring fixed income investments to improve returns. Through February of 25, approximately $320 million of the portfolio was reinvested at 5.2 percent, consisting of two-thirds in high-quality corporates and structured securities. We expect this strategy will increase duration to about 1.25 years by the end of the first quarter of 25. Now let's move to underwriting performance for 24. We continue to see good results as the current accident year consolidated underwriting income was $18.8 million compared to $14.3 million in 2023. This was driven by a consolidated accident year combined ratio of 95.4 in 2024 compared to 97.3 in 2023. The improvement in the current accident year underwriting income was due to the strong performance of our core business, PEN America. Penn America's action year underwriting income was $22.1 million in 2024, compared to $18.5 million in 2023. As Jay noted, Penn America's action year combined ratio improved to 94.4 in 2024, compared to 95.2 in 2023. The action year loss ratio of 56.4 was a point better than the 57.4 in 2023. The property loss ratio closed the year of 53.9 compared to 53.4 in 23. Non-CAT loss ratio remains strong. We posted a 46.3 in 24 and a 43.6 in 23. Cat loss ratio improved to 7.6 in 24 compared to 9.8% in 23. Overall cap losses declined to $12.7 million, compared to $13.8 million in 2023. The casualty loss ratio is 58.4 in 2024, compared to 59.9 in 2023. Unlike last year, our non-core operations have a diminished effect on our overall performance. Our non-core operations center premium has dropped to $7.2 million, compared to $118.8 million in 23, mainly from an assumed retrocession casualty treaty, which we did not receive. Further, the runoff of our exited specialty property business resulted in no catastrophe losses in 24, compared to $3.4 million last year. The current X-year underwriting loss was $3.3 million for 24 compared to $4.2 million in Combined ratio was 145.6. The loss ratio is in line with X-4.6, but runoff expenses remain a bit high as we wind down the number of the smaller underwriting portfolios. As for the calendar year underwriting income, Cal consolidated calendar year underwriting income of 17.8 million compared to 3 million in 2023. Looking at prior accident year losses, book reserves remain solidly above our current actuarial indications. 2024 loss in LAE related to prior accident years was only a modest increase of $72,000. Turning to premiums, Consolidated gross premiums was 389.8 million in 24 compared to 416.4 million in 23. This decrease is entirely due to the runoff business of our non-core segment, which declined 57 million year-over-year, offset partially by the growth of PEN America. PEN America's gross written premiums increased 8% to 400 million compared to 369.7 million in 23. As Jay noted, excluding terminated products, and America's grocery premiums grew from $352.4 million in 23 to $395.1 million in 24, a 12% increase. Let me add a little color on each of those divisions. Wholesale commercial, which focuses on Main Street small business, grew 6% to $248.6 million, compared to $234.9 million in 23. Excluding premium audit in these calendar numbers, the underlying policy premium trends or best indicator of growth was 12%, which includes rate increases of 7%. InsureTech, which consists of vacant Express and collectibles, grew 17% to 56.3 million in 24, compared to 48.3 million in 23. Let me break down those two products a bit. ones for vacant express through 24% to 40.5 million, driven by organic growth from existing agents and agency appointments. New technical automation implemented in the third quarter of 2023 for a vacant dwelling products, including the expansion of monoline general liability products contributed to the growth in premium our agents are producing. Collectibles, gross written premium of $15.8 million, was slightly higher than 2023 by 2%. We've implemented underwriting action on task-free phone risk that has curtailed growth a bit, but is expected to improve overall profitability. Our assumed reinsurance business continues to grow at a nice pace. We signed on eight new trees in 2024. Grocery and premiums grew to $25.4 million compared to $13.9 million in 2023. Specialty products, excluding terminated products mentioned earlier, was $64.7 million compared to $55.3 million in 2023. We signed on two new products in 2024 that contributed a million during the year. We expect to have four new products signed on over the next six to 12 months. In closing, we are pleased with the 24 results. Further, despite the impact of the first quarter wildfires, as Jay mentioned, our outlook for 2025 is very positive. We continue to expect revenue growth to 10% from Pan America. Further, we expect to see continued improvement in our non-catastrophe accident year-loss ratios. Book reserves remain solidly above current actual locations. We believe premium pricing is continuing to attract with loss inflation. Discretionate capital, which is considered the amount of consolidated equity in excess of that amount required to maintain the strongest levels with our rating agencies increased to $255 million at December 31, 2024, compared to $200 million in December 31, 2023 due to growth in equity and the reduced capital needed to run off the non-core business. As Jay noted earlier, this will support the efforts to invest in the growth of PEN America underwriters. Lastly, the portfolio is well positioned to invest in longer-term duration maturities at higher yields. Thank you. We'll now take your questions.

At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad if you would like to submit a question via the web please use the Q&A button located at the bottom right side of your webcast screen your first question comes from the line of Tom Kerr with VAX mocap research please go ahead good morning guys real quick on the California fires was that just the underwriting type issues or have you guys been trying to get rate increases and deal with that issue we've had an outstanding rate increase for our vacant express probably for a year plus at this point in time like most carriers

it's just stalled completely in the regulatory environment um but otherwise you know it it was a it's obviously a sizable loss for us but involved very few number of properties i think it was less than less than 10 properties overall were involved in the fire okay great and can you provide a little more color on the reinsurance segment and that growth and then what is the plans I mean that could that continue its strong growth in 2025 yeah the our growth there was is if you recall two years ago when we cut back dramatically when I first arrived at the company obviously our view at that point in time with the reduced volume we were doing in other sectors, that we had a lot of capacity available. We had had a history of doing some reinsurance, but we decided over the near term being two years ago and a couple years forward that the best use of our internal capital was to develop some existing, especially product relationships into assumed reinsurance. So we're up to, Brian, how many?

16.

16 treaties at this point in time, roughly 45 million in force, and we expect that we're going to have a nice increase in 25 and 26. At that point, we'll be looking at our other lines of business and allocation of capital across our businesses to decide if we want to grow it much beyond that.

Got it. um two more quick ones from me on the project manifest have you seen any benefits yet on the uh the de-stacking of the organization in terms of the ability to move capital between organizations has that kind of started yet yeah we picked up um net of net of dividends to the holding company about 50 million um so we're our statutory surplus is right around 500 million as we get above that though give us more capacity in the insurance market got it last one off to ask the standard share buyback question with 255 million in discretionary capital any portion of that

could be used to buy back you know the stock at a discount the book value of course could be used to buy back stock at a discount but right now the board feels more enthusiastic fantastic about our prospects for adding additional products and different types of underwriting into our company through the pen America our decision to hire Praveen is very much focused on this and we expect that we can get better better returns on on growing our insurance business in the short term than just buying back stock got it all right I'll jump Your next question comes from the line of Ross Haberman with RLH Investments.

Please go ahead.

Good morning, gentlemen. Thanks for taking the call. I have a quick question. Could you go back to the California? Could you tell us what your total exposure is there? And is it on the direct commercial side or is it mostly on the reinsurance side?

Thank you. the uh our total exposure in california is about six basis points of the total property market i don't have it at my fingertips exactly how much the premium was it was all on our direct book it was not on any assumed reinsurance and and the fifth the 15 million could that could that be a bigger number as time goes on or that's that's your best guess at least as of today we're we paid over half the losses at this point. Because of the small number, as I said, it's less than 10 losses, 10 individual properties that were involved. So we're pretty confident the number is not going to move too much at this point.

Okay. And your total fire or wildfire exposure, which you said you're reassessing, what is that number today?

Well, it depends on the frequency and the location of loss. It's, you know, we have wildfire exposure in California and other states. My comment there was really focused on the fact that we use catastrophe models to estimate our exposure and manage how much we'll do in particular areas. One of the ways those models work is to assess the frequency of a cat loss of a particular size. And so we typically manage to a 1 in 250 or 1 in 500 kind of level as the maximum that we expect from a loss. This one went almost double that in terms against what the model estimated. And so what I'm saying is we're like a lot of people wondering at the tail of the individual models that we're using, are they that inaccurate? Why are they off that much? Now, this was an unusual fire, but it is something that we expect in California. We have different zones that we have fire exposure. One of the two fires was in a more exposed area. That was the Eaton fire. We actually had no losses in the Eaton location. Pasadena, which was slightly better in terms of the rating and expected a less frequency of loss, actually turned out for us to be where all of the properties were there. were burned in that particular situation. So again, it's a modeling question for us. We're constantly trying to improve our models. And this one, you know, came in somewhat of a surprise, but we've all seen an escalation in the size of cat losses. Now, in comparison, if we go back for the prior four years, there were cat losses, wildfire losses. And in each of the four years, we had no wildfire losses at all. And so we were pretty comfortable with the way we're managing that exposure. But again, the models for this type of loss don't seem to work very well.

So basically, you've got to reassess it and rejigger, I guess, the assumptions there?

Yeah, we're looking at it. But it's, you know, we're trying to, there's a couple of minor adjustments that we're making very quickly in terms of what we would do in a zone three versus a zone four or a five. And we're trying to say maybe we have to move that out a little bit to contain that exposure. But again, this size loss is not disproportionate for a company our size. I mean, it's kind of the, if you're going to write any property business, you're going to have some cat exposures. For us, it always hurts more when it comes in the first quarter, but over the course of the year, we typically expect, as I mentioned, something like $16 or $17 million in cat losses. Some years it's more, some years it's less, but that's what our current book would expect over time to see in a normal year. overall just a follow-up question overall given what happened in california what kind of rate increases going forward do you expect uh in that in that state or in that general area given what happened what we expect and what we get might be two different things um but i would say that we need at least 50 percent on the type of business that was affected by this particular wildfire, and perhaps more depending on the types of individual exposures. But California has been tough on rates, and it's a real obstacle, and they're creating a real problem for themselves in terms of not allowing carriers to get an adequate rate, which makes it much harder for people to obtain coverage. And that's obviously not the goal of the insurance industry. We want to provide coverage for every possible exposure that we feel we can rate appropriately. I guess if you can't get an appropriately risked rate, whether it's 50% as you hope to, you know, do you say, you know, hypothetically, if you can only get 20 or 25, do you say it's not worth it to us, it's not worth the risk, we're just not going to write there anymore? typically that'll be a decision that we face uh selectively over time and we we try and manage it uh in line with what our customers are trying to achieve meaning our agent partners but the reality is we we are in we are a for-profit business we're very very focused on making good with our shareholders and if we can't make it in california selling uh cat exposed business

we'll find someplace else in the united states to sell more business and just one last question You brought in this new gentleman to expand your lines of business. Do you have a rough idea of what kind of lines is he sort of going to be focused on yet?

Stay tuned.

Okay.

Your next question comes from the line of Andrew Vendegni. That's from the web. Is there room to reduce the expense ratio without compromising on the writing quality? any uses for excess capital, maybe a special dividend?

We don't currently plan any special dividends. And in terms of our expense ratio, there is room. We expect that as we front off the remaining terminated business, there'll be a little bit of pickup in terms of that area not needing expenses. But the big lift for us in terms of where we are, given that we were $250 million higher a couple of years ago, is really growing back to that size over the next couple of years and bringing the expense ratio down another point, point and a half from where it currently exists. The expense ratio is somewhat misleading sometimes to look at. You see 38% and kind of go, wow, that's a big number. And then you have to realize that less than 12% or 13% of that is our internal expenses. and the remainder is commissions we pay our agents, licensing fees, et cetera. And so the actual cost that we're dealing with is out of that 38 is roughly 12% or 13% of that total. Not percent, but portion of. So about a third of the expense is something that we're focused on managing down a point and a point and a half in the next couple of years.

Your next question comes from Justin Saunders of IOWeb. Anything abnormal in the Q4's corporate and other operating expenses wraps to $7 million for the Q?

Yeah. Yeah, for the year, corporate expenses are up $5 million. Professional fees related to project manifest and implementation drove most of that.

Before going to the next question, again, if you would like to ask a question, press star 1 on your telephone keypad. or use the Q&A button located at the bottom right side of your webcast screen. Your next question comes from the line of Joel Straka via web. Regarding Project Manifest, GBLI has tried growth strategies in the past and failed. You were brought into the map of those out. Can you explain why a growth strategy will work this time?

Sure. One is our new structure allows us to bring in additional underwriting teams coupled with the technology investment we're making. Our growth structure that we tried and attempted two or three years ago, our biggest problem was the underwriting teams were bought in and were operating in essentially a manual environment with no technology support. That was a mistake on our part. We talked about it at the time, and it's certainly not a mistake we're going to make going forward. This time around, we feel much more comfortable that our technology investments are creating a platform that will allow a variety of products we don't currently sell to be offered to existing and new agency partners. The other thing to, I guess, kind of reflect on is we made a very clear decision to bring in a particular individual with a lot of experience with products that we don't currently offer. And so we're looking to expand, given his knowledge and context in the industry, some of which will be built internally, some of which will be by bringing in additional people. And finally, in some cases, by actually buying certain types of operations from other carriers. It's always hard to say if you weren't successful in the past, why do you think you're going to be successful this time? But I would tell you that based on my last two and a half years here, the team and the board and particularly Fox Payne have focused very carefully about a comprehensive plan to bring this out where we can grow at a greater rate than we've been able to grow over the most recent past. And I think time will tell if we're successful at that, but I think now that we have a very stable, profitable underwriting base in place, we don't have any major decisions to make about staffing in the short term in terms of having too much. And having approximately 15 months behind us in a three-year technology spend, I feel very, very personally confident that this is gonna be a successful strategy for Global to Pursue.

I will now turn the call back over to Evan Kasubitz for closing remarks.

Thank you. This concludes our 2024 earnings call. We look forward to speaking with you about our first quarter 2025 results.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.