Global Indemnity Q2 Earnings in Line with Estimates, Up Y/Y - Analyst Blog

Global Indemnity Plc ( GBLI ) reported operating earnings per share (EPS) of 35 cents for second-quarter 2014. The results were in line with the Zacks Consensus Estimate and higher than the year-ago quarter figure of 27 cents.

With this result, the company's average four-quarter beat stands at 41.1%. Notably, shares fell 3.3% following the earnings announcement.

The company's operating net income surged 29.4% year over year to $8.8 million. Including extraordinary items, reported net income escalated to $33.2 million or $1.31 per share from $8.7 million or 34 cents a sharein the prior-year quarter.

Growth primarily stemmed from improved premiums in insurance operations and higher net realized investment gains. These were partially offset by lower investment income and higher-than-expected operating, underwriting and loss and loss adjusted expenses (LAE).

Behind the Headlines

Global Indemnity's total revenue soared 59% year over year to $113.7 million. The upside was led by a 12.4% rise in net earned premiums, bringing the figure to $66 million. Additionally, net realized investment gains surged to $39.9 million from $2.8 million in the year-ago quarter. However, net investment income declined 21.4% to $7.7 million, while other revenues fell to $0.16 million from $0.25 million in the year-ago quarter.

Meanwhile, acquisition and underwriting expenses rose 11%, operating expenses increased 28% and LAE increased 9.7%, all on a year-over-year basis. These were partly offset by a 73% decline in interest expenses.

Subsequently, the combined ratio improved modestly to 99.2% against 101.2% in the year-ago quarter, reflecting lower loss and expense ratios.

Financial Update

At the end of Jun 2014, Global Indemnity had cash and cash equivalents of $1.46 billion, down from $1.57 billion at 2013-end. Total assets climbed to $1.98 billion from $1.91 billion at 2013-end, whereas shareholder equity rose to $896.8 million from $873.3 million at the end of Dec 2013.

Additionally, book value per share was $35.43 at Jun 2014-end, up 2.3% from 2013-end.

Stocks to Consider

Along with Global Indemnity sports a Zacks Rank #1 (Strong Buy). Other stocks in the same sector that warrant a look include Mercury General Corp. ( MCY ), White Mountains Insurance Group Ltd. ( WTM ) and AmTrust Financial Services Inc. ( AFSI ). All of these have the same Zacks Rank as Global Indemnity.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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