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2nd Quarter 2025 Financial Results
Global Indemnity Group (NYSE:GBLI) reported 2nd quarter 2025 financial and operating results, which showed solid underwriting results and improved profitability. Underwriting income was $5.6 million in the 2nd quarter of 2025 compared to $3.5 million in the 2nd quarter of 2024 and $5.3 million in the 1st quarter of 2025 (excluding California wildfires).
Gross written premiums increased 6.1% to $106.8 million. Excluding Belmont Non-Core operations, gross written premiums increased 9.2%. Operating income was $10.2 million compared to $9.9 million in the 2nd quarter of 2024 and $8.4 million in the 1st quarter of 2025 (excluding California wildfires).
Net investment income from its fixed-income portfolio increased 2.0% in the 2nd quarter of 2025 to $15.3 million compared to $15.0 million in the prior year period. Book yield on the investment portfolio increased to 4.54% at the end of the 2nd quarter of 2025. Annualized total investment return was 4.9% for 2025. As a result of the current low duration on fixed income securities (approximately 1.2 years), the company has a significant amount of investments maturing throughout the rest of 2025 that are expected to be reinvested in longer maturity bonds to improve overall investment returns.
Segment Review
For financial reporting purposes, the company recently realigned the composition of its reportable segments to reflect changes in how it now manages its operations:
Agency and Insurance Services – This consists of Penn-America Underwriters, LLC and includes three agencies: 1) Penn-America Insurance Services, LLC, 2) J.H. Ferguson, LLC, which includes the Vacant Express division, and 3) Collectibles Insurance Services, LLC that source, underwrite, and service policies and 2) two strategic insurance product and service businesses including Liberty Insurance Adjustment Agency, Inc. a claims adjustment and claims service business and Kaleidoscope Insurance Technologies, Inc., a proprietary insurance software and services provider.
Belmont Insurance Companies (Core (“Belmont Core”)) – This was previously known as the Penn-America segment and consists of five state-regulated insurance carriers: 1) Penn-Patriot Insurance Company, 2) Diamond State Insurance Company, 3) Penn-Star Insurance Company, 4) Penn-America Insurance Company, and 5) United National Insurance Company. These are all rated “A” (Excellent) by AM Best.
Belmont Insurance Companies (Non-Core (“Belmont Non-Core”)) – This was previously known as the Non-Core Operations segment and consists of insurance company operations for lines of business that have been de-emphasized or are no longer being written. The primary activities of Belmont Non-Core are servicing the run-off of polices/treaties, adjusting claims and estimating loss reserves on de-emphasized and terminated business.
Direct written premium produced for Belmont Core increased 4.0% in the 2nd quarter. In the aggregate, direct written premiums for Wholesale Commercial, Vacant Express and Collectibles grew by 10.3%. This growth was driven by premium rate increases, new agency appointments, organic growth of existing agents, and new products. Direct written premiums for Specialty Products declined by 26.1% due to terminated products not meeting profitability expectations.
Combined Ratios
The consolidated combined ratio for the 2nd quarter of 2025 was 94.4% (Loss Ratio 55.6% and Expense Ratio 38.8%) as compared to 96.6% (Loss Ratio 57.8% and Expense Ratio 38.8%) for the prior year period. The current accident year combined ratio was slightly higher at 94.6% in the 2nd quarter compared to 96.7% for the same period in 2024.
Corporate expenses were elevated in the quarter as the company has been hiring people to help execute its strategic growth plans. The company was also paying higher than normal business development fees to find new opportunities for growth.
Fee Business
The company has been making a concerted effort to grow non-risk revenues in terms of fee income generation. This can come in the form of commission, service, policy and installment fees. Commission and service fee income are reported separately on affiliated business for segment purposes but eliminated in consolidation. Policy and installment fees with third parties are a separate line item and reported under Other Income. We project policy and installment fees (Other Income) will be approximately $1.8 million in 2025 and continue to grow thereafter.
Valuation and Estimates
GBLI book value per share increased to $48.35 as of June 30, 2025, compared to $47.85 as of March 31, 2025.
On June 5, 2025, the Board of Directors approved a dividend of $0.35 per common share, which was paid on June 27, 2025. The current dividend yield is approximately 4.89%.
We adjust our 2025 total revenue estimate to $456.1 million, which includes $393.1 million in Net Earned Premiums and $60.2 million in net Investment Income. Our 2025 EPS estimate is adjusted to $1.99. As the consolidated expense ratio continues to drift down, we believe EPS of over $4.00 can be achieved in the next 2-3 years.
Management stated its long-term financial goals which are:
1) Grow the overall business at a rate of 10% or higher,
2) Achieve a combined ratio in the low 90’s,
3) Manage the expense ratio to a competitive level of 36%-37%.
GBLI stock is currently selling at 62.2% of book value based on June 30, 2025, shareholders’ equity. We separate our price target into near-term and long-term objectives. Our near-term target is $48.00, which assumes GBLI stock will trade near book value per share. We maintain our long-term price target of $55.00 per share based on the stock selling at a small premium to future book value per share.
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