10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit such files.). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 29, 2024, the registrant had outstanding 9,810,763 Class A Common Shares and 3,793,612 Class B Common Shares.

Investments

The amortized cost and estimated fair value of the Company’s fixed maturities securities were as follows as of March 31, 2024 and December 31, 2023:


(Dollars in thousands)	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of March 31, 2024
Fixed maturities:
U.S. treasuries	$	547,350	$	—	$	36	$	(2,843	)	$	544,543
Obligations of states and political subdivisions		24,280		—		—		(1,188	)		23,092
Mortgage-backed securities		61,200		—		486		(4,144	)		57,542
Asset-backed securities		203,449		—		687		(4,441	)		199,695
Commercial mortgage-backed securities		82,027		—		15		(4,271	)		77,771
Corporate bonds		230,387		—		168		(5,891	)		224,664
Foreign corporate bonds		102,282		—		45		(3,325	)		99,002
Total fixed maturities	$	1,250,975	$	—	$	1,437	$	(26,103	)	$	1,226,309


(Dollars in thousands)	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of December 31, 2023
Fixed maturities:
U.S. treasuries	$	497,099	$	—	$	515	$	(3,391	)	$	494,223
Obligations of states and political subdivisions		27,326		—		—		(1,176	)		26,150
Mortgage-backed securities		63,173		—		229		(4,475	)		58,927
Asset-backed securities		207,375		—		668		(5,091	)		202,952
Commercial mortgage-backed securities		84,062		—		12		(4,994	)		79,080
Corporate bonds		298,526		—		116		(6,929	)		291,713
Foreign corporate bonds		144,531		—		40		(3,823	)		140,748
Total fixed maturities	$	1,322,092	$	—	$	1,580	$	(29,879	)	$	1,293,793

As of March 31, 2024 and December 31, 2023, the Company’s investments in equity securities consist of preferred stock in the amounts of $17.0 million and $16.5 million, respectively.

Excluding U.S. treasuries and limited partnerships, the Company did not hold any debt or equity investments in a single issuer in excess of 2.0% and 2.1% of shareholders' equity at March 31, 2024 and December 31, 2023, respectively.

The amortized cost and estimated fair value of the Company’s fixed maturities portfolio classified as available for sale at March 31, 2024, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


(Dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	632,837	$	630,760
Due in one year through five years		247,306		238,850
Due in five years through ten years		12,694		11,330
Due after ten years		11,462		10,361
Mortgage-backed securities		61,200		57,542
Asset-backed securities		203,449		199,695
Commercial mortgage-backed securities		82,027		77,771
Total	$	1,250,975	$	1,226,309

The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses that are not deemed to have credit losses, categorized by the period that the securities were in a continuous loss position as of March 31, 2024. The fair value amounts reported in the table are estimates that are prepared using the process described in Note 4.


	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasuries	$	301,942	$	(816	)	$	148,120	$	(2,027	)	$	450,062	$	(2,843	)
Obligations of states and political subdivisions		—		—			20,092		(1,188	)		20,092		(1,188	)
Mortgage-backed securities		5,770		(67	)		37,528		(4,077	)		43,298		(4,144	)
Asset-backed securities		46,385		(474	)		84,010		(3,967	)		130,395		(4,441	)
Commercial mortgage-backed securities		—		—			75,207		(4,271	)		75,207		(4,271	)
Corporate bonds		23,798		(45	)		150,118		(5,846	)		173,916		(5,891	)
Foreign corporate bonds		4,702		(6	)		81,790		(3,319	)		86,492		(3,325	)
Total fixed maturities	$	382,597	$	(1,408	)	$	596,865	$	(24,695	)	$	979,462	$	(26,103	)

The following table contains an analysis of the Company’s fixed income securities with gross unrealized losses that are not deemed to have credit losses, categorized by the period that the securities were in a continuous loss position as of December 31, 2023. The fair value amounts reported in the table are estimates that are prepared using the process described in Note 4.


	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities:
U.S. treasuries	$	55,447	$	(342	)	$	239,254	$	(3,049	)	$	294,701	$	(3,391	)
Obligations of states and political subdivisions		—		—			26,150		(1,176	)		26,150		(1,176	)
Mortgage-backed securities		12,432		(406	)		39,734		(4,069	)		52,166		(4,475	)
Asset-backed securities		38,828		(469	)		108,947		(4,622	)		147,775		(5,091	)
Commercial mortgage-backed securities		13		(2	)		76,467		(4,992	)		76,480		(4,994	)
Corporate bonds		34,658		(264	)		231,816		(6,665	)		266,474		(6,929	)
Foreign corporate bonds		7,096		(13	)		111,750		(3,810	)		118,846		(3,823	)
Total fixed maturities	$	148,474	$	(1,496	)	$	834,118	$	(28,383	)	$	982,592	$	(29,879	)

The Company regularly performs various analytical valuation procedures with respect to its investments, including reviewing each available for sale debt security in an unrealized loss position to assess whether the decline in fair value below amortized cost basis has resulted from a credit loss or other factors. In assessing whether a credit loss exists, the Company compares the present value of the cash flows expected to be collected from the security to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis of the security, a credit loss exists and an allowance for expected credit losses is recorded. Subsequent changes in the allowances are recorded in the period of change as either credit loss expense or reversal of credit loss expense. Any declines in value related to factors other than credit losses and the intent to sell are recorded through other comprehensive income, net of taxes.

For fixed maturities, the factors considered in reaching the conclusion that a credit loss exists include, among others, whether:

(1)

the extent to which the fair value is less than the amortized cost basis;

(2)

the issuer is in financial distress;

(3)

the investment is secured;

(4)

a significant credit rating action occurred;

(5)

scheduled interest payments were delayed or missed;

(6)

changes in laws or regulations have affected an issuer or industry;

(7)

the investment has an unrealized loss and was identified by the Company’s investment manager as an investment to be sold before recovery or maturity;

(8)

the investment failed cash flow projection testing to determine if anticipated principal and interest payments will be realized; and

(9)

changes in US Treasury rates and/or credit spreads since original purchase to identify whether the unrealized loss is simply due to interest rate movement.

According to accounting guidance for debt securities in an unrealized loss position, the Company is required to assess whether it has the intent to sell the debt security or more likely than not will be required to sell the debt security before the anticipated recovery. If either of these conditions is met, any allowance for expected credit losses is written off and the amortized cost basis is written down to the fair value of the fixed maturity security with any incremental impairment reported in earnings. That new amortized cost basis shall not be adjusted for subsequent recoveries in fair value. Subject to the risks and uncertainties in evaluating the potential impairment of a security's value, the impairment evaluation conducted by the Company as of March 31, 2024 and December 31, 2023 concluded the unrealized losses in the tables above are non-credit losses on securities where management does not intend to sell, and it is more likely than not that the Company will not be required to sell the security before recovery.

The Company elected the practical expedient to exclude accrued interest from both the fair value and the amortized cost basis of the available for sale debt securities for the purposes of identifying and measuring an impairment and to not measure an allowance for expected credit losses for accrued interest receivables. Accrued interest receivable is written off through net realized investment gains (losses) at the time the issuer of the bond defaults or is expected to default on payment. The Company made an accounting policy election to present the accrued interest receivable balance with other assets on the Company’s consolidated statements of financial position. Accrued interest receivable related to fixed maturities was $5.4 million and $7.5 million as of March 31, 2024 and December 31, 2023, respectively.

The following is a description, by asset type, of the methodology and significant inputs that the Company used to measure the amount of credit loss recognized in earnings, if any:

U.S. treasuries – As of March 31, 2024, gross unrealized losses related to U.S. treasuries were $2.843 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, macroeconomic and market analysis is conducted in evaluating these securities. Consideration is given to the interest rate environment, duration and yield curve management of the portfolio, sector allocation and security selection. Based on the analysis performed, the Company did not recognize a credit loss on U.S. treasuries during the period.

Obligations of states and political subdivisions – As of March 31, 2024, gross unrealized losses related to obligations of states and political subdivisions were $1.188 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, elements that may influence the performance of the municipal bond market are considered in evaluating these securities such as investor expectations, supply and demand patterns, and current versus historical yield and spread relationships. The analysis relies on the output of fixed income credit analysts, as well as dedicated municipal bond analysts who perform extensive in-house fundamental analysis on each issuer, regardless of their rating by the major agencies. Based on the analysis performed, the Company did not recognize a credit loss on obligations of states and political subdivisions during the period.

Mortgage-backed securities (“MBS”) – As of March 31, 2024, gross unrealized losses related to mortgage-backed securities were $4.144 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, mortgage-backed securities are modeled to project principal losses under downside, base, and upside scenarios for the economy and home prices. The primary assumption that drives the security and loan level modeling is the Home Price Index (“HPI”) projection. These forecasts incorporate not just national macro-economic trends, but also regional impacts to arrive at the most granular and accurate projections. These assumptions are incorporated into the model as a basis to generate delinquency probabilities, default curves, loss severity curves, and voluntary prepayment curves at the loan level within each deal. The model utilizes HPI-adjusted current loan to value, payment history, loan terms, loan modification history, and borrower characteristics as inputs to generate expected cash flows and principal loss for each bond under various scenarios. Based on the analysis performed, the Company did not recognize a credit loss on mortgage-backed securities during the period.

Asset backed securities (“ABS”) - As of March 31, 2024, gross unrealized losses related to asset backed securities were $4.441 million. The weighted average credit enhancement for the Company’s asset backed portfolio is 37.0. This represents the percentage of pool losses that can occur before an asset backed security will incur its first dollar of principal losses. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, every ABS transaction is analyzed on a stand-alone basis. This analysis involves a thorough review of the collateral, prepayment, and structural risk in each transaction. Additionally, the analysis includes an in-depth credit analysis of the originator and servicer of the collateral. The analysis projects an expected loss for a deal given a set of assumptions specific to the asset type. These assumptions are used to calculate at what level of losses the deal will incur its first dollar of principal loss. The major assumptions used to calculate this ratio are loss severities, recovery lags, and no advances on principal and interest. Based on the analysis performed, the Company did not recognize a credit loss on asset backed securities during the period.

Commercial mortgage-backed securities (“CMBS”) - As of March 31, 2024, gross unrealized losses related to the CMBS portfolio were $4.271 million. The weighted average credit enhancement for the Company’s CMBS portfolio is 48.5. This represents the percentage of pool losses that can occur before a commercial mortgage-backed security will incur its first dollar of principal loss. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, a loan level analysis is utilized where every underlying CMBS loan is re-underwritten based on a set of assumptions reflecting expectations for the future path of the economy. Each loan is analyzed over time using a series of tests to determine if a credit event will occur during the life of the loan. Inherent in this process are several economic scenarios and their corresponding rent/vacancy and capital market states. The five primary credit events that frame the analysis include loan modifications, term default, balloon default, extension, and ability to pay off the balloon. The resulting output is the expected loss adjusted cash flows for each bond under the base case and distressed scenarios. Based on the analysis performed, the Company did not recognize a credit loss on commercial mortgage-backed securities during the period.

Corporate bonds - As of March 31, 2024, gross unrealized losses related to corporate bonds were $5.891 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, analysis for this asset class includes maintaining detailed financial models that include a projection of each issuer’s future financial performance, including prospective debt servicing capabilities, capital structure composition, and the value of the collateral. The analysis incorporates the macroeconomic environment, industry conditions in which the issuer operates, the issuer’s current competitive position, its vulnerability to changes in the competitive and regulatory environment, issuer liquidity, issuer commitment to bondholders, issuer creditworthiness, and asset protection. Part of the process also includes running downside scenarios to evaluate the expected likelihood of default as well as potential losses in the event of default. Based on the analysis performed, the Company did not recognize a credit loss on corporate bonds during the period.

Foreign bonds – As of March 31, 2024, gross unrealized losses related to foreign bonds were $3.325 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, detailed financial models are maintained that include a projection of each issuer’s future financial performance, including prospective debt servicing capabilities, capital structure composition, and the value of the collateral. The analysis incorporates the macroeconomic environment, industry conditions in which the issuer operates, the issuer’s current competitive position, its vulnerability to changes in the competitive and regulatory environment, issuer liquidity, issuer commitment to bondholders, issuer creditworthiness, and asset protection. Part of the process also includes running downside scenarios to evaluate the expected likelihood of default as well as potential losses in the event of default. Based on the analysis performed, the Company did not recognize a credit loss on foreign bonds during the period.

The Company has evaluated its investment portfolio and has determined that an allowance for expected credit losses on its investments is not required.

Accumulated Other Comprehensive Income (Loss), Net of Tax

Accumulated other comprehensive income (loss), net of tax, as of March 31, 2024 and December 31, 2023 was as follows:


(Dollars in thousands)	March 31, 2024			December 31, 2023
Net unrealized gains (losses) from:
Fixed maturities	$	(24,666	)	$	(28,299	)
Foreign currency fluctuations		(273	)		(187	)
Deferred taxes		4,944			5,623
Accumulated other comprehensive income (loss), net of tax	$	(19,995	)	$	(22,863	)

The following tables present the changes in accumulated other comprehensive income (loss), by components, for the quarters ended March 31, 2024 and 2023:


Quarter Ended March 31, 2024 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities			Foreign Currency Items			Accumulated Other Comprehensive Income (Loss)
Beginning balance, net of tax	$	(22,715	)	$	(148	)	$	(22,863	)
Other comprehensive income (loss) before reclassification, before tax		3,608			(86	)		3,522
Amounts reclassified from accumulated other comprehensive income, before tax		25			—			25
Other comprehensive income (loss), before tax		3,633			(86	)		3,547
Income tax benefit (expense)		(697	)		18			(679	)
Ending balance, net of tax	$	(19,779	)	$	(216	)	$	(19,995	)


Quarter Ended March 31, 2023 (Dollars in thousands)	Unrealized Gains and Losses on Available for Sale Securities			Foreign Currency Items			Accumulated Other Comprehensive Income (Loss)
Beginning balance, net of tax	$	(42,958	)	$	(100	)	$	(43,058	)
Other comprehensive income (loss) before reclassification, before tax		10,128			(254	)		9,874
Amounts reclassified from accumulated other comprehensive income, before tax		606			—			606
Other comprehensive income (loss), before tax		10,734			(254	)		10,480
Income tax benefit (expense)		(2,090	)		53			(2,037	)
Ending balance, net of tax	$	(34,314	)	$	(301	)	$	(34,615	)

The reclassifications out of accumulated other comprehensive income (loss) for the quarters ended March 31, 2024 and 2023 were as follows:


		Amounts Reclassified from Accumulated Other (Loss) Comprehensive Income
(Dollars in thousands)		Quarters Ended March 31,
Details about Accumulated Other Comprehensive Income Components	Affected Line Item in the Consolidated Statements of Operations	2024			2023
Unrealized gains and losses on available for sale securities	Other net realized investment losses	$	25		$	606
	Income tax benefit		(3	)		(119	)
	Total reclassifications, net of tax	$	22		$	487

Net Realized Investment Gains (Losses)

The components of net realized investment gains (losses) for the quarters ended March 31, 2024 and 2023 were as follows:


	Quarters Ended March 31,
(Dollars in thousands)	2024			2023
Fixed maturities:
Gross realized gains	$	6		$	5
Gross realized losses		(31	)		(611	)
Net realized gains (losses)		(25	)		(606	)
Equity securities:
Gross realized gains		875			627
Gross realized losses		(3	)		(1,541	)
Net realized gains (losses)		872			(914	)
Total net realized investment gains (losses)	$	847		$	(1,520	)

The following table shows the calculation of the portion of realized gains and losses related to equity securities held as of March 31, 2024 and 2023:


	Quarters Ended March 31,
(Dollars in thousands)	2024			2023
Net gains (losses) recognized during the period on equity securities	$	872		$	(914	)
Less: net gains (losses) recognized during the period on equity securities sold during the period		(11	)		18
Unrealized gains (losses) recognized during the reporting period on equity securities still held	$	883		$	(932	)

The proceeds from sales and redemptions of available for sale and equity securities resulting in net realized investment gains (losses) for the quarters ended March 31, 2024 and 2023 were as follows:


	Quarters Ended March 31,
(Dollars in thousands)	2024		2023
Fixed maturities	$	20,759	$	44,381
Equity securities		—		—

Net Investment Income

The sources of net investment income for the quarters ended March 31, 2024 and 2023 were as follows:


	Quarters Ended March 31,
(Dollars in thousands)	2024			2023
Fixed maturities	$	13,578		$	11,460
Equity securities		189			190
Cash and cash equivalents		659			263
Other invested assets		597			467
Total investment income		15,023			12,380
Investment expense		(503	)		(372	)
Net investment income	$	14,520		$	12,008

The Company’s total investment return on a pre-tax basis for the quarters ended March 31, 2024 and 2023 were as follows:


	Quarters Ended March 31,
(Dollars in thousands)	2024			2023
Net investment income	$	14,520		$	12,008
Net realized investment gains (losses)		847			(1,520	)
Change in unrealized holding gains		3,547			10,480
Net realized and unrealized investment returns		4,394			8,960
Total investment return	$	18,914		$	20,968
Total investment return % (1)		1.3	%		1.6	%
Average investment portfolio (2)	$	1,403,878		$	1,344,886

(1)

Not annualized.

(2)

Average of total cash and invested assets, net of receivable/payable for securities, as of the beginning and end of the period.

As of March 31, 2024 and December 31, 2023, the Company did not own any fixed maturity securities that were non-income producing for the preceding twelve months.

Insurance Enhanced Asset-Backed and Credit Securities

As of March 31, 2024, the Company held insurance enhanced municipal bonds with a market value of approximately $4.9 million which represented 0.3% of the Company’s total cash and invested assets, net of receivable for securities matured. The financial guarantors of the Company’s $4.9 million municipal bonds include Assured Guaranty Corporation ($3.7 million) and Ambac Financial Group ($1.2 million).

The Company had no direct investments in the entities that have provided financial guarantees or other credit support to any security held by the Company at March 31, 2024.

Bonds Held on Deposit

Certain cash and cash equivalents and bonds available for sale were deposited with various governmental authorities in accordance with statutory requirements, were held as collateral, or were held in trust. The fair values were as follows as of March 31, 2024 and December 31, 2023:


	Estimated Fair Value
(Dollars in thousands)	March 31, 2024		December 31, 2023
On deposit with governmental authorities	$	19,089	$	19,262
Held in trust pursuant to third party requirements		152,896		150,796
Total (1)	$	171,985	$	170,058

(1)

Includes cash and cash equivalents of $9.9 million and $9.0 million at March 31, 2024 and December 31, 2023, respectively, with the remainder related to bonds available for sale.

Variable Interest Entities

A Variable Interest Entity (“VIE”) refers to an investment in which an investor holds a controlling interest that is not based on the majority of voting rights. Under the VIE model, the party that has the power to exercise significant management influence and maintain a controlling financial interest in the entity’s economics is said to be the primary beneficiary, and is required to consolidate the entity within their results. Other entities that participate in a VIE, for which their financial interests fluctuate with changes in the fair value of the investment entity’s net assets but do not have significant management influence and the ability to direct the VIE’s significant economic activities are said to have a variable interest in the VIE but do not consolidate the VIE in their financial results.

The Company has interests in three limited partnership investments with a carrying value approximating fair value of $34.0 million and $38.2 million as of March 31, 2024 and December 31, 2023. The Company has a variable interest in two of these

limited partnership investments, for which it is not the primary beneficiary. These investments are accounted for under the equity method since its ownership interest exceeds 3%.

The carrying value of one of the Company’s VIE’s, which invests in distressed securities and assets, was $4.0 million as of March 31, 2024 and December 31, 2023. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $18.2 million and $18.3 million at March 31, 2024 and December 31, 2023, respectively. The carrying value and maximum exposure to loss of a second VIE that invests in Real Estate Investment Trust (“REIT”) qualifying assets was $8.6 million and $8.2 million as of March 31, 2024 and December 31, 2023, respectively. The Company’s investment in VIEs is included in other invested assets on the consolidated balance sheets with changes in carrying value recorded in the consolidated statements of operations.

Fair Value Measurements

The accounting standards related to fair value measurements define fair value, establish a framework for measuring fair value, outline a fair value hierarchy based on inputs used to measure fair value, and enhance disclosure requirements for fair value measurements. These standards do not change existing guidance as to whether or not an instrument is carried at fair value. The Company has determined that its fair value measurements are in accordance with the requirements of these accounting standards.

The Company’s invested assets are carried at their fair value and are categorized based upon a fair value hierarchy:

•

Level 1 – inputs utilize quoted prices (unadjusted) in active markets for identical assets that the Company has the ability to access at the measurement date.

•

Level 2 – inputs utilize other than quoted prices included in Level 1 that are observable for similar assets, either directly or indirectly.

•

Level 3 – inputs are unobservable for the asset, and include situations where there is little, if any, market activity for the asset.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset.

The following table presents information about the Company’s invested assets measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.


	Fair Value Measurements
As of March 31, 2024 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
U.S. treasuries	$	544,543	$	—	$	—	$	544,543
Obligations of states and political subdivisions		—		23,092		—		23,092
Mortgage-backed securities		—		57,542		—		57,542
Commercial mortgage-backed securities		—		77,771		—		77,771
Asset-backed securities		—		199,695		—		199,695
Corporate bonds		—		224,664		—		224,664
Foreign corporate bonds		—		99,002		—		99,002
Total fixed maturities		544,543		681,766		—		1,226,309
Equity securities		—		17,045		—		17,045
Total assets measured at fair value	$	544,543	$	698,811	$	—	$	1,243,354


	Fair Value Measurements
As of December 31, 2023 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
U.S. treasuries	$	494,223	$	—	$	—	$	494,223
Obligations of states and political subdivisions		—		26,150		—		26,150
Mortgage-backed securities		—		58,927		—		58,927
Commercial mortgage-backed securities		—		79,080		—		79,080
Asset-backed securities		—		202,952		—		202,952
Corporate bonds		—		291,713		—		291,713
Foreign corporate bonds		—		140,748		—		140,748
Total fixed maturities		494,223		799,570		—		1,293,793
Equity securities		—		16,508		—		16,508
Total assets measured at fair value	$	494,223	$	816,078	$	—	$	1,310,301

The securities classified as Level 1 in the above tables consist of U.S. treasuries actively traded on an exchange.

The securities classified as Level 2 in the above tables consist primarily of fixed maturities and preferred stocks. Based on the typical trading volumes and the lack of quoted market prices for fixed maturities and preferred stocks, security prices are derived through recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. If there are no recent reported trades, matrix or model processes are used to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Included in the pricing of asset-backed securities, collateralized mortgage obligations, and mortgage-backed securities are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment speeds previously experienced at the interest rate levels projected for the underlying collateral.

The following table presents changes in Level 3 investments measured at fair value on a recurring basis for the quarters ended March 31, 2024 and 2023:


	Quarters Ended March 31,
(Dollars in thousands)	2024		2023
Beginning balance	$	—	$	4,571
Total gains (realized / unrealized):
Included in accumulated other comprehensive income (loss)		—		10
Included in earnings attributable to realized gains / losses		—		(59	)
Transfers into level 3		—		—
Transfers out of level 3				—
Amortization of bond premium and discount, net		—		2
Purchases		—		74
Sales		—		(263	)
Ending balance	$	—	$	4,335
Gains (losses) included in earnings attributable to the change in unrealized gains (losses) related to assets still held at end of reporting period	$	—	$	(59	)

There were no transfers into or out of Level 3 during the quarters ended March 31, 2024 or 2023.

Fair Value of Alternative Investments

Other invested assets consist of limited partnerships whose carrying value approximates fair value. The following table provides the fair value and future funding commitments related to these investments at March 31, 2024 and December 31, 2023.


	March 31, 2024				December 31, 2023
(Dollars in thousands)	Fair Value		Future Funding Commitment		Fair Value		Future Funding Commitment
European Non-Performing Loan Fund, LP (1)	$	3,990	$	14,214	$	4,048	$	14,214
Mortgage Debt Fund, LP (2)		8,619		—		8,172		—
Global Debt Fund, LP (3)		21,412		—		26,016		—
Total	$	34,021	$	14,214	$	38,236	$	14,214

(1)

This limited partnership invests in distressed securities and assets through senior and subordinated, secured and unsecured debt and equity, in both public and private large-cap and middle-market companies. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets.

(2)

This limited partnership invests in REIT qualifying assets such as mortgage loans, investor property loans, and commercial mortgage loans. The Company does not have the ability to sell or transfer its limited partnership interest without consent from the general partner. The Company does not have the contractual option to redeem its limited partnership interest but receives distributions based on the liquidation of the underlying assets.

(3)

This limited partnership invests in performing, stressed or distressed securities and loans across the global fixed income markets. The Company does have the contractual option to withdraw all or a portion of its limited partnership interest by providing notice to the fund. On July 31, 2023, the Company provided the Global Debt Fund, LP with a formal withdrawal request to fully redeem the partnership interest. Partial redemption proceeds of $4.3 million were received during the quarter ended March 31, 2024.

Limited Partnerships with ownership interest exceeding 3%

The Company uses the equity method to account for investments in limited partnerships where its ownership interest exceeds 3%. The equity method of accounting for an investment in limited partnerships requires that its cost basis be updated to account for the income or loss earned on the investment. In the Fair Value of Alternative Investments table above, all of the investments are booked on a one quarter lag due to non-availability of data at the time the financial statements are prepared. The investment income (loss) associated with the limited partnerships whose ownership interest exceeds 3% is reflected in the consolidated statements of operations in the amounts of $0.4 million and $0.1 million for the quarters ended March 31, 2024 and 2023, respectively.

Pricing

The Company’s pricing vendors provide prices for all investment categories except for investments in limited partnerships. Two primary vendors are utilized to provide prices for equity and fixed maturity securities.

The following is a description of the valuation methodologies used by the Company’s pricing vendors for investment securities carried at fair value:

•

Equity security prices are received from primary and secondary exchanges.

•

Corporate and agency bonds, as well as preferred stock, are evaluated by utilizing a spread to a benchmark curve. Bonds with similar characteristics are grouped into specific sectors. Inputs for both asset classes consist of trade prices, broker quotes, the new issue market, and prices on comparable securities.

•

Data from commercial vendors is aggregated with market information, then converted into an option adjusted spread (“OAS”) matrix and prepayment model used for collateralized mortgage obligations (“CMO”). CMOs are categorized with mortgage-backed securities in the tables listed above. For asset-backed securities, spread data is derived from trade prices, dealer quotations, and research reports. For both asset classes, evaluations utilize standard inputs plus new issue data, and collateral performance. The evaluated pricing models incorporate cash flows, broker quotes, market trades, historical prepayment speeds, and dealer projected speeds.

•

For obligations of state and political subdivisions, an attribute-based modeling system is used. The pricing model incorporates trades, market clearing yields, market color, and fundamental credit research.

•

U.S. treasuries are evaluated by obtaining feeds from a number of live data sources including primary and secondary dealers as well as inter-dealer brokers.

•

For mortgage-backed securities, various external analytical products are utilized and purchased from commercial vendors.

The Company performs certain procedures to validate whether the pricing information received from the pricing vendors is reasonable, to ensure that the fair value determination is consistent with accounting guidance, and to ensure that its assets are properly classified in the fair value hierarchy. The Company’s procedures include, but are not limited to:

•

Reviewing periodic reports provided by the Investment Manager that provides information regarding rating changes and securities placed on watch. This procedure allows the Company to understand why a particular security’s market value may have changed or may potentially change.

•

Understanding and periodically evaluating the various pricing methods and procedures used by the Company’s pricing vendors to ensure that investments are properly classified within the fair value hierarchy.

•

On a quarterly basis, the Company corroborates investment security prices received from its pricing vendors by obtaining pricing from a second pricing vendor for a sample of securities.

During the quarters ended March 31, 2024 and 2023, the Company has not adjusted quotes or prices obtained from the pricing vendors.

13.

Segment Information

During the fourth quarter of 2023, the Company restructured its insurance operations to strengthen its market presence and enhance GBLI's focus on core products and made the decision to manage the business through two segments, Penn-America and Non-Core Operations. Management believes these segments allow users of the Company’s financial statements to better understand the Company's performance, better assess prospects for future net cash flows, and make more informed judgments about the Company as a whole. Segment results for prior years have been revised to reflect these changes.

The Company manages the distribution of its core product offerings through Penn-America. Penn-America offers specialty property and casualty products designed for GBLI's Wholesale Commercial, Programs, InsurTech, and Assumed Reinsurance product offerings. The Company also has a Non-Core Operations segment that contains lines of business that have been de-emphasized or are no longer being written.

The following are tabulations of business segment information for the quarters ended March 31, 2024 and 2023. Corporate information is included to reconcile segment data to the consolidated financial statements.


Quarter Ended March 31, 2024 (Dollars in thousands)	Penn- America		Non-Core Operations			Total
Revenues:
Gross written premiums	$	94,048	$	(560	)	$	93,488
Net written premiums	$	92,596	$	(511	)	$	92,085
Net earned premiums	$	89,132	$	7,447		$	96,579
Other income		339		6			345
Total revenues		89,471		7,453			96,924
Losses and Expenses:
Net losses and loss adjustment expenses		48,909		4,475			53,384
Acquisition costs and other underwriting expenses		34,927		3,342			38,269
Income (loss) from segments	$	5,635	$	(364	)	$	5,271
Unallocated Items:
Net investment income							14,520
Net realized investment gains							847
Corporate and other operating expenses							(6,373	)
Income before income taxes							14,265
Income tax expense							(2,899	)
Net income						$	11,366

Segment assets	$	983,495	$	597,601		$	1,581,096
Corporate assets							147,146
Total assets						$	1,728,242


Quarter Ended March 31, 2023 (Dollars in thousands)	Penn- America			Non-Core Operations		Total
Revenues:
Gross written premiums	$	95,412		$	27,573	$	122,985
Net written premiums	$	91,148		$	24,713	$	115,861
Net earned premiums	$	90,612		$	49,460	$	140,072
Other income		267			87		354
Total revenues		90,879			49,547		140,426
Losses and Expenses:
Net losses and loss adjustment expenses		59,278			28,723		88,001
Acquisition costs and other underwriting expenses		34,709			18,769		53,478
Income (loss) from segments	$	(3,108	)	$	2,055	$	(1,053	)
Unallocated Items:
Net investment income							12,008
Net realized investment losses							(1,520	)
Corporate and other operating expenses							(6,368	)
Income before income taxes							3,067
Income tax expense							(573	)
Net income						$	2,494

Segment assets	$	940,617		$	740,750	$	1,681,367
Corporate assets							95,911
Total assets						$	1,777,278

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes of the Company included elsewhere in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to the Company’s plans and strategy, constitutes forward-looking statements that involve risks and uncertainties. Please see "Cautionary Note Regarding Forward-Looking Statements" at the end of this Item 2 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained herein. For more information regarding the Company’s business and operations, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The Company realized net income of $11.4 million and $2.5 million during the quarters ended March 31, 2024 and 2023, respectively.

Net investment income increased by $2.5 million during the quarter ended March 31, 2024 as compared to the same period in 2023. This increase in net investment income was primarily due to strategies employed by the Company to take advantage of rising interest rates which resulted in a 19% increase in book yield on the fixed maturities portfolio to 4.3% at March 31, 2024 from 3.6% at March 31, 2023. The weighted average duration of the fixed maturities portfolio was 1.1 years as of March 31, 2024.

The Company generated strong underwriting income of $5.3 million for the quarter ended March 31, 2024 compared to an underwriting loss of $1.1 million for the same period in 2023. This improvement is primarily driven by strong property results during the quarter ended March 31, 2024.

The following table summarizes the Company’s results for the quarters ended March 31, 2024 and 2023:

The following table summarizes the change in premium volume by business segment:

Gross written premiums decreased by 24.0% for the quarter ended March 31, 2024 as compared to same period in 2023. The decrease in gross written premiums is mainly due to a reduction in premiums within Non-Core Operations for lines of business that have been de-emphasized or no longer written. In addition, within Penn-America, the gross written premiums for Programs decreased primarily due to actions taken in 2023 to improve underwriting results through increased rates and form changes. These reductions in premiums were partially offset by continued growth of 7.1% in aggregate for Penn-America's Wholesale Commercial, InsurTech, and Assumed Reinsurance divisions. The growth in Wholesale Commercial and InsurTech is driven by new agency appointments, organic growth of existing agents, and new products. The growth in Assumed Reinsurance is primarily due to three new treaties entered into during 2023 and increased participation on one treaty.

The ratio of net written premiums to gross written premiums is referred to as the Company’s net premium retention. The Company’s net premium retention is summarized by segments as follows:

The net premium retention for the quarter ended March 31, 2024 increased by 4.3 points as compared to the same period in 2023. Penn-America's retention increased by 3.0 points primarily due to the termination of two quota share agreements and lower cost on the Company's catastrophe reinsurance treaty. Cessions on Non-Core Operations were significantly reduced

due to sale of manufactured home and dwelling business in 2021 and the Farm, Ranch and Stable business in 2022. See Note 2 of the notes to the consolidated financial statements in Item 8 of Part II of the Company’s 2023 Annual Report on Form 10-K for additional information on the sale of renewal rights related to the Company’s manufactured and dwelling homes business and the Company's Farm, Ranch & Stable business.

Net earned premiums within the Penn-America segment decreased by 1.6% for the quarter ended March 31, 2024 as compared to the same period in 2023 primarily due to the reduction in premiums written for Programs as a result of underwriting actions taken in 2023 to improve underwriting profitability partially offset by continued premium growth in Penn-America's Wholesale Commercial, InsurTech, and Assumed Reinsurance divisions. Property net earned premiums were $39.9 million and $37.6 million for the quarters ended March 31, 2024 and 2023, respectively. Casualty net earned premiums were $49.2 million and $53.0 million for the quarters ended March 31, 2024 and 2023, respectively.

Net earned premiums within the Non-Core Operations segment decreased by 84.9% for the quarter ended March 31, 2024 as compared to the same period in 2023 primarily due to the non-renewal of a casualty treaty as well as a reduction in earned premiums due to the sale of Farm, Ranch & Stable renewal rights on August 8, 2022. Property net earned premiums were less than $0.1 million and $8.8 million for the quarters ended March 31, 2024 and 2023, respectively. Casualty net earned premiums were $7.4 million and $40.7 million for the quarters ended March 31, 2024 and 2023, respectively.

Amounts recorded for unpaid losses and loss adjustment expenses represent management’s best estimate at March 31, 2024. Management’s best estimate is as of a particular point in time and is based upon known facts, the Company’s actuarial analyses, current law, and the Company’s judgment. This resulted in carried gross and net reserves of $853.6 million and $781.8 million, respectively, as of March 31, 2024. A breakout of the Company’s gross and net reserves, as of March 31, 2024, is as follows:

Each reserve category has an implicit frequency and severity for each accident year as a result of the various assumptions made. If the actual levels of loss frequency and severity are higher or lower than expected, the ultimate losses will be different than management’s best estimate. For most of its reserve categories, the Company believes that frequency can be predicted with greater accuracy than severity. Therefore, the Company believes management’s best estimate is more likely influenced by changes in severity than frequency. The following table, which the Company believes reflects a reasonable range of variability around its best estimate based on historical loss experience and management’s judgment, reflects the

impact of changes (which could be favorable or unfavorable) in frequency and severity on the Company’s current accident year net loss estimate of $53.4 million for claims occurring during the quarter ended March 31, 2024:

The Company’s net reserves for losses and loss adjustment expenses of $781.8 million as of March 31, 2024 relate to multiple accident years. Therefore, the impact of changes in frequency and severity for more than one accident year could be higher or lower than the amounts reflected above.

The components of income (loss) from the Company’s Penn-America segment and corresponding underwriting ratios are as follows:

See “Results of Operations” above for a discussion on consolidated premiums.

Other income was $0.3 million for each of the quarters ended March 31, 2024 and 2023. Other income is primarily comprised of fee income.

The calendar year loss ratio for the quarter ended March 31, 2024 was 54.9% and includes an increase of less than $0.1 million, or 0.1 percentage points related to reserve development on prior accident years. The calendar year loss ratio for the quarter ended March 31, 2023 was 65.4% and includes an increase of $2.2 million, or 2.4 percentage points related to reserve development on prior accident years. Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

The current accident year loss ratio improved by 8.2 points from 63.0% for the quarter ended March 31, 2023 to 54.8% for the quarter ended March 31, 2024. The current accident year losses and loss ratio is summarized as follows:

The expense ratio for the Company’s Penn-America segment increased by 0.9 points from 38.3% for the quarter ended March 31, 2023 to 39.2% for the quarter ended March 31, 2024 primarily due to a reduction in earned premiums.

The table below reconciles the non-GAAP measures or ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends within Penn-America may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company.

The components of income (loss) from the Company’s Non-Core Operations segment and corresponding underwriting ratios are as follows:

See “Results of Operations” above for a discussion on consolidated premiums.

The Company recognized income of less than $0.1 million for each of the quarters ended March 31, 2024 and 2023. Other income is primarily comprised of fee income net of bank fees.

The calendar year loss ratio for the quarter ended March 31, 2024 was 60.1% and includes a decrease of less than $0.1 million, or 0.5 percentage points related to reserve development on prior accident years. The calendar year loss ratio for the quarter ended March 31, 2023 was 58.1% and includes a decrease of $2.2 million, or 4.4 percentage points related to reserve development on prior accident years. Please see Note 7 of the notes to the consolidated financial statements in Item 1 of Part I of this report for further discussion on prior accident year development.

The current accident year loss ratio improved by 1.9 points from 62.5% for the quarter ended March 31, 2023 to 60.6% for the quarter ended March 31, 2024. The current accident year losses and loss ratio is summarized as follows:

The expense ratio for the Company’s Non-Core Operations increased by 7.0 points from 37.9% for the quarter ended March 31, 2023 to 44.9% for the quarter ended March 31, 2024 primarily due to lower earned premiums as a result of exiting various lines of business.

The table below reconciles the non-GAAP measures or ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends within Non-Core Operations may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company.

The Company’s fixed income portfolio, excluding cash, continues to maintain high quality with an AA- average rating and a duration of 1.1 years.

Net investment income increased by 20.9% for the quarter ended March 31, 2024 as compared to the same period in 2023. This increase in net investment income was primarily due to strategies employed by the Company to take advantage of rising interest rates which resulted in a 19% increase in book yield on the fixed maturities portfolio to 4.3% at March 31, 2024 from 3.6% at March 31, 2023.

At March 31, 2024, the Company held asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations with a market value of $335.0 million. Excluding the asset-backed, mortgage-backed, commercial mortgage-backed and collateralized mortgage obligations, the average duration of the Company’s fixed maturities portfolio was 0.9 years as of March 31, 2024, compared with 1.4 years as of March 31, 2023. Changes in interest rates can cause principal payments on certain investments to extend or shorten which can impact duration. The Company’s embedded book yield on its fixed maturities, not including cash, was 4.3% as of March 31, 2024, compared to 3.6% as of March 31, 2023. The embedded book yield on the $23.1 million of taxable municipal bonds in the Company’s portfolio was 2.9% at March 31, 2024, compared to an embedded book yield of 3.1% on the Company’s taxable municipal bonds of $31.9 million at March 31, 2023.

The components of net realized investment gains (losses) for the quarters ended March 31, 2024 and 2023 were as follows:

See Note 3 of the notes to the consolidated financial statements in Item 1 of Part I of this report for an analysis of total investment return on a pre-tax basis for the quarters ended March 31, 2024 and 2023.

Corporate and other operating expenses consist of outside legal fees, other professional fees, directors’ fees, management fees & advisory fees, salaries and benefits for holding company personnel, development costs for new products, impairment losses, and taxes incurred which are not directly related to operations. Corporate and other operating expenses were $6.4 million during each of the quarters ended March 31, 2024 and 2023, respectively.

Income tax expense was $2.9 million for the quarter ended March 31, 2024 compared with income tax expense of $0.6 million for the quarter ended March 31, 2023. The increase in income tax expense is primarily due to higher taxable income in the Company's U.S. Subsidiaries during the quarter ended March 31, 2024 as compared to the same period in 2023.

See Note 6 of the notes to the consolidated financial statements in Item 1 of Part I of this report for a comparison of income tax between periods.

The factors described above resulted in net income of $11.4 million and $2.5 million for the quarters ended March 31, 2024 and 2023, respectively.

The Company’s consolidated financial statements are prepared in conformity with GAAP, which require it to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

The most critical accounting policies involve significant estimates and include those used in determining the liability for unpaid losses and loss adjustment expenses, recoverability of reinsurance receivables, investments, fair value measurements, goodwill and intangible assets, deferred acquisition costs, and taxation. For a detailed discussion on each of these policies, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes to any of these policies or underlying methodologies during the current year.

Global Indemnity Group, LLC is a holding company. Its principal asset is its ownership of the shares of its direct and indirect subsidiaries, including those of its insurance companies: United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, Penn-Star Insurance Company, and Penn-Patriot Insurance Company.

Global Indemnity Group, LLC’s current short term and long term liquidity needs include but are not limited to the payment of corporate expenses, distributions to shareholders, and share repurchases. The Company also has commitments in the form of operating leases, commitments to fund limited liability investments, and unpaid losses and loss expense obligations. In order to meet its current short term and long term needs, Global Indemnity Group, LLC’s principal sources of cash includes investment income, dividends from subsidiaries, other permitted disbursements from its direct and indirect subsidiaries, reimbursement for equity awards granted to employees and intercompany borrowings. The principal sources of funds at these direct and indirect subsidiaries include underwriting operations, investment income, proceeds from sales and redemptions of investments, capital contributions, intercompany borrowings, and dividends from subsidiaries. Funds are used principally by these operating subsidiaries to pay claims and operating expenses, to make intercompany debt payments, to purchase investments, and to make distribution payments. In addition, the Company periodically reviews opportunities related to business acquisitions, and as a result, liquidity may be needed in the future.

GBLI Holdings, LLC is a holding company which is a wholly-owned subsidiary of Penn-Patriot Insurance Company. GBLI Holdings, LLC’s principal asset is its ownership of the shares of its direct and indirect subsidiaries which include United National Insurance Company, Diamond State Insurance Company, Penn-America Insurance Company, and Penn-Star Insurance Company. GBLI Holdings, LLC is dependent on dividends from its subsidiaries as well as reimbursements from its subsidiaries for utilization of net operating losses and other tax attributes in order to meet its corporate expense obligations and intercompany financing obligations.

As of March 31, 2024, the Company also had future funding commitments of $14.2 million related to investments that are currently in their harvest period and it is unlikely that a capital call will be made.

The future liquidity of Global Indemnity Group, LLC is dependent on the ability of its subsidiaries to generate income to pay dividends and to pay intercompany debt due to Global Indemnity Group, LLC. The future liquidity of GBLI Holdings, LLC is dependent on the ability of its subsidiaries to generate income to pay dividends as well as receiving reimbursements from its subsidiaries for utilization of net operating losses. Global Indemnity Group, LLC and GBLI Holdings, LLC’s insurance

companies are restricted by statute as to the amount of dividends that they may pay without the prior approval of regulatory authorities. The dividend limitations imposed by state laws are based on the statutory financial results of each insurance company that are determined by using statutory accounting practices that differ in various respects from accounting principles used in financial statements prepared in conformity with GAAP. See “Regulation - Statutory Accounting Principles” in Item 1 of Part I of the Company’s 2023 Annual Report on Form 10-K. Key differences relate to, among other items, deferred acquisition costs, limitations on deferred income taxes, reserve calculation assumptions and surplus notes. See Note 21 of the notes to the consolidated financial statements in Item 8 of Part II of the Company’s 2023 Annual Report on Form 10-K for further information on dividend limitations related to the Insurance Companies. There were no dividends declared or paid during the quarter ended March 31, 2024.

Sources of operating funds consist primarily of net written premiums and investment income. Funds are used primarily to pay claims and operating expenses and to purchase investments. As a result of the distribution policy, funds may also be used to pay distributions to shareholders of the Company.

The Company’s reconciliation of net income to net cash provided by operations is generally influenced by the following:

Net cash provided by operating activities was $22.7 million and $5.3 million for the quarters ended March 31, 2024 and 2023, respectively. The increase in operating cash flows of approximately $17.4 million from the prior year was primarily a net result of the following items:

See the consolidated statements of cash flows in the consolidated financial statements in Item 1 of Part I of this report for details concerning the Company’s investing and financing activities.

The Board of Directors approved a distribution payment of $0.35 per common share to all shareholders of record on the close of business on March 21, 2024. Distributions paid to common shareholders were $4.8 million during the quarter ended March 31, 2024. In addition, distributions of $0.1 million were paid to Global Indemnity Group, LLC’s preferred shareholder during the quarter ended March 31, 2024.

On July 31, 2023, the Company provided the Global Debt Fund, LP with a formal withdrawal request to fully redeem the partnership interest. Partial redemption proceeds of $4.3 million were received during the quarter ended March 31, 2024. The Global Debt Fund, LP had a fair market value of $21.4 million at March 31, 2024.

Other than the items discussed in the preceding paragraphs, there have been no material changes to the Company’s liquidity during the quarter ended March 31, 2024. Please see Item 7 of Part II in the Company’s 2023 Annual Report on Form 10-K for information regarding the Company’s liquidity.

There have been no material changes to the Company’s capital resources during the quarter ended March 31, 2024. Please see Item 7 of Part II in the Company’s 2023 Annual Report on Form 10-K for information regarding the Company’s capital resources.

Some of the statements under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report may include forward-looking statements within the meaning of Section 21E of the Security Exchange Act of 1934, as amended, that reflect the Company’s current views with respect to future events and financial performance. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, expectations or consequences of identified transactions or natural disasters, and statements about the future performance, operations, products and services of the companies.

The Company’s business and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. See “Risk Factors” in Item 1A of Part I in the Company’s 2023 Annual Report on Form 10-K for risks, uncertainties and other factors that could cause actual results and experience to differ from those projected. The Company’s forward-looking statements speak only as of the date of this report or as of the date they were made. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in interest rates, equity prices, credit risk, illiquidity, foreign exchange rates and commodity prices. The Company’s consolidated balance sheets includes the estimated fair values of assets that are subject to market risk. The Company’s primary market risks are interest rate risk and credit risks associated with investments in fixed maturities, equity price risk associated with investments in equity securities, and foreign exchange risk associated with premium received that is denominated in foreign currencies. The Company has no commodity risk.

There have been no material changes to the Company’s market risk since December 31, 2023. The Company’s investment grade fixed income portfolio continues to maintain high quality with an AA- average rating and a duration of 1.1 years.

Please see Item 7A of Part II in the Company’s 2023 Annual Report on Form 10-K for information regarding the Company’s market risk.

The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has

evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2024. Based upon that evaluation, and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2024, the design and operation of the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

There have been no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

The Company is, from time to time, involved in various legal proceedings in the ordinary course of business. The Company maintains insurance and reinsurance coverage for risks in amounts that it considers adequate. However, there can be no assurance that the insurance and reinsurance coverage that the Company maintains is sufficient or will be available in adequate amounts or at a reasonable cost. The Company does not believe that the resolution of any currently pending legal proceedings, either individually or taken as a whole, will have a material adverse effect on its business, results of operations, cash flows, or financial condition.

There is a greater potential for disputes with reinsurers who are in runoff. Some of the Company’s reinsurers’ have operations that are in runoff, and therefore, the Company closely monitors those relationships. The Company anticipates that, similar to the rest of the insurance and reinsurance industry, it will continue to be subject to litigation and arbitration proceedings in the ordinary course of business.

The Company’s results of operations and financial condition are subject to numerous risks and uncertainties described in Item 1A of Part I in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on March 15, 2024. The risk factors identified therein have not materially changed.

The Company’s Share Incentive Plan allows employees to surrender the Company’s class A common shares as payment for the tax liability incurred upon the vesting of restricted stock. There were no shares surrendered by the Company’s employees during the quarter ended March 31, 2024.

Global Indemnity Group, LLC did not repurchased any shares from third parties under its repurchase program during the quarter ended March 31, 2024.

All class A common shares surrendered by the Company's employees or repurchased from third parties under its repurchase program are held as treasury stock and recorded at cost until formally retired.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Large accelerated filer	☐;	Accelerated filer	☒;

Non-accelerated filer	☐;	Smaller reporting company	☐;

Emerging growth company	☐


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Shares	GBLI	New York Stock Exchange


			Page
	PART I – FINANCIAL INFORMATION

Item 1.		Financial Statements:	3

		Consolidated Balance Sheets As of March 31, 2024 (Unaudited) and December 31, 2023	3

		Consolidated Statements of Operations Quarters Ended March 31, 2024 (Unaudited) and March 31, 2023 (Unaudited)	4

		Consolidated Statements of Comprehensive Income Quarters Ended March 31, 2024 (Unaudited) and March 31, 2023 (Unaudited)	5

		Consolidated Statements of Changes in Shareholders’ Equity Quarters Ended March 31, 2024 (Unaudited) and March 31, 2023 (Unaudited)	6

		Consolidated Statements of Cash Flows Quarters Ended March 31, 2024 (Unaudited) and March 31, 2023 (Unaudited)	7

		Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.		Quantitative and Qualitative Disclosures about Market Risk	41

Item 4.		Controls and Procedures	41

	PART II – OTHER INFORMATION

Item 1.		Legal Proceedings	43

Item 1A.		Risk Factors	43

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.		Defaults Upon Senior Securities	43

Item 4.		Mine Safety Disclosures	43

Item 5.		Other Information	43

Item 6.		Exhibits	44

Signature			45


	(Unaudited) March 31, 2024			December 31, 2023
ASSETS
Fixed maturities:
Available for sale, at fair value (amortized cost: $1,250,975 and $1,322,092; net of allowance for expected credit losses of $0 at March 31, 2024 and December 31, 2023)	$	1,226,309		$	1,293,793
Equity securities, at fair value		17,045			16,508
Other invested assets		34,021			38,236
Total investments		1,277,375			1,348,537

Cash and cash equivalents		38,857			38,037
Premium receivables, net of allowance for expected credit losses of $4,423 at March 31, 2024 and $4,796 at December 31, 2023		92,440			102,158
Reinsurance receivables, net of allowance for expected credit losses of $8,992 at March 31, 2024 and December 31, 2023		77,664			80,439
Funds held by ceding insurers		17,395			16,989
Deferred federal income taxes		33,224			36,802
Deferred acquisition costs		40,231			42,445
Intangible assets		14,368			14,456
Goodwill		4,820			4,820
Prepaid reinsurance premiums		3,229			4,958
Receivable for securities matured		101,091			3,858
Lease right of use assets		9,288			9,715
Other assets		18,260			26,362
Total assets	$	1,728,242		$	1,729,576

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses	$	853,602		$	850,599
Unearned premiums		176,630			182,852
Ceded balances payable		1,651			2,642
Federal income tax payable		1,600			1,595
Contingent commissions		2,598			5,632
Lease liabilities		11,910			12,733
Other liabilities		20,756			24,770
Total liabilities	$	1,068,747		$	1,080,823

Commitments and contingencies (Note 10)		—			—

Shareholders’ equity:
Series A cumulative fixed rate preferred shares, $1,000 par value; 100,000,000 shares authorized, shares issued and outstanding: 4,000 and 4,000 shares, respectively, liquidation preference: $1,000 per share and $1,000 per share, respectively		4,000			4,000
Common shares: no par value; 900,000,000 common shares authorized; class A common shares issued: 11,082,004 and 11,042,670 respectively; class A common shares outstanding: 9,810,763 and 9,771,429, respectively; class B common shares issued and outstanding: 3,793,612 and 3,793,612, respectively		—			—
Additional paid-in capital		456,179			454,791
Accumulated other comprehensive income (loss), net of tax		(19,995	)		(22,863	)
Retained earnings		251,474			244,988
Class A common shares in treasury, at cost: 1,271,241 and 1,271,241 shares, respectively		(32,163	)		(32,163	)
Total shareholders’ equity		659,495			648,753
Total liabilities and shareholders’ equity	$	1,728,242		$	1,729,576


	(Unaudited) Quarters Ended March 31,
	2024			2023
Net income	$	11,366		$	2,494

Other comprehensive income, net of tax:
Unrealized holding gains		2,914			8,157
Reclassification adjustment for losses included in net income		22			487
Unrealized foreign currency translation losses		(68	)		(201	)
Other comprehensive income, net of tax		2,868			8,443

Comprehensive income, net of tax	$	14,234		$	10,937


Period (1)	Total Number of Shares Purchased			Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1-31, 2023		3,302	(3)	$	23.31		—		—
January 1-31, 2023		250,000	(4)	$	25.90		250,000		31,604,066
Total		253,302		$	25.82


Approval Date	Record Date	Payment Date	Total Distributions Declared (Dollars in thousands)
March 6, 2024	March 21, 2024	March 28, 2024	$	4,752
Various (1)	Various	Various		18
Total			$	4,770


	Quarters Ended March 31,
(Dollars in thousands, except share and per share data)	2024		2023
Numerator:
Net income	$	11,366	$	2,494
Less: preferred stock distributions		110		110
Net income available to common shareholders	$	11,256	$	2,384

Denominator:
Weighted average shares for basic earnings per share		13,579,210		13,670,732
Non-vested restricted stock units		47,335		103,407
Options		60,867		155,007
Weighted average shares for diluted earnings per share		13,687,412		13,929,146

Earnings per share - Basic	$	0.83	$	0.17
Earnings per share - Diluted	$	0.82	$	0.17


	Quarters Ended March 31,						Point
(Dollars in thousands)	2024			2023			Change
Penn-America		98.5	%		95.5	%		3.0
Non-Core Operations		91.3	%		89.6	%		1.7
Total		98.5	%		94.2	%		4.3


	Gross Reserves
(Dollars in thousands)	Case		IBNR (1)		Total
Penn-America	$	132,147	$	296,078	$	428,225
Non-Core Operations		118,526		306,851		425,377
Total	$	250,673	$	602,929	$	853,602


	Net Reserves (2)
(Dollars in thousands)	Case		IBNR (1)		Total
Penn-America	$	131,735	$	284,913	$	416,648
Non-Core Operations		84,746		280,394		365,140
Total	$	216,481	$	565,307	$	781,788


		Severity Change
(Dollars in thousands)		-10%			-5%			0%			5%			10%
Frequency Change	-5%		(7,741	)		(5,205	)		(2,669	)		(133	)		2,402
	-3%		(6,780	)		(4,191	)		(1,601	)		988			3,577
	-2%		(6,299	)		(3,683	)		(1,068	)		1,548			4,164
	-1%		(5,819	)		(3,176	)		(534	)		2,109			4,751
	0%		(5,338	)		(2,669	)		—			2,669			5,338
	1%		(4,858	)		(2,162	)		534			3,230			5,926
	2%		(4,377	)		(1,655	)		1,068			3,790			6,513
	3%		(3,897	)		(1,148	)		1,601			4,351			7,100
	5%		(2,936	)		(133	)		2,669			5,472			8,274


Underwriting Ratios:
Loss ratio:
Current accident year	54.8	%	63.0	%	(8.2	)
Prior accident year	0.1	%	2.4	%	(2.3	)
Calendar year loss ratio	54.9	%	65.4	%	(10.5	)
Expense ratio	39.2	%	38.3	%	0.9
Combined ratio	94.1	%	103.7	%	(9.6	)

Accident year combined ratio (1)	94.0	%	101.2	%



10.1+		Executive Employment Agreement with Brian J. Riley dated October 14, 2004

31.1+		Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) / 15d-14 (a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2+		Certification of Chief Financial Officer pursuant to Rule 13a-14 (a) / 15d-14 (a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1+		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2+		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


	GLOBAL INDEMNITY GROUP, LLC
	Registrant


Dated: May 8, 2024	By:	/s/ Brian J. Riley
		Brian J. Riley
		Chief Financial Officer
		(Authorized Signatory and Principal Financial and Accounting Officer)


	Quarters Ended March 31,
	2024						2023
(Dollars in thousands)	Amount			% of Pre- Tax Income			Amount			% of Pre- Tax Income
Expected tax provision at weighted average tax rate	$	2,996			21.0	%	$	644			21.0	%
Adjustments:
Non-deductible executive compensation		105			0.7			53			1.7
Dividend exclusion		(16	)		(0.1	)		(17	)		(0.5	)
Parent income treated as partnership for tax		(194	)		(1.3	)		(196	)		(6.4	)
Meals & Entertainment		17			0.1			66			2.2
Other		(9	)		(0.1	)		23			0.7
Effective income tax expense	$	2,899			20.3	%	$	573			18.7	%