00:02 Good day, and welcome to Global Indemnity Group, LLC’s Third Quarter twenty twenty one Earnings Conference call. Today's conference call is being recorded. The speakers’ remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by the use of forward-looking words, including without limitation, believes, expects or estimates. We caution you that such forward-looking statements should not be regarded as a representation by us with the future, plans, estimates or expectations, contemplated by us will in fact be achieved. 00:39 Please refer to our annual report on Form 10-K for the year-ended December thirty one, twenty twenty and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect the results. Global Indemnity Group, LLC is not under any obligation and expressly disclaims any such obligation to update or altered forward-looking statements, whether as a result of new information, future events, or otherwise. 01:10 I would now like to turn the call over to Mr. David Charlton, Chief Executive of GBLI. Please proceed.

01:18 Good morning. Thank you for joining our earnings call. Reiner Mauer, our Chief Operating Officer; Jonathan Oltman, President, Insurance Operations; Tom McGeehan, our Chief Financial Officer, and Steve Ries, Head of Investor Relations are joining me for this call. After I complete my remarks, Tom will provide additional updates on our results. I will conclude with my closing remarks, and then we'll open it up for Q&A. 01:49 The third quarter had strong gross written premium growth of twenty one point three percent to one hundred and seventy point three million dollars. Our growth is coming in the right places from our core businesses. Penn-America Binding programs and casualty reinsurance with the most significant drivers for the quarter. 02:11 Net loss for the quarter was seven point seven million dollars. Hurricane Ida was at fourteen point eight million dollars event for us. Property Brokerage also has significant negative impact on the quarter. Excluding Ida and Property Brokerage, combined ratio would have been eighty eight point five percent. So a similar story the past quarters forecast (ph) and property losses are behind the negative results. 02:40 Let's now review our recent actions taken since Investor Day to address these areas. The Property Brokerage Business division will not be a separate unit going forward. There are non policies with limits greater than ten million dollars and policies that are written in unprofitable habitational lines. The go-forward focus is to target historically profitable areas of property with our Penn-America programs and other E&S businesses. 03:14 The Property Brokerage business is down twenty three point one percent year-to-date and will continue to run-off in profitable business in the remainder of twenty twenty one and ended twenty twenty two. The further growth of our strategy to focus on core small and middle market commercial…

05:59 Thank you, David and good morning. Commercial Specialty lines continued their strong growth. Gross written premium at ninety six million dollars for the quarter is up twenty eight percent from twenty twenty. Penn-America Binding gross written premium was fifty five million dollars, an increase of approximately thirty four percent from twenty twenty. United National Programs gross written premiums was twenty seven point five million dollars, up approximately twenty seven percent. 06:33 Vacant property gross written premium at six point four million dollars was up one percent. Property Brokerage had gross written premiums of six point nine million dollars and was down twenty six percent in the quarter due to actions taken to improve profitability. Commercial Specialty lines suffered in underwriting loss of eight point six million dollars, primarily due to catastrophe losses from Hurricane Ida and several high severity losses in the Property Brokerage line. 07:04 Reinsurance continues to perform well. Gross written premium was twenty nine point six million dollars, compared to fourteen point six million dollars in the third quarter of twenty twenty. This is due to increasing participation on a casualty quota share treaty, the global has assumed for the last several years and writing several smaller casualty treaties in twenty twenty one. Its combined ratio for the quarter was ninety six point two percent. 07:31 Farm, Ranch & Stables gross written premium was eighteen point five million dollars down five percent from twenty twenty. This is due to taking action to reduce premium that is not providing an adequate return on capital and reducing catastrophe exposure. Underwriting income was close to breakeven. 07:53 Lastly, Specialty Properties gross written premium of thirty point five million dollars was down twelve percent compared to twenty twenty. It had an underwriting loss of three point three million dollars primarily…

10:03 Thank you, Tom. As we shared a couple of months ago, at the Investor Day, our transformation of GBLI is not short term, but a five-year plan. We are being actionable on the business as historically had a negative impact on our earnings, and we are working hard to build our core businesses. Our strategy is in play and is being executed by a solid and committed team. 10:31 That concludes our remarks and we are now open -- we'll now open the call to your questions.

10:38 At this time, we will be conducting a question-and-answer session. Our first question is from Julia Ferguson with Dowling & Partners. Please proceed with your question.

11:21 Good morning. Thank you for taking my question. Hello. Can you hear me?

11:32 Yes, ma'am.

11:31 Yes?

11:32 Yes, we can.

11:34 Thank you. Yeah. My first question would be about the sale of the part of the Specialty Property business of American reliable. A few questions. First of all, I understand that a lot of this business is cat exposed and this combined with also your actions you are taking on your Property Binding business should further decrease your cat exposure. So my question would be, should we think that your expected annual cat load which I think you indicated about thirty five percent on your Investor Day for the year, should it go down even further with that? 12:26 Then overall, what would be the impact on the earnings going forward and also on the premium growth. Should we kind of -- how should we think about your five year target of the sale of this business, should be more kind of adjusted base premium growth more on a higher end of your range. And also would there any underwriting impact, I know that the business was underperforming, but I understand that go-forward, you were looking for combination that business about ninety four percent. So it's assumes some expected underwriting profit from it? 13:07 And first of all, what actually are the subject premiums. I understand there's just some subset of your specialty property business specifically for manufactured and dwelling? That's my first question.

13:26 I'll try to take the first part. This is David. So, yes, twenty twenty one, we had a cat load of thirty five point four million. So when the specialty property business is fully transitioned, we would expect a reduction of about -- between ten million dollars to fifteen million dollars around twelve million dollars on that business. And then that is not taking account of low of our Property Brokerage business. So that would just give you an idea of how that affects us on the thirty five point four versus twenty one. 14:01 And Tom, do you want to address some of the other…

14:04 Yes. There's a lot of questions there Julie, but I will – if miss anything, please step in. So, again, when we modeled the manufactured home and dwelling book individually, the one and two fifty PML of that book was about -- I'm sorry, it was fifty three million dollars. Now the way that the -- when we renewed our tax treaty round numbers, are one and two fifty dollars was about one hundred million dollars. Now, when you model, it doesn't necessarily means that the PML is going to reduce by the full fifty three. It's not a subjective type of size, but there will be a significant reduction in the PML. 14:56 And on an ongoing forward basis, our catastrophe treaty renews on June one of next year. We are strategizing today on how that prospect of reinsurance structure will look. We don't have the answers for that today, but we would expect that our reinsurance cost, our reinsurance buy will be significantly less as a result of the sale, and the reductions that are happening in Property Brokerage. 15:28 Now, in terms of premium growth at Investor Day, we had targeted. We had noted that we expect that on a going forward basis, our net premiums written would increase on a compound annual growth rate of at least six percent annually. That's the bottom end of the range that we would be targeting. We would expect it that it could be higher as David has noted, we have the new lines that will be going into place. And we have been experiencing good growth out of our commercial lines and reinsurance businesses. 16:07 Okay. And I'll pass it back to David now for -- what's in and not in the K2 deal.

16:14 Yeah. So in the K2 deal, we sold the renewal rights and that's for the mobile home and the dwelling business. And that excludes the state of Louisiana all the sheets are included in that and then also on the forward business we sold the rights that's not reinsurance as part of the deal. Outside that we kept within specialty property our collectible and our homeowners businesses, which are really very long.

16:46 So how much premium overall is going away is giving your rights to you?

16:51 Yes. Round numbers when this deal is complete, it will be about ninety five million dollars and that includes the sale of the rights plus what we will not renewed for what we've retained on with Louisiana. So, it will take twelve to eighteen months to get the full benefit of this Julia. But as we schedule, you'll see a reduction in significant reduction in specialty property premium.

17:22 Okay. No. That makes sense. And you indicated there is some gain on this transaction.

17:31 Yeah. There's two things. We will receive thirty point four million dollars that's broken up into two pieces. The sale of the business lines will be for twenty eight million dollars. K2 is also taking space in our Scottsdale location, they will be assuming about one third of the space through a sublease transaction between now in twenty twenty nine that is worth two point four million dollars.

18:02 Okay. But that's a cash proceeds, right and the gain or any gain -- gap gain, you will recognize.

18:11 That is, yes. What will happen is from a gap standpoint, the twenty eight million dollars will be booked immediately, now just to be clear, we will be taking up a hard look because we are not going to be continuing this business on a going forward basis. When we purchased the American reliable back in twenty fifteen, we still have the small amount of goodwill and intangibles on our books. We have software that is backing the specialty property business and to the extent that we will not be using those assets on a going forward basis. We will be writing those off in the fourth quarter. So there will be a gain, but it will be less twenty eight million dollars.

19:01 Okay, makes sense. No that's perfect. Thank you. And just -- I want just one to clarify, if I understood this correctly, so the cat load of thirty five million dollars it is reduced by twelve million or?

19:15 That is to be clear. That's the amount that we had, that was our average expected loss when we developed our plan for twenty twenty one. So, yes, the overall amount that we expected for cats was around thirty five million dollars and approximately twelve million dollars of that was specialty property.

19:37 Okay. No perfect.

19:38 Strictly planned.

19:40 Okay. Yes. I understand. No, that's great. And if I may another, totally unrelated question. This increased severity of property loss is not non-weather non-cat property losses. You are not the only company who talks about it, other companies on the conference calls also talked about that. So, can you kind of give me a little bit more information about that how you explain it, if there is any trend, somewhat related to the current state of the economy?

20:19 It's the most part on the non-cat has within Property Brokerage, and a lot of businesses been within our net retention of the two million dollars and so we've seen up both a higher frequency and severity on those lines. And that's another reason why -- especially within the habitation of book of business. So that's why we are non-renewing that the habitational side of it. We have other pieces, of property, they're actually running very well, be that in unless risk, and those of areas that will be moving and we'll continue to write managing our limits in more than ten million dollars and but we'll be writing that business outside of our business segments that focus on package business as well.

21:05 All right. So there is no any kind of specific trend you can see in that because I thought it was for several quarters you mentioned something like that in your press releases and 10-K?

21:18 No, it's really this traditional property loss not that good .

21:23 All right. I think that’s all for me for now.

21:28 Okay.

21:31 Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back over to Steve Ries for closing remarks.

21:41 Thank you. This concludes our earnings update call. Thank you for listening. Look forward to speaking with you again soon.

21:49 This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.