Thank you for standing by, and welcome to the GBLI 2023 Earnings Call. I would now like to welcome Steve Ries, Head of IR, to begin the call. Steve, over to you.

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

Thank you, Steve. Good morning, and thanks to everyone for joining us this morning for our 2023 results call. Before I turn it over to our CFO, Tom McGeehan, to take you through a detailed synopsis of our 2023 financial results, I will provide a brief overview of the past year, where we are now and where we are going. After seven years on the Board of Global Indemnity, I accepted the position as CEO 16 months ago. My mandate was very straightforward, determining which businesses we're working execute a strategy to exit everything that didn't make sense and then rightsize the company expense structure to manage the business profitably, and to utilize capital efficiently. These tasks were accomplished in the first 90 days and have been reported on through the last four results calls. We also reaffirmed some simple long-term objectives that we would use to measure our insurance operations. They are, one, achieve a consistent combined ratio in the low 90s. Two, grow the insurance business at a compound rate of 10% or greater. And three, manage our expense ratio to 37% or better subject to business mix. As we announced in our earnings release this morning, we are tracking towards these objectives but fell a bit short in 2023. First, our accident year loss ratio for our ongoing business in our Penn-America segment fell a couple of points short of target. As Tom will detail, this was due to the overhang in the current year from the remaining effect of exposures in our New York habitational book of business. The good news is our exposure in terms of number of units in that book is now down 85% from its peak and 75% in the past 12 months. The significant reserve strengthening on our 2019 through 2023…

Okay. Before I start, I just wanted to say thank you to Saul Fox, our Chairman and the rest of the Board for expressing confidence in me. I look very forward to working more closely with the Board. I’m very happy and honored to remain associated with Global Indemnity and we’ll work hard to continue to increase value to our shareholders. So with that, let me jump into my section of the presentation. Net income for 2023 was $25.4 million compared to a net loss of $0.85 million in the comparable period in 2022. Book value per share increased from $44.87 at December 31, 2022 to $47.53 at December 31, 2023. Net income increases in the market value of the fixed income portfolio and share repurchases all contributed to the increases in book value per share, including the $1 distribution paid to shareholders during 2023, returns to shareholders were 8.2%. I will now discuss some of the key drivers of net income starting with investment performance. Investment income was $55.4 million compared to $27.6 million in 2022. Actions taken in early 2022 to sell longer dated securities in shortened duration have translated into much higher book yields. Book yield on the fixed income portfolio is 4.05% at December 31, 2023 and its duration is 1.15 years. The average credit quality of the fixed income portfolio is AA-. As a comparison, at December 31, 2021, book yield on the fixed income portfolio was 2.2% and duration was 3.2 years. In 2024, we expect our investment portfolio will generate over $800 million of cash flow as bonds mature and investment income is realized. Average book yield on investments maturing in 2024 is approximately 3.5%. In this higher interest rate environment, our portfolio is well positioned to increase investment earnings. Moving to underwriting.…

[Operator Instructions] Our first question comes from the line of Ross Haberman with RLH Investments. Please go ahead.

Good morning, gentlemen. How are you? Two quick questions. First one, the New York habitational book, how big is that and what do you expect in terms of a loss in 2024? The second question is how much – it looked like you bought back about 300,000 shares in calendar 2023. How much is left in that program? Thank you.

Sure. In terms of the New York hab, the – it’s concentrated in terms of the problem, results were concentrated in two of the boroughs in New York City. The total book that we’re writing will remain on the books through 2024. In other words, this year will probably be less than $3 million.

Yes. And on the share repurchases, the authorization is up to $135 million. We still have a little more than $100 million that we would be authorized to repurchase.

Thank you very much.

Our next question comes from the line of Tom Kerr with Zacks Investment Research.

Good morning, guys.

Please go…

Good morning. Can you hear me?

Yes, we can.

Can you kind of talk about the casualty book in general? Besides those two issues that were highlighted, what’s the general health or any other potential issues going on in the overall book?

Well, the casualty book in general, Tom, we focus on Main Street business, small business America. Most of the limits written are $1 million or less. There’s a few that are a little bit larger than that, but that’s the main focus of our business. We had two particular books that we noted on this call that we stumped our toes, just to be honest, and completely non renewed the one and greatly downsized the other. So the potential adverse experience that might be incurred on it going forward from those two areas is greatly mitigated. The rest of the casualty book is actually performing fairly well. Again, we don’t have exposures to really high limits, and again, we’re seeing loss ratios that are running as we would expect.

Yes. We’ve taken note that there has been a fair amount of disclosure at the end of 2024 across the industry of different types of development in the general liability area. And excluding the two books of business Tom mentioned, we haven’t seen that same development in our book of business.

Okay, great. Thanks. And on the expense ratio, the 37% goal that I think you mentioned won’t be hit in 2024. Can you kind of give more color on that? I think I missed the gist of why that wouldn’t be met in 2024?

Sure. When we went through the restructuring at the beginning of 2023, we sized the staffing level and all of our internal expenses to match both what we needed to deal with the non-core book, which is running off, plus the part that would be dealing with the ongoing book. In terms of looking at 2024, our staff will be down modestly during the course of the year as the non-core book continues to run off. The rest of the expense base is probably sticking within a couple of million dollars of what we spent in 2023. But because of the way we’ve written premium our earned premium will be a bit, will not grow as fast as our written premium will in 2024. So the ratio will creep up perhaps 100 basis points during the course of the year and then come back down in 2025.

Okay, got it. One more quick one on the rate increases in the Wholesale Commercial. I think there is a 10% rate increases throughout the year. And sorry if I missed this, but the 2024, we’re still expecting strong rate increases, correct? Would it be at that level or lower or higher? Can you give us any color on that?

I expect it’ll be a bit lower we were because of the COVID lag. We were a little bit slow off the mark in beginning of 2021. We played catch up in 2021 and 2022. 2023, we pretty much stayed level with our expectation for long-term trends. We now think we’re matching that pretty well. So a combination of rate increases and exposure changes probably will be in the 6% to 7% range. Exposure changes can drive that quite a bit different if the book starts to shift in terms of the size of risk that we’re underwriting. But that’s kind of what level we have against our long-term trends right now.

All right. Thanks. I’ll get back in the queue.

Thank you.

We have received a question from Michael O'Brien. He asked, could you talk about your strategy related to stock buyback, given the big discount to BV? Also, do you have the TBV number?

Let me speak to the stock buyback. Our stock buyback approach has been really for reverse inquiry. We have not participated in open market purchases. The reason being for that is our volume is so small that if we went in there with any kind of ongoing program, we would distort how the market is actually pricing our stock. So we've chosen not to participate in open market. We have been approached at different points in time with blocks of shares which we've considered, depending on where we are at that point in time, whether we could buy it back or not at that price. A lot of it depends on what we might currently be doing at that moment in time, who we're talking to or what we're thinking about. So we can't always buy back 100 or 365 days of the year, but we continue to encourage people that have substantial blocks of business, blocks of our shares. Excuse me to call Steve. And we will always consider buybacks. I think, as Tom mentioned, we still have $100 million available under our buyback program, and we certainly would entertain any sizable blocks of stock at the current price.

Yes. Regarding your tangible book value per share question, I didn't compute the exact value before I came on this call, but we don't have much in the way of goodwill or intangibles on our balance sheet. Round numbers, we have $649 million of equity. Our goodwill and intangibles are only $19 million. Which round numbers, that's about a $1.50 per share. So goodwill and intangibles are really not that big of a drag on our overall book value.

Our next question comes from the line of Ross Haberman with RLH Investments. Please go ahead.

Thanks for taking the call again. In terms of the corporate and overhead expenses, could you tell us how much of the $23 million and $23.4 [ph] million would you say is non-recurring or less recurring, maybe related to your merger negotiations and whatever light you might be able to shed on why that did not or why that fell apart? Thank you.

Okay. On a normal year, we would expect our corporate expenses to be $18 million to $20 million. Nothing fell apart. In the last two years, our corporate expenses have been in that low $20-some million range. A year ago, we in 2022, we sold our farm business and incurred expenses for that. This year, early in the year, we had some restructuring charges. And really, most of what you're seeing this year is onetime charges as we reposition the business to move ahead.

In terms of falling apart. I'm assuming you were asking a question why we didn't complete any kind of a transaction. And the reality is very simple. We did not achieve a price indication that matched our expectation of what we thought was the right decision for our shareholders. With a shareholder that owns over 40% of the stock, that's a fairly easy decision process of if we meet a number that Saul Fox and Fox Paine feel is acceptable, we of course, would then go and engage in a transaction. But we have not yet achieved that.

Thank you for that.

[Operator Instructions] We do have a question from Michael O'Brien. He asks, are you searching for a new CFO?

The answer to that is no. Tom and I have been discussing for the past six months, the timing of what would be the right time for him to make the transition from being our CFO to becoming a Board member. We are extremely fortunate to have Brian Reilly [ph], who has been a senior member, the senior member underneath Tom and our finance department for the last 18 years and who will be taking on the role of CFO on April 1. So that is not going to involve an external search at this point, obviously, since we are very happy to have an internal candidate to take on that role.

This concludes today's question-and-answer session. I would now like to turn the call over to Steve Ries for closing remarks.

Thank you again, Mandeep. Once again, if you have questions, you may reach out to me, and we look forward of speaking with you in the next quarter.

This concludes today's call. You may now disconnect.