Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Indemnity Group Second Quarter 2025 Earnings Call. [Operator Instructions] It is now my pleasure to turn the call over to Evan Kasowitz, President of Belmont Holdings. You may begin.

Thank you, operator. 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 is now my pleasure to turn the call over to Mr. Jay Brown, Chief Executive of Global Indemnity.

Thank you, Evan. Good morning, and thank you for taking the time this morning to join us for the GBLI second quarter update on our financial and operational results. Following our usual format, I will first provide a few overview comments on my view of this quarter's results. Then our Chief Financial Officer, Brian Riley, will offer a few key details on our insurance and investment operations. Following Brian's comments, we will then answer any questions you might have. This quarter's results are comparable to the underlying positive insurance operating investment trends that we have seen for the past several quarters. Our accident year combined ratio of 94.6% produced an underwriting profit of $5.6 million, a very nice increase over the 96.7% we recorded last year. Our short duration investment portfolio continued to deliver stable results at $14.7 million, with an annualized investment return of 4.9%. The overall positive insurance and investment results were offset a bit by the planned higher corporate expenses as we continue to invest in our Agency and Insurance Services segment. The resulting net income of $10.3 million remains consistent with the results from last year. Brian will provide a bit of insight on the areas where corporate expenses are increasing. Moving from the bottom line to the top line for insurance operations, excluding terminate contracts, gross premium grew 18% over the second quarter of 2024. As we noted in our results release, we saw a very solid sustainable growth in Vacant Express, collectibles, wholesale, commercial and assumed reinsurance. Premium rate changes are running in the mid-single digits, which when coupled with exposure changes are tracking close to our current expectations for loss trends. Turning from the quarterly financials. Our efforts to revamp our technology infrastructure, information management and policy issuance systems continues to be on…

Thank you, Jay. My commentary will focus on results for the second quarter. Of course, we can answer any questions you may have for the 6-month results. With the combination of net income and a $3 million increase in market value of the fixed income portfolio, book value per share increased from $47.85 at March 31 to $48.35 at June 30. Including dividends paid of $0.35 per share, return to shareholders was 1.8% for the second quarter of 2025. Net income was $10.3 million for the second quarter of '25 compared to $10.1 million for the same period last year. The key drivers include: underwriting income improved by 61% to $5.6 million in the second quarter of '25 compared to $3.5 million for the same period last year. This was offset by an increase in corporate expenses of $1.2 million to $7.5 million in the second quarter of '25, resulting from recruiting fees, and professional fees related to due diligence on business development opportunities. And last, investment income of $14.7 million for the quarter was stable compared to $15.3 million in the same period last year. Let me add a little color on investments and underwriting income. Starting with investments. Total investment return was $17.7 million for the second quarter of '25 compared to $17.9 million for the same period last year. And as Jay mentioned, annualized investment return for the second quarter of '25 was 4.9%. Investment income on our fixed income portfolio was $15.3 million for the second quarter of '25 compared to $15 million for the same period last year. Current book yield on the fixed income portfolio is now 4.5% with a duration of 1.2 years at June 30, 2025, compared to December 31, 2024, of a 4.4% book yield and a duration of 0.8 years.…

[Operator Instructions] And our first audio question comes from the line of Tom Kerr with Zacks Research.

A quick question on the corporate expenses. I think you said business development fees to find new opportunities. What is that exactly?

We're looking to expand our agency operations with additional underwriting capabilities. And so we've been reviewing a number of different opportunities in the market. We probably looked at a half a dozen to a dozen some of which involve us spending some money to do some due diligence. We haven't yet gotten any conclusions on those at this point in time.

Okay. Any comment on the overall E&S market? Where do you see cycle weakness and that sort of stuff?

Yes. It's a tricky question because it differs depending on which segment you're looking at. Our Vacant Express segment, for example, continues to have real growth opportunities because of what's going on in the property market around the country. But in small commercial, we're starting to see a little bit more headwinds than probably we saw the last 2 years. We continue to be pleased with the level of premium we're obtaining for the business we're writing. But we are seeing a little bit more price competition than we probably saw for the last 2 years.

But what was the time frame on that just recently?

Yes. Just in the past 6 months, it's just -- you start to see it as a wobble first with a little bit lower hit ratio than we've been seeing, but not significant yet. It's still -- we still believe strongly then we should see 8% to 10% growth in that segment this year and perhaps the same next year.

Got it. One quick one. Do you still have any substantial business in California across the portfolio?

Yes. As mentioned in our last call is that we have business in California, across all of our businesses, we are currently moving some of that from an admitted product to a non-admitted product.

Next audio question comes from the line of Ross Haberman with RLH Investments.

Quick question going back to the administrative expenses. Do you see further growth from the level we saw quarter as you look for other lines of business?

Yes. If you -- we've engaged a couple of outside contractors to help with our internal staff to review financials for different things we're looking at. That expense would not create anything. But if we actually get to the point of closing on any transactions, you'll probably see a potential bumps and expenses when that occurs. We're not...

Sorry. Sorry.

No problem. We aren't planning on any big expenditures, but we're doing it incrementally. And if there's any substantial change in the current level, it probably will be a company by actually closing on a transaction and we'll obviously discuss that at that time.

And just a follow-up to the California fire exposure. Was there any further allowances that you came across -- but besides the initial exposure, you expensed, I guess, in March and do you have any exposure to the new fires that are beginning come up in California today?

Two-part question. On the first part, the initial reserves that were established at the end of the first quarter have maintained on there was very little movement, less than 1% or 2% in terms of our final estimates. In terms of the new expires, we haven't yet seen any significant exposure to our company.

Our next question comes from Andrew Bendigney. Can you provide a tangible return on equity target a few years out? What kind of loss and expense ratios would that imply?

Sure. It's it depends on what level you're looking at our return on equity. If we're looking at Belmont, which is our -- essentially our balance sheet company and its holding company, we would expect that the returns there will get into the 12% range in the next couple of years. That's kind of the insurance operation underwriting side. I would say, when you then look at the other side and the holding company expenses, we're probably going to continue to target at 8% to 9%. The loss ratio that we need for that we're actually at the right loss ratio. What we really need to see is our expense ratio come down another 2 points, and that should put us pretty close to those targets.

All right. With that, we will thank you all again for joining us. This will conclude our 2025 Second Quarter Earnings Call. We look forward to speaking with you about our third quarter 2025 results. Thank you.