Good morning, ladies and gentlemen, and thank you for standing by, and welcome to the Global Indemnity Group 2025 Earnings Call. My name is Jonathan, and I will be your conference operator today. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Evan Kasowitz, President of Belmont Holdings. Please go ahead.

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 descriptions 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 joining us for the GBLI Year-end 2025 Results Conference Call. With me today are Evan Kasowitz and Brian Riley, our Chief Financial Officer. Following our usual format, I will first provide overview comments on my assessments of both the fourth quarter and the full year's results. Then our CFO, Brian Riley, will provide the highlights of our financial and operating results. Following Brian's comments, we look forward to your questions. This quarter results continue the very strong underlying positive insurance operating trends that we have seen for the last several quarters. Our accident quarter combined ratio of 89.3% produced an underwriting profit of $11 million, a very nice increase over the 96.6% we recorded in the fourth quarter last year. This was our first sub-90% quarterly accident year combined ratio in the past several years, reflecting both exceptional property results for non-cat losses and solid casualty results. Our short duration investment portfolio delivered acceptable net investment income results at $15.3 million, down a tad from the prior period of $16.1 million. As Brian will provide more details on the investment portfolio, I would just observe that we are sitting at an extremely short duration of 1 year with very high-quality fixed income investments. Given where we are in a very uncertain world today, I am personally happy that we are playing defense and have the ability to redeploy into a more attractive portfolio once things settle down. As we noted in our press release, excluding the largest ever California wildfire loss that we experienced in the first quarter, our quarterly year-to-date accident results improved each quarter with a sequence of 94.8%, 94.7%, 93.2% and 92.2% for the full year. Even including the wildfire losses, which occurred in the first quarter, we…

Thank you, Jay. The underwriting results, as Jay mentioned, improved steadily since the California wildfire event that resulted in a $15.7 million of underwriting loss that contributed 4 points to the combined ratio and $12 million loss after tax. Given that, I'll focus my discussion on operating income, excluding the impact of the California wildfires to describe year-over-year performance. Operating income, which excludes after-tax impact of unrealized losses on equity securities, was $40.2 million compared to $42.9 million in 2024. Starting with investments. Investment income was up slightly to $62.7 million from $62.4 million in 2024, mostly in line with growth in average cash and investments as average yield remained steady at 4.4%. Growth in the investment portfolio is stunted by runoff of our loss reserves in our Belmont noncore segment, which declined by $67 million to $237 million at year-end. The current book yield on the fixed income portfolio was 4.4% with an average duration of approximately 1 year, almost unchanged since December 31, 2024. The average credit quality of the fixed income portfolio remains at AA-. Second, corporate expenses were higher by $6 million, resulting from personnel costs and professional fees for the build-out of Katalyx and mergers and acquisition activity. Lastly, calendar year underwriting income increased by about $5 million, a 1 point improvement in the combined ratio to 94.6% compared to 95.6% in 2024 and consists of a few notable components. First, current accident year underwriting income improved by $13.9 million as the current accident year combined ratio of 92.2% was better than '24 by 3.2 points. Our loss ratio was better than '24 by 4.1 points, driven by both property and casualty. Property was 44.8%, 9.3 points better than 2024. And casualty was 57.6%, better than '24 by around 1 point. As Jay mentioned, our…

[Operator Instructions] And our first question for today comes from the line of Tom Kerr from Zacks SCR.

Did you give an expense ratio for the fourth quarter? Or what would that be?

Brian is looking for a second.

Yes, a little over 40%, 40.5%.

Okay. And just a big picture on the expense ratio, again, you said it's going to be elevated. Does it drift down towards the end of the year finally? Or is it more level and 2027 is going to see the big improvement in expense ratios?

I think 2026 will be pretty level with that. We'll start to see some improvement starting in '27.

Okay. And on the competition, maybe give your big picture thoughts on just the overall cycle, the competition. You mentioned it's just in E&S, but is there other stuff going on broad-based in the P&C world that's seeing softening or turn or whatever you want to call it?

Sure. I don't know if it's my sixth or seventh cycle in 50 years, but they all seem to have similar ingredients. We seem, as an industry, to be very uncomfortable making money. And when we make a lot of money and particularly when we don't have a lot of cat losses, the market reacts much, much quicker than it used to just simply because information systems are better today, the market is more responsive. I think the fourth quarter, the concentrated change in the property markets driven by not only our own excellent results, but everybody's excellent results has caused the admitted market to come back in and a significant drop in actual available premium. Now when we look out and talk to our various wholesale partners and look at their numbers, obviously, it's not the same across the board, but there was a big change in the fourth quarter. And so I think we're looking at headwinds going into '26. We're working very quickly to map against what we had been offering in the fourth quarter into the first quarter and making adjustments in real time to try and match up against our competition where we feel comfortable we can still make money. But this is a big change in the cycle, not to be underestimated. It's very different. It's concentrated for us in the wholesale market, but we see a little bit of the effect in Vacant Express, obviously, also, too.

Okay. Great. Two more quick ones. The Specialty Products premiums, is that an inflection point where it's going to be stable? Or is there -- is that where you want to be? Or is there more declines, do you think this year?

Short term, I think it's pretty stable with some -- again, starting with a little more growth in 2027.

Yes. We trimmed out more than 2/3 of the book in the last 2 years. The really bad ones went away right away when I first got here. And we picked up a few more that we identified that had issues and have gotten rid of them in the past 12 months. We ended the year with programs that we're 100% comfortable with going forward. So we do expect to see some organic growth in that area in '26.

Got it. Last one is you guys switched to the NASDAQ, I think, 4 months ago maybe or any benefits to that or any good reasons or benefits from switching from the New York Stock Exchange to the NASDAQ?

Well, as advertised, we should get better trading volumes, but I don't think we've seen that quite yet. So we're hoping to see a little bit more activity for both buyers and sellers because our market -- our actual public market has been so thin in trading volumes. It's been hard for buyers to determine buy a big chunk or sellers to move on from owning our stock. And so we're hoping the volumes pick up a bit and that they get a better execution on both sides.

And our next question comes from the line of Ross Haberman from Rlh Investments.

Could you talk about -- do you have any exposure, one, on the private equity side, there's been a lot of discussion about that in the last couple of months. And any reinsurance exposure to what's happening in the Middle East?

Thank goodness, not to any of our knowledge, do we have any exposure to what's happening directly in the Middle East. In terms of private equity, do you mean on the investment side?

Yes. Yes.

We don't hold any direct private equity. We do have some small investments in some private credit funds. I think roughly about $20 million at this point in time.

And what's your thought going forward with those funds? Are you comfortable with them? Do you think you're going to exit? What's your thought going forward with those funds?

4 or 5 months into it, I would have to say we're disappointed. The real -- the hard question is always, should I be a buyer versus a seller at this point in time. And it's -- our investment portfolio is managed by a subcommittee of the Board, and they spent a fair amount of time discussing it at last week's Board meeting. So it's individual discussions. There's a difference between the 4 different BDCs that we owned. And so we're hopeful that whatever pain we felt in that is behind us. But as you know, it's been a bit of a free fall for the last 3 or 4 weeks.

Yes, I've seen that. Last question. I did see you took some realized losses about [ $3.66 ] million last year. Was that related to the private debt? Or can you tell us a little bit about what [indiscernible] from?

Ross, that's exactly it. It's realized gains on the income statement, but unrealized in the sense that they're mark-to-market, and we're still holding them.

And again, that's related to the $20 million gross exposure you're saying.

Yes.

Yes, $20 million. Exactly.

Okay. And final question, going back to the prior questioner, he talked about your overhead and expense ratio. Should that be moderating, I should say, over the next couple of quarters? Or should we see the level of expense that we saw in this fourth quarter, again, ex that $9 million I guess, adjustment you mentioned?

Yes. Our existing book continues to perform very well. Our in-force loss portfolio book and our loss reserves and our existing in-force premium. We don't see any major changes happening in that in the near term. I do think that it's hard to count on the kind of exceptional year we have to be duplicated back to back. But certainly, through whatever we are 2 months and a few days into the first part of the year, our property book continues to perform well and our casualty looks good.

And I'm not showing any further questions from the phone lines at this time. We'll now move to our web questions.

Thank you, Jonathan. We have one web question from Joel Straka. Book value per share, including the dividend, grew 1% last year. That's obviously an unacceptable return. What return on equity do you expect in 2026 and 2027? And how does that compare to your cost of equity?

Tough question. I would say book value before we pay dividends should increase a minimum of 6% to 7% a year with our current structure, and that would be the same for both of the next 2 years. We are carrying an extraordinary level of excess capital. Brian actually added a different way of thinking about our return on the underlying insurance business and investment business, taking out all of the excess, you see a return that's in the low to mid-teens. That's kind of the underlying book of business we're managing, and we have to deal with our cost structure and our excess capital. We believe the opportunity is emerging very quickly to deploy that excess capital in our business. We've structured our IT investments such that we could add product very easily. We can increase our writings 30%, 40%, 50% without any real substantial change. I mean, infinitesimal change in our staffing under the new system that we've been building. And so we're really poised to be able to deliver much better returns. And I would share your conclusion that the return over the last couple of years has been unacceptable, and it's certainly something that we spend an enormous amount of time discussing in the boardroom about why we've had those numbers produce. And that's not something we're proud of and it's something we expect to do better going forward.

And we have a follow-up question from the line of Tom Kerr from Zacks SCR.

Okay. Sorry. Just one final question, and this wouldn't be a GBLI call without a share buyback question. You guys are at 58% of book value, I think, as of today, $284 million in discretionary capital. And I don't think anybody is saying by $284 million in shares buyback, but any updated comment on share buybacks from 3 months ago when we had the last call?

No. Just to elaborate, our Board continues to believe the investments we've been making in our company will lead us to a real opportunity going forward to put that capital to work either through additional product inside our existing channels or adding additional arms to our company. And so it's a tough call. And I would agree with what you're saying that it looks like a lot of capital, and it's something that we want to redeploy.

And our next question is a follow-up from the line of Ross Haberman from Rlh Investments.

Sorry, Jay, just one final question along the lines you were talking about. Are you actively looking to buy new lines of business as part of the expansion or as part of the organic growth plan? And/or would that include, if you found small, I don't know, small public and/or private businesses with that, are you actively looking in that direction as part of your expansion plan?

Yes. Let me remind you that a year ago -- a little bit over a year ago, we split the company into a distribution platform, Katalyx, and Belmont Insurance, which is our insurance platform. Belmont, obvious, is where the excess capital sits. And so they're open for more business, entertaining additional programs or individual MGAs that might approach them with existing books of business that they -- that would meet Belmont's appetite. On the Katalyx side, we spent most of last year looking at an enormous number of possible acquisitions some of which would have involved Belmont underwriting the business, most of which would have been coming with other capacity. And as we've looked at those, we obviously didn't find a large number of acquisitions. So we continue to sit with a large amount of excess capital. But we've been active and open for business. Our best growth, the most predictable growth and the best way to continue profitability is to grow our existing business. And so I would say 85%, 90% of our focus as a management team continuing to execute what we've been doing well for the past 2 or 3 years in our core business. If that continues to perform well, it's easier then to add business to that as we go forward.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Evan Kasowitz for any further remarks.

Thank you again. This concludes our 2025 fourth quarter earnings call. We look forward to speaking with you about our first quarter 2026 results.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.