Global Indemnity Group (GBLI) Q2 FY26 earnings call: guidance and Q&A

When will the elevated expense ratio, caused by technology investments, return to normal levels?

Management expects the expense ratio to accelerate its decline during 2027 and return to more normal levels, specifically targeting the 36% range, by the latter half of 2028.

“It will accelerate rapidly during 2027, and I would expect by the latter half of 2028, we'll be back to more normal levels.”

asked by Thomas Kerr · answered by Joseph Brown

What is the current level of discretionary capital?

The discretionary capital is $302 million as of June 30, 2026.

“Yes, $302 million, Tom.”

asked by Thomas Kerr · answered by Joseph Brown

How is the company using AI in its business, specifically in claims, fraud detection, or underwriting?

The company is training its entire employee base on AI skills and seeing isolated efficiencies. Larger AI programs for underwriting and claims are in development and testing, with significant deployment expected after year-end for existing direct product capabilities. Management is optimistic about AI's broad impact, expecting it to be fully integrated within a year or two.

“The underwriting will follow very shortly after the end of the year when Kaleidoscope is fully deployed across our existing direct product capabilities for Collectibles, Collectibles assumed, and Penn-America wholesale business, all of which have AI developments underway that will affect their business fairly significantly as we start to move through '27.”

asked by Thomas Kerr · answered by Joseph Brown

Can you explain the $2.3 million limited partnership adjustment and the company's future plans for this investment?

The $2.3 million was a fair value mark-to-market adjustment loss in Q1 that fully reversed in Q2, resulting in a zero change for the year. The underlying security is equity, and the company expects to exit this investment by the end of the year.

“It's a fair value mark-to-market adjustment loss in the first quarter of $2.3 million, reversed in the second quarter fully. So for the year, the fair value change on the limited partnership was zero. ... We expect to be out of it by the end of the year.”

asked by Ross Haberman · answered by Brian Riley

Can you confirm the 15% gross premium growth target for FY26, given modest H1 growth?

Management confirmed the 15% gross written premium growth target for the full year, acknowledging it implies strong double-digit growth in the second half due to the composition of different products growing at varying rates.

“That is still our belief that we'll have a pretty good shot at getting there by the end of the year. I know it's hard to believe given we only have modest growth in the first half, but because of the composition of the different products growing at very different rates, we still think that's a reasonable target for the year.”

asked by Thomas Kerr · answered by Joseph Brown

What are the plans and timeline for using excess capital, and what ROE can the company generate when it's fully deployed?

The company plans a 2 to 2.5-year ramp-up to fully utilize the excess capital through new products and expansion. The adjusted ROE, excluding investment earnings on excess capital, is currently nearing 13%.

“I would expect it would be probably a 2, 2.5-year ramp-up to fully utilize all the excess capital with our current plans. ... So the adjusted ROEs, when you take out investment capital and really focus on pre-tax or after-tax operating income, is nearing 13%.”

asked by Ashok Mehta · answered by Joseph Brown