Global Indemnity Group: A Contrarian Play on Undervalued Insurance Turnaround?

The insurance sector has long been a bastion of stability, but Global Indemnity Group (GBLI) has quietly transformed into a compelling contrarian opportunity. Despite a 35% decline in its share price over the past five years, the company's fundamentals have strengthened remarkably—most notably with a 71% surge in net income in 2024—suggesting the market has yet to appreciate its operational turnaround. Let's dissect why GBLI could be primed for a rebound.

The Numbers Tell a Story of Resilience

The 71% jump in 2024 net income to $42.8 million isn't a fluke. Investment income rose 13% to $62.4 million, driven by a higher-yielding portfolio (4.4% vs. 4.0% in 2023) and a 4% growth in assets under management to $1.44 billion. Meanwhile, underwriting performance improved, with accident-year underwriting income up 31% to $18.8 million, fueled by the Penn-America segment, which delivered a 12% premium increase ($395.1 million) in core commercial lines.

Even in the challenging first quarter of 2025, which included a $12.2 million hit from California Wildfires, the adjusted net income (excluding catastrophes) rose to $0.58 per share—still a 2% increase over Q1 2024. This underscores management's ability to navigate volatility.

Revenue Diversification: A Key Defensive Advantage

GBLI isn't relying solely on traditional insurance. Its assumed reinsurance premiums surged 275% in Q1 2025 to $10.9 million, reflecting new treaty wins. Meanwhile, InsurTech initiatives are driving growth, with premiums up 20% in the quarter. These segments reduce reliance on volatile catastrophe-exposed lines, a trend that should stabilize earnings over time.

The Belmont Core segment, while challenged by wildfires, still delivered a 4% adjusted underwriting income—proof that cost discipline is intact. The Belmont Non-Core runoff continues to shrink, minimizing legacy risks.

Combined Ratio: A Mixed Picture, but Underlying Strength

The headline combined ratio in Q1 2025 hit 111.5%, up sharply from 94.9% in 2024. But stripping out wildfires reveals a 94.8% ratio—essentially flat with prior-year performance. This suggests that GBLI's underwriting fundamentals remain intact, and the wildfire hit is an outlier rather than a systemic issue.

Balance Sheet and Dividends: A Solid Foundation

With shareholders' equity rising 6% to $689 million and book value per share up 8.1% to $49.98, GBLI has ample capital to weather shocks. The dividend, now at $1.40 annually (a 40% increase from 2023), offers a yield of 3.8%—attractive for income investors, especially as peers cut payouts.

Why the Stock Struggles—and Why It's a Contrarian Buy

The 35% share price decline over five years (see ) reflects skepticism about the insurance sector's exposure to climate-related risks and economic uncertainty. However, GBLI's moves—diversifying into stable reinsurance, InsurTech, and runoff management—position it better than many peers.

Valuation: A Discounted Play on Growth

At current prices, GBLI trades at a 1.2x P/B ratio, well below its five-year average of 1.6x and meaningfully cheaper than peers like Alleghany (Y) or Markel (MKL). If the stock simply reverts to its historical P/B multiple, this alone could unlock ~33% upside.

Risks to Consider

• Catastrophe exposure: The California Wildfires remind investors that GBLI isn't immune to weather risks.
• Combined ratio pressure: Even excluding disasters, the Belmont Core segment's adjusted underwriting income dipped slightly from 2023, requiring close monitoring.
• Interest rate headwinds: The Fed's rate cuts could reduce investment yields, though GBLI's portfolio has proven resilient.

The Bottom Line: A High-Conviction Contrarian Bet

Global Indemnity's operational improvements—71% net income growth, diversified revenue streams, and improved capital metrics—are undeniable. The stock's depressed valuation and rising dividend make it a compelling play for investors willing to look past short-term volatility. With a 3.8% yield and a balance sheet that can withstand shocks, GBLI offers a rare mix of income, growth, and upside potential in a sector that's been written off.

Investment recommendation: Buy GBLI as a long-term hold, targeting a 1.5x P/B multiple (~$75 share price) over the next 12–18 months. Pair this with a stop-loss at $30 to guard against further catastrophe-driven declines.

This analysis underscores why GBLI's stock could be the insurance sector's best-kept secret—until the market catches on.