The Company evaluates the performance of these four segments based on gross and net written premiums, revenues in the form of net earned premiums, and expenses in the form of (1) net losses and loss adjustment expenses, (2) acquisition costs, and (3) other underwriting expenses.
Net earned premiums within the Specialty Property segment decreased by 6.2% for the year ended December 31, 2020 as compared to the same period in 2019 primarily due to a continued reduction of catastrophe exposed business and a reduction in business not providing an adequate return on capital. Property net earned premiums were $122.6 million and $129.5 million for the years ended December 31, 2020 and 2019, respectively. Casualty net earned premiums were $8.6 million and $10.8 million for the years ended December 31, 2020 and 2019, respectively.
The table below reconciles the non-GAAP measures or ratios, which excludes the impact of prior accident year adjustments, to its most directly comparable GAAP measure or ratio. The Company believes the non-GAAP measures or ratios are useful to investors when evaluating the Company's underwriting performance as trends in the Company's Farm, Ranch & Stable segment may be obscured by prior accident year adjustments. These non-GAAP measures or ratios should not be considered as a substitute for its most directly comparable GAAP measure or ratio and does not reflect the overall underwriting profitability of the Company.
The current accident year property non-catastrophe loss ratio for 2020 improved by 17.7 points compared to 2019 reflecting a lower claims frequency and severity. The current accident year property non-catastrophe loss ratio for 2019 increased by 14.4 points compared to 2018 reflecting a higher claims frequency and severity compared to last year.
See Note 10 of the notes to the consolidated financial statements in Item 8 of Part II of this report for a comparison of income tax between periods.
During 2019, the Board of Directors approved a dividend payment of $0.25 per common share to all shareholders of record on the close of business on March 22, 2019, June 21, 2019, September 26, 2019, and December 24, 2019. Dividends paid were $14.2 million during the year ended December 31, 2019.
Represents the Subordinated Notes due in 2047 in the aggregate principal amount of $130.0 million through an underwritten public offering. The notes bear interest at an annual rate equal to 7.875% payable quarterly. See Note 12 of the notes to the consolidated financial statements in Item 8 of Part II of this report for additional information on the 2047 Subordinated Notes.
the investment has an unrealized loss and was identified by the Company’s investment manager as an investment to be sold before recovery or maturity;
changes in US Treasury rates and/or credit spreads since original purchase to identify whether the unrealized loss is simply due to interest rate movement.
The carrying amounts reported in the balance sheet represent the outstanding balances, net of deferred issuance cost. See Note 12 for details.
Obligations of states and political subdivisions - As of December 31, 2020, gross unrealized losses related to obligations of states and political subdivisions were $0.067 million. To assess whether the decline in fair value below amortized cost has resulted from a credit loss or other factors, elements that may influence the performance of the municipal bond market are considered in evaluating these securities such as investor expectations, supply and demand patterns, and current versus historical yield and spread relationships. The analysis relies on the output of fixed income credit analysts, as well as dedicated municipal bond analysts who perform extensive in-house fundamental analysis on each issuer, regardless of their rating by the major agencies. Based on the analysis performed, the Company did not recognize a credit loss on obligations of states and political subdivisions during the period.
The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the years ended December 31, 2020 and 2019:
The carrying value of one of the Company’s VIE’s, which invests in distressed securities and assets, was $10.8 million and $13.5 million as of December 31, 2020 and 2019, respectively. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $25.0 million and $27.7 million at December 31, 2020 and 2019, respectively. The carrying value of a second VIE that also invests in distressed securities and assets was $15.7 million and $24.0 million as of December 31, 2020 and 2019, respectively. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $32.7 million and $41.0 million at December 31, 2020 and 2019, respectively. The carrying value of a third VIE that invests in REIT qualifying assets was $10.5 million and $9.8 million as of December 31, 2020 and 2019, respectively. The Company’s maximum exposure to loss from this VIE, which factors in future funding commitments, was $10.5 million and $10.3 million at December 31, 2020 and 2019, respectively. During the 4th quarter, the Company made a $60.0 million investment in a fourth VIE that invests in a broad portfolio of non-investment grade loans. As of December 31, 2020, the carry value and maximum exposure to loss from this VIE were $60.0 million. The Company’s investment in VIEs is included in other invested assets on the consolidated balance sheets with changes in carrying value recorded in the consolidated statements of operations.
The following table presents information about the Company’s invested assets and derivative instruments measured at fair value on a recurring basis as of December 31, 2020 and 2019 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.
The Margin Borrowing Facility was fully paid down in August 2020.
As of December 31, 2020 and 2019, the carrying value and fair value of the 7.875% Subordinated Notes due 2047 are net of unamortized debt issuance cost of $3.7 million and $3.9 million, respectively.
Amortization related to the Company’s definite lived intangible assets was $0.5 million for each of the years ended December 31, 2020, 2019, and 2018. The weighted average amortization period for total definite lived intangible assets was 13.6 years.
Effective August 28, 2020, Global Indemnity Group, LLC became a publicly traded partnership for U.S. federal income tax purposes. Global Indemnity Group, LLC meets the qualifying income exception to maintain partnership status. As a publicly traded partnership, Global Indemnity Group, LLC is generally not subject to federal income tax and most state income taxes. However, income earned by the subsidiaries of Global Indemnity Group, LLC is subject to corporate tax in the United States and certain foreign jurisdictions.
Property: A $2.0 million decrease mainly reflects lower than anticipated claims severity in the 2016 through 2018 accident years and a reduction in the catastrophe reserve category in the 2017 accident year for subrogation recoveries from the California wildfires, partially offset by an increase in the 2019 accident year.
Professional Liability: A $1.9 million reduction primarily in the 2007 through 2011 accident years recognizes better than expected claims severity.
General Liability: A $1.3 million reduction in reserve categories excluding construction defect. Lower than expected claims severity was the primary driver of the favorable development, mainly in the 2002 through 2004, 2006 through 2010, and 2012 through 2014 accident years which was partially offset by increases in the 2011 and 2015 through 2017 accident years.
The 2047 Notes bear interest at an annual rate equal to 7.875%, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, commencing July 15, 2017. The 2047 Notes mature on April 15, 2047. The Company has the right to redeem the 2047 Notes in $25 increments, in whole or in part, on and after April 15, 2022, or on any interest payment date thereafter, at a redemption price equal to 100% of the principal amount of the 2047 Notes being redeemed plus accrued and unpaid interest to, but not including, the date of redemption. If the Company redeems only a portion of the 2047 Notes on any date of redemption, the Company may subsequently redeem additional 2047 Notes.
On April 25, 2018, Global Indemnity Limited and its indirect wholly-owned subsidiaries (including GBLI Holdings, LLC and Global Indemnity Reinsurance) entered into a series of recapitalization and reorganization transactions (collectively, the “Reorganization”) designed to improve the Company’s annual results and long-term financial performance. Pursuant to the Reorganization, the Company’s affiliated group implemented the following, among other things: (i) GBLI Holdings, LLC became a subordinated co-obligor with Global Indemnity Limited under the Company’s 7.75% Subordinated Notes due in 2045 and its 7.875% Subordinated Notes due in 2047, (ii) GBLI Holdings, LLC agreed to provide capital to Global Indemnity Reinsurance from time to time to satisfy Global Indemnity Reinsurance’s obligations incurred in connection with its insurance and reinsurance business and (iii) GBLI Holdings, LLC received a promissory note from Global Indemnity Limited, which was subsequently assigned within the Company’s affiliated group in connection with the settlement of certain intra-group indebtedness.
Fox Paine & Company, LLC acted as financial advisor to the Company's affiliated group in connection with the design, structuring and implementation of the Reorganization. Fox Paine & Company, LLC’s services for the Company’s affiliated group in connection with the Reorganization were performed during the first and second quarter of 2018. The total fee for these services was $12.5 million which was paid in June 2018. As with each of the Company's transactions with Fox Paine & Company, LLC, this transaction was reviewed and approved by Global Indemnity Group, LLC 's Audit Committee and the Board of Directors (other than Saul A. Fox, Chairman of the Board of Directors of Global Indemnity Group, LLC and Chief Executive of Fox Paine & Company, LLC, who is not a member of the Audit Committee and recused himself from the Board of Directors’ deliberations), and, in connection with its review and approval of this transaction, the Audit Committee also engaged its own investment banking firm for advice.
Subject to Board approval, 50% of granted restricted stock will vests 100%, no later than March 15, 2021, following a re-measurement of 2017 results as of December 31, 2020.
In January, 2021, Ms. Valko announced her retirement effective January 31, 2021. Corporate expenses includes $1.3 million related to extending the time to exercise existing options and for the accrual of Tranche 5 options. See Note 25 for additional information regarding Ms. Valko’s retirement.
For the years ended December 31, 2020 and 2018, “weighted average shares outstanding - basic” was used to calculate “diluted earnings per share” due to a net loss for these periods.