By Thomas Kerr, CFA
NASDAQ:GBLI
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Industry Update
As the property and casualty (P&C) insurance industry enters 2026, brokers are beginning to observe some signs that pricing is loosening in certain segments. However, some observers see the environment as a period of adjustment rather than a decisive shift into a broadly soft market.
According to the Swiss Re Institute’s U.S. P&C outlook for 2025–2026, direct premiums written are projected to moderate to roughly 4% in 2026 (from approximately 5% in 2025), reflecting slowing rate momentum and stronger competition among insurers.
Alera Group P&C leader Justin Foa explains that, unlike past cycles when pricing softened broadly, today’s moderation is uneven and highly risk-specific. Some construction and property accounts are seeing more capacity and better pricing, while risks with recent losses or catastrophe exposure remain constrained. Because conditions now vary not just by line of business but by niche, account quality, and individual risk traits, broad market labels are less meaningful. Instead, the market behaves like a matrix in which even within one segment, certain risks are easing as others stay tight.
Fitch Ratings expects U.S. P&C insurers to maintain solid but moderating performance in 2026, with the strong results of 2025 carrying over into a softer market phase. Premium growth is projected to slow to about 4% in 2026 from 8.8% in 2024, while profitability normalizes after an exceptionally strong 2025, with combined ratios edging up to roughly 96%–97%. Return on equity is also expected to ease to about 9.1%–10%, down from over 15% in 2025, reflecting a more competitive yet still stable operating environment.
Industry Valuations
In recent months (early 2026), publicly traded P&C insurers and brokers have seen valuations pull back modestly after a 2025 peak, reflecting both cyclical and sentiment-driven factors. Fundamentally, 2025 marked a cyclical high in underwriting profitability and growth, and expectations for softer pricing, slower premiums, and rising combined ratios in 2026 have led investors to anticipate lower returns which typically compress multiples.
The S&P 500 Insurance index recently fell about 3.9%, with some broker stocks dropping 9–12% in a single session due to AI-disruption fears and competitive concerns. Many analysts broadly view this as partly overdone, but it has nonetheless pushed valuations down from late-2025 levels.
New Estimates
We adjust our 2026 total revenue estimate for Global Indemnity Group (NASDAQ:GBLI) to $480.4 million which includes $411.8 million in Net Earned Premiums and $67.1 million in net Investment Income. Our new 2026 EPS estimate is $3.21. As the consolidated expense ratio continues to drift down, we believe EPS of over $4.00 can be achieved in the next 2-3 years. We also introduce 2026 quarterly estimates (see below).
Balance Sheet
At the end of the 3rd quarter of 2025, GBLI had unrestricted cash of $75.4 million and total investments of $1.36 billion. Approximately 96.1% of the investment portfolio consists of fixed income securities. The average credit quality of the fixed income portfolio remains at AA-. Shareholders’ equity increased to $704.1 million.
Valuation
GBLI book value per share increased to $48.88 as of September 30, 2025, compared to $48.35 as of June 30, 2025. On December 4, 2025, the Board of Directors approved a distribution (dividend) of $0.35 per common share, which was paid on December 30, 2025. The current dividend yield is approximately 4.95%.
Management stated its long-term financial goals, which are:
1) Grow the overall business at a rate of 10% or higher,
2) Achieve a combined ratio in the low 90’s,
3) Manage the expense ratio to a competitive level of 36%-37%.
GBLI stock is currently selling at 57% of book value based on September 30, 2025, shareholders’ equity. We separate our price target into near-term and long-term objectives. Our near-term target is $48.00, which assumes GBLI stock will trade near book value per share. We maintain our long-term price target of $55.00 per share based on the stock selling at a small premium to future book value per share.
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