December 3, 2021

Greenlight Re announces net loss of $89.1 million for the third quarter of 2018

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GRAND CAYMAN, Cayman Islands, Nov. 05, 2018 (GLOBE NEWSWIRE) — Greenlight Capital Re, Ltd. (NASDAQ:GLRE) (“Greenlight Re” or the “Company”) today announced financial results for the third quarter ended September 30, 2018. Greenlight Re reported a net loss of $89.1 million for the third quarter of 2018, compared to net income of $19.9 million for the same period in 2017. The loss was primarily driven by a net investment loss during the period as well as an underwriting loss as a result of estimated losses from Hurricane Florence. The net loss per share for the third quarter of 2018 was $2.48, compared to net income per share of $0.53 for the same period in 2017.

Fully diluted adjusted book value per share was $15.29 as of September 30, 2018, compared to $23.18 per share as of September 30, 2017 and $17.38 as of June 30, 2018.

Management Commentary

Simon Burton, Chief Executive Officer of Greenlight Re, stated, “During the quarter we strengthened our financial position through a private offering of $100 million aggregate principal amount of Convertible Senior Notes due 2023, $13.8 million of which we utilized for share repurchases. Our third quarter underwriting results were negatively impacted by a loss related to Hurricane Florence which added 5.0 points to our 103.5% combined ratio.”

Mr. Burton concluded, “I am pleased with the progress made by our Innovations unit as we announced several completed investments during the quarter.  This is a first step but marks important progress in our growth strategy which places technology and innovation at the heart of our business.”

David Einhorn, Chairman of the Board of Directors, stated, “The third quarter continued to be challenging for our value-oriented investing strategy. Our investment portfolio reported a loss of 8.4% for the quarter, the majority of which came from losses on short positions. In October, the heavy selling in growth and momentum stocks and relative outperformance of value stocks resulted in a gain of 1.2% in our investment portfolio, despite our net long exposure to a weak equity market.”

Financial and Operating Highlights

Third Quarter 2018

  • Gross written premiums of $115.2 million, a decrease from $181.6 million in the third quarter of 2017. The premium decrease was primarily due to the non-renewal of a Florida homeowner’s quota share contract during the fourth quarter of 2017, the commutation of a mortgage reinsurance contract and a lower participation in a multi-line casualty contract.
  • Ceded premiums were $15.5 million compared to $7.9 million in the prior year period as the Company continued to cede off a portion of its non-standard automobile business.
  • Net earned premiums were $114.1 million, a decrease from $172.7 million reported in the prior-year period.
  • Net investment loss of $80.9 million, compared to net investment income of $64.0 million in the third quarter of 2017.
  • A net underwriting loss of $4.0 million, including $5.7 million from Hurricane Florence, compared to an underwriting loss of $38.5 million in the third quarter of 2017, which included losses from natural catastrophes including hurricanes Harvey, Irma, and Maria.
  • The Company reported a small adverse prior year loss development of approximately $2.0 million, primarily due to an unfavorable change in estimated reserves on automobile contracts.
  • A composite ratio for the quarter of 100.9%, compared to 119.8% for the prior-year period. The combined ratio for the quarter was 103.5% compared to 122.3% for the prior-year period.

Nine Months Ended September 30, 2018

  • Gross written premiums were $432.4 million, a decrease of 21.9% from $553.7 million reported in the prior year period.
  • Net earned premiums were $388.8 million, a decrease of 19.8% from $484.9 million reported in the prior-year period.
  • Net investment loss of $266.7 million, compared to net investment income of $36.4 million reported in the prior-year period.
  • A composite ratio for the nine months ended September 30, 2018 of 96.4%, compared to 104.4% for the prior-year period. The combined ratio for the nine months ended September 30, 2018 was 99.1%, compared to 107.0% for the prior-year period.

Rating Affirmed

On October 11, 2018A.M. Best affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of A- of our operating reinsurance subsidiaries. The outlook of this rating is stable.

Investment Restructuring

As previously announced, on September 1, 2018 Greenlight Re entered into a limited partnership agreement with Solasglas Investments, LP (“Solasglas”), managed by DME Advisors LP.  The partnership is intended to replace the Company’s joint venture agreement with DME Advisors LP. As of September 30, 2018 some assets had not yet been transferred into Solasglas and continue to be reported within the joint venture. Management expects that all investable assets will be transferred from the joint venture to Solasglas no later than the first quarter of 2019. Details of the limited partnership agreement were filed on Form 8-K on September 4, 2018.

As a result, Greenlight Re will report a net asset value based on its limited partnership interest in Solasglas, in lieu of reporting gross values of long and short investments and derivatives on the balance sheet.

We believe the following non-GAAP summarized balance sheet provides useful information to investors because it depicts what our balance sheet would have looked like had the legal title of all the assets from the joint venture been transferred to Solasglas on or before September 30, 2018.

For more on this story and to view financials go to: https://www.nasdaq.com/press-release/greenlight-re-announces-third-quarter-2018-financial-results-20181105-01145

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