Greenlight Re Announces Second Quarter 2024 Financial Results

Rhea-AI Summary

Greenlight Capital Re, (NASDAQ: GLRE) reported its Q2 2024 financial results, showing 9.1% growth in gross premiums written to $169.0 million and a 13.2% increase in net premiums earned to $158.4 million. The company achieved net income of $8.0 million, or $0.23 per diluted ordinary share, compared to $49.9 million in Q2 2023. The combined ratio rose to 99.8% from 96.2% year-over-year, impacted by U.S. severe convective storm losses. Total investment income was $12.6 million, down from $42.2 million in Q2 2023. Fully diluted book value per share increased by 1.5% to $17.65. The company will host its 2024 Investor Day on November 19, 2024, in New York City.

Positive

• Gross premiums written increased 9.1% to $169.0 million
• Net premiums earned increased 13.2% to $158.4 million
• Net income of $8.0 million, or $0.23 per diluted ordinary share
• Fully diluted book value per share increased 1.5% to $17.65

Negative

• Combined ratio increased to 99.8% from 96.2% year-over-year
• Total investment income decreased to $12.6 million from $42.2 million in Q2 2023
• Underwriting income decreased to $0.3 million from $5.4 million in Q2 2023
• Current-period catastrophe losses added 8.4% to the combined ratio

Financial Analyst

Greenlight Re's Q2 2024 results show a mixed performance. The 9.1% increase in gross premiums written to $169.0 million and 13.2% rise in net premiums earned to $158.4 million indicate solid top-line growth. However, underwriting income dropped significantly from $5.4 million to $0.3 million, largely due to U.S. severe convective storm losses. The combined ratio deteriorated from 96.2% to 99.8%, approaching the break-even point.

Total investment income declined sharply from $42.2 million to $12.6 million, impacting overall profitability. Net income fell from $49.9 million to $8.0 million, with EPS dropping from $1.32 to $0.23. Despite these challenges, the company managed a 1.5% increase in fully diluted book value per share, reaching $17.65. This modest growth in book value amid challenging conditions demonstrates some resilience in the company's financial position.

Insurance Industry Expert

The Q2 results reveal Greenlight Re's exposure to catastrophic events, particularly U.S. severe convective storms, which added 8.4% to the combined ratio. This highlights the volatility inherent in the reinsurance business and the importance of risk management. The increase in the acquisition cost ratio from 27.4% to 31.9% is noteworthy and may indicate higher costs to secure business in a competitive market.

The growth in financial, general liability and specialty lines suggests a strategic shift towards potentially more profitable or less volatile segments. However, the near-100% combined ratio indicates slim underwriting margins, leaving little room for error. The slight improvement in the loss ratio and reduction in the underwriting expense ratio show some positive trends in operational efficiency, but these were offset by the higher acquisition costs. The company's ability to navigate these challenges while maintaining growth will be important for its long-term success in the reinsurance market.

Investment Strategist

Greenlight Re's investment performance in Q2 2024 was subdued compared to the previous year. The Solasglas fund, managed by DME Advisors, returned a modest 1.2%, contributing $4.3 million to net income. This, combined with $8.2 million from other investment income, primarily interest on restricted cash, resulted in a total investment income of $12.6 million - a significant drop from $42.2 million in Q2 2023.

The company's investment strategy appears to be balanced but conservative, with gains in short and macro positions offsetting small losses in long positions. This approach may provide stability but could limit upside potential in bullish markets. The focus on earning interest from restricted cash suggests a prioritization of liquidity and capital preservation. For investors, this conservative stance might be reassuring given the volatility in the reinsurance market, but it also means that significant returns may rely more heavily on underwriting performance rather than investment gains in the current environment.

Premium Growth of 9.1%; 2024 Investor Day to be Held on Tuesday November 19, 2024

GRAND CAYMAN, Cayman Islands, Aug. 06, 2024 (GLOBE NEWSWIRE) -- Greenlight Capital Re, Ltd. (NASDAQ: GLRE) (“Greenlight Re” or the “Company”) today reported its financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Highlights (all comparisons are to second quarter 2023 unless noted otherwise):

• Gross premiums written increased 9.1% to $169.0 million;
• Net premiums earned increased 13.2% to $158.4 million;
• Underwriting income of $0.3 million, compared to $5.4 million;
• Total investment income of $12.6 million, compared to $42.2 million;
• Net income of $8.0 million, or $0.23 per diluted ordinary share, compared to $49.9 million, or $1.32 per diluted ordinary share;
• Combined ratio of 99.8%, compared to 96.2%; and
• Fully diluted book value per share increased $0.26, or 1.5%, to $17.65, from $17.39 at March 31, 2024.
  

Greg Richardson, Chief Executive Officer of Greenlight Re, stated, “This quarter Greenlight Re continued its measured growth by taking advantage of attractive opportunities. While our underwriting results were negatively impacted by U.S. severe convective storm losses from a single run-off contract, we are pleased with the performance of our overall book of business.”

David Einhorn, Chairman of the Board of Directors, said, “Solasglas had a positive result in a relatively uneventful quarter, with small gains in short and macro positions offset by a small loss in our long positions.”

Second Quarter 2024 Results

Gross premiums written in the second quarter of 2024 were $169.0 million, compared to $154.9 million in the second quarter of 2023. The $14 million increase, or 9.1%, was primarily due to growth in financial, general liability and specialty lines. Earned premiums increased by $18.5 million, or 13.2%, to $158.4 million as the growth in premiums written during 2023 and 2024 continued to earn out.

The Company recognized net underwriting income of $0.3 million in the second quarter of 2024, compared to net underwriting income of $5.4 million during the equivalent period in 2023. The combined ratio for the second quarter of 2024 was 99.8%, compared to 96.2% for the equivalent period in 2023. The current-period catastrophe losses, primarily related to the U.S. severe convective storms, added 8.4% to the combined ratio during the second quarter of 2024.

The Company’s total investment income during the second quarter of 2024 was $12.6 million. The Company’s investment in the Solasglas fund, managed by DME Advisors, returned 1.2%, representing net income of $4.3 million. The Company reported $8.2 million of other investment income, primarily from interest earned on its restricted cash and cash equivalents.

The net income of $8.0 million contributed to the 1.5% increase in fully diluted book value per share for the quarter, which increased to $17.65 per share at June 30, 2024 from $17.39 at March 31, 2024.

The following table summarizes the components of the Company’s combined ratio.

		Second Quarter
Underwriting ratios			2024				2023
Loss ratio - current year			64.8	%			63.4	%
Loss ratio - prior year			(0.4	)%			1.3	%
Loss ratio			64.4	%			64.7	%
Acquisition cost ratio			31.9	%			27.4	%
Composite ratio			96.3	%			92.1	%
Underwriting expense ratio			3.5	%			4.1	%
Combined ratio			99.8	%			96.2	%

Greenlight Capital Re, Ltd. Second Quarter 2024 Earnings Call

Greenlight Re will host a live conference call to discuss its financial results on Wednesday, August 7, 2024, at 9:00 a.m. Eastern Time. Dial-in details:

U.S. toll free	1-877-407-9753
International	1-201-493-6739

The conference call can also be accessed via webcast at:

https://event.webcasts.com/starthere.jsp?ei=1681118&tp_key=126229da94

A telephone replay will be available following the call through August 12, 2024.  The replay of the call may be accessed by dialing 1-877-660-6853 (U.S. toll free) or 1-201-612-7415 (international), access code 13748042. An audio file of the call will also be available on the Company’s website, www.greenlightre.com.

2024 Investor Day

The Company is set to host its 2024 Investor Day in New York City on Tuesday, November 19, 2024, at 12:00 noon Eastern Time. The event will include a luncheon, detailed presentation from members of the executive management team, and opportunities for live interaction during the Q&A segment.

Attendees must register in advance. To register, please contact Karin Daly, Greenlight Capital Re’s investor relations representative at IR@greenlightre.ky.

The 2024 Investor Day will be held exclusively in-person. An archived webcast will become available on the Company’s website following the event.

Non-GAAP Financial Measures
In presenting the Company’s results, management has included financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (GAAP). Such measures, including fully diluted book value per share and net underwriting income (loss), are referred to as non-GAAP measures. These non-GAAP measures may be defined or calculated differently by other companies. Management believes these measures allow for a more thorough understanding of the underlying business. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be used to monitor our results and should be considered in addition to, and not viewed as a substitute for those measures determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included in the attached financial information in accordance with Regulation G.

Forward-Looking Statements
This news release contains forward-looking statements concerning Greenlight Capital Re, Ltd. and/or its subsidiaries (the “Company”) within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on the Company’s behalf. These risks and uncertainties include a downgrade or withdrawal of our A.M. Best ratings; any suspension or revocation of any of our licenses; losses from catastrophes; the loss of significant brokers; the performance of Solasglas Investments, LP; the carry values of our investments made under our Greenlight Re Innovations pillar may differ significantly from those that would be used if we carried these investments at fair value; and other factors described in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 5, 2024, as those factors may be updated from time to time in our periodic and other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. The Company undertakes no obligation to publicly update or revise any forward-looking statements, which speak only as to the date of this release, whether as a result of new information, future events, or otherwise, except as provided by law.

About Greenlight Capital Re, Ltd.
Greenlight Re (www.greenlightre.com) provides multiline property and casualty insurance and reinsurance through its licensed and regulated reinsurance entities in the Cayman Islands and Ireland, and its Lloyd’s platform, Greenlight Innovation Syndicate 3456. The Company complements its underwriting activities with a non-traditional investment approach designed to achieve higher rates of return over the long term than reinsurance companies that exclusively employ more traditional investment strategies. The Company’s innovations unit, Greenlight Re Innovations, supports technology innovators in the (re)insurance space by providing investment capital, risk capacity, and access to a broad insurance network.

Investor Relations Contact
Karin Daly
Vice President, The Equity Group Inc.
(212) 836-9623
IR@greenlightre.ky

GREENLIGHT CAPITAL RE, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (expressed in thousands of U.S. dollars, except per share and share amounts)
	June 30, 2024				December 31, 2023
	(UNAUDITED)
Assets
Investments
Investment in related party investment fund, at fair value	$	351,468			$	258,890
Other investments		73,159				73,293
Total investments		424,627				332,183
Cash and cash equivalents		52,240				51,082
Restricted cash and cash equivalents		561,930				604,648
Reinsurance balances receivable (net of allowance for expected credit losses)		686,743				619,401
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses)		58,647				25,687
Deferred acquisition costs		83,305				79,956
Unearned premiums ceded		28,184				17,261
Other assets		4,272				5,089
Total assets	$	1,899,948			$	1,735,307
Liabilities and equity
Liabilities
Loss and loss adjustment expense reserves	$	752,757			$	661,554
Unearned premium reserves		349,015				306,310
Reinsurance balances payable		76,253				68,983
Funds withheld		18,266				17,289
Other liabilities		8,042				11,795
Debt		61,595				73,281
Total liabilities		1,265,928				1,139,212
Shareholders' equity
Ordinary share capital (par value $0.10; issued and outstanding, 35,321,144) (2023: par value $0.10; issued and outstanding, 35,336,732)	$	3,532			$	3,534
Additional paid-in capital		487,462				484,532
Retained earnings		143,026				108,029
Total shareholders' equity		634,020				596,095
Total liabilities and equity	$	1,899,948			$	1,735,307

GREENLIGHT CAPITAL RE, LTD. CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED) (expressed in thousands of U.S. dollars, except percentages and per share amounts)
	Three months ended June 30								Six months ended June 30
		2024				2023				2024				2023
Underwriting revenue
Gross premiums written	$	168,975			$	154,943			$	386,233			$	341,398
Gross premiums ceded		(14,832	)			(9,739	)			(38,013	)			(20,951	)
Net premiums written		154,143				145,204				348,220				320,447
Change in net unearned premium reserves		4,255				(5,261	)			(28,286	)			(37,855	)
Net premiums earned	$	158,398			$	139,943			$	319,934			$	282,592
Underwriting related expenses
Net loss and loss adjustment expenses incurred:
Current year	$	102,722			$	88,740			$	206,647			$	173,428
Prior year		(689	)			1,764				4,712				13,801
Net loss and loss adjustment expenses incurred		102,033				90,504				211,359				187,229
Acquisition costs		50,454				38,293				92,064				79,769
Underwriting expenses		5,811				5,468				12,150				9,407
Deposit interest expense (income), net		(233	)			235				643				367
Net underwriting income(1)	$	333			$	5,443			$	3,718			$	5,820
Income (loss) from investment in Solasglas	$	4,330			$	32,782			$	22,578			$	29,644
Net investment income		8,224				9,369				16,367				17,747
Total investment income	$	12,554			$	42,151			$	38,945			$	47,391
Corporate expenses	$	4,706			$	4,557			$	9,081			$	10,554
Foreign exchange losses (gains)		932				(4,729	)			2,581				(9,660	)
Other income, net		(2,724	)			(2,866	)			(7,759	)			(5,032	)
Interest expense		1,560				744				2,809				1,520
Income tax expense		435				28				954				82
Net income	$	7,978			$	49,860			$	34,997			$	55,747
Earnings per share
Basic	$	0.23			$	1.46			$	1.02			$	1.64
Diluted	$	0.23			$	1.32			$	1.01			$	1.49
Underwriting ratios:
Loss ratio - current year		64.8	%			63.4	%			64.6	%			61.4	%
Loss ratio - prior year		(0.4	)%			1.3	%			1.5	%			4.9	%
Loss ratio		64.4	%			64.7	%			66.1	%			66.3	%
Acquisition cost ratio		31.9	%			27.4	%			28.8	%			28.2	%
Composite ratio		96.3	%			92.1	%			94.9	%			94.5	%
Underwriting expense ratio		3.5	%			4.1	%			4.0	%			3.5	%
Combined ratio		99.8	%			96.2	%			98.9	%			98.0	%
1 Net underwriting income is a non-GAAP financial measure. See “Key Financial Measures and Non-GAAP Measures” below for discussion and reconciliation of non-GAAP financial measures.

The following tables present the Company’s net premiums earned and underwriting ratios by line of business: 

	Three months ended June 30																Three months ended June 30
		2024																2023
	Property				Casualty				Other				Total				Property				Casualty				Other				Total
	($ in thousands except percentage)
Net premiums earned	$	18,119			$	86,155			$	54,124			$	158,398			$	20,749			$	81,446			$	37,748			$	139,943
Underwriting ratios:
Loss ratio		116.8	%			68.0	%			41.2	%			64.4	%			103.1	%			60.9	%			51.6	%			64.7	%
Acquisition cost ratio		10.7				36.9				31.0				31.9				19.1				30.5				25.1				27.4
Composite ratio		127.5	%			104.9	%			72.2	%			96.3	%			122.2	%			91.4	%			76.7	%			92.1	%
Underwriting expense ratio														3.5																4.1
Combined ratio														99.8	%															96.2	%

	Six months ended June 30																Six months ended June 30
		2024																2023
	Property				Casualty				Other				Total				Property				Casualty				Other				Total
	($ in thousands except percentage)
Net premiums earned		41,476				180,793				97,665				319,934				39,492				165,561				77,539				282,592
Underwriting ratios:
Loss ratio		79.9	%			65.6	%			61.1	%			66.1	%			98.6	%			66.8	%			48.6	%			66.3	%
Acquisition cost ratio		15.8				32.0				28.3				28.8				19.1				30.5				28.1				28.2
Composite ratio		95.7	%			97.6	%			89.4	%			94.9	%			117.7	%			97.3	%			76.7	%			94.5	%
Underwriting expense ratio														4.0																3.5
Combined ratio														98.9	%															98.0	%

GREENLIGHT CAPITAL RE, LTD.
KEY FINANCIAL MEASURES AND NON-GAAP MEASURES

Management uses certain key financial measures, some of which are not prescribed under U.S. GAAP rules and standards (“non-GAAP financial measures”), to evaluate our financial performance, financial position, and the change in shareholder value. Generally, a non-GAAP financial measure, as defined in SEC Regulation G, is a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented under U.S. GAAP. We believe that these measures, which may be calculated or defined differently by other companies, provide consistent and comparable metrics of our business performance to help shareholders understand performance trends and facilitate a more thorough understanding of the Company’s business. Non-GAAP financial measures should not be viewed as substitutes for those determined under U.S. GAAP.

The key non-GAAP financial measures used in this news release are:

• Fully diluted book value per share; and
• Net underwriting income (loss).

These non-GAAP financial measures are described below.

Fully Diluted Book Value Per Share

Our primary financial goal is to increase fully diluted book value per share over the long term. We use fully diluted book value as a financial measure in our incentive compensation plan.

We believe that long-term growth in fully diluted book value per share is the most relevant measure of our financial performance because it provides management and investors a yardstick to monitor the shareholder value generated. Fully diluted book value per share may also help our investors, shareholders, and other interested parties form a basis of comparison with other companies within the property and casualty reinsurance industry. Fully diluted book value per share should not be viewed as a substitute for the most comparable U.S. GAAP measure, which in our view is the basic book value per share.

We calculate basic book value per share as (a) ending shareholders' equity, divided by (b) the total ordinary shares issued and outstanding, as reported in the consolidated financial statements. Fully diluted book value per share represents basic book value per share combined with any dilutive impact of in-the-money stock options (assuming net exercise) and all outstanding restricted stock units “RSUs”. We believe these adjustments better reflect the ultimate dilution to our shareholders.

The following table presents a reconciliation of the fully diluted book value per share to basic book value per share (the most directly comparable U.S. GAAP financial measure):

	June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023					June 30, 2023
Numerator for basic and fully diluted book value per share:
Total equity as reported under U.S. GAAP	$	634,020			$	624,458			$	596,095			$	575,865			$	561,121
Denominator for basic and fully diluted book value per share:
Ordinary shares issued and outstanding as reported and denominator for basic book value per share		35,321,144				35,321,144				35,336,732				35,337,407				35,272,013
Add: In-the-money stock options(1)and all outstanding RSUs		594,612				585,334				264,870				312,409				312,409
Denominator for fully diluted book value per share		35,915,756				35,906,478				35,601,602				35,649,816				35,584,422
Basic book value per share	$	17.95			$	17.68			$	16.87			$	16.30			$	15.91
Fully diluted book value per share	$	17.65			$	17.39			$	16.74			$	16.15			$	15.77

⁽¹⁾ Assuming net exercise by the grantee.

Net Underwriting Income (Loss)

One way that we evaluate the Company’s underwriting performance is by measuring net underwriting income (loss). We do not use premiums written as a measure of performance. Net underwriting income (loss) is a performance measure used by management to evaluate the fundamentals underlying the Company’s underwriting operations. We believe that the use of net underwriting income (loss) enables investors and other users of the Company’s financial information to analyze our performance in a manner similar to how management analyzes performance. Management also believes this measure follows industry practice and allows the users of financial information to compare the Company’s performance with that of our industry peer group.

Net underwriting income (loss) is considered a non-GAAP financial measure because it excludes items used to calculate net income before taxes under U.S. GAAP. We calculate net underwriting income (loss) as net premiums earned less net loss and loss adjustment expenses, acquisition costs, underwriting expenses (including related G&A expenses), and deposit interest expense, plus deposit interest income. The measure excludes, on a recurring basis: (1) investment income (loss); (2) other income (expense) not related to underwriting, including foreign exchange gains or losses, and Lloyd’s interest income and expense; (3) corporate G&A expenses; and (4) interest expense. We exclude total investment income or loss, foreign exchange gains or losses, and Lloyd’s interest income or expense as we believe these items are influenced by market conditions and other factors unrelated to underwriting decisions. Additionally, we exclude corporate G&A and interest expenses because these costs are generally fixed and not incremental to or directly related to our underwriting operations. We believe all of these amounts are largely independent of our underwriting process, and including them could hinder the analysis of trends in our underwriting operations. Net underwriting income (loss) should not be viewed as a substitute for U.S. GAAP net income before income taxes.

The reconciliations of net underwriting income to income before income taxes (the most directly comparable U.S. GAAP financial measure) on a consolidated basis are shown below:

	Three months ended June 30								Six months ended June 30
		2024				2023				2024				2023
	($ in thousands)
Income before income tax	$	8,413			$	49,888			$	35,951			$	55,829
Add (subtract):
Total investment income		(12,554	)			(42,151	)			(38,945	)			(47,391	)
Foreign exchange losses (gains)		932				(4,729	)			2,581				(9,660	)
Other non-underwriting income		(2,724	)			(2,866	)			(7,759	)			(5,032	)
Corporate expenses		4,706				4,557				9,081				10,554
Interest expense		1,560				744				2,809				1,520
Net underwriting income	$	333			$	5,443			$	3,718			$	5,820

FAQ

What was Greenlight Re's gross premium growth in Q2 2024?

Greenlight Re reported a 9.1% increase in gross premiums written, reaching $169.0 million in Q2 2024 compared to Q2 2023.

How did Greenlight Re's (GLRE) net income change in Q2 2024 compared to Q2 2023?

Greenlight Re's net income decreased to $8.0 million ($0.23 per diluted ordinary share) in Q2 2024, compared to $49.9 million ($1.32 per diluted ordinary share) in Q2 2023.

What was Greenlight Re's combined ratio for Q2 2024?

Greenlight Re reported a combined ratio of 99.8% for Q2 2024, an increase from 96.2% in Q2 2023.

When is Greenlight Re (GLRE) hosting its 2024 Investor Day?

Greenlight Re will host its 2024 Investor Day on Tuesday, November 19, 2024, at 12:00 noon Eastern Time in New York City.