Gross premiums written increased 15.0%
Net income of $49.9 million ($1.32 per diluted ordinary share)
Fully diluted book value per share increased 9.9% to $16.21
GRAND CAYMAN, Cayman Islands, Aug. 02, 2023 (GLOBE NEWSWIRE) -- Greenlight Capital Re, Ltd. ( GLRE) (“Greenlight Re” or the “Company”) today reported its financial results for the second quarter ended June 30, 2023.
Second Quarter 2023 Highlights (all comparisons are to second quarter 2022 unless noted otherwise):
- Gross premiums written increased 15.0% to $154.9 million;
- Net premiums earned increased 27.0% to $139.9 million;
- Underwriting income of $5.4 million compared to an underwriting income of $9.3 million;
- Net income of $49.9 million, or $1.32 per diluted ordinary share compared to a net income of $14.8 million, or $0.37 per diluted ordinary share;
- Combined ratio of 96.2%, compared to a combined ratio of 91.6%;
- Total investment income of $42.2 million, compared to total investment income of $17.2 million; and
- Fully diluted book value per share increased $1.46, or 9.9%, to $16.21, compared to $14.75 on March 31, 2023.
Simon Burton, Chief Executive Officer of Greenlight Re, stated, “Book value growth of 9.9% in the second quarter was very strong, and it is a demonstration of our multi-faceted strategy to build shareholder value. I’m pleased with the positioning of the underwriting book in favorable market conditions, although the combined ratio of 96.2% was impacted by 7.3 points from an unusually active quarter of severe storms in the U.S.”
David Einhorn (Trades, Portfolio), Chairman of the Board of Directors, said, “We had good results in the second quarter despite unusually bad weather in the U.S. The Solasglas fund generated a solid 10.9% return for the quarter, as gains in Green Brick Partners more than compensated for the return of a challenging environment for value investment strategies.”
Second Quarter 2023 Results
Gross premiums written in the second quarter of 2023 were $154.9 million, compared to $134.8 million in the second quarter of 2022. The $20.2 million increase, or 15.0%, relates primarily to new opportunities and improved pricing on property and general liability business, as well as several new specialty contracts bound during the quarter.
The Company recognized net underwriting income of $5.4 million in the second quarter of 2023. By comparison, the equivalent period in 2022 reported net underwriting income of $9.3 million. The combined ratio for the second quarter of 2023 was 96.2%, compared to 91.6% for the equivalent period in 2022. The current period combined ratio included $10.2 million, or 7.3 percentage points, of losses related to catastrophe events primarily relating to the U.S. severe storms that occurred during the second quarter of 2023. The storm losses stemmed from a homeowners’ insurance program.
The following table summarizes the components of our combined ratio.
Underwriting ratios Second Quarter2023 Second Quarter
2022Loss ratio - current year 63.4% 57.8% Loss ratio - prior year 1.3% (2.6)% Loss ratio 64.7% 55.2% Acquisition cost ratio 27.4% 33.0% Composite ratio 92.1% 88.2% Underwriting expense ratio 4.1% 3.4% Combined ratio 96.2% 91.6%
The Company’s total investment income during the second quarter of 2023 was $42.2 million. The Company’s investment in the Solasglas fund, managed by DME Advisors, returned 10.9%, representing net income of $32.8 million. The Company reported $9.4 million of other investment income, primarily from interest earned on its restricted cash and cash equivalents.
The Company reported other non-underwriting income of $7.6 million during the second quarter of 2023, due primarily to investment income on the funds withheld by the Lloyd’s syndicates and foreign exchange gains driven by the strengthening of the pound sterling.
The net income of $49.9 million contributed to the 9.9% increase in fully diluted book value per share which increased to $16.21 per share at June 30, 2023.
Greenlight Capital Re, Ltd. Second Quarter 2023 Earnings Call
Greenlight Re will host a live conference call to discuss its financial results on Thursday, August 3, 2023, 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=1623319&tp_key=eae48bf681
A telephone replay will be available following the call through August 8, 2023. 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 13739761. An audio file of the call will also be available on the Company’s website, www.greenlightre.com.
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 basic book value per share, 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 measures are used to monitor our results and should not be viewed as a substitute for those 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 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 the fluctuation of our results of operations from period to period; the impact of general economic, capital and credit market conditions, including banking sector instability, financial market illiquidity and fluctuations in interest rates, equity securities' prices and/or foreign currency exchange rates; a downgrade or withdrawal of our A.M. Best ratings; any suspension or revocation of any of our licenses; 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; our level of debt and its adverse impact on our liquidity; impact of United States federal income taxes and legal uncertainties and other factors described in our most recent Form 10-K filed with the Securities and Exchange Commission (“SEC”), 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. In 2018, the Company launched its Greenlight Re Innovations unit, which 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
[email protected]
| GREENLIGHT CAPITAL RE, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED | |||||
| (expressed in thousands of U.S. dollars, except per share and share amounts) | |||||
| June 30, 2023 | December 31, 2022 | ||||
| Assets | |||||
| Investments | |||||
| Investment in related party investment fund | $ | 216,845 | $ | 178,197 | |
| Other investments | 68,670 | 70,279 | |||
| Total investments | 285,515 | 248,476 | |||
| Cash and cash equivalents | 55,597 | 38,238 | |||
| Restricted cash and cash equivalents | 627,734 | 668,310 | |||
| Reinsurance balances receivable (net of allowance for expected credit losses) | 616,727 | 505,555 | |||
| Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses) | 21,555 | 13,239 | |||
| Deferred acquisition costs | 83,017 | 82,391 | |||
| Unearned premiums ceded | 19,227 | 18,153 | |||
| Other assets | 6,293 | 6,019 | |||
| Total assets | $ | 1,715,665 | $ | 1,580,381 | |
| Liabilities and equity | |||||
| Liabilities | |||||
| Loss and loss adjustment expense reserves | $ | 621,101 | $ | 555,468 | |
| Unearned premium reserves | 338,054 | 307,820 | |||
| Reinsurance balances payable | 109,534 | 105,135 | |||
| Funds withheld | 15,605 | 21,907 | |||
| Other liabilities | 7,125 | 6,397 | |||
| Convertible senior notes payable | 63,125 | 80,534 | |||
| Total liabilities | 1,154,544 | 1,077,261 | |||
| Shareholders' equity | |||||
| Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding, 29,017,298 (2022: 28,569,346): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2022: 6,254,715)) | $ | 3,527 | $ | 3,482 | |
| Additional paid-in capital | 480,648 | 478,439 | |||
| Retained earnings | 76,946 | 21,199 | |||
| Total shareholders' equity | 561,121 | 503,120 | |||
| Total liabilities and equity | $ | 1,715,665 | $ | 1,580,381 | |
| 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 | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Underwriting revenue | |||||||||||||||
| Gross premiums written | $ | 154,943 | $ | 134,780 | $ | 341,398 | $ | 280,666 | |||||||
| Gross premiums ceded | (9,739 | ) | (7,163 | ) | (20,951 | ) | (13,172 | ) | |||||||
| Net premiums written | 145,204 | 127,617 | 320,447 | 267,494 | |||||||||||
| Change in net unearned premium reserves | (5,261 | ) | (17,398 | ) | (37,855 | ) | (31,350 | ) | |||||||
| Net premiums earned | $ | 139,943 | $ | 110,219 | $ | 282,592 | $ | 236,144 | |||||||
| Underwriting related expenses | |||||||||||||||
| Net loss and loss adjustment expenses incurred | |||||||||||||||
| Current year | $ | 88,740 | $ | 63,706 | $ | 173,428 | $ | 158,788 | |||||||
| Prior year | 1,764 | (2,883 | ) | 13,801 | (558 | ) | |||||||||
| Net loss and loss adjustment expenses incurred | 90,504 | 60,823 | 187,229 | 158,230 | |||||||||||
| Acquisition costs | 38,293 | 36,335 | 79,769 | 69,280 | |||||||||||
| Underwriting expenses | 5,468 | 3,528 | 9,407 | 6,749 | |||||||||||
| Deposit interest expense | 235 | 191 | 367 | 225 | |||||||||||
| Net underwriting income (loss) | $ | 5,443 | $ | 9,342 | $ | 5,820 | $ | 1,660 | |||||||
| Income (loss) from investment in related party investment fund | $ | 32,782 | $ | 11,876 | $ | 29,644 | $ | 15,953 | |||||||
| Net investment income (loss) | 9,369 | 5,280 | 17,747 | 8,940 | |||||||||||
| Total investment income (loss) | $ | 42,151 | $ | 17,156 | $ | 47,391 | $ | 24,893 | |||||||
| Net underwriting and investment income (loss) | $ | 47,594 | $ | 26,498 | $ | 53,211 | $ | 26,553 | |||||||
| Corporate expenses | $ | 4,557 | $ | 4,578 | $ | 10,554 | $ | 8,589 | |||||||
| Other (income) expense, net | (7,595 | ) | 5,957 | (14,692 | ) | 6,590 | |||||||||
| Interest expense | 744 | 1,166 | 1,520 | 2,320 | |||||||||||
| Income tax expense (benefit) | 28 | 9 | 82 | (7 | ) | ||||||||||
| Net income (loss) | $ | 49,860 | $ | 14,788 | $ | 55,747 | $ | 9,061 | |||||||
| Earnings (loss) per share (Class A and Class B) | |||||||||||||||
| Basic | $ | 1.46 | $ | 0.44 | $ | 1.64 | $ | 0.27 | |||||||
| Diluted | $ | 1.32 | $ | 0.37 | $ | 1.49 | $ | 0.23 | |||||||
The following tables present the Company’s net premiums earned and underwriting ratios by line of business:
