Net loss of $0.1 million 
Fully diluted book value per share increased to $11.81 at quarter end

GRAND CAYMAN, Cayman Islands, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Greenlight Capital Re, Ltd. (NASDAQ: GLRE) (“Greenlight Re” or the “Company”) today reported a net loss of $0.1 million, or $0.00 per share, in the second quarter of 2020, compared to net income of $15.3 million, or $0.42 per share, in the second quarter of 2019. Fully diluted book value per share increased $0.18, or 1.5%, to $11.81 in the second quarter of 2020, reflecting share repurchases executed during the quarter. Fully diluted book value per share was $13.58 at the end of the second quarter of 2019.

Simon Burton, Chief Executive Officer of Greenlight Re, stated, “We have been pleased with our stability and performance in light of the impact of the COVID-19 pandemic on the reinsurance industry and the global economy. Additionally, our repurchases of common stock enabled us to deliver solid growth in book value per share during the quarter. Looking ahead to the rest of 2020 and into 2021, we are well positioned to take advantage of broad pricing increases that we are seeing across multiple lines of business.”

David Einhorn, Chairman of the Board of Directors, stated, “We reported a small investment gain during the second quarter, and believe our investment portfolio is well positioned for the current market uncertainty. We are cognizant that the financial markets remain volatile and as such we continue to be conservatively positioned.”

Underwriting and investment results

Second Quarter 2020

Gross written premiums in the second quarter of 2020 were $116.7 million, compared to $152.3 million in the second quarter of 2019. This decrease was largely due to the Company’s decision not to renew certain auto business, partially offset by additional new business written in several specialty lines.

Net written premiums decreased 9.8% to $116.6 million in the second quarter of 2020, compared to $129.2 million reported in the second quarter of 2019. The Company recognized ceded premiums of $0.1 million during the second quarter of 2020, compared to $23.1 million in the second quarter of 2019. This decrease in ceded premiums was due primarily to the non-renewal of retrocessional coverage on auto business.

Net premiums earned were $108.4 million during the second quarter of 2020, a decrease from $120.4 million in the comparable 2019 period. 

The Company incurred a net underwriting loss of $1.3 million in the second quarter of 2020, compared to a net underwriting gain of $1.5 million in the second quarter of 2019. The net financial impact of the COVID-19 pandemic during the second quarter of 2020 was a $6.0 million loss.

COVID-19 losses contributed 5.5 percentage points to the combined ratio resulting in a combined ratio for the second quarter of 2020 of 101.2%. Excluding COVID-19 losses, the underlying book of business reported a combined ratio of 95.7% for the quarter. The combined ratio for the second quarter of 2019 was 98.8%.

Greenlight Re’s total investment income during the second quarter of 2020 was $5.5 million. The Company’s Investment Portfolio, which is managed by DME Advisors, earned 0.3%, representing $1.6 million of investment income from the Solasglas fund. Other investment income of $3.9 million included net unrealized gains of $3.3 million relating to our portfolio of innovation investments.

Six Months Ended June 30, 2020

Gross written premiums were $226.5 million for the first half of 2020, a decrease of 28.1% from $314.9 million reported in the comparable 2019 period.

Net premiums earned were $219.4 million for the first half of 2020, a decrease of 10.7% from $245.8 million reported in the comparable 2019 period.

The combined ratio for the first half of 2020 was 100.0% compared to 108.3% for the first half of 2019.

The Company incurred an investment loss of $29.7 million for the first half of 2020. The Company’s Investment Portfolio incurred a loss of 7.8%, representing a loss of $40.5 million from the Company’s investment in the Solasglas fund.

Other items

On July 22, 2020 AM Best affirmed the Financial Strength Rating of A- (Excellent) of Greenlight Reinsurance, Ltd. and Greenlight Reinsurance Ireland, Designated Activity Company.

The Company repurchased 1.16 million shares during the second quarter of 2020 at an average price of $6.69 per share.

Conference Call

Greenlight Re will hold a live conference call to discuss its financial results for the second quarter ended June 30, 2020 on Thursday, August 6, 2020 at 9:00 a.m. Eastern time. The conference call title is Greenlight Capital Re, Ltd. Second Quarter 2020 Earnings Call.

To participate in the Greenlight Capital Re, Ltd. Second Quarter 2020 Earnings Call, please dial in to the conference call at:

     U.S. toll free    1-888-336-7152
     International    1-412-902-4178

Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN.

Conference Call registration link: http://dpregister.com/10144936

The conference call can also be accessed via webcast at:

https://services.choruscall.com/links/glre200806.html

A telephone replay of the call will be available from 11:00 a.m. Eastern time on August 6, 2020 until 9:00 a.m. Eastern time on August 13, 2020. The replay of the call may be accessed by dialing 1-877-344-7529 (U.S. toll free) or 1-412-317-0088 (international), access code 10144936. 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 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 complete 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 behalf of the Company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market fluctuations, trends in insured and paid losses, catastrophes, regulatory and legal uncertainties and other factors described in our Form 10-K and Amendment No. 1 to Form 10-K filed with the Securities Exchange Commission on April 29, 2020. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as provided by law.

About Greenlight Capital Re, Ltd.
Established in 2004, Greenlight Re (www.greenlightre.com) is a NASDAQ listed company with specialist property and casualty reinsurance companies based in the Cayman Islands and Ireland. Greenlight Re provides risk management products and services to the insurance, reinsurance and other risk marketplaces. The Company focuses on delivering risk solutions to clients and brokers by whom Greenlight Re's expertise, analytics and customer service offerings are demanded. With an emphasis on deriving superior returns from both sides of the balance sheet, Greenlight Re manages its assets according to a value-oriented equity-focused strategy that supports the goal of long-term growth in book value per share.

Contact:
Investor Relations:
Adam Prior
The Equity Group Inc.
(212) 836-9606
IR@greenlightre.ky

 
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2020 and December 31, 2019
(expressed in thousands of U.S. dollars, except per share and share amounts)
 
 June 30, 2020 December 31, 2019
 (unaudited) (audited)
Assets   
Investments   
Investment in related party investment fund$177,658  $240,056 
Other investments22,045  16,384 
Total investments199,703  256,440 
Cash and cash equivalents7,318  25,813 
Restricted cash and cash equivalents731,292  742,093 
Reinsurance balances receivable (net of allowance for expected credit losses of $89)251,163  230,384 
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $47)20,225  27,531 
Deferred acquisition costs49,227  49,665 
Unearned premiums ceded165  901 
Notes receivable (net of allowance for expected credit losses of $1,000)18,842  20,202 
Other assets1,521  2,164 
Total assets$1,279,456  $1,355,193 
Liabilities and equity   
Liabilities   
Loss and loss adjustment expense reserves$467,655  $470,588 
Unearned premium reserves185,378  179,460 
Reinsurance balances payable94,217  122,665 
Funds withheld4,644  4,958 
Other liabilities3,021  6,825 
Convertible senior notes payable94,637  93,514 
Total liabilities849,552  878,010 
Shareholders' equity   
Preferred share capital (par value $0.10; authorized, 50,000,000; none issued)—  — 
Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding, 30,017,870 (2019: 30,739,395): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2019: 6,254,715))3,627  3,699 
Additional paid-in capital497,559  503,547 
Retained earnings (deficit)(71,282) (30,063)
Total shareholders' equity429,904  477,183 
Total liabilities and equity$1,279,456  $1,355,193 



 
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended June 30, 2020 and 2019
(expressed in thousands of U.S. dollars, except per share and share amounts)
 
 Three months ended June 30 Six months ended June 30
 2020 2019 2020 2019
Revenues       
Gross premiums written$116,689  $152,340  $226,476  $314,900 
Gross premiums ceded(132) (23,141) (810) (44,542)
Net premiums written116,557  129,199  225,666  270,358 
Change in net unearned premium reserves(8,143) (8,758) (6,231) (24,555)
Net premiums earned108,414  120,441  219,435  245,803 
Income (loss) from investment in related party investment fund [net of related party expenses of $616 and $1,278, (three and six months ended June 30, 2019: $3,131 and $8,563, respectively)]1,609  14,405  (40,517) 45,161 
Net investment income3,934  4,386  10,771  5,953 
Other income (expense), net788  1,117  1,001  2,186 
Total revenues114,745  140,349  190,690  299,103 
Expenses       
Net loss and loss adjustment expenses incurred89,194  78,476  164,891  201,341 
Acquisition costs17,903  37,172  49,642  58,698 
General and administrative expenses6,149  7,919  12,943  14,759 
Interest expense1,562  1,562  3,123  3,106 
Total expenses114,808  125,129  230,599  277,904 
Income (loss) before income tax(63) 15,220  (39,909) 21,199 
Income tax (expense) benefit0  94  (424) 21 
Net income (loss)$(63) $15,314  $(40,333) $21,220 
Earnings (loss) per share       
Basic$0.00  $0.42  $(1.12) $0.59 
Diluted$0.00  $0.42  $(1.12) $0.58 
Weighted average number of ordinary shares used in the determination of earnings and loss per share       
Basic35,776,736  36,100,665  35,958,965  36,037,177 
Diluted35,776,736  36,829,963  35,958,965  36,592,318 
            
            

The following table provides the ratios categorized as Property, Casualty and Other: 

 Six months ended June 30 Six months ended June 30
 2020 2019
 Property Casualty Other Total Property Casualty Other Total
                
Loss ratio68.1% 71.6% 87.4% 75.1% 67.1% 89.1% 67.1% 81.9%
Acquisition cost ratio20.2  28.0  10.9  22.6  18.2  22.1  36.0  23.9 
Composite ratio88.3% 99.6% 98.3% 97.7% 85.3% 111.2% 103.1% 105.8%
Underwriting expense ratio      2.3        2.5 
Combined ratio      100.0%       108.3%
                  
                  

GREENLIGHT CAPITAL RE, LTD.
NON-GAAP MEASURES AND RECONCILIATION

Basic Book Value Per Share and Fully Diluted Book Value Per Share

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 by which to monitor the shareholder value generated. In addition, fully diluted book value per share may be useful to our investors, shareholders and other interested parties to form a basis of comparison with other companies within the property and casualty reinsurance industry.

Basic book value per share is calculated on the basis of ending shareholders' equity and aggregate of Class A and Class B Ordinary shares issued and outstanding, as well as all unvested restricted shares. Fully diluted book value per share is considered a non-GAAP financial measure and represents basic book value per share combined with any dilutive impact of in-the-money stock options and RSUs issued and outstanding as of any period end. In addition, the fully diluted book value per share includes the dilutive effect, if any, of ordinary shares to be issued upon conversion of the convertible notes. Basic book value per share and fully diluted book value per share should not be viewed as substitutes for the comparable U.S. GAAP measures.

Our primary financial goal is to increase fully diluted book value per share over the long term.

The following table presents a reconciliation of the non-GAAP financial measures basic and fully diluted book value per share to the most comparable U.S. GAAP measure.

 June 30,
2020		 March 31,
2020		 December 31,
2019		 September 30,
2019		 June 30,
2019
 ($ in thousands, except per share and share amounts)
Numerator for basic and fully diluted book value per share:         
Total equity (U.S. GAAP) (numerator for basic book value per share)$429,904  $436,899  $477,183  $506,543  $500,738 
Add: Proceeds from in-the-money stock options issued and outstanding—  —  —  —  — 
Numerator for fully diluted book value per share$429,904  $436,899  $477,183  $506,543  $500,738 
Denominator for basic and fully diluted book value per share: (1)         
Ordinary shares issued and outstanding (denominator for basic book value per share)36,272,585  37,434,244  36,994,110  36,994,110  36,793,162 
Add: In-the-money stock options and RSUs issued and outstanding116,722  116,722  63,582  63,582  87,747 
Denominator for fully diluted book value per share36,389,307  37,550,966  37,057,692  37,057,692  36,880,909 
Basic book value per share$11.85  $11.67  $12.90  $13.69  $13.61 
Increase (decrease) in basic book value per share ($)$0.18  $(1.23) $(0.79) $0.08  $0.42 
Increase (decrease) in basic book value per share (%)1.5% (9.5)% (5.8)% 0.6% 3.2%
          
Fully diluted book value per share$11.81  $11.63  $12.88  $13.67  $13.58 
Increase (decrease) in fully diluted book value per share ($)$0.18  $(1.25) $(0.79) $0.09  $0.42 
Increase (decrease) in fully diluted book value per share (%)1.5% (9.7)% (5.9)% 0.7% 3.2%

(1) All unvested restricted shares, including those with performance conditions, are included in the “basic” and “fully diluted” denominators. As of June 30, 2020, the number of unvested restricted shares with performance conditions was 501,989 (as of March 31, 2020: 501,989, December, 31, 2019: 356,900, September 30, 2019: 356,900, June 30, 2019: 120,605).

Net Underwriting Income (Loss)

One way that we evaluate the Company’s underwriting performance is through the measurement of 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 as it measures 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 that this measure follows industry practice and allows the users of financial information to compare the Company’s performance with its those of our industry peer group.

Net underwriting income (loss) is considered a non-GAAP financial measure because it excludes items used in the calculation of net income before taxes under U.S. GAAP. Net underwriting income (loss) is calculated as net premiums earned, plus other income (expense) relating to deposit-accounted contracts, less net loss and loss adjustment expenses, less acquisition costs, and less underwriting expenses. 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 adjustments to the allowance for expected credit losses; (3) corporate general and administrative expenses; (4) interest expense and (5) income taxes. We exclude total investment related income or loss and foreign exchange gains or losses as we believe these items are influenced by market conditions and other factors not related to underwriting decisions. We exclude corporate expenses because these expenses 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.

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

 Three months ended June 30 Six months ended June 30
 2020 2019 2020 2019
 ($ in thousands)
Income (loss) before income tax$(63) $15,220  $(39,909) $21,199 
Add (subtract):       
Investment related (income) loss(5,543) (18,791) 29,746  (51,114)
Other non-underwriting (income) expense(143) (126) 251  (195)
Corporate expenses2,881  3,657  6,739  6,691 
Interest expense1,562  1,562  3,123  3,106 
Net underwriting income (loss)$(1,306) $1,522  $(50) $(20,313)


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