GREENLIGHT CAPITAL RE LTD

Previous wording

References to “we,” “us,” “our,” “our company,” or “the Company” refer to Greenlight Capital Re, Ltd. (“GLRE”) and its wholly-owned subsidiaries unless the context dictates otherwise. See Item 1, Note 1 of the financial statements for list of our wholly-owned subsidiaries.

Current wording

References to “we,” “us,” “our,” “our company,” or “the Company” refer to Greenlight Capital Re, Ltd. (“GLRE”) and its wholly-owned subsidiaries unless the context dictates otherwise.

Previous wording

The following is management’s discussion and analysis (“MD&A”) of our results of operations for the three months ended March 31, 2024 and 2023 and the Company’s financial condition at March 31, 2024 and December 31, 2023 (herein referred as “Q1 2024 Financials”).

Current wording

The following is management’s discussion and analysis (“MD&A”) of our results of operations for the three and six months ended June 30, 2024 and 2023 and the Company’s financial condition at June 30, 2024 and December 31, 2023 (herein referred as “Q2 2024 Financials”).

Previous wording

We earned net income of $27.0 million for the three months ended March 31, 2024, an increase of $21.1 million, or 359% over the same period in the prior year, principally due to stronger performance from our investment in SILP and to a lesser extent improved underwriting performance despite higher CAT losses.

Current wording

For the second quarter of 2024 (“Q2 2024”) we earned a net income of $8.0 million, a decrease of $41.9 million over the same period in the prior year, principally due to the lower return from our investment in Solasglas and to a lesser extent lower underwriting profits driven by higher CAT losses.

Previous wording

The following is a summary of our financial performance for the three months ended March 31, 2024, compared to the same period in 2023:

Current wording

The following is a summary of our financial performance for Q2 2024, compared to the same quarter in 2023 (“Q2 2023”):

Previous wording

•Net premiums earned was $161.5 million, an increase of 13.2%;

Current wording

•Net premiums earned was $158.4 million, an increase of 13.2%;

Previous wording

•Total investment income was $26.4 million, an increase of 403.6% (including 5.2% net return from our investment in SILP, compared to a loss of 1.1%);

Current wording

•Total investment income was $12.6 million, a decrease of 70.2% (including 1.2% net return from our investment in Solasglas, compared to net return of 10.9%); and

Previous wording

The table below summarizes our consolidated operating results for the three months ended March 31, 2024 and 2023:

Current wording

The table below summarizes our consolidated operating results for the three and six months ended June 30, 2024 and 2023:

Previous wording

1 The net financial impacts associated with changes in the estimate of losses incurred in prior years, which incorporate earned reinstatement premiums assumed and ceded, adjustments to assumed and ceded acquisition costs, and deposit interest expense, were a loss of $5.4 million and $12.0 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

1 The net financial impact associated with changes in the estimate of losses incurred in prior years, which incorporates earned reinstatement premiums assumed and ceded, adjustments to assumed and ceded acquisition costs, and deposit interest income and expense, was a loss of $0.4 million and $1.9 million for the three months ended June 30, 2024 and 2023, respectively, and a loss of $5.8 million and $13.9 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

2 Net underwriting income (loss) is a non-GAAP financial measure. See “ Key Financial Measures and Non-GAAP Measures” above for discussion and reconciliation of non-GAAP financial measures.

Current wording

2 Net underwriting income is a non-GAAP financial measure. See “Key Financial Measures and Non-GAAP Measures” above for discussion and reconciliation of non-GAAP financial measures.

Previous wording

The following provides further details on the significant variances for the first quarter 2024 (“Q1 2024”) compared to same quarter in 2023 (“Q1 2023”).

Current wording

The following provides further details on the significant variances for Q2 2024 compared to same quarter in 2023 (“Q2 2023”) and for the six months ended June 30, 2024 (“YTD 2024”) compared to the same period in 2023 (“YTD 2023”).

Previous wording

For the three months ended March 31, 2024, the fully diluted book value per share increased by $0.65 per share, or 3.9%, to $17.39 per share from $16.74 per share at December 31, 2023. For the three months ended March 31, 2024, basic book value per share increased by $0.81 per share, or 4.8%, to $17.68 per share from $16.87 per share at December 31, 2023.

Current wording

Fully diluted book value per share increased by $0.26 per share, or 1.5%, to $17.65 per share from $17.39 per share at March 31, 2024. Basic book value per share increased by $0.27 per share, or 1.5%, to $17.95 per share from $17.68 per share at March 31, 2024.

Previous wording

The developments that most significantly affected our financial performance during Q1 2024, compared to the equivalent 2023 period, are summarized below:

Current wording

The developments that most significantly affected our financial performance during Q2 2024, compared to Q2 2023, are summarized below:

Previous wording

•Underwriting income: Increased by $3.0 million primarily driven by 1.8 percentage points improvement in our combined ratio due to lower adverse prior year loss development and acquisition costs, offset partially by an increase in underwriting costs. Current year CAT losses contributed 7.7% to our combined ratio, compared to 4.3% in Q1 2023. For further information on CAT losses and prior year loss development, refer to Note 7 -Loss and Loss Adjustment Expense Reserves of the Q1 2024 Financials.

Current wording

•Underwriting income: Decreased by $2.1 million primarily driven by 0.9 percentage points increase in our combined ratio mainly due to an increase in acquisition costs (same reason as Q2 2024) and an increase in underwriting expenses. While current year CAT losses contributed 8.0 percentage points to our combined ratio, compared to 5.8 percentage points for YTD 2023, the increase was offset by an improved attritional loss ratio for our underwriting portfolio. For further information on CAT losses and prior year loss development, refer to Note 7 -Loss and Loss Adjustment Expense Reserves of the Q2 2024 Financials.

Previous wording

•Investment income: Increased by $21.2 million primarily driven by stronger results from SILP. Our investment in SILP reported a gain of $18.2 million during Q1 2024, compared to a loss of $3.1 million during the equivalent period in 2023. SILP generated a net return of 5.2% for Q1 2024.

Current wording

•Investment income: Decreased by $8.4 million primarily driven by lower income from Solasglas. Our investment in Solasglas reported a gain of $22.6 million during YTD 2024, compared to a gain of $29.6 million during the equivalent period in 2023. Solasglas generated a net return of 6.4% for YTD 2024 compared to a net return of 9.7% for YTD 2023 .

Previous wording

•Corporate expense: Decreased by $1.6 million mainly due to non-recurring severance costs included in Q1 2023 and lower outside legal costs following the hiring of our new General Counsel in April 2023.

Current wording

•Corporate expense: Decreased by $1.5 million mainly due to non-recurring severance costs included in YTD 2023 and lower outside legal costs following the hiring of our new General Counsel in April 2023.

Previous wording

•Foreign exchange gains (losses): $1.6 million foreign exchange losses for Q1 2024, compared to $4.9 million foreign exchange gains in Q1 2023, driven mainly by the reversal of the pound sterling movement against the U.S. dollar; and

Current wording

•Foreign exchange gains (losses): $2.6 million foreign exchange losses for YTD 2024, compared to $9.7 million foreign exchange gains for YTD 2023, driven mainly by the reversal of the pound sterling movement against the U.S. dollar; and

Previous wording

•Other income, net: Increased by $2.9 million due to stronger investment income on funds withheld by third party Lloyd’s syndicates, reported on a quarterly lag basis.

Current wording

•Other income, net: Increased by $2.7 million due to stronger investment income generated on funds withheld by third party Lloyd’s syndicates, reported on a quarterly lag basis.

Previous wording

The following provides a further discussion of our underwriting results for our Property & Casualty (Re)insurance operating segment for the three months ended March 31, 2024 and 2023.

Current wording

The following provides a further discussion of our underwriting results for our Property & Casualty (Re)insurance operating segment for the three and six months ended June 30, 2024 and 2023.

Previous wording

For the three months ended March 31, 2024, our gross premiums written increased by $30.8 million, or 16.5%, compared to the equivalent 2023 period. The following table provides a further analysis of this overall increase:

Current wording

The following table provides a further analysis of this overall increase:

Previous wording

For the three months ended March 31, 2024, premiums ceded were $23.2 million, or 10.7% of gross premiums written, compared to $11.2 million, or 6.0% of gross premiums written, for the same quarter in 2023. The increase was primarily due to the purchase of an additional reinsurance coverage to reduce our overall exposure to Marine and Energy class in light of recent growth in this class of business, coupled with an increase in quota share retrocessions for Other Specialty business due to growth from inward premiums.

Current wording

The increase in both periods was primarily due to the purchase of an additional retrocessional coverage to manage our overall exposure to Marine and Energy class in light of recent growth in this class of business and to reinstate certain retro excess of loss treaties in which the full coverage was presumed exhausted primarily from the Baltimore bridge loss event. Additionally, we had an increase in quota share retrocessions for Other Specialty business due to growth from inward premiums.

Previous wording

For the three months ended March 31, 2024 net premiums written increased by $18.8 million, or 10.7%, compared to the three months ended March 31, 2023. The movement in net premiums written resulted from the changes in gross premiums written and ceded during the periods as previously noted.

Current wording

For Q2 2024 and YTD 2024, net premiums written increased by $8.9 million, or 6.2%, and $27.8 million or 8.7%, respectively, compared to the same periods in 2023. The movement in net premiums written resulted from the changes in gross premiums written and ceded during the periods as previously noted.

Previous wording

Net premiums earned for the three months ended March 31, 2024, increased by $18.9 million or 13.2%, compared to the three months ended March 31, 2023. The change in net premiums earned is primarily a function of the amount and timing of net premiums written during the current and prior periods, coupled by the mix of business written in the form of excess of loss versus proportional contracts.

Current wording

Net premiums earned for Q2 2024 and YTD 2024, increased by $18.5 million or 13.2%, and by $37.3 million or 13.2%, respectively, compared to the same periods in 2023. The change in net premiums earned is primarily a function of the amount and timing of net premiums written during the current and prior periods, coupled with the mix of business written in the form of excess of loss versus proportional contracts. For Q2 2024 and YTD 2024, excess of loss treaties accounted for 16% and 15% of the total net premiums earned, respectively, compared to 14% and 13% for Q2 2023 and YTD 2023, respectively.

Previous wording

For the three months ended March 31, 2024, we had prior year adverse loss development of 3.3%, compared to 8.4% for the same quarter in 2023. Refer to Note 7 for further details on prior year developments.

Current wording

For the current quarter, we had prior year favorable loss development of 0.4%, compared to adverse loss development of 1.3% for the same quarter in 2023. For YTD 2024, our prior year adverse loss development improved by 3.4 percentage points compared to the same period in 2023. Refer to Note 7 for further details on prior year loss development.

Previous wording

Our total acquisition cost increased by 0.3% to $41.6 million, compared to Q1 2023, mainly due to growth in net premiums earned offset partially by lower commissions from excess of loss contracts compared to proportional treaties. The acquisition cost ratios by line of business were as follows:

Current wording

For Q2 2024 and YTD 2024, our total acquisition costs increased by 31.8% to $50.5 million, and by 15.4% to $92.1 million, respectively, compared to the same periods in 2023, mainly due to growth in net premiums earned and higher commissions, predominantly in our Casualty and Other lines of business. The acquisition cost ratios by line of business were as follows:

Previous wording

Our combined ratio improved by 1.8 percentage points in the current quarter compared to Q1 2023 predominantly due to lower acquisition costs ratio; partially offset by an increase in underwriting expense ratio (see G&A Expenses below for further details).

Current wording

Our combined ratio increased by 0.9 percentage points for YTD 2024 compared to same period in 2023 predominantly due to higher acquisition cost ratio and underwriting expense ratio (see G&A Expenses below for further details); partially offset by a decrease in loss ratio.

Previous wording

G&A increased by 7.8% in the current quarter, compared to Q1 2023. The increase was driven by:

Current wording

G&A increased by 4.9% for Q2 2024, compared to Q2 2023. The increase was driven by:

Previous wording

•Underwriting expenses: Increased by $2.4 million or 60.9%, predominantly due to an increase in headcount to drive business growth, coupled with an increase in professional fees and outsourced services relating to underwriting activities. As a result, our underwriting expense ratio increased by 1.6 percentage points in the current quarter compared to Q1 2023.

Current wording

•Underwriting expenses: Increased by $2.7 million or 29.2%, predominantly due to an increase in headcount to drive business growth, coupled with an increase in professional fees and outsourced services relating to underwriting activities. As a result, this contributed to the net increase in underwriting expense ratio in the YTD 2024 compared to the same period in 2023.

Previous wording

•Corporate expenses: Decreased by $1.6 million or 27.0%, driven mainly by non-recurring severance costs included in Q1 2023 and lower outside legal costs following the hiring of our new General Counsel in April 2023.

Current wording

•Corporate expenses: Decreased by $1.5 million or 14.0%, driven mainly by non-recurring severance costs included in YTD 2023 and lower outside legal costs following the hiring of our new General Counsel in April 2023.

Previous wording

For the three months ended March 31, 2024, Solasglas reported a gain of 5.2%, compared to a loss of 1.1% for the same quarter in 2023. The following table provides a breakdown of the gross and net investment return.

Current wording

For Q2 2024 and YTD 2024, Solasglas reported a gain of 1.2% and 6.4%, respectively, compared to a gain of 10.9% and 9.7% for Q2 2023 and YTD 2023, respectively. The following table provides a breakdown of the gross and net investment return for Solasglas.

Previous wording

For the three months ended March 31, 2024, the significant contributors to SILP’s investment return were long positions in Green Brick Partners (GRBK), Tenet Healthcare (THC), and an S&P 500 / U.S. interest rate derivative position. The largest detractors were long positions in Penn National Gaming (PENN), CONSOL Energy (CEIX), and a single-name short position.

Current wording

For YTD 2024, the significant contributors to Solasglas’ investment return were long positions in GRBK, gold, and Tenet Healthcare (THC). The largest detractors were a long position in BHF and two single-name short positions.

Previous wording

Each month, we post on our website (www.greenlightre.com) the returns from our investment in SILP.

Current wording

Each month, we post on our website (www.greenlightre.com) the returns from our investment in Solasglas.

Previous wording

At March 31, 2024, our total investments increased by $47.6 million, or 14.3%, to $379.8 million from December 31, 2023. The increase was primarily driven by $30.0 million of additional contributions into SILP, coupled with the net investment return for Q1 2024.

Current wording

At June 30, 2024, our total investments increased by $92.4 million, or 27.8%, to $424.6 million from December 31, 2023. The increase was primarily driven by $70.0 million of additional contributions into Solasglas, coupled with the net investment return for Q2 2024. The contributions were funded partially from cash flow from operations and partially from the release of restricted cash.

Previous wording

DME Advisors reports the composition of SILP’s portfolio on a delta-adjusted basis, which it believes is the appropriate manner to assess the exposure and profile of investments and reflects how it manages the portfolio. An option’s delta is the option price’s sensitivity to the underlying stock (or commodity) price. The delta-adjusted basis is the number of shares or contracts underlying the option multiplied by the delta and the underlying stock (or commodity) price.

Current wording

DME Advisors reports the composition of Solasglas’ portfolio on a delta-adjusted basis, which it believes is the appropriate manner to assess the exposure and profile of investments and reflects how it manages the portfolio. An option’s delta is the option price’s sensitivity to the underlying stock (or commodity) price. The delta-adjusted basis is the number of shares or contracts underlying the option multiplied by the delta and the underlying stock (or commodity) price.

Previous wording

The following table represents the composition of SILP’s investments:

Current wording

The following table represents the composition of Solasglas’ investments:

Previous wording

The above exposure analysis does not include cash (U.S. dollar and foreign currencies), gold and other commodities, credit default swaps, sovereign debt, foreign currency derivatives, interest rate derivatives, inflation swaps and other macro positions. Under this methodology, a total return swap’s exposure is reported at its full notional amount and options are reported at their delta-adjusted basis. At March 31, 2024, SILP’s exposure to gold on a delta-adjusted basis was 8.7% (Q1 2023: 11.2%).

Current wording

The above exposure analysis does not include cash (U.S. dollar and foreign currencies), gold and other commodities, credit default swaps, sovereign debt, foreign currency derivatives, interest rate derivatives, inflation swaps and other macro positions. Under this methodology, a total return swap’s exposure is reported at its full notional amount and options are reported at their delta-adjusted basis. At June 30, 2024, Solasglas’ exposure to gold on a delta-adjusted basis was 7.5% (2023: 11.2%).

Previous wording

At March 31, 2024, 95.2% of SILP’s portfolio was valued based on quoted prices in actively traded markets (Level 1), 3.4% was composed of instruments valued based on observable inputs other than quoted prices (Level 2), and a nominal amount was composed of instruments valued based on non-observable inputs (Level 3). At March 31, 2024, 1.4% of SILP’s portfolio consisted of private equity funds valued using the funds’ net asset values as a practical expedient.

Current wording

At June 30, 2024, 94.3% of Solasglas’ portfolio was valued based on quoted prices in actively traded markets (Level 1), 4.1% was composed of instruments valued based on observable inputs other than quoted prices (Level 2), and a nominal amount was composed of instruments valued based on non-observable inputs (Level 3). At June 30, 2024, 1.6% of Solasglas’ portfolio consisted of private equity funds valued using the funds’ net asset values as a practical expedient.

Previous wording

The other investment holdings relate to private investments made by Innovations. During Q1 2024, we made no new private investments compared to $1.1 million in Q1 2023.

Current wording

The other investment holdings relate to private investments made by Innovations. During Q2 2024, we made two modest private equity investments. During the YTD 2024, we impaired certain debt securities (see Note 4), resulting in a decrease in the carrying value of these securities.

Previous wording

We use our restricted cash and cash equivalents primarily for funding trusts and letters of credit issued to our ceding insurers. Our restricted cash decreased by $23.4 million, or 3.9%, from $604.6 million at December 31, 2023, to $581.2 million at March 31, 2024, primarily due to release of collateral from our ceding insurers relating to legacy contracts in run-off.

Current wording

We use our restricted cash and cash equivalents primarily for funding trusts and letters of credit issued to our ceding insurers. Our restricted cash decreased by $42.7 million, or 7.1%, from $604.6 million at December 31, 2023, to $561.9 million at June 30, 2024, primarily due to release of collateral from our ceding insurers relating to legacy contracts in run-off.

Previous wording

Our reinsurance balances receivable increased by $74.3 million, or 12.0%, to $693.7 million from $619.4 million at December 31, 2023. This increase was driven primarily by the renewal of reinsurance treaties, in addition to new business in Q1 2024.

Current wording

Our reinsurance balances receivable increased by $67.3 million, or 10.9%, to $686.7 million from $619.4 million at December 31, 2023. This increase was driven primarily by the renewal of reinsurance treaties, in addition to new business bound during 2024.

Previous wording

Our total gross loss and LAE reserves increased by $69.1 million, or 10.4%, to $730.7 million from $661.6 million at December 31, 2023. This increase is primarily driven by the increase in earned premium from the renewal of reinsurance and new business, offset partially by paid losses during Q1 2024. See Note 7 “Loss and Loss Adjustment Expense Reserves” of the financial statements for a summary of changes in outstanding loss and LAE reserves and a description of prior period loss developments.

Current wording

Our total gross loss and LAE reserves increased by $91.2 million, or 13.8%, to $752.8 million from $661.6 million at December 31, 2023. This increase is primarily driven by the increase in earned premium from the renewal of reinsurance treaties and new business, offset partially by paid losses during Q2 2024. See Note 7 “Loss and Loss Adjustment Expense Reserves” of the financial statements for a summary of changes in outstanding loss and LAE reserves and a description of prior period loss developments.