GREENLIGHT CAPITAL RE LTD

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

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 an income of $4.6 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively, and a loss of $1.1 million and $12.2 million for the nine months ended September 30, 2024 and 2023, respectively.

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.

The following provides further details on the significant variances for Q3 2024 compared to Q3 2023 and for the nine months ended September 30, 2024 (“YTD 2024”) compared to the same period in 2023 (“YTD 2023”).

Overview

Three months ended September 30, 2024

Fully diluted book value per share increased by $1.07 per share, or 6.1%, to $18.72 per share from $17.65 per share at June 30, 2024. Basic book value per share increased by $1.10 per share, or 6.1%, to $19.05 per share from $17.95 per share at June 30, 2024.

Net income was $35.2 million for Q3 2024, compared to net income of $13.5 million reported for Q3 2023.

The developments that most significantly affected our financial performance during Q3 2024, compared to Q3 2023, are summarized below:

•Underwriting income: Decreased by $8.3 million due to an increase of 4.7 percentage points to our combined ratio on lower net premiums earned. The increase in our combined ratio was driven by the increase in loss ratio, acquisition cost ratio, and underwriting expense ratio. While the attritional loss ratio for our underwriting portfolio and current year CAT losses were higher in the current quarter than in Q3 2023, this was offset partially by improved prior year loss development. Current year CAT losses contributed 9.3% to our combined ratio, compared to 8.1% in Q3 2023. For further information on CAT losses and prior year loss development, refer to Note 7 -Loss and Loss Adjustment Expense Reserves of the Q3 2024 Financials.

•Investment income: Increased by $23.0 million primarily driven by our investment in Solasglas, which reported a gain of $19.8 million during Q3 2024, compared to a loss of $1.9 million during Q3 2023. Solasglas generated a net return of 5.2% for Q3 2024 compared to a net return of (0.6)% for Q3 2023.

•Corporate expense: Increased by $1.0 million mainly due to an increase in personnel costs, overhead costs, and technology investment to support the business growth we experienced in the last two years.

•Foreign exchange gains (losses): $5.8 million foreign exchange gains for Q3 2024, compared to $2.0 million foreign exchange losses in Q3 2023, driven mainly by the strengthening of the pound sterling against the U.S. dollar in Q3 2024.

•Other income, net: Increased by $1.5 million due to higher investment income generated on funds withheld by third party Lloyd’s syndicates, reported on a quarterly lag basis.

Nine months ended September 30, 2024

Fully diluted book value per share increased by $1.98 per share, or 11.8%, to $18.72 per share from 16.74 per share at December 31, 2023. Basic book value per share increased by $2.18 per share, or 12.9%, to $19.05 per share from 16.87 per share at December 31, 2023.

Net income was $70.2 million for YTD 2024, compared to net income of $69.2 million reported for YTD 2023.

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

•Underwriting income: Decreased by $10.4 million due to 2.4 percentage points increase in our combined ratio, offset partially by an increase in net premiums earned. The increase in our combined ratio was driven by the increase in loss ratio, acquisition cost ratio, and underwriting expense ratio. While the current year CAT losses contributed 8.5 percentage points to our combined ratio, compared to 5.1 percentage points for YTD 2023, this was offset partially by improved prior year loss development. For further information on CAT losses and prior year loss development, refer to Note 7 -Loss and Loss Adjustment Expense Reserves of the Q3 2024 Financials.

•Investment income: Increased by $14.5 million primarily driven by our investment in Solasglas, which reported a gain of $42.4 million during YTD 2024, compared to a gain of $27.8 million during the equivalent period in 2023. Solasglas generated a net return of 11.9% for YTD 2024, compared to a net return of 9.1% for YTD 2023.

•Corporate expense: Decreased by $0.5 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. This was partially offset by the increase in other personnel and overhead costs as noted for Q3 2024.

•Foreign exchange gains (losses): $3.2 million foreign exchange gains for YTD 2024, compared to $7.7 million foreign exchange gains for YTD 2023, driven mainly by a stronger pound sterling movement against the U.S. dollar in YTD 2023.

•Other income, net: Increased by $4.2 million due to stronger investment income generated on funds withheld by third party Lloyd’s syndicates, reported on a quarterly lag basis.

Underwriting Results by Segment

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

Gross Premiums Written

Details of gross premiums written are provided in the following table:

As a result of our underwriting philosophy, the total premiums we write and the mix of premiums between property, casualty, and other business, may vary significantly from period to period depending on the market opportunities we identify.

Our Q3 2024 gross premiums written decreased by $14.7 million, or 8.0%, compared to the equivalent 2023 period.

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

Our YTD 2024 gross premiums written increased by $30.1 million, or 5.7%, compared to the equivalent 2023 period.

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

Premiums Ceded

For Q3 2024, premiums ceded were $26.6 million, or 15.8% of gross premiums written, compared to $14.8 million, or 8.1% of gross premiums written, for the same quarter in 2023. For YTD 2024, premiums ceded were $64.6 million, or 11.7% of gross premiums written, compared to $35.7 million, or 6.8% of gross premiums written, for YTD 2023.

The increase in both periods was primarily due to the purchase of additional retrocessional coverage to manage our overall exposure to Aviation and Marine and Energy in light of growth in these classes of business during 2024 and to reinstate certain retro excess-of-loss treaties in which the full coverage was presumed exhausted primarily from the Baltimore Bridge loss event in Q1 2024. Additionally, we had an increase in quota share retrocessions for Other Specialty business due to growth from inward premiums.

Net Premiums Written

Details of net premiums written are provided in the following table:

For Q3 2024 and YTD 2024, net premiums written decreased by $26.5 million, or 15.8%, and increased by $1.2 million or 0.3%, 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.

Net Premiums Earned

Details of net premiums earned are provided in the following table:

Net premiums earned for Q3 2024 and YTD 2024, decreased by $11.2 million or 6.9%, and increased by $26.1 million or 5.9%, 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.

Loss and LAE Incurred, Net

The components of the loss ratio were as follows:

For Q3 2024 and YTD 2024, our total loss ratio increased by 1.9 and 0.7 percentage points, respectively, compared to the same periods in 2023.

Current accident year loss ratio increased by 3.6 percentage points and 3.3 percentage points for Q3 2024 and YTD 2024, respectively, compared to the same periods in 2023, driven mainly by 1.2 points and 1.9 points increase in CAT losses, respectively, coupled with a change in business mix with higher attritional loss ratio.

For Q3 2024 and YTD 2024, prior year favorable loss development improved by 1.7 percentage points and 2.6 percentage points, respectively, compared to the same periods in 2023. Refer to Note 7 for further details on prior year loss development.

Details of net losses incurred by line of business are provided in the following table:

The below table summarizes the loss ratios by line of business:

The following provides further details on the change in Q3 2024 vs. Q3 2023.

The following provides further details on the change in YTD 2024 vs. YTD 2023.

Acquisition Costs, Net

For Q3 2024 and YTD 2024, our total acquisition costs decreased by 1.6% to $46.2 million, and increased by 9.1% to $138.2 million, respectively, compared to the same periods in 2023. The YTD 2024 increase was mainly due to growth in net premiums earned. The acquisition cost ratios by line of business were as follows:

The following provides further details on the change in Q3 2024 vs. Q3 2023.

The following provides further details on the change in YTD 2024 vs. YTD 2023.

Ratio Analysis

The following table provides our underwriting ratios by line of business for the respective periods:

Our combined ratio increased by 4.7 percentage points for the current quarter compared to Q3 2023 driven by higher loss ratio, acquisition cost ratio and underwriting expense ratio. The underwriting expense ratio increased primarily due to an increase in fixed underwriting expenses - see G&A Expenses below.

Our combined ratio increased by 2.4 percentage points for YTD 2024 compared to same period in 2023 for same reason as noted for Q3 2024.

General and Administrative (“G&A”) Expenses

The breakdown of our G&A expenses between underwriting and corporate functions was as follows:

G&A increased by 30.6% for Q3 2024, compared to Q3 2023. The increase was driven by:

•Underwriting expenses: Increased by $1.4 million or 30.9%, predominantly due to an increase in headcount to drive business growth, coupled with an increase in professional fees, office expenses, and outsourced services relating to underwriting activities.

•Corporate expenses: Increased by $1.0 million or 30.2%, predominantly due to an increase in personnel costs, including share-based compensation costs, coupled with an increase in professional fees and office overhead costs, including information technology systems and support.

G&A increased by 13.2% for YTD 2024, compared to same period in 2023. The increase was driven by:

•Underwriting expenses: Increased by $4.2 million or 29.7%, for the same reason as noted for Q3 2024. Further, YTD 2023 included a bad debt charge of $0.6 million, with no bad debt charge during YTD 2024.

•Corporate expenses: Decreased by $0.5 million or 3.5%, 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. This was partially offset by an increase in personnel costs, including share-based compensation costs, and office overhead costs.

Total Investment Income

A summary of our total investment income is as follows:

Net investment-related income

Our net investment-related income increased by 18.5% compared to Q3 2023, and by a nominal change compared to YTD 2023, mainly driven by lower net realized and unrealized gains (losses) from our Innovation portfolio. This was partially offset by the decrease in interest income earned from restricted cash and cash equivalents mainly due to the decrease in the outstanding collateral balance during both periods.

Share of Solasglas’ net income

For Q3 2024 and YTD 2024, Solasglas reported a net gain of 5.2% and 11.9%, respectively, compared to a net loss of 0.6% and a net gain of 9.1% for Q3 2023 and YTD 2023, respectively. The following table provides a breakdown of the gross and net investment return for Solasglas.

1 “Other income and expenses” excludes performance compensation but includes management fees. “Net investment return” incorporates both of these amounts. For further information about management fees and performance compensation, refer to Note 3.

For Q3 2024, the significant contributors to Solasglas’ investment return were long positions in Green Brick Partners (GRBK), gold, and Solvay (Belgium: SOLB). The largest detractors were a short basket to hedge home building exposure, equity index hedges, and a separate housing-related, single-name short position.

For YTD 2024, the significant contributors to Solasglas’ investment return were long positions in GRBK, gold, and SOLB. The largest detractors were long positions in ODP Corporation (ODP), Brighthouse Financial (BHF) and a single-name short position.

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