GREENLIGHT CAPITAL RE LTD
For the period ended Dec 31, 2024. Filed Mar 10, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 10, 2025
GLRE$16.08-1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-05.
0001385613-24-000016
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSBusiness OverviewOutlook and TrendsRevenues and ExpensesKey Financial Measures and Non-GAAP MeasuresConsolidated Results of OperationsFinancial ConditionLiquidityCapital ResourcesContractual Obligations and CommitmentsCritical Accounting Policies and Estimates - Loss and Loss Adjustment Expense ReservesPremium RevenuesLoss and Loss Adjustment Expense ReservesInvestmentsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-10.
0001385613-25-000007
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSBusiness OverviewOutlook and TrendsRevenues and ExpensesKey Financial Measures and Non-GAAPConsolidated Results of OperationsResults by SegmentOpen Market SegmentInnovations SegmentRunoff Underwriting BusinessIncome from Investment in SolasglasFinancial ConditionLiquidityCapital ResourcesContractual Obligations and CommitmentsCritical Accounting EstimatesPremium RecognitionLoss and LAE ReservesInvestments ValuationThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 222 previous paragraphs and 229 current paragraphs.
76 unchanged; 44 reworded; 107 added; 101 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 28 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (107)
Current report
The following is management’s discussion and analysis (“MD&A”) of the financial condition and results of operations for the years ended December 31, 2024, and 2023. Except for the “Results by Segment” section of this MD&A, comparisons between 2023 and 2022 have been omitted from this Annual Report, but may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC. Accordingly, this information is incorporated by reference.
Current report
This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto presented in “Part II, Item 8. Financial Statements and Supplementary Data” of this Annual Report. Unless otherwise noted, tabular dollars are in thousands, except per share amounts. Amounts may not reconcile due to rounding differences.
Current report
•Gross premiums written was $698.3 million, an increase of 9.7%;
Current report
•Net premiums earned was $620.0 million, an increase of 6.3%;
Current report
•Net underwriting loss was $8.2 million, compared to net underwriting income of $32.0 million;
Current report
•Foreign exchange losses were $5.6 million, compared to foreign exchange gains of $11.6 million;
Current report
•Diluted EPS was $1.24, compared to $2.50, a decrease of 50%; and
Current report
•Fully diluted book value per share was $17.95, an increase of $1.21, or 7.2%.
Current report
As the key January 1, 2025, renewal period progressed, we saw increased competition which put pressure on headline rate; however, attachment points and other terms & conditions largely held firm. We were able to achieve signings to construct a diversified portfolio that met our risk appetite and profitability requirements. Looking forward to 2025, we believe that market conditions are still broadly, but not uniformly, positive. We will continue to write business where we believe the price adequately compensates us for the risk.
Current report
There are many factors contributing to an uncertain global economic outlook, and in particular, we believe that inflationary trends of recent years could persist. We continue to consider the potential impact of relevant economic factors on our underwriting portfolio. On the investment side, DME Advisors regularly monitors and re-positions Solasglas’ investment portfolio to manage the impact of inflation on its underlying investments and holds macro positions to benefit from a rising inflationary environment.
Current report
Underwriting expenses consist primarily of compensation costs related to our underwriting activities, in addition to an allocation of corporate overhead costs.
Current report
Corporate and other expenses consist primarily of compensation costs related to non-underwriting activities, including Innovations related investments and corporate personnel. Additionally, these also include professional fees (non-claim related), travel and entertainment, information technology, rent, and other general operating costs, net of an allocation to underwriting expenses.
Current report
We use the following non-GAAP financial measure in this Annual Report.
Current report
(1)Assuming net exercise by the grantee.
Current report
Consolidated Results of Operations for 2024 compared to 2023
Current report
•Underwriting income: Decreased by $40.2 million due to 6.9 percentage points increase in our combined ratio, driven predominantly by an increase in current year attritional and CAT loss ratios. Refer to the “Results by Segment” section of the MD&A for further discussion and analysis.
Current report
•Corporate and other expenses: Decreased by $7.3 million mainly due to non-recurring severance costs included in 2023, including $4.3 million relating to the separation agreement entered with our former CEO, and lower incentive compensation costs in light of the Company’s weaker performance in 2024. This was partially offset by the increase in other non-underwriting personnel and overhead costs in addition to technology investment to support the business growth.
Current report
•Foreign exchange gains (losses): $5.6 million foreign exchange losses for 2024, compared to $11.6 million foreign exchange gains for 2023, driven mainly by a weaker pound sterling movement against the U.S. dollar in 2024.
Current report
•Interest expense: Increased by $0.5 million primarily due to unfavorable fair value movement on the interest rate swaps used to partially hedge the Term Loans; offset partially by lower interest expense driven by a decrease in the average outstanding Term Loans balance in 2024.
Current report
During the fourth quarter of 2024, we have revised our operating segments to Open Market and Innovations. See Note 17 “Segment Reporting” for the consolidated segment net income before taxes in 2024, including a reconciliation to net income as reported under U.S. GAAP. Comparatives have been recast to conform with the new reportable segments.
Current report
The following is a further discussion and analysis for each reporting segment.
Current report
Results for the Open Market segment were as follows:
Current report
Gross premiums written by line of business were as follows:
Current report
Gross premiums written in 2024 increased by $99.4 million or 19.7%, compared to 2023. The increase was predominantly attributable to the following lines of business:
Current report
•Financial: new excess of loss treaties in our financial multiline business and an increase in premium volume for our transactional liability business.
Current report
•Property: improved pricing in our commercial and property catastrophe business.
Current report
•Specialty: improved pricing and new customers in our marine and energy (M&E) business, including Lloyd’s whole account excess of loss treaties. Additionally, there was an increase of $9.0 million in reinstatement premiums attributable to the 2024 CAT events, in particular for the Baltimore Bridge collapse.
Current report
The above was partially offset by the decrease in our multiline business, driven by two non-renewed FAL accounts on January 1, 2024; offset by premium growth from the remaining third-party FAL business.
Current report
Gross premiums written in 2023 increased by $51.9 million or 11.5%, compared to 2022. The increase was predominantly attributable to property and specialty lines due to improved pricing and new business. This was partially offset mostly by a decrease in financial line predominantly due to lower level of activity in transactional liability business.
Current report
Ceded premiums written in 2024 was $62.4 million, resulting in net premiums written of $541.4 million, compared to $37.9 million and $466.5 million, respectively, in 2023. The increase in ceded premiums written of 64.6% was primarily within our specialty line driven by additional retrocessional coverage to manage our overall exposure to aviation, marine and energy classes of business and to reinstate certain retrocession excess of loss treaties in which the full coverage was presumed exhausted primarily from the Baltimore Bridge loss event in 2024 and the Russian-Ukraine conflict event in 2022. Additionally, we had an increase in quota share retrocessions due to growth from inward property and M&E business.
Current report
Ceded premiums written in 2023 was $37.9 million, resulting in net premiums written of $466.5 million, compared to $14.7 million and $437.8 million, respectively, in 2022. The increase in ceded premiums written of 157.0% was predominantly attributable to an increase in quota share retrocessions due to growth from inward property business.
Current report
Net premiums earned by line of business were as follows:
Current report
Net premiums earned in 2024 increased by $45.2 million or 9.7%, compared to 2023. Further, net premiums earned in 2023 increased by $55.9 million or 13.6%, compared to 2022. The increase (decrease) in net premiums earned by line of business is relatively consistent with the trends noted for the gross premiums written. The change is also influenced by the amount and timing of net premiums written during the current year and prior years, coupled with the business mix written in the form of excess of loss versus proportional contracts. Additionally, within the financial line and certain specialty line classes, the gross premiums written are earned over multiple years, corresponding with the anticipated risk coverage period.
Current report
The current year loss ratio in 2024 increased by 8.3%, compared to 2023 due to:
Current report
•4.6% increase in attritional loss ratio in 2024, driven mainly by higher reserve estimates for the growing in-force casualty, specialty and property lines of business.
Showing the first 40 of 107 passages. Open the source sections for the rest.
Removed paragraphs (101)
Previous report
The following is management’s discussion and analysis (“MD&A”) of our results of operations for the years ended December 31, 2023, and 2022, and our financial condition at December 31, 2023 and 2022. This discussion should be read in conjunction with “Part II, Item 8. Financial Statements and Supplementary Data” of this Annual Report.
Previous report
For the discussion and analysis of our results of operations and changes in financial condition for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to our 2022 Annual Report.
Previous report
All amounts are reported in U.S. dollars, unless otherwise noted. Tabular dollars are presented in thousands, with the exception of per share amounts or as otherwise noted.
Previous report
•Gross premiums written was $636.8 million, an increase of 13.1%;
Previous report
•Net premiums earned was $583.1 million, an increase of 24.2%;
Previous report
•Net underwriting income(1) was $32.0 million, compared to an underwriting loss of $10.7 million;
Previous report
•Fully diluted book per share(1) was $16.74, an increase of 16.8%.
Previous report
(1)See “Key Financial Measures and Non-GAAP Measures” section of this MD&A.
Previous report
Following strong pricing improvements at the January 1, 2023 renewal season and throughout 2023 (primarily in property catastrophe, aviation, war and terror and marine), we witnessed a more disciplined but still attractive January 1, 2024 renewal season. In the property market we noted additional capacity entering the market, but we still saw favorable market conditions to grow our book. On our Specialty and FAL books, we noted a healthy amount of competitive interest but we were successful in securing the accounts we targeted for both renewal and new business with some modest rate increases.
Previous report
The global inflationary pressures have abated from their recent highs. However, we believe loss cost inflation will continue to be a significant concern within the (re)insurance industry, as it can add uncertainty to the cost of claims, particularly for classes of business with long payout tails. As a result, it creates pricing challenges for new business and valuation challenges in claims reserves. We continue to manage these concerns and risks in multiple ways:
Previous report
•Our underwriting strategy focuses on relatively shorter-tailed business, which is inherently less exposed to inflation than longer-tailed lines. We estimate the payout duration of our existing reserves at less than three years.
Previous report
•We incorporate inflation assumptions in all our pricing and reassess these assumptions frequently.
Previous report
•We are minimizing our exposure to classes that are experiencing severe supply-chain-driven inflation.
Previous report
The rising interest rate environment over the last two years has had a mixed impact on our financial results. The Term Loans we secured in 2023 are partially exposed to fluctuations in the SOFR interest rate, and we stand to benefit if the interest rates start decreasing. The higher interest rates have improved the yield on our restricted cash and cash equivalents and our funds held at Lloyd’s. To the extent interest rates begin to decrease, we may see some of these trends reverse. The SILP investment portfolio is positioned to benefit from an inflationary environment.
Previous report
General and administrative expenses consist primarily of salaries and benefits and related costs, including costs associated with our incentive compensation plan, bonuses, and stock compensation expenses. General and administrative expenses also include professional fees (non-claim related), travel and entertainment, information technology, rent, and other general operating costs. General and administrative expenses reported in our consolidated statements of operations include both underwriting and corporate expenses.
Previous report
The key non-GAAP financial measures used in this Annual Report are:
Previous report
•Fully diluted book value per share; and
Previous report
•Net underwriting income (loss).
Previous report
These non-GAAP financial measures are described below.
Previous report
Net Underwriting Income (Loss)
Previous report
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.
Previous report
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. 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.
Previous report
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 are shown below:
Previous report
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.
Previous report
The following provides further details on the significant variances for the year ended December 31, 2023, compared to 2022.
Previous report
•Underwriting income: Increased by $42.7 million to $32.0 million, primarily driven by combined ratio improving 7.8 percentage points mainly due to lower CAT losses and favorable pricing in 2023, partially offset by an increase in adverse loss development from prior years. For further information on CAT losses and prior year loss development, refer to Note 7 -Lossand Loss Adjust ment Expense Rese rves of the consolidated financial statements.
Previous report
•Investment income: Declined by $2.9 million to $66.1 million. While we benefited from the rising U.S. interest rates on our cash and short-term investment holdings, this was offset by a decline in SILP’s net income. SILP generated a net return of 9.4% in 2023, compared to 25.3% in 2022.
Previous report
•Foreign exchange gains: Increased by $17.6 million driven mainly by the strengthening of the U.S. dollar over the pound sterling.
Previous report
•Corporate expenses: Increased by $5.9 million primarily driven by $4.3 million of severance relating to the separation agreement entered with our former CEO. For further details, see “Separation Agreement with CEO” in Note 15 -“Related Party Tran sactions” in the consolidated financial statements.
Previous report
For our Property and Casualty Reinsurance segment, we analyze it based on three lines of business: “property,” “casualty,” and “other.”
Previous report
Details of gross premiums written are provided in the following table:
Previous report
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.
Previous report
Our gross premiums written increased by $73.6 million, or 13.1%, compared to the same period in 2022. The following table provides a further analysis of this overall increase:
Previous report
For the year ended December 31, 2023, ceded premiums were $42.8 million, or 6.7% of gross premiums written, compared to $33.4 million, or 5.9% of gross premiums written, for the year ended December 31, 2022. The increase was mainly due to purchasing an aviation quota share retrocession coverage, as well as an additional $10.0 million excess of loss coverage to manage our exposure to marine and energy.
Previous report
Details of net premiums written are provided in the following table:
Showing the first 40 of 101 passages. Open the source sections for the rest.
Reworded paragraphs (44)
Previous wording
We earned a net income of $86.8 million for the year ended December 31, 2023, an increase of $61.5 million, or 243% over the prior year, as a result of favorable reinsurance pricing conditions with lower losses from catastrophe and weather-related events (collectively referred as “CAT losses”), coupled with favorable rising interest rate environment for our cash and fixed maturity investments (relating to the Lloyd’s syndicates) as well as favorable foreign exchange movement in 2023.
Current wording
We earned a net income of $42.8 million for the year ended December 31, 2024, a decrease of $44.0 million, or 51% compared to the prior year, predominantly due to higher losses from catastrophe and weather-related events (collectively referred as “CAT losses”), coupled with unfavorable foreign exchange movement in 2024.
Previous wording
•Total investment income was $66.1 million, a decrease of 4.2% (include 9.4% net return from our investment in SILP, compared to 25.3%);
Current wording
•Total investment income was $79.6 million, an increase of 10.3% (including 9.8% net return from our investment in Solasglas, compared to 9.4%);
Previous wording
•income (or loss) generated from our investment in SILP, net of management fee and performance compensation;
Current wording
•income (or loss) generated from our investment in Solasglas, net of management fee and performance compensation;
Previous wording
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. In prior years, we calculated the basic book value per share by modifying the denominator to exclude unearned performance-based restricted shares granted after December 31, 2021. We have revised this calculation in 2023 to eliminate the basic book value per share non-GAAP financial measure and have restated the 2022 comparative basic book value per share in the table below and elsewhere in this Annual Report to conform with the current presentation.
Current wording
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.
Previous wording
Fully diluted book value per share represents basic book value per share combined with any dilutive impact of in-the-money stock options and all outstanding restricted stock units “RSUs”. We believe these adjustments better reflect the ultimate dilution to our shareholders.
Current wording
Fully diluted book value per share represents basic book value per share combined with any dilutive impact of in-the-money stock options and all outstanding restricted stock units, or “RSUs”. We believe these adjustments better reflect the ultimate dilution to our shareholders.
Previous wording
The table below summarizes our consolidated operating results for the years ended December 31:
Current wording
The table below summarizes our consolidated operating results.
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 $15.7 million in 2023 (2022: $12.2 million).
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 $21.8 million in 2024 (2023: $15.7 million).
Previous wording
For the year ended December 31, 2023, fully diluted book value per share increased by $2.41, or 16.8%, to $16.74 per share and basic book value per share increased by $2.42, or 16.8%, to $16.87 per share since December 31, 2022 driven by strong underwriting performance.
Current wording
Basic book value per share increased by $1.39 per share, or 8.2%, to $18.26 per share from $16.87 per share at December 31, 2023. Fully diluted book value per share increased by $1.21 per share, or 7.2%, to $17.95 per share from $16.74 per share at December 31, 2023.
Previous wording
For the year ended December 31, 2023, our net income increased by $61.5 million to $86.8 million, driven mainly by the following:
Current wording
For the year ended December 31, 2024, net income decreased by $44.0 million to $42.8 million, driven mainly by the following:
Previous wording
•Other income: Increased by $12.1 million driven primarily by an increase in investment income on funds withheld by third party Lloyd’s syndicates. The Lloyd’s syndicates invest a portion of these funds in fixed-maturity securities and investment funds. We record our share of the investment income and fair value adjustments on these securities when the syndicates report them to us, generally on a quarter in arrears.
Current wording
•Investment income: Increased by $7.5 million primarily driven by an increase in income from our investment in Solasglas, which reported a gain of $33.6 million in 2024, compared to $28.7 million in 2023. Solasglas generated a net return of 9.8% for the year ended December 31, 2024, compared to a net return of 9.4% for the same period in 2023. Additionally, we earned additional investment income on funds withheld by third party Lloyd’s syndicates. The Lloyd’s syndicates invest a portion of these funds in fixed maturity securities, equities, and investment funds. We record our share of the investment income and fair value adjustments on these securities when the syndicates report them to us, generally on a quarter in arrears. See Note 13 “Net Investment Income” of the consolidated financial financial statements for further details.
Previous wording
Net premiums earned increased by $113.7 million or 24.2%, compared to the prior year. 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.
Current wording
Net premiums earned in 2024 increased by $14.6 million or 20.3%, compared to 2023. Further, net premiums earned in 2023 increased by $38.6 million or 116.3%, compared to 2022. The increase in net premiums by line of business is relatively consistent with the trends noted for the gross premiums written. The change is also influenced by the amount and timing of net premiums written during the current year and prior years, coupled with the business mix written in the form of excess of loss versus proportional contracts.
Previous wording
Our share of SILP’s net income decreased by $26.1 million in 2023 compared to 2022. For the year ended December 31, 2023, SILP reported a net investment return of 9.4%, compared to 25.3% for 2022. The following table provides a breakdown of the gross and net investment returns:
Current wording
Our share of Solasglas’ net income increased by $4.9 million to $33.6 million in 2024 compared to 2023. For the year ended December 31, 2024, Solasglas reported a net investment return of 9.8%, compared to 9.4% for 2023. The following table provides a breakdown of the gross and net investment return for Solasglas:
Previous wording
The most significant contributors to SILP’s net investment return for the year ended December 31, 2023 were long positions in Green Brick Partners Inc., CONSOL Energy Inc., and a S&P 500 / U.S. interest rate derivative position. For the same period, the most significant detractors were three single-name short positions.
Current wording
For the year ended December 31, 2023, the significant contributors to Solasglas’ investment return were long positions in GRBK, CONSOL Energy Inc., and a S&P 500 / U.S. interest rate derivative position. The most significant detractors were three 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 December 31, 2023, our total investments increased by $83.7 million, or 33.7%, to $332.2 million from December 31, 2022. The increase was primarily driven from net additional contributions into SILP, coupled with the net investment return in 2023.
Current wording
At December 31, 2024, our total investments increased by $128.1 million, or 38.6%, to $460.3 million from December 31, 2023. The increase was predominantly driven by $94.6 million of net contributions into Solasglas, coupled with the 9.8% net investment return in 2024. The contributions were funded partially from cash flows from operations and from the partial 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 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 December 31, 2023, SILP’s exposure to gold on a delta-adjusted basis was 11.2% (2022: 15.2%).
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 December 31, 2024, Solasglas’ exposure to gold on a delta-adjusted basis was 10.1% (2023: 11.2%).
Previous wording
At December 31, 2023, 95.0% of SILP’s portfolio was valued based on quoted prices in actively traded markets (Level 1), 3.6% 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 December 31, 2023, 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 December 31, 2024, 94.5% of Solasglas’ portfolio was valued based on quoted prices in actively traded markets (Level 1), 3.9% was composed of instruments valued based on observable inputs other than quoted prices (Level 2), and no instruments valued based on non-observable inputs (Level 3). At December 31, 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 2023, we made $7.1 million of new private investments compared to $13.2 million in the prior year. While we manage a diversified Innovations-related investment portfolio with approximately 40 holdings, our top five holdings accounted for 67% of the total carrying value as a result of favorable fair value remeasurement since our initial investments, net of impairment charges. For further information, see Note 4 “Other Investments” of the consolidated financial statements.
Current wording
While we manage a diversified Innovations-related investment portfolio, our top five holdings accounted for 70% (2023: 67%) of the total carrying value. For further information, see Note 4 “Other Investments” of the consolidated financial statements.
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 $63.7 million, or 9.5%, from $668.3 million at December 31, 2022, to $604.6 million at December 31, 2023, primarily due to release of collateral from our ceding insurers relating to legacy contracts in run-off. During the year ended December 31, 2023, we also pledged $10.0 million collateral as security for the new Loan Facility (see “Debt” below).
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 $20.2 million, or 3.3%, from $604.6 million at December 31, 2023, to $584.4 million at December 31, 2024, primarily due to release of collateral from our ceding insurers relating to legacy contracts in runoff.
Previous wording
Loss and Loss Adjustment Expense Reserves
Current wording
Our total gross loss and LAE reserves increased by $199.4 million, or 30.1%, to $861.0 million from $661.6 million at December 31, 2023. See Note 7 “Loss and Loss Adjustment Expense Reserves” of the consolidated financial statements for a summary of changes in outstanding loss and LAE reserves, current year CAT losses, prior period reserve development, and analysis of our incurred and paid claims development and claims duration for each of our reporting segments. In addition, refer to “Critical Accounting Estimates - Loss and LAEReserves” within this MD&A for information on the reserving techniques, assumptions and processes we follow to estimate our loss and LAE reserves.
Previous wording
Our total loss and LAE recoverable increased by $12.4 million, or 94.0%, to $25.7 million from $13.2 million at December 31, 2022. See Note 8 “Retrocession” of the consolidated financial statements for a description of the credit risk associated with our retrocessionaires.
Current wording
Our total loss and LAE recoverable increased by $60.1 million, or 234.0%, to $85.8 million since December 31, 2023, driven primarily by retrocession coverage on the current year CAT loss events and on the adverse reserve development relating to the Russian-Ukrainian conflict. Virtually all the outstanding balance is based on estimated recoveries not yet due. See Note 8 “Retrocession” of the consolidated financial statements for a description of the credit risk associated with our retrocessionaires.
Previous wording
For most of the contracts we write, defined limits of liability limit our risk exposure. Once each contract’s limit of liability has been reached, we have no further exposure to additional losses from that contract. However, certain contracts, particularly quota share contracts covering first-dollar exposure, do not contain aggregate limits.
Current wording
Most of our contracts have defined limits of liability that cap our risk exposure. Once these limits are reached, we are not liable for further losses. However, some contracts, especially quota share contracts covering first-dollar exposure, lack aggregate limits.
Previous wording
Our property and Lloyd’s business, and to a lesser extent our casualty and other business, incorporate contracts that contain natural peril loss exposure. We currently monitor our catastrophe loss exposure in terms of our PML (net of retrocession and reinstatement premiums). We anticipate that our PMLs will vary from period to period depending upon the modeled simulated losses and the composition of our in-force book of business.
Current wording
Our property and Lloyd’s business, and to a lesser extent our casualty and other business, in the Open Market segment include contracts with natural peril loss exposure. We monitor our catastrophe loss exposure using PML (net of retrocession and reinstatement premiums), which can vary based on simulated losses and our in-force business composition.
Previous wording
Our PML estimates incorporate all significant exposure from our reinsurance operations, including coverage for property, marine and energy, motor, and catastrophe workers’ compensation exposures.
Current wording
PMLs are best estimates based on available modeled data, and actual events may differ significantly from these models. Our PML estimates cover all significant exposures from our reinsurance operations, including property, marine and energy, motor, and catastrophe workers’ compensation.
Previous wording
At January 1, 2024, our estimated largest PML at a 1-in-250-year return period for a single event and in aggregate was $89.7 million and $97.0 million, respectively, both relating to the peril of North Atlantic Hurricane, compared to $77.5 million and $83.5 million, respectively, at January 1, 2023. We have increased our PMLs in response to favorable market conditions and attractive opportunities, coupled with increased surplus.
Current wording
At January 1, 2025, our estimated largest PML at a 1-in-250-year return period for a single event and in aggregate was $116.3 million and $129.1 million, respectively, both relating to the peril of North Atlantic Hurricane, compared to $89.7 million and $97.0 million, respectively, at January 1, 2024. Our PMLs increased as we grew our clients and accessed new business that met our profitability requirements.
Previous wording
•the need to preserve our current “A- (Excellent)” rating with a stable outlook by A.M. Best.
Current wording
•the need to preserve our current “A- (Excellent)” rating by A.M. Best.
Previous wording
Our sources of funds from operating subsidiaries consist primarily of premium receipts (net of brokerage and ceding commissions), investment income, and other income. We use cash from our operations to pay losses and loss adjustment expenses, profit commissions, interest, and G&A expenses. Our reinsurance business inherently provides liquidity as premiums are received well in advance of the time claims are paid. However, the amount of cash required to fund loss payments can fluctuate significantly from period to period due to the low frequency / high severity nature of certain types of business we write.
Current wording
Our sources of funds from operating subsidiaries consist primarily of premium receipts (net of brokerage and ceding commissions), investment income, and other income. We use cash from our operations to pay losses and loss adjustment expenses, profit commissions, interest, and G&A expenses. Our reinsurance business inherently provides liquidity as premiums are received in advance of the time claims are paid. However, the amount of cash required to fund loss payments can fluctuate significantly from period to period due to the low frequency / high severity nature of certain types of business we write.
Previous wording
(1)Cash includes unrestricted and restricted cash and cash equivalents - see Note 5 of the consolidated financial statements.
Current wording
(1)Cash includes unrestricted and restricted cash and cash equivalents - see Note 5 “Restricted Cash and Cash Equivalents” of the consolidated financial statements.
Previous wording
The debt to shareholders’ equity provides an indication of our leverage and capital structure, along with some insights into our financial strength. In addition to the above capital, we also have LOC facilities to support our reinsurance business operations where we are not licensed or admitted as a reinsurer.
Current wording
The debt to shareholders’ equity provides an indication of our leverage and capital structure, along with some insights into our financial strength. In addition to the above capital, we also have LOC facilities to support our reinsurance business operations where we are not licensed or admitted as a reinsurer (see Note 9 “Debt and Credit Facilities” of the consolidated financial statements for further information).
Previous wording
We expect that the existing capital base and internally generated funds will be sufficient to implement our business strategy for the foreseeable future. However, to provide us with flexibility and timely access to public capital markets should we require additional capital for working capital, capital expenditures, acquisitions, or other general corporate purposes, we have filed a Form S-3 registration statement, which expires in July 2024.
Current wording
We expect that the existing capital base and internally generated funds will be sufficient to implement our business strategy for the foreseeable future. However, to provide us with flexibility and timely access to public capital markets should we require additional capital for working capital, capital expenditures, acquisitions, or other general corporate purposes, we have renewed our $200.0 million shelf registration by filing the Form S-3 registration statement with the SEC, which became effective on July 5, 2024, and will expire on July 1, 2027.
Previous wording
(1) Due to the nature of our reinsurance operations, the amount and timing of the cash flows associated with our reinsurance contractual liabilities will fluctuate, perhaps materially, and, therefore, are highly uncertain.
Current wording
(1) Due to the nature of our reinsurance operations, the actual amount and timing of the cash flows associated with our reinsurance contractual liabilities will fluctuate, perhaps materially, and, therefore, are highly uncertain. We have not taken into account corresponding reinsurance recoverable on unpaid amounts that would be due to us.
Previous wording
(2) See Note 16 “Commitments and Cont ingencies” of the consolidated financial statements.
Current wording
(2) See Note 16 “Commitments and Contingencies” of the consolidated financial statements.
Previous wording
Our consolidated financial statements contain certain amounts that are inherently subjective and have required management to make assumptions and best estimates to determine reported values. If certain factors, including those described in “Part I, Item IA. — Risk Factors,” cause actual events or results to differ materially from our underlying assumptions or estimates, there could be a material adverse effect on our results of operations, financial condition, or liquidity. We believe the following accounting policies affect the more significant estimates used to prepare our consolidated financial statements. We have summarized the descriptions below for clarity. We have included a more detailed description of our significant accounting policies and recently issued accounting standards in Note 2 “Significant Accounting Policies” to the consolidated financial statements.
Current wording
Our consolidated financial statements contain certain amounts that are inherently subjective and have required management to make assumptions and best estimates to determine reported values. If certain factors, including those described in “Part I, Item IA. — Risk Factors,” cause actual events or results to differ materially from our underlying assumptions or estimates. In that case, there could be a material adverse effect on our results of operations, financial condition, or liquidity.
Previous wording
We record our property and casualty reinsurance premiums as premiums written based on our best estimate of the ultimate premiums for the contract period. Our estimates are based on actuarial pricing models and information received from ceding companies. Further, we record reinsurance premiums so long as they meet the risk transfer criteria under U.S. GAAP (see “Deposit Contracts” below).
Current wording
We record our property and casualty reinsurance premiums as premiums written based on our best estimate of the ultimate premiums for the contract period. Our estimates are based on actuarial pricing models, information received from ceding companies, and from Lloyd’s syndicates (for FAL business). Further, we record reinsurance premiums so long as they meet the risk transfer criteria under U.S. GAAP (see “Deposit Contracts” below).
Previous wording
Excess of loss reinsurance contracts typically state premiums as a percentage of the subject premiums written by the client, subject to a minimum and deposit premium. The minimum and deposit premium is generally based on an estimate of subject premiums expected to be written by the client during the contract term. The minimum and deposit premium is reported initially as premiums written and adjusted, if necessary, in subsequent periods once the actual subject premium is known.
Current wording
•Excess of loss contracts: typically the contracts state premiums as a percentage of the subject premiums written by the client, subject to a minimum and deposit premium. The minimum and deposit premium is generally based on an estimate of subject premiums expected to be written by the client during the contract term. At the inception of the contract, we record the total contractual minimum and deposit premium, which is subsequently adjusted when the actual subject premium is known. Generally, the adjustment to actual is not material on an aggregate basis.
Previous wording
For quota share (also known as proportional) contracts, we record premiums in the same periods in which the underlying insurance contracts are written, based on cession statements from cedents. We typically receive these statements monthly or quarterly, depending on the terms specified in each contract. For any reporting lag, we estimate premiums written based on the portion of the estimated ultimate premiums relating to the risks bound during the lag period.
Current wording
•Quota share (also known as proportional) contracts: we record our participation share of the estimated ultimate premiums in the same periods in which the underlying insurance contracts are written. For example, for a 12-month quota share reinsurance contract, we will recognize the estimated gross premiums written over 12 months, generally on a linear basis.
Previous wording
For multi-year contracts, reinsurance premiums are recorded at the inception of the contract based on our best estimate of total premiums to be received. Premiums are recognized on an annual basis for multi-year contracts where the cedants have the ability to unilaterally commute or cancel coverage within the term of the contract.
Current wording
•For multi-year contracts: we record reinsurance premiums at the inception of the contract based on our best estimate of total premiums to be received. Premiums are recognized on an annual basis for multi-year contracts where the cedants have the ability to unilaterally commute or cancel coverage within the term of the contract.
Previous wording
Certain contracts provide for reinstatement premiums in the event of a loss. Reinstatement premiums are written and earned when a triggering loss event occurs.
Current wording
Certain contracts provide for reinstatement premiums in the event of a loss. Reinstatement premiums are written and earned when a triggering loss event occurs, based on management’s estimates of the ultimate reinstatement premiums. These estimates are subsequently adjusted when actual reinstatement premiums are known.
Previous wording
Line slip or proportional insurance/reinsurance contracts are generally written on a “risks attaching” basis, covering claims that relate to the underlying policies written during the terms of these contracts. As the underlying business incepts throughout the contract term, which is generally one year, and the underlying business generally has a one year coverage period, these premiums are generally earned evenly over a 24-month period from inception.
Current wording
Line slip or proportional insurance/reinsurance contracts are generally written on a “risks attaching” basis, covering claims that relate to the underlying policies written during the terms of these contracts. As the underlying business incepts throughout the contract term, which is generally one year, and the underlying business generally has a one year coverage period, these premiums are generally earned evenly over a 24-month period from inception. For certain classes within financial and specialty lines of business, the underlying risk exposure period extend over several years and accordingly these premiums are earned over up to 60-months.
Showing the first 40 of 44 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The components of the loss ratio were as follows:
Current report — wording carried from elsewhere
We believe the following are the critical accounting estimates used to prepare our consolidated financial statements:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Our reserves for loss and LAE by lines of business were as follows: