Greenlight Re Announces Second Quarter 2019 Financial Results

Increase in fully diluted book value per share of 3.2% and fully diluted net income per share of $0.42 for second quarter of 2019

Company to Hold Conference Call at 9:00 a.m. ET on Tuesday, August 6, 2019

GRAND CAYMAN, Cayman Islands, Aug. 05, 2019 (GLOBE NEWSWIRE) -- Greenlight Capital Re, Ltd. (NASDAQ: GLRE) (“Greenlight Re” or the “Company”) today announced financial results for the second quarter ended June 30, 2019.

Greenlight Re reported net income attributable to common shareholders of $15.3 million for the second quarter of 2019, compared to net loss attributable to common shareholders of $37.4 million for the same period in 2018. The fully diluted net income per share for the second quarter of 2019 was $0.42, compared to a net loss per share of $1.01 for the same period in 2018.

Fully diluted adjusted book value per share was $13.58 as of June 30, 2019, compared to $17.38 per share as of June 30, 2018 and $13.16 as of March 31, 2019.

Management Commentary

Simon Burton, Chief Executive Officer of Greenlight Re, stated, “We increased fully diluted book value per share by 3.2% in the quarter, with a positive contribution from underwriting and strong investment performance. Conditions are improving in multiple lines of business and our diversified underwriting platform is well-positioned to participate in the emerging opportunities.”

As announced on May 31st as a result of A.M. Best’s decision to revise the outlook of our financial strength rating of A- from “stable” to “negative”, the Company has partially de-risked its investment portfolio and commenced a strategic review led by its Board of Directors. The Board has engaged Credit Suisse to assist in the review, which is ongoing.

David Einhorn, Chairman of the Board of Directors, stated, “We were pleased to see our investment portfolio perform well throughout the second quarter as Solasglas posted a positive return of 2.7%, net of all fees and expenses for the quarter and 9.1% for the first half of the year.”

Financial and Operating Highlights
Second Quarter 2019

• Gross written premiums were $152.3 million, an increase from $142.1 million in the second quarter of 2018. The most significant items comprising this $10.2 million increase were the addition of a new workers compensation program along with smaller new programs offsetting lower premiums from certain financial and auto accounts.
   
• Net written premiums were $129.2 million, compared to $114.9 million reported in the prior-year period. Ceded premiums were $23.1 million compared to $27.2 million in the prior year period.
   
• Net earned premiums were $120.4 million, a decrease from $128.8 million reported in the prior-year period.
   
• Net underwriting income of $1.5 million, compared to net underwriting income of $5.1 million reported in the second quarter of 2018.
   
• A composite ratio for the quarter of 96.1%, compared to 92.7% for the prior-year period. The combined ratio for the quarter was 98.8%, compared to 96.0% for the prior-year period.
   
• Total net investment income of $18.8 million, compared to a net investment loss of $40.7 million in the second quarter of 2018.

Six Months Ended June 30, 2019

• Gross written premiums were $314.9 million, a decrease of 0.7% from $317.2 million reported in the prior-year period.
  
  
• Net earned premiums were $245.8 million, a decrease of 10.5% from $274.7 million reported in the prior-year period.
  
  
• A composite ratio for the six months ended June 30, 2019 of 105.8%, compared to 94.5% for the prior-year period. The combined ratio for the six months ended June 30, 2019 was 108.3%, compared to 97.3% for the prior-year period.
  
  
• Total net investment income of $51.1 million, compared to a net investment loss of $185.9 million reported in the prior-year period. Included in total net investment income is a gain $45.2 million on the Solasglas fund which reported a gain of 9.1% for the first six months of 2019.

Conference Call Details

Greenlight Re will hold a live conference call to discuss its financial results for the second quarter ended June 30, 2019 on Tuesday, August 6, 2019 at 9:00 a.m. Eastern time.  The conference call title is Greenlight Capital Re, Ltd. Second Quarter 2019 Earnings Call.

A telephone replay of the call will be available from 11:00 a.m. Eastern time on August 6, 2019 until 9:00 a.m. Eastern time on August 15, 2019.  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 10133285. 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 adjusted 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 annual report on Form 10-K filed with the Securities Exchange Commission.  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

Public Relations/Media:
Mairi Mallon
Rein4ce
+44 (0)203 786 1160
mairi.mallon@rein4ce.co.uk

GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2019 and December 31, 2018
(expressed in thousands of U.S. dollars, except per share and share amounts)

GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

For the three and six months ended June 30, 2019 and 2018
(expressed in thousands of U.S. dollars, except per share and share amounts)

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

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

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

We believe that long-term growth in fully diluted adjusted 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 adjusted 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 adjusted book value per share is considered a non-GAAP financial measure because the numerator excludes non-controlling interests in the Joint Venture. The Joint Venture was terminated during the first quarter of 2019, and as a result no such adjustment is required as at June 30, 2019. Fully diluted adjusted book value per share is also considered a non-GAAP financial measure and represents basic adjusted book value per share combined with the impact of dilution of all in-the-money stock options and RSUs issued and outstanding as of any period end. In addition, the fully diluted adjusted book value per share includes the dilutive effect, if any, of ordinary shares to be issued upon conversion of the convertible notes. Basic adjusted book value per share and fully diluted adjusted 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 adjusted book value per share over the long term.

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

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) related to underwriting activities, 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) foreign exchange gains or losses; (3) corporate general and administrative expenses; (4) interest expense and other income (expense) not related to underwriting, (5) income taxes and (6) income attributable to non-controlling interest. 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. We include other income and expense relating to deposit accounted contracts and industry loss warranty contracts, which we consider part of 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: