(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
65 Market Street
Suite 1207, Jasmine Court
P.O. Box 31110
Camana Bay
Grand Cayman
Cayman Islands
KY1-1205
(Address of principal executive offices)
(Zip code)
(205) 291-3440
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Ordinary Shares
GLRE
Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes ☐No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
This Quarterly Report on Form 10-Q (herein referred as “Form 10-Q”) of Greenlight Capital Re, Ltd. (“Greenlight Capital Re,” “Company,” “us,” “we,” or “our”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical facts included in this report, including statements regarding estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements”. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the United States (“U.S.”) federal securities laws established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words “believe,” “project,” “predict,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are not historical facts, and are based on current expectations, estimates and projections, and various assumptions, many of which, are inherently uncertain and beyond management’s control.
Forward-looking statements contained in this Form 10-Q may include, but are not limited to, information regarding our estimates for catastrophes and weather-related losses (herein referred as “CAT losses”), measurements of potential losses in the fair market value of our investments, our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the outcome of our strategic initiatives, our expectations regarding pricing, and other market and economic conditions including inflation, our growth prospects, and valuations of the potential impact of movements in interest rates, equity securities’ prices, and foreign currency exchange rates.
Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual events or results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to:
•a downgrade or withdrawal of our A.M. Best ratings;
•any suspension or revocation of any of our licenses;
•losses from catastrophes and other major events;
•the loss of significant brokers; and
•those described under “Item 1A, Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31,2023, as filed with the SEC on March 5, 2024 (“2023 Form 10-K”), which is accessible on the SEC’s website at www.sec.gov.
We undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events, or otherwise. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only to the dates they were made.
We intend to communicate certain events that we believe may have a material adverse impact on our operations or financial position, including property and casualty catastrophic events and material losses in our investment portfolio, in a timely manner through a public announcement. Other than as required by the Exchange Act, we do not intend to make public announcements regarding underwriting or investment events that we do not believe, based on management’s estimates and current information, will have a material adverse impact on our operations or financial position.
3
Item 1. FINANCIAL STATEMENTS
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2024 (unaudited) and December 31, 2023
(expressed in thousands of U.S. dollars, except per share and share amounts)
June 30, 2024
December 31, 2023
Assets
Investments
Investment in related party investment fund, at fair value
$
351,468
$
258,890
Other investments
73,159
73,293
Total investments
424,627
332,183
Cash and cash equivalents
52,240
51,082
Restricted cash and cash equivalents
561,930
604,648
Reinsurance balances receivable (net of allowance for expected credit losses of 2024: $865 and 2023: $854)
686,743
619,401
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of 2024: $701 and 2023: $487)
58,647
25,687
Deferred acquisition costs
83,305
79,956
Unearned premiums ceded
28,184
17,261
Other assets
4,272
5,089
Total assets
$
1,899,948
$
1,735,307
Liabilities and equity
Liabilities
Loss and loss adjustment expense reserves
$
752,757
$
661,554
Unearned premium reserves
349,015
306,310
Reinsurance balances payable
76,253
68,983
Funds withheld
18,266
17,289
Other liabilities
8,042
11,795
Debt
61,595
73,281
Total liabilities
1,265,928
1,139,212
Commitments and Contingencies (Note 15)
Shareholders' equity
Preferred share capital (par value $0.10; none issued)
—
—
Ordinary share capital (par value $0.10; issued and outstanding, 35,321,144) (2023: par value $0.10; issued and outstanding, 35,336,732)
3,532
3,534
Additional paid-in capital
487,462
484,532
Retained earnings
143,026
108,029
Total shareholders' equity
634,020
596,095
Total liabilities and equity
$
1,899,948
$
1,735,307
The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 2024
1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Greenlight Capital Re, Ltd. (“GLRE” and, together with its wholly-owned subsidiaries, the “Company”) was incorporated as an exempted company under the Companies Law of the Cayman Islands on July 13, 2004. The Company is a global specialty property and casualty reinsurer headquartered in the Cayman Islands. The ordinary shares of GLRE are listed on Nasdaq Global Select Market under the symbol “GLRE.”
Basis of Presentation
These unaudited condensed consolidated financial statements (the “financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the U.S. Securities and Exchange Commission’s (“SEC”) instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. The financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s 2023 Form 10-K. The financial statements include the accounts of GLRE and the consolidated financial statements of its wholly-owned subsidiaries and all significant intercompany transactions and balances have been eliminated on consolidation.
In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position and results of operations as at the end of and for the periods presented. The results of operations for any interim period are not necessarily indicative of the results for a full year.
Tabular dollars are in thousands, with the exception of per share amounts or otherwise noted. All amounts are reported in U.S. dollars.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current financial statements. The Company has reported separately the foreign exchange gains (losses) from “Other income” in the condensed consolidated statements of operations. This resulted in no change to the previously reported total revenues or net income. The Company has also included the foreign exchange gains (losses) as part of the net change in working capital in the condensed consolidated statements of cash flows. Further, the Company combined “Other assets, excluding depreciation” and “Other liabilities” and presented the sum as “Other items, net” in the condensed consolidated statements of cash flows. These changes in presentation in the condensed consolidated statements of cash flows have resulted in no change to the previously reported net cash provided by (used in) operating activities.
2. SIGNIFICANT ACCOUNTING POLICIES
There were no material changes to the Company’s significant accounting policies subsequent to its 2023 Form 10-K.
Recently Issued Accounting Standards Not Yet Adopted
On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures. The new ASU requires incremental disclosures related to a public entity’s reportable segments but does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. This new guidance is effective for the Company’s 2024 year-end financial statements, and should be adopted retrospectively unless impracticable. Early adoption is permitted.
On December 14, 2023, FASB issued ASU 2023-09, Income Taxes Topic (740) - Improvements to Income Tax Disclosures. The new ASU provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Early adoption is permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. This ASU is effective for the Company’s 2024 year-end financial statements.
As the above ASUs relate solely to financial statement disclosures, the adoption of these ASUs will not impact the Company’s financial condition, results of operations, or cash flows.
3. INVESTMENT IN RELATED PARTY INVESTMENT FUND
For the three and six months ended June 30, 2024, there was no change to the Company’s agreement with Solasglas Investments, LP (“Solasglas”). Effective August 1, 2024, the parties amended the agreement to revise the Investment Cap from 60% to 70% (as defined in Note 3 of the 2023 Form 10-K).
The Company’s maximum exposure to loss relating to Solasglas is limited to GLRE's share of Partners’ capital in Solasglas. At June 30, 2024, GLRE’s share of Partners’ capital in Solasglas was $351.5 million (December 31, 2023: $258.9 million), representing 76.3% (December 31, 2023: 72.7%) of Solasglas’ total net assets. DME II held the remaining 23.7% (December 31, 2023: 27.3%) of Solasglas’ total net assets.
The Company’s share of the net increase in Partner’s capital for the three and six months ended June 30, 2024 was $4.3 million and $22.6 million, respectively, (three and six months ended June 30, 2023: $32.8 million and $29.6 million, respectively), as shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s condensed consolidated statements of operations.
The summarized financial statements of Solasglas are presented below.
Summarized Statements of Financial Condition of Solasglas Investments, LP
At December 31, 2023, the breakdown of the Company’s other investments was as follows:
Cost
Unrealized gains
Unrealized losses
Accrued interest
Fair value / carrying value
Private investments and unlisted equities
$
28,470
$
49,424
$
(6,737)
$
—
$
71,157
Debt and convertible debt securities
2,499
—
(499)
136
2,136
Total other investments
$
30,969
$
49,424
$
(7,236)
$
136
$
73,293
The following table presents the carrying values of the private investments and unlisted equity securities carried under the measurement alternative at June 30, 2024 and 2023, and the related adjustments recorded during the periods then ended.
Six months ended June 30
2024
2023
Carrying value (1)
$
71,866
$
65,904
Upward carrying value changes (2)
$
501
$
506
Downward carrying value changes and impairment (3)
$
(114)
$
(250)
(1)The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes.
(2) The cumulative upward carrying value changes from inception to June 30, 2024, totaled $50.9 million.
(3) The cumulative downward carrying value changes and impairments from inception to June 30, 2024, totaled $2.8 million.
Net investment income
The following table summarizes the change in unrealized gains (losses) and the realized gains (losses) for the Company’s other investments, which are included in “Net investment income” in the condensed consolidated statements of operations (see Note 13):
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Gross realized gains
$
—
$
—
$
—
$
—
Gross realized losses
—
—
(1,332)
(800)
Net realized gains (losses)
$
—
$
—
$
(1,332)
$
(800)
Change in unrealized gains
89
506
1,008
1,056
Net realized and unrealized gains (losses) on other investments
$
89
$
506
$
(324)
$
256
During the six months ended June 30, 2024, the Company collected $0.2 million of liquidation proceeds relating to a private investment which was previously fully impaired, resulting in a gross realized loss of $1.3 million offset by a corresponding reduction in unrealized losses of $1.5 million.
During the three and six months ended June 30, 2023, the Company realized a loss of $nil and $0.8 million, respectively, and a corresponding reversal of unrealized loss relating to an investment which was previously fully impaired at December 31, 2022, resulting in no impact to the Company’s net income (loss).
The following table shows the breakdown of the Company’s restricted cash and cash equivalents, along with a reconciliation of the total cash, cash equivalents, and restricted cash reported in the condensed consolidated statements of cash flows:
June 30, 2024
December 31, 2023
Restricted cash and cash equivalents:
Cash securing trust accounts
$
274,275
$
300,152
Cash securing letters of credit issued
274,048
291,456
Cash securing Loan Facility
10,000
10,000
Other
3,607
3,040
Total restricted cash and cash equivalents
561,930
604,648
Cash and cash equivalents
52,240
51,082
Total cash, cash equivalents, and restricted cash
$
614,170
$
655,730
Where the Company operates as a non-admitted carrier in certain foreign jurisdictions, regulatory trust accounts and letters of credit are issued to cedents. Additionally, the Company has provided cash collateral for the Loan Facility (see Note 9).
6. FAIR VALUE MEASUREMENTS
Assets measured at fair value on a nonrecurring basis
At June 30, 2024 and December 31, 2023, the Company held $61.8 million and $61.3 million, respectively, of private investments and unlisted equities measured at fair value on a nonrecurring basis. At June 30, 2024, the Company held $10.0 million (2023: $9.9 million) of private investments and unlisted equities measured at cost. The Company classifies these investments as Level 3 within the fair value hierarchy.
The following table summarizes the periods between the most recent fair value measurement dates and June 30, 2024, for the private and unlisted equities measured at fair value on a nonrecurring basis:
Less than 6 months
6 to 12 months
Over 1 year
Total
Fair values measured on a nonrecurring basis
$
1,423
$
26,338
$
34,086
$
61,847
Assets measured at fair value on a recurring basis
Derivative financial instruments
The Company uses interest rate swaps in connection with its risk management activities to hedge 50% of the interest rate risk relating to the outstanding Term Loans (see Note 9). The interest rate swaps are carried at fair value and are determined using a market approach valuation technique based on significant observable market inputs from third-party pricing vendors. Accordingly, the interest rates swaps are classified as Level 2 within the fair value hierarchy. These derivative instruments are not designated as accounting hedges under U.S. GAAP.
For the three and six months ended June 30, 2024, the Company recognized a reduction in unrealized loss of $0.1 million and $0.6 million, respectively, for the above derivatives to a nominal value at June 30, 2024, which is included in other liabilities in the condensed consolidated balance sheets, in interest expense in the condensed consolidated statements of operations, and in “net change in unrealized gains and losses on investments and derivatives” in the condensed consolidated statements of cash flows. There were no derivative financial instruments for the three and six months ended June 30, 2023.
Financial Instruments Disclosed, But Not Carried, at Fair Value
At June 30, 2024, the carrying value of debt and convertible debt securities within “Other Investments” (see Note 4) and the Term Loans approximates their fair values. The Company classifies these financial instruments as Level 2 within the fair value hierarchy.
7. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES
The Company’s loss and loss adjustment expense (“LAE”) reserves were composed of the following:
June 30, 2024
December 31, 2023
Case reserves
$
210,802
$
189,050
IBNR
541,955
472,504
Total
$
752,757
$
661,554
Reserve Roll-forward
The following provides a summary of changes in outstanding loss and LAE reserves for all lines of business:
Consolidated
Six months ended June 30
2024
2023
Gross balance at January 1
$
661,554
$
555,468
Less: Losses recoverable
(25,687)
(13,239)
Net balance at January 1
635,867
542,229
Incurred losses related to:
Current year
206,647
173,428
Prior years
4,712
13,801
Total incurred
211,359
187,229
Paid losses related to:
Current year
(20,677)
(22,428)
Prior years
(129,716)
(114,056)
Total paid
(150,393)
(136,484)
Foreign currency revaluation
(2,723)
6,572
Net balance at June 30
694,110
599,546
Add: Losses recoverable (see Note 8)
58,647
21,555
Gross balance at June 30
$
752,757
$
621,101
Estimates for Significant Catastrophe Events
At June 30, 2024, the Company’s net reserves for losses and loss expenses include estimated amounts for several catastrophe and weather-related events (“CAT loss”). The magnitude and volume of losses arising from these events is inherently uncertain and, consequently, actual losses for these events may ultimately differ, potentially materially, from current estimates.
During the six months ended June 30, 2024, the Company recognized total CAT loss, net of reinsurance, of $35.2 million. Current year CAT loss events were $25.7 million, driven mainly by the Baltimore bridge collapse, the U.S. tornados (including severe convective storms), satellite failures, and a Mexican state-owned oil platform fire. Additionally, the Company incurred $9.4 million of net adverse prior year CAT loss development relating primarily to severe weather affecting U.S. homeowners’ property coverage (2021-2023 underwriting years).
During the six months ended June 30, 2023, the Company recognized total CAT loss, net of reinsurance, of $19.6 million. Current year CAT loss events were $16.4 million, driven mainly by the Turkey earthquake, New Zealand Cyclone
Gabrielle and the U.S. tornados, coupled with $3.2 million net adverse prior year CAT loss development mainly relating to the 2022 Winter Storm Elliott.
Prior Year Reserve Development
During the six months ended June 30, 2024, the Company experienced $4.7 million in net adverse development on prior year loss and LAE reserves. This was composed of $19.5 million of reserve strengthening predominantly for the above prior year CAT loss events, coupled with additional losses reported on general liability contracts (mostly 2014-2017 underwriting years) and legacy quota share workers’ compensation treaties (mostly 2017-2021 underwriting years) due to current economic and social inflation trends. The reserve increases were partially offset by $14.8 million favorable loss development predominantly from mortgage contracts (various underwriting years), multi-line commercial treaties (mostly 2020 underwriting year), Funds at Lloyd’s (“FAL”) (2023 underwriting year), and other specialty business (mostly 2020-2022 underwriting years).
During the six months ended June 30, 2023, the Company experienced $13.8 million in net adverse development on prior year loss and LAE reserves. This was comprised of $21.5 million of reserve strengthening predominantly on casualty contracts (mostly 2018, 2019 and 2021 underwriting years) and property contracts (mostly 2020 and 2021 underwriting years) due to current economic and social inflation trends, coupled with adverse CAT loss development on U.S. homeowners’ property business relating to Winter Storm Elliott (2022 underwriting year). This was partially offset by $7.7 million better than expected loss emergence predominantly from other property catastrophe events (mostly 2019, 2021 and 2022 underwriting years).
8. RETROCESSION
The following table provides a breakdown of ceded reinsurance:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Gross ceded premiums
$
14,832
$
9,739
$
38,013
$
20,951
Earned ceded premiums
$
11,849
$
11,296
$
27,091
$
19,877
Loss and loss adjustment expenses ceded
$
14,773
$
9,537
$
37,849
$
15,708
Retrocession contracts do not relieve the Company from its obligations to its cedents. Failure of retrocessionaires to honor their obligations could result in losses to the Company. The following table shows a breakdown of losses recoverable on a gross and net of collateral basis:
June 30, 2024
December 31, 2023
Gross
Net of Collateral(1)
Gross
Net of Collateral(1)
A- or better by A.M. Best
$
33,288
$
33,288
$
8,767
$
8,767
Not rated
26,059
8,816
17,407
2,432
Total before provision
59,347
$
42,104
$
26,174
$
11,199
Provision for credit losses
(700)
(487)
Total loss and loss adjustment expenses recoverable, net
$
58,647
$
25,687
(1) Collateral is in the form of cash, letters of credit, funds withheld, and/or cash collateral held in trust accounts. This excludes any excess collateral in order to disclose the aggregate net exposure for each retrocessionaire.
At June 30, 2024, we had 3 reinsurers (December 31, 2023: 3) that accounted for 10% or more of the total loss and loss adjustment expenses recoverable, net, for an aggregate gross amount of $42.3 million (December 31, 2023: $20.4 million).
The following table summarizes the Company’s outstanding debt obligations.
June 30, 2024
December 31, 2023
Term loans
$
62,188
$
74,062
Accrued interest payable
38
—
Less: deferred financing costs
(631)
(781)
Total debt
$
61,595
$
73,281
During the six months ended June 30, 2024, the Company partially repaid $11.9 million of the outstanding Term loans.
Credit Facilities
At June 30, 2024, the Company had the following letter of credit (“LOC”) facilities:
Capacity
LOCs issued
Termination Date
Citibank Europe plc ("Citi LOC")1
$
289,000
$
231,665
August 20, 2024
CIBC Bank USA ("CIBC LOC")
200,000
42,338
December 21, 2024
$
489,000
$
274,003
1) Includes $14 million of uncommitted capacity.
The above LOCs issued are cash collateralized (see Note 5). The LOC facilities are subject to various customary affirmative, negative and financial covenants. At June 30, 2024, the Company was in compliance with all LOC facilities covenants.
On April 12, 2024, the Company received written notice from Citibank Europe plc (“Citi”) of its decision to terminate the $275 million committed capacity under the Citi LOC agreement, with an effective date of August 20, 2024. However, Citi informed the Company that it intends to continue providing the Citi LOC on an uncommitted basis for the foreseeable future following the termination date.
10. SHARE CAPITAL
Ordinary Shares
The following table is a summary of changes in ordinary shares issued and outstanding for the six months ended June 30:
2024
2023
Ordinary
Class A
Class B
Balance – beginning of period
35,336,732
28,569,346
6,254,715
Issue of shares, net of forfeitures
(15,588)
447,952
—
Balance – end of period
35,321,144
29,017,298
6,254,715
The Company’s authorized share capital is 125,000,000 ordinary shares, par value of $0.10 per share.
On July 25, 2023, at the Company’s Annual General Meeting the shareholders approved the re-designation of Class B ordinary shares as Class A ordinary shares, and then reclassified Class A ordinary shares as “ordinary shares”, resulting in the elimination of the dual-class share structure.
At June 30, 2024, the Company has an effective Form S-3 registration statement on file with the SEC for an aggregate principal amount of $200.0 million in securities.
Share Repurchase Plan
On May 3, 2024, the Board of Directors re-approved the share repurchase plan, until June 30, 2025, authorizing the Company to repurchase up to $25.0 million of ordinary shares or securities convertible into ordinary shares in the open market,
through privately negotiated transactions or Rule 10b5-1 stock trading plans.Any shares repurchased are canceled immediately upon repurchase. For the six months ended June 30, 2024 and 2023, there was no repurchase of ordinary shares.
Preferred Shares
The Company’s authorized share capital also consists of 50,000,000 preference shares with a par value of $0.10 each. At June 30, 2024, the Company has no issued and outstanding preferred shares.
11. SHARE-BASED COMPENSATION
Refer to Note 11 of the Company’s audited consolidated financial statements of its 2023 Form 10-K for a summary of the Company’s 2023 Incentive Plan, including the definition of performance-based and service-based stock awards.
Employee and Director Restricted Shares
The following table summarizes the activity for unvested outstanding restricted share awards (“RSs”) during the six months ended June 30, 2024 and 2023:
Performance Restricted Shares
Service Restricted Shares
Number of non-vested restricted shares
Weighted average grant date fair value
Number of non-vested restricted shares
Weighted average grant date fair value
Balance at December 31, 2022
794,362
$
7.62
832,896
$
7.76
Granted
357,766
9.85
177,563
9.84
Vested
—
—
(256,243)
6.75
Forfeited
(109,105)
9.37
(55,967)
8.43
Balance at June 30, 2023
1,043,023
$
8.20
698,249
$
8.60
Balance at December 31, 2023
1,042,688
$
9.94
419,604
$
9.18
Granted
—
—
—
—
Vested
—
—
(217,522)
8.78
Forfeited
(89,945)
10.84
—
—
Balance at June 30, 2024
952,743
$
9.86
202,082
$
9.61
At June 30, 2024, 2,914,198 (December 31, 2023: 3,296,771) ordinary shares remained available for future issuance under the Company’s 2023 Incentive Plan.
There was no grant of RSs during the six months ended June 30, 2024 (2023: 535,329). For the six months ended June 30, 2024, the total fair value of Service RSs vested was $1.9 million (2023: $1.7 million).
The following table summarizes the activity for unvested outstanding restricted stock units (“RSUs”) during the six months ended June 30, 2024 and 2023:
Performance RSUs
Service RSUs
Number of non-vested RSUs
Weighted average grant date fair value
Number of non-vested RSUs
Weighted average grant date fair value
Balance at December 31, 2022
105,008
$
6.82
172,952
$
7.58
Granted
71,121
9.85
42,811
9.85
Vested
—
—
(77,695)
6.74
Forfeited
—
—
(1,788)
7.82
Balance at June 30, 2023
176,129
$
8.04
136,280
$
8.76
Balance at December 31, 2023
154,445
$
8.03
110,425
$
8.78
Granted
258,148
11.85
124,425
11.85
Vested
—
—
(74,357)
8.84
Forfeited
—
—
—
—
Balance at June 30, 2024
412,593
$
10.42
160,493
$
11.14
For the awards granted during the six months ended June 30, 2024, the Service RSUs vest evenly over three years on January 1, subject to the grantee’s continued service with the Company. If performance goals are achieved, the Performance RSUs will cliff vest at the end of a three-year performance period within a range of 50% and 200% of the awarded Performance RSUs, with a target of 100%.
For the six months ended June 30, 2024, the total fair value of Service RSUs vested was $0.7 million (2023: $0.5 million).
Employee and Director Stock Options
During the six months ended June 30, 2024, 250,000 ordinary share purchase options were granted to the Company’s CEO, pursuant to his employment contract. These options vest 50,000 annually and expire in 10 years from the grant date. The grant date fair value of these options was $4.31 per share, based on the Black-Scholes option pricing model. The following inputs were used in this pricing model:
Expected volatility
36.4
%
Expected term (in years)
5
Expected dividend yield
—
%
Risk-free interest rate
3.9
%
Stock price at grant date
$
11.20
Stock Compensation Expense
For the six months ended June 30, 2024 and 2023, the Company recorded $2.9 million and $2.3 million of total stock compensation expense (net of forfeitures), respectively. The stock compensation expense is included in “General and administrative expenses” in the condensed consolidated statements of operations. Forfeiture recoveries were immaterial for both periods.
The following table reconciles net income and weighted average shares used in computing basic and diluted EPS for the three and six months ended June 30, 2024 and 2023:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Numerator for EPS
Net income - basic
$
7,978
$
49,860
$
34,997
$
55,747
Add: interest on convertible notes
—
744
—
1,520
Less: gain on repurchase of convertible notes
—
—
—
(265)
Net income - diluted
$
7,978
$
50,604
$
34,997
$
57,002
Denominator for EPS
Weighted average shares outstanding - basic
34,238,863
34,070,818
34,255,454
34,065,066
Effect of dilutive employee and director share-based awards
460,319
580,494
423,871
534,958
Shares potentially issuable in connection with convertible notes
—
3,615,825
—
3,722,897
Weighted average shares outstanding - diluted
34,699,182
38,267,137
34,679,325
38,322,921
Anti-dilutive stock options outstanding
902,140
690,337
902,140
690,337
EPS:
Basic
$
0.23
$
1.46
$
1.02
$
1.64
Diluted
$
0.23
$
1.32
$
1.01
$
1.49
13.NET INVESTMENT INCOME
The following table provides a breakdown of net investment income:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Interest and dividend income, net of withholding taxes and other expenses
$
8,135
$
8,863
$
16,691
$
17,491
Net realized and unrealized gains on other investments (see Note 4)
89
506
(324)
256
Net investment-related income
8,224
9,369
16,367
17,747
Share of Solasglas' net income (see Note 3)
4,330
32,782
22,578
29,644
Total investment income
$
12,554
$
42,151
$
38,945
$
47,391
14. RELATED PARTY TRANSACTIONS
Investment Advisory Agreement
There has been no change to the Company’s agreement with Solasglas as described in its 2023 Form 10-K. Refer to Note 3 for a breakdown of management fees and performance fees for the six months ended June 30, 2024 and 2023.
David Einhorn also serves as the Chairman of the Board of Directors of Green Brick Partners, Inc. (“GRBK”), a publicly-traded company. At June 30, 2024, Solasglas, along with certain affiliates of DME Advisors, collectively owned 25.2% of the issued and outstanding common shares of GRBK. Under applicable securities laws, DME Advisors may sometimes be limited in its ability to trade GRBK shares held in Solasglas. At June 30, 2024, Solasglas held 1.8 million shares of GRBK. Subsequent to June 30, 2024, Solasglas reduced its exposure to GRBK and as of July 31, 2024 held 1.3 million shares of GRBK.
Service Agreement
The Company has entered into a service agreement with DME Advisors, pursuant to which DME Advisors provides certain investor relations services to the Company for compensation of five thousand dollars per month (plus expenses). The agreement automatically renews annually until terminated by either the Company or DME Advisors for any reason with 30 days prior written notice to the other party.
Collateral Assets Investment Management Agreement
Effective January 1, 2019, the Company (and its subsidiaries) entered into a collateral assets investment management agreement (the “CMA”) with DME Advisors, pursuant to which DME Advisors manages certain assets of the Company that are not subject to the Solasglas LPA and are held by the Company to provide collateral required by the cedents in the form of trust accounts and letters of credit. In accordance with the CMA, DME Advisors receives no fees and is required to comply with the collateral investment guidelines. The CMA can be terminated by any of the parties upon 30 days’ prior written notice to the other parties.
15. COMMITMENTS AND CONTINGENCIES
a) Concentration of Credit Risk
Cash and cash equivalents
The Company monitors its concentration of credit risk with financial institutions and limits acceptable counterparties based on current rating, outlook and other relevant factors.
Investments
The Company’s credit risk exposure to private debt and convertible debt securities within its “Other investments” are immaterial (see Note 4).
Reinsurance balances receivable, net
The following table shows the breakdown of reinsurance balances receivable:
The Company has posted deposits at Lloyd’s to support underwriting capacity for certain syndicates, including Syndicate 3456. Lloyd’s has a credit rating of “A” (Excellent) from A.M. Best.
Premiums receivable includes a significant portion of estimated premiums not yet due. Brokers and other intermediaries are responsible for collecting premiums from customers on the Company’s behalf. The Company monitors its concentration of credit risks from brokers. The diversity in the Company’s client base limits credit risk associated with premiums receivable and funds (premiums) held by cedents. Further, under the reinsurance contracts the Company has contractual rights to offset premium balances receivable and funds held by cedants against corresponding payments for losses and loss expenses.
Loss and loss adjustment expenses recoverable, net
The Company regularly evaluates its net credit exposure to the retrocessionaires and their abilities to honor their respective obligations. See Note 8 for analysis of concentration of credit risk relating to retrocessionaires.
b) Lease Obligations
There was no material change to the Company’s operating lease agreements subsequent to its 2023 Form 10-K.
c) Litigation
From time to time, in the ordinary course of business, the Company may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation. The outcomes of these procedures determine the rights and obligations under the Company’s reinsurance contracts and other contractual agreements. In some disputes, the Company may seek to enforce its rights under an agreement or collect funds owed. In other matters, the Company may resist attempts by others to collect funds or enforce alleged rights. While the Company cannot predict the outcome of legal disputes with certainty, the Company does not believe that any existing dispute, when finally resolved, will have a material adverse effect on the Company’s business, financial condition, or operating results.
The Company has one operating segment: Property & Casualty Reinsurance.
The following tables provide a breakdown of the Company’s gross premiums written by line and class of business, and by geographic area of risks insured for the periods indicated:
Gross Premiums Written by Line of Business
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Property
Commercial
$
12,070
7.1
%
$
14,440
9.3
%
$
30,236
7.8
%
$
29,131
8.5
%
Motor
93
0.1
352
0.2
155
—
584
0.2
Personal
10,614
6.3
16,368
10.6
17,562
4.5
32,005
9.4
Total Property
22,777
13.5
31,160
20.1
47,953
12.3
61,720
18.1
Casualty
General Liability
33,741
20.0
27,517
17.8
55,398
14.3
48,076
14.1
Motor Liability
8,638
5.1
2,707
1.7
14,656
3.8
8,306
2.4
Professional Liability
(448)
(0.3)
2,625
1.7
119
—
6,272
1.8
Workers' Compensation
(40)
—
3,899
2.5
3,380
0.9
7,058
2.1
Multi-line
38,314
22.7
51,724
33.4
113,441
29.4
105,884
31.0
Total Casualty
80,205
47.5
88,472
57.1
186,994
48.4
175,596
51.4
Other
Accident & Health
2,947
1.7
2,013
1.3
3,878
1.0
4,489
1.3
Financial
17,945
10.6
8,850
5.7
38,144
9.9
31,347
9.2
Marine
10,879
6.4
7,854
5.1
30,442
7.9
19,994
5.9
Other Specialty
34,222
20.3
16,594
10.7
78,822
20.5
48,252
14.1
Total Other
65,993
39.1
35,311
22.8
151,286
39.3
104,082
30.5
$
168,975
100.0
%
$
154,943
100.0
%
$
386,233
100.0
%
$
341,398
100.0
%
Gross Premiums Written by Geographic Area of Risks Insured
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
U.S. and Caribbean
$
61,786
36.6
%
$
59,588
38.5
%
$
119,160
30.9
%
$
129,440
37.9
%
Worldwide (1)
90,153
53.4
75,131
48.5
234,462
60.7
181,393
53.1
Europe
3,792
2.2
3,641
2.3
8,280
2.1
7,068
2.1
Asia
13,244
7.8
16,583
10.7
24,331
6.3
23,497
6.9
$
168,975
100.0
%
$
154,943
100.0
%
$
386,233
100.0
%
$
341,398
100.0
%
(1) “Worldwide” is composed of contracts that reinsure risks in more than one geographic area and may include risks in the U.S.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
The following discussion should be read in conjunction with the audited consolidated financial statements and accompanying notes, which appear in our 2023 Form 10-K.
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”).
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.
We are a global specialty property and casualty reinsurer headquartered in the Cayman Islands, with an underwriting and investment strategy that we believe differentiates us from most of our competitors. Our goal is to build long-term shareholder value by providing risk management solutions to the insurance, reinsurance, and other risk marketplaces.
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.
The following is a summary of our financial performance for Q2 2024, compared to the same quarter in 2023 (“Q2 2023”):
•Gross premiums written was $169.0 million, an increase of 9.1%;
•Net premiums earned was $158.4 million, an increase of 13.2%;
•Net underwriting income (1) was $0.3 million, compared to $5.4 million;
•Total CAT losses, net of reinsurance, were $17.9 million, compared to $9.3 million;
•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
•Diluted EPS was $0.23, compared to $1.32.
Fully diluted book value per share(1) was $17.65 at June 30, 2024, an increase of 5.4% since December 31, 2023.
The 2024 mid-year renewals have been characterized by a healthy balance of supply and demand of reinsurance capacity. Reinsurance terms and conditions are retaining discipline across a majority of classes, most notably with respect to property excess of loss attachment points. We continue to view the terms and conditions available in the property and specialty market as attractive for growth.
As we approach the peak months of North Atlantic hurricane season, the industry’s attention is drawn to the record set in early July by Hurricane Beryl for the earliest category 5 storm to form in the North Atlantic. Another key focus in the industry is the degree of additional reserve strengthening that may emerge in casualty classes throughout the remainder of the year.
It is likely that terms and conditions in the reinsurance market will be highly dependent on the progression of the above factors throughout the remainder of 2024.
There have been no changes to our key financial measures, including non-GAAP financial measures, as described in the MD&A of our 2023 Form 10-K.
Fully Diluted Book Value Per Share
The following table presents a reconciliation of the fully diluted book value per share to basic book value per share (the most directly comparable U.S. GAAP financial measure):
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
June 30, 2023
Numerator for basic and fully diluted book value per share:
Total equity as reported under U.S. GAAP
$
634,020
$
624,458
$
596,095
$
575,865
$
561,121
Denominator for basic and fully diluted book value per share:
Ordinary shares issued and outstanding as reported and denominator for basic book value per share
35,321,144
35,321,144
35,336,732
35,337,407
35,272,013
Add: In-the-money stock options (1) and all outstanding RSUs
594,612
585,334
264,870
312,409
312,409
Denominator for fully diluted book value per share
35,915,756
35,906,478
35,601,602
35,649,816
35,584,422
Basic book value per share
$
17.95
$
17.68
$
16.87
$
16.30
$
15.91
Increase in basic book value per share ($)
$
0.27
$
0.81
$
0.57
$
0.39
$
1.45
Increase in basic book value per share (%)
1.5
%
4.8
%
3.5
%
2.5
%
10.0
%
Fully diluted book value per share
$
17.65
$
17.39
$
16.74
$
16.15
$
15.77
Increase in fully diluted book value per share ($)
$
0.26
$
0.65
$
0.59
$
0.38
$
1.43
Increase in fully diluted book value per share (%)
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:
1The 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.
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 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”).
Overview
Three months ended June 30, 2024
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.
Net income was $8.0 million for Q2 2024, compared to net income of $49.9 million reported for Q2 2023.
The developments that most significantly affected our financial performance during Q2 2024, compared to Q2 2023, are summarized below:
•Underwriting income: Decreased by $5.1 million primarily driven by 3.6 percentage points increase in our combined ratio, predominantly due to higher acquisition costs relating to our FAL business, partially offset by improved loss ratio and underwriting expense ratio. While total CAT losses were higher than in Q2 2023, this was offset by improved attritional loss ratio for our underwriting portfolio during the quarter. Current year CAT losses contributed 8.4% to our combined ratio, compared to 7.3% in Q2 2023. 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.
•Investment income: Decreased by $29.6 million primarily driven by lower income from Solasglas. Our investment in Solasglas reported a gain of $4.3 million during Q2 2024, compared to a gain of $32.8 million during Q2 2023. Solasglas generated a net return of 1.2% for Q2 2024 compared to a net return of 10.9% for Q2 2023; and
•Foreign exchange gains (losses): $0.9 million foreign exchange losses for Q2 2024, compared to $4.7 million foreign exchange gains in Q2 2023, driven mainly by the strengthening of the pound sterling against the U.S. dollar in Q2 2023 whereby there was no significant movement in Q2 2024.
Six months ended June 30, 2024
Fully diluted book value per share increased by $0.91 per share, or 5.4%, to $17.65 per share from $16.74 per share at December 31, 2023. Basic book value per share increased by $1.08 per share, or 6.4%, to $17.95 per share from 16.87 per share at December 31, 2023.
Net income was $35.0 million for YTD 2024, compared to net income of $55.7 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 $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.
•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 .
•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.
•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
•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.
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 six months ended June 30, 2024 and 2023.
Gross Premiums Written
Details of gross premiums written are provided in the following table:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Property
$
22,777
13.5
%
$
31,160
20.1
%
$
47,953
12.4
%
$
61,720
18.1
%
Casualty
80,205
47.5
88,472
57.1
186,994
48.4
175,596
51.4
Other
65,993
39.1
35,311
22.8
151,286
39.2
104,082
30.5
Total
$
168,975
100.0
%
$
154,943
100.0
%
$
386,233
100.0
%
$
341,398
100.0
%
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 Q2 2024 gross premiums written increased by $14.0 million, or 9.1%, compared to the equivalent 2023 period.
The following table provides a further analysis of this overall increase:
Gross Premiums Written
Three months ended June 30, 2024
Increase (decrease) ($ in millions)
% change
Explanation
Property
$(8.4)
(26.9)%
The decrease was driven predominantly by the non-renewal of a U.S. homeowners’ property treaty within Personal class. This was offset partially by growth in the Commercial class driven by new Innovations business. This resulted in a change in business mix for Property, with Commercial and Personal accounting for 53% and 47%, respectively, of total Property compared to 46% and 53%, respectively, for the same quarter in 2023.
Casualty
$(8.3)
(9.3)%
The decrease was driven predominantly from revision to estimated ultimate gross premiums for certain 2023 and 2024 FAL treaties, partially offset by growth experienced by Syndicate 3456, within the Multi-line class.
Additionally, we revised the estimated premiums for certain prior years’ quota share treaties within Professional and Workers’ Compensation classes of business. This reduction in Casualty premiums was partially offset by growth in the General Liability class from 2023 quota share treaties and new business in 2024. Further, Motor Liability premium increased mainly due to new excess of loss treaties.
As a result, the business mix within our Casualty line of business has changed with General Liability, Motor Liability, and Multi-line classes accounting for 42%, 11%, and 48% of total Casualty, respectively, compared to 31%, 3%, and 58% in the same period in 2023.
Other
$30.7
86.9%
The increase was driven predominantly by new business in our Marine and Energy class, including Lloyd’s whole account excess of loss treaties.
Our YTD 2024 gross premiums written increased by $44.8 million, or 13.1%, compared to the equivalent 2023 period.
The following table provides a further analysis of this overall increase:
Gross Premiums Written
Six months ended June 30, 2024
Increase (decrease) ($ in millions)
% change
Explanation
Property
$(13.8)
(22.3)%
Same trends as noted for Q2 2024. This resulted in a change in business mix for Property, with Commercial and Personal accounting for 53% and 47%, respectively, of total Property compared to 46% and 53%, respectively, for the same period in 2023.
Casualty
$11.4
6.5%
The increase was due to growth in the General Liability and Motor Liability classes of business as noted for Q2 2024, coupled with an overall net increase in Multi-Line class, driven mainly by growth in our Syndicate 3456. The growth in Motor Liability class is predominantly from new excess of loss treaties.
The above growth was partially offset by revision to estimated ultimate gross premiums for certain 2023 and 2024 FAL treaties and by lower premiums for Professional and Workers’ Compensation classes of business.
General Liability and Multi-line classes accounted for 30% and 61%, respectively, of total Casualty, compared to 27% and 60%, respectively, in the same period in 2023.
For Q2 2024, premiums ceded were $14.8 million, or 8.8% of gross premiums written, compared to $9.7 million, or 6.3% of gross premiums written, for the same quarter in 2023. For YTD 2024, premiums ceded were $38.0 million, or 9.8% of gross premiums written, compared to $21.0 million, or 6.1% of gross premiums written, for YTD 2023.
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.
Net Premiums Written
Details of net premiums written are provided in the following table:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Property
$
16,855
10.9
%
$
26,433
18.2
%
$
38,059
10.9
%
$
52,626
16.4
%
Casualty
77,431
50.2
84,840
58.4
176,881
50.8
172,036
53.7
Other
59,857
38.8
33,931
23.4
133,280
38.3
95,785
29.9
Total
$
154,143
100.0
%
$
145,204
100.0
%
$
348,220
100.0
%
$
320,447
100.0
%
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.
Net Premiums Earned
Details of net premiums earned are provided in the following table:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Property
$
18,119
11.4
%
$
20,749
14.8
%
$
41,476
13.0
%
$
39,492
14.0
%
Casualty
86,155
54.4
81,446
58.2
180,793
56.5
165,561
58.6
Other
54,124
34.2
37,748
27.0
97,665
30.5
77,539
27.4
Total
$
158,398
100.0
%
$
139,943
100.0
%
$
319,934
100.0
%
$
282,592
100.0
%
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.
For Q2 2024 and YTD 2024, our total loss ratio improved by 0.3 and 0.2 percentage points, respectively, compared to the same periods in 2023.
Current accident year loss ratio increased by 1.4 percentage points for Q2 2024, compared to the same quarter in 2023 driven mainly by 1.3 points increase in CAT losses. This increase was driven predominantly by the severe U.S. tornados (including convective storms).
Current accident year loss ratio increased by 3.2 percentage points for YTD 2024, compared to the same period in 2023, driven by 2.2 points increase in CAT loss events, mainly due to the Baltimore bridge loss and the severe U.S. tornados. While we have not renewed a U.S. homeowners’ property program in 2024, we wrote and earned premiums from the 2023 quota share treaty during 2024.
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.
Details of net losses incurred by line of business are provided in the following table:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Property
$
21,155
20.7
%
$
21,402
23.6
%
$
33,133
15.7
%
$
38,932
20.8
%
Casualty
58,581
57.3
49,608
54.8
118,598
56.1
110,646
59.1
Other
22,297
22.0
19,494
21.6
59,628
28.2
37,651
20.1
Total
$
102,033
100.0
%
$
90,504
100.0
%
$
211,359
100.0
%
$
187,229
100.0
%
The below table summarizes the loss ratios by line of business:
The following provides further details on the change in Q2 2024 vs. Q2 2023.
Net Losses Incurred
Three months ended June 30, 2024
Increase (decrease) ($ in millions)
Increase / (decrease) in loss ratio points
Property
$(0.2)
13.7
The marginal decrease in losses incurred was driven by the 12.7% decrease in net premiums earned, offset partially by an increase of $0.3 million in current CAT losses mainly from U.S. tornados and to a lesser extent from German floods.
The increase in loss ratio points is driven mainly by the higher attritional and CAT losses from a U.S. homeowners’ property program which was non-renewed in 2024.
Casualty
$9.0
7.1
Driven by the 5.8% increase in net premiums earned, coupled with an increase in prior year adverse loss development, which contributed 7.1 percentage points to the loss ratio. This was predominantly driven by our legacy Multiline and Workers’ Compensation exposures.
Other
$2.8
(10.4)
Driven by the 43.4% increase in net premiums earned, offset partially by favorable prior year loss development, mainly in our Mortgage and Marine and Energy classes of business. This contributed 16.8 percentage points to the reduction in the loss ratio. However, offsetting this benefit, our current attritional loss ratio increased for the Marine class in 2024 compared 2023.
The following provides further details on the change in YTD 2024 vs. YTD 2023.
Net Losses Incurred
Six months ended June 30, 2024
Increase (decrease) ($ in millions)
Increase / (decrease) in loss ratio points
Property
$(5.8)
(18.7)
Despite the 5.0% increase in net premiums earned, the losses incurred and loss ratio decreased predominantly due to the 16.6 percentage points decrease in property-related CAT losses compared to YTD 2023.
Casualty
$8.0
(1.2)
The increase in losses incurred was driven by the 5.8% increase in net premiums earned.
The improvement in loss ratio was driven by lower prior year adverse loss development, which contributed 4.3 percentage points. This was primarily driven from significant adverse loss development in our legacy Motor class in 2023, whereas we had favorable loss development for this class in 2024.
Other
$22.0
12.5
The increase in losses incurred was driven by the 26.0% increase in net premiums earned, coupled with higher CAT losses.
The current year CAT losses contributed 14.5 percentage points to the total loss ratio, which was driven by the Baltimore bridge collapse and satellite failures. The change in business mix also contributed to the increase in loss ratio. This was partially offset by 6.4 percentage points from prior year favorable loss development, primarily in our Mortgage and Marine and Energy classes of business.
Acquisition Costs, Net
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:
Increase / (decrease) in acquisition cost ratio points
2024
2023
Increase / (decrease) in acquisition cost ratio points
Property
10.7
%
19.1
%
(8.4)
%
15.8
%
19.1
%
(3.3)
%
Casualty
36.9
30.5
6.4
32.0
30.5
1.5
Other
31.0
25.1
5.9
28.3
28.1
0.2
Total
31.9
%
27.4
%
4.5
%
28.8
%
28.2
%
0.6
%
The following provides further details on the change in Q2 2024 vs. Q2 2023.
Change in Acquisition Cost Ratios
Three months ended June 30, 2024
Increase / (decrease) in acquisition cost ratio points
Explanation
Property
(8.4)
The decrease was driven by the change in business mix as a result of not renewing a U.S. homeowner’s program that had a higher acquisition cost ratio compared to the increase in net premiums earned from CAT retro quota share treaties at lower acquisition costs.
Casualty
6.4
The increase was driven primarily due to higher than previously estimated acquisition costs for certain 2023 and 2024 FAL business within our Multi-line class. This was partially offset by a change in business mix, particularly with growth in net premiums earned from General Liability and Motor Liability classes of business at lower acquisition costs.
Other
5.9
The increase was driven primarily by the prior year favorable loss reserve releases during the quarter for certain mortgage programs within our Financial class, which resulted in higher performance-based commission costs. There was no comparable favorable loss reserves release for this business in Q2 2023, which would have triggered additional commission costs.
The following provides further details on the change in YTD 2024 vs. YTD 2023.
Change in Acquisition Cost Ratios
Six months ended June 30, 2024
Increase / (decrease) in acquisition cost ratio points
Explanation
Property
(3.3)
Same trends as noted for Q2 2024.
Casualty
1.5
Same trends as noted for Q2 2024.
Other
0.2
Same trends as noted for Q2 2024. However, this was offset partially by the change in business mix as a result of the growth in our Marine and Energy class at lower acquisition costs.
The following table provides our underwriting ratios by line of business for the respective periods:
Three months ended June 30
Three months ended June 30
2024
2023
Property
Casualty
Other
Total
Property
Casualty
Other
Total
Loss ratio
116.8
%
68.0
%
41.2
%
64.4
%
103.1
%
60.9
%
51.6
%
64.7
%
Acquisition cost ratio
10.7
36.9
31.0
31.9
19.1
30.5
25.1
27.4
Composite ratio
127.5
%
104.9
%
72.2
%
96.3
%
122.2
%
91.4
%
76.7
%
92.1
%
Underwriting expense ratio
3.5
4.1
Combined ratio
99.8
%
96.2
%
Our combined ratio increased by 3.6 percentage points for the current quarter compared to Q2 2023 predominantly due to higher acquisition cost ratio; partially offset by a decrease in loss ratio and underwriting expense ratio. The underwriting expense ratio improved as a result of higher volume of net premium earned to cover underwriting expenses and, to a lesser extent, a net gain from deposit-accounted contracts as a result of a favorable commutation during the quarter.
Six months ended June 30
Six months ended June 30
2024
2023
Property
Casualty
Other
Total
Property
Casualty
Other
Total
Loss ratio
79.9
%
65.6
%
61.1
%
66.1
%
98.6
%
66.8
%
48.6
%
66.3
%
Acquisition cost ratio
15.8
%
32.0
%
28.3
%
28.8
%
19.1
%
30.5
%
28.1
%
28.2
%
Composite ratio
95.7
%
97.6
%
89.4
%
94.9
%
117.7
%
97.3
%
76.7
%
94.5
%
Underwriting expense ratio
4.0
%
3.5
%
Combined ratio
98.9
%
98.0
%
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.
General and Administrative (“G&A”) Expenses
The breakdown of our G&A expenses between underwriting and corporate functions was as follows:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Underwriting expenses
$
5,811
$
5,468
$
12,150
$
9,407
Corporate expenses
4,706
4,557
9,081
10,554
General and administrative expenses
$
10,517
$
10,025
$
21,231
$
19,961
G&A increased by 4.9% for Q2 2024, compared to Q2 2023. The increase was driven by:
•Underwriting expenses: Increased by $0.3 million or 6.3%, 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. Further, Q2 2023 included a bad debt charge of $0.6 million, with no similar charge during Q2 2024.
•Corporate expenses: No significant change for the quarter.
G&A increased by 6.4% for YTD 2024, compared to same period in 2023. The increase was driven by:
•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.
•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.
Total Investment Income
A summary of our total investment income is as follows:
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Interest and dividend income, net of withholding taxes and other expenses
8,135
8,863
$
16,691
$
17,491
Net realized and unrealized gains on other investments (see Note 4)
89
506
(324)
256
Net investment-related income
$
8,224
$
9,369
$
16,367
$
17,747
Share of Solasglas' net income (see Note 3)
4,330
32,782
22,578
29,644
Total investment income
$
12,554
$
42,151
$
38,945
$
47,391
Net investment-related income
Our net investment-related income decreased by 8.2% compared to Q2 2023, and by 4.6% compared to YTD 2023, mainly driven by the decrease in interest income earned from restricted cash and cash equivalents as a result of decreases in the outstanding collateral balance during both periods.
Share of Solasglas’ net income
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.
Three months ended June 30
Six months ended June 30
2024
2023
2024
2023
Long portfolio gains (losses)
(1.0)
%
18.0
%
3.4
%
27.3
%
Short portfolio gains (losses)
1.6
(5.5)
1.7
(14.8)
Macro gains (losses)
0.9
0.3
2.9
(0.1)
Other income and expenses 1
(0.2)
(0.8)
(0.9)
(1.6)
Gross investment return
1.3
%
12.0
%
7.1
%
10.8
%
Net investment return 1
1.2
%
10.9
%
6.4
%
9.7
%
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 Q2 2024, the significant contributors to Solasglas’ investment return were long positions in Solvay (Belgium: SOLB), HP (HPQ), and Kyndryl Holdings (KD). The largest detractors were long positions in Brighthouse Financial (BHF), Green Brick Partners (GRBK), and a single-name short position.
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.
Each month, we post on our website (www.greenlightre.com) the returns from our investment in Solasglas.
Financial Condition
Investments
The following table provides a breakdown of our total investments:
June 30
December 31
2024
2023
Investment in related party investment fund (Solasglas)
$
351,468
82.8
%
$
258,890
78.0
%
Other investments:
Private investments and unlisted equities
71,866
16.9
71,157
21.4
Debt and convertible debt securities
1,293
0.3
2,136
0.6
Total other investments
$
73,159
17.2
%
$
73,293
22.0
%
Total investments
$
424,627
100.0
%
$
332,183
100.0
%
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.
Investments in Solasglas
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.
The following table represents the composition of Solasglas’ investments:
June 30
December 31
2024
2023
Long %
Short %
Long %
Short %
Equities and related derivatives
79.4
%
38.2
%
90.2
%
53.8
%
Private and unlisted equity securities
2.0
—
2.0
—
Debt instruments
0.3
—
0.3
—
Total
81.7
%
38.2
%
92.5
%
53.8
%
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%).
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.
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.
Restricted cash and cash equivalents
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.
Reinsurance balances receivable
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.
Loss and LAE Reserves; Loss and LAE Recoverable
Our reserves for loss and LAE by lines of business were as follows:
June 30, 2024
December 31, 2023
Case Reserves
IBNR
Total
Case Reserves
IBNR
Total
Property
$
33,531
$
49,708
$
83,239
$
24,181
$
41,056
$
65,237
Casualty
139,286
317,563
456,849
136,713
299,933
436,646
Other
37,985
174,684
212,669
28,156
131,515
159,671
Total
$
210,802
$
541,955
$
752,757
$
189,050
$
472,504
$
661,554
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.
Our total loss and LAE recoverable increased by $33.0 million, or 128.3%, to $58.6 million from $25.7 million at December 31, 2023. This increase was driven mainly by the loss recoveries on the Baltimore bridge loss event, the Taiwan earthquake (gross losses were mostly retroceded), and the increase in quota share retrocessions for Other Specialty business due to growth from inward premiums. See Note 8 “Retrocession” of the financial statements for a description of the credit risk associated with our retrocessionaires.
Probable Maximum Loss (“PML”)
At July 1, 2024, our estimated largest PML at a 1-in-250-year return period for a single event, and in aggregate, was $99.9 million and $109.2 million, respectively, both relating to the peril of North Atlantic Hurricane, compared to $103.3 million and $111.5 million, respectively, at April 1, 2024.
The below table contains the expected modeled loss for each of our peak peril regions and sub-regions for both a single event loss and aggregate loss measures at the 1-in-250-year return period.
July 1, 2024
Net 1-in-250 Year Return Period
Peril
Single Event Loss
Aggregate Loss
North Atlantic Hurricane
$
99,856
$
109,207
Southeast Hurricane
94,455
94,455
Gulf of Mexico Hurricane
52,552
52,715
Northeast Hurricane
54,688
55,167
North America Earthquake
95,487
96,748
California Earthquake
83,828
86,690
Pacific Northwest Earthquake
49,540
49,540
Other N.A. Earthquake
48,328
48,391
Japan Earthquake
37,941
38,491
Japan Windstorm
22,120
23,419
Europe Windstorm
60,870
64,018
Debt
Our total debt decreased by $11.7 million, or 15.9%, to $61.6 million from $73.3 million at December 31, 2023 due to partial repayment. Refer to Note 9 “Debt and Credit Facilities” of the financial statements for further information.
Total shareholders’ equity
Total shareholders’ equity increased by $37.9 million to $634.0 million, compared to $596.1 million at December 31, 2023. The increase was primarily due to the net income of $35.0 million reported for the period. For details of other movements in shareholders’ equity, see the condensed consolidated statements of shareholders’ equity.
Refer to the “Liquidity and Capital Resources” section included in Item 7 of our 2023 Form 10-K for a general discussion of our liquidity and capital resources.
Liquidity
The following table summarizes our sources and uses of funds:
Six months ended June 30
2024
2023
Total cash provided by (used in):
Operating activities
$
40,669
$
566
Investing activities
(70,246)
(7,049)
Financing activities
(11,876)
(17,085)
Effect of currency exchange on cash(1)
(107)
351
Net cash inflows (outflows)
(41,560)
(23,217)
Cash, beginning of period
655,730
706,548
Cash, end of period
$
614,170
$
683,331
(1) Cash includes unrestricted and restricted cash and cash equivalents - see Note 5 of the financial statements.
Cash provided by operating activities
The increase in cash provided by operating activities was driven mainly by the ebb and flow from our underwriting activities, which may vary significantly from period to period depending on the mix of business, the nature of underwriting opportunities available and volume of claims submitted to us by our cedents.
Cash used in investing activities
The increase in cash used for investing activities was driven mainly by the net change in our investment in Solasglas where we made a net contribution of $70.0 million for YTD 2024 compared to a net contribution of $9.0 million during the same period in 2023.
Cash used in financing activities
The decrease in cash used in our financing activities was driven mainly by the repurchase of a portion of the outstanding Convertible Notes in the first half of 2023. In Q2 2024, we partially repaid $11.7 million of the Term loans.
Capital Resources
The following table summarizes our debt and capital structure:
June 30, 2024
December 31, 2023
Debt
$
62,188
$
74,062
Shareholders’ equity
$
634,020
$
596,095
Ratio of debt to shareholders’ equity
9.7
%
12.4
%
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.
Our shareholders’ equity increased in YTD 2024 primarily due to net income for the period.
At June 30, 2024, there were 35,321,144 outstanding ordinary shares, a decrease of 15,588 since December 31, 2023, due to forfeited performance restricted shares net of issuance of ordinary shares for vested RSUs.
We did not repurchase any ordinary shares for the six months ended June 30, 2024.
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.
Secured LOC Facilities
As disclosed in Note 9 “Debt and Credit Facilities” of Q2 2024 Financials, the $275 million committed capacity under the Citi LOC agreement will terminate on August 20, 2024. However, Citi informed the Company that it intends to continue providing the Citi LOC on an uncommitted basis for the foreseeable future following the termination date.
Contractual Obligations and Commitments
At June 30, 2024, our contractual obligations and commitments by period due were as follows:
Less than 1 year
1-3 years
3-5 years
More than 5 years
Total
Operating activities
Loss and loss adjustment expense reserves (1)
$
357,560
$
238,624
$
88,825
$
67,748
$
752,757
Operating lease obligations
686
726
—
—
1,412
Financing activities
Debt (2)
2,813
59,375
—
—
62,188
Total
$
361,059
$
298,725
$
88,825
$
67,748
$
816,357
(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.
Our 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 II. Item 1A. Risk Factors” included in our 2023 Form 10-K, 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. The most significant estimates relate to: premium revenues and risk transfer, loss and loss adjustment expense reserves, investment impairments, allowances for credit losses, and share-based compensation.
We believe that the critical accounting estimates discussion in “Part II. Item 7. — Management’s Discussion and Analysis of Financial Condition and Results on Operations” of our 2023 Form 10-K continues to describe the significant estimates and judgments included in the preparation of these financial statements.
Recent Accounting Pronouncements
At June 30, 2024, there were no recently issued accounting pronouncements that we have not yet adopted that we expect could have a material impact on our results of operations, financial condition, or liquidity. See Note 2 “Significant Accounting Policies”of theQ2 2024 Financials.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Refer to Item 7A included in our 2023 Form 10-K. There have been no material changes to this item since December 31, 2023.
Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 of the Exchange Act, the Company has evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the effectiveness of its disclosure controls and procedures (as defined in such rules) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports prepared in accordance with the rules and regulations of the SEC is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures will prevent all errors and all frauds. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company continues to review its disclosure controls and procedures, including its internal controls over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.
From time to time, in the normal course of business, we may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation, the outcomes of which determine our rights and obligations under our reinsurance contracts and other contractual agreements. In some disputes, we may seek to enforce our rights under an agreement or to collect funds owing to us. In other matters, we may resist attempts by others to collect funds or enforce alleged rights. While the final outcome of legal disputes cannot be predicted with certainty, we do not believe that any of our existing contractual disputes, when finally resolved, will have a material adverse effect on our business, financial condition or operating results.
Item 1A. RISK FACTORS
Factors that could cause our actual results to differ materially from those in this report are any of the risks described in “Part I. Item 1A. Risk Factors” included in our 2023 Form 10-K, as filed with the SEC on March 5, 2024. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
As of June 30, 2024, there have been no other material changes to the risk factors disclosed in “Part I. Item 1A. Risk Factors” included in our 2023 Form 10-K. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our Board has adopted a share repurchase plan. The timing of such repurchases and the actual number of shares repurchased will depend on various factors, including price, market conditions, and applicable regulatory and corporate requirements. On May 3, 2024, our Board of Directors re-approved the share repurchase plan until June 30, 2025, authorizing us to repurchase up to $25.0 million of ordinary shares or securities convertible into ordinary shares in the open market, through privately negotiated transactions or Rule 10b5-1 stock trading plans.Any shares repurchased are canceled immediately upon repurchase. We are not required to repurchase any of the ordinary shares. The repurchase plan may be modified, suspended, or terminated at the election of our Board of Directors at any time without prior notice.
There were no share repurchases made under the plan during the three months ended June 30, 2024.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
(c)Insider Trading Arrangements and Related Disclosures
Our directors and executive officers may purchase or sell shares of our ordinary shares in the market from time to time, including pursuant to equity trading plans adopted in accordance with Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and in compliance with guidelines specified by the Company. In accordance with Rule 10b5-1 and our insider trading policy, directors, officers, and certain employees who, at such time, are not in possession of material non-public information about the Company are permitted to enter into written plans that pre-establish amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s equity plans (“Rule 10b5-1 Trading Plans”). Under Rule 10b5-1 Trading Plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them.
During the three months ended June 30, 2024, we did not have any Rule 10b5-1 trading arrangements or any “non-Rule 10b5-1 arrangements” (as defined in Item 408(a) of Regulation S-K) in place for our directors and officers.
The following materials from the Company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2024 formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Changes in Shareholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GREENLIGHT CAPITAL RE, LTD.
(Registrant)
By:
/s/ GREGORY RICHARDSON
Gregory Richardson Director and Chief Executive Officer (principal executive officer)
August 6, 2024
By:
/s/ FARAMARZ ROMER
Faramarz Romer Chief Financial Officer (principal financial and accounting officer)