10-K: Greenlight Capital Re, Ltd. Reports Fiscal Year 2024 Results

Greenlight Capital Re, Ltd. releases its 10-K filing, highlighting a 9.7% increase in gross premiums written and a net income of $42.8 million for fiscal year 2024.

Summary

• Greenlight Capital Re, Ltd. (GLRE) reported a net income of $42.8 million for the fiscal year ended December 31, 2024.
• Gross premiums written increased by 9.7% to $698.3 million.
• Net premiums earned rose by 6.3% to $620.0 million.
• The company experienced a net underwriting loss of $8.2 million, compared to a net underwriting income of $32.0 million in the previous year.
• Total investment income increased by 10.3% to $79.6 million, including a 9.8% net return from the investment in Solasglas.
• Foreign exchange losses amounted to $5.6 million, contrasting with gains of $11.6 million in the prior year.
• Diluted earnings per share (EPS) decreased by 50% to $1.24.
• Fully diluted book value per share increased by 7.2% to $17.95.
• A.M. Best revised the outlook to positive from stable for the company's principal operating subsidiaries in October 2024.
• The company's debt-to-capital ratio is 9.5%.

Sentiment

Score: 6

Explanation: The document presents a mixed picture. While there's growth in premiums and investment income, the underwriting loss and foreign exchange losses temper the positive aspects. The outlook revision by A.M. Best is a positive sign, but the overall financial performance is weaker than the previous year.

Positives

• Gross premiums written increased by 9.7% to $698.3 million.
• Net premiums earned rose by 6.3% to $620.0 million.
• Total investment income increased by 10.3% to $79.6 million, with Solasglas generating a 9.8% net return.
• Fully diluted book value per share increased by 7.2% to $17.95.
• A.M. Best revised the outlook to positive from stable for the company's principal operating subsidiaries in October 2024.

Negatives

• Net underwriting loss was $8.2 million, compared to a net underwriting income of $32.0 million in the previous year.
• Foreign exchange losses amounted to $5.6 million, contrasting with gains of $11.6 million in the prior year.
• Diluted earnings per share (EPS) decreased by 50% to $1.24.

Risks

• The company's results of operations fluctuate from period to period and may not be indicative of long-term prospects.
• A downgrade or withdrawal of the company's A.M. Best ratings would materially and adversely affect its ability to implement its business strategy.
• The company's property and casualty reinsurance operations make it vulnerable to losses from catastrophes and may cause results of operations to vary significantly.
• The loss of significant brokers or customers could materially and adversely affect the company's business, financial condition, and results of operations.
• The company is subject to the credit risk of its brokers, cedents, agents, and other counterparties.
• The company's investment performance depends in part on the performance of Solasglas, and may suffer as a result of adverse financial market developments or other factors that impact Solasglas liquidity.
• Investments in privately held early-stage companies involve significant risks and are highly illiquid.
• Technology breaches or failures, including those resulting from a malicious ransomware or cyber-attack on the company or its business partners and service providers, could disrupt or otherwise negatively impact the company's business.

Future Outlook

The company believes that market conditions are still broadly, but not uniformly, positive and will continue to write business where they believe the price adequately compensates for the risk.

Industry Context

The global reinsurance market is highly competitive, with competition generally influenced by available capacity, service, financial strength ratings, prior history and relationships, and price.

Comparison to Industry Standards

• The company competes with major global reinsurers, including Arch Capital, AXIS Capital, Everest Re, Hamilton Re, Hannover Re, RenaissanceRe, and SiriusPoint.
• Competitors also provide protection in the form of catastrophe bonds, industry loss warranties, and other risk-linked products that are outside of the traditional reinsurance treaty market.
• The company's A(Excellent) rating from A.M. Best is the fourth highest of 15 financial strength ratings that A.M. Best issues.

Management Changes

Related Party Transactions

• The company has entered into an amended and restated exempted limited partnership agreement of Solasglas with DME Advisors II, LLC, as General Partner.
• DME Advisors receives a monthly management fee at an annual rate of 1.5% of each limited partners Investment Portfolio.
• DME II receives a performance allocation based on the positive performance change of each limited partners capital account equal to 20% of net profits calculated per annum, subject to a loss carryforward provision.

Stakeholder Impact

• Shareholders will see a decrease in diluted EPS but an increase in fully diluted book value per share.
• Employees may be affected by changes in incentive compensation due to the company's performance.
• Customers may be affected by changes in the company's underwriting strategy and risk management practices.

Next Steps

• The company will continue to monitor market conditions and write business where they believe the price adequately compensates for the risk.
• The company will continue to monitor and manage its exposure to catastrophe events.
• The company will continue to monitor and manage its investment portfolio to maximize returns over the long term while minimizing the risk of capital loss.

Key Dates