Greenlight Capital Re, Ltd 10-Q for FY2020 Q2

Greenlight Capital Re, Ltd. (GLRE)

10-Q 2020-08-05 For: 2020-06-30

Added on April 06, 2026

About this 10-Q

Greenlight Capital Re, Ltd filed this 10-Q on August 5, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $114.75M; down 18.2% from $140.35M a year earlier
Net loss: $63K; compared with net income of $15.31M a year earlier
Diluted EPS: $0.00; compared with $0.42 a year earlier

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☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from	to


Cayman Islands			N/A
(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)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Ordinary Shares	GLRE	Nasdaq Global Select Market


Class A Ordinary Shares, $0.10 par value			29,741,459
Class B Ordinary Shares, $0.10 par value			6,254,715
(Class)			Outstanding as of July 31, 2020


	June 30, 2020		December 31, 2019
	(unaudited)		(audited)
Assets
Investments
Investment in related party investment fund	$	177,658	$	240,056
Other investments	22,045		16,384
Total investments	199,703		256,440
Cash and cash equivalents	7,318		25,813
Restricted cash and cash equivalents	731,292		742,093
Reinsurance balances receivable (net of allowance for expected credit losses of $89)	251,163		230,384
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $47)	20,225		27,531
Deferred acquisition costs	49,227		49,665
Unearned premiums ceded	165		901
Notes receivable (net of allowance for expected credit losses of $1,000)	18,842		20,202
Other assets	1,521		2,164
Total assets	$	1,279,456	$	1,355,193
Liabilities and equity
Liabilities
Loss and loss adjustment expense reserves	$	467,655	$	470,588
Unearned premium reserves	185,378		179,460
Reinsurance balances payable	94,217		122,665
Funds withheld	4,644		4,958
Other liabilities	3,021		6,825
Convertible senior notes payable	94,637		93,514
Total liabilities	849,552		878,010
Shareholders' equity
Preferred share capital (par value $0.10; authorized, 50,000,000; none issued)	—		—
Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding, 30,017,870 (2019: 30,739,395): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2019: 6,254,715))	3,627		3,699
Additional paid-in capital	497,559		503,547
Retained earnings (deficit)	(71,282)		(30,063)
Total shareholders' equity	429,904		477,183
Total liabilities and equity	$	1,279,456	$	1,355,193


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

			For the quarterly period ended June 30, 2020


	Three months ended June 30						Six months ended June 30
	2020		2019		2020		2019
Revenues
Gross premiums written	$	116,689	$	152,340	$	226,476	$	314,900
Gross premiums ceded	(132)		(23,141)		(810)		(44,542)
Net premiums written	116,557		129,199		225,666		270,358
Change in net unearned premium reserves	(8,143)		(8,758)		(6,231)		(24,555)
Net premiums earned	108,414		120,441		219,435		245,803
Income (loss) from investment in related party investment fund [net of related party expenses of $616 and $1,278, (three and six months ended June 30, 2019: $3,131 and $8,563, respectively)]	1,609		14,405		(40,517)		45,161
Net investment income	3,934		4,386		10,771		5,953
Other income (expense), net	788		1,117		1,001		2,186
Total revenues	114,745		140,349		190,690		299,103
Expenses
Net loss and loss adjustment expenses incurred	89,194		78,476		164,891		201,341
Acquisition costs	17,903		37,172		49,642		58,698
General and administrative expenses	6,149		7,919		12,943		14,759
Interest expense	1,562		1,562		3,123		3,106
Total expenses	114,808		125,129		230,599		277,904
Income (loss) before income tax	(63)		15,220		(39,909)		21,199
Income tax (expense) benefit	0		94		(424)		21
Net income (loss)	$	(63)	$	15,314	$	(40,333)	$	21,220
Earnings (loss) per share
Basic	$	0.00	$	0.42	$	(1.12)	$	0.59
Diluted	$	0.00	$	0.42	$	(1.12)	$	0.58
Weighted average number of ordinary shares used in the determination of earnings and loss per share
Basic	35,776,736		36,100,665		35,958,965		36,037,177
Diluted	35,776,736		36,829,963		35,958,965		36,592,318


	Ordinary share capital		Additional paid-in capital		Retained earnings (deficit)		Shareholders’ equity attributable to Greenlight Capital Re, Ltd.		Non-controlling interest in joint venture		Total equity
Balance at December 31, 2018	$	3,638	$	499,726	$	(26,077)	$	477,287	$	485	$	477,772
Issue of Class A ordinary shares, net of forfeitures	41		—		—		41		—		41

Share-based compensation expense	—		2,190		—		2,190		—		2,190

Change in non-controlling interest in related party joint venture	—		—		—		—		(485)		(485)
Net income (loss)	—		—		21,220		21,220		—		21,220
Balance at June 30, 2019	$	3,679	$	501,916	$	(4,857)	$	500,738	$	—	$	500,738

Balance at December 31, 2019	$	3,699	$	503,547	$	(30,063)	$	477,183	$	—	$	477,183
Cumulative effect of adoption of accounting guidance for expected credit losses at January 1, 2020	—		—		(886)		(886)		—		(886)
Issue of Class A ordinary shares, net of forfeitures	44		—		—		44		—		44
Repurchase of Class A ordinary shares	(116)		(7,656)		—		(7,772)		—		(7,772)
Share-based compensation expense	—		1,668		—		1,668		—		1,668

Net income (loss)	—		—		(40,333)		(40,333)		—		(40,333)
Balance at June 30, 2020	$	3,627	$	497,559	$	(71,282)	$	429,904	$	—	$	429,904


	June 30, 2020		December 31, 2019
	($ in thousands)
Cash and cash equivalents	$	7,318	$	25,813
Restricted cash and cash equivalents	731,292		742,093
Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows	$	738,610	$	767,906


June 30, 2020	Cost		Unrealized gains		Unrealized losses		Fair value / carrying value
	($ in thousands)
Private investments and unlisted equities	$	11,339	$	5,325	$	(1,111)	$	15,553
Investment accounted for under the equity method	—		—		—		6,492
Total other investments							$	22,045


•			Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
•			Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.
•			Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.


Consolidated	2020		2019
	($ in thousands)
Gross balance at January 1	$	470,588	$	482,662
Less: Losses recoverable	(27,531)		(43,705)
Net balance at January 1	443,057		438,957
Incurred losses related to:
Current year	159,225		171,437
Prior years	5,666		29,904
Total incurred	164,891		201,341
Paid losses related to:
Current year	(35,874)		(48,554)
Prior years	(122,532)		(162,363)
Total paid	(158,406)		(210,917)

Foreign currency revaluation	(2,112)		(102)
Net balance at June 30	447,430		429,279
Add: Losses recoverable	20,225		40,787
Gross balance at June 30	$	467,655	$	470,066


Health	2020		2019
	($ in thousands)
Gross balance at January 1	$	18,063	$	24,502
Less: Losses recoverable	—		—
Net balance at January 1	18,063		24,502
Incurred losses related to:
Current year	15,811		19,241
Prior years	1,972		2,245
Total incurred	17,783		21,486
Paid losses related to:
Current year	(7,063)		(8,046)
Prior years	(13,909)		(21,897)
Total paid	(20,972)		(29,943)
Foreign currency revaluation	—		—
Net balance at June 30	14,874		16,045
Add: Losses recoverable	—		—
Gross balance at June 30	$	14,874	$	16,045


	Number of non-vested restricted shares	Weighted average grant date fair value




Balance at December 31, 2019	873,087	$	12.83
Granted	451,353	6.72
Vested	(163,288)	17.00
Forfeited	(18,701)	12.78
Balance at June 30, 2020	1,142,451	$	9.82


	Number of non-vested RSUs	Weighted average grant date fair value




Balance at December 31, 2019	63,582	$	13.76
Granted	60,622	6.72
Vested	(7,482)	21.65
Forfeited	—	—
Balance at June 30, 2020	116,722	$	9.60


	Three months ended June 30						Six months ended June 30
	2020		2019		2020		2019
	($ in thousands)
Investment income
Dividend income (net of withholding taxes)	$	287	$	442	$	1,034	$	1,682
Interest income	17		904		226		1,590
Total Investment income	304		1,346		1,260		3,272

Expenses
Management fee	(616)		(1,568)		(1,278)		(3,582)
Interest	(325)		(845)		(342)		(2,219)
Dividends	(254)		(366)		(399)		(1,436)
Professional fees and other	(124)		(425)		(332)		(805)
Total expenses	(1,319)		(3,204)		(2,351)		(8,042)
Net investment income (loss)	(1,015)		(1,858)		(1,091)		(4,770)

Realized and change in unrealized gains (losses)
Net realized gain (loss)	(31,607)		19,404		(43,560)		12,229
Net change in unrealized appreciation (depreciation)	34,772		1,630		(5,021)		51,383
Net gain (loss) on investment transactions	3,165		21,034		(48,581)		63,612

Net income (loss)	$	2,150	$	19,176	$	(49,672)	$	58,842

GLRE Limited Partners’ share of net income (loss) (1)	$	1,609	$	14,405	$	(40,517)	$	45,161


	2020		2021		2022		2023		2024		Thereafter		Total
	($ in thousands)
Operating lease obligations	$	340	$	62	$	—	$	—	$	—	$	—	$	402
Interest and convertible note payable	2,000		4,000		4,000		104,000		—		—		114,000
	$	2,340	$	4,062	$	4,000	$	104,000	$	—	$	—	$	114,402


	Three months ended June 30														Six months ended June 30
	2020						2019						2020				2019
	($ in thousands)														($ in thousands)
Property
Commercial	$	3,065	2.6	%	$	2,934	1.9	%	$	6,030	2.7	%	$	6,664	2.1	%
Motor	6,812		5.9		19,256		12.7		15,045		6.6		39,439		12.5
Personal	3,674		3.1		3,263		2.1		6,635		2.9		6,156		2.0
Total Property	13,551		11.6		25,453		16.7		27,710		12.2		52,259		16.6

Casualty
General Liability	528		0.5		473		0.3		696		0.3		1,455		0.5
Motor Liability	25,655		22.0		71,072		46.7		55,050		24.3		150,315		47.7
Professional Liability	33		—		24		—		123		0.1		106		—
Workers' Compensation	28,605		24.5		11,615		7.6		38,929		17.2		21,044		6.7
Multi-line	19,973		17.1		25,343		16.6		41,559		18.4		46,092		14.6
Total Casualty	74,794		64.1		108,527		71.2		136,357		60.3		—		69.5

Other
Accident & Health	10,228		8.8		8,666		5.8		28,104		12.4		23,537		7.5
Financial	3,725		3.2		7,175		4.7		13,887		6.1		15,079		4.8
Marine	266		0.2		17		—		622		0.3		127		—
Other Specialty	14,125		12.1		2,502		1.6		19,796		8.7		4,886		1.6
Total Other	28,344		24.3		18,360		12.1		62,409		27.5		43,629		13.9
	$	116,689	100.0	%	$	152,340	100.0	%	$	226,476	100.0	%	$	314,900	100.0	%


	Three months ended June 30														Six months ended June 30
	2020						2019						2020				2019
	($ in thousands)														($ in thousands)
U.S. and Caribbean	$	94,663	81.1	%	$	130,637	85.8	%	$	180,713	79.8	%	$	268,288	85.1	%
Worldwide (1)	20,616		17.7		21,231		13.9		43,412		19.2		46,140		14.7
Europe	—		—		(13)		—		—		—		(13)		—
Asia	1,410		1.2		485		0.3		2,351		1.0		485		0.2
	$	116,689	100.0	%	$	152,340	100.0	%	$	226,476	100.0	%	$	314,900	100.0	%


	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
	($ in thousands, except per share and share amounts)
Numerator for basic and fully diluted book value per share:
Total equity (U.S. GAAP) (numerator for basic book value per share)	$	429,904		$	436,899		$	477,183		$	506,543		$	500,738


Add: Proceeds from in-the-money stock options issued and outstanding	—			—			—			—			—
Numerator for fully diluted book value per share	$	429,904		$	436,899		$	477,183		$	506,543		$	500,738
Denominator for basic and fully diluted book value per share: (1)
Ordinary shares issued and outstanding (denominator for basic book value per share)	36,272,585			37,434,244			36,994,110			36,994,110			36,793,162
Add: In-the-money stock options and RSUs issued and outstanding	116,722			116,722			63,582			63,582			87,747
Denominator for fully diluted book value per share	36,389,307			37,550,966			37,057,692			37,057,692			36,880,909
Basic book value per share	$	11.85		$	11.67		$	12.90		$	13.69		$	13.61
Increase (decrease) in basic book value per share ($)	$	0.18		$	(1.23)		$	(0.79)		$	0.08		$	0.42
Increase (decrease) in basic book value per share (%)	1.5		%	(9.5)		%	(5.8)		%	0.6		%	3.2		%

Fully diluted book value per share	$	11.81		$	11.63		$	12.88		$	13.67		$	13.58
Increase (decrease) in fully diluted book value per share ($)	$	0.18		$	(1.25)		$	(0.79)		$	0.09		$	0.42
Increase (decrease) in fully diluted book value per share (%)	1.5		%	(9.7)		%	(5.9)		%	0.7		%	3.2		%


	June 30, 2020										December 31, 2019
	Case Reserves		IBNR		Total		Case Reserves		IBNR		Total
	($ in thousands)
Property	$	49,293	$	23,833	$	73,126	$	48,350	$	27,126	$	75,476
Casualty	137,579		197,193		334,772		152,049		204,574		356,623
Other	20,881		38,876		59,757		17,435		21,054		38,489
Total	$	207,753	$	259,902	$	467,655	$	217,834	$	252,754	$	470,588


	July 1, 2020
	1-in-250 year return period
Zone	Single Event Loss		Aggregate Loss
	($ in thousands)
United States, Canada and the Caribbean	$	90,864	$	99,720
Europe	44,264		47,952
Japan	34,288		36,594
Rest of the world	33,099		36,764
Maximum	90,864		109,692


	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
	($ in thousands)
Operating lease obligations (1)	$	402	$	—	$	—	$	—	$	402
Interest and convertible note payable (2)	4,000		110,000		—		—		114,000
Loss and loss adjustment expense reserves (3)	241,310		124,396		47,701		54,248		467,655
	$	245,712	$	234,396	$	47,701	$	54,248	$	582,057


•						equity price risk;
•						commodity price risk;
•						foreign currency risk;
•						interest rate risk;
•						credit risk; and
•						political risk.


	10% increase in commodity prices		10% decrease in commodity prices
Commodity	Change in fair value		Change in fair value
	($ in millions)
Gold	$	0.5	$	(0.5)
Natural Gas	0.5		(0.5)

Total	$	1.0	$	(1.0)


Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 1 - 30, 2020	292,985	$	6.46	292,985	4,707,015
May 1 - 31, 2020	344776	$	6.50	344,776	4,362,239
June 1 - 30, 2020	523,898	$	6.77	523,898	3,838,341
Total	1,161,659	$	6.69	1,161,659	3,838,341


10.1			Third Amendment to Employment Agreement, dated as of May 1, 2020, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd. and Laura Accurso (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 5, 2020).
10.2			Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Laura Accurso.
10.3			Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Brendan Barry.
10.4			Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Simon Burton.
10.5			Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Thomas Curnock.
10.6			Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Neil Greenspan.
10.7			Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Patrick O’Brien.
10.8			Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Tim Courtis.
10.9			Letter Agreement between Greenlight Reinsurance, Ltd, Greenlight Reinsurance Ireland, DAC, DME Advisors II, LLC and DME Advisors LP, effective July 1, 2020.
31.1			Certification of the Chief Executive Officer filed hereunder pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2			Certification of the Chief Financial Officer filed hereunder pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1			Certification of the Chief Executive Officer filed hereunder pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (*)
32.2			Certification of the Chief Financial Officer filed hereunder pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (*)
101			The following materials from the Company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2020 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 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)


1.			I have reviewed this quarterly report on Form 10-Q of Greenlight Capital Re, Ltd.;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


Dated:	August 5, 2020	/s/ SIMON BURTON
		Simon Burton Chief Executive Officer (principal executive officer)


Dated:	August 5, 2020	/s/ TIM COURTIS
		Tim Courtis
		Chief Financial Officer