Greenlight Capital Re, Ltd 10-Q for FY2021 Q2

Greenlight Capital Re, Ltd. (GLRE)

10-Q 2021-08-03 For: 2021-06-30

Added on April 06, 2026

About this 10-Q

Greenlight Capital Re, Ltd filed this 10-Q on August 3, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $134.52M; up 17.2% from $114.75M a year earlier
Net income: $628K; compared with a net loss of $63K a year earlier
Diluted EPS: $0.02; compared with $0.00 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			27,561,942
Class B Ordinary Shares, $0.10 par value			6,254,715
(Class)			Outstanding as of July 30, 2021


		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020 (unaudited)	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended June 30, 2021 and 2020 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4.	Controls and Procedures	50
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	52
SIGNATURES		53


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

			For the quarterly period ended June 30, 2021


	June 30, 2021		December 31, 2020
Assets
Investments
Investment in related party investment fund	$	175,136	$	166,735
Other investments	31,418		29,418
Total investments	206,554		196,153
Cash and cash equivalents	35,204		8,935
Restricted cash and cash equivalents	709,672		745,371
Reinsurance balances receivable (net of allowance for expected credit losses of $89 and $89)	392,154		330,232
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $47 and $47)	14,332		16,851
Deferred acquisition costs	60,780		51,014

Notes receivable	—		6,101
Other assets	3,838		2,993
Total assets	$	1,422,534	$	1,357,650
Liabilities and equity
Liabilities
Loss and loss adjustment expense reserves	$	514,642	$	494,179
Unearned premium reserves	244,597		201,089
Reinsurance balances payable	88,813		92,247
Funds withheld	5,092		4,475
Other liabilities	5,664		5,009
Convertible senior notes payable	96,900		95,794
Total liabilities	955,708		892,793
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, 27,916,353 (2020: 28,260,075): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2020: 6,254,715))	3,417		3,452
Additional paid-in capital	483,365		488,488
Retained earnings (deficit)	(19,956)		(27,083)
Total shareholders' equity	466,826		464,857
Total liabilities and equity	$	1,422,534	$	1,357,650


	Three months ended June 30				Six months ended June 30
	2021		2020		2021		2020
Revenues
Gross premiums written	$	141,579	$	116,689	$	311,514	$	226,476
Gross premiums ceded	(1)		(132)		54		(810)
Net premiums written	141,578		116,557		311,568		225,666
Change in net unearned premium reserves	(9,099)		(8,143)		(43,693)		(6,231)
Net premiums earned	132,479		108,414		267,875		219,435
Income (loss) from investment in related party investment fund (net of related party expenses of $672 and $1,973 (three and six months ended June 30, 2020: $616 and $1,278, respectively))	(2,006)		1,609		2,018		(40,517)
Net investment income (loss)	4,046		3,934		18,696		10,771
Other income (expense), net	(3)		788		(3,653)		1,001
Total revenues	134,516		114,745		284,936		190,690
Expenses
Net loss and loss adjustment expenses incurred	86,957		89,194		184,678		164,891
Acquisition costs	37,631		17,903		71,012		49,642
General and administrative expenses	7,739		6,149		15,280		12,943
Interest expense	1,562		1,562		3,106		3,123
Total expenses	133,889		114,808		274,076		230,599
Income (loss) before income tax	627		(63)		10,860		(39,909)
Income tax (expense) benefit	1		—		(3,733)		(424)
Net income (loss)	$	628	$	(63)	$	7,127	$	(40,333)
Earnings (loss) per share
Basic	$	0.02	$	0.00	$	0.21	$	(1.12)
Diluted	$	0.02	$	0.00	$	0.21	$	(1.12)
Weighted average number of ordinary shares used in the determination of earnings and loss per share
Basic	34,667,114		35,776,736		34,560,246		35,958,965
Diluted	34,821,248		35,776,736		34,699,291		35,958,965


	June 30, 2021		December 31, 2020
	($ in thousands)
Cash and cash equivalents	$	35,204	$	8,935
Restricted cash and cash equivalents	709,672		745,371
Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows	$	744,876	$	754,306


	Cost		Unrealized gains		Unrealized losses		Fair value / carrying value
	($ in thousands)
Private investments and unlisted equities	$	15,735	$	16,383	$	(1,800)	$	30,318
Derivative financial instruments (not designated as hedging instruments)	—		1,100		—		1,100
Total other investments	$	15,735	$	17,483	$	(1,800)	$	31,418


•			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. The term “unobservable inputs” includes certain pricing models, discounted cash flow methodologies, and similar techniques.


Consolidated	2021		2020
	($ in thousands)
Gross balance at January 1	$	494,179	$	470,588
Less: Losses recoverable	(16,851)		(27,531)
Net balance at January 1	477,328		443,057
Incurred losses related to:
Current year	185,281		159,225
Prior years	(603)		5,666
Total incurred	184,678		164,891
Paid losses related to:
Current year	(47,262)		(35,874)
Prior years	(114,680)		(122,532)
Total paid	(161,942)		(158,406)

Foreign currency revaluation	246		(2,112)
Net balance at June 30	500,310		447,430
Add: Losses recoverable	14,332		20,225
Gross balance at June 30	$	514,642	$	467,655


Health	2021		2020
	($ in thousands)
Gross balance at January 1	$	17,485	$	18,063
Less: Losses recoverable	—		—
Net balance at January 1	17,485		18,063
Incurred losses related to:
Current year	22,895		15,811
Prior years	(1,667)		1,972
Total incurred	21,228		17,783
Paid losses related to:
Current year	(11,941)		(7,063)
Prior years	(12,188)		(13,909)
Total paid	(24,129)		(20,972)
Foreign currency revaluation	—		—
Net balance at June 30	14,584		14,874
Add: Losses recoverable	—		—
Gross balance at June 30	$	14,584	$	14,874


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




Balance at December 31, 2020	697,549	$	9.38
Granted	381,292	9.15
Vested	(139,482)	11.53
Forfeited	(20,592)	8.35
Balance at June 30, 2021	918,767	$	8.98


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




Balance at December 31, 2020	116,722	$	9.60
Granted	58,123	9.18
Vested	(20,711)	15.90

Balance at June 30, 2021	154,134	$	8.59


	Three months ended June 30				Six months ended June 30
	2021		2020		2021		2020
	($ in thousands)
Investment income
Dividend income (net of withholding taxes)	$	159	$	287	$	363	$	1,034
Interest income	570		17		719		226
Total Investment income	729		304		1,082		1,260

Expenses
Management fee	(895)		(616)		(1,749)		(1,278)
Interest	(427)		(325)		(669)		(342)
Dividends	(301)		(254)		(546)		(399)
Professional fees and other	(337)		(124)		(559)		(332)
Total expenses	(1,960)		(1,319)		(3,523)		(2,351)
Net investment income (loss)	(1,231)		(1,015)		(2,441)		(1,091)

Realized and change in unrealized gains (losses)
Net realized gain (loss)	(6,332)		(31,607)		(13,398)		(43,560)
Net change in unrealized appreciation (depreciation)	4,789		34,772		17,580		(5,021)
Net gain (loss) on investment transactions	(1,543)		3,165		4,182		(48,581)

Net income (loss)	$	(2,774)	$	2,150	$	1,741	$	(49,672)

GLRE Limited Partners’ share of net income (loss) (1)	$	(2,006)	$	1,609	$	2,018	$	(40,517)


	2021		2022		2023		2024		2025		Thereafter		Total
	($ in thousands)
Operating lease obligations	$	257	$	522	$	537	$	553	$	570	$	289	$	2,728
Interest and convertible note payable	$	2,000	$	4,000	$	104,000	—		—		—		110,000
	$	2,257	$	4,522	$	104,537	$	553	$	570	$	289	$	112,728


	Three months ended June 30								Six months ended June 30
	2021				2020				2021				2020
	($ in thousands)								($ in thousands)
Property
Commercial	$	4,154	2.9	%	$	3,065	2.6	%	$	6,302	2.0	%	$	6,030	2.7	%
Motor	8,725		6.2		6,812		5.9		18,434		5.9		15,045		6.6
Personal	3,629		2.6		3,674		3.1		6,687		2.1		6,635		2.9
Total Property	16,508		11.7		13,551		11.6		31,423		10.1		27,710		12.2

Casualty
General Liability	1,678		1.2		528		0.5		3,373		1.1		696		0.3
Motor Liability	35,408		25.0		25,655		22.0		76,972		24.7		55,050		24.3
Professional Liability (1)	(3)		—		33		—		148		—		123		0.1
Workers' Compensation	15,971		11.3		28,605		24.5		38,120		12.2		38,929		17.2
Multi-line	49,580		35.0		19,973		17.1		97,695		31.4		41,559		18.4
Total Casualty	102,634		72.5		74,794		64.1		216,308		69.4		136,357		60.3

Other
Accident & Health	7,588		5.4		10,228		8.8		22,252		7.1		28,104		12.4
Financial	8,884		6.3		3,725		3.2		22,214		7.1		13,887		6.1
Marine	1,420		1.0		266		0.2		5,950		1.9		622		0.3
Other Specialty	4,545		3.2		14,125		12.1		13,367		4.3		19,796		8.7
Total Other	22,437		15.8		28,344		24.3		63,783		20.5		62,409		27.5
	$	141,579	100.0	%	$	116,689	100.0	%	$	311,514	100.0	%	$	226,476	100.0	%


	Three months ended June 30								Six months ended June 30
	2021				2020				2021				2020
	($ in thousands)								($ in thousands)
U.S. and Caribbean	$	86,908	61.4	%	$	94,663	81.1	%	$	191,762	61.6	%	$	180,713	79.8	%
Worldwide (1)	51,863		36.6		20,616		17.7		114,854		36.9		43,412		19.2
Europe	384		0.3		—		—		1,304		0.4		—		—
Asia	2,424		1.7		1,410		1.2		3,594		1.2		2,351		1.0
	$	141,579	100.0	%	$	116,689	100.0	%	$	311,514	100.0	%	$	226,476	100.0	%


	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
	($ 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 and fully diluted book value per share)	$	466,826		$	472,119		$	464,857		$	426,867		$	429,904




Denominator for basic and fully diluted book value per share: (1)
Ordinary shares issued and outstanding (denominator for basic book value per share)	34,171,068			34,850,528			34,514,790			35,368,417			36,272,585
Add: In-the-money stock options and RSUs issued and outstanding	154,134			154,134			116,722			116,722			116,722
Denominator for fully diluted book value per share	34,325,202			35,004,662			34,631,512			35,485,139			36,389,307
Basic book value per share	$	13.66		$	13.55		$	13.47		$	12.07		$	11.85
Increase (decrease) in basic book value per share ($)	$	0.11		$	0.08		$	1.40		$	0.22		$	0.18
Increase (decrease) in basic book value per share (%)	0.8		%	0.6		%	11.6		%	1.9		%	1.5		%

Fully diluted book value per share	$	13.60		$	13.49		$	13.42		$	12.03		$	11.81
Increase (decrease) in fully diluted book value per share ($)	$	0.11		$	0.07		$	1.39		$	0.22		$	0.18
Increase (decrease) in fully diluted book value per share (%)	0.8		%	0.5		%	11.6		%	1.9		%	1.5		%


Change in Acquisition Cost Ratios
Three months ended June 30, 2021
	Increase / (decrease) in acquisition cost ratio points	Explanation
Property	1.3	The increase in the property acquisition cost ratio during the three months ended June 30, 2021 over the comparable 2020 period was due primarily to growth in certain quota share commercial property contracts with higher ceding commissions than our other property contracts.
Casualty	(2.3)	The decrease in the casualty acquisition cost ratio during the three months ended June 30, 2021 over the comparable 2020 period was due primarily to favorable ceding commission adjustments on workers’ compensation contracts that experienced adverse loss development during the first quarter of 2021.
Other	56.6	The increase in the “other” acquisition cost ratio during the three months ended June 30, 2021 over the comparable 2020 period was due to profit commissions on a mortgage contract, offsetting most of the corresponding decrease in loss reserves relating to the COVID-19 pandemic.


Change in Acquisition Cost Ratios
Six months ended June 30, 2021
	Increase / (decrease) in acquisition cost ratio points	Explanation
Property	0.8	There was no significant change in the property acquisition cost ratio during the first half of 2021 over the comparable 2020 period.
Casualty	(2.2)	The casualty acquisition cost ratio decreased during the first half of 2021 over the comparable 2020 period. The decrease related to favorable ceding commission adjustments on workers’ compensation contracts that experienced adverse loss development during the first quarter of 2021.
Other	19.9	The increase in the “other” acquisition cost ratio during the first half of 2021, over the comparable 2020 period was due to profit commissions that were previously reversed during 2020 as a result of COVID-19 losses. The increase was partially offset by shift in the mix of business towards non-proportional specialty business during the first half of 2021. This business incorporates relatively lower commission rates as compared to proportional health and financial lines business.


	June 30, 2021						December 31, 2020
	Case Reserves		IBNR		Total		Case Reserves		IBNR		Total
	($ in thousands)
Property	$	23,728	$	44,359	$	68,087	$	25,833	$	45,680	$	71,513
Casualty	147,247		216,256		363,503		138,432		206,152		344,584
Other	15,420		67,632		83,052		12,540		65,542		78,082
Total	$	186,395	$	328,247	$	514,642	$	176,805	$	317,374	$	494,179


	July 1, 2021
	1-in-250 year return period
Zone	Single Event Loss		Aggregate Loss
	($ in thousands)
United States, Canada and the Caribbean	$	84,502	$	99,055
Europe	45,134		51,720
Japan	45,860		49,295
Rest of the world	53,694		58,220
Maximum	84,502		108,960


	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
	($ in thousands)

Loss and loss adjustment expense reserves (1)	$	252,175	$	150,790	$	55,581	$	56,096	$	514,642


•						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	$	2.0	$	(2.0)
Silver	0.4		(0.4)
Crude oil	0.1		(0.1)
Total	$	2.5	$	(2.5)


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) (2)




April 1 - 30, 2021	—	$	—	—	2,452,903
May 1 - 31, 2021	246,823	$	9.29	246,823	2,206,080
June 1 - 30, 2021	478,310	$	9.31	478,310	1,727,770
Total	725,133	$	9.30	725,133


10.1			Amendment No. 2 to Shareholders Agreement, dated and effective as of June 30, 2021 (incorporated by reference to Exhibit 10.1 to the Company Form 8-K filed June 30, 2021).
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, 2021 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)


			GREENLIGHT CAPITAL RE, LTD.
			(Registrant)
			By:			/s/ SIMON BURTON
						Simon Burton Director and Chief Executive Officer (principal executive officer)
						August 3, 2021

			By:			/s/ NEIL GREENSPAN
						Neil Greenspan Chief Financial Officer (principal financial and accounting officer)
						August 3, 2021


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 officer 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 3, 2021	/s/ SIMON BURTON
		Simon Burton Chief Executive Officer (principal executive officer)