Greenlight Capital Re, Ltd 10-Q for FY2022 Q2

Greenlight Capital Re, Ltd. (GLRE)

10-Q 2022-08-02 For: 2022-06-30

Added on April 06, 2026

About this 10-Q

Greenlight Capital Re, Ltd filed this 10-Q on August 2, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $121.42M; down 9.7% from $134.52M a year earlier
Net income: $14.79M; up 2254.8% from net income of $628K a year earlier
Diluted EPS: $0.37; up 1750.0% from $0.02 a year earlier

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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			28,462,490
Class B Ordinary Shares, $0.10 par value			6,254,715
(Class)			Outstanding at July 29, 2022


		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited)	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended June 30, 2022 and 2021 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (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	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	50
Item 4.	Controls and Procedures	53
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
SIGNATURES		56


	June 30, 2022		December 31, 2021
Assets
Investments
Investment in related party investment fund	$	189,256	$	183,591
Other investments	65,809		47,384
Total investments	255,065		230,975
Cash and cash equivalents	28,000		76,307
Restricted cash and cash equivalents	669,603		634,794
Reinsurance balances receivable (net of allowance for expected credit losses of $89 and $89)	446,285		405,365
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $47 and $47)	9,426		11,100
Deferred acquisition costs	70,343		63,026
Unearned premiums ceded	9,294		42
Other assets	5,107		5,885
Total assets	$	1,493,123	$	1,427,494
Liabilities and equity
Liabilities
Loss and loss adjustment expense reserves	$	526,445	$	524,010
Unearned premium reserves	268,254		227,584
Reinsurance balances payable	95,374		91,224
Funds withheld	12,522		3,792
Other liabilities	5,323		7,164
Convertible senior notes payable	100,912		98,057
Total liabilities	1,008,830		951,831
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, 28,466,516 (2021: 27,589,731): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2021: 6,254,715))	3,472		3,384
Additional paid-in capital	475,903		481,784
Retained earnings (deficit)	4,918		(9,505)
Total shareholders' equity	484,293		475,663
Total liabilities and equity	$	1,493,123	$	1,427,494


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

			For the quarterly period ended June 30, 2022


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

			For the transition period from to


	Three months ended June 30				Six months ended June 30
	2022		2021		2022		2021
Revenues
Gross premiums written	$	134,780	$	141,579	$	280,666	$	311,514
Gross premiums ceded	(7,163)		(1)		(13,172)		54
Net premiums written	127,617		141,578		267,494		311,568
Change in net unearned premium reserves	(17,398)		(9,099)		(31,350)		(43,693)
Net premiums earned	110,219		132,479		236,144		267,875
Income (loss) from investment in related party investment fund (net of related party expenses - Note 3)	11,876		(2,006)		15,953		2,018
Net investment income (loss)	5,280		4,046		8,940		18,696
Other income (expense), net	(5,957)		(3)		(6,590)		(734)
Total revenues	121,418		134,516		254,447		287,855
Expenses
Net loss and loss adjustment expenses incurred	60,823		86,957		158,230		184,678
Acquisition costs	36,335		37,631		69,280		71,012
General and administrative expenses	8,106		7,739		15,338		15,280
Deposit interest expense	191		—		225		2,919
Interest expense	1,166		1,562		2,320		3,106
Total expenses	106,621		133,889		245,393		276,995
Income (loss) before income tax	14,797		627		9,054		10,860
Income tax (expense) benefit	(9)		1		7		(3,733)
Net income (loss)	$	14,788	$	628	$	9,061	$	7,127
Earnings (loss) per share
Basic	$	0.44	$	0.02	$	0.27	$	0.21
Diluted	$	0.37	$	0.02	$	0.23	$	0.21
Weighted average number of ordinary shares used in the determination of earnings and loss per share
Basic	33,871,359		34,667,114		33,861,151		34,560,246
Diluted	40,111,152		34,821,248		39,993,066		34,699,291


	June 30, 2022		December 31, 2021
	($ in thousands)
Cash and cash equivalents	$	28,000	$	76,307
Restricted cash and cash equivalents	669,603		634,794
Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows	$	697,603	$	711,101


	Cost		Unrealized gains		Unrealized losses		Fair value / carrying value
	($ in thousands)
Private investments and unlisted equities	$	21,062	$	42,143	$	(3,396)	$	59,809
Certificates of deposit	6,000		—		—		6,000

Total other investments	$	27,062	$	42,143	$	(3,396)	$	65,809


•			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 supported by little or no market activity and 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.


	Less than 6 months		6 to 12 months		Over 1 year		Total
	($ in thousands)
Fair values measured on a nonrecurring basis	$	33,028	$	9,475	$	10,346	$	52,849


Consolidated	2022		2021
	($ in thousands)
Gross balance at January 1	$	524,010	$	494,179
Less: Losses recoverable	(11,100)		(16,851)
Net balance at January 1	512,910		477,328
Incurred losses related to:
Current year	158,788		185,281
Prior years	(558)		(603)
Total incurred	158,230		184,678
Paid losses related to:
Current year	(27,896)		(47,262)
Prior years	(116,200)		(114,680)
Total paid	(144,096)		(161,942)
Foreign currency revaluation	(10,025)		246
Net balance at June 30	517,019		500,310
Add: Losses recoverable	9,426		14,332
Gross balance at June 30	$	526,445	$	514,642


Health	2022		2021
	($ in thousands)
Gross balance at January 1	$	9,939	$	17,485
Less: Losses recoverable	—		—
Net balance at January 1	9,939		17,485
Incurred losses related to:
Current year	5,293		22,895
Prior years	3,466		(1,667)
Total incurred	8,759		21,228
Paid losses related to:
Current year	(1,843)		(11,941)
Prior years	(9,653)		(12,188)
Total paid	(11,496)		(24,129)
Foreign currency revaluation	—		—
Net balance at June 30	7,202		14,584
Add: Losses recoverable	—		—
Gross balance at June 30	$	7,202	$	14,584


	Performance Restricted Stock			Service Restricted Stock
	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, 2021	193,149	$	10.10	753,407	$	8.68
Granted	601,213	6.82		248,659	6.82
Vested	—	—		(169,213)	10.31
Forfeited	—	—		(8,476)	7.67
Balance at June 30, 2022	794,362	$	7.62	824,377	$	7.80


	Three months ended June 30				Six months ended June 30
	2022		2021		2022		2021
	($ in thousands)
Investment income
Dividend income (net of withholding taxes)	$	303	$	159	$	623	$	363
Interest income	286		570		335		719
Total Investment income	589		729		958		1,082

Expenses
Management fee	(894)		(895)		(1,785)		(1,749)
Interest	(479)		(427)		(735)		(669)
Dividends	(200)		(301)		(582)		(546)
Professional fees and other	(230)		(337)		(494)		(559)
Total expenses	(1,803)		(1,960)		(3,596)		(3,523)
Net investment income (loss)	(1,214)		(1,231)		(2,638)		(2,441)

Realized and change in unrealized gains (losses)
Net realized gain (loss)	26,827		(6,332)		50,975		(13,398)
Net change in unrealized appreciation (depreciation)	(6,699)		4,789		(23,491)		17,580
Net gain (loss) on investment transactions	20,128		(1,543)		27,484		4,182

Net income (loss)	$	18,914	$	(2,774)	$	24,846	$	1,741

GLRE Limited Partners’ share of net income (loss) (1)	$	11,876	$	(2,006)	$	15,953	$	2,018


	Three months ended June 30				Six months ended June 30
	2022		2021		2022		2021
	($ in thousands)
Management fees	$	894	$	895	$	1,785	$	1,749
Performance allocation	1,319		$	(223)	1,772		224
Total	$	2,213	$	672	$	3,557	$	1,973


Year ending December 31,	($ in thousands)
2022	$	300
2023	616
2024	633
2025	649
2026	349
Thereafter	—
Total lease payments	2,547
Less Imputed Interest	(316)
Present value of lease liabilities	$	2,231


	Three months ended June 30								Six months ended June 30
	2022				2021				2022				2021
	($ in thousands)								($ in thousands)
Property
Commercial	$	5,360	4.0	%	$	4,154	2.9	%	$	9,346	3.3	%	$	6,302	2.0	%
Motor(1)	(884)		(0.6)		8,725		6.2		562		0.2		18,434		5.9
Personal	18,653		13.8		3,629		2.6		31,756		11.3		6,687		2.1
Total Property	23,129		17.2		16,508		11.7		41,664		14.8		31,423		10.1

Casualty
General Liability	16,720		12.4		1,678		1.2		26,725		9.5		3,373		1.1
Motor Liability(1)	(1,613)		(1.2)		35,408		25.0		3,496		1.3		76,972		24.7
Professional Liability(1)	113		0.1		(3)		—		254		0.1		148		—
Workers' Compensation	8,368		6.2		15,971		11.3		18,288		6.5		38,120		12.2
Multi-line	52,216		38.7		49,580		35.0		105,310		37.5		97,695		31.4
Total Casualty	75,804		56.2		102,634		72.5		154,073		54.9		216,308		69.4

Other
Accident & Health	2,604		1.9		7,588		5.4		4,498		1.6		22,252		7.1
Financial	15,380		11.4		8,884		6.3		36,416		13.0		22,214		7.1
Marine	5,351		4.0		1,420		1.0		13,750		4.9		5,950		1.9
Other Specialty	12,512		9.3		4,545		3.2		30,265		10.8		13,367		4.3
Total Other	35,847		26.6		22,437		15.8		84,929		30.3		63,783		20.5
	$	134,780	100.0	%	$	141,579	100.0	%	$	280,666	100.0	%	$	311,514	100.0	%


	Performance Restricted Stock Units			Service Restricted Stock Units
	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, 2021	—	$	—	154,134	$	8.59
Granted	105,008	6.82		54,207	6.82
Vested	—	—		(35,389)	10.84

Balance at June 30, 2022	105,008	$	6.82	172,952	$	7.58


	Number of options outstanding	Weighted average exercise price		Weighted average grant date fair value		Intrinsic value ($ in millions)		Weighted average remaining contractual term





Balance at December 31, 2021	735,627	$	22.35	$	10.23	$	—	4.7 years
Granted	—	—		—		—		—
Exercised	—	—		—		—		—
Forfeited	—	—		—		—		—
Expired	—	—		—		—		—
Balance at June 30, 2022	735,627	$	22.35	$	10.23	$	—	4.2 years


	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
	($ 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)	$	484,293		$	468,407		$	475,663		$	450,514		$	466,826




Denominator for basic and fully diluted book value per share: (1)
Ordinary shares issued and outstanding as presented in the Company’s condensed consolidated balance sheets	34,721,231			34,721,231			33,844,446			33,844,446			34,171,068
Less: Unearned performance-based restricted shares granted after December 31, 2021	(560,927)			(581,593)			—			—			—
Denominator for basic book value per share	34,160,304			34,139,638			33,844,446			33,844,446			34,171,068
Add: In-the-money stock options, service-based RSUs granted, and earned performance-based RSUs granted	179,988			176,379			154,134			154,134			154,134
Denominator for fully diluted book value per share	34,340,292			34,316,017			33,998,580			33,998,580			34,325,202
Basic book value per share	$	14.18		$	13.72		$	14.05		$	13.31		$	13.66
Increase (decrease) in basic book value per share ($)	$	0.46		$	(0.33)		$	0.58		$	(0.35)		$	0.11
Increase (decrease) in basic book value per share (%)	3.4		%	(2.3)		%	4.3		%	(2.6)		%	0.8		%

Fully diluted book value per share	$	14.10		$	13.65		$	13.99		$	13.25		$	13.60
Increase (decrease) in fully diluted book value per share ($)	$	0.45		$	(0.34)		$	0.57		$	(0.35)		$	0.11
Increase (decrease) in fully diluted book value per share (%)	3.3		%	(2.4)		%	4.2		%	(2.6)		%	0.8		%


Change in Acquisition Cost Ratios
Three months ended June 30, 2022
	Increase / (decrease) in acquisition cost ratio points	Explanation
Property	2.8	The increase in property acquisition cost ratio during the three months ended June 30, 2022, over the comparable 2021 period was due primarily to higher ceding commissions on the personal property quota share contracts relative to motor business that decreased during the current period.
Casualty	1.6	The increase in casualty acquisition cost ratio during the three months ended June 30, 2022, over the comparable 2021 period was due primarily to changes in the mix of business we write. Our motor and workers’ compensation business, which decreased in 2022, generally incorporate lower ceding commission ratios than our general liability and multi-line business, which grew compared to the equivalent 2021 period.
Other	10.4	The increase in the “other” acquisition cost ratio during the three months ended June 30, 2022, over the comparable 2021 period was due primarily to: •increased profit commissions on mortgage contracts driven by favorable loss development; •growth in transactional liability business, which carries higher ceding commission ratios than other specialty business; and •new specialty quota share contracts bound in 2022, which incorporate relatively high acquisition costs.


Change in Acquisition Cost Ratios
Six months ended June 30, 2022
	Increase / (decrease) in acquisition cost ratio points	Explanation
Property	2.9	The year-to-date increase was driven by the same trends as those discussed above in reference to the second quarter.
Casualty	1.3	The year-to-date increase was driven by the same trends as those discussed above in reference to the second quarter.
Other	6.4	The year-to-date increase was driven by the same trends as those discussed above in reference to the second quarter. A decrease in health business, which generally carries lower ceding commissions relative to other specialty business, was an additional driver of the increase in the acquisition cost ratio.


	June 30, 2022						December 31, 2021
	Case Reserves		IBNR		Total		Case Reserves		IBNR		Total
	($ in thousands)
Property	$	21,286	$	42,533	$	63,819	$	21,357	$	49,486	$	70,843
Casualty	146,786		211,195		357,981		151,734		219,949		371,683
Other	14,552		90,093		104,645		17,129		64,355		81,484
Total	$	182,624	$	343,821	$	526,445	$	190,220	$	333,790	$	524,010


	July 1, 2022
	Net 1-in-250 Year Return Period
Peril	Single Event Loss		Aggregate Loss
	($ in thousands)
North Atlantic Hurricane	$	87,558	$	95,876
Southeast Hurricane	66,237		71,541
Gulf of Mexico Hurricane	59,936		64,145
Northeast Hurricane	60,540		61,924
North America Earthquake	60,733		65,126
California Earthquake	54,407		57,088
Other N.A. Earthquake	34,533		36,329
Japan Earthquake	38,158		41,048
Japan Windstorm	38,014		41,429
Europe Windstorm	30,041		36,550


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

Loss and loss adjustment expense reserves (1)	$	271,119	$	153,195	$	47,906	$	54,225	$	526,445


•						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	$	3.7	$	(3.7)
Silver	0.3		(0.3)
Uranium	0.1		(0.1)
Crude oil	—		(0.1)
Total	$	4.1	$	(4.2)


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, 2022 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 2, 2022

			By:			/s/ NEIL GREENSPAN
						Neil Greenspan Chief Financial Officer (principal financial and accounting officer)
						August 2, 2022


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 2, 2022	/s/ SIMON BURTON
		Simon Burton Chief Executive Officer (principal executive officer)