GLRE 8-K
Greenlight Capital Re, Ltd. (GLRE)
8-K
2020-04-13
For: 2020-04-13
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Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
April 13, 2020
Date of Report (Date of earliest event reported)
GREENLIGHT CAPITAL RE, LTD.
(Exact name of registrant as specified in its charter)
Cayman Islands | 001-33493 | N/A | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
65 Market Street, Suite 1207, Jasmine Court, Camana Bay, P.O. Box 31110 Grand Cayman, Cayman Islands (Address of principal executive offices) | KY1-1205 (Zip code) | |||
(345) 943-4573 (Registrant’s telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) | ||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Class A Ordinary Shares | GLRE | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
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. o
Item 2.02. Results of Operations and Financial Condition.
On April 13, 2020, Greenlight Capital Re, Ltd. (the “Company”) issued a press release announcing preliminary estimated financial results for the first quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.
In accordance with general instruction B.2 to Form 8-K, the information set forth in this Item 2.02 (including Exhibit 99.1) shall be deemed “furnished” and not “filed” with the Securities and Exchange Commission for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
The Company is supplementing and updating the risk factors described in Item 1A of the Company’s Annual Report on Form 10- K for the year ended December 31, 2019 (the “Form 10-K”) with the following risk factors. The information in this report on Form 8-K should be read in conjunction with the risk factors described in the Form 10-K and the information under the “Forward-Looking Statements” in the Form 10-K.
Our ability to make repurchases of our Class A ordinary shares or 4.00% Convertible Senior Notes due 2023 under our authorized repurchase programs may be contingent on the ability of our subsidiaries to declare and issue dividends which may be limited by laws and regulations or regulatory agencies.
As a holding company, we rely on the ability of our subsidiaries, Greenlight Reinsurance, Ltd. (“Greenlight Re”), Greenlight Reinsurance Ireland, Designated Activity Company (“GRIL”) and Verdant Holding Company, Ltd. (“Verdant”), to pay dividends to us in order to meet ongoing cash requirements, including making repurchases of our Class A ordinary shares and 4.00% Convertible Senior Notes due 2023 under our repurchase programs. Greenlight Re may be required to seek approval from the Cayman Islands Monetary Authority (“CIMA”) and GRIL may be required to seek approval from the Central Bank of Ireland (“CBI”) to declare and issue dividends, as well as make other distributions of capital to us. If either CIMA or CBI limits our subsidiaries’ ability to declare or issue dividends, or other distributions of capital, to us for any reason, we may be limited in making repurchases under our repurchase programs. Even if CIMA and CBI allow dividends to be issued to us by Greenlight Re or GRIL, there may be other legal limitations to the extent to which our subsidiaries, including Verdant, may pay dividends or otherwise distribute funds to, or engage in transactions with us. As such, we cannot guarantee the amounts or timing of any repurchases of our Class A ordinary shares and 4.00% Convertible Senior Notes due 2023.
Provisions of our Articles may reallocate the voting power of our Class A ordinary shares, allow us to repurchase our Class A ordinary shares or Class B ordinary shares without shareholder consent, and subject holders of Class A ordinary shares to Securities and Exchange Commission compliance.
In certain circumstances, the total voting power of our Class A ordinary shares held by any one person will be reduced to less than 9.9% of the total issued and outstanding ordinary shares, and the total voting power of the Class B ordinary shares will be reduced to 9.5% of the total voting power of the total issued and outstanding ordinary shares. In the event a holder of our Class A ordinary shares acquires shares representing 9.9% or more of the total voting power of our total ordinary shares or the Class B ordinary shares represent more than 9.5% of the total voting power of our total outstanding shares, there will be an effective reallocation of the voting power of the Class A ordinary shares or Class B ordinary shares which may cause a shareholder to acquire 5% or more of the voting power of the total ordinary shares.
Such a shareholder may become subject to the reporting and disclosure requirements of Sections 13(d) and (g) of the Exchange Act. Such a reallocation also may result in an obligation to amend previous filings made under Section 13(d) or (g) of the Exchange Act. Under our Articles, we have no obligation to notify shareholders of any adjustments to their
voting power. Shareholders should consult their own legal counsel regarding the possible reporting requirements under Section 13 of the Exchange Act.
Additionally, under our Articles and subject to Cayman Islands law, if our Board of Directors (the “Board”) determines, from time to time and at any time, that (1) a person would own in excess of 9.9% of our Class A ordinary shares and Class B ordinary shares or (2) ownership by any person of our Class A ordinary shares or Class B ordinary shares would result in any adverse tax, regulatory or legal consequence to us or any of our subsidiaries, then the Board may, in its absolute discretion, determine the extent to which it is necessary or advisable to require the sale by such shareholders in order to avoid or cure any adverse or potentially adverse consequences (the shares subject to such determination, the “Repurchase Securities”). If the Board has determined it is necessary or advisable to require the sale by such shareholders of such Repurchase Securities, it will provide written notice to the affected shareholders setting forth the repurchase price and the date the Repurchase Securities are to be purchased. We have the option, but not the obligation, to elect to purchase all or part of the Repurchase Securities at a price equal to the fair market value of such Repurchase Securities on the business day immediately prior to the date we send the repurchase notice.
As of December 31, 2019, David Einhorn owned 16.9% of the issued and outstanding ordinary shares, which given that each Class B share is entitled to ten votes, causes him to exceed the 9.5% limitation imposed on the total voting power of the Class B ordinary shares. Thus, the voting power held by the Class B ordinary shares that is in excess of the 9.5% limitation will be reallocated pro-rata to holders of Class A ordinary shares according to their percentage interest in the Company. However, no shareholder will be allocated voting rights that would cause it to have 9.9% or more of the total voting power of our ordinary shares. The allocation of the voting power of the Class B ordinary shares to a holder of Class A ordinary shares will depend upon the total voting power of the Class B ordinary shares outstanding, as well as the percentage of Class A ordinary shares held by a shareholder and the other holders of Class A ordinary shares. Accordingly, we cannot estimate with precision what multiple of a vote per share a holder of Class A ordinary shares will be allocated as a result of the anticipated reallocation of voting power of the Class B ordinary shares.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Preliminary estimated earnings press release, “GREENLIGHT RE ANNOUNCES PRELIMINARY FIRST QUARTER 2020 RESULTS”, dated April 13, 2020, issued by the Company.
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 hereunto duly authorized.
GREENLIGHT CAPITAL RE, LTD | |||
(Registrant) | |||
By: | /s/ Tim Courtis | ||
Name: | Tim Courtis | ||
Title: Date: | Chief Financial Officer April 13, 2020 | ||
GREENLIGHT RE ANNOUNCES PRELIMINARY
FIRST QUARTER 2020 RESULTS
GRAND CAYMAN, Cayman Islands - April 13, 2020 - Greenlight Capital Re, Ltd. (NASDAQ: GLRE) (“Greenlight Re” or the “Company”), a global specialty property and casualty reinsurer headquartered in the Cayman Islands, today announced preliminary, unaudited financial estimates of its results of operations for the quarter ended March 31, 2020.
On a preliminary estimated basis:
The Company expects its results of operations for the quarter ended March 31, 2020 to reflect:
– | A net loss of $38 million to $43 million or ($1.05) to ($1.19) per fully diluted share. |
– | Net premiums written of $107 million to $112 million |
– | Net premiums earned of $109 million to $114 million |
– | An underwriting loss of $1 million to an underwriting gain of $4 million |
– | A composite ratio of 96% to 100% |
– | A combined ratio of 97% to 101% |
– | An investment loss in the Solasglas Investments, LP (“SILP”) fund of $42.2 million, representing a loss of 8.1% for the quarter as previously reported |
The Company expects a fully diluted book value per share as of March 31, 2020 of $11.56 to $11.69.
Further, management has been advised by SILP’s general partner that the fund generated an investment loss on the Company’s funds invested in SILP for the period from April 1, 2020 to April 10, 2020 of -0.2% which represents an estimated investment loss (net of fees and expense) to the Company of $0.9 million.
The preliminary financial and other data set forth above has been prepared by and is the responsibility of Greenlight Re’s management. The foregoing information and estimates have not been compiled or examined by our independent registered public accounting firm nor have our independent registered public accounting firm performed any procedures with respect to this information or expressed any opinion or any form of assurance of such information. In addition, the foregoing information and estimates are subject to revision
as the Company prepares its condensed consolidated financial statements and other disclosures as of and for the three months ended March 31, 2020, including all disclosures required by U.S. GAAP. Because the Company has not completed its normal quarterly closing and review procedures for the three months ended March 31, 2020, and subsequent events may occur that require material adjustments to these results, the final results and other disclosures for the three months ended March 31, 2020 may differ materially from these estimates. These estimates should not be viewed as a substitute for full financial statements prepared in accordance with U.S. GAAP or as a measure of performance. In addition, these estimated results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be achieved for any future period. See "Forward-looking Statements." These estimated results of operations should be read together with subsequent filings and announcements, including any subsequent press release announcing the Company’s earnings for the three months ended March 31, 2020 and our unaudited condensed consolidated financial statements and related notes to be filed on Form 10-Q on or before May 11, 2020.
Non-GAAP Financial Measures
In presenting the Company’s results, management has included financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (GAAP). Such measures, including fully diluted book value per share and net underwriting income (loss), are referred to as non-GAAP measures. These non-GAAP measures may be defined or calculated differently by other companies. Management believes these measures allow for a more complete understanding of the underlying business. These measures are used to monitor our results and should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included in the attached financial information in accordance with Regulation G.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market fluctuations, trends in insured and paid losses, catastrophes, rating agency actions, COVID-19, regulatory and legal uncertainties and other factors described in our annual report on Form 10-K filed with the Securities Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as provided by law.
About Greenlight Capital Re, Ltd.
Established in 2004, Greenlight Re (www.greenlightre.com) is a NASDAQ listed company with specialist property and casualty reinsurance companies based in the Cayman Islands and Ireland. Greenlight Re provides risk management products and services to the insurance, reinsurance and other risk marketplaces. The Company focuses on delivering risk solutions to clients and brokers by whom Greenlight Re's expertise, analytics and customer service offerings are demanded. With an emphasis on deriving superior returns from both sides of the balance sheet, Greenlight Re manages its assets according to a value-oriented equity-focused strategy that supports the goal of long-term growth in book value per share.
Contact:
Investor Relations:
Adam Prior
The Equity Group Inc.
(212) 836-9606
GREENLIGHT CAPITAL RE, LTD.
NON-GAAP MEASURES AND RECONCILIATION
Basic Book Value Per Share and Fully Diluted Book Value Per Share
We believe that long-term growth in fully diluted book value per share is the most relevant measure of our financial performance because it provides management and investors a yardstick by which to monitor the shareholder value generated. In addition, fully diluted book value per share may be useful to our investors, shareholders and other interested parties to form a basis of comparison with other companies within the property and casualty reinsurance industry.
Fully diluted book value per share is considered a non-GAAP financial measure and represents basic book value per share combined with any dilutive impact of in-the-money stock options and restricted stock units (“RSUs”) issued and outstanding as of any period end. In addition, the fully diluted book value per share includes the dilutive effect, if any, of ordinary shares to be issued upon conversion of the convertible notes. Basic book value per share and fully diluted book value per share should not be viewed as substitutes for the comparable U.S. GAAP measures.
Our primary financial goal is to increase fully diluted book value per share over the long term.
The following table presents a reconciliation of the estimated non-GAAP financial measures basic and fully diluted book value per share to the most comparable U.S. GAAP measure.
March 31, 2020 | |||||||
($ in millions, except per share and share amounts) | |||||||
Low | High | ||||||
Numerator for basic and fully diluted book value per share: | |||||||
Total equity (U.S. GAAP) (numerator for basic book value per share) | $ | 434 | $ | 439 | |||
Add: Proceeds from in-the-money stock options issued and outstanding | — | — | |||||
Numerator for fully diluted book value per share | $ | 434 | $ | 439 | |||
Denominator for basic and fully diluted book value per share: (1) | |||||||
Ordinary shares issued and outstanding (denominator for basic book value per share) | 37,434,244 | 37,434,244 | |||||
Add: In-the-money stock options and RSUs issued and outstanding | 116,722 | 116,722 | |||||
Denominator for fully diluted book value per share | 37,550,966 | 37,550,966 | |||||
Basic book value per share | $ | 11.59 | $ | 11.73 | |||
Fully diluted book value per share | $ | 11.56 | $ | 11.69 | |||
(1) All unvested restricted shares, including those with performance conditions, are included in the “basic” and “fully diluted” denominators. As of March 31, 2020, the number of unvested restricted shares with performance conditions was 501,989.
Net Underwriting Income (Loss)
One way that we evaluate the Company’s underwriting performance is through the measurement of net underwriting income (loss). We do not use premiums written as a measure of performance. Net underwriting income (loss) is a performance measure used by management as it measures the fundamentals underlying the Company’s underwriting operations. We believe that the use of net underwriting income (loss) enables investors and other users of the Company’s financial information to analyze our performance in a manner similar to how management analyzes performance. Management also believes that this measure follows industry practice and allows the users of financial information to compare the Company’s performance with its those of our industry peer group.
Net underwriting income (loss) is considered a non-GAAP financial measure because it excludes items used in the calculation of net income before taxes under U.S. GAAP. Net underwriting income (loss) is calculated as net premiums earned, plus other income (expense) relating to deposit-accounted contracts, less net loss and loss adjustment expenses, less acquisition costs, and less underwriting expenses. The measure excludes, on a recurring basis: (1) investment related income (loss); (2) other income (expense) not related to underwriting, including foreign exchange gains or losses and allowance for credit losses; (3) corporate
general and administrative expenses; (4) interest expense and (5) income taxes. We exclude total investment related income or loss and foreign exchange gains or losses as we believe these items are influenced by market conditions and other factors not related to underwriting decisions. We exclude corporate expenses because these expenses are generally fixed and not incremental to or directly related to our underwriting operations. We believe all of these amounts are largely independent of our underwriting process and including them could hinder the analysis of trends in our underwriting operations. Net underwriting income (loss) should not be viewed as a substitute for U.S. GAAP net income.
The reconciliations of estimated net underwriting income (loss) to estimated income (loss) before income taxes (the most directly comparable U.S. GAAP financial measure) on a consolidated basis is shown below:
Three months ended March 31, 2020 | |||||||
($ in millions) | |||||||
Low | High | ||||||
Income (loss) before income tax | $ | (42 | ) | $ | (37 | ) | |
Add (subtract): | |||||||
Investment related (income) loss, corporate expenses, interest expense and other non-underwriting expenses | 41 | 41 | |||||
Net underwriting income (loss) | $ | (1 | ) | $ | 4 | ||