Greenlight Capital Re, Ltd 10-Q for FY2022 Q3

Greenlight Capital Re, Ltd. (GLRE)

10-Q 2022-11-02 For: 2022-09-30

Added on April 06, 2026

About this 10-Q

Greenlight Capital Re, Ltd filed this 10-Q on November 2, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

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

Revenue: $126.72M; down 9.0% from $139.27M a year earlier
Net loss: $18.47M; compared with a net loss of $13.85M a year earlier
Diluted EPS: -$0.56; compared with -$0.42 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			28,569,346
Class B Ordinary Shares, $0.10 par value			6,254,715
(Class)			Outstanding at October 28, 2022


		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (unaudited)	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended September 30, 2022 and 2021 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 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	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	55
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	57
SIGNATURES		58


	September 30, 2022		December 31, 2021
Assets
Investments
Investment in related party investment fund	$	195,199	$	183,591
Other investments	65,081		47,384
Total investments	260,280		230,975
Cash and cash equivalents	32,278		76,307
Restricted cash and cash equivalents	648,897		634,794
Reinsurance balances receivable (net of allowance for expected credit losses of $89 and $89)	473,564		405,365
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $47 and $47)	10,604		11,100
Deferred acquisition costs	78,836		63,026
Unearned premiums ceded	13,659		42
Other assets	6,425		5,885
Total assets	$	1,524,543	$	1,427,494
Liabilities and equity
Liabilities
Loss and loss adjustment expense reserves	$	540,827	$	524,010
Unearned premium reserves	298,173		227,584
Reinsurance balances payable	108,772		91,224
Funds withheld	11,446		3,792
Other liabilities	4,927		7,164
Convertible senior notes payable	93,446		98,057
Total liabilities	1,057,591		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, 28,569,346 (2021: 27,589,731): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2021: 6,254,715))	3,482		3,384
Additional paid-in capital	477,021		481,784
Retained earnings (deficit)	(13,551)		(9,505)
Total shareholders' equity	466,952		475,663
Total liabilities and equity	$	1,524,543	$	1,427,494


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

			For the quarterly period ended September 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 September 30				Nine months ended September 30
	2022		2021		2022		2021
Revenues
Gross premiums written	$	155,146	$	128,735	$	435,812	$	440,249
Gross premiums ceded	(8,801)		(60)		(21,973)		(6)
Net premiums written	146,345		128,675		413,839		440,243
Change in net unearned premium reserves	(24,397)		6,849		(55,747)		(36,844)
Net premiums earned	121,948		135,524		358,092		403,399
Income (loss) from investment in related party investment fund (net of related party expenses - Note 3)	8,521		(6,214)		24,474		(4,196)
Net investment income (loss)	3,038		10,303		11,978		28,999
Other income (expense), net	(6,784)		(342)		(13,374)		(1,076)
Total revenues	126,723		139,271		381,170		427,126
Expenses
Net loss and loss adjustment expenses incurred	94,559		110,400		252,789		295,078
Acquisition costs	36,821		35,048		106,101		106,060
General and administrative expenses	7,389		6,060		22,727		21,340
Deposit interest expense	6,148		38		6,373		2,957
Interest expense	1,091		1,578		3,411		4,684
Total expenses	146,008		153,124		391,401		430,119
Income (loss) before income tax	(19,285)		(13,853)		(10,231)		(2,993)
Income tax (expense) benefit	816		—		823		(3,733)
Net income (loss)	$	(18,469)	$	(13,853)	$	(9,408)	$	(6,726)
Earnings (loss) per share (Class A and Class B)
Basic	$	(0.56)	$	(0.42)	$	(0.28)	$	(0.20)
Diluted	$	(0.56)	$	(0.42)	$	(0.28)	$	(0.20)
Weighted average number of ordinary shares used in the determination of earnings and loss per share
Basic	33,127,384		32,929,097		33,119,814		33,507,060
Diluted	33,127,384		32,929,097		33,119,814		33,507,060


	September 30, 2022		December 31, 2021
	($ in thousands)
Cash and cash equivalents	$	32,278	$	76,307
Restricted cash and cash equivalents	648,897		634,794
Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows	$	681,175	$	711,101


	Cost		Unrealized gains		Unrealized losses		Fair value / carrying value
	($ in thousands)
Private investments and unlisted equities	$	22,037	$	42,412	$	(3,368)	$	61,081
Convertible debt securities	1,000		—		—		1,000
Certificates of deposit	3,000		—		—		3,000

Total other investments	$	26,037	$	42,412	$	(3,368)	$	65,081


•			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	$	24,451	$	17,080	$	11,423	$	52,954


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	251,231		296,333
Prior years	1,558		(1,255)
Total incurred	252,789		295,078
Paid losses related to:
Current year	(54,866)		(96,442)
Prior years	(160,094)		(146,545)
Total paid	(214,960)		(242,987)
Foreign currency revaluation	(20,516)		(1,722)
Net balance at September 30	530,223		527,697
Add: Losses recoverable	10,604		13,082
Gross balance at September 30	$	540,827	$	540,779


Health	2022		2021
	($ in thousands)
Gross balance at January 1	$	9,938	$	17,485
Less: Losses recoverable	—		—
Net balance at January 1	9,938		17,485
Incurred losses related to:
Current year	6,567		31,189
Prior years	3,552		(1,898)
Total incurred	10,119		29,291
Paid losses related to:
Current year	(3,051)		(20,224)
Prior years	(11,146)		(13,824)
Total paid	(14,197)		(34,048)
Foreign currency revaluation	—		—
Net balance at September 30	5,860		12,728
Add: Losses recoverable	—		—
Gross balance at September 30	$	5,860	$	12,728


	Performance Restricted Shares			Service Restricted Shares
	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		356,422	7.02
Vested	—	—		(197,002)	10.06
Forfeited	—	—		(8,476)	7.67
Balance at September 30, 2022	794,362	$	7.62	904,351	$	7.73


	Three months ended September 30				Nine months ended September 30
	2022		2021		2022		2021
	($ in thousands)
Investment income
Dividend income (net of withholding taxes)	$	305	$	146	$	928	$	509
Interest income	693		51		1,028		770
Total Investment income	998		197		1,956		1,279

Expenses
Management fee	(901)		(883)		(2,686)		(2,632)
Interest	(464)		(205)		(1,199)		(874)
Dividends	(356)		(306)		(938)		(852)
Professional fees and other	(262)		(227)		(756)		(786)
Total expenses	(1,983)		(1,621)		(5,579)		(5,144)
Net investment income (loss)	(985)		(1,424)		(3,623)		(3,865)

Realized and change in unrealized gains (losses)
Net realized gain (loss)	7,221		(1,411)		58,196		(14,809)
Net change in unrealized appreciation (depreciation)	6,464		(5,437)		(17,027)		12,143
Net gain (loss) on investment transactions	13,685		(6,848)		41,169		(2,666)

Net income (loss)	$	12,700	$	(8,272)	$	37,546	$	(6,531)

GLRE Limited Partners’ share of net income (loss) (1)	$	8,521	$	(6,214)	$	24,474	$	(4,196)


	Nine months ended September 30
	2022		2021
	($ in thousands)
Carrying value (1)	$	61,081	$	42,349
Upward carrying value changes (2)	$	11,260	$	13,355
Downward carrying value changes and impairment (3)	$	(1,676)	$	(500)


Year ending December 31,	($ in thousands)
2022	$	149
2023	611
2024	627
2025	644
2026	345
Thereafter	—
Total lease payments	2,376
Less Imputed Interest	(280)
Present value of lease liabilities	$	2,096


	Three months ended September 30								Nine months ended September 30
	2022				2021				2022				2021
	($ in thousands)								($ in thousands)
Property
Commercial	$	2,146	1.4	%	$	3,398	2.6	%	$	8,648	2.0	%	$	9,700	2.2	%
Motor	206		0.1		6,103		4.8		768		0.2		24,537		5.6
Personal	17,669		11.4		3,631		2.8		49,425		11.3		10,318		2.3
Total Property	20,021		12.9		13,132		10.2		58,841		13.5		44,555		10.1

Casualty
General Liability	13,798		8.9		7,376		5.7		40,523		9.3		10,749		2.4
Motor Liability	565		0.4		19,823		15.4		4,061		0.9		96,795		22.0
Professional Liability	242		0.2		154		0.1		496		0.1		302		0.1
Workers' Compensation	7,216		4.6		17,117		13.3		25,504		5.9		55,237		12.5
Multi-line	69,419		44.7		40,162		31.2		177,647		40.8		137,857		31.3
Total Casualty	91,240		58.8		84,632		65.7		248,231		57.0		300,940		68.4

Other
Accident & Health	5,879		3.8		4,175		3.3		10,377		2.4		26,427		6.0
Financial	20,065		12.9		17,920		13.9		56,481		12.9		40,134		9.1
Marine	4,675		3.0		2,462		1.9		18,425		4.2		8,412		1.9
Other Specialty	13,266		8.6		6,414		5.0		43,457		10.0		19,781		4.5
Total Other	43,885		28.3		30,971		24.1		128,740		29.5		94,754		21.5
	$	155,146	100.0	%	$	128,735	100.0	%	$	435,812	100.0	%	$	440,249	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 September 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	(45,290)	23.80		11.04		—		—
Balance at September 30, 2022	690,337	$	22.25	$	10.18	$	—	4.2 years


	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 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)	$	466,952		$	484,293		$	468,407		$	475,663		$	450,514




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	34,824,061			34,721,231			34,721,231			33,844,446			33,844,446
Less: Unearned performance-based restricted shares granted after December 31, 2021	(539,161)			(560,927)			(581,593)			—			—
Denominator for basic book value per share	34,284,900			34,160,304			34,139,638			33,844,446			33,844,446
Add: In-the-money stock options, service-based RSUs granted, and earned performance-based RSUs granted	183,790			179,988			176,379			154,134			154,134
Denominator for fully diluted book value per share	34,468,690			34,340,292			34,316,017			33,998,580			33,998,580
Basic book value per share	$	13.62		$	14.18		$	13.72		$	14.05		$	13.31
Increase (decrease) in basic book value per share ($)	$	(0.56)		$	0.46		$	(0.33)		$	0.58		$	(0.35)
Increase (decrease) in basic book value per share (%)	(3.9)		%	3.4		%	(2.3)		%	4.3		%	(2.6)		%

Fully diluted book value per share	$	13.55		$	14.10		$	13.65		$	13.99		$	13.25
Increase (decrease) in fully diluted book value per share ($)	$	(0.55)		$	0.45		$	(0.34)		$	0.57		$	(0.35)
Increase (decrease) in fully diluted book value per share (%)	(3.9)		%	3.3		%	(2.4)		%	4.2		%	(2.6)		%


Change in Acquisition Cost Ratios
Three months ended September 30, 2022
	Increase / (decrease) in acquisition cost ratio points	Explanation
Property	(2.6)	The decrease in the property acquisition cost ratio during the three months ended September 30, 2022, over the comparable 2021 period, was due primarily to a change in our business mix. During the 2022 period, a higher proportion of the property business we wrote related to excess of loss contracts, which incorporate lower commissions than the quota share contracts that comprised a larger proportion of the business we wrote during the third quarter of 2021.
Casualty	5.5	The increase in the casualty acquisition cost ratio during the three months ended September 30, 2022, over the comparable 2021 period, was due primarily to changes in our business mix. Our motor and workers’ compensation premium, which decreased in 2022, generally incorporates lower ceding commission ratios than our general liability and multi-line business, which grew compared to the equivalent 2021 period.
Other	3.4	The increase in the “other” acquisition cost ratio during the three months ended September 30, 2022, over the comparable 2021 period was due primarily to the following: •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
Nine months ended September 30, 2022
	Increase / (decrease) in acquisition cost ratio points	Explanation
Property	1.4	The year-to-date increase was driven by the higher ceding commissions on the growing personal property quota share contracts relative to the shrinking motor business.
Casualty	2.7	The year-to-date increase was driven by the same trends as those discussed above in reference to the third quarter.
Other	5.2	The year-to-date increase was driven by the same trends as those discussed above in reference to the third quarter. A decrease in health business, which generally carries relatively low ceding commissions, was an additional driver of the increase.


	September 30, 2022						December 31, 2021
	Case Reserves		IBNR		Total		Case Reserves		IBNR		Total
	($ in thousands)
Property	$	32,716	$	84,009	$	116,725	$	21,357	$	49,486	$	70,843
Casualty	117,847		148,746		266,593		151,734		219,949		371,683
Other	36,382		121,127		157,509		17,129		64,355		81,484
Total	$	186,945	$	353,882	$	540,827	$	190,220	$	333,790	$	524,010


	October 1, 2022
	Net 1-in-250 Year Return Period
Peril	Single Event Loss		Aggregate Loss
	($ in thousands)
North Atlantic Hurricane	$	88,673	$	95,876
Southeast Hurricane	66,247		71,541
Gulf of Mexico Hurricane	59,936		64,145
Northeast Hurricane	62,020		63,404
North America Earthquake	60,793		65,126
California Earthquake	53,957		56,977
Other N.A. Earthquake	34,533		36,329
Japan Earthquake	37,771		40,751
Japan Windstorm	37,406		40,713
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)	$	278,526	$	157,381	$	49,215	$	55,706	$	540,827


•						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	$	3.0	$	(3.0)
Silver	0.3		(0.3)
Uranium	0.2		(0.2)
Crude oil	—		(0.1)
Total	$	3.5	$	(3.6)


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 Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)




July 1 - 31, 2022	4,026	$	7.00	4,026	$	24,971,818
August 1 - 31, 2022	—	$	—	—	$	24,971,818
September 1 - 30, 2022	907	$	7.23	907	$	24,965,260
Total	4,933	$	7.04	4,933	$	24,930,532


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 nine months ended September 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)
						November 2, 2022

			By:			/s/ NEIL GREENSPAN
						Neil Greenspan Chief Financial Officer (principal financial and accounting officer)
						November 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:	November 2, 2022	/s/ SIMON BURTON
		Simon Burton Chief Executive Officer (principal executive officer)