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Greenlight Re Announces 2017 Fourth Quarter and Year-End Financial Results

Company to Hold Conference Call at 9:00 a.m. ET on Wednesday February 21, 2018

GRAND CAYMAN, Cayman Islands, Feb. 20, 2018 (GLOBE NEWSWIRE) -- Greenlight Capital Re, Ltd. (NASDAQ:GLRE) today announced financial results for the fourth quarter and year ended December 31, 2017.  Greenlight Re reported a net loss of $37.7 million for the fourth quarter of 2017, compared to net income of $49.2 million for the same period in 2016.  The net loss per share for the fourth quarter of 2017 was $1.02, compared to fully diluted net income per share of $1.31 for the same period in 2016.

Fully diluted adjusted book value per share was $22.22 as of December 31, 2017, a 5.0% decrease from $23.38 per share as of December 31, 2016.

Management Commentary

Simon Burton, Chief Executive Officer of Greenlight Re, stated, “Our fourth quarter results were negatively impacted by reserve strengthening, an investment loss and, to a lesser extent, losses from the California wildfires. The reserving action taken this quarter is the result of a detailed ground-up review led by our Chief Operating Officer, Mike Belfatti, during his first full quarter with the Company. Our current underwriting portfolio performed acceptably well in the quarter and I’m pleased with our progress in repositioning the business.”

David Einhorn, Chairman of the Board of Directors, stated, “2017 continued to be a challenging environment for our investment style as our managed portfolio returned 1.5% for the year. Despite the headwinds caused by natural catastrophic events and reserve strengthening, I am pleased with the proactive actions taken by our management team during the second half of 2017.”

Financial and Operating Highlights

Fourth Quarter 2017

  • Gross written premiums were $139.0 million, compared to $148.8 million in the prior year period.  Net written premiums were $96.3 million compared to $146.6 million in the prior year period. Gross premium ceded increased during the fourth quarter as the Company ceded off a portion of its non-standard automobile business.

  • Net earned premiums were $141.1 million, a 3.3% increase compared to $136.6 million in the prior year period.

  • Net investment loss was $16.2 million (or 1.3%) for the fourth quarter of 2017, compared to net investment income of $52.9 million for the prior year period.

  • Underwriting loss was $19.7 million, compared to underwriting income of $1.4 million in the fourth quarter of 2016.  Included in this underwriting loss is an estimated $4.7 million loss, net of reinstatement premiums, from the recent California wildfires.

  • The Company strengthened prior year reserves by $16.5 million during the period primarily due from additional reporting on individual claims as well as industry wide performance on professional liability exposures and to a lesser extent due to higher reserves on various casualty and multi-line contracts.

  • Composite ratio for the three months ended December 31, 2017 was 111.8%, compared to 96.3% for the prior-year period. Combined ratio for the three months ended December 31, 2017 was 114.0%, compared to 99.0% in the prior year period. Catastrophe losses contributed 3.5 percentage points to the composite and combined ratio for the three month period.

2017 Annual

  • Gross written premiums were $692.7 million, an increase of 29.2% from $536.1 million in the prior year. Net written premiums increased to $636.1 million, compared to $526.1 million in the prior year.

  • Net premiums earned increased 22.0% to $626.0 million, from $513.1 million in the prior year.

  • Net investment income was $20.2 million (or 1.5%), compared to net investment income of $76.2 million during 2016.

  • The composite ratio was 106.1%, compared to 100.4% for the prior-year. Combined ratio for the twelve months ended December 31, 2017 was 108.6%, compared to 103.6% in the prior year. Catastrophe losses contributed 6.9 percentage points to the composite and combined ratios for the year.

  • Net loss was $45.0 million, or $1.21 per diluted share, compared to net income of $44.9 million, or $1.20 per diluted share, in 2016.

Conference Call Details
Greenlight Re will hold a live conference call to discuss its financial results for the fourth quarter and year ended December 31, 2017 on Wednesday February 21, 2018 at 9:00 a.m. Eastern time.  The conference call title is Greenlight Capital Re, Ltd. Fourth Quarter 2017 Earnings Call.

To participate in the Greenlight Capital Re, Ltd. Fourth Quarter 2017 Earnings Call, please dial in to the conference call at:

       
  U.S. toll free    1-888-336-7152
  International    1-412-902-4178
       

Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN.

Conference Call registration link: http://dpregister.com/10116537 

The conference call can also be accessed via webcast at:

https://services.choruscall.com/links/glre180221.html 

A telephone replay of the call will be available from 11:00 a.m. Eastern time on February 21, 2018 until 9:00 a.m. Eastern time on February 18, 2018.  The replay of the call may be accessed by dialing 1-877-344-7529 (U.S. toll free) or 1-412-317-0088 (international), access code 10116537. An audio file of the call will also be available on the Company’s website, www.greenlightre.ky

Regulation G

Fully diluted adjusted book value per share is considered a non-GAAP measure and represents basic adjusted book value per share combined with the impact from dilution of share based compensation including in-the-money stock options and RSUs as of any period end.  Book value is adjusted by subtracting the amount of the non-controlling interest in joint venture from total shareholders’ equity to calculate adjusted book value.  We believe that long term growth in fully diluted adjusted 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 adjusted book value per share may be of benefit to our investors, shareholders and other interested parties to form a basis of comparison with other companies within the property and casualty reinsurance industry.

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.  The measure includes underwriting expenses which are directly related to underwriting activities as well as an allocation of other general and administrative expenses. Net underwriting income (loss) is calculated as net premiums earned, less net loss and loss adjustment expenses incurred, less, acquisition costs and less underwriting expenses. The measure excludes, on a recurring basis: (1) net investment income; (2) any foreign exchange gains or losses; (3) corporate general and administrative expenses; (4) other income (expense) not related to underwriting, and (5) income taxes and income attributable to non-controlling interest. We exclude net investment income and foreign exchange gains or losses as we believe these are influenced by market conditions and other factors not related to underwriting decisions. We exclude corporate general and administrative 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 distorts the analysis of trends in our underwriting operations. We include other income and expense relating to deposit accounted contracts and industry loss warranty contracts which we believe are part of our underwriting operations and should be reflected in our underwriting income (loss).  Net underwriting income should not be viewed as a substitute for U.S. GAAP net income.

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, 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.

About Greenlight Capital Re, Ltd.

Established in 2004, Greenlight Re (www.greenlightre.ky) 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
IR@greenlightre.ky

Public Relations/Media:
Mairi Mallon
Rein4ce
+44 (0)203 786 1160
mairi.mallon@rein4ce.co.uk

 
GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED BALANCE SHEETS
 
December 31, 2017 and 2016
(expressed in thousands of U.S. dollars, except per share and share amounts)
 
  2017   2016
Assets      
Investments      
Debt instruments, trading, at fair value $ 7,180     $ 22,473  
Equity securities, trading, at fair value 1,203,672     844,001  
Other investments, at fair value 152,132     156,063  
Total investments 1,362,984     1,022,537  
Cash and cash equivalents 27,285     39,858  
Restricted cash and cash equivalents 1,503,813     1,202,651  
Financial contracts receivable, at fair value 12,893     76,381  
Reinsurance balances receivable 301,762     219,126  
Loss and loss adjustment expenses recoverable 29,459     2,704  
Deferred acquisition costs, net 62,350     61,022  
Unearned premiums ceded 25,120     2,377  
Notes receivable, net 28,497     33,734  
Other assets 3,230     4,303  
Total assets $ 3,357,393     $ 2,664,693  
Liabilities and equity      
Liabilities      
Securities sold, not yet purchased, at fair value $ 912,797     $ 859,902  
Financial contracts payable, at fair value 22,222     2,237  
Due to prime brokers and other financial institutions 672,700     319,830  
Loss and loss adjustment expense reserves 464,380     306,641  
Unearned premium reserves 255,818     222,527  
Reinsurance balances payable 144,058     41,415  
Funds withheld 23,579     5,927  
Other liabilities 10,413     14,527  
Total liabilities 2,505,967     1,773,006  
       
Redeemable non-controlling interest in related party joint venture 7,169     5,884  
       
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, 31,104,830 (2016: 31,111,432): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2016: 6,254,895)) 3,736     3,737  
Additional paid-in capital 503,316     500,337  
Retained earnings 324,272     370,168  
Shareholders’ equity attributable to shareholders 831,324     874,242  
Non-controlling interest in related party joint venture 12,933     11,561  
Total equity 844,257     885,803  
Total liabilities, redeemable non-controlling interest and equity $ 3,357,393     $ 2,664,693  


 
GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED STATEMENTS OF INCOME
 
Years ended December 31, 2017, 2016 and 2015
(expressed in thousands of U.S. dollars, except per share and share amounts)
 
  2017   2016   2015
Revenues          
Gross premiums written $ 692,651     $ 536,072     $ 502,124  
Gross premiums ceded (56,587 )   (10,015 )   (9,001 )
Net premiums written 636,064     526,057     493,123  
Change in net unearned premium reserves (10,060 )   (12,939 )   (84,736 )
Net premiums earned 626,004     513,118     408,387  
Net investment income (loss) [net of related party expenses of $19,863, $24,543 and $19,246] 20,231     76,183     (281,924 )
Other income (expense), net (560 )   (935 )   (3,413 )
Total revenues 645,675     588,366     123,050  
Expenses          
Loss and loss adjustment expenses incurred, net 502,404     380,815     317,097  
Acquisition costs, net 161,740     134,534     116,207  
General and administrative expenses 26,356     25,808     23,434  
Total expenses 690,500     541,157     456,738  
Income (loss) before income tax (44,825 )   47,209     (333,688 )
Income tax (expense) benefit 451     (509 )   1,755  
Net income (loss) including non-controlling interest (44,374 )   46,700     (331,933 )
Loss (income) attributable to non-controlling interest in related party joint venture (578 )   (1,819 )   5,508  
Net income (loss) $ (44,952 )   $ 44,881     $ (326,425 )
Earnings (loss) per share          
Basic $ (1.21 )   $ 1.20     $ (8.90 )
Diluted $ (1.21 )   $ 1.20     $ (8.90 )
Weighted average number of ordinary shares used in the determination of earnings and loss per share          
Basic 37,002,260     37,267,145     36,670,466  
Diluted 37,002,260     37,340,018     36,670,466  
                 

The following table provides the ratios for the years ended December 31, 2017, 2016 and 2015:

   
  Year ended December 31
  2017   2016   2015
  Frequency   Severity   Total   Frequency   Severity   Total   Frequency   Severity   Total
                                   
Loss ratio 75.4 %   141.9 %   80.3 %   75.8 %   55.4 %   74.2 %   82.6 %   9.5 %   77.6 %
Acquisition cost ratio 27.1 %   9.8 %   25.8 %   26.5 %   23.2 %   26.2 %   28.0 %   35.2 %   28.5 %
Composite ratio 102.5 %   151.7 %   106.1 %   102.3 %   78.6 %   100.4 %   110.6 %   44.7 %   106.1 %
Underwriting expense ratio         2.5 %           3.2 %           4.2 %
Combined ratio         108.6 %           103.6 %           110.3 %
 

 

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