Greenlight Re Announces Fourth Quarter and Year-end 2023 Financial Results
- Record underwriting income of $32.0 million achieved for full year 2023.
- Net income of $86.8 million reported for full year 2023.
- Gross premiums written increased by 13.1% to $636.8 million for full year 2023.
- Net premiums earned increased by 24.2% to $583.1 million for full year 2023.
- Fully diluted book value per share increased by 16.8% to $16.74 at December 31, 2023.
- Company's combined ratio improved to 94.5% for full year 2023, compared to 102.3% in 2022.
- Total investment income of $66.1 million reported for full year 2023.
- Key executives express confidence in the company's performance and strategic positioning for 2024.
- None.
Insights
The reported financial results of Greenlight Capital Re, Ltd. indicate a significant turnaround in underwriting performance, with a full-year underwriting income of $32.0 million compared to a loss in the previous year. This is a critical metric for assessing the health of an insurance company, as underwriting income reflects the profitability of its core business operations, excluding investment activities. The improvement in the combined ratio from 102.3% to 94.5% suggests increased underwriting efficiency and pricing accuracy. However, the decrease in total investment income year-over-year, from $69.0 million to $66.1 million, warrants attention as it may signal a potential area of concern in the company's investment strategy or market volatility.
From an investor's perspective, the substantial increase in net income and the 16.8% rise in fully diluted book value per share are positive indicators of the company's financial strength and shareholder value creation. These figures are especially important when evaluating the company's performance relative to its peers and the broader insurance sector. The reported growth in gross premiums written across all categories signifies market expansion and the ability to attract new business, which is essential for long-term sustainability.
Greenlight Capital Re's performance reflects broader trends in the reinsurance industry, where companies have been adjusting their pricing models in response to past catastrophic events and market conditions. The reported increase in underwriting income and improved combined ratio are indicative of successful repricing and risk management strategies. Such strategies are particularly relevant in today's insurance market, which has been affected by various global challenges, including climate change and geopolitical tensions.
It's also noteworthy that the company's net premiums earned outpaced the growth of gross premiums written, suggesting that the company's underwriting book is maturing and that there is effective management of premium recognition over time. This could point to a stable revenue base for future quarters. The reported reduction in gross premiums written in the fourth quarter, attributed to timing-related premium adjustments, may raise questions about the predictability of premium flows, but the overall annual growth trend remains positive.
The reported foreign exchange gains, largely attributed to the strengthening of the pound sterling, highlight the influence of currency fluctuations on international businesses like Greenlight Capital Re. While beneficial in this reporting period, reliance on such gains can introduce volatility to net income. It is essential for stakeholders to consider the potential impact of ongoing currency and geopolitical risks on future financial performance.
Additionally, the overall economic environment, including interest rate movements and investment market dynamics, will continue to play a significant role in the performance of the company's investment portfolio. The modest return of 0.3% from the Solasglas fund, managed by DME Advisors, may reflect cautious investment strategies or underperforming markets. Stakeholders should monitor these aspects, as they could affect the company's investment income and, consequently, its comprehensive income.
Achieves Record Underwriting Income of
GRAND CAYMAN, Cayman Islands, March 05, 2024 (GLOBE NEWSWIRE) -- Greenlight Capital Re, Ltd. (NASDAQ: GLRE) (“Greenlight Re” or the “Company”) today reported its financial results for the fourth quarter and year-ended December 31, 2023.
Fourth Quarter 2023 Highlights (all comparisons are to fourth quarter 2022 unless noted otherwise):
- Gross premiums written decreased
11.8% to$112.3 million ; - Net premiums earned increased
23.4% to$137.4 million ; - Underwriting income of
$11.8 million compared to$6.5 million ; - Net income of
$17.6 million , or$0.50 per diluted ordinary share, compared to$34.8 million , or$0.91 per diluted ordinary share; - Combined ratio of
91.4% , compared to94.2% ; - Total investment income of
$13.6 million , compared to$32.5 million ; and - Fully diluted book value per share increased
$0.59 , or3.7% , to$16.74 , from$16.15 at September 30, 2023.
Full Year 2023 Highlights (all comparisons are to full year 2022):
- Gross premiums written increased
13.1% to$636.8 million ; - Net premiums earned increased
24.2% to$583.1 million ; - Underwriting income of
$32.0 million compared to an underwriting loss of$10.7 million ; - Net income of
$86.8 million , or$2.50 per diluted ordinary share, compared to$25.3 million , or$0.73 per diluted ordinary share; - Combined ratio of
94.5% , compared to102.3% ; - Total investment income of
$66.1 million , compared to$69.0 million ; and - Fully diluted book value per share increased
$2.41 , or16.8% , to$16.74 , from$14.33 at December 31, 2022.
Greg Richardson, Chief Executive Officer of Greenlight Re, stated, “The Company ended the year with robust growth in fully diluted book value per share, driven by strong performance on both sides of the balance sheet.”
David Einhorn, Chairman of the Board of Directors, said, “2023 was a milestone year for the company with solid returns on both our underwriting and investing activities. We successfully executed several executive management transitions and believe we are well positioned going into 2024.”
Fourth Quarter 2023 Results
Gross premiums written in the fourth quarter of 2023 were
The Company recognized net underwriting income of
The Company’s total investment income during the fourth quarter of 2023 was
The Company reported foreign exchange gains
The net income of
Full Year 2023 Results
Gross premiums written were
Net premiums earned were
The Company reported an underwriting income for the year ended December 31, 2023, of
Total investment income for the year ended December 31, 2023, was
The Company reported foreign exchange gains of
The net income of
The following table summarizes the components of our combined ratio.
| Fourth Quarter | Full Year | |||||||||||
| Underwriting ratios | 2023 | 2022 | 2023 | 2022 | ||||||||
| Loss ratio - current year | 54.7 | % | 58.5 | % | 59.8 | % | 67.4 | % | ||||
| Loss ratio - prior year | 0.5 | % | (1.3) | % | 1.9 | % | — | % | ||||
| Loss ratio | 55.2 | % | 57.2 | % | 61.7 | % | 67.4 | % | ||||
| Acquisition cost ratio | 30.7 | % | 33.3 | % | 29.0 | % | 30.5 | % | ||||
| Composite ratio | 85.9 | % | 90.5 | % | 90.7 | % | 97.9 | % | ||||
| Underwriting expense ratio | 5.5 | % | 3.7 | % | 3.8 | % | 4.4 | % | ||||
| Combined ratio | 91.4 | % | 94.2 | % | 94.5 | % | 102.3 | % | ||||
Greenlight Capital Re, Ltd. Fourth Quarter and Year-End 2023 Earnings Call
Greenlight Re will host a live conference call to discuss its financial results on Wednesday, March 6, 2024, at 9:00 a.m. Eastern Time. Dial-in details:
U.S. toll free 1-877-407-9753
International 1-201-493-6739
The conference call can also be accessed via webcast at:
https://event.webcasts.com/starthere.jsp?ei=1654363&tp_key=08652ad3de
A telephone replay will be available following the call through March 11, 2024. The replay of the call may be accessed by dialing 1-877-660-6853 (U.S. toll free) or 1-201-612-7415 (international), access code 13744164. An audio file of the call will also be available on the Company’s website, www.greenlightre.com.
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 basic book value per share, 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 thorough understanding of the underlying business. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be used to monitor our results and should be considered in addition to, and not viewed as a substitute for those measures 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 concerning Greenlight Capital Re, Ltd. and/or its subsidiaries (the “Company”) 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 the Company’s behalf. These risks and uncertainties include a downgrade or withdrawal of our A.M. Best ratings; any suspension or revocation of any of our licenses; losses from catastrophes; the loss of significant brokers; the performance of Solasglas Investments, LP; the carry values of our investments made under our Greenlight Re Innovations pillar may differ significantly from those that would be used if we carried these investments at fair value; and other factors described in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 5, 2024, as those factors may be updated from time to time in our periodic and other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. The Company undertakes no obligation to publicly update or revise any forward-looking statements, which speak only as to the date of this release, whether as a result of new information, future events, or otherwise, except as provided by law.
About Greenlight Capital Re, Ltd.
Greenlight Re (www.greenlightre.com) provides multiline property and casualty insurance and reinsurance through its licensed and regulated reinsurance entities in the Cayman Islands and Ireland, and its Lloyd’s platform, Greenlight Innovation Syndicate 3456. The Company complements its underwriting activities with a non-traditional investment approach designed to achieve higher rates of return over the long term than reinsurance companies that exclusively employ more traditional investment strategies. The Company’s innovations unit, Greenlight Re Innovations, supports technology innovators in the (re)insurance space by providing investment capital, risk capacity, and access to a broad insurance network.
Investor Relations Contact
Karin Daly
Vice President, The Equity Group Inc.
(212) 836-9623
IR@greenlightre.ky
GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED BALANCE SHEETS
(expressed in thousands of U.S. dollars, except per share and share amounts)
| December 31, 2023 | December 31, 2022 | ||||
| Assets | |||||
| Investments | |||||
| Investment in related party investment fund, at fair value | $ | 258,890 | $ | 178,197 | |
| Other investments | 73,293 | 70,279 | |||
| Total investments | 332,183 | 248,476 | |||
| Cash and cash equivalents | 51,082 | 38,238 | |||
| Restricted cash and cash equivalents | 604,648 | 668,310 | |||
| Reinsurance balances receivable (net of allowance for expected credit losses) | 619,401 | 505,555 | |||
| Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses) | 25,687 | 13,239 | |||
| Deferred acquisition costs | 79,956 | 82,391 | |||
| Unearned premiums ceded | 17,261 | 18,153 | |||
| Other assets | 5,089 | 6,019 | |||
| Total assets | $ | 1,735,307 | $ | 1,580,381 | |
| Liabilities and equity | |||||
| Liabilities | |||||
| Loss and loss adjustment expense reserves | $ | 661,554 | $ | 555,468 | |
| Unearned premium reserves | 306,310 | 307,820 | |||
| Reinsurance balances payable | 68,983 | 105,135 | |||
| Funds withheld | 17,289 | 21,907 | |||
| Other liabilities | 11,795 | 6,397 | |||
| Debt | 73,281 | 80,534 | |||
| Total liabilities | 1,139,212 | 1,077,261 | |||
| Shareholders' equity | |||||
| Ordinary share capital (par value | $ | 3,534 | $ | 3,482 | |
| Additional paid-in capital | 484,532 | 478,439 | |||
| Retained earnings | 108,029 | 21,199 | |||
| Total shareholders' equity | 596,095 | 503,120 | |||
| Total liabilities and equity | $ | 1,735,307 | $ | 1,580,381 | |
GREENLIGHT CAPITAL RE, LTD.
CONSOLIDATED RESULTS OF OPERATIONS
(UNAUDITED)
(expressed in thousands of U.S. dollars, except percentages and per share amounts)
| Three months ended December 31 | Year ended December 31 | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Underwriting revenue | |||||||||||||||
| Gross premiums written | $ | 112,338 | $ | 127,359 | $ | 636,810 | $ | 563,171 | |||||||
| Gross premiums ceded | (7,022 | ) | (11,456 | ) | (42,762 | ) | (33,429 | ) | |||||||
| Net premiums written | 105,316 | 115,903 | 594,048 | 529,742 | |||||||||||
| Change in net unearned premium reserves | 32,129 | (4,518 | ) | (10,901 | ) | (60,265 | ) | ||||||||
| Net premiums earned | $ | 137,445 | $ | 111,385 | $ | 583,147 | $ | 469,477 | |||||||
| Underwriting related expenses | |||||||||||||||
| Net loss and loss adjustment expenses incurred: | |||||||||||||||
| Current year | $ | 75,228 | $ | 65,135 | $ | 348,798 | $ | 316,367 | |||||||
| Prior year | 704 | (1,440 | ) | 11,206 | 118 | ||||||||||
| Net loss and loss adjustment expenses incurred | 75,932 | 63,696 | 360,004 | 316,485 | |||||||||||
| Acquisition costs | 42,175 | 37,047 | 168,877 | 143,148 | |||||||||||
| Underwriting expenses | 5,541 | 3,779 | 19,587 | 13,813 | |||||||||||
| Deposit interest expense | 2,042 | 344 | 2,687 | 6,717 | |||||||||||
| Net underwriting income (loss)(1) | $ | 11,755 | $ | 6,519 | $ | 31,992 | $ | (10,686 | ) | ||||||
| Income from investment in SILP | $ | 905 | $ | 30,370 | $ | 28,696 | $ | 54,844 | |||||||
| Net investment income | 12,662 | 2,161 | 37,367 | 14,139 | |||||||||||
| Total investment income | $ | 13,567 | $ | 32,531 | $ | 66,063 | $ | 68,983 | |||||||
| Corporate expenses | $ | 9,833 | $ | 5,100 | $ | 23,653 | $ | 17,793 | |||||||
| Other (income) expense, net | (4,473 | ) | (1,597 | ) | (17,872 | ) | 11,777 | ||||||||
| Interest expense | 2,367 | 790 | 5,344 | 4,201 | |||||||||||
| Income tax expense (benefit) | (11 | ) | 7 | 100 | (816 | ) | |||||||||
| Net income | $ | 17,606 | $ | 34,750 | $ | 86,830 | $ | 25,342 | |||||||
| Earnings per share | |||||||||||||||
| Basic | $ | 0.52 | $ | 1.02 | $ | 2.55 | $ | 0.75 | |||||||
| Diluted | $ | 0.50 | $ | 0.91 | $ | 2.50 | $ | 0.73 | |||||||
1 Net underwriting income (loss) is a non-GAAP financial measure. See “Key Financial Measures and Non-GAAP Measures” below for discussion and reconciliation of non-GAAP financial measures.
The following tables present the Company’s net premiums earned and underwriting ratios by line of business:
| Three months ended December 31 | Three months ended December 31 | ||||||||||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||||||||||
| Property | Casualty | Other | Total | Property | Casualty | Other | Total | ||||||||||||||||||||||||
| ($ in thousands except percentage) | |||||||||||||||||||||||||||||||
| Net premiums earned | $ | 22,685 | $ | 72,121 | $ | 42,639 | $ | 137,445 | $ | 14,820 | $ | 64,498 | $ | 32,067 | $ | 111,385 | |||||||||||||||
| Underwriting ratios: | |||||||||||||||||||||||||||||||
| Loss ratio | 44.8 | % | 71.6 | % | 33.2 | % | 55.2 | % | 82.6 | % | 70.9 | % | 17.9 | % | 57.2 | % | |||||||||||||||
| Acquisition cost ratio | 19.3 | 28.5 | 40.4 | 30.7 | 21.3 | 30.1 | 45.1 | 33.3 | |||||||||||||||||||||||
| Composite ratio | 64.1 | % | 100.1 | % | 73.6 | % | 85.9 | % | 103.9 | % | 101.0 | % | 63.0 | % | 90.5 | % | |||||||||||||||
| Underwriting expense ratio | 5.5 | 3.7 | |||||||||||||||||||||||||||||
| Combined ratio | 91.4 | % | 94.2 | % | |||||||||||||||||||||||||||
| Year ended December 31 | Year ended December 31 | ||||||||||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||||||||||
| Property | Casualty | Other | Total | Property | Casualty | Other | Total | ||||||||||||||||||||||||
| ($ in thousands except percentage) | |||||||||||||||||||||||||||||||
| Net premiums earned | $ | 86,539 | $ | 331,196 | $ | 165,412 | $ | 583,147 | $ | 52,397 | $ | 289,820 | $ | 127,260 | $ | 469,477 | |||||||||||||||
| Underwriting ratios: | |||||||||||||||||||||||||||||||
| Loss ratio | 72.0 | % | 68.0 | % | 43.8 | % | 61.7 | % | 78.0 | % | 71.0 | % | 55.0 | % | 67.4 | % | |||||||||||||||
| Acquisition cost ratio | 18.7 | 30.5 | 31.3 | 29.0 | 22.2 | 29.0 | 37.4 | 30.5 | |||||||||||||||||||||||
| Composite ratio | 90.7 | % | 98.5 | % | 75.1 | % | 90.7 | % | 100.2 | % | 100.0 | % | 92.4 | % | 97.9 | % | |||||||||||||||
| Underwriting expense ratio | 3.8 | 4.4 | |||||||||||||||||||||||||||||
| Combined ratio | 94.5 | % | 102.3 | % | |||||||||||||||||||||||||||
GREENLIGHT CAPITAL RE, LTD.
KEY FINANCIAL MEASURES AND NON-GAAP MEASURES
Management uses certain key financial measures, some of which are not prescribed under U.S. GAAP rules and standards (“non-GAAP financial measures”), to evaluate our financial performance, financial position, and the change in shareholder value. Generally, a non-GAAP financial measure, as defined in SEC Regulation G, is a numerical measure of a company’s historical or future financial performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented under U.S. GAAP. We believe that these measures, which may be calculated or defined differently by other companies, provide consistent and comparable metrics of our business performance to help shareholders understand performance trends and facilitate a more thorough understanding of the Company’s business. Non-GAAP financial measures should not be viewed as substitutes for those determined under U.S. GAAP.
The key non-GAAP financial measures used in this Annual Report are:
- Fully diluted book value per share; and
- Net underwriting income (loss).
These non-GAAP financial measures are described below.
Fully Diluted Book Value Per Share
Our primary financial goal is to increase fully diluted book value per share over the long term. We use fully diluted book value as a financial measure in our incentive compensation plan.
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 to monitor the shareholder value generated. Fully diluted book value per share may also help our investors, shareholders, and other interested parties form a basis of comparison with other companies within the property and casualty reinsurance industry. Fully diluted book value per share should not be viewed as a substitute for the most comparable U.S. GAAP measure, which in our view is the basic book value per share.
We calculate basic book value per share as (a) ending shareholders' equity, divided by (b) the total ordinary shares issued and outstanding, as reported in the consolidated financial statements. In prior years, we calculated the basic book value per share by modifying the denominator to exclude unearned performance-based restricted shares granted after December 31, 2021. We have revised this calculation in 2023 to eliminate the basic book value per share non-GAAP financial measure and have restated the 2022 comparative basic book value per share in the table below and elsewhere in this Annual Report to conform with the current presentation.
Fully diluted book value per share represents basic book value per share combined with any dilutive impact of in-the-money stock options and all outstanding restricted stock units “RSUs”. We believe these adjustments better reflect the ultimate dilution to our shareholders.
The following table presents a reconciliation of the fully diluted book value per share to basic book value per share (the most directly comparable U.S. GAAP financial measure):
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||
| Numerator for basic and fully diluted book value per share: | |||||||||||||
| Total equity as reported under U.S. GAAP | $ | 596,095 | $ | 575,865 | $ | 561,121 | $ | 510,041 | $ | 503,120 | |||
| Denominator for basic and fully diluted book value per share: | |||||||||||||
| Ordinary shares issued and outstanding as reported and denominator for basic book value per share | 35,336,732 | 35,337,407 | 35,272,013 | 35,262,678 | 34,824,061 | ||||||||
| Add: In-the-money stock options and all outstanding RSUs | 264,870 | 312,409 | 312,409 | 312,409 | 277,960 | ||||||||
| Denominator for fully diluted book value per share | 35,601,602 | 35,649,816 | 35,584,422 | 35,575,087 | 35,102,021 | ||||||||
| Basic book value per share | $ | 16.87 | $ | 16.30 | $ | 15.91 | $ | 14.46 | $ | 14.45 | |||
| Fully diluted book value per share | $ | 16.74 | $ | 16.15 | $ | 15.77 | $ | 14.34 | $ | 14.33 | |||
Net Underwriting Income (Loss)
One way that we evaluate the Company’s underwriting performance is by measuring 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 to evaluate 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 this measure follows industry practice and allows the users of financial information to compare the Company’s performance with that of our industry peer group.
Net underwriting income (loss) is considered a non-GAAP financial measure because it excludes items used to calculate net income before taxes under U.S. GAAP. We calculate net underwriting income (loss) as net premiums earned less net loss and loss adjustment expenses, acquisition costs, underwriting expenses (including related G&A expenses), and deposit interest expense. The measure excludes, on a recurring basis: (1) investment income (loss); (2) other income (expense) not related to underwriting, including foreign exchange gains or losses, and Lloyd’s interest income and expense; (3) corporate G&A expenses; and (4) interest expense. We exclude total investment income or loss, foreign exchange gains or losses, and Lloyd’s interest income or expense as we believe these items are influenced by market conditions and other factors unrelated to underwriting decisions. Additionally, we exclude corporate G&A and interest expenses because these costs 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 before income taxes.
The reconciliations of net underwriting income (loss) to income (loss) before income taxes (the most directly comparable U.S. GAAP financial measure) on a consolidated basis are shown below:
| Three months ended December 31 | Year ended December 31 | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| ($ in thousands) | |||||||||||||||
| Income (loss) before income tax | $ | 17,595 | $ | 34,757 | $ | 86,930 | $ | 24,526 | |||||||
| Add (subtract): | |||||||||||||||
| Total investment (income) loss | (13,567 | ) | (32,531 | ) | (66,063 | ) | (68,983 | ) | |||||||
| Other non-underwriting (income) expense | (4,473 | ) | (1,597 | ) | (17,872 | ) | 11,777 | ||||||||
| Corporate expenses | 9,833 | 5,100 | 23,653 | 17,793 | |||||||||||
| Interest expense | 2,367 | 790 | 5,344 | 4,201 | |||||||||||
| Net underwriting income (loss) | $ | 11,755 | $ | 6,519 | $ | 31,992 | $ | (10,686 | ) | ||||||
FAQ
What was Greenlight Capital Re, Ltd.'s underwriting income for full year 2023?
What was the net income for full year 2023?
How much did the gross premiums written increase by for full year 2023?
What was the fully diluted book value per share at December 31, 2023?
What was the combined ratio for full year 2023?
How much total investment income was reported for full year 2023?
What do key executives express about the company's performance for 2024?
