Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Greenlight Capital Re Ltd (GLRE, Financial) reported a net income of $35.2 million for the third quarter, up $21.7 million compared to the same period last year.
- The company achieved a combined ratio of 95.9% for the quarter, marking its eighth consecutive quarter of underwriting profit.
- The Solasglas Fund contributed significantly to investment income, with a 5.2% return on the investment portfolio.
- AM Best upgraded Greenlight Capital Re Ltd (GLRE)'s outlook to positive from stable, recognizing the company's progress.
- The specialty book grew by 52% in gross premiums compared to the third quarter last year, driven by new marine and energy business.
Negative Points
- Gross premiums written for the third quarter decreased by 8% to $168.3 million compared to the same period last year, primarily due to non-renewed contracts.
- Catastrophe losses contributed 9.3% to the combined ratio in the quarter, with significant losses from Hurricane Helane and other natural disasters.
- The casualty gross premiums written decreased by 15.5% due to non-renewing a funds at Lloyd's contract and a shift in the workers' compensation book.
- The underwriting expense ratio increased to 4.2% for the third quarter, up from 3% in the same period last year, due to higher personnel costs and professional fees.
- The short portfolio detracted 5.1% from the Solasglas Fund's performance during the quarter, impacting overall investment returns.
Q & A Highlights
Q: Can you provide more details on the impact of Hurricane Helane and other natural catastrophes on your financials?
A: Greg Richardson, CEO: Hurricane Helane resulted in an estimated loss of $7.5 million for Greenlight Re, assuming an industry loss of approximately $10 billion. Overall, catastrophe losses for the quarter were $14.1 million, including $2 million from central European floods and additional losses from severe convective storms earlier in the year. These losses contributed 9.3% to our combined ratio for the quarter.
Q: How did the Solasglas Fund perform during the quarter, and what were the main contributors and detractors?
A: David Einhorn (Trades, Portfolio), Chairman: The Solasglas Fund returned 5.2% in the third quarter. The long portfolio contributed 9.9%, while the macro portfolio added 1.2%. However, the short portfolio detracted 5.1%. Key positive contributors included long positions in Green Brick Partners and Solve, while detractors were a short basket to hedge homebuilding exposure and equity index hedges.
Q: What strategic changes have been made in your underwriting and investment portfolios?
A: Greg Richardson, CEO: We increased our allocation to the Solasglas investment portfolio from 60% to 70% of adjusted book value, effective August 1st. In underwriting, we non-renewed certain contracts, including a homeowner's contract and a funds at Lloyd's contract, to focus on more profitable opportunities. Our specialty book grew significantly, driven by new marine and energy business.
Q: Can you elaborate on the changes in your leadership team and their expected impact?
A: Greg Richardson, CEO: The board approved the appointments of Tom Curnock as Group Chief Underwriting Officer and Pat O'Brien as Group Chief Operating Officer. Both have been instrumental leaders in our company and are expected to enhance our operational efficiency and strategic execution in their new roles.
Q: What are your expectations for the upcoming renewal season and market conditions?
A: Greg Richardson, CEO: We believe market conditions remain attractive, with strong discipline and no significant increase in reinsurance capacity. Our recent interactions with clients and brokers at industry conferences have reinforced our confidence in capitalizing on market opportunities during the upcoming renewal season.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
