Company to Hold Conference Call at 9:00
a.m. ET on Tuesday, November 6, 2018
Greenlight Capital Re, Ltd. (NASDAQ: GLRE) (“Greenlight Re” or the
“Company”) today announced financial results for the third quarter
ended September 30, 2018. Greenlight Re reported a net loss of
$89.1 million for the third quarter of 2018, compared to net income
of $19.9 million for the same period in 2017. The loss was
primarily driven by a net investment loss during the period as well
as an underwriting loss as a result of estimated losses from
Hurricane Florence. The net loss per share for the third quarter of
2018 was $2.48, compared to net income per share of $0.53 for the
same period in 2017.
Fully diluted adjusted book value per share was
$15.29 as of September 30, 2018, compared to $23.18 per share as of
September 30, 2017 and $17.38 as of June 30, 2018.
Management Commentary
Simon Burton, Chief Executive Officer of
Greenlight Re, stated, “During the quarter we strengthened our
financial position through a private offering of $100 million
aggregate principal amount of Convertible Senior Notes due 2023,
$13.8 million of which we utilized for share repurchases. Our third
quarter underwriting results were negatively impacted by a loss
related to Hurricane Florence which added 5.0 points to our 103.5%
combined ratio.”
Mr. Burton concluded, “I am pleased with the
progress made by our Innovations unit as we announced several
completed investments during the quarter. This is a first
step but marks important progress in our growth strategy which
places technology and innovation at the heart of our business.”
David Einhorn, Chairman of the Board of
Directors, stated, “The third quarter continued to be challenging
for our value-oriented investing strategy. Our investment portfolio
reported a loss of 8.4% for the quarter, the majority of which came
from losses on short positions. In October, the heavy selling in
growth and momentum stocks and relative outperformance of value
stocks resulted in a gain of 1.2% in our investment portfolio,
despite our net long exposure to a weak equity market.”
Financial and Operating
Highlights
Third Quarter 2018
- Gross written premiums of $115.2
million, a decrease from $181.6 million in the third quarter of
2017. The premium decrease was primarily due to the non-renewal of
a Florida homeowner’s quota share contract during the fourth
quarter of 2017, the commutation of a mortgage reinsurance contract
and a lower participation in a multi-line casualty
contract.
- Ceded premiums were $15.5 million
compared to $7.9 million in the prior year period as the Company
continued to cede off a portion of its non-standard automobile
business.
- Net earned premiums were $114.1
million, a decrease from $172.7 million reported in the prior-year
period.
- Net investment loss of $80.9
million, compared to net investment income of $64.0 million in the
third quarter of 2017.
- A net underwriting loss of $4.0
million, including $5.7 million from Hurricane Florence, compared
to an underwriting loss of $38.5 million in the third quarter of
2017, which included losses from natural catastrophes including
hurricanes Harvey, Irma, and Maria.
- The Company reported a small
adverse prior year loss development of approximately $2.0 million,
primarily due to an unfavorable change in estimated reserves on
automobile contracts.
- A composite ratio for the quarter
of 100.9%, compared to 119.8% for the prior-year period. The
combined ratio for the quarter was 103.5% compared to 122.3% for
the prior-year period.
Nine Months Ended September 30, 2018
- Gross written premiums were $432.4 million, a decrease of 21.9%
from $553.7 million reported in the prior year period.
- Net earned premiums were $388.8 million, a decrease of 19.8%
from $484.9 million reported in the prior-year period.
- Net investment loss of $266.7 million, compared to net
investment income of $36.4 million reported in the prior-year
period.
- A composite ratio for the nine months ended September 30, 2018
of 96.4%, compared to 104.4% for the prior-year period. The
combined ratio for the nine months ended September 30, 2018 was
99.1%, compared to 107.0% for the prior-year period.
Rating Affirmed
On October 11, 2018 A.M. Best affirmed the
Financial Strength Rating of A- (Excellent) and the Long-Term
Issuer Credit Rating (Long-Term ICR) of A- of our operating
reinsurance subsidiaries. The outlook of this rating is stable.
Investment Restructuring
As previously announced, on September 1, 2018
Greenlight Re entered into a limited partnership agreement with
Solasglas Investments, LP (“Solasglas”), managed by DME Advisors
LP. The partnership is intended to replace the Company’s
joint venture agreement with DME Advisors LP. As of September 30,
2018 some assets had not yet been transferred into Solasglas and
continue to be reported within the joint venture. Management
expects that all investable assets will be transferred from the
joint venture to Solasglas no later than the first quarter of 2019.
Details of the limited partnership agreement were filed on Form 8-K
on September 4, 2018.
As a result, Greenlight Re will report a net
asset value based on its limited partnership interest in Solasglas,
in lieu of reporting gross values of long and short investments and
derivatives on the balance sheet.
We believe the following non-GAAP summarized
balance sheet provides useful information to investors because it
depicts what our balance sheet would have looked like had the legal
title of all the assets from the joint venture been transferred to
Solasglas on or before September 30, 2018.
|
|
September 30,
2018 |
|
September 30,
2018 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
|
Assets |
GAAP |
Adjustments 1 |
Non-GAAP 1 |
|
Investments |
|
|
|
|
Investment in related party investment fund, at fair value |
$ |
346,721 |
|
$ |
46,938 |
|
$ |
393,659 |
|
|
Debt instruments, trading, at fair value |
25 |
|
(25 |
) |
— |
|
|
Equity securities, trading, at fair value |
57,776 |
|
(57,776 |
) |
— |
|
|
Other investments, at fair value |
73,505 |
|
(66,100 |
) |
7,405 |
|
|
Total investments |
478,027 |
|
(76,963 |
) |
401,064 |
|
|
Cash and cash equivalents |
43,912 |
|
(28,565 |
) |
15,347 |
|
|
Restricted cash and cash equivalents |
673,835 |
|
(18,736 |
) |
655,099 |
|
|
Financial contracts receivable, at fair value |
69,166 |
|
(69,166 |
) |
— |
|
|
Reinsurance balances receivable |
289,366 |
|
— |
|
289,366 |
|
|
Loss and loss adjustment expenses recoverable |
37,835 |
|
— |
|
37,835 |
|
|
Deferred acquisition costs, net |
52,717 |
|
— |
|
52,717 |
|
|
Unearned premiums ceded |
25,900 |
|
— |
|
25,900 |
|
|
Notes receivable, net |
29,436 |
|
— |
|
29,436 |
|
|
Other assets |
4,118 |
|
— |
|
4,118 |
|
|
Total assets |
$ |
1,704,312 |
|
$ |
(193,430 |
) |
$ |
1,510,882 |
|
|
Liabilities and equity |
|
|
|
|
Liabilities |
|
|
|
|
Due to related party investment fund |
111,697 |
|
(111,697 |
) |
— |
|
|
Securities sold, not yet purchased, at fair value |
— |
|
— |
|
— |
|
|
Financial contracts payable, at fair value |
20,749 |
|
(20,749 |
) |
— |
|
|
Due to prime brokers and other financial institutions |
43,687 |
|
(43,687 |
) |
— |
|
|
Loss and loss adjustment expense reserves |
474,943 |
|
— |
|
474,943 |
|
|
Unearned premium reserves |
227,517 |
|
— |
|
227,517 |
|
|
Reinsurance balances payable |
137,321 |
|
— |
|
137,321 |
|
|
Funds withheld |
16,129 |
|
— |
|
16,129 |
|
|
Other liabilities |
8,615 |
|
(230 |
) |
8,385 |
|
|
Convertible senior notes payable, net of deferred costs |
89,606 |
|
— |
|
89,606 |
|
|
Total liabilities |
1,130,264 |
|
(176,363 |
) |
953,901 |
|
|
Redeemable non-controlling interest in related party joint
venture |
15,310 |
|
(15,310 |
) |
— |
|
|
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, 30,131,606 (2017: 31,104,830):
Class B: par value $0.10; authorized, 25,000,000; issued and
outstanding, 6,254,715 (2017: 6,254,715)) |
3,639 |
|
— |
|
3,639 |
|
|
Additional paid-in capital |
498,600 |
|
— |
|
498,600 |
|
|
Retained earnings |
54,742 |
|
— |
|
54,742 |
|
|
Shareholders’ equity attributable to
shareholders |
556,981 |
|
— |
|
556,981 |
|
|
Non-controlling interest in related party joint venture |
1,757 |
|
(1,757 |
) |
— |
|
|
Total equity |
558,738 |
|
(1,757 |
) |
556,981 |
|
|
Total liabilities, redeemable non-controlling interest and
equity |
$ |
1,704,312 |
|
$ |
(193,430 |
) |
$ |
1,510,882 |
|
1 The adjustments made to the GAAP balance sheet
in order to reconcile to the Non-GAAP balance sheet represent the
reclassification of each item, currently accounted for under U.S.
GAAP as the remaining assets in the joint venture, that will be
moved to Solasglas once the legal title of those assets have been
transferred. The change in the value of investment in related
party investment fund represents assets which are not part of the
participation agreement as of September 1, 2018 that will be
transferred to Solasglas by January 2019.
Greenlight to Host Investor Day on November 14,
2018
Greenlight Re is hosting its 6th Biennial
Investor Day on Wednesday, November 14, 2018 at 11:00 AM ET in New
York, NY. Interested parties should reach out to Adam Prior
at aprior@equityny.com.
Conference Call Details
Greenlight Re will hold a live conference call
to discuss its financial results for the third quarter ended
September 30, 2018 on Tuesday, November 6, 2018 at 9:00 a.m.
Eastern time. The conference call title is Greenlight Capital
Re, Ltd. Third Quarter 2018 Earnings Call.
To participate in the Greenlight Capital Re,
Ltd. Third Quarter 2018 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/10125315
The conference call can also be accessed via
webcast at:
https://services.choruscall.com/links/glre181106.html
A telephone replay of the call will be available
from 11:00 a.m. Eastern time on November 6, 2018 until 9:00
a.m. Eastern time on November 13, 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 10125315. 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
fully diluted adjusted 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,
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.
About Greenlight Re
InnovationsGreenlight Re Innovations was launched as a
unit of Greenlight Re in March 2018 to support technology
innovators working in the areas of risk preparedness, prevention,
post-loss mitigation and risk finance. Over the past three months,
Greenlight’s Innovation Unit has announced several strategic
investments, including:
- October 17, 2018: Greenlight Capital Re, Ltd. Announces
Investment in Digital Insurance Processing Platform Click2Sure
- October 5, 2018: Greenlight Capital Re, Ltd. Announces
Strategic Investment in Healthcare Third Part Administrator Sana
Benefits
- September 28, 2018: Greenlight Capital Re, Ltd. Announces
Investment in Blockchain Business Galileo Platforms
Contact:
Investor Relations:Adam PriorThe Equity Group
Inc.(212) 836-9606IR@greenlightre.ky
Public Relations/Media:Mairi MallonRein4ce+44
(0)203 786 1160mairi.mallon@rein4ce.co.uk
GREENLIGHT CAPITAL RE,
LTD.CONDENSED CONSOLIDATED BALANCE
SHEETS
September 30, 2018 and December 31,
2017 (expressed in thousands of U.S. dollars,
except per share and share amounts)
|
|
September 30,
2018 |
|
December 31,
2017 |
|
|
(unaudited) |
|
(audited) |
|
Assets |
|
|
|
|
Investments |
|
|
|
|
Investment in related party investment fund, at fair value |
$ |
346,721 |
|
|
$ |
— |
|
|
Debt instruments, trading, at fair value |
25 |
|
|
7,180 |
|
|
Equity securities, trading, at fair value |
57,776 |
|
|
1,203,672 |
|
|
Other investments, at fair value |
73,505 |
|
|
152,132 |
|
|
Total investments |
478,027 |
|
|
1,362,984 |
|
|
Cash and cash equivalents |
43,912 |
|
|
27,285 |
|
|
Restricted cash and cash equivalents |
673,835 |
|
|
1,503,813 |
|
|
Financial contracts receivable, at fair value |
69,166 |
|
|
12,893 |
|
|
Reinsurance balances receivable |
289,366 |
|
|
301,762 |
|
|
Loss and loss adjustment expenses recoverable |
37,835 |
|
|
29,459 |
|
|
Deferred acquisition costs, net |
52,717 |
|
|
62,350 |
|
|
Unearned premiums ceded |
25,900 |
|
|
25,120 |
|
|
Notes receivable, net |
29,436 |
|
|
28,497 |
|
|
Other assets |
4,118 |
|
|
3,230 |
|
|
Total assets |
$ |
1,704,312 |
|
|
$ |
3,357,393 |
|
|
Liabilities and equity |
|
|
|
|
Liabilities |
|
|
|
|
Due to related party investment fund |
$ |
111,697 |
|
|
$ |
— |
|
|
Securities sold, not yet purchased, at fair value |
— |
|
|
912,797 |
|
|
Financial contracts payable, at fair value |
20,749 |
|
|
22,222 |
|
|
Due to prime brokers and other financial institutions |
43,687 |
|
|
672,700 |
|
|
Loss and loss adjustment expense reserves |
474,943 |
|
|
464,380 |
|
|
Unearned premium reserves |
227,517 |
|
|
255,818 |
|
|
Reinsurance balances payable |
137,321 |
|
|
144,058 |
|
|
Funds withheld |
16,129 |
|
|
23,579 |
|
|
Other liabilities |
8,615 |
|
|
10,413 |
|
|
Convertible senior notes payable, net of deferred costs |
89,606 |
|
|
— |
|
|
Total liabilities |
1,130,264 |
|
|
2,505,967 |
|
|
Redeemable non-controlling interest in related party joint
venture |
15,310 |
|
|
7,169 |
|
|
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, 30,131,606 (2017: 31,104,830):
Class B: par value $0.10; authorized, 25,000,000; issued and
outstanding, 6,254,715 (2017: 6,254,715)) |
3,639 |
|
|
3,736 |
|
|
Additional paid-in capital |
498,600 |
|
|
503,316 |
|
|
Retained earnings |
54,742 |
|
|
324,272 |
|
|
Shareholders’ equity attributable to
shareholders |
556,981 |
|
|
831,324 |
|
|
Non-controlling interest in related party joint venture |
1,757 |
|
|
12,933 |
|
|
Total equity |
558,738 |
|
|
844,257 |
|
|
Total liabilities, redeemable non-controlling interest and
equity |
$ |
1,704,312 |
|
|
$ |
3,357,393 |
|
GREENLIGHT CAPITAL RE,
LTD.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME(UNAUDITED)
For the three and nine months ended
September 30, 2018 and 2017(expressed in thousands
of U.S. dollars, except per share and share amounts)
|
|
Three months ended September
30 |
|
Nine months ended September
30 |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Revenues |
|
|
|
|
|
|
|
|
Gross premiums written |
$ |
115,154 |
|
|
$ |
181,588 |
|
|
$ |
432,388 |
|
|
$ |
553,691 |
|
|
Gross premiums ceded |
(15,456 |
) |
|
(7,931 |
) |
|
(72,536 |
) |
|
(13,880 |
) |
|
Net premiums written |
99,698 |
|
|
173,657 |
|
|
359,852 |
|
|
539,811 |
|
|
Change in net unearned premium reserves |
14,406 |
|
|
(964 |
) |
|
28,912 |
|
|
(54,892 |
) |
|
Net premiums earned |
114,104 |
|
|
172,693 |
|
|
388,764 |
|
|
484,919 |
|
|
Income (loss) from investment in related party investment fund [net
of related party expenses of $803; $0; $803 and $0,
respectively] |
(10,025 |
) |
|
— |
|
|
(10,025 |
) |
|
— |
|
|
Net investment income (loss) [net of related party expenses of
$1,832; $8,369; $10,418 and $17,013, respectively] |
(70,851 |
) |
|
63,976 |
|
|
(256,723 |
) |
|
36,445 |
|
|
Other income (expense), net |
(683 |
) |
|
(520 |
) |
|
(1,246 |
) |
|
(224 |
) |
|
Total revenues |
32,545 |
|
|
236,149 |
|
|
120,770 |
|
|
521,140 |
|
|
Expenses |
|
|
|
|
|
|
|
|
Loss and loss adjustment expenses incurred, net |
86,780 |
|
|
168,918 |
|
|
267,419 |
|
|
379,746 |
|
|
Acquisition costs, net |
28,331 |
|
|
38,011 |
|
|
107,163 |
|
|
126,651 |
|
|
General and administrative expenses |
7,136 |
|
|
8,202 |
|
|
20,050 |
|
|
21,292 |
|
|
Interest expense |
927 |
|
|
— |
|
|
927 |
|
|
— |
|
|
Total expenses |
123,174 |
|
|
215,131 |
|
|
395,559 |
|
|
527,689 |
|
|
Income (loss) before income tax |
(90,629 |
) |
|
21,018 |
|
|
(274,789 |
) |
|
(6,549 |
) |
|
Income tax (expense) benefit |
355 |
|
|
(65 |
) |
|
1,448 |
|
|
109 |
|
|
Net income (loss) including non-controlling interest |
(90,274 |
) |
|
20,953 |
|
|
(273,341 |
) |
|
(6,440 |
) |
|
Loss (income) attributable to non-controlling interest in related
party joint venture |
1,159 |
|
|
(1,078 |
) |
|
4,106 |
|
|
(780 |
) |
|
Net income (loss) |
$ |
(89,115 |
) |
|
$ |
19,875 |
|
|
$ |
(269,235 |
) |
|
$ |
(7,220 |
) |
|
Earnings (loss) per share |
|
|
|
|
|
|
|
|
Basic |
$ |
(2.48 |
) |
|
$ |
0.53 |
|
|
$ |
(7.49 |
) |
|
$ |
(0.20 |
) |
|
Diluted |
$ |
(2.48 |
) |
|
$ |
0.53 |
|
|
$ |
(7.49 |
) |
|
$ |
(0.20 |
) |
|
Weighted average number of ordinary shares used in
thedetermination of earnings and loss per share |
|
|
|
|
|
|
|
|
Basic |
35,952,472 |
|
|
37,345,985 |
|
|
35,951,384 |
|
|
36,994,969 |
|
|
Diluted |
35,952,472 |
|
|
37,375,273 |
|
|
35,951,384 |
|
|
37,022,347 |
|
The following table provides the ratios for the nine months
ended September 30, 2018 and 2017:
|
|
Nine months ended
September 30 |
|
|
2018 |
|
2017 |
|
|
Property |
|
Casualty |
|
Other |
|
Total |
|
Property |
|
Casualty |
|
Other |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
57.4 |
% |
|
75.3 |
% |
|
57.5 |
% |
|
68.8 |
% |
|
95.7 |
% |
|
75.0 |
% |
|
66.0 |
% |
|
78.3 |
% |
|
Acquisition cost ratio |
22.6 |
% |
|
24.9 |
% |
|
40.0 |
% |
|
27.6 |
% |
|
28.5 |
% |
|
23.8 |
% |
|
33.0 |
% |
|
26.1 |
% |
|
Composite ratio |
80.0 |
% |
|
100.2 |
% |
|
97.5 |
% |
|
96.4 |
% |
|
124.2 |
% |
|
98.8 |
% |
|
99.0 |
% |
|
104.4 |
% |
|
Underwriting expense ratio |
|
|
|
|
|
|
2.7 |
% |
|
|
|
|
|
|
|
2.6 |
% |
|
Combined ratio |
|
|
|
|
|
|
99.1 |
% |
|
|
|
|
|
|
|
107.0 |
% |
GREENLIGHT CAPITAL RE,
LTD.NON-GAAP MEASURES AND
RECONCILIATION
Fully Diluted Adjusted Book Value Per Share
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, we believe fully diluted adjusted 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 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. In addition, the fully diluted adjusted
book value per share includes the dilutive effect, if any, of
ordinary shares to be issued upon conversion of the convertible
notes. 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.
The following table presents a reconciliation of
the non-GAAP financial measures basic adjusted and fully diluted
adjusted book value per share to the most comparable U.S. GAAP
measure.
|
|
September
30,2018 |
|
June 30,2018 |
|
March 31,2018 |
|
December
31,2017 |
|
September
30,2017 |
|
|
|
|
|
($ in thousands,
except per share and share amounts) |
|
Numerator for basic adjusted and fully diluted
adjusted book value per share: |
|
|
|
|
|
|
|
|
|
|
Total equity (U.S. GAAP) |
$ |
558,738 |
|
|
$ |
661,665 |
|
|
$ |
700,916 |
|
|
$ |
844,257 |
|
|
$ |
880,333 |
|
|
Less: Non-controlling interest in joint venture |
(1,757 |
) |
|
(10,719 |
) |
|
(11,071 |
) |
|
(12,933 |
) |
|
(12,828 |
) |
|
Numerator for basic adjusted book value per share |
556,981 |
|
|
650,946 |
|
|
689,845 |
|
|
831,324 |
|
|
867,505 |
|
|
Add: Proceeds from in-the-money stock options issued and
outstanding |
— |
|
|
— |
|
|
— |
|
|
13,859 |
|
|
14,028 |
|
|
Numerator for fully diluted adjusted book value per share |
$ |
556,981 |
|
|
$ |
650,946 |
|
|
$ |
689,845 |
|
|
$ |
845,183 |
|
|
$ |
881,533 |
|
|
Denominator for basic adjusted and fully diluted
adjusted book value per share: |
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued and outstanding (denominator for
basic adjusted book value per share) |
36,386,321 |
|
|
37,415,259 |
|
|
37,550,648 |
|
|
37,359,545 |
|
|
37,348,753 |
|
|
Add: In-the-money stock options and RSUs issued and
outstanding |
46,398 |
|
|
46,398 |
|
|
46,398 |
|
|
679,684 |
|
|
687,351 |
|
|
Denominator for fully diluted adjusted book value per share |
36,432,719 |
|
|
37,461,657 |
|
|
37,597,046 |
|
|
38,039,229 |
|
|
38,036,104 |
|
|
Basic adjusted book value per share |
$ |
15.31 |
|
|
$ |
17.40 |
|
|
$ |
18.37 |
|
|
$ |
22.25 |
|
|
$ |
23.23 |
|
|
Fully diluted adjusted book value per share |
15.29 |
|
|
17.38 |
|
|
18.35 |
|
|
22.22 |
|
|
23.18 |
|
Net Underwriting Income (Loss)
One way that management evaluates 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
underlying fundamentals of the Company’s underwriting operations.
Management believes that the use of net underwriting income (loss)
enables investors and other users of the Company’s financial
information to analyze its performance in a manner similar to how
management analyzes performance. Management also believes that this
measure follows industry practice and, therefore, allows the users
of financial information to compare the Company’s performance with
its 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. 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)
interest expense and 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.
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 is
shown below:
|
|
Three months ended September
30 |
|
Nine months ended September
30 |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
($ in
thousands) |
|
Income (loss) before income tax |
$ |
(90,629 |
) |
|
$ |
21,018 |
|
|
$ |
(274,789 |
) |
|
$ |
(6,549 |
) |
|
Add (subtract): |
|
|
|
|
|
|
|
| Investment related (income) loss |
80,876 |
|
|
(63,976 |
) |
|
266,748 |
|
|
(36,445 |
) |
| Other (income) expense |
734 |
|
|
397 |
|
|
1,311 |
|
|
101 |
|
| Corporate expenses |
4,076 |
|
|
4,050 |
|
|
9,420 |
|
|
8,995 |
|
| Interest expense |
927 |
|
|
— |
|
|
927 |
|
|
— |
|
|
Net underwriting income (loss) |
$ |
(4,016 |
) |
|
$ |
(38,511 |
) |
|
$ |
3,617 |
|
|
$ |
(33,898 |
) |
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