Greenlight Re Announces Fourth Quarter and Year End 2016 Financial Results
February 22 2017 - 4:05PM
Greenlight Capital Re, Ltd. (NASDAQ:GLRE) today announced financial
results for the fourth quarter and year ended December 31, 2016.
Greenlight Re reported net income of $49.2 million for the fourth
quarter of 2016, compared to a net loss of $43.1 million for the
same period in 2015. The net income per share for the fourth
quarter of 2016 was $1.31, compared to a net loss per share of
$1.17 for the same period in 2015.
Fully diluted adjusted book value per share was
$23.38 as of December 31, 2016, a 5.5% increase from $22.17 per
share as of December 31, 2015.
“We are pleased with our fourth quarter
underwriting performance,” said Bart Hedges, Chief Executive
Officer of Greenlight Re. “Despite the competitive environment
during 2016, we continued to grow and diversify our underwriting
portfolio while also resolving some problematic legacy
contracts.”
Financial and operating highlights for
Greenlight Re for the fourth quarter ended December 31, 2016
include:
- Gross written premiums of $148.8 million, compared to $144.9
million in the fourth quarter of 2015; net earned premiums were
$136.6 million, an increase from $119.9 million reported in the
prior-year period.
- Underwriting income of $1.4 million, compared to $2.8 million
in the fourth quarter of 2015.
- The combined ratio for the fourth quarter 2016 was 99.0%
compared to 97.7% for the fourth quarter 2015.
- A net investment gain of 5.0% on Greenlight Re’s investment
portfolio managed by DME Advisors, LP compared to a net investment
loss of 4.0% in the fourth quarter of 2015.
“Our fourth quarter 2016 investment gain was
solid despite our low net exposure,” stated David Einhorn, Chairman
of the Board of Directors. “While we faced challenges during 2016,
the Company made significant strides to position itself to grow
book value per share from both underwriting and investment
activities.”
Financial and operating highlights for
Greenlight Re for the year ended December 31, 2016 include:
- Gross written premiums in 2016 of $536.1 million, an increase
of 6.8% compared to 2015; net earned premiums were $513.1 million,
an increase of 25.6% over the previous year.
- An underwriting loss of $18.8 million, compared to an
underwriting loss of $41.9 million for 2015. All of the loss during
2016 related to the novation of legacy contracts in
run-off.
- The combined ratio for the year ended December 31, 2016 was
103.6%, compared to 110.3% for 2015.
- Net investment income of $76.2 million, representing a return
of 7.2%, compared to a net investment loss of $281.9 million during
2015 when Greenlight Re reported a negative 20.2% return.
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, 2016 on Thursday, February 23, 2017 at 9:00
a.m. Eastern time. The conference call title is Greenlight Capital
Re, Ltd. Fourth Quarter and Year End 2016 Earnings Call.
To participate in the Greenlight Capital Re,
Ltd. Fourth Quarter and Year End 2016 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/10100396
The conference call can also be accessed via webcast at:
http://services.choruscall.com/links/glre170223.html
A telephone replay of the call will be available
from 11:00 a.m. Eastern time on February 23, 2017 until 9:00
a.m. Eastern time on March 2, 2017. 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 10100396. An audio file
of the call will also be available on the Company’s website,
www.greenlightre.ky.
Regulation GFully 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. Net
underwriting income should not be viewed as a substitute for U.S.
GAAP net income.
Forward-Looking StatementsThis 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.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 a variety of
custom-tailored reinsurance solutions to the insurance, risk
retention group, captive and financial marketplaces. Established in
2004, Greenlight Re selectively offers customized reinsurance
solutions in markets where capacity and alternatives are
limited. With a focus on deriving superior returns from both
sides of the balance sheet, Greenlight Re’s assets are managed
according to a value-oriented equity-focused strategy that
complements the Company’s business goal of long-term growth in book
value per share.
GREENLIGHT CAPITAL RE, LTD. |
CONSOLIDATED BALANCE SHEETS |
|
December 31, 2016 and 2015 |
(expressed in thousands of U.S. dollars, except
per share and share amounts) |
|
2016 |
|
2015 |
Assets |
|
|
|
Investments |
|
|
|
Debt instruments,
trading, at fair value |
$ |
22,473 |
|
|
$ |
39,087 |
|
Equity securities,
trading, at fair value |
844,001 |
|
|
905,994 |
|
Other investments, at
fair value |
156,063 |
|
|
119,083 |
|
Total investments |
1,022,537 |
|
|
1,064,164 |
|
Cash and cash
equivalents |
39,858 |
|
|
112,162 |
|
Restricted cash and
cash equivalents |
1,202,651 |
|
|
1,236,589 |
|
Financial contracts
receivable, at fair value |
76,381 |
|
|
13,215 |
|
Reinsurance balances
receivable |
219,126 |
|
|
187,940 |
|
Loss and loss
adjustment expenses recoverable |
2,704 |
|
|
3,368 |
|
Deferred acquisition
costs, net |
61,022 |
|
|
59,823 |
|
Unearned premiums
ceded |
2,377 |
|
|
3,251 |
|
Notes receivable,
net |
33,734 |
|
|
25,146 |
|
Other assets |
4,303 |
|
|
6,864 |
|
Total
assets |
$ |
2,664,693 |
|
|
$ |
2,712,522 |
|
Liabilities and
equity |
|
|
|
Liabilities |
|
|
|
Securities sold, not
yet purchased, at fair value |
$ |
859,902 |
|
|
$ |
882,906 |
|
Financial contracts
payable, at fair value |
2,237 |
|
|
28,245 |
|
Due to prime
brokers |
319,830 |
|
|
396,453 |
|
Loss and loss
adjustment expense reserves |
306,641 |
|
|
305,997 |
|
Unearned premium
reserves |
222,527 |
|
|
211,954 |
|
Reinsurance balances
payable |
41,415 |
|
|
18,326 |
|
Funds withheld |
5,927 |
|
|
7,143 |
|
Other liabilities |
14,527 |
|
|
12,725 |
|
Total
liabilities |
1,773,006 |
|
|
1,863,749 |
|
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, 31,111,432 (2015: 30,772,572): Class B: par value
$0.10; authorized, 25,000,000; issued and outstanding, 6,254,895
(2015: 6,254,895)) |
3,737 |
|
|
3,703 |
|
Additional paid-in
capital |
500,337 |
|
|
496,401 |
|
Retained earnings |
370,168 |
|
|
325,287 |
|
Shareholders’
equity attributable to shareholders |
874,242 |
|
|
825,391 |
|
Non-controlling
interest in joint venture |
17,445 |
|
|
23,382 |
|
Total
equity |
891,687 |
|
|
848,773 |
|
Total
liabilities and equity |
$ |
2,664,693 |
|
|
$ |
2,712,522 |
|
|
|
|
|
|
|
|
|
GREENLIGHT CAPITAL RE, LTD. |
CONSOLIDATED STATEMENTS OF
INCOME |
|
Years ended December 31, 2016, 2015 and
2014 |
(expressed in thousands of U.S. dollars,
except per share and share amounts) |
|
2016 |
|
2015 |
|
2014 |
Revenues |
|
|
|
|
|
Gross premiums
written |
$ |
536,072 |
|
|
$ |
502,124 |
|
|
$ |
324,023 |
|
Gross premiums
ceded |
(10,015 |
) |
|
(9,001 |
) |
|
(13,493 |
) |
Net premiums
written |
526,057 |
|
|
493,123 |
|
|
310,530 |
|
Change in net unearned
premium reserves |
(12,939 |
) |
|
(84,736 |
) |
|
43,710 |
|
Net premiums
earned |
513,118 |
|
|
408,387 |
|
|
354,240 |
|
Net investment income
(loss) |
76,183 |
|
|
(281,924 |
) |
|
122,575 |
|
Other income (expense),
net |
(935 |
) |
|
(3,413 |
) |
|
2,987 |
|
Total revenues |
588,366 |
|
|
123,050 |
|
|
479,802 |
|
Expenses |
|
|
|
|
|
Loss and loss
adjustment expenses incurred, net |
380,815 |
|
|
317,097 |
|
|
234,986 |
|
Acquisition costs,
net |
134,534 |
|
|
116,207 |
|
|
107,665 |
|
General and
administrative expenses |
25,808 |
|
|
23,434 |
|
|
24,500 |
|
Total expenses |
541,157 |
|
|
456,738 |
|
|
367,151 |
|
Income (loss) before
income tax |
47,209 |
|
|
(333,688 |
) |
|
112,651 |
|
Income tax (expense)
benefit |
(509 |
) |
|
1,755 |
|
|
624 |
|
Net income (loss)
including non-controlling interest |
46,700 |
|
|
(331,933 |
) |
|
113,275 |
|
Loss (income)
attributable to non-controlling interest in joint venture |
(1,819 |
) |
|
5,508 |
|
|
(3,683 |
) |
Net income
(loss) |
$ |
44,881 |
|
|
$ |
(326,425 |
) |
|
$ |
109,592 |
|
Earnings (loss)
per share |
|
|
|
|
|
Basic |
$ |
1.20 |
|
|
$ |
(8.90 |
) |
|
$ |
2.94 |
|
Diluted |
$ |
1.20 |
|
|
$ |
(8.90 |
) |
|
$ |
2.89 |
|
Weighted
average number of ordinary shares used in the determination of
earnings and loss per share |
|
|
|
|
|
Basic |
37,267,145 |
|
|
36,670,466 |
|
|
37,242,687 |
|
Diluted |
37,340,018 |
|
|
36,670,466 |
|
|
37,874,387 |
|
|
|
|
|
|
|
|
|
|
The
following table provides the ratios for the years ended December
31, 2016, 2015 and 2014: |
|
Year ended December 31 |
|
2016 |
|
2015 |
|
2014 |
|
Frequency |
|
Severity |
|
Total |
|
Frequency |
|
Severity |
|
Total |
|
Frequency |
|
Severity |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
75.8 |
% |
|
55.4 |
% |
|
74.2 |
% |
|
82.6 |
% |
|
9.5 |
% |
|
77.6 |
% |
|
69.9 |
% |
|
16.1 |
% |
|
66.3 |
% |
Acquisition cost
ratio |
26.5 |
% |
|
23.2 |
% |
|
26.2 |
% |
|
28.0 |
% |
|
35.2 |
% |
|
28.5 |
% |
|
31.2 |
% |
|
19.7 |
% |
|
30.4 |
% |
Composite ratio |
102.3 |
% |
|
78.6 |
% |
|
100.4 |
% |
|
110.6 |
% |
|
44.7 |
% |
|
106.1 |
% |
|
101.1 |
% |
|
35.8 |
% |
|
96.7 |
% |
Underwriting expense
ratio |
|
|
|
|
3.2 |
% |
|
|
|
|
|
4.2 |
% |
|
|
|
|
|
4.7 |
% |
Combined ratio |
|
|
|
|
103.6 |
% |
|
|
|
|
|
110.3 |
% |
|
|
|
|
|
101.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Garrett Edson
ICR
(203) 682-8331
IR@greenlightre.ky
Media:
Brian Ruby
ICR
(203) 682-8268
Brian.ruby@icrinc.com
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