Greenlight Capital Re, Ltd. (NASDAQ: GLRE) (“Greenlight Re” or the
“Company”) today reported its 2020 fourth quarter and year-end
financial results. The results included:
- Net income of $42.0 million, or
$1.20 per share, compared to a net loss of $30.3 million, or $0.84
per share, in the fourth quarter of 2019.
- Combined ratio of 101.0%, compared
to a combined ratio of 114.5% in the fourth quarter of 2019.
- Total investment income of $48.4
million, including $38.5 million of investment gains from the
Solasglas fund.
- An increase in fully diluted book
value per share of $1.39, or 11.6%, to $13.42.
The following table summarizes the Company’s
underwriting results for the fourth quarter of 2020 and 2019:
|
Three months ended December 31 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
($ in thousands) |
Net premiums written |
$ |
117,725 |
|
|
$ |
98,380 |
|
Net premiums earned |
120,457 |
|
|
108,623 |
|
Underwriting loss |
(1,142 |
) |
|
(15,766 |
) |
Combined ratio |
101.0 |
% |
|
114.5 |
% |
Simon Burton, Chief Executive Officer of Greenlight
Re, stated, “We had a strong overall quarter and grew book value
per share by 11.6%. This growth was led by $38.5 million of gains
generated by our investment in Solasglas, and we recognized a
further $9.9 million of other investment income, driven primarily
by our strategic and Innovations partnerships. The underwriting
combined ratio of 101% includes a small loss from COVID, and caps a
year during which our underwriting business showed tremendous
resilience to the pressures of the pandemic and numerous natural
catastrophes.”
David Einhorn, Chairman of the Board of Directors,
stated, “We reported an 8.4% investment gain in the Solasglas fund
during the fourth quarter, driven primarily by strong performance
in our long positions. We expect a global economic recovery as the
pandemic subsides and are positioned for higher inflation, a strong
housing market and rising interest rates.”
Underwriting and investment
results
Fourth Quarter 2020
Gross written premiums in the fourth quarter of
2020 were $117.7 million, compared to $98.5 million in the fourth
quarter of 2019. This increase was due primarily to increases in
workers’ compensation and specialty business, as well as health
premiums associated with the Company’s strategic partnerships and
Innovations initiatives.
Net written premiums increased 19.7% to $117.7
million in the fourth quarter of 2020, compared to $98.4 million
reported in the fourth quarter of 2019.
Net premiums earned were $120.5 million during
the fourth quarter of 2020, an increase from $108.6 million in the
comparable 2019 period.
The Company incurred a net underwriting loss of
$1.1 million in the fourth quarter of 2020, which included COVID-19
losses of $1.1 million. In the fourth quarter of 2019, the Company
incurred a net underwriting loss of $15.8 million, which was driven
primarily by losses from typhoons Hagibis and Faxai. The combined
ratio for the fourth quarter of 2020 was 101.0%, compared to 114.5%
for the fourth quarter of 2019.
The Company’s total investment income during the
fourth quarter of 2020 was $48.4 million. The Company’s Investment
Portfolio, which is managed by DME Advisors, earned 8.4%,
representing $38.5 million of investment income from the Solasglas
fund. The Company also reported $9.9 million of other investment
income, primarily from its Innovations and other strategic
investments.
Year Ended December 31, 2020
Net written premiums were $477.5 million for
2020, an increase of $2.2 million, or 0.5% over 2019.
Net premiums earned were $455.4 million for
2020, a decrease of 5.8% from $483.6 million from 2019.
The Company incurred an underwriting loss of
$1.6 million in 2020, which equated to a combined ratio of 100.4%.
In 2019, the Company’s underwriting loss was $33.5 million, which
represented a combined ratio of 106.9%. During 2020, the Company
recognized catastrophe losses of $9.0 million from Hurricanes
Laura, Isaias, and Sally, the Midwest derecho storms, and the North
American wildfires. COVID-19 generated additional underwriting
losses of $7.1 million. By comparison, catastrophe events,
including Hurricane Dorian and Typhoons Faxai and Hagibis,
contributed $17.4 million to the underwriting loss for the
year ended December 31, 2019. The net financial impact of adverse
prior-year loss development contributed $3.7 million and $30.1
million to the underwriting loss in 2020 and 2019, respectively.
Most of the prior-year loss development recognized in 2019 related
to our private passenger automobile business. Excluding the impacts
of prior year development, catastrophe events, and COVID-19, the
adjusted combined ratio for the year ended December 31, 2020, was
96.0%, compared to 97.1% in 2019.
The Company earned investment income of $25.5
million during 2020. The Company’s Investment Portfolio reported a
gain of 1.4%, representing $4.4 million of income from the
Company’s investment in the Solasglas fund.
Other items
The Company repurchased 0.7 million shares
during the fourth quarter of 2020 at an average price of $7.60 per
share. As of December 31, 2020, 2.5 million shares remained
available for repurchase under the existing plan.
Conference Call
Greenlight Re will hold a live conference call
to discuss its financial results on Thursday, March 11, 2021
at 9:00 a.m. Eastern time. The conference call title is Greenlight
Capital Re, Ltd. Fourth Quarter and Year End 2020 Earnings
Call.
To participate in the Greenlight Capital Re,
Ltd. Fourth Quarter and Year End 2020 Earnings Call, please dial in
to the conference call at:
|
U.S. toll free |
1-844-274-4096 |
|
International |
1-412-317-5608 |
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:
https://dpregister.com/sreg/10151777/e16cef7d0c
The conference call can also be accessed via
webcast
at: https://services.choruscall.com/links/glre210311.html
A telephone replay of the call will be available
from 11:00 a.m. Eastern time on March 11, 2021 until 9:00 a.m.
Eastern time on March 18, 2021. 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 10151777. 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 book value
per share, adjusted combined ratio, 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 Form 10-K and Amendment No. 1 to Form 10-K filed with the
Securities Exchange Commission on April 29, 2020. 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.
Contact:Investor
Relations:Adam PriorThe Equity Group Inc.(212)
836-9606IR@greenlightre.ky
|
|
GREENLIGHT CAPITAL RE, LTD.CONSOLIDATED
BALANCE SHEETS |
|
December 31, 2020 and 2019 (expressed in
thousands of U.S. dollars, except per share and share
amounts) |
|
|
December 31, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
Investments |
|
|
|
Investment in related party investment fund |
$ |
166,735 |
|
|
$ |
240,056 |
|
Other investments |
29,418 |
|
|
16,384 |
|
Total investments |
196,153 |
|
|
256,440 |
|
Cash and cash equivalents |
8,935 |
|
|
25,813 |
|
Restricted cash and cash equivalents |
745,371 |
|
|
742,093 |
|
Reinsurance balances receivable (net of allowance for expected
credit losses) |
330,232 |
|
|
230,384 |
|
Loss and loss adjustment expenses recoverable (net of allowance for
expected credit losses) |
16,851 |
|
|
27,531 |
|
Deferred acquisition costs |
51,014 |
|
|
49,665 |
|
Unearned premiums ceded |
— |
|
|
901 |
|
Notes receivable (net of allowance for expected credit losses) |
6,101 |
|
|
20,202 |
|
Other assets |
2,993 |
|
|
2,164 |
|
Total assets |
$ |
1,357,650 |
|
|
$ |
1,355,193 |
|
Liabilities and equity |
|
|
|
Liabilities |
|
|
|
Loss and loss adjustment expense reserves |
$ |
494,179 |
|
|
$ |
470,588 |
|
Unearned premium reserves |
201,089 |
|
|
179,460 |
|
Reinsurance balances payable |
92,247 |
|
|
122,665 |
|
Funds withheld |
4,475 |
|
|
4,958 |
|
Other liabilities |
5,009 |
|
|
6,825 |
|
Convertible senior notes payable |
95,794 |
|
|
93,514 |
|
Total liabilities |
892,793 |
|
|
878,010 |
|
Shareholders' 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, 28,260,075 (2019:
30,739,395): Class B: par value $0.10; authorized, 25,000,000;
issued and outstanding, 6,254,715 (2019: 6,254,715)) |
3,452 |
|
|
3,699 |
|
Additional paid-in capital |
488,488 |
|
|
503,547 |
|
Retained earnings (deficit) |
(27,083 |
) |
|
(30,063 |
) |
Total shareholders' equity |
464,857 |
|
|
477,183 |
|
Total liabilities and equity |
$ |
1,357,650 |
|
|
$ |
1,355,193 |
|
|
|
|
|
|
|
|
|
GREENLIGHT CAPITAL RE, LTD.CONSOLIDATED
STATEMENTS OF OPERATIONS(UNAUDITED) |
|
(expressed in thousands of U.S. dollars, except per share
and share amounts) |
|
|
Three months ended December 31 |
|
Year ended December 31 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues |
|
|
|
|
|
|
|
Gross premiums written |
$ |
117,719 |
|
|
$ |
98,470 |
|
|
$ |
479,791 |
|
|
$ |
523,977 |
|
Gross premiums ceded |
6 |
|
|
(90 |
) |
|
(2,268 |
) |
|
(48,667 |
) |
Net premiums written |
117,725 |
|
|
98,380 |
|
|
477,523 |
|
|
475,310 |
|
Change in net unearned premium reserves |
2,732 |
|
|
10,243 |
|
|
(22,112 |
) |
|
8,270 |
|
Net premiums earned |
120,457 |
|
|
108,623 |
|
|
455,411 |
|
|
483,580 |
|
Income (loss) from investment in related party investment fund
[net of related party expenses of $1,270 and $3,251, (year
ended December 31, 2019: $(14) and $9,874, respectively)] |
38,517 |
|
|
(5,714 |
) |
|
4,431 |
|
|
46,056 |
|
Net investment income (loss) |
9,864 |
|
|
(3,054 |
) |
|
21,101 |
|
|
6,211 |
|
Other income (expense), net |
579 |
|
|
1,007 |
|
|
3,149 |
|
|
2,306 |
|
Total revenues |
169,417 |
|
|
100,862 |
|
|
484,092 |
|
|
538,153 |
|
Expenses |
|
|
|
|
|
|
|
Net loss and loss adjustment expenses incurred |
84,889 |
|
|
94,184 |
|
|
337,833 |
|
|
388,487 |
|
Acquisition costs |
32,628 |
|
|
27,424 |
|
|
109,288 |
|
|
117,084 |
|
General and administrative expenses |
8,306 |
|
|
7,338 |
|
|
26,401 |
|
|
29,822 |
|
Interest expense |
1,578 |
|
|
1,579 |
|
|
6,280 |
|
|
6,263 |
|
Total expenses |
127,401 |
|
|
130,525 |
|
|
479,802 |
|
|
541,656 |
|
Income (loss) before income tax |
42,016 |
|
|
(29,663 |
) |
|
4,290 |
|
|
(3,503 |
) |
Income tax (expense) benefit |
— |
|
|
(683 |
) |
|
(424 |
) |
|
(483 |
) |
Net income (loss) |
$ |
42,016 |
|
|
$ |
(30,346 |
) |
|
$ |
3,866 |
|
|
$ |
(3,986 |
) |
Earnings (loss) per share |
|
|
|
|
|
|
|
Basic |
$ |
1.20 |
|
|
$ |
(0.84 |
) |
|
$ |
0.11 |
|
|
$ |
(0.11 |
) |
Diluted |
$ |
1.20 |
|
|
$ |
(0.84 |
) |
|
$ |
0.11 |
|
|
$ |
(0.11 |
) |
Weighted average number of ordinary shares used in the
determination of earnings and loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
35,019,037 |
|
|
36,121,023 |
|
|
36,172,216 |
|
|
36,079,419 |
|
Diluted |
35,135,759 |
|
|
36,121,023 |
|
|
36,278,028 |
|
|
36,079,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables present the Company’s underwriting ratios by
line of business: |
|
|
Three months ended December 31 |
|
Three months ended December 31 |
|
2020 |
|
2019 |
|
Property |
|
Casualty |
|
Other |
|
Total |
|
Property |
|
Casualty |
|
Other |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
46.2 |
% |
|
72.9 |
% |
|
75.7 |
% |
|
70.5 |
% |
|
140.5 |
% |
|
72.0 |
% |
|
94.5 |
% |
|
86.7 |
% |
Acquisition cost ratio |
20.4 |
% |
|
26.6 |
% |
|
31.5 |
% |
|
27.1 |
% |
|
18.7 |
% |
|
27.4 |
% |
|
22.7 |
% |
|
25.2 |
% |
Composite ratio |
66.6 |
% |
|
99.5 |
% |
|
107.2 |
% |
|
97.6 |
% |
|
159.2 |
% |
|
99.4 |
% |
|
117.2 |
% |
|
111.9 |
% |
Underwriting expense ratio |
|
|
|
|
|
|
3.4 |
% |
|
|
|
|
|
|
|
2.6 |
% |
Combined ratio |
|
|
|
|
|
|
101.0 |
% |
|
|
|
|
|
|
|
114.5 |
% |
|
Year ended December 31 |
|
Year ended December 31 |
|
2020 |
|
2019 |
|
Property |
|
Casualty |
|
Other |
|
Total |
|
Property |
|
Casualty |
|
Other |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
69.7 |
% |
|
71.7 |
% |
|
83.4 |
% |
|
74.2 |
% |
|
82.8 |
% |
|
81.4 |
% |
|
73.6 |
% |
|
80.3 |
% |
Acquisition cost ratio |
20.4 |
|
|
27.2 |
|
|
17.4 |
|
|
24.0 |
|
|
18.6 |
|
|
23.7 |
|
|
31.9 |
|
|
24.2 |
|
Composite ratio |
90.1 |
% |
|
98.9 |
% |
|
100.8 |
% |
|
98.2 |
% |
|
101.4 |
% |
|
105.1 |
% |
|
105.5 |
% |
|
104.5 |
% |
Underwriting expense ratio |
|
|
|
|
|
|
2.2 |
|
|
|
|
|
|
|
|
2.4 |
|
Combined ratio |
|
|
|
|
|
|
100.4 |
% |
|
|
|
|
|
|
|
106.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GREENLIGHT CAPITAL RE,
LTD.NON-GAAP MEASURES AND
RECONCILIATION
Basic Book Value Per Share and Fully
Diluted Book Value Per Share
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.
We calculate basic book value per share based on
ending shareholders' equity and aggregate of Class A and Class B
Ordinary shares issued and outstanding, as well as all unvested
restricted shares. Fully diluted book value per share represents
basic book value per share combined with any dilutive impact of
in-the-money stock options and RSUs issued and outstanding as of
any period end. Fully diluted book value per share also includes
the dilutive effect, if any, of ordinary shares to be issued upon
conversion of the convertible notes. Basic book value per share and
fully diluted book value per share should not be viewed as
substitutes for the comparable U.S. GAAP measures.
Our primary financial goal is to increase fully
diluted book value per share over the long term.
The following table presents a reconciliation of
the non-GAAP financial measures basic and fully diluted book value
per share to the most comparable U.S. GAAP measure.
|
|
December 31, 2020 |
|
September 30, 2020 |
|
June 30,2020 |
|
March 31, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands, except per share and share amounts) |
Numerator for basic and fully diluted book value per
share: |
|
|
|
|
|
|
|
|
|
|
Total equity (U.S. GAAP) (numerator for basic and fully diluted
book value per share) |
|
$ |
464,857 |
|
|
$ |
426,867 |
|
|
$ |
429,904 |
|
|
$ |
436,899 |
|
|
$ |
477,183 |
|
Denominator for basic and fully diluted book value per
share: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued and outstanding (denominator for
basic book value per share) |
|
34,514,790 |
|
|
35,368,417 |
|
|
36,272,585 |
|
|
37,434,244 |
|
|
36,994,110 |
|
Add: In-the-money stock options and RSUs issued and
outstanding |
|
116,722 |
|
|
116,722 |
|
|
116,722 |
|
|
116,722 |
|
|
63,582 |
|
Denominator for fully diluted book value per share |
|
34,631,512 |
|
|
35,485,139 |
|
|
36,389,307 |
|
|
37,550,966 |
|
|
37,057,692 |
|
Basic book value per share |
|
$ |
13.47 |
|
|
$ |
12.07 |
|
|
$ |
11.85 |
|
|
$ |
11.67 |
|
|
$ |
12.90 |
|
Increase (decrease) in basic book value per share ($) |
|
$ |
0.57 |
|
|
$ |
0.22 |
|
|
$ |
0.18 |
|
|
$ |
(1.23) |
|
|
$ |
(0.22) |
|
Increase (decrease) in basic book value per share (%) |
|
4.4 |
% |
|
1.9 |
% |
|
1.5 |
% |
|
(9.5) |
% |
|
(1.7) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully diluted book value per share |
|
$ |
13.42 |
|
|
$ |
12.03 |
|
|
$ |
11.81 |
|
|
$ |
11.63 |
|
|
$ |
12.88 |
|
Increase (decrease) in fully diluted book value per share ($) |
|
$ |
0.54 |
|
|
$ |
0.22 |
|
|
$ |
0.18 |
|
|
$ |
(1.25) |
|
|
$ |
(0.22) |
|
Increase (decrease) in fully diluted book value per share (%) |
|
4.2 |
% |
|
1.9 |
% |
|
1.5 |
% |
|
(9.7) |
% |
|
(1.7) |
% |
(1) All unvested restricted shares, including those
with performance conditions, are included in the “basic” and “fully
diluted” denominators. As of December 31, 2020, the number of
unvested restricted shares with performance conditions was 193,149
(as of September 30, 2020: 429,444, June 30, 2020: 501,989, March
31, 2020: 501,989, December, 31, 2019: 356,900).
Adjusted combined ratio:
“Combined ratio” is a commonly used measure in the
property and casualty insurance industry, and is calculated using
U.S. GAAP components. We use the combined ratio, as well as an
adjusted combined ratio that excludes the impacts of certain items,
to evaluate our underwriting performance. We believe this adjusted
non-GAAP measure provides management and financial statement users
with a better understanding of the factors influencing our
underwriting results.
In calculating the adjusted combined ratio, we
exclude underwriting losses attributable to (i) prior accident-year
reserve development, (ii) catastrophe losses, and (iii) certain
significant, infrequent loss events.
- Prior accident-year
reserve development, which can be favorable or unfavorable,
represents changes in our estimates of losses and loss adjustment
expenses associated with loss events that occurred in prior years.
We believe a discussion of current accident-year performance, which
excludes prior accident-year reserve development, is helpful since
it provides more insight into current underwriting
performance.
- By their nature, catastrophe losses
and other significant, infrequent loss events are unrepresentative
of the type of loss activity that we would expect to occur in every
period. For example, the COVID-19 pandemic has certain
characteristics that are unlike those of any other event in recent
history.
We believe an adjusted combined ratio that excludes
the effects of items such as these aids in understanding the
underlying trends and variability in our underwriting results that
may be obscured by these items.
The following table reconciles the combined
ratio to the adjusted combined ratio:
|
|
Three months ended December 31 |
|
Year ended December 31 |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Combined ratio |
|
101.0 |
% |
|
114.5 |
% |
|
100.4 |
% |
|
106.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact on combined ratio of selected items: |
|
|
|
|
|
|
|
|
|
|
|
|
Prior-year development |
|
(1.0 |
)% |
|
1.0 |
% |
|
0.8 |
% |
|
6.2 |
% |
Catastrophes |
|
— |
% |
|
13.1 |
% |
|
2.0 |
% |
|
3.6 |
% |
COVID-19 |
|
0.9 |
% |
|
— |
% |
|
1.6 |
% |
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted combined ratio |
|
101.1 |
% |
|
100.4 |
% |
|
96.0 |
% |
|
97.1 |
% |
Net Underwriting Income
(Loss)
One way that we evaluate 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
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 that this measure
follows industry practice and allows the users of financial
information to compare the Company’s performance with its those of
our 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. Net
underwriting income (loss) is calculated as net premiums earned,
plus other income (expense) relating to reinsurance and
deposit-accounted contracts, less net loss and loss adjustment
expenses, less acquisition costs, and less underwriting expenses.
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 adjustments to the
allowance for expected credit losses; (3) corporate general and
administrative expenses; (4) interest expense and (5) income taxes.
We exclude total investment income or loss and foreign exchange
gains or losses as we believe these items are influenced by market
conditions and other factors not related to underwriting decisions.
We exclude corporate 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
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.
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 December 31 |
|
Year ended December 31 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
Income (loss) before income tax |
$ |
42,016 |
|
|
$ |
(29,663 |
) |
|
$ |
4,290 |
|
|
$ |
(3,503 |
) |
Add (subtract): |
|
|
|
|
|
|
|
Total investment (income) loss |
(48,381 |
) |
|
8,768 |
|
|
(25,532 |
) |
|
(52,267 |
) |
Other non-underwriting (income) expense |
(680 |
) |
|
(592 |
) |
|
(686 |
) |
|
467 |
|
Corporate expenses |
4,325 |
|
|
4,142 |
|
|
14,036 |
|
|
15,560 |
|
Interest expense |
1,578 |
|
|
1,579 |
|
|
6,280 |
|
|
6,263 |
|
Net underwriting income (loss) |
$ |
(1,142 |
) |
|
$ |
(15,766 |
) |
|
$ |
(1,612 |
) |
|
$ |
(33,480 |
) |
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