UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
__________________________
FORM 10-Q 
__________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20212022

or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission file number 001-33493

GREENLIGHT CAPITAL RE, LTD.
(Exact name of registrant as specified in its charter)

Cayman IslandsN/A
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification no.)
65 Market Street
Suite 1207, Jasmine Court
P.O. Box 31110
Camana Bay
Grand Cayman
Cayman IslandsKY1-1205
(Address of principal executive offices)(Zip code)

(345) 943-4573
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Ordinary SharesGLRENasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 
Large accelerated filer ☐         Accelerated filer ☒          Non-accelerated filer ☐          Smaller reporting company ☐          Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) 
Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class A Ordinary Shares, $0.10 par value27,561,94228,462,490
Class B Ordinary Shares, $0.10 par value6,254,715
(Class)Outstanding as ofat July 30, 202129, 2022



GREENLIGHT CAPITAL RE, LTD.
 
TABLE OF CONTENTS
 
  Page
 Condensed Consolidated Balance Sheets as of June 30, 20212022 and December 31, 20202021 (unaudited)
 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 20212022 and 20202021 (unaudited)
 Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended June 30, 20212022 and 20202021 (unaudited)
 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 20212022 and 20202021 (unaudited)
 Notes to the Condensed Consolidated Financial Statements (unaudited)


 
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PART I — FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS 
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) 

June 30, 20212022 and December 31, 20202021
(expressed in thousands of U.S. dollars, except per share and share amounts)
June 30, 2021December 31, 2020 June 30, 2022December 31, 2021
AssetsAssets  Assets  
InvestmentsInvestments  Investments  
Investment in related party investment fundInvestment in related party investment fund$175,136 $166,735 Investment in related party investment fund$189,256 $183,591 
Other investmentsOther investments31,418 29,418 Other investments65,809 47,384 
Total investmentsTotal investments206,554 196,153 Total investments255,065 230,975 
Cash and cash equivalentsCash and cash equivalents35,204 8,935 Cash and cash equivalents28,000 76,307 
Restricted cash and cash equivalentsRestricted cash and cash equivalents709,672 745,371 Restricted cash and cash equivalents669,603 634,794 
Reinsurance balances receivable (net of allowance for expected credit losses of $89 and $89)Reinsurance balances receivable (net of allowance for expected credit losses of $89 and $89)392,154 330,232 Reinsurance balances receivable (net of allowance for expected credit losses of $89 and $89)446,285 405,365 
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $47 and $47)Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $47 and $47)14,332 16,851 Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $47 and $47)9,426 11,100 
Deferred acquisition costsDeferred acquisition costs60,780 51,014 Deferred acquisition costs70,343 63,026 
Notes receivable6,101 
Unearned premiums cededUnearned premiums ceded9,294 42 
Other assetsOther assets3,838 2,993 Other assets5,107 5,885 
Total assetsTotal assets$1,422,534 $1,357,650 Total assets$1,493,123 $1,427,494 
Liabilities and equityLiabilities and equity Liabilities and equity 
LiabilitiesLiabilities Liabilities 
Loss and loss adjustment expense reservesLoss and loss adjustment expense reserves$514,642 $494,179 Loss and loss adjustment expense reserves$526,445 $524,010 
Unearned premium reservesUnearned premium reserves244,597 201,089 Unearned premium reserves268,254 227,584 
Reinsurance balances payableReinsurance balances payable88,813 92,247 Reinsurance balances payable95,374 91,224 
Funds withheldFunds withheld5,092 4,475 Funds withheld12,522 3,792 
Other liabilitiesOther liabilities5,664 5,009 Other liabilities5,323 7,164 
Convertible senior notes payableConvertible senior notes payable96,900 95,794 Convertible senior notes payable100,912 98,057 
Total liabilitiesTotal liabilities955,708 892,793 Total liabilities1,008,830 951,831 
Shareholders' equityShareholders' equity Shareholders' equity 
Preferred share capital (par value $0.10; authorized, 50,000,000; NaN issued)
Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding, 27,916,353 (2020: 28,260,075): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2020: 6,254,715))3,417 3,452 
Preferred share capital (par value $0.10; authorized, 50,000,000; none issued)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, 28,466,516 (2021: 27,589,731): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2021: 6,254,715))Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding, 28,466,516 (2021: 27,589,731): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2021: 6,254,715))3,472 3,384 
Additional paid-in capitalAdditional paid-in capital483,365 488,488 Additional paid-in capital475,903 481,784 
Retained earnings (deficit)Retained earnings (deficit)(19,956)(27,083)Retained earnings (deficit)4,918 (9,505)
Total shareholders' equityTotal shareholders' equity466,826 464,857 Total shareholders' equity484,293 475,663 
Total liabilities and equityTotal liabilities and equity$1,422,534 $1,357,650 Total liabilities and equity$1,493,123 $1,427,494 
 





  The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements.
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GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three and six months ended June 30, 20212022 and 20202021
(expressed in thousands of U.S. dollars, except per share and share amounts)
Three months ended June 30Six months ended June 30Three months ended June 30Six months ended June 30
2021202020212020 2022202120222021
RevenuesRevenues Revenues 
Gross premiums writtenGross premiums written$141,579 $116,689 $311,514 $226,476 Gross premiums written$134,780 $141,579 $280,666 $311,514 
Gross premiums cededGross premiums ceded(1)(132)54 (810)Gross premiums ceded(7,163)(1)(13,172)54 
Net premiums writtenNet premiums written141,578 116,557 311,568 225,666 Net premiums written127,617 141,578 267,494 311,568 
Change in net unearned premium reservesChange in net unearned premium reserves(9,099)(8,143)(43,693)(6,231)Change in net unearned premium reserves(17,398)(9,099)(31,350)(43,693)
Net premiums earnedNet premiums earned132,479 108,414 267,875 219,435 Net premiums earned110,219 132,479 236,144 267,875 
Income (loss) from investment in related party investment fund (net of related party expenses of $672 and $1,973 (three and six months ended June 30, 2020: $616 and $1,278, respectively))(2,006)1,609 2,018 (40,517)
Income (loss) from investment in related party investment fund (net of related party expenses - Note 3)Income (loss) from investment in related party investment fund (net of related party expenses - Note 3)11,876 (2,006)15,953 2,018 
Net investment income (loss)Net investment income (loss)4,046 3,934 18,696 10,771 Net investment income (loss)5,280 4,046 8,940 18,696 
Other income (expense), netOther income (expense), net(3)788 (3,653)1,001 Other income (expense), net(5,957)(3)(6,590)(734)
Total revenuesTotal revenues134,516 114,745 284,936 190,690 Total revenues121,418 134,516 254,447 287,855 
ExpensesExpensesExpenses
Net loss and loss adjustment expenses incurredNet loss and loss adjustment expenses incurred86,957 89,194 184,678 164,891 Net loss and loss adjustment expenses incurred60,823 86,957 158,230 184,678 
Acquisition costsAcquisition costs37,631 17,903 71,012 49,642 Acquisition costs36,335 37,631 69,280 71,012 
General and administrative expensesGeneral and administrative expenses7,739 6,149 15,280 12,943 General and administrative expenses8,106 7,739 15,338 15,280 
Deposit interest expenseDeposit interest expense191 — 225 2,919 
Interest expenseInterest expense1,562 1,562 3,106 3,123 Interest expense1,166 1,562 2,320 3,106 
Total expensesTotal expenses133,889 114,808 274,076 230,599 Total expenses106,621 133,889 245,393 276,995 
Income (loss) before income taxIncome (loss) before income tax627 (63)10,860 (39,909)Income (loss) before income tax14,797 627 9,054 10,860 
Income tax (expense) benefitIncome tax (expense) benefit(3,733)(424)Income tax (expense) benefit(9)(3,733)
Net income (loss)Net income (loss)$628 $(63)$7,127 $(40,333)Net income (loss)$14,788 $628 $9,061 $7,127 
Earnings (loss) per shareEarnings (loss) per shareEarnings (loss) per share
BasicBasic$0.02 $0.00 $0.21 $(1.12)Basic$0.44 $0.02 $0.27 $0.21 
DilutedDiluted$0.02 $0.00 $0.21 $(1.12)Diluted$0.37 $0.02 $0.23 $0.21 
Weighted average number of ordinary shares used in the determination of earnings and loss per shareWeighted average number of ordinary shares used in the determination of earnings and loss per shareWeighted average number of ordinary shares used in the determination of earnings and loss per share
BasicBasic34,667,114 35,776,736 34,560,246 35,958,965 Basic33,871,359 34,667,114 33,861,151 34,560,246 
DilutedDiluted34,821,248 35,776,736 34,699,291 35,958,965 Diluted40,111,152 34,821,248 39,993,066 34,699,291 
 










 
The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements.


  
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GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
For the three and six months ended June 30, 20212022 and 20202021
(expressed in thousands of U.S. dollars)

Three months ended June 30Six months ended June 30Three months ended June 30Six months ended June 30
20212020202120202022202120222021
Ordinary share capitalOrdinary share capitalOrdinary share capital
Balance - beginning of periodBalance - beginning of period$3,485 $3,743 $3,452 $3,699 Balance - beginning of period$3,472 $3,485 $3,384 $3,452 
Issue of Class A ordinary shares, net of forfeituresIssue of Class A ordinary shares, net of forfeitures— 38 44 Issue of Class A ordinary shares, net of forfeitures— 88 38 
Repurchase of Class A ordinary sharesRepurchase of Class A ordinary shares(73)(116)(73)(116)Repurchase of Class A ordinary shares— (73)— (73)
Balance - end of periodBalance - end of period3,417 3,627 3,417 3,627 Balance - end of period3,472 3,417 3,472 3,417 
Additional paid-in capitalAdditional paid-in capitalAdditional paid-in capital
Balance - beginning of periodBalance - beginning of period489,218 504,375 488,488 503,547 Balance - beginning of period474,805 489,218 481,784 488,488 
Cumulative effect of adoption of accounting guidance for convertible debt at January 1, 2022Cumulative effect of adoption of accounting guidance for convertible debt at January 1, 2022— — (7,896)— 
Repurchase of Class A ordinary sharesRepurchase of Class A ordinary shares(6,675)(7,656)(6,675)(7,656)Repurchase of Class A ordinary shares— (6,675)— (6,675)
Share-based compensation expenseShare-based compensation expense822 840 1,552 1,668 Share-based compensation expense1,098 822 2,015 1,552 
Balance - end of periodBalance - end of period483,365 497,559 483,365 497,559 Balance - end of period475,903 483,365 475,903 483,365 
Retained earnings (deficit)Retained earnings (deficit)Retained earnings (deficit)
Balance - beginning of periodBalance - beginning of period(20,584)(71,219)(27,083)(30,063)Balance - beginning of period(9,870)(20,584)(9,505)(27,083)
Cumulative effect of adoption of accounting guidance for expected credit losses at January 1, 2020
— — — (886)
Cumulative effect of adoption of accounting guidance for convertible debt at January 1, 2022Cumulative effect of adoption of accounting guidance for convertible debt at January 1, 2022— — 5,362 — 
Net income (loss)Net income (loss)628 (63)7,127 (40,333)Net income (loss)14,788 628 9,061 7,127 
Balance - end of periodBalance - end of period(19,956)(71,282)(19,956)(71,282)Balance - end of period4,918 (19,956)4,918 (19,956)
Total shareholders' equityTotal shareholders' equity$466,826 $429,904 $466,826 $429,904 Total shareholders' equity$484,293 $466,826 $484,293 $466,826 






















The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements. 


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GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the six months ended June 30, 20212022 and 20202021
(expressed in thousands of U.S. dollars) 
Six months ended June 30Six months ended June 30
20212020 20222021
Cash provided by (used in) operating activitiesCash provided by (used in) operating activities Cash provided by (used in) operating activities 
Net income (loss)Net income (loss)$7,127 $(40,333)Net income (loss)$9,061 $7,127 
Adjustments to reconcile net income or loss to net cash provided by (used in) operating activitiesAdjustments to reconcile net income or loss to net cash provided by (used in) operating activitiesAdjustments to reconcile net income or loss to net cash provided by (used in) operating activities
Loss (income) from investments in related party investment fundLoss (income) from investments in related party investment fund(2,018)40,517 Loss (income) from investments in related party investment fund(15,953)(2,018)
Loss (income) from investment accounted for under the equity method(790)
Net change in unrealized gains and losses on investments and notes receivableNet change in unrealized gains and losses on investments and notes receivable(5,224)(19,106)Net change in unrealized gains and losses on investments and notes receivable(9,183)(5,224)
Net realized (gains) losses on investments and notes receivableNet realized (gains) losses on investments and notes receivable(14,210)15,000 Net realized (gains) losses on investments and notes receivable— (14,210)
Foreign exchange (gains) losses on investments(1)276 
Current expected credit losses recognized on notes receivable and reinsurance assets250 
Foreign exchange (gains) lossesForeign exchange (gains) losses5,402 (1)
Share-based compensation expenseShare-based compensation expense1,590 1,712 Share-based compensation expense2,103 1,590 
Amortization and interest expense, net of change in accrualsAmortization and interest expense, net of change in accruals1,106 1,123 Amortization and interest expense, net of change in accruals321 1,106 
Depreciation expenseDepreciation expense16 14 Depreciation expense— 16 
Net change inNet change inNet change in
Reinsurance balances receivableReinsurance balances receivable(61,922)(20,868)Reinsurance balances receivable(55,718)(61,922)
Loss and loss adjustment expenses recoverableLoss and loss adjustment expenses recoverable2,519 7,259 Loss and loss adjustment expenses recoverable1,674 2,519 
Deferred acquisition costsDeferred acquisition costs(9,766)438 Deferred acquisition costs(7,317)(9,766)
Unearned premiums cededUnearned premiums ceded736 Unearned premiums ceded(9,252)— 
Other assets, excluding depreciationOther assets, excluding depreciation(861)629 Other assets, excluding depreciation778 (861)
Loss and loss adjustment expense reservesLoss and loss adjustment expense reserves20,463 (2,933)Loss and loss adjustment expense reserves12,361 20,463 
Unearned premium reservesUnearned premium reserves43,508 5,918 Unearned premium reserves40,670 43,508 
Reinsurance balances payableReinsurance balances payable(3,434)(28,448)Reinsurance balances payable4,150 (3,434)
Funds withheldFunds withheld617 (314)Funds withheld8,730 617 
Other liabilitiesOther liabilities655 (3,804)Other liabilities(1,841)655 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities(19,835)(42,724)Net cash provided by (used in) operating activities(14,014)(19,835)
Investing activitiesInvesting activitiesInvesting activities
Proceeds from redemptions from related party investment fundProceeds from redemptions from related party investment fund42,221 58,120 Proceeds from redemptions from related party investment fund60,288 42,221 
Contributions to related party investment fundContributions to related party investment fund(48,604)(36,239)Contributions to related party investment fund(50,000)(48,604)
Purchases of investmentsPurchases of investments(3,320)(919)Purchases of investments(9,652)(3,320)
Sales of investments20,755 
Proceeds from sales of investmentsProceeds from sales of investments— 20,755 
Net change in notes receivable6,101 360 
Change in notes receivableChange in notes receivable— 6,101 
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities17,153 21,322 Net cash provided by (used in) investing activities636 17,153 
Financing activitiesFinancing activitiesFinancing activities
Repurchase of Class A ordinary sharesRepurchase of Class A ordinary shares(6,748)(7,772)Repurchase of Class A ordinary shares— (6,748)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(6,748)(7,772)Net cash provided by (used in) financing activities— (6,748)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cashEffect of foreign exchange rate changes on cash, cash equivalents and restricted cash(122)Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash(120)— 
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash(9,430)(29,296)Net increase (decrease) in cash, cash equivalents and restricted cash(13,498)(9,430)
Cash, cash equivalents and restricted cash at beginning of the periodCash, cash equivalents and restricted cash at beginning of the period754,306 767,906 Cash, cash equivalents and restricted cash at beginning of the period711,101 754,306 
Cash, cash equivalents and restricted cash at end of the periodCash, cash equivalents and restricted cash at end of the period$744,876 $738,610 Cash, cash equivalents and restricted cash at end of the period$697,603 $744,876 
Supplementary informationSupplementary information Supplementary information 
Interest paid in cashInterest paid in cash$2,000 $2,000 Interest paid in cash$2,000 $2,000 
Income tax paid in cashIncome tax paid in cash3,700 Income tax paid in cash— 3,700 

The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements. 
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GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 2021
2022
  
1. ORGANIZATION AND BASIS OF PRESENTATION
 
Greenlight Capital Re, Ltd. (“GLRE”) was incorporated as an exempted company under the Companies Law of the Cayman Islands on July 13, 2004. GLRE’s wholly-owned subsidiary, Greenlight Reinsurance, Ltd. (“Greenlight Re”), provides global specialty property and casualty reinsurance. Greenlight Re has a Class D insurer license issued in accordance with the terms of The Insurance Act, 2010 (as amended) and underlying regulations thereto (the “Act”) and is subject to regulation by the Cayman Islands Monetary Authority, in terms of the Act.Authority. Greenlight Re commenced underwriting in April 2006. Verdant Holding Company, Ltd. (“Verdant”), a wholly-owned subsidiary of GLRE, was incorporated in 2008 in the state of Delaware. During 2010, GLRE established Greenlight Reinsurance Ireland, Designated Activity Company (“GRIL”), a wholly-owned reinsurance subsidiary based in Dublin, Ireland. GRIL is authorized as a non-life reinsurance undertaking in accordance with the provisions of the European Union (Insurance and Reinsurance) Regulations 2015. GRIL provides multi-line property and casualty reinsurance capacity to the European broker market and provides GLRE with an additional platform to serve clients located in Europe and North America.  In 2020, GLRE established Greenlight Re Marketing (UK) Limited (“Greenlight Re UK”) as a wholly-owned subsidiary to increase the Company’s presence in the London market. In 2022, Syndicate 3456 commenced underwriting under the Lloyd’s syndicate-in-a-box model, with Greenlight Re as the sole capital provider. As used herein, the “Company” refers collectively to GLRE and its consolidated subsidiaries.

The Class A ordinary shares of GLRE are listed on Nasdaq Global Select Market under the symbol “GLRE.”

These unaudited condensed consolidated financial statements include the results of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In addition, the year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020,2021, as filed with the U.S. Securities and Exchange Commission on March 10, 2021.8, 2022. The condensed consolidated financial statements include the accounts of GLRE and its wholly-owned subsidiaries, Greenlight Re, GRIL, Verdant, and Greenlight Re UK. All significant intercompany transactions and balances have been eliminated on consolidation.

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statements presentation. These reclassifications do not affect previously reported net income or retained earnings.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position and results of operations as at the end of and for the periods presented.

Significant estimates used in the preparation ofto prepare the Company’s condensed consolidated financial statements, including those associated with premiums and the estimations of loss and loss adjustment expense reserves, including losses arising from the novel coronavirus (the “COVID-19 pandemic”), may be subject to significant adjustments in future periods (see Note 5 for the significant assumptions which served as the basis for the Company's estimates of reserves for the COVID-19 pandemic). All significant intercompany accounts and transactions have been eliminated.

The results for the six months ended June 30, 2021, are not necessarily indicative of the results expected for the full calendar year.periods.

2. SIGNIFICANT ACCOUNTING POLICIES
 
There have been no material changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the year ended December 31, 2020.2021.

Use of Estimates
 
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of incomerevenue and expenses during the period. Actual results could differ from these estimates. The significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, loss and loss adjustment expense reserves,
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condensed consolidated financial statements include, but are not limited to, losspremiums written, earned, and loss adjustment expense reserves, premium revenues andreceivable, variability underlying risk transfer bonus accruals,assessments, allowances for credit losses, share-based compensation, valuation allowances associated with deferred tax assets and share-based payments.investment impairments.

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents
 
Cash and cash equivalents consist of cash and short-term, highly liquid investments and certificates of deposit with original maturity dates of three months or less. Certificates of deposit with original maturities greater than three months are included under the caption "Other investments" on the condensed consolidated balance sheets.

The Company maintains cash and cash equivalent balances to collateralize regulatory trusts and letters of credit issued to cedents (see Note 12). The following table reconciles the cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total presented in the condensed consolidated statements of cash flows:

June 30, 2021December 31, 2020 June 30, 2022December 31, 2021
($ in thousands) ($ in thousands)
Cash and cash equivalentsCash and cash equivalents$35,204 $8,935 Cash and cash equivalents$28,000 $76,307 
Restricted cash and cash equivalentsRestricted cash and cash equivalents709,672 745,371 Restricted cash and cash equivalents669,603 634,794 
Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flowsTotal cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows$744,876 $754,306 Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows$697,603 $711,101 

Funds Held by Cedents

The caption “Reinsurance balances receivable” in the Company’s condensed consolidated balance sheets includes amountsfinancial assets held by cedents. At June 30, 2022, funds held by cedents were $282.1 million (December 31, 2021: $246.9 million). Such amounts held include premiums as well as Funds atwithheld by Lloyd’s which is held in trust atsyndicates and funds contributed by the Company to Lloyd's as security for members’ underwriting activities. At June 30, 2021, funds held by cedents were $184.1 million (December 31, 2020: $127.6 million)The syndicates invest a portion of the premiums withheld in fixed maturity securities and investment funds. The Company records its share of income (or expense) from these assets in its condensed consolidated statements of operations under the caption “Other income (expense).
 
Reinsurance Assets

The Company calculates an allowance for expected credit losses for its reinsurance balances receivable and loss and loss adjustment expenses recoverable by applying a Probability of Default (“PD”) / Loss Given Default (“LGD”) model thatmodel. The PD / LGD approach considers both the Company’s collectibility history on its reinsurance assets as well asand representative external loss history. In calculating the probability of default, the Company also considers the estimated duration of its reinsurance assets.

EachThe Company evaluates each counterparty’s creditworthiness is evaluated individuallybased on the basis of credit ratings assigned bythat independent agencies.agencies assign to the counterparty. The Company manages its credit risk in its reinsurance assets by transacting only with insurers and reinsurers that it considers financially sound.Credit ratings of the counterparties are forward-looking and consider various economic scenarios. The Company's evaluation of the required allowance for reinsurance balances receivable and loss and loss adjustment expenses recoverable considers the current economic environment as well as potential macroeconomic developments.

For its retrocessional counterparties that are unrated, the Company may hold collateral in the form of funds withheld, trust accounts, or irrevocable letters of credit. In evaluating credit risk associated with reinsurance balances receivable, the Company considers its right to offset loss obligations or unearned premiums against premiums receivable. The Company regularly evaluates its net credit exposure to assess the ability of cedents and retrocessionaires to honor their respective obligations.

At June 30, 2021,2022, the Company has recorded an allowance for expected credit loss on its Reinsurance Assets of $0.1 million (December 31, 2020:2021: $0.1 million).
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Deposit Assets and Liabilities
 
The Company applies deposit accounting to reinsurance contracts that do not transfer sufficient insurance risk to merit reinsurance accounting. Under deposit accounting, the Company recognizes an asset or liability based on the consideration it hasits paid or received.received consideration. The deposit asset or liability balance is subsequently adjusted using the interest method with the corresponding income or expense recorded in the Company’s condensed consolidated statements of operations under the captioncaptions “Other income (expense). and “Deposit interest expense,” respectively. The Company records deposit assets and liabilities in its condensed consolidated balance sheets in the caption “Reinsurance balances receivable” and “Reinsurance balances payable,” respectively. At June 30, 2021,2022, deposit assets and deposit liabilities were $5.0$3.1 million and $19.5$14.3 million, respectively (December 31, 2020: $4.62021: $3.5 million and $31.0$18.6 million, respectively). For the three and six months ended June 30, 20212022, and 2020,2021, the interest income and (expense)expense on deposit accounted contracts were as follows:
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 Three months ended June 30Six months ended June 30
 2022202120222021
($ in thousands)($ in thousands)
Deposit interest income$— $28 $— $— 
Deposit interest expense$(191)$— $(225)$(2,919)
Deposit interest income/(expense), net$(191)$28 $(225)$(2,919)

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Foreign Exchange
 Three months ended June 30Six months ended June 30
 2021202020212020
($ in thousands)($ in thousands)
Deposit interest income$28 $645 $$1,252 
Deposit interest expense$$$(2,919)$
Deposit interest income/(expense), net$28 $645 $(2,919)$1,252 

The reporting and functional currency of the Company and all its significant subsidiaries is the U.S. dollar. The Company records foreign currency transactions at the exchange rates in effect on the transaction date. Monetary assets and liabilities in foreign currencies at the balance sheet date are converted at the exchange rate in effect at the balance sheet date. The Company includes any foreign exchange gains and losses under the caption “Other income (expense), net” in the Company’s condensed consolidated statements of operations. 

For the three and six months ended June 30, 2022, $4.3 million and $5.4 million, respectively, (three and six months ended June 30, 2021: $0.2 million and $0.8 million, respectively), of foreign exchange loss was included in the Company’s net income (loss) in the condensed consolidated statements of operations. 

Derivative instruments

The Company recognizes derivative financial instruments in the condensed consolidated balance sheets at their fair values. It includes any realized gains and losses and changes in unrealized gains and losses in the caption “Net investment income (loss)” in the condensed consolidated statements of operations.

The Company’s derivatives do not qualify as hedges for financial reporting purposes. The Company records the associated assets and liabilities in its condensed consolidated balance sheets on a gross basis. The Company does not offset these balances against collateral pledged or received.

Other Assets

The caption “Other assets” in the Company’s condensed consolidated balance sheets consists primarily of prepaid expenses, fixed assets, right-of-use lease assets, other receivables, taxes recoverable, and deferred tax assets.

Other Liabilities

The caption “Other liabilities” in the Company’s condensed consolidated balance sheets consists primarily of accruals for legal and other professional fees, employee bonuses, taxes payable, and lease liabilities.

Earnings (Loss) Per Share
 
The Company’sCompany has issued unvested restricted stock awards, some of which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid,unpaid. These awards are considered “participating securities” for the purposes of calculating earnings (loss) per share. Basic earnings per share is calculated on the basis of the weighted average number of common
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ordinary shares and participating securities outstanding during the period. Diluted earnings (or loss) per share includes the dilutive effect of the following:

Restricted Stock Units (“RSUs”) issued that would convert to commonordinary shares upon vesting;
additionalUnvested restricted stock awards which are not considered “participating securities”;
Additional potential commonordinary shares issuable when in-the-money stock options are exercised, determined using the treasury stock method; and
For periods prior to January 1, 2022, those commonordinary shares with the potential to be issued in connection with convertible debtnotes and other such convertible instruments, determined using the treasury stock method; and
Effective January 1, 2022, the maximum number of additional ordinary shares required to settle the convertible notes, as required under the if-converted method.

Diluted earnings (or loss) per share contemplates a conversion to commonordinary shares of all convertible instruments only if they are dilutive with regards to earnings per share.dilutive. In the event of a net loss, all RSUs, stock options, shares potentially issuable in connection with convertible debt,notes, and participating securities are excluded from the calculation of both basic and diluted loss per share as their inclusion would be anti-dilutive.

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The table below presents the shares outstanding for the calculation of earnings (loss) per share for the three and six months ended June 30, 20212022 and 2020:2021:
Three months ended June 30Six months ended June 30 Three months ended June 30Six months ended June 30
2021202020212020 2022202120222021
Weighted average shares outstanding - basicWeighted average shares outstanding - basic34,667,114 35,776,736 34,560,246 35,958,965 Weighted average shares outstanding - basic33,871,359 34,667,114 33,861,151 34,560,246 
Effect of dilutive employee and director share-based awardsEffect of dilutive employee and director share-based awards154,134 139,045 Effect of dilutive employee and director share-based awards421,611 154,134 313,733 139,045 
Shares potentially issuable in connection with convertible notesShares potentially issuable in connection with convertible notes5,818,182 — 5,818,182 — 
Weighted average shares outstanding - dilutedWeighted average shares outstanding - diluted34,821,248 35,776,736 34,699,291 35,958,965 Weighted average shares outstanding - diluted40,111,152 34,821,248 39,993,066 34,699,291 
Anti-dilutive stock options outstandingAnti-dilutive stock options outstanding835,627 875,627 835,627 875,627 Anti-dilutive stock options outstanding735,627 835,627 735,627 835,627 
Participating securities excluded from calculation of loss per share 1,259,173 1,259,173 

Taxation
 
Under current Cayman Islands law, no corporate entity, including GLRE and Greenlight Re, is obligated to pay taxes in the Cayman Islands on either income or capital gains. The Company has an undertaking from the Governor-in-Cabinet of the Cayman Islands, pursuant to the provisions of the Tax Concessions Law,Act, as amended, that, in the event that the Cayman Islands enacts any legislation that imposes a tax on profits, income, gains, or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax will not be applicable to GLRE, Greenlight Re nor their respective operations, or to the Class A or Class B ordinary shares or related obligations, before February 1, 2025.
 
Verdant is incorporated in Delaware and therefore is subject to taxes in accordance with the U.S. federal rates and regulations prescribed by the U.S. Internal Revenue Service (“IRS”). Verdant’s taxable income is generally expected to be taxed at a marginal rate of 21% (2020:(2021: 21%). Verdant’s tax years 20172018 and beyond remain open and may be subject to examination by the IRS.

GRIL is incorporated in Ireland and therefore is subject to the Irish corporation tax rate of 12.5% on its trading income and 25% on its non-trading income.

The Company records a valuation allowance to the extent that the Company considers it more likely than not that all or a portion of the deferred tax asset will not be realized in the future. Other than this valuation allowance, the Company has not taken any income tax positions subject to significant uncertainty that areis reasonably likely to have a material impact on the Company. 

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Recent Accounting Pronouncements

Recently Issued Accounting Standards Not Yet Adopted

In January 2020,June 2022, the FASBFinancial Accounting Standards Board (FASB) issued ASUAccounting Standards Update (ASU) No. 2020-01, Investments -2022-03 “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force)Subject to Contractual Sale Restrictions.” (“ASU 2020-01”2022-03”). The amendments in ASU 2020-01 clarify certain interactions between2022-03 clarifies the guidance to account for certain equity securities under Topic 321,measuring the guidance to account for investments under the equity methodfair value of accounting in Topic 323, and the guidance in Topic 815, which could change how an entity accounts for an equity security undersubject to contractual restrictions that prohibit the measurement alternative or a forward contract or purchased optionsale of an equity security, and introduces new disclosure requirements for equity securities subject to purchase securitiescontractual sale restrictions that upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or theare measured at fair value option in accordance with Topic 825, Financial Instruments.820. ASU 2020-012022-03 is effective for public business entities for fiscal years, beginning after December 15, 2020, andincluding interim periods within those fiscal years.years, beginning after December 15, 2023. Early adoption is permitted. The adoption ofCompany does not expect ASU 2020-01 during the first quarter of 2021 had no2022-03 to have a material impact on the Company’s consolidatedits financial statements.position, results of operations, or cash flows.

Recently Issued Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity (“ASU 2020-06”). ASU 2020-06 is designed to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments. The amendments remove
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the separation models in Subtopic 470-20 for certain contracts. As a result, entities will no longer present embedded conversion features separately in equity; rather,instead, the convertible debt instrument will be accounted for as a single liability measured at its amortized cost. ASU 2020-06 also addresses the computation of earnings per share for convertible debt instruments, requiring the application of the if-converted method when calculating diluted earnings per share. Under the if-converted method, the shares potentially issuable in connection with convertible debt are assumed to be converted at the beginning of the period. The resulting ordinary shares are included in the denominator of the diluted earnings per share calculation for the period presented.

The Company intends to adoptadopted ASU 2020-06 during the first quarter of 2022, using the “modified retrospective” transition method.

The Company expects that its adoption of ASU 2020-06 will impact the accounting for its senior convertible notes (see Note 7) and will lead toresulted in a decrease in its totalthe Company’s opening shareholders’ equity of approximately $2.5 million, with a corresponding increase in the carrying value of the senior convertible notes. The Company expects that innotes (see Note 7). For the periods in which the Company reports a net income, an additional 5.8 million ordinary shares are included in the number of shares outstanding for the diluted earnings per share calculation will be approximately 5.8 million higher under the if-converted method.method, without regard to the conversion price of such convertible notes. The Company does not expect the adoption of ASU 2020-06 todid not have a material impact on the Company’s net income, cash flows, or any other balances.

3. INVESTMENT IN RELATED PARTY INVESTMENT FUND

On September 1, 2018, theThe Company has entered into an amendedthe Second Amended and restated exempted limited partnership agreement (as amended by the letter agreement dated as of August 5, 2020,Restated Exempted Limited Partnership Agreement (the “Previous SILP“SILP LPA”) of Solasglas Investments, LP (“SILP”), with DME Advisors II, LLC (“DME II”), as General Partner, Greenlight Re, and GRIL, (together, the “GLRE Limited Partners”), and the initial limited partner (each, a “Partner”). On September 1, 2018, SILP alsohas entered into a SILP investment advisory agreement (“IAA”) with DME Advisors. LP (“DME Advisors”) pursuant to which DME Advisors is the investment manager for SILP. DME II and DME Advisors are related to the Company, and each is an affiliate of David Einhorn, Chairman of the Company’s Board of Directors.

On January 7, 2021, the Company and DME II entered into the Second Amended and Restated Exempted Limited Partnership Agreement, effective as of January 1, 2021 (the “SILP LPA”). The SILP LPA amends, restates, supersedes, and incorporates all material terms ofincludes the Previous SILP LPA, as amended as of February 26, 2019, and the letter agreements dated June 18, 2019, December 27, 2019, and August 5, 2020 (collectively, the “Amendments”). The SILP LPA agreement also amended the definition of “Additional Investment Ratio” and amended each of the defined terms “Greenlight Re Surplus” and the “GRIL Surplus” so as to clarify that each of the respectively referenced “financial statements” are “U.S. GAAP financial statements.” In addition, the SILP LPA included the following:following proviso: “The Investment Portfolio of each Partner will not exceed the product of (a) such Partner’s surplus (Greenlight Re Surplus or GRIL Surplus, as the case may be) multiplied by (b) the Investment Cap (50%), and the General Partner will designate any portion of a Partner’s Investment Portfolio as Designated Securities to effectuate such limit”. The SILP LPA also amended the investment guidelines to reflect the amended investment guidelines adopted by the Company’s Board of Directors effective as of January 1, 2021.limit.”

The Company has concluded that SILP qualifies as a variable interest entity (“VIE”) under U.S. GAAP. In assessing its interest in SILP, the Company noted the following:

DME II serves as SILP’s general partner and has the power of appointing the investment manager. The Company does not have the power to appoint, change or replace the investment manager or the general partner except “for cause.” Neither of the GLRE Limited Partners can participate in the investment decisions of SILP as long as SILP adheres to the investment guidelines provided within the SILP LPA. For these reasons, the GLRE Limited Partners are not considered to have substantive participating rights or kick-out rights.

DME II holds an interest in excess of 10% of SILP’s net assets, which the Company considers to represent an obligation to absorb losses and a right to receive benefits of SILP that are significant to SILP.
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Consequently, the Company has concluded that DME II’s interests, not the Company’s, meet both the “power” and “benefits” criteria associated with VIE accounting guidance, and therefore DME II is SILP’s primary beneficiary. The Company’sCompany presents its investment in SILP is presented in the Company’sits condensed consolidated balance sheets in the caption “Investment in related party investment fund.”

The Company’s maximum exposure to loss relating to SILP is limited to the net asset value of the GLRE Limited Partners’ investment in SILP. At June 30, 2021,2022, the net asset value of the GLRE Limited Partners’ investment in SILP was $175.1$189.3 million (December 31, 2020: $166.72021: $183.6 million), representing 76.8%76.0% (December 31, 2020: 75.7%2021: 78.2%) of SILP’s total net assets. DME II held the remaining 23.2%24.0% (December 31, 2020: 24.3%2021: 21.8%) of SILP’s total net assets. The investment in SILP is recorded at the GLRE Limited Partners’ share of the net asset value of SILP as reported by SILP’s third-party administrator. The GLRE Limited Partners can redeem their assets from SILP for operational purposes by providing three business days’ notice to DME II. At June 30, 2021,2022, the majority of SILP’s long investments were composed of cash and publicly traded equity
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securities, which could be readily liquidated to meet the GLRE Limited Partners’ redemption requests.

The Company’s share of the change in the net asset value of SILP for the three and six months ended June 30, 2021,2022, was $(2.0)$11.9 million and $2.0$16.0 million, respectively (three and six months ended June 30, 2020: $1.62021: $(2.0) million and $(40.5)$2.0 million, respectively), and shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s condensed consolidated statements of operations.

The summarized financial statements of SILP are presented below.


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Summarized Statement of Assets and Liabilities of Solasglas Investments, LP
June 30, 2021December 31, 2020June 30, 2022December 31, 2021
($ in thousands)($ in thousands)
AssetsAssetsAssets
Investments, at fair valueInvestments, at fair value$260,235 $272,398 Investments, at fair value$247,121 $297,937 
Derivative contracts, at fair valueDerivative contracts, at fair value8,895 1,450 Derivative contracts, at fair value12,934 2,542 
Due from brokersDue from brokers54,190 92,053 Due from brokers111,050 84,775 
Cash and cash equivalentsCash and cash equivalents4,494 Cash and cash equivalents8,689 — 
Interest and dividends receivableInterest and dividends receivable19 59 Interest and dividends receivable11 28 
Total assetsTotal assets327,833 365,960 Total assets379,805 385,282 
Liabilities and partners’ capitalLiabilities and partners’ capitalLiabilities and partners’ capital
LiabilitiesLiabilitiesLiabilities
Investments sold short, at fair valueInvestments sold short, at fair value(91,071)(131,902)Investments sold short, at fair value(121,531)(132,360)
Derivative contracts, at fair valueDerivative contracts, at fair value(4,947)(4,156)Derivative contracts, at fair value(8,154)(7,253)
Capital withdrawals payableCapital withdrawals payable— (10,000)
Due to brokersDue to brokers(3,111)(9,179)Due to brokers(730)— 
Interest and dividends payableInterest and dividends payable(443)(429)Interest and dividends payable(324)(580)
Other liabilitiesOther liabilities(97)(175)Other liabilities(156)(358)
Total liabilitiesTotal liabilities(99,669)(145,841)Total liabilities(130,895)(150,551)
Net AssetsNet Assets$228,164 $220,119 Net Assets$248,910 $234,731 
GLRE Limited Partners’ share of Net AssetsGLRE Limited Partners’ share of Net Assets$175,136 $166,735 GLRE Limited Partners’ share of Net Assets$189,256 $183,591 


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Summarized Statement of Operations of Solasglas Investments, LP
Three months ended June 30Six months ended June 30Three months ended June 30Six months ended June 30
20212020202120202022202120222021
($ in thousands)($ in thousands)
Investment incomeInvestment incomeInvestment income
Dividend income (net of withholding taxes)Dividend income (net of withholding taxes)$159 $287 $363 $1,034 Dividend income (net of withholding taxes)$303 $159 $623 $363 
Interest incomeInterest income570 17 719 226 Interest income286 570 335 719 
Total Investment incomeTotal Investment income729 304 1,082 1,260 Total Investment income589 729 958 1,082 
ExpensesExpensesExpenses
Management feeManagement fee(895)(616)(1,749)(1,278)Management fee(894)(895)(1,785)(1,749)
InterestInterest(427)(325)(669)(342)Interest(479)(427)(735)(669)
DividendsDividends(301)(254)(546)(399)Dividends(200)(301)(582)(546)
Professional fees and otherProfessional fees and other(337)(124)(559)(332)Professional fees and other(230)(337)(494)(559)
Total expensesTotal expenses(1,960)(1,319)(3,523)(2,351)Total expenses(1,803)(1,960)(3,596)(3,523)
Net investment income (loss)Net investment income (loss)(1,231)(1,015)(2,441)(1,091)Net investment income (loss)(1,214)(1,231)(2,638)(2,441)
Realized and change in unrealized gains (losses)Realized and change in unrealized gains (losses)Realized and change in unrealized gains (losses)
Net realized gain (loss)Net realized gain (loss)(6,332)(31,607)(13,398)(43,560)Net realized gain (loss)26,827 (6,332)50,975 (13,398)
Net change in unrealized appreciation (depreciation)Net change in unrealized appreciation (depreciation)4,789 34,772 17,580 (5,021)Net change in unrealized appreciation (depreciation)(6,699)4,789 (23,491)17,580 
Net gain (loss) on investment transactionsNet gain (loss) on investment transactions(1,543)3,165 4,182 (48,581)Net gain (loss) on investment transactions20,128 (1,543)27,484 4,182 
Net income (loss)Net income (loss)$(2,774)$2,150 $1,741 $(49,672)Net income (loss)$18,914 $(2,774)$24,846 $1,741 
GLRE Limited Partners’ share of net income (loss) (1)
GLRE Limited Partners’ share of net income (loss) (1)
$(2,006)$1,609 $2,018 $(40,517)
GLRE Limited Partners’ share of net income (loss) (1)
$11,876 $(2,006)$15,953 $2,018 

(1) Net income (loss) is net of management fees and performance allocation presented below:

Three months ended June 30Six months ended June 30Three months ended June 30Six months ended June 30
20212020202120202022202120222021
($ in thousands)($ in thousands)
Management feesManagement fees$895 $616 $1,749 $1,278 Management fees$894 $895 $1,785 $1,749 
Performance allocationPerformance allocation$(223)$$224 $Performance allocation1,319 $(223)1,772 224 
TotalTotal$672 $616 $1,973 $1,278 Total$2,213 $672 $3,557 $1,973 

See Note 11 for further details on related party management fees and performance allocation.

4. FINANCIAL INSTRUMENTS 
 
Investments
  
Other Investments

The Company’s “Other investments” are composed of the following:

Private investments and unlisted equities, which consist primarily of Innovations-related investments supporting technology innovators in the (re)insurance market; and
Derivative financial instruments associated with the Company’s Innovations investments.
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Certificates of deposit with original maturities greater than three months.

At June 30, 2021,2022, the Company included the following securities were included in the caption “Other investments”:
CostUnrealized
gains
Unrealized
losses
Fair value / carrying valueCostUnrealized
gains
Unrealized
losses
Fair value / carrying value
($ in thousands) ($ in thousands)
Private investments and unlisted equitiesPrivate investments and unlisted equities$15,735 $16,383 $(1,800)$30,318 Private investments and unlisted equities$21,062 $42,143 $(3,396)$59,809 
Derivative financial instruments (not designated as hedging instruments)1,100 1,100 
Certificates of depositCertificates of deposit6,000 — — 6,000 
Total other investmentsTotal other investments$15,735 $17,483 $(1,800)$31,418 Total other investments$27,062 $42,143 $(3,396)$65,809 

At December 31, 2020,2021, the Company included the following securities were included in the caption “Other investments”: 
CostUnrealized
gains
Unrealized
losses
Fair value / carrying valueCostUnrealized
gains
Unrealized
losses
Fair value / carrying value
($ in thousands) ($ in thousands)
Private investments and unlisted equitiesPrivate investments and unlisted equities$12,414 $10,679 $(1,300)$21,793 Private investments and unlisted equities$17,411 $31,438 $(1,800)$47,049 
Derivative financial instruments (not designated as hedging instruments)Derivative financial instruments (not designated as hedging instruments)1,080 1,080 Derivative financial instruments (not designated as hedging instruments)— 335 — 335 
Other investments12,414 11,759 (1,300)22,873 
Investment accounted for under the equity method6,545 
Total other investmentsTotal other investments$29,418 Total other investments$17,411 $31,773 $(1,800)$47,384 

Private investments and unlisted equities includeequity securities that do not havewithout readily determinable fair values. values

The carrying values of these holdings are determined based on their original cost minus impairment, if any, plus or minus changes resulting from observable price changes. At June 30, 2021, the carrying value ofCompany measures its private investments and unlisted equities was $30.3 million (December 31, 2020: $21.8 million). It incorporated upward adjustmentsequity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from identical or similar investments of $4.0 million and $5.2 million during the three and six months ended June 30, 2021, respectively (three and six months ended June 30, 2020: $3.3 million and $4.1 million, respectively)same issuers (the “measurement alternative”), excluding any unrealized gains or losses related towith such changes recognized in foreign currency exchange rates.the caption “Net investment income (loss)” in the condensed consolidated statements of operations. The net upward adjustments sinceCompany considers the acquisitionneed for impairment on a by-investment basis, based on certain indicators. Under the measurement alternative, the Company makes two types of these private investments were $14.5 million and $9.3 million as of June 30, 2021, and December 31, 2020, respectively.valuation adjustments:

At December 31, 2020,When the Company observes an orderly transaction of an investee’s identical or similar equity securities, the Company adjusts the carrying value based on the observable price as of the transaction date. Once the Company records such an adjustment, the investment accounted for under the equity method representedis considered an investment in AccuRisk Holdings LLC (“AccuRisk”),“asset measured at fair value on a Chicago, Illinois-based managing general underwriter focused on employee and health insurance benefits. During the six months ended June 30, 2021,nonrecurring basis.”
If the Company solddetermines that the investment is impaired and the fair value is less than its carrying value, it writes down the investment in AccuRisk and realizedto its fair value. Once the Company records such an adjustment, the investment is considered an “asset measured at fair value on a gain (pre-tax) of $14.2 million.nonrecurring basis.”

Derivative instruments include warrants issued by certain entities grantingThe following table presents the Companycarrying values of the right, but notprivate investments and unlisted equity securities carried under the obligation, to purchase sharesmeasurement alternative at a specified price on or beforeJune 30, 2022, and 2021, and the maturity date. The Company has not designated warrants issued to it in connection with Innovations-related investments as hedging instruments. The Company’s maximum exposure to loss relating to these warrants is limited torelated adjustments recorded during the warrants’ carrying amount.periods then ended.
Six months ended June 30
20222021
($ in thousands)
Carrying value (1)
$59,809 $47,049 
Upward carrying value changes (2)
$11,184 $20,814 
Downward carrying value changes and impairment (3)
$(1,698)$(500)

(1) The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes.
(2) The cumulative upward carrying value changes from inception to June 30, 2022, totaled $42.8 million.
(3) The cumulative downward carrying value changes and impairments from inception to June 30, 2022, totaled $3.7 million.

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Fair Value Hierarchy

The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. Assets and liabilities measured at fair value are categorized based on whetherthe extent to which the inputs are observable in the market and the degree that the inputs are observable.market. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

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Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. The term “unobservable inputs” includes certain pricing models, discounted cash flow methodologies, and similar techniques.

The Company values its derivative instruments using the Black-Scholes option pricing modelAssets measured at fair value on thea nonrecurring basis of Level 3 inputs. The Company uses the carrying value of the underlying stock as an input in the option pricing model. The underlying stock does not have a readily determinable fair value. Its carrying value is determined based on its original cost minus impairment, if any, plus or minus changes resulting from observable price changes. The other assumptions applied to the option pricing model include a risk-free rate of 0.50% and estimated volatility of 50%. The carrying value of the derivative instruments represents the fair value.

For the derivative instruments valued on the basis of Level 3 inputs, any change in unrealized gains or losses is included in the caption “Net investment income (loss)” in the Company’s condensed consolidated statements of operations.

At June 30, 2021,2022, and December 31, 2020,2021, the Company held $52.9 million and $40.5 million, respectively, of private investments and unlisted equities measured at fair value on a nonrecurring basis. The Company classifies these assets as Level 3 within the fair value hierarchy. The following table summarizes the periods between the most recent fair value measurement dates and June 30, 2022, for the private and unlisted equities measured at fair value on a nonrecurring basis:

Less than 6 months6 to 12 monthsOver 1 yearTotal
($ in thousands)
Fair values measured on a nonrecurring basis$33,028 $9,475 $10,346 $52,849 

At June 30, 2022, and December 31, 2021, the Company held $7.0 million and $6.6 million, respectively, of private investments and unlisted equities measured at cost.

The carrying value of certificates of deposit with original maturities of one year or less approximates their fair values. The Company classifies these assets as Level 2 within the fair value hierarchy.

At June 30, 2022, and December 31, 2021, the Company did not carry any other investments at fair value with an assigned Level within the fair value hierarchy. The Company’s investment in the related party investment fund is measured at fair value using the net asset value practical expedient andexpedient. It is therefore not classified within the fair value hierarchy. (See Note 3 for further details on the related party investment fund.)

Financial Instruments Disclosed, But Not Carried, at Fair Value

The caption “Convertible senior notes payable” represents financial instruments that the Company carries at amortized cost. The fair value of the convertible senior notes payable is estimated based on the bid price observed in an inactive market for the identical instrument (Level 2 input) (see Note 7).

5. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

At June 30, 2021,2022, the Company’s loss and loss adjustment expense reserves included estimated amounts for several catastrophe events. For significant catastrophe events, including, but not limited to, hurricanes, tornados, typhoons, floods, earthquakes, wildfires, and pandemics, loss reserves are generally established based on loss payments and case reserves reported by clients when and if, received. To establish IBNR loss estimates, the Company makes use of, among other things, the following:following information:

estimates communicated by ceding companies;
information received from clients, brokers, and loss adjusters;
an understanding of the underlying business written and its exposures to catastrophe event-related losses;
industry data;
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catastrophe scenario modeling software; and
management’s judgment.

The COVID-19 pandemic is unprecedented, andAt June 30, 2022, the Company does not have previous loss experience on which to base the associated estimate forCompany’s loss and loss adjustment expenses. Theexpense reserves included $13.6 million from the Russian-Ukrainian conflict. Additional information the Company basedconsidered in estimating its estimate onloss reserves included the following:

a review of in-force treaties that may provide coverage and incur losses;
catastrophe and scenario modeling analyses and results shared by cedents;
preliminary loss estimates received from clients, and their analystsbrokers, and loss adjusters;
reviews of industry insured loss estimates and market share analyses; and
management’s judgment.

SignificantThe Company’s Russian-Ukrainian conflict loss estimates include actuarial assumptions, which served as the basis for the Company's estimates of reserves for the COVID-19 pandemic losses and loss adjustment expenses include:including:

the areas within the affected regions that have incurred losses;
the scope of coverage provided by the underlying policies, particularly those that provide for business interruption coverage;policies;
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the interpretation of contract terms;
the determination of loss-triggering events;
regulatory, legislative, and judicial actions that could influence contract interpretations across the insurance industry;
the extent of economic contraction caused by the COVID-19 pandemic and associated actions, particularly in the United States; and
the ability of the cedents and insured to mitigate some or all of their losses.

WhileDue to the Company believes its estimate ofuncertainty associated with the foregoing assumptions, the Company’s loss estimates are subject to significant variability, and loss adjustment expense reserves for the COVID-19 pandemic is adequate as of June 30, 2021, based on available information, actual losses may ultimately differ materially from the Company's current estimates. The Company will continue to monitor the appropriateness ofevaluate its assumptions as new information becomes available and willmay adjust its loss estimates accordingly.in future periods. Such adjustments may be material to the Company's results of operations and financial condition.

Additionally, if the Russian-Ukrainian conflict is prolonged, the Company may incur additional losses in subsequent periods.

The Company made no significant changes in the actuarial methodology or reserving process related to its loss and loss adjustment expense reserves for the six months ended June 30, 2021.2022.

At June 30, 20212022 and December 31, 2020,2021, loss and loss adjustment expense reserves were composed of the following:
June 30, 2021December 31, 2020June 30, 2022December 31, 2021
($ in thousands) ($ in thousands)
Case reservesCase reserves$186,395 $176,805 Case reserves$182,624 $190,220 
IBNRIBNR328,247 317,374 IBNR343,821 333,790 
TotalTotal$514,642 $494,179 Total$526,445 $524,010 
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A summary of changes in outstanding loss and loss adjustment expense reserves for all lines of business consolidated
for the six months ended June 30, 20212022 and 20202021 is as follows: 
ConsolidatedConsolidated20212020Consolidated20222021
($ in thousands) ($ in thousands)
Gross balance at January 1Gross balance at January 1$494,179 $470,588 Gross balance at January 1$524,010 $494,179 
Less: Losses recoverableLess: Losses recoverable(16,851)(27,531)Less: Losses recoverable(11,100)(16,851)
Net balance at January 1Net balance at January 1477,328 443,057 Net balance at January 1512,910 477,328 
Incurred losses related to:Incurred losses related to:  Incurred losses related to:  
Current yearCurrent year185,281 159,225 Current year158,788 185,281 
Prior yearsPrior years(603)5,666 Prior years(558)(603)
Total incurredTotal incurred184,678 164,891 Total incurred158,230 184,678 
Paid losses related to:Paid losses related to:  Paid losses related to:  
Current yearCurrent year(47,262)(35,874)Current year(27,896)(47,262)
Prior yearsPrior years(114,680)(122,532)Prior years(116,200)(114,680)
Total paidTotal paid(161,942)(158,406)Total paid(144,096)(161,942)
Foreign currency revaluationForeign currency revaluation246 (2,112)Foreign currency revaluation(10,025)246 
Net balance at June 30Net balance at June 30500,310 447,430 Net balance at June 30517,019 500,310 
Add: Losses recoverableAdd: Losses recoverable14,332 20,225 Add: Losses recoverable9,426 14,332 
Gross balance at June 30Gross balance at June 30$514,642 $467,655 Gross balance at June 30$526,445 $514,642 
    
For the six months ended June 30, 2022, the estimate of net losses incurred relating to prior accident years decreased by $0.6 million, primarily due to favorable development on mortgage contracts. This favorable development was partially offset by adverse development on motor and health business driven by the inflationary increase in claims costs and additional losses from the COVID-19 pandemic.

For the six months ended June 30, 2021, the estimate of net losses incurred relating to prior accident years decreased by $0.6 million due primarily to favorable development on certain catastrophe, and a mortgage, contract associated with the COVID-19 pandemic and certain health contracts. The decrease in prior accident years was partially offset by adverse loss development on certain casualty contracts written between 2014 and 2018. The favorable loss development on a mortgage contract was offset by an increase in profit commissions on the same contract.

For the six months ended June 30, 2020, the estimate of net losses incurred relating to prior accident years increased by $5.7 million, due primarily to certain general liability, health and multi-line contracts, partially offset by favorable loss development on professional liability contracts.
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The changes in the outstanding loss and loss adjustment expense reserves for health claims for the six months ended June 30, 20212022 and 20202021 are as follows:
HealthHealth20212020Health20222021
($ in thousands) ($ in thousands)
Gross balance at January 1Gross balance at January 1$17,485 $18,063 Gross balance at January 1$9,939 $17,485 
Less: Losses recoverableLess: Losses recoverableLess: Losses recoverable— — 
Net balance at January 1Net balance at January 117,485 18,063 Net balance at January 19,939 17,485 
Incurred losses related to:Incurred losses related to: Incurred losses related to: 
Current yearCurrent year22,895 15,811 Current year5,293 22,895 
Prior yearsPrior years(1,667)1,972 Prior years3,466 (1,667)
Total incurredTotal incurred21,228 17,783 Total incurred8,759 21,228 
Paid losses related to:Paid losses related to: Paid losses related to: 
Current yearCurrent year(11,941)(7,063)Current year(1,843)(11,941)
Prior yearsPrior years(12,188)(13,909)Prior years(9,653)(12,188)
Total paidTotal paid(24,129)(20,972)Total paid(11,496)(24,129)
Foreign currency revaluationForeign currency revaluationForeign currency revaluation— — 
Net balance at June 30Net balance at June 3014,584 14,874 Net balance at June 307,202 14,584 
Add: Losses recoverableAdd: Losses recoverableAdd: Losses recoverable— — 
Gross balance at June 30Gross balance at June 30$14,584 $14,874 Gross balance at June 30$7,202 $14,584 

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6. RETROCESSION
 
From time to time, the Company purchases retrocessional coverage for one or more of the following reasons: to manage its overall exposure, reduce its net liability on individual risks, obtain additional underwriting capacity and balance its underwriting portfolio. LossThe Company records loss and loss adjustment expenses recoverable from retrocessionaires are recorded as assets.

For the three and six months ended June 30, 2021,2022, the Company’s earned ceded premiums were $0.0$2.7 million and $0.1$3.9 million, respectively (2020: $0.5 million(insignificant for the three and $1.5 million)six months ended June 30, 2021). For the three and six months ended June 30, 2021,2022, loss and loss adjustment expenses incurred of $87.0recovered and changes in losses recoverable were $0.7 million and $184.7 million, respectively (2020: $89.2nil, respectively. The recoveries recognized by the Company for the three and six months ended June 30, 2021, were $0.1 million and $164.9$0.1 million, respectively), reported on the condensed consolidated statements of operations are net of loss and loss expenses recovered of $(0.1) million and $(0.1) million, respectively (2020: $0.2 million and $3.7 million, respectively).respectively.

Retrocession contracts do not relieve the Company from its obligations to its cedents. Failure of retrocessionaires to honor their obligations could result in losses to the Company. At June 30, 2021,2022, the Company’s loss reserves recoverable consisted of (i) $10.6$7.4 million (December 31, 2020: $12.62021: $8.4 million) recoverable from unrated retrocessionaires, of which $10.4$6.7 million (December 31, 2020: $11.92021: $8.2 million) were secured by cash, letters of credit and collateral held in trust accounts for the benefit of the Company and (ii) $3.7$2.1 million (December 31, 2020: $4.32021: $2.8 million) recoverable from retrocessionaires rated A- or above by A.M. Best.

The Company regularly evaluates its net credit exposure to assess the ability of the retrocessionaires to honor their respective obligations. At June 30, 2021,2022, the Company had recorded an allowance for expected credit losses of $47.0$47 thousand (December 31, 2020: $47.02021: $47 thousand).

7. SENIOR CONVERTIBLE NOTES

On August 7, 2018, the Company issued $100.0 million of senior unsecured convertible notes (the “Notes”), which mature on August 1, 2023. The Notes bear interest at 4.0%, payable semi-annually on February 1 and August 1 of each year beginning on February 1, 2019.

Note holders have the option, under certain conditions, to redeem the Notes prior to maturity. At June 30, 2022, the Company’s share price was lower than the conversion price of $17.19 per share.
If thea holder redeems the Notes, the Company shall have the option to settle the conversion obligation in cash, ordinary shares of the Company, or a combination thereof pursuant to the terms of the indenture governing the Notes. ThePrior to January 1, 2022, the Company has therefore bifurcated the Notes into liability and equity components.
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At June 30, 2021,ASU 2020-06, the Company no longer bifurcates the Notes and presents the entire balance as a single liability on the Company’s share price was lower than the conversion price of $17.19 per share.condensed consolidated balance sheets (see Note 2 for recently issued accounting standards adopted).
The Company’s effective borrowing rate for non-convertible debt at the time of issuance of the Notes was estimated to be 6.0%, which equated to an $8.2 million discount. At June 30, 2021 and December 31, 2020, the unamortized debt discount was $3.4 million and $4.2 million, respectively. The debt discount also represents the portion of the Note’s principal amount allocated to the equity component..
The Company incurred issuance costs in connection with the issuance of the Notes. At June 30, 2021,2022, the unamortized portion of these costs attributed to the debt component was $1.3$0.7 million (December 31, 2020: $1.62021: $1.0 million), which the Company expects to amortize through the maturity date. The Company netted the portion of these issuance costs attributed to the equity component against the gross proceeds allocated to equity, resulting in the Company including $7.9 million in the caption “Additional paid-in capital” in the Company’s condensed consolidated balance sheets.

The carrying value of the Notes at June 30, 2021,2022, including accrued interest of $0.7$1.7 million, was $96.9$100.9 million (December 31, 2020: $95.82021: $98.1 million). At June 30, 2021,2022, the Company estimated the fair value of the Notes to be $97.0$94.5 million (December 31, 2020: $83.62021: $97.5 million) (see Note 4 Financial Instruments).
For the three and six months ended June 30, 2021,2022, the Company recognized interest expenseexpenses of $1.2 million and $2.3 million, respectively (three and six months ended June 30, 2021: $1.6 million and $3.1 million, (2020: $1.6 million and $3.1 million)respectively) in connection with the interest coupon and amortization of issuance costs, and amortization of the discount.costs.

The Company was in compliance with all covenants relating to the Notes at June 30, 2021,2022, and December 31, 2020.2021. At June 30, 2022, the Company had a remaining obligation for interest and principal payments of $2.0 million and $104.0 million during 2022 and 2023, respectively.

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8. SHARE CAPITAL

The Company’s share capital is made up of ordinary share capital and additional paid-in capital. Ordinary share capital represents the issued and outstanding Class A and Class B ordinary shares at their par values of $0.10 per share. Additional paid-in capital includes the premium paid per share by the subscribing shareholders for Class A and Class B ordinary shares, as well as the earned portion of the grant-date fair value of share-based awards.

On October 29, 2020, the Company’s shareholders approved an amendment to the stock incentive plan to increase the number of Class A ordinary shares available for issuance by 3.0 million shares from 5.0 million to 8.0 million. At June 30, 2021, 3,056,0652022, 2,119,189 (December 31, 2020: 3,474,888)2021: 3,128,276) Class A ordinary shares remained available for future issuance under the Company’s stock incentive plan. The Compensation Committee of the Board of Directors administers the Company’s stock incentive plan. 

The Board has adopted a share repurchase plan. The timing of such repurchases and the actual number of shares repurchased will depend on various factors, including price, market conditions, and applicable regulatory and corporate requirements. On March 26, 2020, theThe Board of Directors extended thehas approved a share repurchase plan, towhich expires on June 30, 2021. It increased the number of shares authorized to be repurchased to 5.0 million Class A ordinary shares or securities convertible into Class A ordinary shares in the open market through privately negotiated transactions or Rule 10b5-1 stock trading plans. In addition, the Board of Directors also authorized2023, authorizing the Company to repurchase up to $25.0 million aggregate face amount of the Company’s 4.00% Convertible Senior Notes due 2023 (the “Notes”) in privately negotiated transactions, in open market repurchases, or pursuant to one or more tender offers. The Company repurchased 725,133 Class A ordinary shares during the six months ended June 30, 2021. The Company did not repurchase any Notes under the repurchase plan.

On May 4, 2021, the Board of Directors approved a new share repurchase plan effective from July 1, 2021, until June 30, 2022, authorizing the Company to purchase up to $25 million of Class A ordinary shares or securities convertible into Class A ordinary shares in the open market, through privately negotiated transactions or Rule 10b5-1 stock trading plans. The Company is not required to repurchase any of the Class A ordinary shares or the Notes.shares. The repurchase plansplan may be modified, suspended, or terminated at the election of our Board of Directors at any time without prior notice.

The Company repurchased no Class A ordinary shares during the six months ended June 30, 2022. All Class A ordinary shares repurchased are canceled immediately upon repurchase.


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The following table is a summary of ordinary shares issued and outstanding:
Six months ended June 30Six months ended June 30Six months ended June 30Six months ended June 30
20212020 20222021
Class AClass BClass AClass BClass AClass BClass AClass B
Balance – beginning of periodBalance – beginning of period28,260,075 6,254,715 30,739,395 6,254,715 Balance – beginning of period27,589,731 6,254,715 28,260,075 6,254,715 
Issue of ordinary shares, net of forfeituresIssue of ordinary shares, net of forfeitures381,411 440,134 Issue of ordinary shares, net of forfeitures876,785 — 381,411 — 
Repurchase of ordinary sharesRepurchase of ordinary shares(725,133)(1,161,659)Repurchase of ordinary shares— — (725,133)— 
Balance – end of periodBalance – end of period27,916,353 6,254,715 30,017,870 6,254,715 Balance – end of period28,466,516 6,254,715 27,916,353 6,254,715 

Additional paid-in capital includes the premium per share paid by the subscribing shareholders for Class A and B ordinary shares, which have a par value of $0.10 each. It also includes the earned portion of the grant-date fair value of share-based awards.awards that have not yet vested.

9. SHARE-BASED COMPENSATION
 
The Company has a stock incentive plan for directors, employees, and consultants administered by the Compensation Committee of the Board of Directors.
 
Employee and Director Restricted Shares

The restricted shares issued to certain employees contain restrictions relating to vesting, forfeiture in the event of termination of employment, transferability, and other matters.

For the six months ended June 30, 2021,2022, the Company issued 334,312 (2020: 306,264)849,872 (2021: 334,312) Class A ordinary shares to employees pursuant to the Company’s stock incentive plan. These shares contain certain restrictions relatingThe Restricted Shares granted to among other things, vesting, forfeitureemployees in the event of termination of employment, and transferability. The2022 include (i) restricted shares with both performance and service-based vesting conditions (“Performance RSs”) and (ii) restricted shares with only service-based vesting conditions (“Service RSs”). The Service RSs vest evenly each year on January 1, subject to the grantee’s continued service with the Company. If performance goals are achieved, the Performance RSs will cliff vest at the end of a three-year performance period within a range of 25% and 100% of the awarded Performance RSs, with a target of 50%. During the vesting period, the holder of the Service RSs and Performance RSs retains voting rights but is entitled to any dividends declared by the Company only upon vesting.

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Prior to fiscal year 2022, the restricted shares granted to employees cliff vested three years after the date of issuance, subject to the grantee’s continued service with the Company. During the vesting period, the holder of the restricted shares retainsretained voting rights and iswas entitled to any dividends declared by the Company.

Prior to fiscal year 2021, the Company issued Class A ordinary shares to the Chief Executive Officer (“CEO”) pursuant to the Company’s stock incentive plan (“CEO RSs”). These shares contain performance and service conditions and certain restrictions relating to, among other things, vesting, forfeiture in the event of termination of the CEO’s employment, and transferability. The CEO RSs cliff vest five years after the date of issuance, subject to the performance condition being met and the CEO’s continued service with the Company. At June 30, 2022, there were 193,149 non-vested CEO RSs with a weighted average grant date fair value of $10.10 per share. As the performance conditions associated with these restricted shares have not been met, the Company recognized no compensation cost relating to the unvested shares for the six months ended June 30, 2022, and 2021.

The Company recognizes compensation expense associated with Performance RSs and Service RSs based on the fair value of the Company's Class A ordinary shares measured at the grant date. For Service RSs, the Company recognizes this expense on a straight-line basis over the requisite service period. For Performance RSs, the Company recognizes the associated compensation expense based on achieving established performance criteria during the performance period.
For the six months ended June 30, 2021,2022, grantees forfeited 20,592 (2020: 18,701)8,476 (2021: 20,592) restricted shares. For the six months ended June 30, 2021,2022, the Company reversed $0.1 million$26 thousand of stock compensation expense (2020:(2021: $0.1 million) in relation to the forfeited restricted shares.

The Company recorded $1.2$1.4 million of share-based compensation expense, net of forfeiture reversals, relating to restricted shares for the six months ended June 30, 2021 (2020:2022 (2021: $1.2 million). At June 30, 2021,2022, there was $3.5$4.4 million (December 31, 2020: $1.92021: $2.7 million) of unrecognized compensation cost relating to non-vested restricted shares (excluding any restricted shares with performance conditions the Company currently does not expect to meet)CEO RSs), which the Company expects to recognize over a weighted-average period of 2.11.8 years (December 31, 2020: 1.52021: 1.8 years). For the six months ended June 30, 2021,2022, the total fair value of restricted shares vested was $1.6$2.0 million (2020: $2.8(2021: $1.6 million).

For the six months ended June 30, 2021, the Company also issued to non-employee directors an aggregate of 46,980 (2020: 0) restricted Class A ordinary shares as part of their remuneration for services to the Company. Each of these restricted shares issued to non-employee directors contains similar restrictions to those issued to employees and will vest on the earlier of the first anniversary of the date of the share issuance or the Company’s next annual general meeting, subject to the grantee’s continued service with the Company.

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The following table summarizes the activity for unvested outstanding restricted share awards during the six months ended June 30, 2021:2022:

Number of
non-vested
restricted
 shares
Weighted
 average
grant date
fair value
Performance Restricted StockService Restricted Stock
Number of
non-vested
restricted
 shares
Weighted
 average
grant date
fair value
Number of
non-vested
restricted
 shares
Weighted
 average
grant date
fair value
Balance at December 31, 2020697,549 $9.38 
Balance at December 31, 2021Balance at December 31, 2021193,149 $10.10 753,407 $8.68 
GrantedGranted381,292 9.15 Granted601,213 6.82 248,659 6.82 
VestedVested(139,482)11.53 Vested— — (169,213)10.31 
ForfeitedForfeited(20,592)8.35 Forfeited— — (8,476)7.67 
Balance at June 30, 2021918,767 $8.98 
Balance at June 30, 2022Balance at June 30, 2022794,362 $7.62 824,377 $7.80 


Employee Restricted Stock Units

The Company issues RSUs to certain employees as part of the stock incentive plan and contain restrictions relating to vesting, forfeiture in the event of termination of employment, transferability, and other matters. On the vesting date, the Company converts each RSU into 1 Class A ordinary share and issues new Class A ordinary shares from the shares authorized for issuance as part of the Company’s stock incentive plan.

The RSUs granted to employees in 2022 include (i) RSUs with both performance and service-based vesting conditions (“Performance RSUs”) and (ii) RSUs with only service-based vesting conditions (“Service RSUs”). The Service RSUs vest evenly each year on January 1, subject to the grantee’s continued service with the Company. If performance goals are achieved, the Performance RSUs will cliff vest at the end of a three-year performance period within a range of 25% and 100% of the awarded Performance RSUs, with a target of 50%.

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The Company recognizes compensation expense associated with Performance RSUs and Service RSUs based on the fair value of the Company's Class A ordinary shares measured at the grant date. For Service RSUs, the Company recognizes this expense on a straight-line basis over the requisite service period. For Performance RSUs, the Company recognizes the associated compensation expense based on achieving established performance criteria during the performance period.

Prior to 2022, the RSUs issued to employees cliff vested three years after the date of issuance, subject to the grantee’s continued service with the Company. For the six months ended June 30, 2022, the Company issued 159,215 (2021: 58,123) RSUs to employees pursuant to the Company’s stock incentive plan. For the six months ended June 30, 2022, and 2021, no RSUs were forfeited.

The Company recorded $0.3 million of share-based compensation expense relating to RSUs for the six months ended June 30, 2022 (2021: $0.2 million). At June 30, 2022, the total compensation cost related to non-vested RSUs not yet recognized was $0.8 million (December 31, 2021: $0.5 million), which the Company expects to recognize over a weighted-average period of 1.8 years (December 31, 2021: 1.8 years).

Employee RSU activity during the six months ended June 30, 2022, was as follows:
Performance Restricted Stock UnitsService Restricted Stock Units
 Number of
non-vested
RSUs
Weighted
 average
grant date
fair value
Number of
non-vested
RSUs
Weighted
 average
grant date
fair value
Balance at December 31, 2021— $— 154,134 $8.59 
Granted105,008 6.82 54,207 6.82 
Vested— — (35,389)10.84 
Balance at June 30, 2022105,008 $6.82 172,952 $7.58 


Employee and Director Stock Options

For the six months ended June 30, 2022, and 2021, 0no Class A ordinary share purchase options were granted or exercised by directors or employees and no stock options expired or vested. When the Company grants stock options, are granted, the Companyit reduces the corresponding number from the shares authorized for issuance as part of the Company’s stock incentive plan.

The Board of Directors does not currently anticipate that the Company will declare any dividends during the expected term of the options. The Company uses graded vesting for expensing employee stock options. The total compensation cost expensed relating to stock options for the six months ended June 30, 2021,2022, was $0.2$0.1 million (2020: $0.4(2021: $0.2 million). At June 30, 2021,2022, the total compensation cost related to non-vested options not yet recognized was $0.4$0.1 million (December 31, 2020: $0.72021: $0.3 million), which will be recognized over a weighted-average period of 1.6 years1.0 year (December 31, 2020: 1.82021: 1.2 years) assuming the grantee completes the service period for vesting of the options.

At June 30, 2021Employee and December 31, 2020, 0.8 milliondirector stock options were outstanding, with a weighted average exercise price of $22.22 per share and a weighted average grant date fair value of $10.25 per share. The weighted-average remaining contractual term of the stock options was 4.6 years and 5.1 years, at June 30, 2021, and December 31, 2020, respectively.

Employee Restricted Stock Units

The Company issues RSUs to certain employees as part of the stock incentive plan.

These RSUs contain restrictions relating to vesting, forfeiture in the event of termination of employment, transferability, and other matters. Each RSU grant cliff vests three years after the date of issuance, subject to the grantee’s continued service with the Company. On the vesting date, the Company converts each RSU into 1 Class A ordinary share and issues new Class A ordinary shares from the shares authorized for issuance as part of the Company’s stock incentive plan. For the six months ended June 30, 2021, the Company issued 58,123 (2020: 60,622) RSUs to employees pursuant to the Company’s stock incentive plan. For the six months ended June 30, 2021 and 2020, 0 RSUs were forfeited.

The Company recorded $0.2 million of share-based compensation expense relating to RSUs for the six months ended June 30, 2021 (2020: $0.2 million).

Employee RSUoption activity during the six months ended June 30, 2021,2022 was as follows:
 Number of
non-vested
RSUs
Weighted
 average
grant date
fair value
Balance at December 31, 2020116,722 $9.60 
Granted58,123 9.18 
Vested(20,711)15.90 
Balance at June 30, 2021154,134 $8.59 

Number of
 options outstanding
Weighted
 average
 exercise
 price
Weighted
 average
 grant date
 fair value
Intrinsic value
($ in millions)
Weighted average remaining contractual term
Balance at December 31, 2021735,627 $22.35 $10.23 $— 4.7 years
Granted— — — — — 
Exercised— — — — — 
Forfeited— — — — — 
Expired— — — — — 
Balance at June 30, 2022735,627 $22.35 $10.23 $— 4.2 years

Stock Compensation Expense

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For the six months ended June 30, 20212022, and 2020,2021, the combined stock compensation expenseexpenses (net of forfeitures) included in the caption “General and administrative expenses” in the Company’s condensed consolidated statements of operations was $1.6were $2.1 million and $1.7$1.6 million, respectively.

Performance Restricted Shares

Prior to 2021, the Company issued Class A ordinary shares to the Chief Executive Officer (“CEO”) pursuant to the Company’s stock incentive plan. These shares contain performance and service conditions and certain restrictions relating to, among other things, vesting, forfeiture in the event of termination of the CEO’s employment, and transferability. These restricted shares cliff vest five years after the date of issuance, subject to the performance condition being met and the CEO’s continued service with the Company. The weighted average grant date fair value of these restricted shares subject to performance conditions was $6.72 per share. At June 30, 2021, 193,149 unvested performance restricted shares were outstanding (December 31, 2020: 193,149). As the performance conditions associated with these restricted shares have not been met, the Company recognized 0 compensation cost relating to the unvested shares for the six months ended June 30, 2021 and 2020.


10. TAXATION

At June 30, 2021,2022, the Company recorded a gross deferred tax asset of $3.7$3.5 million (2020: $3.5(December 31, 2021: $3.2 million) and a deferred tax asset valuation allowance of $3.2$3.0 million (2020: $3.0(December 31, 2021: $2.7 million). The net deferred tax asset is included in the caption “Other assets” in the Company’s condensed consolidated balance sheets. The Company has determined that it is more likely than not that it willto fully realize the recorded deferred tax asset (net of the valuation allowance) in the future. The Company based this determination on the expected timing of the reversal of the temporary differences and the likelihood of generating sufficient taxable income to realize the future tax benefit.

The following table sets forth our current and deferred income tax benefit (expense) on a consolidated basis for the six months ended June 30, 20212022 and 2020:2021:
Three months ended June 30Six months ended June 30
 2021202020212020
 ($ in thousands)($ in thousands)
Current tax (expense) benefit$171 $134 $(3,563)$305 
Deferred tax (expense) benefit(184)
Increase in deferred tax valuation allowance14 (134)(170)(729)
Income tax (expense) benefit $$$(3,733)$(424)

For the six months ended June 30, 2021, the income tax expense of $3.7 million resulted from Verdant’s gain on the sale of its AccuRisk investment.
Three months ended June 30Six months ended June 30
 2022202120222021
 ($ in thousands)($ in thousands)
Current tax (expense) benefit$(9)$171 $(421)$(3,563)
Tax recovered— — 428 — 
Deferred tax (expense) benefit(298)(184)258 — 
Decrease (increase) in deferred tax valuation allowance298 14 (258)(170)
Income tax (expense) benefit $(9)$$$(3,733)


11. RELATED PARTY TRANSACTIONS 
 
Investment Advisory Agreement
 
DME, DME II, and DME Advisors are each an affiliate of David Einhorn, Chairman of the Company’s Board of Directors, and therefore, are related parties to the Company.

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The Company has entered into the SILP LPA (as described in Note 3 of the condensed consolidated financial statements). DME II receives a performance allocation equal to (with capitalized terms having the meaning provided under the SILP LPA) (a) 10% of the portion of the Positive Performance Change for each limited partner’s capital account that is less than or equal to the positive balance in such limited partner’s Carryforward Account, plus (b) 20% of the portion of the Positive Performance Change for each limited partner’s capital account that exceeds the positive balance in such limited partner’s Carryforward Account. The Carryforward Account for Greenlight Re and GRIL includes the amount of investment losses that were to be recouped, under the Joint Venture as well asincluding any loss generated on the assets invested in SILP, subject to adjustments for redemptions. The loss carry-forward provision contained in the SILP LPA allows DME II to earn a reduced performance allocation of 10% of profits in years subsequent to any year in which SILP has incurred a loss until all losses are recouped, and an additional amount equal to 150% of the loss is earned.

In accordance with the SILP LPA, DME Advisors constructs a levered investment portfolio as agreed by the Company (the “Investment Portfolio” as defined in the SILP LPA). On September 1, 2018, SILP entered into the IAA with DME Advisors, which entitles DME Advisors to a monthly management fee equal to 0.125% (1.5% on an annual basis) of each limited partner’s Investment Portfolio. The IAA has an initial term ending on August 31, 2023, subject to an automatic extension for successive three-year terms.

For a detailed breakdown of management fees and performance compensation for the three and six months ended June 30, 20212022, and 2020,2021, refer to Note 3 of the condensed consolidated financial statements.
 
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Pursuant to the SILP LPA and the IAA, the Company has agreed to indemnify DME, DME II, and DME Advisors for any expense, loss, liability, or damage arising out of any claim asserted or threatened in connection with DME Advisors serving as the Company’s or SILP’s investment advisor. The Company will reimburse DME, DME II, and DME Advisors for reasonable costs and expenses of investigating and defending such claims, provided such claims were not caused due to gross negligence, breach of contract, or misrepresentation by DME, DME II, or DME Advisors. The Company incurred no indemnification amounts during the periods presented.

Green Brick Partners, Inc.

David Einhorn also serves as the Chairman of the Board of Directors of Green Brick Partners, Inc. (“GRBK”), a publicly tradedpublicly-traded company. At June 30, 2021,2022, SILP, along with certain affiliates of DME Advisors, collectively owned 34.4%36% of the issued and outstanding common shares of GRBK. Under applicable securities laws, DME Advisors may sometimes be limited at times in its ability to trade GRBK shares on behalfheld in SILP. At June 30, 2022, SILP held 2.7 million shares of SILP.GRBK.

Service Agreement
 
The Company has entered into a service agreement with DME Advisors, pursuant to which DME Advisors provides certain investor relations services to the Company for compensation of 5000 dollars per month (plus expenses). The agreement is automatically renewedrenews annually until terminated by either the Company or DME Advisors for any reason with 30 days prior written notice to the other party. 

Collateral Assets Investment Management Agreement

Effective January 1, 2019, the Company (and its subsidiaries) entered into a collateral assets investment management agreement (the “CMA”) with DME Advisors, pursuant to which DME Advisors manages certain assets of the Company that are not subject to the SILP LPA and are held by the Company to provide collateral required by the cedents in the form of trust accounts and letters of credit. In accordance with the CMA, DME Advisors receives no fees and is required to comply with the collateral investment guidelines. The CMA can be terminated by any of the parties upon 30 days’ prior written notice to the other parties.

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12. COMMITMENTS AND CONTINGENCIES 
 
Letters of Credit and Trusts
 
At June 30, 2021,2022, the Company had 1 letter of credit facility, which automatically renews each year unless terminated by either party in accordance with the applicable required notice period:
Maximum Facility LimitTermination DateNotice period required for termination
 ($ in thousands)  
Citibank Europe plc$275,000 August 20, 20222023120 days before the termination date

At June 30, 2021,2022, an aggregate amount of $138.9$182.7 million (December 31, 2020: $135.32021: $136.8 million) in letters of credit werewas issued under the credit facility. At June 30, 2021,2022, the Company had pledged total cash and cash equivalents with a fair value in the aggregate of $142.4$183.5 million (December 31, 2020:2021: $137.6 million) as collateral against the letters of credit issued and included in the caption “Restricted cash and cash equivalents” in the Company’s condensed consolidated balance sheets. The credit facility contains customary events of default and restrictive covenants, including but not limited to limitations on liens on collateral, transactions with affiliates, mergers, and sales of assets, as well as solvency and maintenance of certain minimum pledged equity requirements and restricts issuance of any debt without the consent of the letter of credit provider. Additionally, if an event of default exists, as defined in the letter of credit facility, Greenlight Re will be prohibited from paying dividends to its parent company. The Company was in compliance with all the credit facility covenants at June 30, 20212022 and December 31, 2020.2021.

The Company has also established regulatory trust arrangements for certain cedents. At June 30, 2021,2022, collateral of $567.3$486.1 million (December 31, 2020: $607.82021: $497.1 million) was provided to cedents in the form of regulatory trust accounts and included in the caption “Restricted cash and cash equivalents” in the Company’s condensed consolidated balance sheets.

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Lease Obligations

Greenlight ReThe Company has entered into a newdetermined that its lease agreementagreements for office space inqualify as operating lease arrangements. At the Cayman Islands commencing July 1, 2021.commencement date, the Company determined the lease term by assuming the exercise of those renewal options deemed to be reasonably certain. The exercise of lease expires onrenewal options is at the Company's sole discretion, and these options do not contain any material residual value guarantees or material restrictive covenants. The Company’s weighted-average remaining operating lease term is approximately 4.0 years at June 30, 2026, unless Greenlight Re exercises its right to renew the lease for another five-year period. The annual lease obligation ranges from $0.5 million to $0.6 million.2022.

Greenlight Re’s previousAs the lease arrangement qualified ascontracts generally do not provide an implicit discount rate, the Company used the weighted-average discount rate of 6%, representing its incremental borrowing rate based on information available at the commencement date, to determine the present value of lease payments. The incremental borrowing rate is based on a short-term lease forborrowing with a term similar to that of the three and six months endedassociated lease. The Company has made an accounting policy election not to include renewal, termination, or purchase options that are not reasonably certain of exercise when determining the term of the borrowing.

At June 30, 2021..2022, the right-of-use assets and lease liabilities relating to the operating leases were $2.2 million and $2.2 million, respectively. The short-term leaseoperating expense for the three and six months ended June 30, 2021,2022, was $0.1$0.2 million and $0.3 million, respectively (three and six months ended June 30, 2020:2021: nil and $0.1 million, and $0.3 million, respectively).

Schedule of Commitments and ContingenciesAt June 30, 2022, the commitment for operating lease liabilities for future annual periods was as follows:
The following is a schedule of future minimum payments required under the above commitments:  
 20212022202320242025ThereafterTotal
 ($ in thousands)
Operating lease obligations$257 $522 $537 $553 $570 $289 $2,728 
Interest and convertible note payable$2,000 $4,000 $104,000 110,000 
 $2,257 $4,522 $104,537 $553 $570 $289 $112,728 
Year ending December 31,($ in thousands)
2022$300 
2023616 
2024633 
2025649 
2026349 
Thereafter— 
Total lease payments2,547 
Less Imputed Interest(316)
Present value of lease liabilities$2,231 

Litigation

From time to time, in the normalordinary course of business, the Company may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation. The outcomes of these procedures determine the rights and obligations under the Company’s reinsurance contracts and other contractual agreements. In some disputes, the Company may seek to enforce its rights under an agreement or to collect funds owed. In other matters, the Company may resist attempts by others to collect funds or enforce alleged rights. While the Company cannot predict the outcome of legal disputes with certainty, the Company does not believe that any existing dispute, when finally resolved, will have a material adverse effect on the Company’s business, financial condition, or operating results.




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13. SEGMENT REPORTING
 
The Company has 1 operating segment, Property & Casualty Reinsurance.

Substantially allThe following tables provide a breakdown of the Company’s gross premiums written by line and class of business, is sourced through reinsurance brokers. The following table sets forthand by geographic area of risks insured for the premiums generated through our largest brokers and their subsidiaries and affiliates (totals may not sum due to rounding):   periods indicated:

Gross Premiums Written by Line of Business
  Three months ended June 30Six months ended June 30
2021202020212020
  ($ in thousands)($ in thousands)
Property
Commercial$4,154 2.9 %$3,065 2.6 %$6,302 2.0 %$6,030 2.7 %
Motor8,725 6.2 6,812 5.9 18,434 5.9 15,045 6.6 
Personal3,629 2.6 3,674 3.1 6,687 2.1 6,635 2.9 
Total Property16,508 11.7 13,551 11.6 31,423 10.1 27,710 12.2 
Casualty
General Liability1,678 1.2 528 0.5 3,373 1.1 696 0.3 
Motor Liability35,408 25.0 25,655 22.0 76,972 24.7 55,050 24.3 
Professional Liability (1)
(3)33 148 123 0.1 
Workers' Compensation15,971 11.3 28,605 24.5 38,120 12.2 38,929 17.2 
Multi-line49,580 35.0 19,973 17.1 97,695 31.4 41,559 18.4 
Total Casualty102,634 72.5 74,794 64.1 216,308 69.4 136,357 60.3 
Other
Accident & Health7,588 5.4 10,228 8.8 22,252 7.1 28,104 12.4 
Financial8,884 6.3 3,725 3.2 22,214 7.1 13,887 6.1 
Marine1,420 1.0 266 0.2 5,950 1.9 622 0.3 
Other Specialty4,545 3.2 14,125 12.1 13,367 4.3 19,796 8.7 
Total Other22,437 15.8 28,344 24.3 63,783 20.5 62,409 27.5 
$141,579 100.0 %$116,689 100.0 %$311,514 100.0 %$226,476 100.0 %
  Three months ended June 30Six months ended June 30
2022202120222021
  ($ in thousands)($ in thousands)
Property
Commercial$5,360 4.0 %$4,154 2.9 %$9,346 3.3 %$6,302 2.0 %
Motor(1)
(884)(0.6)8,725 6.2 562 0.2 18,434 5.9 
Personal18,653 13.8 3,629 2.6 31,756 11.3 6,687 2.1 
Total Property23,129 17.2 16,508 11.7 41,664 14.8 31,423 10.1 
Casualty
General Liability16,720 12.4 1,678 1.2 26,725 9.5 3,373 1.1 
Motor Liability(1)
(1,613)(1.2)35,408 25.0 3,496 1.3 76,972 24.7 
Professional Liability(1)
113 0.1 (3)— 254 0.1 148 — 
Workers' Compensation8,368 6.2 15,971 11.3 18,288 6.5 38,120 12.2 
Multi-line52,216 38.7 49,580 35.0 105,310 37.5 97,695 31.4 
Total Casualty75,804 56.2 102,634 72.5 154,073 54.9 216,308 69.4 
Other
Accident & Health2,604 1.9 7,588 5.4 4,498 1.6 22,252 7.1 
Financial15,380 11.4 8,884 6.3 36,416 13.0 22,214 7.1 
Marine5,351 4.0 1,420 1.0 13,750 4.9 5,950 1.9 
Other Specialty12,512 9.3 4,545 3.2 30,265 10.8 13,367 4.3 
Total Other35,847 26.6 22,437 15.8 84,929 30.3 63,783 20.5 
$134,780 100.0 %$141,579 100.0 %$280,666 100.0 %$311,514 100.0 %
(1) The negative balance represents the reversal of premiums due to premium adjustments, termination of contracts, or premium returned upon novation or commutation of contracts.
Gross Premiums Written by Geographic Area of Risks Insured
Three months ended June 30Six months ended June 30 Three months ended June 30Six months ended June 30
20212020202120202022202120222021
($ in thousands)($ in thousands) ($ in thousands)($ in thousands)
U.S. and CaribbeanU.S. and Caribbean$86,908 61.4 %$94,663 81.1 %$191,762 61.6 %$180,713 79.8 %U.S. and Caribbean$76,182 56.5 %$86,908 61.4 %$152,219 54.2 %$191,762 61.6 %
Worldwide (1)
Worldwide (1)
51,863 36.6 20,616 17.7 114,854 36.9 43,412 19.2 
Worldwide (1)
50,414 37.4 51,863 36.6 116,685 41.6 114,854 36.9 
EuropeEurope384 0.3 1,304 0.4 Europe1,885 1.4 384 0.3 4,759 1.7 1,304 0.4 
AsiaAsia2,424 1.7 1,410 1.2 3,594 1.2 2,351 1.0 Asia6,299 4.7 2,424 1.7 7,003 2.5 3,594 1.2 
$141,579 100.0 %$116,689 100.0 %$311,514 100.0 %$226,476 100.0 %$134,780 100.0 %$141,579 100.0 %$280,666 100.0 %$311,514 100.0 %
(1) “Worldwide” is composed of contracts that reinsure risks in more than one geographic area and may include risks in the U.S. 

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Item 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
References to “we,” “us,” “our,” “our company,”  or “the Company” refer to Greenlight Capital Re, Ltd. (“GLRE”) and ourits wholly-owned subsidiaries, Greenlight Reinsurance, Ltd, (“Greenlight Re”), Greenlight Reinsurance Ireland, Designated Activity Company (“GRIL”), Greenlight Re Marketing (UK) Limited (“Greenlight Re UK”), and Verdant Holding Company, Ltd. (“Verdant”), unless the context dictates otherwise. References to our “Ordinary Shares” refer collectively to our Class A Ordinary Shares and Class B Ordinary Shares.
 
The following is a discussion and analysis of our results of operations for the three and six months ended June 30, 2021 and 2020 and financial condition at June 30, 2021 and December 31, 2020. The following discussion should be read in conjunction with the audited consolidated financial statements and accompanying notes, which appear in our annual report on Form 10-K for the fiscal year ended December 31, 2020.2021.

The following is a discussion and analysis of our results of operations for the six months ended June 30, 2022 and 2021 and financial condition at June 30, 2022 and December 31, 2021.
  
Special Note About Forward-Looking Statements
 
Certain statements in Management’s Discussion and Analysis, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally are identified by the words “believe,” “project,” “predict,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements. AWe have included a detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk“Part II. Item 1A. Risk Factors” (refer to Partincluded in our Form 10-Q for the three months ended March 31, 2022, as filed with the Securities and Exchange Commission (the “SEC”) on May 3, 2022, and in the section entitled “Part I, Item 1A)1A. Risk Factors” contained in our Form 10-K for the fiscal year ended December 31, 2020,2021, as filed with the Securities and Exchange Commission (the “SEC”)SEC on March 10, 2021.8, 2022. Such risks and uncertainties include, but are not limited to:

The impact of disruptions to commerce, reduced economic activity, and other consequences of a pandemic, including the novel coronavirus (“COVID-19”), is unknown;
A.M. Best mayA downgrade or withdrawwithdrawal of either of our ratings;A.M. Best ratings would materially and adversely affect our ability to implement our business strategy successfully;
Our results of operations will likely fluctuate from period to period and may not be indicative of our long-term prospects;
UnderOur results of operations and financial condition could be adversely affected by the ongoing conflict between Russia and Ukraine and related disruptions in the global economy;
The impact of COVID-19 and related risks could materially and adversely affect our investment management structure, we have limited control over Solasglas Investments, LP (“SILP”);results of operations, financial position, and liquidity;
SILP may be concentrated in a few large positions, which could result in large losses;investment volatility;
Competitors with greater resources may make it difficult for us to effectively marketThe performance of our products or offerInnovations investments could result in financial losses and reduce our products at a profit;capital;
If our losses and loss adjustment expenses greatly exceed our loss reserves, our financial condition may be significantlymaterially and negativelyadversely affected;
WeInflation may face risks from future strategic transactions such as acquisitions, dispositions, mergers,adversely impact our results of operations or joint ventures;financial condition;
The effect of emerging claim and coverage issues on our business is uncertain;
The property and casualty reinsurance market may be affected by cyclical trends; and
The loss of key executives could adversely impact our ability to implement our business strategy; and
Currency fluctuations could result in exchange rate losses and negatively impact our business.strategy.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result ofdue to new information, future events, or otherwise. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only to the dates they were made.
 
We intend to communicate certain events that we believe may have a material adverse impact on our operations or financial position, including property and casualty catastrophic events and material losses in our investment portfolio, in a timely manner through a public announcement. Other than as required by the Exchange Act, we do not intend to make public announcements regarding reinsurance or investment events that we do not believe, based on management’s estimates and current information, will have a material adverse impact on our operations or financial position.

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General
 
We are a global specialty property and casualty reinsurer headquartered in the Cayman Islands, with a reinsurance and investment strategy that we believe differentiates us from most of our competitors. Our goal is to build long-term shareholder value by providing risk management solutions to the insurance, reinsurance, and other risk marketplaces. We focus on delivering risk solutions to clients and brokers who value our expertise, analytics, and customer service offerings.
 
We aim to complement our 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. Our investment portfolio is managed according to a value-oriented philosophy, in which our investment advisor takes long positions in perceived undervalued securities and short positions in perceived overvalued securities. In 2018, we launched our

Through Greenlight Re Innovations, unit, which supportswe support technology innovators in the (re)insurance market by providing investment, risk capacity, and access to a broad insurance network.

Because we seek to capitalize on favorable market conditions and opportunities, period-to-period comparisons of our underwriting results may not be meaningful. Also, our historical investment results are not necessarily indicative of future performance. Due to the nature of our reinsurance and investment strategies, our operating results will likely fluctuate from period to period.

The Company’s subsidiaries hold an A.M. Best Financial Strength Rating of A- (Excellent) with a negativestable outlook.

Critical Accounting Policies and Estimates
 
Our condensed consolidated financial statements contain certain amounts that are inherently subjective and have required management to make assumptions and best estimates to determine reported values. If certain factors, including those described in “Part II. Item 1A. Risk Factors” included in our Form 10-Q for the three months ended March 31, 2022, as filed with the SEC on May 3, 2022, and in “Part I. Item IA. — Risk Factors” included in our Form 10-K for the fiscal year ended December 31, 2020,2021, as filed with the SEC on March 10, 2021,8, 2022, cause actual events or results to differ materially from our underlying assumptions or estimates,estimates. In that case, there could be a material adverse effect on our results of operations, financial condition, or liquidity. “Part II. Item 7. — Management’s Discussion and Analysis of Financial Condition and Results on Operations” included in our annual report on Form 10-K for the fiscal year ended December 31, 2020,2021, describes our critical accounting policies and estimates. The most significant estimates relate to premium revenues and risk transfer, investments, loss and loss adjustment expense reserves, bonus accruals,investment impairments, allowances for credit losses, and share-based payments.compensation.

Recently issued and adopted accounting standards and their impact on the Company, if any, are presented under “Recent Accounting Pronouncements” in Note 2 to the condensed consolidated financial statements.

Segments
 
We have one operating segment, Property & Casualty reinsurance, and we analyze our business based on the following categories:
 Property
Casualty
Other

Property business covers automobile physical damage, personal lines, (including homeowners’ insurance), and commercial lines exposures. Property business includes both catastrophe and non-catastrophe coverage. We expect catastrophe business to make up a small proportion of our property business.

Casualty business covers general liability, motor liability, professional liability, and workers’ compensation exposures. The Company’s multi-line business relates predominantly to casualty reinsurance, and as such, the Company includes all multi-line business within the casualty category. Casualty business generally has losses reported and paid over a longer period than property business. We categorize Lloyd’s syndicate contracts, which incorporate incidental catastrophe exposure, as multi-line (and therefore casualty) business.

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Other business covers accident and health, financial lines (including transactional liability, mortgage insurance, surety, and trade credit), marine, energy, and to a lesser extent,as well as other specialty business such as aviation, crop, cyber, political, and terrorism exposures.

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Outlook and Trends

In February 2022, the Russian army commenced military actions against Ukraine. The ongoing Russian-Ukrainian conflict has resulted in the U.S., United Kingdom, European Union, and other countries imposing financial and economic sanctions, which have caused disruption in the global economy and have increased economic and geopolitical uncertainty. Our underwriting results for the first half of 20212022 include $13.6 million of losses attributed to the Russian-Ukrainian conflict. If this conflict is prolonged, we may incur additional losses in future periods.

During the first half of 2022 we saw improved rates in most of the classes of business we wrotewrite, which enabled us to selectively expand our specialty book while taking advantage of improved rates. Our in-force portfolio reflects increased diversification across the classes of business we write and a lower concentration of risk to individual counterparties than at any other time in our history.

The widespread inflation we have seen is a significant concern to the industry, as it can add uncertainty to the cost of claims, particularly for classes of business with long payout tails. As a result, it creates pricing challenges for new business and valuation challenges in claims reserves. We are addressing these concerns in multiple ways:

Our underwriting strategy focuses on relatively short-tailed business, which is inherently less exposed to high inflation than long-tailed lines. We estimate the payout duration of our existing reserves at approximately two years.
We wrote significantly more premiumincorporate inflation assumptions in all our pricing, and reassess these assumptions frequently.
We are minimizing our exposure to classes that are experiencing severe supply-chain-driven inflation.

The rising costs also bring a benefit with increased demand for coverage limits, which we believe will extend the currently favorable market conditions.

We expect that the rising interest rate environment will have a mixed impact on our financial results. While we have some exposure to interest rate risk from fixed income securities held by the Lloyd’s syndicates in which we participate, we expect that the higher interest rates will improve the yield on our restricted cash and cash equivalents.

We continue to be encouraged by our Innovations unit, whose central objective is to enhance our underwriting return and risk profile by establishing a range of strategic partnerships. Our Innovations-related premiums accounted for approximately 13% of our net premiums written in the first half of 2021 than we did in2022. We see the comparable 2020 period. The largest area ofpotential for significant growth was in support of various Lloyd’s syndicates, an institution that we believe is ideally situated to respond to the insurance market dislocation. Improved market conditions also drove our expanded participation in marine and other specialty classes. Our exposure to motor business increased during the past several quarters, as we saw an opportunity to benefit from relatively favorable claim frequency. However, as more workers in the U.S. return to pre-pandemic commuting routines, we are expecting claim frequency to increase. We believe that the increase in claims frequency, combined with increased interest from other reinsurers, will cause motor business to become less profitable. As a result, we have taken steps to reduce our motor exposure over the next six to twelve months.Innovations-derived underwriting opportunities going forward.

In the second quarter of 2022, we launched our Lloyd’s approved insurtech-focused syndicate (“Syndicate 3456”). We believehave received a significant amount of interest from our current and prospective counterparties as we prepare for Syndicate 3456 to enable us to provide capacity to our growing portfolio of Innovations partners. The underwriting volume in Syndicate 3456 was immaterial in the workers’ compensation class will likely experience a similar post-pandemic increase in claim frequency, despitesecond quarter, but we are pleased with the underlying premium rates trending flat to slightly down. We still see areas of opportunity but our overall exposure tovolumes that are committed for the class is likely to reduce in future quarters.third quarter and beyond.

During the first half of 2021, we reduced the amount of “pure catastrophe” business we wrote. Although catastrophe premium rates did increase as compared to the January 1, 2020, renewals, in our view these increases were not sufficient to compensate reinsurers for the risks associated with this business as compared to other classes. However, as this reduction has been offset by our increased incidental exposure from specialty classes of business, our overall exposure to catastrophe events has remained largely consistent with last year.

By reducing our property, motor, and workers’ compensation exposure we plan to free up capacity to support underwriting opportunities generated from our Innovations unit and the specialty class, which we believe will produce higher margins.

Key Financial Measures and Non-GAAP Measures

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.

Our primary financial goal is to increase fully diluted book value per share over the long term.

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The following table presents the basis and fully diluted book value per share for the recent periods:
June 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
   ($ 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)$466,826 $472,119 $464,857 $426,867 $429,904 
Denominator for basic and fully diluted book value per share: (1)
Ordinary shares issued and outstanding (denominator for basic book value per share)34,171,06834,850,52834,514,79035,368,41736,272,585
Add: In-the-money stock options and RSUs issued and outstanding154,134154,134116,722116,722116,722
Denominator for fully diluted book value per share34,325,20235,004,66234,631,51235,485,13936,389,307
Basic book value per share$13.66 $13.55 $13.47 $12.07 $11.85 
Increase (decrease) in basic book value per share ($)$0.11 $0.08 $1.40 $0.22 $0.18 
Increase (decrease) in basic book value per share (%)0.8 %0.6 %11.6 %1.9 %1.5 %
Fully diluted book value per share$13.60 $13.49 $13.42 $12.03 $11.81 
Increase (decrease) in fully diluted book value per share ($)$0.11 $0.07 $1.39 $0.22 $0.18 
Increase (decrease) in fully diluted book value per share (%)0.8 %0.5 %11.6 %1.9 %1.5 %

(1) All unvested restricted shares, including those with performance conditions, are included in the “basic” and “fully diluted” denominators. At June 30, 2021, the number of unvested restricted shares with performance conditions was 193,149 (at March 31, 2021: 193,149, December 31, 2020: 193,149, September 30, 2020: 429,444, June 30, 2020: 501,989).

Management also 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 allow forfacilitate a more thorough understanding of the Company’s business. Non-GAAP financial measures should not be viewed as a substitutesubstitutes for those determined under U.S. GAAP.

The key non-GAAP financial measures used in this report are:

Adjusted combined ratio;Basic book value per share and fully diluted book value per share; and
Net underwriting income (loss).

These non-GAAP measures are described below.

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.
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In calculating the adjusted combined ratio, we exclude underwriting income
Basic Book Value Per Share and losses attributable to (i) prior accident-year reserve development, (ii) catastrophe events, and (iii) other significant infrequent adjustments.Fully Diluted Book Value Per Share
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 events and other significant infrequent adjustments are not representative of the type of loss activity that we would expect to occur in every period.
We believe an adjustedthat 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. 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.

We calculate basic book value per share as (a) ending shareholders' equity, divided by (b) aggregate of Class A and Class B Ordinary shares issued and outstanding, including all unvested service-based restricted shares, and the earned portion of performance-based restricted shares granted after December 31, 2021. We exclude shares potentially issuable in connection with convertible notes if the conversion price exceeds the share price.

Fully diluted book value per share represents basic book value per share combined ratio that excludeswith any dilutive impact of in-the-money stock options, unvested service-based RSUs, and the effectsearned portion of these items aids in understandingunvested performance-based RSUs granted. Fully diluted book value per share also includes the underlying trends and variabilitydilutive effect, if any, of ordinary shares expected to be issued upon settlement of the convertible notes.

Our primary financial goal is to increase fully diluted book value per share over the long term. We use fully diluted book value per share as a financial measure in our underwriting results that these items may obscure.annual incentive compensation.

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The following table reconcilespresents a reconciliation of the combined rationon-GAAP financial measures basic and fully diluted book value per share to the adjusted combined ratio:most comparable U.S. GAAP measure:
June 30, 2022March 31, 2022December 31, 2021September 30, 2021June 30, 2021
   ($ 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)$484,293 $468,407 $475,663 $450,514 $466,826 
Denominator for basic and fully diluted book value per share: (1)
Ordinary shares issued and outstanding as presented in the Company’s condensed consolidated balance sheets34,721,23134,721,23133,844,44633,844,44634,171,068
Less: Unearned performance-based restricted shares granted after December 31, 2021(560,927)(581,593)
Denominator for basic book value per share34,160,30434,139,63833,844,44633,844,44634,171,068
Add: In-the-money stock options, service-based RSUs granted, and earned performance-based RSUs granted179,988176,379154,134154,134154,134
Denominator for fully diluted book value per share34,340,29234,316,01733,998,58033,998,58034,325,202
Basic book value per share$14.18 $13.72 $14.05 $13.31 $13.66 
Increase (decrease) in basic book value per share ($)$0.46 $(0.33)$0.58 $(0.35)$0.11 
Increase (decrease) in basic book value per share (%)3.4 %(2.3)%4.3 %(2.6)%0.8 %
Fully diluted book value per share$14.10 $13.65 $13.99 $13.25 $13.60 
Increase (decrease) in fully diluted book value per share ($)$0.45 $(0.34)$0.57 $(0.35)$0.11 
Increase (decrease) in fully diluted book value per share (%)3.3 %(2.4)%4.2 %(2.6)%0.8 %

Three months ended June 30Six months ended June 30
2021202020212020
Combined ratio96.5 %101.2 %99.0 %100.0 %
Impact on combined ratio of selected items:
Prior-year development2.7 %1.0 %1.3 %2.3 %
Catastrophes (current year)0.8 %— %2.1 %— %
Other adjustments— %5.5 %1.1 %2.7 %
Adjusted combined ratio93.0 %94.7 %94.5 %95.0 %
(1) For periods prior to January 1, 2022, all unvested restricted shares are included in the “basic” and “fully diluted” denominators. Restricted shares with performance-based vesting conditions granted after December 31, 2021, are included in the “basic” and “fully diluted” denominators to the extent that the Company has recognized the corresponding share-based compensation expense. At June 30, 2022, the aggregate number of unearned restricted shares with performance conditions not included in the “basic” and “fully diluted” denominators was 754,076 (March 31, 2022: 774,742, December 31, 2021: 193,149, September 30, 2021: 193,149, June 30, 2021: 193,149).

For the three and six months ended June 30, 2021, the caption “Prior-year development” includes development on losses relating to the COVID-19 pandemic.
The caption “Catastrophes (current year)” includes events that occur during a given period, as well as current-period development on catastrophe events occurring earlier in the fiscal year.
The caption “Other adjustments” represents, for the six months ended June 30, 2021, interest income and expense on deposit-accounted contracts due to changes in the associated estimated ultimate cash flows and, for the three and six months ended June 30, 2020, losses relating to the COVID-19 pandemic.

Net Underwriting Income (Loss)

One way that we evaluate the Company’s underwriting performance is through the measurement ofby 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 that this measure follows industry practice and allows the users of financial information to compare the Company’s performance with thosethat 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, plus other
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income (expense) relating to reinsurance and deposit-accounted contracts, less deposit interest expense, less net loss and loss adjustment expenses, acquisition costs, and 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, Lloyd’s interest income or expense and adjustments to the allowance for expected credit losses; (3) corporate general and administrative expenses; and (4) interest expense. We exclude total investment income or loss, and foreign exchange gains or losses, Lloyd’s interest income or expense and expected credit losses as we believe these items are influenced by market conditions and other factors not related to underwriting decisions. We exclude corporate and interest expenses because these expensescosts 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.

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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 June 30Six months ended June 30Three months ended June 30Six months ended June 30
20212020202120202022202120222021
($ in thousands)($ in thousands)
Income (loss) before income taxIncome (loss) before income tax$627 $(63)$10,860 $(39,909)Income (loss) before income tax$14,797 $627 $9,054 $10,860 
Add (subtract):Add (subtract):Add (subtract):
Total investment (income) lossTotal investment (income) loss(2,040)(5,543)(20,714)29,746 Total investment (income) loss(17,156)(2,040)(24,893)(20,714)
Other non-underwriting (income) expenseOther non-underwriting (income) expense31 (143)734 251 Other non-underwriting (income) expense5,957 31 6,590 734 
Corporate expensesCorporate expenses4,382 2,881 8,586 6,739 Corporate expenses4,578 4,382 8,589 8,586 
Interest expenseInterest expense1,562 1,562 3,106 3,123 Interest expense1,166 1,562 2,320 3,106 
Net underwriting income (loss)Net underwriting income (loss)$4,562 $(1,306)$2,572 $(50)Net underwriting income (loss)$9,342 $4,562 $1,660 $2,572 


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Results of Operations

The table below summarizes our operating results for the three and six months ended June 30, 20212022, and 2020:2021:
Three months ended June 30Six months ended June 30Three months ended June 30Six months ended June 30
20212020202120202022202120222021
(in thousands, except percentages)(in thousands, except percentages)
Underwriting revenueUnderwriting revenueUnderwriting revenue
Gross premiums writtenGross premiums written$141,579 $116,689 $311,514 $226,476 Gross premiums written$134,780 $141,579 $280,666 $311,514 
Gross premiums cededGross premiums ceded(1)(132)54 (810)Gross premiums ceded(7,163)(1)(13,172)54 
Net premiums writtenNet premiums written141,578 116,557 311,568 225,666 Net premiums written127,617 141,578 267,494 311,568 
Change in net unearned premium reservesChange in net unearned premium reserves(9,099)(8,143)(43,693)(6,231)Change in net unearned premium reserves(17,398)(9,099)(31,350)(43,693)
Net premiums earnedNet premiums earned$132,479 $108,414 $267,875 $219,435 Net premiums earned$110,219 $132,479 $236,144 $267,875 
Underwriting related expensesUnderwriting related expensesUnderwriting related expenses
Net loss and loss adjustment expenses incurredNet loss and loss adjustment expenses incurredNet loss and loss adjustment expenses incurred
Current yearCurrent year$87,420 $87,700 $185,281 $159,225 Current year$63,706 $87,420 $158,788 $185,281 
Prior year *Prior year *(463)1,494 (603)5,666 Prior year *(2,883)(463)(558)(603)
Net loss and loss adjustment expenses incurredNet loss and loss adjustment expenses incurred86,957 89,194 184,678 164,891 Net loss and loss adjustment expenses incurred60,823 86,957 158,230 184,678 
Acquisition costsAcquisition costs37,631 17,903 71,012 49,642 Acquisition costs36,335 37,631 69,280 71,012 
Underwriting expensesUnderwriting expenses3,357 3,268 6,694 6,204 Underwriting expenses3,528 3,357 6,749 6,694 
Deposit accounting and other reinsurance expense (income)Deposit accounting and other reinsurance expense (income)(28)(645)2,919 (1,252)Deposit accounting and other reinsurance expense (income)191 (28)225 2,919 
Net underwriting income (loss)Net underwriting income (loss)$4,562 $(1,306)$2,572 $(50)Net underwriting income (loss)$9,342 $4,562 $1,660 $2,572 
Income (loss) from investment in related party investment fundIncome (loss) from investment in related party investment fund$(2,006)$1,609 $2,018 $(40,517)Income (loss) from investment in related party investment fund$11,876 $(2,006)$15,953 $2,018 
Net investment income (loss)Net investment income (loss)4,046 3,934 18,696 10,771 Net investment income (loss)5,280 4,046 8,940 18,696 
Total investment income (loss)Total investment income (loss)$2,040 $5,543 $20,714 $(29,746)Total investment income (loss)$17,156 $2,040 $24,893 $20,714 
Net underwriting and investment income (loss)Net underwriting and investment income (loss)$26,498 $6,602 $26,553 $23,286 
Corporate expensesCorporate expenses$4,578 $4,382 $8,589 $8,586 
Other (income) expense, netOther (income) expense, net5,957 31 6,590 734 
Interest expenseInterest expense1,166 1,562 2,320 3,106 
Income tax expense (benefit)Income tax expense (benefit)(1)(7)3,733 
Net income (loss)Net income (loss)628 (63)7,127 (40,333)Net income (loss)$14,788 $628 $9,061 $7,127 
Earnings (loss) per shareEarnings (loss) per share
BasicBasic$0.44 $0.02 $0.27 $0.21 
DilutedDiluted$0.37 $0.02 $0.23 $0.21 
Underwriting ratiosUnderwriting ratios
Loss ratio - current yearLoss ratio - current year66.0 %80.9 %69.2 %72.5 %Loss ratio - current year57.8 %66.0 %67.2 %69.2 %
Loss ratio - prior yearLoss ratio - prior year(0.4)%1.4 %(0.3)%2.6 %Loss ratio - prior year(2.6)%(0.4)%(0.2)%(0.3)%
Loss ratioLoss ratio65.6 %82.3 %68.9 %75.1 %Loss ratio55.2 %65.6 %67.0 %68.9 %
Acquisition cost ratioAcquisition cost ratio28.4 %16.5 %26.5 %22.6 %Acquisition cost ratio33.0 %28.4 %29.3 %26.5 %
Composite ratioComposite ratio94.0 %98.8 %95.4 %97.7 %Composite ratio88.2 %94.0 %96.3 %95.4 %
Underwriting expense ratioUnderwriting expense ratio2.5 %2.4 %3.6 %2.3 %Underwriting expense ratio3.4 %2.5 %3.0 %3.6 %
Combined ratioCombined ratio96.5 %101.2 %99.0 %100.0 %Combined ratio91.6 %96.5 %99.3 %99.0 %

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* The net financial impactimpacts associated with changes in the estimate of losses incurred in prior years, which incorporatesincorporate earned reinstatement premiums assumed and ceded, and adjustments to assumed and ceded acquisition costs, waswere a loss of $3.6$3.5 million and $1.1$3.6 million for the three months ended June 30, 20212022, and 2020,2021, respectively, and a loss of $3.4$6.1 million and $5.0$3.4 million for the six months ended June 30, 20212022, and 2020,2021, respectively.





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Three months ended June 30, 20212022 and 20202021

For the three months ended June 30, 2021,2022, the fully diluted book value per share increased by $0.11$0.45 per share, or 0.8%3.3%, to $13.60$14.10 per share from $13.49$13.65 per share at March 31, 2021.2022. For the three months ended June 30, 2021,2022, the basic book value per share increased by $0.11$0.46 per share, or 0.8%3.4%, to $13.66$14.18 per share from $13.55$13.72 per share at March 31, 2021.2022.

For the three months ended June 30, 2021,2022, our net income was $0.6$14.8 million, compared to a net lossincome of $0.1$0.6 million reported for the equivalent 20202021 period.

The developments that most significantly affected our financial performance during the three months ended June 30, 2021,2022, compared to the equivalent 20202021 period, are summarized below:

Underwriting: The underwriting income for the three months ended June 30, 20212022, was $4.6$9.3 million. By comparison, the equivalent period in 20202021 reported an underwriting lossincome of $1.3$4.6 million. The increaseimproved underwriting result was driven primarily by a change in the business mix. As we have been reducing our exposure to low-margin motor and workers’ compensation business, the higher-margin lines of business have elevated the underwriting income was due primarily to the comparative period being impacted by COVID-19 pandemic losses.income.

Our overall combined ratio was 96.5%91.6% for the three months ended June 30, 2021,2022, compared to 101.2%96.5% during the equivalent 20202021 period. The net impact of changes incasualty (including multi-line) business was the estimate of losses incurred in prior years contributed 2.7%largest contributor to the improvement in our combined ratio for three months ended June 30, 2021.ratio.

Investments: Our total investment income for the three months ended June 30, 20212022, was $2.0$17.2 million, compared to total investment income of $5.5$2.0 million reported for the same period in 2020. The decrease was due primarily to lower investment return on our2021. Our investment in SILP reported a gain of $11.9 million during the three months ended June 30, 2021,2022, compared to a loss of $2.0 million during the sameequivalent period in 2020.2021. Other investment income totaled $5.3 million and $4.0 million during the three months ended June 30, 2022, and 2021, respectively, driven primarily by gains in our Innovations portfolio.
Other income (expense): For the three months ended June 30, 2022, we incurred $6.0 million of other non-underwriting expenses, primarily as a result of foreign exchange losses. The weakening of the pound sterling against the U.S. dollar drove the foreign exchange loss. In addition, the other income (expense) included our share of Lloyd’s syndicates’ investment losses on the Funds at Lloyd’s business, which is generally conducted on a funds withheld basis. The syndicates invest a portion of these funds in fixed-maturity securities and investment funds, which were negatively impacted by rising interest rates and market volatility. We record our share of these mark-to-market adjustments when the syndicates report these to us, generally one quarter in arrears.

Six months ended June 30, 20212022, and 20202021

For the six months ended June 30, 2021,2022, fully diluted book value per share increased by $0.18 per share,$0.11, or 1.3%0.8%, to $13.60$14.10 per share from $13.42$13.99 per share at December 31, 2020.2021. For the six months ended June 30, 2021,2022, basic book value per share increased by $0.19 per share,$0.13, or 1.4%0.9%, to $13.66$14.18 per share from $13.47$14.05 per share at December 31, 2020.2021. The increase in fully diluted book value per share during the six months ended June 30, 2022, was net of $0.07, or 0.5%, adverse impact relating to the adoption of ASU 2020-06 (see Note 2 of the accompanying condensed consolidated financial statements for recently issued accounting standards adopted).

For the six months ended June 30, 2021,2022, our net income was $7.1$9.1 million, compared to a net lossincome of $40.3$7.1 million reported for the equivalent 20202021 period.

The developments that most significantly affected our financial performance during the six months ended June 30, 2021,2022, compared to the equivalent 20202021 period, are summarized below:

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Underwriting: The underwriting income for the six months ended June 30, 20212022, was $2.6 million.$1.7 million, driven primarily by $13.6 million of losses related to the Russian-Ukrainian conflict and $2.8 million of losses related to Tennessee wildfires. By comparison, the underwriting lossincome for the sameequivalent period in 20202021 was $0.1 million. The higher underwriting income was due primarily to the comparative period being impacted$2.6 million, driven by COVID-19 pandemic losses. The higher underwriting income was partially offset by (i) losses from the winter storm Uri during the first quarter of 2021, (ii) losses associated withand deposit-accounted contracts and (iii) the net financial impact of prior-year loss development.contracts.

Our overall combined ratio was 99.0%99.3% for the six months ended June 30, 2021,2022, compared to 100.0%99.0% for the same period in 2020.2021. The winter storm UriRussian-Ukrainian conflict contributed 2.1%5.8 percentage points to the combined ratio for the six months ended June 30, 2021.2022.

Investments: Our total investment income for the six months ended June 30, 2021,2022, was $20.7$24.9 million compared to oura total investment lossincome of $29.7$20.7 million incurred during the equivalent 20202021 period. The investment income forFor the six months ended June 30, 2022, our investment in SILP reported a gain of $16.0 million, while our Innovations-related investments reported an unrealized gain of $9.2 million. The investment income during the equivalent 2021 was due primarily toperiod reflected a $14.2 million gain realized on the sale of our investment in AccuRisk. Additionally, our investment in SILP reported a gain of $2.0 million for

Other income (expense): For the six months ended June 30, 2021, compared to a loss2022, other expense of $40.5$6.6 million duringwas driven primarily by the equivalent 2020 period.mark-to-market adjustments and foreign exchange losses for the reasons explained above for the three months ended June 30, 2022.

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Underwriting results

We analyze our business based on three categories: “property,” “casualty,” and “other.”

Gross Premiums Written
 
Details of gross premiums written are provided in the following table: 
Three months ended June 30Six months ended June 30 Three months ended June 30Six months ended June 30
2021202020212020 2022202120222021
($ in thousands)($ in thousands)($ in thousands)($ in thousands)
PropertyProperty$16,508 11.7 %$13,551 11.6 %$31,423 10.1 %$27,710 12.2 %Property$23,129 17.2 %$16,508 11.7 %$41,664 14.8 %$31,423 10.1 %
CasualtyCasualty102,634 72.5 74,794 64.1 216,308 69.4 136,357 60.2 Casualty75,804 56.2 102,634 72.5 154,073 54.9 216,308 69.4 
OtherOther22,437 15.8 28,344 24.3 63,783 20.5 62,409 27.6 Other35,847 26.6 22,437 15.8 84,929 30.3 63,783 20.5 
TotalTotal$141,579 100.0 %$116,689 100.0 %$311,514 100.0 %$226,476 100.0 %Total$134,780 100.0 %$141,579 100.0 %$280,666 100.0 %$311,514 100.0 %

As a result of our underwriting philosophy, the total premiums we write as well asand the mix of premiums between property, casualty, and other business, may vary significantly from period to period depending on the market opportunities that we identify.

For the three months ended June 30, 2021,2022, our gross premiums written increaseddecreased by $24.9$6.8 million, or 21.3%4.8%, compared to the equivalent 20202021 period. The primary drivers for this change are the following:

Gross Premiums Written
Three months ended June 30, 2021
Increase (decrease)
($ in millions)
% changeExplanation
Property$3.021.8%The increase in property gross premiums written during the three months ended June 30, 2021 over the comparable 2020 period was partially related to new commercial property contracts, and partially to motor contracts. Effective July 1, 2021, we did not renew a quota share motor contract and decreased our share on another motor contract. As part of our strategy to diversify premiums between classes of business, we expect our motor premiums to decrease in future periods.
Casualty$27.837.2%The increase in casualty gross premiums written during the three months ended June 30, 2021 over the comparable 2020 period was due primarily to an increase in Lloyd’s syndicate multi-line quota share contracts written during 2021. To a lesser extent, the increase in casualty gross premiums written related to higher motor premiums. The increase in casualty premiums was partially offset by workers’ compensation business.
Other$(5.9)(20.8)%The decrease in “other” gross premiums written during the three months ended June 30, 2021 over the comparable 2020 period was primarily related to certain crop contracts not renewed during 2021. To a lesser extent the decrease in other premiums related to health contracts. The decrease in other gross premiums written was partially offset by an increase in premiums relating to financial lines.



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Gross Premiums Written
Three months ended June 30, 2022
Increase (decrease)
($ in millions)
% changeExplanation
Property$6.640.1%The increase in property gross premiums written during the three months ended June 30, 2022, over the comparable 2021 period was due primarily to personal lines business, driven by the growth of one of our Innovations partners.

The increase was partially offset by our motor contracts on which we previously elected to reduce or not renew our participation.
Casualty$(26.8)(26.1)%The decrease in casualty gross premiums written during the three months ended June 30, 2022, over the comparable 2021 period was due primarily to non-renewed motor contracts as described above. In addition, workers’ compensation premiums decreased as we elected not to renew certain contracts during 2021.

The decrease in casualty gross premiums written was partially offset by an increase in general liability premiums driven primarily by new contracts bound during 2022.
Other$13.459.8%The increase in “other” gross premiums written during the three months ended June 30, 2022 over the comparable 2021 period was related primarily to marine, energy, and financial lines. New business drove most of the increase in marine and energy premiums. The growth in financial lines was driven primarily by an increase in underlying transactional liability business.

The increase was partially offset by a decrease in premiums, due primarily to changing certain exposures from a proportional basis to excess of loss.

For the six months ended June 30, 2021,2022, our gross premiums written increaseddecreased by $85.0$30.8 million, or 37.5%9.9%, compared to the equivalent 20202021 period. The primary drivers of this change are as follows:the following:
Gross Premiums Written
Six months ended June 30, 2021
Increase (decrease)
($ in millions)
% changeExplanation
Property$3.713.4%The increase in property gross premiums written during the first half of 2021 over the comparable 2020 period was primarily related to motor contracts where underlying business written was higher in the first half of 2021 compared to the same period in 2020. Effective July 1, 2021, we did not renew a quota share motor contract and decreased our share on another motor contract. As part of our strategy to diversify premiums between classes of business, we expect our motor premiums to decrease in future periods.
Casualty$80.058.6%The increase in casualty gross premiums written during the first half of 2021 over the comparable 2020 period was due primarily to an increase in Lloyd’s syndicate multi-line quota share contracts written during 2021. To a lesser extent, we also experienced an increase in motor and general liability business. For the reasons explained above, we expect our motor premiums to decrease in future periods.
Other$1.42.2%The increase in “other” gross premiums written during the first half of 2021 over the comparable 2020 period was primarily attributable to new contracts relating to financial lines, marine, energy, and other specialty lines. The hardening market enabled us to selectively expand our specialty book while taking advantage of improved rates. A decrease in health and crop premiums partially offset the increase as we lowered our participation in these lines in 2021.
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Gross Premiums Written
Six months ended June 30, 2022
Increase (decrease)
($ in millions)
% changeExplanation
Property$10.232.6%The increase in property gross premiums written during the six months ended June 30, 2022, over the comparable 2021 period was due primarily to personal lines business as discussed above. In addition, the commercial lines gross premiums written also increased, driven by new contracts bound during 2022.

The increase was partially offset by our motor contracts on which we had previously elected to reduce or not renew our participation.
Casualty$(62.2)(28.8)%The decrease in casualty premiums written during the six months ended June 30, 2022 over the comparable 2021 period was due primarily to motor and workers’ compensation contracts on which we elected to reduce or not renew our participation.

The decrease in casualty premiums was partially offset by growth in general liability and multi-line premiums, driven by new and renewed contracts, including Lloyd’s syndicates and Innovations-related business.
Other$21.133.2%
The increase in “other” premiums written during the six months ended June 30, 2022, over the comparable 2021 period was due primarily to:

financial lines, including transactional liability business;
new marine and energy contracts bound during 2022; and
new contracts bound during 2022 relating to other specialty classes.

The increase was partially offset by a decrease in premiums, due primarily to changing certain exposures from a proportional basis to excess of loss.

Premiums Ceded
 
For the three and six months ended June 30, 2021,2022, premiums ceded were $0.0$(7.2) million and (0.1)$(13.2) million, respectively, compared to $0.1 million and $0.8 millioninsignificant premiums ceded for the three and six months ended June 30, 2020, respectively. The negative premiums ceded for the six months ended June 30, 2021, resulted primarily from premium adjustments on contracts retroceded in prior periods. We have not2021. In 2022, we entered into anynew retrocession contracts during 2021. In general, we use retrocessional coverageagreements to managereduce our net portfolio exposure to leverage areas of expertisemarine, energy, and to improve our strategic position in meeting the needs of clients and brokers.property losses.

Net Premiums Written

Details of net premiums written are provided in the following table: 
Three months ended June 30Six months ended June 30 Three months ended June 30Six months ended June 30
2021202020212020 2022202120222021
($ in thousands)($ in thousands)($ in thousands)($ in thousands)
PropertyProperty$16,506 11.7 %$13,641 11.7 %$31,462 10.1 %$27,620 12.2 %Property$16,891 13.2 %$16,506 11.7 %$33,326 12.5 %$31,462 10.1 %
CasualtyCasualty102,634 72.5 74,571 64.0 216,339 69.4 135,807 60.2 Casualty75,803 59.4 102,634 72.5 154,072 57.6 216,339 69.4 
OtherOther22,438 15.8 28,345 24.3 63,767 20.5 62,239 27.6 Other34,923 27.4 22,438 15.8 80,096 29.9 63,767 20.5 
TotalTotal$141,578 100.0 %$116,557 100.0 %$311,568 100.0 %$225,666 100.0 %Total$127,617 100.0 %$141,578 100.0 %$267,494 100.0 %$311,568 100.0 %

For the three and six months ended June 30, 2021,2022, net premiums written increaseddecreased by $25.0$14.0 million, or 21.5%9.9%, and $85.9by $44.1 million, or 38.1%14.1%, respectively, compared to the three and six months ended June 30, 2020.2021. The movement in net premiums written resulted from the changes in gross premiums written and ceded during the periods.
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Net Premiums Earned
 
Details of net premiums earned are provided in the following table: 
Three months ended June 30Six months ended June 30 Three months ended June 30Six months ended June 30
2021202020212020 2022202120222021
($ in thousands)($ in thousands)($ in thousands)($ in thousands)
PropertyProperty$14,761 11.1 %$14,257 13.2 %$28,916 10.8 %$29,066 13.2 %Property$12,166 11.0 %$14,761 11.1 %$26,656 11.3 %$28,916 10.8 %
CasualtyCasualty85,690 64.7 69,199 63.8 172,781 64.5 134,472 61.3 Casualty67,546 61.3 85,690 64.7 148,774 63.0 172,781 64.5 
OtherOther32,028 24.2 24,958 23.0 66,178 24.7 55,897 25.5 Other30,507 27.7 32,028 24.2 60,714 25.7 66,178 24.7 
TotalTotal$132,479 100.0 %$108,414 100.0 %$267,875 100.0 %$219,435 100.0 %Total$110,219 100.0 %$132,479 100.0 %$236,144 100.0 %$267,875 100.0 %

Net premiums earned are primarily a function of the amount and timing of net premiums written during the current and prior periods.

Loss and Loss Adjustment Expenses Incurred, Net
 
Details of net losses incurred are provided in the following table:

Three months ended June 30Six months ended June 30 Three months ended June 30Six months ended June 30
2021202020212020 2022202120222021
($ in thousands)($ in thousands)($ in thousands)($ in thousands)
PropertyProperty$7,261 8.4 %$10,323 11.6 %$18,646 10.1 %$19,795 12.0 %Property$5,789 9.5 %$7,261 8.4 %$15,502 9.8 %$18,646 10.1 %
CasualtyCasualty65,333 75.1 48,795 54.7 129,485 70.1 96,229 58.4 Casualty43,621 71.7 65,333 75.1 98,994 62.6 129,485 70.1 
OtherOther14,363 16.5 30,076 33.7 36,547 19.8 48,867 29.6 Other11,413 18.8 14,363 16.5 43,734 27.6 36,547 19.8 
TotalTotal$86,957 100.0 %$89,194 100.0 %$184,678 100.0 %$164,891 100.0 %Total$60,823 100.0 %$86,957 100.0 %$158,230 100.0 %$184,678 100.0 %

The below table summarizes the loss ratios for the three and six months ended June 30, 20212022, and 2020:2021:
 Three months ended June 30Six months ended June 30
 20212020Increase / (decrease) in loss ratio points20212020Increase / (decrease) in loss ratio points
Property49.2 %72.4 %(23.2)64.5 %68.1 %(3.6)
Casualty76.2 %70.5 %5.7 74.9 %71.6 %3.3 
Other44.8 %120.5 %(75.7)55.2 %87.4 %(32.2)
Total65.6 %82.3 %(16.7)68.9 %75.1 %(6.2)
 Three months ended June 30Six months ended June 30
 20222021Increase / (decrease) in loss ratio points20222021Increase / (decrease) in loss ratio points
Property47.6 %49.2 %(1.6)58.2 %64.5 %(6.3)
Casualty64.6 76.2 (11.6)66.5 74.9 (8.4)
Other37.4 44.8 (7.4)72.0 55.2 16.8 
Total55.2 %65.6 %(10.4)67.0 %68.9 %(1.9)

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The changes in net losses incurred for the three months ended June 30, 20212022, as compared to the equivalent 20202021 period, were attributable to the following:
Net Losses IncurredNet Losses IncurredNet Losses Incurred
Three months ended June 30, 2021
Three months ended June 30, 2022Three months ended June 30, 2022
Increase (decrease)
($ in millions)
Increase / (decrease) in loss ratio pointsExplanationIncrease (decrease)
($ in millions)
Increase / (decrease) in loss ratio pointsExplanation
PropertyProperty$(3.1)(23.2)
The decrease in property losses incurred during the three months ended June 30, 2021, over the comparable 2020 period, was due primarily to:

favorable development on prior catastrophe events; and
the comparable period included COVID-19 pandemic related business interruption claims.

The decrease in property losses was partially offset by an increase in the motor line which, in the comparable 2020 period, had benefited from a lower level of losses during the shelter-in-place orders in the U.S.
 
During the three months ended June 30, 2021, the property loss ratio decreased 23.2 percentage points for reasons consistent with those driving the decrease in losses incurred noted above.

Property$(1.5)(1.6)
The decrease in property losses incurred during the three months ended June 30, 2022, compared to the same period in 2021, was due primarily to a reduction in motor business related to contracts on which we elected to reduce or non-renew our participation. Higher personal lines losses partially offset the decrease.

The property loss ratio decreased 1.6 percentage points during the three months ended June 30, 2022, over the equivalent 2021 period, due primarily to the reasons described above.

CasualtyCasualty$16.55.7
The increase in losses incurred during the three months ended June 30, 2021, over the comparable 2020 period was due primarily to:

an increase in the volume of motor, workers’ compensation and Lloyd’s business;
favorable loss development recorded in the comparable 2020 period on professional liability contracts; and
a lower level of motor losses reported in the comparable 2020 period due to the shelter-in-place orders in the U.S.

The casualty loss ratio increased 5.7 percentage points during the three months ended June 30, 2021 over the comparable 2020 period for reasons consistent with those driving the increase in losses incurred noted above.

Casualty$(21.7)(11.6)
The decrease in losses incurred during the three months ended June 30, 2022, over the comparable 2021 period was due primarily to reductions in motor and workers’ compensation exposures. The decrease was partially offset by increased attritional losses on new and renewed general liability and multi-line contracts.

The casualty loss ratio decreased 11.6 percentage points during the three months ended June 30, 2022, over the equivalent 2021 period, due primarily to changes in our business mix. We significantly reduced our motor and workers’ compensation exposures and increased our general liability and multi-line business, which generally incorporates lower loss ratios. Adverse loss development on certain motor and workers’ compensation contracts partially offset the loss ratio decreases.

OtherOther$(15.7)(75.7)
The decrease in “other” losses incurred during the three months ended June 30, 2021 over the equivalent 2020 period was due primarily to:

favorable loss development on a mortgage contract relating to the COVID-19 pandemic, and
the prior period included loss estimates relating to COVID-19 pandemic.

The above factors contributed to the other loss ratio decreasing 75.7 percentage points during the three months ended June 30, 2021 over the comparable 2020 period.

Other$(3.0)(7.4)
The decrease in “other” losses incurred during the three months ended June 30, 2022, over the comparable 2021 period was due primarily to:

health contracts on which we previously elected to reduce or not renew our participation;
the release of loss reserves on certain mortgage contracts; and
crop losses incurred in the prior period.
   
 The decrease was partially offset by increased losses on:
new and renewed marine and energy contracts; and
our growing book of transactional liability business.

The “other” loss ratio decreased 7.4 percentage points during the three months ended June 30, 2022, over the equivalent 2021 period, due primarily to the reasons described above.

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The changes in net losses incurred and loss ratios during the six months ended June 30, 20212022, were attributable to the following:
Net Losses IncurredNet Losses IncurredNet Losses Incurred
Six months ended June 30, 2021
Six months ended June 30, 2022Six months ended June 30, 2022
Increase (decrease)
($ in millions)
Increase / (decrease) in loss ratio pointsExplanationIncrease (decrease)
($ in millions)
Increase / (decrease) in loss ratio pointsExplanation
PropertyProperty$(1.1)(3.6)
The decrease in property losses incurred during the first half of 2021, over the comparable 2020 period, was due primarily to favorable development on prior catastrophe events. The decrease was partially offset by losses relating to the winter storm Uri and an increase in motor losses which, in the comparable 2020 period, had benefited from a lower level of losses during the shelter-in-place order in the U.S.
 
During the first half of 2021, the property loss ratio decreased 3.6 percentage points for reasons consistent with those driving the decrease in losses incurred noted above.

Property$(3.1)(6.3)
The decrease in property losses incurred during the six months ended June 30, 2022, compared to the same period in 2021, was due primarily to a reduction in motor business related to contracts on which we elected to reduce or non-renew our participation. The decrease was partially offset by losses from a growing personal lines book and Tennessee wildfires that occurred during the first quarter of 2022.

The property loss ratio decreased 6.3 percentage points during the six months ended June 30, 2022 over the equivalent 2021 period. This decrease was due primarily to the reduction in our motor business. Higher personal lines losses partially offset the decrease.

CasualtyCasualty$33.33.3
The increase in casualty losses incurred during the first half of 2021, over the comparable 2020 period, was due primarily to:

losses from the winter storm Uri on certain multi-line contracts;
an increase in the motor, workers’ compensation and Lloyd’s business; and
a lower level of motor losses reported in the comparable 2020 period due to the shelter-in-place orders in the U.S.

During the first half of 2021, the casualty loss ratio increased 3.3 percentage point over the comparable 2020 period for reasons consistent with those driving the increase in losses incurred noted above.

Casualty$(30.5)(8.4)
The decrease in casualty losses incurred during the six months ended June 30, 2022, compared to the same period in 2021, was due primarily to a reduction in motor and worker’s compensation business related to contracts on which we elected to reduce or non-renew our participation. In addition, the prior period included losses from winter storm Uri.

The decrease was partially offset by higher incurred losses relating to general liability and multi-line business, reflecting the growth in our Lloyd’s syndicate business.

The casualty loss ratio decreased 8.4 percentage points during the six months ended June 30, 2022 over the equivalent 2021 period, due primarily to changes in our business mix. We significantly reduced our motor and workers’ compensation exposures and increased our general liability and multi-line business, which generally incorporates lower loss ratios. Adverse loss development on certain motor and workers’ compensation contracts partially offset the loss ratio decreases.

OtherOther$(12.3)(32.2)
The decrease in other losses incurred during the first half of 2021, over the comparable 2020 period, was due primarily to:

��favorable development on a mortgage contract relating to the COVID-19 pandemic losses; and
the prior period included loss estimates relating to COVID-19 pandemic.

The decrease in losses incurred was partially offset by increases related primarily to:
a satellite loss occurring during 2021; and
increase in volume of specialty health, marine, energy, and other specialty business.

The primary drivers of the 32.2 percentage points were consistent with those driving the decrease in losses incurred noted above.

Other$7.216.8
The increase in “other” losses incurred during the six months ended June 30, 2022, compared to the same period in 2021, was due primarily to losses relating to the Russian-Ukrainian conflict. Our growing book of transactional liability and marine and energy business also contributed to the increase.

The increase was partially offset by:
lower losses incurred on health contracts on which we elected to reduce or not renew our participation;
the release of loss reserves on certain mortgage contracts; and
crop losses incurred in the equivalent 2021 period.

The “other” loss ratio increased 16.8 percentage points during the six months ended June 30, 2022, over the equivalent 2021 period, due primarily to the reasons described above.


Russian-Ukrainian Conflict

Our loss and loss adjustment expenses from the Russian-Ukrainian conflict relate primarily to marine, energy, political violence, and terrorism (“MEPVT”) policies and whole account contracts, all of which are included in our Specialty book of business. We have purchased excess of loss reinsurance to reduce our net exposure relating to MEPVT exposures. As of June 30, 2022, we have not recorded any reinsurance recoveries, as the estimated losses had not impacted the excess layers. However, we may generate recoveries under the retroceded contracts if we recognize significant further MEPVT losses from the Russian-Ukrainian conflict.
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See Note 5 of the accompanying condensed consolidated financial statements for additional discussion of our reserving techniques and prior period development of net claims and claim expenses.

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Acquisition Costs, Net
 
Details of acquisition costs are provided in the following table: 
Three months ended June 30Six months ended June 30 Three months ended June 30Six months ended June 30
2021202020212020 2022202120222021
($ in thousands)($ in thousands)($ in thousands)($ in thousands)
PropertyProperty$3,282 8.7 %$2,977 16.6 %$6,082 8.6 %$5,862 11.8 %Property$3,036 8.4 %$3,282 8.7 %$6,384 9.2 %$6,082 8.6 %
CasualtyCasualty22,766 60.5 20,021 111.8 44,557 62.7 37,688 75.9 Casualty19,072 52.5 22,766 60.5 40,318 58.2 44,557 62.7 
OtherOther11,583 30.8 (5,095)(28.4)20,373 28.7 6,092 12.3 Other14,227 39.2 11,583 30.8 22,578 32.6 20,373 28.7 
TotalTotal$37,631 100.0 %$17,903 100.0 %$71,012 100.0 %$49,642 100.0 %Total$36,335 100.0 %$37,631 100.0 %$69,280 100.0 %$71,012 100.0 %

The acquisition cost ratios for the six months ended June 30, 20212022 and 2020,2021, were as follows:
 Three months ended June 30Six months ended June 30
 20212020Increase / (decrease)20212020Increase / (decrease)
Property22.2 %20.9 %1.3 %21.0 %20.2 %0.8 %
Casualty26.6 %28.9 %(2.3)%25.8 %28.0 %(2.2)%
Other36.2 %(20.4)%56.6 %30.8 %10.9 %19.9 %
Total28.4 %16.5 %11.9 %26.5 %22.6 %3.9 %
 Three months ended June 30Six months ended June 30
 20222021Increase / (decrease)20222021Increase / (decrease)
Property25.0 %22.2 %2.8 %23.9 %21.0 %2.9 %
Casualty28.2 26.6 1.6 27.1 25.8 1.3 
Other46.6 36.2 10.4 37.2 30.8 6.4 
Total33.0 %28.4 %4.6 %29.3 %26.5 %2.8 %


The changes in the acquisition cost ratios for the three months ended June 30, 2021,2022, compared to the sameequivalent period in 2020,2021, were attributable to the following:
Change in Acquisition Cost Ratios
Three months ended June 30, 20212022
 Increase / (decrease) in acquisition cost ratio pointsExplanation
Property1.32.8The increase in the property acquisition cost ratio during the three months ended June 30, 20212022, over the comparable 20202021 period was due primarily to growth in certain quota share commercial property contracts with higher ceding commissions than our otheron the personal property contracts.quota share contracts relative to motor business that decreased during the current period.
Casualty(2.3)1.6
The decreaseincrease in the casualty acquisition cost ratio during the three months ended June 30, 20212022, over the comparable 20202021 period was due primarily to favorablechanges in the mix of business we write. Our motor and workers’ compensation business, which decreased in 2022, generally incorporate lower ceding commission adjustments on workers’ compensation contracts that experienced adverse loss development duringratios than our general liability and multi-line business, which grew compared to the first quarter of 2021.equivalent 2021 period.

Other56.610.4
The increase in the “other” acquisition cost ratio during the three months ended June 30, 20212022, over the comparable 20202021 period was due toprimarily to:

increased profit commissions on a mortgage contract, offsetting most of the corresponding decreasecontracts driven by favorable loss development;
growth in loss reserves relating to the COVID-19 pandemic.transactional liability business, which carries higher ceding commission ratios than other specialty business; and
new specialty quota share contracts bound in 2022, which incorporate relatively high acquisition costs.

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The changes in the acquisition cost ratios during the six months ended June 30, 2021,2022, compared to the equivalent period in 2020,2021, were attributable to the following:
Change in Acquisition Cost Ratios
Six months ended June 30, 20212022
 Increase / (decrease) in acquisition cost ratio pointsExplanation
Property0.82.9ThereThe year-to-date increase was no significant changedriven by the same trends as those discussed above in reference to the property acquisition cost ratio during the first half of 2021 over the comparable 2020 period.second quarter.
Casualty(2.2)1.3
The casualty acquisition cost ratio decreased duringyear-to-date increase was driven by the first half of 2021 oversame trends as those discussed above in reference to the comparable 2020 period. The decrease related to favorable ceding commission adjustments on workers’ compensation contracts that experienced adverse loss development during the first quarter of 2021.second quarter.

Other19.96.4
The year-to-date increase was driven by the same trends as those discussed above in reference to the second quarter. A decrease in health business, which generally carries lower ceding commissions relative to other specialty business, was an additional driver of the increase in the “other” acquisition cost ratio during the first half of 2021, over the comparable 2020 period was due to profit commissions that were previously reversed during 2020 as a result of COVID-19 losses.
ratio.

The increase was partially offset by shift in the mix of business towards non-proportional specialty business during the first half of 2021. This business incorporates relatively lower commission rates as compared to proportional health and financial lines business.
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Ratio Analysis
 
The following table provides our underwriting ratios by line of business: 


Three months ended June 30Three months ended June 30Three months ended June 30Three months ended June 30
2021202020222021
PropertyCasualtyOtherTotalPropertyCasualtyOtherTotalPropertyCasualtyOtherTotalPropertyCasualtyOtherTotal
Loss ratioLoss ratio49.2 %76.2 %44.8 %65.6 %72.4 %70.5 %120.5 %82.3 %Loss ratio47.6 %64.6 %37.4 %55.2 %49.2 %76.2 %44.8 %65.6 %
Acquisition cost ratioAcquisition cost ratio22.2 26.6 36.2 28.4 20.9 28.9 (20.4)16.5 Acquisition cost ratio25.0 28.2 46.6 33.0 22.2 26.6 36.2 28.4 
Composite ratioComposite ratio71.4 %102.8 %81.0 %94.0 %93.3 %99.4 %100.1 %98.8 %Composite ratio72.6 %92.8 %84.0 %88.2 %71.4 %102.8 %81.0 %94.0 %
Underwriting expense ratioUnderwriting expense ratio2.5 2.4 Underwriting expense ratio3.4 2.5 
Combined ratioCombined ratio96.5 %101.2 %Combined ratio91.6 %96.5 %


Six months ended June 30Six months ended June 30Six months ended June 30Six months ended June 30
2021202020222021
PropertyCasualtyOtherTotalPropertyCasualtyOtherTotalPropertyCasualtyOtherTotalPropertyCasualtyOtherTotal
Loss ratioLoss ratio64.5 %74.9 %55.2 %68.9 %68.1 %71.6 %87.4 %75.1 %Loss ratio58.2 %66.5 %72.0 %67.0 %64.5 %74.9 %55.2 %68.9 %
Acquisition cost ratioAcquisition cost ratio21.0 25.8 30.8 26.5 20.2 28.0 10.9 22.6 Acquisition cost ratio23.9 27.1 37.2 29.3 21.0 25.8 30.8 26.5 
Composite ratioComposite ratio85.5 %100.7 %86.0 %95.4 %88.3 %99.6 %98.3 %97.7 %Composite ratio82.1 %93.6 %109.2 %96.3 %85.5 %100.7 %86.0 %95.4 %
Underwriting expense ratioUnderwriting expense ratio3.6 2.3 Underwriting expense ratio3.0 3.6 
Combined ratioCombined ratio99.0 %100.0 %Combined ratio99.3 %99.0 %

The increase in underwriting expense ratio for the three months ended June 30, 2022, compared to the same period in 2021, was due partially to lower net earned premiums and partially to higher underwriting expenses driven by stock-based compensation expenses.

The underwriting expense ratio for the six months ended June 30, 2021, compared to the equivalent 2020 period, was primarily dueincluded 1.1 percentage points relating to interest expense on deposit-accounted contracts based on revised expectations of ultimate cash flows. Overall, ourThere was no similar impact on the underwriting related general and administrative expenses have remained steadyexpense ratio for the three and six months ended June 30, 2021 and 2020.2022. Excluding the deposit-accounted contracts, the underwriting expense ratio for the six months ended June 30, 2022, was higher due to lower net earned premiums.

General and Administrative Expenses

Details of general and administrative expenses are provided in the following table: 
Three months ended June 30Six months ended June 30Three months ended June 30Six months ended June 30
20212020202120202022202120222021
($ in thousands)($ in thousands)($ in thousands)($ in thousands)
Underwriting expensesUnderwriting expenses$3,357 $3,268 $6,694 $6,204 Underwriting expenses$3,528 $3,357 $6,749 $6,694 
Corporate expensesCorporate expenses4,382 2,881 8,586 6,739 Corporate expenses4,578 4,382 8,589 8,586 
General and administrative expensesGeneral and administrative expenses$7,739 $6,149 $15,280 $12,943 General and administrative expenses$8,106 $7,739 $15,338 $15,280 

For the three months ended June 30, 2021,2022, general and administrative expenses increased by $1.6$0.4 million, or 25.9%4.7%, compared to the equivalent 20202021 period. The increase was due primarily to higher expenses relating to (i) our Innovations unit,stock-based compensation and (ii) directors’legal and officers’ insurance premiums and (iii) information systems and technology,other professional fees compared to the same period in 2020.2021. The increase was partially offset by lower D&O insurance expenses and reductions in other personnel costs.

For the six months ended June 30, 2021,2022, general and administrative expenses increased by $2.3$0.1 million, or 18.1%0.4%, compared to the equivalent 20202021 period. The increase was due primarily to higher expenses relating to (i) our Innovations unit, (ii) directors’ and officers’ insurance premiums, (iii) personnel costs, and (iv) information system and technology. The increase was partially offset by lower legal and other professional fees.
stock-based
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compensation, and (ii) legal and other professional fees. The increase was partially offset by lower D&O insurance expenses and personnel costs.

For the six months ended June 30, 2021,2022, and 2020,2021, general and administrative expenses included $1.6$2.1 million and $1.7$1.6 million, respectively, of expensescosts related to stock compensation granted to employees and directors.

Total Investment Income (Loss)
 
Total investment income (loss) incorporates (i) changes in the net asset value of our investment in SILP managed by DME Advisors, (ii) interest income earned on the restricted cash and cash equivalents pledged as collateral to our clients, and (iii) gains (or losses) and interest on our portfolio of strategic and Innovations investments, notes receivable and investments accounted for under the equity method. We expect our total investment income, including any change in the net asset value of our investment in SILP, to fluctuate from period to period.

A summary of our total investment income (loss) is as follows:
Three months ended June 30Six months ended June 30Three months ended June 30Six months ended June 30
2021202020212020 2022202120222021
($ in thousands) ($ in thousands)
Realized gains (losses)Realized gains (losses)$— $— $14,210 $(15,000)Realized gains (losses)$— $— $— $14,210 
Change in unrealized gains and lossesChange in unrealized gains and losses3,995 3,329 5,223 18,844 Change in unrealized gains and losses5,284 3,995 9,183 5,223 
Investment related foreign exchange gains (losses)20 165 (154)
Investment-related foreign exchange gains (losses)Investment-related foreign exchange gains (losses)(372)20 (410)
Interest and dividend income, net of withholding taxesInterest and dividend income, net of withholding taxes33 568 146 6,330 Interest and dividend income, net of withholding taxes986 33 1,008 146 
Interest, dividend and other expenses(2)(30)(884)(38)
Income (loss) from equity method investment— (98)— 789 
Net investment related income (loss)$4,046 $3,934 $18,696 $10,771 
Interest, dividend, and other expensesInterest, dividend, and other expenses(618)(2)(841)(884)
Net investment-related income (loss)Net investment-related income (loss)$5,280 $4,046 $8,940 $18,696 
Income (loss) from investments in related party investment fundIncome (loss) from investments in related party investment fund$(2,006)$1,609 $2,018 $(40,517)Income (loss) from investments in related party investment fund$11,876 $(2,006)$15,953 $2,018 
Total investment income (loss)Total investment income (loss)$2,040 $5,543 $20,714 $(29,746)Total investment income (loss)$17,156 $2,040 $24,893 $20,714 

The caption “Income (loss) from investment in related party investment fund” in the above table is net of management fees paid by SILP to DME Advisors and performance compensation, if any, allocated from the Company’s investment in SILP to DME II. No performance compensation is allocated in periods of loss reported by SILP. For detailed breakdowns of management fees and performance compensation for the three and six months ended June 30, 20212022 and 2020,2021, please refer to Note 3 of the condensed consolidated financial statements.

For the three months ended June 30, 2021, investment income, net of fees and expenses, resulted in a loss of 0.9%, on2022, the Investment Portfolio managed by DME Advisors reported a gain of 4.9%, compared to a gainloss of 0.3%0.9% for the three months ended June 30, 2020.2021. SILP’s long portfolio gained 4.2%lost 10.0%, while the short portfolio and macro positions lost 2.3%,gained 15.3% and 2.4%0.7%, respectively, during the three months ended June 30, 2021.2022. For the three months ended June 30, 2021,2022, the significant contributors to SILP’s investment incomereturn were short positions in the S&P 500 index and a consumer cyclical company and a macro position on a high-yield bond index. The largest detractors were long positions in Brighthouse Financial and The Chemours Company (CC), and CONSOL Energy (CEIX), and short positions in a basket of U.S. home builders. The largest detractors were various short positionsODP Corp, and a longmacro position in Danimer Scientific (DNMR).gold.

For the six months ended June 30, 2021, investment income, net of fees and expenses, resulted in a gain of 0.5% on2022, the Investment Portfolio managed by DME Advisors reported a gain of 6.7%, compared to a lossgain of 7.8%0.5% for the six months ended June 30, 2020.2021. The long portfolio gained 16.0%lost 15.8%, while the short portfolio and macro positions lost 9.1%gained 20.2% and 5.3%4.1%, respectively, during the six months ended June 30, 2021.2022. For the six months ended June 30, 2021,2022, the largestmost significant contributors to SILP’s investment incomereturn were short positions in the S&P 500 index and a basket of overvalued stocks and a macro position on a high-yield bond index For the six months ended June 30, 2022, the most significant detractors were long positions in Brighthouse Financial, (BHF), The Chemours Company (CC),Green Brick Partners, and CONSOL Energy (CEIX). Various short positions were the largest detractors during the six months ended June 30, 2021.Atlas Air Worldwide.

ForDuring the three and six months ended June 30, 2021, the decrease in interest income compared2022, some of our Innovations-related investees completed new financing rounds contributing to the equivalent period in 2020 resulted primarily from lower interest rates offered by financial institutions on the restricted cash and cash equivalents we have pledged as collateral to our clients.

During the six months ended June 30, 2021, we recorded a realizednet unrealized gain of $14.2$5.3 million (pre-tax) relating to the saleand $9.2 million, respectively. The unrealized gains are net of our investment in AccuRisk. Additionally,a $2.2 million valuation allowance recorded during the three and six months ended June 30, 2021, we recorded a net unrealized gain of $4.0 million and $5.2 million, respectively,2022 on our portfolio of Innovations relatedcertain Innovations-related investments. During the

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equivalent period in 2020, we wrote off a valuation allowance previously recorded on certain notes receivable. The write-off represented a realized loss, which was fully offset by a reduction in unrealized losses.

For the three months ended June 30, 20212022, and 2020, and for the six months ended June 30, 2021, and 2020, the gross investment return (loss) on our investments managed by DME Advisors (excluding investment advisor performance allocation) was composed of the following:
Three months ended June 30Six months ended June 30Three months ended June 30Six months ended June 30
20212020202120202022202120222021
Long portfolio gains (losses)Long portfolio gains (losses)4.2 %7.6 %16.0 %(1.9)%Long portfolio gains (losses)(10.0)%4.2 %(15.8)%16.0 %
Short portfolio gains (losses)Short portfolio gains (losses)(2.3)(7.3)(9.1)(6.1)Short portfolio gains (losses)15.3 (2.3)20.2 (9.1)
Macro gains (losses)Macro gains (losses)(2.4)0.2 (5.3)0.5 Macro gains (losses)0.7 (2.4)4.1 (5.3)
Other income and expenses 1
Other income and expenses 1
(0.5)(0.2)(1.0)(0.3)
Other income and expenses 1
(0.5)(0.5)(1.1)(1.0)
Gross investment returnGross investment return(1.0)%0.3 %0.6 %(7.8)%Gross investment return5.5 %(1.0)%7.4 %0.6 %
Net investment return 1
Net investment return 1
(0.9)%0.3 %0.5 %(7.8)%
Net investment return 1
4.9 %(0.9)%6.7 %0.5 %

1 “Other income and expenses” excludes performance compensation but includes management fees. “Net investment return” incorporates both of these amounts.

Effective January 1, 2021, the Investment Portfolio is calculated based on 50% of GLRE Surplus, or the Company’s shareholders’ equity, of the Company, as reported in the Company’s then most recent quarterly U.S. GAAP financial statements, and is adjusted monthly for our share of the net profits and net losses as reported by SILP during any intervening period. Prior to January 1, 2021, the Investment Portfolio was calculated based on several factors, including our share of SILP’s net asset value and our posted collateral and our net reserves.

Each month, we post on our website (www.greenlightre.com) the returns from our investment in SILP.
       
Income Taxes
 
We are not obligated to pay taxes in the Cayman Islands on either income or capital gains. The Governor-In-Cabinet has granted us an exemption from any income taxes that may be imposed in the Cayman Islands for a period ofthe 20 years expiring on February 1, 2025.

GRIL is incorporated in Ireland and is subject to the Irish corporation tax. We expect GRIL to be taxed at 12.5% on its taxable trading income and 25% on its non-trading income, if any.

Verdant is incorporated in Delaware and is subject to taxes under the U.S. federal rates and regulations prescribed by the Internal Revenue Service. We expect Verdant’s future taxable income to be taxed at 21%. For the six months ended June 30, 2021, the income tax expense of $3.7 million was due primarily to the gain on the sale of our investment in AccuRisk.

At June 30, 2021,2022, we have included a gross deferred tax asset of $3.7$3.5 million (December 31, 2020: $3.52021: $3.2 million) in the caption “Other assets” in the Company’s condensed consolidated balance sheets. At June 30, 2021,2022, a valuation allowance of $3.2$3.0 million (December 31, 2020: $3.02021: $2.7 million) partially offset this gross deferred tax asset. We have concluded that it is more likely than not that the Company will fully realize the recorded deferred tax asset (net of the valuation allowance) in the future. We have based this conclusion on the expected timing of the reversal of the temporary differences and the likelihood of generating sufficient taxable income to realize the future tax benefit. We have not taken any other tax positions that we believe are subject to uncertainty or reasonably likely to have a material impact on the Company.
             

Financial Condition
 
Total investments
 
The total investments reported in the condensed consolidated balance sheets at June 30, 2021,2022, was $206.6$255.1 million, compared to $196.2$231.0 million at December 31, 2020, 2021,an increase of $10.4$24.1 million, or 5.3%10.4%. The increase was primarily related to gains on SILP and Innovations-related investments and purchase of certificates of deposit. The increase was partially offset by net contributions into SILPredemptions from the collateral released by our ceding insurers. The income from our investment in SILP also contributed to the increase.
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SILP.

At June 30, 2021, 92.9%2022, 91.4% of SILP’s investments wereportfolio was valued based on quoted prices in actively traded markets (Level 1), 3.6%5.3% was composed of instruments valued based on observable inputs other than quoted prices (Level 2), and 0.7%0.4% was composed of instruments valued based on non-observable inputs (Level 3). At June 30, 2021, 2.8%2022, 2.9% of SILP’s investments wereportfolio consisted of private equity funds valued using the funds’ net asset values as a practical expedient. At June 30, 2022, 88% of our
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Innovations-related portfolio was carried at fair value on a nonrecurring basis, measured as of the investees’ most recent completed financing round, and 12% was carried at original cost.

Other than our investment in SILP (see Notes 3 of the accompanying condensed consolidated financial statements), we have not participated in transactions that created relationships with unconsolidated entities or financial partnerships, including VIEs, established to facilitate off-balance sheet arrangements. 

Cash and cash equivalents; Restricted cash and cash equivalents

The unrestricted cash and cash equivalents decreased by $48.3 million, or 63.3%, from $76.3 million at December 31, 2021, to $28.0 million at June 30, 2022, primarily due to collateral posted to our ceding insurers, and partially due to purchase of certificates of deposit.

We use our restricted cash and cash equivalents for funding trusts and letters of creditscredit issued to our ceding insurers. Our restricted cash decreasedincreased by $35.7$34.8 million, or 4.8%5.5%, from $745.4$634.8 million at December 31, 20202021, to $709.7$669.6 million at June 30, 2021,2022, primarily due to a reduction in collateral heldrequired by our ceding insurers. The increase in collateral was partially funded from withdrawals from SILP and partially from unrestricted cash and cash equivalents.

Reinsurance balances receivable

During the six months ended June 30, 2021,2022, reinsurance balances receivable increased by $61.9$40.9 million, or 18.8%10.1%, to $392.2$446.3 million from $330.2$405.4 million at December 31, 2020.2021. This increase was related primarily to increases in (i) premiums writtenreceivable on new and renewed contracts bound during the six months ended June 30, 2021, including increasesfirst half of 2022 and (ii) premium withheld by Lloyd’s syndicates on contracts in funds withheld on reinsurance contracts with Lloyd’s syndicates.which we participate.

Loss and Loss Adjustment Expense Reserves; Loss and Loss Adjustment Expenses Recoverable
 
The COVID-19 pandemic is unprecedented and we do not have previous loss experience on which to base our estimates for the associated loss and loss adjustment expense reserves. See Note 5 of the accompanying condensed consolidated financial statements for assumptions used in our loss estimates relating to the COVID-19 pandemic. Losses in respect of the COVID-19 pandemic recognized after June 30, 2021, will be reflected in the periods in which those losses are incurred.

Reserves for loss and loss adjustment expenses were composed of the following: 
June 30, 2021December 31, 2020 June 30, 2022December 31, 2021
Case
Reserves
IBNRTotalCase
Reserves
IBNRTotal Case
Reserves
IBNRTotalCase
Reserves
IBNRTotal
($ in thousands) ($ in thousands)
PropertyProperty$23,728 $44,359 $68,087 $25,833 $45,680 $71,513 Property$21,286 $42,533 $63,819 $21,357 $49,486 $70,843 
CasualtyCasualty147,247 216,256 363,503 138,432 206,152 344,584 Casualty146,786 211,195 357,981 151,734 219,949 371,683 
OtherOther15,420 67,632 83,052 12,540 65,542 78,082 Other14,552 90,093 104,645 17,129 64,355 81,484 
TotalTotal$186,395 $328,247 $514,642 $176,805 $317,374 $494,179 Total$182,624 $343,821 $526,445 $190,220 $333,790 $524,010 
 
During the six months ended June 30, 2021,2022, the total gross loss and loss adjustment expense reserves increased by $20.5$2.4 million, or 4.1%0.5%, to $514.6$526.4 million from $494.2$524.0 million at December 31, 2020.2021. See Note 5 of the accompanying condensed consolidated financial statements for a summary of changes in outstanding loss and loss adjustment expense reserves and a description of prior period loss developments.

During the six months ended June 30, 2021,2022, the total loss and loss adjustment expenses recoverable decreased by $2.5$1.7 million, or 14.9%15.1%, to $14.3$9.4 million from $16.9$11.1 million at December 31, 2020.2021. See Note 6 of the accompanying condensed consolidated financial statements for a description of the credit risk associated with our retrocessionaires.

For most of the contracts we write, our risk exposure is limited by defined limits of liability.liability limit our risk exposure. Once each contract’s limit of liability has been reached, we have no further exposure to additional losses from that contract. However, certain contracts, particularly quota share contracts covering first-dollar exposure, may not contain aggregate limits.

Our property and Lloyd’s business, and to a lesser extent our casualty and other business, incorporate contracts that contain natural peril loss exposure. We estimatecurrently monitor our catastrophe loss exposure in terms of our PML. PML (probable maximum loss).

We anticipate that our PMLPMLs will vary from period to period depending upon the modeled simulated losses and the composition of our in-force book of business.

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We describe projected severity levels in termsmonitor our natural peril PMLs on a worldwide basis, with a particular focus on our peak peril regions. When these perils consist of a large geographic area, we split them into sub-regions, where the underlying geographic components can also be considered individual peril zones.

For our natural catastrophe PMLs, we utilize the output of catastrophe models at the 1-in-250 year return period. The 1-in-250 year return period PML means that we believe there is a 0.4% chanceprobability that in any given year, that an occurrence of a natural catastrophe will lead to losses exceeding the stated estimate. In other words, it corresponds to a 99.6% probability that the loss from an event will fall below the indicated PML.
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It is important to note that PMLs are estimates.best estimates based on the modeled data available for each underlying risk. As a result, we cannot provide any assurance that any actual event will align with the modeled event or that actual losses from events similar to the modeled events will not vary materially from the modeled event PML.

Our PML estimate incorporatesestimates incorporate all significant exposure from our reinsurance operations, including coverage for property, marine and energy, motor, and catastrophe workers’ compensation.

At July 1, 2021,2022, our estimated largest PML exposure (net of retrocession and reinstatement premiums) at a 1-in-250 year return period for a single event and in aggregate was $84.5$87.6 million and $109.0$95.9 million, respectively. respectively, both relating to the peril of North Atlantic Hurricane.

The followingbelow table providescontains the PMLexpected modeled loss for each of our peak peril regions and sub-regions, for both a single event loss exposure and aggregate loss exposure to natural peril losses for each ofmeasures at the peak zones at July 1, 2021:1-in-250 year return period.
July 1, 2021
1-in-250 year return period
ZoneSingle Event LossAggregate Loss
($ in thousands)
United States, Canada and the Caribbean$84,502 $99,055 
Europe45,134 51,720 
Japan45,860 49,295 
Rest of the world53,694 58,220 
Maximum84,502 108,960 

July 1, 2022
Net 1-in-250 Year Return Period
PerilSingle Event LossAggregate Loss
($ in thousands)
North Atlantic Hurricane$87,558 $95,876 
Southeast Hurricane66,237 71,541 
Gulf of Mexico Hurricane59,936 64,145 
Northeast Hurricane60,540 61,924 
North America Earthquake60,733 65,126 
California Earthquake54,407 57,088 
Other N.A. Earthquake34,533 36,329 
Japan Earthquake38,158 41,048 
Japan Windstorm38,014 41,429 
Europe Windstorm30,041 36,550 

Total shareholders’ equity
 
Total equity reported on the condensed consolidated balance sheet increased by $2.0$8.6 million to $466.8$484.3 million at June 30, 2021,2022, compared to $464.9$475.7 million at December 31, 2020, due primarily to a net income of $7.1 million reported for2021. The increase in shareholders’ equity during the six months ended June 30, 2021, and2022, was primarily due to the net income of $9.1 million reported for the period, partially offset by funds used to repurchase shares during the same period.adoption of ASU 2020-06 (see Note 2 of the accompanying condensed consolidated financial statements). For details of other movements in shareholders’ equity, please see the “Condensed Consolidated Statements of Shareholders’ Equity.”

Liquidity and Capital Resources
 
General

Greenlight Capital Re is organized as a holding company with no operations of its own. As a holding company, Greenlight Capital Re has minimal continuing cash needs, most of which are related to the payment of corporate and general administrative expenses and interest expense.expenses. We conduct all our underwriting operations through our wholly-owned reinsurance subsidiaries, Greenlight Re and GRIL, which underwrite property and casualty reinsurance. There are restrictions on each of Greenlight Re’s and GRIL’s ability to pay dividends, described in more detail below. It is our current policy to retain earnings to support the growth of our business. We currently do not expect to pay dividends on our ordinary shares.
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At June 30, 2021,2022, Greenlight Re and GRIL were each rated “A- (Excellent)” with a negativestable outlook by A.M. Best. The ratings reflect A.M. Best’s opinion of our reinsurance subsidiaries’ financial strength, operating performance, and ability to meet obligations. They are not evaluations directed toward the protection of investors or a recommendation to buy, sell or hold our Class A ordinary shares. If A.M. Best downgrades our ratings below “A- (Excellent)” or withdraws our rating, we could be severely limited or prevented from writing any new reinsurance contracts, which would significantly and negatively affect our business. Our A.M. Best ratings may be revised or revoked at the sole discretion of the rating agency. 

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Sources and Uses of Funds
 
Our sources of funds consist primarily of premium receipts (net of brokerage and ceding commissions), investment income, and other income. We use cash from our operations to pay losses and loss adjustment expenses, profit commissions, interest, and general and administrative expenses. At June 30, 2021,2022, all of our investable assets, excluding strategic and Innovations investments and funds required for business operations and capital risk management, are invested by DME Advisors in SILP, subject to our investment guidelines. We have the ability tocan redeem funds from SILP at any time for operational purposes by providing three days’ notice to the general partner. At June 30, 2021,2022, the majority of SILP’s long investments were composed of cash and cash equivalents and publicly traded equity securities, which can be readily liquidated to meet our redemption requests. We record all investment income (loss), including any changes in the net asset value of SILP, and any unrealized gains and losses, in our condensed consolidated statements of operations for each reporting period.    
   
For the six months ended June 30, 20212022 and 2020,2021, the net cash used in operating activities was $19.8$14.0 million and $42.7$19.8 million, respectively. The net cash used in operating activities was used primarily for our underwriting activities and for payment of corporate and general administrative expenses was $19.1 million and $49.0 million for the six months ended June 30, 20212022 and 2020, respectively.2021. Generally, if the premiums collected exceed claim payments within a given period, we generate cash from our underwriting activities. Our underwriting activities represented a net use of cash for the six months ended June 30, 20212022 and 2020,2021, as the losses we paid exceeded the premiums we collected. On our Lloyd’s syndicate contracts we do not receive any premiums until the year of account is settled, net of losses, at the end of three years. Our Lloyd’s syndicate business has been growing in recent years, contributing to the net use of cash for underwriting activities. The cash used in, and generated from, underwriting activities may vary significantly from period to period depending on the mix of business, the nature of underwriting opportunities available and volume of claims submitted to us by our cedents.

For the six months ended June 30, 2021,2022, our investing activities used $6.4provided $10.3 million of cash for contribution intofrom redemptions from SILP (net of redemptions)contributions) and $3.3used $9.7 million for new Innovations investments. Investing activities also provided $26.9 million of cash from the sale of our AccuRisk investment and the collection of a note receivable from AccuRisk.other investments. By comparison, for the same period in 20202021 our investing activities provided cash of $21.3$17.2 million.

For the six months ended June 30, 2021, our2022, there were no financing activities used $6.7 million relatingcompared to repurchase of our Class A ordinary shares. By comparison, for the same period in 2020 our financing activities2021 where we used $7.8$6.7 million relating to repurchase of our Class A ordinary shares.
  
At June 30, 2021,2022, we believe we have sufficient cash flow from operating and investing activitiesliquidity to meet our foreseeable liquidityfinancial requirements. We do not expect that the recent global events, including the Russian-Ukrainian conflict and the COVID-19 pandemic, will materially impact our operational liquidity needs, which will be met by cash, funds generated from underwriting activities, and investment income, including withdrawals from SILP if necessary. At June 30, 2021,2022, we expect to fund our operations for the next twelve months from operating and investing cash flow. However, we may explore various financing options, including debt refinancing and other capital raising alternatives, to fund our business strategy, improve our capital structure, increase surplus, pay claims or make acquisitions. We can provide no assurances regarding the terms of such transactions or that any such transactions will occur.
 
Although GLRE is not subject to any significant legal prohibitions on the payment of dividends, Greenlight Re and GRIL are each subject to regulatory minimum capital requirements and regulatory constraints that affect their ability to pay dividends to us. In addition, any dividend payment would have to be approved by the relevant regulatory authorities prior to payment. At June 30, 2021,2022, Greenlight Re and GRIL both exceeded thetheir regulatory minimum capital requirements. 

Letters of Credit and Trust Arrangements
 
At June 30, 2021,2022, neither Greenlight Re nor GRIL was licensed or admitted as a reinsurer in any jurisdiction other than the Cayman Islands and the European Economic Area, respectively. Because manyMany jurisdictions do not permit domestic insurance companies to take credit on their statutory financial statements for loss recoveries or ceded unearned premiums unless appropriate measures are in place for reinsurance obtained from unlicensed or non-admitted insurers,insurers. As a result, we anticipate that all of our U.S. clients and some of our non-U.S. clients will require us to provide collateral through funds withheld, trust arrangements, letters of credit, or a combination thereof.

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At June 30, 2021,2022, we had one letter of credit facility available with an aggregate capacity of $275.0 million (December 31, 2020:2021: $275.0 million). See Note 12 of the accompanying condensed consolidated financial statements for details on the letter of credit facility. We provide collateral to cedents in the form of letters of credit and trust arrangements. At June 30, 2021,2022, the aggregate amount of collateral provided to cedents under such arrangements was $706.3$668.8 million (December 31, 2020: $743.02021: $633.9 million). At June 30, 2021,2022, the letters of credit and trust accounts were secured by restricted cash and cash equivalents with a total fair value of $709.7$669.6 million (December 31, 2020: $745.42021: $634.8 million).

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The letter of credit facility contains customary events of default and restrictive covenants, including but not limited to limitations on liens on collateral, transactions with affiliates, mergers and sales of assets, as well as solvency and maintenance of certain minimum pledged equity requirements, and restricts issuance of any debt without the consent of the letter of credit provider. Additionally, if an event of default exists, as defined in the letter of credit facility, Greenlight Re would be prohibited from paying dividends to its parent company. The Company was in compliance with all the covenants of this facility at June 30, 2021.2022.

Capital
 
Our capital structure currently consists of senior convertible notes and equity issued in two classes of ordinary shares. We expect that the existing capital base and internally generated funds will be sufficient to implement our business strategy for the foreseeable future. Consequently, we do not presently anticipate that we will incur any additional material indebtedness in the ordinary course of our business. However, to provide us with flexibility and timely access to public capital markets should we require additional capital for working capital, capital expenditures, acquisitions, or other general corporate purposes, we have filed a Form S-3 registration statement, which expires in July 2024. In addition, as noted above, we may explore various financing alternatives, although there can be no assurance that additional financing will be available on acceptable terms when needed or desired. We did not make any significant commitments for capital expenditures during the six months ended June 30, 2021.2022.

OurThe Board of Directors had previously extended theapproved a share repurchase plan to June 30, 2021, and the authorized repurchase of up to 5.0 million Class A ordinary shares or securities convertible into Class A ordinary shares in the open market, through privately negotiated transactions or Rule 10b5-1 stock trading plans. In addition, the Board of Directors had also authorizedauthorizing the Company to repurchase up to $25.0 million aggregate face amount of the Company’s 4.00% Convertible Senior Notes due 2023 (the “Notes”) in privately negotiated transactions, in open market repurchases, or pursuant to one or more tender offers.

On May 4, 2021, the Board of Directors approved a share repurchase plan effective from July 1, 2021 until June 30, 2022 authorizing the Company to purchase up to $25 million of Class A ordinary shares or securities convertible into Class A ordinary shares in the open market, through privately negotiated transactions or Rule 10b5-1 stock trading plans.

On April 26, 2022, the Board of Directors renewed and extended the share repurchase plan until June 30, 2023. The Company is not required to repurchase any of the Class A ordinary shares, or the Notes, and the repurchase plansplan may be modified, suspended, or terminated at the election of our Board of Directors at any time without prior notice. During the six months ended June 30, 2021,2022, the Company repurchased 725,133no Class A ordinary shares.

Under the Company’s stock incentive plan, the number of Class A ordinary shares availableauthorized for issuance is 8.0 million shares. At June 30, 2021, there were 3,056,0652022, 2,119,189 Class A ordinary shares were available for future issuance under the Company’s stock incentive plan. The Compensation Committee of the Board of Directors administers the stock incentive plan. 
 
Contractual Obligations and Commitments
 
Due to the nature of our reinsurance operations, the amount and timing of the cash flows associated with our reinsurance contractual liabilities will fluctuate, perhaps materially, and, therefore, are highly uncertain. As ofAt June 30, 2021,2022, we expect toestimate that we will pay the loss and loss adjustment expense reserves as follows: 
Less than
 1 year
1-3 years3-5 yearsMore than
 5 years
Total
   ($ in thousands)
Loss and loss adjustment expense reserves (1)
$252,175 $150,790 $55,581 $56,096 $514,642 
Less than
 1 year
1-3 years3-5 yearsMore than
 5 years
Total
   ($ in thousands)
Loss and loss adjustment expense reserves (1)
$271,119 $153,195 $47,906 $54,225 $526,445 
(1)      Due to the nature of our reinsurance operations, the amount and timing of the cash flows associated with our reinsurance contractual liabilities will fluctuate, perhaps materially, and, therefore, are highly uncertain.

Greenlight Re has entered into a lease agreement for office space in the Cayman Islands commencing from July 1, 2021. The lease expires on June 30, 2026, unless Greenlight Re exercises its right to renew the lease for another five yearfive-year period. GRIL has entered into a lease agreement for office space in Dublin, Ireland commencing from October 1, 2021. This lease expires on September 30, 2031, unless GRIL exercises the break clause by providing a notice of termination at least nine months prior to September 30, 2026. The aggregate annual lease obligation ranges from $0.5 million to $0.6 million.
 
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The Company has $100.0 million of senior convertible notes payable, which mature on August 1, 2023. The Company is obligated to make semi-annual interest payments of $2.0 million at an interest rate of 4.0% per annum. The Company has received regulatory approval to declare dividends from Greenlight Re to meet the interest payments obligation.
 
Pursuant to the IAA between SILP and DME Advisors, DME Advisors is entitled to a monthly management fee equal to 0.125% (1.5% on an annual basis) of each limited partner’s Investment Portfolio, as provided in the SILP LPA. The IAA has an initial term ending on August 31, 2023, subject to automatic extension for successive three-year terms. Pursuant to the SILP LPA, DME II is entitled to a performance allocation equal to 20% of the net profit, calculated per annum, of each limited partner’s share of the capital account managed by DME Advisors, subject to a loss carry-forward provision. DME II is not entitled to earn a performance allocation in a year in which SILP incurs a loss. The loss carry-forward provision contained in the SILP LPA allows DME II to earn reduced performance allocation of 10% of net profits in years subsequent to the year in which the capital accounts of the limited partners incur a loss, until all losses are recouped and an additional amount equal to 150% of the loss is earned. At June 30, 2021,2022, we estimate the reduced performance allocation of 10% to continue to be applied until SILP achieves additional investment returns of 191%176%, at which point the performance allocation will revert to 20%. For detailed breakdowns of management fees and performance compensation for the three and six months ended June 30, 20212022 and 2020,2021, please refer to Note 3 of the condensed consolidated financial statements.

The Company has entered into a service agreement with DME Advisors pursuant to which DME Advisors will provide investor relations services to us for compensation of $5,000 per month plus expenses. The service agreement had an initial term of one year and continues for sequential one-year periods until terminated by us or DME Advisors. Either party may terminate the service agreement for any reason with 30 days prior written notice to the other party.

Our related party transactions are presented in Note 11 to the accompanying condensed consolidated financial statements.

Off-Balance Sheet Financing Arrangements
We have no obligations, assets, or liabilities which would be considered off-balance sheet arrangements. Other than our investment in SILP (see Note 3 of the accompanying condensed consolidated financial statements), we have not participated in transactions that created relationships with unconsolidated entities or financial partnerships, including VIEs, established to facilitate off-balance sheet arrangements. 

Effects of Inflation
 
Inflation generally affects the cost of claims and claim expenses,expenses. Long-tailed lines of business generally have greater exposure to inflation than short-tailed lines, with this differential becoming more pronounced as well as asset values inthe severity of inflation increases. Our underwriting portfolio is predominantly short-tailed, and we actively manage our investment portfolio.exposures to classes that experience significant inflation. Our pricing and reserving models incorporate considerations of the anticipated effects of inflation on our claim costs.costs, and we regularly review and update our assumptions. However, we cannot predict or estimate the onset, duration, and severity of an inflationary period with precision. ThisThe actual effect of inflation may differ significantly from our estimate.assumptions.

Inflation can also affect the asset values in SILP’s investment portfolio. DME Advisors regularly monitors and re-positions SILP’s investment portfolio to deal with the impact of inflation on its underlying investments, and holds macro positions to benefit from a rising inflationary environment.


Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
We believe we are principally exposed to the following types of market risk: 
equity price risk;
commodity price risk;
foreign currency risk;
interest rate risk;
credit risk; and
political risk.
 
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Equity Price Risk
At June 30, 2021,2022, our investments consisted primarily of an investment in SILP. Among SILP’s holdings are equity securities, the carrying values of which are based primarily on quoted market prices. Generally, market prices of common equity securities are subject to fluctuation, which could cause the amount to be realized upon the closing of a position to differ significantly from its current reported value. This risk is partly mitigated by the presence of both long and short equity securities as part of our investment strategy. At June 30, 2021,2022, a 10% decline in the price of each of the underlying listed equity securities and equity-based derivative instruments would result in a $7.5$3.4 million loss to our Investment Portfolio.

Computations of the prospective effects of hypothetical equity price changes are based on numerous assumptions, including the maintenance of the current composition of SILP’s portfolio. TheyThe computations should not be relied on as indicative of future results.

Commodity Price Risk
Generally, market prices of commodities are subject to fluctuation. SILP’s investments periodically include long or short investments in commodities or derivatives directly impacted by fluctuations in the prices of commodities. At June 30, 2021,2022, SILP’s investments incorporate unhedged exposure to changes in gold, silver, uranium and crude oil prices.
The following table summarizes the net impact that a 10% increase and decrease in commodity prices would have on the value of our Investment Portfolio at June 30, 2021.2022. The below table excludes the indirect effect that changes in commodity prices might have on equity securities in our Investment Portfolio. 
10% increase in commodity prices10% decrease in commodity prices10% increase in commodity prices10% decrease in commodity prices
CommodityCommodityChange in
fair value
Change in
fair value
CommodityChange in
fair value
Change in
fair value
  ($ in millions)  ($ in millions)
GoldGold$2.0 $(2.0)Gold$3.7 $(3.7)
SilverSilver0.4 (0.4)Silver0.3 (0.3)
UraniumUranium0.1 (0.1)
Crude oilCrude oil0.1 (0.1)Crude oil— (0.1)
TotalTotal$2.5 $(2.5)Total$4.1 $(4.2)

Foreign Currency Risk
Certain of our reinsurance contracts are denominated in foreign currencies, whereby premiums are receivable and losses are payable in foreign currencies. Foreign currency exchange rate risk exists to the extent that our foreign currency reinsurance balances are more than (or less than) the corresponding foreign currency cash balances and there is an increase (or decrease) in the exchange rate of that foreign currency.  

While we do not seek to precisely match our liabilities under reinsurance policies that are payable in foreign currencies with investments denominated in such currencies, we continually monitor our exposure to potential foreign currency losses and may use foreign currency cash and cash equivalents or forward foreign currency exchange contracts to mitigate against adverse foreign currency movements. Certain cedents report to us in foreign currencies even though some or all of the underlying exposure is denominated in U.S. dollars. Our condensed consolidated statements of operations may report a foreign exchange gain or loss associated with this exposure when reported by the cedents. However, as we monitor our foreign currency denominated assets and liabilities on an “underlying exposure” basis, exposure to underlying U.S. dollar balances does not represent a material foreign currency risk.

At June 30, 2021,2022, our underlying exposure to GBP denominated net reinsurance asset balance was £25.7£14.0 million. At June 30, 2021,2022, a 10% decrease in the U.S. dollar against the GBP (all else constant) would result in an estimated $3.6$1.7 million foreign exchange gain. Alternatively, a 10% increase in the U.S dollar against the GBP would result in an estimated $3.6$1.7 million foreign exchange loss. Similarly, at June 30, 2021,2022, our net underlying exposure to Euro-denominated reinsurance liability balances was €1.5€5.8 million. At June 30, 2021,2022, a 10% decrease in the U.S. dollar against the Euro (all else constant) would result in an estimated $0.2$0.6 million foreign exchange loss. Alternatively, a 10% increase in the U.S dollar against the Euro would result in an estimated $0.2$0.6 million foreign exchange gain.

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We may also be exposed to foreign currency risk through SILP’s underlying cash, forwards, options, and investments in securities denominated in foreign currencies. At June 30, 2021, a majority2022, most of ourSILP’s currency exposureexposures resulting from foreign denominated securities (longs and shorts) waswere reduced by offsetting cash balances denominated in the corresponding foreign currencies.

At June 30, 2021,2022, a 10% increase or decrease in the value of the U.S. dollar against foreign currencies would have no meaningful impact on the value of our Investment Portfolio. 
 
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Interest Rate Risk
Our investment in SILP includes interest-rate sensitive securities, such as corporate and sovereign debt instruments and interest rate options. The primary market risk exposure for any debt instrument is interest rate risk. As interest rates rise, the fair value of a long fixed-income portfolio generally falls. Similarly, falling interest rates generally lead to increases in the fair value of fixed-income securities. Additionally, some of the derivative investments may also be sensitive to interest rates, and their value may indirectly fluctuate with changes in interest rates. 

The caption “Reinsurance balances receivable” in our condensed consolidated balance sheets incorporates amounts held by cedents, including the Lloyd’s syndicates that we participate on. These syndicates invest a portion of the premiums withheld in fixed-income and variable-yield securities, which expose us to interest rate risk. At June 30, 2021, SILP’s investments included interest rate options expiring in September 2021 which were exposed to movements in the 3-month LIBOR interest rates (“LIBOR”). If the LIBOR interest rates decreased by 15 basis points to 0%, the value of our Investment Portfolio would decrease by $2.9 million. If the LIBOR interest rates increased by2022, a 100 basis points itincrease or decrease in interest rates would have no meaningful impact onresult in an estimated $1.3 million loss or gain, respectively, which would be recorded in our condensed consolidated statements of operations under the value ofcaptions “Other income (expense).”
Our investment in SILP includes interest-rate sensitive securities, such as corporate and sovereign debt instruments and interest rate options. At June 30, 2022, a 100 basis points increase or decrease in interest rates would result in a $0.2 million loss or a $0.9 million loss, respectively, to our Investment Portfolio.

We, along with DME Advisors, monitor the net exposure to interest rate risk and generally do not expect changes in interest rates to have a materially adverse impact on our operations.
 
Credit Risk

Credit risk relates to the uncertainty of a counterparty’s ability to make timely payments in accordance with terms of the instrument or contract. Our maximum exposure to credit risk is the carrying value of our financial assets. We evaluate the financial condition of our business partners and clients relating to balances receivable under our reinsurance contracts, including premiums receivable, losses recoverable, and commission adjustments recoverable. We obtain collateral in the form of funds withheld, trusts, and letters of credit from our counterparties to mitigate this credit risk. We monitor our net exposure to each counterparty relative to the financial strength of our counterparties and assess the collectibility of these balances on a regular basis. See Note 2 of the accompanying condensed consolidated financial statements for further details on allowance for credit loss on reinsurance assets.

In addition, the securities, commodities, and cash in SILP’s investment portfolio are held with several prime brokers and derivative counterparties, subjecting SILP, and indirectly us, to a significant concentration of credit risk. While we have no direct control over SILP, DME Advisors regularly monitors the concentration of credit risk with each counterparty and, if appropriate, transfers cash or securities between counterparties or requests collateral to diversify and mitigate this credit risk. 

Political Risk

Through our assumed reinsurance contracts, we currently provide a limited amount of political risk insurance coverage. We do not expect this exposure to have a materially adverse impact on our underwriting results.

We are exposed to political risk to the extent that we underwrite business from entities located in foreign markets and to the extent that DME Advisors, on behalf of SILP and subject to our investment guidelines, trades securities listed on various U.S. and foreign exchanges and markets. The governments in any of these jurisdictions could impose restrictions, regulations, or other measures, which may have a material adverse impact on our underwriting operations and investment strategy. See “Item 1A. Risk Factors - We could face unanticipated losses from political instability which could have a material adverse effect on our financial condition and results of operations” included in our Form 10-K for the fiscal year ended December 31, 2020.2021.

 
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Item 4. CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
As required by Rules 13a-15 and 15d-15 of the Exchange Act, the Company has evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the effectiveness of its disclosure controls and procedures (as defined in such rules) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports prepared in accordance with the rules and regulations of the SEC is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
 
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures will prevent all errors and all frauds. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
 
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.  
  
Changes in Internal Control Over Financial Reporting
 
There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2021,2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company continues to review its disclosure controls and procedures, including its internal controls over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and ensuringto ensure that the Company’s systems evolve with its business.


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PART II — OTHER INFORMATION
 
Item 1.    LEGAL PROCEEDINGS
 
From time to time, in the normal course of business, we may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation, the outcomes of which determine our rights and obligations under our reinsurance contracts and other contractual agreements. In some disputes, we may seek to enforce our rights under an agreement or to collect funds owing to us. In other matters, we may resist attempts by others to collect funds or enforce alleged rights. While the final outcome of legal disputes cannot be predicted with certainty, we do not believe that any of our existing contractual disputes, when finally resolved, will have a material adverse effect on our business, financial condition or operating results.
 
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Item 1A. RISK FACTORS
 
Factors that could cause our actual results to differ materially from those in this report are any of the risks described in “Part I. Item 1A. Risk Factors” included in our Form 10-K for the fiscal year ended December 31, 2020,2021, as filed with the "Securities and Exchange Commission ("SEC") on March 10, 20218, 2022 (the “Form 10-K”) and in “Part II. Item 1A. Risk Factors” included in our Form 10-Q for the three months ended March 31, 2022, as filed with the SEC on May 3, 2022 (the “Q2 Form 10-Q”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
As of the date of this report,June 30, 2022, there have been no other material changes to the risk factors as disclosed in “Part I. Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in “Part II. Item 1A. Risk Factors” included in our Q2 Form 10-K.10-Q. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.


Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 
 
The BoardOur board of directors has adopted a share and notes repurchase plan. Ourplan authorizing the Company to repurchase Class A ordinary shares. From time to time, the repurchase plan has been re-approved or modified at the election of our Board of Directors. The previous plan expired on June 30, 2022. On April 26, 2022, the Board of Directors had previously extendedre-approved the share repurchase plan toeffective from July 1, 2022, until June 30, 2021, and the authorized repurchase of up to 5.0 million Class A ordinary shares or securities convertible into Class A ordinary shares in the open market, through privately negotiated transactions or Rule 10b5-1 stock trading plans. In addition, the Board of Directors had also authorized2023, authorizing the Company to repurchase up to $25.0 million aggregate face amount of the Company’s 4.00% Convertible Senior Notes due 2023 (the “Notes”) in privately negotiated transactions, in open market repurchases, or pursuant to one or more tender offers.

On May 4, 2021, the Board of Directors approved a share repurchase plan effective from July 1, 2021 until June 30, 2022 authorizing the Company to purchase up to $25 million of Class A ordinary shares or securities convertible into Class A ordinary shares in the open market, through privately negotiated transactions or Rule 10b5-1 stock trading plans.

The Company is not required to repurchase any of the Class A ordinary shares or Notes and the repurchase plansplan may be modified, suspended or terminated at the election of our Board of Directors at any time without prior notice.

There were no share repurchases of Notes during the three months ended June 30, 2021.2022.

The table below details the share repurchases that were made under the plan during the three months ended June 30, 2021:
Issuer Purchases of Equity Securities
PeriodTotal Number of Shares Purchased (1)Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) (2)
April 1 - 30, 2021— $— — 2,452,903 
May 1 - 31, 2021246,823 $9.29 246,823 2,206,080 
June 1 - 30, 2021478,310 $9.31 478,310 1,727,770 
Total725,133 $9.30 725,133 
(1) Class A ordinary shares.
(2)While 1,727,770 shares remained available under the plan at June 30, 2021, the share repurchase plan expired on June 30, 2021 and a new share repurchase plan took effect on July 1, 2021 as further described above.



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Item 3.    DEFAULTS UPON SENIOR SECURITIES 
 
None.
 
Item 4.    MINE SAFETY DISCLOSURES

Not applicable
 
Item 5.    OTHER INFORMATION

None
 
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Item 6.    EXHIBITS

10.1
31.1
31.2
32.1
32.2
101The following materials from the Company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 20212022 formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Changes in Shareholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 
 
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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 GREENLIGHT CAPITAL RE, LTD.
 (Registrant)
 By:/s/ SIMON BURTON                     
 Simon Burton
Director and Chief Executive Officer
(principal executive officer)
 August 3, 20212, 2022
 By:/s/ NEIL GREENSPAN                           
 Neil Greenspan
Chief Financial Officer
(principal financial and accounting officer)
 August 3, 20212, 2022
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