UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

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. 

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 

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): 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

integral part of the Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(expressed in thousands of U.S. dollars, except per share and share amounts)

 

integral part of the Condensed Consolidated Financial Statements.  

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

integral part of the Condensed Consolidated Financial Statements. 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

integral part of the Condensed Consolidated Financial Statements. 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Greenlight Capital Re, Ltd. (“GLRE” and, together with its wholly-owned subsidiaries, the “Company”) was incorporated as an exempted company under the Companies Law of the Cayman Islands on July 13, 2004. The Company’s wholly-owned subsidiaries are described below:

 

Additionally, through Greenlight Innovation Syndicate 3456 (“Syndicate 3456”), Greenlight Re provides a (re)insurance platform to its growing portfolio of insurtech partnerships. Domiciled in the U.K. since 2022, Syndicate 3456 is authorized to underwrite under the Lloyd’s syndicate-in-a-box model.

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

These unaudited condensed consolidated financial statements 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 U.S. Securities and Exchange Commission’s (“SEC”) instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. 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 on2022 Form 10-K, for the year ended December 31, 2022, as filed with the SEC on March 8, 2023. These unaudited condensed consolidated financial statements include GLRE and its wholly-owned subsidiaries and all significant intercompany transactions and balances have been eliminated on consolidation.

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. The results of operations for any interim period are not necessarily indicative of the results for a full year.

 

There have been no material changes to the Company’s significant accounting policies as described in its Annual Report on2022 Form 10-K for the year ended December 31, 2022.10-K.

 

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 revenue 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, premiums written, earned, and receivable, variability underlying risk transfer assessments, allowances for credit losses, share-based compensation, valuation allowances associated with deferred tax assets and investment impairments.

 

The Company maintains cash and cash equivalent balances to collateralize regulatory trusts and letters of credit issued to cedents (see Note 11). The following table reconciles the cash, cash equivalents, and restricted cash reported within the unaudited condensed consolidated balance sheets to the total presented in the unaudited condensed consolidated statements of cash flows:

The caption “Reinsurance balances receivable” in the Company’s unaudited condensed consolidated balance sheets includes financial assets held by cedents. At March 31,September 30, 2023, funds held by cedents were $367.8$422.4 million (December 31, 2022: $337.4 million). Such amounts include premiums withheld by Lloyd’s syndicates and funds contributed by the Company to Lloyd's as security for members’ underwriting activities. The Lloyd’s syndicates invest a portion of the premiums withheld in investment funds and fixed-maturity securities. The Company records its share of income (or expense) from these assets, in its unaudited condensed consolidated statements of operations under the caption “Other income (expense)” as reported by the syndicates on a quarterly lag basis due to the timing of the availability of these quarterly financial reports.

 

At March 31,September 30, 2023, deposit assets and liabilities were $3.1$3.0 million and $8.8$5.2 million, respectively (December 31, 2022: $3.1 million and $10.7 million, respectively). For the three and nine months ended March 31,September 30, 2023 and 2022, the interest income (expense) on deposit-accounted contracts were as follows:

For the three and nine months ended March 31,September 30, 2023, $4.9$(2.0) million and $7.6 million (three and nine months ended March 31,September 30, 2022: $(1.1)$(5.0) million and $(10.4) million), respectively, of foreign exchange gains (losses) were included in the Company’s net income in the unaudited condensed consolidated statements of operations.operations under the caption of “Other income (expense), net”. 

 

The Company has entered into the Second Amended and Restated Exempted Limited Partnership Agreement (the “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”). SILP has 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 (the “Chairman”).

At March 31,September 30, 2023, the SILP LPA included the 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 (60%), and the General Partner will designate any portion of a Partner’s Investment Portfolio as Designated Securities to effectuate such 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:

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. Therefore DME II is SILP’s primary beneficiary. The Company presents its investment in SILP in its unaudited 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 March 31,September 30, 2023, the net asset value of the GLRE Limited Partners’ investment in SILP was $196.1$229.0 million (December 31, 2022: $178.2 million), representing 71.6%70.3% (December 31, 2022: 69.3%) of SILP’s total net assets. DME II held the remaining 28.4%29.7% (December 31, 2022: 30.7%) 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 3 business days’ notice to DME II. At March 31,September 30, 2023, the majority of SILP’s long investments were composed of cash and publicly traded equity 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 nine months ended March 31,September 30, 2023 was $(3.1)$(1.9) million and $27.8 million, respectively (three and nine months ended March 31,September 30, 2022: $4.1 million)$8.5 million and $24.5 million, respectively), and shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s unaudited condensed consolidated statements of operations.

The summarized financial statements of SILP are presented below.

Summarized Statement of Assets and Liabilities of Solasglas Investments, LP

Summarized Statement of Operations of Solasglas Investments, LP

See Note 10 for further details on related party management fees and performance allocation.

 

At December 31, 2022, the Company included the following private investments and unlisted securities without readily determinable fair values in the caption “Other investments”:

The following table presents the carrying values of the private investments and unlisted equity securities carried under the measurement alternative at March 31,September 30, 2023 and 2022, and the related adjustments recorded during the periods then ended.

During three and nine months ended March 31,September 30, 2023, the Company realized a loss of $nil and $0.8 million, respectively, (three and nine months ended March 31,2022:September 30, 2022: $nil), and a corresponding reversal of unrealized loss relating to an investment which was previously fully impaired at December 31, 2022, resulting in no impact to the Company’s net income (loss) for the quarter.nine months ended September 30, 2023.

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 the extent to which the inputs are observable in the 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:

At March 31,September 30, 2023 and December 31, 2022, the Company held $53.6$53.7 million and $53.6 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 March 31,September 30, 2023, for the private and unlisted equities measured at fair value on a nonrecurring basis:

At March 31,September 30, 2023 and December 31, 2022, the Company held $9.1$11.1 million and $8.9 million, respectively, of private investments and unlisted equities measured at cost.

The Company’s investment in the related party investment fund is measured at fair value using the net asset value practical expedient.Therefore, this investment is not classified within the fair value hierarchy. (See Note 3 for further details on the related party investment fund.)

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).

At March 31,September 30, 2023 and December 31, 2022, loss and loss adjustment expense reserves were composed of the following:

A summary of changes in outstanding loss and loss adjustment expense reserves for all lines of business consolidated for the threenine months ended March 31,September 30, 2023 and 2022 is as follows: 

At March 31,September 30, 2023, the Company’s net reserves for losses and loss expenses includedinclude estimated amounts for several catastrophe and weather-related events.events (“CAT loss”). The magnitude and complexityvolume of losses arising from certain of these events is inherently increase the level of uncertaintyuncertain and, accordingly, the level of management judgement involved in arriving at estimated net reserves for losses and loss expenses. Consequently,consequently, actual losses for these events may ultimately differ, potentially materially, from current management estimates.

During the threenine months ended March 31,September 30, 2023, the Company recognized catastrophe and weather-related losses,CAT loss, net of reinsurance, of $6.2$29.5 million related tofor current year CAT loss events, driven by the Turkey earthquake, theCyclone Gabrielle in New Zealand, Cyclone Gabrielle and the U.S. convectivesevere storms, that occurred duringMexican state-owned oil platform fire, and satellite losses. For the current quarter, coupled with $4.1 million of CAT losses relating to the 2022 Winter Storm Elliott for total CAT losses of $10.3 million (threenine months ended March 31, 2022: $17.9 million).September 30, 2022, the Company recognized CAT loss of $39.1 million driven by $13.6 million from the Russian-Ukrainian conflict and $19.5 million from hurricane Ian.

For the threenine months ended March 31,September 30, 2023, the estimate of net losses incurred relating to prior accident years increased by $12.0$10.5 million, primarily due to the following:

For the threenine months ended March 31,September 30, 2022, the estimate of net losses incurred relating to prior accident years increased by $2.3$1.6 million, primarily due to the following:

 

For the three and nine months ended March 31,September 30, 2023, the Company’s earned ceded premiums were $8.6$15.3 million and $35.2 million, respectively (three and nine months ended March 31,September 30, 2022: $1.2 million)$4.4 million and $8.4 million, respectively). For the three and nine months ended March 31,September 30, 2023, loss and loss adjustment expenses recovered and changes in losses recoverable were $6.2$9.1 million and $24.8 million, respectively (three and nine months ended March 31,September 30, 2022: $0.7 million)$2.5 million and $2.5 million, respectively).