Exhibit 99.1
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GREENLIGHT RE REPORTS SECOND QUARTER
2008 FINANCIAL RESULTS AND SHARE REPURCHASE PLAN
2008 FINANCIAL RESULTS AND SHARE REPURCHASE PLAN
GRAND CAYMAN, Cayman Islands (August 6, 2008)- Greenlight Capital Re, Ltd. (NASDAQ: GLRE) today announced financial results for the second quarter of 2008. Greenlight Re reported net income of $33.5 million for the second quarter of 2008 compared to a net income of $21.3 million for the same period in 2007. On a fully diluted basis, net income per share was $0.92 for the second quarter of 2008, compared to $0.76 for the same period in 2007.
Fully diluted book value per share was $17.29 as of June 30, 2008, a 9.4% increase over $15.81 per share as of June 30, 2007.
For the six months ended June 30, 2008, net income was $28.8 million compared to $8.2 million for the same period in 2007. On a fully diluted basis, net income per share was $0.79 for the second quarter of 2008, compared to $0.33 for the same period in 2007.
“We were successful this quarter in creating value on both sides of our balance sheet” said David Einhorn, Chairman of the Board of Directors of Greenlight Re. “We continue to focus our underwriting activities on creating economic profits, and we benefited in the second quarter from positive returns in our asset portfolio during a challenging investment environment.”
Greenlight Re’s financial and operating highlights for the first half of 2008 include the following:
• | Gross written premiums in the second quarter were $25.4 million compared to $65.4 million in the second quarter of 2007, while net earned premiums were $24.7 million compared to $25.0 million. For the first six months, gross premiums written were $96.1 million compared to $103.5 million for the first six months of 2007, while net earned premiums were $52.2 million compared to $45.9 million. | ||
• | The combined ratio for the six months ended June 30, 2008 was 92.5% compared to 94.3% for the six months ended June 30, 2007. | ||
• | Net investment income in the second quarter was $31.0 million, a return of 4.5% on our investment portfolio, compared to $19.9 million in the second quarter of 2007, a 6.8% return on our investment portfolio. For the first six months of 2008, net investment income was $25.3 million compared to $5.5 million in the six months ended June 30, 2007. |
“Our underwriting portfolio continues to perform in line with our expectations.” said Len Goldberg, Chief Executive Officer of Greenlight Re. “Our premium numbers were lower in the second quarter primarily due to clients reducing planned exposures in an increasingly competitive market. This further affirms our underwriting strategy; most of our frequency based business is written with significant risk sharing and profit sharing incentives to align interests between Greenlight Re and our clients.”
On August 5, 2008, the Board of Directors adopted a share repurchase plan authorizing the Company to repurchase up to two million Class A ordinary shares. The plan, which expires on June 30, 2011, will enable us to repurchase Class A ordinary shares from time to time to optimize the Company’s capital structure. Class A ordinary shares may be purchased in the open market or through privately negotiated transactions.
Conference Call Details
Greenlight Re will hold a live conference call to discuss its financial results for the second quarter of 2008 on Thursday, August 7, 2008 at 9:00 a.m. Eastern time. To participate, please dial in to the conference call at (877) 362-3812 (domestic) or (706) 634-9925 (international), access code 57817864. The conference call topic is Greenlight Re Earnings Conference Call.
A telephone replay of the call will be available from 11:00 a.m. Eastern time on August 7, 2008 until 11:59 p.m. Eastern time on August 14, 2008. The replay of the call may be accessed by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international), access code 57817864. An audio file of the call will also be available on the company’s website.
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Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of general economic conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market fluctuations, trends in insured and paid losses, catastrophes, regulatory and legal uncertainties and other factors described in our annual report on Form 10-K filed with the Securities Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About Greenlight Capital Re, Ltd.
Greenlight Re (www.greenlightre.ky) is a specialty property and casualty reinsurance company based in the Cayman Islands. The Company provides a variety of custom-tailored reinsurance solutions to the insurance, risk retention group, captive and financial marketplaces. Established in 2004, Greenlight Re selectively offers customized reinsurance solutions in markets where capacity and alternatives are limited. With a focus on deriving superior returns from both sides of the balance sheet, Greenlight Re’s assets are managed according to a value-oriented equity-focused strategy that complements the Company’s business goal of long-term growth in book value per share.
Contact:
Alex Stanton
Stanton Crenshaw Communications
(212) 780-1900
alex@stantoncrenshaw.com
Alex Stanton
Stanton Crenshaw Communications
(212) 780-1900
alex@stantoncrenshaw.com
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2008 and December 31, 2007
(expressed in thousands of U.S. dollars, except per share and share amounts)
CONDENSED CONSOLIDATED BALANCE SHEETS
(expressed in thousands of U.S. dollars, except per share and share amounts)
June 30, | ||||||||
2008 | December 31, | |||||||
(unaudited) | 2007 | |||||||
Assets | ||||||||
Investments in securities | ||||||||
Debt securities, trading, at fair value | $ | 6,328 | $ | 1,520 | ||||
Equity investments, trading, at fair value | 588,604 | 570,440 | ||||||
Other investments, at fair value | 11,013 | 18,576 | ||||||
Total investments in securities | 605,945 | 590,536 | ||||||
Cash and cash equivalents | 97,523 | 64,192 | ||||||
Restricted cash and cash equivalents | 441,747 | 371,607 | ||||||
Financial contracts receivable, at fair value | 4,620 | 222 | ||||||
Reinsurance balances receivable | 69,654 | 43,856 | ||||||
Loss and loss adjustment expense recoverables | 7,680 | 6,721 | ||||||
Deferred acquisition costs | 15,251 | 7,302 | ||||||
Unearned premiums ceded | 15,595 | 8,744 | ||||||
Other assets | 2,006 | 965 | ||||||
Total assets | $ | 1,260,021 | $ | 1,094,145 | ||||
Liabilities and shareholders’ equity | ||||||||
Liabilities | ||||||||
Securities sold, not yet purchased, at fair value | $ | 409,218 | $ | 332,706 | ||||
Financial contracts payable, at fair value | 1,643 | 17,746 | ||||||
Loss and loss adjustment expense reserves | 57,367 | 42,377 | ||||||
Unearned premium reserves | 95,289 | 59,298 | ||||||
Reinsurance balances payable | 33,172 | 19,140 | ||||||
Funds withheld | 9,180 | 7,542 | ||||||
Other liabilities | 4,983 | 2,869 | ||||||
Performance compensation payable to related party | 6,145 | 6,885 | ||||||
Minority interest in joint venture | 7,270 | — | ||||||
Total liabilities | 624,267 | 488,563 | ||||||
Shareholders’ equity | ||||||||
Preferred share capital (par value $0.10; authorized, 50,000,000; none issued) | — | — | ||||||
Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding 30,010,636, (2007: 29,847,787); Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,949 (2007: 6,254,949)) | 3,627 | 3,610 | ||||||
Additional paid-in capital | 478,228 | 476,861 | ||||||
Retained earnings | 153,899 | 125,111 | ||||||
Total shareholders’ equity | 635,754 | 605,582 | ||||||
Total liabilities and shareholders’ equity | $ | 1,260,021 | $ | 1,094,145 | ||||
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For the three and six months ended June 30, 2008 and 2007
(expressed in thousands of U.S. dollars, except per share and share amounts)
(expressed in thousands of U.S. dollars, except per share and share amounts)
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues | ||||||||||||||||
Gross premiums written | $ | 25,360 | $ | 65,445 | $ | 96,126 | $ | 103,509 | ||||||||
Gross premiums ceded | (5,615 | ) | (14,534 | ) | (14,887 | ) | (28,277 | ) | ||||||||
Net premiums written | 19,745 | 50,911 | 81,239 | 75,232 | ||||||||||||
Change in net unearned premium reserves | 4,937 | (25,939 | ) | (29,065 | ) | (29,339 | ) | |||||||||
Net premiums earned | 24,682 | 24,972 | 52,174 | 45,893 | ||||||||||||
Net investment income | 31,025 | 19,924 | 25,263 | 5,543 | ||||||||||||
Total revenues | 55,707 | 44,896 | 77,437 | 51,436 | ||||||||||||
Expenses | ||||||||||||||||
Loss and loss adjustment expenses incurred, net | 9,337 | 11,138 | 21,461 | 20,126 | ||||||||||||
Acquisition costs | 9,228 | 9,515 | 19,157 | 17,227 | ||||||||||||
General and administrative expenses | 3,210 | 2,926 | 7,670 | 5,905 | ||||||||||||
Total expenses | 21,775 | 23,579 | 48,288 | 43,258 | ||||||||||||
Net income before minority interest | 33,932 | 21,317 | 29,149 | 8,178 | ||||||||||||
Minority interest in income of joint venture | (394 | ) | — | (361 | ) | — | ||||||||||
Net income | $ | 33,538 | $ | 21,317 | $ | 28,788 | $ | 8,178 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.93 | $ | 0.78 | $ | 0.80 | $ | 0.33 | ||||||||
Diluted | 0.92 | 0.76 | 0.79 | 0.33 | ||||||||||||
Weighted average number of ordinary shares used in the determination of | ||||||||||||||||
Basic | 35,981,386 | 27,472,993 | 35,981,349 | 24,515,973 | ||||||||||||
Diluted | 36,652,441 | 27,980,421 | 36,644,456 | 24,895,878 |
Due to the opportunistic and customized nature of our underwriting operations, we expect to report different loss and expense ratios in both our frequency and severity businesses from period to period. The following table provides the ratios for the six month periods ended June 30, 2008 and 2007: |
Six months ended | Six months ended | |||||||||||||||||||||||
June 30, 2008 | June 30, 2007 | |||||||||||||||||||||||
Frequency | Severity | Total | Frequency | Severity | Total | |||||||||||||||||||
Loss ratio | 42.3% | 39.0% | 41.1% | 52.6% | 10.1% | 43.9% | ||||||||||||||||||
Acquisition cost ratio | 49.7% | 13.9% | 36.7% | 41.7% | 21.5% | 37.5% | ||||||||||||||||||
Composite ratio | 92.0% | 52.9% | 77.8% | 94.3% | 31.6% | 81.4% | ||||||||||||||||||
Internal expense ratio | 14.7% | 12.9% | ||||||||||||||||||||||
Combined ratio | 92.5% | 94.3% | ||||||||||||||||||||||