![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation1.jpg)
A Differentiated Model with
Sustainable Advantage
May 2009
Nasdaq: GLRE
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation2.jpg)
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We are a Cayman Islands specialty property and casualty reinsurer
with a differentiated reinsurance and investment strategy
with a differentiated reinsurance and investment strategy
Greenlight Re Vision
n Capitalize on inefficiencies in the traditional approach to
reinsurance
reinsurance
n Generate superior underwriting economics
n Derive superior returns from both sides of the balance sheet
n Maintain a highly skilled and focused team
n Align long-term management and shareholder interests
n Focus on long-term growth in book value per share
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation3.jpg)
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Greenlight Re Model
Focus on downside on a deal-
by-deal basis
by-deal basis
Fewer, bigger deals that are
important to our clients and us
important to our clients and us
Focus on deal economics
Bottom-up approach to
underwriting portfolio
underwriting portfolio
Portfolio is sum total of good
opportunities
opportunities
Small team of highly skilled
generalists
generalists
Capital preservation on
investment-by-investment basis
investment-by-investment basis
Concentrate on best
investment ideas
investment ideas
Focus on business economics
Bottom-up approach to
investment selection
investment selection
Portfolio is sum total of good
opportunities
opportunities
Small team of highly skilled
generalists
generalists
Liability
Asset
DELIVER SUPERIOR LONG-TERM GROWTH IN BOOK VALUE
A fundamentally different, symmetric approach to the reinsurance business
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation4.jpg)
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Len Goldberg,
CEO
Bart Hedges,
President & CUO
Tim Courtis, CFO
Brendan Barry
SVP
Sherry Diaz
Controller
Kerry Berchem
General Counsel
(Partner, Akin Gump)
Faramarz Romer
Reporting and Compliance
Mandy Vodak-Marotta
Operations Manager
Rene Shortridge
Office Administrator
Parker Boone
VP
Claude Wagner
VP
Analyst
Open
Nadia Dilbert
Underwriting Assistant
Andie Welsch
VP
Isaac Espinoza
Analyst
Tom Curnock
VP
VP Actuary
Open
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation5.jpg)
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Underwriting Philosophy
Lead underwriter for majority of transactions
Generalists with flexibility to look at a wide range of
opportunities
opportunities
Rigorous modeling combined with practical underwriting
experience
experience
Each contract stands on its own
Incorporate risk-aversion into pricing
Focus on transaction economics rather than on earnings or
premium growth
premium growth
Cradle-to-grave underwriting and administration process
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation6.jpg)
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Cyclical Opportunities
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database.
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation7.jpg)
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Investment Program
n Deep value, long/short primarily equity with cyclical debt
exposure
exposure
n Historically approximately 80-100% long, 20-50% short
q Currently near the conservative end of the range
n Above market returns with less volatility than the major
stock indices over the last 13 years
stock indices over the last 13 years
n Constraints on leverage, liquidity and concentration risks
n Fees are 1.5 and 20 with a modified high water mark
n YTD return through April is 11.1% net of all fees
n As of April 30, 2009, the largest disclosed positions in our
portfolio are Arkema, Criteria Caixa Corp, Ford Motor
Company debt, gold, Helix Energy Solutions Group and
URS Corp.
portfolio are Arkema, Criteria Caixa Corp, Ford Motor
Company debt, gold, Helix Energy Solutions Group and
URS Corp.
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation8.jpg)
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Compensation Framework
n Align management and shareholders
n Compensate for true increase in economic value, not for
premium growth, GAAP accounting, irrational
exuberance or “fully deploying capital”
premium growth, GAAP accounting, irrational
exuberance or “fully deploying capital”
n Cash Bonus Program:
q Track economics of every contract individually
q No bonus when underwriting ROE less than Risk Free return
q Target Bonus when ROE = target ROE
q Uncapped upside when ROE in excess of target
q First bonus payment after three years with continuous roll-forward
n So far, so good
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation9.jpg)
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Risk and Capital Management
n 2008 premium to capital ratio of 0.3, anticipated
to increase as portfolio develops
to increase as portfolio develops
n Low leverage play:
q No corporate debt
q Low premium-to-capital and reserve-to-capital
ratios
ratios
q Frequency business orientation
n CEO and CFO review reserves by account every
quarter
quarter
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation10.jpg)
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NA
NA
NA
221.0
99.0%
Book Value Growth
$ in millions
Notes:
1. The Composite Ratio is the ratio of underwriting losses incurred and acquisition costs, excluding internal expenses, to premiums earned.
2. The Combined Ratio is the sum of the loss ratio, acquisition cost ratio and the internal expense ratio.
3. 2004 and 2005 have been adjusted for principal outstanding on a promissory note which was fully repaid in 2006.
$ per share
75.5
109.6
312.2
105.9%
Composite Ratio1
Combined Ratio2
Capital and Surplus3
Invested Assets/Capital
7.9% CAGR in fully diluted book value per share since inception
84.5
96.5
491.4
118.5%
94.1
103.6
520.5
120.1%
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation11.jpg)
Current ROE Sensitivity
10
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation12.jpg)
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Hypothetical ROE Sensitivity
Assumptions:
Earned Premium = 75% of capital
Invested Assets = 175% of capital
![](https://capedge.com/proxy/8-K/0001385613-09-000030/investorpresentation13.jpg)
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Why Greenlight Re?
Differentiated, symmetric approach
Low leverage model with significant upside potential
A- rating from A.M. Best with ability to invest 100% in
equities
equities
Proven underwriting and investment capabilities
Uniquely positioned for current market conditions
= Sustainable Advantage