Greenlight Capital Re (GLRE) 8-K Second Quarter 2009 Financial Results

GREENLIGHT RE ANNOUNCES

SECOND QUARTER 2009 FINANCIAL RESULTS

GRAND CAYMAN, Cayman Islands (August 3, 2009) - Greenlight Capital Re, Ltd. (NASDAQ: GLRE) today announced financial results for the second quarter of 2009.  Greenlight Re reported net income of $92.2 million for the second quarter of 2009 compared to net income of $33.5 million for the same period in 2008.  The net income per share on a fully diluted basis was $2.51 for the second quarter of 2009, compared to net income per share of $0.91 for the same period in 2008.

Fully diluted book value per share was $16.73 as of June 30, 2009, a 4.3% decrease from $17.49 per share as of June 30, 2008.

For the six months ended June 30, 2009, net income was $120.0 million compared to $28.8 million for the same period in 2008.  On a fully diluted basis, net income per share was $3.29 for the six months ended June 30, 2009 compared to $0.78 for the same period in 2008.

“In the second quarter of 2009 our underwriting portfolio continued its profitable growth while our investment portfolio posted a good return in light of our conservative portfolio positioning,” said David Einhorn, Chairman of the Board of Directors of Greenlight Re.  “While the insurance market has not hardened as quickly as we had hoped, our team continues to identify and select attractive underwriting opportunities while retaining our existing portfolio.  We expect continued uncertainty in the economy, and believe we are uniquely positioned to take advantage of opportunities and dislocations in the market.”

Greenlight Re’s financial and operating highlights for the second quarter and six months ended June 30, 2009 include the following:

·   Gross written premiums in the second quarter of 2009 were $70.0 million compared to $25.4 million in the second quarter of 2008, while net earned premiums were $49.3 million compared to $24.7 million, respectively.  For the first six months of 2009, gross premiums written were $141.9 million compared to $96.1 million for the first six months of 2008, while net earned premiums were $95.5 million compared to $52.2 million, respectively.

·   The combined ratio for the six months ended June 30, 2009 was 96.7% compared to 92.5% for the six months ended June 30, 2008.

·   Net investment income in the second quarter was $88.3 million, a return of 13.9% on our investment portfolio. This compares to $31.0 million in the second quarter of 2008, when we reported a 4.5% return on our investment portfolio. For the first six months of 2009, net investment income was $116.0 million compared to $25.3 million during the comparable period in 2008.

“We continued to successfully build our underwriting portfolio and leverage our strategic partnerships while also benefiting from the reversal of the catastrophe loss we booked in the first quarter of 2009.  Our growing team of reinsurance professionals continue to find new and differentiated ways to penetrate the market to find what we believe will be profitable opportunities,” said Len Goldberg, Chief Executive Officer of Greenlight Re.  “While our investment portfolio has been conservatively positioned given the potential volatility in the markets, we were able to demonstrate significant outperformance in the second quarter of 2009.  Our second quarter results underline our strategy to earn strong risk-adjusted returns on both sides of the balance sheet in order to drive long-term growth in book value per share.”

Conference Call Details

Greenlight Re will hold a live conference call to discuss its financial results for the second quarter of 2009 on Tuesday, August 4, 2009 at 9:00 a.m. Eastern time.  The conference call title is Greenlight Capital Re, Ltd. Second Quarter 2009 Earnings Call.

To participate, please dial in to the conference call at:

U.S. toll free                                                      1-800-860-2442

International                                                      1-412-858-4600

The conference call can also be accessed via webcast at:

http://www.talkpoint.com/viewer/starthere.asp?Pres=127399

A telephone replay of the call will be available from 11:00 a.m. Eastern time on August 4, 2009 until 9:00 a.m. Eastern time on August 19, 2009.  The replay of the call may be accessed by dialing 1-877-344-7529 (U.S. toll free) or 1-412-317-0088 (international), access code 432752. An audio file of the call will also be available on the Company’s website.

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Regulation G

Fully diluted book value per share is a non-GAAP measure and represents basic book value per share combined with the impact from dilution of share based compensation including in-the-money stock options as of any period end.  We believe that long term growth in fully diluted book value per share is the most relevant measure of our financial performance.  In addition, fully diluted book value per share may be of benefit to our investors, shareholders and other interested parties to form a basis of comparison with other companies within the reinsurance industry.

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 specialist 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 investment strategy that complements the Company’s business goal of long-term growth in book value per share.

Contact:

Alex Stanton

Stanton Public Relations & Marketing

(212) 780-0701

astanton@stantonprm.com

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GREENLIGHT CAPITAL RE, LTD.

 CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2009 and December 31, 2008

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

	June 30,  2009  (unaudited)		December 31, 2008
Assets
Investments in securities
Debt instruments, trading, at fair value	$	134,347	$	70,214
Equity securities, trading, at fair value		401,139		409,329
Other investments, at fair value		60,144		14,423
Total investments in securities		595,630		493,966
Cash and cash equivalents		133,472		94,144
Restricted cash and cash equivalents		387,172		248,330
Financial contracts receivable, at fair value		19,156		21,419
Reinsurance balances receivable		105,727		59,573
Loss and loss adjustment expense recoverables		6,880		11,662
Deferred acquisition costs, net		34,117		17,629
Unearned premiums ceded		9,813		7,367
Notes receivable		16,952		1,769
Other assets		3,797		2,146
Total assets	$	1,312,716	$	958,005
Liabilities and shareholders’ equity
Liabilities
Securities sold, not yet purchased, at fair value	$	369,293	$	234,301
Financial contracts payable, at fair value		12,966		17,140
Loss and loss adjustment expense reserves		115,534		81,425
Unearned premium reserves		129,920		88,926
Reinsurance balances payable		45,097		34,963
Funds withheld		2,936		3,581
Other liabilities		9,726		6,229
Performance compensation payable to related party		12,698		—
Total liabilities		698,170		466,565
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, 30,021,393 (2008: 29,781,736); Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,949 (2008: 6,254,949))		3,628		3,604
Additional paid-in capital		479,311		477,571
Non-controlling interest in joint venture		7,395		6,058
Retained earnings		124,212		4,207
Total shareholders’ equity		614,546		491,440
Total liabilities and shareholders’ equity	$	1,312,716	$	958,005

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GREENLIGHT CAPITAL RE, LTD.

 CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 (UNAUDITED)

For the three and six months ended June 30, 2009 and 2008

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

		Three months ended June 30,				Six months ended June 30,
		2009		2008		2009		2008
Revenues
Gross premiums written	$	70,047	$	25,360	$	141,918	$	96,126
Gross premiums ceded		(6,611	)	(5,615	)	(7,831	)	(14,887	)
Net premiums written		63,436		19,745		134,087		81,239
Change in net unearned premium reserves		(14,089	)	4,937		(38,547	)	(29,065	)
Net premiums earned		49,347		24,682		95,540		52,174
Net investment income		88,323		31,025		116,040		25,263
Other income (expense)		(70	)	—		2,054		—
Total revenues		137,600		55,707		213,634		77,437
Expenses
Loss and loss adjustment expenses incurred, net		23,547		9,337		53,743		21,461
Acquisition costs, net		15,578		9,228		28,823		19,157
General and administrative expenses		5,330		3,210		9,708		7,670
Total expenses		44,455		21,775		92,274		48,288
Net income before non-controlling interest and corporate income tax expense		93,145		33,932		121,360		29,149
Non-controlling interest in income of joint venture		(1,006	)	(394	)	(1,337	)	(361	)
Net income before corporate income tax expense		92,139		33,538		120,023		28,788
Corporate income tax benefit (expense)		57		—		(18	)	—
Net income	$	92,196	$	33,538	$	120,005	$	28,788
Earnings per share
Basic	$	2.54	$	0.93	$	3.32	$	0.80
Diluted	$	2.51	$	0.91	$	3.29	$	0.78
Weighted average number of ordinary shares used in the determination of
Basic		36,252,925		36,249,979		36,160,160		36,181,761
Diluted		36,689,711		36,841,029		36,503,890		36,771,949

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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 months ended June 30, 2009 and 2008:

	Six months ended June 30, 2009									Six months ended June 30, 2008
	Frequency			Severity			Total			Frequency			Severity			Total
Loss ratio		58.2	%		50.8	%		56.3	%		42.3	%		39.0	%		41.1	%
Acquisition cost ratio		39.4	%		4.7	%		30.2	%		49.7	%		13.9	%		36.7	%
Composite ratio		97.6	%		55.5	%		86.5	%		92.0	%		52.9	%		77.8	%
Internal expense ratio								10.2	%								14.7	%
Combined ratio								96.7	%								92.5	%

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