GLRE - Earnings call transcript Q3 2017 | Greenlight Capital Re, Ltd.

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Operator

Thank you for joining the Greenlight Re Conference Call for Third Quarter 2017 Earnings.

Joining us on the call this morning are David Einhorn, Chairman; Simon Burton, Chief Executive Officer; Tim Courtis, Chief Financial Officer; Brendan Barry, Chief Underwriting Officer; and Mike Belfatti, Chief Operating Officer. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. is even this note being recorded. Please Securities reminds made in company by Safe the you of to that be may the Private of provisions that statements Harbor Reform this covered Act XXXX. forward-looking be The Litigation call intended are

projects. are publicly a result and historical be forward-looking the fact, dated not including risks, and actual prove Please are or company's conference subject over if reflect the If but future as vary assumptions Simon about those of materialize uncertainties or statements and and sir. other the go company's by one Greenlight the or would no whether XXXX, the CEO, XX, assumptions, XX-K information, new estimates turn or to February results expectations, incorrect, otherwise. underlying like predictions obligation Burton. statements to company's company I enumerated results revise The now or undertakes statements Re’s more risks the any ahead, update rather materially events the future to company filed Forward-looking current and of Form with in may events from uncertainties documents to what company SEC. to

Simon Burton

well million, efforts, The expertise include million, team. earthquakes. losses significantly risk Mariah responsibilities resulting our Harvey, book the or in $XX.X Mexican has quantitative net August for of Chief morning catastrophes $XX.X net and Brendan, investment income third as fully and highlights includes colleagues, as areas strengthened $XX.X and third in reserving. before X% financial administrative which David, our joined of the from Operating XXXX and $XX I’m hurricanes quarter loss Irma along who joining approximately Tim data million and Officer. with per share; for value and underwriting thank Good brings valued as and and of these million or oversight management general of He quarter net joined you team the $X.XX expenses and today. income of Mike’s us by deep of my Mike of Belfatti, an executive adjusted including include,

increase Our other of years of response claim million. casualty experienced to accident losses by to prior an were related These affected results ultimate classes. $XX.X health, on specialty in contracts in and auto were increases reported our several

the analyze value adjusted portfolio. continue reserves the diluted our understand trends improve fully increased Overall, closely claim and per We book to the $XX.XX. shape quarter our to X.X% during share emerging by of

caused Light and or market replace events results. pricing cat unreported industry of Total ability on we Green losses acceptable reported impacts possible monitor income business, private to continue mechanisms. of funds events of be risk have and favorable premium to strong capital large capital. for and improved muted results We underwriting we improvements injections quarterly will There these hardship sign should changing and markets. by shade high returns us believe see to on was response cat under that are catastrophe classes for quarter, either no are third the natural The significant with a and be and other the depend thoughts the far a led scenario but loss the prepared renewals, not portion rates our I a the cost the may underwriting degree approach usual so to of of the life theme as the third but ex a industry, evenly investment those growth dominant across go During that affected. insured borne result. quarter our as and out to and our significant a all bearing

deploy our mind with to and to the sources [re-positional] understand long regard clients better an to our first we inwards As capacity price outwards and standing open are efficiently, positioned both of opportunities. we and tension,

to appetite overall the catastrophe on surplus not margin expansion. likely proportionate based a as reviews Our in will our risk of to materially XXXX increase

there relationships a As discussed London, our US. leveraging Bermuda quarter, of critical opportunities balance in last exploring the term long with and markets both is we subscription the in client

Our is relatively area portfolio our exploring to diverse, for is an concentration of the market, auto are us. reshape exposure we but options to non-standard which

our a continue reposition and class. I’m Our transaction market relationships as role at manage prominent to and in to exposure so net a partner one maintaining use pleased look with report we tool to far have is objective to concluded close our while the client that others.

to As we Greenlight on January constructing renewal market of increasingly broader balanced the we portfolio. Re establishing transformation next continuing busy the build phase and X, are season, in presence move to an

I’d Einhorn the the and in results discuss like Now over turn call to progress our overall Chairman, to investment our David strategy. to our

David Einhorn

largest driving and post the its business X.X and loss quarter, natural General is Caterpillar portfolio market in as third GM Thanks in of businesses focused on company two the in The investments focus quarter, contributed and Simon as separated, sale natural a continued rerate European morning the short Happy market and operating we the the and Uniper; play close XX% vast quarter the strong Mylan. money-losing the advanced position, and has The to long lift. short our winners the on from vehicles, CONSOL’s position which detractors up includes to Greenlight gas CONSOL’s Energy, its our Auto detracted Halloween. with separation pure X.X%. and CONSOL during good quarter; biggest Re X.X% valuable businesses. showed the X.X% gas progress results, prior our are electric CONSOL and were autonomous Once investment believe in coal upcoming everyone. the Motors were between recovered its assets.

shares Uniper end buy-out of stock We materially and rebuffed quarter bid to earnings fair XX% agreement steps improve as announced significant a perpetual encouraged as Uniper were Uniper to completed at its of August Fortum by euros and the rumors billion took to it E.ON’s next earnings, company continued Finnish XX% end XX% estimate the offering. purchase an from are execute and in that the a continues share. stock The utility, cost the Uniper $X per rates stake was year below target, announced GM value. capita strong to for guidance in its management growth on buyback a low XX% at preferred of dividends at its Management of the XX growth. and guidance was

This Mylan to shares influencing Mylan’s is reduce form conclude On the biggest believe quarter the earnings for where We entering and term approvals and which the times next a is implying investors results, drug shares the beat the we it’s Caterpillar leading to XX% new inventory cyclical quarter, deal the peak. led Copaxone. This third year. drugs energy still are construction for company’s near the products FDA well hand, mining, and company including approval month already in slower earnings as its of deflation oversupply which at guidance. see quarter, a drivers the price the the up few half a significant decline. generic the third and has for poised stock below result exclusivity that where the other of to Caterpillar potential mid-cycle first business new played Caterpillar’s analyst approved landed traded We XX% stock straight has Mylan as of believe believe disappointment Caterpillar builds raised company recent the guidance. was during second and generic cycle. that and investment rose are sector, accelerated double fell led the XX delays by a generic in management super-cycle; over-capacity is is earnings. led the China retraced as Copaxone weighed from way a short with in ordering on entire raise,

hedge its Greenlight to Capita quarterly discussing its performance. led Lastly, fund clients her to

argument letter understood the most the be from as value strategy, on nothing an truth. letter investing, as made could rhetorical a further of value some investing misconstrued While abandonment the the

its headwinds benefits from unfortunate simply and excited in a made the few do have meeting, the Mike impact cyclical catastrophe see we and made very been Despite tremendous natural year. strategy. of a under In Cayman We not I strategy. a to for we’re investing during years Simon the days leadership. team the just shown our to energized and Board value phenomenon plan upcoming the have several dual short and the challenged headwinds, however the time, engine believe progress change new is as we’ve events in has Islands the quarter, our spent this last

to to call Now the financial I the turn would results. discuss to Tim like over

Tim Courtis

higher of premiums diluted reported to second on quarter $XX the net the of month the was of a quota prior I’ll quarter, Thanks slightly were David. net during in starting both period. per period the XXXX, contract automobile $X.XX quarter per financial share net Greenlight during year non-standard to during third share net and XXXX. third prior the new home-owners for share compared of XXXX. through income $XX.X results, Fully comparable with where the of income million, income the in income Re of to three go compared the million third $X.XX for briefly than quarter due fourth business written were written higher property written periods than those year only incepted which increased Gross that significantly quarter premium

a during from million income and of XXXX net increased portion Harvey, quarter, of reflecting Composite net points losses the quarter and our our for third to third included non-standard These which indicated, expect XXXX, catastrophe third quarter automobile investment XX.X the on of ceded hurricanes gross losses of Simon investment million $XX.X losses, Mexican ratio. Irma Mariah quarter the reported ratio cat a gain we We of in composite in quarter was which added estimated X.X% As portfolio. earthquakes. XXX.X% will there included we off $XX was the third during our and ceded business third subsequent quarters. continue premium of the

million, gross year-to-date the during in for premiums $XXX.X for XX, results, from homeowners our an net the loss XXXX. a attributable non-centered XXXX, of the of were of approximately for of of share months was compared Net loss our months written for premiums Similar nine we XX% per XX, of per automobile XXXX. nine to nine Gross $XXX.X million months for premiums to to loss ended, to $X.XX net in XX, September the share results, $X.X written September Moving compared increase same is XXXX, million nine quota and written ’XX, $X.XX nine first net months loss XXXX. first months contracts. the share $X.X of increase to million a quarterly ended period the property reported ended the September

to due the increased nine primarily of premiums million $XXX.X the our first to premium for earned writing. months higher year XX% net prior XXXX Our approximately by from period,

first the during the $XX.X of in Corporate current resulting million in to was our points. The $XX.X $X of the of non-reoccurring nine effects $XX.X months corporate professional the was ratio same first For nine before first XXX% in nine million, a XX.X%. incurred. the compared increased for period. increase the catastrophe to administrative for to expenses general primarily compared of nine losses million and year-to-date. $X to prior includes of incurred $XX.X underwriting of of line million the year $X.X nine X.X%, year with expenses months year Combined during months expenses during for XXX.X% reported catastrophe million expense the of of million X.X of relating the expenses of The consulting combined prior expenses fees nine the of adding Total in period the composite were months first months XXXX, XXXX was for and expenses for year first incurred first in XXXX ratio Underwriting the months million. ratio XXXX underwriting ratio the XXXX XXXX. losses

months of of A A.M. of million, net XXXX, a both Best strength income of (Excellent) net investment was nine reported as of minus September The reflecting entities. first X.X%. gain diluted book affirms investment stable. we the financial for share XX rating For $XX.X value XX, September operating remained XXXX per for XXXX. $XX.XX $XX.XX, reported ratings from September per these a share adjusted increase X.X% credit XX, Greenlight outlook at Fully the

Simon to Now remarks. I’ll call back to concluding turn some provide the

Simon Burton

Tim. Thanks

coming take now As here where you Greenlight at years. to headed to my are months update the opportunity long, in on wanted tenure is I and we the months four

my power observation core of this is quarters’ company engines a this a sheet In of manner now is over underscores, we footprint strategic strategy. dealing As business potentially realize comprise from the however, to potential, seek only to and and underway two remain both and over surface of potential. months contain of our of results returns have sides are are strength earnings the is that it The model. this balance the highly and not taking have will does compelling core the companies steps able an broad clear disciplined in many industry we well The with. in will operational protect we investment in that that the vigorously scratched our past that

industry As we sources scale maintain leading expense continue rapidly in new capital like a and industry areas can ratio. face distribution, the changes to many an ours shifting company to others, and opportunities, response of small only judiciously technology,

we will taken business to have with steps continue efficiency that expect adopter those strength an efforts. advances and directly is placed which be We our in to the play to of

supported clear range depth in appetite risk. for to progress significant indications of our pipeline, by regarding brokers our seeing already are the We and customers and

differentiated will future be Our success built expertise. upon

believe have smaller we our business for be compelling the use bright discussed leadership will lean chain, we risk wisely. underwrite on and to questions. a Part a and access this via or In access industry-leading structure quarters. way. months, the have [strings], plan to understand of best I expertise numerous data, auto operationally more remaining delivery the dialogues acquisition to four and create discuss future advanced asset to equally bearing as strategic partnerships coming and main in With the future, to managing on be of create As to and that influx example for net will them expertise remain obtaining becoming numerous flexible the say and technologically of appetite to to central with partnership, parties for will fully the embarked written on value we look while foreseeable the counter and our in first knowledge expertise to that access parts a industry to already hazards will hiring Combined in underwriting acquire engine, and the be but of my we expect The able firm, a success. and should for will analytics distribution, take company. this we position we’ll with earlier we

Operator

[Operator first question from Instructions] Bob of will And go this Glasspiegel come morning your Please Janney. ahead.

Bob Glasspiegel

but going Starting commentary for there’s capital. questions of characterization, and suggest you for be you’re with retro impact that business? to you, commit more rise more to a to not couple rate whatever a you not your write got one think David. going increases enough I happen Simon, just seems correct much to for you an Was that so and

Simon Burton

accurate. Yes, that’s Bob

to business. more expecting Our considerably capital half see that are the than rates to view is have committing to the move of we significantly further to consider back will

compared we We’re not it company, do cat at peers. cats, assume a fairly all moderate is some our to

many the without way about we’ve coming I some reversed supports seen now. the don’t have of expect completely that years industry and arithmetic concerns And transacts fundamental that. some reductions the be renewals. But we’ll of the We cats rate

assessment. our that’s So

Bob Glasspiegel

sort of you rate that but need to XX, XX is magnitude? a X% increases, rough or So XX, quarter XX%

Simon Burton

supply perhaps Well doesn’t but and a be the we’re will there much fundamentals course I’m so equation. fashioned as on Bob, there predicting supply, I movement. or tension increase, hopes believe as of old side be not demand But the seem demand far some in guy an either of and to the particular industry of

many we’re our bit bearish So, peers, at more let’s a leave it that. I think little than of

Bob Glasspiegel

quarter type in of results and look rate. get there you of And any happens you the and as reserving drive reserving. that Simon quarter the each annoy the quarter CEO not lot a, or reserve touched that I Was that launch prior in that to review was there of are run property future reserving but so head increases philosophy see surprises specifically likes a of quarterly with increases the on a reserve a more triggered wants what more the it more to avoid is would than huge this? your methodology. type it, was in we’ll negative out let the you of general are

Simon Burton

It’s a good question.

time-to-time second a and of personality that the positive let really developments at over outcome satisfy I’ll on To strife Mike negative the to that’s to to will answer see my answer me. help we’ll that. view. we what detailed Mike a But From for it Bob, all reserving jump times on take that’s look me more part So in moment. am get the sort I and right

Mike Belfatti

Bob, our quarter at unchanged detail. process this in much every for accounts and quarter our up from prior all it look We very build was quarters.

a of So little bit that’s note. process a

In will, the aiming cost said, to terms of of the estimate we’re Simon get of if right contracts. you the target, as our

feeds the to pricing We’re on reserving in feeds pricing of in focused fact reserving. to and

under a obviously And financial strength. So terms business in figuring it’s get the you reporting figuring estimate strategic want to out not grow requirement best it’s overshoot out in to and where to both try and undershoot. to what and of imperative write also a to and

So that’s probably estimate. best as to know, have errors more balanced are probably of than the our reserve peers philosophy. for We some you but want aiming we well

Bob Glasspiegel

you any to David, up through? has you, one and and on to you rate bit, have keep take cuts, how get it significantly have were it or would know you October of more be hurt that. market up able for idea we’ll positioned works to relative no how position little a been, But the tax how benefit, comment no portfolio do

David Einhorn

at good do today. month our that pay needs last But of challenging number taxes, that days a Yeah, very for from point. shorts of don’t materially have profitable most the result a fundamentally not. October started taxes, to off relatively longs our expect this are been is us. We’ll strong and and believe few I for zero the see to what we and Relating happens different

lower we book. long of our that effect rate tax imagine the would positive should side a disproportionate on So a have

Bob Glasspiegel

you haven’t a happen it or not. taken will But tactical on position whether

David Einhorn

I is was. been much more time to personally has it’s believe long likely happen And for that a than happen. more reform my belief that tax ever to likely healthcare

Operator

[Operator questions. no I’m Instructions] showing And additional

Should he please you. the to on follow-up Prior have direct assist to and The Group any Equity We XXX-XXX-XXXX, happy them conclude of question, question-and-answer will will be session. Adam you

on concluded. Greenlight about pertinent today’s We call also remind The replay attending conference for you Thank and that now www.greenlightre.ky. a presentation. available this has of you website information is Re at other our

You again lines. has disconnect disconnect your may your now you And may conference once the lines. concluded,

Greenlight Capital Re (GLRE) 31 Oct 172017 Q3 Earnings call transcript