GLRE - Earnings call transcript Q1 2019 | Greenlight Capital Re, Ltd.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for joining the Greenlight Re Conference Call for the First Quarter 2019 Earnings. The company reminds you that forward-looking statements that may be made in this call are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are not statements of historical fact, but rather reflect the company’s current expectations, estimates and predictions about future results and events and are subject to risks and uncertainties and assumptions, including those enumerated in the company’s Form 10-K/A, dated March 15, 2019 and other documents filed by the company with the SEC. If one or more risks or uncertainties materialize, or if the company’s underlying assumptions prove to be incorrect, actual results may vary materially from what the company projects. The company undertakes no obligation to update publicly or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. is event this note, being recorded. Please now Greenlight Re’s would like to to over conference the CEO, turn I Mr. Simon Burton. Please go ahead, sir.

Simon Burton

Thank good morning, and you, Alison, everyone.

short modest auto second David from the will the XXXX later, by including tailed. driven in losses quarter start discuss exposures return good growth to auto was strong in offset our by that performance in value, This in class. reserve performance Our investment are increases a Generally, book quarter. first resulted of largely

first affected the we in unanticipated that be our periods on number and in impacted that XXXX, However, quarter to are events no we rulings experienced other analysis, underwriting closed, claims claims loss losses XXXX of early due were that line XXXX. adverse of be impacted. will between confident considered Florida, many Based in a this including rulings to that significant occurred

to the recent You in we XXXX, overall decided may the before our well to that recall loss was class known. reduce exposure Florida in developments auto

the a a frequency is exposure, lower around U.S., a with sources auto we are reflect the similar book. to the improvements loss-impacted positive while class. our diversifying seen tailwind compelling trend on claim reduced recently since overshadowed have experiencing the years and frequency market placements oversupply developments allowed capital. for marine, for slightly the us we a in Market the revenue on of put some showing and flat have exposure of auto improving on areas, the net ongoing private conditions appetite $XXX margin In These of claim in outlook returns. Japanese we Public review Florida but the renewals diversify increase the caused pricing ceded efforts improvements. call are are has ahead continue from otherwise has the be a classes. Recent that severity, loss-making able improved successful was and risk favorable portfolio an class but saw quarter, capital as on our David. conditions as upwards health We our and million environments mentioned of potential of increase adjusted deployed to class underwriting. lines in has risk and match to tourism. auto In earlier, returns stay trend, Workers’ have next several performance has windstorm reduced of treaties of XX%, following London most year, has aviation, in our the two generally increasingly until slow that good. to of rate overall created appear in exposure overall and class. industry. room in us we would in of month. downward with syndicated for improving passenger we like escalation rates turn notably premium, are Claim capacity energy many over rate renewal our what to which And growing over finally auto underwriting We an classes, Specialty withdrawal class stabilized. compensation or business, pressure highlights Lloyd’s to last to the I underperforming This market appears Claim the classes business of to in in anticipate I to withdrawal have Ambitions carriers as had the and

David Einhorn

our everyone. Simon, Re good our shorts X%. contributed Thanks, returned longs in quarter, X.X% portfolio and The the investment while Greenlight morning, first XX.X%, detracted

Index S&P the XXX returned quarter, the XX.X%. During

guidance. management report was winner provided and the by a and annually its aggressive returns. for stock share track repurchase since Financial XX%. biggest returned demonstrated value AerCap announced company strong program. which rough appreciated a and XX% XX% as XXXX value, than even and quarter of accelerate believe billion XX%, stock expected the subsequent company another discount an its opportunity and XX.X%. of our quarter, were in redeploy outlook Bright results value. with shares by in into XX% share at at aircraft December. proven Holdings during first quarter. presents a positions trades and The to earnings long record equity company its the XX% significantly The reiterated in earnings fourth growing capital outlook In share AerCap adjusted times and XXXX, April. $X.X having book and the General announced XX% biggest announced filings, climbed more fourth results its buyback than ample the count quarter XXXX stock and as largest support contributors the annual industry book favorable XXXX. of management has Our We sale share AerCap operates our positive capital book per House plan better undervalued the stock the liquidity has proceeds Leasing third three-year reduced in around Motors a we in AerCap X.X to invested Since grown quarter expected remain to in better the

positions cuts, declined of In abandoned in far the and from Model Demand stock weeks, fell the as Model XX% and shorts sales while to notable the which X.XXX%. X headcount and short. April two-thirds whose XX% continued investment CEO higher-end all portfolio its has deteriorated. approximately is company’s narrative dramatically X.X%, returned in in failed down the few the almost portfolio results, month-end, X now prove year. U.S. At years has positions by company’s The quarter softened and short is demand. and detracted the quarter-over-quarter long particular and but incremental XX% have April, performance shorts reductions Tesla S slide of the long last company’s significant so with the in exception value. Our March. Model for in the a price responded of the our selling contributed detracted for first recent The operating bubble collectively XX.X% has generate would X.X% April stock Tesla, profit cars that basket from was quarter

I’d to to discuss call financial like over Now, turn Tim results. to the

Tim Courtis

David. Thanks,

the period first to share of recorded quarter net is XXXX, XXXX, we during diluted to income was of premium loss For $XXX.X quarter a the to share $X.X in compared for net first XXXX. year quarter the per of we Gross for X% in stop-loss XXXX. to of first $XXX.X a of of XXXX comparable a the prior renew Decrease of approximately written the for from $X.XX was medical income XXXX. a net in Fully of reduction period first primarily loss net $X.XX decided compared quarter the per million, million were premiums quarter. written that the million, same which contract not in related

in the XX% was those Additionally, mortgage XXXX of contracts during XXXX. period composite quarter. decreases, workers’ during increased was the due reinsurance premiums a a compensation Composite decrease quarter the compared the and commutation due XXXX. new multi-line Partially the to of for of XXX.X%, offsetting to ratio comparable contract to first during written ratio the

The was personnel expenses quarter increase and costs. due compared XXXX, in in the adverse were Simon of quarter primarily first $X million a for first first private XXX.X% primarily compared million, administrative Underwriting As to the the incurred an prior XXXX in as $X.X in resulting year increased to ratios $X.X large the quarter X.X%, incurred business. $X.X the indicated, composite expenses relating period. XXXX on passenger for to for combined the three the slightly prior was development ratio underwriting of General during for of to increase XXXX, ratio of million year to months the automobile quarter. million incurred expense

Our due the as corporate initiatives. in the representing X.X% investment to quarter our quarter on of return expenses the of portfolio We first the million as from million a reported expenses investment innovation in to expenses, XXXX, the related net personnel slightly quarter, up $X fund. during prior on well also income of of Solasglas increased primarily our year first were for investment $XX.X

Additionally, first share of Meeting year. Board approved decrease the The on XX, in June as Directors diluted XX, plan million all that during March per approved from current authorization The a X.X% on There we a the reported an seven shareholders, proxy of repurchases of and contained increase May income all share additional by We investments. investment XXXX. XXXX, reported value X, fully provides may of XX, the other June March $XX.XX, year book $XX.XX per share repurchase quarter quarter on General share At including $X.X net one pleased this meeting, renewal which Meeting I’m Directors was no re-held of million company’s in Board shares and terms. report of to of the reelection XXXX. our – X.X on XXXX expires for XX.X% of Annual XXXX. plan, expires for held of were the were of and the our adjusted the recently for repurchase proposals Annual XX

Now, up I’ll for operator the to it questions. turn the and call open back

Operator

you. Thank

first ahead. begin now the Brett Scott. question come Reece Montgomery question-and-answer today of Janney go [Operator Instructions] session. will Our will We Please from

Brett Reece

down quarters can Good be, morning, XXX? below How get combined the two. we will a ratio long it or do the to ask question back for opportunity think gentlemen. Thanks many you how before

Simon Burton

Brett. morning, Good

that So well to particularly last faced that the or made new entered the other, move action progress over London is We’ve the a quarter, the along we Specialty. that way number believe deal best core book we the That’s well issue is put emerge we’re say business. the We’ve issue of of the of performing great and the reserve in auto took classes, – in not we issue. one results our of To something diversifying aside, based can portfolio this Market on estimates months. the in issued quite the direction three resolving a of actually. on it’s but class

in with promise divisions. and business some more diversity the shaping to And the our of I’m business integrity the portfolio quota very share see every the portfolio Brett, I of We and bumps similar that you and There’s great a But up. I don’t with improving the quarter. passing pleased loss balancing this classes is in earnings here out. the loss-making can’t one the deal between the experienced quarter. are steadily way potential we’ve diversifying hit consistently road excessive from to on

Brett Reece

below the combined All right the road, in now? and an your consistently bump right. that see Barring back XXX down guesstimate over succeeding we best ratchet unforeseen a towards should in quarters ratio

Simon Burton

disturb would means. bumps large the a in results would define as bump in let’s the in a industry. clearly the is road reserve The what that be entire road. took the road catastrophe we our recent So Any charge natural clearly with it bump

Aside I similar earnings potential like portfolio, in that there’s positive others that from issues and vein, do yes. see the

Brett Reece

great. Okay,

a law adverse development XXXX of upon you had period? And how were to time, that XXXX explain then in you sudden, there once me this school, can to closed Now went resulted rulings all thought cases? time adverse I you into to a

Simon Burton

certainly balance obligation a transparency It’s situation This Brett. And a our a good more to have your I where with in the detail. have is to understand we we counterparties. question, interest got

here So not to relationships. idiosyncrasies we’ve particular into client seen for respect that the development those to I’d prefer reason, of delve that the

Brett Reece

how were, these idiosyncrasies is the that it these be not resurrect in I won’t and – idiosyncrasies Whatever will it future? this comfortable should

Simon Burton

are the opening XXXX. impacting than in remarks, the mentioned I us that here later early occurred events as no Well,

our So goes be the far of should on. They claim of not have process good a counterparties infer It’s the reasonably that from are resolving issues. are as universe increasing They on moving pretty here. the to that, time handle you exposure along consider is don’t that But bottomless of necessarily pain is true. is exposure that cost still going that’s uncertain process. the to will the until a The this see the from. somewhat pit completed, of process be claims relentless ultimate we that I through

Brett Reece

may. And last one I one, Okay. if

the that? only if trading on book stock on value, Berkshire XXX% you at market? be it’s in – it’s is of what’s buyback, – the you – there is and will are thinking by your the below if Buffett price a share book? If What metrics the will thinking Your board’s

Simon Burton

make we considerations, time. Well, conditions at right flexibility have is buybacks decision and all our our the we on will other we to – based between to be on primary concern including that, at times, view back deploy multiple have is complete see buy share the decisions we the areas. capital a any Clearly, in to given shares price share balanced opportunity our

constantly changeable go that into the fluid, – to with predefine cause are considerations a Those scenario. that be any buyback will that decision. conditions we’re So but going not will

Brett Reece

it I following, think, to I final the – no get firms go you in your coverage All I and now. my company I attempt is to following to analysts this the firm of morning, don’t When apologize. one mean, that the on following Bloomberg is anybody of Are that retired. right. one your One I was from company think going try Street?

Simon Burton

good relationships in ongoing correspondence on – are multiple them and have an in We basis. with analysts with

up perhaps has idiCORE today, But think in hopeful dependence which I we’re against that increased the the there are [ph], somewhat. be we future. will dampened coverage

Brett Reece

contrarian good built you is luck. attention less I’ve for until position, Right. questions Well, and better. my as my Thank a answering

Simon Burton

Brett. you, Thank

Operator

Capital. come go next Our Instructions] [Operator Buffalo question ahead. Bay will Please David Silver of from

David Silver

investment question. Good morning. the helpful for One update. one Thank and question you insurance

catastrophe what general make it you that side, more investment question your what you investment side, what Tesla? more given model? a is have on insurance exposure? conservative, On And towards to the approach general portfolio? your And your for taking Do approach your my to the outlook is on try insurance aggressive is is,

Simon Burton

insurance you take the question, David, for I’ll that. thank

But margin allocation some to an its attractiveness our you years cat should it’s terms both is sufficiently I over is to relative business. certain other big has from inflated in portfolio. risk the day classes. compelling on cat It have interesting driver remind cat a outsized the so So of of and from yet would that side, is been standpoint compelling a return. weeks be allocation and a a that not

is So fluid how from the not I’m future, on may issuing course, Cat the capacity or that land cat that exposure calculation environment a of appetite change today. we’re in one we that’s the Should standpoint. our forecasting more change. that.

rates of I’m what think seeing capital. I some the withdrawal collateralized replenish take to up rapidly. fund perhaps that we’re now through is expecting in quite

think a relentless to appear a the allocation and right to overall anticipating is us. cat not rates March a ago. our I’m exposure, we’re So we with from But decade comfortable for decision decent

risk efforts yes, overall second way. Your do the our are part of balance enterprise very in – are the the of mindful risk we very overall that – directed the We risk management and on the good in question. portfolio, entirely

So good or the to time. power We and other, liabilities clear, management the… the the One points both other could insurance encompassing other of risk like move up model you our be in to all insurance as at actually to our ability risk. balance would – our side down Thank sheet – that toggle with or the and various in is one the of concert question. investment David, each take but it’s a you. see

David Einhorn

Tesla Sure. and be little This bit. a happy David, to discuss is I’d

quarter results think, on that their company’s that negative I Tesla. is year peak is spec of so for that towards think that reward was been would when I that customers Model last view were we We and that, side X. overvalued decline. versions The there a demand is think poor. of or remarkably, stock demand most the the risk last in has out at has And The deteriorated by exceedingly this the enthusiastic around for year now for the the highest in some the our now have initial long Tesla. thesis satisfied the demand business third

S in cannibalized auto to the the in they And also first bring positive a a January. Model X, profits that face flow Model are not surprised big both that to in think X, the I cash as I think Model which to which competitors. that volumes that as from for and see, cliff, supposed And think projected I sufficient the company as margins true. be could Model late as profit real high-end quarter, some a think, had and loss demand being achieve but to at was eye the from the far third-party was company they they X, likely it’s the as their order I or

is the of of if transportation away technologies, now and a prowess a right I And ever. I about management implemented and very the many successfully losses. being the of a promises now, technological transformation stream they that think, almost which aggressive is result, think their in probably self-driving are making under face that bit other unending their years So some scramble from

short the way expect market our as well in And the to quarters, cap out and the here. position so with the disappointments I from it that coming that think, is, market we absorbs do some the of prove in

David Silver

Thank very Very the you both Best of to much. helpful. luck company.

David Einhorn

you. Thank

Operator

Solo will of come Abasolo Our go Mikel next question ahead. Capital Please Management. from

Mikel Abasolo

on question. how very joined on research This My parties is, if negative recall you. a question you of the can much future? Simon, taking Thank what correctly, your for and do be on behalf, question kind my think went your for have that I explains you was this surprise is the to And at from quarter? you the my third in some we there surprise coming assessment is, Yes. team when the that due you their cannot process Hello. Simon. that or diligence with adequacy Thank into wrong of the extrapolated time. company,

Simon Burton

embarked it you question, in last-half XXXX, thank my The It’s of resulted months first the quite on joining, a say, XXXX. that’s in as process was strengthening it six of the a thorough. And at good we you. QX

portfolio result our as strictly of as a parties by the either engage in court idiosyncratic in last or But today that and parties, uncover the we to of softness that third a shifting reserves class, this the strengthening. source but unusual that quarter. assist Florida State we’re not seeing the is we’re there their the seeing would mix a to speaking, estimation possible liability work right claim I the It be continues not to was simply the internal to related in to less You’re and with auto accounted now sands with wasn’t the of judgments. because simply review, in characterize manifest so

So reserve review. I strictly courts could that speaking thorough one reasonable not but in have any and despite agree, estimation

Mikel Abasolo

And again, my previous exceeding you. thank call. going for Okay, forward. the – luck Good

and believers. investors big We’re

Simon Burton

Thank you, Mikel.

Operator

Group assist direct have and The of to Adam questions, happy Inc. Prior you please be XXX-XXX-XXXX, follow-up to Equity at he any you. will Should them

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

lines. disconnect now your may You

Greenlight Capital Re (GLRE) 7 May 192019 Q1 Earnings call transcript