GLRE - Earnings call transcript Q2 2019 | Greenlight Capital Re, Ltd.

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Operator

Thank you for joining the Greenlight Re Conference Call for Second Quarter 2019 Earnings. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

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, uncertainties, and assumptions including those enumerated in the company's Form 10-K/A dated March 15th, 2019 and other documents filed by the company with the SEC.

company risks prove materialize results to materially what more company's if may or from assumptions underlying be the one or or uncertainties the vary If projects. incorrect, actual to The company statements as required or result a by publicly events revise new future except any whether information update of otherwise undertakes forward-looking or law. obligation no as

ahead I Mr. Simon CEO, to Greenlight would Re's now like Please to sir. go turn the conference over Burton.

Simon Burton

with positive Thank of since for had XXXX, quarter in you, by six operator, a quarter and quarterly premium the underwriting everyone. we year-on-year implemented reduction. good first quarters of the changes over second increased which resulted year-on-year premium from Re Greenlight underwriting results investments. and represents morning, were This about late written our XXXX. premium X% to the both in good Gross written increase in gross our quarter growth appetites

quarter of improvements combination the the of during reflects achieved areas multiple in business increase new portfolio. of our second The XXXX existing sources and attractive of rate

In into two year-end outsized season resulted perhaps losses have through that years rate will renewal the the improvements catastrophe industry in the I and of expect property XXXX. class, continue

by a loss of the pricing initial today. deterioration billion billion improvements is for to in industry $X One insured Typhoon of significant caused estimates estimates from Jebi about $XX

in on was following painful XXXX. miss estimation Hurricane this loss industry as a Irma miss whole Reinsurance another significant on

loss Jebi to increased overall over loss excellent. our on estimation about time pick our decreased catastrophe estimates the be record loss our has quarter, on proving recent million Irma While by $X during on second with

direct ILS collateral retro demand increased rated the We between for which have of the We reinsurance that significant are from has by pricing a also of level funds XX%. X% increases margin those estimate and of products. exceeded traditional trapped rates seeing in improvement

have the result on retro not cover maximize to renewed return year allocated in a order capital. our we As this

combined than business, energy, has performance upwards are effects loss The higher with we of satellites, Specialty London our withdrawal marine, now rating the in aviation the classes. and Lloyd's experience XXXX. expected the of capacity review Market In particularly seeing pressure created resulting

expect have each margin write We these we areas. from classes as expansion additional and in positions and benefit renew business of to these been in building

Greenlight portfolio investments Re six XX Innovations entered new the during bringing into transactions. quarter the completed to

products. opportunities We will that develop conditions we our they awareness healthy reflects our growing to their as momentum of add of have pipeline brand that the a partners improving insurance further expect and launch and market

this remains Our outlook for positive. unit

on led to derisked we of as announced XX negative, of A- portfolio is Best's from of the assist the to have providing result We May forward Board which and commenced to a Suisse A.M. by outlook stable look decision our a review, investment our strategic partially we Board strength As Credit in revise financial the of to as engaged updates appropriate. has review Directors. rating ongoing.

Now, like to to over call turn David. I'd the

David Einhorn

second contributed morning good our our longs X%. X.X% Solasglas everyone. returned contributed and and quarter, the Simon, in X.X% Thanks, shorts fund The

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

short largest was quarterly our announced during company the the results. Tesla Our contributor as quarter

were and lose experienced during energy in demonstrated capital Should positions its $XXX over to financial despite senior serious executives to brain two the quarter plans continues quarter also face underspend by Tesla deliveries. global they AerCap access markets Adient continues. trouble. in second Tesla Tesla its company's structurally the and short offset contributors positive drain growth losses of the Long the losses. million lost companies. CapEx company The theatrics remain will unprofitable We during despite to record management's vehicle as has in reverse ability despite the and to no

cash the the that risk short XX, disclosed investment two-thirds review. short-term and a of while of represented derisked treasuries strategic long been reduction exposure. completed of the moved majority The portfolio to Directors have May and combined Board about and the been investment the we assets On had

to the strategic expect with We manage review. an completed Board until has investment composition approximately portfolio this the

X.X% returned should Brighthouse investment as The has position. X.X% positive year-to-date. performing net loan well. business our approximately mature, is XX% is in significantly. July free to Financial returned book annuity Solasglas is Brighthouse's cash and and variable its largest And portfolio flow continues expand

buy value shares believe of plans extremely the around XXXX, and company remains At of to The $X.X billion. by current the end times Brighthouse XX% market under X than of $X capitalization company's less less which we earnings, XX% of is outstanding. billion currently book represents stock Today, back just the than undervalued.

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

Tim Courtis

Thanks, David.

of of in quarter the second $XX.X quarter prior $XX.X income loss the net year share $X.XX comparable compared loss Re million period of per XXXX. Greenlight Fully for second net was a XXXX XXXX for diluted net net million in period. reported to $X.XX income a of the compared to The of

months June XX, we net compared of loss $XX.X loss a share $X.XX diluted compared for six ended for million months six XXXX, period Fully XXXX. the to a net income the same net For per was reported of share $XXX.X first million net to income the in of of XXXX. $X.XX per

XXXX, mostly the a the due contracts and contracts during of and written were stop-loss of million period. premium year from to of decrease XXXX $XXX.X commutation from new contract were non-renewal offset six mortgage compensation written prior medical by workers' small the X.X% multiline premiums increases in for a XXXX. first the the reductions Premium Gross months of

resulting there million million with for as was composite prior by increase XX.X% in second new quarter was performed The loss of net during small $XXX.X in which quarter an and unearned first business six from portfolio our ratio for XX.X% earned written the underwriting the coincides XXXX, premiums the The premiums the the year line period, the XXXX. of expectations. months from decreased $X.X with favorable development to during

auto composite first ratio the to the XXX.X%, for the second quarter quarter was XX.X%, the the was actions from ratio of a losses higher XXXX, taken during resulting ratio of ratio six months year-to-date for year. bringing combined For the XXXX the composite first Combined XXX.X%. of on reserving

deposit-accounted six higher first X.X%, the underwriting incurred compared general administrative of over was to higher Total primarily of months XXXX million was during to prior IT income period X.X% is million deals, calculation was expense comparable was $XX.X innovation-related increase reported the expenses. This XXXX, the primarily which the which for the of in related and $X.X This first underwriting increase ratio ratio. personnel, included and due in of is year. half an in expense decrease XXXX. The the expenses other on to

$XX.X of investment million second income the the XXXX, on for of during on which Solasglas fund total reflecting million in includes net net income investment quarter a reported quarter. investment the gain X.X% our We Solasglas, net of of $XX.X

$XX.XX, income as at and million per X.X% December XX, For reported per of XXXX million investment the months XXXX, adjusted reported fund, reported share which $XX.XX gain related from the from first of per XX, was six diluted of reflecting value of increase to $XX.X share book of investment Fully of a a share $XX.XX net XX.X% June $XX.X XXXX Solasglas a XXXX. June we at income in total X.X%. decrease XX,

operator open to I'll up back and the to it turn questions. Now call then the

Operator

you. Thank

comes begin Please from go David first now answer an question session. ahead. will Rocker, We [Operator and the individual. Instructions] question Our

Unidentified Analyst

was on period Best insurance a over AM company's of much. very decision to downgrade time. the based core performance debt Thanks long

below partner very to Credit or While buy is, value. stock a the why go things given basically party? And have The seem Most attractive on? a you capabilities Suisse? gain to What portfolio. is is charge to book specific insurance not out to still XX% being of offer What is to What stabilized, providing question attractive considered? have an the have the are I options is return. the specifically do or assets due

David Einhorn

David. is Hi, David. This

Unidentified Analyst

Hello, David.

David Einhorn

think business the has public by Credit for the its think strategic the the Ireland. itself team think has, is book Thank Cayman We listing to company. is including and we number for has in Suisse value. We that assets, a find review team direction of in the and question. best attractive value. has strategic investment company underwriting designed place existing of value. program in The The you We that that the that believe, led

are to the this improve company's rating position stock Suisse process discount The order. book agencies. that in we the value the Credit structure is through that short whatever way looking obvious and with deal is in pressure to with will the it from everybody to between the and of and -- manifestly a business reasonably And And is the coming addressed is be hope we company something involved.

Unidentified Analyst

its own book other a undervalued you -- between long and one a be prospects. you've Can on your similar substantial as that of buyback whether a amount of closing you of of -- means your to of have as one gap you the improved believe comment was of buyback positions your considered strong security, what things for indicated

David Einhorn

I'm going math the able and the while sensitive the from likely clearance moment own be possession is we're given to have we're counsel in The very to I'm material the information. to strategic of review account, in aware we very the trade non-public at our where of in not have relating Yes. stock discount to be problem to we to able buybacks. are

Unidentified Analyst

required Best reverse you given any to be kind for indication downgrade? improvement what A.M. would of Has of their them

Simon Burton

modification Their press levels clear high from a balance negative our clear, a A.M. pressure course, Best that Simon. we're To mindful is does rating of made volatility to from is release, of to as stable amount not from in Best sheet. was over they both decision, it A-minus action downgrade. result outlook, the of this David, time a of sides a their But, the of be A.M. of.

business an working Best profile next not They on with our our continues needed in improvement is our A.M. line company and to and take. all put the in our And The term. step a view, relationship review have time they near may underwriting healthy commitments not with any in strategic be positive. their on is

Unidentified Analyst

fully Solasglas? within I'm individual investment that you which the part last two-thirds of like equities understood. the eliminated. eliminated quarter, just not it was Because just with it your restructuring, increased I One question. Okay. seemed your have year-over-year In actually sure portfolio were

Tim Courtis

Yes. note Q; actually the has it Certainly, the you in two if David. composition look the Courtis Solasglas fund. in It's Tim Actually, of here.

of element have fund. the to large the that, cash And to equities you'll remain and it repositioned in was in that relative see treasuries, U.S. a that,

in those tables. can numbers and you from the actually equities, the So, see reduction the

Unidentified Analyst

Thank you very much.

Operator

Scott. from with question next Please Brett Our Montgomery go comes Janney ahead. Reece

Brett Reece

Good morning, gentlemen.

Mr. brought do there going forward, a be to to that's another to conservative think mandate, manager, you Going Einhorn, just with manage in? more continue the investments, going or is is,

Simon Burton

period, made Board, volatility from the process, directed reduce review we've strategic through Obviously, Simon. the that changes is recent this the in short-term we've by seen our significantly we strategy. go investment Brett, the as to

an have we to point, committed And relationship, Capital. not company and And any changes. Greenlight this foresee at the David ongoing and does

Brett Reece

Thank Good. one own the Because that's stock. you. reason, I

Operator

[Operator go from Instructions] with Our Mikel comes question ahead. Capital Management. Abasolo Please Solo next

Mikel Abasolo

Hello. question with to the I question. A.M. Yes. for Thanks what taking Brett -- to is or to out figure I've well, Best. first would to David. first And go ways do the mandated And to if understood to assignment this improve CSMB rating Reece, relates my is, questions. your

But they strategic are broader, contemplating, alternatives. not

will One liquidate, blind on totally is And -- to table, I review something the the question. one the of my the That specific we're of which or you strategic would the Board, is that be That question. to simply disregard? it this company have first very of liquidation --is just be since the company.

David Einhorn

is not first This of CS' believe what the suggested. the company mandate is do to have We Yeah. the liquidation broader option consider. you is than David.

path through to of going a than are liquidation. find, better trying We solutions

in decide available. out, way would we than worse is whatever a plays to have process other that the if might We certainly we presently alternatives that compare, expect. But to be

Mikel Abasolo

is because frame the investment a Okay. we're that like, Credit for review. we at is company it bank, me $XXX investors follow-up internal Greenlight But has in constrained debate, to the capabilities of And where in is anyway strategic Definitely, million invested assets mean mandate side just given of me bit let risk. can company David, if I I that insurance And think to if at business. view than the that be I better the of an Suisse yourselves. something from are the only -- my $X.X of technical out say, mean, assets in it’s a not just Re it a that seems, may, the XX% strategic billion chair review point very just in least you

any per so my mean, the And mean doesn't it's that share -- hard the company a asset But the raise Thank liquidate. aim or but could the incredibly the I is debate to for to a mind, if ongoing, would that manage different you. And know capital $XX.X review me most ambition net in you one there is value stabilize you situation, than here. either erode can big I the go to frame is be through from that to strategic alternative I help helpful.

David Einhorn

useful other engaging potential with. you you Look that of They a well to soliciting this do Sure. contacts for ,it's that relationships and in make experience partners smooth. as want number is are a good where good to financial large run strategic want third those number have among area to process have may a reasons of a as we broad with kinds a consider if of process is to calls having parties, the round of adviser contacts to run them to it's

value neither separate and which have assess the the different this useful something capabilities. also our idea top I would of for that you I there at that abilities that list, at idea of is believe about the liquidation in So not is relationship a of whatever of the is process, capital is a managing large alternatives they apart point. think in terms to for say, raise the

I any alternatives think I that but remote out unlikely stage. the not particular this completely, think to those at in thing of actually are both very rule between somewhere and we're position

that results. and this agree level Board a then I investment, company sustainable attractive And achieve you agree the low to with asset not would regarding with the for I finally, is the think of you position would

lead for the while the brief the us and company with So with for of a comes is is this we period presently have the the of things -- interest to take the is are think but a time, reasonable its what company best best to to in than the different outcome what process shareholders we going of up to that scheme this something position displaying, of strategy.

Mikel Abasolo

own is you was Simon. Thank that review I I I me other Excellent. surprised emphasis shares some I so -- expert, Simon And very more was the insurance looked not in here. on missed have And insurance the much. and say if we an in by forgive because the I'm tactical at -- it may business may I I some workers' insurers. made compensation. I that if And one company I But for if this

float. exception particular we results I Holding Thank in hardening Fairfax of with that And healthy latest across certainly my increases of America And own know negative this to question continuing that shares price companies operation you workers' in said Canada. to consistently And you do underwrites in in what lines release would their their -- you in speaking business see most as cost is the an mean, are North see? don't be compensation. others they see you. that insurance And for

Simon Burton

a our key, We not not for float business intention at negative of a is that write acquire profit. is compensation some business. but the class That workers' cost. So to our largest

can't many so. or reason workers' But peer in many receiving that perspective on comment that in seem whereas others broadly less that as our or I less terms six our class workers' that a in was were compensation for view in is other you're and adequate industry. rates insurance the many course, that it in one past cases. classes or correct months on as have adequate the and fundamental inadequate not comp be Of conditions to is the any of those does improved classes is But

I well. has see made. we stand We when the we've opportunities. behind attractive And decisions particular Our portfolio underwriting write business performed

Mikel Abasolo

a lot. Thanks Excellent.

Operator

question Our Please is from ahead. follow-up Rocker. David next go a

Unidentified Analyst

of side entire income this insurance substantial very constituted? from you what investment some gain very at are give dollars is and investment business looking much. Thank that expectation you on as the also business quarter think Virtually is of the Can reasonable years the well prior ex side insurance the of earnings currently a I know, the in for Suisse Crédit and this as came us in you side. taking from you idea the reserves after

Simon Burton

guidance balance either reinsurance the we're I and book-value insurance of the taking. side risk operations taking to we investors risks the that the that additive the David, forward will of particular should company that insurance our sheet over to say provide on be should is reasons. long-term that don't and anticipate we compensate earnings What for from medium for and the we're -- our

risk. in that It's the positioned as believe adequately for that investors fact its important. I today our compensates does portfolio

of do our several we some positioning in to that were cases results our As years the some by you liabilities prior current that. what's the present to correctly is investors, assumed point But, important which think out, me more portfolio most periods, headwinds risk compelling. our not if ago, the quite than is on relate I that to company and reward

Unidentified Analyst

can the how a greater you the performance insurance, in trust investment the has indicated, performance. of is Greenlight's despite low, great give in The of quarter lost you the I've investment and improvements future? a little Your that what incremental your the of provided this Obviously, the deal at improvements earnings idea period. you reverse of can demonstrate confidence in these some own that? investment was you've very was. as during do stock group. And performance to in basically What Can half despite

Simon Burton

our year our Financial now judge, performance. and year choose for is, to as is performance that. question and period respect examine, metric you'll our you can underwriting on it's the that at look going and to development. is our That The forward underwriting loss agree I performance -- example, a you current your think take rather I of One that. to may demonstrate current Well, pure than maybe ultimately competence metrics, review of portfolio you year, activities. picture different year a including we financial financial as how course, course, prior our for opposed a of when

Unidentified Analyst

the officials company decisions? buying evaluation, this present selling Are their individual of from and could activities, make or of security own their they during own prohibited time

David Einhorn

restricted the the people this shares with Generally from are think I at time. company speaking, involved trading

Unidentified Analyst

any it Suisse have its complete long proposals idea for of you to Credit you? how will review and Do to take

David Einhorn

expect to the progress putting we a sand, have to Without line be -- this in year.

Unidentified Analyst

Thank you. Okay.

Operator

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

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

may You now disconnect.

Greenlight Capital Re (GLRE) 6 Aug 192019 Q2 Earnings call transcript