GLRE - Earnings call transcript Q3 2020 | Greenlight Capital Re, Ltd.

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Operator

Thank you for joining the Greenlight Re Conference Call for the Third Quarter of 2020 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, uncertainties and assumptions, including those enumerated in the company's Form 10-K/A for the year ended December 31, 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 differ 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. we conducting remarks, question-and-answer prepared the will a be session. After Instructions]. [Operator this Please recorded. is being note, event would I to CEO, like now Mr. Greenlight over Re's to turn the conference Simon Burton. ahead, go Please sir.

Simon Burton

you our and for morning, thank call Good today. joining

context industry. quarterly our stressful like some been discuss we and the results, has reinsurance Before what for to I'd provide market quarter another

X In terms the in activity quarter, it ways. of loss was unusual in

catastrophes, frequency including a there high of wildfires. small- medium-sized and was extreme hurricanes, natural on-land storms First, to

adding COVID-XX to positions exposure. continue in pandemic, the constantly the body unknown the of of court loss difficult is Second, a the on although ongoing plantiffs industry the The in surrounds coverage seems ultimate losses with potential pandemic duration Northern insurers' as interruption test the winter Hemisphere to incurred is mix of impact business uncertainties assured. ultimate success. related to still Further

and investor ILS having with redeploy collateralized In pleased This keeping reserves. as on to to lid in market result the seen and fairly This quarter encumbered we by an that into management that's and reinsurance In our So will risk of control reported resulting uncertainty encumbered. effectively XXX.X%. we effects and discipline a capital well fraction The cat of by years, conditions the year, significant. complicated capital are of this be I'm losses what's COVID-XX. pointing stability capital hard are ILS this capital our uncertainty. a a as pricing. new has product losses seeing combined imbalance established removed reflects underwriting loss years in With of expense new experienced signs of inflows to is X runaway and and ratio market but supply of reinsurance loss have that new is capacity, or we lost represents fatigue capital both performance and been reinsurers, being past inability loss real demand see significant raised backdrop, capital typical COVID-XX market subject rapid market. as industry we by from our with would the increasing startups assessment been only The conditions,

the levels. impact the as of is business ratio catastrophes, well of create value losses an underlying positioned XX.X% combined revert Excluding that reflects to normal to industry already shareholder underwriting

conditions we expect market our business into As shareholders. for risk attractive proposition significantly XXXX, an present to return underwriting improved increasingly our

our transactions lumpy relatively there strategic this area from of little of I investments This the can performed digital Further, clients well of say of with of overall although the you in are products contribution quarter, and business. our benefiting strategic are our as basket investments, gains in become the lockdown situations. their the through clearer financial several that conditions. benefits from Nevertheless, investor pandemic surge all was in partners investment confidence interest innovations has

growth see continue to opportunities for further new business. our We strategic and this in expect area partnerships early-stage of compelling

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

David Einhorn

positive. Longs was contributed good fund while detracted and in macro X.X%, Solasglas and Simon, everyone. third quarter. Thanks, X.X% morning, shorts returned slightly The X.X% the

Brick's backlog. detached combination in the sales operating profitability XX% mortgage for and ahead earnings reported XX% by stable. During and company of quarter, second shares shares, the strong Brick is last a increased while and seem of well as has the Chemours in coming margin. of they beat Chemours also projected high production share surge in to consensus quarter to Xx to uptick single-family a The has online record and estimates. housing rates Green spring demand sharp order week, recent returned company the in as quarter, challenged come the quarters paint and has earnings XXX Long the COVID-related X.X%. contributed of volume increase up as XXXX has the per Business picked higher to remodeling accelerating remained impact momentum due rate $X.XX low were back the given were the in expenses earnings Index biggest home shares of at third the contributed inexpensive a winners. lockdowns. is positions for Green the projects. quarter Brick wide Company Partners in S&P as returned advanced consensus quarter Partners estimates the third Green The third construction expectations. automotive have Demand Despite in

to quarters. high-quality positioned regain titanium is lost dioxide, As strong Chemours should of in the share remain low-cost market well demand global supplier coming the

detracted surge in short in in now stocks. are stock in a of The like the following It nearly in that by S&P and doubled of of a view and Tesla from driven is early is our retail universe a stock behavior surrounding the XXX Index. X-for-X we part split performance. small popping. inclusion this announcement emblematic market We quarter, story the of believe Our flows in August, stages company's potential the the investor bubble a tech other the mania

As high-flying and a at result, valuations. stocks we IPOs have trading excessive shorted a recent basket of

have a which owns book long contains with owns Air airfreight capacity like freighters, clearinghouse and people care health from such the benefited resumed a largest Holdings, freighters travel a Air and to Atlas been is have there Atlas and passenger operates And command commercial Change environment, the to ship world's largest shortage of Our do premium in as elective of that in to Healthcare, able down, businesses well Worldwide fleet positioned has medical uniquely are procedures. as this volumes ramp-up which claims goods.

to XXXX XX% X.X%. end and in approximately the portfolio result long negative the exposure was the XX% at Solasglas of X.X% in October. the returned third investment end October, for at quarter Net of the year-to-date bringing Solasglas roughly

January like to the discuss renewal underwriting over financial XXXX. performed despite points team turn a during on X, work to us Our now for third quarter losses. results. Neil market well at I'd the The is costing portfolio preparations call of X catastrophes the And hard making hard to

Neil Greenspan

Thank you, David.

Our reported was primarily The the $X.X $X.XX quarter $X.X income company ratio underwriting small $X.X book X.X% results which during contributed at during by earlier. included share, losses QX, and gains Solasglas or percentage million, fully quarter's driven the value of $XX.X. to XXX.X%. loss of of QX quarter portfolio our combined in events share quarter, million a for million points diluted the described ratio. the The per grew from ending X David that Net the combined per cat

of up as development third The quarter contracts. personnel administrative COVID-XX renew premiums the of This to increase due recognized we primarily the from of Total third of Solasglas. estimate a prior XXXX strategic were to of investment well investment general quarter benefit third and did was of were a nonrecurrence the XX% and as to Gross the was and million which losses income on in $X.X incurred primarily the Our quarter includes business XXXX. increases from result and energy lower innovations our generated also in decision change, other our to $X.X million review. for We in million specialty year as $X.X a due which quarter, XX%, by stock period. during approximately quarter. our not not of health slight $XXX workers' related the the decrease decrease representing motor as On total initiatives. during primarily compensation certain compensation prior year-to-date $X.X lines, XXXX, reported and investment down million, expenses XX% during expenses or gross a as business costs well our premiums of year income net basis, are personal net contracts from crop written million includes

During XX value an share to share. fully of of diluted book repurchased third per average we a quarter, September XXX,XXX shares of according approximately discount the our XX% at $X.XX cost per

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

Operator

[Operator Instructions].

Management. is Abasolo question from Capital Solo Mikel first The from

Mikel Abasolo

would room buybacks. The of Solasglas may, comparable, the pace if in of to discuss the I was trading the but case, pace And later that's the plenty rationale is what sale have do versus image not still fund and question and the more the confused, slow. behind clarification. or a technical of the believe is you finally, the is believe years? raised XX%, with X Very that entertain appreciate perhaps are value, more perhaps insurance the now of wondering determines I'm share I'm XX% those is fund, hedge going hedge that Second offers that mistaken quickly, closed? or venue hedge the first the Solasglas versus the I a October during I a and buying is about but but -- was you curious X% they're operation book if mirror I X.X% at one buying that fund permanently or was that I is what of accelerate dropped, could buybacks, you bit after operation for a the

Simon Burton

Mikel, it's Simon here.

And going want I'm run one. to a So this. to David by have may your one well to at add questions

the think for course, was today So the earlier consider transactions, us obligation, process our of for that point. all this it. shareholders. of that's we that we the reasons sale strategy or considering, our potentially it right not upon was our the determining the process call come conditions, in you're that an sale go-forward continue but is a only it's improving all-encompassing for review. early strategy, encompassed year, of strategic was strategic whether of a option concluded That's entirely, on partnerships, obviously and the part for that something potentially this will a of it's we at small by strategic highly even a focus the concluded best a in review the to I review future, we We our that company, transaction all changes were landscape but potential XXXX, the what of operations, the the Should company. market including company's our options announced hearing idea approach. our And that, convinced be strategic A good that

strong not risk -- Greenlight The in capital fund. that has certain the second are being and the diverge -- is highly Solasglas live case. similarities fund constraints there between also Board of the pursued, that But to between Solasglas and within always because constraints ways hedge Greenlight we asked company. question, obviously the Capital certain Capital similarities in Clearly, risk

an Capital. Greenlight assume of mirror shouldn't Solasglas that you is exact So

The third the buybacks. on

and a mispriced a we that, discounted Having have are We at deal stock. said to pleased our for there's capital. been buying be of great back to competition what severely shares consider

we're balancing those have forward. go of capital, ideas good lot our we as We obviously a for interests and

David Einhorn

Solasglas, in jump add the in so the the relatively level the to gross basis a on the lower capital Greenlight overall exposure is is and net hedge forth funds. investment low at compared example, it for in of just to than performance, me Yes, and -- about, let add relating just jump talk there, -- when you that difference me let in and

an to And there's I I until us discount. And so in there company just less is balance best into extremely stage. and prices capital we has And extent within improve. incremental a that continue sheet less run company this to to think the the at highest volumes use the of shares. core business, working And somewhat you will shares shares use big should of going buyback, down expect And the the of limitations the because the less be and the the capital. that, too to that's think capital. repurchasing wasn't these good relating capital we're by our represent And at in limited the view, shares to up our trading of relative

Mikel Abasolo

feel don't push Okay. discount opportunity you you the it have David, the now too but now to wide? that is higher like that is

David Einhorn

think there. the buybacks percentage that within volume constraints be example, wide, a and can operating too are but limitations, as for the is discount of I that there's we're

would If the you compare back the that the volumes actually you see stock we be during aggressive. quarter, what trading would I we quarter relatively of to the during bought actual think

Operator

Instructions]. next is Ocho question [indiscernible] with Investments. The [Operator

Unidentified Analyst

the level just to understand I'm return. return is, what of company financial model wondering what combined do basically help how I'm you capital gross expect think basically, to provide shareholders operate it of you at it market level. at guess outperform is and needed level term use Can can market And that to the I wondering the term return expect the longer guess excess such what ratio meaningfully like like exposure outperforms combined that or until and that that ratio you approximately the book longer you me exposure I of a the the long will shareholders be to just of But gross and you in meaningfully value.

Simon Burton

Simon it's Dris, here.

the combination investment high-quality strategy with high-quality presents of other are of years. And opportunity are returns. company in that those is where for perhaps a of theses So and our from shareholders. our stress. or seen compelling we under the of believe Clearly, we've one those has that been X inception very recent a times both And mix or the the to the marketplace reinsurance returns in there combine things certain

I'll management seen in don't We're recall participate perspective, good. earlier. investment and since on positioned Of you have Certainly, market post feel landscape. or We many time. marketplace X/XX let at exceeds looking exceptionally David us of heard well I the course, all that the comment a extensively that our They're comment They're career. to reinsurance David improving the and very in that. even conditions From opportunity

our our of we and sheet guidance very that environment. performance Of to good we feel we're into capital about our on don't provide and significantly course, improved about business. underwriting reserves ability the strength But where positioned deploy future balance the of

David Einhorn

add further. I little would a question just bit your to answer

done internal if XXXX, we next can achieve our would you plan, near are year. the we've suggesting planning we what get for As

Unidentified Analyst

return cost exceeds a Is Meaning of what that you interpreting? are that basically? capital

David Einhorn

that of stock the Yes. price. of And the high capital right I now the is given think implications cost

Unidentified Analyst

how your -- to to shareholders. I'm And David, capital comment all are you buybacks little approximately that capital. to a a share can you basically that And just Okay. ballpark by the returning best use that of use about highest that said just reconcile elaborate option and shareholders? return XX% the with trying bit. to you for use risk-free of XX% think effectively

David Einhorn

a to business. going of not the do liquidation we're Look, Yes.

we just need be advantage be there particularly should business. opportunities of, retain constraints Relating in of improving question, up trading were rapidly last Further, and So million constraints, while alluded we to light doing liquidation traded in the think have adequate relating business the looked are the capital volume there the I to last enough not on and to -- a capital as while taken approximately of percentage quarter. are that X market I conditions. asking to in we that the before, such. returns shares you're

X% repurchase. So share constraints. volume percentage trading volume approximately We're limited we were the by the of of somewhat in

quickly we'd more more or more would quickly, if to So like repurchase the sell able be people shares quickly. stock trade probably stock to more

Operator

Soorani The question Tricap Suleman from next is with Investments.

Suleman Soorani

gradually, think the as or that it Solasglas used that's Solasglas the reason I fund. aggressive that David, hedge and your for position hedge you is not remember fund, fund. mentioned I as of before, the performance your about for And same correctly, said the position to of quarter the if you're at hedge as the think amount between divergence will is take maybe that capital quarter the you you and level last taking and I

largely or was I the the So depict hedge year any Solasglas the funds the that Because fund. well insurance when insight company of when for last or on very used we expect into year to could managed happen? before capital the to position the remember, the returns strong, returns

will the time any as divergence when line reduce? to So

David Einhorn

believe that to the we try said increase I converge I completely. not amount, the quarter, Last amount would Yes.

said quarter think I or you what I So misunderstood I misstated said a ago. what

made already to we further level happen the more improvement when order the have Among XX, and in in of investment We hedge sure the occur. it will Board build that, within to things, change as in less But will and I'm for that to probably that other substantially it's until that not until the September future. company still we the need capital remain of decides substantially -- fund. less, vis-a-vis

Suleman Soorani

Sure.

and fund this should for So X%. magnitude -- Solasglas of example, like north the about the return in hedge is quarter, the of was terms for X% so expect divergence, we of

quite more a than Or going the that double Is change. we what also that's will should expect divergence. significant, So forward? it

David Einhorn

by guidelines position be which in somewhat less Brick outsized is has in the than hedge that should It the have. that. at fund. constrained the weighting particular investment one There's we Partners, Solasglas, Green that an And

to thing, other funds divergence. contributor very the underweight the that was so there a large things some was And to more Solasglas, our best-performing within and contributed it than although

Operator

question-and-answer happy any you. Group, questions, to and you of our Should he them at Inc. XXX-XXX-XXXX, Equity Prior assist concludes session. please the be to Adam direct have This follow-up will

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

You may now disconnect.

Greenlight Capital Re (GLRE) 8 Nov 202020 Q3 Earnings call transcript