10-Q 1 glre-20240331.htm 10-Q glre-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
__________________________
FORM 10-Q 
__________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024

or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to
Commission file number 001-33493
____________________________________________________________________________________
GREENLIGHT CAPITAL RE, LTD.
(Exact name of registrant as specified in its charter)
____________________________________________________________________________________
Cayman IslandsN/A
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification no.)
65 Market Street
Suite 1207, Jasmine Court
P.O. Box 31110
Camana Bay
Grand Cayman
Cayman IslandsKY1-1205
(Address of principal executive offices)(Zip code)

(205) 291-3440
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary SharesGLRENasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
Yes No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.: 
Large accelerated filer ☐         Accelerated filer ☒          Non-accelerated filer ☐          Smaller reporting company           Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) 
Yes ☐ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Ordinary Shares, $0.10 par value35,321,144
(Class)Outstanding at May 3, 2024



GREENLIGHT CAPITAL RE, LTD.
 
TABLE OF CONTENTS
 
  Page
 Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023
 Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (unaudited)
 Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2024 and 2023 (unaudited)
 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)
 Notes to the Condensed Consolidated Financial Statements (unaudited)


 
2

PART I — FINANCIAL INFORMATION

NOTE OF FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (herein referred as “Form 10-Q”) of Greenlight Capital Re, Ltd. (“Greenlight Capital Re,” “Company,” “us,” “we,” or “our”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical facts included in this report, including statements regarding estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements”. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the United States (“U.S.”) federal securities laws established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words “believe,” “project,” “predict,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are not historical facts, and are based on current expectations, estimates and projections, and various assumptions, many of which, are inherently uncertain and beyond management’s control.

Forward-looking statements contained in this Form 10-Q may include, but are not limited to, information regarding our estimates for catastrophes and weather-related losses (herein referred as “CAT losses”), measurements of potential losses in the fair market value of our investments, our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the outcome of our strategic initiatives, our expectations regarding pricing, and other market and economic conditions including inflation, our growth prospects, and valuations of the potential impact of movements in interest rates, equity securities’ prices, and foreign currency exchange rates.

Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual events or results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to:

a downgrade or withdrawal of our A.M. Best ratings;
any suspension or revocation of any of our licenses;
losses from catastrophes and other major events;
the loss of significant brokers; and
those described under “Item 1A, Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended December 31,2023, as filed with the SEC on March 5, 2024 (“2023 Form 10-K”), which is accessible on the SEC’s website at www.sec.gov.

We undertake no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events, or otherwise. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only to the dates they were made.

We intend to communicate certain events that we believe may have a material adverse impact on our operations or financial position, including property and casualty catastrophic events and material losses in our investment portfolio, in a timely manner through a public announcement. Other than as required by the Exchange Act, we do not intend to make public announcements regarding underwriting or investment events that we do not believe, based on management’s estimates and current information, will have a material adverse impact on our operations or financial position.















3


Item 1. FINANCIAL STATEMENTS 
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2024 (unaudited) and December 31, 2023
(expressed in thousands of U.S. dollars, except per share and share amounts)
 March 31, 2024December 31, 2023
Assets  
Investments 
Investment in related party investment fund, at fair value$307,138 $258,890 
Other investments72,656 73,293 
Total investments379,794 332,183 
Cash and cash equivalents61,598 51,082 
Restricted cash and cash equivalents581,208 604,648 
Reinsurance balances receivable (net of allowance for expected credit losses of 2024: $865 and 2023: $854)
693,742 619,401 
Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of 2024: $701 and 2023: $487)
44,765 25,687 
Deferred acquisition costs 84,891 79,956 
Unearned premiums ceded25,202 17,261 
Other assets5,769 5,089 
Total assets$1,876,969 $1,735,307 
Liabilities and equity 
Liabilities 
Loss and loss adjustment expense reserves$730,655 $661,554 
Unearned premium reserves348,631 306,310 
Reinsurance balances payable71,640 68,983 
Funds withheld20,796 17,289 
Other liabilities8,323 11,795 
Debt 72,466 73,281 
Total liabilities1,252,511 1,139,212 
Commitments and Contingencies (Note 15)
Shareholders' equity 
Preferred share capital (par value $0.10; none issued)
  
Ordinary share capital (par value $0.10; issued and outstanding, 35,321,144 (2023: par value $0.10; issued and outstanding, 35,336,732)
3,532 3,534 
Additional paid-in capital485,878 484,532 
Retained earnings135,048 108,029 
Total shareholders' equity624,458 596,095 
Total liabilities and equity$1,876,969 $1,735,307 
 


  The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements.


GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) 
For the three months ended March 31, 2024 and 2023
(expressed in thousands of U.S. dollars, except per share and share amounts)
Three months ended March 31
 20242023
Revenues 
Gross premiums written$217,258 $186,455 
Gross premiums ceded(23,181)(11,212)
Net premiums written194,077 175,243 
Change in net unearned premium reserves(32,541)(32,594)
Net premiums earned161,536 142,649 
Income (loss) from investment in related party investment fund (net of related party expenses - Note 3) 18,248 (3,138)
Net investment income8,143 8,378 
Foreign exchange gains (losses)(1,649)4,931 
Other income, net5,035 2,166 
Total revenues191,313 154,986 
Expenses
Net loss and loss adjustment expenses incurred109,326 96,725 
Acquisition costs41,610 41,476 
General and administrative expenses10,714 9,936 
Deposit interest expense876 132 
Interest expense1,249 776 
Total expenses163,775 149,045 
Income before income tax27,538 5,941 
Income tax expense(519)(54)
Net income$27,019 $5,887 
Earnings (loss) per share ("EPS"):
  Basic$0.79 $0.17 
  Diluted$0.78 $0.17 
Weighted average number of ordinary shares used in the determination of EPS:
  Basic34,272,230 34,059,185 
  Diluted34,653,381 38,231,607 
 










 
The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements.  
5

GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
 For the three months ended March 31, 2024 and 2023
(expressed in thousands of U.S. dollars)

Three months ended March 31
20242023
Ordinary share capital
Balance - beginning of period$3,534 $3,482 
Issue of ordinary shares, net of forfeitures(2)44 
Balance - end of period3,532 3,526 
Additional paid-in capital
Balance - beginning of period484,532 478,439 
Share-based compensation expense1,346 990 
Balance - end of period485,878 479,429 
Retained earnings
Balance - beginning of period108,029 21,199 
Net income27,019 5,887 
Balance - end of period135,048 27,086 
Total shareholders' equity$624,458 $510,041 






















The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements. 

6

GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the three months ended March 31, 2024 and 2023
(expressed in thousands of U.S. dollars) 
Three months ended March 31
 20242023
Cash flows from operating activities 
Net income $27,019 $5,887 
Adjustments to reconcile net income or loss to net cash provided by (used in) operating activities:
   Income from investments in related party investment fund(18,248)3,138 
   Net realized gain on repurchase of convertible senior notes payable (265)
   Net realized and unrealized losses (gains) on other investments413 250 
   Net realized and unrealized losses (gains) on derivatives(472) 
   Current expected credit losses (gains) recognized on reinsurance assets 225  
   Share-based compensation expense1,344 1,034 
   Accretion of debt offering costs and change in interest accruals123 (803)
   Net change in:
     Reinsurance balances receivable(74,352)(76,086)
     Loss and loss adjustment expenses recoverable(19,292)(3,688)
     Deferred acquisition costs(4,935)(2,164)
     Unearned premiums ceded(7,941)(2,630)
     Loss and loss adjustment expense reserves69,101 40,331 
     Unearned premium reserves42,321 30,069 
     Reinsurance balances payable2,657 4,114 
     Funds withheld3,507 (61)
     Other items, net(3,510)(385)
Net cash provided by (used in) operating activities17,960 (1,259)
Cash flows from investing activities
Proceeds from redemptions of investment in SILP 26,000 
Contributions to investment in SILP(30,000)(47,001)
Purchases of other investments (1,075)
Proceeds on disposal of other investments168  
Net cash provided by (used in) investing activities(29,832)(22,076)
Cash flows from financing activities
Repayment of term loans(938) 
Repurchases of convertible senior notes payable (17,085)
Net cash used in financing activities(938)(17,085)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash(114)132 
Decrease in cash, cash equivalents and restricted cash(12,924)(40,288)
Cash, cash equivalents and restricted cash at beginning of the period 655,730 706,548 
Cash, cash equivalents and restricted cash at end of the period $642,806 $666,260 
Supplementary information 
Interest paid in cash$1,724 $1,578 
Income tax paid (refund received) in cash
 21 

The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of the Condensed Consolidated Financial Statements. 
7

GREENLIGHT CAPITAL RE, LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2024
  
1. ORGANIZATION AND BASIS OF PRESENTATION

Organization
 
Greenlight Capital Re, Ltd. (“GLRE” and, together with its wholly-owned subsidiaries, the “Company”) was incorporated as an exempted company under the Companies Law of the Cayman Islands on July 13, 2004. The Company is a global specialty property and casualty reinsurer headquartered in the Cayman Islands. The ordinary shares of GLRE are listed on Nasdaq Global Select Market under the symbol “GLRE.”

Basis of Presentation

These unaudited condensed consolidated financial statements (the “financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the U.S. Securities and Exchange Commission’s (“SEC”) instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. The financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s 2023 Form 10-K. The financial statements include the accounts of GLRE and the consolidated financial statements of its wholly-owned subsidiaries and all significant intercompany transactions and balances have been eliminated on consolidation.

In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position and results of operations as at the end of and for the periods presented. The results of operations for any interim period are not necessarily indicative of the results for a full year.

Tabular dollars are in thousands, with the exception of per share amounts or otherwise noted. All amounts are reported in U.S. dollars.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current financial statements. The Company has reported separately the foreign exchange gains (losses) from “Other income” in the condensed consolidated statements of operations. This resulted in no change to the previously reported total revenues or net income. The Company has also included the foreign exchange gains (losses) as part of the net change in working capital in the condensed consolidated statements of cash flows. Further, the Company combined “Other assets, excluding depreciation” and “Other liabilities” and presented the sum as “Other items, net” in the condensed consolidated statements of cash flows. These changes in presentation in the condensed consolidated statements of cash flows have resulted in no change to the previously reported net cash provided by (used in) operating activities.

2. SIGNIFICANT ACCOUNTING POLICIES
 
There have been no material changes to the Company’s significant accounting policies as described in its 2023 Form 10-K.

Recently Issued Accounting Standards Not Yet Adopted

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures. The new ASU requires incremental disclosures related to a public entity’s reportable segments but does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. This new guidance is effective for the Company’s 2024 year-end financial statements, and should be adopted retrospectively unless impracticable. Early adoption is permitted.

8

On December 14, 2023, FASB issued ASU 2023-09, Income Taxes Topic (740) - Improvements to Income Tax Disclosures. The new ASU provides more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Early adoption is permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. This ASU is effective for the Company’s 2024 year-end financial statements.

As the above ASUs relate solely to financial statement disclosures, the adoption of these ASUs will not impact the Company’s financial condition, results of operations, or cash flows.


3. INVESTMENT IN RELATED PARTY INVESTMENT FUND

There has been no change to the Company’s agreement with Solasglas Investments, LP (“SILP” or “Solasglas”) as described in its 2023 Form 10-K.

The Company’s maximum exposure to loss relating to SILP is limited to GLRE's share of Partners’ capital in SILP. At March 31, 2024, GLRE'’s share of Partners’ capital in SILP was $307.1 million (December 31, 2023: $258.9 million), representing 74.2% (December 31, 2023: 72.7%) of SILP’s total net assets. DME II held the remaining 25.8% (December 31, 2023: 27.3%) of SILP’s total net assets.

The Company’s share of the net increase in Partner’s capital for the three months ended March 31, 2024 was $18.2 million (three months ended March 31, 2023: decrease of $3.1 million), as shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s condensed consolidated statements of operations.

The summarized financial statements of SILP are presented below.

Summarized Statements of Financial Condition of Solasglas Investments, LP
March 31, 2024December 31, 2023
Assets
Investments, at fair value$446,433 $453,358 
Derivative contracts, at fair value15,609 11,167 
Due from brokers152,611 121,754 
Cash and cash equivalents881  
Interest and dividends receivable224 1,143 
Total assets615,758 587,422 
Liabilities and partners’ capital
Liabilities
Investments sold short, at fair value(190,353)(197,571)
Derivative contracts, at fair value(9,896)(12,917)
Capital withdrawals payable(390)(1,000)
Due to brokers (17,398)
Interest and dividends payable(1,234)(2,315)
Accrued expenses and other liabilities(103)(247)
Total liabilities(201,976)(231,448)
Partners' capital$413,782 $355,974 
GLRE’s share of Partners' capital
$307,138 $258,890 

9

Summarized Statements of Operations of Solasglas Investments, LP
Three months ended March 31
20242023
Investment income
Dividend income (net of withholding taxes)$831 $627 
Interest income4,352 1,816 
Total Investment income5,183 2,443 
Expenses
Management fee(1,323)(1,068)
Interest(1,334)(1,428)
Dividends(704)(419)
Professional fees and other(324)(282)
Total expenses(3,685)(3,197)
Net investment income (loss)1,498 (754)
Realized and change in unrealized gains (losses)
Net realized gain (loss) 42,945 (1,760)
Net change in unrealized appreciation (depreciation)(16,245)(1,033)
Net gain (loss) on investment transactions26,700 (2,793)
Net increase (decrease) in Partners' capital (1)
$28,198 $(3,547)
GLRE’s share of the increase (decrease) in Partners' capital
$18,248 $(3,138)

(1) The net increase in Partners’ capital is net of management fees and performance allocation presented below:

Three months ended March 31
20242023
Management fees$1,323 $1,068 
Performance allocation2,028  
Total$3,351 $1,068 


4. OTHER INVESTMENTS  
 
At March 31, 2024, the breakdown of the Company’s other investments was as follows:
CostUnrealized
gains
Unrealized
losses
Accrued interestFair value / carrying value
Private investments and unlisted equities $26,970 $49,844 $(5,237)$ $71,577 
Debt and convertible debt securities2,499  (1,510)90 1,079 
Total other investments$29,469 $49,844 $(6,747)$90 $72,656 

10


At December 31, 2023, the breakdown of the Company’s other investments was as follows:

CostUnrealized
gains
Unrealized
losses
Accrued interestFair value / carrying value
Private investments and unlisted equities$28,470 $49,424 $(6,737)$ $71,157 
Debt and convertible debt securities2,499  (499)136 2,136 
Total other investments$30,969 $49,424 $(7,236)$136 $73,293 

The following table presents the carrying values of the private investments and unlisted equity securities carried under the measurement alternative at March 31, 2024 and 2023, and the related adjustments recorded during the periods then ended.
Three months ended March 31
20242023
Carrying value (1)
$71,577 $62,684 
Upward carrying value changes (2)
$419 $ 
Downward carrying value changes and impairment (3)
$(114)$(250)

(1) The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes.
(2) The cumulative upward carrying value changes from inception to March 31, 2024, totaled $50.8 million.
(3) The cumulative downward carrying value changes and impairments from inception to March 31, 2024, totaled $2.8 million.


Net investment income

The following table summarizes the change in unrealized gains (losses) and the realized gains (losses) for the Company’s other investments, which are included in “Net investment income” in the condensed consolidated statements of operations (see Note 13):
Three months ended March 31
20242023
Gross realized gains$ $ 
Gross realized losses(1,332)(800)
Net realized gains (losses)$(1,332)$(800)
Change in unrealized gains919 550 
Net realized and unrealized gains (losses) on other investments$(413)$(250)

During the three months ended March 31, 2024, the Company collected $0.2 million of liquidation proceeds relating to a private investment which was previously fully impaired, resulting in a gross realized loss of $1.3 million offset by a corresponding reduction in unrealized losses of $1.5 million.

During the three months ended March 31, 2023, the Company realized a loss of $0.8 million, and a corresponding reversal of unrealized loss relating to an investment which was previously fully impaired at December 31, 2022, resulting in no impact to the Company’s net income (loss) for the quarter.


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5. RESTRICTED CASH AND CASH EQUIVALENTS

The following table shows the breakdown of the Company’s restricted cash and cash equivalents, along with a reconciliation of the total cash, cash equivalents, and restricted cash reported in the condensed consolidated statements of cash flows:
 March 31, 2024December 31, 2023
Restricted cash and cash equivalents:
  Cash securing trust accounts$281,951 $300,152 
  Cash securing letters of credit issued286,381 291,456 
  Cash securing Loan Facility10,000 10,000 
  Other2,876 3,040 
Total restricted cash and cash equivalents581,208 604,648 
Cash and cash equivalents61,598 51,082 
Total cash, cash equivalents, and restricted cash$642,806 $655,730 

Where the Company operates as a non-admitted carrier in certain foreign jurisdictions, regulatory trust accounts and letters of credit are issued to cedents. Additionally, the Company has provided cash collateral for the Loan Facility (see Note 9).


6. FAIR VALUE MEASUREMENTS

Assets measured at fair value on a nonrecurring basis

At March 31, 2024 and December 31, 2023, the Company held $61.7 million and $61.3 million, respectively, of private investments and unlisted equities measured at fair value on a nonrecurring basis. At March 31, 2024, the Company held $9.9 million (2023: $9.9 million) of private investments and unlisted equities measured at cost. The Company classifies these investments as Level 3 within the fair value hierarchy.

The following table summarizes the periods between the most recent fair value measurement dates and March 31, 2024, for the private and unlisted equities measured at fair value on a nonrecurring basis:

Less than 6 months6 to 12 monthsOver 1 yearTotal
Fair values measured on a nonrecurring basis$10,433 $18,552 $32,724 $61,709 

Assets measured at fair value on a recurring basis

Derivative financial instruments

The Company uses interest rate swaps in connection with its risk management activities to hedge 50% of the interest rate risk relating to the outstanding Term Loans (see Note 9). The interest rate swaps are carried at fair value and are determined using a market approach valuation technique based on significant observable market inputs from third-party pricing vendors. Accordingly, the interest rates swaps are classified as Level 2 within the fair value hierarchy. These derivative instruments are not designated as accounting hedges under U.S. GAAP.

For the three months ended March 31, 2024, the Company recognized a reduction in unrealized loss for the above derivatives of $0.5 million to $0.1 million, which is included in other liabilities in the condensed consolidated balance sheets, in interest expense in the condensed consolidated statements of operations, and in “net change in unrealized gains and losses on investments and derivatives” in the condensed consolidated statements of cash flows.





12

Financial Instruments Disclosed, But Not Carried, at Fair Value

At March 31, 2024, the carrying value of debt and convertible debt securities within “Other Investments” (see Note 4) and the Term Loans approximates their fair values. The Company classifies these financial instruments as Level 2 within the fair value hierarchy.


7. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

The Company’s loss and loss adjustment expense (“LAE”) reserves were composed of the following:
March 31, 2024December 31, 2023
Case reserves$192,063 $189,050 
IBNR538,592 472,504 
Total$730,655 $661,554 

Reserve Roll-forward

The following provides a summary of changes in outstanding loss and LAE reserves for all lines of business:
ConsolidatedThree months ended March 31
20242023
Gross balance at January 1$661,554 $555,468 
Less: Losses recoverable(25,687)(13,239)
Net balance at January 1635,867 542,229 
Incurred losses related to:  
Current year103,925 84,687 
Prior years5,401 12,038 
Total incurred109,326 96,725 
Paid losses related to:  
Current year(3,525)(5,546)
Prior years(53,343)(57,158)
Total paid(56,868)(62,704)
Foreign currency revaluation(2,435)2,622 
Net balance at March 31685,890 578,872 
Add: Losses recoverable (see Note 8)
44,765 16,927 
Gross balance at March 31$730,655 $595,799 

Estimates for Significant Catastrophe Events

At March 31, 2024, the Company’s net reserves for losses and loss expenses include estimated amounts for several catastrophe and weather-related events (“CAT loss”). The magnitude and volume of losses arising from these events is inherently uncertain and, consequently, actual losses for these events may ultimately differ, potentially materially, from current estimates.

During the three months ended March 31, 2024, the Company recognized CAT loss, net of reinsurance, of $12.4 million for current year CAT loss events, driven mainly by the Baltimore bridge collapse and satellite failures. Additionally, the Company incurred $4.9 million of net adverse prior year CAT loss development relating primarily to a Mexican state-owned oil platform fire (2023 underwriting year), Hurricane Otis (2023 underwriting year) and homeowners’ property (mostly 2022 underwriting year).

During the three months ended March 31, 2023, the Company recognized CAT loss, net of reinsurance, of $6.2 million for current year CAT loss events, driven mainly by the Turkey earthquake, the New Zealand Cyclone Gabrielle and the U.S.
13

convective storms that occurred during the quarter, coupled with adverse prior year CAT development of $4.1 million relating to the 2022 Winter Storm Elliott.


Prior Year Reserve Development

During the three months ended March 31, 2024, the Company experienced $5.4 million in net adverse development on prior year loss and LAE reserves. This was comprised of $10.5 million of reserve strengthening predominantly for the above prior year CAT loss events, coupled with additional losses reported on general liability contracts (mostly 2015-2017 underwriting years) due to current economic and social inflation trends. The reserve increases were partially offset by $5.1 million favorable loss development predominantly from FAL and other specialty business (2022 and 2023 underwriting years).

During the three months ended March 31, 2023, the Company experienced $12.0 million in net adverse development on prior year loss and LAE reserves. This was comprised of $13.9 million of reserve strengthening on casualty contracts due to current economic and social inflation trends (mostly 2019 and 2021 underwriting years), as well as on homeowners’ business primary due to the deterioration in the CAT loss estimate relating to Winter Storm Elliott (2022 underwriting year). This was partially offset by $1.9 million better than expected loss emergence for other lines of business (mostly 2021 and 2022 underwriting years).


8. RETROCESSION
 
From time to time, the Company purchases retrocessional coverage for one or more of the following reasons: to manage its overall exposure, reduce its net liability on individual risks, obtain additional underwriting capacity, and balance its underwriting portfolio. The Company records loss and loss adjustment expenses recoverable from retrocessionaires as assets.

The following table provides a breakdown of ceded reinsurance:
Three months ended March 31
 20242023
Gross ceded premiums$23,181 $11,212 
Earned ceded premiums$15,242 $8,581 
Loss and loss adjustment expenses ceded$23,076 $6,171 

Retrocession contracts do not relieve the Company from its obligations to its cedents. Failure of retrocessionaires to honor their obligations could result in losses to the Company. The following table shows a breakdown of losses recoverable on a gross and net of collateral basis:

March 31, 2024December 31, 2023
 
Gross
Net of Collateral(1)
Gross
Net of Collateral(1)
A- or better by A.M. Best
$28,232 $28,232 $8,767 $8,767 
Not rated
17,234 762 17,407 2,432 
Total before provision
45,466 $28,994 $26,174 $11,199 
Provision for credit losses
(701)(487)
Total loss and loss adjustment expenses recoverable, net
$44,765 $25,687 
(1) Collateral is in the form of cash, letters of credit, funds withheld, and/or cash collateral held in trust accounts. This excludes any excess collateral in order to disclose the aggregate net exposure for each retrocessionaire.
At March 31, 2024, we had 2 reinsurers (December 31, 2023: 3) that accounted for 10% or more of the total loss and loss adjustment expenses recoverable, net, for an aggregate gross amount of $14.7 million (December 31, 2023: $20.4 million).

14

9. DEBT AND CREDIT FACILITIES

Debt Obligations

The following table summarizes the Company’s outstanding debt obligations.
March 31, 2024December 31, 2023
Term loans
$73,125 $74,062 
Accrued interest payable47  
Less: deferred financing costs
(706)(781)
Total debt$72,466 $73,281 

Credit Facilities

At March 31, 2024, the Company had the following letter of credit (“LOC”) facilities:
Capacity
LOCs issued
Termination Date
Citibank Europe plc ("Citi LOC")1
$289,000 $247,174 August 20, 2024
CIBC Bank USA ("CIBC LOC")
200,000 39,163 December 21, 2024
 $489,000 $286,337 
1) Includes $14 million of uncommitted capacity.
The above LOCs issued are cash collateralized (see Note 5). The LOC facilities are subject to various customary affirmative, negative and financial covenants. At March 31, 2024, the Company was in compliance with all LOC facilities covenants.
On April 12, 2024, the Company received written notice from Citibank Europe plc (“Citi”) of its decision to terminate the $275 million committed capacity under the Citi LOC agreement, with an effective date of August 20, 2024. However, Citi informed the Company that it intends to continue providing the Citi LOC on an uncommitted basis for the foreseeable future following the termination date.

10. SHARE CAPITAL

Ordinary Shares

The following table is a summary of changes in ordinary shares issued and outstanding for the three months ended March 31:
 20242023
OrdinaryOrdinaryClass AClass B
Balance – beginning of period35,336,732  28,569,346 6,254,715 
Issue of shares, net of forfeitures(15,588) 438,617  
Balance – end of period35,321,144  29,007,963 6,254,715 

The Company’s authorized share capital is 125,000,000 ordinary shares, par value of $0.10 per share.

On July 25, 2023, at the Company’s Annual General Meeting the shareholders approved the re-designation of Class B ordinary shares as Class A ordinary shares, and then reclassified Class A ordinary shares as “ordinary shares”, resulting in the elimination of the dual-class share structure.

At March 31, 2024, the Company has an effective Form S-3 registration statement on file with the SEC for an aggregate principal amount of $200.0 million in securities.

Share Repurchase Plan

On May 3, 2024, the Board of Directors re-approved the share repurchase plan, until June 30, 2025, authorizing the Company to repurchase up to $25.0 million of ordinary shares or securities convertible into ordinary shares in the open market,
15

through privately negotiated transactions or Rule 10b5-1 stock trading plans. Any shares repurchased are canceled immediately upon repurchase. For the three months ended March 31, 2024 and 2023, there was no repurchase of ordinary shares.

Preferred Shares

The Company’s authorized share capital also consists of 50,000,000 preference shares with a par value of $0.10 each. At March 31, 2024, the Company has no issued and outstanding preferred shares.

11. SHARE-BASED COMPENSATION
 
Refer to Note 11 of the Company’s audited consolidated financial statements of its 2023 Form 10-K for a summary of the Company’s 2023 Incentive Plan, including the definition of performance-based and service-based stock awards.

Employee and Director Restricted Shares

The following table summarizes the activity for unvested outstanding restricted share awards (“RSs”) during the three months ended March 31, 2024 and 2023:

Performance Restricted SharesService Restricted Shares
 Number of
non-vested
restricted
 shares
Weighted
 average
grant date
fair value
Number of
non-vested
restricted
 shares
Weighted
 average
grant date
fair value
Balance at December 31, 2022794,362 $7.62 832,896 $7.76 
Granted357,766 9.85 152,001 9.85 
Vested  (256,243)6.75 
Forfeited(99,428)9.62 (49,417)8.64 
Balance at March 31, 20231,052,700 $8.19 679,237 $8.54 
Balance at December 31, 20231,042,688 $9.94 419,604 $9.18 
Granted    
Vested  (217,522)8.78 
Forfeited(89,945)10.84   
Balance at March 31, 2024952,743 $9.86 202,082 $9.61 

At March 31, 2024, 2,914,198 (December 31, 2023: 3,296,771) ordinary shares remained available for future issuance under the Company’s 2023 Incentive Plan.

There was no grant of RSs during the three months ended March 31, 2024 (2023: 509,767). For the three months ended March 31, 2024, the total fair value of Service RSs vested was $1.9 million (2023: $1.7 million).

16

Employee Restricted Stock Units

The following table summarizes the activity for unvested outstanding restricted stock units (“RSUs”) during the three months ended March 31, 2024 and 2023:
Performance
Service
 Number of
non-vested
RSUs
Weighted
 average
grant date
fair value
Number of
non-vested
RSUs
Weighted
 average
grant date
fair value
Balance at December 31, 2022105,008 $6.82 172,952 $7.58 
Granted71,121 9.85 42,811 9.85 
Vested  (77,695)6.74 
Forfeited  (1,788)7.82 
Balance at March 31, 2023176,129 $8.04 136,280 $8.76 
Balance at December 31, 2023154,445 $8.03 110,425 $8.78 
Granted258,148 11.85 124,425 11.85 
Vested  (74,357)8.84 
Forfeited    
Balance at March 31, 2024412,593 $10.42 160,493 $11.14 

For the awards granted during the three months ended March 31, 2024, the Service RSUs vest evenly over three years on January 1, subject to the grantee’s continued service with the Company. If performance goals are achieved, the Performance RSUs will cliff vest at the end of a three-year performance period within a range of 50% and 200% of the awarded Performance RSUs, with a target of 100%.

For the three months ended March 31, 2024, the total fair value of Service RSUs vested was $0.7 million (2023: $0.5 million).

Employee and Director Stock Options

During the three months ended March 31, 2024, 250,000 ordinary share purchase options were granted to the Company’s CEO, pursuant to his employment contract. These options vest 50,000 annually and expire in 10 years from the grant date. The grant date fair value of these options was $4.31 per share, based on the Black-Scholes option pricing model. The following inputs were used in this pricing model:
Expected volatility
36.4 %
Expected term (in years)
5
Expected dividend yield
 %
Risk-free interest rate
3.9 %
Stock price at grant date
$11.20 

Stock Compensation Expense

For the three months ended March 31, 2024 and 2023, the Company recorded $1.3 million and $1.0 million of total stock compensation expense (net of forfeitures), respectively. The stock compensation expense is included in “General and administrative expenses” in the condensed consolidated statements of operations. Forfeiture recoveries were immaterial for both periods.





17




12. EARNINGS PER SHARE

The following table reconciles net income and weighted average shares used in computing basic and diluted EPS for the three months ended March 31, 2024 and 2023:
 Three months ended March 31
 20242023
Numerator for EPS
Net income - basic$27,019 $5,887 
Add: interest on convertible notes 776 
Less: gain on repurchase of convertible notes
 (265)
Net income - diluted
$27,019 $6,398 
Denominator for EPS
Weighted average shares outstanding - basic34,272,230 34,059,185 
Effect of dilutive employee and director share-based awards381,151 341,263 
Shares potentially issuable in connection with convertible notes  3,831,159 
Weighted average shares outstanding - diluted34,653,381 38,231,607 
Anti-dilutive stock options outstanding902,140 690,337 
EPS:
Basic$0.79 $0.17 
Diluted$0.78 $0.17 


13. NET INVESTMENT INCOME

The following table provides a breakdown of net investment income:
Three months ended March 31
 20242023
Interest and dividend income, net of withholding taxes and other expenses$8,556 $8,628 
Net realized and unrealized gains on other investments (see Note 4)(413)(250)
Net investment-related income8,143 8,378 
Share of Solasglas' net income (see Note 3)18,248 (3,138)
Total investment income$26,391 $5,240 


14. RELATED PARTY TRANSACTIONS 

Investment Advisory Agreement
 
There has been no change to the Company’s agreement with SILP as described in its 2023 Form 10-K. Refer to Note 3 for a breakdown of management fees and performance fees for the three months ended March 31, 2024 and 2023

18

Green Brick Partners, Inc.

David Einhorn also serves as the Chairman of the Board of Directors of Green Brick Partners, Inc. (“GRBK”), a publicly-traded company. At March 31, 2024, SILP, along with certain affiliates of DME Advisors, collectively owned 25.2% of the issued and outstanding common shares of GRBK. Under applicable securities laws, DME Advisors may sometimes be limited in its ability to trade GRBK shares held in SILP. At March 31, 2024, SILP held 1.8 million shares of GRBK.

Service Agreement
 
The Company has entered into a service agreement with DME Advisors, pursuant to which DME Advisors provides certain investor relations services to the Company for compensation of five thousand dollars per month (plus expenses). The agreement automatically renews annually until terminated by either the Company or DME Advisors for any reason with 30 days prior written notice to the other party. 

Collateral Assets Investment Management Agreement

Effective January 1, 2019, the Company (and its subsidiaries) entered into a collateral assets investment management agreement (the “CMA”) with DME Advisors, pursuant to which DME Advisors manages certain assets of the Company that are not subject to the SILP LPA and are held by the Company to provide collateral required by the cedents in the form of trust accounts and letters of credit. In accordance with the CMA, DME Advisors receives no fees and is required to comply with the collateral investment guidelines. The CMA can be terminated by any of the parties upon 30 days’ prior written notice to the other parties.


15. COMMITMENTS AND CONTINGENCIES 
 
a) Concentration of Credit Risk

Cash and cash equivalents

The Company monitors its concentration of credit risk with financial institutions and limits acceptable counterparties based on current rating, outlook and other relevant factors.

Investments

The Company’s credit risk exposure to private debt and convertible debt securities within its “Other investments” are immaterial (see Note 4).
Reinsurance balances receivable, net

The following table shows the breakdown of reinsurance balances receivable:

March 31, 2024December 31, 2023
Amount
%
Amount
%
Premiums receivable
$241,910 34.9 %$186,940 30.2 %
Funds withheld:
  Funds held by cedants
48,148 7.0 %50,075 8.1 %
  Premiums held by Lloyds' syndicates
293,533 42.3 %264,278 42.7 %
  Funds at Lloyd’s
107,681 15.5 %115,772 18.6 %
Profit commission receivable
3,060 0.4 %2,302 0.4 %
Deposit assets
275  %888 0.1 %
Total before provision
694,607 100.1 %620,255 100.1 %
Provision for expected credit losses
(865)(0.1)%(854)(0.1)%
Reinsurance balances receivable, net
$693,742 100.0 %$619,401 100.0 %
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The Company has posted deposits at Lloyd’s to support underwriting capacity for certain syndicates, including Syndicate 3456. Lloyd’s has a credit rating of “A” (Excellent) from A.M. Best.

Premiums receivable includes a significant portion of estimated premiums not yet due. Brokers and other intermediaries are responsible for collecting premiums from customers on the Company’s behalf. The Company monitors its concentration of credit risks from brokers. The diversity in the Company’s client base limits credit risk associated with premiums receivable and funds (premiums) held by cedents. Further, under the reinsurance contracts the Company has contractual rights to offset premium balances receivable and funds held by cedants against corresponding payments for losses and loss expenses.

Loss and loss adjustment expenses recoverable, net

The Company regularly evaluates its net credit exposure to the retrocessionaires and their abilities to honor their respective obligations. See Note 8 for analysis of concentration of credit risk relating to retrocessionaires.

b) Lease Obligations

There has been no material change to the Company’s operating lease agreements as described in its 2023 Form 10-K.

c) Litigation

From time to time, in the ordinary course of business, the Company may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation. The outcomes of these procedures determine the rights and obligations under the Company’s reinsurance contracts and other contractual agreements. In some disputes, the Company may seek to enforce its rights under an agreement or collect funds owed. In other matters, the Company may resist attempts by others to collect funds or enforce alleged rights. While the Company cannot predict the outcome of legal disputes with certainty, the Company does not believe that any existing dispute, when finally resolved, will have a material adverse effect on the Company’s business, financial condition, or operating results.
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16. SEGMENT REPORTING
 
The Company has one operating segment: Property & Casualty Reinsurance.

The following tables provide a breakdown of the Company’s gross premiums written by line and class of business, and by geographic area of risks insured for the periods indicated:

Gross Premiums Written by Line of Business
  Three months ended March 31
2024
2023 (1)
Property
Commercial$18,166 8.4 %$14,691 7.9 %
Motor62  232 0.1 
Personal6,948 3.2 15,637 8.4 
Total Property25,176 11.6 30,560 16.4 
Casualty
General Liability21,657 10.0 20,559 11.0 
Motor Liability6,018 2.8 5,599 3.0 
Professional Liability567 0.3 3,647 2.0 
Workers' Compensation3,420 1.6 3,159 1.7 
Multi-line 75,127 34.5 54,160 29.0 
Total Casualty106,789 49.2 87,124 46.7 
Other
Accident & Health931 0.4 2,476 1.3 
Financial20,199 9.3 22,497 12.1 
Marine19,563 9.0 12,140 6.5 
Other Specialty44,600 20.5 31,658 17.0 
Total Other85,293 39.2 68,771 36.9 
$217,258 100.0 %$186,455 100.0 %
(1) During the three months ended June 30, 2023, the Company reclassified certain reinsurance contracts within Property, Casualty and Other resulting in a presentation change to the previously reported gross premiums written for the three months ended March 31, 2023, to conform with the revised presentation. This resulted in reclassifying $8.1 million from Casualty (mostly multi-line class), and $7.9 million to Other (mostly marine and other specialty classes) and $0.2 million to Property for the three months ended March 31, 2023.
Gross Premiums Written by Geographic Area of Risks Insured
 Three months ended March 31
20242023
U.S. and Caribbean$57,374 26.4 %$69,852 37.5 %
Worldwide (1)
144,309 66.4 106,262 57.0 
Europe
4,488 2.1 3,427 1.8 
Asia
11,087 5.1 6,914 3.7 
$217,258 100.0 %$186,455 100.0 %
(1) “Worldwide” is composed of contracts that reinsure risks in more than one geographic area and may include risks in the U.S. 



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Item 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
References to “we,” “us,” “our,” “our company,” or “the Company” refer to Greenlight Capital Re, Ltd. (“GLRE”) and its wholly-owned subsidiaries unless the context dictates otherwise. See Item 1, Note 1 of the financial statements for list of our wholly-owned subsidiaries.
 
The following discussion should be read in conjunction with the audited consolidated financial statements and accompanying notes, which appear in our 2023 Form 10-K.

The following is management’s discussion and analysis (“MD&A”) of our results of operations for the three months ended March 31, 2024 and 2023 and the Company’s financial condition at March 31, 2024 and December 31, 2023 (herein referred as “Q1 2024 Financials”).
  
All amounts are reported in U.S. dollars, unless otherwise noted. Tabular dollars are presented in thousands, with the exception of per share amounts or as otherwise noted.

Page

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Overview

Business Overview

We are a global specialty property and casualty reinsurer headquartered in the Cayman Islands, with an underwriting and investment strategy that we believe differentiates us from most of our competitors. Our goal is to build long-term shareholder value by providing risk management solutions to the insurance, reinsurance, and other risk marketplaces.

We earned net income of $27.0 million for the three months ended March 31, 2024, an increase of $21.1 million, or 359% over the same period in the prior year, principally due to stronger performance from our investment in SILP and to a lesser extent improved underwriting performance despite higher CAT losses.

The following is a summary of our financial performance for the three months ended March 31, 2024, compared to the same period in 2023:
Gross premiums written was $217.3 million, an increase of 16.5%;
Net premiums earned was $161.5 million, an increase of 13.2%;
Net underwriting income (1) was $3.4 million, compared to $0.4 million;
Total investment income was $26.4 million, an increase of 403.6% (including 5.2% net return from our investment in SILP, compared to a loss of 1.1%);
Diluted EPS was $0.78, compared to $0.17; and
Fully diluted book value per share(1) was $17.39, an increase of 3.9%.

(1) See “Key Financial Measures and Non-GAAP Measures” section of this MD&A.


Outlook and Trends

Further to increasing competition in the market at the January 1, 2024 renewal season, we have continued to see higher levels of competition in the market in most classes of business throughout the first quarter. Most notably at the April 1 renewals, we observed an increase in capacity related to property catastrophe and specialty classes. Specific to Japanese property renewals, the pricing was impacted by the devaluation of the Japanese Yen over the trailing 12 months. We have seen market conditions stabilize relative to prior year, but continue to view the property and specialty market as attractive.

Market headline catastrophic events occurring in the first quarter of 2024 include the January 1 Noto Peninsula earthquake in Japan and the March 26 collapse of the Francis Scott Key bridge in Baltimore, Maryland. The Japan earthquake event is anticipated to result in minimal losses ceded to the reinsurance market, and market conditions at the April 1 renewal reflected this, with risk adjusted rates modestly down and little evidence of supply constraints. Conversely, market sources are indicating that the Baltimore bridge collapse might be among the largest-ever Marine industry losses. As a result we expect the Marine & Energy reinsurance market to continue experiencing favorable pricing conditions.



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Key Financial Measures and Non-GAAP Measures

There have been no changes to our key financial measures, including non-GAAP financial measures, as described in the MD&A of our 2023 Form 10-K.

Fully Diluted Book Value Per Share

The following table presents a reconciliation of the fully diluted book value per share to basic book value per share (the most directly comparable U.S. GAAP financial measure):
March 31, 2024December 31, 2023September 30, 2023June 30, 2023March 31, 2023
Numerator for basic and fully diluted book value per share: 
Total equity as reported under U.S. GAAP$624,458 $596,095 $575,865 $561,121 $510,041 
Denominator for basic and fully diluted book value per share:
Ordinary shares issued and outstanding as reported and denominator for basic book value per share35,321,14435,336,73235,337,40735,272,01335,262,678
Add: In-the-money stock options (1) and all outstanding RSUs
585,334264,870312,409312,409312,409
Denominator for fully diluted book value per share 35,906,47835,601,60235,649,81635,584,42235,575,087
Basic book value per share$17.68 $16.87 $16.30 $15.91 $14.46 
Increase in basic book value per share ($)
$0.81 $0.57 $0.39 $1.45 $0.01 
Increase in basic book value per share (%)
4.8 %3.5 %2.5 %10.0 %0.1 %
Fully diluted book value per share$17.39 $16.74 $16.15 $15.77 $14.34 
Increase in fully diluted book value per share ($)
$0.65 $0.59 $0.38 $1.43 $0.01 
Increase in fully diluted book value per share (%)
3.9 %3.7 %2.4 %10.0 %0.1 %
(1) Assuming net exercise by the grantee.

The above comparative prior quarters have been restated to conform with the revised calculation for basic and fully diluted book value per share as described in the MD&A of our 2023 Form 10-K.
















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Net Underwriting Income (Loss)

The reconciliations of net underwriting income (loss) to income (loss) before income taxes (the most directly comparable U.S. GAAP financial measure) on a consolidated basis are shown below:
Three months ended March 31
20242023
Income before income tax$27,538 $5,941 
Add (subtract):
Total investment income(26,391)(5,240)
Foreign exchange losses (gains)1,649 (4,931)
Other non-underwriting income(5,035)(2,166)
Corporate expenses4,375 5,997 
Interest expense1,249 776 
Net underwriting income$3,385 $377 

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Consolidated Results of Operations

The table below summarizes our consolidated operating results for the three months ended March 31, 2024 and 2023:
20242023
Underwriting revenue
Gross premiums written$217,258 $186,455 
Gross premiums ceded(23,181)(11,212)
Net premiums written194,077 175,243 
Change in net unearned premium reserves(32,541)(32,594)
Net premiums earned$161,536 $142,649 
Underwriting related expenses
Net loss and loss adjustment expenses incurred:
Current year$103,925 $84,687 
Prior year (1)
5,401 12,038 
Net loss and loss adjustment expenses incurred109,326 96,725 
Acquisition costs41,610 41,476 
Underwriting expenses6,339 3,939 
Deposit interest expense876 132 
Net underwriting income (2)
$3,385 $377 
Income (loss) from investment in Solasglas$18,248 $(3,138)
Net investment income8,143 8,378 
Total investment income
$26,391 $5,240 
Corporate expenses$4,375 $5,997 
Foreign exchange losses (gains)
1,649 (4,931)
Other income, net(5,035)(2,166)
Interest expense1,249 776 
Income tax expense519 54 
Net income$27,019 $5,887 
Earnings per share:
  Basic$0.79 $0.17 
  Diluted$0.78 $0.17 
Underwriting ratios:
Loss ratio - current year64.4 %59.4 %
Loss ratio - prior year3.3 %8.4 %
Loss ratio67.7 %67.8 %
Acquisition cost ratio25.8 %29.1 %
Composite ratio93.5 %96.9 %
Underwriting expense ratio4.5 %2.9 %
Combined ratio98.0 %99.8 %

1 The net financial impacts associated with changes in the estimate of losses incurred in prior years, which incorporate earned reinstatement premiums assumed and ceded, adjustments to assumed and ceded acquisition costs, and deposit interest expense, were a loss of $5.4 million and $12.0 million for the three months ended March 31, 2024 and 2023, respectively.

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2 Net underwriting income (loss) is a non-GAAP financial measure. See “ Key Financial Measures and Non-GAAP Measures” above for discussion and reconciliation of non-GAAP financial measures.


The following provides further details on the significant variances for the first quarter 2024 (“Q1 2024”) compared to same quarter in 2023 (“Q1 2023”).

Overview

For the three months ended March 31, 2024, the fully diluted book value per share increased by $0.65 per share, or 3.9%, to $17.39 per share from $16.74 per share at December 31, 2023. For the three months ended March 31, 2024, basic book value per share increased by $0.81 per share, or 4.8%, to $17.68 per share from $16.87 per share at December 31, 2023.

For the three months ended March 31, 2024, our net income was $27.0 million, compared to net income of $5.9 million reported for the equivalent 2023 period.

The developments that most significantly affected our financial performance during Q1 2024, compared to the equivalent 2023 period, are summarized below:

Underwriting income: Increased by $3.0 million primarily driven by 1.8 percentage points improvement in our combined ratio due to lower adverse prior year loss development and acquisition costs, offset partially by an increase in underwriting costs. Current year CAT losses contributed 7.7% to our combined ratio, compared to 4.3% in Q1 2023. For further information on CAT losses and prior year loss development, refer to Note 7 - Loss and Loss Adjustment Expense Reserves of the Q1 2024 Financials.
Investment income: Increased by $21.2 million primarily driven by stronger results from SILP. Our investment in SILP reported a gain of $18.2 million during Q1 2024, compared to a loss of $3.1 million during the equivalent period in 2023. SILP generated a net return of 5.2% for Q1 2024.
Corporate expense: Decreased by $1.6 million mainly due to non-recurring severance costs included in Q1 2023 and lower outside legal costs following the hiring of our new General Counsel in April 2023.
Foreign exchange gains (losses): $1.6 million foreign exchange losses for Q1 2024, compared to $4.9 million foreign exchange gains in Q1 2023, driven mainly by the reversal of the pound sterling movement against the U.S. dollar; and
Other income, net: Increased by $2.9 million due to stronger investment income on funds withheld by third party Lloyd’s syndicates, reported on a quarterly lag basis.

Underwriting Results by Segment
The following provides a further discussion of our underwriting results for our Property & Casualty (Re)insurance operating segment for the three months ended March 31, 2024 and 2023.

Gross Premiums Written
 
Details of gross premiums written are provided in the following table: 
 Three months ended March 31
 2024
2023 (1)
Property$25,176 11.6 %$30,560 16.4 %
Casualty106,789 49.2 87,124 46.7 
Other85,293 39.3 68,771 36.9 
Total$217,258 100.0 %$186,455 100.0 %
(1) As a result of the reclassification of certain treaties within the lines of business (see Note 16 of the Q1 2024 Financials), the gross premiums written for Property, Casualty, and Other were restated accordingly. However, there was no change to the Total gross premiums written.
As a result of our underwriting philosophy, the total premiums we write and the mix of premiums between property,
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casualty, and other business, may vary significantly from period to period depending on the market opportunities we identify.

For the three months ended March 31, 2024, our gross premiums written increased by $30.8 million, or 16.5%, compared to the equivalent 2023 period. The following table provides a further analysis of this overall increase:
Gross Premiums Written
Three months ended March 31, 2024
Increase (decrease)
($ in millions)
% changeExplanation
Property$(5.4)(17.6)%
The decrease was driven predominantly by the non-renewal of a homeowner treaty within Personal class in order to reduce our exposure to U.S. severe convective storms. This was offset partially by growth in the Commercial class driven by new business. This resulted in a change in business mix for Property, with Commercial and Personal accounting for 72% and 28%, respectively, of total Property compared to 48% and 51%, respectively, for the same quarter in 2023.
Casualty$19.722.6%
The increase was driven predominantly from new quota share business in 2023 and 2024 within our Syndicate 3456, which is included in our Multi-line class. This was partially offset by lower renewals in our Professional class.

As a result, the business mix within our Casualty line of business has changed with General Liability and Multi-line classes accounting for 20% and 70% of total Casualty, respectively, compared to 24% and 62% in same period in 2023.
Other$16.524.0%
The increase was driven mainly from new business in our Marine and Energy class, including Lloyd’s whole account excess of loss treaties, offset partially by lower premiums written within Financial relating to Mortgage business.


Premiums Ceded
 
For the three months ended March 31, 2024, premiums ceded were $23.2 million, or 10.7% of gross premiums written, compared to $11.2 million, or 6.0% of gross premiums written, for the same quarter in 2023. The increase was primarily due to the purchase of an additional reinsurance coverage to reduce our overall exposure to Marine and Energy class in light of recent growth in this class of business, coupled with an increase in quota share retrocessions for Other Specialty business due to growth from inward premiums.


Net Premiums Written

Details of net premiums written are provided in the following table: 
 Three months ended March 31
 2024
2023 (1)
Property$21,204 10.9 %$26,193 14.9 %
Casualty99,450 51.3 87,196 49.8 
Other73,423 37.8 61,854 35.3 
Total$194,077 100.0 %$175,243 100.0 %
(1) As a result of the reclassification of certain treaties within the lines of business (see Note 16), the net premiums written for Property, Casualty, and Other were restated accordingly. However, there was no change to the Total net premiums written.

For the three months ended March 31, 2024 net premiums written increased by $18.8 million, or 10.7%, compared to the three months ended March 31, 2023. The movement in net premiums written resulted from the changes in gross premiums written and ceded during the periods as previously noted.
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