Greenlight Re(GLRE) - 2022 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements This section presents Greenlight Capital Re, Ltd.'s unaudited condensed consolidated financial statements, reporting $9.1 million net income for the first six months of 2022 and $1.49 billion in total assets Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $1,493,123 | $1,427,494 | | Total Investments | $255,065 | $230,975 | | Cash and cash equivalents | $28,000 | $76,307 | | Restricted cash and cash equivalents | $669,603 | $634,794 | | Total Liabilities | $1,008,830 | $951,831 | | Loss and loss adjustment expense reserves | $526,445 | $524,010 | | Unearned premium reserves | $268,254 | $227,584 | | Total Shareholders' Equity | $484,293 | $475,663 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Gross Premiums Written | $134,780 | $141,579 | $280,666 | $311,514 | | Net Premiums Earned | $110,219 | $132,479 | $236,144 | $267,875 | | Total Revenues | $121,418 | $134,516 | $254,447 | $287,855 | | Total Expenses | $106,621 | $133,889 | $245,393 | $276,995 | | Net Income (Loss) | $14,788 | $628 | $9,061 | $7,127 | | Diluted EPS | $0.37 | $0.02 | $0.23 | $0.21 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(14,014) | $(19,835) | | Net cash provided by (used in) investing activities | $636 | $17,153 | | Net cash provided by (used in) financing activities | $0 | $(6,748) | | Net increase (decrease) in cash | $(13,498) | $(9,430) | | Cash, cash equivalents and restricted cash at end of period | $697,603 | $744,876 | Notes to the Condensed Consolidated Financial Statements These notes detail accounting policies, financial instruments, loss reserves including $13.6 million for the Russia-Ukraine conflict, and share capital structure - The company's investment in the related party investment fund, Solasglas Investments, LP (SILP), had a net asset value of $189.3 million as of June 30, 2022, representing 76.0% of SILP's total net assets[59] - Loss and loss adjustment expense reserves as of June 30, 2022, included an estimated $13.6 million related to the Russian-Ukrainian conflict[77] - The company adopted ASU 2020-06 for convertible instruments in Q1 2022, resulting in a $2.5 million decrease in opening shareholders' equity and a corresponding increase in the carrying value of senior convertible notes[55] - The company has a share repurchase plan authorizing up to $25.0 million of Class A ordinary shares, expiring on June 30, 2023, with no shares repurchased in the six months ended June 30, 2022[95][96] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, highlighting $9.1 million net income for the first six months, $14.10 fully diluted book value per share, and strategic shifts in underwriting to mitigate inflation and grow specialty lines Key Financial Performance (Six Months Ended June 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income | $9.1 million | $7.1 million | | Fully Diluted Book Value Per Share | $14.10 | $13.60 (at June 30, 2021) | | Combined Ratio | 99.3% | 99.0% | | Total Investment Income | $24.9 million | $20.7 million | - Underwriting results for the first half of 2022 include $13.6 million of losses from the Russian-Ukrainian conflict, contributing 5.8 percentage points to the combined ratio[154][180] - Management addresses inflation by focusing on short-tailed business, incorporating inflation assumptions in pricing, and minimizing exposure to supply-chain-driven inflation classes[156] - The Innovations unit continues to grow, with related premiums accounting for approximately 13% of net premiums written in the first half of 2022, alongside the launch of its insurtech-focused Lloyd's syndicate (Syndicate 3456)[158][159] Investment Portfolio Performance (Managed by DME Advisors) | Period | 2022 Return | 2021 Return | | :--- | :--- | :--- | | Three months ended June 30 | 4.9% | (0.9)% | | Six months ended June 30 | 6.7% | 0.5% | Quantitative and Qualitative Disclosures about Market Risk This section details the company's exposure to market risks, including equity price, commodity price, foreign currency, and interest rate fluctuations, quantifying potential impacts on the investment portfolio - A 10% decline in underlying listed equity securities and derivatives would result in a $3.4 million loss to the company's Investment Portfolio[253] - A 10% increase in gold prices would result in a $3.7 million gain, while a 10% decrease would result in a $3.7 million loss to the Investment Portfolio[257] - A 10% adverse move in the GBP/USD rate would result in a $1.7 million loss, and a 10% adverse move in the EUR/USD rate would result in a $0.6 million loss[260] - A 100 basis point increase in interest rates would result in an estimated $1.3 million loss on funds held by cedents and a $0.2 million loss to the SILP investment portfolio[264] Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[270] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2022[273] PART II — OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal disputes, but management does not anticipate any material adverse effects on its financial condition or results - The company is involved in various dispute resolution procedures in the ordinary course of business but does not expect any existing disputes to have a material adverse effect on its financial condition or results[275] Risk Factors No material changes to the risk factors previously disclosed in the 2021 Form 10-K and Q1 2022 Form 10-Q were reported as of June 30, 2022 - There have been no material changes to the risk factors disclosed in the company's 2021 Form 10-K and Q1 2022 Form 10-Q as of June 30, 2022[278] Unregistered Sales of Equity Securities and Use of Proceeds The Board re-approved a share repurchase plan for up to $25.0 million of Class A ordinary shares, effective until June 30, 2023, with no repurchases made in Q2 2022 - The Board of Directors re-approved a share repurchase plan authorizing up to $25.0 million of Class A ordinary shares, effective until June 30, 2023[279] - No share repurchases were made during the three months ended June 30, 2022[281] Defaults Upon Senior Securities No defaults upon senior securities were reported - None[282] Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Not applicable[283] Other Information No other material information was reported in this section - None[283] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and financial statements formatted in Inline XBRL[286]