Greenlight Re(US:GLRE)2021-03-11 18:55Financial Data and Key Metrics Changes - Fully diluted book value per share grew 11.6% in Q4 2020, ending at $13.42 per share [24] - Net income for Q4 2020 was $42 million or $1.20 per share, primarily driven by gains in the Solasglas investment [24] - The company reported an underwriting loss of $1.1 million during Q4 2020, with a combined ratio of 101% [24][28] - For the full year 2020, net income was $3.9 million or $0.11 per share, with a total underwriting loss of $1.6 million and a combined ratio of 100.4% [27][28] Business Line Data and Key Metrics Changes - Net written premiums for Q4 2020 were $117.7 million, up 20% from Q4 2019, largely due to new business written during 2020 [25] - Total general and administrative expenses for Q4 2020 were $8.3 million, a 13% increase from Q4 2019, mainly due to additional incentive compensation costs [26] - Total net investment income for Q4 2020 was $48.4 million, including $38.5 million from Solasglas [26] Market Data and Key Metrics Changes - The Solasglas fund returned 8.4% in Q4 2020, with longs contributing 14.1% and shorts detracting 4.9% [15] - The S&P 500 Index returned 12.1% during the same quarter [15] Company Strategy and Development Direction - The company has transformed its underwriting business over the past three years, focusing on higher margin business and minimizing systemic risk concentration [7][9] - The innovations business is growing and is seen as a source of attractive underwriting opportunities and investment gains [9][10] - The company is focused on cash efficiency and has made improvements in this area [62] Management's Comments on Operating Environment and Future Outlook - Management noted that 2020 was a challenging year for the reinsurance industry, but the company's performance was strong relative to the industry backdrop [5][22] - The underwriting environment is improving, and the company sees significant opportunities in various areas, including innovations and value investing [39][40] - Management emphasized the importance of focusing on margin expansion rather than just premium growth [41] Other Important Information - The company repurchased approximately 700,000 shares at an average cost of $7.60 per share during Q4 2020 [30] - The company established a service company in London to increase visibility and access to key markets [13] Q&A Session Summary Question: Impact of winter storms on exposure and rate environment - Management indicated that the company's exposure to the winter storms is limited, as they do not write much personal and commercial property directly in Texas [36] Question: Capital deployment strategy for 2021 - Management sees great opportunities in underwriting and innovations, with a focus on margin expansion rather than just premium growth [39][41] Question: COVID losses split between IBNR and actual case reserves - The majority of COVID losses are IBNR, with net financial impact being $7.1 million [42][43] Question: Changes in catastrophe load and combined ratio targets - Management stated that they are cautious about tail exposure and do not provide specific combined ratio targets [50][54] Question: AM Best rating and negative outlook - Management has a positive relationship with AM Best and is working towards removing the negative outlook, but specific criteria are not disclosed [57] Question: Use of restricted cash for traditional investments - Management noted that restricted cash is a common requirement for rated reinsurance companies, but they are focused on cash efficiency [62][65]