Greenlight Re(GLRE) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a combined ratio of 100.4% for Q3 2020, reflecting discipline in expense control and risk management [10] - The underlying combined ratio, excluding catastrophe impacts, was 93.4%, indicating a well-positioned underwriting business [11] - Fully diluted book value per share grew 1.9% during Q3, ending at $12.3 [23] - Net income for the quarter was $2.2 million or $0.06 per share, primarily driven by gains in the Solasglas portfolio [23] Business Line Data and Key Metrics Changes - Gross premiums for the quarter were $134 million, up 23% from Q3 2019, mainly due to increases in workers' compensation and specialty lines [25] - Year-to-date gross premiums written are down 15%, primarily due to the decision not to renew certain personal motor contracts [26] - The company reported a small underwriting loss of $0.4 million during the quarter [24] Market Data and Key Metrics Changes - The reinsurance industry faced high frequency of small- to medium-sized natural catastrophes and ongoing pandemic-related uncertainties [7] - The capital removal from the reinsurance industry due to catastrophe losses and COVID-19 uncertainty is significant [9] Company Strategy and Development Direction - The company concluded a strategic review, determining that its go-forward strategy is the best option for shareholders, focusing on improving market conditions [31][32] - The company is positioned to benefit from improving market conditions in the reinsurance sector, with expectations of attractive risk-return propositions for shareholders [11][42] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the ongoing pandemic's impact on potential industry loss exposure and the uncertainty surrounding COVID-19 losses [7] - The company anticipates that underwriting business will present increasingly attractive opportunities as market conditions improve into 2021 [11][42] Other Important Information - The company repurchased approximately 700,000 shares at an average cost of $6.87 per share, representing a discount of 43% to the fully diluted book value per share [27] - Total net investment income for Q3 was $6.9 million, including $6.4 million from the Solasglas investment [27] Q&A Session Summary Question: After the sale of the insurance operation was dropped, do you still entertain offers for the operation? - The company concluded that its go-forward strategy is the best option for shareholders, but will consider good ideas in the future [31][32] Question: Can you clarify the performance divergence between Solasglas and the hedge fund? - Solasglas and the hedge fund have strong similarities but diverge due to risk constraints and capital constraints [33][34] Question: What determines the pace of share buybacks? - The company is pleased with the buybacks but is balancing competition for capital and trading volume constraints [35][37] Question: What level of combined ratio and gross exposure do you expect to outperform the market? - The strategy combines high-quality reinsurance returns with high-quality investment returns, with expectations of improved market conditions [41][42] Question: When can we expect the divergence in performance between Solasglas and the hedge fund to reduce? - The company has made improvements in investment levels but will remain substantially less until the Board decides to change that [51]