Greenlight Re(US:GLRE)2023-05-10 18:47Financial Data and Key Metrics Changes - The net income for the first quarter of 2023 was $5.9 million, or $0.17 per diluted share, compared to an underwriting loss of $7.7 million in the same period of 2022 [28] - The combined ratio improved to 99.8% from 106.2% year-over-year, despite being negatively impacted by $10.3 million in catastrophe and weather-related events [28] - The fully diluted book value per share increased by 1.1% from December 31, 2022, and by 8.1% from March 31, 2022, reaching $14.75 [10] Business Line Data and Key Metrics Changes - Net written premium grew by 25% in the first quarter to $175 million, marking the highest first-quarter volume achieved under the new underwriting strategy [21] - The underwriting income for the quarter was $0.4 million, showing improvement in overall underwriting performance [28] - The reserve pressure was noted particularly in the auto class, where claim severity continues to escalate, but the company expects this pressure to be short-lived due to its short reserve duration [21] Market Data and Key Metrics Changes - The company reported a growth in its Japanese catastrophe book with rate improvements exceeding 20% [41] - The Solasglas portfolio lost 1.1% in the first quarter, while the S&P 500 Index advanced 7.5% during the same period [23] - The investment portfolio's net exposure was approximately 43% at the end of the first quarter [8] Company Strategy and Development Direction - The company is focusing on leveraging current market conditions to create value for shareholders, with a strong pipeline of opportunities for its Lloyd's Syndicate [22] - The management expressed optimism regarding the underwriting model's outlook for the rest of 2023 and into 2024, driven by increased reinsurance demand and persistent supply constraints [41] - The company is assessing opportunities for its capital structure and believes refinancing its convertible debt with non-convertible debt is the best option at this time [38] Management's Comments on Operating Environment and Future Outlook - Management indicated that the inflationary pressures experienced in the first quarter are expected to persist in the industry, but they believe they have received the bulk of bad news regarding these pressures [31] - The company is cautiously optimistic about improving profitability on both sides of the balance sheet for the remainder of the year, supported by significant rate increases achieved in the underwriting portfolio [8] - The management highlighted that the current market environment presents opportunities for underwriting, and they want to maintain liquidity to deploy in these markets [38] Other Important Information - Total general and administrative expenses increased to $9.9 million from $7.2 million in the first quarter of 2022, primarily due to non-recurring expenses [10] - The company repurchased $17.5 million of its senior unsecured convertible notes during the first quarter [10] - The company welcomed David Sigmon as General Counsel, who brings significant reinsurance experience [22] Q&A Session Summary Question: Is the strong property growth in Q1 a good run rate for growth for the rest of the year? - Management indicated that while property volume is up, much of it is due to rates rather than exposure, and they are reluctant to guide on a specific run rate due to the variability [36] Question: Will the pressures on reserves persist in future quarters? - Management believes that while pressures may persist, they have already accounted for the bulk of bad news regarding inflationary pressures and expect to manage reserves effectively [31] Question: Is there a reason to maintain any debt? - Management stated that they are assessing opportunities for their capital structure and believe that maintaining some debt provides liquidity to capitalize on market opportunities [38]