Greenlight Re 'satisfied' despite $40m Q1 net loss and investment turmoil

Hedge fund-backed specialist property/casualty reinsurer Greenlight Capital Re swung to a  loss in the first quarter of 2020 as its investment portfolio took a massive hit due to the "unprecedented turmoil and uncertainty in global financial markets". Chief executive Simon Burton said he is "satisfied" with the results.

The Cayman Islands-based reinsurer, which recently completed a strategic review of its business, reported a net loss of $40.3 million, compared with a net income of $5.9 million for the same period in 2019.

The company’s net loss for the quarter included an investment loss in the Solasglas Investments (SILP) fund of $42.1 million, representing a loss of 8.1 percent for the quarter.

Gross written premiums were $109.8 million, compared with $162.6 million in the first quarter of 2019. The quarterly decrease was largely due to the non-renewal of certain auto business, offset by additional new business written in several different specialty lines.

The combined ratio for the quarter was 98.9 percent, an improvement from 117.4 percent for the prior-year period.

Burton, CEO of Greenlight Re, said: “Overall, we were satisfied with the quarter, with our reinsurance business showing resilience to almost unprecedented turmoil and uncertainty in global financial markets.”

Burton added: “In early April, the Company announced the completion of its review of strategic transaction alternatives, concluding that stockholder value is likely to be better enhanced on a standalone basis than by pursuing a transaction with a third party. We expanded our share repurchase program in order to capitalize on the current market opportunity to maximize shareholder value.”

Commenting on the investment portfolio, David Einhorn, chairman of the board of directors, said: “Our investment performance from the Solasglas fund during the first quarter of 2020 was impacted by the considerable market turmoil surrounding COVID-19. Solasglas reported an 8.1% net loss during the quarter. We continued to focus on fundamental securities analysis, while continuing to gauge the possible long-term impact that the pandemic has had on companies and the economy as a whole. The market remains very difficult for value investing.”