11 March 2021Insurance

Profits rebound at hedge fund-backed Greenlight Re on investment gains

Hedge fund-backed specialist property/casualty reinsurer Greenlight Capital Re turned previous year's loss into a healthy profit in 2020 on the back of investment gains, particularly from its Solasglas portfolio.

The Cayman Islands-based reinsurer posted a net profit of $3.86 million in 2020 against a net loss of $3.98 million in 2019. In the fourth quarter of 2020, the company generated a profit of $42 million, compared with a loss of $30.3 million in the prior year period.

The company's gross written premiums came in at around $480 million in full-year 2020, down from $524 million in the prior year. In Q4 2020, the GWP rose to $117.7 million from $98.5 million in Q4 2019, due primarily to increases in workers’ compensation and specialty business, as well as health premiums associated with certain strategic partnerships and initiatives.

Its combined ratio for 2020 was 100.4 percent, an improvement from 106.9 percent in 2019. Combined ratio in the fourth quarter of 2020 was 101 percent, compared with 114.5 percent in the prior year period.

During 2020, the company recognised catastrophe losses of $9 million from Hurricanes Laura, Isaias, and Sally, the Midwest derecho storms, and the North American wildfires. COVID-19 generated additional underwriting losses of $7.1 million.

However, Greenlight Re increased its total investment income to $48.4 million, including $38.5 million of investment gains from the Solasglas fund.

Simon Burton, chief executive officer of Greenlight Re, said: “We had a strong overall quarter and grew book value per share by 11.6 percent. This growth was led by $38.5 million of gains generated by our investment in Solasglas, and we recognised a further $9.9 million of other investment income, driven primarily by our strategic and Innovations partnerships. The underwriting combined ratio of 101 percent includes a small loss from COVID, and caps a year during which our underwriting business showed tremendous resilience to the pressures of the pandemic and numerous natural catastrophes.”

David Einhorn, chairman of the board of directors, added: “We reported an 8.4 percent investment gain in the Solasglas fund during the fourth quarter, driven primarily by strong performance in our long positions. We expect a global economic recovery as the pandemic subsides and are positioned for higher inflation, a strong housing market and rising interest rates.”

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