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3 June 2019Insurance

AM Best moves Greenlight Re outlook to 'negative' over underwriting profitability concerns

Rating agency AM Best has revised the outlook of Cayman Islands-based reinsurer Greenlight Capital Re to negative from stable, expressing concern over its "negative underwriting performance".

AM Best said that it is concerned about the company’s business profile, owing to its track record of negative underwriting performance, which has led to a five-year average company reported combined ratio of 105.3 percent (2014-2018) and has contributed to a five-year average return on equity of -13.3 percent (2014-2018).

"GLRE’s consolidated surplus has decreased materially in recent years, to $480 million as of year-end 2018 from $1.2 billion at year-end 2014, primarily due to the outsized losses generated by its investment adviser," the agency said. "However, management has taken appropriate actions to de-risk the balance sheet significantly, thereby reducing the potential for volatility in the investment portfolio going forward."

It stated that the reinsurer will need to improve its underwriting profitability, stabilise its earnings and gradually replenish its capital position through internal capital generation.

"Failure to do so may result in further negative rating actions," it added.

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More on this story

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22 July 2019   Reinsurance firm Greenlight Re has made a strategic investment in insurtech start-up Cove Limited, which is based in New Zealand.
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6 August 2019   Reinsurer Greenlight Re CEO Simon Burton, said “conditions are improving in multiple lines of business” as the firm reported gross written premiums (GWP) and net income increases in its 2019 second quarter results.
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9 August 2021   AM Best warns of negative rating action if the planned improvements in its underwriting performance fail to materialise.