Greenlight Re cut short on earnings rebound by major new reserves

Greenlight Re swung back to a first quarter underwriting gain from a prior year loss, but cutting the profit razor thin after writing notable new reserves on prior period losses.

The by-word appears to be growth: gross written premiums increased 27.8% to $186.5 million with management giving credit “primarily to new opportunities and improved pricing on property and general liability business, as well as several new specialty contracts bound during the quarter.”

“During the first quarter we executed our strategy of expanding our portfolio into exceptional market conditions,” CEO Simon Burton (pictured) said.

The 6.4 point improvement in the combined ratio to a still-high 99.8% saw additional reserves against prior period events obscure a much stronger improvement in current year loss metrics.

The current year loss ratio of 59.4% is down an eye-opening 26.2 percentage points to 59.4%. Adverse prior period reserve adjustments added a quick 8.4 percentage points back into the count.

Q1 2023 losses include $6.2 million, or 4.3 loss ratio points, from major events including the Turkey earthquake, the New Zealand Cyclone Gabrielle and U.S. convective storms.

Greenlight led acquisition and underwriting costs rise from Q1 2022 to the tune of 3.2 combined ratio points.

“Although our combined ratio improved more than 6% compared to last year, adverse prior year development prevented the impacts of the favourable market from flowing through this quarter,” Burton said.

“We expect the impact of our underwriting strategy and rate increases to flow through as improved combined ratios as 2023 progresses.”

After $5.2 million in total investment income and a hefty boost from FX impacts, Greenlight Re was left with $5.9 million in net income.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.