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Form 8-K GREENLIGHT CAPITAL RE, For: Oct 23

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October 23, 2015 4:19 PM EDT




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

FORM 8-K

 
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
October 23, 2015
Date of report (Date of earliest event reported) 

GREENLIGHT CAPITAL RE, LTD.
(Exact name of registrant as specified in charter)
 
 
 
 
Cayman Islands
(State or other jurisdiction of incorporation)
001-33493
(Commission file number)
N/A
(IRS employer identification no.)
 
 
 
65 Market Street, Suite 1207,
Jasmine Court, Camana Bay,
P.O. Box 31110
Grand Cayman, Cayman Islands
(Address of principal executive offices)
 
KY1-1205
(Zip code)
 
(345) 943-4573
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02 Results of Operations and Financial Condition
 
On October 23, 2015, Greenlight Capital Re, Ltd. (the "Registrant") issued a press release announcing its financial results for the third quarter and nine months ended September 30, 2015. A copy of the press release is attached hereto as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.
 
In accordance with general instruction B.2 to Form 8-K, the information set forth in this Item 2.02 (including Exhibit 99.1) shall be deemed “furnished” and not “filed” with the Securities and Exchange Commission for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. 


Item 9.01 Financial Statements and Exhibits
 
(d) Exhibits
 
99.1 Earnings press release, "GREENLIGHT RE ANNOUNCES THIRD QUARTER 2015 FINANCIAL RESULTS", dated October 23, 2015, issued by the Registrant.




SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
 
GREENLIGHT CAPITAL RE, LTD.
 
(Registrant)
 
 
 
 
By:
/s/ Tim Courtis              
 
Name:
Tim Courtis
 
Title:
Chief Financial Officer
 
Date:
October 23, 2015






GREENLIGHT RE ANNOUNCES
THIRD QUARTER 2015 FINANCIAL RESULTS

GRAND CAYMAN, Cayman Islands - October 23, 2015 - Greenlight Capital Re, Ltd. (NASDAQ: GLRE) today announced financial results for the third quarter ended September 30, 2015. Greenlight Re reported a net loss of $219.7 million for the third quarter of 2015, compared to a net loss of $51.8 million for the same period in 2014. The net loss per share for the third quarter of 2015 was $5.98, compared to a net loss per share of $1.40 for the same period in 2014.

Fully diluted adjusted book value per share was $23.29 as of September 30, 2015, a 20.1% decrease from $29.16 per share as of September 30, 2014.

“We are disappointed with our third quarter results as we reported losses on both our underwriting and investment portfolios,” said Bart Hedges, Chief Executive Officer of Greenlight Re. “We completed a review of our run-off book with the assistance of a third party expert and increased reserves on one contract. While these legacy contracts have negatively impacted our results, we are encouraged by the performance of our current underwriting portfolio.”

Financial and operating highlights for Greenlight Re for the third quarter and nine months ended September 30, 2015 include:

•
Gross written premiums of $134.6 million, an increase from $97.2 million in the third quarter of 2014; net earned premiums were $102.0 million, an increase from $79.5 million reported in the prior-year period.

•
An underwriting loss of $27.6 million, compared to underwriting income of $4.0 million in the third quarter of 2014.

•
A composite ratio for the nine months ended September 30, 2015 of 111.0% compared to 94.2% for the prior year period. The combined ratio for the nine months ended September 30, 2015 was 117.4% compared to 100.6% for the prior year period.

•
A net investment loss of 14.2% on Greenlight Re's investment portfolio managed by DME Advisors, LP compared to a net investment loss of 3.7% in the third quarter of 2014. For the first nine months of 2015, the net investment loss was $236.5 million, representing a loss of 16.9%, compared to net investment income of $49.8 million during the comparable period in 2014 when Greenlight Re reported a 3.2% gain.

•
During the third quarter 2015, Greenlight Re repurchased 473,540 Class A ordinary shares at an average price of $28.41. Greenlight Re can repurchase up to an additional 1,386,460 Class A ordinary




shares or securities convertible into Class A ordinary shares in the open market under its current share repurchase plan, which expires on June 30, 2016.

On October 23, 2015 A.M. Best affirmed Greenlight Re's rating of "A" (Excellent) but revised the outlook from stable to negative. A.M. Best has indicated that the negative outlook is driven by Greenlight Re's less favorable underwriting results in recent years which have fallen short of A.M. Best's expectations.

“During the third quarter of 2015, our investment portfolio was adversely affected by declining prices in three of our largest investments,” stated David Einhorn, Chairman of the Board of Directors. “With the recent market decline, we have added modestly to our net long exposure.”
 
Conference Call Details

Greenlight Re will hold a live conference call to discuss its financial results for the third quarter ended September 30, 2015 on Thursday, October 29, 2015 at 9:00 a.m. Eastern time.  The conference call title is Greenlight Capital Re, Ltd. Third Quarter 2015 Earnings Call.

To participate in the Greenlight Capital Re, Ltd. Third Quarter 2015 Earnings Call, please dial in to the conference call at:
    
U.S. toll free             1-888-336-7152
International            1-412-902-4178

Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN.
Conference Call registration link: http://dpregister.com/10074449

The conference call can also be accessed via webcast at:

http://services.choruscall.com/links/glre151029

A telephone replay of the call will be available from 11:00 a.m. Eastern time on October 29, 2015 until 9:00 a.m. Eastern time on November 6, 2015.  The replay of the call may be accessed by dialing 1-877-344-7529 (U.S. toll free) or 1-412-317-0088 (international), access code 10074449. An audio file of the call will also be available on the Company's website, www.greenlightre.ky .

###

Regulation G
Fully diluted adjusted book value per share is a non-GAAP measure and represents basic adjusted book value per share combined with the impact from dilution of share based compensation including in-the-money stock options and RSUs as of any period end. Book value is adjusted by subtracting the amount of the non-controlling interest in joint venture from total shareholders' equity to calculate adjusted book value. We believe that long term growth in fully diluted adjusted book value per share is the most relevant measure of our financial performance. In addition, fully diluted adjusted book value per share may be of benefit to our investors, shareholders and other interested parties to form a basis of comparison with other companies within the reinsurance industry.

Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. Federal securities laws. These statements involve risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements made on behalf of the Company. These risks and uncertainties include the impact of general economic




conditions and conditions affecting the insurance and reinsurance industry, the adequacy of our reserves, our ability to assess underwriting risk, trends in rates for property and casualty insurance and reinsurance, competition, investment market fluctuations, trends in insured and paid losses, catastrophes, regulatory and legal uncertainties and other factors described in our annual report on Form 10-K filed with the Securities Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


About Greenlight Capital Re, Ltd.
Greenlight Re (www.greenlightre.ky) is a NASDAQ listed company with specialist property and casualty reinsurance companies based in the Cayman Islands and Ireland.  Greenlight Re provides a variety of custom-tailored reinsurance solutions to the insurance, risk retention group, captive and financial marketplaces.  Established in 2004, Greenlight Re selectively offers customized reinsurance solutions in markets where capacity and alternatives are limited.  With a focus on deriving superior returns from both sides of the balance sheet, Greenlight Re's assets are managed according to a value-oriented equity-focused strategy that complements the Company's business goal of long-term growth in book value per share.


Contact:

Garrett Edson
ICR
(203) 682-8331

Media:
Brian Ruby
ICR
(203) 682-8268





GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
September 30, 2015 and December 31, 2014
(expressed in thousands of U.S. dollars, except per share and share amounts)
 
September 30, 2015
 
December 31, 2014
 
(unaudited)
 
(audited)
Assets
 
 
 
Investments
 
 
 
Debt instruments, trading, at fair value
$
28,657

 
$
49,212

Equity securities, trading, at fair value
966,755

 
1,266,175

Other investments, at fair value
108,125

 
115,591

Total investments
1,103,537

 
1,430,978

Cash and cash equivalents
99,351

 
12,030

Restricted cash and cash equivalents
1,046,157

 
1,296,914

Financial contracts receivable, at fair value
14,872

 
47,171

Reinsurance balances receivable
156,952

 
151,185

Loss and loss adjustment expenses recoverable
3,253

 
11,523

Deferred acquisition costs, net
54,023

 
34,420

Unearned premiums ceded
2,680

 
4,027

Notes receivable
27,546

 
1,566

Other assets
6,008

 
5,478

Total assets
$
2,514,379

 
$
2,995,292

Liabilities and equity
 
 
 
Liabilities
 
 
 
Securities sold, not yet purchased, at fair value
$
800,105

 
$
1,090,731

Financial contracts payable, at fair value
25,864

 
44,592

Due to prime brokers
266,975

 
211,070

Loss and loss adjustment expense reserves
302,165

 
264,243

Unearned premium reserves
189,945

 
128,736

Reinsurance balances payable
18,652

 
40,372

Funds withheld
6,428

 
6,558

Other liabilities
12,629

 
14,949

Total liabilities
1,622,763

 
1,801,251

Equity
 
 
 
Preferred share capital (par value $0.10; authorized, 50,000,000; none issued)
—

 
—

Ordinary share capital (Class A: par value $0.10; authorized, 100,000,000; issued and outstanding, 30,772,572 (2014: 31,129,648): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,895 (2014: 6,254,895))
3,703

 
3,738

Additional paid-in capital
495,258

 
500,553

Retained earnings
368,392

 
660,860

Shareholders’ equity attributable to shareholders
867,353

 
1,165,151

Non-controlling interest in joint venture
24,263

 
28,890

Total equity
891,616

 
1,194,041

Total liabilities and equity
$
2,514,379

 
$
2,995,292






GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 
For the three and nine months ended September 30, 2015 and 2014
(expressed in thousands of U.S. dollars, except per share and share amounts)
 
Three months ended September 30
 
Nine months ended September 30
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
Gross premiums written
$
134,568

 
$
97,200

 
$
357,240

 
$
249,755

Gross premiums ceded
(2,288
)
 
(2,706
)
 
(5,782
)
 
(11,405
)
Net premiums written
132,280

 
94,494

 
351,458

 
238,350

Change in net unearned premium reserves
(30,286
)
 
(15,003
)
 
(62,986
)
 
40,685

Net premiums earned
101,994

 
79,491

 
288,472

 
279,035

Net investment income (loss)
(191,322
)
 
(54,027
)
 
(236,456
)
 
49,755

Other income (expense), net
(542
)
 
2,664

 
(2,714
)
 
1,445

Total revenues
(89,870
)
 
28,128

 
49,302

 
330,235

Expenses
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
97,421

 
53,028

 
237,281

 
177,035

Acquisition costs, net
32,146

 
22,478

 
82,926

 
85,844

General and administrative expenses
5,382

 
6,013

 
18,436

 
17,771

Total expenses
134,949

 
81,519

 
338,643

 
280,650

Income (loss) before income tax expense
(224,819
)
 
(53,391
)
 
(289,341
)
 
49,585

Income tax benefit
1,233

 
254

 
1,394

 
828

Net income (loss) including non-controlling interest
(223,586
)
 
(53,137
)
 
(287,947
)
 
50,413

Loss (income) attributable to non-controlling interest in joint venture
3,909

 
1,369

 
4,627

 
(1,509
)
Net income (loss)
$
(219,677
)
 
$
(51,768
)
 
$
(283,320
)
 
$
48,904

Earnings (loss) per share
 
 
 
 
 
 
 
Basic
$
(5.98
)
 
$
(1.40
)
 
$
(7.73
)
 
$
1.31

Diluted
$
(5.98
)
 
$
(1.40
)
 
$
(7.73
)
 
$
1.29

Weighted average number of ordinary shares used in the determination of earnings and loss per share
 
 
 
 
 
 
 
Basic
36,710,216

 
36,984,650

 
36,636,464

 
37,214,809

Diluted
36,710,216

 
36,984,650

 
36,636,464

 
37,874,627








The following table provides the ratios for the nine months ended September 30, 2015 and 2014:
 
Nine months ended September 30
 
 
 
2015
 
 
 
 
 
2014
 
 
 
Frequency
 
Severity
 
Total
 
Frequency
 
Severity
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
Loss ratio
87.4
%
 
5.4
%
 
82.3
%
 
66.8
%
 
14.5
%
 
63.4
%
Acquisition cost ratio
27.9
%
 
41.3
%
 
28.7
%
 
31.5
%
 
19.3
%
 
30.8
%
Composite ratio
115.3
%
 
46.7
%
 
111.0
%
 
98.3
%
 
33.8
%
 
94.2
%
Internal expense ratio
 
 
 
 
4.9
%
 
 
 
 
 
5.5
%
Corporate expense ratio
 
 
 
 
1.5
%
 
 
 
 
 
0.9
%
Combined ratio
 
 
 
 
117.4
%
 
 
 
 
 
100.6
%




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