Hedge fund-backed reinsurer Greenlight Re has confirmed that it saw a net loss of $40.3 million in the first quarter of 2020, due to what CEO Simon Burton described as “unprecedented turmoil and uncertainty in global financial markets.”
The result compares with net income of $5.9 million posted by Greenlight Re last year, and was mainly driven by an investment loss in the Solasglas Investments, LP (SILP) fund of $42.1 million, representing a loss of 8.1% for the quarter.
The company warned ahead of this result last month, when it predicted that its net loss would be between $38 million and $43 million.
“Our investment performance from the Solasglas fund during the first quarter of 2020 was impacted by the considerable market turmoil surrounding COVID-19,” said David Einhorn, Chairman of the Board of Directors.
“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,” he explained. “The market remains very difficult for value investing.”
Burton also stated: “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.”
Greenlight Re’s gross written premiums amounted to $109.8 million in Q1 2020, compared to $162.6 million for the same period last year.
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.
Net written premiums, meanwhile, decreased 22.7% to $109.1 million, compared to $141.2 million reported in the prior-year period.
And ceded premiums were down to just $0.7 million from $21.4 million last year, due to the non-renewal of retrocessional coverage on auto business.
Underwriting income also decreased from $21.8 million to $1.3 million, driven by a $47.2 million decrease in loss and loss adjustment expenses, as well as prior year adverse development of $4.2 million.
Overall, Greenlight Re’s combined ratio for the quarter came to 98.9%, compared to 117.4% in Q1 2019.
