Hedge fund-backed reinsurer Greenlight Re has announced a fourth quarter net loss of $30.3 million, driven by a $14.2 million catastrophe loss related to typhoons Hagibis and Faxai.
The loss represents an improvement from the $80.8 million hit in the prior year quarter.
A net investment loss of $8.8 million compares to a net investment loss of $56.4 million in the fourth quarter of 2018.
Included in total net investment loss is a loss of $5.7 million on the Solasglas fund and a $6 million valuation allowance provision made on notes receivable.
Also impacted by Hagibis and Faxai, Greenlight Re posted a Q4 net underwriting loss of $15.8 million, compared to a net underwriting loss of $18 million reported in the fourth quarter of 2018.
The quarterly loss reserve review resulted in a small adverse development of $1.1 million booked in the quarter.
Gross written premiums were $98.5 million, compared to $135.1 million in the fourth quarter of 2018.
The quarterly decrease was largely due to the non-renewal of certain auto business, offset by additional new business written in several different markets.
Net written premiums decreased 6.2% to $98.4 million, compared to $104.9 million reported in the prior-year period.
Ceded premiums were $0.1 million compared to $30.3 million in the prior year period. The decrease in ceded premium in the quarter was primarily due to the non-renewal of retrocessional coverage on auto business.
Net earned premiums were $108.6 million, a decrease from $119.6 million reported in the prior-year period.
The combined ratio for the quarter was 114.5%, compared to 115% for the prior-year period.
“As we compare our portfolio at the end of 2019 with the one that started the year, we are pleased with the progress we’ve made,” said Simon Burton, Chief Executive Officer of Greenlight Re.
“Excluding the adverse loss development on our private passenger auto business recognized in the first half of 2019, our portfolio performed acceptably during 2019, despite $17 million of natural catastrophe losses that we incurred during the year.
“We are optimistic about our positioning in 2020, which will enable us to take advantage of improving market conditions.”
A track record of poor underwriting returns led ratings agency A.M. Best to turn negative on Greenlight Re last year, and as a result of these measures the firm has partially de-risked its investment portfolio and also started a strategic review led by its Board of Directors.
“As previously discussed, the Company has undertaken a strategic review process and has been engaging in discussions with interested counterparties,” Burton added.
“The review is not yet complete. We continue to evaluate various options and ultimately intend to determine the best outcome for our shareholders.”
Commenting on the investment portfolio, David Einhorn, Chairman of the Board of Directors, stated, “Our investment returns from the Solasglas fund were positive for the year, reporting a 9.3% return and an overall net investment gain of $46.1 million.
“We gave up some ground during the fourth quarter, given the unabated outperformance of growth vs. value stocks.”
