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Greenlight Re posts income of $6.5m as investments offset underwriting loss

6th May 2021 - Author: Luke Gallin

Hedge fund-backed reinsurer Greenlight Re has recorded net income of $6.5 million for the first quarter of 2021 against a net loss of $40.3 million a year earlier, despite falling to an underwriting loss on the impacts of winter storm Uri in the U.S. in February.

Greenlight-ReDuring Q1 2021, gross written premiums (GWP) increased to $169.9 million, reflecting rate improvements and other market opportunities related to new multi-line contracts covering Lloyd’s syndicates.

At the same time, net written premiums (NWP) increased by almost 56% to $170 million for Greenlight Re in Q1 2021, while net premiums earned jumped from $111 million in Q1 2020 to $135.4 million in Q1 2021.

Year-on-year, the amount of gross premiums ceded declined significantly for the firm, from $678 million to $55 million.

Overall, Greenlight Re has fallen to an underwriting loss of $2 million for the first quarter of 2021, which included an adverse impact of $4.6 million from winter storm Uri. In comparison, the firm produced an underwriting gain of $1.3 million in Q1 2020, which incorporated a net financial loss of $3.9 million from adverse prior year development.

As a result, Greenlight Re’s combined ratio deteriorated slightly, year-on-year, from 98.9% to an unprofitable 101.5%.

Despite remaining above the 100% threshold, the reinsurer’s underwriting performance has improved in recent times, with the firm reporting a full-year 2020 underwriting loss of just $1.6 million, against a loss of $33.5 million for 2019.

However, the firm has still produced net income for the opening quarter of 2021, as investment income of $18.7 million more than offset the impact of catastrophe losses. In Q1 2020, Greenlight Re reported a net investment loss of $35.3 million.

Greenlight Re’s investment portfolio is managed by DME Advisors, and earned 1.5%, representing $4 million of investment income from the Solasglas fund. Additionally, the firm also reported $14.7 million of other investment income, primarily from its strategic investments in the period.

Simon Burton, Chief Executive Officer (CEO), commented: “We were pleased to report an increase in book value per share during the quarter, despite the unusually costly winter storms that occurred in February. Gross written premium of $170 million represents an increase of 55% against the first quarter of 2020 as we grew our underwriting business to address a broadly improving market.”

David Einhorn, Chairman of the Board of Directors, added: “We reported a 1.5% investment gain in the Solasglas fund during the first quarter, driven primarily by gains on our long portfolio. After a difficult January, we believe the investment environment has turned favorably to our strategy and positioning.”

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