Hedge fund style reinsurer Greenlight Re has reported investment income of $32.3 million for the first-quarter of 2019, which more than offset a quarterly underwriting loss as the firm announces Q1 net income of $5.9 million.
Net income of $5.9 million compares with a net loss of $142.8 million for the first-quarter of 2018, driven by an improved investment performance.
In Q1 2018, the reinsurer recorded an investment loss of $145.2 million, so a positive return of $32.3 million in Q1 2019, is a significant year-on-year improvement.
Offsetting an improved investment performance, Greenlight Re’s underwriting result suffered in the quarter. The company has reported an underwriting loss of $21.8 million for Q1 2019, compared with underwriting income of $2.5 million a year earlier.
The firm attributes the underwriting loss to adverse prior-year loss development which led to a net negative financial impact of $25.7 million.
As a result of the non-renewal of two accounts in the financial and health lines of business, the reinsurer’s gross written premiums declined to $162.6 million. At the same time, net written premiums declined slightly to $141.2 million, while ceded premiums decreased from $29.8 million to $21.4 million, in Q1 2019. Net earned premiums fell from $145.8 million to $125.4 million, year-on-year.
Commenting on the firm’s first-quarter 2019 results, Greenlight Re Chief Executive Officer (CEO), Simon Burton, said: “We increased fully diluted book value per share by 0.5% in the quarter, driven by strong investment performance and offset by a reserve increase in our auto class. While this issue clouded the quarter, our ongoing work to diversify underwriting is aided by tailwinds from an overall improving rate environment and from dislocation in several London market specialty classes.”
David Einhorn, Chairman of the Board of Directors, added: “We were pleased to see our investment in Solasglas bounce back with the market at the start of 2019. The fund’s investment portfolio posted a positive return of 6.2%, net of all fees and expenses for the quarter. Even though growth stocks continue to lead value stocks, we achieved better results due to a series of positive company-specific developments. We generated an additional 4.8% return in April.”
