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| 8-K - GREENLIGHT CAPITAL RE, LTD. | q22012earningsreleaseform8k.htm |
GREENLIGHT RE ANNOUNCES
SECOND QUARTER 2012 FINANCIAL RESULTS
GRAND CAYMAN, Cayman Islands (July 30, 2012) - Greenlight Capital Re, Ltd. (NASDAQ: GLRE) today announced financial results for the second quarter ended June 30, 2012. Greenlight Re reported a net loss of $36.1 million for the second quarter of 2012 compared to a net loss of $16.0 million for the same period in 2011. The net loss per share was $0.98, compared to a net loss per share of $0.44 for the same period in 2011.
Fully diluted adjusted book value per share was $22.34 as of June 30, 2012, a 12.7% increase over $19.82 per share as of June 30, 2011.
For the six months ended June 30, 2012, Greenlight Re reported a net profit of $29.1 million compared to a net loss of $59.0 million for the comparable period in 2011. The net income per share was $0.78 on a fully diluted basis for the six months ended June 30, 2012, compared to net loss of $1.63 for the same period in 2011.
“There are signs that conditions are improving in the underlying insurance market, but we have yet to experience this in the reinsurance market, which remains quite competitive,” said Bart Hedges, Chief Executive Officer of Greenlight Re. “We are maintaining our underwriting discipline as we continually assess new business opportunities in the U.S. and Europe.”
Financial and operating highlights for Greenlight Re for the second quarter ended June 30, 2012 include:
• | Gross written premiums in the second quarter of 2012 were $84.0 million compared to $113.3 million in the second quarter of 2011, while net earned premiums were $130.0 million, an increase from $107.2 million reported in the second quarter of last year. |
• | The combined ratio for the six months ended June 30, 2012 was 100.8% compared to 102.1% for the six months ended June 30, 2011. |
• | A net investment loss of $36.9 million was reported for the second quarter of 2012, representing a loss of 3.3% to the Company's investment portfolio. This compares to an investment loss of $19.5 million in the second quarter of 2011, when Greenlight Re reported a loss of 1.9%. For the first six months of 2012, net investment income was $34.7 million compared to a net investment loss of $55.6 million during the comparable period in 2011. |
“During the second quarter of 2012, our investment portfolio gave back some of the gains we generated in the first quarter of the year,” said David Einhorn, Chairman of the Board of Directors of Greenlight Re. “The Company remains focused on its prudent, opportunistic underwriting approach in what remains a challenging reinsurance market.”
Conference Call Details
Greenlight Re will hold a live conference call to discuss its financial results for the second quarter of 2012 on Tuesday July 31, 2012 at 9:00 a.m. Eastern time. The conference call title is Greenlight Capital Re, Ltd. Second Quarter 2012 Earnings Call.
To participate, please dial in to the conference call at:
U.S. toll free 1-877-317-6789
International 1-412-317-6789
The conference call can also be accessed via webcast at:
http://services.choruscall.com/links/glre120731.html
A telephone replay of the call will be available from 11:00 a.m. Eastern time on July 31, 2012 until 9:00 a.m. Eastern time on August 8, 2012. 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 10016300. An audio file of the call will also be available on the Company's website, www.greenlightre.ky .
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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 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 specialist property and casualty reinsurance company based in the Cayman Islands and Ireland. The Company 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:
Alex Stanton
Stanton Public Relations & Marketing
(212) 780-0701
astanton@stantonprm.com
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2012 and December 31, 2011
(expressed in thousands of U.S. dollars, except per share and share amounts)
June 30, 2012 | December 31, 2011 | ||||||
(unaudited) | (audited) | ||||||
Assets | |||||||
Investments | |||||||
Debt instruments, trading, at fair value | $ | 9,088 | $ | 10,639 | |||
Equity securities, trading, at fair value | 1,058,729 | 890,822 | |||||
Other investments, at fair value | 138,513 | 128,685 | |||||
Total investments | 1,206,330 | 1,030,146 | |||||
Cash and cash equivalents | 11,262 | 42,284 | |||||
Restricted cash and cash equivalents | 922,889 | 957,462 | |||||
Financial contracts receivable, at fair value | 23,972 | 23,673 | |||||
Reinsurance balances receivable | 179,958 | 141,278 | |||||
Loss and loss adjustment expenses recoverable | 36,911 | 29,758 | |||||
Deferred acquisition costs, net | 60,321 | 68,725 | |||||
Unearned premiums ceded | 11,929 | 27,233 | |||||
Notes receivable | 19,082 | 17,437 | |||||
Other assets | 4,755 | 5,492 | |||||
Total assets | $ | 2,477,409 | $ | 2,343,488 | |||
Liabilities and equity | |||||||
Liabilities | |||||||
Securities sold, not yet purchased, at fair value | $ | 663,542 | $ | 683,816 | |||
Financial contracts payable, at fair value | 12,972 | 6,324 | |||||
Due to prime brokers | 365,007 | 260,359 | |||||
Loss and loss adjustment expense reserves | 294,647 | 241,279 | |||||
Unearned premium reserves | 208,766 | 225,735 | |||||
Reinsurance balances payable | 37,947 | 32,192 | |||||
Funds withheld | 33,185 | 38,031 | |||||
Other liabilities | 7,777 | 10,054 | |||||
Performance compensation payable to related party | 7,870 | — | |||||
Total liabilities | 1,631,713 | 1,497,790 | |||||
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, 30,423,704 (2011: 30,283,200): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,949 (2011: 6,254,949)) | 3,668 | 3,654 | |||||
Additional paid-in capital | 490,215 | 488,478 | |||||
Retained earnings | 340,035 | 310,971 | |||||
Shareholders’ equity attributable to shareholders | 833,918 | 803,103 | |||||
Non-controlling interest in joint venture | 11,778 | 42,595 | |||||
Total equity | 845,696 | 845,698 | |||||
Total liabilities and equity | $ | 2,477,409 | $ | 2,343,488 | |||
GREENLIGHT CAPITAL RE, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For the three and six months ended June 30, 2012 and 2011
(expressed in thousands of U.S. dollars, except per share and share amounts)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues | |||||||||||||||
Gross premiums written | $ | 83,986 | $ | 113,266 | $ | 236,206 | $ | 214,005 | |||||||
Gross premiums ceded | 4,602 | (17,183 | ) | (6,393 | ) | (20,659 | ) | ||||||||
Net premiums written | 88,588 | 96,083 | 229,813 | 193,346 | |||||||||||
Change in net unearned premium reserves | 41,426 | 11,068 | 1,789 | 18,962 | |||||||||||
Net premiums earned | 130,014 | 107,151 | 231,602 | 212,308 | |||||||||||
Net investment income (loss) | (36,896 | ) | (19,469 | ) | 34,711 | (55,645 | ) | ||||||||
Other income (expense), net | (236 | ) | (86 | ) | (448 | ) | (347 | ) | |||||||
Total revenues | 92,882 | 87,596 | 265,865 | 156,316 | |||||||||||
Expenses | |||||||||||||||
Loss and loss adjustment expenses incurred, net | 87,337 | 56,870 | 150,644 | 122,595 | |||||||||||
Acquisition costs, net | 37,905 | 42,824 | 73,930 | 84,945 | |||||||||||
General and administrative expenses | 4,359 | 4,336 | 8,982 | 9,335 | |||||||||||
Total expenses | 129,601 | 104,030 | 233,556 | 216,875 | |||||||||||
Income (loss) before income tax expense | (36,719 | ) | (16,434 | ) | 32,309 | (60,559 | ) | ||||||||
Income tax benefit (expense) | 201 | (40 | ) | (62 | ) | (41 | ) | ||||||||
Net income (loss) including non-controlling interest | (36,518 | ) | (16,474 | ) | 32,247 | (60,600 | ) | ||||||||
(Income) loss attributable to non-controlling interest in joint venture | 449 | 513 | (3,183 | ) | 1,649 | ||||||||||
Net income (loss) | $ | (36,069 | ) | $ | (15,961 | ) | $ | 29,064 | $ | (58,951 | ) | ||||
Earnings (loss) per share | |||||||||||||||
Basic | $ | (0.98 | ) | $ | (0.44 | ) | $ | 0.80 | $ | (1.63 | ) | ||||
Diluted | $ | (0.98 | ) | $ | (0.44 | ) | $ | 0.78 | $ | (1.63 | ) | ||||
Weighted average number of ordinary shares used in the determination of earnings (loss) per share | |||||||||||||||
Basic | 36,660,267 | 36,153,743 | 36,605,610 | 36,153,743 | |||||||||||
Diluted | 36,660,267 | 36,153,743 | 37,338,484 | 36,153,743 | |||||||||||
The following table provides the ratios for the six months ended June 30, 2012 and 2011:
Six months ended June 30, 2012 | Six months ended June 30, 2011 | ||||||||||||||||
Frequency | Severity | Total | Frequency | Severity | Total | ||||||||||||
Loss ratio | 67.5 | % | 7.9 | % | 65.0 | % | 57.7 | % | 58.6 | % | 57.7 | % | |||||
Acquisition cost ratio | 32.6 | % | 15.9 | % | 31.9 | % | 41.0 | % | 18.8 | % | 40.0 | % | |||||
Composite ratio | 100.1 | % | 23.8 | % | 96.9 | % | 98.7 | % | 77.4 | % | 97.7 | % | |||||
Internal expense ratio | 3.9 | % | 4.4 | % | |||||||||||||
Combined ratio | 100.8 | % | 102.1 | % | |||||||||||||