Q4 2024 Greenlight Capital Re Ltd Earnings Call

Thank you for joining the Greenlight capital REIT fourth quarter and yearend 2024 earnings conference call. At this time, all participants are in a listen only mode.

Unknown Executive: Thank you for joining the Greenlight Capital Re fourth quarter and year-end 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. You may press star 1 at any time to be placed into question queue.

A question and answer session will follow the formal presentation.

You May press star one at any time she plays into the question queue.

David Sigmon: It's now my pleasure to turn the call over to David Sigmon, Greenlight Regional General Counsel. You may begin. Thank you and good morning.

David Sickening: It's now my pleasure to turn the call over to David Sickening Greenlight Res General Counsel you may begin.

David Sickening: Thank you and good morning, I would like to remind you that this conference call is being recorded and will be available for replay. Following the conclusion would be that an audio replay will also be available under the investors section of the company's website at www Dot Greenlight re dotcom.

David Sigmon: I would like to remind you that this conference call is being recorded and will be available for replay following the conclusion of the event. An audio replay will also be available under the investors section of the company's website at www.greenlightre.com.

David Sigmon: Joining us on the call today will be our Chief Executive Officer, Greg Richardson, Chairman of the Board, David Einhorn, and Chief Financial Officer, Faramarz Romer. On behalf of the company, I'd like to remind you that forward-looking statements may be made during this call and are intended to be covered by the safe harbor provisions of the federal securities laws. These forward-looking statements reflect the company's current expectations, estimates, and predictions about future results and are subject to risks and uncertainties. As a result, actual results may differ materially from those expressed or implied.

David Sickening: Joining us on the call today will be our Chief Executive Officer, Greg Richardson Chairman of the Board, David Einhorn, and Chief Financial Officer farmers from.

David Sickening: On behalf of the company I'd like to remind you that forward looking statements may be made during this call and are intended to be covered by the safe Harbor provisions of the federal Securities laws. These forward looking statements reflect the company's current expectations estimates and predictions about future results and are subject to risks and then.

David Sickening: Certainties as a result actual results may differ materially from those expressed or implied for more information on the risks and other factors that may impact future performance investors should review the periodic reports that are filed by the company with the SEC from time to time.

David Sigmon: For more information on the risks and other factors that may impact future performance, investors should review the periodic reports that are filed by the company with the SEC from time to time. Additionally, management may refer to certain non-GAAP financial measures. The reconciliations to these measures can be found in the company's filings with the SEC, including the company's recently filed Form 10-K for the year ended December 31, 2024.

David Sickening: Additionally, management may refer to certain non-GAAP financial measures. The reconciliations to these measures can be found in the company's filings with the SEC, including the company's recently filed Form 10-K for the year ended December 31st 2024.

David Sigmon: Company undertakes no obligation to publicly update or revise any forward-looking statements.

David Sickening: Company undertakes no obligation to publicly update or revise any forward looking statements with that it is now my pleasure to turn the call over to Greg.

Greg Richardson: With that, it is now my pleasure to turn the call over to Greg. Thanks, David. Good morning, everyone. And thank you for joining us today.

Greg Richardson: Thanks, David Good morning, everyone and thank you for joining us today.

To start off I would like to thank everyone that attended our Investor Day presentation in New York City last November where we provided additional color on Greenlight re's progress and our go forward strategy.

Greg Richardson: To start off, I would like to thank everyone that attended our Investor Day presentation in New York City last November, where we provided additional color on Greenlight Re's progress and our go forward strategy. I'm excited about Greenlight RE's future, notwithstanding the fourth quarter results. The fourth quarter of 2024 was challenging for Greenlight REIT. We reported a net underwriting loss of $18 million, or a combined ratio of 112.1%. and investment loss from Solace Glass of $8.8 million or negative 1.9%, driving a net loss for the quarter of $27.4 million. Our underwriting loss was driven by a combination of CAD activity in the quarter and prior year development.

Greg Richardson: I'm excited about greenlight re's future notwithstanding the fourth quarter results.

Greg Richardson: The fourth quarter of 2024 was challenging for Greenlight re.

Greg Richardson: We reported a net underwriting loss of $18 million or a combined ratio of 112, 1% and.

Greg Richardson: An investment loss from Solas class of $8 8 million or negative one 9%.

Greg Richardson: Driving a net loss for the quarter of $27 4 million.

Greg Richardson: Our underwriting loss was driven by a combination of cat activity in the quarter and prior year development.

Greg Richardson: On the cat side, we booked $17 6 million of cat losses in quarter four 2024.

Greg Richardson: On the cat side, we booked $17.6 million of cat losses in Q4 2024. with Hurricane Milton being the most material at 7.5 million. With regard to prior year development, the major driver was a $15 million increase in our Russia-Ukraine conflict reserves linked to the confiscation of aircraft. We booked an initial provision for the Russia-Ukraine conflict in the first quarter of 2022, and that provision remained broadly flat over the intervening quarter. However, in Q4 of last year, following the commencement of high court litigation in London, we became aware of increased settlement activity. Based on our analysis of various legal claims in industry sources and in anticipation of formal claim notifications, we decided to get ahead of this issue and to strengthen our IV&R provision.

Greg Richardson: With Hurricane Milton being the most material at $7 5 million.

Greg Richardson: With regard to prior year development. The major driver was a 15 million dollar increase in our Russia, Ukraine conflict reserves linked to the confiscation of aircrafts.

Greg Richardson: We booked an initial provision for the Russia, Ukraine conflict in the first quarter of 2022.

Greg Richardson: And that provision remained broadly flat over the intervening quarters.

Greg Richardson: However in Q4 of last year following the commencement of high Court litigation in London, We became aware of increased settlement activity.

Greg Richardson: Based on our analysis of various legal claims and industry sources and then in anticipation of formal claims notifications, we decided to get ahead of this issue and to strengthen our IV in our provision.

Greg Richardson: Our fourth quarter 2020 for underwriting results turned our solid performance for the first three quarters of the year into an underwriting loss of $8 2 million or a combined ratio of 101, 4% for the full year 2024.

Greg Richardson: Our fourth quarter 2024 underwriting results turned our solid performance for the first three quarters of the year into an underwriting loss of $8.2 million, or a combined ratio of 101.4% for the full year 2024. Net income for the year was $42.8 million, which generated a 7.2% increase in fully diluted book value per share to $17.95.

Greg Richardson: Okay.

Greg Richardson: Net income for the year was $42 8 million, which generated a seven 2% increase in fully diluted book value per share to $17.95.

Greg Richardson: One item I would like to highlight in our earnings release, and our 10-K filing is that for the first time, we have split our financial results into two segments open market and innovations, which reflects how I think about and oversee the business.

Greg Richardson: One item I would like to highlight in our earnings release and our 10k filing is that for the first time we have split our financial results into two segments, open market and innovation. which reflects how I think about and oversee the business. Historically, we have spoken of the importance of our innovations unit, and the key part it plays in our growth strategy. Our innovation segment generated a combined ratio of 95.8% in 2024 on 94.7 million of gross written premium. We believe this new disclosure will be valuable to shareholders and other key stakeholders going forward.

Greg Richardson: Historically, we have spoken of the importance of our innovations unit and the key part it plays in our growth strategy.

Greg Richardson: Our innovation segment generated a combined ratio of 95, 8% in 2024.

Greg Richardson: Our $94 7 million of gross written premium.

Greg Richardson: We believe this new disclosure will be valuable to shareholders and other key stakeholders going forward.

Greg Richardson: Turning to one one renewals.

Greg Richardson: Turning to 1-1 Renewals. The 1-1 renewal season is key for Greenlight RE as over 50% of our business incepts on January 1st. We are very pleased with how 1125 progressed. Market conditions remain very attractive despite softening in certain classes, and we took advantage of those conditions to grow our business in key areas. I will provide an overview of our 1-1-25 book in a few of these Q&As. generally are funded at Lloyd's or Falbook in SEPs at 1-1. We have been a material player in this market for a few years, and we are optimistic for the prospects of Lloyd's in 2025, after several years of material rate increases and strong performance.

Greg Richardson: The one one renewal season is key for Greenlight re as over 50% of our business and steps on January one.

Greg Richardson: We are very pleased with how one $1 25 progressed.

Market conditions remain very attractive despite softening in certain classes and we took advantage of those conditions to grow our business in key areas.

Greg Richardson: I will provide an overview of our one 125 book in a few of these key areas.

Greg Richardson: Okay.

Greg Richardson: Generally our funded at Lloyd's or sour book in steps at one one.

Greg Richardson: We have been a material player in this market for a few years and we are optimistic for the prospects of Lloyds in 2025.

Greg Richardson: After several years of material rate increases and strong performance.

Greg Richardson: This year, we expect our book to grow by approximately 25% given the attractive opportunities available to us.

Greg Richardson: This year we expect our FAL book to grow by approximately 25% given the attractive opportunities available. A material element of our specialty book renews at 1-1. In general, the specialty market remained disciplined with terms and conditions being maintained and some modest softening on rates from two and a half to five percent down. However, the specialty market was very competitive on signings with many of our competitors looking to grow in this. We expect our 1-1 Specialty Book to grow modestly. The third element of our book with a strong one-one focus is our property. We saw some weakening in the property line, and we estimate rates are down on average 5% to 7.5%, with reductions on our XOL accounts larger than on our quota share.

Greg Richardson: A material element of our specialty book renews at one one.

Greg Richardson: In general the specialty market remained disciplined with terms and conditions being maintained and some modest softening on rates from 2.5% to 5% down.

Greg Richardson: However, the specialty market was very competitive on signings with many of our competitors looking to grow in this space.

Greg Richardson: We expect our one one specialty book to grow modestly.

Greg Richardson: The third element of our book with a strong one one focuses our property book, we saw some weakening in the property line and we estimate rates are down on average 5% to seven 5% with reductions on our ex ol accounts larger than on a quota share counts.

Greg Richardson: Despite this the market remains attractive and we expect this portfolio to grow by approximately 10% over 2024.

Greg Richardson: Despite this, the market remains attractive, and we expect this portfolio to grow by approximately 10% over 2020. Our North Atlantic hurricane exposure on a 1 in 250 occurrence basis increased by 16% to 116.3 million, reflecting this increased volume.

Greg Richardson: Our north Atlantic Hurricane exposure on a one and 250 occurrence basis increased by 16% to $116 3 million, reflecting this increased volume.

Greg Richardson: Our innovation portfolio is not heavily weighted towards one one.

Greg Richardson: Our innovations portfolio is not heavily weighted towards 1-1, rather it is more evenly spread throughout the year. For the business that did renew on 1-1, we saw strong growth and relatively flat rates.

Greg Richardson: Rather it is more evenly spread throughout the year.

Greg Richardson: For the business that did renew 111, we saw strong growth and relatively flat rates.

Greg Richardson: Since one one we.

Greg Richardson: Since 1-1, we have all witnessed the tragic human and economic impact of the Los Angeles wildfires. It is early stages, but we estimate the insurance industry loss at $40 to $50 billion. and anticipate Greenlight's share of this loss will be $15 million to $30 million as we are somewhat underweight in property compared to the entire company. As we look ahead towards 2025, we are optimistic about the opportunities ahead.

Speaker Change: We have all witnessed the tragic human and economic impact of the Los Angeles wildfires.

Speaker Change: It is early stages, but we estimate the insurance industry loss at $40 to $50 billion.

Speaker Change: And anticipate green lights share of this loss will be 15 million to $30 million.

Speaker Change: As we are somewhat underweight in property compared to the industry.

Speaker Change: As we look ahead towards 2025, we are optimistic about the opportunities ahead.

Greg Richardson: Over the past year, we have strengthened our organization, processes, and balance sheet. Well, we saw modest softening at 1.1. Global uncertainty and losses such as the Los Angeles wildfires serve as a reminder of the importance of reinsurance and adequate rates to support the risks that we assume.

Speaker Change: Over the past year, we have strengthened our organization processes and balance sheet.

Speaker Change: While we saw modest softening at one one.

Speaker Change: Global uncertainty and losses, such as the Los Angeles Wildfires serves as a reminder of the importance of reinsurance and adequate rates to support the risks that we assume.

David: Now I'd like to turn the call over to David.

Faramarz Romer: Now I'd like to turn the call over to David. Thanks, Greg, and good morning, everyone. The Thales Glass Fund returned negative 1.9% in the fourth quarter. Our long portfolio detracted 3% on a gross basis, while the short and macro portfolios contributed 1.2% and 0.1% respectively. During the quarter, the S&P 500 Index advanced 2.4%. The largest positive contributors were long investments in Peloton Interactive and Kindra Holdings and a newly established arbitrage position in MicroStrategy. The largest detractors were long investments in Greenberg Partners and Salve, and a short position in a profitless technology company. Peloton Interactive advanced 86% during the quarter.

David: Thanks, Greg and good morning, everyone.

David: The <unk> class funds returned negative one 9% in the fourth quarter, our long portfolio detracted, 3% on a gross basis, while the short and macro portfolios contributed one 2% and <unk>, 1% respectively.

David: During the quarter, the S&P 500 index advanced to 4%.

David: The largest positive contributors were long investments in peloton interactive and Kendra holdings, and a newly established arbitrage position and micro strategy.

David: The largest detractors for long investments in green brick partners, and Solvay and a short position in a profitless technology company.

David: Peloton interactive advanced 86% during the quarter, but this quarterly update the company demonstrated progress and that's cost cutting initiatives and reaffirmed its commitment to prioritizing profitability peloton also announced the hiring of a well regarded CEO who will begin his tenure with the company around the beginning of the year.

Faramarz Romer: With this quarterly update, the company demonstrated progress in its cost-cutting initiatives and reaffirmed its commitment to prioritizing profit. Peloton also announced the hiring of a well regarded CEO who began his tenure with the company around the beginning of Tindrel Holdings advanced 51% during the quarter. In its most recent quarterly update, Tindrel announced another set of positive results, raised its guidance, and showed significant improvement in The company also reaffirmed its positive fiscal 2025 outlook, with constant currency revenues now expected to return to growth by the fiscal fourth quarter, and margins set to again improve. Our new position shorting levered ETFs that aim to double the daily return of microstrategy stock, which is partially offset by owning microstrategy.

David: Kendra Holdings advanced 51% during the quarter.

David: Its most recent quarterly update <unk> announced another set of positive results raised its guidance and showed significant improvement in signings. The company also reaffirmed its positive fiscal 2025 outlook with constant currency revenues now expected to return to growth by the fish.

<unk> fourth quarter and margins.

Again improved.

David: Our new position shorting Levered Etfs that aim to double the daily return of micro strategy stock, which is partially offset by owning micro strategy stock was our third largest positive contributor.

Faramarz Romer: was our third-largest positive contributor. Greenberg shares fell over 32% over the quarter, giving back most of the gains from the third quarter as rising interest rates weighed on the second quarter. In November, we increased the size of our short basket of homebuilder stocks, which enabled us to offset about half Greenbrick's negative contribution for the quarter. Solve a decline to 12% over the quarter, the company announced quarterly results that mostly met expectations, but allowed for skeptics to debate the quality of the earnings. Also, there were concerns that both demand and pricing for Solvay Soda Ash products had not picked up as hoped around year end.

David: Green brick shares fell over 32% over the quarter, giving back most of the gains from the third quarter as rising interest rates weighed on the sector in November we.

David: We increased the size of our short passed yet homebuilder stocks, which enabled us to offset about half green bricks negative contribution for the quarter.

David: Solvay declined 12% over the quarter the company announced quarterly results that mostly met expectations that allowed for skeptics to debate the quality of the earnings.

David: Also there were concerns that both demand and pricing for Solvay soda ash products had not picked up as hoped around year end.

David: In addition to the micro strategy arbitrage position, we established a new medium size position and CNA industrial and agricultural equipment company.

Faramarz Romer: In addition to the MicroStrategy arbitrage position, we established a new medium-sized position in CNH Industrial and Agricultural Equipment. At year-end, our net exposure was about 33%, which was roughly the same as it was at the beginning of the fourth quarter. We're comfortable maintaining lower gross and net exposure as the market not only remains historically expensive, but the new administration in Washington is creating extraordinary volatility by a constant barrage of newsletters.

David: At year end, our net exposure was about 33%, which was roughly the same as it was at the beginning of the fourth quarter, we're comfortable maintaining lower gross and net exposure is the market not only remains historically expensive, but the new administration of Washington is creating extraordinary volatility.

David: Constant barrage of news flow.

Faramarz Romer: The Solace Glass Fund returned 9.8% in 2024 compared to a 25% return of the S&P 500. Fallis Class returned 2.8% in January and 1.4% in February, bringing the 2025 year-to-date through the end of February to 4.2%. Net exposure in the investment portfolio was approximately 30% at the end of February. We don't usually discuss performance intra-month, but in light of the sharp downturn in equity markets so far this month, we're pleased to report that we had a solidly profitable return through last year. While we ended 2024 with disappointing results, we managed to grow fully diluted book value per share, our key metric by 7.2%.

David: The solid class fund returned nine 8% in 2024 compared to a 25% return of the S&P 500.

David: <unk> class returned two 8% in January and 1.4% in February bringing the 2025 year to date through the end of February to four 2%.

David: Net exposure in the portfolio and the rest of the portfolio was approximately 30% at the end of February.

David: We don't usually discuss performance intra month, but in light of the sharp downturn in equity markets. So far. This month. We're pleased to report that we had a solidly profitable return through last night.

David: While we ended 2024 with disappointing results, we managed to grow fully diluted book value per share our key metric by seven 2%.

Faramarz Romer: Despite the Los Angeles wildfire losses, we started 2025 well, and I'm optimistic about the year ahead.

David: The Los Angeles Wildfire losses, we started 2025, well and I'm optimistic about the year ahead now I'd like to turn the call over to farmers to discuss the financial results in more detail.

Faramarz Romer: Now I'd like to turn the call over to Faramarz to discuss the financial results in more detail. Thank you, David. Good morning, everyone.

Speaker Change: Thank you David and good morning, everyone during.

Faramarz Romer: During the fourth quarter of 2024, Greenlight reported an ad loss of $27.4 million or a loss of $0.81 per diluted share compared to net income of $17.6 million or $0.50 per diluted share during the fourth quarter of 2023. The underwriting loss of $18 million translated into a combined ratio of 112.1%. Fourth quarter CAD losses added 11.9 percentage points to our combined ratio, while the aviation reserves strengthening relating to the Russia-Ukraine conflict contributed 10.1 percentage points of combined ratio.

Speaker Change: During the fourth quarter of 2020 for Greenlight re reported a net loss of $27 $4 million or a loss of 81 cents per diluted share.

Speaker Change: <unk> to net income of $17 $6 million or 50 cents.

Speaker Change: The diluted share during the fourth quarter of 2023.

Speaker Change: The underwriting loss of 18 million translated into a combined ratio of 112, 1%.

Speaker Change: Fourth quarter Cat losses added 11, nine percentage points to our combined ratio, while the aviation reserves strengthening relating to the Russia, Ukraine conflict contributed 10, one percentage points of combined ratio.

Greg Richardson: As Greg mentioned, we have revised our segment disclosures to present, our results separately for the open market segment.

Faramarz Romer: As Greg mentioned, we have revised our segment disclosures to present our results separately for the open market segment and the innovation segment. For each of these segments, we now present the in writing results and any investment income that is directly attributable to those segments. For the open market segment, the investment income includes interest income on the collateral we have pledged to our open market students and any interest and investment income related to our funds at LloydsBiz. For our segment, innovation segment, the investment income includes interest on the Collateral Pledge to the Innovation Seedance and any investment gains or losses from our private innovations investment.

Speaker Change: The innovation segment.

Speaker Change: For each of these segments, we now present, the underwriting results and any investment income that is directly attributable to those segments.

Speaker Change: For the open market segment investment income includes interest income on the collateral we have pledged to our open market seasons, and any interest and investment income related to our funds at Lloyd's business.

Speaker Change: For our segments innovation segment the.

Speaker Change: The investment income includes interest on the collateral pledged to the innovation seasons, and any investment gains or losses from our private innovations investments.

Faramarz Romer: We also allocate corporate and other expenses such as personnel costs and other overhead expenses that can be attributable to the innovations, investments, operations. Any other income or expense that is not attributable to the two segments is included as corporate.

Speaker Change: We also allocated corporate and other expenses such as personnel costs and other overhead expenses that can be attributable to the innovations investments operations.

Speaker Change: Any other income or expense that is not attributable to the two segments is included in that corporate.

Faramarz Romer: As we have mentioned on previous calls, we non-renewed and placed into runoff the Soil Innovations Property Program due to the impact of underlying exposure to severe convective storms. That runoff business is also included under corporate. We believe the new segment reporting structure provides greater transparency and insight into the performance of our in-force business and aligns with how we manage and allocate our capital.

Speaker Change: As we have mentioned on previous calls, we nonrenewed and placed into runoff the sole innovations property program due to the impact of underlying exposure to severe convective storms.

Speaker Change: That runoff business and is also included under corporate.

Speaker Change: We believe the new segment reporting structure provides greater transparency and insight into the performance of our enforced business and aligns with how we manage and allocate our capital.

Faramarz Romer: Now let's turn to the underwriting results by Sigmon. For the fourth quarter, the open market segment's net earned premiums increased 25% to $127.8 million, primarily related to the financial and specialty lines. The open market combined ratio for the fourth quarter was 111.1% compared to 90.9% for the same period in 2023. The impact of aviation losses relating to the Russia-Ukraine conflict accounted for 11.7 combined ratio points. The CAD losses during the fourth quarter accounted for 13.8 combined ratio points, which by comparison, the CAD activity during the same period in 2023 was more benign at three combined ratio points.

Speaker Change: Now, let's turn to the underwriting results by segment.

Speaker Change: For the fourth quarter. The open market segments net earned premiums increased 25% $227 $8 million, primarily related to the financial and specialty lines.

Speaker Change: The open market combined ratio for the fourth quarter was 111, 1% compared to 99% for the same period in 2023.

Speaker Change: The impact of aviation losses relating to the Russia, Ukraine conflict accounted for $11 seven combined ratio points the cat losses during the fourth quarter accounted for $13 eight combined ratio points.

By comparison, the cat activity during the same period in 2023 was more benign at three combined ratio points.

Faramarz Romer: Additionally, we increased our loss reserves on older years casualty business based on updated reporting from CDANS and driven by inflationary trends. The reserve increases were partially offset by favorable loss development on the specialty line. For the full year, open market segments net earned premiums increased by 9.7% to $511.9 million, driven by growth in our property and specialty lines. We also grew the written premiums on our financial line, however those premiums burned out over a longer time frame. For the full year 2024, the open market combined ratio was 99% compared to 89.6% in 2023. The CAD losses in 2024 accounted for 7 combined ratio points and prior year loss development accounted for 2.9 combined ratio points.

Speaker Change: Additionally, we increased our loss reserves on older years casualty business based on updated reporting from C dense and driven by inflationary trends.

Speaker Change: The reserve increases were partially offset by favorable loss development on the specialty line.

Speaker Change: For the full year open market segments net earned premiums increased by nine 7% to $511 $9 million driven by growth in our property and specialty lines.

Speaker Change: We also grew with the written premiums on a financial line.

Speaker Change: However, those premiums earn out over a longer timeframe.

Speaker Change: For the full year 2020 for the open market combined ratio was 99% compared to 89, 6% in 2023.

Speaker Change: The cat losses in 2024 accounted for seven combined ratio points and prior year loss development accounted for $2 nine combined ratio points.

Speaker Change: Turning to our innovation segment for the fourth quarter. The net earned premiums decreased by two by $4 $2 million or 18, 1% to 19 million.

Faramarz Romer: Turning to our innovation segment, for the fourth quarter, the net earned premiums decreased by $4.2 million, or 18.1%, to $19 million, as we reduced our share on a multi-line program. During the fourth quarter, we also put in place a whole account quota share retrocession of 28% of our innovations book. The innovations combined ratio for the fourth quarter was 102.1% compared to 93.4% for the same period in 2023. The main driver of the higher combined ratio in the fourth quarter was adverse loss development on a multiline contract. For the full year, the innovation segment's net earned premiums increased by 20.3% to $86.4 million, driven by growth in our specialty, casualty, and multiline business as new programs were added.

Speaker Change: We reduced our share on a multiline program.

Speaker Change: During the fourth quarter, we also put in place a whole account quota share retrocession of 28% of our innovations book.

Speaker Change: The innovations combined ratio for the fourth quarter was 102, 1% compared to 93, 4% for the same period in 2023. The main driver of the higher combined ratio in the fourth quarter was adverse loss development on a multi line contract.

Speaker Change: For the full year. The innovation segment net earned premiums increased by 23% to $86 4 million driven by growth in our specialty casualty and multiline business as new programs we're at it.

Speaker Change: The innovations combined ratio for the full year 2024 improved to 95, 8% compared to 97, 5% for 2023.

Faramarz Romer: The innovations combined ratio for the full year 2024 improved to 95.8% compared to 97.5% for 2023.

Speaker Change: While both our segments reported underwriting profits for full year 2024.

Faramarz Romer: While both our segments reported underwriting profits for full year 2024, the runoff business related to the homeowners property program generated a loss of $16.8 million, primarily due to the severe convective storms during 2024. For full year 2024, we reported a consolidated combined ratio of 101.4%, which generated a small underwriting loss of $8.2 million. However, we ended the year with $42.8 million of net income and $1.24 of diluted earnings per share, driven by total investment income of $79.6 million. For the full year 2024, we grew our fully diluted book value per share by 7.2% to $17.95 as of December 31st, 2024.

Speaker Change: Runoff business related to the homeowners property program generated a loss of $16 8 million, primarily due to the severe convective storms during 2024.

Speaker Change: For full year 'twenty 'twenty four we reported a consolidated combined ratio of 101, 4%, which generated a small underwriting loss of $8 $2 million.

Speaker Change: However, we ended the year with $42 8 million of net income and a dollar and 24 cents of diluted earnings per share driven by total investment income of $79 6 million.

Speaker Change: For the full year 2024, we grew our fully diluted book value per share by seven 2% to $17.95 as of December 31st 2024.

Speaker Change: So I am 24 was the fifth consecutive year of growing our fully diluted book value per share equating to an annualized growth rate of six 9%.

Faramarz Romer: 2024 was the fifth consecutive year of growing our fully diluted book value per share, equating to an annualized growth rate of 6.9%. While this growth rate is below our expectations, we believe the current in-force book, along with its investment income generating assets, Greenlight RE is capable of delivering double digit growth in book value per share.

Speaker Change: While this growth rate is below our expectations. We believe the current enforce book along with its investment income generating assets Greenlight re is capable of delivering double digit growth in book value per share.

Speaker Change: I will now hand, the call back to the operator to open it up for questions.

Unknown Executive: I will now hand the call back to the operator to open it up for questions. Thank you. And I'll be conducting a question and answer session.

Speaker Change: Thank you, we'll now be conducting a question and answer session.

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Speaker Change: The question queue. Please press.

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Speaker Change: Our first question today is coming from canceling modal easy from Dowling <unk> partners. Your line is now live.

Anthony Mota: Our first question today is coming in from Anthony Mota. from Dowling and Partners, your line is now live. Hi, good morning.

Speaker Change: Yeah.

Speaker Change: Hi, good morning.

Greg Richardson: Greg, do you think you could share some more information on that Q4 charge related to Russia, Ukraine, and maybe help frame it in the sense of how does this fit into your View on the ultimate industry loss, really any additional insight in potential losses to Greenlight would be helpful here. Sure. Good morning, Anthony. Thanks for the question. I'll start and then Faramarz can add color to it. It was the thrust of your question is, how do we view this in terms of ultimate losses? With all of our losses, we endeavor to book what we think are the ultimate loss ratios.

Speaker Change: Greg do you think you could share some more information on that Q4 charge related to Russia, Ukraine and maybe.

Speaker Change: To help frame it in the sense of how does this fit into your view.

Speaker Change: View on the ultimate industry loss really any additional insight in potential losses to greenlight would be helpful. Here. Thank you.

Speaker Change: Sure. Good morning, Anthony Thanks for the question I'll start and then farmers can add color to it.

Speaker Change: It was.

Speaker Change: The boat the thrust of your question is how do we view this in terms of ultimate losses with all of our losses, we endeavor.

Speaker Change: <unk>.

Speaker Change: To book, what we think are the ultimate loss ratios.

Speaker Change: For all the contracts in every line of business. That's our our goal. So this is not intended to be a down payment on what we think the ultimate losses. This is what we think the ultimate losses.

Greg Richardson: Our goal is for all the contracts and every line of business. So this is not intended to be a down payment on what we think the ultimate loss is this is what we think the ultimate loss is. Obviously there is some uncertainty but perhaps not as much as one might think. Already there's been some settlements, significant settlements in the industry, there's been significant legal expenses. And there's a limited bounded number of aircraft involved at the end of the day. So that limits the range. In addition, we have outward retrocession. So we're booking a number which is net of that.

Obviously, there is some uncertainty, but perhaps not as much as one might think already theres been some settlements significant settlements in the industry. There's been significant legal expenses and then Theres a limited bounded number of aircraft involved.

Speaker Change: At the end of the day, so that limits. The range. In addition, we have outward retrocession. So were booking a number which is net of all of that and that that retrocession will cover is not exhausted we're into it but not exhausted. So that also dampens the uncertainty where there is.

Faramarz Romer: And that retrocessional cover is not exhausted. We're into it but not exhausted. So that also dampens the uncertainty. Where there is, I think for us, the most uncertainty is the treatment of the interpretation of the loss in terms of number of events and how it's reported by our reinsurers into the reinsurance and retrocessional market. So those are the biggest drivers of the uncertainty.

Speaker Change: I think for us the most uncertainty is the treatment of.

Speaker Change: The interpretation of the loss in terms of the number of events and how it's reported by our reinsurance into the reinsurance and retro sessional market. So those are that those are the biggest drivers of the uncertainty farmers do you want add any color to that or is that pretty much no. I think you know as well.

Faramarz Romer: Farmers, do you want to add any color to that or is that pretty much? No, I think we've always reserved at our best estimate as Greg said. And it's hard to tell exactly how much the ultimate settlements will be. As reinsurers we're one layer removed and there's been a lot of settlements happening on the underlying business. But there could be various movements on it. The one thing we haven't received are formal notices or formal notifications from our students on the losses. So at this point, all of the reserve that we've booked previously in 2022 as well as the increase this quarter is booked as IB&R.

Greg Richardson: But we've always reserve at our best estimate as Greg said and there's.

Greg Richardson: It's hard to tell exactly how much the ultimate settlements will be you know as reinsurers were one layer removed and there's been a lot of settlements happening on the underlying on the underlying business.

Greg Richardson: But you know there that there could be you know various movements on it. The one thing we haven't received our formal notices are formal notifications from our seat and so on the losses. So you know at this point all of the reserves that these bulks and previously in 2022.

Greg Richardson: Two as well as the increase this quarter as both as the IV NR. So we're anticipating that it's going to be claims now signed to flow in from what they're hearing in the industry.

Anthony Mota: So we're anticipating there's going to be claims now starting to flow in from what we're hearing in the industry. So we've taken the strengthening this quarter in anticipation of that. Thank you for the full answer on that.

Greg Richardson: So we've taken we've taken the strengthening this quarter in anticipation of that.

Greg Richardson: Okay.

Greg Richardson: Alright.

Speaker Change: Yeah, Yeah, Yeah. It does thank you for the full answer on that if I may I have a second question specifically was thinking about the other adverse development trends you cited in the quarter.

Greg Richardson: If I may, I have a second question. Specifically, I was thinking about the other adverse development trends you cited in the quarter. Sounds specific to casualty books. I was curious, you know, if there are any Primary accident years or specific books of businesses impacted by inflationary or other accelerating trends. Just anything you can share there. Yeah, these are secondary and smaller issues relative to the Ukraine. Adverse Development. We continue. to observe the development in casualty lines. Our historical exposure to sort of the broader market casualty trends are primarily from earlier years from a large retro-sessional contract that we wrote.

Greg Richardson:

Greg Richardson: It sounds specific to casualty books I was curious you know if there are any.

Greg Richardson: Primary accident years are specific books of businesses impacted by inflationary or other accelerating trends just anything you can share there.

Greg Richardson: Yeah. These are <unk>.

Greg Richardson: Secondary is smaller issues relative to <unk>.

Greg Richardson: The Ukraine.

Greg Richardson: The adverse development we continue.

Greg Richardson: To observe the development and cashed the lines.

Greg Richardson: Our historical exposure to sort of the broader market casualty trends are primarily from earlier years from a large retro sessional contracts that we wrote.

Greg Richardson: Fortunately that contract was started to shrink before. before the market started getting particularly bad. I think our biggest exposure is maybe in the 15, 16, 17 years, but then diminishing for 18 and 19. So in terms of that wholesale open market, you know, cashly reinsurance adverse development, that's barely older. We think that we have that pretty well boxed in, but you know, there, you know, we can't guarantee that, but it's not huge, we don't think. I think our go forward book tends to be smaller limits, more frequency, severity, not the major casualty programs that are subject to nuclear verdicts and aggressive plaintiff attorneys and severity kind of problems that have been plaguing the industry.

Greg Richardson: Fortunately that contract was.

Greg Richardson: It started to shrink before.

Greg Richardson:

Greg Richardson: Before the market started getting particularly bad I think our biggest exposure is maybe in the 15 16 and 17 years, but then diminishing for 18 and 19.

Greg Richardson: So in terms of that wholesale open market.

Greg Richardson: Casualty reinsurance adverse development.

Greg Richardson: That's fairly older. We think we have that pretty well boxed in but you know what.

Greg Richardson: There you know we can't guarantee that but its not huge we don't think I think our go forward book tends to be smaller limits more frequency severity not the major casualty programs that are subject to a nuclear verdicts and aggressive plaintiff attorneys and severity kind of problems that are there.

Greg Richardson: Plaguing the industry.

Faramarz Romer: So So that's, you know, we have seen some adverse development in the cash flow lines. It's not. something that is we think is hugely probable. Is that a fair answer?

Greg Richardson: No.

Greg Richardson: So that's you know we have seen some adverse development in casualty lines, it's not.

Greg Richardson: Something that is we think its hugely problematic for us.

Greg Richardson: Fair answer yes.

Greg Richardson: You know, there's some of the legacy casualty contracts is what's impacting it.

Greg Richardson: Some of the legacy casualty contracts is what's impacting it. We did, in the quarter, have favorable development on our specialty lines as well. So when you look at our overall adverse development for the quarter, Ukraine was by far the largest. We had some adverse on casualty, which was, for the most part, offset by favorable development on our specialty books. Okay, thank you. And as I think about sort of this go forward book, you know, you shared an update about one-on-one renewals for property on specialty.

Greg Richardson: In the quarter have favorable development on our specialty lines as well. So when you look at our overall adverse development for the quarter, Ukraine was by far the largest we had some adverse on casualty, which was for the most part offset by favorable development on our specialty book.

Greg Richardson: Okay. Thank you.

Greg Richardson: And as I think about sort of the go forward book you know you shared.

Greg Richardson: About one one renewals for property on specialty how are you thinking about where does casualty fit into the growth profile today or are there areas specific.

Greg Richardson: How are you thinking about where does casualty fit into Growth Profile specific lines of business that you find attracting now, or is there still just caution given the loss environment here? Yeah, I think caution, you know, our As an underwriting team, we're very much underwriting margin focus. And so You know, casualty. Today I think is being underwritten with an eye to future investment income. I think there's a role of IOS that's playing in this that allows people to monetize future investment income in the forms of seeding commissions. I think that we're not likely to be a major player on the large U.S.

Greg Richardson: Specific lines of business that you find attractive now or is there still just caution given the loss environment here.

Greg Richardson: Yeah, I think caution you know are.

Greg Richardson: As an underwriting team, we're very much underwriting margin focus and so.

Greg Richardson: You know casualty.

Greg Richardson: Today, I think is being underwritten with an eye to future investment income I think there's a rollover.

Greg Richardson: IOS that's playing in this that allows people to monetize future investment income in the forms of ceding commissions.

Greg Richardson: <unk>.

Greg Richardson: I think that that major we're not likely to be a major player on the on the large.

Greg Richardson: Our U S national casualty programs, but where we are attracted as some of these smaller programs and we definitely don't want to turn off the spigot on that area. There's a lot going on there I think some of the major markets and in the reinsurance industry are being cautious in that area and maybe.

Greg Richardson: national casualty programs, but where we are attracted is some of these smaller programs, and we definitely don't want to turn off the spigot on that area. There's a lot going on there. I think some of the major markets in the reinsurance industry are being cautious in that area and maybe even pulling back, and that can also create opportunities in casualty. So I don't want to paint a completely negative picture about casualty, but we want to be sort of strategic and targeted where we, Greenlight Re, as a smaller company, can compete most effectively. And I think some of that, for example, is in our innovation.

Greg Richardson: He even pulling back and that can also create opportunities in casualty. So I don't want to paint a completely negative picture about casualty.

Greg Richardson: But we want to be sort of strategic and targeted where we greenlight re as a smaller company can compete most effectively and I think some of that for example is in our innovation space.

Greg Richardson: Yeah.

Greg Richardson: Well. Thank you for your time and for all the answers today.

Anthony Mota: Thank you for your time and for all the answers today.

Speaker Change: Okay any other questions. Yes. Thank you. Our next question is coming from Eric Hagen from <unk>. Your line is now live.

Unknown Executive: Okay, any other questions? Yeah, thank you.

Eric Hagen: Our next question is from Eric Hagen from BTIG.

Greg Richardson: Your line is now live. Yeah, I think It's incremental, not step change. As we said at Investor Day, we continue to find the returns on our SILPI investment strategy very attractive. And so. Over time, continuing with that allocation, possibly increasing the allocation is something that is accretive to us, as we indicated on Investor Day. Open market is subject to cyclical pressures in the overall global reinsurance market. So we did see softening, modest softening, maybe a little more than we expected, though, at Investor Day. I think the rates remain very attractive. So, as you see, we grew that segment at 1.1.

Eric Hagen: Hey, Thanks, Good morning, good to hear from you guys and thanks for a great Investor day back in November.

Eric Hagen: I want to revisit the overall capital allocation, how do you see the target allocation may be changing with the chunk of the business renewing over the next you know the near to medium term and as the broader market volatility right now actually serve as an opportunistic window to deviate from our capital allocation strategy overall.

Eric Hagen: At all here. Thank you.

Eric Hagen: Yeah I think.

Eric Hagen: Okay.

Eric Hagen: It's it's incremental not a step change.

Eric Hagen: As we said at Investor Day.

Eric Hagen: We continue to find the returns on our <unk> investment strategy very attractive.

Eric Hagen: Uh huh.

Eric Hagen: And so.

Eric Hagen: Over time continuing to.

Eric Hagen: With that allocation, possibly increasing the allocation is is is something that is accretive to us as we indicated on investor day open market is subject to cyclical pressures in.

Eric Hagen: In the overall global reinsurance market. So we did see softening modest softening, maybe a little more than we expected, though at Investor Day, I don't I think the rates remain very attractive. So you know as you see we grew that segment.

Eric Hagen: Segment at one one.

Faramarz Romer: But if rates continue to soften, and all indications are that they will in 26 and beyond, absent major market-changing events. Then we would begin probably to reallocate capital from that, perhaps increase our outwards purchases is one way to manage that capital allocation down. And, you know, what do we do? We either could allocate that capital to innovations, to other pillars, or buy back shares.

Eric Hagen:

Eric Hagen: But if rates continue to soften and and all indications are that they will in 26 and beyond absent major market changing events.

Eric Hagen: Then we would begin probably to reallocate capital from that.

Eric Hagen: Perhaps increase our outward.

Eric Hagen: Outwards purchases as one way to manage that capital allocation down.

Eric Hagen: And you know.

Eric Hagen: What do we do either could allocate that capital to innovations two other pillars or buy back shares, but that's more of a <unk> 26 and beyond kind of a question innovations again, we are we find that attractive we see that as a great growth opportunity building on some really distinctive strengths that green.

Greg Richardson: But that's more of a 26 and beyond kind of a question. Innovations, again, we find that attractive, we see that as a great growth opportunity, building on some really distinctive strengths that Greenlight has in that area. And, and I'm committed to finding ways to leverage those strengths. So that's an area we would look for.

Eric Hagen: Light has in that area.

Eric Hagen: And I'm committed to finding ways to leverage those strengths. So that scenario, we would look for for growth over time.

Faramarz Romer: And Eric, the only thing I would add, this is Faramarz, is that, you know, on the innovation side, we did enter into a whole account quota share in Q4, which was, you know, a way of allocating capital and allowing for more growth in that segment by freeing up some capital by having that retro program in place as well. Yep, okay, this is helpful. Thank you guys.

Speaker Change: And Eric the only thing I would add the farmers is that you know on the innovation side, we did enter into a whole account quota share in Q4, which was a way of allocating capital and allowing for more growth in that segment.

Speaker Change: By freeing up some capital by having that retro program in place as well.

Speaker Change: Yeah. Okay. This is helpful. Thank you guys on the micro strategy arbitrage is there a target rate of return you're looking for on an opportunistic trade like that but how does it compare to the target return you might look for another pair trades or opportunities you're applying solas class.

David Romer: On the micro strategy arbitrage, is there a target rate of return you're looking for on an opportunistic trade like that? And how does it compare to the target return you might look for in other pair trades, or opportunities you apply in solace class? Yeah, this is David. Thanks for the question. I don't think there's a way to calculate a target rate of return for the arbitrage. There's two dynamics that work for it. One is that the double levered ETFs relating to micro strategy achieve some of their leverage through high volatility, very expensive call options. And as those call options decay or have to get rolled on a continued basis, there's just a drain in NAV that investors who own these things don't seem to appreciate.

Speaker Change: Yeah. This is David Thanks for the question.

Speaker Change: I don't think there's a way to calculate a target rate of return for the arbitrage. There's two dynamics that work for it one is that the double levered etf's relating to micro strategy.

Speaker Change: <unk> achieved some of their leverage through high volatility very expensive call options and as those call options decay or have to get rolled on a continued basis. There's just a drain and N V that investors who own these things don't seem too.

Speaker Change: I appreciate it and then secondarily, there's the impact of the negative gamma that is created through the double leverage such that on up days they have to buy more and on down days they have to sell more so to the extent you have chop. The gamma you know kind of destroys the return the return on that on that position since.

David Romer: And then secondarily, there's the impact of the negative gamma that is created through the double leverage such that on up days, they have to buy more and on down days, they have to sell more. So to the extent you have chop, the gamma, you know, kind of destroys the return. The return on that on that position, since we put it on, has been exceedingly high. It probably annualizes nearly triple digits. So it's a lot better than many other things that we've been able to do.

Speaker Change: We put it on.

Speaker Change: <unk> has been exceedingly high it's probably annualized is nearly nearly triple digits. So it's it's a it's a lot better than many other things that where <unk> been able to do.

Speaker Change: Great stuff appreciate you guys. Thank you sure.

Unknown Executive: http://incompetech.com There are no further questions at this time.

Speaker Change: Okay.

Speaker Change: Thank you there are no further questions at this time.

Unknown Executive: If you have any follow-up questions, please direct them to Karen Daly of the Equity Grouping at ir at greenlightread.ky should be happy to assist.

Speaker Change: Should you have any follow up questions. Please direct them to Karen daily of the equity group at.

Speaker Change: Alright, Greenlight re Dr T y.

Speaker Change: I'll be happy to assist you.

Unknown Executive: This now concludes Greenlight Re's fourth quarter and year-end 2024 Earnings Conference. Thank you. You may now disconnect.

Speaker Change: This now concludes <unk> fourth quarter and year end 2024 earnings conference call. Thank you you may now disconnect.

Speaker Change: Yeah.