Greenlight Re Posts $29.6 Million Loss on Middle East Reserve, CAT Losses
Greenlight Capital Re swung to a $29.6 million net loss in the second quarter as a newly disclosed Middle East exposure reserve and rising catastrophe losses pushed its combined ratio above 100% for the first time in five quarters.
Greenlight Capital Re (GLRE), the Cayman Islands-based reinsurer, reported a net loss of $29.6 million, or $0.89 a diluted share, for the second quarter, reversing a $0.3 million profit a year earlier and the $35.8 million profit posted just one quarter prior.
The loss followed the company's first disclosure of a reserve tied to Middle East exposure, which the company's chief executive cited as a primary driver of the quarter's results. The reserve had not appeared in any of the four preceding quarterly releases.
The combined ratio rose to 100.1% in the quarter, up from 95.0% a year earlier and from 96.0% in the first quarter, ending a four-quarter streak of underwriting profitability that had included a record 86.6% combined ratio in the third quarter of 2024. The current year loss ratio climbed to 68.8% from 60.0%, and net underwriting results swung to a loss of $0.2 million from income of $8.1 million a year earlier.
Investment results compounded the underwriting weakness. Total investment losses widened to $23.8 million from $7.8 million a year earlier, reversing $40.4 million of investment income in the first quarter and $44.8 million in the fourth quarter of 2024. The company's investment in Solasglas, run by affiliated manager David Einhorn's Greenlight Capital, swung to a $27.9 million loss from an $18.3 million loss a year earlier, following a $5.8 million gain in the first quarter. Foreign exchange results also turned negative, a $0.6 million loss versus a $6.3 million gain a year earlier.
Segment performance diverged. The Innovations segment's underwriting income improved to $2.6 million from an underwriting loss of $1.5 million a year earlier, while the Open Market segment swung to a $1.0 million underwriting loss from $11.2 million of underwriting income, a mix shift that left the smaller, faster-growing Innovations book outperforming the company's legacy reinsurance business.
Gross premiums written rose just 2% year over year in the quarter, a sharp deceleration from 11% growth for full-year 2024 and 12% in the fourth quarter, with six-month gross premiums written for 2025 down 4% from the prior-year period. Gross premiums ceded more than doubled to $36.3 million from $15.1 million, pushing net premiums written down to $146.8 million from $164.5 million even as gross premiums rose.
Fully diluted book value per share fell 3.7% sequentially to $20.61 at June 30 from $21.40 at March 31, the first sequential decline after three consecutive quarterly increases.
Greenlight Re repurchased $14.2 million of shares in the quarter at an average price of $17.69, up from $5.0 million at $13.99 a year earlier and $5.0 million at $16.70 in the first quarter. The company repurchased an additional $3.9 million of shares at $16.42 apiece after quarter-end through August 3, following $9.5 million bought back in April at $18.38.