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Greenlight Capital Re Ltd. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 31, 2011 05:50PM
Greenlight Capital Re Ltd. (GLRE) filed Quarterly Report for the period ended 2011-09-30.
Highlight of Business Operations:For the three months ended September 30, 2011, the increase in the severity acquisition cost ratio from 14.9% to 18.1% was principally related to a multi-year professional liability excess of loss contract where we are holding a profit commission payable to the client and accrue interest on the amount withheld. We record this interest expense as an underwriting expense since it is directly related to this contract. Given that all the premiums on this contract were earned in prior periods, the interest expense caused the acquisition cost ratio for the three months ended September 30, 2011 to increase compared to the same period in 2010.
Each of the facilities contain customary events of default and restrictive covenants, including but not limited to, limitations on liens on collateral, transactions with affiliates, mergers and sales of assets, as well as solvency and maintenance of certain minimum pledged equity requirements, and restricts issuance of any debt without the consent of the letter of credit provider. Additionally, if an event of default exists, as defined in the letter of credit facilities, Greenlight Re would be prohibited from paying dividends to its parent company. The Company was in compliance with all the covenants of each of these facilities for the nine months ended September 30, 2011.
Stocks Discussed: GLRE,