Greenlight Capital Re Ltd. (GLRE) filed Quarterly Report for the period ended 2009-06-30.
GREENLIGHT CAPITAL REINSURANCE LTD. is an AM Best `A-` (Excellent) rated specialty property and casualty reinsurance company based in the Cayman Islands. The Company provides a variety of custom-tailored reinsurance solutions to the insurance risk retention group captive and financial marketplaces. 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. Greenlight Capital Re Ltd. has a market cap of $570 million; its shares were traded at around $19.01 with and P/S ratio of 4.5.
Highlight of Business Operations:
For the three months ended June 30, 2009, we reported net income of $92.2 million, as compared to $33.5 million reported for the same period in 2008. The increase in net income is principally due to our investment portfolio reporting a net gain of $88.3 million, or a return of 13.9%, for the second quarter of 2009 as compared to a net investment income of $31.0 million, or a return of 4.5%, for the same period in 2008. Underwriting income reported for the three months ended June 30, 2009 increased by $4.1 million to $10.2 million from $6.1 million reported for the three months ended June 30, 2008.
For the six months ended June 30, 2009, we reported a net income of $120.0 million, as compared to net income of $28.8 million reported for the same period in 2008. The increase in net income is principally due to our investment portfolio reporting a net gain of $116.0 million, or a return of 19.1%, for the six months ended June 30, 2009 as compared to a net investment income of $25.3 million, or a return of 3.6%, for the same period in 2008. Underwriting income reported for the six months ended June 30, 2009 increased by $1.4 million to $13.0 million from $11.6 million reported for the six months ended June 30, 2008.
Our primary financial goal is to increase the long-term value in fully diluted book value per share. During the three months ended June 30, 2009, fully diluted book value increased by $2.48 per share, or 17.4%, to $16.73 per share from $14.25 per share at March 31, 2009. During the six months ended June 30, 2009, fully diluted book value increased by $3.18 per share, or 23.5%, to $16.73 per share from $13.55 per share at December 31, 2008. Fully diluted book value per share is a non-GAAP measure and represents basic 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. We believe that long term growth in fully diluted book value per share is the most relevant measure of our financial performance. In addition, fully diluted 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.
We expect quarterly reporting of premiums written to remain volatile as our underwriting portfolio continues to develop. Additionally, the composition of premiums written between frequency and severity business will vary from quarter to quarter depending on the specific market opportunities that we pursue. The volatility in premiums is reflected in the premiums written for both frequency business and severity business when comparing the three and six month periods ended June 30, 2009 and 2008. For the three months ended June 30, 2009, the frequency premiums increased by $46.2 million. The largest contributor to the increase was a new multi-year homeowners personal lines contract entered into during the second quarter of 2009 accounting for $17.7 million of the increase. Increases in motor liability and health coverage premiums accounted for $8.3 million and $6.1 million of the increases respectively. In addition, frequency premiums written for general liability line were higher by $5.5 million. A contract entered into during July 2008 accounted for $12.5 million of the increase, offset by a $7.0 million reduction on another general liability contract which was renewed in May 2009 as a quota share contract whereas the expiring contract was an excess of loss contract. Premiums written on quota share contracts are recorded over the period of coverage while premiums written on an excess of loss contract are recorded in full at inception. Workers\' compensation premiums written accounted for $3.3 million of the increase. The remaining increases in frequency premiums resulted from premiums returned and premiums adjusted during the three months ended June 30, 2008.
For the six months ended June 30, 2009, the $36.2 million increase in frequency premiums written was largely attributable to a new multi-year homeowners personal lines contract which accounted for $17.7 million of the increase. In addition, workers\' compensation, and general liability lines contributed $8.5 million, and $6.8 million, respectively, to the increase in frequency premiums written. These increases in premiums written were offset by decreases in the specialty health premiums written of $2.5 million during the six months ended June 30, 2009.
For the six months ended June 30, 2009, the increase in severity premiums of $9.6 million was principally due to an increase in commercial property lines, primarily from a new excess of loss contract written ($11.5 million) and additional premiums on an existing excess of loss contract ($2.5 million), offset by a decrease in medical malpractice lines ($4.5 million). A detailed analysis of gross premiums written by line of business can be found in Note 8 to the condensed consolidated financial statements.
GLRE is in the portfolios of Daniel Loeb of Third Point, LLC, John Griffin of Blue Ridge Capital, Bill Ackman of Pershing Square Capital Management, L.P., Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, George Soros of Soros Fund Management LLC.
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