8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

July 31, 2018

Date of report (Date of earliest event reported) 

GREENLIGHT CAPITAL RE, LTD.

(Exact name of registrant as specified in charter)

Cayman Islands (State or other jurisdiction of incorporation)	001-33493 (Commission file number)	N/A (IRS employer identification no.)
65 Market Street, Suite 1207, Jasmine Court, Camana Bay, P.O. Box 31110 Grand Cayman, Cayman Islands (Address of principal executive offices)		KY1-1205 (Zip code)

(345) 943-4573

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act. ¨

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02 Results of Operations and Financial Condition

On July 31, 2018, Greenlight Capital Re, Ltd. (the "Registrant") issued a press release announcing its financial results for the second quarter and six months ended June 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

In accordance with general instruction B.2 to Form 8-K, the information set forth in this Item 2.02 (including Exhibit 99.1) shall be deemed “furnished” and not “filed” with the Securities and Exchange Commission for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Earnings press release, "GREENLIGHT RE ANNOUNCES SECOND QUARTER 2018 FINANCIAL RESULTS", dated July 31, 2018, issued by the Registrant.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GREENLIGHT CAPITAL RE, LTD.
(Registrant)
By:	/s/ Tim Courtis
Name:	Tim Courtis
Title:	Chief Financial Officer
Date:	July 31, 2018

EX-99.1

GREENLIGHT RE ANNOUNCES

SECOND QUARTER2018 FINANCIAL RESULTS

Company to Hold Conference Call at 9:00 a.m. ET on Wednesday, August 1, 2018

GRAND CAYMAN, Cayman Islands - July 31, 2018- Greenlight Capital Re, Ltd. (NASDAQ: GLRE) today announced financial results for the second quarter ended June 30, 2018. Greenlight Re reported a net loss of $37.4 million for the second quarter of 2018, compared to a net loss of $35.5 million for the same period in 2017. The loss was primarily driven by a net investment loss during the period, partially offset by stronger underwriting performance. The net loss per share for the second quarter of 2018 was $1.01, compared to a net loss per share of $0.96 for the same period in 2017.

Fully diluted adjusted book value per share was $17.38 as of June 30, 2018, compared to $22.64 per share as of June 30, 2017, and $18.35 as of March 31, 2018.

Management Commentary

Simon Burton, Chief Executive Officer of Greenlight Re, stated, “We are pleased to see our combined ratio at 96.0% for the quarter, marking consecutive quarters of improved underwriting profitability. Gross written premiums were lower during the period due to continued work on portfolio rebalancing. Greenlight is focused on underwriting profitability while also diversifying our portfolio and the results are beginning to materialize.”

David Einhorn, Chairman of the Board of Directors, stated, “The second quarter showed solid execution by our underwriting team, as the processes and strategies that Simon and our management team have implemented are beginning to show results. However, the quarter continued to be challenging for our value-investing strategy. Our investment portfolio reported a loss of 3.8% in the second quarter. We remain confident in our portfolio, as the valuation disconnect on many of our largest positions has increased despite generally improving fundamentals.”

Financial and Operating Highlights

Second Quarter 2018

• Gross written premiums of $142.1 million, a decrease from $174.9 million in the second quarter of 2017. The premium decrease was primarily due to the non-renewal of a Florida homeowner’s quota share contract during the fourth quarter of 2017, as well as a lower participation in a multi-line casualty contract and non-renewal of certain professional liability contracts.

• Ceded premiums were $27.2 million compared to $2.5 million in the prior year period as the Company continued to cede off a portion of its non-standard automobile business.

• Net earned premiums were $128.8 million, a decrease from $160.3 million reported in the prior-year period.

• Net investment loss of $40.7 million, compared to a net investment loss of $39.1 million in the second quarter of 2017.

• Underwriting income of $5.1 million, compared to underwriting income of $4.8 million in the second quarter of 2017.

• The Company reported a small favorable prior year development of approximately $0.8 million, primarily due to a favorable change in estimated attritional catastrophe losses.

• A composite ratio for the quarter of 92.7%, compared to 94.4% for the prior-year period. The combined ratio for the quarter was 96.0% compared to 96.9% for the prior-year period.

Six Months Ended June 30, 2018

• Gross written premiums were $317.2 million, a decrease of 14.7% from $372.1 million reported in the prior year period.

• Net earned premiums were $274.7 million, a decrease of 12.0% from $312.2 million reported in the prior-year period.

• Net investment loss of $185.9 million, compared to a net investment loss of $27.5 million reported in the prior-year period.

• A composite ratio for the six months ended June 30, 2018 of 94.5%, compared to 95.9% for the prior-year period. The combined ratio for the six months ended June 30, 2018 was 97.3%, compared to 98.5% for the prior-year period.

Conference Call Details

Greenlight Re will hold a live conference call to discuss its financial results for the second quarter ended June 30, 2018 on Wednesday, August 1, 2018 at 9:00 a.m. Eastern time.  The conference call title is Greenlight Capital Re, Ltd. Second Quarter2018 Earnings Call.

To participate in the Greenlight Capital Re, Ltd. Second Quarter2018 Earnings Call, please dial in to the conference call at:

U.S. toll free1-888-336-7152

International1-412-902-4178

Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN.

Conference Call registration link: http://dpregister.com/10121349

The conference call can also be accessed via webcast at:

https://services.choruscall.com/links/glre180731.html

A telephone replay of the call will be available from 11:00 a.m. Eastern time on August 1, 2018 until 9:00 a.m. Eastern time on August 8, 2018.  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 10121349. An audio file of the call will also be available on the Company’s website, www.greenlightre.com .

###

Regulation G

Fully diluted adjusted book value per share is considered 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 and RSUs 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 because it provides management and investors a yardstick by which to monitor the shareholder value generated. 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 property and casualty reinsurance industry.

Net underwriting income (loss) is considered a non-GAAP financial measure because it excludes items used in the calculation of net income before taxes under U.S. GAAP. The measure includes underwriting expenses which are directly related to underwriting activities as well as an allocation of other general and administrative expenses. Net underwriting income (loss) is calculated as net premiums earned, less net loss and loss adjustment expenses incurred, less, acquisition costs and less underwriting expenses. The measure excludes, on a recurring basis: (1) net investment income; (2) any foreign exchange gains or losses; (3) corporate general and administrative expenses; (4) other income (expense) not related to underwriting, and (5) income taxes and income attributable to non-controlling interest. We exclude net investment income and foreign exchange gains or losses as we believe these are influenced by market conditions and other factors not related to underwriting decisions. We exclude corporate general and administrative expenses because these expenses are generally fixed and not incremental to or directly related to our underwriting operations. We believe all of these amounts are largely independent of our underwriting process and including them distorts the analysis of trends in our underwriting operations. We include other income and expense relating to deposit accounted contracts and industry loss warranty contracts which we believe are part of our underwriting operations and should be reflected in our underwriting income (loss). Net underwriting income should not be viewed as a substitute for U.S. GAAP net income.

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.

Established in 2004, Greenlight Re (www.greenlightre.com) is a NASDAQ listed company with specialist property and casualty reinsurance companies based in the Cayman Islands and Ireland.  Greenlight Re provides risk management products and services to the insurance, reinsurance and other risk marketplaces.  The Company focuses on delivering risk solutions to clients and brokers by whom Greenlight Re's expertise, analytics and customer service offerings are demanded.  With an emphasis on deriving superior returns from both sides of the balance sheet, Greenlight Re manages its assets according to a value-oriented equity-focused strategy that supports the goal of long-term growth in book value per share.

Contact:

Investor Relations:

Adam Prior

The Equity Group Inc.

(212) 836-9606

IR@greenlightre.ky

Public Relations/Media:

Mairi Mallon

Rein4ce

+44 (0)203 786 1160

mairi.mallon@rein4ce.co.uk

GREENLIGHT CAPITAL RE, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2018 and December 31, 2017

(expressed in thousands of U.S. dollars, except per share and share amounts)

	June 30, 2018		December 31, 2017
	(unaudited)		(audited)
Assets
Investments
Debt instruments, trading, at fair value	$	13,831	$	7,180
Equity securities, trading, at fair value	820,493		1,203,672
Other investments, at fair value	69,251		152,132
Total investments	903,575		1,362,984
Cash and cash equivalents	65,441		27,285
Restricted cash and cash equivalents	1,264,941		1,503,813
Financial contracts receivable, at fair value	68,123		12,893
Reinsurance balances receivable	321,873		301,762
Loss and loss adjustment expenses recoverable	37,005		29,459
Deferred acquisition costs, net	56,136		62,350
Unearned premiums ceded	28,735		25,120
Notes receivable, net	28,612		28,497
Other assets	4,327		3,230
Total assets	$	2,778,768	$	3,357,393
Liabilities and equity
Liabilities
Securities sold, not yet purchased, at fair value	$	681,278	$	912,797
Financial contracts payable, at fair value	18,746		22,222
Due to prime brokers and other financial institutions	520,172		672,700
Loss and loss adjustment expense reserves	474,338		464,380
Unearned premium reserves	244,807		255,818
Reinsurance balances payable	147,096		144,058
Funds withheld	16,946		23,579
Other liabilities	7,284		10,413
Total liabilities	2,110,667		2,505,967
Redeemable non-controlling interest in related party joint venture	6,436		7,169
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, 31,160,544 (2017: 31,104,830): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,715 (2017: 6,254,715))	3,742		3,736
Additional paid-in capital	503,331		503,316
Retained earnings	143,873		324,272
Shareholders’ equity attributable to shareholders	650,946		831,324
Non-controlling interest in related party joint venture	10,719		12,933
Total equity	661,665		844,257
Total liabilities, redeemable non-controlling interest and equity	$	2,778,768	$	3,357,393

GREENLIGHT CAPITAL RE, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

For the three and six months ended June 30, 2018 and 2017

(expressed in thousands of U.S. dollars, except per share and share amounts)

	Three months ended June 30						Six months ended June 30
	2018			2017			2018			2017
Revenues
Gross premiums written	$	142,109		$	174,889		$	317,234		$	372,103
Gross premiums ceded	(27,237		)	(2,523		)	(57,080		)	(5,949		)
Net premiums written	114,872			172,366			260,154			366,154
Change in net unearned premium reserves	13,944			(12,042		)	14,506			(53,928		)
Net premiums earned	128,816			160,324			274,660			312,226
Net investment income (loss) [net of related party expenses of $4,131, $3,148, $8,585 and $8,644]	(40,656		)	(39,149		)	(185,872		)	(27,531		)
Other income (expense), net	(76		)	303			(563		)	296
Total revenues	88,084			121,478			88,225			284,991
Expenses
Loss and loss adjustment expenses incurred, net	84,815			106,016			180,639			210,828
Acquisition costs, net	34,623			45,429			78,832			88,640
General and administrative expenses	6,958			6,347			12,914			13,090
Total expenses	126,396			157,792			272,385			312,558
Income (loss) before income tax	(38,312		)	(36,314		)	(184,160		)	(27,567		)
Income tax benefit	323			295			1,093			174
Net income (loss) including non-controlling interest	(37,989		)	(36,019		)	(183,067		)	(27,393		)
Loss (income) attributable to non-controlling interest in related party joint venture	621			550			2,947			298
Net income (loss)	$	(37,368	)	$	(35,469	)	$	(180,120	)	$	(27,095	)
Earnings (loss) per share
Basic	$	(1.01	)	$	(0.96	)	$	(4.87	)	$	(0.73	)
Diluted	$	(1.01	)	$	(0.96	)	$	(4.87	)	$	(0.73	)
Weighted average number of ordinary shares used in the determination of earnings and loss per share
Basic	36,952,472			37,025,703			36,950,828			37,009,539
Diluted	36,952,472			37,025,703			36,950,828			37,009,539

The following table provides the ratios for the six months ended June 30, 2018 and 2017:

	Six months ended June 30
	2018								2017
	Property		Casualty		Other		Total		Property		Casualty		Other		Total
Loss ratio	41.6	%	76.3	%	53.7	%	65.8	%	61.2	%	70.2	%	63.8	%	67.5	%
Acquisition cost ratio	23.3	%	24.5	%	44.6	%	28.7	%	30.7	%	26.3	%	35.1	%	28.4	%
Composite ratio	64.9	%	100.8	%	98.3	%	94.5	%	91.9	%	96.5	%	98.9	%	95.9	%
Underwriting expense ratio							2.8	%							2.6	%
Combined ratio							97.3	%							98.5	%