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GREENLIGHT CAPITAL RE, LTD. (GLRE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered positive net income ($29.6M; $0.86 diluted EPS) and 5.1% growth in fully diluted book value per share (FD BVPS) to $18.87, driven by strong investment income (Solasglas +7.2% in the quarter), while underwriting posted a loss tied to the California wildfires (14 pts of combined ratio) .
  • Underwriting combined ratio rose to 104.6% (vs. 97.9% LY), with net underwriting loss of $7.8M; prior-year development added 2.1 pts following a $22M strengthening of historical casualty reserves offset by $19M of specialty/property releases .
  • Investment engines outperformed: total investment income of $40.5M (Solasglas income $32.2M), positioning GLRE to benefit from anticipated higher market volatility; net exposure reduced to ~20% with bearish macro stance, and YTD Solasglas return cited at 10.6% through April contextually (April result noted on the call) .
  • Strategic pivot: casualty MGA flow moving primarily to the Innovations channel to improve data visibility/control; near-term casualty contraction expected as open-market casualty is non-renewed, with intent to rebuild via Innovations .

What Went Well and What Went Wrong

  • What Went Well

    • Strong investment performance offset underwriting losses: total investment income $40.5M with Solasglas +7.2% return; “outstanding return… despite challenging market conditions” (CEO) .
    • FD BVPS increased 5.1% q/q to $18.87 (non‑GAAP), reinforcing the focus on long-term book value compounding .
    • Innovations segment profitability improved (combined ratio 94.3% vs. 99.3% LY); “performance… was in line with expectations” (CEO) .

  • What Went Wrong

    • California wildfires drove underwriting to a loss: combined ratio 104.6% with 14 pts from the wildfires; net wildfire loss booked at ~$23.6M .
    • Reserve actions: historical casualty reserves strengthened by $22M (2014–2019 years), partly offset by $11M specialty and $8M property releases; prior-year development added 2.1 pts to CR .
    • Open Market segment combined ratio rose to 106.0% (from 96.2% LY), with 18 pts of CAT load in the segment (vs. 9.4 pts LY) .

Financial Results

  • Headline comparison vs prior two quarters and prior year
MetricQ3 2024Q4 2024Q1 2025
Net Premiums Earned ($USD MM)$151.9 $148.1 $168.5
Diluted EPS ($)$1.01 $(0.81) $0.86
Combined Ratio (%)95.9% 112.1% 104.6%
  • Drivers and quality metrics
MetricQ3 2024Q4 2024Q1 2025
Loss Ratio (%)61.3% 69.0% 72.9%
Acquisition Cost Ratio (%)30.4% 28.5% 27.8%
Underwriting Expense Ratio (%)4.2% 3.9% 3.9%
Total Investment Income ($USD MM)$28.1 $2.6 $40.5
Income from Solasglas ($USD MM)$19.8 $(8.8) $32.2
Net Income ($USD MM)$35.2 $(27.4) $29.6
FD BVPS (Period-End, $)$18.72 $17.95 $18.87
Solasglas Return (%)5.2% (1.9)% 7.2%
CAT Impact (CR pts)9.3 11.9 14.0
Prior-Year Development (CR pts)(3.7) 14.7 2.1
  • Segment breakdown (quarterly)
SegmentQ1 2024 Net Premiums Earned ($MM)Q1 2024 Underwriting Income ($MM)Q1 2024 Combined Ratio (%)Q1 2025 Net Premiums Earned ($MM)Q1 2025 Underwriting Income ($MM)Q1 2025 Combined Ratio (%)
Open Market$131.6 $5.0 96.2% $149.6 $(8.9) 106.0%
Innovations$20.2 $0.2 99.3% $19.0 $1.1 94.3%
Corporate$9.7 $(1.7) 117.9% $(0.2) $0.1 149.2%
Total Consolidated$161.5 $3.4 97.9% $168.5 $(7.8) 104.6%
  • Additional details
    • Gross premiums written rose 14.1% y/y to $247.9M; net premiums written up 13.0% y/y to $219.4M .
    • Balance sheet: shareholders’ equity increased to $666.8M from $635.9M at 12/31/24; total assets $2.15B .

Guidance Changes

GLRE did not issue formal quantitative guidance (revenue, margins, EPS, tax, etc.) in Q1 2025.

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidanceFY/QuarterNot provided Not provided Maintained
Strategic context (from Q4 call): Lloyd’s FAL expected +~25% at 1/1; property book +~10% (context, not numeric guidance)2025 contextShared in Q4 commentary No update in Q1 call N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Catastrophe exposure/lossesQ3: CATs added 9.3 pts; still profitable underwriting . Q4: CATs 11.9 pts; adverse RU-Ukraine aviation reserve; CR 112.1% .California wildfires drove 14 pts; net wildfire loss ~$23.6M .Higher CAT drag q/q; elevated volatility persists.
Casualty strategy/reservesQ4: strengthened aviation RU-Ukraine; cautious casualty; some adverse dev offset by specialty releases .Shift MGA casualty to Innovations; $22M reserve strengthening (2014–2019); net prior-year dev +2.1 pts .Tightening/derisking legacy; channel shift to enhance control.
Investment portfolio stanceQ3: Solasglas +5.2%; conservative exposure . Q4: −1.9%; net exposure ~33% .+7.2% return; net exposure ~20%; positioning for bear market; YTD +10.6% through April contextually .More defensive; strong absolute returns.
Pricing/renewalsQ4: 1/1 conditions attractive; FAL +~25% expected; property rates −5% to −7.5% but still attractive .April 1 renewals “attractive and similar to 1/1” (CEO) .Attractive but pockets of softening.
Regulatory/legal (RU-Ukraine aviation)Q4: material reserve add linked to litigation/settlements; booked best estimate; retro reduces uncertainty .No new RU-Ukraine actions disclosed in Q1; focus shifted to casualty legacy/wildfire .Issue moderated in Q1 narrative.
Lloyd’s/FALQ3/Q4: growing FAL book, optimistic post rate hardening .Open Market growth partly from FAL; segment grew NPW +16.6% .Continued growth contributor.
Macro/tariffsQ4: volatile macro backdrop; conservative exposure .Tariffs may inflate reconstruction costs; near-term underwriting impact expected limited (CEO); bearish macro stance (Einhorn) .Macro risk vigilant; portfolio hedged/defensive.

Management Commentary

  • CEO: “We delivered strong book value per share growth of 5.1% this quarter, driven by an outstanding return of 7.2% from our Solasglas investment portfolio… These results more than offset the financial impact of the California wildfires, which contributed 14 combined ratio points” .
  • CEO strategy: “We will access casualty MGA business primarily through our innovations channel… better access to underlying data… more control… near term… contraction… expect to replace… with Innovations” .
  • CFO: “CAT losses added 14 percentage points… reserve development contributed 2.1 points… Solasglas contributed $32.2 million… other investment income $8.3 million (interest on restricted cash)” .
  • Chairman (Einhorn): “We’ve pivoted from conservative to bearish positioning… lowered gross and net exposures… net exposure ended the quarter at about 20%… Solasglas returned 3.2% in April, bringing 2025 YTD to 10.6%” (April/YTD context cited) .
  • Organizational: Appointment of Head of Underwriting Analytics (Martin Vezina) to advance analytics in underwriting/pricing .

Q&A Highlights

  • The Q1 2025 call did not include an analyst Q&A session; the operator closed the call citing no questions .
  • For continuity, Q4 2024 Q&A focused on RU‑Ukraine aviation reserve methodology (best-estimate booking, retro dampening uncertainty) and casualty loss trends largely tied to older accident years, with favorable specialty development offsets .

Estimates Context

  • S&P Global consensus for Q1 2025 EPS and revenue was unavailable at the time of this analysis; as a result, we cannot assess beat/miss versus Street. Estimates-based comparisons are therefore omitted to avoid speculation.
  • Given the mix (elevated CAT losses but outsized investment income), any forward estimate adjustments will likely focus on normalizing CAT load assumptions and the sustainability of Solasglas returns/macro positioning highlighted on the call .

Key Takeaways for Investors

  • Investment engine drove the quarter: $40.5M total investment income and +7.2% Solasglas return overcame wildfire-driven underwriting loss; FD BVPS +5.1% to $18.87 .
  • Underwriting volatility remains the central swing factor: 14 pts of CAT impact from California wildfires; prior-year development +2.1 pts tied to legacy casualty .
  • Strategic casualty pivot should improve control/visibility and risk selection over time (Innovations channel focus), albeit with near-term volume contraction in open-market casualty .
  • Innovations performance improving (CR 94.3% vs. 99.3% LY), suggesting a more resilient earnings mix as this channel scales; appointment of Head of Underwriting Analytics should further enhance discipline .
  • Macro and positioning: GLRE is running defensively (net exposure ~20%), seeking to capitalize on volatility per Chairman’s remarks; investment alpha remains a differentiator in a challenging underwriting quarter .
  • Trendline vs. prior quarters: Combined ratio improved from Q4’s 112.1% but remains above Q3’s 95.9%; net income recovered from Q4’s loss, albeit with underwriting still negative .
  • Near-term catalysts: CAT loss crystallization clarity, casualty runoff/reserve trajectory, April/June renewals, property market pricing into hurricane season, and continued Solasglas performance updates .

Notes:

  • Financials and KPIs are sourced from the Q1 2025 8‑K/press release and the Q1 earnings call; prior-quarter comparatives from Q4 2024 and Q3 2024 press releases/calls .