GREENLIGHT CAPITAL RE, LTD. (GLRE)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 was loss-making: net loss of $27.4m (–$0.81 diluted EPS), a 112.1% combined ratio, with losses driven by reserve strengthening on Russia‑Ukraine aviation exposures (10.1 pts of CR) and elevated catastrophes (11.9 pts; Hurricane Milton, Jeju Air, marine/energy) .
• Investment performance was weak in the quarter (total investment income $2.6m; Solasglas −1.9%), but FY 2024 still delivered $79.6m of total investment income and a 9.8% Solasglas return; fully diluted BVPS rose 7.2% to $17.95, the fifth consecutive year of growth .
• Management introduced new segment reporting (Open Market and Innovations) to enhance transparency; FY 2024 combined ratio was 101.4% (Open Market 99.0%, Innovations 95.8%) .
• Outlook/near‑term catalysts: 1/1 growth (Funds at Lloyd’s ~+25%, property ~+10%; NA hurricane 1‑in‑250 PML to $116.3m), but 2025 results will absorb Los Angeles wildfires loss ($15m–$30m estimate) .
• Wall Street EPS/revenue consensus (S&P Global) was unavailable at the time of analysis; beat/miss vs estimates cannot be determined (we will update once accessible).

What Went Well and What Went Wrong

• What Went Well

  • FY 2024 capital creation despite Q4 headwinds: fully diluted BVPS +7.2% to $17.95; five consecutive years of BVPS growth .
  • Innovations segment profitability for FY 2024 (95.8% CR) and expanded disclosure, aligning with strategy to scale niche programs and balanced capital allocation .
  • Clear strategic and capital-allocation messaging: Solasglas +9.8% for 2024; net exposure ~33% at year‑end with continued “incremental, not step‑change” posture on investment allocation .
  • Quote (CEO): “We are well positioned to deliver shareholder value in 2025 and beyond.”

• What Went Wrong

  • Q4 underwriting loss ($18.0m) and 112.1% CR, driven by $17.6m cat losses (11.9 pts) and ~$15m reserve strengthening on Russia‑Ukraine aviation exposures (10.1 pts) .
  • Open Market Q4 2024 deterioration (111.1% CR) versus 90.9% in Q4 2023; casualty legacy years also required additional reserves (partially offset by favorable specialty development) .
  • Q4 investment income fell sharply ($2.6m vs $14.1m LY) as Solasglas produced −1.9% in the quarter; management cited post‑election market dynamics .

Financial Results

Key P&L and margins (USD, $ Millions unless noted)

Segment performance (Q4 2024 vs Q4 2023)

KPIs and drivers

Notes: BVPS is shown as of period end; “revenue” shown as Net Premiums Earned.

Guidance Changes

No formal quantitative revenue/EPS/CR guidance was issued.

Earnings Call Themes & Trends

Management Commentary

• CEO (drivers/positioning): “We reported a net underwriting loss of $18 million… booked $17.6 million of cat losses… [and] a $15 million increase in our Russia‑Ukraine conflict reserves… we decided to get ahead of this issue and to strengthen our IBNR provision.”
• CEO (outlook): “We are very pleased with how 1/1/25 progressed… expect our FAL book to grow by ~25%… property portfolio to grow by ~10%… NA hurricane exposure… increased by 16% to $116.3 million.”
• Chairman (investments): “Solasglas… returned negative 1.9% in the fourth quarter… 9.8% in 2024… net exposure about 33%… comfortable maintaining lower gross and net exposure.”
• CFO (CR details/segments): “Cat losses added 11.9 percentage points… aviation reserves [Russia‑Ukraine] contributed 10.1 points… Open Market combined ratio 111.1%… Innovations 102.1%… implemented a 28% whole‑account quota share on Innovations in Q4.”

Q&A Highlights

• Russia‑Ukraine aviation reserve: Management booked its “best estimate” of ultimate losses, net of outward retrocession (retro not exhausted); uncertainty relates to “number of events” interpretation and reporting through the market; all booked as IBNR pending cedent notifications .
• Casualty trends: Adverse development relates mainly to legacy years (2015–2017), diminishing for ’18–’19; go‑forward focus on smaller‑limit, frequency‑severity programs; favorable specialty development partly offset casualty adverse in Q4 .
• Capital allocation: Approach remains incremental; if reinsurance rates soften into 2026, capital could be reallocated (e.g., more outwards purchases, Innovations growth, or buybacks) .
• Opportunistic trades: MicroStrategy ETF arbitrage has “exceedingly high” realized return since inception, “nearly triple digits” annualized; not a target‑return strategy per se .

Estimates Context

• S&P Global (Capital IQ) Wall Street consensus for Q4 2024 EPS and revenue was unavailable at the time of this analysis due to access limits. As a result, we cannot assess beat/miss versus consensus. We will update when S&P Global estimates are accessible.

Key Takeaways for Investors

• Q4’s loss was driven by discrete, quantifiable items (Russia‑Ukraine aviation reserve add; multiple cats), not a broad deterioration in the core portfolio; FY 2024 still produced BVPS accretion and two profitable segments on an annual basis .
• Risk remains for 2025 from the Los Angeles wildfires ($15m–$30m company estimate), and management increased 1‑in‑250 hurricane exposure alongside property growth (~10%)—watch aggregate cat loads and retro usage .
• Open Market segment bears the brunt of volatility (Q4 111.1% CR); Innovations remains a relative stabilizer (95.8% FY CR) with capital efficiency enhanced by the new 28% quota share .
• Investment program stayed conservatively positioned into year‑end (net ~33%); returns were resilient over 2024 (+9.8%), but quarterly variability can impact reported earnings .
• Strategic disclosures (new segments) and AM Best outlook to Positive underscore improved process/ERM; this can support valuation resilience if underwriting volatility is contained .
• Near‑term trading set‑up: headline sensitivity to Russia‑Ukraine developments, 2025 wildfire updates, and cat season; positive catalysts include evidence of benign cat activity, favorable reserve emergence, and continued BVPS growth .
• Medium‑term thesis: disciplined growth in property/specialty with active retro, targeted casualty, scaling Innovations via partner capital, and optionality to tilt capital toward Solasglas or buybacks as cycle softens .

Citations

• Q4 2024 press release and financial statements:
• Q4 2024 8‑K (includes full tables and BVPS reconciliation):
• Q4 2024 earnings call transcript (prepared remarks & Q&A):
• Q3 2024 press release/8‑K, for trend:
• Q2 2024 press release/8‑K, for trend:
• AM Best outlook revised to Positive (Oct 2024):