• Net Underwriting Loss (Q4 2024): $18 million, combined ratio of 112.1%.
• Investment Loss from Solasglas (Q4 2024): $8.8 million, negative 1.9% return.
• Net Loss (Q4 2024): $27.4 million.
• Catastrophe Losses (Q4 2024): $17.6 million, including $7.5 million from Hurricane Milton.
• Russia-Ukraine Conflict Reserves Increase (Q4 2024): $15 million.
• Net Income (Full Year 2024): $42.8 million.
• Fully Diluted Book Value Per Share (End of 2024): $17.95, a 7.2% increase.
• Innovations Segment Combined Ratio (2024): 95.8% on $94.7 million of gross written premium.
• Open Market Segment Net Earned Premiums (Q4 2024): $127.8 million, a 25% increase.
• Open Market Segment Combined Ratio (Q4 2024): 111.1%.
• Innovations Segment Net Earned Premiums (Q4 2024): $19 million, an 18.1% decrease.
• Innovations Segment Combined Ratio (Q4 2024): 102.1%.
• Consolidated Combined Ratio (Full Year 2024): 101.4%, resulting in an $8.2 million underwriting loss.
• Total Investment Income (Full Year 2024): $79.6 million.

• Warning! GuruFocus has detected 2 Warning Signs with SEG.

Release Date: March 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Greenlight Capital Re Ltd (NASDAQ:GLRE) reported a net income of $42.8 million for the full year 2024, resulting in a 7.2% increase in fully diluted book value per share to $17.95.
• The Innovations segment generated a combined ratio of 95.8% in 2024 on $94.7 million of gross written premium, highlighting its role in the company's growth strategy.
• The company expects its Fund at Lloyd's book to grow by approximately 25% in 2025, indicating optimism for future prospects.
• Despite challenges, Greenlight Capital Re Ltd (NASDAQ:GLRE) managed to grow its fully diluted book value per share for the fifth consecutive year, with an annualized growth rate of 6.9%.
• The Solasglas fund returned 9.8% in 2024, demonstrating positive investment performance compared to the S&P 500's 25% return.

Negative Points

• Greenlight Capital Re Ltd (NASDAQ:GLRE) reported a net underwriting loss of $18 million in Q4 2024, with a combined ratio of 112.1%, driven by cat activity and prior-year development.
• The company faced a net loss of $27.4 million for Q4 2024, with significant cat losses from Hurricane Milton and increased reserves related to the Russia-Ukraine conflict.
• The Solasglas fund experienced a negative return of 1.9% in Q4 2024, with long investments in Green Brick Partners and Solvay being major detractors.
• The Open Market segment's combined ratio increased to 111.1% in Q4 2024, impacted by aviation losses related to the Russia-Ukraine conflict and cat losses.
• The Innovations segment's combined ratio for Q4 2024 was 102.1%, affected by adverse loss development on a multiline contract.

Q & A Highlights

Q: Can you provide more details on the Q4 charge related to the Russia-Ukraine conflict and its impact on Greenlight's potential losses? A: Greg Richardson, CEO, explained that the charge reflects their estimate of ultimate losses, not just a preliminary figure. The uncertainty is somewhat limited due to existing settlements and legal expenses, and the number of aircraft involved is finite. They have retrocession coverage that is not exhausted, which reduces uncertainty. The main uncertainty lies in how losses are interpreted and reported by reinsurers.

Q: Regarding adverse development trends in casualty books, are there specific years or books affected by inflationary trends? A: Greg Richardson noted that the adverse development in casualty lines is secondary to the Ukraine issue. The exposure is mainly from older years, particularly 2015-2017, with diminishing exposure in later years. The current book focuses on smaller limits and frequency severity, avoiding major casualty programs.

Q: How does casualty fit into Greenlight's growth profile, and are there specific lines of business that are attractive? A: Greg Richardson stated that they are cautious with casualty, focusing on underwriting margin. They are not major players in large US national casualty programs but are interested in smaller programs. The innovation space presents opportunities, and they aim to be strategic and targeted in their approach.

Q: How does the current market volatility affect Greenlight's capital allocation strategy? A: Greg Richardson mentioned that while they find returns on their SIP investment strategy attractive, they may adjust allocations if rates soften further. Innovations are seen as a growth opportunity, and they may reallocate capital from Open Market to Innovations or buy back shares if necessary.

Q: What is the target rate of return for the MicroStrategy arbitrage, and how does it compare to other opportunities? A: David Einhorn (Trades, Portfolio), Chairman, explained that the arbitrage benefits from the decay of expensive call options and negative gamma effects. The return has been exceedingly high, potentially annualizing nearly triple digits, making it more profitable than many other investments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.