Greenlight Capital Re reports lower fourth quarter profit

Greenlight Capital Re reported a fourth quarter 2014 net income of $60.7 million, down from $83.9 million for the same period in 2013.

During the quarter an underwriting loss of $4.6 million was offset by a net investment gain of 5.3 percent on the reinsurer’s investment portfolio.

In the comparable period in 2013, Greenlight Re reported underwriting income of $7.9 million and a net investment gain of 6.6 percent.

Gross written premiums of $74.3 million during the quarter were significantly lower year-on-year compared to $124.8 million in the fourth quarter of 2013. Net earned premiums were $75.2 million, a decrease from $141.5 million reported in the prior-year period. Still, the firm said it is winning new business in both its offices in Cayman and Ireland despite the soft reinsurance environment.

“We are pleased with our progress and ability to attract new business in this competitive reinsurance market,” said Bart Hedges, chief executive officer of Greenlight Re. “Overall, our 2014 premium numbers decreased due to the impact of not renewing certain business, which we believe was inadequately priced. Our combined ratio was modestly impacted by the effect of adverse development on prior years’ contracts and the de-leveraging effect of flat costs on reduced premiums.”

The combined ratio for 2014 was 102.9 percent, compared to 97.1 percent in 2013.

For the full year 2014, gross written premiums of $324.0 million and net earned premiums of $354.2 million dropped significantly from $535.7 million and $547.9 million, respectively, in 2013. Underwriting income for the year of $11.6 million was also down compared to 2013 (US$37.5 million).

Net investment income in 2014 was $122.6 million, representing a return of 8.7 percent, compared to net investment income of $218.1 million during 2013 when Greenlight Re reported a 19.6 percent return. “In a persistently challenging reinsurance market, we have made progress finding new opportunities that we believe will bear favorable results,” said David Einhorn, chairman of the board of directors. “The company remains focused on generating income and preserving capital while we continue to enhance our infrastructure and seek new business.”

Fully diluted net income per share for the fourth quarter of 2014 was $1.60, compared to $2.22 for the same period in 2013.

Fully diluted adjusted book value per share was $30.76 at the end of 2014, a 10.2 percent increase from $27.91 per share one year earlier.