Greenlight Reinsurance, Ltd.

Thank you for joining the Greenlight Capital REIT Limited fourth quarter and year-end December 31, 2022 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal remarks. It is now my pleasure to turn the call over to Karen Daly, Greenlight REIT's investor relations representative and vice president at the Equity Group. You may begin.

Thank you, Donna, and good morning. I would like to remind you that this conference call is being recorded and will be available for replay following the conclusion of the event. An audio replay will also be available under the investor section of the company's website at www.greenlightree.com. Joining us on the call today will be Chief Executive Officer Simon Burton, Chairman of the Board David Eidhorn, and Chief Financial Officer Neil Greenspan. Additionally, Farrah Mars Romer, current Chief Accounting Officer and Treasurer and incoming Chief Financial Officer, will be available for the question and answer session of the call. On behalf of the company, I'd like to remind you that forward-looking statements may be made during this call and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not statements of historical fact, but rather reflect the company's current expectations, estimates, and predictions about future results and are subject to risks and uncertainties. If one or more risks or uncertainties materialize, or if the company's underlying assumptions prove to be inaccurate, actual results could vary materially. Additionally, management may refer to certain non-GAAP financial measures during their remarks. The reconciliations to these measures, as well as the risk factors, can be found at the company's filings with the Securities and Exchange Commission, including Form 10-K for year-ended December 31, 2022. 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, except as required by law. With that, it is now my pleasure to turn the call over to Mr. Simon Burton. Simon?

Thank you, Karen, and welcome to your first Greenlight RE conference call. And good morning, everyone. Thank you for joining us. I believe that we will look back on this period and consider it a watershed for Greenlight RE and the reinsurance industry as a whole. The industry and Greenlight has for several years posted substandard underwriting results. in large part because rate improvements each year didn't keep up with the combination of stubbornly frequent hurricane and weather events, inflation, COVID, and the tragic and unexpected war in Ukraine. This pattern of underpricing was broken at the January renewals this year. The reinsurance industry experienced a significant capital void, resulting in a market that struggled to clear the demand for risk in classes that were impacted by losses in 2022. such as property catastrophe, aviation, war and terror, and marine. In these classes, we commonly saw placements close at 25% rate increases or better, whereas in property catastrophe, the rates were generally up by 50%. In our view, the subjectively good but unlucky 2022 market for short-tail specialty and catastrophe business is now an objectively good market in 2023. This is the first time in my career that I've said this. The short-tail specialty and property catastrophe classes represent around 40% of our 2023 business plan. Elsewhere in our portfolio, rate improvements are moderate in the single digits on average, although that's still meaningful for classes that have in general been consistently profitable. Overall, I'm very pleased with the quality of the business that we wrote at January 1st, and I believe the outlook for our underwriting business over the next year or two is excellent. Now I'd like to comment on some of the highlights of the fourth quarter and full year 2022 financial results. Our key performance metric is increase in fully diluted book value per share. In 2022, when most of our peers saw a decline in this metric, I am pleased to report that our fully diluted book value per share increased during the fourth quarter by 7.7% and by 4.3% for the year. The Solace Glass Fund was the largest driver of gain with an exceptional return during the quarter of 13.4% and 25.3% for the year. While the underwriting combined ratio of 102.3% for the year was broadly in line with our peer group, it was significantly behind our expectations going into 2022. There were two main reasons for this. First, we experienced catastrophic losses, mainly from the Ukraine war and Hurricane Ian, that were in total well beyond an average year, contributing 8.4 percentage points to our combined ratio. Secondly, revisions to our estimates of reinsurance and deposit accounted losses incurred in prior years increased our combined ratio by 3.9 points. The reserving pressure came from a couple of sources, including the runoff of our U.S. auto book, the runoff of a large legacy workers' compensation relationship, and other inflationary pressure on reserves. Underwriting revenue that derived from innovations partnerships was 18% of our 2022 net written premium. We are now in our sixth year of steadily building our innovations business. We have demonstrated our ability to pick winners as valuations increased over the last few years and are now showing resiliency despite last year's waning of investor appetite in the insurtech sector. However, our long-term objective has always been to build a differentiated underwriting business supported by innovations partnerships. Earlier in the year, we launched our innovation syndicate 3456 at Lloyds, and while the premium volume in 2022 was not material due to the mid-year start, this launch was an important milestone in developing our innovation strategy. We are excited by the strategic potential of our innovations business. Finally, we announced on Tuesday that Neil is leaving us at the end of March, with Faramaz Roma stepping up as our next CFO. This is the result of a succession plan that we sketched out about three years ago. Faramaz has been with us for 16 years, and he's ready for this new role. Orderly succession of my exceptional colleagues is always gratifying to me, although we also have to say farewell to Neil, who agreed to join the team at an uncertain time for green lights. and who has been instrumental in setting us on a very exciting new path. I wish him all the best for the future. Now I'd like to turn the call over to David.