Greenlight Reinsurance, Ltd.

Hello, and thank you for joining the Greenlight Capital REIT first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may press star 1 at any time to be placed into question queue. It's 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 please go ahead, Karen.

Thank you, Kevin, 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.greenlightre.com. Joining us on the call today will be Chief Executive Officer Simon Burton, Chairman of the Board David Einhorn, and Chief Financial Officer Fairmars Romer. On behalf of the company, I'd like to remind you that forward-looking statements may be made during the 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. As a result, actual results may differ materially from those expressed or implied. For more information on the risks and other factors that may impact future performance, investors should review the periodic reports that are filed by the company with the SEC from time to time. Additionally, management may refer to certain non-GAAP financial measures during their remarks. The reconciliations to these measures can be found in the company's filings with the SEC, including the company's Form 10-Q for three months ended March 31, 2023. 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's now my pleasure to turn the call over to Mr. Simon Burton.

Thank you, Karen. Good morning, everyone. Thank you for joining us. I'd first like to welcome Faramaz Roma, who is joining his first earnings call as CFO since his promotion effective April 1st. The CFO transition went well, which is not surprising as Faramaz has been an integral member of the team for the past 16 years. He is now fully up to speed. For the first quarter of 2023, we reported growth in book value per share of 1.1%, a net income of $5.9 million, despite each of our three pillars of underwriting, innovations, and SILPI performing below our expectations for the quarter. Starting with the underwriting results, the combined ratio of 99.8% was impacted by 5.7 points of winter storm and convective storm losses, along with 5.6 points of non-cap reserve deterioration in our honor book. The storm losses relate to a single innovation U.S. homeowners program written in 2022 that experienced higher than anticipated volatility from a winter storm in late December and from convective storms in March. We had identified these concentration issues leading up to the renewal of the homeowners program at January 1st when we restructured at favorable terms. So this volatility is contained to a single policy that's now running off. Otherwise, our book of innovations underwriting risks is running well, and we expect that this is an isolated situation. The reserve pressure we experienced in the first quarter is in part coming from the auto class, where claim severity continues to escalate. Auto insurers as a whole have struggled with rate adequacy in the face of extraordinary repair cost inflation. You will recall that we had almost completely exited this class by the middle of 2022. So we expect this pressure to be short-lived with respect to our reserves. The theme of claim inflation is also present elsewhere in our reserves and is responsible for another portion of the deterioration. Our reserve duration is relatively short at under three years, and this inflationary pressure is generally confined to a minority block of reserves in runoff. We grew net written premium by 25% in the first quarter to $175 million. which is the highest first quarter volume we have achieved under our new underwriting strategy. Some of the increase is from the portion of the book that was repriced at January 1st at significantly better terms, including property, marine, specialty, and multi-line, which includes our Lloyd's FAL positions. We were also able to expand and diversify the overall book into a market that is supply constrained in many of the classes that we write. Renewals at April 1st were similarly compelling. We grew our Japanese catastrophe book as we saw rate improvements that exceeded 20% as just one example. Given that we continue to see increases in reinsurance demand as sedents attempt to reduce their own volatility, coupled with persistent supply constraints, I believe that the outlook for our underwriting model is excellent for the rest of 2023 and into 2024. Moving on to our innovations business, InsurTech valuations continue to be relatively depressed. This provides us an opportunity to access attractive underwriting business via our partnership approach at compelling valuations. We completed two new investments during the quarter and had a small write-down on one of our positions. Our Lloyds Syndicate 3456 is proving to be an attractive option for partners seeking risk capacity, despite some bumps in navigating the Lloyds onboarding processes. We have a strong pipeline of opportunities for the syndicate. Finally, we are pleased to welcome David Sigmund, who joined last month as General Counsel. David comes to us with significant reinsurance experience, and we are excited to have him on the team. Now I'd like to turn the call over to David.