Greenlight Reinsurance, Ltd.

Thank you for joining the Greenlight Capital Reef Fourth Quarter and Year-End 2024 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 David Sigmund, Greenlight Reef General Counsel. You may begin.

Thank you, 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 Investors section of the company's website at www.greenlightree.com. Joining us on the call today will be our Chief Executive Officer, Greg Richardson, Chairman of the Board, David Einhorn, and Chief Financial Officer, Farmars Romer. 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 federal securities laws. These forward-looking statements 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. The reconciliations to these measures can be found in the company's filings with the SEC, including the company's recently filed Form 10-K for the year ended December 31st, 2024. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, it is now my pleasure to turn the call over to Greg.

Thanks, David. Good morning, everyone, and thank you for joining us today. To start off, I would like to thank everyone that attended our Investor Day presentation in New York City last November. where we provided additional color on GreenLight Re's progress and our go-forward strategy. I'm excited about GreenLight Re's future, notwithstanding the fourth quarter results. The fourth quarter of 2024 was challenging for GreenLight Re. We reported a net underwriting loss of $18 million, or a combined ratio of 112.1%. an investment loss from the SOLUS class of 8.8 million or negative 1.9%, driving a net loss for the quarter of 27.4 million. Our underwriting loss was driven by a combination of CAT activity in the quarter and prior year development. On the CAT side, we booked 17.6 million of CAT losses in quarter four, 2024. With hurricane Milton being the most material at 7.5 million. With regard to prior year development, the major driver was a $15 million increase in our Russia Ukraine conflict reserves linked to the confiscation of aircraft. We booked an initial provision for the Russia Ukraine conflict in the first quarter of 2022. and that provision remained broadly flat over the intervening quarters. However, in Q4 of last year, following the commencement of High Court litigation in London, we became aware of increased settlement activity. Based on our analysis of various legal claims in industry sources and in anticipation of formal claim notifications, we decided to get ahead of this issue and to strengthen our IV&R provision. Our fourth quarter 2024 underwriting results turned our solid performance for the first three quarters of the year into an underwriting loss of $8.2 million or a combined ratio of 101.4% for the full year 2024. Net income for the year was $42.8 million which generated a 7.2% increase in fully diluted book value per share to $17.95. One item I would like to highlight in our earnings release and our 10-K filing is that for the first time we have split our financial results into two segments, open market and innovations, which reflects how I think about and oversee the business. Historically, we have spoken of the importance of our innovations unit and the key part it plays in our growth strategy. Our innovation segment generated a combined ratio of 95.8% in 2024 on 94.7 million of gross written premium. We believe this new disclosure will be valuable to shareholders and other key stakeholders going forward. Turning to 1-1 renewals, the 1-1 renewal season is key for GreenLight RE, as over 50% of our business incepts on January 1st. We are very pleased with how 1.125 progressed. Market conditions remain very attractive despite softening in certain classes, and we took advantage of those conditions to grow our business in key areas. I will provide an overview of our 1.125 book in a few of these key areas. Generally, our fund at Lloyds or FAL book incepts at 1.1. We have been a material player in this market for a few years, and we are optimistic for the prospects of Lloyds in 2025 after several years of material rate increases and strong performance. This year, we expect our FAL book to grow by approximately 25% given the attractive opportunities available to us. A material element of our specialty book renews at 1-1. In general, the specialty market remained disciplined with terms and conditions being maintained and some modest softening on rates from 2.5% to 5% down. However, the specialty market was very competitive on signings, with many of our competitors looking to grow in this space. We expect our 1-1 specialty book to grow modestly. The third element of our book with a strong one-one focus is our property book. We saw some weakening in the property line, and we estimate rates are down on average 5% to 7.5%, with reductions on our XOL accounts larger than on our quota share accounts. Despite this, the market remains attractive, and we expect this portfolio to grow by approximately 10% over 2024. Our North Atlantic hurricane exposure on a 1 in 250 occurrence basis increased by 16% to 116.3 million, reflecting this increased volume. Our innovations portfolio is not heavily weighted towards 1.1. Rather, it is more evenly spread throughout the year. For the business that did renew on 1.1, we saw strong growth and relatively flat rates. Since 1.1, we have all witnessed the tragic human and economic impact of the Los Angeles wildfires. It is early stages, but we estimate the insurance industry loss at $40 to $50 billion and anticipate Greenlight's share of this loss will be $15 million to $30 million as we are somewhat underweight in property compared to the industry. As we look ahead towards 2025, We are optimistic about the opportunities ahead. Over the past year, we have strengthened our organization, processes, and balance sheet. While we saw modest softening at 1.1, global uncertainty and losses such as the Los Angeles wildfires serve as a reminder of the importance of reinsurance and adequate rates to support the risks that we assume.