Greenlight Reinsurance, Ltd.

Thank you for joining the Greenlight Capital Re-Limited second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. A question and a session will follow the prepared remarks. You may press star one at any time to be placed in the question queue. It's now my pleasure to turn the call over to David Sigman, Greenlight Re's General Counsel. You may begin.

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. And audio replay will also be available under the investors section of the company's website at .greenlightre.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, Farmers Roemer. 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 reconciliation to these measures can be found in the company's filings with the SEC, including the company's Form 10K. 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.

Thank you, David. Good morning, everyone, and thank you for joining us. We reported net income of 0.3 million in Q2 2025, which brings our year to date net income to 30 million dollars. Fully diluted book value per share increased .5% in the quarter and .7% for the first half of the year. We reported a combined ratio of .0% for the quarter, translating to 8.1 million dollars of underwriting income. Our investment in Solarglass portfolio was down 4% in the quarter, reversing a portion of the Q1 outperformance. David will provide more color on this in his remarks. Q2 was a benign quarter from a cat activity perspective. We have updated the definition of cat event loss to be individual catastrophe loss to us of 5 million or more net of reinsurance recoveries. We also started reporting known large loss events defined as losses between 1 million and 5 million dollars. The net financial impact of prior year adverse loss development was 2.6 million dollars or 1.6 combined ratio points. Farmers will elaborate on the loss development for each segment momentarily. Our underwriting result in the second quarter was largely unaffected by our previous reserving actions unrelated to the California wildfires and Russia, Ukraine, 80% of the year. And the second quarter was a result of our previous nonrenewal and nonrenewal aviation losses. On the latter, we had strengthened our reserves in Q4 of last year and the long awaited outcome of a UK trial in the second quarter validated our early decisive action on this. As mentioned on our previous quarter code, we have started to nonrenew a significant portion of our open market casualty book. The impact of these non renewals started to flow through our top line and Q2, which was offset by growth in other areas, including foul and the specialty book. We don't have a large renewal book for 7-1, but we are seeing overall market conditions remaining similar to 1-1 and 4-1 with flat to mild single digit decreases and risk adjusted rate change. As we head into the peak of cat season, we feel good about our exposures and are well positioned to weather any storms. During the second quarter, we repurchased $5 million worth of our stock and average cost of $13.99 per share. We continue to monitor our capital position in light of our various capital metrics and will carefully evaluate opportunities for further share repurchases as part of our overall capital management. Finally, this quarter, we have prepared an investor presentation summarizing our results and strategy, which is available in the investor relations section of our corporate website. We hope it provides additional context as we continue our efforts to communicate more broadly with shareholders. Now, I'd like to turn the call over to David.

Thanks, Greg. And good morning, everyone. The Solace class fund returned negative 4% in the second quarter. The long portfolio and macro contributed 1.2 and .5% respectively, while the short portfolio detracted 8.9%. During the quarter, the S&P 500 index advanced 10.9%. Our biggest problem during the quarter was a lack of winners in our long portfolio and a strongly rising market. The largest positive contributors were long investments in gold and kinder holdings, equity index hedges and macro positions tied to a weaker US dollar and lower short term interest rates. The largest detractors included a short position in a profitless technology company and a health care equipment business. All of the largest positive contributor as its price appreciated about 6% over the quarter. Dendrel Holdings shares advanced 34% during the quarter and made the company announced strong quarterly results marked by a return to positive net revenue growth and a significant increase in new customer sightings. Also, the company raised its guidance for fiscal year 2026. In macro, our SOFR futures position benefited as the market priced an additional interest rate cuts from the Federal Reserve. Also, our long euro and yen positions were positive contributors as the dollar weakened further. The largest detractors included several short positions, primarily in profitless tech and similarly speculative companies, which all rallied significantly. We found ourselves on the wrong side of a couple of short squeezes, which we had to risk manage, which means taking a partial loss. In the long portfolio, Brighthouse Financial declined 7% as the market speculated that a possible takeover may happen at a smaller premium than originally expected or possibly not at all. Throughout the quarter, there was a lot of economic activity designed to get ahead of the tariff implementation. As tariffs have now mostly come into effect on August 1st, we believe that there will be a reversal in some of that front running and expected to show in the data over the next several months. While the losses were mostly on the shorts, our 100 performance came mostly on the longs. As we contemplate the reason why we believe that the economy is doing worse than generally understood, as many of the companies actually on both sides of our book are reporting weak results. The main difference is that the investors have more commitment to look through the weakness on our short names than on our long names. Our net exposure into the quarter at about 2% down from 20% at the end of the 1st quarter. Silas Glass returned negative 4% in July, bringing the 2025 year to date return to negative 1.2%. Net exposure for the investment portfolio was approximately 7% at the end of July. We continue to make progress on our underwriting portfolio and expect that the repositioning away from open market casualty into other, better risk adjusted lines will contribute to our results over the intermediate term. Last week, we held our annual shareholders meeting and I'm pleased to announce that all of the proposals passed by over 90%. I want to thank all of our shareholders for their vote confidence. Now, I'd like to turn the call over to farmers to discuss the financial results.

Thank you, David. Good morning everyone during the 2nd quarter of 2025, green light. We reported a net income of 0.3Million or 1 cent, but diluted share. Compared to a net income of 8Million or 23 cents diluted share during the 2nd quarter of 2024. The consolidated underwriting income was 8.1Million resulting in a combined ratio of 95%. Which was 4.9 points better than 2nd quarter last year. Primarily due to no cat losses in the quarter. Our investments in the solar class 1 lost 18.3Million dollars during the 2nd quarter while other investments earned 10.5Million income. The majority of which related to interest on restricted cash and cash equivalence collateralizing obligations to seedings. Now, let's look at the 2nd quarter results by segment. For the quarter, the open market segment grew net written premiums by 8%. To 142.1Million dollars. The increase was driven primarily from growth in the file business. Meanwhile, the casualty premiums decreased during the quarter as a result of non renewing the casualty book. The open market combined ratio for the 2nd quarter improved by 2.1 points. To 92% compared to .1% for the same period in 2024. The current year loss ratio increased by 1.8 points primarily related to the casualty book. And a transactional liability program. The higher loss ratio was offset by lower acquisition cost ratio, which improved by 3.1 points on lower commissions. The segment reported a net variable loss development of 0.9Million dollars. Or 0.7 combined ratio points resulting from 9.7Million release of our specialty reserves. Partially offset by reserves strengthening of casualty and multi line programs and a transactional liability program. The open market segment reported a pre tax income of 16.8Million dollars. Composed of underwriting income of 11.2Million and investment income of 5.6Million. The innovation segment grew net written premiums by .3% to 22.7Million dollars during Q2. The increase was mainly driven by syndicate 3456 and some specialty programs. Partially offset by decrease in casualty premiums. Our whole account quarter share retro program, which incepted in Q4 2024. Also contributed to lower net earned premiums compared to the same quarter of last year. The combined ratio for innovation segment was 107% during the second quarter compared to .9% in Q2 last year. Unfavorable prior year reserve development contributed 11.8 points to the innovation segment combined ratio. Compared to favorable development of 6.5 points in Q2 2024. The 2.5Million of adverse reserve development related to two specific programs. That reported greater number of claims than expected. We are already working with our partners to implement corrective actions on these programs. The combined ratio benefited from lower attritional loss ratio. And lower acquisition cost ratio, which improved by 0.8 points and 5.1 points respectively. The expense ratio for the innovation segment this quarter was .6% compared to .9% during the same quarter last year. Due to a combination of growth in personnel and increase in direct costs attributable to the segment and lower earned premiums. Outside of the two segments, the runoff homeowners property contract suffered adverse development of 1.5Million dollars during the second quarter. Foreign exchange gains in the quarter were 6.3Million primarily driven by a British pound sterling denominated balances as the pound strengthened against the US dollar. We ended the second quarter of 2025 with our fully diluted book value per share growing to $18.97. An increase of .5% since the second quarter of 2024. This included the impact of the 5Million dollars of shares repurchased in the second quarter. That concludes our prepared comments. The operator will now open the line for questions.

Thank you, ladies and gentlemen. At this time, we'll be conducting a question and answer session. If you'd like to be placed into question Q, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question Q. You may press star two if you'd like to move your question from the queue. Once again, at this time, ladies and gentlemen, we'll be conducting a question and answer session. If you'd like to be placed into question Q, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question Q. You may press star two if you'd like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And once again, that's star one to be placed into question Q.

We've reached the

end of our question and answer session. Should you have any follow-up questions, please register them. Karen Daly of Equity Group Inc. at ir at greenlightree.ky will be happy to assist you. This now concludes Greenlight REIT's second quarter 2025 earnings conference call. Thank you. You may now disconnect.