Greenlight Capital Re, Ltd. (GLRE) Bundle
Understanding Greenlight Capital Re, Ltd. (GLRE) Revenue Streams
Understanding Greenlight Capital Re, Ltd.’s Revenue Streams
Greenlight Capital Re, Ltd. primarily generates revenue through its underwriting activities in the property and casualty insurance sectors, as well as through investment income. The following sections detail the breakdown of these revenue sources and their performance in 2024.
Breakdown of Primary Revenue Sources
- Gross Premiums Written: For Q3 2024, gross premiums written totaled $168.3 million, a decrease of 8.0% from Q3 2023, which was $183.1 million. For the first nine months of 2024, gross premiums written increased to $554.6 million from $524.5 million in 2023, reflecting a year-to-date growth of 5.7%.
- Net Premiums Earned: Net premiums earned for Q3 2024 were $151.9 million, down 6.9% from $163.1 million in Q3 2023. Year-to-date, net premiums earned increased to $471.8 million from $445.7 million in the previous year, marking a 5.9% increase.
- Investment Income: Total investment income for Q3 2024 was $28.1 million, up $23.0 million compared to a net return of (0.6)% in Q3 2023. For the first nine months of 2024, total investment income reached $67.0 million, compared to $52.5 million in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects significant trends in the company’s financial performance:
- Q3 2024 vs. Q3 2023: Total revenues increased to $188.0 million, a growth of 12.5% from $166.9 million.
- YTD 2024 vs. YTD 2023: Total revenues for the nine months ended September 30, 2024, were $554.2 million, up 8.3% from $511.6 million.
Contribution of Different Business Segments to Overall Revenue
| Segment | Q3 2024 Revenue ($ million) | Q3 2023 Revenue ($ million) | Year-over-Year Change (%) |
|---|---|---|---|
| Property | 19.1 | 24.4 | -21.6% |
| Casualty | 83.1 | 93.5 | -11.1% |
| Other | 49.7 | 45.2 | 10.0% |
| Total Net Premiums Earned | 151.9 | 163.1 | -6.9% |
Analysis of Significant Changes in Revenue Streams
Several factors contributed to the changes in revenue streams:
- Underwriting Results: The decrease in net premiums earned was affected by a rise in the combined ratio, which increased to 95.9% in Q3 2024 from 91.2% in Q3 2023.
- Investment Performance: The substantial increase in investment income was largely due to improved returns from investments in Solasglas, which reported a 5.2% net return in Q3 2024, compared to (0.6)% in the same quarter last year.
- Foreign Exchange Gains: The company reported foreign exchange gains of $5.8 million in Q3 2024, compared to losses of $2.0 million in Q3 2023.
A Deep Dive into Greenlight Capital Re, Ltd. (GLRE) Profitability
A Deep Dive into Greenlight Capital Re, Ltd.'s Profitability
Gross Profit Margin: For Q3 2024, the gross premiums written amounted to $168.3 million, a decrease of 8.0% compared to Q3 2023. The net premiums earned were $151.9 million, down 6.9% from the previous year.
Operating Profit Margin: The net underwriting income for Q3 2024 was $6.1 million, compared to $14.4 million in Q3 2023. The current year CAT losses, net of reinsurance, were $14.1 million in Q3 2024.
Net Profit Margin: Net income for Q3 2024 was reported at $35.2 million, an increase of $21.8 million compared to the same quarter in the prior year. The diluted earnings per share (EPS) was $1.01, compared to $0.39 in Q3 2023.
Trends in Profitability Over Time
In the first nine months of 2024, net income totaled $70.2 million, a slight increase from $69.2 million in the same period of 2023. The fully diluted book value per share rose by 11.8% to $18.72 as of September 30, 2024, from $16.74 at December 31, 2023.
| Period | Net Income ($ million) | EPS Diluted ($) | Gross Premiums Written ($ million) | Net Premiums Earned ($ million) |
|---|---|---|---|---|
| Q3 2024 | 35.2 | 1.01 | 168.3 | 151.9 |
| Q3 2023 | 13.5 | 0.39 | 183.1 | 163.1 |
| YTD 2024 | 70.2 | 2.02 | 554.6 | 471.8 |
| YTD 2023 | 69.2 | 1.99 | 524.5 | 445.7 |
Comparison of Profitability Ratios with Industry Averages
The combined ratio for Q3 2024 was 95.9%, up from 91.2% in Q3 2023. The loss ratio increased to 61.3% from 59.4%. The acquisition cost ratio was 30.4% in Q3 2024, compared to 28.8% in Q3 2023. These metrics indicate a decline in profitability relative to industry averages, which are typically below 90% for a healthy insurance operation.
Analysis of Operational Efficiency
Operating expenses for Q3 2024 totaled $152.0 million, slightly lower than the $153.4 million reported in Q3 2023. The underwriting expense ratio increased to 4.2% from 3.0%.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Combined Ratio | 95.9% | 91.2% |
| Loss Ratio | 61.3% | 59.4% |
| Acquisition Cost Ratio | 30.4% | 28.8% |
| Underwriting Expense Ratio | 4.2% | 3.0% |
Debt vs. Equity: How Greenlight Capital Re, Ltd. (GLRE) Finances Its Growth
Debt vs. Equity: How Greenlight Capital Re, Ltd. Finances Its Growth
As of September 30, 2024, the company's total debt stands at $62.6 million, a decrease of 14.6% from $73.3 million at December 31, 2023. This reduction is attributed to a voluntary repayment of $10.0 million in addition to regular quarterly installments.
The breakdown of the company's debt structure is as follows:
| Debt Type | Outstanding Amount (in millions) |
|---|---|
| Long-term Debt | $62.6 |
| Short-term Debt | $0.0 |
The debt-to-equity ratio for Greenlight Capital Re is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Shareholders' Equity
As of September 30, 2024:
Total Shareholders' Equity = $663.4 million, up from $596.1 million at December 31, 2023.
Calculating the ratio:
Debt-to-Equity Ratio = $62.6 million / $663.4 million = 0.094
This figure indicates a conservative approach to leveraging, especially when compared to the industry average debt-to-equity ratio of around 0.3.
In 2024, the company has not issued any new debt but has focused on reducing its existing debt load. The latest credit rating from A.M. Best affirms the financial strength rating of A- (Excellent), which reflects the company’s stable operating performance.
Recent financing activities included:
- $10.0 million voluntary repayment of debt.
- Share repurchase totaling $7.5 million at an average price of $13.68 per share.
The capital structure is further supported by the company's internal cash flow and investment income, which for the nine months ended September 30, 2024, amounted to $70.2 million in net income.
In summary, the strategic focus remains on balancing debt and equity financing to maintain financial health and support growth initiatives. The company’s ability to manage its debt effectively while enhancing its equity base underscores its commitment to maintaining a robust financial position.
Assessing Greenlight Capital Re, Ltd. (GLRE) Liquidity
Assessing Greenlight Capital Re, Ltd. (GLRE) Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 1.58, reflecting a strong liquidity position, calculated as current assets of $1.04 billion divided by current liabilities of $659.0 million.
Quick Ratio: The quick ratio is measured at 1.49, indicating good short-term liquidity, with quick assets amounting to $940.0 million against current liabilities of $659.0 million.
Analysis of Working Capital Trends
The working capital has shown a positive trend, with total current assets increasing by 6.0% from $982.0 million at December 31, 2023, to $1.04 billion at September 30, 2024. Current liabilities have also increased slightly by 3.5% from $636.0 million to $659.0 million.
| Period | Current Assets ($ million) | Current Liabilities ($ million) | Working Capital ($ million) |
|---|---|---|---|
| December 31, 2023 | 982.0 | 636.0 | 346.0 |
| September 30, 2024 | 1,040.0 | 659.0 | 381.0 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows from operating activities totaled $81.97 million, a significant recovery from a cash outflow of ($14.63 million) during the same period in 2023. The increase is attributed to improved underwriting performance and efficient cash management.
Investing activities saw cash outflows of ($97.22 million), primarily due to net contributions to investment funds, particularly $96.6 million in Solasglas. Financing activities experienced cash outflows of ($19.36 million), driven by share repurchases and debt repayments.
| Cash Flow Activity | 2024 ($ million) | 2023 ($ million) |
|---|---|---|
| Operating Activities | 81.97 | (14.63) |
| Investing Activities | (97.22) | (22.55) |
| Financing Activities | (19.36) | (5.29) |
Potential Liquidity Concerns or Strengths
The liquidity position remains robust, with total cash, cash equivalents, and restricted cash amounting to $621.73 million at the end of Q3 2024. This reflects a decrease from $655.73 million at the beginning of the period, mainly due to the active investment strategy.
Debt levels decreased by 14.6% to $62.19 million from $74.06 million at December 31, 2023. The ratio of debt to shareholders’ equity improved to 9.4%, down from 12.4%, indicating a stronger equity base and reduced leverage.
| Metric | Q3 2024 | Q4 2023 |
|---|---|---|
| Total Cash & Equivalents ($ million) | 621.73 | 655.73 |
| Total Debt ($ million) | 62.19 | 74.06 |
| Debt to Equity Ratio (%) | 9.4 | 12.4 |
Is Greenlight Capital Re, Ltd. (GLRE) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation analysis of the company provides critical insights into whether the stock is overvalued or undervalued based on several key financial metrics.
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio stands at 12.9, calculated using a recent stock price of $13.00 and earnings per share (EPS) of $1.01 for Q3 2024. This ratio is indicative of a potentially undervalued status when compared to the industry average P/E of 15.5.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio is currently 0.69, based on a book value per share of $18.72 and a market price of $13.00. This suggests that the stock is trading at a significant discount to its book value, further supporting the case for undervaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is calculated at 8.3, using an enterprise value of approximately $1.02 billion and EBITDA of $123 million. This ratio indicates that the company could be undervalued compared to the industry average of 10.1.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $10.50 and a high of $15.00. The current price of $13.00 reflects a 15% increase year-to-date, suggesting positive momentum.
Dividend Yield and Payout Ratios
The company currently does not pay a dividend, resulting in a dividend yield of 0%. The lack of dividends reflects a focus on reinvestment for growth rather than returning cash to shareholders.
Analyst Consensus
Analyst consensus on the stock is predominantly a buy, with approximately 65% of analysts covering the stock rating it as such. The remaining 35% recommend a hold position, indicating overall confidence in the company's future performance.
| Metric | Value |
|---|---|
| P/E Ratio | 12.9 |
| P/B Ratio | 0.69 |
| EV/EBITDA Ratio | 8.3 |
| Stock Price (current) | $13.00 |
| 52-week Low | $10.50 |
| 52-week High | $15.00 |
| Dividend Yield | 0% |
| Analyst Rating (Buy) | 65% |
| Analyst Rating (Hold) | 35% |
Key Risks Facing Greenlight Capital Re, Ltd. (GLRE)
Key Risks Facing Greenlight Capital Re, Ltd.
The financial health of Greenlight Capital Re, Ltd. (GLRE) is influenced by various internal and external risks that could impact its operations and profitability. These risks include industry competition, regulatory changes, and evolving market conditions.
Industry Competition
GLRE operates in a highly competitive insurance and reinsurance market. As of September 30, 2024, the company reported gross premiums written of $168.3 million, a decrease of 8.0% compared to Q3 2023. This decline was driven predominantly by a non-renewal of a U.S. homeowners’ property treaty and a reduction in estimated ultimate gross premiums for certain treaties.
Regulatory Changes
Regulatory changes pose significant risks to GLRE's business model. The company is subject to various laws and regulations that govern the insurance industry, which can change frequently. For instance, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2023-07, which requires additional disclosures related to reportable segments, effective for the year-end financial statements in 2024.
Market Conditions
Market conditions significantly affect GLRE’s underwriting results. The company reported a combined ratio of 95.9% for Q3 2024, an increase of 4.7 percentage points due to lower net premiums earned and higher loss ratios. Additionally, the current year catastrophe (CAT) losses contributed 9.3% to the combined ratio, compared to 8.1% in Q3 2023.
Operational Risks
Operational risks include the management of underwriting expenses and claims processing. For the nine months ended September 30, 2024, GLRE's net loss and loss adjustment expenses incurred were $304.5 million, which reflects ongoing challenges in managing claims. The company's total expenses for the same period amounted to $482.3 million.
Financial Risks
Financial risks encompass investment performance and interest rate fluctuations. GLRE reported total investment income of $67.0 million for the nine months ended September 30, 2024, an increase from $52.5 million in the previous year. However, the company faced unrealized losses of $24.6 million during the same period, highlighting volatility in investment returns.
Strategic Risks
Strategic risks include the company's reliance on specific markets and investment strategies. The investment in Solasglas accounted for 84.4% of total investments as of September 30, 2024, amounting to $397.9 million. This concentration could expose GLRE to significant losses if Solasglas underperforms.
Mitigation Strategies
GLRE implements several strategies to mitigate these risks. The company has established a comprehensive risk management framework that includes regular assessments of its underwriting practices, investment portfolio diversification, and adherence to regulatory compliance. For instance, the company reported an increase in shareholders' equity to $663.4 million as of September 30, 2024, up from $596.1 million at the end of 2023, indicating a positive capital position that can absorb potential losses.
| Risk Factor | Current Impact | Financial Data |
|---|---|---|
| Industry Competition | Gross premiums written decreased by 8.0% | $168.3 million |
| Regulatory Changes | New disclosure requirements | Effective 2024 |
| Market Conditions | Combined ratio increased to 95.9% | 9.3% CAT losses contribution |
| Operational Risks | Challenges in claims management | $304.5 million in net loss and LAE incurred |
| Financial Risks | Investment volatility | $67.0 million in total investment income |
| Strategic Risks | Concentration in Solasglas investment | $397.9 million in Solasglas |
Future Growth Prospects for Greenlight Capital Re, Ltd. (GLRE)
Future Growth Prospects for Greenlight Capital Re, Ltd.
Analysis of Key Growth Drivers
Key growth drivers for the company include:
- Product Innovations: The company reported a significant increase in investment income, primarily due to its investment in Solasglas, which generated a net return of 5.2% for Q3 2024, compared to a net return of (0.6)% in Q3 2023.
- Market Expansions: The company’s gross premiums written for YTD 2024 increased by 5.7% to $554.6 million compared to $524.5 million in YTD 2023.
- Acquisitions: The total investment in Solasglas increased by $138.3 million from $258.9 million to $397.9 million as of September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to be driven by:
- Earnings Estimates: Net income for YTD 2024 was reported at $70.2 million, an increase from $69.2 million in YTD 2023.
- Revenue Growth: Total revenues for Q3 2024 reached $188.0 million, compared to $166.9 million in Q3 2023.
Strategic Initiatives or Partnerships
Strategic initiatives that may drive future growth include:
- Partnerships: The company has maintained its investment advisory agreement with Solasglas, which significantly contributed to its investment performance.
- Market Positioning: The company continues to focus on property reinsurance, which remains well matched to meet demand in the current state of the market, especially following an active North Atlantic hurricane season.
Competitive Advantages
The company holds several competitive advantages that position it for growth:
- Financial Strength: A.M. Best affirmed the Financial Strength Rating of A- (Excellent) for the company's principal operating subsidiaries.
- Strong Investment Portfolio: The total investment portfolio increased by 41.9% from $332.2 million at December 31, 2023, to $471.4 million at September 30, 2024.
| Financial Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Income | $35.2 million | $13.5 million | $70.2 million | $69.2 million |
| Total Revenue | $188.0 million | $166.9 million | $554.2 million | $511.6 million |
| Gross Premiums Written | $168.3 million | $183.1 million | $554.6 million | $524.5 million |
| Investment Income from Solasglas | $19.8 million | ($1.9 million) | $42.4 million | $27.8 million |
| Fully Diluted Book Value per Share | $18.72 | $16.74 | $18.72 | $16.74 |
As of September 30, 2024, the total shareholders’ equity increased to $663.4 million, compared to $596.1 million at December 31, 2023.
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Updated on 16 Nov 2024
Resources:
- Greenlight Capital Re, Ltd. (GLRE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Greenlight Capital Re, Ltd. (GLRE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Greenlight Capital Re, Ltd. (GLRE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.