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DATE

Wednesday, May 6, 2026 at 9 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Greg Richardson
  • President — David Einhorn
  • Chief Financial Officer — Faramarz Romer

TAKEAWAYS

  • Net Income -- $35.8 million, producing fully diluted book value per share growth of 4.7% in the quarter.
  • Investment Portfolio (Solasglas) -- 6.8% return, outperforming the S&P 500 Index, which declined 4.4%.
  • Underwriting Profit -- $6.2 million, representing a company-wide combined ratio of 96.0%, with a $5 million provision for Middle East conflict losses adding 3.2 points to the combined ratio.
  • Open Market Segment -- Pretax income of $11.9 million, combining $6.8 million in underwriting income and $5.1 million in investment income.
  • Open Market Premiums -- Net written premiums declined 22.7% to $151.3 million, and net earned premiums declined 13.8%; driven by prior nonrenewal of casualty book and downward premium adjustments on certain contracts.
  • Open Market Combined Ratio -- 94.8%, an 11.2-point improvement, benefiting from favorable loss development and lower catastrophe losses.
  • Innovations Segment Premiums -- Gross written premiums increased 73% to $47.6 million due to organic growth and expansion in Syndicate 3456.
  • Innovations Net Earned Premiums -- Increased 32% to $25.2 million, reflecting both underlying business growth and a higher ceded share in the retrocession program (now 33%).
  • Innovations Combined Ratio -- 102.3%, including 1.4 points of adverse prior year development and a 4.4-point increase in attritional loss ratio, largely from a financial lines program.
  • Capital Return to Shareholders -- $14.5 million returned year-to-date via share repurchases; new $40 million buyback authorization effective May 15, 2026.
  • Segment Underwriting Trends -- Discontinued direct Japanese catastrophe business due to significant rate decreases and limited margin potential effective at April 1 renewal.
  • Expense Ratios -- Open Market showed higher acquisition and expense ratios due to FAL commissions and performance-based compensation; Innovations expense ratio remained at 8.2% despite higher earned premiums.
  • Net Investment Income -- $40.4 million, with $33.7 million attributable to Solasglas portfolio.

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RISKS

  • The company established a $5 million general provision for potential losses related to the Middle East conflict, adding 3.2 points to the combined ratio and citing "significant uncertainty remains."
  • Open Market net written premiums are expected to be lower for the year, as management anticipates continued softening across most lines in the reinsurance market.
  • Innovations segment combined ratio exceeded 100% due to adverse development and increased attritional loss ratio from a financial lines program with "past loss experience warranted a higher current year loss ratio."

SUMMARY

Management directly highlighted growing book value per share and a solid investment performance led by the Solasglas fund's 6.8% quarterly return. Strategic actions included the nonrenewal of underperforming Japanese catastrophe business and a focus on long-term profitability through disciplined underwriting. The company increased capital return activity, with $14.5 million in share repurchases year-to-date and a newly authorized $40 million buyback program.

  • Faramarz Romer reported, "Total underwriting income was $6.2 million, resulting in a combined ratio of 96%, which was 8.6 points better than the same period last year."
  • The Innovations segment renewed its whole account retrocession program, raising its ceded share to 33% effective January 1, 2026, boosting ceded premiums.
  • David Einhorn stated, "Our net exposure at the end of the quarter was about 41% compared to about 40% at the end of 2025," indicating consistent risk positioning despite a volatile backdrop.
  • The Board's approval of a new $40 million buyback authorization, effective May 15, 2026 through May 2027, was announced at quarter-end.

INDUSTRY GLOSSARY

  • Combined Ratio: Ratio of incurred losses and expenses to earned premiums, measuring underwriting profitability below or above 100%.
  • Retrocession: Reinsurance purchased by a reinsurer, allowing further risk transfer to other parties.
  • Syndicate 3456: Specific underwriting entity for multiline business growth within the Innovations segment.
  • Attritional Loss Ratio: The portion of incurred losses excluding large, infrequent claims such as catastrophes; reflects ongoing claims patterns in a portfolio.
  • FAL Programs: Funds At Lloyd’s programs in which capital is deposited by market participants for underwriting at Lloyd’s of London.

Full Conference Call Transcript

Greg Richardson: Thank you, David. Good morning, everyone, and thank you for joining us. We reported net income of $35.8 million in Q1 2026, driving an increase in fully diluted book value per share of 4.7%. Our net income was driven by a combination of strong investment performance with the Solasglas portfolio returning 6.8% in the quarter, an excellent result in a challenging market and an underwriting profit of $6.2 million, which equates to a combined ratio of 96.0%. Our underwriting results in the first quarter includes a $5 million provision linked to the Middle East conflict. This added 3.2 points to our combined ratio.

As we referenced on our earnings call in early March, the Middle East conflict remains a fluid situation. While a cease-fire is currently in place, and we hope the conflict will end soon, significant uncertainty remains. In Q1, we received an immaterial amount of formal loss notifications. However, given the high degree of uncertainty, we felt it was prudent to establish a $5 million general provision for potential losses. On our Q4 2025 call, I provided an update on our 1/1/26 renewal season and the market environment at the time. While April 1 is not a major renewal date for us, market trends are unchanged with softening across most lines. April 1 is the primary renewal date for Japanese business.

Due to significant rate decreases this year, we decided to nonrenew our direct Japanese cat business. Given the relatively small amount of premium, the limited margin potential no longer made sense for the portfolio. We remain disciplined. We expect Open Market reinsurance written premium this year to be lower than in the prior year given the soft reinsurance market. On the other hand, we expect our Innovations segment premium to continue to increase, given the organic growth of our existing client portfolio, a strong flow of new business opportunities, more favorable rate trends and our ability to monitor and influence terms and conditions. As a management team, we are focused on delivering consistent profitability over the long term.

While our shares have been trading at a discount to our growing book value, we have all along maintained that strong underwriting and investment results will ultimately be reflected in our share price. We have started to see this recently following the release of our full year 2025 results. Meanwhile, we have returned $14.5 million of capital to our shareholders year-to-date via share repurchases under our Board-approved share repurchase plan. As I have noted previously, we are optimistic about the opportunities ahead and Greenlight Re's positioning. Now I'd like to turn the call over to David.

David Einhorn: Thanks, Greg, and good morning, everyone. The Solasglas fund returned 6.8% in the first quarter. The long portfolio contributed 1%, the short portfolio contributed 5.7% and macro contributed 1.2%. During the quarter, the S&P 500 Index declined 4.4%. The largest positive contributors were long investments in gold, Acadia Healthcare and DHT Holdings. The largest detractors included our macro position in short-term interest rates and our long investments in Kyndryl Holdings and Graphic Packaging. Gold was the largest positive contributor as its price advanced 8% during the quarter. Gold spiked through the end of February amid dedollarization concerns leading to gains in both our physical and call option positions.

We took some profits, which lowered our total exposure and allowed us to preserve most of our gains in gold as it declined in March. Acadia Healthcare shares advanced 65% during the quarter. We established a small position in late 2024 when the shares came under pressure following the New York Times investigation into patient treatment. The decline continued as the company's aggressive expansion strategy weighed on results. In late January, shares recovered when the company removed the incumbent CEO and announced the return of its well-regarded former CEO. Should the company be successful in improving occupancy to its target levels, we believe annual earnings per share can double. DHT Holdings shares advanced 53% during the quarter.

The company owns and charters very large crude carriers, which were in short supply even prior to the war. With day rates increasing to 5x the long-term average level, these elevated rates, we expect will allow the company to pay a dividend that is nearly quadruple this year. The largest detractor for the quarter was our long SOFR futures position. After the war began and oil prices spiked, the market [indiscernible] to doubt the Fed's ability to cut rates, resulting in losses for the quarter. We maintained the position as we view the oil price shock as ultimately a headwind to growth, creating a viable pathway for the incoming Chairman of the Federal Reserve to lower rates.

Kyndryl shares declined 58% during the quarter. We owned Kyndryl for more than 4 years through a successful turnaround following its spin-off from IBM. Recently, it became more difficult for the company to win new business and the shares were on [indiscernible] back near our entry price. Fortunately, along the way, we took some profits at higher prices. We exited our remaining position during the quarter. Graphic Packaging shares declined 33% during the quarter. The company missed earnings expectations and lowered guidance as costs for its new paper mill came in well over budget.

Also, the company replaced its experienced CEO with a new one who recently oversaw a major disappointment at its prior company and has yet to outline a clear strategy. While the shares have suffered, we believe they are extremely cheap relative to reasonable mid-cycle operating results. We initiated a medium-sized position in Versant Media Group following its recent spin-off from Comcast. Shares declined after the spin-off as Comcast shareholders sold stock they received, and the index removals triggered additional selling. This resulted in Versant trading at under 4x adjusted EBITDA and an implied cash flow yield that we believe will allow the company to return almost all its entire market cap to shareholders within 4 years.

Prior to the war, we cautiously positioned with relatively low gross and net exposure. While most market participants are optimistic that the conflict will be resolved soon and with minimal repercussions, we continue to prioritize capital preservation and maintain some dry powder. Our net exposure at the end of the quarter was about 41% compared to about 40% at the end of 2025. Solasglas returned 0.4% in April, bringing the year-to-date 2026 return to 7.2%. Net exposure in the investment portfolio was approximately 30% at the end of April. We continue to be pleased with the performance of the company's underwriting portfolio and investments.

We remain disciplined in our capital allocation and are being deliberate on where we can generate the best returns on our invested capital given the many levers we have at our disposal, including share buybacks. And now I'd like to turn the call over to Faramarz to discuss the financial results in more detail.

Faramarz Romer: Thank you, David. Good morning, everyone. During the first quarter of 2026, Greenlight Re reported net income of $35.8 million or $1.05 per diluted share. Total underwriting income was $6.2 million, resulting in a combined ratio of 96%, which was 8.6 points better than the same period last year. The 2026 first quarter combined ratio benefited from 10.5 points of improvement due to lower cat and event losses contributing 5.8 combined ratio points compared to the same period last year, which included 18.1 combined ratio points related to the California wildfires.

Favorable loss development contributed 4.1 points of improvement in the combined ratio and was offset by 4 points of higher acquisition cost ratio and 1.2 points of higher expense ratio. Our net investment income for the quarter was $40.4 million compared to $40.5 million in the first quarter of 2025. $33.7 million of the investment income related to our investment in Solasglas, which posted a strong 6.8% return in the quarter, the remainder related to interest income on our collateral and funds withheld balances. I will now break down the first quarter results by segment, starting with the Open Market segment.

The Open Market segment reported a pretax income of $11.9 million composed of underwriting income of $6.8 million and investment income of $5.1 million. For the quarter, the Open Market segment net written premiums decreased by 22.7% to $151.3 million, while net earned premiums decreased by 13.8%. A decrease in net earned premium was expected as it related to the casualty book, which we had decided to nonrenew early in 2025. The remainder of the decrease was mostly related to downward premium adjustments on quota share specialty property and multiline contracts.

The Open Market combined ratio for the first quarter improved by 11.2 points to 94.8% compared to the same period in 2025 due to favorable loss development and lower cat losses. First quarter favorable reserve development was 2.2 percentage points compared to adverse development of 3.3% in first quarter last year. Cat losses were $5 million related to the Middle East conflict in the first quarter of this year versus $27 million relating to the California wildfires in Q1 last year. The improvement in combined ratio was partially offset by higher acquisition cost ratio due to higher commissions reported on the FAL programs and higher expense ratio attributed to performance-based long-term incentive compensation.

Overall, the Open Market segment had a strong performance during the quarter. Now let's turn to the Innovations segment. The Innovations segment produced an underwriting loss of $0.6 million and an investment income of $1.1 million. During the quarter, the Innovations gross written premiums increased by $20.1 million or 73% to $47.6 million, mainly driven by new business and exposure growth from existing treaties in casualty, financial and specialty lines, combined with growth in Syndicate 3456, which is presented under Multiline. We renewed our Innovations whole account retrocession program on January 1, 2026, increasing the ceded share from 28.5% to 33%.

Therefore, the ceded premiums in the first quarter increased due to the combination of growth in underlying business and a higher portion ceded. The net earned premiums for Innovations segment increased by $6.2 million or 32% to $25.2 million. The combined ratio for the Innovations segment was 102.3% during the first quarter, which included 1.4 points related to adverse prior year development compared to 3 points of favorable development in the first quarter last year. The attritional loss ratio was 4.4 points higher, mainly related to a financial lines program where the past loss experience warranted a higher current year loss ratio.

The expense ratio for this Innovations segment was unchanged at 8.2% in spite of the increase in earned premiums. We continue to invest in talent and technology in readiness for future growth of this segment. During the first quarter, we repurchased 298,701 shares for $5 million at an average price of $16.7 per share. Subsequently, during the month of April, we repurchased an additional $9.5 million of shares, bringing our year-to-date repurchases to $14.5 million. On April 28, the Board approved a new share repurchase authorization of $40 million effective May 15, 2026, and expiring at the end of May 2027.

At the end of the first quarter, our fully diluted book value per share was $21.40, an increase of 4.7% for the quarter. Our primary metric continues to be growth in fully diluted book value per share, and we are pleased with the first quarter 2026 results. That concludes our prepared remarks. The operator will now open the line for your questions.

Operator: Thank you. We'll now be conducting your question-and-answer session. [Operator Instructions] Thank you. As there are no questions at this time. Should you have any follow-up questions, please direct them to Jeremy Hellman at -- The Equity Group Inc. at [email protected], and he'll be happy to assist you. This does conclude Greenlight Re's First Quarter 2026 Earnings Conference Call. Thank you. You may now disconnect.