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DATE

Wednesday, Aug. 5, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

  • General Counsel - David Sigmon
  • Chief Executive Officer - Greg Richardson
  • Chairman of the Board - David Einhorn
  • Chief Financial Officer - Faramarz Romer

TAKEAWAYS

  • Net Loss -- $29.6 million, or $0.89 per diluted share, for Greenlight Capital Re, Ltd. (GLRE +0.46%), compared to net income of $0.3 million for the same period last year.
  • Gross Written Premium -- $183.1 million, representing a 2% increase year over year driven by growth in the Innovations segment.
  • Net Written Premium -- $146.8 million, an 11% decrease from $164.5 million in the prior year period as management reduced exposure in response to softening market conditions.
  • Net Earned Premium -- $161.8 million, remaining relatively flat compared to $161.6 million in the second quarter of 2025.
  • Combined Ratio -- 100.1%, compared to 95.0% in the prior year period, primarily driven by catastrophe and large losses.
  • Catastrophe and Large Loss Ratio -- 17.1%, compared to 4.0% in the prior year period, primarily due to losses in the specialty book.
  • Middle East Conflict Reserves -- $20.0 million, bringing the total conflict-related reserves to $25.0 million, including one known full limit loss of $7.6 million.
  • Qatar Energy Facility Loss -- $6.5 million, representing a provision for a fire at the QatarEnergy gas facility that was not considered war related.
  • Innovations Segment Underwriting Income -- $2.6 million, reflecting a combined ratio of 89.7% for the quarter.
  • Innovations Gross Written Premium -- $30.9 million, a 12% increase year over year supported by new business in financial and specialty lines.
  • Open Market Combined Ratio -- 100.7%, impacted by 20.3 percentage points of catastrophe and large losses.
  • Attritional Loss Ratio -- 51.7%, representing an improvement of 4.3 percentage points from 56.0% in the second quarter of 2025.
  • Net Investment Loss -- $23.8 million, compared to a loss of $7.8 million in the second quarter of 2025, primarily related to the Solasglas portfolio.
  • Solasglas Fund Return -- Negative 5.4% for the quarter, with the long portfolio contributing 12.0% while the short portfolio detracted 12.3% and macro detracted 5.4%.
  • July Investment Performance -- 4.9% return for the Solasglas fund in July, bringing the year-to-date return to 6.1%.
  • Solasglas Net Exposure -- 33% at the end of the second quarter, a decrease from 41% at the end of the first quarter of 2026.
  • Centene Investment Performance -- 96% share price appreciation during the quarter following an earnings beat and data suggesting health care utilization peaked.
  • Green Brick Partners Investment Performance -- 24% appreciation as market sentiment regarding homebuilding stocks improved.
  • PENN Entertainment Investment Performance -- 42% appreciation driven by regional casino growth and acquisition interest in peer companies.
  • Gold Investment Performance -- 14% price decline during the quarter, making it the third-largest detractor in the investment portfolio.
  • Share Repurchases -- $14.2 million of ordinary shares repurchased in the second quarter at an average price of $17.69 per share, with an additional $3.9 million repurchased subsequently in July and August.
  • Remaining Repurchase Authorization -- $36 million as of the earnings call date, allowing for continued opportunistic share buybacks.
  • Fully Diluted Book Value Per Share -- $20.61 at June 30, 2026, representing a 0.9% increase for the first six months of the year.

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RISKS

  • Richardson stated, "Reserving for this ongoing conflict has been challenging with limited available information," regarding the high degree of uncertainty surrounding Middle East war loss estimates.
  • Richardson noted, "The specialty book is susceptible to severity events such as the Middle East war," highlighting the concentration risk in marine and aviation lines.

SUMMARY

Greenlight Capital Re, Ltd. reported a net loss for the second quarter of 2026, primarily attributed to negative investment performance and significant geopolitical loss provisions. Management stated that underwriting results were impacted by specific catastrophe claims in the Middle East and an industrial fire in Qatar, which offset a strong performance from the Innovations segment. The company reported that the investment losses sustained in the second quarter essentially reversed in July. Management also announced that it received approval to transition its Lloyd's operations to a full syndicate effective Jan. 1, 2027, which is intended to enable further diversification into new insurance channels. The company continues to manage capital through share repurchases, having bought back 4% of outstanding shares since the beginning of the year.

  • The company received approval in principle from the Council of Lloyd's to transition Syndicate 3456 to a full syndicate for 2027, which CEO Richardson noted will allow diversification into a new treaty reinsurance channel and a managing general agent channel.
  • Chairman Einhorn attributed the investment detraction to a "short basket of AI adjacent companies that appreciated significantly as investors continue to chase anything AI related."
  • Management reported that exposure to potential losses from the Middle East conflict is decreasing as cedents reduce regional exposure and the company nonrenews specific accounts.
  • CFO Romer clarified that an increase in liquidity funds was driven by moving balances previously held as cash and cash equivalents into a Lloyd's approved liquidity fund to back syndicate books.
  • CEO Richardson indicated that management is actively considering increasing the capital allocation to the Solasglas fund as the reinsurance market enters a softer phase.
  • Management noted that the attritional loss ratio improved by 4.3 percentage points due to underwriting discipline and a shift toward more profitable lines in the Innovations segment.

INDUSTRY GLOSSARY

  • Combined Ratio: A measure of underwriting profitability calculated by dividing the sum of incurred losses and expenses by earned premiums; a ratio below 100% indicates an underwriting profit.
  • IBNR: Incurred But Not Reported, which refers to reserves set aside for claims that have occurred but have not yet been officially reported to the insurance company.
  • Cedent: An insurance company that passes a portion of its risk to a reinsurer.
  • Lloyd's Syndicate: A group of underwriters at Lloyd's of London who provide insurance and reinsurance capacity for specific risks.
  • SOFR: The Secured Overnight Financing Rate, a benchmark interest rate for dollar-denominated derivatives and loans.
  • Attritional Loss: Routine, smaller-scale insurance claims that occur regularly, excluding large catastrophe or one-off severity events.
  • MGA: Managing General Agent, a specialized insurance agent or broker with the authority to underwrite business on behalf of an insurer.
  • Treaty Reinsurance: A contract between a primary insurer and a reinsurer where the reinsurer agrees to accept all risks of a certain type.
  • Solasglas: The concentrated, value-oriented investment fund managed by DME Advisors that holds the majority of the company's investable assets.

Full Conference Call Transcript

Operator: Thank you for joining the Greenlight Capital Re Second Quarter 2026 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the call over to David Sigmon, Greenlight Re's General Counsel. You may begin.

David Sigmon: 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 Investors section of the company's website at www.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, Faramarz 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 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 Form 10-K for the year ended December 31, 2025. 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.

Greg Richardson: Thank you, David. Good morning, everyone, and thank you for joining us. Q2 2026 was challenging for Greenlight Re. We reported a net loss of $29.6 million for the quarter, driven by investment income losses from the Solasglas portfolio and a modest underwriting loss. It is worth noting that the second quarter investment loss has essentially reversed in July. Our underwriting result in the second quarter includes a $20 million provision linked to losses related to the Middle East conflict, plus a $6.5 million provision linked to an oil refinery explosion in Qatar, which was not war related. Our specialty book is a core part of our overall portfolio and has been profitable historically.

The specialty book is susceptible to severity events such as the Middle East war. Reserving for this ongoing conflict has been challenging with limited available information. We have posted a reserve in relation to events up to June 30, 2026, which we believe is prudent, although there is a high degree of uncertainty. We are not aware of any major Q3 losses as we continue to closely monitor the situation. Furthermore, our exposure to potential loss from the war going forward is decreasing as our cedents are actively reducing their exposures in the region, and we have nonrenewed several accounts.

On a more positive note, our Innovations segment recorded a solid underwriting result in the quarter, generating $2.6 million of underwriting profit and a combined ratio of 89.7%. We have been excited for some time about the potential of our Innovations segment, and it is gratifying to see this reflected in the underwriting results. The softening market trends across most lines that we saw in Q1 continued in Q2. We are committed to maintaining our underwriting discipline in the market. And while our gross written premium was up 2% in the quarter due to Innovations growth, our net written premium was down 11% as we reduced net exposure in response to softening conditions.

Finally, I would like to highlight that in July, we received approval in principle from the Council of Lloyd's to transition our Syndicate-in-a-Box, Greenlight Re Innovations Syndicate 3456, to a full syndicate effective January 1, 2027. Syndicate 3456 has been a successful part of the growth in our Innovations business over the last 4 years. The transition to a full syndicate for 2027 will enable further growth of this segment at Lloyd's and further diversification into 2 new channels, an MGA channel focused on more traditional business and a treaty reinsurance channel. Lloyd's is a key part of our overall strategy and the transition to a full syndicate status cements our strong position in the Lloyd's market.

Now I'd like to turn the call over to David.

David Einhorn: Thanks, Greg, and good morning, everyone. The Solasglas fund returned negative 5.4% in the second quarter. The long portfolio contributed 12% and the short portfolio detracted 12.3% and macro detracted 5.4%. During the quarter, the S&P 500 Index advanced 15.2%. The largest positive contributors were long investments in Centene, Green Brick Partners and PENN Entertainment. The largest detractors include a short basket of AI adjacent stocks and our macro positions in SOFR futures and gold. Following an earnings beat, Centene shares rose 96% during the quarter. Industry data released during the period also suggested that health care utilization has likely peaked, supporting the view that the industry is entering a durable profit upcycle.

Green Brick Partners shares appreciated 24% during the quarter as the mood around homebuilding stocks improved. PENN Entertainment shares appreciated 42% as its regional casino portfolio returned to modest growth driven by strong performance from newer properties. Promotional activity also moderated and acquisition bids for 2 peer companies pointed to a higher valuation for PENN. The largest detractor was a short basket of AI adjacent companies that appreciated significantly as investors continue to chase anything AI related. Our second largest detractor was our long SOFR futures position. As inflation expectations picked up following the outbreak of the conflict in the Middle East, the market priced in multiple rate hikes by year-end.

Portion of these losses was offset by gains in our inflation swaps position. Gold was the third largest detractor as its price declined 14% over the quarter. Earlier in the year, we took profits on most of our call options, reducing our overall exposure and mitigating part of the impact from gold's steep decline following its peak in the first quarter. Net exposure ended the quarter at around 33% compared to about 41% at the end of the first quarter. Solasglas returned 4.9% in July, bringing the 2026 year-to-date return to 6.1%. Net exposure in the investment portfolio was approximately 39% at the end of July.

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 second quarter of 2026, Greenlight Re reported a net loss of $29.6 million, or $0.89 per diluted share. The underwriting loss was marginal at $0.2 million, resulting in a combined ratio of 100.1%, which included 17.1 percentage points of cat and large losses during the quarter. By comparison, the cat and large loss ratio was 4% for the second quarter last year. The majority of the cat and large losses for the second quarter of this year related to our specialty book. As the Middle East war continued, we booked an additional $20 million of loss reserves in the second quarter on top of the $5 million reserved in the first quarter.

The total $25 million reserves include one known full limit loss accounting for $7.6 million. Other specific event losses made up $9.9 million of the reserves and the remaining $7.5 million has been reserved as our best estimate of incurred but not reported losses from the conflict. However, there is still a high degree of uncertainty surrounding the insured loss estimates due to limited access to affected areas and restrictions imposed in certain territories. In addition, we incurred a $6.5 million loss from a fire at the QatarEnergy gas facility. We do not believe this was caused by a hostile act or attack connected to the Middle East war.

Excluding the cat and large losses, we have a -- we had a solid underwriting quarter. If we dissect the loss ratio further, the attritional loss ratio during the second quarter improved by 4.3 percentage points to 51.7% versus 56% for the same period last year. The prior year reserve development was 0.4% during the second quarter of 2026 compared to 1.9% in the same period last year, improving the combined ratio by 1.4 percentage points. Most of the improvement came from the release of reserves related to the 2025 California wildfires.

The 2026 second quarter combined ratio also benefited from 1.8 points of lower acquisition cost ratio and 0.4 points of lower expense ratio compared to the same period last year. Our net investment loss for the quarter was $23.8 million compared to $7.8 million in the second quarter last year. The majority of the investment loss was related to our investment in Solasglas, which posted a 5.4% loss in the quarter, but the investment loss was partially offset by other investment and interest income on our collateral and funds withheld balances, which contributed $4.1 million. Now let's look at our results for the quarter at the segment level.

The Open Market segment reported a pretax income of $3.4 million, composed of underwriting loss of $1 million and investment income of $4.4 million. For the second quarter, the Open Market segment net written premiums decreased by 10% to $128.2 million, while net earned premiums decreased by 3%. A decrease in net earned premiums was mainly related to the casualty book, which we had decided to nonrenew early in 2025. The Open Market combined ratio for the second quarter was 100.7%, mainly driven by the Middle East conflict losses that I mentioned earlier. The cat and large losses accounted for 20.3 combined ratio points for the quarter.

The acquisition cost ratio for the Open Market segment improved by 1.1 points compared to the same period last year. Moving to the Innovations segment. The Innovations segment reported a pretax income of $1.5 million composed of underwriting income of $2.6 million, investment loss of $0.5 million and other expenses of $0.6 million. During the quarter, Innovations' gross written premiums increased by $3.3 million, or 12%, to $30.9 million, mainly driven by new business and exposure growth from existing treaties in financial and specialty lines. Net earned premiums in the second quarter increased by $3.5 million or 16% to $24.9 million as the segment continues to show strong growth.

The combined ratio for the Innovations segment was 89.7% during the second quarter compared to 107% for the same period last year. The loss ratio improved by 9.5 points, partially related to the lower attritional losses and partially due to improvement in prior year reserve development. Acquisition cost ratio for the Innovations segment improved by 5.4 points, while the expense ratio improved by 2.4 points. During the second quarter, we repurchased $14.2 million of shares. Subsequently, we repurchased an additional $3.9 million of shares. Since the beginning of this year, we have repurchased 4% of our outstanding shares for a total of $23.1 million.

We have $36 million remaining under the current Board-approved repurchase plan, which will allow us to continue repurchasing shares opportunistically. At the end of the second quarter, our fully diluted book value per share was $20.61, an increase of 0.9% for the first 6 months of the year. That concludes our prepared remarks. The operator will now open the line for your questions.

Operator: [Operator Instructions] Our first question today is coming from Ross Haberman from RLH Investments.

Ross Haberman: Could you just elaborate, if you would, on your total Middle East exposure on direct or reinsurance facilities, if you could do that?

Greg Richardson: I would say it is the Middle East and in general, marine and aviation is an area of concentration for us. We are not a major cat writer. We're not a major casualty writer, but we do focus on specialty as an area of strength. It's an area where Greenlight is not merely a following market but is a respected and important player in that market. So when we have events like this, the Ukraine war is another example, we do expect be -- have meaningful losses. And indeed, we've experienced that in the Middle East as we did in the Ukraine earlier. It is not as big as our cat exposures, but there's more frequency perhaps.

So we're very comfortable with the losses that we've had. It's well within our risk management guidelines and expectations. Does that get at your question?

Ross Haberman: Yes.

Operator: Next question today is coming from Kevin English, a private investor.

Kevin English: One quick question, just a numbers one. It's related to the increase in liquidity funds sort of relative to end of year versus June 30. Just was curious what sort of is driving that and what specifically that sort of includes? I know you sort of footnoted it's cash and cash equivalents and highly liquid investments, but wondering if there's just a little more color you could provide on that.

Faramarz Romer: Sure. Kevin, this is Faramarz. The liquidity funds are the balances that we have at Funds at Lloyd's that backs our Lloyd's syndicate books. We have transferred them. They were sitting in cash and cash equivalents. We moved them into a Lloyd's approved liquidity fund. So the majority of the balance you're seeing was in transition at year-end. So we moved -- it was sitting at $12 million at the end of the year, and we moved the remaining balance during the first half of this year. So that's why you're seeing that increase. So it was previously sitting as cash at Lloyd's, but on our balance sheet, it would have been under our reinsurance balance receivable.

So because those are funds that are sitting as either funds withheld by the cedents or providing capital for our FAL business.

Kevin English: Got it. That's helpful. And the second sort of question I had is just related to one that I brought up a couple of quarters ago, but apologies to be repetitive here, but I was wondering if there are any sort of upcoming discussions with the Board about removing the sort of artificial investment ceiling that governs the Solasglas funds. I know I've asked this to the team. Last time, Greg, you gave a response relating to not wanting to move it around willy-nilly and sort of understanding that there's quarterly volatility.

But one thing I continue to not understand is, one, why you care about the quarterly volatility of the Solasglas fund when it's returned pretty consistently 10% per year, not just since 2021, but if I start looking at the returns as of January 2019, after the kind of risk management shift. It seems to be the most consistent and highest returning part of the strategy. It seems to be mean reverting in terms of negative volatility as evidenced by the last couple of months. I could understand not wanting to be more invested at the wrong periods of time, given that markets are arguably frothy, but the fund seems to do its best when markets are doing their worst.

You can look at 2022 as a guide to that. It's not like it's market dependent in terms of strong years, look at 2020. I mean it's pretty sort of muted as far as the correlation to market. So was hoping that we'd be seeing some update on the website there and hoping that, that's a discussion that's upcoming with the Board, but just wanted to raise that again and maybe ask pointedly, why do you care at this point about the quarterly volatility, especially given there's no debt on the balance sheet? The ratings seem to be as strong as ever. Yes, just curious to hear an update on that.

Greg Richardson: Well, first of all, it's great to hear your impressions of that, and we agree with you. And we take capital allocation very seriously. It's core to what we do. And we agree with you that in terms of a return on our allocated AM Best capital, it is -- it has been very high performing. At the same time, we're just coming out -- we've come out of a very strong reinsurance market. It's now -- we're in a softer phase. So we're very actively thinking about how we redeploy capital. And absolutely, one of the options is to increase the allocation to Solasglas, and I would not be surprised if that happens.

At the same time, we're actively buying back stock as well. And so without forecasting exactly what we're doing, your thoughts are harmonized well with my thoughts. Faramarz, do you want to add to that?

Faramarz Romer: No. Look, I mean, we've increased the allocation over the last few years. And as Greg mentioned, we continue to look at it from how much excess surplus we have, how much excess capital we have relative to what we need to hold for our ratings and our growth in our surplus. And we have a number of options in managing that capital base. And buybacks is obviously one of them right now. Buying back at a deep discount to our book value is quite accretive to our shareholders as well. So we're looking at it from all angles, Kevin. But we appreciate your thoughts on this. Thank you.

Kevin English: No, that's fantastic to hear. And I appreciate all of that context just because, again, just a closing comment here, it's just causation versus correlation is a dangerous thing to look at from a data perspective. But it's hard to ignore at this point the discount to book value and how that's coincided with the reduced exposure to the equity book. It makes no sense in the world that the stock should trade at a discount to book value today versus history when it traded at a premium when rates were 0 and the float was receiving no interest.

And it seems that obviously, the insurance book has ebbed and flowed, but I think that it will probably go a long way to just kind of remove those restrictions and be a little bit more invested on that.

Operator: There are no additional questions at this time. Should you have any follow-up questions, please direct them to Jeremy Hellman of the Equity Group at [email protected], and he'll be happy to assist you. This now concludes Greenlight Re's Second Quarter 2026 Earnings Conference Call. Thank you. You may now disconnect.