Teleconferência de Resultados do 3T26 da Greenlight Capital Re (GLRE): Índice Combinado Atinge 90,5%

Principais Destaques

• A Greenlight Capital Re (NASDAQ: GLRE) reportou um lucro líquido no 3T26 de US$ 3,2 milhões, ou US$ 0,10 por ação diluída. O lucro líquido acumulado no ano atingiu US$ 9,4 milhões, ou US$ 0,28 por ação diluída.
• O resultado de subscrição foi de US$ 14,6 milhões, com um índice combinado de 90,5%. O resultado refletiu a lucratividade subjacente, a ausência de novas catástrofes ou grandes perdas e uma redução de US$ 6 milhões nas reservas vinculadas a eventos específicos no Oriente Médio.
• O segmento Open Markets permaneceu como o maior contribuidor de subscrição, gerando um índice combinado de 87,9% e resultado de subscrição de US$ 15,2 milhões. Os prêmios emitidos líquidos caíram 19%, para US$ 114,2 milhões, à medida que a empresa respondeu a condições de mercado mais brandas.
• Os prêmios emitidos brutos do segmento Innovations aumentaram 46% em relação ao mesmo período do ano anterior, para US$ 43 milhões, enquanto os prêmios ganhos líquidos subiram 34%, para US$ 28,1 milhões. Seu índice combinado aumentou para 98,2%, incluindo 7,6 pontos de desenvolvimento adverso de reservas de anos anteriores.
• A carteira do Solasglas teve retorno negativo de 3,3% durante o trimestre, parcialmente compensado por US$ 10,5 milhões de outras receitas de investimento. Posteriormente, o Solasglas rendeu 2,3% em outubro, trazendo seu retorno acumulado em 2026 para a estabilidade.
• A GLRE recomprou 5,4% de suas ações em circulação por US$ 30,5 milhões desde o início de 2026 até outubro. A empresa ainda tinha US$ 24,8 milhões remanescentes sob seu plano de recompra autorizado.

Principais Dados Financeiros

Desempenho Operacional e dos Negócios

Open Markets

O segmento Open Markets gerou lucro antes dos impostos de US$ 19,5 milhões, composto por US$ 15,2 milhões em resultado de subscrição e US$ 4,3 milhões em receitas de investimento. O índice combinado do segmento foi de 87,9%, em comparação com 84,5% um ano antes.

Os prêmios emitidos líquidos caíram 19%, para US$ 114,2 milhões, enquanto os prêmios ganhos líquidos recuaram 13%. A administração atribuiu a queda a estimativas menores de prêmios para contratos proporcionais de linhas especiais e patrimoniais, além de uma menor exposição decorrente de negócios de responsabilidade civil não renovados. Os prêmios emitidos brutos do segmento Open Markets caíram 10,4%, à medida que a GLRE exerceu disciplina de ciclo em meio a condições de preços mais brandas.

O índice de sinistralidade melhorou 1,9 ponto percentual, beneficiado pelo desenvolvimento favorável de reservas de anos anteriores e pela liberação de reservas relacionadas ao conflito no Oriente Médio. Isso foi parcialmente compensado por um índice de sinistralidade atritiva mais alto no segmento de linhas especiais. O índice de custos de aquisição subiu 4,1 pontos, principalmente devido a ajustes de comissão variável, enquanto o índice de despesas aumentou 1,1 ponto, para 4,9%.

Innovations

O segmento Innovations registrou lucro antes dos impostos de US$ 5,8 milhões, incluindo US$ 0,5 milhão de resultado de subscrição e US$ 6 milhões em receitas de investimento, parcialmente compensados por US$ 0,6 milhão em outras despesas.

Os prêmios emitidos brutos subiram 46%, para US$ 43 milhões, impulsionados por novos negócios e maior exposição em contratos multilinhas e de linhas financeiras já existentes. Os prêmios ganhos líquidos aumentaram 34%, para US$ 28,1 milhões, com a expansão de todas as linhas de negócios.

O índice combinado subiu para 98,2%, ante 96,8%. O índice de sinistralidade aumentou 13,5 pontos, principalmente devido a 7,6 pontos de desenvolvimento adverso de reservas de anos anteriores. O índice de custos de aquisição melhorou 10,1 pontos devido a ajustes de comissões variáveis, enquanto o índice de despesas melhorou 2 pontos, já que o crescimento dos prêmios superou o crescimento das despesas.

A GLRE também anunciou uma parceria estratégica com a Hippo Holdings. A Hippo poderá co-investir com a unidade Innovations em investimentos em estágio inicial em agentes gerais gestores (MGAs), enquanto a Spinnaker Insurance Company atuará como a seguradora de fronting admitida preferencial da GLRE nos EUA para programas de co-investimento elegíveis. O Lloyd's também aprovou a transição do Syndicate 3456 para um sindicato pleno.

Carteira de Investimentos e Gestão de Capital

A carteira do Solasglas recuou 3,3% no 3T. O maior detrator foi a posição macro em contratos futuros de SOFR, que refletia a visão de que as taxas de juros de curto prazo dos EUA cairiam menos ou subiriam menos do que o mercado esperava. A GLRE reduziu a posição para gerenciar o risco, com a exposição remanescente extendendo-se até o próximo verão norte-americano.

A Green Brick Partners e a Brighthouse Financial também foram grandes detratoras. Os contribuidores positivos incluíram posições vendidas em empresas ligadas à IA e construtoras residenciais, juntamente com a posição comprada na DHT Holdings. As novas posições compradas incluíram Century Aluminum, ADI Global Distribution e Canal+.

A exposição líquida da carteira foi de 32% no final do trimestre, ante 33% no final do 2T, e de aproximadamente 28% no final de outubro.

A GLRE recomprou 505.000 ações por US$ 8 milhões durante o 3T e outras 220.000 ações por US$ 3,3 milhões em outubro. A administração informou que as recompras continuarão de forma oportunista sob a autorização existente.

Perspectivas da Administração

A administração afirmou que as condições do mercado de resseguros continuam a se abrandar, mas acredita que as taxas e os termos permanecem atraentes para os negócios de Open Market. A empresa espera novas oportunidades lucrativas até 2027, mantendo ao mesmo tempo a disciplina de subscrição durante o ciclo de renovação de 1º de janeiro.

Para o segmento Innovations, a administração espera um crescimento contínuo sob preços estáveis. A empresa também espera que o índice de despesas do segmento diminua à medida que ganha escala, apoiado por iniciativas que incluem a parceria com a Hippo e a transição do Syndicate 3456 para um sindicato pleno do Lloyd's.

Riscos e Pontos de Atenção

• O conflito em andamento no Oriente Médio permanece incerto. A GLRE reduziu as reservas de sinistros conhecidos em US$ 6 milhões para eventos específicos, mas manteve as reservas de sinistros ocorridos, mas não avisados (IBNR).
• O desenvolvimento adverso de reservas de anos anteriores foi de 1,6 ponto no 3T, concentrado principalmente em diversos contratos do segmento Innovations.
• Condições mais brandas no mercado de resseguros estão pressionando os volumes de prêmios, especialmente em Open Markets.
• A volatilidade dos investimentos do Solasglas compensou grande parte do lucro de subscrição do trimestre. A posição em contratos futuros de SOFR tem sido dispendiosa no acumulado do ano, embora a exposição tenha sido reduzida.
• Preocupações de que os reguladores pudessem bloquear ou atrasar a aquisição pendente da Brighthouse Financial pela Aquarian Capital contribuíram para uma queda de 21% nas ações da Brighthouse durante o trimestre.

Destaques das Perguntas e Respostas dos Analistas

A única pergunta feita por analistas abordou o acordo de recompra de ações da empresa com David Einhorn. A administração explicou que as recompras no mercado aberto, caso contrário, aumentariam a porcentagem de participação de Einhorn à medida que o número de ações em circulação diminuísse.

Para manter sua participação acionária total abaixo dos limites aplicáveis, a GLRE tem um acordo para recomprar ações de Einhorn em valor equivalente a 33% das ações recompradas no mercado aberto. A administração afirmou que o acordo tem como objetivo preservar a capacidade da empresa de continuar recomprando ações e foi prorrogado até março de 2027.

Transcrição Completa da Teleconferência de Resultados

Transcrição completa da teleconferência de resultados

Comentários da administração

Operator

Greetings. Thank you for joining the Greenlight Capital Re Third 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. Thank you. You may begin.

David Sigmon

Thank you, and good morning. I'd 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 CEO, Greg Richardson; Chairman of the Board, David Einhorn; and our 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 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. 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. The third quarter of 2026 was mixed with a strong underwriting result offset by investment losses. Overall, we reported a net profit of $3.2 million, which brings our year-to-date net income to $9.4 million. Fully diluted book value per share increased 0.8% in the quarter to $20.78 per share. We reported a combined ratio of 90.5% in the quarter, translating to $14.6 million of underwriting income. This result was driven by a combination of the strong underlying profitability of the book assisted by a benign cat quarter. Our open market book delivered an 87.9% combined ratio, while our innovations book delivered a 98.2% combined ratio.

Shifting to our top line. Our open market gross written premium contracted 10.4% in the quarter compared to prior year as we respond to the softening market conditions and exercise prudent cycle management. In contrast, our innovations book grew by 46% in the quarter, reflecting stable pricing and strong organic growth of the companies we support in this segment. During 2026, we have also expanded our use of outward reinsurance and third-party capital with overall gross written premium for the quarter down just 1.4%, while net written premium was down 12.3%. During our August earnings call, we noted a $25 million provision linked to the Middle East conflict. This provision reduced by $6 million in the third quarter as more information became available on specific individual losses.

While the Middle East conflict is still ongoing, it is noteworthy that we have not reported any new large losses this quarter. Our investment in the Solasglas portfolio was down 3.3% in the quarter. David will provide more color on this in his remarks. The Solasglas loss was offset by $10.5 million of other investment income. Included in other investment income was $4.1 million of realized gains on the partial sale of two innovations investments. As our innovations book matures, we are seeing opportunities to monetize gains on some of our investments. We will recycle this capital into new investment opportunities.

I would like to highlight a strategic partnership we announced last week with Hippo Holdings. Under the partnership, Hippo will have the opportunity to co-invest alongside our innovations unit in early-stage MGA investments. Furthermore, Hippo's carrier, Spinnaker Insurance Company, will serve as Greenlight Re's preferred U.S. admitted fronting carrier for qualifying co-invested programs.

This partnership builds on existing relationships between Hippo and Greenlight Re, and we believe it will help accelerate disciplined profitable growth of our Innovation segment. We are now focused on 1/1 renewals. While the market is continuing to soften, we generally believe that rates and terms remain attractive for our open market reinsurance business, and we expect to see profitable new opportunities through next year. As noted above, innovations growth continues to be strong with stable rates. Now I'd like to turn the call over to David.

David Einhorn

Thanks, Greg, and good morning, everyone. The Solasglas fund returned negative 3.3% in the third quarter. The loan portfolio detracted 7.6%, the short portfolio contributed 7.3% and macro detracted 2.8%. During the quarter, the S&P 500 Index advanced 2.3%. While the market advanced, our long and short portfolios behaved as if they were in a bear market; many of our longs and shorts declined between 10% and 25%. The longs reversed gains and the shorts reverse losses from earlier in the year without a company-specific catalyst. The largest positive contributors were shorts of AI adjacent companies and homebuilder stocks and our long position in DHT Holdings, which benefited from much higher tanker charter rates. The largest detractors were our macro position in short-term U.S. interest rates and our long positions in Green Brick Partners and Brighthouse Financial.

The largest detractor in the quarter was our macro SOFR futures position, which reflects our view that short-term interest rates will decline or at least not increase as much as the market expects. The position has been costly year-to-date, and we've reduced it to manage risk. Our remaining exposure extends through next summer, and we continue to believe that the market is pricing in more Federal Reserve rate increases than are likely to occur. Green Brick Partners shares declined 17% and gave back most of their second quarter appreciation. Brighthouse Financial shares fell 21% amid increasing concern that regulators would block or delay its pending acquisition by Aquarian Capital. We added a few small long positions to the portfolio during the quarter.

Century Aluminum is the largest domestic producer of primary aluminum. The company is benefiting from tariffs in a tight global market and has an attractive growth opportunity to bring new smelter capacity online with government subsidies. We presented this idea last month at the Robin Hood Investors Conference in New York. The full presentation is available on our homepage at www.greenlightcapital.com. We also added positions in ADI Global Distribution, a leading distributor of low-voltage electrical products that recently spun out of Resideo, and Canal+, a London-listed global pay TV and content production company.

Our net exposure ended the third quarter at 32% compared to 33% at the end of the second quarter. Solasglas returned 2.3% in October, bringing the 2026 year-to-date return to flat. Net exposure in the investment portfolio was approximately 28% at the end of October.

Greenlight Re continues to perform well in a softening reinsurance environment. The team has been disciplined and has made prudent decisions over the last year. While the market continues to trade our stock at a significant discount to book value, we continue our share repurchase plan and have bought back over 5% of our outstanding shares in 2026. Joe Platt has been a Director of Greenlight Re since 2004. At our Board meeting last week, he announced he will retire from the Board at the end of the year. Joe has been a great friend and a guiding light for the company through good times and bad. His role as Lead Director and his wise advice have been invaluable to me and the company. I wish Joe the best, and we will miss him. 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 third quarter of 2026, Greenlight Re reported a net income of $3.2 million or $0.10 per diluted share, bringing our year-to-date earnings to $9.4 million or $0.28 per diluted share. The underwriting income of $14.6 million for the quarter resulted in a combined ratio of 90.5%, which benefited from no new cat or large losses during the quarter. While the Middle East conflict has continued, we received favorable information relating to specific events that were reserved in the first and second quarters. As Greg mentioned, we reduced our case reserves by $6 million on certain events, while we have maintained our IBNR reserves given the uncertainty in the region. Prior year adverse reserve development was 1.6 points during the third quarter compared to 0.5 points in the same period last year. Most of the reserve strengthening related to a handful of contracts within the Innovation segment.

Now let's look at this quarter's results at the segment level. The Open Markets segment reported a pre-tax income of $19.5 million, composed of underwriting income of $15.2 million and investment income of $4.3 million. For the third quarter, the Open Market segment net written premiums decreased by 19% to $114.2 million, while net earned premiums decreased by 13% -- the decrease in net earned premiums was driven by lowered premium estimates on specialty and property proportional contracts as well as decreased exposure on the non-renewed casualty book. The open market combined ratio for the third quarter was 87.9% compared to 84.5% for the third quarter last year.

Loss ratio for open market decreased by 1.9 points, driven by favorable prior year reserve development of 0.6 points compared to adverse development of 0.6 points in the third quarter of last year. The favorable movement in the cat and large loss ratio from the release of reserves relating to the Middle East conflict was partially offset by higher attritional loss ratio mainly related to the specialty business compared to the same period last year. The acquisition cost ratio for the Open Market segment increased by 4.1 points compared to same period last year, mainly due to variable commission true-ups recorded in the quarter. Expense ratio increased by 1.1 points to 4.9% as a function of lower earned premiums and higher expenses related to personnel costs.

Moving to the Innovation segment. The Innovation segment reported a pretax income of $5.8 million, composed of underwriting income of $0.5 million and investment income of $6 million, partially offset by other expenses of $0.6 million. During the quarter, Innovations gross written premiums increased by $13.6 million or 46% compared to third quarter last year to $43 million, mainly driven by new business and exposure growth from existing treaties in multiline and financial lines. Net earned premiums in the third quarter increased by $7.1 million or 34% to $28.1 million as all lines within the Innovation segment grew compared to the same period last year. The combined ratio for Innovations was 98.2% during the third quarter compared to 96.8% for the same period last year.

The loss ratio in the third quarter increased by 13.5 points, primarily due to 7.6 points of adverse prior year reserve development, while during the same period last year, the segment reported a favorable reserve development of 3.1 points. The third quarter acquisition cost ratio for innovations improved by 10.1 points compared to the same period last year due to variable commission adjustments. In our 10-K filed yesterday, we noted that the Innovations underwriting expenses now include our share of Syndicate 3456 expenses, which were previously presented under acquisition costs. We have reclassified the comparatives to conform prior period figures to the new presentation as we believe it better reflects the nature of these expenses.

As we previously indicated, we expect the expense ratio for Innovations to decrease as the segment gains scale. We are starting to see evidence of this as the expense ratio improved by 2 points as the premium growth exceeded expense growth. We continue to invest in this segment to deliver profitable growth. Our new partnership with Hippo and the Lloyd's approval to transition Syndicate 3456 to a full syndicate are some of the initiatives that we expect will advance us towards this objective.

During the third quarter, we repurchased 505,000 shares for $8 million. Subsequently, in October, we repurchased an additional 220,000 shares for $3.3 million. Since the beginning of the year, we have repurchased 5.4% of our outstanding shares for $30.5 million. We have $24.8 million remaining under the current Board-approved repurchase plan, which will allow us to continue repurchasing shares opportunistically. At the end of the third quarter, our fully diluted book value per share was $20.78, an increase of 1.7% for the first 9 months of the year. That concludes our prepared remarks. The operator will now open the line for your questions.

Operator

[Operator Instructions] The first question comes from Dan DeYoung.

Perguntas e respostas

Daniel DeYoung

Could you give more explanation of the tax considerations that make you want to keep David Einhorn's ownership of the company, I guess, where it is or lower it slightly during the share buybacks, please?

Greg Richardson

David, do you want to take that? Or do you want Faramarz to speak on that?

David Sigmon

Yes. Look, we've entered into a number of -- this is, I think, the third one now where we have a share repurchase agreement with David. I'll let David talk about the details of it. But essentially, as the company is buying back shares, it reduces the number of outstanding shares of the company and increases the portion that David is owning as he keeps holding on to the shares. So in order to ensure that David doesn't exceed the thresholds required, we have entered into an agreement where we repurchased 33% of the shares that we repurchased on the open market, we will repurchase them from David. So as we enter into our open market repurchase agreements, we then and enter into a similar agreement with David. And I think we just recently filed a new one with our 8-K yesterday, where you'll see that that's continuing up to March of 2027.

Daniel DeYoung

It's not something where David wants to reduce his ownership at all. It's just for tax considerations and the threshold of his ownership.

David Sigmon

Correct. To maintain this overall ownership percentage. Yes. That's right. The alternative would be not to be able to buy back stock.

Operator

Thank you. At this time, ladies and gentlemen, we would like to thank you for your participation. This does conclude today's teleconference. Please disconnect your lines at this time, and have a great day.