Greenlight Capital Re Reports Q2 Loss of $63M, in 5th Loss in 6 Quarters

By and | August 2, 2016

Greenlight Capital Re Ltd., the reinsurer that counts on hedge fund manager David Einhorn to oversee investments, posted its fifth loss in six quarters as the portfolio slumped.

The second-quarter net loss widened to $63 million, or $1.69 a share, from $39.6 million, or $1.06, a year earlier, the Cayman Islands-based company said Monday in a statement. Einhorn was hurt in the period by an oil-fracking short and a bet against Inc., the online retailer that surged 21 percent in the three months ended June 30, according to a letter to his hedge fund investors last week.

Greenlight Re is seeking to recover from the 20 percent loss on Einhorn’s investments last year, when he was burned by the plunge of Micron Technology Inc., SunEdison Inc. and Consol Energy Inc., and the reinsurer was unprofitable all four quarters. The company has also struggled to find profitable underwriting opportunities amid increased competition from other Wall Street investors seeking to bet on insurance. Greenlight Re said Monday that it had obtained coverage from a third party to take on risks that Einhorn’s company had assumed from another insurer tied to flaws in building projects.

Combined with the wind-down of a book of underperforming commercial auto policies, “our exit from construction-defect business leaves us without significant exposure to poorly performing lines for the first time in several years,” Chief Executive Officer Bart Hedges said in the statement.

The net underwriting loss widened to $24.5 million from $13.3 million in last year’s second quarter. The result was driven by the risk transfer and claims tied to Canadian wildfires, the company said.

Greenlight Re’s adjusted book value, a measure of assets minus liabilities, fell to $21.20 a share as of June 30 from $22.88 at the end of March. The net investment loss widened to $38.1 million from $20.3 million a year earlier.

The reinsurer had gained 13 percent this year to $21.22 as of 4 p.m. in New York, buoyed recently by a 4.8 percent jump in Einhorn’s main fund in July. That stock price compares with $19 in the company’s initial public offering in 2007. Results were released after the close of regular trading.

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