Greenlight Capital Re, Ltd. ( GLRE) Q2 2011 Earnings Call August 10, 2011, 09:00 a.m. ET Executives David Einhorn - Chairman Len Goldberg - CEO Bart Hedges - President and Chief Underwriting Officer Tim Courtis - CFO Presentation Operator
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» Greenlight Capital Re, Ltd. Q2 2010 Earnings Call Transcript
Len GoldbergGood morning. My name is Len Goldberg, Chief Executive Officer of Greenlight Re. Thank you for taking the time to join us today. In the second quarter of 2011, in what remains a challenging market for reinsurers and investors alike, Greenlight Re produced a small gain in our underwriting portfolio and a small loss in our investment portfolio. Overall, our fully diluted adjusted book value per share decreased by 2% in the quarter and by 7.3% for the year-to-date. Our year-to-date combined ratio of 102.1 has improved from our first quarter 2011 combined ratio of 107.4. This is mainly due to a small reduction in our ultimate losses for storms during this period offset by limited adverse development on a commercial auto program that is (inaudible) us. In addition, we had no additional storm related losses in the second quarter of 2011 as we continue to benefit from right into (inaudible) for peak exposures and high attachment points. Bart will give us more details when he discusses our underwriting results. Our gross written premium increased by 27% in the quarter compared to the same period in the prior year and by 37% for the year-to-date. In addition, the frequency we are in a business we prefer grew by 44% on a year-to-date basis while severity business declined by 22% reflecting the execution of our strategy. Much of the increase in frequency premiums is a result of further success in our Florida home owner’s portfolio which continues to perform well as we have seen strong rate increases in the Florida insurance market. Our investment portfolio lost 1.9% in the second quarter of 2011 as we maintained (inaudible) position portfolio. We believe our investment portfolio was well positioned for the uncertainty that is ahead of us, but we did have some things worked against us in the quarter which David will discuss further. In the month of July we reported a 1% gain on our investment portfolio.
In a week’s time I will officially step down as CEO of Greenlight Re and (inaudible) over to Bart while I continue to serve Greenlight Re as a Director. I’m proud of the team we have build and our ability to capitalize on opportunities in the market. It has been a great partnership for the last 5.5 years and I’m confident that Bart will continue his successful development of our company. Together we have developed a strong deep and talented organization that we believe will excel in both good times and difficult times.And now I’d like to turn the call over to our Chairman, David Einhorn, to discuss our investment results in more detail and the progress of Greenlight Re’ overall strategy. David Einhorn Thanks Len and thanks everyone for joining us today. The Greenlight Re investment portfolio was down 1.9% in the second quarter of 2011 brining our first half of 2011 net returns to negative 5.2%. In the volatile yet relatively flat second quarter for the S&P, our long portfolio was up slightly but our short portfolio was up a little bit more than the market in losses in our euro and yen positions more than offset a slight gain in goal. In July we had a small loss on our longs and positive returns for our shorts and macro positions which added up to a gain for over 1% for the month. Although, we had a slight gain in our short portfolio in June and July, the loss in our investment portfolio for the first half of the year came from our shorts. As we saw at the end of the internet bubble, markets have performed when it simply becomes too expensive on the day-to-day basis to hold (inaudible) research in short positions. In the first half of the year we witnessed the bifurcated market where a small number of momentum starts rose mostly because they were rising. These markets continue until they don’t and we have seen what can happen when the enthusiasm ends. It is also becoming increasingly clear that the (inaudible) economic stimulus through [QE2] was not only ineffective but has brought about inflation in items that consumers use on the daily basis such as food and energy. This has caused consumers to have to reduce other consumption which has caused a global economy to slow. Read the rest of this transcript for free on seekingalpha.com