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A.M. Best Affirms Credit Ratings of Greenlight Capital Re, Ltd. and Its Subsidiaries
[October 11, 2018]

A.M. Best Affirms Credit Ratings of Greenlight Capital Re, Ltd. and Its Subsidiaries

A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "a-" of Greenlight Reinsurance, Ltd. (Greenlight Re) (Cayman Islands) and Greenlight Reinsurance Ireland, Designated Activity Company (Ireland). A.M. Best also has affirmed the Long-Term ICR of "bbb-" of Greenlight Capital Re, Ltd. (Cayman Islands) (GLRE) [NASDAQ: GLRE], the ultimate holding company. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect GLRE's balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

GLRE's risk-adjusted capitalization level of very strong, as measured by Best's Capital Adequacy Ratio (BCAR), its financial flexibility, robust liquidity and quality of capital contribute to A.M. Best's overall balance sheet assessment of very strong. GLRE's capitalization was stressed under various scenarios, including further investment portfolio losses. Capital levels remain supportive of the 'very strong' risk-adjusted capitalization designation under all scenarios. Additionally, in August of 2018, the company issued $100 million of convertible senior notes - net proceeds from the sale are available to the operating subsidiaries, if needed.

GLRE's operating performance is deemed marginal due to an unfavorable loss reserve development trend in recent years and its inability to generate operating profitability consistently over the past five years. Like many of its peers, GLRE's 2017 underwriting results were impacted by losses from hurricanes Harvey, Irma and Maria, the Mexico earthquakes and the California wildfires. The losses were offset partially by $20.2 million of investment income generated during 2017. Although GLRE reported an underwriting profit for the first six months of 2018, it was overshadowed by the substantial losses generated by te company's investment portfolio during the same period. Further outsized investment losses or adverse loss reserve development could lead to negative rating pressure.

GLRE's business profile was assessed as neutral. The company was incorporated in the Cayman Islands in 2004 and is one of the longest tenured total return carriers among its peers. Through its two operating subsidiaries, GLRE provides property and casualty reinsurance on a global scale. Historically, GLRE was somewhat concentrated geographically and by line of business; however, the company has taken steps to diversify its platform while maintaining solid pipelines in key lines of business. The company - under the leadership of Simon Burton, CEO - maintains strict underwriting discipline and enters new lines of business prudently.

Additionally, GLRE's ERM is deemed appropriate for the company's business complexity and overall risk profile. ERM has been tested recently; as investment losses manifested in 2018, the company took actions to decrease investment risk to lower levels. One such noteworthy action included deleveraging the investment portfolio further to a level at which net reserves are held, for the time being, in fixed income securities or cash.

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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