What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-10 compared with 2020-03-09 · 289 added, 273 removed, 272 unchanged (67% of the section changed)

2 unchanged sentences

Unless otherwise indicated or unless the context otherwise requires, all references in this annual report to entity names are as set forth in the following table:

Entity’s legal name

Greenlight Capital Re

Greenlight Capital Re, Ltd.

Greenlight Re

Greenlight Reinsurance, Ltd.

Greenlight Reinsurance Ireland, Designated Activity Company

Verdant Holding Company, Ltd.

Reference Entity’s legal name

Greenlight Capital Re Greenlight Capital Re, Ltd.

Greenlight Re Greenlight Reinsurance, Ltd.

GRIL Greenlight Reinsurance Ireland, Designated Activity Company

Verdant Verdant Holding Company, Ltd.

Greenlight Re UK Greenlight Re Marketing (UK) Limited

We have included a Glossary of Selected Reinsurance Terms at the end of “Part 1, Item 1.

1 unchanged sentence

Company Overview

Greenlight Capital Re is a holding company that was incorporated in July 2004 under the laws of the Cayman Islands.

Greenlight Capital Re is a holding company incorporated in July 2004 under the laws of the Cayman Islands.

In August 2004, we raised gross proceeds of $212.2 million from private placements of Greenlight Capital Re’s Class A ordinary shares and Class B ordinary shares, or, collectively, the ordinary shares.

On May 24, 2007, Greenlight Capital Re raised proceeds of $208.3 million, net of underwriting fees, in an initial public offering of Class A ordinary shares, as well as an additional $50.0 million from a private placement of Class B ordinary shares.

We are a global specialty property and casualty reinsurer, headquartered in the Cayman Islands, with a reinsurance and investment strategy that we believe differentiates us from most of our competitors.

We are a global specialty property and casualty reinsurer, headquartered in the Cayman Islands, with a reinsurance and investment strategy that we believe differentiates us from our competitors.

We conduct our reinsurance operations through two licensed and regulated reinsurance entities:

3 unchanged sentences

We focus on delivering risk solutions to clients and brokers who value our expertise, analytics, and customer service offerings.

Historically, we have aimed to complement our underwriting results with a non-traditional investment approach in order to achieve higher rates of return over the long term than reinsurance companies that employ more traditional investment strategies.

We aim to complement our underwriting results with a non-traditional investment approach to achieve higher rates of return over the long term than reinsurance companies that exclusively employ more traditional investment strategies.

Our investment portfolio is managed according to a value-oriented philosophy, in which our investment advisor takes long positions in perceived undervalued securities and short positions in perceived overvalued securities.

During the second quarter of 2019, A.M.

Best revised its rating outlook of the Company’s subsidiaries’ Financial Strength Rating of A- (Excellent) from “stable” to “negative.” The Company’s Board of Directors has initiated a strategic review to address the risk of a downgrade.

Additionally, to reduce volatility near-term, the Company determined to de-risk its investment portfolio.

As of the date of this Annual Report, the majority of our investable assets are held in cash and short-term treasuries which we expect to maintain until the strategic review is complete.

We do not intend to discuss or disclose developments with respect to the strategic review process unless and until we determine that further disclosure is appropriate or required by regulation or law.

From time to time, we make long-term strategic investments in insurance companies and general agents to complement our strategy and strengthen our client relationships.

In certain instances, we utilize Verdant to facilitate strategic investments in property and casualty insurers, general agents and other entities domiciled in the United States.

Because we adapt our portfolio in response to market conditions and our risk appetite, period-to-period comparisons of our underwriting results may not be meaningful.

In addition, our historical investment results may not necessarily be indicative of future performance.

Due to the nature of our reinsurance and investment strategies, our operating results will likely fluctuate from period to period.

In 2020, we established a UK marketing Company, Greenlight Re UK, to increase our London market presence.

The London market specialty business is now central to our underwriting portfolio and we believe Greenlight Re UK will facilitate continued growth in this market.

Description of Business

Greenlight Re is licensed and regulated by the Cayman Islands Monetary Authority (“CIMA”) to write property and casualty reinsurance business as well as long term business (e.g., life insurance, long term disability, long term care, etc.);

however, to date, we have not written any long term business.

GRIL is licensed and regulated by the Central Bank of Ireland (“CBI”) to write property and casualty reinsurance business.

Currently, we manage our business on the basis of one operating segment:

Currently, we have one operating segment:

property and casualty reinsurance.

Within that segment, we employ a two-pillar strategy:

Link to Table of Contents

Underwriting traditional property and casualty reinsurance

Traditional property and casualty reinsurance

We offer excess of loss and quota share products across a range of classes in the property and casualty market.

Our underwriting approach varies by class and type of opportunity:

Link to Table of Contents

● where we have domain-specific expertise and a high level of market access, we may seek to act as the lead underwriter to achieve greater influence in negotiating pricing, terms and conditions;

where our expertise is sufficient to thoroughly evaluate the risk, we will generally seek to participate on syndicated placements that have been negotiated and priced by another party that we judge to have market-leading expertise in the class, or as a quota share retrocessionaire of a market-leading reinsurer.

● where our expertise is sufficient to evaluate the risk thoroughly, we will generally seek to participate in syndicated placements that have been negotiated and priced by another party that we judge to have market-leading expertise in the class, or as a quota share retrocessionaire of a market-leading reinsurer.

Risk innovation and strategic partnerships

We seek to develop a range of risk products, via strategic partnerships and other methods, with the objective of gaining access to fee income, a stream of underwriting business, and/or the potential for investment upside.

Our initiatives in this space generally aim to meet at least one of several criteria:

the value we add to a partnership primarily comes from application of our risk expertise, not solely capital or reinsurance support;

We seek to develop a range of risk products, via strategic partnerships and other methods to gain access to fee income, a stream of underwriting business, and investment upside potential.

We refer to this pillar as Greenlight Re Innovations (“Innovations”).

In evaluating Innovations opportunities, we generally ensure that each investment meets at least one of the following criteria:

● the value we add to a partnership primarily comes from the application of our risk expertise, not solely capital or reinsurance support;

● the partnership adds expertise to our company, in specific risk areas, technology, product innovation, and/or other areas;

the partnership provides access to a pool of capital, to products and/or to distribution;

overall, the partnership creates a combined effort that generates durable strategic and/or competitive position in one or more markets, and increases our opportunity for revenue growth and margin expansion.

● the partnership provides access to a pool of capital, to products or to distribution;

● overall, the partnership creates a combined effort that generates durable strategic and/or competitive position in one or more markets, and increases our opportunity for revenue growth and margin expansion opportunities.

Our investment strategy, like our reinsurance strategy, is designed to maximize returns over the long term while minimizing the risk of capital loss.

Unlike the investment strategies of many of our traditional competitors, which invest primarily in fixed-income securities either directly or through fixed-fee arrangements with one or more investment managers, our investment strategy is to invest (directly or indirectly) in long and short positions primarily in publicly-traded equity and corporate debt instruments.

We measure our success by long-term growth in book value per share, which we believe is the most comprehensive gauge of the performance of our business.

Accordingly, our incentive compensation plans are designed to align employee and shareholder interests.

Compensation under our cash bonus plan is largely dependent on the ultimate underwriting returns of our business measured over a multi-year period, rather than premium targets or estimated underwriting profitability for the year in which we initially underwrite the business.

We seek to grow and diversify our portfolio.

We measure our success by long-term growth in book value per share, which we believe is the most comprehensive gauge of our performance.

Accordingly, we design our incentive compensation plan to align employee and shareholder interests.

We seek to grow and diversify our underwriting portfolio.

Our allocation of risk will vary based on our perception of the opportunities available in each line of business at each point in time.

3 unchanged sentences

● employ strict underwriting discipline;

select reinsurance opportunities with anticipated favorable returns on capital over the life of the contract.

● select reinsurance opportunities with anticipated favorable returns on capital over the contract’s term.

Link to Table of Contents

1 unchanged sentence

Year ended December 31

2020 2019 2018

($ in thousands)

Commercial $ 11,190 2.3 % $ 14,165 2.7 % $ 10,487 1.8 %

Motor 33,054 6.9 59,402 11.3 76,425 13.5

Personal 14,219 3.0 12,390 2.4 14,118 2.5

Total Property 58,463 12.2 85,957 16.4 101,030 17.8

2 unchanged sentences

Professional Liability (1)

204 — (448) (0.1) 3,068 0.5

Workers' Compensation 82,189 17.1 50,369 9.6 24,101 4.3

Multi-line 88,237 18.4 76,461 14.6 57,497 10.1

Total Casualty 302,237 63.0 362,374 69.2 377,785 66.6

Accident & Health 56,284 11.7 39,175 7.5 69,605 12.2

Financial 23,231 4.8 23,087 4.4 16,611 2.9

Marine 770 0.2 160 — 394 0.1

Other Specialty 38,806 8.1 13,224 2.5 2,106 0.4

(1) The negative balances represent the reversal of premiums due to premium adjustments, termination of contracts and/or premium returned upon novation or commutation of contracts.

Total Other 119,091 24.8 75,646 14.4 88,716 15.6

$ 479,791 100.0 % $ 523,977 100.0 % $ 567,531 100.0 %

(1) Negative balances reflect premium adjustments and premium returned upon contract’s termination, novation or commutation.

The following table sets forth our gross premiums written by the geographic area of the risk insured:

Year ended December 31

2020 2019 2018

($ in thousands)

1 unchanged sentence

Worldwide (1)

84,204 17.5 84,728 16.2 59,366 10.5

— — (13) — 506 —

5,587 1.2 3,804 0.7 (46) —

$ 479,791 100.0 % $ 523,977 100.0 % $ 567,531 100.0 %

(1) “Worldwide” is composed of contracts that reinsure risks in more than one geographic area and may include risks in the U.S.

The negative balances represent the reversal of premiums due to premium adjustments, termination of contracts and/or premium returned upon novation or commutation of contracts.

(2) Negative balances reflect premium adjustments and premium returned upon contract’s termination, novation or commutation.

Additional information about our business is set forth in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

1 unchanged sentence

Business transacted using intermediaries

A majority of our business is sourced through reinsurance brokers.

We source a majority of our business through reinsurance brokers.

Brokerage distribution channels provide us with access to an efficient, variable cost and global distribution system without the significant time and expense that would be incurred in creating a wholly-owned distribution network.

2 unchanged sentences

We aim to build and strengthen long-term relationships with global reinsurance brokers.

Our management team has relationships with most of the primary and specialty broker intermediaries in the reinsurance marketplace.

We believe that by maintaining close relationships with brokers we will be able to continue to obtain access to a broad range of reinsurance clients and opportunities.

Our management team has relationships with most primary and specialty broker intermediaries in the reinsurance marketplace.

We believe that by maintaining close relationships with brokers we will continue to obtain access to a broad range of reinsurance clients and opportunities.

We seek to strengthen our broker relationships and become the preferred choice of brokers and clients by providing, where applicable:

● customized solutions that address the specific business needs of our clients;

demonstrated expertise in the underlying reinsured exposures and in the operation of the contracts;

rapid response to risk submissions;

timely payment of claims;

● demonstrated expertise in the underlying reinsured exposures and the operation of the contracts;

● rapid responses to risk submissions;

● timely claims payments;

● financial security;

clear indication of risks we will and will not underwrite.

● a clear indication of risks we will and will not underwrite.

We focus on the quality and financial strength of any brokerage firm with which we do business.

3 unchanged sentences

Year ended December 31

2020 2019 2018

($ in thousands)

Guy Carpenter (Marsh) $ 195,274 40.7 % $ 297,150 56.7 % $ 376,696 66.4 %

Trean Re 112,659 23.5 85,323 16.3 45,446 8.0

Willis Re 31,970 6.7 21,094 4.0 9,501 1.7

Aon Benfield 29,032 6.0 41,071 7.8 70,554 12.4

Total of largest brokers 368,935 76.9 444,638 84.8 502,197 88.5

All other brokers and direct placements 110,856 23.1 79,339 15.2 65,334 11.5

Total $ 479,791 100.0 % $ 523,977 100.0 % $ 567,531 100.0 %

We meet frequently in the Cayman Islands, Ireland and elsewhere with brokers and senior representatives of clients and prospective clients.

All contract submissions are received, reviewed and approved in our offices in the Cayman Islands or Ireland.

We review and (when we deem appropriate) approve all contract submissions in our offices in the Cayman Islands or Ireland.

Due to our dependence on brokers, the inability to obtain business from them could adversely affect our business strategy.

See “Item 1A.

Risk Factors — Risks Related to Our Business — The inability to obtain business provided from brokers could adversely affect our business strategy and results of operations.

” In addition, we may assume a degree of the credit risk of our reinsurance brokers.

Risk Factors — Risks Related to Our Business — The inability to obtain business provided from brokers could materially and adversely affect our ability to implement our business strategy and results of operations.

” We may assume a degree of the credit risk of our reinsurance brokers.

See “Item 1A.

3 unchanged sentences

We have underwriting operations in two locations, Cayman Islands and Dublin, Ireland, that respectively provide proximity to key markets in the U.S.

Our experienced team allows us to deploy our capital in a variety of lines of business and to capitalize on opportunities that we believe offer favorable returns on equity over the long term.

Our experienced team allows us to deploy our capital in a variety of lines of business and capitalize on opportunities that we believe offer favorable returns on equity over the long term.

Our underwriters and actuaries have expertise in multiple lines of business, and we also look to outside consultants on a fee-for-service basis to help us with niche areas of expertise when we deem it appropriate.

1 unchanged sentence

Economics of Results

Our primary underwriting goal is to build a reinsurance portfolio that maximizes economic results within certain risk and volatility constraints.

Our primary underwriting goal is to build a reinsurance portfolio that maximizes profitability, subject to risk and volatility constraints.

Link to Table of Contents

1 unchanged sentence

Our approach to underwriting analysis begins at the class-of-business level.

This analysis includes identifying and assessing the structural drivers of risk and emerging loss trends, as well as obtaining an understanding of the market participants and results, capacity conditions for supply and demand, and other factors.

Our underwriting professionals specialize in lines of business and are supported by quantitative professionals.

Combined with cross-line management and insights, we believe this approach allows the building and deployment of deeper expertise and more thorough insight into the risk dynamics of the line and on external risk factors that will affect each transaction.

Each potential transaction is assigned to a deal team composed of underwriting and quantitative professionals to evaluate underwriting, pricing and structuring.

Prior to committing capital to any transaction, the deal team must obtain approval from the Chief Executive Officer and Chief Underwriting Officer.

This analysis includes identifying and assessing the structural drivers of risk and emerging loss trends, and understanding the market participants and results, capacity conditions for supply and demand, and other factors.

Our underwriting professionals specialize in business lines and our quantitative professionals assist in evaluating all risks we underwrite.

Combined with cross-line management, we believe this approach enables us to build and deploy expertise and insight into the business line’s risk dynamics and external risk factors that will affect each transaction.

We assign a deal team composed of underwriting and quantitative professionals to evaluate each potential transaction’s pricing and structure.

Before committing capital to any transaction, the deal team must obtain approval from the Chief Executive Officer/Chief Underwriting Officer.

In seeking this approval, the deal team presents the key components of the proposed transaction, including assumptions and threats, market and individual deal risk factors, market capacity dynamics, transaction structure and pricing, maximum downside, and other factors.

We spend a significant amount of time with our current and prospective clients and brokers to understand the risks associated with each potential transaction and structure each contract on the basis of this understanding.

Where appropriate, we conduct or contract for on-site audits or reviews of the clients’ underwriting files, systems and operations.

We usually obtain significant amounts of data from our clients to conduct a thorough actuarial modeling analysis.

We usually obtain substantial amounts of data from our clients to conduct a thorough actuarial modeling analysis.

As part of our pricing and underwriting process, we assess, among other factors:

8 unchanged sentences

We have developed and use proprietary quantitative models, and also use several commercially available tools to price our business.

Our models consider conventional underwriting and risk metrics, and incorporate various class specific and/or market specific aspects from our line of business analyses.

In using quantitative models, we consider the quality and predictive power of the quantitative work, including explicit assessment of the data quality, and we place greater weight on scenarios that result in greater losses.

We price each transaction based on our view of the merits and structure of the transaction.

Our models consider conventional underwriting and risk metrics, and incorporate various class-specific and market-specific aspects from our line-of-business analyses.

Using models, we consider the quantitative work’s quality and predictive power and undertake a detailed assessment of the data quality.

We place greater weight on scenarios that result in higher losses.

Underwriting Authorities

1 unchanged sentence

The Underwriting Committee must approve any exceptions to the established limits.

The maximum underwriting authorities, as set by our Underwriting Committee, may be amended from time to time, including as and when our capital base changes.

Our underwriting authorities are designed to ensure that the premium we receive is appropriate on a risk-adjusted basis.

The Underwriting Committee may amend the maximum underwriting authorities periodically and to align with our capital base.

The Underwriting Committee designs our underwriting authorities to ensure the underwriting portfolio is appropriate on a risk-adjusted basis.

Retrocessional Coverage

We purchase retrocessional coverage for one or more of the following reasons:

to manage our overall catastrophe events exposure, to reduce our net liability on individual risks, to obtain additional underwriting capacity and/or to balance our underwriting portfolio.

The amount of retrocessional coverage that we purchase varies based on numerous factors, some of which include the inherent volatility and risk accumulation of the portfolio of business we write and the level of our capital base.

Our portfolio,

We selectively purchase retrocessional coverage for one or more of the following reasons:

to manage our overall catastrophe events exposure, to reduce our net liability on individual risks, to obtain additional underwriting capacity and to balance our underwriting portfolio.

The amount of retrocessional coverage that we purchase varies based on numerous factors, including the inherent volatility and risk accumulation of the portfolio of business we write and our capital base.

Our portfolio, and by extension our

Link to Table of Contents

and by extension our gross risk position, will change in size from year to year depending on market opportunities, so it is not possible to predict the level of retrocessional coverage that we will purchase in any future year.

We generally purchase uncollateralized retrocessional coverage from reinsurers with a minimum financial strength ratings of “A- (Excellent)” from A.M.

gross risk position, will change in size from year to year depending on market opportunities, so it is impossible to predict the level of retrocessional coverage that we will purchase in any future year.

We generally purchase uncollateralized retrocessional coverage from reinsurers with a minimum financial strength rating of “A- (Excellent)” from A.M.

Best Company, Inc.

1 unchanged sentence

For lower-rated or non-rated reinsurers, we endeavor to obtain and monitor collateral in the form of cash, funds withheld, letters of credit, regulatory trusts, or other collateral in the form of guarantees.

As of December 31, 2019 , the aggregate amount due from reinsurers from retrocessional coverages represents 5.9% ( 2018 :

As of December 31, 2020, the aggregate amount due from reinsurers from retrocessional coverages represents 3.4% (December 31, 2019:

5.9%) of our gross loss reserves.

1 unchanged sentence

We regularly evaluate the financial condition of our reinsurers to assess their ability to honor their obligations.

At December 31, 2019 and 2018 , no provision for uncollectible losses recoverable was considered necessary.

At December 31, 2020, the Company had recorded an allowance for expected credit losses of $0.1 million (December 31, 2019:

Claims Management

Our claims management process begins upon receipt of claims notifications from our clients or third-party administrators.

Reserving and settlement authority are reviewed in accordance with the requirements of the individual contract and, as necessary, discussed with the underwriter.

Our in-house claims officer is responsible for overseeing the review of claims and providing approval for complex or large claim settlements.

Claims in excess of the claims officer’s authority are referred to the general counsel, together with the claims officer’s recommendations, for secondary approval.

Claim payments above a certain threshold must be approved by our Chief Executive Officer.

We believe that this process ensures that we pay claims consistently within the terms and conditions of each contract.

We review reserving and settlement authority under the individual contract requirements and, as necessary, discuss with the contract’s underwriter.

Our in-house claims officer is responsible for overseeing claims reviews and providing approval for complex or large claim settlements.

Claims above the claims officer’s authority are referred to the general counsel, together with the claims officer’s recommendations, for secondary approval.

Our Chief Executive Officer must approve claim payments above a certain threshold.

We believe that this process ensures that we pay claims in accordance with each contract's terms and conditions.

Where appropriate, we conduct or contract for on-site claims audits at cedents and third-party administrators, particularly for large accounts and for those whose performance differs from our expectations.

Through these audits, we evaluate and monitor the third-party administrators’ and ceding companies’ claims-handling practices, including the organization of their claims departments, their fact-finding and investigation techniques, their loss notifications, the adequacy of their reserves, their negotiation and settlement practices and their adherence to claims-handling guidelines.

We recognize that fair interpretation of our reinsurance agreements with our clients and timely payment of covered claims are valuable services to our clients.

We evaluate and monitor the third-party administrators’ and ceding companies’ organization and claims-handling practices through these audits.

These practices include:

• fact-finding and investigation techniques;

• loss notifications;

• claims negotiation and settlement;

• adherence to claims-handling guidelines.

We recognize that the fair interpretation of our reinsurance agreements and timely payment of covered claims are essential components of the service we provide to our clients.

Our reserving philosophy is to set reserves that represent our best estimate of the amount we will ultimately be required to pay in connection with risks we have underwritten.

Our actuarial staff performs quarterly reviews of our portfolio and provide reserving estimates in line with our stated reserving philosophy.

Our actuarial staff performs quarterly reviews of our portfolio and provides reserving estimates according to our stated reserving philosophy.

In doing so, our actuarial staff groups our portfolio of business into reserving analysis segments based primarily on homogeneity considerations.

1 unchanged sentence

We engage independent external actuaries who review and provide an opinion on these reserve estimates at least once a year.

Due to the use of different assumptions and loss experience, the amount we establish as reserves with respect to individual risks, clients, transactions or classes of business may be greater or less than those established by our clients or ceding companies.

Due to the use of different assumptions and loss experience, the amount we establish as reserves with respect to individual risks, clients, transactions or business lines may be greater or less than those set by our clients or ceding companies.

Reserves include claims reported but not yet paid, claims incurred but not reported and claims in the process of settlement.

1 unchanged sentence

Reserves represent an estimate rather than an exact quantification.

Although the methods for establishing reserves are well tested, many of the assumptions about anticipated loss emergence patterns are subject to unanticipated fluctuation.

Although the methods for establishing reserves are well established, many assumptions about anticipated loss emergence patterns are subject to unanticipated fluctuation.

We base our estimates on our assessment of facts and circumstances known at the time of the estimate, as well as estimates of future trends in claim severity and frequency, judicial theories of liability, and other factors, including the actions of third parties, which are beyond our control.

See Note 7 of the accompanying consolidated financial statements for a reconciliation of claims reserves, loss development tables by accident year and for explanations of significant prior period loss development movements.

See Note 7 of the accompanying consolidated financial statements for a reconciliation of claims reserves, loss development tables by accident year and explanations of significant prior period loss development movements.

See “Item 1A.

3 unchanged sentences

We are licensed and admitted as an insurer only in the Cayman Islands and the European Economic Area.

Many jurisdictions, including the United States, do not permit clients to take credit for reinsurance on their statutory financial statements if such reinsurance is obtained from unlicensed or non-admitted insurers, without appropriate collateral.

As a result, we anticipate that all of our U.S.

Many jurisdictions, including the United States, do not permit clients to take credit for reinsurance on their statutory financial statements if they obtain such reinsurance from unlicensed or non-admitted insurers, without appropriate collateral.

As a result, our U.S.

clients and a portion of our non-U.S.

clients will require us to provide collateral for the contracts we bind with them.

This collateral can be provided as funds withheld, trust arrangements or letters of credit.

As of December 31, 2019 , we had one letter of credit facility with an aggregate capacity of $400.0 million ( 2018 :

two facilities with an aggregate capacity of $414.9 million ).

Effective November 30, 2018, we amended the Butterfield Bank letter of credit facility to reduce the facility limit from $50.0 million to $14.9 million and subsequently canceled the facility effective April 25, 2019.

clients require us to provide collateral for the contracts we bind with them.

We provide collateral as funds withheld, trust arrangements or letters of credit.

As of December 31, 2020, we had one letter of credit facility with a limit of $275.0 million (2019:

one facility with a limit of $400.0 million).

In 2020, we amended the Citibank facility and reduced the maximum limit from $400.0 million to $275.0 million.

As of December 31, 2020, we had issued letters of credit totaling $135.3 million (2019:

2 unchanged sentences

$528.7 million) as collateral through trust arrangements.

The failure to maintain, replace or increase our collateral arrangements on commercially acceptable terms may significantly and negatively affect our ability to implement our business strategy.

See “Item 1A.

Risk Factors — Risks Relating to Our Business — Our failure to maintain sufficient collateral arrangements or to increase our collateral capacity on commercially acceptable terms as we grow could significantly and negatively affect our ability to implement our business strategy.

The reinsurance industry is highly competitive.

We compete with major reinsurers, most of which are well established, have significant operating histories and strong financial strength ratings, and have developed long-standing client relationships.

Our competitors vary according to the individual market and situation, but generally include Arch, Axis, Everest Re, Hamilton Re, Hannover Re, Partner Re, Renaissance Re and Third Point Re as well as smaller companies, other niche reinsurers and Lloyd’s syndicates and their related entities.

Our competitors vary according to the individual market and situation.

Generally, they include Arch Capital, Axis, Everest Re, Hamilton Re, Hannover Re, PartnerRe, RenaissanceRe, SiriusPoint, and smaller companies, other niche reinsurers and Lloyd’s syndicates and their related entities.

Although we seek to provide coverage where capacity and alternatives are limited, we directly compete with these and other larger companies due to the breadth of their coverage across the property and casualty market in substantially all lines of business.

See "Item 1A – Risk Factors – Risks Relating to Our Business – Competitors with greater resources may make it difficult for us to effectively market our products or offer our products at a profit.

During the second quarter of 2019, A.M.

Best revised its rating outlook of the Company’s subsidiaries’ Financial Strength Rating of A- (Excellent) from “stable” to “negative.” Our current “A- (Excellent)” rating from A.M.

Our current “A- (Excellent)” rating from A.M.

Best is the fourth highest of 13 ratings.

We believe that a strong rating is an important factor in the marketing of reinsurance products to clients and brokers.

We believe that a strong rating is an important factor in marketing reinsurance products to clients and brokers.

These ratings reflect the rating agency’s opinion of our reinsurance subsidiaries’ financial strength, operating performance and ability to meet obligations.

It is not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold our Class A ordinary shares.

It is not an evaluation directed toward the investors’ protection or a recommendation to buy, sell or hold our Class A ordinary shares.

Best has currently assigned a negative outlook on our A- (Excellent) rating.

The failure to maintain a strong rating may significantly and negatively affect our ability to implement our business strategy.

1 unchanged sentence

Risk Factors — Risks Relating to Our Business —“ A downgrade or withdrawal of either of our A.M.

Best ratings may significantly and negatively affect our ability to implement our business strategy successfully.

Best ratings would materially and adversely affect our ability to implement our business strategy successfully.

Cayman Islands Insurance Regulation

The legislative framework for conducting insurance and reinsurance business in and from within the Cayman Islands is composed of The Insurance Law, 2010 (as amended) and underlying regulations thereto (the “Law”) which became effective in the Cayman Islands effective November 1, 2012.

Greenlight Re holds a Class D insurer license issued in accordance with the terms of the Law and is subject to regulation and supervision by CIMA.

The legislative framework for conducting insurance and reinsurance business in and from within the Cayman Islands is composed of The Insurance Act, 2010 (as amended) and underlying regulations thereto (the “Act”) which became effective in the Cayman Islands effective November 1, 2012.

Greenlight Re holds a Class D insurer license issued in accordance with the terms of the Act and is subject to regulation and supervision by CIMA.

As the holder of a Class D insurer license, Greenlight Re is permitted to carry on reinsurance business from the Cayman Islands, but, except with the prior written approval of CIMA, may not carry on any insurance or reinsurance business where the underlying risk originates and resides in the Cayman Islands.

Greenlight Re is required to comply with the following principal requirements under the Act:

Link to Table of Contents

Greenlight Re is required to comply with the following principal requirements under the Law:

to maintain capital and a margin of solvency in accordance with the capital and solvency requirements prescribed by the Law;

● to maintain capital and a margin of solvency in accordance with the capital and solvency requirements prescribed by the Act;

● to carry on its business in accordance with the laws of the Cayman Islands, including the regulatory laws, regulations, rules, and statements of guidance, where applicable;

11 unchanged sentences

● to maintain a general review of insurance practices in the Cayman Islands;

to examine the affairs or business of any licensee or other person carrying on, or who has carried on, insurance business in order to ensure that the Law has been complied with and that the licensee is in a sound financial position and is carrying on its business in a fit and proper manner;

to examine and report on the annual returns delivered to CIMA in terms of the Law;

● to examine the affairs or business of any licensee or other person carrying on, or who has carried on, insurance business to ensure that the Act has been complied with and that the licensee is in a sound financial position and is carrying on its business in a fit and proper manner;

● to examine and report on the annual returns delivered to CIMA in terms of the Act;

● to examine and make recommendations with respect to, among other things, proposals for the revocation of licenses and cases of suspected insolvency of licensed entities.

1 unchanged sentence

Respectively, these rules require regulated insurers to establish and maintain (a) a corporate governance framework which provides for the sound and prudent management and oversight of the insurer's business, including outsourcing and internal controls, and which adequately recognizes and protects the interests of its policyholders, and (b) a risk management framework that is capable of promptly identifying, measuring, assessing, reporting, monitoring and controlling all sources of risks that could have a material impact on its operations.

Where CIMA believes that a licensee is committing, or is about to commit or pursue, an act that is an unsafe or unsound business practice, CIMA may direct the licensee to cease or refrain from committing the act or pursuing the offending course of conduct.

The Act provides that where CIMA believes a licensee is committing, or is about to commit or pursue, an act that is an unsafe or unsound business practice, CIMA may direct the licensee to cease or refrain from committing the act or pursuing the offending course of conduct.

Failure to comply with such a CIMA direction may be punishable on summary conviction by a fine of up to 100,000 Cayman Islands dollars (approximately US$120,000) or to imprisonment for a term of five years or to both, and on conviction on indictment to a fine of 500,000 Cayman Islands dollars (approximately US$600,000) or to imprisonment for a term of ten years or to both and to an additional 10,000 Cayman Islands dollars (approximately US$12,000) for every day after conviction that the breach continues.

In addition, CIMA may impose fines and penalties on a licensee in certain circumstances, ranging from a fixed fine of 5,000 Cayman Islands dollars (approximately US$6,000) or a discretionary fine depending on the severity of the breach.

Regulations passed under the Monetary Authority Law determine the circumstances under which CIMA can impose administrative fines.

Under the current regulations, administrative fines can only be imposed for breaches of the Cayman Islands anti-money laundering regime (the "AML regime") and, as a reinsurance business, the AML regime does not apply to Greenlight Re.

The circumstances in which fines can be imposed are currently undergoing a private sector consultation and are expected to expand in future years.

The Monetary Authority Act (“MAA”) also provides CIMA with authority to impose administrative fines on licensees.

The recent Monetary Authority (Administrative Fines) (Amendment) Regulations, 2020 (the “Amendment Regulations”) came into force on 26 June 2020.

They extended the scope of the fines which CIMA may impose for breaches of a range of regulatory laws, including the Act.

Breaches are categorised as minor, serious or very serious and, depending on the category of breach, fines range from US$6,100 to US$1,220,000 per breach for very serious breaches.

Where a breach is committed by a corporate entity and is shown to have been committed with the consent, connivance, knowledge, or neglect of an individual, that individual may also be subject to an administrative fine.

Link to Table of Contents

Whenever CIMA believes that a licensee is or may become unable to meet its obligations as they fall due, is carrying on business in a manner likely to be detrimental to the public interest or to the interest of its creditors or policyholders, has contravened the terms of the Law or has otherwise behaved in such a manner so as to cause CIMA to call into question the licensee’s fitness, CIMA may take one of a number of steps, including requiring the licensee to take steps to rectify the matter, suspending the license of the licensee, revoking the license, imposing conditions upon the license and amending or revoking any such condition, requiring the substitution of any director, manager or officer of the licensee, at the expense of the licensee, appointing a person to advise the licensee on the proper conduct of its affairs and to report to CIMA thereon, at the expense of the licensee, appointing a person to assume control of the licensee’s affairs or otherwise requiring such action to be taken by the licensee as CIMA considers necessary.

To date, we have not been subject to any such actions from CIMA.

The steps include requiring the licensee to rectify the matter, suspending the license of the licensee, revoking the license, imposing conditions upon the license and amending or revoking any such condition, requiring the substitution of any director, manager or officer of the licensee, at the expense of the licensee, appointing a person to advise the licensee on the proper conduct of its affairs and to report to CIMA thereon, at the expense of the licensee, appointing a person to assume control of the licensee’s affairs or otherwise requiring such action to be taken by the licensee as CIMA considers necessary.

We have not been subject to any such actions from CIMA to date.

Other Regulations in the Cayman Islands

2 unchanged sentences

Economic substance law requiring a “relevant entity” conducting “relevant activity” to file notifications and, unless exempt, to report to the Tax Information Authority (“TIA”) and maintain economic substance has been introduced in the Cayman Islands.

The International Tax Co-operation (Economic Substance) Law, 2018 and International Tax Co-operation (Economic Substance) (Prescribed Date) Regulations, 2018 were published on 27 December 2018 and amended on 22 February 2019 by the International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2019 and on 30 April 2019 by the International Tax Co-operation (Economic Substance) (Amendment of Schedule) (No.

2) Regulations, 2019 (together, the “ES Law”).

Economic substance Guidance on Economic Substance for Geographically Mobile Activities (“ES Guidance”) was published on 22 February 2019 and updated on 30 April 2019.

The International Tax Co-operation (Economic Substance) Act (2020 Revision) and International Tax Co-operation (Economic Substance) Regulations, 2020 were published on January 14, 2020, and August 11, 2020, respectively (together, the “ES Act”).

The latest version of the Guidance on Economic Substance for Geographically Mobile Activities (“ES Guidance”) was published on July 13, 2020.

Commencing January 2020, Greenlight Capital Re and Greenlight Re are required to confirm their economic substance classification and submit this classification to the TIA as a prerequisite to the Annual Return filing.

10 unchanged sentences

As of 25 May 2018, the General Data Protection Regulation (the "GDPR") came into force across the EU.

The GDPR significantly increases the obligations and responsibilities for organizations in how they collect, use and protect personal data.

The GDPR significantly increases the organizations’ obligations and responsibilities in collecting, using, storing and protecting personal data.

Organizations in breach of the GDPR may incur sizable financial penalties.

1 unchanged sentence

Overview of Investments

Our investment portfolio is managed by DME Advisors, LP (“DME Advisors”), a value-oriented investment advisor that analyzes companies’ available financial data, business strategies and prospects in an effort to identify undervalued and overvalued securities.

DME Advisors is controlled by David Einhorn, the Chairman of our Board of Directors and the President of Greenlight Capital, Inc.

Prior to September 1, 2018, substantially all of our investable assets were invested through a joint venture arrangement in which DME Advisors, LLC (“DME”) acted as the investment advisor.

We were party to a joint venture agreement (the “venture agreement”) with DME Advisors and DME under which the Company, its reinsurance subsidiaries and DME were participants in a joint venture (the “Joint Venture”) for the purpose of managing certain jointly held assets.

In addition to the venture agreement, we had entered into an amended and restated investment advisory agreement (the “advisory agreement”) with DME Advisors to provide discretionary advisory services relating to the assets and liabilities of the venture.

The advisory agreement term period mirrored that of the venture agreement.

On September 1, 2018, the Company and DME entered into a termination agreement (the “Termination Agreement”) for the Joint Venture.

On January 2, 2019, the Joint Venture was terminated.

On September 1, 2018, we entered into an amended and restated exempted limited partnership agreement (the “SILP LPA”) of Solasglas Investments, LP (“SILP”), with DME Advisors II, LLC (“DME II”), as General Partner, Greenlight Re, GRIL and the initial limited partner (each, a “Partner”).

The SILP LPA, in conjunction with a participation agreement, replaced the venture agreement and assigned and/or transferred Greenlight Re’s and GRIL’s net invested assets in the Joint Venture to SILP.

Pursuant to the Termination Agreement, the Joint Venture terminated on January 2, 2019 and substantially all investments were transferred to SILP.

The investment in SILP is recorded on the consolidated balance sheets under the caption “Investment in related party investment fund”.

On September 1, 2018, SILP entered into a SILP investment advisory agreement (the “IAA”) with DME Advisors, with an initial term ending on August 31, 2023 subject to automatic extensions for successive three-year terms.

DME Advisors has the contractual right to manage substantially all of our investable assets, and is required to follow our investment guidelines and to act in a manner that is fair and equitable in allocating investment opportunities to SILP.

We show our investment in SILP under the caption “Investment in related party investment fund” in our consolidated balance sheets.

On September 1, 2018, SILP entered into an investment advisory agreement (the “IAA”) with DME Advisors, with an initial term ending on August 31, 2023, subject to automatic extensions for successive three-year terms.

DME Advisors has the contractual right to manage substantially all of our investable assets, and is required to follow our investment guidelines and act in a fair and equitable manner in allocating investment opportunities to SILP.

However, DME Advisors is not otherwise restricted with respect to the nature or timing of making investments for SILP.

1 unchanged sentence

1 to the SILP LPA.

amendment was intended to revise the mechanics for calculating the Carryforward Account and Performance Allocation (as

defined in the SILP LPA) to take into account withdrawals from and subsequent recontributions of capital to SILP, consistent

with the treatment under the Joint Venture.

In addition, we have entered into a letter agreement with DME Advisors and DME II whereby during the period from June 1, 2019 to June 30, 2020, (a) at least 50% of the Investment Portfolio (as defined in the SILP LPA) shall be held in cash and cash equivalents and (b) the portion of the Investment Portfolio held in cash or cash equivalents will not be subject to any management fee or performance allocation.

amendment revised the mechanics for calculating the Carryforward Account and Performance Allocation (as defined in the SILP LPA) to consider withdrawals from and subsequent recontributions of capital to SILP, consistent with the treatment under the Joint Venture.

On January 7, 2021, effective as of January 1, 2021, we entered into a second amendment to the SILP LPA which amended (a) the definition of “Additional Investment Ratio” and (b) each of the defined terms “Greenlight Re Surplus” and “GRIL Surplus”.

The second amendment to the SILP LPA also incorporated the requirement that the Investment Portfolio, as defined in the SILP LPA, will not exceed 50% of GLRE Surplus.

DME Advisors receives a monthly management fee at an annual rate of 1.5% of each limited partner’s Investment Portfolio, as provided in the SILP LPA.

In addition, DME II receives a performance allocation based on the positive performance change of each limited partner’s capital account equal to 20% of net profits calculated per annum, subject to a loss carry forward provision.

The loss carry forward provision allows DME II to earn a reduced performance allocation of 10% on net profits in any year subsequent to the year in which a limited partner’s capital accounts incurs a loss, until all the losses are recouped and an additional amount equal to 150% of the loss is earned.

DME II receives a performance allocation based on the positive performance change of each limited partner’s capital account equal to 20% of net profits calculated per annum, subject to a loss carryforward provision.

The loss carryforward provision allows DME II to earn a reduced performance allocation of 10% on net profits in any year after the year in which a limited partner’s capital account incurs a loss, until the limited partner has recouped all losses and has earned an additional amount equal to 150% of the loss.

DME II is not entitled to a performance allocation in a year in which a capital account incurs a loss.

DME Advisors is required to follow our investment guidelines and act in a manner that it considers fair and equitable in allocating investment opportunities to us and SILP, but the IAA does not otherwise impose any specific obligations or requirements concerning the allocation of time, effort or investment opportunities to us and SILP or any restrictions on the nature or timing of investments for our or SILP’s account, or other accounts that DME Advisors or its affiliates may manage.

In addition, DME Advisors can outsource to sub-advisors without our consent or approval.

In the event that DME Advisors and any of its affiliates attempt to simultaneously invest in the same opportunity, the opportunity may be allocated pro-rata as reasonably determined by DME Advisors and its affiliates.

Affiliates of DME Advisors presently serve as general partner or investment advisor of Greenlight Capital, L.P., Greenlight Capital Qualified, L.P., Greenlight Capital Offshore, Ltd., Greenlight Capital Offshore Qualified, Ltd., Greenlight Capital Offshore Partners, Greenlight Capital Investors, L.P., Greenlight Capital Offshore Investors, Ltd., Greenlight Capital Offshore Master, Ltd., Greenlight Masters, L.P., Greenlight Masters Qualified, L.P., Greenlight Masters Offshore, Ltd., Greenlight Masters Offshore I, Ltd., Greenlight Masters Offshore Partners and Greenlight Masters Partners (collectively, the “Greenlight Funds”).

Link to Table of Contents

DME Advisors is required to follow our investment guidelines and act in a manner that it considers fair and equitable in allocating investment opportunities to us and SILP.

However, the IAA does not otherwise impose any specific obligations or requirements concerning the allocation of time, effort, or investment opportunities to us and SILP or any restrictions on the nature or timing of investments for our or SILP’s account, or other accounts that DME Advisors or its affiliates may manage.

DME Advisors can outsource to sub-advisors without our consent or approval.

If DME Advisors and any of its affiliates attempt to invest in the same opportunity simultaneously, DME Advisors and its affiliates may allocate the opportunity as they determine reasonably.

Affiliates of DME Advisors presently serve as the general partner or the investment advisor of Greenlight Capital, LP, Greenlight Capital Offshore Qualified, Ltd., GCOQ Intermediate, LP, Greenlight Capital Offshore Partners, Ltd., Greenlight Capital Investors, LP, Greenlight Capital Offshore Investors, Ltd., GCOI Intermediate, LP, Greenlight Capital Offshore Master, Ltd., Greenlight Masters, LP, Greenlight Masters Qualified, LP, Greenlight Masters Offshore, Ltd., Greenlight Masters Offshore I, Ltd., Greenlight Masters Offshore Partners and Greenlight Masters Partners (collectively, the “Greenlight Funds”).

We have agreed to use commercially reasonable efforts to cause all of our current and future subsidiaries to enter into the SILP LPA.

Under the SILP LPA, we are contractually obligated to use commercially reasonable efforts to cause substantially all investable assets of Greenlight Re and GRIL, with limited exceptions, to be contributed to SILP.

Link to Table of Contents

We have agreed to release DME, DME II, and DME Advisors and their affiliates from, and to indemnify and hold them harmless against, any liability arising out of the venture agreement and the advisory agreement, subject to certain exceptions.

Furthermore, DME, DME II, and DME Advisors and their affiliates have agreed to indemnify us against any liability incurred in connection with certain actions.

In accordance with the SILP LPA, either of the GLRE Limited Partners may voluntarily withdraw all or part of its capital account for its operating needs by giving DME II at least 3 business days notice.

In addition, either of the GLRE Limited Partners may withdraw as a partner and fully withdraw all of its capital account from SILP on 3 business days notice if the Board of the limited partner declares that a cause for withdrawal exists as per the SILP LPA.

Under the SILP LPA, either of the GLRE Limited Partners may voluntarily withdraw all or part of its capital account for its operating needs by giving DME II at least three business days notice.

Either of the GLRE Limited Partners may withdraw as a partner and fully withdraw all of its capital account from SILP on three business days notice if the limited partner’s board declares that a cause for withdrawal exists as per the SILP LPA.

Investment Strategy

DME Advisors implements a value-oriented investment strategy by taking long positions in perceived undervalued securities and short positions in perceived overvalued securities.

DME Advisors aims to achieve high absolute rates of return while minimizing the risk of capital loss.

DME Advisors attempts to determine the risk/return characteristics of potential investments by analyzing factors such as the risk that expected cash flows will not be obtained, the volatility of the cash flows, the leverage of the underlying business and the security’s liquidity, among others.

DME Advisors aims to achieve high absolute returns while minimizing the risk of capital loss.

DME Advisors attempts to determine the risk/return characteristics of potential investments by analyzing factors such as the risk that expected cash flows would not be achieved, the volatility of the cash flows, the leverage of the underlying business, and the security’s liquidity, among others.

Our Board of Directors conducts reviews of our investment portfolio activities and oversees our investment guidelines to meet our investment objectives.

We believe our investment approach, while less predictable than traditional fixed-income portfolios, complements our reinsurance business and will achieve higher rates of return over the long term than reinsurance companies that invest predominantly in fixed-income securities.

Our investment guidelines are designed to maintain adequate liquidity to fund our reinsurance operations.

DME Advisors, which is contractually obligated to adhere to our investment guidelines, makes investment decisions on our behalf, which may include buying publicly listed equity securities and corporate debt, selling securities short and investing in private placements, futures, currencies, commodities, credit default swaps, interest rate swaps, sovereign debt, derivatives and other instruments.

We have designed our investment guidelines to maintain adequate liquidity to fund our reinsurance operations.

DME Advisors is contractually obligated to adhere to our investment guidelines, and make investment decisions on our behalf.

These decisions may include buying publicly listed equity securities and corporate debt, selling securities short, and investing in private placements, futures, currencies, commodities, credit default swaps, interest rate swaps, sovereign debt, derivatives, and other instruments.

As of December 31, 2020, DME Advisors was in compliance with our investment guidelines.

During the year ended December 31, 2019 , SILP’s investment portfolio was de-risked in order to reduce our investment volatility in the near-term.

As a result, a large proportion of our invested assets in SILP was held in cash and short-term treasuries as of December 31, 2019 .

Investment Guidelines

The investment guidelines adopted by the respective Boards of Directors of Greenlight Re and GRIL, which may be amended or modified from time to time, take into account restrictions imposed on us by regulators, our liability mix, requirements to maintain an appropriate claims paying rating by ratings agencies and requirements of lenders.

As of the date hereof, Greenlight Re’s investment guidelines, which may be amended by the board of directors of Greenlight Re at any time, are as follows:

As of the date hereof, Greenlight Re’s investment guidelines, which Greenlight Re’s board of directors may amend at any time, are as follows:

Link to Table of Contents

1 unchanged sentence

At least 80% of the assets in its Investment Portfolio (as defined in the Limited Partnership Agreement) will be held in debt or equity securities (including swaps) of publicly-traded companies (or their subsidiaries), governments of the Organization of Economic Co-operation and Development high income countries, cash, cash equivalents and gold.

No more than 10% of the assets in its Investment Portfolio will be held in private equity securities.

No more than 10% of Greenlight Re Surplus (as defined in the Limited Partnership Agreement) will be held in private equity securities.

● Concentration of Investments:

Other than cash, cash equivalents, United States government obligations and gold, no single investment in its Investment Portfolio will constitute more than 20% of the Investment Portfolio.

Other than cash, cash equivalents, United States government obligations and gold, no single investment in its Investment Portfolio will constitute more than 10% of Greenlight Re Surplus.

Assets will be invested in such fashion that Greenlight Re has a reasonable expectation that it can meet any of its liabilities as they become due.

Greenlight Re will review with the Investment Advisor the liquidity of the portfolio on a periodic basis.

● Monitoring:

Greenlight Re will require the Investment Advisor to re-evaluate each position in its Investment Portfolio and to monitor changes in intrinsic value and trading value and provide monthly reports on its Investment Portfolio to Greenlight Re as Greenlight Re may reasonably determine.

Greenlight Re’s Investment Portfolio may not employ greater than 15% indebtedness for borrowed money, including net margin balances, for extended time periods.

The Investment Advisor may employ, in the normal course of business, up to 30% indebtedness for periods of less than 30 days.

No new investments to increase net long exposure shall be made when Greenlight Re’s pro rata share of Assets (excluding cash equivalents) exceed its Investment Portfolio.

In any event, Greenlight Re’s pro rata share of Assets (excluding cash equivalents) may not exceed 110% of its Investment Portfolio.

● Currency hedging activities are excluded from leverage calculations.

Where the Investment Advisor enters into a secondary investment with the primary purpose of reducing the risk of another existing investment then the investment advisor may exclude the secondary investment from the calculation of leverage provided that the Investment Advisor receives approval from Greenlight Re’s Chief Financial Officer.

Such authority is limited such that no more than 10% of indebtedness may be excluded from leverage calculations for such secondary investments.

The investment guidelines for GRIL are identical to Greenlight Re’s except for Concentration of Investments, Leverage and Credit default swaps, which for GRIL are as follows:

In addition to currency hedging, where the Investment Advisor enters into a secondary investment with the primary purpose of reducing the risk of another existing investment then the investment advisor may exclude the secondary investment from the calculation of leverage provided that the Investment Advisor receives approval from Greenlight Re’s Chief Financial Officer.

Such authority is limited such that no more than 10% of gross exposure may be excluded from leverage calculations and may be netted from the primary investment for concentration limits.

The investment guidelines for GRIL are identical to Greenlight Re’s except for (a) currency hedging guidelines, which do not apply to GRIL, and (b) Concentration of Investments and Credit default swaps, which for GRIL are as follows:

● Concentration of Investments:

Other than cash, cash equivalents and United States government obligations, (1) no single investment in its Investment Portfolio will constitute more than 10% of its Investment Portfolio, (2) the 10 largest investments shall not constitute greater than 50% of its total Investment Portfolio, and (3) its Investment Portfolio shall at all times be composed of a minimum of 50 debt or equity securities of publicly traded companies (or their subsidiaries).*

GRIL’s Investment Portfolio may not employ greater than 5% indebtedness for borrowed money, including net margin balances, for extended time periods.

The Investment Advisor may use, in the normal course of business, an aggregate of up to 20% net margin leverage for periods of less than 30 days.

Other than cash, cash equivalents and United States government obligations, (1) no single investment in its Investment Portfolio will constitute more than 7.5% of GRIL Surplus, (2) the ten largest investments shall not constitute greater than 40% of GRIL Surplus, and (3) its Investment Portfolio shall at all times be composed of a minimum of 50 debt or equity securities of publicly traded companies (or their subsidiaries).

● Credit default swaps:

The sale of credit default swaps is prohibited.

* GRIL’s board of directors has temporarily waived the guideline requiring the Investment Portfolio to be composed of a minimum of 50 debt and equity securities of publicly traded companies since at least 50% of the Investment Portfolio is being held in cash and cash equivalents during the period from June 1, 2019 to June 30, 2020.

Investment Results

2 unchanged sentences

Investment in related party investment fund $ 166,735 85.0 % $ 240,056 93.6 %

Equities - listed

Private investments and unlisted equity funds

Equity method investment

Funds and cash held with brokers and swap counterparties

Total long investments

DME Advisors also reports the composition of SILP’s portfolio on a delta adjusted basis, which it believes is the appropriate manner in which to assess the exposure and profile of investments and is the way in which it manages the portfolio.

Link to Table of Contents

The delta of an option is the sensitivity of the option price to the underlying stock (or commodity) price.

The delta adjusted basis is the number of shares underlying the option multiplied by the delta and the underlying stock (or commodity) price.

Private investments and unlisted equities 21,793 11.1 10,681 4.2

Investment accounted for under the equity method 6,545 3.3 5,703 2.2

Derivative financial instruments (not designated as hedging instruments) 1,080 0.6 — —

Total investments $ 196,153 100.0 % $ 256,440 100.0 %

DME Advisors reports the composition of SILP’s portfolio on a delta adjusted basis, which it believes is the appropriate manner in which to assess the exposure and profile of investments and is the way in which it manages the portfolio.

An option’s delta is the option price’s sensitivity to the underlying stock (or commodity) price.

The delta adjusted basis is the number of shares or contracts underlying the option multiplied by the delta and the underlying stock (or commodity) price.

This exposure analysis does not include cash (U.S.

dollar and foreign currencies), gold and other commodities, credit default swaps, sovereign debt, foreign currency derivatives, interest rate options, and other macro positions.

In addition, under this methodology, the exposure for total return swaps is reported at its full notional amount.

Under this methodology, the total return swap’s exposure is reported at its full notional amount.

Options are reported at their delta adjusted basis.

Link to Table of Contents

The following table represents the composition of SILP’s investments as of December 31, 2020, and December 31, 2019:

Long % Short % Long % Short %

Debt instruments 0.1 % — % 0.2 % — %

1 unchanged sentence

Private and unlisted equity securities 2.4 — 2.4 —

Total 42.9 % 21.2 % 28.3 % (7.9) %

As of December 31, 2020, SILP’s exposure to gold on a delta adjusted basis was 3.7% (2019:

The following table represents the composition of SILP by industry sector, as of December 31, 2020:

Sector Long % Short % Net %

Communication Services 0.7 % (1.8) % (1.1) %

1 unchanged sentence

Consumer Staples 0.2 (0.2) —

Energy 1.4 (0.6) 0.8

Financial 6.5 (1.6) 4.9

Healthcare 2.6 (2.9) (0.3)

Industrials 7.3 (4.3) 3.0

Materials 5.6 — 5.6

Real Estate — (2.0) (2.0)

Technology 4.0 (2.7) 1.3

Utilities — — —

Other 1.0 — 1.0

Total 42.9 % (21.2) % 21.7 %

The following table represents the composition of our investments in SILP, by the market capitalization of the underlying security, as of December 31, 2020:

Capitalization

Capitalization Long % Short % Net %

Mega Cap Equity (≥$25 billion) 0.6 % (5.5) % (4.9) %

4 unchanged sentences

Other Investments 2.5 — 2.5

Total 42.9 % (21.2) % 21.7 %

Link to Table of Contents

1 unchanged sentence

In accordance with the SILP LPA, DME Advisors constructs a levered investment portfolio as agreed with the Company (the “Investment Portfolio” as defined in the SILP LPA).

Effective from September 1, 2018, the investment return is calculated by dividing the investment income or loss (net of fees and expenses) by the Investment Portfolio.

Our investment return is based on the total assets in our Investment Portfolio.

Investment returns, net of all fees and expenses, by quarter and for the last five years are as follows:

(1) Investment returns are calculated monthly based on cash flows into and out of the investment accounts and compounded to calculate the quarterly and annual returns generated by our Investment Portfolio.

Investment returns, net of all fees and expenses, by quarter for the last five years are as follows:

Quarter 2020 2019 2018 2017 2016

1st (8.1) % 6.2 % (11.8) % 0.9 % 2.5%

2nd 0.3 2.7 (3.8) (3.4) (3.4)

3rd 1.4 1.2 (8.4) 5.5 3.1

4th 8.4 (1.0) (10.2) (1.3) 5.0

Full Year 1.4 % 9.3 % (30.3) % 1.5 % 7.2 %

(1) Investment returns are calculated monthly and compounded to calculate the quarterly and annual returns generated by our Investment Portfolio.

Past performance is not necessarily indicative of future results.

Internal Risk Management

Our Chief Risk Officer is responsible for the construction and review of our internal risk management function.

Our Chief Risk Officer is responsible for constructing and reviewing our internal risk management function.

A primary objective of our risk management function is to ensure that our underwriting efforts comply with explicitly stated underwriting appetites.

These appetites, in turn, are designed to balance our risk position size with our expertise and the available margins, while containing the cost of being wrong.

We design these appetites to balance our risk position size with our expertise and the available margins, while containing the cost of incorrectly assessing risks and rewards.

In doing so, our risk management function designs, implements, and oversees a range of operational and underwriting controls to support the organization.

We frequently review our investment and underwriting portfolios to assess the impact to capital under stressed scenarios.

With the assistance of DME Advisors, we analyze both our investment assets and liabilities including the numerous components of risk in our portfolio, such as concentration risk and liquidity risk.

We frequently review our investment and underwriting portfolios to assess the impact on capital under stressed scenarios.

With the assistance of DME Advisors, we analyze our investment assets and liabilities including the numerous risk components in our portfolio, such as concentration risk and liquidity risk.

Information Technology

Our information technology infrastructure is primarily housed at an off-site, secure data center in Grand Cayman, Cayman Islands.

Our use of cloud based services is increasing as the security and reliability of these services improves.

We have implemented backup procedures to ensure that key data is saved on a daily basis and can be restored promptly .

We have a disaster recovery plan with respect to our information technology infrastructure that includes data and systems replication between our Cayman Islands office and Dublin office and other off-site locations.

We believe we can access our core systems with insignificant outages and restore operation of our secondary systems in the event that our primary systems are unavailable due to a disaster or otherwise.

We house most of our information technology infrastructure primarily at an off-site, secure data center in Grand Cayman, Cayman Islands.

We are increasing our use of cloud-based services as these services’ security and reliability improve.

We have implemented backup procedures to ensure we save key data daily and we can restore it promptly as needed.

We have a disaster recovery plan for our information technology infrastructure that includes data and systems replication between our Cayman Islands office and Dublin office and other off-site locations.

We believe we can access our core systems with insignificant outages and restore our secondary systems if our primary systems are unavailable due to a disaster or otherwise.

We protect our information systems with physical, electronic, and software safeguards considered appropriate by our management.

We employ a specialist vendor to monitor our systems for security events and risks from within our network.

We regularly provide our staff security risk awareness education and training.

We regularly provide security risk awareness education and training to our staff.

Despite these efforts, computer viruses, hackers, employee misuse or misconduct, and other internal or external hazards could expose our data systems to security breaches, cyber-attacks, or other disruptions.

1 unchanged sentence

Risk Factors — Risks Related to Our Business — Operational risks, including human or systems failures, are inherent in our business.

As of March 6, 2020 , we had 40 full-time employees, 33 who were based in Grand Cayman, Cayman Islands and 7 who were based in Dublin, Ireland.

Human Capital

As of March 5, 2021, we had 35 full-time employees, 26 of whom were based in Grand Cayman, Cayman Islands, eight in Dublin, Ireland and one in London, United Kingdom.

We believe that our employee relations are good.

None of our employees are subject to collective bargaining agreements, and we are not aware of any current efforts to implement such agreements.

We also engage consultants and contract with third-parties, as needed, to provide additional resources to support our business activities.

We are committed to advancement and innovation through investing in our employees’ professional development.

We have implemented an employee training and development policy to encourage our employees to take advantage of training and development opportunities.

Link to Table of Contents

Our performance-driven compensation policy is designed to attract and retain talent.

We use short-term compensation composed of base salary and annual cash bonuses and long-term compensation composed of deferred bonuses and stock options, restricted share units, and/or restricted shares, as applicable, in an effort to align our employees’ and executive officers’ interests with those of our shareholders.

In addition, from time to time and under certain circumstances, we award sign-on bonuses, retention bonuses and other bonuses and/or bonus opportunities.

We also offer welfare benefits and other perquisites including defined contribution pension plan, medical insurance coverage, and tax preparation for our employees.

We believe our employees are fairly compensated, without regard to gender, race, and ethnicity.

We believe in creating and maintaining a workplace that is free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression or any other status protected by applicable law.

Each of our employees annually acknowledges complying with our Code of Business Conduct and Ethics which also provides employees with access to an anonymous whistleblower hotline to report any violations.

Our Code of Business Conduct and Ethics is available on our website.

Additional Information

Our website address is www.greenlightre.com and we make available, free of charge, on or through our website, links to our annual reports on Form 10-K and quarterly reports on Form 10-Q, current reports on Form 8-K, and other documents we file with or furnish to the SEC, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

Additionally, our Code of Business Conduct and Ethics is available on our website.

Glossary of Selected Reinsurance Terms

Accident & Health insurance

Insurance against loss by illness or bodily injury.

Accident & Health insurance Insurance against loss by illness or bodily injury.

Health insurance provides

1 unchanged sentence

other medical expenses.

Acquisition costs

Ceding commission, profit commissions, brokerage fees, premium taxes and other direct expenses relating directly to the production of premiums.

Acquisition cost ratio

The acquisition cost ratio is calculated by dividing net acquisition costs by net premiums earned.

A person professionally trained in the mathematical and technical aspects of insurance and related fields particularly in the calculation of premiums, loss reserves and other values.

An intermediary who negotiates contracts of insurance or reinsurance, receiving a commission for placement and other services rendered, between (1) a policyholder and a primary insurer, on behalf of the policyholder, (2) a primary insurer and a reinsurer, on behalf of the primary insurer, or (3) a reinsurer and a retrocessionaire, on behalf of the reinsurer.

Capacity is the percentage of surplus that an insurer or reinsurer is willing or able to place at risk or the dollar amount of exposure it is willing to assume.

Capacity may apply to a single risk, a program, a line of business or an entire book of business.

Acquisition costs Ceding commission, profit commissions, brokerage fees, premium taxes and other direct expenses relating directly to premium production.

Acquisition cost ratio The acquisition cost ratio is calculated by dividing net acquisition costs by net premiums earned.

Actuary A person professionally trained in the mathematical and technical aspects of insurance and related fields particularly in calculating premiums, loss reserves and other values.

Broker An intermediary who negotiates contracts of insurance or reinsurance, receiving a commission for placement and other services rendered, between (1) a policyholder and a primary insurer, on behalf of the policyholder, (2) a primary insurer and a reinsurer, on behalf of the primary insurer, or (3) a reinsurer and a retrocessionaire, on behalf of the reinsurer.

Capacity Capacity is the percentage of surplus that an insurer or reinsurer is willing or able to place at risk or the dollar amount of exposure it is willing to assume.

Capacity may apply to a single risk, a program, a business line or an entire book of business.

Capacity may be constrained by legal restrictions, corporate restrictions, or indirect financial restrictions such as capital adequacy requirements.

Casualty reinsurance

Casualty reinsurance is primarily concerned with the losses caused by injuries to third persons (persons other than the policyholder) and the legal liability imposed on the policyholder resulting therefrom.

This includes, but is not limited to workers’ compensation, automobile liability, and general liability.

Casualty reinsurance Casualty reinsurance is primarily concerned with the losses caused by injuries to third persons (persons other than the policyholder) and the legal liability imposed on the policyholder resulting therefrom.

Casualty reinsurance includes, but is not limited to workers’ compensation, automobile liability, and general liability.

A greater degree of unpredictability is generally associated with casualty risks known as ‘‘long-tail risks,’’ where losses take time to become known, and a claim may be separated from the circumstances that caused it by several years.

An example of a long-tail casualty risk includes the use of certain drugs that may cause cancer or birth defects.

There tends to be greater delay in the reporting and settlement of casualty reinsurance claims due to the long-tail nature of the underlying casualty risks and their greater potential for litigation.

A severe loss, typically involving multiple claimants.

Common perils include earthquakes, hurricanes, tsunamis, hailstorms, tornados, severe winter weather, floods, fires, explosions, volcanic eruptions and other natural or man-made disasters.

There tends to be a greater delay in the reporting and settlement of casualty reinsurance claims due to the long-tail nature of the underlying casualty risks and their greater potential for litigation.

Link to Table of Contents

Catastrophe A severe loss, typically involving multiple claimants.

Common perils include earthquakes, hurricanes, tsunamis, hailstorms, tornados, derechos, severe winter weather, floods, fires, explosions, volcanic eruptions, and other natural or human-made disasters.

Catastrophe losses may also arise from acts of war, acts of terrorism and political instability.

When a party reinsures its liability to another party, it ‘‘cedes’’ business to the reinsurer and is referred to as the ‘‘client.’’

Request by an insured or reinsured for indemnification by an insurance or reinsurance company for loss incurred from an insured peril or event.

A party whose liability is reinsured by a reinsurer.

cedent When a party reinsures its liability to another party, it ‘‘cedes’’ business to the reinsurer and is referred to as the ‘‘client.’’

Claim Request by an insured or reinsured for indemnification by an insurance or reinsurance company for loss incurred from an insured peril or event.

Client A party whose liability is reinsured by a reinsurer.

Also known as a cedent.

Combined ratio

The combined ratio is the sum of the loss ratio, acquisition cost ratio and underwriting expense ratio.

Composite ratio

The composite ratio is the ratio of underwriting losses incurred, loss adjustment expenses and acquisition costs, excluding underwriting related general and administrative expenses, to net premiums earned, or equivalently, the sum of the loss ratio and acquisition cost ratio.

Corporate expenses

Corporate expenses include those costs associated with operating as a publicly listed entity as well as an allocation of other general and administrative expenses.

Link to Table of Contents

The difference between the amount of reserves for losses and loss adjustment expenses initially estimated by an insurer or reinsurer and the amount re-estimated in an evaluation at a later date.

Excess of loss reinsurance

Reinsurance that indemnifies the reinsured against all or a specified portion of losses in excess of a specified dollar or percentage loss ratio amount.

Financial strength rating

The opinion of rating agencies regarding the financial ability of an insurance or reinsurance company to meet its financial obligations under its policies.

Gross premiums written

Total premiums for assumed reinsurance during a given period.

Health insurance

Insurance against loss by illness or bodily injury.

Combined ratio The combined ratio is the sum of the loss ratio, acquisition cost ratio, and underwriting expense ratio.

Composite ratio The composite ratio is the ratio of underwriting losses incurred, loss adjustment expenses.

and acquisition costs, excluding underwriting-related general and administrative expenses, to net premiums earned, or equivalently, the sum of the loss ratio and acquisition cost ratio.

Corporate expenses Corporate expenses include those costs associated with operating as a publicly listed entity and an allocation of other general and administrative expenses.

Development The difference between the amount of reserves for losses and loss adjustment expenses initially estimated by an insurer or reinsurer and the amount re-estimated in an evaluation at a later date.

Excess of loss reinsurance Reinsurance that indemnifies the reinsured against all or a specified portion of losses above a specified dollar or percentage loss ratio amount.

Financial strength rating The opinion of rating agencies regarding an insurance or reinsurance company’s financial ability to meet its financial obligations under its policies.

Funds at Lloyd’s Funds of an approved form that are lodged and held in trust at Lloyd's as security for a member’s underwriting activities.

They comprise the members deposit, personal reserve fund and special reserve fund and may be drawn down in the event that the member’s syndicate level premium trust funds are insufficient to cover its liabilities.

The amount of the deposit is related to the member's premium income limit and also the nature of the underwriting account.

Gross premiums written Total premiums for assumed reinsurance during a given period.

Health insurance Insurance against loss by illness or bodily injury.

Health insurance provides coverage for medicine, visits to the doctor or emergency room, hospital stays, and other medical expenses.

Incurred but not reported (IBNR)

Reserves for estimated loss and loss adjustment expenses that have been incurred by insureds and reinsureds but not yet reported to the insurer or reinsurer, including unknown future developments on loss and loss adjustment expenses which are known to the insurer or reinsurer.

Loss adjustment expenses (LAE)

The expenses of settling claims, including legal and other fees and the portion of general expenses allocated to claim settlement costs.

Incurred but not reported (IBNR) Reserves for estimated loss and loss adjustment expenses incurred by insureds and reinsureds but not yet reported to the insurer or reinsurer, including unknown future developments on loss and loss adjustment expenses known to the insurer or reinsurer.

Lloyd’s Depending on the context this term may refer to - (a) the society of individual and corporate underwriting members that insure and reinsure risks as members of one or more syndicates.

Lloyd’s is not an insurance company;

(b) the underwriting room in the Lloyd’s Building in which managing agents underwrite insurance and reinsurance on behalf of their syndicate members.

In this sense Lloyd’s should be understood as a market place;

or (c) the Corporation of Lloyd’s which regulates and provides support services to the Lloyd’s market.

Loss adjustment expenses (LAE) The expenses of settling claims, including legal and other fees and the portion of general expenses allocated to claim settlement costs.

Also known as claim adjustment expenses.

The loss ratio is calculated by dividing net loss and loss adjustment expenses incurred by net premiums earned.

Loss reserves and loss adjustment expense reserves

Liabilities established by insurers and reinsurers to reflect the estimated cost of claims payments and the related expenses that the insurer or reinsurer will ultimately be required to pay in respect of insurance or reinsurance contracts it has written.

Reserves are established for losses and for loss adjustment expenses, and consist of reserves established with respect to individual reported claims and incurred but not reported losses.

Contracts that cover more than one line of business.

Net financial impact

The net impact of prior period loss development after taking into account net losses and loss expenses incurred, earned reinstatement premiums assumed and ceded, and adjustments to assumed and ceded acquisition costs and profit commissions.

Net premiums written

An insurer’s gross premiums written less premiums ceded to reinsurers.

Non-admitted insurers

An insurer not licensed to do business in the jurisdiction in question.

Loss ratio The loss ratio is calculated by dividing net loss and loss adjustment expenses incurred by net premiums earned.

Loss reserves and loss adjustment expense reserves Liabilities established by insurers and reinsurers to reflect the estimated cost of claims payments and the related expenses that the insurer or reinsurer will ultimately be required to pay in respect of insurance or reinsurance contracts it has written.

Reserves are established for losses and loss adjustment expenses, and consist of reserves established for individual reported claims and incurred but not reported losses.

Multi-line Contracts that cover more than one line of business.

Net financial impact The net impact of prior period loss development after taking into account net losses and loss expenses incurred, earned reinstatement premiums assumed and ceded, and adjustments to assumed and ceded acquisition costs and profit commissions.

Link to Table of Contents

Net premiums written An insurer’s gross premiums written, less premiums ceded to reinsurers.

Non-admitted insurers An insurer not licensed to do business in the jurisdiction in question.

Also known as an unauthorized insurer and unlicensed insurer.

written, earned and unearned

Premiums represent the cost of insurance that is paid by the cedent or insured to the insurer or reinsurer.

Written represents the complete amount of premiums received, and earned represents the amount recognized as income over a period of time.

written, earned and unearned Premiums represent the cost of insurance paid by the cedent or insured to the insurer or reinsurer.

Written represents the total amount of premiums received, and earned represents the amount recognized as income over a period of time.

Unearned is the difference between written and earned premiums.

Probable maximum loss (PML)

PML is the anticipated loss, taking into account contract terms and limits, caused by a natural catastrophe affecting a broad geographic area, such as that caused by an earthquake or hurricane.

Professional liability insurance

Professional liability insurance protects a company and its representatives against legal claims arising from error or misconduct in providing or failing to provide professional services.

This type of coverage includes errors and/or omissions policies, directors and officers coverage and specialty coverage like employment practices liability insurance.

Profit commission

A commission paid by a reinsurer to a ceding insurer based on a predetermined percentage of the profit realized by the reinsurer on the ceded business.

Property insurance

Property insurance covers a business’s building and its contents—money and securities, records, inventory, furniture, machinery, supplies and even intangible assets such as trademarks—when damage, theft or loss occurs.

Property catastrophe reinsurance

Property catastrophe reinsurance contracts are typically ‘‘all risk’’ in nature, meaning that they protect against losses from natural and/or man-made catastrophes.

Probable maximum loss (PML) PML is the anticipated loss, taking into account contract terms and limits, caused by a natural catastrophe affecting a broad geographic area, such as that caused by an earthquake or hurricane.

Professional liability insurance Professional liability insurance protects a company and its representatives against legal claims arising from error or misconduct in providing or failing to provide professional services.

This coverage type includes errors and omissions policies, directors and officers coverage and specialty coverage like employment practices liability insurance.

Profit commission A commission paid by a reinsurer to a ceding insurer based on a predetermined percentage of the profit realized by the reinsurer on the ceded business.

Property insurance Property insurance covers a business’s building and its contents—money and securities, records, inventory, furniture, machinery, supplies, and even intangible assets such as trademarks—when damage, theft.

or loss occurs.

Property catastrophe reinsurance Property catastrophe reinsurance contracts are typically ‘‘all risk’’ in nature, meaning that they protect against losses from natural and human-made catastrophes.

Losses on these contracts typically stem from direct property damage and business interruption.

Link to Table of Contents

Proportional reinsurance

All forms of reinsurance in which the reinsurer shares a proportional part of the original premiums and losses of the reinsured.

Proportional reinsurance All forms of reinsurance in which the reinsurer shares a proportional part of the original premiums and losses of the reinsured.

In proportional reinsurance, the reinsurer generally pays the client a ceding commission.

The ceding commission generally is based on the client’s cost of acquiring the business being reinsured (including commissions, premium taxes, assessments and miscellaneous administrative expenses) and also may include a profit component.

The ceding commission is generally based on the client’s cost of acquiring the business being reinsured (including commissions, premium taxes, assessments, and miscellaneous administrative expenses) and may include a profit component.

Frequently referred to as quota-share reinsurance.

Quota-share reinsurance

A form of proportional reinsurance in which the reinsurer assumes an agreed percentage of each underlying insurance contract being reinsured.

Reinstatement premium

A Premium charged for the reinstatement of the amount of reinsurance coverage to its full amount reduced as a result of a reinsurance loss payment.

An arrangement in which a reinsurer agrees to indemnify an insurance company, the client, against all or a portion of the insurance risks underwritten by the client under one or more policies.

Reinsurance can provide a client with several benefits, including a reduction in net liability on individual risks and catastrophe protection from large or multiple losses.

Quota-share reinsurance A form of proportional reinsurance in which the reinsurer assumes an agreed percentage of each underlying insurance contract being reinsured.

Reinstatement premium A Premium charged for the reinstatement of the amount of reinsurance coverage to its full amount reduced as a result of a reinsurance loss payment.

Reinsurance An arrangement in which a reinsurer agrees to indemnify an insurance company, the client, against all or a portion of the insurance risks underwritten by the client under one or more policies.

Reinsurance can provide a client with several benefits, including reducting net liability on individual risks and catastrophe protection from large or multiple losses.

Reinsurance also provides a client with additional underwriting capacity by permitting it to accept larger risks and write more business than would be possible without a related increase in capital and surplus, and facilitates the maintenance of acceptable financial ratios by the client.

Reinsurance does not legally discharge the client from its liability with respect to its obligations to the insured.

An insurance company that assumes part of the risk in exchange for part of the premium to a primary insurer.

Reinsurer An insurance company that assumes part of the risk in exchange for part of the premium to a primary insurer.

Retrocession;

retrocessional coverage

A transaction whereby a reinsurer cedes to another reinsurer, commonly referred to as the retrocessionaire, all or part of the reinsurance that the first reinsurer has assumed.

retrocessional coverage A transaction whereby a reinsurer cedes to another reinsurer, commonly referred to as the retrocessionaire, all or part of the reinsurance that the first reinsurer has assumed.

Retrocessional reinsurance does not legally discharge the ceding reinsurer from its liability with respect to its obligations to the reinsured.

Risk-free rate

The interest rate on a riskless, or safe, asset, usually taken to be a short-term U.S.

Risk-free rate The interest rate on a riskless, or safe, asset, usually taken to be a short-term U.S.

government security.

Risk transfer

The shifting of all or a part of a risk to another party.

Severity business

Insurance/reinsurance that is characterized by contracts containing the potential for significant losses emanating from one event.

Surety and fidelity insurance

Surety and fidelity includes (1) insurance guaranteeing the fidelity of persons holding positions of public or private trust;

Risk transfer The shifting of all or a part of a risk to another party.

Severity business Insurance/reinsurance characterized by contracts containing the potential for significant losses emanating from one event.

Surety and fidelity insurance Surety and fidelity includes (1) insurance guaranteeing the fidelity of persons holding positions of public or private trust;

(2) insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings, and contracts of suretyship;

and (3) insurance indemnifying banks, bankers, brokers, financial or moneyed corporations or associations against loss.

An employee of an insurance or reinsurance company who examines, accepts or rejects risks and classifies risks in order to charge an appropriate premium for each accepted risk.

The process of evaluating, defining, and pricing reinsurance risks including, where appropriate, the rejection of such risks, and the acceptance of the obligation to pay the reinsured under the terms of the contract.

Underwriting expense

Underwriting expenses include those expenses directly related to underwriting activities which are not eligible to be capitalized, as well as an allocation of other general and administrative expenses.

Underwriting expense ratio

The underwriting expense ratio includes those expenses directly related to underwriting activities as well as an allocation of other general and administrative expenses.

Link to Table of Contents

Underwriter An employee of an insurance or reinsurance company who examines, accepts or rejects risks and classifies risks to charge an appropriate premium for each accepted risk.

Underwriting The process of evaluating, defining, and pricing reinsurance risks including, where appropriate, the rejection of such risks, and the acceptance of the obligation to pay the reinsured under the terms of the contract.

Underwriting expense Underwriting expenses include those expenses directly related to underwriting activities that are not eligible to be capitalized and an allocation of other general and administrative expenses.

Underwriting expense ratio The underwriting expense ratio includes those expenses directly related to underwriting activities and an allocation of other general and administrative expenses.

Therefore, the underwriting expense ratio is the ratio of underwriting expenses to net premiums earned.

In addition, the underwriting expense ratio incorporates gains and losses resulting from deposit accounted contracts.

Workers’ compensation insurance

Workers’ compensation insurance provides medical, disability and lost-wage benefits to employees for injuries and illness sustained in the course of their employment.

The underwriting expense ratio also incorporates gains and losses resulting from deposit accounted contracts.

Workers’ compensation insurance Workers’ compensation insurance provides medical, disability and lost-wage benefits to employees for injuries and illness sustained in the course of their employment.

Link to Table of Contents

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business