What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-05 compared with 2020-11-04 · 269 added, 304 removed, 460 unchanged (55% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2020 and December 31, 2019

March 31, 2021 and December 31, 2020

(expressed in thousands of U.S.

dollars, except per share and share amounts)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Investment in related party investment fund $ 199,882 $ 166,735

3 unchanged sentences

Restricted cash and cash equivalents 697,689 745,371

Reinsurance balances receivable (net of allowance for expected credit losses of $ 89 )

Reinsurance balances receivable (net of allowance for expected credit losses of $ 89 and $ 89 )

386,858 330,232

Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $ 47 )

Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of $ 47 and $ 47 )

15,009 16,851

Deferred acquisition costs 58,591 51,014

Unearned premiums ceded — 901

Notes receivable (net of allowance for expected credit losses of $ 1,000 )

18,461 20,202

Notes receivable — 6,101

Other assets 4,394 2,993

28 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and nine months ended September 30, 2020 and 2019

For the three months ended March 31, 2021 and 2020

(expressed in thousands of U.S.

dollars, except per share and share amounts)

Three months ended September 30 Nine months ended September 30

2020 2019 2020 2019

Three months ended March 31

Gross premiums written $ 169,935 $ 109,787

3 unchanged sentences

Net premiums earned 135,396 111,021

Income (loss) from investment in related party investment fund [net of related party expenses of $ 703 and $ 1,981 , (three and nine months ended September 30, 2019:

$ 1,325 and $ 9,888 , respectively)]

Income (loss) from investment in related party investment fund (net of related party expenses of $ 1,301 (three months ended March 31, 2020:

4,024 ( 42,126 )

Net investment income 466 3,312 11,237 9,265

Net investment income (loss) 14,650 6,837

Other income (expense), net ( 3,650 ) 213

19 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the three and nine months ended September 30, 2020 and 2019

For the three months ended March 31, 2021 and 2020

(expressed in thousands of U.S.

Three months ended September 30 Nine months ended September 30

2020 2019 2020 2019

Three months ended March 31

Ordinary share capital

Beginning balance $ 3,627 $ 3,679 $ 3,699 $ 3,638

Balance - beginning of period $ 3,452 $ 3,699

Issue of Class A ordinary shares, net of forfeitures 33 44

Repurchase of Class A ordinary shares ( 71 ) — ( 187 ) —

Ending balance 3,537 3,699 3,537 3,699

Balance - end of period 3,485 3,743

Additional paid-in capital

Beginning balance 497,559 501,916 503,547 499,726

Repurchase of Class A ordinary shares ( 4,828 ) — ( 12,484 ) —

Balance - beginning of period 488,488 503,547

Share-based compensation expense 730 828

Ending balance 492,429 502,561 492,429 502,561

Balance - end of period 489,218 504,375

Retained earnings (deficit)

Beginning balance ( 71,282 ) ( 4,857 ) ( 30,063 ) ( 26,077 )

Balance - beginning of period ( 27,083 ) ( 30,063 )

Cumulative effect of adoption of accounting guidance for expected credit losses at January 1, 2020

— — ( 886 ) —

Net income (loss) 6,499 ( 40,270 )

Ending balance ( 69,099 ) 283 ( 69,099 ) 283

Balance - end of period ( 20,584 ) ( 71,219 )

Total shareholders' equity $ 472,119 $ 436,899

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2020 and 2019

For the three months ended March 31, 2021 and 2020

(expressed in thousands of U.S.

Nine months ended September 30

Three months ended March 31

Cash provided by (used in) operating activities

4 unchanged sentences

Net change in unrealized gains and losses on investments and notes receivable ( 1,228 ) ( 15,771 )

Net realized (gains) losses on investments 15,000 14,150

Net realized (gains) losses on investments and notes receivable ( 14,210 ) 15,000

Foreign exchange (gains) losses on investments 19 441

19 unchanged sentences

Purchases of investments ( 2,070 ) —

Change in due to related party investment fund — ( 9,642 )

Notes receivable collected (issued) 741 ( 1,016 )

Non-controlling interest contribution into (withdrawal from) related party joint venture, net — ( 1,278 )

Sales of investments 20,755 —

Net change in notes receivable 6,101 2

Net cash provided by (used in) investing activities ( 4,337 ) 8,034

Financing activities

Repurchase of Class A ordinary shares ( 12,671 ) —

Net cash provided by (used in) financing activities ( 12,671 ) —

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash — ( 122 )

Net increase (decrease) in cash, cash equivalents and restricted cash ( 23,080 ) ( 23,858 )

Cash, cash equivalents and restricted cash at beginning of the period (see Note 2) 767,906 703,231

Cash, cash equivalents and restricted cash at end of the period (see Note 2) $ 731,266 $ 774,006

Cash, cash equivalents and restricted cash at beginning of the period 754,306 767,906

Cash, cash equivalents and restricted cash at end of the period $ 731,226 $ 744,048

Supplementary information

Interest paid in cash $ 2,000 $ 2,000

Income tax paid in cash — —

Non-cash transfer of investments (Note 3) — 36,673

Non-cash addition of right-of-use asset — 323

The accompanying Notes to the Condensed Consolidated Financial Statements are an

3 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

ORGANIZATION AND BASIS OF PRESENTATION

3 unchanged sentences

(“Greenlight Re”), provides global specialty property and casualty reinsurance.

Greenlight Re has a Class D insurer license issued in accordance with the terms of The Insurance Law, 2010 and underlying regulations thereto (the “Law”) and is subject to regulation by the Cayman Islands Monetary Authority, in terms of the Law.

Greenlight Re has a Class D insurer license issued in accordance with the terms of The Insurance Act, 2010 (as amended) and underlying regulations thereto (the “Act”) and is subject to regulation by the Cayman Islands Monetary Authority, in terms of the Act.

Greenlight Re commenced underwriting in April 2006.

4 unchanged sentences

GRIL provides multi-line property and casualty reinsurance capacity to the European broker market and provides GLRE with an additional platform to serve clients located in Europe and North America.

In 2020, GLRE established Greenlight Re Marketing (UK) Limited (“Greenlight Re UK”) as a wholly-owned subsidiary to increase the Company’s presence in the London market.

As used herein, the “Company” refers collectively to GLRE and its consolidated subsidiaries.

The Class A ordinary shares of GLRE are listed on Nasdaq Global Select Market under the symbol “GLRE”.

These unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X.

These unaudited condensed consolidated financial statements include the results of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2019.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all of the normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position and results of operations as of the dates and for the periods presented.

The global pandemic related to the novel coronavirus (the “COVID-19 pandemic”) is expected to have a significant adverse impact on the property and casualty insurance and reinsurance industry.

The Company has included in the loss and loss adjustment reserves, its best estimate of losses arising from the COVID-19 pandemic.

However, there remains considerable uncertainty relating to the ultimate losses, which will depend on the extent and duration of economic contraction, particularly in the United States.

Accordingly, significant estimates used in the preparation of the Company’s consolidated financial statements including those associated with premiums, expected credit losses on amounts owed to us and the estimations of loss and loss adjustment expense reserves may be subject to significant adjustments in future periods.

The results for the nine months ended September 30, 2020 are not necessarily indicative of the results expected for the full calendar year.

GAAP for complete financial statements.

In addition, the year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the U.S.

Securities and Exchange Commission on March 10, 2021.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position and results of operations as at the end of and for the periods presented.

Significant estimates used in the preparation of the Company’s consolidated financial statements, including those associated with premiums, expected credit losses on amounts owed to us and the estimations of loss and loss adjustment expense reserves, including losses arising from the novel coronavirus (the “COVID-19 pandemic”), may be subject to significant adjustments in future periods (see Note 5 for the significant assumptions which served as the basis for the Company's estimates of reserves for the COVID-19 pandemic).

All significant intercompany accounts and transactions have been eliminated.

The results for the three months ended March 31, 2021, are not necessarily indicative of the results expected for the full calendar year.

SIGNIFICANT ACCOUNTING POLICIES

In the first quarter of 2020, the Company adopted ASU No.

2016-13, Financial Instruments - Credit Losses (“ASU 2016-13”) which requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset.

ASU 2016-13 was effective for public business entities for annual and interim periods beginning after December 15, 2019.

The financial assets included in the captions “Reinsurance balances receivable,” “Loss and loss adjustment expenses recoverable” (collectively, “Reinsurance Assets”) and “Notes receivable,” in the Company’s condensed consolidated balance sheets are carried at amortized cost and therefore affected by ASU 2016-13.

Other than the changes relating to the adoption of ASU 2016-13, there have been no changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the year ended December 31, 2019.

Return to table of contents

There have been no material changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the year ended December 31, 2020.

Use of Estimates

2 unchanged sentences

Actual results could differ from these estimates.

Restricted Cash and Cash Equivalents

The significant estimates reflected in the Company’s

Return to table of contents

condensed consolidated financial statements include, but are not limited to, loss and loss adjustment expense reserves, premium revenues and risk transfer, bonus accruals, and share-based payments.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

The Company maintains cash and cash equivalent balances to collateralize regulatory trusts and letters of credit issued to cedents (see Note 12).

The following table reconciles the cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total presented in the condensed consolidated statements of cash flows:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

($ in thousands)

2 unchanged sentences

Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows $ 731,226 $ 754,306

Funds Held by Cedents

The caption “Reinsurance balances receivable” in the Company’s condensed consolidated balance sheets includes amounts held by cedents.

Such amounts held include Funds at Lloyd’s, which is held in trust at Lloyd's as security

for members’ underwriting activities.

At March 31, 2021, funds held by cedents were $ 155.8 million (December 31, 2020:

$ 127.6 million).

Reinsurance Assets

Upon adoption of ASU 2016-13, the Company calculated an allowance for expected credit losses for its reinsurance balances receivable and loss and loss adjustment expenses recoverable by applying a Probability of Default (“PD”) / Loss Given Default (“LGD”) model that considers both the Company’s collectibility history on its reinsurance assets as well as representative external loss history.

The external loss history that the Company uses includes a long-term probability of liquidation study specific to insurance companies.

Additionally, the life of each of the Company’s reinsurance treaties is also considered as the probability of default is calculated over the contractual length of the reinsurance contracts.

The credit worthiness of a counterparty is evaluated by considering the credit ratings assigned by independent agencies and individually evaluating all the counterparties.

The Company manages its credit risk in its reinsurance assets by transacting with insurers and reinsurers that it considers financially sound.

For its retrocessionaire counterparties that are unrated, the Company may hold collateral in the form of funds withheld, trust accounts and/or irrevocable letters of credit.

The Company calculates an allowance for expected credit losses for its reinsurance balances receivable and loss and loss adjustment expenses recoverable by applying a Probability of Default (“PD”) / Loss Given Default (“LGD”) model that considers both the Company’s collectibility history on its reinsurance assets as well as representative external loss history.

In calculating the probability of default, the Company also considers the estimated duration of its reinsurance assets.

Each counterparty’s creditworthiness is evaluated individually on the basis of credit ratings assigned by independent agencies.

The Company manages its credit risk in its reinsurance assets by transacting only with insurers and reinsurers that it considers financially sound.

For its retrocessional counterparties that are unrated, the Company may hold collateral in the form of funds withheld, trust accounts, or irrevocable letters of credit.

In evaluating credit risk associated with reinsurance balances receivable, the Company considers its right to offset loss obligations or unearned premiums against premiums receivable.

The Company regularly evaluates its net credit exposure to assess the ability of retrocessionaires to honor their respective obligations.

Upon adoption of ASU 2016-13 , the Company recorded an allowance for expected credit loss on its Reinsurance Assets of $ 0.1 million with an offset to retained earnings.

At September 30, 2020, the allowance for expected credit losses was $ 0.1 million.

Notes Receivable

Notes receivable represent promissory notes receivable from third parties.

These notes are recorded at cost plus accrued interest, if any, net of valuation allowance for expected credit losses.

Interest income, changes in the allowance for expected credit losses and unrealized and realized gains or losses on the notes receivable are included in the caption “Net investment income (loss)” in the Company’s condensed consolidated statements of operations.

The allowance for expected credit losses is calculated using a PD / LGD model that takes into account the Company’s experience as well as representative external loss history.

The expected loss percentage is calculated as the product of the PD and LGD for each period over the life of a note.

The Company evaluates the financial condition of the notes receivable counterparties and monitors its exposure on a regular basis.

At September 30, 2020, the Company considers the notes receivable balance to be collectible and has not experienced any default on payments since inception of these notes.

The notes receivable originated between 2015 and 2018.

Return to table of contents

At September 30, 2020 and December 31, 2019, $ 0.1 million and $ 0.1 million, respectively, of accrued interest was included in the caption “Notes receivable” in the Company’s condensed consolidated balance sheets.

When there is uncertainty as to the collection of interest contractually due, the Company places the note on non-accrual status.

For notes receivable placed on non-accrual status, the notes are presented excluding any accrued interest amount.

The Company resumes the accrual of interest on a note when none of the principal or interest remains past due, and the Company expects to collect the remaining contractual principal and interest.

Interest collected on notes that are placed on non-accrual status is recorded as interest income when collected, provided that the recorded value of the note is deemed to be fully collectible.

Where doubt exists as to the collectibility of the remaining recorded value of the notes placed on non-accrual status, the Company immediately reverses any previous accrued interest through interest income and any payments received are applied to reduce the recorded value of the notes.

The allowance for expected credit losses for notes receivable is calculated on the amortized cost excluding accrued interest and interest written off due to non-accrual status.

Charge offs of notes receivable are recorded when all or a portion of the financial asset is deemed uncollectible.

Full or partial charge offs are recorded as reductions to the amortized cost and deducted from the allowance in the period in which the note receivable is deemed uncollectible.

In instances where the Company collects cash that it has previously charged off, the recovery will be recognized through earnings or as a reduction of the amortized cost for interest and principal, respectively.

The following table provides a roll-forward of the Company’s allowance for credit losses on notes receivable:

Nine months ended September 30

($ in thousands)

Balance at beginning of period $ 15,000 $ 9,012

Cumulative effect of adoption of ASU 2016-13 at January 1, 2020 750 —

Charge offs ( 15,000 ) —

Net increase (decrease) in allowance 250 —

Balance at end of period $ 1,000 $ 9,012

The Company regularly evaluates its net credit exposure to assess the ability of cedents and retrocessionaires to honor their respective obligations.

At March 31, 2021, the Company has recorded an allowance for expected credit loss on its Reinsurance Assets of $ 0.1 million (December 31, 2020:

$ 0.1 million).

Deposit Assets and Liabilities

2 unchanged sentences

The deposit asset or liability balance is subsequently adjusted using the interest method with a corresponding income or expense recorded in the Company’s condensed consolidated statements of operations under the caption “Other income (expense).” The Company’s deposit assets and liabilities are recorded in the Company’s condensed consolidated balance sheets in the caption “Reinsurance balances receivable” and “Reinsurance balances payable,” respectively.

At September 30, 2020, deposit assets and deposit liabilities were $ 5.3 million and $ 35.2 million, respectively (December 31, 2019:

At March 31, 2021, deposit assets and deposit liabilities were $ 3.4 million and $ 31.1 million, respectively (December 31, 2020:

$ 4.6 million and $ 31.0 million, respectively).

For the three and nine months ended September 30, 2020 and 2019, the interest income/(expense) on deposit accounted contracts was as follows:

Three months ended September 30 Nine months ended September 30

2020 2019 2020 2019

($ in thousands) ($ in thousands)

For the three months ended March 31, 2021 and 2020, the interest income/(expense) on deposit accounted contracts was as follows:

Return to table of contents

Three months ended March 31

($ in thousands)

Deposit interest income $ — $ 607

1 unchanged sentence

Deposit interest income/(expense), net $ ( 2,947 ) $ 607

Return to table of contents

Other assets consist primarily of prepaid expenses, fixed assets, right-of-use lease assets, other receivables and deferred tax assets.

Derivative instruments

The Company’s derivative financial instruments are recognized in the consolidated balance sheets at their fair values with any changes in unrealized gains and losses included in the caption “Net investment income (loss)” in the Company’s consolidated statements of operations.

The Company’s derivatives do not qualify as hedges for financial reporting purposes and are recorded in the consolidated balance sheets on a gross basis and not offset against any collateral pledged or received.

The caption “Other assets” in the Company’s condensed consolidated balance sheets consists primarily of prepaid expenses, fixed assets, right-of-use lease assets, other receivables, and deferred tax assets.

Other Liabilities

Other liabilities consist primarily of accruals for legal and other professional fees, employee bonuses and lease liabilities.

The caption “Other liabilities” in the Company’s condensed consolidated balance sheets consists primarily of accruals for legal and other professional fees, employee bonuses, taxes payable, and lease liabilities.

Earnings (Loss) Per Share

3 unchanged sentences

• Restricted Stock Units (“RSUs”) issued that would convert to common shares upon vesting;

• additional potential common shares issuable when stock options are exercised, determined using the treasury stock method;

• those common shares with the potential to be issued by virtue of convertible debt and other such convertible instruments, determined using the treasury stock method.

Diluted earnings (or loss) per share contemplates a conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share.

In the event of a net loss, all RSUs, stock options outstanding, convertible debt and participating securities are excluded from the calculation of both basic and diluted loss per share as their inclusion would be anti-dilutive.

The table below presents the shares outstanding for the purposes of the calculation of earnings (loss) per share for the three and nine months ended September 30, 2020 and 2019:

Three months ended September 30 Nine months ended September 30

2020 2019 2020 2019

• additional potential common shares issuable when in-the-money stock options are exercised, determined using the treasury stock method;

• those common shares with the potential to be issued in connection with convertible debt and other such convertible instruments, determined using the treasury stock method.

Diluted earnings (or loss) per share contemplates a conversion to common shares of all convertible instruments only if they are dilutive with regards to earnings per share.

In the event of a net loss, all RSUs, stock options, convertible debt, and participating securities are excluded from the calculation of both basic and diluted loss per share as their inclusion would be anti-dilutive.

The table below presents the shares outstanding for the calculation of earnings (loss) per share for the three months ended March 31, 2021 and 2020:

Three months ended March 31

Weighted average shares outstanding - basic 34,522,994 36,138,245

3 unchanged sentences

Participating securities excluded from calculation of loss per share — 1,326,613

Return to table of contents

Under current Cayman Islands law, no corporate entity, including GLRE and Greenlight Re, is obligated to pay taxes in the Cayman Islands on either income or capital gains.

5 unchanged sentences

Verdant’s tax years 2017 and beyond remain open and subject to examination by the IRS.

Return to table of contents

GRIL is incorporated in Ireland and therefore is subject to the Irish corporation tax rate of 12.5% on its trading income and 25% on its non-trading income.

3 unchanged sentences

Recently Issued Accounting Standards Adopted

As discussed above, the Company adopted ASU 2016-13 during the first quarter of 2020 using a modified retrospective transition method.

The adoption resulted in a cumulative-effect adjustment to retained earnings of $ 0.9 million as of January 1, 2020.

Recently Issued Accounting Standards Not Yet Adopted

In January 2020, the FASB issued ASU No.

2 unchanged sentences

ASU 2020-01 is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The adoption of ASU 2020-01 is not expected to have a material impact on the Company’s consolidated financial statements.

The adoption of ASU 2020-01 during the first quarter of 2021 had no material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU No.

7 unchanged sentences

ASU 2020-06 requires the application of the if-converted method when calculating diluted earnings per share.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 using either a modified retrospective method of transition or a fully retrospective method of transition.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 using either a “modified retrospective” or a “fully retrospective” method of transition.

Early adoption is permitted no earlier than for fiscal years beginning after December 15, 2020.

The Company is currently evaluating the effect the new standard will have on its consolidated financial statements.

The Company intends to adopt ASU 2020-06 during the first quarter of 2022 and is currently evaluating the effect that the new standard will have on its consolidated financial statements.

INVESTMENT IN RELATED PARTY INVESTMENT FUND

Prior to January 2, 2019, the Company and its reinsurance subsidiaries were party to a joint venture agreement (the “venture agreement”) with DME Advisors, LP (“DME Advisors”) and DME Advisors LLC (“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.

DME and DME Advisors are related to the Company and each is an affiliate of David Einhorn, Chairman of the Company’s Board of Directors.

On September 1, 2018, the Company entered into an amended and restated exempted limited partnership agreement (as amended by that certain letter agreement dated as of August 5, 2020, the “SILP LPA”) of Solasglas Investments, LP (“SILP”), with DME Advisors II, LLC (“DME II”), as General Partner, Greenlight Re and GRIL, (together the “GLRE Limited Partners”), 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 invested assets in the Joint Venture to SILP.

The Joint Venture was terminated on January 2, 2019 by which date all assets were transferred to SILP.

On September 1, 2018, the Company entered into an amended and restated exempted limited partnership agreement (as amended by the letter agreement dated as of August 5, 2020, (the “Previous SILP LPA”) of Solasglas Investments, LP

Return to table of contents

1, 2018, SILP also entered into a SILP investment advisory agreement (“IAA”) with DME Advisors pursuant to which DME Advisors is the investment manager for SILP.

(“SILP”), with DME Advisors II, LLC (“DME II”), as General Partner, Greenlight Re and GRIL, (together the “GLRE Limited Partners”), and the initial limited partner (each, a “Partner”).

On September 1, 2018, SILP also entered into a SILP investment advisory agreement (“IAA”) with DME Advisors.

LP (“DME Advisors”) pursuant to which DME Advisors is the investment manager for SILP.

DME II and DME Advisors are related to the Company and each is an affiliate of David Einhorn, Chairman of the Company’s Board of Directors.

On January 7, 2021, the Company and DME II, entered into the Second Amended and Restated Exempted Limited Partnership Agreement, effective as of January 1, 2021 (the “SILP LPA”).

The SILP LPA agreement amends, restates, supersedes and incorporates all material terms of the Previous SILP LPA, as amended as of February 26, 2019, and the letter agreements dated as of June 18, 2019, December 27, 2019 and August 5, 2020 (collectively, the “Amendments”).

The SILP LPA agreement also amended the definition of “Additional Investment Ratio” and amended each of the defined terms “Greenlight Re Surplus” and the “GRIL Surplus” so as to clarify that each of the respectively referenced “financial statements” are “U.S.

GAAP financial statements.” In addition, the SILP LPA included the following:

“The Investment Portfolio of each Partner will not exceed the product of (a) such Partner’s surplus (Greenlight Re Surplus or GRIL Surplus, as the case may be) multiplied by (b) the Investment Cap (50%), and the General Partner will designate any portion of a Partner’s Investment Portfolio as Designated Securities to effectuate such limit”.

The SILP LPA also amended the investment guidelines to reflect the amended investment guidelines adopted by the Company’s Board of Directors effective as of January 1, 2021.

The Company has concluded that SILP qualifies as a variable interest entity (“VIE”) under U.S.

6 unchanged sentences

The Company’s investment in SILP is presented in the Company’s condensed consolidated balance sheets in the caption “Investment in related party investment fund.”

During 2019, SILP’s investment portfolio was de-risked in order to reduce the Company’s investment volatility in the near-term.

As a result, a significant proportion of the Company’s investment assets in SILP was held in cash and short-term treasuries as of December 31, 2019.

On August 5, 2020, the Company entered into an amended and restated letter agreement with DME Advisors and DME II whereby the deployed Investment Portfolio can not exceed an amount equal to 50 % of the Company’s shareholders’ equity, as reported in the Company’s then most recent quarterly U.S.

GAAP financial statements, adjusted monthly for investment gains and losses as reported by SILP during any intervening period.

The Company’s maximum exposure to loss relating to SILP is limited to the net asset value of the GLRE Limited Partners’ investment in SILP.

As of September 30, 2020, the net asset value of the GLRE Limited Partners’ investment in SILP was $ 185.0 million (December 31, 2019:

At March 31, 2021, the net asset value of the GLRE Limited Partners’ investment in SILP was $ 199.9 million (December 31, 2020:

$ 166.7 million), representing 78.8 % (December 31, 2020:

75.7 %) of SILP’s total net assets.

The remaining 19.0 % (December 31, 2019:

19.0 %) of SILP’s total net assets was held by DME II.

DME II held the remaining 21.2 % (December 31, 2020:

24.3 %) of SILP’s total net assets.

The investment in SILP is recorded at the GLRE Limited Partners’ share of the net asset value of SILP as reported by SILP’s third-party administrator.

The GLRE Limited Partners can redeem their assets from SILP for operational purposes by providing three business days’ notice to DME II.

As of September 30, 2020, the majority of SILP’s long investments are composed of cash and publicly-traded equity securities, which can be readily liquidated to meet GLRE Limited Partners’ redemption requests.

The Company’s share of the change in the net asset value of SILP for the three and nine months ended September 30, 2020 was $ 6.4 million and $( 34.1 ) million, respectively, (three and nine months ended September 30, 2019:

$ 6.6 million and $ 51.8 million, respectively), and shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s condensed consolidated statements of operations.

The change in the net asset value of SILP for the nine months ended September 30, 2020 was primarily driven by the impact of changes in fair value primarily attributable to the disruptions in global financial markets associated with the COVID–19 pandemic.

At March 31, 2021, the majority of SILP’s long investments were composed of cash and publicly traded equity securities, which could be readily liquidated to meet the GLRE Limited Partners’ redemption requests.

The Company’s share of the change in the net asset value of SILP for the three months ended March 31, 2021, was $ 4.0 million (three months ended March 31, 2020:

$( 42.1 ) million), and shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s condensed consolidated statements of operations.

The summarized financial statements of SILP are presented below.

1 unchanged sentence

Summarized Statement of Assets and Liabilities of Solasglas Investments, LP

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

($ in thousands)

16 unchanged sentences

Summarized Statement of Operations of Solasglas Investments, LP

Three months ended September 30 Nine months ended September 30

2020 2019 2020 2019

Three months ended March 31

($ in thousands)

15 unchanged sentences

GLRE Limited Partners’ share of net income (loss) (1)

(1) Net of management fees and accrued performance allocation as follows:

Three months ended September 30 Nine months ended September 30

$ 4,024 $ ( 42,126 )

(1) Net income (loss) is net of management fees and performance allocation presented below:

Three months ended March 31

($ in thousands)

1 unchanged sentence

Performance allocation $ 447 $ —

Total $ 1,301 $ 662

See Note 11 for further details on management fees and performance allocation.

FINANCIAL INSTRUMENTS

Other Investments

“Other investments” include unlisted securities and investments accounted for under the equity method.

Other I nvestments

The Company’s “Other investments” are composed of the following:

• Private investments and unlisted equities, which consist primarily of Innovations-related investments supporting technology innovators in the (re)insurance market;

• Derivative financial instruments associated with the Company’s Innovations investments.

Return to table of contents

At September 30, 2020, the following securities were included in the caption “Other investments”:

September 30, 2020 Cost Unrealized

At March 31, 2021, the following securities were included in the caption “Other investments”:

Cost Unrealized

gains Unrealized

2 unchanged sentences

Private investments and unlisted equities $ 14,485 $ 11,877 $ ( 1,300 ) $ 25,062

Investment accounted for under the equity method — — — 6,571

Derivative financial instruments (not designated as hedging instruments) — 1,090 — 1,090

Total other investments $ 14,485 $ 12,967 $ ( 1,300 ) $ 26,152

At December 31, 2020, the following securities were included in the caption “Other investments”:

December 31, 2019 Cost Unrealized

Cost Unrealized

gains Unrealized

2 unchanged sentences

Private investments and unlisted equities $ 12,414 $ 10,679 $ ( 1,300 ) $ 21,793

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

Other investments 12,414 11,759 ( 1,300 ) 22,873

Investment accounted for under the equity method 6,545

2 unchanged sentences

The carrying values of these holdings are determined based on their original cost minus impairment, if any, plus or minus changes resulting from observable price changes.

At September 30, 2020, the carrying value of private investments and unlisted equities was $ 15.7 million (December 31, 2019:

$ 10.7 million), and incorporated upward adjustments of $ 0.0 million and $ 4.1 million during the three and nine months ended September 30, 2020, respectively (2019:

$ 0.0 million and $ 0.2 million, respectively), excluding any unrealized gains or losses related to changes in foreign currency exchange rates.

The Company’s investment accounted for under the equity method represents its investment in AccuRisk Holdings LLC (“AccuRisk”), a Chicago, Illinois-based managing general underwriter focused on employee and health insurance benefits.

At September 30, 2020, the Company held a 58 % (December 31, 2019:

58 %) economic interest in AccuRisk and had provided a $ 6.0 million credit facility.

In addition to providing capital and funding in support of AccuRisk’s expansion plans, the Company also provides reinsurance capacity for business produced by AccuRisk.

The Company has determined that AccuRisk is a VIE, of which the Company is not the primary beneficiary.

The Company’s carrying value represents its ownership share of AccuRisk’s net assets.

The Company’s maximum exposure to loss relating to AccuRisk is limited to the carrying amount of its investment, plus the credit facility extended.

For the three and nine months ended September 30, 2020, the Company’s share of AccuRisk’s net income was $ 0.1 million and $ 0.9 million, respectively (2019:

$( 0.2 ) million and $ 0.3 million, respectively), which was included in the caption “Net investment income” in the Company’s condensed consolidated statements of operations.

At March 31, 2021, the carrying value of private investments and unlisted equities was $ 25.1 million (December 31, 2020:

$ 21.8 million).

It incorporated upward adjustments of $ 1.2 million during the three months ended March 31, 2021 (2020:

$ 9.3 million), excluding any unrealized gains or losses related to changes in foreign currency exchange rates.

At December 31, 2020, the investment accounted for under the equity method represented an investment in AccuRisk Holdings LLC (“AccuRisk”), a Chicago, Illinois-based managing general underwriter focused on employee and health insurance benefits.

During the three months ended March 31, 2021, the Company sold its investment in AccuRisk and realized a gain (pre-tax) of $ 14.2 million.

Derivative instruments include warrants issued by certain entities granting the Company the right, but not the obligation, to purchase shares at a specified price on or before the maturity date.

During the three months ended March 31, 2021, and the year ended December 31, 2020, warrants were issued to the Company in connection with certain Innovations-related investments.

The Company has not designated these warrants as hedging instruments.

The Company’s maximum exposure to loss relating to these warrants is limited to the warrants’ carrying amount.

Fair Value Hierarchy

8 unchanged sentences

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.

This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

As of September 30, 2020 and December 31, 2019, the Company did not carry any investments at fair value that were assigned a Level within the fair value hierarchy.

The Company’s investment in the related party investment fund is measured at

The term “unobservable inputs” includes certain pricing models, discounted cash flow methodologies, and similar techniques.

Return to table of contents

fair value using the net asset value practical expedient, and is therefore not classified within the fair value hierarchy.

(See Note 3 for further details.)

The Company values its derivative instruments using the Black-Scholes option pricing model on the basis of Level 3 inputs.

The Company uses the carrying value of the underlying stock as an input in the option pricing model.

The underlying stock does not have a readily determinable fair value.

Its carry value is determined based on its original cost minus impairment, if any, plus or minus changes resulting from observable price changes.

The other assumptions applied to the option pricing model include a risk-free rate of 0.50 % and estimated volatility of 50 %.

The carrying value of the derivative instruments represents the fair value.

For the derivative instruments valued on the basis of Level 3 inputs, any change in unrealized gains or losses is included in the caption “Net investment income (loss)” in the Company’s consolidated statements of operations.

At March 31, 2021, and December 31, 2020, the Company did not carry any other investments at fair value with an assigned Level within the fair value hierarchy.

The Company’s investment in the related party investment fund is measured at fair value using the net asset value practical expedient and is therefore not classified within the fair value hierarchy.

(See Note 3 for further details on the related party investment fund.)

Financial Instruments Disclosed, But Not Carried, at Fair Value

The captions “Notes receivable (net of allowance for expected credit loss)” and “Convertible senior notes payable” represent financial instruments that are carried at amortized cost.

The carrying values of the notes receivable (net of allowance for expected credit loss) approximate their fair values, which the Company has determined on the basis of Level 3 inputs.

The caption “Convertible senior notes payable” represents financial instruments that the Company carries at amortized cost.

The fair value of the convertible senior notes payable is estimated based on the bid price observed in an inactive market for the identical instrument (Level 2 input) (see Note 7).

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

At September 30, 2020, the loss and loss adjustment expenses reserves included estimated amounts for several catastrophe events.

At March 31, 2021, the loss and loss adjustment expense reserves included estimated amounts for several catastrophe events.

For significant catastrophe events, including, but not limited to, hurricanes, typhoons, floods, wildfires, and pandemics, loss reserves are generally established based on loss payments and case reserves reported by clients when, and if, received.

1 unchanged sentence

• estimates communicated by ceding companies;

• industry data;

• information received from clients, brokers, and loss adjusters;

• an understanding of the underlying business written and its exposures to catastrophe event-related losses;

• industry data;

• catastrophe scenario modelling software;

• management’s judgement.

The COVID-19 pandemic is unprecedented.

Therefore, the Company does not have previous loss experience on which to base its estimates for loss and loss adjustment expenses related to the COVID-19 pandemic.

The determination of the Company's estimate was based on:

The COVID-19 pandemic is unprecedented, and the Company does not have previous loss experience on which to base the associated estimate for loss and loss adjustment expenses.

The Company based its estimate on the following:

• a review of in-force treaties that may provide coverage and incur losses;

• catastrophe and scenario modeling analyses and results shared by cedents;

• catastrophe and scenario modelling analyses and results shared by cedents;

• preliminary loss estimates received from clients and their analysts and loss adjusters;

1 unchanged sentence

• management’s judgement.

Significant assumptions on which the Company's estimates of reserves for the COVID-19 pandemic losses and loss adjustment expenses are based include:

Significant assumptions which served as the basis for the Company's estimates of reserves for the COVID-19 pandemic losses and loss adjustment expenses include:

• the scope of coverage provided by the underlying policies, particularly those that provide for business interruption coverage;

• the regulatory, legislative or judicial actions and social impact that could influence contract interpretations across the insurance industry;

• the extent of economic contraction caused by the COVID-19 pandemic, particularly in the United States;

• the regulatory, legislative, and judicial actions that could influence contract interpretations across the insurance industry;

• the extent of economic contraction caused by the COVID-19 pandemic and associated actions, particularly in the United States;

• the ability of the cedents and insured to mitigate some or all of their losses.

While the Company believes its estimate of loss and loss adjustment expense reserves for the COVID-19 pandemic is adequate as of September 30, 2020 based on available information, actual losses may ultimately differ materially from the Company's current estimates.

The Company will continue to monitor the appropriateness of its assumptions as new information becomes available and will adjust its estimates accordingly.

Such adjustments may be material to the Company's results of operations and financial condition.

There were no significant changes in the actuarial methodology or reserving process related to the Company’s loss and loss adjustment expense reserves for the nine months ended September 30, 2020.

While the Company believes its estimate of loss and loss adjustment expense reserves for the COVID-19 pandemic is adequate as of March 31, 2021, based on available information, actual losses may ultimately differ materially from the Company's current estimates.

The Company will continue to monitor the appropriateness of its assumptions as new information

Return to table of contents

At September 30, 2020 and December 31, 2019, loss and loss adjustment expense reserves were composed of the following:

September 30, 2020 December 31, 2019

becomes available and will adjust its estimates accordingly.

Such adjustments may be material to the Company's results of operations and financial condition.

The Company made no significant changes in the actuarial methodology or reserving process related to its loss and loss adjustment expense reserves for the three months ended March 31, 2021.

At March 31, 2021 and December 31, 2020, loss and loss adjustment expense reserves were composed of the following:

March 31, 2021 December 31, 2020

($ in thousands)

3 unchanged sentences

A summary of changes in outstanding loss and loss adjustment expense reserves for all lines of business consolidated

for the nine months ended September 30, 2020 and 2019 is as follows:

for the three months ended March 31, 2021 and 2020 is as follows:

Consolidated 2021 2020

12 unchanged sentences

Foreign currency revaluation 145 ( 2,235 )

Net balance at September 30 461,821 437,900

Net balance at March 31 497,834 432,574

Losses recoverable 15,009 23,095

Gross balance at September 30 $ 481,770 $ 479,435

Gross balance at March 31 $ 512,843 $ 455,669

Return to table of contents

The changes in the outstanding loss and loss adjustment expense reserves for health claims for the nine months ended September 30, 2020 and 2019 are as follows:

The changes in the outstanding loss and loss adjustment expense reserves for health claims for the three months ended March 31, 2021 and 2020 are as follows:

Health 2021 2020

12 unchanged sentences

Foreign currency revaluation — —

Net balance at September 30 12,994 14,810

Net balance at March 31 17,899 16,264

Losses recoverable — —

Gross balance at September 30 $ 12,994 $ 14,810

For the nine months ended September 30, 2020, the estimate of net losses incurred relating to prior accident years increased by $ 5.4 million, primarily in relation to certain general liability, health and multi-line contracts, partially offset by favorable loss development on professional liability contracts.

The net financial impact of the prior year unfavorable loss development for the nine months ended September 30, 2020, taking into account earned reinstatement premiums assumed and ceded, adjustments to assumed and ceded acquisition costs and adjustments to deposit accounted contracts, was a loss of $ 4.8 million.

For the nine months ended September 30, 2019, the estimate of net losses incurred relating to prior accident years increased by $ 30.2 million that originated primarily from certain private passenger automobile contracts.

These unanticipated automobile losses were the result of adverse court rulings that affected a significant number of loss events that occurred in Florida between 2015 and early 2018, including many claims that had previously been considered closed.

The net financial impact of the prior year adverse loss development for the nine months ended September 30, 2019 was a loss of $ 27.7 million.

The Company, from time to time, purchases retrocessional coverage for one or more of the following reasons:

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

Gross balance at March 31 $ 17,899 $ 16,264

For the three months ended March 31, 2021, the estimate of net losses incurred relating to prior accident years decreased by $ 0.1 million.

For the three months ended March 31, 2020, the estimate of net losses incurred relating to prior accident years increased by $ 4.2 million primarily in relation to certain general liability, health, and multi-line contracts.

From time to time, the Company purchases retrocessional coverage for one or more of the following reasons:

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

Loss and loss adjustment expenses recoverable from retrocessionaires are recorded as assets.

For the three and nine months ended September 30, 2020, the Company’s earned ceded premiums were $ 1.7 million and $ 3.2 million, respectively (2019:

$ 22.0 million and $ 65.8 million, respectively).

For the three and nine months ended September 30, 2020, loss and loss adjustment expenses incurred of $ 88.1 million and $ 252.9 million, respectively (2019:

$ 93.0 million and $ 294.3 million, respectively), reported on the condensed consolidated statements of operations are net of loss and loss expenses recovered and recoverable of $ 2.5 million and $ 6.2 million (2019:

$ 13.9 million and $ 56.2 million).

For the three months ended March 31, 2021, the Company’s earned ceded premiums were $ 0.1 million (2020:

$ 1.0 million).

For the three months ended March 31, 2021, loss and loss adjustment expenses incurred of $ 97.7 million (2020:

$ 75.7 million), reported on the condensed consolidated statements of operations are net of loss and loss expenses recovered of $ 17.0 thousand (2020:

$ 3.5 million).

Retrocession contracts do not relieve the Company from its obligations to the insureds.

Failure of retrocessionaires to honor their obligations could result in losses to the Company.

At September 30, 2020, the Company’s loss reserves recoverable consisted of (i) $ 15.0 million (December 31, 2019:

At March 31, 2021, the Company’s loss reserves recoverable consisted of (i) $ 11.3 million (December 31, 2020:

$ 12.6 million) from unrated retrocessionaires, of which $ 10.6 million (December 31, 2020:

2 unchanged sentences

The Company regularly evaluates its net credit exposure to assess the ability of the retrocessionaires to honor their respective obligations.

At September 30, 2020, the Company had recorded an allowance for expected credit losses of $ 0.1 million (December 31, 2019:

Return to table of contents

At March 31, 2021, the Company had recorded an allowance for expected credit losses of $ 47.0 thousand (December 31, 2020:

$ 47.0 thousand).

SENIOR CONVERTIBLE NOTES

2 unchanged sentences

Note holders have the option, under certain conditions, to redeem the Notes prior to maturity.

Return to table of contents

If the Notes are redeemed by the holder, the Company shall have the option to settle the conversion obligation in cash, ordinary shares of the Company, or a combination thereof pursuant to the terms of the indenture governing the Notes.

The Company has therefore bifurcated the Notes into liability and equity components.

At September 30, 2020, the Company’s share price was lower than the conversion price of $ 17.19 per share.

At March 31, 2021, the Company’s share price was lower than the conversion price of $ 17.19 per share.

The Company’s effective borrowing rate for non-convertible debt at the time of issuance of the Notes was estimated to be 6.0 %, which equated to an $ 8.2 million discount.

As of September 30, 2020 and December 31, 2019, the unamortized debt discount was $ 4.7 million and $ 5.9 million, respectively, and is expected to be amortized through the maturity date.

At March 31, 2021 and December 31, 2020, the unamortized debt discount was $ 3.8 million and $ 4.2 million, respectively, which the Company expects to amortize through the maturity date.

The debt discount also represents the portion of the Note’s principal amount allocated to the equity component.

The Company incurred issuance costs in connection with the issuance of the Notes.

As of September 30, 2020, the unamortized portion of these costs attributed to the debt component was $ 1.8 million (December 31, 2019:

$ 2.3 million), which are expected to be amortized through the maturity date.

At March 31, 2021, the unamortized portion of these costs attributed to the debt component was $ 1.5 million (December 31, 2020:

$ 1.6 million), which the Company expects to amortize through the maturity date.

The portion of these issuance costs attributed to the equity component was netted against the gross proceeds allocated to equity, resulting in $ 7.9 million being included in the caption “Additional paid-in capital” in the Company’s condensed consolidated balance sheets.

The carrying value of the Notes as of September 30, 2020, including accrued interest of $ 0.7 million, was $ 94.2 million (December 31, 2019:

The carrying value of the Notes at March 31, 2021, including accrued interest of $ 0.7 million, was $ 95.3 million (December 31, 2020:

$ 95.8 million).

As of September 30, 2020, the fair value of the Notes was estimated to be $ 80.1 million (December 31, 2019:

At March 31, 2021, the the Company estimated the fair value of the Notes to be $ 92.5 million (December 31, 2020:

$ 83.6 million) (see Note 4 Financial Instruments).

For the three and nine months ended September 30, 2020, the Company recognized interest expense of $ 1.6 million and $ 4.7 million (2019:

$ 1.6 million and $ 4.7 million) in connection with the interest coupon, amortization of issuance costs and amortization of the discount.

The Company was in compliance with all covenants relating to the Notes as of September 30, 2020 and December 31, 2019.

For the three months ended March 31, 2021, the Company recognized interest expense of $ 1.5 million (2020:

$ 1.6 million) in connection with the interest coupon, amortization of issuance costs, and amortization of the discount.

The Company was in compliance with all covenants relating to the Notes at March 31, 2021, and December 31, 2020.

SHARE CAPITAL

As of September 30, 2020, 293,939 (December 31, 2019:

555,805 ) Class A ordinary shares remained available for future issuance under the Company’s stock incentive plan.

The stock incentive plan is administered by the Compensation Committee of the Board of Directors.

On October 29, 2020, the Company’s shareholders approved an amendment to the stock incentive plan to increase the number of Class A ordinary shares available for issuance by 3.0 million shares from 5.0 million to 8.0 million.

At March 31, 2021, 3,101,738 (December 31, 2020:

3,474,888 ) Class A ordinary shares remained available for future issuance under the Company’s stock incentive plan.

The Compensation Committee of the Board of Directors administers the Company’s stock incentive plan.

The Board has adopted a share repurchase plan.

The timing of such repurchases and actual number of shares repurchased will depend on a variety of factors including price, market conditions and applicable regulatory and corporate requirements.

The timing of such repurchases and the actual number of shares repurchased will depend on various factors including price, market conditions and applicable regulatory and corporate requirements.

On March 26, 2020, the Board of Directors extended the share repurchase plan to June 30, 2021, and increased the number of shares authorized to be repurchased to 5.0 million Class A ordinary shares or securities convertible into Class A ordinary shares in the open market, through privately negotiated transactions or Rule 10b5-1 stock trading plans.

In addition, the Board of Directors also authorized the Company to repurchase up to $ 25.0 million aggregate face amount of the Company’s 4.00 % Convertible Senior Notes due 2023 (the “Notes”) in privately negotiated transactions, in open market repurchases or pursuant to one more tender offers.

The Company is not required to repurchase any of the Class A ordinary shares or the Notes and the repurchase plans may be modified, suspended or terminated at the election of our Board of Directors at any time without prior notice.

During the nine months ended September 30, 2020, 1.9 million Class A ordinary shares were repurchased by the Company (2019:

As of September 30, 2020, 3.1 million Class A ordinary shares and $ 25.0 million of the Notes, remained available for repurchase under the repurchase plans.

The Company is not required to repurchase any of the Class A ordinary shares or the Notes.

The repurchase plans may be modified, suspended, or terminated at the election of our Board of Directors at any time without prior notice.

The Company did not repurchase any Class A ordinary shares during the three months ended March 31, 2021 or 2020.

At March 31, 2021, 2.5 million Class A ordinary shares and $ 25.0 million of the Notes remained available for repurchase under the repurchase plans.

All Class A ordinary shares repurchased are canceled immediately upon repurchase.

Return to table of contents

The following table is a summary of voting ordinary shares issued and outstanding:

Nine months ended September 30 Nine months ended September 30

The following table is a summary of ordinary shares issued and outstanding:

Three months ended March 31 Three months ended March 31

Class A Class B Class A Class B

3 unchanged sentences

Balance – end of period 28,595,813 6,254,715 31,179,529 6,254,715

Return to table of contents

Additional paid-in capital includes the premium per share paid by the subscribing shareholders for Class A and B ordinary shares, which have a par value of $ 0.10 each.

It also includes the earned portion of the grant-date fair value of share-based awards that have not yet vested.

It also includes the earned portion of the grant-date fair value of share-based awards.

SHARE-BASED COMPENSATION

The Company has a stock incentive plan for directors, employees and consultants that is administered by the Compensation Committee of the Board of Directors.

The Company has a stock incentive plan for directors, employees, and consultants administered by the Compensation Committee of the Board of Directors.

Employee and Director Restricted Shares

For the nine months ended September 30, 2020, 306,264 (2019:

For the three months ended March 31, 2021, 334,312 (2020:

306,264 ) Class A ordinary shares were issued to employees pursuant to the Company’s stock incentive plan.

2 unchanged sentences

During the vesting period, the holder of the restricted shares retains voting rights and is entitled to any dividends declared by the Company.

For the nine months ended September 30, 2020, 145,089 (2019:

326,240 ) Class A ordinary shares were issued to the Company’s Chief Executive Officer (“CEO”) pursuant to the Company’s stock incentive plan.

These shares contain performance and service conditions and certain restrictions relating to, among other things, vesting, forfeiture in the event of termination of employment and transferability.

These restricted shares cliff vest 5 years after the date of issuance, subject to the performance condition being met and the grantee’s continued service with the Company.

During the vesting period, the holder of the restricted shares retains voting rights and is entitled to any dividends declared by the Company.

The weighted average grant date fair value of these restricted shares subject to performance conditions was $ 6.72 (2019:

$ 10.84 ) per share.

On July 30, 2020, the Company accelerated the vesting of a portion of the CEO’s restricted shares resulting in 72,545 shares vesting immediately.

The remaining restricted shares are still subject to performance and service conditions.

As the performance conditions associated with these restricted shares have not been met, no compensation cost was recognized relating to the unvested shares for the nine months ended September 30, 2020 and 2019.

For the nine months ended September 30, 2020, 210,109 (2019:

27,386 ) restricted shares were forfeited by employees who left the Company and prior to the expiration of the applicable vesting periods.

For the nine months ended September 30, 2020, $ 0.7 million stock compensation expense (2019:

$ 0.2 million) relating to the forfeited restricted shares was reversed.

The Company recorded $ 0.6 million of share-based compensation expense, net of forfeiture reversals, relating to restricted shares for the nine months ended September 30, 2020 (2019:

For the three months ended March 31, 2021, 19,285 (2020:

18,701 ) restricted shares were forfeited by grantees.

For the three months ended March 31, 2021, the Company reversed $ 0.1 million of stock compensation expense (2020:

$ 0.1 million) in relation to the forfeited restricted shares.

The Company recorded $ 0.5 million of share-based compensation expense, net of forfeiture reversals, relating to restricted shares for the three months ended March 31, 2021 (2020:

$ 0.6 million).

As of September 30, 2020, there was $ 2.2 million (December 31, 2019:

$ 2.7 million) of unrecognized compensation cost relating to non-vested restricted shares (excluding CEO’s restricted shares with performance conditions) which are expected to be recognized over a weighted average period of 2.4 years (December 31, 2019:

For the nine months ended September 30, 2020, the total fair value of restricted shares vested was $ 2.8 million (2019:

At March 31, 2021, there was $ 3.6 million (December 31, 2020:

$ 1.9 million) of unrecognized compensation cost relating to non-vested restricted shares (excluding any restricted shares with performance conditions currently not expected to be met), which the Company expects to recognize over a weighted-average period of 2.4 years (December 31, 2020:

For the three months ended March 31, 2021, the total fair value of restricted shares vested was $ 1.1 million (2020:

$ 2.1 million).

Return to table of contents

The following table summarizes the activity for unvested outstanding restricted share awards during the nine months ended September 30, 2020:

The following table summarizes the activity for unvested outstanding restricted share awards during the three months ended March 31, 2021:

shares Weighted

3 unchanged sentences

Forfeited ( 19,285 ) 8.30

Balance at September 30, 2020 878,498 $ 9.88

Balance at March 31, 2021 946,350 $ 8.88

Employee and Director Stock Options

For the nine months ended September 30, 2020, no Class A ordinary share purchase options were granted or exercised by directors or employees, while 40,000 (2019:

60,000 ) stock options expired and 80,000 (2019:

80,000 ) stock options vested.

For the three months ended March 31, 2021, no Class A ordinary share purchase options were granted or exercised by directors or employees, and no stock options expired or vested.

When stock options are granted, the Company reduces the corresponding number from the shares authorized for issuance as part of the Company’s stock incentive plan.

The total compensation cost expensed relating to stock options for the nine months ended September 30, 2020 was $ 0.5 million (2019:

The Board of Directors does not currently anticipate that the Company will declare any dividends during the expected term of the options.

The Company uses graded vesting for expensing employee stock options.

The total compensation cost expensed relating to stock options for the three months ended March 31, 2021, was $ 0.1 million (2020:

$ 0.2 million).

At September 30, 2020, the total compensation cost related to non-vested options not yet recognized was $ 0.8 million (December 31, 2019:

At March 31, 2021, the total compensation cost related to non-vested options not yet recognized was $ 0.5 million (December 31, 2020:

$ 0.7 million), which will be recognized over a weighted-average period of 1.7 years (December 31, 2020:

1.8 years) assuming the grantee completes the service period for vesting of the options.

At September 30, 2020 and December 31, 2019, there were 0.8 million and 0.9 million stock options outstanding, respectively, with a weighted average exercise price of $ 22.22 and $ 22.68 per share, respectively and weighted average grant date fair value of $ 10.25 and $ 10.25 per share, respectively.

The weighted average remaining contractual term of the stock options was 5.3 years and 5.8 years, at September 30, 2020 and December 31, 2019, respectively.

Return to table of contents

At March 31, 2021 and December 31, 2020, 0.8 million stock options were outstanding, with a weighted average exercise price of $ 22.22 per share and a weighted average grant date fair value of $ 10.25 per share.

The weighted-average remaining contractual term of the stock options was 4.8 years and 5.1 years, at March 31, 2021, and December 31, 2020, respectively.

Employee Restricted Stock Units

3 unchanged sentences

On the vesting date, the Company converts each RSU into one Class A ordinary share and issues new Class A ordinary shares from the shares authorized for issuance as part of the Company’s stock incentive plan.

For the nine months ended September 30, 2020, 60,622 (2019:

48,535 ) RSUs were issued to employees pursuant to the Company’s stock incentive plan.

For the nine months ended September 30, 2020, no (2019:

24,165 ) RSUs were forfeited by employees who left the Company prior to the expiration of the applicable vesting periods.

The Company recorded $ 0.3 million of share-based compensation expense, net of forfeitures, relating to RSUs for the nine months ended September 30, 2020 (2019:

For the three months ended March 31, 2021, the Company issued 58,123 (2020:

60,622 ) RSUs to employees pursuant to the Company’s stock incentive plan.

For the three months ended March 31, 2021 and 2020, no RSUs were forfeited.

The Company recorded $ 0.1 million of share-based compensation expense relating to RSUs for the three months ended March 31, 2021 (2020:

$ 0.1 million).

Employee RSU activity during the nine months ended September 30, 2020 was as follows:

Employee RSU activity during the three months ended March 31, 2021 was as follows:

RSUs Weighted

3 unchanged sentences

Forfeited — —

Balance at September 30, 2020 116,722 $ 9.60

Balance at March 31, 2021 154,134 $ 8.59

For the three months ended March 31, 2021 and 2020, the combined stock compensation expense (net of forfeitures) included in the caption “General and administrative expenses” in the Company’s statements of operations, was $ 0.8 million and $ 0.9 million, respectively.

Performance Restricted Shares

Prior to 2021, the Company issued Class A ordinary shares to the Chief Executive Officer (“CEO”) pursuant to the Company’s stock incentive plan.

These shares contain performance and service conditions and certain restrictions relating to, among other things, vesting, forfeiture in the event of termination of the CEO’s employment, and transferability.

These restricted shares cliff vest five years after the date of issuance, subject to the performance condition being met and the CEO’s continued service with the Company.

The weighted average grant date fair value of these restricted shares subject to performance conditions was $ 6.72 per share.

At March 31, 2021, 193,149 unvested performance restricted shares were outstanding (December 31, 2020:

As the performance conditions associated with these restricted shares have not been met, the Company recognized no compensation cost relating to the unvested shares for the three months ended March 31, 2021 and 2020.

At March 31, 2021, the Company recorded a gross deferred tax asset of $ 3.7 million (2020:

$ 3.5 million) and a deferred tax asset valuation allowance of $ 3.2 million (2020:

$ 3.0 million).

The net deferred tax asset is included in the caption “Other assets” in the Company’s condensed consolidated balance sheets.

The Company has determined that it is more likely than not that it will fully realize the recorded deferred tax asset (net of the valuation allowance) in the future.

The Company based this determination on the expected timing of the reversal of the temporary differences, and the likelihood of generating sufficient taxable income to realize the future tax benefit.

Return to table of contents

For the nine months ended September 30, 2020 and 2019, the combined stock compensation expense (net of forfeitures), which was included in the caption “General and administrative expenses” in the Company’s statements of operations, was $ 1.4 million and $ 2.9 million, respectively.

The following table sets forth our current and deferred income tax benefit (expense) on a consolidated basis for the three months ended March 31, 2021 and 2020:

Three months ended March 31

($ in thousands)

Current tax (expense) benefit $ ( 3,734 ) $ 171

Deferred tax (expense) benefit 184 —

Increase in deferred tax valuation allowance ( 184 ) ( 595 )

Income tax (expense) benefit $ ( 3,734 ) $ ( 424 )

For the three months ended March 31, 2021, the income tax expense of $ 3.7 million resulted from Verdant’s gain on the sale of its AccuRisk investment.

RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

DME, DME II and DME Advisors are related to the Company and each is an affiliate of David Einhorn, Chairman of the Company’s Board of Directors.

The Company has entered into the SILP LPA with DME II.

DME, DME II, and DME Advisors are each an affiliate of David Einhorn, Chairman of the Company’s Board of Directors, and therefore, are related parties to the Company.

The Company has entered into the SILP LPA (as described in Note 3 of the condensed consolidated financial statements).

DME II receives a performance allocation equal to (with capitalized terms having the meaning provided under the SILP LPA) (a) 10 % of the portion of the Positive Performance Change for each limited partner’s capital account that is less than or equal to the positive balance in such limited partner’s Carryforward Account, plus (b) 20 % of the portion of the Positive Performance Change for each limited partner’s capital account that exceeds the positive balance in such limited partner’s Carryforward Account.

The Carryforward Account for Greenlight Re and GRIL include the amount of losses that were to be recouped under the Joint Venture as well as any loss generated on the assets invested in SILP, subject to adjustments for redemptions.

The Carryforward Account for Greenlight Re and GRIL includes the amount of losses that were to be recouped under the Joint Venture as well as any loss generated on the assets invested in SILP, subject to adjustments for redemptions.

The loss carry-forward provision contained in the SILP LPA allows DME II to earn a reduced performance allocation of 10 % of profits in years subsequent to any year in which SILP has incurred a loss until all losses are recouped, and an additional amount equal to 150 % of the loss is earned.

On February 26, 2019, effective as of September 1, 2018, the Company entered into Amendment No.

1 to the SILP LPA.

The amendment was intended to revise the mechanics for calculating the Carryforward Account and Performance Allocation (as defined in the LPA) to take into account withdrawals from and subsequent recontributions of capital to SILP, consistent with the treatment under the Joint Venture.

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

1 unchanged sentence

The IAA has an initial term ending on August 31, 2023, subject to an automatic extension for successive three-year terms.

The Company has entered into a letter agreement with DME Advisors and DME II whereby during the period from June 1, 2019 to June 30, 2021, cash, cash equivalents and/or U.S government issued securities will not be subject to any management fee or performance allocation.

For a detailed breakdown of management fees and performance compensation for the three and nine months ended September 30, 2020 and 2019, refer to Note 3 of the condensed consolidated financial statements.

For a detailed breakdown of management fees and performance compensation for the three months ended March 31, 2021 and 2020, refer to Note 3 of the condensed consolidated financial statements.

Pursuant to the SILP LPA and the IAA, the Company has agreed to indemnify DME, DME II, and DME Advisors for any expense, loss, liability, or damage arising out of any claim asserted or threatened in connection with DME Advisors serving as the Company’s or SILP’s investment advisor.

The Company will reimburse DME, DME II and DME Advisors for reasonable costs and expenses of investigating and/or defending such claims, provided such claims were not caused due to gross negligence, breach of contract or misrepresentation by DME, DME II or DME Advisors.

There were no indemnification amounts incurred by the Company during any of the periods presented.

The Company will reimburse DME, DME II and DME Advisors for reasonable costs and expenses of investigating and defending such claims provided such claims were not caused due to gross negligence, breach of contract, or misrepresentation by DME, DME II, or DME Advisors.

The Company incurred no indemnification amounts during the periods presented.

Green Brick Partners, Inc.

1 unchanged sentence

(“GRBK”), a publicly traded company.

As of September 30, 2020, SILP, along with certain affiliates of DME Advisors, collectively owned 47.6 % of the issued and outstanding common shares of GRBK.

At March 31, 2021, SILP, along with certain affiliates of DME Advisors, collectively owned 34.4% of the issued and outstanding common shares of GRBK.

Under applicable securities laws, DME Advisors may be limited at times in its ability to trade GRBK shares on behalf of SILP.

Service Agreement

Return to table of contents

The Company has entered into a service agreement with DME Advisors, pursuant to which DME Advisors provides certain investor relations services to the Company for compensation of five thousand dollars per month (plus expenses).

The agreement is automatically renewed annually until terminated by either the Company or DME Advisors for any reason with 30 days prior written notice to the other party.

Return to table of contents

Collateral Assets Investment Management Agreement

4 unchanged sentences

Letters of Credit and Trusts

At September 30, 2020, the Company had one letter of credit facility, which automatically renews each year unless terminated by either party in accordance with the applicable required notice period:

At March 31, 2021, the Company had one letter of credit facility, which automatically renews each year unless terminated by either party in accordance with the applicable required notice period:

Maximum Facility Limit Termination Date Notice period required for termination

($ in thousands)

Citibank Europe plc $ 275,000 August 20, 2021 120 days prior to termination date

Effective August 26, 2020, the Company amended the credit facility to reduce the maximum facility limit from $ 400.0 million to $ 275.0 million.

As of September 30, 2020, an aggregate amount of $ 133.0 million (December 31, 2019:

Citibank Europe plc $ 275,000 August 20, 2021 120 days before the termination date

At March 31, 2021, an aggregate amount of $ 141.3 million (December 31, 2020:

$ 135.3 million) in letters of credit were issued under the credit facility.

As of September 30, 2020, total cash and cash equivalents with a fair value in the aggregate of $ 135.6 million (December 31, 2019:

$ 213.4 million) were pledged as collateral against the letters of credit issued and included in the caption “Restricted cash and cash equivalents” in the Company’s condensed consolidated balance sheets.

At March 31, 2021, the Company had pledged total cash and cash equivalents with a fair value in the aggregate of $ 142.4 million (December 31, 2020:

$ 137.6 million) as collateral against the letters of credit issued and included in the caption “Restricted cash and cash equivalents” in the Company’s condensed consolidated balance sheets.

The credit facility contains customary events of default and restrictive covenants, including but not limited to limitations on liens on collateral, transactions with affiliates, mergers and sales of assets, as well as solvency and maintenance of certain minimum pledged equity requirements, and restricts issuance of any debt without the consent of the letter of credit provider.

Additionally, if an event of default exists, as defined in the letter of credit facility, Greenlight Re will be prohibited from paying dividends to its parent company.

The Company was in compliance with all the covenants of the credit facility as of September 30, 2020 and December 31, 2019.

The Company was in compliance with all the covenants of the credit facility at March 31, 2021 and December 31, 2020.

The Company has also established regulatory trust arrangements for certain cedents.

As of September 30, 2020, collateral of $ 587.5 million (December 31, 2019:

At March 31, 2021, collateral of $ 555.3 million (December 31, 2020:

$ 607.8 million) was provided to cedents in the form of regulatory trust accounts and included in the caption “Restricted cash and cash equivalents” in the Company’s condensed consolidated balance sheets.

Lease Obligations

Greenlight Re has entered into lease agreements for office space in the Cayman Islands that expires on December 31, 2020.

Greenlight Re has entered into lease agreements for office space in the Cayman Islands that expired on December 31, 2020.

The Company and the landlord have agreed to extend the lease until December 31, 2021, while negotiating a new lease agreement.

The Company has determined that the current arrangement qualifies as a short-term lease.

The short-term lease expense for the three and nine months ended September 30, 2020 was $ 0.4 million (2019:

The short-term lease expense for the three months ended March 31, 2021 was $ 0.1 million (2020:

$ 0.1 million).

GRIL has entered into a lease agreement for office space in Dublin, Ireland.

Under the terms of this lease agreement, GRIL is committed to minimum annual rent payments denominated in Euros approximating € 0.1 million until May 2021, and adjusted to the prevailing market rates for the subsequent five-year term.

GRIL has the option to terminate the lease agreement in 2021.

The Company has determined that this agreement qualifies as an operating lease under GAAP.

As of September 30, 2020 the Company has recorded a right-of-use asset and a corresponding lease liability of $ 0.1 million (December 31, 2019:

$ 0.2 million).

The operating lease expense for the three and nine months ended September 30, 2020 and 2019 was insignificant.

Included in the “Schedule of Commitments and Contingencies,” below, are the net minimum lease payment obligations relating to this lease as of September 30, 2020.

Under the terms of this lease agreement, GRIL is committed to minimum annual rent payments denominated in Euros approximating € 0.1 million until May 2021.

GRIL has exercised its option to terminate the lease agreement effective May 2021 and is evaluating alternative office space in Dublin.

Return to table of contents

6 unchanged sentences

$ 2,386 $ 4,000 $ 104,000 $ — $ — $ — $ 110,386

From time to time in the normal course of business, the Company may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation, the outcomes of which determine the rights and obligations under the Company’s reinsurance contracts and other contractual agreements.

From time to time in the normal course of business, the Company may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation.

The outcomes of these procedures determine the rights and obligations under the Company’s reinsurance contracts and other contractual agreements.

In some disputes, the Company may seek to enforce its rights under an agreement or to collect funds owed to it.

In other matters, the Company may resist attempts by others to collect funds or enforce alleged rights.

While the final outcome of legal disputes cannot be predicted with certainty, the Company does not believe that any existing dispute, when finally resolved, will have a material adverse effect on the Company’s business, financial condition or operating results.

While the Company cannot predict the outcome of legal disputes with certainty, the Company does not believe that any existing dispute, when finally resolved, will have a material adverse effect on the Company’s business, financial condition, or operating results.

Return to table of contents

SEGMENT REPORTING

The Company manages its business on the basis of one operating segment, Property & Casualty Reinsurance.

The following tables provide a breakdown of the Company’s gross premiums written by line of business and by geographic area of risks insured for the periods indicated:

The Company has one operating segment, Property & Casualty Reinsurance.

Substantially all of the Company’s business is sourced through reinsurance brokers.

The following table sets forth the premiums generated through our largest brokers and their subsidiaries and affiliates:

Gross Premiums Written by Line of Business

Three months ended September 30 Nine months ended September 30

2020 2019 2020 2019

($ in thousands) ($ in thousands)

Three months ended March 31

($ in thousands)

Commercial $ 2,148 1.3 % $ 2,965 2.7 %

15 unchanged sentences

Gross Premiums Written by Geographic Area of Risks Insured

Three months ended September 30 Nine months ended September 30

2020 2019 2020 2019

($ in thousands) ($ in thousands)

Three months ended March 31

($ in thousands)

and Caribbean $ 104,854 61.7 % $ 86,050 78.4 %

Worldwide (1)

Europe $ — — % $ — — % $ — — % $ ( 13 ) — %

Asia $ 2,060 1.5 % $ 2,346 2.1 % $ 4,411 1.2 % $ 2,831 0.7 %

62,991 37.1 22,796 20.7

1,170 0.7 941 0.9

$ 169,935 100.0 % $ 109,787 100.0 %

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

SUBSEQUENT EVENTS

Subsequent to September 30, 2020, the Company agreed to settle a promissory note that had been entered into with a reinsurance counterparty.

The Company’s amortized cost associated with the promissory note at September 30, 2020 was $ 13.3 million, which was included in the caption “Notes receivable (net of allowance for expected credit loss).” In connection with this settlement, the Company received $ 19.1 million, resulting in a gain of $ 5.8 million that will be recognized in the fourth quarter of 2020.

Return 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-Q

Item 1. Financial Statements