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Item 1. Financial Statements

2021-08-03 compared with 2021-05-05 · 189 added, 163 removed, 566 unchanged (38% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2021 and December 31, 2020

June 30, 2021 and December 31, 2020

(expressed in thousands of U.S.

dollars, except per share and share amounts)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Investment in related party investment fund $ 175,136 $ 166,735

39 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2021 and 2020

For the three and six months ended June 30, 2021 and 2020

(expressed in thousands of U.S.

dollars, except per share and share amounts)

Three months ended March 31

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

Gross premiums written $ 141,579 $ 116,689 $ 311,514 $ 226,476

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Net premiums earned 132,479 108,414 267,875 219,435

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

Income (loss) from investment in related party investment fund (net of related party expenses of $ 672 and $ 1,973 (three and six months ended June 30, 2020:

$ 616 and $ 1,278 , respectively))

( 2,006 ) 1,609 2,018 ( 40,517 )

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the three months ended March 31, 2021 and 2020

For the three and six months ended June 30, 2021 and 2020

(expressed in thousands of U.S.

Three months ended March 31

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

Ordinary share capital

1 unchanged sentence

Issue of Class A ordinary shares, net of forfeitures 5 — 38 44

Repurchase of Class A ordinary shares ( 73 ) ( 116 ) ( 73 ) ( 116 )

Balance - end of period 3,417 3,627 3,417 3,627

1 unchanged sentence

Balance - beginning of period 489,218 504,375 488,488 503,547

Repurchase of Class A ordinary shares ( 6,675 ) ( 7,656 ) ( 6,675 ) ( 7,656 )

Share-based compensation expense 822 840 1,552 1,668

3 unchanged sentences

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

— — — ( 886 )

Net income (loss) 628 ( 63 ) 7,127 ( 40,333 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2021 and 2020

For the six months ended June 30, 2021 and 2020

(expressed in thousands of U.S.

Three months ended March 31

Six months ended June 30

Cash provided by (used in) operating activities

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Net cash provided by (used in) investing activities 17,153 21,322

Financing activities

Repurchase of Class A ordinary shares ( 6,748 ) ( 7,772 )

Net cash provided by (used in) financing activities ( 6,748 ) ( 7,772 )

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

4 unchanged sentences

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

Income tax paid in cash 3,700 —

The accompanying Notes to the Condensed Consolidated Financial Statements are an

3 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

June 30, 2021

ORGANIZATION AND BASIS OF PRESENTATION

1 unchanged sentence

(“GLRE”) was incorporated as an exempted company under the Companies Law of the Cayman Islands on July 13, 2004.

GLRE’s principal wholly-owned subsidiary, Greenlight Reinsurance, Ltd.

GLRE’s wholly-owned subsidiary, Greenlight Reinsurance, Ltd.

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

17 unchanged sentences

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).

Significant estimates used in the preparation of the Company’s condensed consolidated financial statements, including those associated with premiums 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.

The results for the six months ended June 30, 2021, are not necessarily indicative of the results expected for the full calendar year.

SIGNIFICANT ACCOUNTING POLICIES

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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:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

($ in thousands)

4 unchanged sentences

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:

Such amounts held include premiums as well as Funds at Lloyd’s, which is held in trust at Lloyd's as security for members’ underwriting activities.

At June 30, 2021, funds held by cedents were $ 184.1 million (December 31, 2020:

$ 127.6 million).

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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:

At June 30, 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).

1 unchanged sentence

The Company applies deposit accounting to reinsurance contracts that do not transfer sufficient insurance risk to merit reinsurance accounting.

Under deposit accounting, an asset or liability is recognized based on the consideration paid or received.

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

Under deposit accounting, the Company recognizes an asset or liability based on the consideration it has paid or received.

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

At June 30, 2021, deposit assets and deposit liabilities were $ 5.0 million and $ 19.5 million, respectively (December 31, 2020:

$ 4.6 million and $ 31.0 million, respectively).

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

For the three and six months ended June 30, 2021 and 2020, the interest income and (expense) on deposit accounted contracts were as follows:

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Three months ended March 31

($ in thousands)

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

($ in thousands) ($ in thousands)

Deposit interest income $ 28 $ 645 $ — $ 1,252

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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 Company recognizes derivative financial instruments in the condensed consolidated balance sheets at their fair values.

It includes any realized gains and losses and changes in unrealized gains and losses in the caption “Net investment income (loss)” in the condensed consolidated statements of operations.

The Company’s derivatives do not qualify as hedges for financial reporting purposes.

The Company records the associated assets and liabilities in its condensed consolidated balance sheets on a gross basis.

The Company does not offset these balances against 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.

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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

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The table below presents the shares outstanding for the calculation of earnings (loss) per share for the three and six months ended June 30, 2021 and 2020:

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

Weighted average shares outstanding - basic 34,667,114 35,776,736 34,560,246 35,958,965

3 unchanged sentences

Participating securities excluded from calculation of loss per share — 1,259,173 — 1,259,173

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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.

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The Company records a valuation allowance to the extent that the Company considers it more likely than not that all or a portion of the deferred tax asset will not be realized in the future.

Other than this valuation allowance, the Company has not taken any income tax positions that are subject to significant uncertainty that is reasonably likely to have a material impact on the Company.

Other than this valuation allowance, the Company has not taken any income tax positions subject to significant uncertainty that are reasonably likely to have a material impact on the Company.

Recent Accounting Pronouncements

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Accounting for Convertible Instruments and Contracts in an Entity's Own Equity (“ASU 2020-06”).

ASU 2020-06 is designed to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity.

The amendments remove the separation models in Subtopic 470-20 for certain contracts.

As a result, embedded conversion features would not be presented separately in equity;

rather, the contract would be accounted for as a single liability measured at its amortized cost.

Subtopic 815-40 simplifies the analysis of whether an embedded conversion feature meets the derivative scope exception for contracts that are indexed to, and classified in, stockholders equity, as well as addresses the computation of earnings per share for convertible debt instruments.

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” or a “fully retrospective” method of transition.

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

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

ASU 2020-06 is designed to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments.

The amendments remove

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(“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 separation models in Subtopic 470-20 for certain contracts.

As a result, entities will no longer present embedded conversion features separately in equity;

rather, the convertible debt instrument will be accounted for as a single liability measured at its amortized cost.

ASU 2020-06 also addresses the computation of earnings per share for convertible debt instruments, requiring the application of the if-converted method when calculating diluted earnings per share.

The Company intends to adopt ASU 2020-06 during the first quarter of 2022, using the “modified retrospective” transition method.

The Company expects that its adoption of ASU 2020-06 will impact the accounting for its senior convertible notes (see Note 7) and will lead to a decrease in its total shareholders’ equity of approximately $ 2.5 million, with a corresponding increase in the carrying value of the senior convertible notes.

The Company expects that in the periods in which the Company reports a net income, the number of shares outstanding for the diluted earnings per share calculation will be approximately 5.8 million higher under the if-converted method.

The Company does not expect the adoption of ASU 2020-06 to have a material impact on net income, cash flows, or any other balances.

INVESTMENT IN RELATED PARTY INVESTMENT FUND

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 (“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.

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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 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 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.

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• DME II holds an interest in excess of 10% of SILP’s net assets, which the Company considers to represent an obligation to absorb losses and a right to receive benefits of SILP that are significant to SILP.

Consequently, the Company has concluded that DME II’s interests, and not the Company’s, meet both the “power” and “benefits” criteria associated with VIE accounting guidance, and therefore DME II is SILP’s primary beneficiary.

Consequently, the Company has concluded that DME II’s interests, not the Company’s, meet both the “power” and “benefits” criteria associated with VIE accounting guidance, and therefore DME II is SILP’s primary beneficiary.

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.”

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.

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

At June 30, 2021, the net asset value of the GLRE Limited Partners’ investment in SILP was $ 175.1 million (December 31, 2020:

$ 166.7 million), representing 76.8 % (December 31, 2020:

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

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.

At June 30, 2021, the majority of SILP’s long investments were composed of cash and publicly traded equity

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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 and six months ended June 30, 2021, was $( 2.0 ) million and $ 2.0 million, respectively, (three and six months ended June 30, 2020:

$ 1.6 million and $( 40.5 ) 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 summarized financial statements of SILP are presented below.

Summarized Statement of Assets and Liabilities of Solasglas Investments, LP

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

($ in thousands)

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Summarized Statement of Operations of Solasglas Investments, LP

Three months ended March 31

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

($ in thousands)

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

Three months ended March 31

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

($ in thousands)

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

At June 30, 2021, the following securities were included in the caption “Other investments”:

Cost Unrealized

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

At June 30, 2021, the carrying value of private investments and unlisted equities was $ 30.3 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.

It incorporated upward adjustments of $ 4.0 million and $ 5.2 million during the three and six months ended June 30, 2021, respectively (three and six months ended June 30, 2020:

$ 3.3 million and $ 4.1 million, respectively), excluding any unrealized gains or losses related to changes in foreign currency exchange rates.

The net upward adjustments since the acquisition of these private investments were $ 14.5 million and $ 9.3 million as of June 30, 2021, and December 31, 2020, respectively.

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.

During the six months ended June 30, 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 has not designated warrants issued to it in connection with Innovations-related investments as hedging instruments.

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

4 unchanged sentences

The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

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Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

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

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

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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.

Its carrying 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.

At June 30, 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.

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LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

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

At June 30, 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.

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• industry data;

• catastrophe scenario modelling software;

• management’s judgement.

• catastrophe scenario modeling software;

• management’s judgment.

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.

1 unchanged sentence

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

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

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

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

• reviews of industry insured loss estimates and market share analyses;

• management’s judgement.

• management’s judgment.

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;

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

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• 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 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

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becomes available and will adjust its estimates accordingly.

While the Company believes its estimate of loss and loss adjustment expense reserves for the COVID-19 pandemic is adequate as of June 30, 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 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

The Company made no significant changes in the actuarial methodology or reserving process related to its loss and loss adjustment expense reserves for the six months ended June 30, 2021.

At June 30, 2021 and December 31, 2020, loss and loss adjustment expense reserves were composed of the following:

June 30, 2021 December 31, 2020

($ in thousands)

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

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

for the six months ended June 30, 2021 and 2020 is as follows:

Consolidated 2021 2020

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Foreign currency revaluation 246 ( 2,112 )

Net balance at March 31 497,834 432,574

Net balance at June 30 500,310 447,430

Losses recoverable 14,332 20,225

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

Gross balance at June 30 $ 514,642 $ 467,655

For the six months ended June 30, 2021, the estimate of net losses incurred relating to prior accident years decreased by $ 0.6 million, due primarily to favorable development on catastrophe and a mortgage contract associated with the COVID-19 pandemic and certain health contracts.

The decrease in prior accident years was partially offset by adverse loss development on certain casualty contracts written between 2014 and 2018.

The favorable loss development on a mortgage contract was offset by an increase in profit commissions on the same contract.

For the six months ended June 30, 2020, the estimate of net losses incurred relating to prior accident years increased by $ 5.7 million, due primarily to certain general liability, health and multi-line contracts, partially offset by favorable loss development on professional liability contracts.

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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:

The changes in the outstanding loss and loss adjustment expense reserves for health claims for the six months ended June 30, 2021 and 2020 are as follows:

Health 2021 2020

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Foreign currency revaluation — —

Net balance at March 31 17,899 16,264

Net balance at June 30 14,584 14,874

Losses recoverable — —

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.

Gross balance at June 30 $ 14,584 $ 14,874

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

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

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.

For the three and six months ended June 30, 2021, the Company’s earned ceded premiums were $ 0.0 million and $ 0.1 million, respectively (2020:

$ 0.5 million and $ 1.5 million).

For the three and six months ended June 30, 2021, loss and loss adjustment expenses incurred of $ 87.0 million and $ 184.7 million, respectively (2020:

$ 89.2 million and $ 164.9 million, respectively), reported on the condensed consolidated statements of operations are net of loss and loss expenses recovered of $( 0.1 ) million and $( 0.1 ) million, respectively (2020:

$ 0.2 million and $ 3.7 million, respectively).

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

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

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

At June 30, 2021, the Company’s loss reserves recoverable consisted of (i) $ 10.6 million (December 31, 2020:

$ 12.6 million) from unrated retrocessionaires, of which $ 10.4 million (December 31, 2020:

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

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

At June 30, 2021, the Company had recorded an allowance for expected credit losses of $ 47.0 thousand (December 31, 2020:

$ 47.0 thousand).

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

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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.

If the holder redeems the Notes, 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 March 31, 2021, the Company’s share price was lower than the conversion price of $ 17.19 per share.

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At June 30, 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.

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.

At June 30, 2021 and December 31, 2020, the unamortized debt discount was $ 3.4 million and $ 4.2 million, respectively.

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.

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

At June 30, 2021, the unamortized portion of these costs attributed to the debt component was $ 1.3 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 at March 31, 2021, including accrued interest of $ 0.7 million, was $ 95.3 million (December 31, 2020:

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

The carrying value of the Notes at June 30, 2021, including accrued interest of $ 0.7 million, was $ 96.9 million (December 31, 2020:

$ 95.8 million).

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

At June 30, 2021, the Company estimated the fair value of the Notes to be $ 97.0 million (December 31, 2020:

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

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.

For the three and six months ended June 30, 2021, the Company recognized interest expense of $ 1.6 million and $ 3.1 million (2020:

$ 1.6 million and $ 3.1 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 June 30, 2021, and December 31, 2020.

SHARE CAPITAL

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:

At June 30, 2021, 3,056,065 (December 31, 2020:

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

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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.

On March 26, 2020, the Board of Directors extended the share repurchase plan to June 30, 2021.

It 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 or more tender offers.

The Company repurchased 725,133 Class A ordinary shares during the six months ended June 30, 2021.

The Company did not repurchase any Notes under the repurchase plan.

On May 4, 2021, the Board of Directors approved a new share repurchase plan effective from July 1, 2021, until June 30, 2022, authorizing the Company to purchase up to $ 25 million of 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.

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.

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

Three months ended March 31 Three months ended March 31

Six months ended June 30 Six months ended June 30

Class A Class B Class A Class B

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Balance – end of period 27,916,353 6,254,715 30,017,870 6,254,715

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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.

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Employee and Director Restricted Shares

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.

For the six months ended June 30, 2021, the Company issued 334,312 (2020:

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

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

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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 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:

For the six months ended June 30, 2021, grantees forfeited 20,592 (2020:

18,701 ) restricted shares.

For the six months ended June 30, 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:

The Company recorded $ 1.2 million of share-based compensation expense, net of forfeiture reversals, relating to restricted shares for the six months ended June 30, 2021 (2020:

$ 1.2 million).

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:

At June 30, 2021, there was $ 3.5 million (December 31, 2020:

$ 1.9 million) of unrecognized compensation cost relating to non-vested restricted shares (excluding any restricted shares with performance conditions the Company currently does not expect to meet), which the Company expects to recognize over a weighted-average period of 2.1 years (December 31, 2020:

For the six months ended June 30, 2021, the total fair value of restricted shares vested was $ 1.6 million (2020:

$ 2.8 million).

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

For the six months ended June 30, 2021, the Company also issued to non-employee directors an aggregate of 46,980 (2020:

0 ) restricted Class A ordinary shares as part of their remuneration for services to the Company.

Each of these restricted shares issued to non-employee directors contains similar restrictions to those issued to employees and will vest on the earlier of the first anniversary of the date of the share issuance or the Company’s next annual general meeting, subject to the grantee’s continued service with the Company.

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The following table summarizes the activity for unvested outstanding restricted share awards during the six months ended June 30, 2021:

shares Weighted

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Forfeited ( 20,592 ) 8.35

Balance at March 31, 2021 946,350 $ 8.88

Balance at June 30, 2021 918,767 $ 8.98

Employee and Director Stock Options

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.

For the six months ended June 30, 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.

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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:

The total compensation cost expensed relating to stock options for the six months ended June 30, 2021, was $ 0.2 million (2020:

$ 0.4 million).

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

At June 30, 2021, the total compensation cost related to non-vested options not yet recognized was $ 0.4 million (December 31, 2020:

$ 0.7 million), which will be recognized over a weighted-average period of 1.6 years (December 31, 2020:

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

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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.

At June 30, 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 4.6 years and 5.1 years, at June 30, 2021, and December 31, 2020, respectively.

Employee Restricted Stock Units

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

For the six months ended June 30, 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:

For the six months ended June 30, 2021 and 2020, no RSUs were forfeited.

The Company recorded $ 0.2 million of share-based compensation expense relating to RSUs for the six months ended June 30, 2021 (2020:

$ 0.2 million).

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

Employee RSU activity during the six months ended June 30, 2021, was as follows:

RSUs Weighted

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Vested ( 20,711 ) 15.90

Forfeited — —

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.

Balance at June 30, 2021 154,134 $ 8.59

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For the six months ended June 30, 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 $ 1.6 million and $ 1.7 million, respectively.

Performance Restricted Shares

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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:

At June 30, 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 six months ended June 30, 2021 and 2020.

At June 30, 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:

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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.

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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)

The following table sets forth our current and deferred income tax benefit (expense) on a consolidated basis for the six months ended June 30, 2021 and 2020:

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

($ in thousands) ($ in thousands)

Current tax (expense) benefit $ 171 $ 134 $ ( 3,563 ) $ 305

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Income tax (expense) benefit $ 1 $ — $ ( 3,733 ) $ ( 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.

For the six months ended June 30, 2021, the income tax expense of $ 3.7 million resulted from Verdant’s gain on the sale of its AccuRisk investment.

RELATED PARTY TRANSACTIONS

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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.

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

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

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.

For a detailed breakdown of management fees and performance compensation for the three and six months ended June 30, 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.

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(“GRBK”), a publicly traded company.

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.

At June 30, 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

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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).

4 unchanged sentences

The CMA can be terminated by any of the parties upon 30 days’ prior written notice to the other parties.

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COMMITMENTS AND CONTINGENCIES

Letters of Credit and Trusts

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:

At June 30, 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

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Citibank Europe plc $ 275,000 August 20, 2022 120 days before the termination date

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

At June 30, 2021, an aggregate amount of $ 138.9 million (December 31, 2020:

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

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:

At June 30, 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.

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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 at March 31, 2021 and December 31, 2020.

The Company was in compliance with all the credit facility covenants at June 30, 2021 and December 31, 2020.

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

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

At June 30, 2021, collateral of $ 567.3 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 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 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.

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

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Greenlight Re has entered into a new lease agreement for office space in the Cayman Islands commencing July 1, 2021.

The lease expires on June 30, 2026, unless Greenlight Re exercises its right to renew the lease for another five-year period.

The annual lease obligation ranges from $ 0.5 million to $ 0.6 million.

Greenlight Re’s previous lease arrangement qualified as a short-term lease for the three and six months ended June 30, 2021..

The short-term lease expense for the three and six months ended June 30, 2021, was $ 0.1 million and $ 0.3 million, respectively (three and six months ended June 30, 2020:

$ 0.1 million and $ 0.3 million, respectively).

Schedule of Commitments and Contingencies

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

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

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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:

The following table sets forth the premiums generated through our largest brokers and their subsidiaries and affiliates (totals may not sum due to rounding):

Gross Premiums Written by Line of Business

Three months ended March 31

($ in thousands)

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

($ in thousands) ($ in thousands)

Commercial $ 4,154 2.9 % $ 3,065 2.6 % $ 6,302 2.0 % $ 6,030 2.7 %

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Professional Liability (1)

( 3 ) — 33 — 148 — 123 0.1

Workers' Compensation 15,971 11.3 28,605 24.5 38,120 12.2 38,929 17.2

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$ 141,579 100.0 % $ 116,689 100.0 % $ 311,514 100.0 % $ 226,476 100.0 %

(1) The negative balance represents the reversal of premiums due to premium adjustments, termination of contracts, or premium returned upon novation or commutation of contracts.

Gross Premiums Written by Geographic Area of Risks Insured

Three months ended March 31

($ in thousands)

Three months ended June 30 Six months ended June 30

2021 2020 2021 2020

($ in thousands) ($ in thousands)

and Caribbean $ 86,908 61.4 % $ 94,663 81.1 % $ 191,762 61.6 % $ 180,713 79.8 %

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2,424 1.7 1,410 1.2 3,594 1.2 2,351 1.0

$ 141,579 100.0 % $ 116,689 100.0 % $ 311,514 100.0 % $ 226,476 100.0 %

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

1 unchanged sentence

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