What changed in this filing

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Item 1. Financial Statements

2021-11-03 compared with 2021-08-03 · 156 added, 149 removed, 606 unchanged (33% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2021 and December 31, 2020

September 30, 2021 and December 31, 2020

(expressed in thousands of U.S.

dollars, except per share and share amounts)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Investment in related party investment fund $ 180,239 $ 166,735

8 unchanged sentences

Deferred acquisition costs 60,634 51,014

Unearned premiums ceded 26 —

Notes receivable — 6,101

29 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

For the three and nine months ended September 30, 2021 and 2020

(expressed in thousands of U.S.

dollars, except per share and share amounts)

Three months ended June 30 Six months ended June 30

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

4 unchanged sentences

Net premiums earned 135,524 115,519 403,399 334,954

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:

Income (loss) from investment in related party investment fund (net of related party expenses of $ 659 and $ 2,632 (three and nine months ended September 30, 2020:

$ 703 and $ 1,981 , respectively))

22 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

For the three and nine months ended September 30, 2021 and 2020

(expressed in thousands of U.S.

Three months ended June 30 Six months ended June 30

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2021 and 2020

For the nine months ended September 30, 2021 and 2020

(expressed in thousands of U.S.

Six months ended June 30

Nine months ended September 30

Cash provided by (used in) operating activities

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

September 30, 2021

ORGANIZATION AND BASIS OF PRESENTATION

13 unchanged sentences

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

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.

These unaudited condensed consolidated financial statements 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.

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

GAAP for complete financial statements.

3 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 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).

(See Note 5 for the significant assumptions that 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 six months ended June 30, 2021, are not necessarily indicative of the results expected for the full calendar year.

The results of operations and cash flows for any interim period will not necessarily be indicative of the results of operations and cash flows for the full fiscal year or subsequent periods.

SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

The preparation of condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the period.

Actual results could differ from these estimates.

The significant estimates reflected in the Company’s

The significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, loss and loss adjustment expense reserves,

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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.

premiums written, earned and receivable, variability underlying risk transfer assessments, allowances for credit losses, bonus accruals, share-based compensation, valuation allowances associated with deferred tax assets and investment impairments.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

1 unchanged sentence

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:

June 30, 2021 December 31, 2020

September 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 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:

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

At September 30, 2021, funds held by cedents were $ 201.3 million (December 31, 2020:

$ 127.6 million).

Reinsurance Assets

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.

The PD / LGD approach considers the Company’s collectibility history on its reinsurance assets and 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 evaluates each counterparty’s creditworthiness based on credit ratings that independent agencies assign to the counterparty.

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.

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

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

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:

At September 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, the Company recognizes an asset or liability based on the consideration it has paid or received.

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

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:

At September 30, 2021, deposit assets and deposit liabilities were $ 4.9 million and $ 14.0 million, respectively (December 31, 2020:

$ 4.6 million and $ 31.0 million, respectively).

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

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

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Three months ended June 30 Six months ended June 30

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

22 unchanged sentences

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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

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

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

13 unchanged sentences

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 subject to significant uncertainty that are 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 is reasonably likely to have a material impact on the Company.

Recent Accounting Pronouncements

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2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) (“ASU 2020-01”).

The amendments in ASU 2020-01 clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the guidance in Topic 815, which could change how an entity accounts for an equity security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance with Topic 825, Financial Instruments.

ASU 2020-01 clarifies interactions between the accounting guidance for (i) certain equity securities under Topic 321, (ii) investments under the equity method of accounting in Topic 323, and (iii) certain derivative instruments in Topic 815.

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

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

The amendments remove 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.

ASU 2020-06 also addresses the computation of earnings per share for convertible debt instruments, requiring

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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 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 opening 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.

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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.

The SILP LPA agreement also amended the definition of “Additional Investment Ratio” and 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:

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

At September 30, 2021, the net asset value of the GLRE Limited Partners’ investment in SILP was $ 180.2 million (December 31, 2020:

$ 166.7 million), representing 78.0 % (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 June 30, 2021, the majority of SILP’s long investments were composed of cash and publicly traded equity

At September 30, 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 and nine months ended September 30,

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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:

2021, was $( 6.2 ) million and $( 4.2 ) million, respectively, (three and nine months ended September 30, 2020:

$ 6.4 million and $( 34.1 ) 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.

1 unchanged sentence

Summarized Statement of Assets and Liabilities of Solasglas Investments, LP

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

($ in thousands)

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Summarized Statement of Operations of Solasglas Investments, LP

Three months ended June 30 Six months ended June 30

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

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

Three months ended June 30 Six months ended June 30

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

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

At September 30, 2021, the Company included the following securities in the caption “Other investments”:

Cost Unrealized

5 unchanged sentences

Total other investments $ 17,175 $ 27,105 $ ( 1,800 ) $ 42,480

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

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

Cost Unrealized

9 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 June 30, 2021, the carrying value of private investments and unlisted equities was $ 30.3 million (December 31, 2020:

At September 30, 2021, the carrying value of private investments and unlisted equities was $ 39.4 million (December 31, 2020:

$ 21.8 million).

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:

It incorporated upward adjustments of $ 7.6 million and $ 12.9 million during the three and nine months ended September 30, 2021, respectively (three and nine months ended September 30, 2020:

$ 0.0 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.

Since acquiring these private investments, the Company has recognized net upward adjustments of $ 22.1 million and $ 9.3 million as of September 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 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.

The Company has not designated warrants issued to it in connection with Innovations-related investments as hedging instruments.

During the nine months ended September 30, 2021, the Company sold its investment in AccuRisk and realized a pre-tax gain of $ 14.2 million.

The Company’s derivative financial instruments are composed of warrants granting the Company the right, but not the obligation, to purchase shares at a specified price on or before the maturity date.

The Company has not designated any of its derivative financial instruments as hedging instruments.

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

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or other inputs that are observable or can be corroborated with observable market data.

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

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

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

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

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

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

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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 condensed consolidated statements of operations.

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.

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

At September 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.

It is therefore not classified within the fair value hierarchy.

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

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LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

At June 30, 2021, the loss and loss adjustment expense reserves included estimated amounts for several catastrophe events.

At September 30, 2021, the Company’s 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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• 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 extent of economic contraction caused by the COVID-19 pandemic and associated measures, 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 June 30, 2021, based on available information, actual losses may ultimately differ materially from the Company's current estimates.

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

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

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

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

for the nine months ended September 30, 2021 and 2020 is as follows:

Consolidated 2021 2020

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Foreign currency revaluation ( 1,722 ) ( 505 )

Net balance at June 30 500,310 447,430

Net balance at September 30 527,697 461,821

Losses recoverable 13,082 19,949

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.

Gross balance at September 30 $ 540,779 $ 481,770

For the nine months ended September 30, 2021, the estimate of net losses incurred relating to prior accident years decreased by $ 1.3 million, due primarily to favorable development on catastrophe events, 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 workers’ compensation and multi-line casualty contracts written between 2014 and 2018.

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

For the nine months ended September 30, 2020, the estimate of net losses incurred relating to prior accident years increased by $ 5.4 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 six months ended June 30, 2021 and 2020 are as follows:

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

Health 2021 2020

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Foreign currency revaluation — —

Net balance at June 30 14,584 14,874

Net balance at September 30 12,728 12,994

Losses recoverable — —

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

Gross balance at September 30 $ 12,728 $ 12,994

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 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).

The Company records loss and loss adjustment expenses recoverable from retrocessionaires as assets.

For the three and nine months ended September 30, 2021, the Company’s earned ceded premiums were insignificant compared to $ 1.7 million and $ 3.2 million for the three and nine months ended September 30, 2020, respectively.

For the three and nine months ended September 30, 2021, loss and loss expenses recovered were insignificant compared to $ 2.5 million and $ 6.2 million for the three and nine months ended September 30, 2020, 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 June 30, 2021, the Company’s loss reserves recoverable consisted of (i) $ 10.6 million (December 31, 2020:

At September 30, 2021, the Company’s loss reserves recoverable consisted of (i) $ 9.9 million (December 31, 2020:

$ 12.6 million) from unrated retrocessionaires, of which $ 9.7 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 June 30, 2021, the Company had recorded an allowance for expected credit losses of $ 47.0 thousand (December 31, 2020:

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

$ 47.0 thousand).

1 unchanged sentence

On August 7, 2018, the Company issued $ 100.0 million of senior unsecured convertible notes (the “Notes”), which mature on August 1, 2023.

The Notes bear interest at 4.0 % payable semi-annually on February 1 and August 1 of each year beginning on February 1, 2019.

The Notes bear interest at 4.0 %, payable semi-annually on February 1 and August 1 of each year beginning February 1, 2019.

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

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.

If a 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.

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At June 30, 2021, the Company’s share price was lower than the conversion price of $ 17.19 per share.

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

At September 30, 2021, and December 31, 2020, the unamortized debt discount was $ 3.0 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 June 30, 2021, the unamortized portion of these costs attributed to the debt component was $ 1.3 million (December 31, 2020:

At September 30, 2021, the unamortized portion of these costs attributed to the debt component was $ 1.2 million (December 31, 2020:

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

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:

The carrying value of the Notes at September 30, 2021, including accrued interest of $ 0.7 million, was $ 96.5 million (December 31, 2020:

$ 95.8 million).

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

At September 30, 2021, the Company estimated the fair value of the Notes to be $ 94.6 million (December 31, 2020:

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

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.

For the three and nine months ended September 30, 2021, the Company recognized interest expenses of $ 1.6 million and $ 4.7 million, respectively (2020:

$ 1.6 million and $ 4.7 million, respectively) 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 September 30, 2021, and December 31, 2020.

SHARE CAPITAL

The Company’s share capital is made up of ordinary share capital and additional paid-in capital.

Ordinary share capital represents the issued and outstanding Class A and Class B ordinary shares at their par values of $ 0.10 per share.

Additional paid-in capital includes the premium paid per share by the subscribing shareholders for Class A and Class B ordinary shares, as well as the earned portion of the grant-date fair value of share-based awards.

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

At September 30, 2021, 3,128,276 (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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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.

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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 repurchased 1,079,544 Class A ordinary shares during the nine months ended September 30, 2021.

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:

Six months ended June 30 Six months ended June 30

Nine months ended September 30 Nine months ended September 30

Class A Class B Class A Class B

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Balance – end of period 27,589,731 6,254,715 29,113,702 6,254,715

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.

SHARE-BASED COMPENSATION

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Employee and Director Restricted Shares

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

For the nine months ended September 30, 2021, the Company issued 334,312 (2020:

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

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

For the nine months ended September 30, 2021, grantees forfeited 20,592 (2020:

210,109 ) restricted shares.

For the six months ended June 30, 2021, the Company reversed $ 0.1 million of stock compensation expense (2020:

For the nine months ended September 30, 2021, the Company reversed $ 0.1 million of stock compensation expense (2020:

$ 0.7 million) in relation to the forfeited restricted shares.

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:

The Company recorded $ 1.8 million of share-based compensation expense, net of forfeiture reversals, relating to restricted shares for the nine months ended September 30, 2021 (2020:

$ 0.6 million).

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:

At September 30, 2021, there was $ 3.3 million (December 31, 2020:

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

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

$ 2.8 million).

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

For the nine months ended September 30, 2021, the Company also issued to non-employee directors an aggregate of 74,769 (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:

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

shares Weighted

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Forfeited ( 20,592 ) 8.35

Balance at June 30, 2021 918,767 $ 8.98

Balance at September 30, 2021 946,556 $ 8.97

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Employee and Director Stock Options

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.

For the nine months ended September 30, 2021, and 2020, no Class A ordinary share purchase options were granted or exercised by directors or employees.

For the nine months ended September 30, 2021, 100,000 (2020:

40,000 ) stock options expired and 80,000 (2020:

80,000 ) stock options vested.

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

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 six months ended June 30, 2021, was $ 0.2 million (2020:

The total compensation cost expensed relating to stock options for the nine months ended September 30, 2021, was $ 0.3 million (2020:

$ 0.5 million).

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

At September 30, 2021, the total compensation cost related to non-vested options not yet recognized was $ 0.3 million (December 31, 2020:

$ 0.7 million), which will be recognized over a weighted-average period of 1.4 years (December 31, 2020:

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

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.

At September 30, 2021, and December 31, 2020, 0.7 million and 0.8 million stock options were outstanding, respectively, with a weighted average exercise price of $ 22.35 and $ 22.22 per share, respectively, and a weighted average grant date fair value of $ 10.23 and $ 10.25 per share, respectively.

The stock options’ weighted-average remaining contractual terms were 4.9 years and 5.1 years, at September 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 six months ended June 30, 2021, the Company issued 58,123 (2020:

For the nine months ended September 30, 2021, the Company issued 58,123 (2020:

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

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:

For the nine months ended September 30, 2021, and 2020, no RSUs were forfeited.

The Company recorded $ 0.3 million of share-based compensation expense relating to RSUs for the nine months ended September 30, 2021 (2020:

$ 0.3 million).

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

At September 30, 2021, the total compensation cost related to non-vested RSUs not yet recognized was $ 0.6 million (2020:

$ 0.4 million), which the Company expects to recognize over a weighted-average period of 1.9 years (2020:

Employee RSU activity during the nine months ended September 30, 2021, was as follows:

RSUs Weighted

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Vested ( 20,711 ) 15.90

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.

Balance at September 30, 2021 154,134 $ 8.59

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 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:

At September 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 nine months ended September 30, 2021, and 2020.

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For the nine months ended September 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 $ 2.4 million and $ 1.4 million, respectively.

At September 30, 2021, the Company recorded a gross deferred tax asset of $ 4.0 million (2020:

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

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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 has determined that it is more likely than not to 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.

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

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

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

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Current tax (expense) benefit $ 323 $ ( 33 ) $ ( 3,240 ) $ 272

Deferred tax (expense) benefit ( 184 ) — — —

Increase in deferred tax valuation allowance 14 ( 134 ) ( 170 ) ( 729 )

Decrease (increase) in deferred tax valuation allowance ( 323 ) 33 ( 493 ) ( 696 )

Income tax (expense) benefit $ — $ — $ ( 3,733 ) $ ( 424 )

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.

For the nine months ended September 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 and six months ended June 30, 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 nine months ended September 30, 2021, and 2020, refer to Note 3 of the condensed consolidated financial statements.

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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 June 30, 2021, SILP, along with certain affiliates of DME Advisors, collectively owned 34.4 % of the issued and outstanding common shares of GRBK.

At September 30, 2021, SILP, along with certain affiliates of DME Advisors, collectively owned 34.3 % 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.

6 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 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:

At September 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 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 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:

At September 30, 2021, an aggregate amount of $ 138.4 million (December 31, 2020:

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

At September 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 credit facility covenants at June 30, 2021 and December 31, 2020.

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

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

At June 30, 2021, collateral of $ 567.3 million (December 31, 2020:

At September 30, 2021, collateral of $ 550.2 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.

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Lease Obligations

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

Greenlight Re 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:

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

At September 30, 2021, the right-of-use asset and a corresponding lease liability relating to the lease agreement were $ 2.2 million.

The operating lease expense for the three and nine months ended September 30, 2021, was $ 0.1 million and $ 0.1 million, respectively.

Greenlight Re’s previous lease arrangement qualified as a short-term lease.

The short-term lease expense for the three and nine months ended September 30, 2021, was nil and $ 0.3 million, respectively (three and nine months ended September 30, 2020:

$ 0.1 million and $ 0.4 million, respectively).

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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.

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

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

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Gross Premiums Written by Line of Business

Three months ended June 30 Six months ended June 30

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

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Professional Liability 154 0.1 76 0.1 302 0.1 199 0.1

( 3 ) — 33 — 148 — 123 0.1

Workers' Compensation 17,117 13.3 21,979 16.2 55,237 12.5 60,908 16.8

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$ 128,735 100.0 % $ 135,596 100.0 % $ 440,249 100.0 % $ 362,072 100.0 %

(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 June 30 Six months ended June 30

Three months ended September 30 Nine months ended September 30

2021 2020 2021 2020

9 unchanged sentences

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