What changed in this filing

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Item 9A. Controls and Procedures

2022-03-08 compared with 2021-03-10 · 512 added, 633 removed, 1443 unchanged (44% of the section changed)

9 unchanged sentences

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

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Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

9 unchanged sentences

GAAP and includes those policies and procedures that:

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● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

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This item is omitted because a definitive proxy statement containing such information will be filed with the SEC not later than 120 days after the close of the fiscal year pursuant to Regulation 14A, which information required by this item set forth in the proxy statement is incorporated by reference.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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(a)(1) Financial Statements

Report of Independent Registered Public Accounting Firm (on internal control over financial reporting)

Report of Independent Registered Public Accounting Firm (on the consolidated financial statements)

Report of Independent Registered Public Accounting Firm (on the financial statements of Solasglas Investments, LP)

Report of Independent Registered Public Accounting Firm (on internal control over financial reporting) ( BDO USA, LLP ;

Grand Rapids, Michigan, USA ;

PCAOB ID# 243 )

Report of Independent Registered Public Accounting Firm (on the consolidated financial statements) ( BDO USA, LLP ;

Grand Rapids, Michigan, USA ;

PCAOB ID# 243 )

Report of Independent Registered Public Accounting Firm (on the financial statements of Solasglas Investments, L P) ( Ernst & Young Ltd.

Grand Cayman, Cayman Islands ;

PCAOB ID# 1655 )

Consolidated Balance Sheets as of December 31, 2021 and 2020 F- 5

17 unchanged sentences

333-139993) .

4.2 Share Purchase Option, dated August 11, 2004, by and between the Registrant and First International Capital Holdings, Ltd.

(incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement No.

333-139993) .

4.2 Indenture, dated as of August 7, 2018, between Greenlight Capital Re, Ltd.

9 unchanged sentences

333-139993) .

10.5 Amendment No.

2 to Shareholders Agreement, dated and effective as of June 30, 2021 (incorporated by reference to Exhibit 10.1 to the Company Form 8-K filed June 30, 2021).

10.6 Form of Deed of Indemnity between the Registrant and each of its directors and certain of its officers (incorporated by reference to Exhibit 10.11 of the Company’s Registration Statement No.

2 unchanged sentences

and Tim Courtis (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on January 2, 2009) .

10.7 Concurrent Private Placement Stock Purchase Agreement for Class B Ordinary Shares, dated January 11, 2007, by and between the Company and David Einhorn (incorporated by reference to Exhibit 10.16 of the Company’s Registration Statement No.

333-139993) .

10.8 Service Agreement, dated as of February 21, 2007, between DME Advisors, LP and Greenlight Capital Re, Ltd.

(incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement No.

333-139993) .

10.8 (1) Amendment No.

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and Tim Courtis (incorporated by reference to Exhibit 10.26 of the Company’s Form 10-K filed on February 23, 2009).

10.10 Letter of Understanding, dated June 10, 2010, between Greenlight Reinsurance, Ltd.

and Citibank, N.A (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on August 2, 2010) .

10.9 (1) Deed of Settlement and Release, effective as of September 9, 2020, by and among Tim Courtis, Greenlight Capital Re, Ltd.

and Greenlight Reinsurance, Ltd.

(incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed September 9, 2020).

10.10 Service Agreement, dated as of February 21, 2007, between DME Advisors, LP and Greenlight Capital Re, Ltd.

(incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement No.

333-139993) .

10.11 Letter of Credit Agreement, dated August 20, 2010, between Greenlight Reinsurance, Ltd.

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(incorporated by reference to Exhibit 10.3 of the Company’s Form 10-Q filed on November 2, 2010) .

10.14 Consulting agreement dated December 16, 2016, among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd.

and Leonard Goldberg (incorporated by reference to Exhibit 99.3 to the Company’s Form 8-K filed on December 19, 2016).

10.14 (1) Employment Agreement by and between Greenlight Capital Re, Ltd, Greenlight Reinsurance, Ltd.

and Simon Burton dated July 1, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 2, 2017).

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10.15 (1) Employment Agreement by and between Greenlight Reinsurance Ireland, DAC and Patrick O’Brien dated February 16, 2018 (incorporated by reference to Exhibit 10.40 to the Company’s Form 10-K filed on Feb 20, 2018) .

10.17 Amendment No.

1 to Shareholders’ Agreement, dated June 29, 2018, by and between the Registrant and David Einhorn (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on June 29, 2018).

10.16 (1) Amendment to Employment Agreement, dated as of September 2, 2019, by and between Greenlight Reinsurance Ireland, DAC and Patrick O’Brien (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on September 3, 2019).

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10.17 Investment Advisory Agreement among DME Advisors, LP, and Solasglas Investments, LP, dated as of September 1, 2018 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on September 4, 2018) .

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and Neil Greenspan dated December 3, 2018 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on December 7, 2018) .

10.20 (1) Amendment to Employment Agreement, entered into as of September 2, 2019, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd and Neil Greenspan (incorporated by reference to Exhibit 10.53 of the Company’s Form 10-K filed on March 9, 2020).

10.21 Collateral Assets Investment Management Agreement among DME Advisors, LP, Greenlight Reinsurance, Ltd.

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and Laura Accurso dated October 1, 2017, as amended February 18, 2019 (incorporated by reference to Exhibit 10.53 of the Company’s Form 10-K filed on February 27, 2019) .

10.26 (1) Second Amendment to Employment Agreement, dated as of September 2, 2019, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd.

and Laura Accurso (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on September 3, 2019).

10.27 (1) Third Amendment to Employment Agreement, dated as of May 1, 2020, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd.

and Laura Accurso (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 5, 2020).

10.28 (1) Restricted Stock Unit Award Agreement by and between Greenlight Capital Re, Ltd.

5 unchanged sentences

Form of Employees’ Restricted Stock Unit Award (incorporated by reference to Exhibit 4.10 of the Company’s Registration Statement No 333-231214 filed on May 3, 2019).

10.29 (1) Second Amendment to Employment Agreement, dated as of September 2, 2019, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd.

and Laura Accurso (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on September 3, 2019).

10.30 (1) Amendment to Employment Agreement, dated as of September 2, 2019, by and between Greenlight Reinsurance Ireland, DAC and Patrick O’Brien (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on September 3, 2019).

10.31 Second Amended and Restated Exempted Limited Partnership Agreement of Solasglas Investments, LP, between DME Advisors II, LLC, as General Partner, Greenlight Reinsurance, Ltd., Greenlight Reinsurance Ireland, a Designated Activity Company, Greenlight Capital Re, Ltd.

and the initial limited partner, dated as of January 7, 2021 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on January 12, 2021).

10.32 (1) Amendment to Employment Agreement, entered into as of September 2, 2019, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd and Neil Greenspan (incorporated by reference to Exhibit 10.53 of the Company’s Form 10-K filed on March 9, 2020).

10.32 (1) Employment Offer, dated March 23, 2009, by and between Greenlight Reinsurance, Ltd.

4 unchanged sentences

and Tom Curnock (incorporated by reference to Exhibit 10.56 of the Company’s Form 10-K filed on March 9, 2020).

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10.36 (1) Third Amendment to Employment Agreement, dated as of May 1, 2020, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd.

and Laura Accurso (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 5, 2020).

10.37 (1) Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Laura Accurso (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed August 5, 2020).

10.38 (1) Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Simon Burton (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed August 5, 2020).

10.39 (1) Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Thomas Curnock (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed August 5, 2020).

10.40 (1) Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Neil Greenspan (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q filed August 5, 2020).

10.41 (1) Retention Bonus Agreement, dated May 4, 2020 by and between Greenlight Reinsurance, Ltd and Patrick O’Brien (incorporated by reference to Exhibit 10.7 to the Company’s Form 10-Q filed August 5, 2020).

10.35 (1) Amended and Restated Restricted Stock Award Agreement dated July 30, 2020, by and between Greenlight Capital Re, Ltd and Simon Burton (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 5, 2020).

10.36 Letter Agreement between Greenlight Reinsurance, Ltd, Greenlight Reinsurance Ireland, DAC, DME Advisors II, LLC and DME Advisors LP, effective July 1, 2020 (incorporated by reference to Exhibit 10.9 to the Company’s Form 10-Q filed August 5, 2020).

10.44 (1) Deed of Settlement and Release, effective as of September 9, 2020, by and among Tim Courtis, Greenlight Capital Re, Ltd.

and Greenlight Reinsurance, Ltd.

(incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed September 9, 2020).

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10.37 (1) Deed of Settlement and Release, effective as of September 4, 2020, by and among Brendan Barry, Greenlight Capital Re, Ltd.

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10.38 Greenlight Capital Re, Ltd.

Form of Directors’ Restricted Stock Award (incorporated by reference to Exhibit 4.9 of the Company’s Registration Statement No.

10.47 (1) Greenlight Capital Re, Ltd.

Form of Employees’ Restricted Stock Award (incorporated by reference to Exhibit 4.10 of the Company’s Registration Statement No.

Share Ownership and Retention Policy for Executives and Non-Employee Directors (incorporated by reference to Exhibit 99.4 of the Company’s Form 8-K filed August 3, 2021)

10.39 (1) Greenlight Capital Re, Ltd., Short-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed November 3, 2021)

21.1 Subsidiaries of the registrant.

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March 8, 2022 March 8, 2022

/s/ BRYAN MURPHY /s/ ALAN BROOKS

/s/ URSULINE FOLEY /s/ ALAN BROOKS

Ursuline Foley

Director Alan Brooks

March 8, 2022 March 8, 2022

/s/ IAN ISAACS /s/ JOSEPH P.

Director Joseph P.

/s/ IAN ISAACS /s/ BRYAN MURPHY

Director Bryan Murphy

March 8, 2022 March 8, 2022

/s/ NEIL GREENSPAN

/s/ NEIL GREENSPAN /s/ VICTORIA GUEST

Neil Greenspan

Chief Financial Officer

(principal financial and accounting officer)

March 10, 2021

/s/ SIMON BURTON

(principal financial and accounting officer) Victoria Guest

March 8, 2022 March 8, 2022

/s/ SIMON BURTON /s/ JOHNNY FERRARI

Director and Chief Executive Officer

(principal executive officer)

March 10, 2021

(principal executive officer) Johnny Ferrari

March 8, 2022 March 8, 2022

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and schedules and our report dated March 10, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedules listed in the accompanying index and our report dated March 8, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A - Controls and Procedures - Management’s Report on Internal Control over Financial Reporting”.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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/s/ BDO USA, LLP

Grand Rapids, Michigan, USA

Grand Rapids, Michigan, U.S.A.

March 8, 2022

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We have audited the accompanying consolidated balance sheets of Greenlight Capital Re, Ltd.

(the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020 and the related notes and schedules (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021 and the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Compan y Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 8, 2022 expressed an unqualified opinion thereon.

We did not audit the financial statements of Solasglas Investments, LP, an equity method investment of the Company as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 and the period from September 1, 2018 (commencement of operations) through December 31, 2018.

The Company’s investment in Solasglas Investments, LP as of December 31, 2020 and 2019 was $166.7 million and $240.1 million, respectively, and its equity in net income (loss) of Solasglas Investment, LP was $4.4 million and $46.1 million for the year ended December 31, 2020 and 2019, respectively, and was $(60.6) million for the period from September 1, 2018 (commencement of operations) to December 31, 2018.

We did not audit the financial statements of Solasglas Investments, LP, an equity method investment of the Company, as of December 31, 2021 and 2020, and for the three years in the period ended December 31, 2021.

The Company’s investment in Solasglas Investments, LP as of December 31, 2021 and 2020 was $183.6 million and $166.7 million, respectively, and its equity in net income of Solasglas Investments, LP was $18.1 million, $4.4 million and $46.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The financial statements of Solasglas Investments, LP were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Solasglas Investments, LP, is based solely on the report of the other auditors.

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Case reserves have resulted from claims notified to the Company by its clients.

IBNR reserves relate to claims that have been incurred by insureds and reinsureds but have not yet been reported to the insurer or reinsurer, including unknown future developments on amounts already known by the insurer or reinsurer.

IBNR loss reserves relate to claims that have been incurred by insureds and reinsureds but have not yet been reported to the insurer or reinsurer, including unknown future developments on amounts already known by the insurer or reinsurer.

The calculation of the IBNR reserves requires the Company’s reserving actuaries to calculate a best, or “point,” estimate of reserves for each contract.

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We identified the IBNR portion of the Company’s loss and loss adjustment expense reserves as a critical audit matter.

The Company’s actuarial methodologies and key assumptions used to calculate IBNR reserves are highly subjective and can have a significant impact on the loss and loss adjustment expense reserve.

The Company’s actuarial methodologies and key assumptions used to calculate IBNR loss reserves are highly subjective and can have a significant impact on the loss and loss adjustment expense reserve.

Auditing these methodologies and key assumptions used involves a high degree of subjective auditor judgment due to the assessment of risk and nature and extent of specialized skill and knowledge needed to address the risk.

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• Management’s review of the independent external actuarial report, which includes an independent recommended reserve balance.

A comparison is performed between the Company’s internal reserves balance and the recommended balance per the independent external actuary.

• Reviewing the development of prior year estimates of IBNR reserves.

• Testing the completeness and accuracy of the source information used by the Company and any additional source information used by BDO’s actuarial specialists to calculate the IBNR reserves.

• Utilizing personnel with specialized knowledge and skill in actuarial services to evaluate the reasonableness of the Company’s loss and loss adjustment expense reserves by developing an independent estimate and reasonable range of actuarial central estimates based on an alternative combination of methods, assumptions and/or segmentation of the data.

A comparison is performed between the Company’s internal reserve balance and the recommended balance per the independent external actuary.

• Reviewing the development of prior year estimates of IBNR loss reserves.

• Testing the completeness and accuracy of the source information used by the Company and any additional source information used by BDO’s actuarial specialists to calculate the IBNR loss reserves.

• Utilizing personnel with specialized knowledge and skill in actuarial services to:

(i) evaluate the appropriateness of the methodology and the assumptions used by management and management’s specialist and (ii) evaluate the reasonableness of the Company’s loss and loss adjustment expense reserves by developing an independent estimate and reasonable range of actuarial central estimates based on an alternative combination of methods, assumptions and/or segmentation of the data.

/s/ BDO USA, LLP

We have served as the Company's auditor since 2006.

Grand Rapids, Michigan, USA

Grand Rapids, Michigan, U.S.A.

March 8, 2022

4 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying statements of assets, liabilities and partners’ capital of Solasglas Investments, LP (the “Partnership”), including the condensed schedules of investments, as of December 31, 2020 and 2019, and the related statements of operations, changes in partners’ capital and cash flows for the years ended December 31, 2020, December 31, 2019 and for the period from September 1, 2018 (commencement of operations) to December 31, 2018, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2020 and 2019, and the results of its operations, changes in its partners’ capital and its cash flows for the years ended December 31, 2020, December 31, 2019 and for the period from September 1, 2018 (commencement of operations) to December 31, 2018 in conformity with U.S.

We have audited the accompanying statements of assets, liabilities and partners’ capital of Solasglas Investments, LP (the “Partnership”), including the condensed schedules of investments, as of December 31, 2021 and 2020, the related statements of operations, changes in partners’ capital and cash flows for the years December 31, 2021, December 31, 2020 and December 31, 2019, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2021 and 2020, and the results of its operations, changes on its partners’ capital and its cash flows for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 in conformity with U.S.

generally accepted accounting principles.

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Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to those charged with governance and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

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Unearned premiums ceded 42 —

Notes receivable (net of allowance for expected credit losses - see Note 2) 6,101 20,202

Notes receivable — 6,101

Other assets 5,885 2,993

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General and administrative expenses 29,369 26,401 29,822

Deposit interest expense 11,655 — —

Interest expense 6,263 6,280 6,263

3 unchanged sentences

Net income (loss) $ 17,578 $ 3,866 $ ( 3,986 )

Loss attributable to non-controlling interest in related party joint venture — — 4,275

Net income (loss) attributable to Greenlight Capital Re, Ltd.

$ 3,866 $ ( 3,986 ) $ ( 350,054 )

Earnings (loss) per share

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GREENLIGHT CAPITAL RE, LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the years ended December 31, 2021, 2020, and 2019

(expressed in thousands of U.S.

Year ended December 31

2021 2020 2019

Ordinary share capital

Beginning balance $ 3,699 $ 3,638 $ 3,736

Balance - beginning of period $ 3,452 $ 3,699 $ 3,638

Issue of Class A ordinary shares, net of forfeitures 41 8 61

Repurchase of Class A ordinary shares ( 109 ) ( 255 ) —

Ending balance 3,452 3,699 3,638

Balance - end of period 3,384 3,452 3,699

Additional paid-in capital

Beginning balance 503,547 499,726 503,316

Balance - beginning of period 488,488 503,547 499,726

Repurchase of Class A ordinary shares ( 9,891 ) ( 17,526 ) —

Share-based compensation expense 3,187 2,467 3,821

Issuance of convertible notes — — 7,896

Ending balance 488,488 503,547 499,726

Balance - end of period 481,784 488,488 503,547

Retained earnings (deficit)

Beginning balance ( 30,063 ) ( 26,077 ) 324,272

Balance - beginning of period ( 27,083 ) ( 30,063 ) ( 26,077 )

Repurchase of Class A ordinary shares — — —

Cumulative effect of adoption of accounting guidance for expected credit losses at January 1, 2020 — ( 886 ) —

Net income (loss) attributable to Greenlight Capital Re, Ltd.

3,866 ( 3,986 ) ( 350,054 )

Ending balance ( 27,083 ) ( 30,063 ) ( 26,077 )

Non-controlling interest in joint venture

Beginning balance — 485 12,933

Change in non-controlling interest in related party joint venture — ( 485 ) ( 12,448 )

Ending balance — — 485

Net income (loss) 17,578 3,866 ( 3,986 )

Balance - end of period ( 9,505 ) ( 27,083 ) ( 30,063 )

Total shareholders' equity $ 475,663 $ 464,857 $ 477,183

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Purchases of investments ( 4,996 ) ( 1,993 ) ( 4,702 )

Sales of investments — — 1,002,374

Payments for financial contracts — — ( 129,907 )

Proceeds from financial contracts — — 44,596

Securities sold, not yet purchased — — 340,693

Dispositions of securities sold, not yet purchased — — ( 844,379 )

Proceeds from sales of investments 20,755 — —

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

Change in due to prime brokers and other financial institutions — — ( 672,700 )

Notes receivable collected, net 19,867 671 1,636

Change in notes receivable 6,101 19,867 671

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

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Financing activities

Net proceeds from issuance of convertible senior notes payable, net of costs — — 96,576

Repurchase of Class A ordinary shares ( 10,000 ) ( 17,781 ) —

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Net increase (decrease) in cash, cash equivalents and restricted cash ( 43,205 ) ( 13,600 ) 64,675

Cash, cash equivalents and restricted cash at beginning of the period (see Note 2) 767,906 703,231 1,531,098

Cash, cash equivalents and restricted cash at end of the period (see Note 2) $ 754,306 $ 767,906 $ 703,231

Cash, cash equivalents and restricted cash at beginning of the period 754,306 767,906 703,231

Cash, cash equivalents and restricted cash at end of the period $ 711,101 $ 754,306 $ 767,906

Supplementary information

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(“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.

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

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

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

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

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

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

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

The consolidated financial statements include the accounts of GLRE and the consolidated financial statements of its wholly-owned subsidiaries, Greenlight Re, GRIL, Verdant, and Greenlight Re UK.

All significant intercompany transactions and balances have been eliminated on consolidation.

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

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

However, there remains considerable uncertainty relating to the ultimate losses, which will depend on the extent and duration of economic contraction, impact of recent court rulings, and outcomes of pending court cases.

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

Significant estimates used in the preparation of the Company’s 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 7 for the significant assumptions that served as the basis for the Company's reserve estimates for the COVID-19 pandemic).

SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

Other than the changes relating to the adoption of ASU 2016-13, there have been no changes to the Company’s significant accounting policies.

Use of Estimates

The preparation of 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 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 consolidated financial statements include, but are not limited to, loss and loss adjustment expense reserves, premiums written, earned and receivable, variability underlying risk transfer assessments, allowances for credit losses, share-based compensation, valuation allowances associated with deferred tax assets and investment impairments.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and certain short-term, highly liquid investments with original maturity dates of three months or less.

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Restricted Cash and Cash Equivalents

Restricted Cash and Restricted Cash Equivalents

The Company maintains cash and cash equivalent balances to collateralize regulatory trusts and letters of credit issued to cedents (see Notes 6 and 15).

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

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December 31, 2021 December 31, 2020

3 unchanged sentences

Total cash, cash equivalents, and restricted cash presented in the consolidated statements of cash flows

$ 711,101 $ 754,306

Premium Revenue Recognition

The Company writes excess of loss contracts and quota share contracts, and estimates the ultimate premiums for the contract period.

These estimates are based on information received from the ceding companies and actuarial pricing models used by the Company.

For excess of loss contracts, the total ultimate estimated premiums are recorded as premiums written at the inception of the contract.

For quota share contracts, the premiums are recorded as written in the same periods in which the underlying insurance contracts are written, and are based on cession statements from cedents.

These statements are typically received monthly or quarterly depending on the terms specified in each contract.

For any reporting lag, premiums written are estimated based on the portion of the ultimate estimated premiums relating to the risks underwritten during the lag period.

Premium estimates are reviewed by management at least quarterly.

The Company bases these estimates on actuarial pricing models and information received from ceding companies.

For excess of loss contracts, the Company writes the total ultimate estimated premiums at the contract’s inception.

For quota share contracts, the Company writes premiums in the same periods in which the underlying insurance contracts are written, based on cession statements from cedents.

The Company typically receives these statements monthly or quarterly, depending on the terms specified in each contract.

For any reporting lag, the Company estimates premiums written based on the portion of the estimated ultimate premiums relating to the risks bound during the lag period.

The Company’s management reviews premium estimates at least quarterly.

Such review includes a comparison of actual reported premiums to expected ultimate premiums, along with a review of the aging and collection of premiums.

Based on management’s review, the appropriateness of the premium estimates is evaluated, and any adjustments to these estimates are recorded in the period in which they are determined.

Management evaluates the appropriateness of the premium estimates on the basis of these reviews and records any adjustments to these estimates in the period in which they are determined.

Changes in premium estimates, including premium receivable on both excess of loss and quota share contracts, are not unusual and may result in significant adjustments in any period.

A significant portion of amounts included in the caption “Reinsurance balances receivable” in the Company’s consolidated balance sheets represent estimated premiums written, net of commissions and brokerage, and are not currently due based on the terms of the underlying contracts.

Additional premiums due on a contract that has no remaining coverage period are earned in full when written.

A portion of amounts included in the caption “Reinsurance balances receivable” in the Company’s consolidated balance sheets represent estimated premiums written, net of commissions and brokerage, and are not currently due based on the terms of the underlying contracts.

Additional premiums due on a contract with no remaining coverage period are earned in full when written.

Certain contracts allow for reinstatement premiums in the event of a loss.

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Unearned premiums represent the unexpired portion of reinsurance provided.

Funds Held by Cedents

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

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 December 31, 2021, funds held by cedents were $ 246.9 million (December 31, 2020:

$ 127.6 million).

Reinsurance Premiums Ceded

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Acquisition Costs

Policy acquisition costs are costs that vary with, and are directly related to, the successful production of new and renewal business, and consist principally of commissions, taxes and brokerage expenses.

Acquisition costs incurred on reinsurance assumed are shown net of commissions earned on reinsurance ceded.

Policy acquisition costs vary with, and are directly related to, the successful production of new and renewal business and consist principally of commissions, taxes, and brokerage expenses.

The Company presents acquisition costs incurred on reinsurance assumed net of commissions earned on reinsurance ceded.

However, if the sum of a contract’s expected losses and loss expenses and deferred acquisition costs exceeds associated unearned premiums and expected investment income, a premium deficiency is determined to exist.

In this event, deferred acquisition costs are written off to the extent necessary to eliminate the premium deficiency.

If the premium deficiency exceeds deferred acquisition costs then a liability is accrued for the excess deficiency.

There were no premium deficiency adjustments recognized during the periods presented herein.

In this event, the Company writes off deferred acquisition costs to the extent necessary to eliminate the premium deficiency.

If the premium deficiency exceeds deferred acquisition costs, the Company accrues a liability for the excess deficiency.

The Company did not recognize any premium deficiency adjustments during the periods presented.

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Policy acquisition costs also include profit commissions, which are recognized on a basis consistent with our estimate of losses and loss expenses.

As of December 31, 2020, $ 10.9 million of profit commission reserves were recoverable (December 31, 2019:

$ 1.2 million payable).

The recovery of profit commissions was related to mortgage contracts based on increases in loss reserves recorded by the Company during 2020.

Policy acquisition costs also include profit commissions, which the Company recognized on a basis consistent with its estimate of losses and loss expenses.

At December 31, 2021, $ 8.3 million of profit commission reserves were recoverable, net of profit commissions payable (December 31, 2020:

$ 10.9 million).

For the year ended December 31, 2021, net profit commission expense (income) of $ 8.6 million, (2020:

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Funds withheld represent reinsurance balances retained as collateral by the Company on retroceded contracts.

Any interest expense that the Company incurs while these funds are withheld are included under the caption “Net investment income (loss)” in the consolidated statements of operations.

Funds Held by Cedents

The caption “Reinsurance balances receivable” in the Company’s consolidated balance sheets includes amounts held by cedents and Funds at Lloyd’s provided to support the reinsurance contracts with Lloyd’s syndicates.

As of December 31, 2020, funds held by cedents were $ 127.6 million (2019:

$ 68.0 million).

Any interest expense that the Company incurs while these funds are withheld is included under the caption “Net investment income (loss)” in the consolidated statements of operations.

Loss and Loss Adjustment Expense Reserves and Recoverable

The Company’s loss and loss adjustment expense reserves are composed of:

● case reserves resulting from claims notified to the Company by its clients;

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

These reserve estimates are based on the Company’s own actuarial estimates derived from reports received from ceding companies, industry data and historical experience.

● case reserves for loss and loss adjustment expenses resulting from claims notified to the Company by its clients;

The Company estimates these reserves based on reports from ceding companies, industry data, and historical experience analyzed using standard actuarial and statistical techniques.

The analysis performed includes an assessment of currently available data, predictions of future developments, estimates of future trends, and other factors.

These estimates are reviewed by the Company’s reserving committee at least quarterly and adjusted as necessary.

Since reserves are estimates, the final settlement of losses may vary from the reserves established and any adjustments to the estimates, which may be material, are recorded in the period they are determined.

Loss estimates are based upon actuarial and statistical projections, an assessment of currently available data, predictions of future developments, estimates of future trends and other factors.

The final settlement of losses may vary, perhaps materially, from the reserves recorded.

All adjustments to the estimates are recorded in the period in which they are determined.

GAAP does not permit establishing loss reserves, which include case reserves and IBNR loss reserves, until the occurrence of an event which may give rise to a claim.

The Company recognizes all adjustments to the estimates in the period they are determined.

GAAP does not permit establishing loss reserves, which include case reserves and IBNR loss reserves, until the occurrence of an event that may give rise to a claim.

As a result, only loss reserves applicable to losses incurred up to the reporting date are established, with no allowance for the establishment of loss reserves to account for expected future loss events.

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These estimates are reviewed periodically and adjusted when deemed necessary.

The Company may ultimately be unable to recover the loss and loss adjustment expense recoverable amounts due to the retrocessionaires’ inability to pay.

The Company may be unable to recover the loss and loss adjustment expense recoverable amounts due as a result of the retrocessionaires’ inability to pay.

The Company regularly evaluates the financial condition of its retrocessionaires and records provisions for uncollectible reinsurance expenses recoverable when recovery is no longer probable.

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To establish catastrophe IBNR loss estimates, the Company uses estimates communicated by ceding companies, industry data and information, knowledge of the business written, and management’s judgment.

For all non-natural peril business, initial reserves for each individual contract are determined on the basis of a combination of:

(i) the pricing analysis of the expected loss ratio performed prior to the contract being bound;

For all non-natural peril business, initial reserves for each contract are determined based on a combination of (i) the pricing analysis of the expected loss ratio performed prior to binding the contract;

(ii) the underwriter’s detailed knowledge of the cedent, its operations and future business plans;

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This information typically includes, but is not limited to, data related to premiums, losses, exposure, business mix, industry performance, and associated trends covering as much history as deemed appropriate.

The level of detail within the data obtained varies greatly depending on the underlying contract, line of business, client and/or coverage provided.

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The level of detail within the data obtained varies greatly depending on the underlying contract, line of business, client, and coverage provided.

In all cases, the Company requests each client to provide data for each reporting period, which, depending on the contract, could be on a monthly or quarterly basis.

The exact data reporting requirements are specified in the terms and conditions of each contract.

Where practical, historical reserving data that is received from a client is compared to publicly available financial statements of the client to identify, confirm and monitor the accuracy and completeness of the data.

Generally, the Company obtains regular updates of premium and loss related information for the current and historical periods, which are utilized to update the initial expected loss ratio.

The terms and conditions of each contract specify the data reporting requirements.

Generally, the Company obtains regular updates of premium and loss-related information for the current and historical periods and utilizes them to update the initially expected loss ratio.

There may be a lag between (i) claims being reported by the underlying insured to the Company’s cedent and (ii) claims being reported by the Company’s cedent to the Company.

This lag may impact the Company’s loss reserve estimates.

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may impact the Company’s loss reserve estimates.

Client reports have pre-determined due dates (for example, fifteen days after each month-end).

As a result, the lag depends in part upon the terms of the specific contract.

The timing of the reporting requirements is designed so that the Company receives premium and loss information as soon as practicable once the client has closed its books.

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Additionally, most of the contracts that have the potential for large single event losses have provisions that such loss notifications are provided to the Company immediately upon the occurrence of an event.

Once the updated information is received, the Company uses a variety of standard actuarial methods for its analysis each quarter.

Such methods may include the following:

Once the updated information is received, the Company uses various standard actuarial methods for its analysis each quarter.

Such methods typically include the following:

● Paid loss development method:

Ultimate losses are estimated by calculating past paid loss development factors and applying them to exposure periods with further expected paid loss development.

The paid loss development method assumes that losses are paid in a consistent pattern.

This method assumes that losses are paid in a consistent pattern.

It provides an objective test of reported loss projections because paid losses contain no reserve estimates.

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Ultimate losses are estimated by calculating past reported loss development factors and applying them to exposure periods with further expected reported loss development.

Since reported losses include payments and case reserves, changes in both of these amounts are incorporated in this method.

This method incorporates changes in payments and case reserves.

● Expected loss ratio method:

Ultimate losses are estimated by multiplying earned premiums by an expected loss ratio.

The expected loss ratio is selected using industry data, historical company data and actuarial professional judgment.

The expected loss ratio is often determined using industry data, historical company data, past pricing or reserving analysis performed, and actuarial judgment.

This method is typically used for lines of business and contracts where there are no historical losses or where past loss experience is not considered applicable to the current period.

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● Frequency / Severity method:

Ultimate losses are estimated under this method by multiplying the ultimate number of claims (i.e.

the frequency multiplied by the exposure base on which the frequency has been determined), by the estimated ultimate average cost per claim (i.e.

the severity).

This approach enables trends and patterns in the rates of claims emergence (i.e.

reporting) and settlement (i.e.

closure), as well as in the average cost of claims, to be analyzed separately.

In addition, the Company may supplement its analysis with other reserving methodologies that are deemed to be relevant to specific contracts.

For each contract, the Company utilizes reserving methodologies that are deemed appropriate to calculate a best, or “point,” estimate of reserves.

The decision as to whether to use a single methodology or a combination of multiple methodologies depends upon the segment of the portfolio being analyzed and the judgment of the actuaries.

Ultimate losses are estimated under this method by multiplying the ultimate number of claims (i.e., the frequency multiplied by the exposure base on which the frequency has been determined) by the estimated ultimate average cost per claim (i.e., the severity).

This approach enables trends and patterns in the rates of claims emergence (i.e., reporting) and settlement (i.e., closure) and the average cost of claims to be analyzed separately.

In addition, the Company may supplement its analysis with other reserving methodologies that it deems relevant to specific contracts.

For each contract, the Company utilizes reserving methodologies it considers appropriate to calculate a best estimate of reserves.

The decision of whether to use a single methodology or a combination depends upon the portfolio segment being analyzed and the actuaries’ judgment.

The Company’s reserving methodology does not require a fixed weighting of the various methods used.

Certain methods are considered more appropriate than others depending on the type, structure, age, maturity, and duration of the expected losses on the contract.

For example, the ultimate incurred loss for contracts that are relatively new (and therefore have experienced little paid loss development) may be more appropriately estimated using a Bornhuetter-Ferguson reported loss method than a paid loss development method.

The Company’s gross aggregate reserves are the sum of the point estimate reserves of all portfolio exposures.

For example, the ultimate incurred loss for relatively new contracts (and therefore have experienced little paid loss development) may be more appropriately estimated using a Bornhuetter-Ferguson reported loss method than a paid loss development method.

The Company’s gross aggregate reserves are the sum of the best estimate reserves of all portfolio exposures.

Generally, IBNR loss reserves are calculated by estimating the ultimate incurred losses at any point in time and subtracting cumulative paid claims and case reserves.

Each quarter, the Company’s reserving committee, which is led by the Chief Actuary, meets to assess the adequacy of our loss reserves based on the reserve analysis and recommendations prepared by the Company’s reserving department.

Each quarter, the Company’s Reserving Committee, led by the Chief Actuary, meets to assess the adequacy of our loss reserves based on the reserve analysis and recommendations prepared by the Company’s reserving department.

The Reserving Committee reviews, discusses, and puts forward a loss reserve recommendation for the Audit Committee’s approval.

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Additionally, an independent third-party actuarial firm performs a quarterly reserve review and annually opines on the reasonableness and adequacy of the aggregate loss reserves.

The Company provides the third-party actuarial firm with its pricing models, reserving analysis and any other data.

The Company provides the third-party actuarial firm with its pricing models, reserving analysis, and other data.

Additionally, the actuarial firm may inquire as to the various assumptions and estimates used in the reserving analysis.

The actuarial firm independently creates its own reserving models based on industry loss information, augmented by specific client loss information as well as its own independent assumptions and estimates.

Based on various reserving methodologies that the actuarial firm considers appropriate, it creates a loss reserve estimate for each segment in the portfolio and recommends an aggregate loss reserve, including IBNR.

In the event of material differences between the Company's aggregated booked reserves and the actuarial firm's recommended reserves, the reserving committee and Audit Committee would be notified, with the reserves adjusted as deemed appropriate.

The actuarial firm independently creates its own reserving models based on industry loss information, augmented by client-specific loss information and independent assumptions and estimates.

Based on various reserving methodologies that the actuarial firm considers appropriate, it creates a loss reserve estimate for each segment in the portfolio.

It recommends an aggregate loss reserve, including IBNR.

In the event of material differences between the Company's aggregated booked reserves and the actuarial firm's recommended reserves, the reserving committee and Audit

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Committee would be notified, with the reserves adjusted as deemed appropriate.

To date, there have been no material differences resulting from the external actuary’s reviews requiring adjustments to the Company’s booked reserves.

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At December 31, 2021 and 2020, the Company did not have a significant backlog in our claims processing.

There were no significant changes in the actuarial methodology or assumptions relating to the Company’s loss and loss adjustment expense reserves during the year ended December 31, 2020.

There were no significant changes in the actuarial methodology or assumptions relating to the Company’s loss and loss adjustment expense reserves during the years ended December 31, 2021, and 2020.

Reinsurance Assets

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

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

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

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

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

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

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

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

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

At December 31, 2020, the allowance for expected credit losses was $ 0.1 million.

Notes Receivable

Notes receivable represent promissory notes receivable from third parties.

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

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

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

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

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

At December 31, 2020, the Company considers the note receivable balance to be collectible and has not experienced any default on payments since inception of this note in 2018.

During the year ended December 31, 2020 the Company agreed to settle a promissory note that had been entered into with a reinsurance counterparty in 2015.

The Company’s amortized cost associated with the promissory note at the date of settlement was $ 13.3 million.

In connection with this settlement, the Company received $ 19.1 million, resulting in a gain of $ 5.8 million that was included in “net investment income (loss)” in the Company’s consolidated statements of operations.

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

When there is uncertainty as to the collection of

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interest contractually due, the Company places the note on non-accrual status.

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

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

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

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

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

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

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

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

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

Year ended December 31

2020 2019 2018

($ in thousands)

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

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

Charge offs ( 15,000 ) — —

Net increase (decrease) in allowance ( 750 ) 5,988 —

Balance at end of period $ — $ 15,000 $ 9,012

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.

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.

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.

Credit ratings of the counterparties are forward-looking and consider a variety of economic scenarios.

The Company's evaluation of the required allowance for reinsurance balances receivable and loss and loss adjustment expenses recoverable considers the current economic environment as well as macroeconomic outcomes.

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 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 December 31, 2021, the Company has recorded an allowance for expected credit loss on its Reinsurance Assets of $ 0.1 million.

(December 31, 2020, $ 0.1 million).

Deposit Assets and Liabilities

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 consolidated statements of operations under the caption “Other income (expense).” The Company’s deposit assets and liabilities are recorded in the Company’s consolidated balance sheets in the caption “Reinsurance balances receivable” and “Reinsurance balances payable,” respectively.

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 and expense recorded in the Company’s consolidated statements of operations under the captions “Other income (expense)” and “Deposit interest expense,” respectively.

The Company records deposit assets and liabilities in its consolidated balance sheets in the caption “Reinsurance balances receivable” and “Reinsurance balances payable,” respectively.

At December 31, 2021, deposit assets and deposit liabilities were $ 3.5 million and $ 18.6 million, respectively (December 31, 2020:

$ 4.6 million and $ 31.0 million, respectively).

For the years ended December 31, 2020, 2019, and 2018, the interest income/(expense) on deposit accounted contracts was as follows:

Year ended December 31

For the years ended December 31, 2021, 2020, and 2019, the interest income and (expense) on deposit accounted contracts were as follows:

2021 2020 2019

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Equity Method Accounted Investments

Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting.

The Company accounts for its investments in investee companies that are not consolidated but over which the Company exercises significant influence under the equity method of accounting.

Whether the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company.

Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s consolidated balance sheets and statements of operations;

however, the Company’s share of the earnings or losses of the investee company is reflected in the caption ‘‘Net investment income (loss)’’ in the consolidated statements of operations.

The Company’s carrying value in an equity method investee company is reflected in the caption ‘‘Other investments’’ in the Company’s consolidated balance sheets.

however, the Company’s share of the earnings or losses of the investee company is reflected in the caption ‘‘Net investment income (loss)’’ in the consolidated statements of

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The Company’s carrying value in an equity method investee company is reflected in the caption ‘‘Other investments’’ in the Company’s consolidated balance sheets.

When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed the obligations of the investee company or has committed additional funding (see Notes 3 and 4).

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Financial Instruments

The Company purchases “other investments” which may include investments in private and unlisted equity securities, limited partnerships and commodities, all of which are carried at fair value.

The Company purchases “other investments,” which may include investments in private and unlisted equity securities, limited partnerships, and commodities.

Private investments and unlisted equities include securities that do not have readily determinable fair values.

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.

For securities classified as “other investments,” any realized and unrealized gains or losses are determined on the basis of the specific identification method (by reference to cost or amortized cost, as appropriate) and included in the caption “Net investment income (loss)” in the Company’s consolidated statements of operations.

Interest income and interest expense are recorded on an accrual basis.

The Company records interest income and interest expense on an accrual basis.

Share-Based Compensation

The Company has established a stock incentive plan for directors, employees, and consultants.

The Company recognizes share-based compensation costs on the basis of the fair value at the grant date of the award.

The Company recognizes share-based compensation costs based on the fair value at the grant date of the award.

The Company measures compensation for restricted shares and restricted stock units (“RSUs”) based on the price of the Company’s common shares at the grant date.

For restricted shares and RSUs with both service and performance vesting conditions, the expense is recognized based on management’s estimate of the probability of the performance conditions being achieved based on historical results and expectations of future results.

If the performance conditions are expected to be met, the expense is attributed to the period for which the requisite service has been rendered.

For restricted shares and RSUs with only service vesting conditions, the expense is recognized on a straight line basis over the vesting period, net of any estimated or expected forfeitures.

For restricted shares and RSUs with service and performance vesting conditions, the expense is recognized based on management’s estimate of the probability of the performance conditions being achieved based on historical results and expectations of future results.

If the Company expects to meet the performance conditions, it attributes the expense to the period the requisite service is rendered.

For restricted shares and RSUs with only service vesting conditions, the Company recognizes the associated expense on a straight-line basis over the vesting period, net of any estimated or expected forfeitures.

The forfeiture rate is estimated based on the Company’s historical actual forfeitures relating to restricted shares and RSUs granted to employees.

The forfeiture rate is reviewed annually and adjusted as necessary.

No forfeiture rate is used for restricted shares granted to directors which vest over a maximum of twelve-month period.

The Company applies no forfeiture rate to restricted shares granted to directors, which vest over a maximum twelve-month period.

Determining the fair value of share purchase options at the grant date requires significant estimation and judgment.

The Company uses the Black-Scholes option-pricing model to assist in the calculation of fair value for share purchase options.

The model requires estimation of various inputs such as estimated term, forfeiture and dividend rates and expected volatility.

In determining the grant date fair value, the Company uses the full ten-year life of the options as the estimated term, and assumes no forfeitures and no dividends paid during the life of the options.

The estimate of expected volatility is based on the daily historical trading data of the Company’s Class A ordinary shares from the date that these shares commenced trading (May 24, 2007) to the grant date.

For share purchase options issued under the employee stock incentive plan, the compensation cost is calculated and recognized over the vesting periods on a graded vesting basis (see Note 11).

The model requires estimating various inputs such as the term, forfeiture and dividend rates, and expected volatility.

In determining the grant date fair value, the Company uses the entire ten-year life of the options as the estimated term and assumes no forfeitures and no dividends paid during the life of the options.

The Company bases its estimate of expected volatility on the daily historical trading data of the Company’s Class A ordinary shares from the date these shares commenced trading (May 24, 2007) to the grant date.

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For share purchase options issued under the employee stock incentive plan, the compensation cost is calculated and recognized over the vesting periods on a graded vesting basis (see Note 11).

Convertible Notes

The Company has determined that the senior convertible notes’ cash conversion option represents an embedded derivative, which has therefore been bifurcated from the underlying contract for financial reporting purposes.

The Company has determined that the senior convertible notes’ cash conversion option represents an embedded derivative and has bifurcated it from the underlying contract for financial reporting purposes.

For the debt component, the Company recorded a liability equivalent to the present value of comparable debt without the conversion features at the time of issuance.

The remainder of the proceeds, which represented the embedded derivative, were included in the caption “Additional paid-in capital” in the Company’s consolidated balance sheets.

The remainder of the proceeds, which represented the embedded derivative, was included in the caption “Additional paid-in capital” in the Company’s consolidated balance sheets

Costs incurred in issuing the convertible notes consisted primarily of underwriting, legal, accounting, and printing fees.

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These costs are amortized over the term of the debt and are included in the caption “Interest expense” in the Company’s consolidated statements of operations.

The issuance costs allocated to the embedded derivative have been deducted from additional paid-in capital.

The Company has allocated a portion of the issuance costs to the embedded derivative and deducted this portion from additional paid-in capital.

A recently issued U.S.

GAAP accounting standard no longer permits entities to bifurcate embedded conversion features from the underlying contract.

See the below section captioned “Recently Issued Accounting Standards Not Yet Adopted” for the impact of the new accounting standard on the Company’s accounting of its senior convertible notes.

Foreign Exchange

The reporting and functional currency of the Company and all its significant subsidiaries is the U.S.

Transactions in foreign currencies are recorded in U.S.

dollars at the exchange rates in effect on the transaction date.

The Company records foreign currency transactions at the exchange rates in effect on the transaction date.

Monetary assets and liabilities in foreign currencies at the balance sheet date are converted at the exchange rate in effect at the balance sheet date and exchange gains and losses, if any, are included in the caption “Other income (expense), net” in the Company’s consolidated statements of operations.

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

Derivative instruments

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

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

The Company recognizes derivative financial instruments in the 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 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 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 consolidated balance sheets consists primarily of prepaid expenses, fixed assets, right-of-use lease assets, other receivables, and deferred tax assets.

Other Liabilities

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

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

Comprehensive Income (Loss)

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Earnings (Loss) Per Share

The Company’s unvested restricted stock awards, which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are considered “participating securities” for the purposes of calculating earnings (loss) per share.

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Basic earnings per share is calculated on the basis of the weighted average number of common shares and participating securities outstanding during the period.

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

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

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

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

The table below presents the shares outstanding for the purposes of the calculation of earnings (loss) per share for the years ended December 31, 2020, 2019, and 2018:

Year ended December 31

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

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

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

The table below presents the shares outstanding for the calculation of earnings (loss) per share for the years ended December 31, 2021, 2020, and 2019:

2021 2020 2019

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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.

The Company has an undertaking from the Governor-in-Cabinet of the Cayman Islands, pursuant to the provisions of the Tax Concessions Law, as amended, that, in the event that the Cayman Islands enacts any legislation that imposes tax on profits, income, gains or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax will not be applicable to GLRE, Greenlight Re nor their respective operations, or to the Class A or Class B ordinary shares or related obligations, before February 1, 2025.

The Company has an undertaking from the Governor-in-Cabinet of the Cayman Islands, pursuant to the provisions of the Tax Concessions Act, as amended, that, in the event that the Cayman Islands enacts any legislation that imposes tax on profits, income, gains or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax will not be applicable to GLRE, Greenlight Re nor their respective operations, or to the Class A or Class B ordinary shares or related obligations, before February 1, 2025.

Verdant is incorporated in Delaware and therefore is subject to taxes in accordance with the U.S.

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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 is reasonably likely to have a material impact on the Company.

Segment Information

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Recently Issued Accounting Standards Adopted

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

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

Recently Issued Accounting Standards Not Yet Adopted

In January 2020, the FASB issued ASU No.

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

ASU 2020-01 clarifies

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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.

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.

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

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

Recently Issued Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU No.

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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.

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 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 method of transition or a fully retrospective method of transition.

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

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

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 9) 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.

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

Prior to January 2, 2019, the Company and its reinsurance subsidiaries were party to a joint venture agreement (the “venture agreement”) with DME Advisors, LP (“DME Advisors”) and DME Advisors LLC (“DME”) under which the Company, its reinsurance subsidiaries and DME were participants in a joint venture (the “Joint Venture”) for the purpose of managing certain jointly held assets.

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

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

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

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

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

On September 1, 2018, the Company entered into an amended and restated exempted limited partnership agreement (as amended by the letter agreement dated as of August 5, 2020 (the “Previous SILP LPA”) of Solasglas Investments, LP (“SILP”), with DME Advisors II, LLC (“DME II”), as General Partner, Greenlight Re, and GRIL, (together the “GLRE Limited Partners”), and the initial limited partner (each, a “Partner”).

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

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

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

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

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

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

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

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

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

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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.

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

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

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

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

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

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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 presents its investment in SILP in its 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.

As of December 31, 2020, the net asset value of the GLRE Limited Partners’ investment in SILP was $ 166.7 million (2019:

$ 240.1 million), representing 75.7 % (2019:

At December 31, 2021, the net asset value of the GLRE Limited Partners’ investment in SILP was $ 183.6 million (December 31, 2020:

$ 166.7 million), representing 78.2 % (December 31, 2020:

75.7 %) of SILP’s total net assets.

The remaining 24.3 % (2019:

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

DME II held the remaining 21.8 % (December 31, 2020:

24.3 %) of SILP’s total net assets.

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

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

As of December 31, 2020, the majority of SILP’s long investments are composed of cash and publicly-traded equity securities, which can 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 years ended December 31, 2020, and 2019 and the period from September 1, 2018 (commencement of operations) to December 31, 2018 was $ 4.4 million, $ 46.1 million and $( 60.6 ) million respectively, and shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s consolidated statements of operations.

At December 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 years ended December 31, 2021, 2020, and 2019 was $ 18.1 million, $ 4.4 million, and $ 46.1 million, respectively, and shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s consolidated statements of operations.

The change in the net asset value of SILP for the year ended December 31, 2021, was primarily driven by withdrawals made by the GLRE Limited Partners for paying claims and posting collateral to reinsurance clients.

As of December 31, 2020, the Company’s investments in SILP was in excess of 10 % of the Company’s total shareholders’ equity, with fair value of $ 166.7 million (2019:

$ 240.1 million), representing 35.9 % (2019:

At December 31, 2021, the Company’s investments in SILP was in excess of 10 % of the Company’s total shareholders’ equity, with a fair value of $ 183.6 million (December 31, 2020:

$ 166.7 million), representing 38.6 % (December 31, 2020:

35.9 %), of total shareholders’ equity.

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The summarized financial statements of SILP are presented below.

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Summarized Statement of Assets and Liabilities of Solasglas Investments, LP

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Due from brokers 84,775 92,053

Cash and cash equivalents — 111,046

Interest and dividends receivable 28 59

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Derivative contracts, at fair value ( 7,253 ) ( 4,156 )

Capital withdrawals payable ( 10,000 ) —

Due to brokers — ( 9,179 )

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Summarized Statement of Operations of Solasglas Investments, LP

Year ended December 31 From September 1, 2018 (commencement of operations) to December 31, 2018

Year ended December 31

2021 2020 2019

($ in thousands)

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

Year ended December 31 From September 1, 2018 (commencement of operations) to December 31, 2018

Year ended December 31

2021 2020 2019

($ in thousands)

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FINANCIAL INSTRUMENTS

Purchases and sales of investments are disclosed in the Company’s consolidated statements of cash flows.

Purchases and sales of financial instruments are disclosed in the Company’s consolidated statements of cash flows.

The following table summarizes the change in unrealized gains and losses and the realized gains and losses on financial instruments included in the caption “Net investment income (loss)” in the Company’s consolidated statements of operations for the years ended December 31, 2021, 2020, and 2019:

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

• Private investments and unlisted equities, which consist primarily of investments related to Innovations to support technology innovators in the (re)insurance space by providing capital, risk capacity, and access to a broad insurance network,

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

• An investment accounted for under the equity method.

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

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

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

At December 31, 2021, the Company included the following securities in the caption “Other investments”:

Cost Unrealized

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Derivative financial instruments (not designated as hedging instruments) — 335 — 335

Investment accounted for under the equity method — — — 6,545

Total other investments $ 17,411 $ 31,773 $ ( 1,800 ) $ 47,384

At December 31, 2019, 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

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

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

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

Investment accounted for under the equity method — — — 6,545

Total other investments $ 29,418

Private investments and unlisted equities include securities that do not have readily determinable fair values.

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 December 31, 2020, the carrying value of private investments and unlisted equities was $ 21.8 million (2019:

$ 10.7 million), and incorporated upward adjustments of $ 9.1 million and $ 0.2 million during the years ended December 31, 2020, and 2019, 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 was $ 9.3 million and $ 0.2 million, as of December 31, 2020 and 2019, respectively.

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

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

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

In addition to providing capital and funding in support of AccuRisk’s expansion plans, the Company also

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 year ended December 31, 2021, the Company sold its investment in AccuRisk and realized a pre-tax gain of $ 14.2 million, which was included in the caption “Net investment income (loss)” in the Company’s consolidated statements of operations.

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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provides reinsurance capacity for business produced by AccuRisk.

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

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

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

For the year ended December 31, 2020, the Company’s share of AccuRisk’s net income (loss) was $ 0.8 million (2019:

$ 0.7 million, 2018:

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

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 year ended December 31, 2020, warrants were issued to the Company in connection with certain Innovations-related investments and were not designated as hedging instruments.

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

The carrying amount represents the fair value which is determined based on the Black-Scholes option pricing model.

At December 31, 2020, the carrying value of the derivative instruments was $ 1.1 million.

The Company had no derivative instruments during the year ended December 31, 2019.

Private investments and unlisted equity securities without readily determinable fair values

The Company measures its private investments and unlisted equity securities without readily determinable fair values at cost less impairment (if any), plus or minus observable price changes from identical or similar investments of the same issuers (the “measurement alternative”), with such changes recognized in the caption “Net investment income (loss)” in the consolidated statements of operations.

The Company considers the need for impairment on a by-investment basis, based on certain indicators.

Under the measurement alternative, the Company makes two types of valuation adjustments:

• When the Company observes an orderly transaction of an investee’s identical or similar equity securities, the Company adjusts the carrying value based on the observable price as of the transaction date.

Once the Company records such an adjustment, the investment is considered an “asset measured at fair value on a nonrecurring basis.”

• If the Company determines that the investment is impaired and the fair value is less than its carrying value, it writes down the investment to its fair value.

The following table presents the carrying values of the private investments and unlisted equity securities carried under the measurement alternative at December 31, 2021, 2020, and 2019, and the related adjustments recorded during the years then ended.

Year ended December 31

2021 2020 2019

($ in thousands)

Carrying value (1)

$ 47,049 $ 21,793 $ 10,682

Upward carrying value changes (2)

$ 20,814 $ 10,576 $ 200

Downward carrying value changes and impairment (3)

$ ( 500 ) $ ( 1,500 ) $ —

(1) The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes.

(2) The cumulative upward carrying value changes from inception to December 31, 2021, were $ 31.6 million.

(3) The cumulative downward carrying value changes and impairments from inception to December 31, 2021, were $ 2.0 million.

Fair Value Hierarchy

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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.

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

The Company’s derivative instruments are valued on the basis of Level 3 inputs involving the Black-Scholes option pricing model.The Company used the carrying value of the underlying stock as an input in the option pricing model.

The underlying stock does not have readily determinable fair value and 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 included risk free rate of 0.50 % and estimated volatility of 50 %.

For the derivative instruments valued on the basis of Level 3 inputs, the change in unrealized gain for the year ended December 31, 2020 of $ 1.1 million was included in the caption “Net investment income (loss) in the Company’s consolidated statements of operations.

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

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

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.

Assets measured at fair value on a nonrecurring basis

At December 31, 2021, and 2020, the Company held $ 40.5 million and $ 16.5 million, respectively, of private investments and unlisted equities measured at fair value on a nonrecurring basis.

The Company classifies these assets as Level 3 within the fair value hierarchy due to their illiquidity.

Derivative instruments

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.

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

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

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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, the Company includes any change in unrealized gains or losses in the caption “Net investment income (loss)” in the consolidated statements of operations.

At December 31, 2021, and 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.)

Financial Instruments Disclosed, But Not Carried, at Fair Value

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

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

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

The fair value of the convertible senior notes payable is estimated based on the bid price observed in an inactive market for the identical instrument (Level 2 input) (see Note 9 ) .

CASH AND CASH EQUIVALENTS

The Company’s cash and cash equivalents as of December 31, 2020 and 2019 were composed of cash at banks.

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The Company’s cash and cash equivalents at December 31, 2021, and 2020 were composed of cash at banks.

Due to the short-term nature of cash and cash equivalents, the carrying values of cash at banks approximate their fair value.

Cash at banks include cash held at non-U.S.

financial institutions which are not insured by the FDIC or any other deposit insurance programs.

RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents include amounts held by the Company but pledged as security to provide collateral required by the cedents in the form of trust accounts and letters of credit (see Note 15).

As of December 31, 2020 and 2019, the restricted cash and cash equivalents were composed of the following:

Cash at banks includes cash held at non-U.S.

financial institutions which are not insured by the FDIC or other deposit insurance programs.

RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS

Restricted cash and restricted cash equivalents include amounts held by the Company but pledged as security to provide collateral required by the cedents in the form of trust accounts and letters of credit (see Note 15).

At December 31, 2021, and 2020, the restricted cash and cash equivalents were composed of the following:

December 31, 2021 December 31, 2020

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Cash collateral relating to letters of credit issued 137,645 137,620

Total restricted cash and cash equivalents $ 745,371 $ 742,093

Total restricted cash and restricted cash equivalents $ 634,794 $ 745,371

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

At December 31, 2020, 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.

At December 31, 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, tornados, typhoons, floods, earthquakes, wildfires, and pandemics, loss reserves are generally established based on loss payments and case reserves reported by clients when, and if, received.

To establish IBNR loss estimates, the Company makes use of, among other things, the following:

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• industry data;

• catastrophe scenario modelling software;

• management’s judgement.

The COVID-19 pandemic is unprecedented.

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

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

• 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.

The Company based its estimate on the following:

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

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

• management’s judgement.

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

• 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;

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

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

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

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

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

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

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There were no significant changes in the actuarial methodology or reserving process related to the Company’s loss and loss adjustment expense reserves for the year ended 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 years ended December 31, 2021, and 2020.

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

December 31, 2021 December 31, 2020

($ in thousands)

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Total $ 524,010 $ 494,179

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

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Gross balance at December 31 $ 524,010 $ 494,179 $ 470,588

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The changes in the outstanding loss and loss adjustment expense reserves for health claims for the years ended December 31, 2020, 2019, and 2018 are as follows:

Health 2020 2019 2018

($ in thousands)

Gross balance at January 1 $ 18,063 $ 24,502 $ 22,181

Losses recoverable — — —

Net balance at January 1 18,063 24,502 22,181

Incurred losses related to:

Current year 35,911 33,736 56,868

Prior years 1,321 3,569 1,508

Total incurred 37,232 37,305 58,376

Paid losses related to:

Current year ( 20,988 ) ( 17,410 ) ( 34,696 )

Prior years ( 16,822 ) ( 26,334 ) ( 21,359 )

Total paid ( 37,810 ) ( 43,744 ) ( 56,055 )

Foreign currency revaluation — — —

Net balance at December 31 17,485 18,063 24,502

Losses recoverable — — —

Gross balance at December 31 $ 17,485 $ 18,063 $ 24,502

Loss development

Year ended December 31, 2021

During the year ended December 31, 2021, the Company experienced $ 14.1 million in net favorable development on prior year loss and LAE reserves.

This net favorable development resulted primarily from the following:

Favorable developments:

• $ 14.7 million of favorable loss development on motor contracts, primarily relating to contracts that incepted in 2015 and 2016 resulting from better than expected reported claims.

• $ 8.9 million favorable loss development on various specialty lines of business, including crop, space, and marine and energy, as actual losses reported were better than expected.

• $ 5.0 million of favorable loss development on mortgage contracts resulting from lower delinquencies and fewer reported claims than initially anticipated.

On a financial-impact basis, the favorable loss development on these contracts was offset by increased profit commissions, which are included in the caption “Acquisition costs” in the Company’s consolidated statements of operations.

• $ 3.5 million favorable loss development on a multi-line contract that incepted in 2019.

Adverse developments:

• $ 14.4 million of adverse development on multi-line casualty contracts primarily relating to contracts that incepted in 2014 to 2015 resulting from unfavorable development in reported claims.

• $ 2.9 million of adverse development on a general liability contract resulting from unfavorable development in reported claims.

• $ 1.2 million of adverse development on workers’ compensation contracts resulting from higher than anticipated losses.

The remaining development on prior year loss and LAE reserves recognized in 2021 related to several smaller adjustments made across various lines of business.

Year ended December 31, 2020

During the year ended December 31, 2020, the Company experienced $ 4.7 million in net adverse development on prior year loss and LAE reserves.

This net adverse development resulted primarily from the following:

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Adverse developments:

• $ 7.6 million of adverse loss development on a multi-line contract for treaty years 2015 to 2018, resulting from deterioration in reported claims.

• $ 1.9 million of adverse loss development on general liability contracts, primarily relating to a 2017 treaty year contract resulting from deterioration in reported claims.

• $ 1.9 million of adverse loss development on specialty health contracts primarily arising from a few large medical claims reported on the 2019 treaty year.

• $ 1.5 million of adverse loss development on motor contracts relating to the 2018 and 2019 treaty years, partially offset by favorable loss development on treaty years 2015 to 2017.

• $ 7.6 million of adverse loss development on multi-line contracts that incepted from 2015 to 2018, resulting from unfavorable development in reported claims.

• $ 1.9 million of adverse loss development on general liability contracts, primarily relating to a contract that incepted in 2017 resulting from unfavorable development in reported claims.

• $ 1.9 million of adverse loss development on specialty health contracts primarily arising from a few large medical claims reported on a contract that incepted in 2019.

• $ 1.5 million of adverse loss development on motor contracts relating to the 2018 and 2019 treaty years, partially offset by favorable loss development on contracts that incepted from 2015 to 2017.

Favorable developments:

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• $ 2.2 million of favorable loss development on solicitors’ professional indemnity contracts resulting primarily from lower than expected claims on prior accident years.

• $ 1.9 million of favorable loss development on a professional liability contract relating to treaty year 2008 where the reported claims have been lower than those previously anticipated.

• $ 1.9 million of favorable loss development on a professional liability contract relating to a contract that incepted in 2008 where the reported claims have been lower than those previously anticipated.

The remaining development on prior year loss and LAE reserves recognized in 2020 related to several smaller adjustments made across various lines of business.

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Year ended December 31, 2019

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The remaining net favorable development on prior year loss and LAE reserves recognized in 2019 related to several smaller adjustments made across various lines of business.

Year ended December 31, 2018

During the year ended December 31, 2018, the Company experienced a modest $ 2.2 thousand in net adverse development on prior year loss and LAE reserves.

This net adverse development resulted primarily from the following:

Adverse developments:

• $ 11.9 million of adverse loss development on non-standard automobile contracts stemming from industry-wide issues affecting motor liability claims in Florida over accident years 2015 to 2017;

• $ 3.8 million of adverse loss development on solicitors professional indemnity contracts resulting primarily from several large claims being reported on prior accident years;

• $ 2.0 million of adverse loss development on general liability contracts, spread over treaty years 2012-2017, resulting from deterioration in claims experience;

• $ 1.8 million of adverse loss development on surety business, net of retrocession recoveries, due to deterioration on several previously reported claims for one contract.

Favorable developments:

• $ 7.5 million of favorable prior period experience on property contracts stemming primarily from accident years 2015 and 2016 where claims experience has been better than expected;

• $ 5.9 million of favorable loss development, net of retrocession recoveries, relating to 2017 hurricanes as a result of claims experience being better than initially estimated.

The net financial impact of the favorable loss development was partially offset by $ 1.6 million of return premiums relating to reinstatement premiums previously recorded;

• $ 4.1 million of favorable loss development on prior period mortgage insurance contracts resulting from ongoing favorable claims experience across all prior accident years.

The remaining net favorable development on prior year loss and LAE reserves recognized in 2018 related to several smaller adjustments made across various lines of business.

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The changes in the outstanding loss and loss adjustment expense reserves for health claims for the years ended December 31, 2021, 2020, and 2019 are as follows:

Health 2021 2020 2019

($ in thousands)

Gross balance at January 1 $ 17,485 $ 18,063 $ 24,502

Losses recoverable — — —

Net balance at January 1 17,485 18,063 24,502

Incurred losses related to:

Current year 37,076 35,911 33,736

Prior years ( 1,536 ) 1,321 3,569

Total incurred 35,540 37,232 37,305

Paid losses related to:

Current year ( 28,435 ) ( 20,988 ) ( 17,410 )

Prior years ( 14,652 ) ( 16,822 ) ( 26,334 )

Total paid ( 43,087 ) ( 37,810 ) ( 43,744 )

Foreign currency revaluation — — —

Net balance at December 31 9,938 17,485 18,063

Losses recoverable — — —

Gross balance at December 31 $ 9,938 $ 17,485 $ 18,063

Disclosures about Short-Duration Contracts

The Company has one operating segment, Property & Casualty Reinsurance, and categorizes its business as Property, Casualty, and Other.

The Company’s loss development tables presented below have been disaggregated by lines of business for the years ended from December 31, 2011 to 2020.

For purposes of the loss development tables, the property business has been further disaggregated into "Property" and "Motor - Physical Damage".

The casualty category has been disaggregated into "General Liability", "Motor Liability", "Professional Liability" and "Workers' Compensation".

In addition, the incurred and paid claims relating to accident and health business have been presented separately as "Health".

Other specialty business including financial, aviation, crop, cyber, energy and marine, which are individually insignificant to our overall business, have been grouped together as "Other".

Contracts that cover more than one line of business are grouped as "Multi-line".

For each of the categories, the following tables present the incurred and paid claims development as of December 31, 2020, net of retrocession, as well as the total of incurred but not reported liabilities plus expected development on reported claims included within the net incurred claims amount.

The Company’s loss development tables presented below have been disaggregated by lines of business for the years ended from December 31, 2012, through 2021.

For purposes of the loss development tables, the property business has been further disaggregated into "Property" and "Motor - Physical Damage." The casualty category has been disaggregated into "General Liability," "Motor Liability," "Professional Liability," and "Workers' Compensation." In addition, the incurred and paid claims relating to accident and health business have been presented separately as "Health." Other specialty business, including financial, aviation, crop, cyber, energy, and marine, which are individually insignificant to our overall business, have been grouped as "Other." Contracts that cover more than one line of business, including Lloyd’s business, are grouped as "Multi-line."

For each category, the following tables present the incurred and paid claims development at December 31, 2021, net of retrocession, and the total of incurred but not reported liabilities plus expected development on reported claims included within the net incurred claims amount.

Health claims have been disaggregated and presented separately.

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The information in the tables below about incurred and paid claims development for the years ended December 31, 2011 to 2019, is presented as unaudited supplementary information.

The tables below present incurred and paid claims development for the years ended December 31, 2012 to 2020.

They are presented as unaudited supplementary information.

Totals may not sum due to rounding.

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2019 26 227 307

Total 127,214

All outstanding liabilities before 2012, net of reinsurance —

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2020 66 66 66

2021 2,822 2,787

Total $ 110,120 $ 20,060

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2020 11,288 23,463

Total 105,927

All outstanding liabilities before 2012, net of reinsurance —

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For any incurred and paid claims denominated in a currency other than U.S.

dollars, the above tables are presented using the foreign exchange rate in effect as of the current year end date.

As a result, all prior year information has been restated to reflect the exchange rates as of December 31, 2020.

This treatment removes any changes in foreign currency exchange rates from distorting the claims development between the years presented.

dollars, the above tables are presented using the foreign exchange rate in effect at the current year-end date.

As a result, all prior year information has been restated to reflect the exchange rates at December 31, 2021.

This treatment prevents changes in foreign currency exchange rates from distorting the claims development between the years presented.

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Claims reported by the ceding insurer to the Company may have the covered losses occurring in an accident year other than the treaty year.

For the purpose of the loss development tables, some incurred and paid claims have been allocated to the accident years based on the proportion of premiums earned for each contract during such accident year.

Some incurred and paid claims have been allocated to the accident years for the loss development tables based on the proportion of premiums earned for each contract during such accident year.

For example, a one-year treaty incepting on October 1, 2018 (with underlying policies each having a one-year duration) would have a 24-month period over which the premiums would be earned.

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Similarly, for losses reported during 2020 and thereafter, the losses would be allocated to the 2020, 2021 and 2022 accident years based on the proportion of premiums earned during each of those years.

However, natural catastrophe and certain other large losses are addressed separately and are assigned to the accident year in which they occurred.

However, natural catastrophes and certain other large losses are addressed separately and are assigned to the accident year in which they occurred.

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated balance sheet is as follows:

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The average historical annual percentage payout of net incurred claims (excluding health) as of December 31, 2020 is as follows:

The average historical annual percentage payout of net incurred claims (excluding health) at December 31, 2021, is as follows:

Years 1 2 3 4 5 6 7 8 9 10

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The Company is contractually obligated to reimburse the ceding insurer for its share of the losses.

While the Company has the right to conduct audits of the ceding insurer’s claims files, the insurer is generally not obligated to provide detailed listing of claims counts or other claims frequency information to the Company.

While the Company has the right to conduct audits of the ceding insurer’s claims files, the insurer is generally not obligated to provide a detailed listing of claims counts or other claims frequency information.

Therefore it is impracticable for the Company to present the cumulative number of reported claims by accident year.

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

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

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

For the year ended December 31, 2020, the Company’s earned ceded premiums were $ 3.2 million (2019:

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.

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

For the year ended December 31, 2021, the Company’s earned ceded premiums were insignificant (2020:

$ 3.2 million and 2019:

$ 72.8 million).

For the year ended December 31, 2020, loss and loss adjustment expenses incurred of $ 337.8 million (2019:

$ 388.5 million and 2018:

$ 363.9 million) reported on the Company’s consolidated statements of operations are net of loss and loss expenses recovered and recoverable of $ 5.9 million (2019:

For the year ended December 31, 2021, loss and loss adjustment expenses recovered and change in losses recoverable were insignificant (2020:

$ 5.9 million and 2019:

$ 60.7 million).

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

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 December 31, 2020, the Company’s loss reserves recoverable of $ 16.9 million (2019:

$ 27.5 million) consisted of (i) $ 12.6 million (2019:

$ 21.1 million) from unrated retrocessionaires which were secured by cash, letters of credit and collateral held in trust accounts for the benefit of the Company and (ii) $ 4.3 million (2019:

$ 6.4 million) from retrocessionaires rated A- or above by A.M.

At December 31, 2021, the Company’s loss reserves recoverable of $ 11.1 million (December 31, 2020:

$ 16.9 million) consisted of (i) $ 8.4 million (December 31, 2020:

$ 12.6 million) recoverable from unrated retrocessionaires, of which $ 8.2 million (December 31, 2020:

$ 11.9 million) were secured by cash, letters of credit and collateral held in trust accounts for the benefit of the Company and (ii) $ 2.8 million (December 31, 2020:

$ 4.3 million) recoverable from retrocessionaires rated A- or above by A.M.

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

At December 31, 2021, the Company had recorded an allowance for expected credit losses of $ 0.1 million (December 31, 2020:

$ 0.1 million).

SENIOR CONVERTIBLE NOTES

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 %, payable semi-annually on February 1 and August 1 of each year beginning February 1, 2019.

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

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 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.

1 unchanged sentence

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

As of December 31, 2020 and December 31, 2019, the unamortized debt discount was $ 4.2 million and $ 5.9 million respectively, and is expected to be amortized through the maturity date.

At December 31, 2021, and 2020, the unamortized debt discount was $ 2.6 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.

As of December 31, 2020, the unamortized portion of these costs attributed to the debt component was $ 1.6 million (December 31, 2019:

$ 2.3 million), which are expected to be amortized 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 consolidated balance sheets.

The carrying value of the Notes as of December 31, 2020, including accrued interest of $ 1.7 million was $ 95.8 million (December 31, 2019:

At December 31, 2021, the unamortized portion of these costs attributed to the debt component was $ 1.0 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 consolidated balance sheets.

The carrying value of the Notes at December 31, 2021, including accrued interest of $ 1.7 million, was $ 98.1 million (December 31, 2020:

$ 95.8 million).

As of December 31, 2020, the fair value of the Notes was estimated to be $ 83.6 million (December 31, 2019:

At December 31, 2021, the Company estimated the fair value of the Notes to be $ 97.5 million (December 31, 2020:

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

For the year ended December 31, 2020, the Company recognized interest expense of $ 6.3 million (December 31, 2019:

For the year ended December 31, 2021, the Company recognized interest expenses of $ 6.3 million (2020:

$ 6.3 million;

December 31, 2018:

$ 6.3 million) in connection with the interest coupon, amortization of issuance costs, and amortization of the discount.

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

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

At December 31, 2021, the Company had a remaining obligation for interest and principal payments of $ 4.0 million and $ 104.0 million during 2022 and 2023, respectively.

SHARE CAPITAL

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The Third Amended and Restated Memorandum and Articles of Association, as revised by special resolution on July 10, 2008 (the “Articles”), provide that the holders of Class A ordinary shares generally are entitled to one vote per share.

However, except upon unanimous consent of the Board of Directors, no Class A shareholder is permitted to vote an amount of shares which would cause any United States person to own (directly, indirectly or constructively under applicable United States tax attribution and constructive ownership rules) 9.9 % or more of the total voting power of all issued and outstanding ordinary shares.

However, except upon unanimous consent of the Board of Directors, no Class A shareholder is permitted to vote a number of shares which would cause any United States person to own (directly, indirectly, or constructively under applicable United States tax attribution and constructive ownership rules) 9.9 % or more of the total voting power of all issued and outstanding ordinary shares.

The Articles further provide that the holders of Class B ordinary shares generally are entitled to ten votes per share.

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therefore, there has been no recognition in the Company’s consolidated financial statements of the registration rights granted pursuant to the Shareholders’ Agreement.

As of December 31, 2020, the Company has an effective Form S-3 registration statement on file with the SEC for an aggregate principal amount of $ 200.0 million in securities.

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At December 31, 2021, the Company has an effective Form S-3 registration statement on file with the SEC for an aggregate principal amount of $ 200.0 million in securities.

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.

As of December 31, 2020, 3,474,888 (2019:

At December 31,

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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.

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

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

The Board has adopted a share repurchase plan.

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

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

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

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

During the year ended December 31, 2020, 2,547,097 Class A ordinary shares were repurchased by the Company (2019:

As of December 31, 2020, 2.5 million Class A ordinary shares and $ 25.0 million of the Notes, remained available for repurchase under the repurchase plans.

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.

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 4.0 % 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 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 repurchase 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.

The repurchase plan 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 year ended December 31, 2021 (2020:

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

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

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

2021 2020 2019

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Greenlight Re is subject to the Cayman Islands’ Insurance (Capital and Solvency) (Classes B, C, and D Insurers) Regulations, (2018 Revision) (the “Insurance Regulations”).

The Insurance Regulations impose a Minimum Capital Requirement (“MCR”) of $ 50.0 million and a Prescribed Capital Requirement (“PCR”) on Greenlight Re which was $ 204.8 million as of December 31, 2020 (2019:

The Insurance Regulations impose a Minimum Capital Requirement (“MCR”) of $ 50.0 million and a Prescribed Capital Requirement (“PCR”) on Greenlight Re which was $ 222.6 million at December 31, 2021 (2020:

$ 204.8 million).

As of December 31, 2020, Greenlight Re’s statutory capital and surplus of $ 491.4 million exceeded the MCR as well as the PCR.

For the years ended December 31, 2020, 2019, and 2018, Greenlight Re’s net income (loss) was $ 12.6 million, $ 9.2 million, and $( 330.3 ) million, respectively.

Greenlight Re is not required to prepare separate statutory financial statements for filing with CIMA and there were no material differences between Greenlight Re’s GAAP capital, surplus and net income, and its statutory capital, surplus and net income as of December 31, 2020 and 2019.

As of December 31, 2020, the Company was not restricted from payment of dividends to the Company’s shareholders.

However, since most of the Company’s capital and retained earnings are invested in its subsidiaries, a dividend from one or more of the Company’s subsidiaries would likely be required in order to fund a dividend to the Company’s shareholders.

At December 31, 2021, Greenlight Re’s statutory capital and surplus of $ 503.9 million exceeded the MCR as well as the PCR.

For the years ended December 31, 2021, 2020, and 2019, Greenlight Re’s net income was $ 15.9 million, $ 12.6 million, and $ 9.2 million, respectively.

Greenlight Re is not required to prepare separate statutory financial statements for filing with CIMA.

There were no material differences between Greenlight Re’s GAAP capital, surplus, and net income and its statutory capital, surplus, and net income at December 31, 2021 and 2020.

At December 31, 2021, the Company was not restricted from payment of dividends to the Company’s shareholders.

However, since most of the Company’s capital and retained earnings are invested in its subsidiaries, a dividend from one or more of the Company’s subsidiaries would likely be required to fund a dividend to the Company’s shareholders.

Any dividends declared and paid from Greenlight Re to the Company would require approval of CIMA.

During the year ended December 31, 2020, $ 39.5 million in dividends (2019:

During the year ended December 31, 2021, $ 4.0 million of dividends (2020:

$ 39.5 million, 2019:

$ 0.0 million) were declared or paid by Greenlight Re to the Company, of which $ 15.0 million was used for the Company’s share repurchases, $ 20.5 million was used for capital contribution to GRIL and $ 4.0 million was used for payment of interest on the Company’s senior convertible notes.

As of December 31, 2020 and 2019, $ 286.6 million and $ 319.0 million, respectively, of Greenlight Re’s capital and surplus was available for distribution as dividends.

$ 3.9 million) were declared or paid by Greenlight Re to the Company, which the Company used to pay interest on the Notes.

At December 31, 2021 and 2020, $ 281.3 million and $ 286.6 million, respectively, of Greenlight Re’s capital and surplus was available for distribution as dividends.

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GRIL is obligated to maintain a minimum level of statutory capital.

As of December 31, 2020 and 2019, GRIL met such requirements.

As of December 31, 2020 and 2019, GRIL’s statutory capital was $ 57.1 million and $ 35.6 million, respectively.

As of December 31, 2020, GRIL’s statutory minimum capital required under Solvency II was approximately $ 6.9 million (2019:

At December 31, 2021 and 2020, GRIL met such requirements.

At December 31, 2021 and 2020, GRIL’s statutory capital was $ 65.2 million and $ 57.1 million, respectively.

At December 31, 2021, GRIL’s statutory minimum capital required under Solvency II was approximately $ 10.6 million (2020:

$ 6.9 million).

GRIL’s statutory net income (loss) was $ 3.8 million, $( 2.6 ) million, and $ 0.8 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The amount of dividends that GRIL is permitted to distribute is limited to its retained earnings and the Central Bank of Ireland has powers to intervene if a dividend payment were to lead to a breach of regulatory capital requirements.

As of December 31, 2020 and 2019, none of GRIL’s capital and surplus was available for distribution as dividends.

The amount of dividends that GRIL is permitted to distribute is limited to its retained earnings.

The Central Bank of Ireland has powers to intervene if a dividend payment were to breach regulatory capital requirements.

At December 31, 2021 and 2020, none of GRIL’s capital and surplus was available for distribution as dividends.

SHARE-BASED COMPENSATION

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

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

Employee and Director Restricted Shares

For the year ended December 31, 2020, 306,264 (2019:

For the year ended December 31, 2021, the Company issued 334,312 (2020:

306,264 , 2019:

160,595 ) Class A ordinary shares were issued to employees pursuant to the Company’s stock incentive plan.

235,701 ) 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.

The restricted shares cliff vest three years after the date of issuance, subject to the grantee’s continued service with the Company.

During the vesting period, the holder of the restricted shares retains voting rights and is entitled to any dividends declared by the Company.The weighted average grant date fair value of the restricted shares subject to only service condition was $ 6.72 (2019:

$ 10.65 , 2018:

$ 15.90 ) per share.

For the year ended December 31, 2020, 145,089 (2019:

326,240 , 2018:

30,660 ) Class A ordinary shares were issued to the Company’s Chief Executive Officer (“CEO”) pursuant to the Company’s stock incentive plan.

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

Certain restricted shares granted to the CEO during the year ended December 31, 2019, contained vesting conditions whereby they would only vest upon occurrence of a specified performance condition being met prior to December 15, 2020.

The performance condition was not met and 236,295 restricted shares were forfeited during the year ended December 31, 2020.

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

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

$ 10.65 , 2018:

$ 15.90 ) per share.

On July 30, 2020, the Company accelerated the vesting on half of the CEO’s restricted shares granted during the year ended December 31, 2020, resulting in 72,545 shares vesting immediately.

The modification resulted in $ 0.5 million of incremental compensation cost.

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

As the performance conditions associated with these restricted shares have not been met, no compensation cost was recognized relating to the unvested shares for the year ended December 31, 2020.

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 year ended December 31, 2021, the Company also issued to non-employee directors an aggregate of 74,769 (2020:

5 unchanged sentences

37,502 ) restricted shares were forfeited by grantees due to vesting conditions not being met.

For the year ended December 31, 2020, $ 0.7 million stock compensation expense (2019:

For the year ended December 31, 2021, the Company reversed $ 0.1 million of stock compensation expense (2020:

$ 0.7 million, 2019:

$ 0.3 million) relating to the forfeited restricted shares was reversed.

$ 0.2 million) relating to the forfeited restricted shares.

The Company recorded $ 2.4 million of share-based compensation expense, net of forfeiture reversals, relating to restricted shares for the year ended December 31, 2021 (2020:

1 unchanged sentence

$ 2.8 million).

As of December 31, 2020, there was $ 1.9 million (2019:

At December 31, 2021, there was $ 2.7 million (2020:

$ 1.9 million, 2019:

$ 2.6 million) of unrecognized compensation cost relating to non-vested restricted shares (excluding CEO’s restricted shares with performance conditions) which are expected to be recognized over a weighted average period of 1.5 years (2019:

$ 2.7 million) of unrecognized compensation cost relating to non-vested restricted shares (excluding any restricted shares with performance conditions that the Company does not expect will be met).

The Company expects to recognize these costs over a weighted average period of 1.8 years (2020:

1.5 years, 2019:

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$ 3.1 million).

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The following table summarizes the activity for unvested outstanding restricted share awards during the years ended December 31, 2021, and 2020:

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Balance at December 31, 2021 753,407 $ 8.68

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Employee and Director Stock Options

For the years ended December 31, 2020, 2019, and 2018, no Class A ordinary share purchase options were granted or exercised by directors or employees, resulting in no Class A ordinary shares being issued.

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

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

For the years ended December 31, 2021, 2020, and 2019, no Class A ordinary share purchase options were granted or exercised by directors or employees.

For the year ended December 31, 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 for the year ended December 31, 2020 was $ 0.6 million (2019:

The total compensation cost expensed relating to stock options for the year ended December 31, 2021, was $ 0.4 million (2020:

$ 0.6 million, 2019:

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

$ 1.3 million) to be recognized over a weighted average period of 1.8 years (2019:

$ 0.7 million), which will be recognized over a weighted-average period of 1.2 years (2020:

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

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$ 9.60 , 2019:

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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 year ended December 31, 2020, 60,622 (2019:

For the year ended December 31, 2021, the Company issued 58,123 (2020:

60,622 , 2019:

28,301 ) RSUs were issued to employees pursuant to the Company’s stock incentive plan.

For the year ended December 31, 2020, 0 (2019:

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

The Company recorded $ 0.4 million of share-based compensation expense, net of forfeitures, relating to RSUs for the year ended December 31, 2020 (2019:

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

For the year ended December 31, 2021, no RSUs were forfeited (2020:

The Company recorded $ 0.4 million of share-based compensation expense relating to RSUs for the year ended December 31, 2021 (2020:

$ 0.4 million, 2019:

1 unchanged sentence

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

$ 0.4 million) to be recognized over a weighted average period of 1.8 years (2019:

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

$ 0.4 million), which the Company expects to recognize over a weighted-average period of 1.8 years (2020:

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Employee RSU activity during the years ended December 31, 2021, and 2020 was as follows:

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Balance at December 31, 2021 154,134 $ 8.59

For the years ended December 31, 2020, 2019, and 2018, the combined stock compensation expense (net of forfeitures), which was included in the caption “General and administrative expenses” in the Company’s statements of operations, was $ 2.5 million, $ 3.9 million and $ 4.6 million, respectively.

Performance Restricted Shares

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

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

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

During the year ended December 31, 2020, the Company’s compensation committee accelerated the vesting of 72,545 shares that vested immediately.

The modification resulted in $ 0.5 million of incremental compensation cost during the year ended 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 year ended December 31, 2021, and 2020.

The performance restricted share activity during the years ended December 31, 2021, and 2020 was as follows:

performance restricted shares Weighted

Balance at December 31, 2019 356,900 $ 11.10

Granted 145,089 6.72

Vested ( 72,545 ) 6.72

Forfeited ( 236,295 ) 10.58

Balance at December 31, 2020 193,149 10.10

Forfeited — —

Balance at December 31, 2021 193,149 $ 10.10

Stock Compensation Expense

For the years ended December 31, 2021, 2020, and 2019, the combined stock compensation expense (net of forfeitures), which was included in the caption “General and administrative expenses” in the Company’s consolidated statements of operations, was $ 3.2 million, $ 2.5 million and $ 3.9 million, respectively.

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NET INVESTMENT INCOME (LOSS)

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Income (loss) from equity method investment — 843 700

Investment advisor compensation on joint venture — — ( 11,221 )

Net investment-related income (loss) 32,065 21,101 6,211

2 unchanged sentences

“Income (loss) from investments in related party investment fund” reflects the equity in earnings (loss) of SILP (see Note 3).

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The realized gains (losses) for the year ended December 31, 2020, includes $ 15.0 million of valuation allowance charged off on a note receivable, partially offset by a gain of $ 5.8 million on another note receivable that was settled in excess of its carrying value.

The change in unrealized gains and losses for the year ended December 31, 2020, includes net unrealized gains of $ 10.2 million (2019:

For the year ended December 31, 2021, the Company realized a $ 14.2 million pre-tax gain on disposal of the AccuRisk investment (see Note 4).

"Change in unrealized gains and losses” for the year ended December 31, 2021, includes net unrealized gains of $ 19.5 million (2020:

$ 10.2 million, 2019:

nil) on Innovations related investments.

In addition, the change in unrealized gains and losses for year ended December 31, 2020, included a net decrease in the valuation allowance of $ 15.0 million (2019:

net increase of $ 6.0 million, 2018:

nil ) relating to notes receivable.

$ 0.2 million) on Innovations-related investments.

For the year ended December 31, 2020, the change in unrealized gains and losses also included a net decrease in the valuation allowance of $ 15.0 million (2019:

net increase of $ 6.0 million) relating to notes receivable.

Each of the Company and Greenlight Re intends to conduct all of its operations in a manner that will not cause it to be treated as engaging in a trade or business within the United States and will not cause it to be subject to current U.S.

federal income taxation on its net income.

However, because there are no definitive standards provided by the Internal Revenue Code, regulations or court decisions as to the specific activities that constitute being engaged in the conduct of a trade or business within the United States, and as any such determination is essentially factual in nature, there can be no assurance that the IRS will not successfully assert that the Company or Greenlight Re is engaged in a trade or business within the U.S.

As of December 31, 2020, a gross deferred tax asset of $ 3.5 million (2019:

However, because there are no definitive standards provided by the Internal Revenue Code, regulations, or court decisions as to the specific activities that constitute “engaged in the conduct of a trade or business within the United States,” and as any such determination is essentially factual in nature, there can be no assurance that the IRS will not successfully assert that the Company or Greenlight Re is engaged in a trade or business within the U.S.

At December 31, 2021, the Company recorded a gross deferred tax asset of $ 3.2 million (2020:

$ 3.5 million) and a deferred tax asset valuation allowance of $ 2.7 million (2020:

$ 2.6 million) was recorded by the Company.

$ 3.0 million).

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

Based on the timing of the reversal of the temporary differences and likelihood of generating sufficient taxable income to realize the future tax benefit, management believes it is more likely than not that the recorded deferred tax asset (net of the valuation allowance) will be fully realized in the future.

The Company currently believes that it has no uncertain tax positions which, if challenged, would cause a material change to the Company’s consolidated financial statements.

At December 31, 2020, GRIL had a net operating loss carry forward of $ 30.0 million (2019:

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.

At December 31, 2021, GRIL had a net operating loss carryforward of $ 25.8 million (2020:

$ 30.0 million) which can be carried forward indefinitely.

At December 31, 2020 and 2019, no taxes recoverable were included in the Company’s consolidated balance sheets.

At December 31, 2020, Verdant had a net operating loss carry forward totaling $ 2.4 million (2019:

$ 4.6 million) available to offset future taxable income.

Of the total $ 2.4 million, $ 1.4 million expire at various dates from 2033 to 2037 and the remaining $ 1.0 million has no expiration date.

The deferred tax asset associated with the net operating loss carried forward, has been offset by a valuation allowance as management does not anticipate that the carried forward amount will be realized.

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The following table sets forth our current and deferred income tax benefit (expense) on a consolidated basis for the years ended December 31, 2021, 2020, and 2019:

2 unchanged sentences

Current tax (expense) benefit $ ( 3,997 ) $ ( 48 ) $ ( 43 )

Tax recovered — — —

Deferred tax (expense) benefit ( 3 ) 5 ( 8 )

Increase in deferred tax valuation allowance ( 381 ) ( 432 ) ( 2,168 )

Decrease (increase) in deferred tax valuation allowance 254 ( 381 ) ( 432 )

Income tax (expense) benefit $ ( 3,746 ) $ ( 424 ) $ ( 483 )

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

At December 31, 2021, Verdant had no net operating loss carryforward (2020:

$ 2.4 million).

Federal Excise Taxes

1 unchanged sentence

insurers or reinsurers with respect to risks located in the United States.

The rate of tax, unless exempted or reduced by an applicable U.S.

tax treaty, is 1.0 % for all reinsurance premiums.

The Company incurs federal excise taxes on certain of its reinsurance transactions, including amounts ceded through intercompany transactions.

Unless exempted or reduced by an applicable U.S.

tax treaty, the tax rate is 1.0 % for all reinsurance premiums.

The Company incurs federal excise taxes on certain reinsurance transactions, including amounts ceded through intercompany transactions.

For the years ended 2021, 2020, and 2019, the Company incurred approximately $ 3.3 million, $ 3.6 million, and $ 3.8 million, respectively, of federal excise taxes, net of any refunds received.

These amounts are included in the caption “Acquisition costs” in the Company’s consolidated statements of operations.

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RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

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

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

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

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

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

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

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

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

1 to the SILP LPA.

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

The Carryforward Account for Greenlight Re and GRIL includes the amount of investment losses to be recouped, including any loss generated on the assets invested in SILP, subject to adjustments for redemptions.

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

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

1 unchanged sentence

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

As of December 31, 2020, the Company had entered into a letter agreement with DME Advisors and DME II whereby during the period from June 1, 2019 to June 30, 2021, cash, cash equivalents and/or U.S government issued securities will not be subject to any management fee or performance allocation.

For a detailed breakdown of management fees and performance compensation for the year ended December 31, 2020 and 2019, refer to Note 3 of the consolidated financial statements.

On January 7, 2021, the Company entered into an amended LPA agreement with DME Advisors and DME II which amends, restates, supersedes and incorporates all material terms of the SILP LPA.

Refer to Note 18 “Subsequent Events” for further details.

For a detailed breakdown of management fees and performance compensation for the years ended December 31, 2021, 2020, and 2019, refer to Note 3 of the consolidated financial statements.

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

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

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

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

The Company incurred no indemnification amounts during the periods presented.

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Green Brick Partners, Inc.

1 unchanged sentence

(“GRBK”), a publicly-traded company.

As of December 31, 2020, SILP, along with certain affiliates of DME Advisors, collectively owned 47.6 % 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.

At December 31, 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 sometimes be limited in its ability to trade GRBK shares held in SILP.

At December 31, 2021, SILP held 2.7 million shares of GRBK.

Service Agreement

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

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

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

Collateral Assets Investment Management Agreement

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($ in thousands)

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

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

As of December 31, 2020, an aggregate amount of $ 135.3 million (December 31, 2019:

$ 204.5 million) in letters of credit were issued under the credit facility.

As of December 31, 2020, total cash and cash equivalents with a fair value in the aggregate of $ 137.6 million (December 31, 2019:

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

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

At December 31, 2021, an aggregate amount of $ 136.8 million (December 31, 2020:

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

At December 31, 2021, the Company had pledged total cash and cash equivalents with a fair value in the aggregate of $ 137.6 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 consolidated balance sheets.

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

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

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

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

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

As of December 31, 2020, collateral of $ 607.8 million (December 31, 2019:

At December 31, 2021, collateral of $ 497.1 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 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 year ended December 31, 2020 was $ 0.5 million (2019:

$ 0.5 million).

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

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

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

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

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

$ 0.2 million).

The operating lease expense for the years ended December 31, 2020, 2019, and 2018 was insignificant.

Included in the “Schedule of Commitments and Contingencies,” below, are the net minimum lease payment obligations relating to this lease as of December 31, 2020.

The Company has determined that its lease agreements for office space qualify as operating lease arrangements.

At the commencement date, the Company determines the lease term by assuming the exercise of those renewal options deemed to be reasonably certain.

The exercise of lease renewal options is at the Company's sole discretion, and these options do not contain any material residual value guarantees or material restrictive covenants.

The Company’s weighted-average remaining operating lease term is approximately 4.5 years at December 31, 2021.

As the lease contracts generally do not provide an implicit discount rate, the Company used the weighted-average discount rate of 6.0 %, representing its incremental borrowing rate based on information available at the commencement date, to

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Schedule of Commitments and Contingencies

The following is a schedule of future minimum payments required under the above commitments:

2021 2022 2023 2024 2025 Thereafter Total

($ in thousands)

Operating lease obligations $ 581 $ — $ — $ — $ — $ — $ 581

Interest and convertible note payable 4,000 4,000 4,000 100,000 — — 112,000

$ 4,581 $ 4,000 $ 4,000 $ 100,000 $ — $ — $ 112,581

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

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

determine the present value of lease payments.

The incremental borrowing rate is based on a borrowing with a term similar to that of the associated lease.

The Company has made an accounting policy election not to include renewal, termination, or purchase options that are not reasonably certain of exercise when determining the term of the borrowing.

At December 31, 2021, the right-of-use assets and lease liabilities relating to the operating leases were $ 2.4 million and $ 2.5 million, respectively.

The operating and short-term lease expenses for the year ended December 31, 2021, were $ 0.4 million and $ 0.3 million, respectively (2020:

$ 0.2 million and $ 0.5 million).

At December 31, 2021, the commitment for operating lease liabilities for future annual periods was as follows:

Year ending December 31, ($ in thousands)

Total lease payments 2,859

Less Imputed Interest ( 400 )

Present value of lease liabilities $ 2,459

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

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

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

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

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

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

SEGMENT REPORTING

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

Substantially all of the business is sourced through reinsurance brokers.

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

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 (totals may not sum due to rounding):

Year ended December 31

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Guy Carpenter (Marsh) $ 178,336 31.5 % $ 195,274 40.7 % $ 297,150 56.7 %

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

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

Aon Benfield 139,044 24.6 29,032 6.0 41,071 7.8

BMS Group 63,958 11.3 112,659 23.5 85,323 16.3

Total of largest brokers $ 381,338 67.4 % $ 336,965 70.2 % $ 423,544 80.7 %

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QUARTERLY FINANCIAL RESULTS (UNAUDITED)

The following table presents the quarterly financial results for each of the quarters ended during December 31, 2020:

Quarter ended

($ in thousands, except per share amounts)

Gross premiums written 109,787 116,689 135,596 117,719

Gross premiums ceded ( 678 ) ( 132 ) ( 1,464 ) 6

Net premiums written 109,109 116,557 134,132 117,725

Change in net unearned premium reserves 1912 ( 8,143 ) ( 18,613 ) 2,732

Net premiums earned 111,021 108,414 115,519 120,457

Income (loss) from investment in related party investment fund [net of related party expenses] ( 42,126 ) 1,609 6,431 38,517

Net investment income (loss) 6,837 3,934 466 9,864

Other income (expense), net 213 788 1569 579

Total revenues 75945 114,745 123,985 169,417

Net loss and loss adjustment expenses incurred 75,697 89,194 88,053 84,889

Acquisition costs 31,739 17,903 27,018 32,628

General and administrative expenses 6,794 6,149 5,152 8,306

Interest expense 1561 1562 1579 1,578

Total expenses 115,791 114,808 121,802 127,401

Income (loss) before income tax ( 39,846 ) ( 63 ) 2,183 42,016

Income tax (expense) benefit ( 424 ) — — —

Net income (loss) ( 40,270 ) ( 63 ) 2,183 42,016

Earnings (loss) per share

Basic ( 1.11 ) — 0.06 1.20

Diluted ( 1.11 ) — 0.06 1.20

Weighted average number of ordinary shares used in the determination of earnings and loss per share

Basic 36,138,245 35,776,736 35,677,554 35,019,037

Diluted 36,138,245 35,776,736 35,779,703 35,135,759

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The following table presents the quarterly financial results for each of the quarters ended during December 31, 2019:

Quarter ended

($ in thousands)

Gross premiums written $ 162,560 $ 152,340 $ 110,607 $ 98,470

Gross premiums ceded ( 21,401 ) ( 23,141 ) ( 4,035 ) ( 90 )

Net premiums written 141,159 129,199 106,572 98,380

Change in net unearned premium reserves ( 15,797 ) ( 8,758 ) 22,582 10,243

Net premiums earned 125,362 120,441 129,154 108,623

Income (loss) from investment in related party investment fund [net of related party expenses] 30,756 14,405 6,609 ( 5,714 )

Net investment income (loss) 1,567 4,386 3,312 ( 3,054 )

Other income (expense), net 1,069 1,117 ( 887 ) 1,007

Total revenues 158,754 140,349 138,188 100,862

Net loss and loss adjustment expenses incurred 122,865 78,476 92,962 94,184

Acquisition costs 21,526 37,172 30,962 27,424

General and administrative expenses 6,840 7,919 7,725 7,338

Interest expense 1,544 1,562 1,578 1,579

Total expenses 152,775 125,129 133,227 130,525

Income (loss) before income tax 5,979 15,220 4,961 ( 29,663 )

Income tax (expense) benefit ( 73 ) 94 179 ( 683 )

Net income (loss) $ 5,906 $ 15,314 $ 5,140 $ ( 30,346 )

Earnings (loss) per share

Basic $ 0.16 $ 0.42 $ 0.14 $ ( 0.84 )

Diluted $ 0.16 $ 0.42 $ 0.14 $ ( 0.84 )

Weighted average number of ordinary shares used in the determination of earnings and loss per share

Basic 35,972,665 36,100,665 36,841,623 36,121,023

Diluted 36,364,358 36,829,963 36,921,490 36,121,023

SUBSEQUENT EVENTS

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 “Restated SILP LPA”).

The Restated SILP LPA agreement amends, restates, supersedes and incorporates all material terms of the 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 Restated 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 the each of the respectively referenced “financial statements” are “U.S.

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

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

The Restated SILP LPA also amended the investment guidelines to reflect the amended investment guidelines adopted by the board of directors of the Company effective as of January 1, 2021.

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GREENLIGHT CAPITAL RE, LTD.

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Private investments and unlisted equities $ 17,411 $ 47,049 $ 47,049

Investment accounted for under the equity method NA 6,545 6,545

Derivative financial instruments (not designated as hedging instruments) — 335 335

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($ in thousands)

Other investments $ — $ 1,000

Cash and cash equivalents $ 485 $ 7

1 unchanged sentence

Notes receivable (net of allowance for expected credit losses) — 10,706

Due from subsidiaries — 8,200

Total assets $ 576,772 $ 562,503

47 unchanged sentences

Investing activities

Purchase of investments — — ( 800 )

Sale of investments — 1,000 —

3 unchanged sentences

Financing activities

Net proceeds from issuance of convertible senior notes payable, net of costs — — 96,576

Repurchase of Class A ordinary shares ( 10,000 ) ( 17,781 ) —

33 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-K

Item 9A. Controls and Procedures