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Item 1. Financial Statements

2023-05-09 compared with 2022-11-02 · 182 added, 434 removed, 413 unchanged (60% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2022 and December 31, 2021

March 31, 2023 and December 31, 2022

(expressed in thousands of U.S.

dollars, except per share and share amounts)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Investment in related party investment fund $ 196,060 $ 178,197

3 unchanged sentences

Restricted cash and cash equivalents 626,236 668,310

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

Reinsurance balances receivable (net of allowance for expected credit losses of 2023:

$ 356 and 2022:

581,641 505,555

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

Loss and loss adjustment expenses recoverable (net of allowance for expected credit losses of 2023:

$ 62 and 2022:

16,927 13,239

11 unchanged sentences

Total liabilities 1,134,475 1,077,261

Commitments and Contingencies (Note 11)

Shareholders' equity

10 unchanged sentences

Additional paid-in capital 479,429 478,439

Retained earnings (deficit) ( 13,551 ) ( 9,505 )

Retained earnings 27,086 21,199

Total shareholders' equity 510,041 503,120

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and nine months ended September 30, 2022 and 2021

For the three months ended March 31, 2023 and 2022

(expressed in thousands of U.S.

dollars, except per share and share amounts)

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

Three months ended March 31

Gross premiums written $ 186,455 $ 145,886

16 unchanged sentences

Net income (loss) $ 5,887 $ ( 5,727 )

Earnings (loss) per share (Class A and Class B)

Earnings (loss) per share (Class A and Class B) (Note 2)

Basic $ 0.17 $ ( 0.17 )

Diluted $ 0.17 $ ( 0.17 )

Weighted average number of ordinary shares used in the determination of earnings and loss per share

Weighted average number of ordinary shares used in the determination of earnings and loss per share (Note 2)

Basic 34,059,185 32,926,227

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the nine months ended September 30, 2022 and 2021

For the three months ended March 31, 2023 and 2022

(expressed in thousands of U.S.

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

Three months ended March 31

Ordinary share capital

1 unchanged sentence

Issue of Class A ordinary shares, net of forfeitures 44 88

Repurchase of Class A ordinary shares ( 1 ) ( 36 ) ( 1 ) ( 109 )

Balance - end of period 3,526 3,472

2 unchanged sentences

Cumulative effect of adoption of accounting guidance for convertible debt at January 1, 2022 — ( 7,896 )

Repurchase of Class A ordinary shares ( 34 ) ( 3,216 ) ( 34 ) ( 9,891 )

Share-based compensation expense 990 917

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2022 and 2021

For the three months ended March 31, 2023 and 2022

(expressed in thousands of U.S.

Nine months ended September 30

Cash provided by (used in) operating activities

Three months ended March 31

Cash flows from operating activities

Net income (loss) $ 5,887 $ ( 5,727 )

2 unchanged sentences

Net realized gain on repurchase of convertible senior notes payable ( 265 ) —

Net change in unrealized gains and losses on investments and notes receivable ( 9,237 ) ( 14,860 )

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

Net change in unrealized gains and losses on investments ( 550 ) ( 3,899 )

Net realized (gains) losses on investments 800 —

Foreign exchange (gains) losses ( 4,931 ) 38

1 unchanged sentence

Amortization and interest expense, net of change in accruals ( 803 ) ( 845 )

Depreciation expense — 16

Net change in:

Accrued interest receivable ( 58 ) —

Reinsurance balances receivable ( 72,203 ) ( 36,280 )

9 unchanged sentences

Net cash provided by (used in) operating activities ( 1,259 ) ( 11,618 )

Investing activities

Cash flows from investing activities

Proceeds from redemptions from related party investment fund 26,000 46,658

1 unchanged sentence

Purchases of investments ( 1,075 ) ( 3,402 )

Proceeds from sales of investments — 20,755

Change in notes receivable — 6,101

Net cash provided by (used in) investing activities ( 22,076 ) 33,256

Financing activities

Cash flows from financing activities

Repurchases of convertible senior notes payable ( 17,085 ) —

Repurchase of Class A ordinary shares ( 35 ) ( 10,000 )

Net cash provided by (used in) financing activities ( 17,085 ) —

11 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

ORGANIZATION AND BASIS OF PRESENTATION

Greenlight Capital Re, Ltd.

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

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

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

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

(“GLRE” and, together with its wholly-owned subsidiaries, the “Company”) was incorporated as an exempted company under the Companies Law of the Cayman Islands on July 13, 2004.

The Company’s wholly-owned subsidiaries are described below:

• Greenlight Reinsurance, Ltd.

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

Greenlight Re commenced underwriting in April 2006.

Verdant Holding Company, Ltd.

(“Verdant”), a wholly-owned subsidiary of GLRE, was incorporated in 2008 in the state of Delaware.

During 2010, GLRE established Greenlight Reinsurance Ireland, Designated Activity Company (“GRIL”), a wholly-owned reinsurance subsidiary based in Dublin, Ireland.

GRIL is authorized as a non-life reinsurance undertaking in accordance with the provisions of the European Union (Insurance and Reinsurance) Regulations 2015.

• Greenlight Reinsurance Ireland, Designated Activity Company (“GRIL”), domiciled in Ireland since 2010, is authorized as a non-life reinsurance undertaking in accordance with the provisions of the European Union (Insurance and Reinsurance) Regulations 2015.

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

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

In 2022, Greenlight Innovation Syndicate 3456 (“Syndicate 3456”) commenced underwriting under the Lloyd’s syndicate-in-a-box model, with Greenlight Re as the sole capital provider.

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

• Greenlight Re Marketing (UK) Limited, domiciled in the United Kingdom (“U.K.”) since 2020, is a U.K.

company formed to expand GLRE’s presence in the Lloyd’s of London market (“Lloyd’s”).

• Greenlight Re Corporate Member Ltd., domiciled in the U.K.

since 2014, is a corporate member that became a wholly-owned subsidiary of GLRE in 2023 and provides underwriting capacity for various Lloyd’s syndicates, including Syndicate 3456.

• Verdant Holding Company, Ltd., domiciled in the United States since 2008, is an investment holding company.

Additionally, through Greenlight Innovation Syndicate 3456 (“Syndicate 3456”), Greenlight Re provides a (re)insurance platform to its growing portfolio of insurtech partnerships.

Domiciled in the U.K.

since 2022, Syndicate 3456 is authorized to underwrite under the Lloyd’s syndicate-in-a-box model.

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

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

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

GAAP”) for interim financial information, and with the U.S.

Securities and Exchange Commission’s (“SEC”) instructions to Form 10-Q and Article 10 of Regulation S-X.

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

GAAP for complete financial statements.

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

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the U.S.

Securities and Exchange Commission on March 8, 2022.

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

The condensed consolidated financial statements also include the accounts of Syndicate 3456.

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

Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statements presentation.

These reclassifications do not affect previously reported net income or retained earnings.

These unaudited condensed consolidated financial statements include GLRE and its wholly-owned subsidiaries and all significant intercompany transactions and balances have been eliminated on consolidation.

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

Significant estimates used to prepare the Company’s condensed consolidated financial statements, including those associated with premiums and the estimations of loss and loss adjustment expense reserves, may be subject to significant adjustments in future periods.

The results of operations for any interim period are not necessarily indicative of the results for a full year.

SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the year ended December 31, 2022.

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Use of Estimates

2 unchanged sentences

Actual results could differ from these estimates.

The significant estimates reflected in the Company’s

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condensed 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.

The significant estimates reflected in the Company’s condensed 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, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents

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

Certificates of deposit with original maturities greater than three months are included under the caption "Other investments" on the condensed consolidated balance sheets.

The Company maintains cash and cash equivalent balances to collateralize regulatory trusts and letters of credit issued to cedents (see Note 11).

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

($ in thousands)

4 unchanged sentences

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

At September 30, 2022, funds held by cedents were $ 303.1 million (December 31, 2021:

At March 31, 2023, funds held by cedents were $ 367.8 million (December 31, 2022:

$ 337.4 million).

Such amounts include premiums withheld by Lloyd’s syndicates and funds contributed by the Company to Lloyd's as security for members’ underwriting activities.

The syndicates invest a portion of the premiums withheld in fixed maturity securities and investment funds.

The Company records its share of income (or expense) from these assets in its condensed consolidated statements of operations under the caption “Other income (expense).”

Reinsurance Assets

The Company calculates an allowance for expected credit losses for its reinsurance balances receivable and loss and loss adjustment expenses recoverable by applying a Probability of Default (“PD”) / Loss Given Default (“LGD”) model.

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 various 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 potential macroeconomic developments.

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 September 30, 2022, the Company has recorded an allowance for expected credit loss on its Reinsurance Assets of $ 0.1 million (December 31, 2021:

$ 0.1 million).

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The Lloyd’s syndicates invest a portion of the premiums withheld in investment funds and fixed-maturity securities.

The Company records its share of income (or expense) from these assets, in its condensed consolidated statements of operations under the caption “Other income (expense)” as reported by the syndicates on a quarterly lag basis due to the timing of the availability of these quarterly financial reports.

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

The deposit asset or liability balance is subsequently adjusted using the interest method with the corresponding income or expense recorded in the Company’s condensed consolidated statements of operations under the captions “Other income (expense)” and “Deposit interest expense,” respectively.

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

At September 30, 2022, deposit assets and deposit liabilities were $ 3.2 million and $ 13.7 million, respectively (December 31, 2021:

At March 31, 2023, deposit assets and liabilities were $ 3.1 million and $ 8.8 million, respectively (December 31, 2022:

$ 3.1 million and $ 10.7 million, respectively).

For the three and nine months ended September 30, 2022, and 2021, the interest income and expense on deposit accounted contracts were as follows:

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

($ in thousands) ($ in thousands)

For the three months ended March 31, 2023 and 2022, the interest income (expense) on deposit-accounted contracts were as follows:

Three months ended March 31

($ in thousands)

Deposit interest income $ — $ —

2 unchanged sentences

Foreign Exchange

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

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.

Non-monetary assets and liabilities denominated in foreign currencies are carried at their historical exchange rates.

The Company includes any foreign exchange gains and losses under the caption “Other income (expense), net” in the Company’s condensed consolidated statements of operations.

For the three and nine months ended September 30, 2022, $ 5.0 million and $ 10.4 million, respectively, (three and nine months ended September 30, 2021:

$ 0.6 million and $ 1.4 million, respectively), of foreign exchange loss was included in the Company’s net income (loss) in the condensed consolidated statements of operations.

Derivative instruments

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

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

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

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

The Company does not offset these balances against collateral pledged or received.

For the three months ended March 31, 2023, $ 4.9 million (three months ended March 31, 2022:

$( 1.1 ) million), of foreign exchange gains (losses) were included in the Company’s net income in the condensed consolidated statements of operations.

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

Other Liabilities

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

Earnings (Loss) Per Share

The Company has issued unvested restricted stock awards, some of which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid.

These awards are considered “participating securities” for the purposes of calculating earnings (loss) per share.

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

Diluted earnings (or loss) per share includes the dilutive effect, if any, of the following:

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

• Unvested restricted share awards which are not considered “participating securities”;

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

• For periods prior to January 1, 2022, those ordinary shares with the potential to be issued in connection with convertible notes and other such convertible instruments, determined using the treasury stock method;

• Effective January 1, 2022, the dilutive effect of the convertible notes is calculated using the if-converted method.

Under the if-converted method, the convertible notes are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted net income per common share calculation.

Interest expense related to the convertible notes incurred in the period is added back to the numerator for purposes of the if-converted calculation.

For the three and nine months ended September 30, 2022, the effect of the assumed conversion of the convertible notes was anti-dilutive and was not included in the computation of diluted earnings per share.

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

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

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The following table reconciles net income (loss) and weighted average shares used in computing basic and diluted net income (loss) per share for the three and nine months ended September 30, 2022 and 2021 (expressed in thousands of U.S.

The following table reconciles net income (loss) and weighted average shares used in computing basic and diluted net income (loss) per share for the three months ended March 31, 2023 and 2022 (expressed in thousands of U.S.

dollars, except per share and share amounts):

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

Three months ended March 31

Numerator for earnings per share

1 unchanged sentence

interest on convertible notes 776 —

gain on debt repurchases ( 265 ) —

Net income (loss) - diluted $ 6,398 $ ( 5,727 )

10 unchanged sentences

Diluted $ 0.17 $ ( 0.17 )

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 Act, as amended, that, in the event that the Cayman Islands enacts any legislation that imposes a 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.

federal rates and regulations prescribed by the U.S.

Internal Revenue Service (“IRS”).

Verdant’s taxable income is generally expected to be taxed at a marginal rate of 21% (2021:

Verdant’s tax years 2018 and beyond remain open and may be subject to examination by the IRS.

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

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

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

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Recent Accounting Pronouncements

Recently Issued Accounting Standards Not Yet Adopted

In June 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2022-03 “Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” (“ASU 2022-03”).

ASU 2022-03 clarifies the guidance for measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

ASU 2022-03 is effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023.

Early adoption is permitted.

The Company does not expect ASU 2022-03 to have a material impact on its financial position, results of operations, or cash flows.

Recently Issued Accounting Standards Adopted

In August 2020, the FASB issued ASU No.

2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):

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.

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

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

instead, 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.

Under the if-converted method, the shares potentially issuable in connection with convertible debt are assumed to be converted at the beginning of the period.

The resulting ordinary shares are included in the denominator of the diluted earnings per share calculation for the period presented.

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

The adoption of ASU 2020-06 resulted in a decrease in the Company’s opening shareholders’ equity of approximately $ 2.5 million, with a corresponding increase in the carrying value of the senior convertible notes (see Note 7).

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

Due to the net loss attributable to common shareholders recognized for the three months ended March 31, 2022, the share-based awards and convertible notes were anti-dilutive.

INVESTMENT IN RELATED PARTY INVESTMENT FUND

3 unchanged sentences

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 “Chairman”).

The SILP LPA includes the following proviso:

At March 31, 2023, 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 ( 60 %), and the General Partner will designate any portion of a Partner’s Investment Portfolio as Designated Securities to effectuate such limit.”

1 unchanged sentence

In assessing its interest in SILP, the Company noted the following:

• DME II serves as SILP’s general partner and has the power of appointing the investment manager.

• DME II serves as SILP’s general partner and has the power to appoint the investment manager.

The Company does not have the power to appoint, change or replace the investment manager or the general partner except “for cause.” Neither of the GLRE Limited Partners can participate in the investment decisions of SILP as long as SILP adheres to the investment guidelines provided within the SILP LPA.

For these reasons, the GLRE Limited Partners are not considered to have substantive participating rights or kick-out rights.

• 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.

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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.

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.

Therefore DME II is SILP’s primary beneficiary.

The Company presents its investment in SILP in its condensed consolidated balance sheets in the caption “Investment in related party investment fund.”

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

At September 30, 2022, the net asset value of the GLRE Limited Partners’ investment in SILP was $ 195.2 million (December 31, 2021:

At March 31, 2023, the net asset value of the GLRE Limited Partners’ investment in SILP was $ 196.1 million (December 31, 2022:

$ 178.2 million), representing 71.6 % (December 31, 2022:

3 unchanged sentences

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.

At September 30, 2022, the majority of SILP’s long investments were composed of cash and publicly traded equity securities, which could be readily liquidated to meet the GLRE Limited Partners’ redemption requests.

The Company’s share of the change in the net asset value of SILP for the three and nine months ended September 30, 2022, was $ 8.5 million and $ 24.5 million, respectively (three and nine months ended September 30, 2021:

$( 6.2 ) million and $( 4.2 ) million, respectively), and shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s condensed consolidated statements of operations.

The GLRE Limited Partners can redeem their assets from SILP for operational purposes by providing 3 business days’ notice to DME II.

At March 31, 2023, the majority of SILP’s long investments were composed of cash and publicly traded equity securities, which could be readily liquidated to meet the GLRE Limited Partners’ redemption requests.

The Company’s share of the change in the net asset value of SILP for the three months ended March 31, 2023 was $( 3.1 ) million (three months ended March 31, 2022:

$ 4.1 million), and shown in the caption “Income (loss) from investment in related party investment fund” in the Company’s condensed consolidated statements of operations.

The summarized financial statements of SILP are presented below.

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Summarized Statement of Assets and Liabilities of Solasglas Investments, LP

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

($ in thousands)

16 unchanged sentences

Summarized Statement of Operations of Solasglas Investments, LP

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

Three months ended March 31

($ in thousands)

17 unchanged sentences

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

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

Three months ended March 31

($ in thousands)

3 unchanged sentences

See Note 10 for further details on related party management fees and performance allocation.

FINANCIAL INSTRUMENTS

Other I nvestments

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

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

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• Certificates of deposit with original maturities greater than three months.

At September 30, 2022, the Company included the following securities in the caption “Other investments”:

FINANCIAL INSTRUMENTS

Private investments and unlisted equity securities without readily determinable fair values

At March 31, 2023, the Company included the following private investments and unlisted securities without readily determinable fair values in the caption “Other investments”:

Cost Unrealized

gains Unrealized

losses Fair value / carrying value

losses Accrued interest Fair value / carrying value

($ in thousands)

Private investments and unlisted equities $ 22,488 $ 42,461 $ ( 2,265 ) $ — $ 62,684

Convertible debt securities 1,000 — — 1,000

Debt and convertible debt securities 2,420 — — 58 2,478

Certificates of deposit 6,000 — — — 6,000

Total other investments $ 30,908 $ 42,461 $ ( 2,265 ) $ 58 $ 71,162

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

The accrued interest on certificates of deposit was included in other assets at March 31, 2023 and December 31, 2022.

At December 31, 2022, the Company included the following private investments and unlisted securities without readily determinable fair values in the caption “Other investments”:

Cost Unrealized

3 unchanged sentences

Private investments and unlisted equities $ 22,787 $ 42,461 $ ( 2,815 ) $ 62,433

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

Debt and convertible debt securities 1,846 — — 1,846

Certificates of deposit 6,000 — — 6,000

Total other investments $ 30,633 $ 42,461 $ ( 2,815 ) $ 70,279

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 condensed 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.

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

The following table presents the carrying values of the private investments and unlisted equity securities carried under the measurement alternative at September 30, 2022, and 2021, and the related adjustments recorded during the periods then ended.

Nine months ended September 30

The following table presents the carrying values of the private investments and unlisted equity securities carried under the measurement alternative at March 31, 2023 and 2022, and the related adjustments recorded during the periods then ended.

Three months ended March 31

($ in thousands)

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Upward carrying value changes (2)

$ 11,260 $ 13,355

Downward carrying value changes and impairment (3)

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(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 September 30, 2022, totaled $ 42.8 million.

(3) The cumulative downward carrying value changes and impairments from inception to September 30, 2022, totaled $ 3.7 million.

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(2) The cumulative upward carrying value changes from inception to March 31, 2023, totaled $ 42.9 million.

(3) The cumulative downward carrying value changes and impairments from inception to March 31, 2023, totaled $ 3.3 million.

During three months ended March 31, 2023, the Company realized a loss of $ 0.8 million (three months ended March 31,2022:

$ nil ), and a corresponding reversal of unrealized loss relating to an investment which was previously fully impaired at December 31, 2022, resulting in no impact to the Company’s net income (loss) for the quarter.

Fair Value Hierarchy

3 unchanged sentences

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

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

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Assets measured at fair value on a nonrecurring basis

At September 30, 2022, and December 31, 2021, the Company held $ 53.0 million and $ 40.5 million, respectively, of private investments and unlisted equities measured at fair value on a nonrecurring basis.

At March 31, 2023 and December 31, 2022, the Company held $ 53.6 million and $ 53.6 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.

The following table summarizes the periods between the most recent fair value measurement dates and September 30, 2022, for the private and unlisted equities measured at fair value on a nonrecurring basis:

The following table summarizes the periods between the most recent fair value measurement dates and March 31, 2023, for the private and unlisted equities measured at fair value on a nonrecurring basis:

Less than 6 months 6 to 12 months Over 1 year Total

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Fair values measured on a nonrecurring basis $ 599 $ 24,451 $ 28,503 $ 53,553

At September 30, 2022, and December 31, 2021, the Company held $ 8.1 million and $ 6.5 million, respectively, of private investments and unlisted equities measured at cost.

At March 31, 2023 and December 31, 2022, the Company held $ 9.1 million and $ 8.9 million, respectively, of private investments and unlisted equities measured at cost.

Assets measured at fair value on a recurring basis

In accordance with ASC 320, “Investments - Debt Securities,” the Company has classified the convertible debt securities as “trading” measured at estimated fair value with unrealized gains and losses reported in net income.

The Company classifies these securities as Level 3 within the fair value hierarchy and estimates their fair values primarily based on inputs such as third-party quotes, issuers’ book value, market multiples, and other inputs.

Valuation of these securities is subjective as the markets’ illiquidity may increase the likelihood that the estimated fair value of an investment is not reflective of the price at which an actual transaction could occur.

The carrying value of certificates of deposit with original maturities of one year or less approximates their fair values.

The Company classifies these assets as Level 2 within the fair value hierarchy.

At September 30, 2022, and December 31, 2021, 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.

At March 31, 2023 and December 31, 2022, 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.Therefore, this investment is not classified within the fair value hierarchy.

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

During the three and nine months ended September 30, 2022 and 2021, there were no transfers between Level 2 and Level 3 of the fair value hierarchy.

During the three months ended March 31, 2023 and 2022, there were no transfers between Level 2 and Level 3 of the fair value hierarchy.

Financial Instruments Disclosed, But Not Carried, at Fair Value

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

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The carrying value of debt and convertible debt securities (see “Private investments and unlisted equity securities without readily determinable fair values” above) and certificates of deposit with original maturities of one year or less approximates their fair values.

The Company classifies these assets as Level 2 within the fair value hierarchy.

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

At September 30, 2022, 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 received.

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

• estimates communicated by ceding companies;

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

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

• industry data;

• catastrophe scenario modeling software;

• management’s judgment.

At September 30, 2022, the Company’s loss and loss adjustment expense reserves included $ 13.6 million from the Russian-Ukrainian conflict and $ 19.5 million from Hurricane Ian.

Additional information the Company considered in estimating its loss reserves included the following:

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

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

• preliminary loss estimates received from clients, brokers, and loss adjusters;

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

• management’s judgment.

The Company’s Russian-Ukrainian conflict loss estimates include actuarial assumptions, including:

• the areas within the affected regions that have incurred losses;

• the scope of coverage provided by the underlying policies;

• the interpretation of contract terms;

• the determination of loss-triggering events;

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

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

Due to the uncertainty associated with the foregoing assumptions, the Company’s loss estimates are subject to significant variability, and actual losses may ultimately differ materially from the Company's current estimates.

The Company will evaluate its assumptions as new information becomes available and may adjust its loss estimates in future periods.

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

Additionally, if the Russian-Ukrainian conflict is prolonged, the Company may incur additional losses in subsequent periods.

The Company made no significant changes in the actuarial methodology or reserving process related to its loss and loss adjustment expense reserves for the nine months ended September 30, 2022.

At September 30, 2022 and December 31, 2021, loss and loss adjustment expense reserves were composed of the following:

September 30, 2022 December 31, 2021

At March 31, 2023 and December 31, 2022, loss and loss adjustment expense reserves were composed of the following:

March 31, 2023 December 31, 2022

($ in thousands)

3 unchanged sentences

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A summary of changes in outstanding loss and loss adjustment expense reserves for all lines of business consolidated for the nine months ended September 30, 2022 and 2021 is as follows:

A summary of changes in outstanding loss and loss adjustment expense reserves for all lines of business consolidated for the three months ended March 31, 2023 and 2022 is as follows:

Consolidated 2023 2022

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Foreign currency revaluation 2,622 ( 2,741 )

Net balance at September 30 530,223 527,697

Net balance at March 31 578,872 537,772

Losses recoverable 16,927 11,369

Gross balance at September 30 $ 540,827 $ 540,779

For the nine months ended September 30, 2022, the estimate of net losses incurred relating to prior accident years increased by $ 1.6 million, primarily due to the following:

• adverse development on motor and health business driven by the inflationary increase in claims costs;

• adverse development on a multi-line quota share program resulting from newly reported losses received from the cedent;

• newly reported claims received relating to excess of loss marine and energy contracts;

• claims deterioration on a cyber contract.

The adverse developments were partially offset by favorable developments relating to prior accident years primarily due to the following:

• favorable experience on mortgage business;

• loss reserves released relating to catastrophe events and COVID-19 based on updated claims reporting received from cedents;

• loss reserves released on an excess of loss workers’ compensation contract.

For the nine months ended September 30, 2021, the estimate of net losses incurred relating to prior accident years decreased by $ 1.3 million due primarily to favorable development on catastrophe events, a mortgage contract associated with the COVID-19 pandemic, and certain health contracts.

The decrease in prior accident years was partially offset by adverse loss development on certain workers’ compensation and multi-line casualty contracts written between 2014 and 2018.

Gross balance at March 31 $ 595,799 $ 549,141

Estimates for Significant Catastrophe Events

At March 31, 2023, the Company’s net reserves for losses and loss expenses included estimated amounts for several catastrophe and weather-related events.

The magnitude and complexity of losses arising from certain of these events inherently increase the level of uncertainty and, accordingly, the level of management judgement involved in arriving at estimated net reserves for losses and loss expenses.

Consequently, actual losses for these events may ultimately differ materially from current management estimates.

During the three months ended March 31, 2023, the Company recognized catastrophe and weather-related losses, net of reinsurance, of $ 6.2 million related to the Turkey earthquake, the New Zealand Cyclone Gabrielle and the U.S.

convective storms that occurred during the current quarter, coupled with $ 4.1 million of CAT losses relating to the 2022 Winter Storm Elliott for total CAT losses of $ 10.3 million (three months ended March 31, 2022:

$ 17.9 million).

Prior Year Reserve Development

For the three months ended March 31, 2023, the estimate of net losses incurred relating to prior accident years increased by $ 12.0 million, primarily due to the following:

• $ 4.1 million relating to the 2022 Winter Storm Elliott as noted above;

• $ 9.8 million of additional attritional losses driven mainly by $ 7.8 million on casualty contracts (mostly 2019 and 2021 underwriting years) and $ 1.9 million on property contracts (mostly 2020 and 2021 underwriting years).

These increases were partially offset by $ 1.9 million of loss reserve reduction on other lines of business (mostly 2021 and 2022 underwriting years).

For the three months ended March 31, 2022, the estimate of net losses incurred relating to prior accident years increased by $ 2.3 million, primarily due to adverse development on a health contract and additional losses from the COVID-19 pandemic.

For the three months ended March 31, 2023, the Company’s earned ceded premiums were $ 8.6 million, (three months ended March 31, 2022:

$ 1.2 million).

For the three months ended March 31, 2023, loss and loss adjustment expenses recovered and changes in losses recoverable were $ 6.2 million (three months ended March 31, 2022:

$ 0.7 million).

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The changes in the outstanding loss and loss adjustment expense reserves for health claims for the nine months ended September 30, 2022 and 2021 are as follows:

Health 2022 2021

($ in thousands)

Gross balance at January 1 $ 9,938 $ 17,485

Losses recoverable — —

Net balance at January 1 9,938 17,485

Incurred losses related to:

Current year 6,567 31,189

Prior years 3,552 ( 1,898 )

Total incurred 10,119 29,291

Paid losses related to:

Current year ( 3,051 ) ( 20,224 )

Prior years ( 11,146 ) ( 13,824 )

Total paid ( 14,197 ) ( 34,048 )

Foreign currency revaluation — —

Net balance at September 30 5,860 12,728

Losses recoverable — —

Gross balance at September 30 $ 5,860 $ 12,728

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 three and nine months ended September 30, 2022, the Company’s earned ceded premiums were $ 4.4 million and $ 8.4 million, respectively (insignificant for the three and nine months ended September 30, 2021).

For the three and nine months ended September 30, 2022, loss and loss adjustment expenses recovered and changes in losses recoverable were $ 2.5 million and $ 2.5 million, respectively.

The recoveries recognized by the Company for the three and nine months ended September 30, 2021, were nil and $ 0.1 million, respectively.

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

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

At September 30, 2022, the Company’s loss reserves recoverable consisted of (i) $ 7.9 million (December 31, 2021:

At March 31, 2023, the Company’s loss reserves recoverable consisted of (i) $ 12.5 million (December 31, 2022:

$ 9.5 million) recoverable from unrated retrocessionaires, of which $ 12.2 million (December 31, 2022:

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

At September 30, 2022, the Company had recorded an allowance for expected credit losses of $ 47 thousand (December 31, 2021:

At March 31, 2023, the Company had recorded an allowance for expected credit losses of $ 62 thousand (December 31, 2022:

$ 62 thousand).

2 unchanged sentences

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

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

At September 30, 2022, the Company’s share price was lower than the conversion price of $ 17.19 per share.

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

At March 31, 2023, the Company’s share price was lower than the conversion price of $ 17.19 per share.

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.

Prior to January 1, 2022, the Company bifurcated the Notes into liability and equity components.

Effective January 1, 2022, upon adoption of ASU 2020-06, the Company no longer bifurcates the Notes and presents the entire balance as a single liability on the Company’s condensed consolidated balance sheets (see Note 2 for recently issued accounting standards adopted).

The Company’s effective borrowing rate for non-convertible debt at the time of issuance of the Notes was estimated to be 6.0 %.

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

At September 30, 2022, the unamortized portion of these costs was $ 0.6 million (December 31, 2021:

At March 31, 2023, the unamortized portion of these costs was $ 0.2 million (December 31, 2022:

$ 0.4 million), which the Company expects to amortize through the maturity date.

During the three and nine months ended September 30, 2022 the Company repurchased and canceled $ 6.6 million of the Notes.

The carrying value of the Notes at September 30, 2022, including accrued interest of $ 0.6 million, was $ 93.4 million (December 31, 2021:

During the three months ended March 31, 2023 the Company repurchased and canceled $ 17.5 million of the Notes, resulting in realized gains of $ 0.3 million, which is included in Other income (expense), net, in the condensed consolidated statements of operations.

The carrying value of the Notes outstanding at March 31, 2023, including accrued interest of $ 0.4 million, was $ 62.4 million (December 31, 2022:

$ 80.5 million).

At September 30, 2022, the Company estimated the fair value of the Notes to be $ 90.2 million (December 31, 2021:

At March 31, 2023, the Company estimated the fair value of the Notes (excluding accrued interest) to be $ 60.3 million (December 31, 2022:

$ 77.1 million) (see Note 4 Financial Instruments).

For the three and nine months ended September 30, 2022, the Company recognized interest expenses of $ 1.1 million and $ 3.4 million, respectively (three and nine months ended September 30, 2021:

$ 1.6 million and $ 4.7 million, respectively).

The Company was in compliance with all covenants relating to the Notes at September 30, 2022, and December 31, 2021.

At September 30, 2022, the Company had a remaining obligation for interest and principal payments of nil and $ 97.2 million during 2022 and 2023, respectively.

Subsequent to September 30, 2022, the Company repurchased and canceled $ 13.8 million of the Notes.

For the three months ended March 31, 2023, the Company recognized interest expense of $ 0.8 million (three months ended March 31, 2022:

$ 1.2 million), which included the interest coupon and the amortization of issuance costs.

The Company was in compliance with all covenants relating to the Notes at March 31, 2023, and December 31, 2022.

At March 31, 2023, the Company had a remaining obligation for interest and principal payments of $ 63.4 million.

SHARE CAPITAL

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

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

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

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

At September 30, 2022, 2,011,426 (December 31, 2021:

3,128,276 ) Class A ordinary shares remained available for future issuance under the Company’s stock incentive plan.

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

The Board has adopted a share repurchase plan.

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.

The Board of Directors has approved a share repurchase plan, which expires on June 30, 2023, authorizing the Company to repurchase up to $ 25.0 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 4,933 Class A ordinary shares during the nine months ended September 30, 2022.

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

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

Nine months ended September 30 Nine months ended September 30

The following table is a summary of the Company’s ordinary shares issued and outstanding:

Three months ended March 31 Three months ended March 31

Class A Class B Class A Class B

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Balance – end of period 29,007,963 6,254,715 28,466,516 6,254,715

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

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

Under the $ 25.0 million share repurchase plan approved by the Board, expiring on June 30, 2023, the Company repurchased no Class A ordinary shares during the three months ended March 31, 2023 and 2022.

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

On May 2, 2023, the Board of Directors re-approved the share

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repurchase plan effective from July 1, 2023 until June 30, 2024, authorizing the Company to repurchase up to $ 25.0 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.

Under the Company’s stock incentive plan (see Note 9), the number of Class A ordinary shares authorized for issuance is 8.0 million shares.

At March 31, 2023, 1,387,727 (December 31, 2022:

2,011,426 ) Class A ordinary shares remained available for future issuance under the Company’s stock incentive plan.

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

SHARE-BASED COMPENSATION

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

The restricted shares issued to certain employees contain restrictions relating to vesting, forfeiture in the event of termination of employment, transferability, and other matters.

For the nine months ended September 30, 2022, the Company issued to non-employee directors an aggregate of 107,763 (2021:

74,769 ) restricted Class A ordinary shares as part of their remuneration for services to the Company.

These restricted shares contain similar restrictions to those issued to employees.

They will vest on the earlier of (i) the first anniversary of the date of the share issuance and (ii) the Company’s next annual general meeting, subject to the grantee’s continued service with the Company.

During the vesting period, non-employee directors holding these restricted shares retain voting rights and are entitled to any dividends declared by the Company.

For the nine months ended September 30, 2022, the Company issued 849,872 (2021:

334,312 ) Class A ordinary shares to employees pursuant to the Company’s stock incentive plan.

The restricted shares granted to employees in 2022 include (i) restricted shares with both performance and service-based vesting conditions (“Performance RSs”) and (ii) restricted shares with only service-based vesting conditions (“Service RSs”).

The Service RSs vest evenly each year on January 1, subject to the grantee’s continued service with the Company.

If performance goals are achieved, the Performance RSs will cliff vest at the end of a three-year performance period within a range of 25 % and 100 % of the awarded Performance RSs, with a target of 50 %.

During the vesting period, the holder of the Service RSs and Performance RSs retains voting rights but is entitled to any dividends declared by the Company only upon vesting.

Prior to fiscal year 2022, the restricted shares granted to employees cliff vested 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 retained voting rights and are entitled to any dividends declared by the Company.

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

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.

The CEO RSs 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.

At September 30, 2022, there were 193,149 non-vested CEO RSs with a weighted average grant date fair value of $ 10.10 per share.

As the performance conditions associated with these restricted shares have not been met, the Company recognized no compensation cost relating to the unvested shares for the nine months ended September 30, 2022, and 2021.

The Company recognizes compensation expense associated with Performance RSs and Service RSs based on the fair value of the Company's Class A ordinary shares measured at the grant date.

For Service RSs, the Company recognizes this expense on a straight-line basis over the requisite service period.

For Performance RSs, the Company recognizes the associated compensation expense based on achieving established performance criteria during the performance period.

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For the nine months ended September 30, 2022, grantees forfeited 8,476 (2021:

20,592 ) restricted shares.

For the nine months ended September 30, 2022, the Company reversed $ 26 thousand of stock compensation expense (2021:

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

The Company recorded $ 2.6 million of share-based compensation expense, net of forfeiture reversals, relating to restricted shares for the nine months ended September 30, 2022 (2021:

$ 1.8 million).

At September 30, 2022, there was $ 4.4 million (December 31, 2021:

$ 2.7 million) of unrecognized compensation cost relating to non-vested restricted shares (excluding CEO RSs), which the Company expects to recognize over a weighted-average period of 1.6 years (December 31, 2021:

For the nine months ended September 30, 2022, the total fair value of restricted shares vested was $ 2.0 million (2021:

$ 1.6 million).

The following table summarizes the activity for unvested outstanding restricted share awards during the nine months ended September 30, 2022:

The following table summarizes the activity for unvested outstanding restricted share awards during the three months ended March 31, 2023:

Performance Restricted Shares Service Restricted Shares

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Forfeited — — ( 8,476 ) 7.67

Balance at September 30, 2022 794,362 $ 7.62 904,351 $ 7.73

Employee Restricted Stock Units

The Company issues RSUs to certain employees as part of the stock incentive plan.

Such RSUs contain restrictions relating to vesting, forfeiture in the event of termination of employment, transferability, and other matters.

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.

The RSUs granted to employees in 2022 include (i) RSUs with both performance and service-based vesting conditions (“Performance RSUs”) and (ii) RSUs with only service-based vesting conditions (“Service RSUs”).

The Service RSUs vest evenly each year on January 1, subject to the grantee’s continued service with the Company.

If performance goals are achieved, the Performance RSUs will cliff vest at the end of a three-year performance period within a range of 25 % and 100 % of the awarded Performance RSUs, with a target of 50 %.

The Company recognizes compensation expense associated with Performance RSUs and Service RSUs based on the fair value of the Company's Class A ordinary shares measured at the grant date.

For Service RSUs, the Company recognizes this expense on a straight-line basis over the requisite service period.

For Performance RSUs, the Company recognizes the associated compensation expense based on achieving established performance criteria during the performance period.

Prior to 2022, the RSUs issued to employees cliff vested three years after the date of issuance, subject to the grantee’s continued service with the Company.

For the nine months ended September 30, 2022, the Company issued 159,215 (2021:

58,123 ) RSUs to employees pursuant to the Company’s stock incentive plan.

For the nine months ended September 30, 2022, and 2021, no RSUs were forfeited.

The Company recorded $ 0.5 million of share-based compensation expense relating to RSUs for the nine months ended September 30, 2022 (2021:

Balance at March 31, 2022 794,362 $ 7.62 871,357 $ 7.86

Balance at December 31, 2022 794,362 $ 7.62 832,896 $ 7.76

Granted 357,766 9.85 152,001 9.85

Vested — — ( 256,243 ) 6.75

Forfeited ( 99,428 ) 9.62 ( 49,417 ) 8.64

Balance at March 31, 2023 1,052,700 $ 8.19 679,237 $ 8.54

For the three months ended March 31, 2023, the Company issued 587,462 (three months ended March 31, 2022:

849,872 ) Class A ordinary shares to employees pursuant to the Company’s stock incentive plan.

The restricted shares granted to employees in 2023 and 2022 include (i) restricted shares with both performance and service-based vesting conditions (“Performance RSs”) and (ii) restricted shares with only service-based vesting conditions (“Service RSs”).

The Service RSs vest evenly each year on January 1, subject to the grantee’s continued service with the Company.

During the vesting period, the holder of the Service RSs and Performance RSs retains voting rights but is entitled to any dividends declared by the Company only upon vesting.

For the three months ended March 31, 2023, the total fair value of restricted shares vested was $ 1.7 million (three months ended March 31, 2022:

$ 1.3 million).

At September 30, 2022, the total compensation cost related to non-vested RSUs not yet recognized was $ 0.7 million (December 31, 2021:

$ 0.5 million), which the Company expects to recognize over a weighted-average period of 1.6 years (December 31, 2021:

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Employee RSU activity during the nine months ended September 30, 2022, was as follows:

Employee Restricted Stock Units

The following table summarizes the activity for unvested outstanding restricted stock units (“RSUs”) during the three months ended March 31, 2023:

Performance Restricted Stock Units Service Restricted Stock Units

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Vested — — ( 77,695 ) 6.74

Balance at September 30, 2022 105,008 $ 6.82 172,952 $ 7.58

Employee and Director Stock Options

For the nine months ended September 30, 2022, and 2021, no Class A ordinary share purchase options were granted or exercised by directors or employees, and 45,290 Class A ordinary share purchase options expired.

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

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

The Company uses graded vesting for expensing employee stock options.

The total compensation cost expensed relating to stock options for the nine months ended September 30, 2022, was $ 0.2 million (2021:

$ 0.3 million).

At September 30, 2022, the total compensation cost related to non-vested options not yet recognized was $ 0.1 million (December 31, 2021:

$ 0.3 million), which will be recognized over a weighted-average period of 0.8 years (December 31, 2021:

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

Employee and director stock option activity during the nine months ended September 30, 2022 was as follows:

options outstanding Weighted

price Weighted

fair value Intrinsic value

($ in millions) Weighted average remaining contractual term

Balance at December 31, 2021 735,627 $ 22.35 $ 10.23 $ — 4.7 years

Granted — — — — —

Exercised — — — — —

Forfeited — — ( 1,788 ) 7.82

Expired ( 45,290 ) 23.80 11.04 — —

Balance at September 30, 2022 690,337 $ 22.25 $ 10.18 $ — 4.2 years

Balance at March 31, 2023 176,129 $ 8.04 136,280 $ 8.76

For the three months ended March 31, 2023, the Company granted 113,932 (three months ended March 31,2022:

159,215 ) RSUs to employees pursuant to the Company’s stock incentive plan.

The RSUs include (i) RSUs with both performance and service-based vesting conditions (“Performance RSUs”) and (ii) RSUs with only service-based vesting conditions (“Service RSUs”).

The Service RSUs vest evenly each year on January 1, subject to the grantee’s continued service with the Company.

Prior to 2022, the RSUs issued to employees cliff vested three years after the date of issuance, subject to the grantee’s continued service with the Company.

Stock Compensation Expense

For the nine months ended September 30, 2022, and 2021, the combined stock compensation expenses (net of forfeitures) included in the caption “General and administrative expenses” in the Company’s condensed consolidated statements of operations were $ 3.3 million and $ 2.4 million, respectively.

At September 30, 2022, the Company recorded a gross deferred tax asset of $ 3.7 million (December 31, 2021:

$ 3.2 million) and a deferred tax asset valuation allowance of $ 3.2 million (December 31, 2021:

$ 2.7 million).

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

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

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

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The following table sets forth our current and deferred income tax benefit (expense) on a consolidated basis for the nine months ended September 30, 2022 and 2021:

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

($ in thousands) ($ in thousands)

Current tax (expense) benefit $ ( 234 ) $ 323 $ ( 655 ) $ ( 3,240 )

Tax recovered 1,050 — 1,478 —

Deferred tax (expense) benefit 170 — 428 —

Decrease (increase) in deferred tax valuation allowance ( 170 ) ( 323 ) ( 428 ) ( 493 )

Income tax (expense) benefit $ 816 $ — $ 823 $ ( 3,733 )

For the three months ended March 31, 2023 and 2022, the combined stock compensation expense (net of forfeitures) which was included in the caption “General and administrative expenses” in the Company’s condensed consolidated statements of operations was $ 1.0 million and $ 1.0 million, respectively.

RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

DME, DME II, and DME Advisors are each an affiliate of the Chairman and therefore are related parties to the Company.

Each of DME, DME II, and DME Advisors is an affiliate of the Chairman and, therefore, is a related party to the Company.

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

5 unchanged sentences

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

For a detailed breakdown of management fees and performance compensation for the three and nine months ended September 30, 2022, and 2021, refer to Note 3 of the condensed consolidated financial statements.

For a detailed breakdown of management fees and performance compensation for the three months ended March 31, 2023 and 2022, refer to Note 3 of the condensed consolidated financial statements.

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

4 unchanged sentences

(“GRBK”), a publicly-traded company.

At September 30, 2022, SILP, along with certain affiliates of DME Advisors, collectively owned 38 % of the issued and outstanding common shares of GRBK.

At March 31, 2023, SILP, along with certain affiliates of DME Advisors, collectively owned 37.9 % 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 September 30, 2022, SILP held 2.7 million shares of GRBK.

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At March 31, 2023, SILP held 2.7 million shares of GRBK.

Service Agreement

7 unchanged sentences

Letters of Credit and Trusts

At September 30, 2022, the Company had one letter of credit facility, which automatically renews each year unless terminated by either party in accordance with the applicable required notice period:

At March 31, 2023, the Company had the following committed letter of credit facility:

Maximum Facility Limit Termination Date Notice period required for termination

1 unchanged sentence

Citibank Europe plc $ 275,000 August 20, 2023 120 days before the termination date

At September 30, 2022, an aggregate amount of $ 180.2 million (December 31, 2021:

$ 136.8 million) in letters of credit was issued under the credit facility.

At September 30, 2022, the Company had pledged total cash and cash equivalents with a fair value in the aggregate of $ 180.9 million (December 31, 2021:

There was no amendment to the above credit facility since December 31, 2022.

In addition, the Company has a $ 14.0 million uncommitted letter of credit facility with Citibank Europe plc.

At March 31, 2023, an aggregate amount of $ 282.3 million (December 31, 2022:

$ 203.9 million) in letters of credit was issued under the credit facilities.

At March 31, 2023, the Company had pledged total cash and cash equivalents with a fair value in the aggregate of $ 283.1 million (December 31, 2022:

$ 204.7 million) as collateral against the letters of credit issued and included in the caption “Restricted cash and cash equivalents” in the Company’s condensed consolidated balance sheets.

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

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

The Company was in compliance with all the credit facility covenants at September 30, 2022 and December 31, 2021.

The Company was in compliance with all the covenants of these facilities at March 31, 2023.

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

At September 30, 2022, collateral of $ 468.0 million (December 31, 2021:

At March 31, 2023, collateral of $ 343.2 million (December 31, 2022:

$ 463.7 million) was provided to cedents in the form of regulatory trust accounts and included in the caption “Restricted cash and cash equivalents” in the Company’s condensed consolidated balance sheets.

Lease Obligations

The Company has determined that its lease agreements for office space qualify as operating lease arrangements.

At the commencement date, the Company determined 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 4.0 years at September 30, 2022.

As the lease contracts generally do not provide an implicit discount rate, the Company used the weighted-average discount rate of 6 %, representing its incremental borrowing rate based on information available at the commencement date, to 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.

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At September 30, 2022, the right-of-use assets and lease liabilities relating to the operating leases were $ 2.0 million and $ 2.1 million, respectively.

The operating expense for the three and nine months ended September 30, 2022, was $ 0.2 million and $ 0.5 million, respectively (three and nine months ended September 30, 2021:

$ 0.1 million and $ 0.2 million, respectively).

At September 30, 2022, the commitment for operating lease liabilities for future annual periods was as follows:

Year ending December 31, ($ in thousands)

Total lease payments 2,376

Less Imputed Interest ( 280 )

Present value of lease liabilities $ 2,096

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.

3 unchanged sentences

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.

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SEGMENT REPORTING

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

The Company has one operating segment, Property & Casualty (Re)insurance.

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

Gross Premiums Written by Line of Business

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

($ in thousands) ($ in thousands)

Three months ended March 31

($ in thousands)

Commercial $ 14,598 7.8 % $ 3,986 2.7 %

14 unchanged sentences

$ 186,455 100.0 % $ 145,886 100.0 %

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Gross Premiums Written by Geographic Area of Risks Insured

Three months ended September 30 Nine months ended September 30

2022 2021 2022 2021

($ in thousands) ($ in thousands)

Three months ended March 31

($ in thousands)

and Caribbean $ 69,852 37.5 % $ 76,037 52.1 %

5 unchanged sentences

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

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

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

What changed 10-Q

Item 1. Financial Statements