Greenlight Re drops sale plans after 'rigorous' strategic review

Hedge fund-backed specialist property/casualty reinsurer Greenlight Capital Re has completed its review of strategic transaction alternatives and decided to continue with its existing business plan, implying that it is no longer exploring a sale of its business.

The Cayman Islands-based reinsurer revealed that the strategic review, which began almost a year ago, was a "thorough and rigorous process", conducted by the board with the assistance of Credit Suisse Securities (USA).

Greenlight Re stated that considering all factors and recommendations made by a special committee composed of independent directors, the company has determined that "the best course of action is to continue its existing business plan".

Additionally, the board determined that at this time stockholder value is likely to be better enhanced on a standalone basis than by pursuing a transaction with a third party.

Earlier in March, Greenlight Re's CEO Simon Burton revealed that its strategic review process is not yet complete. The reinsurer posted a loss in both its fourth quarter 2019 and full year results ($398 million).

“The Company has undertaken a strategic review process and has been engaging in discussions with interested counterparties," Burton had said. "The review is not yet complete. We continue to evaluate various options and ultimately intend to determine the best outcome for our shareholders.”

In light of the recent developments, the board has expanded the company’s share repurchase program of Class A Ordinary Shares from 2.5 million to 5.0 million Class A Ordinary shares through June 30, 2021.

The board has also authorised the repurchase of up to $25 million aggregate face amount of the company’s 4.00% percent Convertible Senior Notes due 2023 through June 30, 2021.

"Share repurchases may be made through open market and privately negotiated transactions at times and in such amounts as deemed appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. The share repurchase program may be limited or terminated at any time without prior notice," the reinsurer said.