Losses worsen at Greenlight Re; exits construction defect business

Greenlight Capital Re, a property/casualty reinsurer based in the Cayman Islands, again made heavy losses in the second quarter of 2016 though the company’s chief executive said its recent exit of the construction defect contracts business would help turn things around.

Greenlight Re made a net loss of $63 million in the quarter – much worse than the $39.6 million it lost in the same period in 2015.

Greenlight Re also experienced a decrease in the profitability of its underwriting in the period. Its combined ratio was 107.8 percent for the six-month period ending June 30, an increase of 0.8 percentage points from the six-month period in 2015.

The company’s gross premiums written in Q2 were stable at $92.2 million for the three-month period ending June 30 2016, a 0.9 percent decrease from $93 million for the same period in 2015.

The company attributes its dire underwriting performance for this period to poor performing contracts, but said it had taken steps to turn things around.

Bart Hedges, chief executive officer of Greenlight Re, said: “We continue to make strides executing our underwriting strategy in a difficult reinsurance market and are pleased to report an increase of approximately 16 percent in premium writings during the first six months of this year.

“After several years of adverse development, we took aggressive action to put our poorly performing construction defect contracts behind us. Combined with the maturation of our run-off commercial automobile book, where 99.5 percent of all claims have now been resolved, our exit from construction defect business leaves us without significant exposure to poorly performing lines for the first time in several years.

“While the overall underwriting performance has been affected by a handful of poor performing contracts, the rest of the underwriting portfolio has behaved in line with our expectations.”