AM Best Revises Outlooks to Negative for Greenlight Capital Re, Ltd. and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Greenlight Reinsurance, Ltd. (Cayman Islands) and Greenlight Reinsurance Ireland, Designated Activity Company (Ireland). Additionally, AM Best has revised the outlook to negative from stable and affirmed the Long-Term ICR of “bbb-” of Greenlight Capital Re, Ltd. (Cayman Islands) (GLRE) [NASDAQ: GLRE], the ultimate holding company.

The ratings reflect GLRE’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The negative outlooks reflect AM Best’s concern over the company’s business profile, owing to its track record of negative underwriting performance, which has led to a five-year average company reported combined ratio of 105.3% (2014-2018) and has contributed to a five-year average return on equity of -13.3% (2014-2018). Going forward, AM Best expects GLRE to improve its underwriting profitability. Failure to do so may result in further negative rating actions.

GLRE’s consolidated surplus has decreased materially in recent years, to USD 480 million as of year-end 2018 from USD 1.2 billion at year-end 2014, primarily due to the outsized losses generated by its investment adviser. However, management has taken appropriate actions to de-risk the balance sheet significantly, thereby reducing the potential for volatility in the investment portfolio going forward. In the medium to long term, AM Best expects the company to stabilize its earnings and gradually replenish its capital position through internal capital generation.

The rating affirmations and revised outlooks follow an accepted appeal from the rated company in which new material information was provided that enhanced AM Best's opinion of the company's risk-adjusted capitalization and forward-looking operating performance volatility.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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Filippo Novella

Financial Analyst

+1 908 439 2200, ext. 5486

filippo.novella@ambest.com

Steven Chirico, CPA

Director

+1 908 439 2200, ext. 5087

steven.chirico@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best