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x
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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o
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Cayman
Islands
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N/A
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(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
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Title
of Class
|
Name
of Exchange on Which Registered
|
Class
A ordinary shares,
$0.10
par value per share
|
The
Nasdaq Stock Market LLC
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Page
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|||||
3 | |||||
BUSINESS
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4 | ||||
RISK
FACTORS
|
17 | ||||
UNRESOLVED
STAFF
COMMENTS
|
36 | ||||
PROPERTIES
|
36 | ||||
LEGAL
PROCEEDINGS
|
36 | ||||
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
36 | ||||
|
37 | ||||
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
37 | ||||
SELECTED
FINANCIAL
DATA
|
39 | ||||
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
41 | ||||
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
57 | ||||
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
59 | ||||
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
59 | ||||
CONTROLS
AND
PROCEDURES
|
59 | ||||
OTHER
INFORMATION
|
60 | ||||
|
61 | ||||
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
61 | ||||
EXECUTIVE
COMPENSATION
|
61 | ||||
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
61 | ||||
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
61 | ||||
PRINCIPAL
ACCOUNTANT FEES AND
SERVICES
|
61 | ||||
|
62 | ||||
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
62 |
|
•
|
Our
results will fluctuate from period to period and may not be indicative of
our long-term prospects;
|
|
•
|
The
property and casualty reinsurance market may be affected by cyclical
trends;
|
|
•
|
Rating
agencies may downgrade or withdraw our
rating;
|
|
•
|
Loss
of key executives could adversely impact our ability to implement our
business strategy;
|
|
•
|
Currency
fluctuations could result in exchange rate losses and negatively impact
our business; and
|
|
•
|
We
depend on DME Advisors, LP, or DME Advisors, to implement our investment
strategy.
|
ITEM
1.
|
Reference
|
Entity’s
legal name
|
Greenlight
Capital Re
|
Greenlight
Capital Re, Ltd.
|
Greenlight
Re
|
Greenlight
Reinsurance, Ltd.
|
|
•
|
we
focus on offering select, customized reinsurance solutions at times and in
markets where capacity and alternatives are limited rather than pursuing
and participating in broadly available traditional property and casualty
opportunities;
|
|
•
|
we
aim to build a reinsurance portfolio of frequency and severity contracts
with favorable ultimate economic results measured after all loss payments
have been made rather than focusing on interim results when losses may be
incurred but not yet reported or
paid;
|
|
•
|
we
seek to act as the lead underwriter on a majority of the contracts we
underwrite in an effort to obtain greater influence in negotiating
pricing, terms and conditions rather than focusing on taking a minority
participation in contracts that have been negotiated and priced by another
party;
|
|
•
|
we
maintain a small staff of experienced generalist underwriters that are
capable of underwriting many lines of property and casualty business
rather than a large staff of underwriters, each with an individual,
specific focus on certain lines of
business;
|
|
•
|
we
implement a ‘‘cradle to grave’’ service philosophy where the same
individual underwrites and administers each reinsurance contract rather
than separating underwriting and administrative duties among many
employees; and
|
|
•
|
we
compensate our management with a cash bonus structure largely dependent on
our underwriting results over a multi-year period rather than on premium
volume or underwriting results in any given financial accounting
period.
|
|
•
|
target
markets where capacity and alternatives are underserved or
constrained;
|
|
•
|
employ
strict underwriting discipline; and
|
|
•
|
select
reinsurance opportunities with favorable returns on equity over the life
of the contract.
|
|
The
following table sets forth our gross premiums written by line of business
for the years ended December 31, 2008, 2007 and
2006:
|
2008
|
2007
|
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Property
|
||||||||||||||||||||||||
Commercial
lines
|
$ | 13,591 | 8.4 | % | $ | 17,532 | 13.8 | % | $ | 9,875 | 13.3 | % | ||||||||||||
Personal
lines
|
(4,071 | ) (1) | (2.5 | ) | 41,291 | 32.5 | 58,063 | 78.3 | ||||||||||||||||
Casualty
|
||||||||||||||||||||||||
General
liability
|
16,948 | 10.4 | 17,597 | 13.8 | 4,388 | 5.9 | ||||||||||||||||||
Marine
|
— | — | — | — | 1,825 | 2.5 | ||||||||||||||||||
Motor
liability
|
72,578 | 44.7 | 795 | 0.6 | — | — | ||||||||||||||||||
Professional
liability
|
2,150 | 1.3 | 27,230 | 21.4 | — | — | ||||||||||||||||||
Specialty
|
||||||||||||||||||||||||
Health
|
40,210 | 24.7 | 16,489 | 13.0 | — | — | ||||||||||||||||||
Medical
malpractice
|
4,641 | 2.9 | 6,197 | 4.9 | — | — | ||||||||||||||||||
Workers
compensation
|
16,348 | 10.1 | — | — | — | — | ||||||||||||||||||
$ | 162,395 | 100.0 | % | $ | 127,131 | 100.0 | % | $ | 74,151 | 100.0 | % |
2008
|
2007
|
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
USA
|
$ | 142,604 | 87.8 | % | $ | 79,647 | 62.6 | % | $ | 64,409 | 86.9 | % | ||||||||||||
Worldwide
(2)
|
18,991 | 11.7 | 44,722 | 35.2 | 4,388 | 5.9 | ||||||||||||||||||
Europe
|
— | — | 2,157 | 1.7 | 3,521 | 4.7 | ||||||||||||||||||
Caribbean
|
800 | 0.5 | 605 | 0.5 | 500 | 0.7 | ||||||||||||||||||
Japan
|
— | — | — | — | 1,333 | 1.8 | ||||||||||||||||||
$ | 162,395 | 100.0 | % | $ | 127,131 | 100.0 | % | $ | 74,151 | 100.0 | % |
(1)
|
Represents
gross return premiums based on updated information received from
client.
|
(2) | ‘‘Worldwide’’ risk comprises individual policies that insure risks on a worldwide basis. |
|
•
|
customized
solutions that address the specific business needs of our
clients;
|
|
•
|
rapid
and substantive responses to proposal and pricing quote
requests;
|
|
•
|
timely
payment of claims;
|
|
•
|
financial
security; and
|
|
•
|
clear
indication of risks we will and will not
underwrite.
|
2008
|
2007
|
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Name
of Broker
|
||||||||||||||||||||||||
Access
Re
|
$ | — | — | % | $ | — | — | % | $ | 4,000 | 5.4 | % | ||||||||||||
Aon
Ltd
|
8,241 | 5.1 | 35,417 | 27.9 | 5,375 | 7.3 | ||||||||||||||||||
Cornerstone
Re
|
25,552 | 15.7 | — | — | — | — | ||||||||||||||||||
Denis
M Clayton
|
7,500 | 4.6 | 7,500 | 5.9 | 2,325 | 3.1 | ||||||||||||||||||
Frontline
Insurance Managers
(1)
|
(4, 071 | ) (2) | (2.5 | ) | 41,291 | 32.5 | 58,063 | 78.3 | ||||||||||||||||
Gallagher
Re
|
27,495 | 16.9 | 1,997 | 1.6 | — | — | ||||||||||||||||||
Guy
Carpenter & Co
|
9,910 | 6.1 | 1,958 | 1.5 | 2,025 | 2.7 | ||||||||||||||||||
Lainston
International Mgmt
|
5,955 | 3.7 | 12,112 | 9.5 | — | — | ||||||||||||||||||
RIB
Intermediaries
|
9,329 | 5.7 | — | — | — | — | ||||||||||||||||||
Risk
& Insurance Consulting, Inc
|
12,450 | 7.7 | 14,981 | 11.8 | — | — | ||||||||||||||||||
Reinsurance
Cooperative Associates, LLC
|
50,000 | 30.8 | — | — | — | — | ||||||||||||||||||
Other
|
10,034 | 6.2 | 11,875 | 9.3 | 2,363 | 3.2 | ||||||||||||||||||
Total
|
$ | 162,395 | 100.0 | % | $ | 127,131 | 100.0 | % | $ | 74,151 | 100.0 | % |
|
(1)
|
Frontline
Insurance Managers, Inc. is a related party of First Protective Insurance
Company, the counterparty to our largest contract bound in
2006.
|
|
(2)
|
Represents
our share of gross return premiums based on updated information received
from client.
|
|
•
|
pay
our clients a commission based upon a predetermined percentage of the
profit we realize on the business, which we refer to as a profit
commission;
|
|
•
|
allow
the client to perform all claims adjusting and audits, as well as the
funding and paying of claims, which we refer to as self insured
retentions;
|
|
•
|
provide
that the client pays a predetermined proportion of all losses above a
predetermined amount, which we refer to as co-participation;
and/or
|
|
•
|
charge
the client a premium for reinstatement of the amount of reinsurance
coverage to the full amount reduced as a result of a reinsurance loss
payment, which we refer to as a reinstatement
premium.
|
|
•
|
the
client’s and industry historical loss
data;
|
|
•
|
the
expected duration for claims to fully
develop;
|
|
•
|
the
client’s pricing and underwriting
strategies;
|
|
•
|
the
geographic areas in which the client is doing business and its market
share;
|
|
•
|
the
reputation and financial strength of the
client;
|
|
•
|
the
reputation and expertise of the
broker;
|
|
•
|
the
likelihood of establishing a long-term relationship with the client and
the broker; and
|
|
•
|
reports
provided by independent industry
specialists.
|
|
•
|
the
maintenance of a net worth (defined in the Law as the excess of assets,
including any contingent or reserve fund secured to the satisfaction of
CIMA, over liabilities other than liabilities to partners or shareholders)
of at least 100,000 Cayman Islands dollars (which is equal to
approximately US$120,000), subject to increase by CIMA depending on the
type of business undertaken;
|
|
•
|
to
carry on its insurance business in accordance with the terms of the
license application submitted to CIMA, to seek the prior approval of CIMA
to any proposed change thereto, and annually to file a certificate of
compliance with this requirement in the prescribed form signed by an
independent auditor, or any other party approved by
CIMA;
|
|
•
|
to
prepare annual accounts in accordance with generally accepted accounting
principles, audited by an independent auditor approved by
CIMA;
|
|
•
|
to
seek the prior approval of CIMA in respect of the appointment of directors
and officers and to provide CIMA with information in connection therewith
and notification of any changes
thereto;
|
|
•
|
to
notify CIMA as soon as reasonably practicable of any change of control of
Greenlight Re, the acquisition by any person or group of persons of shares
representing more than 10% of Greenlight Re’s issued share capital or
total voting rights;
|
|
•
|
to
maintain appropriate business records in the Cayman Islands;
and
|
|
•
|
to
pay an annual license fee.
|
|
•
|
to
maintain a general review of insurance practice in the Cayman
Islands;
|
|
•
|
to
examine the affairs or business of any licensee or other person carrying
on, or who has carried on, insurance business in order to ensure that the
Law has been complied with and that and the licensee is in a sound
financial position and is carrying on its business in a satisfactory
manner;
|
|
•
|
to
examine and report on the annual returns delivered to CIMA in terms of the
Law; and
|
|
•
|
to
examine and make recommendations with respect to, among other things,
proposals for the revocation of licenses and cases of suspected insolvency
of licensed entities.
|
|
•
|
a
1.5% annual management fee, regardless of the performance of our
investment account, payable monthly based on the net asset value of our
investment account, excluding assets, if any, held in trusts used to
collateralize our reinsurance obligations, which we refer to as Regulation
114 Trusts; and
|
|
•
|
performance
compensation based on the appreciation in the value of our investment
account equal to 20% of net profits calculated per annum, subject to a
loss carryforward provision.
|
|
•
|
a
material violation of applicable law relating to DME Advisors’ advisory
business;
|
|
•
|
DME
Advisors gross negligence, willful misconduct or reckless disregard of its
obligations under the advisory
agreement;
|
|
•
|
a
material breach by DME Advisors of our investment guidelines that is not
cured within a 15-day period; or
|
|
•
|
a
material breach by DME Advisors of its obligations to return and deliver
assets as we may request.
|
|
•
|
Quality
Investments:
At least 80%
of the assets in the investment portfolio are to be held in debt or equity
securities (including swaps) of publicly-traded companies and governments
of the Organization of Economic Co-operation and Development, or the OECD,
high income countries and cash, cash equivalents or United States
government obligations.
|
|
•
|
Concentration of
Investments:
Other than
cash, cash equivalents and United States government obligations, no single
investment in the investment portfolio may constitute more than 20% of the
portfolio. No more than 10% of the assets in the investment portfolio will
be held in private equity
securities.
|
|
•
|
Liquidity:
Assets will
be invested in such fashion that we have a reasonable expectation that we
can meet any of our liabilities as they become due. We periodically review
with the investment advisor the liquidity of the
portfolio.
|
|
•
|
Monitoring:
We require
our investment advisor to re-evaluate each position in the investment
portfolio and to monitor changes in intrinsic value and trading value and
provide monthly reports on the investment portfolio to us as we may
reasonably determine.
|
|
•
|
Leverage:
The
investment portfolio may not employ greater than 5% indebtedness for
borrowed money, including net margin balances, for extended time periods.
The investment advisor may use, in the normal course of business, an
aggregate of 20% net margin leverage for periods of less than 30
days.
|
As
of
December
31, 2008
|
As
of
December
31, 2007
|
|||||||||||||||
($
in thousands)
|
||||||||||||||||
Debt
securities
|
$ | 70,214 | 11.8 | % | $ | 1,520 | 0.2 | % | ||||||||
Equities
– listed
(*)
|
409,329 | 69.0 | 570,440 | 84.7 | ||||||||||||
Equities
– unlisted
|
11,897 | 2.0 | 10,835 | 1.6 | ||||||||||||
Options
|
2,526 | 0.5 | 6,215 | 0.9 | ||||||||||||
Futures
|
— | — | 1,526 | 0.3 | ||||||||||||
Investments
in securities
|
493,966 | 83.3 | 590,536 | 87.7 | ||||||||||||
Cash
and funds held with brokers
|
94,814 | 16.0 | 100,495 | 14.9 | ||||||||||||
Financial
contracts, net
|
4,279 | 0.7 | (17,524 | ) | (2.6 | ) | ||||||||||
Total
long investments
|
$ | 593,059 | 100.0 | % | $ | 673,507 | 100.0 | % |
As
of
December
31, 2008
|
As
of
December
31, 2007
|
|||||||||||||||
Long
%
|
Short
%
|
Long
%
|
Short
%
|
|||||||||||||
Debt
securities
|
11.8 | % | 0.0 | % | 0.1 | % | 0.0 | % | ||||||||
Equities
& related derivatives
|
65.8 | (39.3 | ) | 91.0 | (51.7 | ) | ||||||||||
Equities
– unlisted
|
1.9 | — | 1.2 | 0.0 | ||||||||||||
Other
investments
|
— | (0.2 | ) | 0.7 | (7.6 | ) | ||||||||||
Total
|
79.5 | % | (39.5 | )% | 93.0 | % | (59.3 | )% |
Sector
|
Long
%
|
Short
%
|
Net
%
|
|||||||||
Basic
Materials
|
5.3 | % | (5.3 | )% | 0.0 | % | ||||||
Consumer
Cyclical
|
5.5 | (5.8 | ) | (0.3 | ) | |||||||
Consumer
Non-Cyclical
|
2.5 | (3.4 | ) | (0.9 | ) | |||||||
Energy
|
6.3 | (1.5 | ) | 4.8 | ||||||||
Financial
|
20.6 | (18.4 | ) | 2.4 | ||||||||
Healthcare
|
1.9 | (2.6 | ) | (0.7 | ) | |||||||
Industrial
|
20.9 | (2.5 | ) | 18.4 | ||||||||
Technology
|
12.6 | (0.1 | ) | 12.5 | ||||||||
Utilities
|
3.9 | 0.0 | 3.9 | |||||||||
Total
|
79.5 | % | (39.5 | )% | 40.1 | % |
Capitalization
|
Long
%
|
Short
%
|
Net
%
|
|||||||||
Large
Cap Equity (≥$5 billion)
|
16.9 | % | (22.1 | )% | (5.1 | )% | ||||||
Mid
Cap Equity (≥$1 billion)
|
32.7 | (16.2 | ) | 16.6 | ||||||||
Small
Cap Equity (<$1 billion)
|
16.2 | (1.1 | ) | 15.1 | ||||||||
Debt
Instruments
|
11.8 | (0.0 | ) | 11.6 | ||||||||
Other
Investments
|
1.9 | (0.2 | ) | 1.9 | ||||||||
Total
|
79.5 | % | (39.5 | )% | 40.1 | % |
2008
|
2007
|
2006
|
||||||||||
($
in thousands)
|
||||||||||||
Realized
gains (losses) and change in unrealized gains and losses,
net
|
$ | (118,667 | ) | $ | 28,051 | $ | 70,272 | |||||
Interest,
dividend and other income
|
31,093 | 23,443 | 11,704 | |||||||||
Interest,
dividend and other expenses
|
(28,651 | ) | (9,219 | ) | (4,775 | ) | ||||||
Investment
advisor compensation
|
(9,901 | ) | (14,633 | ) | (18,692 | ) | ||||||
Net
investment (loss) income
|
$ | (126,126 | ) | $ | 27,642 | $ | 58,509 |
Quarter
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
1
st
|
(0.9 | )% | (4.2 | )% | 7.5 | % | 2.2 | % | — | % | ||||||||||
2
nd
|
4.5 | % | 6.8 | 2.9 | 5.4 | — | ||||||||||||||
3
rd
|
(15.9 | )% | (0.8 | ) | 6.2 | 3.0 | 1.3 | |||||||||||||
4
th
|
(5.3 | )% | 4.2 | 5.9 | 2.9 | 3.9 | ||||||||||||||
Full
Year
|
(17.6 | )% | 5.9 | % | 24.4 | % | 14.2 | % | 5.2 | % (2) |
(1)
|
Investment
returns are calculated monthly and compounded to calculate the quarterly
and annual returns. Actual investment income may vary depending on cash
flows into and out of the investment account. Past performance is not
necessarily indicative of future
results.
|
(2)
|
Represents
the return for the period from July 13, 2004 (date of incorporation) to
December 31, 2004.
|
|
•
|
reinsurance
contract pricing;
|
|
•
|
our
assessment of the quality of available reinsurance
opportunities;
|
|
•
|
the
volume and mix of reinsurance products we
underwrite;
|
|
•
|
loss
experience on our reinsurance
liabilities;
|
|
•
|
our
ability to assess and integrate our risk management strategy properly;
and
|
|
•
|
the
performance of our investment
portfolio.
|
|
•
|
premium
charges;
|
|
•
|
the
general reputation and perceived financial strength of the
reinsurer;
|
|
•
|
relationships
with reinsurance brokers;
|
|
•
|
terms
and conditions of products offered;
|
|
•
|
ratings
assigned by independent rating
agencies;
|
|
•
|
speed
of claims payment and reputation;
and
|
|
•
|
the
experience and reputation of the members of our underwriting team in the
particular lines of reinsurance we seek to
underwrite.
|
|
•
|
the
lapse of time from the occurrence of an event to the reporting of the
claim and the ultimate resolution or settlement of the
claim;
|
|
•
|
the
diversity of development patterns among different types of reinsurance
treaties; and
|
|
•
|
the
necessary reliance on the client for information regarding
claims.
|
|
•
|
if
we change our business practices from our organizational business plan in
a manner that no longer supports A.M. Best's
rating;
|
|
•
|
if
unfavorable financial or market trends impact
us;
|
|
•
|
if
our losses significantly exceed our loss
reserves;
|
|
•
|
if
we are unable to retain our senior management and other key personnel;
or
|
|
•
|
if
our investment portfolio incurs significant
losses.
|
|
•
|
fund
liquidity needs caused by underwriting or investment
losses;
|
|
•
|
replace
capital lost in the event of significant reinsurance losses or adverse
reserve developments or significant investment
losses;
|
|
•
|
satisfy
letters of credit or guarantee bond requirements that may be imposed by
our clients or by regulators;
|
|
•
|
meet
applicable statutory jurisdiction
requirements;
|
|
•
|
meet
rating agency capital requirements;
or
|
|
•
|
respond
to competitive pressures.
|
|
•
|
we
cease to carry on reinsurance
business;
|
|
•
|
the
direction and management of our reinsurance business has not been
conducted in a fit and proper
manner;
|
|
•
|
a
person holding a position as a director, manager or officer is not a fit
and proper person to hold the respective position;
or
|
|
•
|
we
become bankrupt or go into liquidation or we are wound up or otherwise
dissolved.
|
|
•
|
a
1.5% annual management fee, regardless of the performance of our
investment account, payable monthly based on net assets of our investment
account, excluding assets, if any, held in Regulation 114 Trusts;
and
|
|
•
|
performance
compensation based on the appreciation in the value of our investment
account equal to 20% of net profits calculated per annum, subject to a
loss carryforward provision.
|
|
•
|
a
material violation of applicable law relating to DME Advisors' advisory
business;
|
|
•
|
DME
Advisors' gross negligence, willful misconduct or reckless disregard of
its obligations under the advisory
agreement;
|
|
•
|
a
material breach by DME Advisors of our investment guidelines that is not
cured within a 15-day period; or
|
|
•
|
a
material breach by DME Advisors' of its obligations to return and deliver
assets as we may request.
|
• | the statutory provisions as to majority vote have been complied with; |
|
•
|
the
shareholders have been fairly represented at the meeting in
question;
|
|
•
|
the
scheme of arrangement is such as a businessman would reasonably approve;
and
|
|
•
|
the
scheme of arrangement is not one that would more properly be sanctioned
under some other provision of the Companies
Law.
|
|
•
|
our
gross income attributable to insurance or reinsurance policies where the
direct or indirect insureds are our direct or indirect United States
shareholders or persons related to such United States shareholders equals
or exceeds 20% of our gross insurance income in any taxable year;
and
|
|
•
|
direct
or indirect insureds and persons related to such insureds owned directly
or indirectly 20% or more of the voting power or value of our
stock,
|
ITEM 5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
2008
|
2007
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First
Quarter
|
$ | 21.46 | $ | 16.30 | n/a | n/a | ||||||||||
Second
Quarter
|
$ | 23.85 | $ | 16.75 | $ | 25.50 | $ | 21.96 | ||||||||
Third
Quarter
|
$ | 23.50 | $ | 15.80 | $ | 24.58 | $ | 18.88 | ||||||||
Fourth
Quarter
|
$ | 19.00 | $ | 8.67 | $ | 22.25 | $ | 18.92 |
Plan
category
|
Number of securities
to
be issued
upon exercise of
outstanding options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding options,
warrants
and rights
|
Number
of securities
remaining
available for
future issuance under
equity compensation
plans
(excluding securities
reflected in column
(a))
|
|||||||||
(a)
|
(b)
|
(c)
|
||||||||||
Equity
compensation plans approved by security holders
|
1,608,340 | (1) | $ | 12.56 | 439,054 | (2) | ||||||
Equity
compensation plans not approved by security holders
|
— | — | — | |||||||||
Total
|
1,608,340
|
(1) | $ | 12.56 |
439,054
|
(2) |
(1)
|
Includes
1,258,340 Class A ordinary shares issuable upon the exercise of options
that were outstanding under the Stock Incentive Plan as of
December 31, 2008. Also includes 400,000 Class A ordinary shares
issuable upon the exercise of share purchase options granted in 2004 to a
consultant, First International Capital Holdings, Ltd., or FIC, less
50,000 Class A ordinary shares relating to the re-purchase of share
purchase options from FIC in December
2007.
|
(2)
|
Represents
the difference between the number of securities issuable under the Stock
Incentive Plan (2,000,000) and the number of securities issued under
the Stock Incentive Plan as of December 31, 2008 (1,560,946). The
number of securities to be issued under the Stock Incentive Plan consists
of options to acquire 1,259,000 Class A ordinary shares as well as 301,946
issued shares.
|
Period
|
Total
Number of
Shares
Purchased
|
Average
Price
Paid
per Share
|
Total
Number of
Shares
Purchased
as
Part of Publicly
Announced
Plans
or
Programs
1
|
Maximum
Number of
Shares
that May Yet
Be
Purchased Under
the
Plans or Programs
1
|
||||||||||||
October
1, 2008 to October 31, 2008
|
0 | $ | 0 | 0 | 2,000,000 | |||||||||||
November
1, 2008 to November 30, 2008
|
63,900 | $ | 10.19 | 63,900 | 1,936,100 | |||||||||||
December
1, 2008 to December 31, 2008
|
165,000 | $ | 10.16 | 165,000 | 1,771,100 | |||||||||||
Total
|
228,900 | $ | 10.17 | 228,900 | 1,771,100 |
Year
Ended December 31,
|
July
13, 2004
to
December 31,
|
|||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
($
in thousands, except per share and share amounts)
|
||||||||||||||||||||
Summary
Statement of Income Data
|
||||||||||||||||||||
Gross
premiums written
|
$ | 162,395 | $ | 127,131 | $ | 74,151 | $ | — | $ | — | ||||||||||
Net
premiums earned
|
114,949 | 98,047 | 26,605 | — | — | |||||||||||||||
Net
investment income (loss)
|
(126,126 | ) | 27,642 | 58,509 | 27,934 | 9,636 | ||||||||||||||
Loss
and loss adjustment expenses incurred, net
|
55,485 | 39,507 | 9,671 | — | — | |||||||||||||||
Acquisition
costs, net
|
41,649 | 38,939 | 10,415 | — | — | |||||||||||||||
General
and administrative expenses
|
13,756 | 11,918 | 9,063 | 2,992 | 3,377 | |||||||||||||||
Net
income (loss)
|
$ | (120,904 | ) | $ | 35,325 | $ | 56,999 | $ | 26,265 | $ | 6,775 | |||||||||
Earnings
(Loss) Per Share Data
(1)
|
||||||||||||||||||||
Basic
|
$ | (3.36 | ) | $ | 1.17 | $ | 2.67 | $ | 1.24 | $ | 0.32 | |||||||||
Diluted
|
(3.36 | ) | 1.15 | 2.66 | 1.24 | 0.32 | ||||||||||||||
Weighted
average number of ordinary shares used in the determination
of
|
||||||||||||||||||||
Basic
|
35,970,479 | 30,311,639 | 21,366,140 | 21,226,868 | 21,225,000 | |||||||||||||||
Diluted
|
35,970,479 | 30,813,243 | 21,457,443 | 21,265,801 | 21,234,350 | |||||||||||||||
Selected
Ratios (based on U.S. GAAP Statement of Income data)
|
||||||||||||||||||||
Loss
ratio
(2)
|
48.3 | % | 40.3 | % | 36.4 | % | — | — | ||||||||||||
Acquisition
cost ratio
(3)
|
36.2 | % | 39.7 | % | 39.1 | % | — | — | ||||||||||||
Internal
expense ratio
(4)
|
12.0 | % | 12.2 | % | 34.1 | % | — | — | ||||||||||||
Combined
ratio
(5)
|
96.5 | % | 92.2 | % | 109.6 | % | — | — |
As
of December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
($
in thousands, except per share and share amounts)
|
||||||||||||||||||||
Selected
Balance Sheet Data:
|
||||||||||||||||||||
Total
investments in securities
|
$ | 493,966 | $ | 590,536 | $ | 243,522 | $ | 219,211 | $ | 162,204 | ||||||||||
Cash
and cash equivalents
|
94,144 | 64,192 | 82,704 | 7,218 | 30,664 | |||||||||||||||
Restricted
cash and cash equivalents
|
248,330 | 371,607 | 154,720 | 99,719 | 96,791 | |||||||||||||||
Total
assets
|
958,005 | 1,094,145 | 518,608 | 327,935 | 290,764 | |||||||||||||||
Loss
and loss adjustment expense reserves
|
81,425 | 42,377 | 4,977 | — | — | |||||||||||||||
Unearned
premium reserves
|
88,926 | 59,298 | 47,546 | — | — | |||||||||||||||
Total
liabilities
|
472,623 | 488,563 | 206,441 | 96,113 | 94,240 | |||||||||||||||
Total
shareholders' equity
|
485,382 | 605,582 | 312,167 | 231,822 | 196,524 | |||||||||||||||
Adjusted
book value
(6)
|
$ | 485,382 | $ | 605,582 | $ | 312,167 | $ | 248,034 | $ | 221,024 | ||||||||||
Ordinary
shares outstanding:
|
||||||||||||||||||||
Basic
|
36,036,685 | 36,102,736 | 21,557,228 | 21,231,666 | 21,225,000 | |||||||||||||||
Diluted
|
37,357,685 | 37,631,736 | 23,094,900 | 22,175,000 | 21,645,000 | |||||||||||||||
Per
Share Data:
|
||||||||||||||||||||
Basic
adjusted book value per share
(7)
|
$ | 13.47 | $ | 16.77 | $ | 14.48 | $ | 11.68 | $ | 10.41 | ||||||||||
Diluted
adjusted book value per share
(8)
|
13.39 | 16.57 | 14.27 | 11.63 | 10.21 |
(1)
|
Basic
earnings per share is calculated by dividing net income by the weighted
average number of shares outstanding for the period, exclusive of unvested
stock awards. Diluted earnings per share is calculated by taking into
account the effects of exercising all dilutive stock options and stock
awards. For a period in which there is a net loss, stock options and
unvested stock awards are excluded from the weighted average number of
ordinary shares, when computing diluted earnings per share, since their
inclusion would have been anti-dilutive for the
year.
|
(2)
|
The
loss ratio is calculated by dividing loss and loss adjustment expenses by
net premiums earned.
|
(3)
|
The
acquisition cost ratio is calculated by dividing net acquisition costs by
net premiums earned.
|
(4)
|
The
internal expense ratio is calculated by dividing general and
administrative expenses by net premiums
earned.
|
(5)
|
The
combined ratio is the sum of the loss ratio, acquisition cost ratio and
the internal expense ratio.
|
(6)
|
Adjusted
book value equals total shareholders’ equity plus the aggregate principal
outstanding on the Greenlight Capital Investors, LLC, or GCI, promissory
note pursuant to the Securities Purchase Agreement, dated April 11, 2004,
between us and GCI, which was fully repaid on December 6,
2006.
|
(7)
|
Basic
adjusted book value per share is calculated by dividing adjusted book
value by the number of shares issued and outstanding at year
end.
|
(8)
|
Diluted
adjusted book value per share is calculated by dividing the aggregate of
adjusted book value and the proceeds from the exercise of options by the
diluted number of shares and share equivalents outstanding at year
end.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
|
•
|
frequency
business; and
|
|
•
|
severity
business.
|
|
•
|
premiums
from reinsurance on property and casualty business assumed;
and
|
|
•
|
income
from investments.
|
|
•
|
underwriting
losses and loss adjustment
expenses;
|
|
•
|
acquisition
costs;
|
|
•
|
investment-related
expenses; and
|
|
•
|
general
and administrative expenses.
|
December
31, 2008
|
December
31, 2007
|
|||||||||||||||||||||||
Case
Reserves
|
IBNR
|
Total
|
Case
Reserves
|
IBNR
|
Total
|
|||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Frequency
|
$ | 6,666 | $ | 49,127 | $ | 55,793 | $ | 1,712 | $ | 34,477 | $ | 36,189 | ||||||||||||
Severity
|
— | 25,632 | 25,632 | — | 6,188 | 6,188 | ||||||||||||||||||
Total
|
$ | 6,666 | $ | 74,759 | $ | 81,425 | $ | 1,712 | $ | 40,665 | $ | 42,377 |
|
•
|
Paid Loss
Development Method
.
We estimate ultimate
losses 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. It provides an objective test of reported loss projections
because paid losses contain no reserve estimates. For many coverages,
claim payments are made very slowly and it may take years for claims to be
fully reported and settled.
|
|
•
|
Reported
Loss Development Method.
We estimate ultimate losses 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 approach provides a larger
volume of data to estimate ultimate losses than paid loss methods. Thus,
reported loss patterns may be less varied than paid loss patterns,
especially for coverage that have historically been paid out over a
long
|
|
period
of time but for which claims are reported relatively early and case loss
reserve estimates have been
established.
|
|
•
|
Expected
Loss Ratio Method.
We estimate ultimate losses under
the expected loss ratio method, by multiplying earned premiums by an
expected loss ratio. We select the expected loss ratio using industry
data, historical company data and our professional judgment. We use this
method for lines of business and contracts where there are no historical
losses or where past loss experience is not
credible.
|
|
•
|
Bornheutter-Ferguson
Paid Loss Method.
We estimate ultimate losses by
modifying expected loss ratios to the extent paid losses experienced to
date differ from what would have been expected to have been paid based
upon the selected paid loss development pattern. This method avoids some
of the distortions that could result from a large development factor being
applied to a small base of paid losses to calculate ultimate losses. We
use this method for lines of business and contracts where there are
limited historical paid losses.
|
|
•
|
Bornheutter-Ferguson
Reported Loss Method.
We estimate ultimate losses by
modifying expected loss ratios to the extent reported losses experienced
to date differ from what would have been expected to have been reported
based upon the selected reported loss development pattern. This method
avoids some of the distortions that could result from a large development
factor being applied to a small base of reported losses to calculate
ultimate losses. We use this method for lines of business and contracts
where there are limited historical reported
losses.
|
2008
|
2007
|
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Frequency
|
$ | 134 ,012 | 82.5 | % | $ | 76,885 | 60.5 | % | $ | 58,063 | 78.3 | % | ||||||||||||
Severity
|
28,383 | 17.5 | 50,246 | 39.5 | 16,088 | 21.7 | ||||||||||||||||||
Total
|
$ | 162,395 | 100.0 | % | $ | 127,131 | 100.0 | % | $ | 74,151 | 100.0 | % |
2008
|
2007
|
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Frequency
|
$ | 117,616 | 80.6 | % | $ | 50,735 | 50.2 | % | $ | 58,063 | 78.3 | % | ||||||||||||
Severity
|
28,383 | 19.4 | 50,246 | 49.8 | 16,088 | 21.7 | ||||||||||||||||||
Total
|
$ | 145,999 | 100.0 | % | $ | 100,981 | 100.0 | % | $ | 74,151 | 100.0 | % |
Zone
|
Single
Event
Loss
|
Aggregate
Loss
|
||||||
($
in thousands)
|
||||||||
USA
(1)
|
$ | 79,375 | $ | 97,125 | ||||
Europe
|
71,375 | 79,125 | ||||||
Japan
|
71,375 | 79,125 | ||||||
Rest
of the world
|
51,375 | 59,125 | ||||||
Maximum
aggregate
|
79,375 | 97,125 |
(1)
|
Includes
the Caribbean
|
2008
|
2007
|
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Frequency
|
$ | 81,133 | 70.6 | % | $ | 71,596 | 73.0 | % | $ | 15,645 | 58.8 | % | ||||||||||||
Severity
|
33,816 | 29.4 | 26,451 | 27.0 | 10,960 | 41.2 | ||||||||||||||||||
Total
|
$ | 114,949 | 100.0 | % | $ | 98,047 | 100.0 | % | $ | 26,605 | 100.0 | % |
2008
|
2007
|
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Frequency
|
$ | 36,013 | 64.9 | % | $ | 34,252 | 86.7 | % | $ | 8,737 | 90.3 | % | ||||||||||||
Severity
|
19,472 | 35.1 | 5,255 | 13.3 | 934 | 9.7 | ||||||||||||||||||
Total
|
$ | 55,485 | 100.0 | % | $ | 39,507 | 100.0 | % | $ | 9,671 | 100.0 | % |
2008
|
2007
|
2006
|
||||||||||||||||||||||||||||||||||
Gross
|
Ceded
|
Net
|
Gross
|
Ceded
|
Net
|
Gross
|
Ceded
|
Net
|
||||||||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||||||||||||||
Losses
paid
|
$ | 29,791 | $ | (8,440 | ) | $ | 21,351 | $ | 15,505 | $ | (6,677 | ) | $ | 8,828 | $ | 4,694 | $ | 0 | $ | 4,694 | ||||||||||||||||
Increase
(decrease) in reserves
|
39,075 | (4,941 | ) | 34,134 | 37,400 | (6,721 | ) | 30,679 | 4,977 | 0 | 4,977 | |||||||||||||||||||||||||
Total
|
$ | 68,866 | $ | (13,381 | ) | $ | 55,485 | $ | 52,905 | $ | (13,398 | ) | $ | 39,507 | $ | 9,671 | 0 | $ | 9,671 |
·
|
Favorable
loss development of $12.4 million on a personal lines contract entered
into during the year ended December 31, 2006. The favorable loss
development was a result of reserves being released based on
updated information received from the client indicating lower than
expected claims development;
|
·
|
Extinguishing $1.2
million of reserves, held on two frequency contracts covering
excess of loss medical malpractice, due to commutation without
any reported losses.
|
·
|
Adverse
loss development of $1.4 million on a casualty clash severity
contract due to notification of claims relating to sub-prime related
events. This resulted in reserving for a full limit
loss.
|
2008
|
2007
|
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Frequency
|
$ | 37,989 | 91.2 | % | $ | 33,174 | 85.2 | % | $ | 6,386 | 61.3 | % | ||||||||||||
Severity
|
3,660 | 8.8 | 5,765 | 14.8 | 4,029 | 38.7 | ||||||||||||||||||
Total
|
$ | 41,649 | 100.0 | % | $ | 38,939 | 100.0 | % | $ | 10,415 | 100.0 | % |
2008
|
2007
|
2006
|
||||||||||
($
in thousands)
|
||||||||||||
Realized
gains (losses) and change in unrealized gains and losses,
net
|
$ | (118,667 | ) | $ | 28,051 | $ | 70,272 | |||||
Interest,
dividend and other income
|
31,093 | 23,443 | 11,704 | |||||||||
Interest,
dividend and other expenses
|
(28,651 | ) | (9,219 | ) | (4,775 | ) | ||||||
Investment
advisor compensation
|
(9,901 | ) | (14,633 | ) | (18,692 | ) | ||||||
Net
investment income (loss)
|
$ | (126,126 | ) | $ | 27,642 | $ | 58,509 |
2008
|
2007
|
2006
|
||||||||||||||||||||||||||||||||||
Frequency
|
Severity
|
Total
|
Frequency
|
Severity
|
Total
|
Frequency
|
Severity
|
Total
|
||||||||||||||||||||||||||||
Loss
ratio
|
44.4 | % | 57.7 | % | 48.3 | % | 47.9 | % | 19.9 | % | 40.3 | % | 55.9 | % | 8.5 | % | 36.4 | % | ||||||||||||||||||
Acquisition
cost ratio
|
46.8 | % | 10.8 | % | 36.2 | % | 46.3 | % | 21.8 | % | 39.7 | % | 40.8 | % | 36.8 | % | 39.1 | % | ||||||||||||||||||
Composite
ratio
|
91.2 | % | 68.5 | % | 84.5 | % | 94.2 | % | 41.7 | % | 80.0 | % | 96.7 | % | 45.3 | % | 75.5 | % | ||||||||||||||||||
Internal
expense ratio
|
12.0 | % | 12.2 | % | 34.1 | % | ||||||||||||||||||||||||||||||
Combined
ratio
|
96.5 | % | 92.2 | % | 109.6 | % |
Less
than
1
year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
Total
|
||||||||||||||||
($
in thousands)
|
||||||||||||||||||||
Operating
leases obligations
(1)
|
$ | 376 | $ | 621 | $ | 552 | $ | 1,243 | $ | 2,792 | ||||||||||
Specialist
service agreement
|
610 | 550 | — | — | 1,160 | |||||||||||||||
Private
equity investments
(2)
|
19,695 | — | — | — | 19,695 | |||||||||||||||
Loss
and loss adjustment expense reserves
(3)
|
34,379 | 25,130 | 10,418 | 11,498 | 81,425 | |||||||||||||||
Total
|
$ | 55,060 | $ | 26,301 | $ | 10,970 | $ | 12,741 | $ | 105,072 |
(1)
|
Reflects
our contractual obligations pursuant to the September 1, 2005 lease
agreement and the July 9, 2008 lease agreement as described
below.
|
(2)
|
As
of December 31, 2008 we have made total commitments of $29.6 million in
private investments, of which we have invested $9.9 million, and
our remaining commitments to these investments total $19.7 million. Given
the nature of the private equity investments, we are unable to determine
with any degree of accuracy on when the commitments will be called. As
such, for the purposes of the above table, we have assumed that all
commitments will be made within one year. Under our investment guidelines,
in effect as of the date hereof, no more than 10% of the assets in the
investment portfolio may be held in private equity securities without
specific approval from the Board of
Directors.
|
(3)
|
Due
to the nature of our reinsurance operations, the amount and timing of the
cash flows associated with our reinsurance contractual liabilities will
fluctuate, perhaps materially, and, therefore, are highly
uncertain.
|
|
•
|
equity
price risk;
|
|
•
|
foreign
currency risk;
|
|
•
|
interest
rate risk;
|
|
•
|
credit
risk;
|
|
•
|
effects
of inflation; and
|
|
•
|
political
risk
|
Original
Currency
|
US$
Equivalent
Fair
Value
|
|||
($
in thousands)
|
||||
European
Union euro
|
$ | 130,568 | ||
Hong
Kong dollar
|
31,638 | |||
Japanese
yen
|
27,667 | |||
Canadian
dollar
|
10,736 | |||
Other
|
4,031 | |||
Total
|
$ | 204,640 |
100 basis point increase
in interest rates
|
100
basis point decrease
in
interest rates
|
|||||||||||||||
Change in
fair value
|
Change in fair value as % of investment
portfolio
|
Change in
fair value
|
Change
in fair value as % of investment portfolio
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Debt
securities
|
$ | (558 | ) | (0.09 | )% | $ | 594 | 0.10 | % | |||||||
Credit default swaps | (524 | ) | (0.09 | ) | 436 | 0.07 | ||||||||||
Interest rate options | 1,725 | 0.29 | (1,001 | ) | (0.17 | ) | ||||||||||
Net exposure to interest rate risk | $ | 643 | 0.11 | % | $ | 29 | 0.01 | % |
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
•
|
pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
•
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. GAAP, and that
receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company;
and
|
•
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s assets that
could have a material effect on its financial
statements.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
EXECUTIVE
COMPENSATION
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
Exhibit
Number
|
Description
of Exhibit
|
3.1
|
Third
Amended and Restated Memorandum and Articles of Association as revised by
special resolution on July 10, 2008. (incorporated by reference to
Exhibit 3.1 of the Company’s Form 10-Q filed on August 7,
2008)
|
4.1
|
Form
of Specimen Certificate of Class A Ordinary Shares (incorporated by
reference to Exhibit 4.1 of the Company’s Registration Statement
No. 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)
|
10.1
|
$200,000,000
Letter of Credit Facility, dated October 12, 2005, by Citibank, N.A.
to Greenlight Reinsurance, Ltd., as amended (incorporated by reference to
Exhibit 10.1 of the Company’s Registration Statement
No. 333-139993)
|
10.2
|
Letter
of Credit Facility amendment letter dated November 2, 2007 and
acknowledged and accepted on November 8, 2007 between Greenlight
Reinsurance, Ltd. and Citibank, N.A. (incorporated by reference to Exhibit
10.1 of the Company’s Current Report on Form 8-K filed with the SEC on
November 9, 2007)
|
10.3
|
Letter
of Credit Agreement dated June 6, 2007 between Greenlight
Reinsurance, Ltd. and Bank Austria Cayman Islands Ltd. (incorporated by
reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
filed with the SEC on June 8, 2008)
|
10.4
|
Deed
of Novation dated December 15, 2008, between Unicredit Bank Cayman Islands
Ltd., Butterfield Bank (Cayman) Limited, and Greenlight Reinsurance, Ltd.
(incorporated by reference to Exhibit 10.1 of the Company’s Current report
on Form 8-K filed with the SEC on December 22, 2008)
|
10.5
|
Form
of Securities Purchase Agreement for Class A Ordinary Shares by and
between the Registrant and each of the subscribers thereto (incorporated
by reference to Exhibit 10.2 of the Company’s Registration Statement
No. 333-139993)
|
10.6
|
Promissory
Note, dated August 11, 2004, for $24,500,000 by and between the
Registrant, as payee, and Greenlight Capital Investors, LLC, as maker
(incorporated by reference to Exhibit 10.3 of the Company’s
Registration Statement No. 333-139993)
|
10.7
|
Second
Amended and Restated Investment Advisory Agreement, dated January 1,
2007, by and between Greenlight Reinsurance, Ltd. and DME Advisors, LP
(incorporated by reference to Exhibit 10.4 of the Company’s
Registration Statement No. 333-139993)
|
10.8
|
Agreement
by and among Greenlight Reinsurance, Ltd., Greenlight Capital Re, Ltd.
(for limited purpose) and DME Advisors dated as of January 1, 2008
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K filed with the SEC on January 3, 2008)
|
10.9
|
Termination
Agreement by and among Greenlight Reinsurance, Ltd., Greenlight Capital
Re, Ltd. and DME Advisors, LP dated as of January 1, 2008
(incorporated by reference to Exhibit 10.2 of the Company’s Current Report
on Form 8-K filed with the SEC on January 3, 2008)
|
10.10
|
Greenlight
Capital Re, Ltd. Third Amended and Restated 2004 Stock Incentive Plan
(incorporated by reference to Exhibit 10.19 of the Company’s Registration
Statement No. 333-139993)
|
10.11
|
Form
of Restricted Stock Award Agreement by and between the Registrant and the
Grantee (incorporated by reference to Exhibit 10.6 of the Company’s
Registration Statement No. 333-139993)
|
10.12
|
Form
of Stock Option Agreement (incorporated by reference to Exhibit 10.7
of the Company’s Registration Statement
No. 333-139993)
|
10.13
|
Greenlight
Capital Re, Ltd. Form of Directors’ Restricted Stock Award (incorporated
by reference to Exhibit 10.20 of the Company’s Registration Statement
No. 333-139993)
|
10.14
|
Greenlight
Capital Re, Ltd. Form of Employees’ Restricted Stock Award (incorporated
by reference to Exhibit 10.21 of the Company’s Registration Statement
No. 333-139993)
|
10.15
|
Form
of Shareholders’ Agreement, dated August 11, 2004, by and among the
Registrant and each of the subscribers (incorporated by reference to
Exhibit 10.8 of the Company’s Registration Statement No.
333-139993)
|
10.16
|
Administration
Agreement, dated August 11, 2004, between the Registrant and HSBC
Financial Services (Cayman) Limited (incorporated by reference to Exhibit
10.9 of the Company’s Registration Statement No.
333-139993)
|
10.17
|
Administration
Agreement, dated August 11, 2004, between Greenlight Reinsurance, Ltd. and
HSBC Financial Services (Cayman) Limited (incorporated by reference to
Exhibit 10.10 of the Company’s Registration Statement No.
333-139993)
|
10.18
|
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. 333-139993)
|
10.19
|
Amended and Restated Employment
Agreement, dated as of December 30, 2008, by and among Greenlight
Capital Re, Ltd., Greenlight Reinsurance, Ltd. and Leonard Goldberg
(incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed with the SEC on January 2,
2009)
|
10.20
|
Amended
and Restated Employment Agreement, dated as of December 30, 2008, by
and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd. and
Tim Courtis
(incorporated
by reference to Exhibit 10.2 of the Company’s Current Report on Form
8-K filed with the SEC on January 2, 2009)
|
10.21
|
Amended and Restated Employment
Agreement, dated as of December 30, 2008, by and between
Greenlight Reinsurance, Ltd. and Barton Hedges
(incorporated by
reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
filed with the SEC on January 2,
2009)
|
10.22
|
Lease,
dated August 25, 2005, by and between Greenlight Reinsurance, Ltd.
and Grand Pavilion Ltd. (incorporated by reference to Exhibit 10.15
of the Company’s Registration Statement
No. 333-139993)
|
10.23
|
Concurrent
Private Placement Stock Purchase Agreement for Class B Ordinary
Shares, dated January 11, 2007, by and between the Registrant and
David Einhorn (incorporated by reference to Exhibit 10.16 of the
Company’s Registration Statement No. 333-139993)
|
10.24
|
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)
|
10.25
|
Multiple
Line Quota Share Reinsurance Agreement, effective as of October 1,
2006, between First Protective Insurance Company and Greenlight
Reinsurance, Ltd. (incorporated by reference to Exhibit 10.22 of the
Company’s Registration Statement No. 333-139993)
|
10.26
|
Amendment No. 1, dated February 18, 2009, to the Amended and Restated Employment Agreement, dated as of December 30, 2008, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd. and Tim Courtis |
10.27
|
Amendment No. 1, dated February 18, 2009, to the Amended and Restated Employment Agreement, dated as of December 30, 2008, by and between Greenlight Reinsurance, Ltd. and Barton Hedges |
10.28
|
Amendment No. 1, dated February 20, 2009 to the Agreement dated January 1, 2008 by and among Greenlight Reinsurance, Ltd., Greenlight Capital Re, Ltd. (for limited purposes) and DME Advisors, LP |
21.1
|
Subsidiaries
of the registrant
|
23.1
|
Consent
of BDO Seidman, LLP
|
24.1
|
Power
of Attorney (included on the signature page of this
filing)
|
31.1
|
Certification
of the Chief Executive Officer of Greenlight Capital Re, Ltd. filed
herewith pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
of the Chief Financial Officer of Greenlight Capital Re, Ltd. filed
herewith pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
of the Chief Executive Officer of Greenlight Capital Re, Ltd. filed
herewith pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
of the Chief Financial Officer of Greenlight Capital Re, Ltd. filed
herewith pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
†
|
Confidential
treatment has been requested with respect to certain portions of this
exhibit pursuant to Rule 406 of the Securities Act. Omitted portions
have been filed separately with the Securities and Exchange
Commission.
|
GREENLIGHT
CAPITAL RE, LTD.
|
|
By:
|
/s/ Leonard
Goldberg
|
Leonard
Goldberg
Chief
Executive Officer
|
|
Date:
February
23,
2009
|
/s/ DAVID
M. EINHORN
|
/s/ LEONARD
GOLDBERG
|
|
David
M. Einhorn
Director
|
Leonard
Goldberg
Director
& Chief Executive Officer
(principal
executive officer)
|
|
Date:
February 23, 2009
|
Date:
February 23, 2009
|
|
/s/ FRANK
D. LACKNER
|
/s/ ALAN
BROOKS
|
|
Frank
D. Lackner
Director
|
Alan
Brooks
Director
|
|
Date:
February 23, 2009
|
Date:
February 23, 2009
|
|
/s/ IAN
ISAACS
|
/s/ JOSEPH
P. PLATT
|
|
Ian
Isaacs
Director
|
Joseph
P. Platt
Director
|
|
Date:
February 23, 2009
|
Date:
February 23
,
2009
|
|
/s/ TIM
COURTIS
|
/s/
BRYAN MURPHY
|
|
Tim
Courtis
Chief
Financial Officer
(principal
financial and accounting officer)
|
Bryan
Murphy
Director
|
|
Date:
February 23, 2009
|
Date:
February 23, 2009
|
2008
|
2007
|
|||||||
Assets
|
||||||||
Investments
in securities
|
||||||||
Debt
securities, trading, at fair value
|
$ | 70,214 | $ | 1,520 | ||||
Equity
securities, trading, at fair value
|
409,329 | 570,440 | ||||||
Other
investments, at fair value
|
14,423 | 18,576 | ||||||
Total
investments in securities
|
493,966 | 590,536 | ||||||
Cash
and cash equivalents
|
94,144 | 64,192 | ||||||
Restricted
cash and cash equivalents
|
248,330 | 371,607 | ||||||
Financial
contracts receivable, at fair value
|
21,419 | 222 | ||||||
Reinsurance
balances receivable
|
59,573 | 43,856 | ||||||
Loss
and loss adjustment expense recoverables
|
11,662 | 6,721 | ||||||
Deferred
acquisition costs, net
|
17,629 | 7,302 | ||||||
Unearned
premiums ceded
|
7,367 | 8,744 | ||||||
Other
assets
|
3,915 | 965 | ||||||
Total
assets
|
$ | 958,005 | $ | 1,094,145 | ||||
Liabilities
and Shareholders’ Equity
|
||||||||
Liabilities
|
||||||||
Securities
sold, not yet purchased, at fair value
|
$ | 234,301 | $ | 332,706 | ||||
Financial
contracts payable, at fair value
|
17,140 | 17,746 | ||||||
Loss
and loss adjustment expense reserves
|
81,425 | 42,377 | ||||||
Unearned
premium reserves
|
88,926 | 59,298 | ||||||
Reinsurance
balances payable
|
34,963 | 19,140 | ||||||
Funds
withheld
|
3,581 | 7,542 | ||||||
Other
liabilities
|
6,229 | 2,869 | ||||||
Minority
interest in joint venture
|
6,058 | — | ||||||
Performance
compensation payable to related party
|
— | 6,885 | ||||||
Total
liabilities
|
472,623 | 488,563 | ||||||
Shareholders’
equity
|
||||||||
Preferred
share capital (par value $0.10; authorized, 50,000,000; none
issued)
|
— | — | ||||||
Ordinary
share capital (Class A: par value $0.10; authorized, 100,000,000; issued
and outstanding, 29,781,736 (2007: 29,847,787): Class B: par value $0.10;
authorized, 25,000,000; issued and outstanding, 6,254,949
(2007:
6,254,949))
|
3,604 | 3,610 | ||||||
Additional
paid-in capital
|
477,571 | 476,861 | ||||||
Retained
earnings
|
4,207 | 125,111 | ||||||
Total
shareholders’ equity
|
485,382 | 605,582 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 958,005 | $ | 1,094,145 |
2008
|
2007
|
2006
|
||||||||||
Revenues
|
||||||||||||
Gross
premiums written
|
$ | 162,395 | $ | 127,131 | $ | 74,151 | ||||||
Gross
premiums ceded
|
(16,396 | ) | (26,150 | ) | — | |||||||
Net
premiums written
|
145,999 | 100,981 | 74,151 | |||||||||
Change
in net unearned premium reserves
|
(31,050 | ) | (2,934 | ) | (47,546 | ) | ||||||
Net
premiums earned
|
114,949 | 98,047 | 26,605 | |||||||||
Net
investment income (loss)
|
(126,126 | ) | 27,642 | 58,509 | ||||||||
Interest
income on related party promissory note receivable
|
— | — | 1,034 | |||||||||
Total
revenues
|
(11,177 | ) | 125,689 | 86,148 | ||||||||
Expenses
|
||||||||||||
Loss
and loss adjustment expenses incurred, net
|
55,485 | 39,507 | 9,671 | |||||||||
Acquisition
costs, net
|
41,649 | 38,939 | 10,415 | |||||||||
General
and administrative expenses
|
13,756 | 11,918 | 9,063 | |||||||||
Total
expenses
|
110,890 | 90,364 | 29,149 | |||||||||
Net
income (loss) before minority interest
|
(122,067 | ) | 35,325 | 56,999 | ||||||||
Minority
interest in loss of joint venture
|
1,163 | — | — | |||||||||
Net
income (loss)
|
$ | (120,904 | ) | $ | 35,325 | $ | 56,999 | |||||
Earnings
(loss) per share
|
||||||||||||
Basic
|
$ | (3.36 | ) | $ | 1.17 | $ | 2.67 | |||||
Diluted
|
(3.36 | ) | 1.15 | 2.66 | ||||||||
Weighted
average number of ordinary shares used in the determination
of
|
||||||||||||
Basic
|
35,970,479 | 30,311,639 | 21,366,140 | |||||||||
Diluted
|
35,970,479 | 30,813,243 | 21,457,443 |
2008
|
2007
|
2006
|
||||||||||
Ordinary
share capital
|
||||||||||||
Balance
– beginning of year
|
$ | 3,610 | $ | 2,156 | $ | 2,123 | ||||||
Issue
of Class A ordinary share capital
|
17 | 1,191 | 33 | |||||||||
Issue
of Class B ordinary share capital
|
— | 263 | — | |||||||||
Repurchase
of Class A ordinary shares
|
(23 | ) | — | — | ||||||||
Balance
– end of year
|
$ | 3,604 | $ | 3,610 | $ | 2,156 | ||||||
Additional
paid-in capital
|
||||||||||||
Balance
– beginning of year
|
$ | 476,861 | $ | 219,972 | $ | 212,871 | ||||||
Issue
of Class A ordinary share capital
|
9 | 207,144 | 4,237 | |||||||||
Issue
of Class B ordinary share capital
|
— | 49,737 | — | |||||||||
Repurchase
of Class A ordinary shares
|
(2,311 | ) | — | — | ||||||||
Options
repurchased
|
— | (247 | ) | — | ||||||||
Share-based
compensation expense
|
3,000 | 2,884 | 2,864 | |||||||||
Initial
public offering expenses
|
— | (2,629 | ) | — | ||||||||
Short-swing
sale profit from shareholder
|
12 | — | — | |||||||||
Balance
– end of year
|
$ | 477,571 | $ | 476,861 | $ | 219,972 | ||||||
Related
party promissory note receivable
|
||||||||||||
Balance
– beginning of year
|
$ | — | $ | — | $ | (16,212 | ) | |||||
Principal
repayments received
|
— | — | 16,212 | |||||||||
Balance
– end of year
|
$ | — | $ | — | $ | — | ||||||
Retained
earnings
|
||||||||||||
Balance
– beginning of year
|
$ | 125,111 | $ | 90,039 | $ | 33,040 | ||||||
Net
income (loss)
|
(120,904 | ) | 35,325 | 56,999 | ||||||||
Options
repurchased
|
— | (253 | ) | — | ||||||||
Balance
– end of year
|
$ | 4,207 | $ | 125,111 | $ | 90,039 | ||||||
Total
shareholders’ equity
|
$ | 485,382 | $ | 605,582 | $ | 312,167 |
2008
|
2007
|
2006
|
||||||||||
Cash
provided by (used in)
|
||||||||||||
Operating
activities
|
||||||||||||
Net income
(loss)
|
$ | (120,904 | ) | $ | 35,325 | $ | 56,999 | |||||
Adjustments
to reconcile net income (loss) to net cash provided by (used in)
operating activities
|
||||||||||||
Net
change in unrealized gains and losses on securities and financial
contracts
|
151,064 | (23,719 | ) | (12,499 | ) | |||||||
Net
realized gains on securities and financial contracts
|
(8,923 | ) | (13,215 | ) | (65,692 | ) | ||||||
Foreign
exchange gain on restricted cash and cash equivalents
|
(23,474 | ) | — | — | ||||||||
Minority
interest in loss of joint venture
|
1,163 | — | — | |||||||||
Share-based
compensation expense
|
3,000 | 2,884 | 2,864 | |||||||||
Depreciation
expense
|
40 | 40 | 20 | |||||||||
Purchases
of securities
|
— | (1,044,933 | ) | (244,645 | ) | |||||||
Sales
of securities
|
— | 943,515 | 335,051 | |||||||||
Change
in
|
||||||||||||
Restricted
cash and cash equivalents
|
— | (216,887 | ) | (55,001 | ) | |||||||
Financial
contracts receivable, at fair value
|
— | (222 | ) | — | ||||||||
Reinsurance
balances receivable
|
(15,717 | ) | (24,234 | ) | (19,622 | ) | ||||||
Loss
and loss adjustment expense recoverables
|
(4,941 | ) | (6,721 | ) | — | |||||||
Deferred
acquisition costs, net
|
(10,327 | ) | 8,980 | (16,282 | ) | |||||||
Unearned
premiums ceded
|
1,377 | (8,744 | ) | — | ||||||||
Other
assets
|
(2,990 | ) | 753 | (308 | ) | |||||||
Financial
contracts payable, at fair value
|
— | 9,106 | 7,918 | |||||||||
Loss
and loss adjustment expense reserves
|
39,048 | 37,400 | 4,977 | |||||||||
Unearned
premium reserves
|
29,628 | 11,752 | 47,546 | |||||||||
Reinsurance
balances payable
|
15,823 | 14,904 | 4,236 | |||||||||
Funds
withheld
|
(3,961 | ) | 7,542 | — | ||||||||
Other
liabilities
|
3,360 | 495 | 1,483 | |||||||||
Performance
compensation payable to related party
|
(6,885 | ) | (7,739 | ) | 7,642 | |||||||
Net
cash provided by (used in) operating activities
|
46,381 | (273,718 | ) | 54,687 | ||||||||
Investing
activities
|
||||||||||||
Purchases
of securities and financial contracts
|
(1,570,683 | ) | — | — | ||||||||
Sales
of securities and financial contracts
|
1,404,904 | — | — | |||||||||
Restricted
cash and cash equivalents
|
146,751 | — | — | |||||||||
Minority
interest in joint venture
|
4,895 | — | — | |||||||||
Purchase
of fixed assets
|
— | — | (200 | ) | ||||||||
Proceeds
on disposal of fixed assets
|
— | — | 38 |
Net
cash used in investing activities
|
(14,133 | ) | — | (162 | ) | |||||||
Financing
activities
|
||||||||||||
Net
proceeds from share issue
|
17 | 255,706 | 4,270 | |||||||||
Options
repurchased
|
— | (500 | ) | — | ||||||||
Net
proceeds from exercise of stock options
|
9 | — | — | |||||||||
Repurchase
of Class A ordinary shares
|
(2,334 | ) | — | — | ||||||||
Short-swing
sale profit from shareholder
|
12 | — | — | |||||||||
Collection
of related party promissory note receivable
|
— | — | 16,212 | |||||||||
Net
change in interest receivable on related party promissory note
receivable
|
— | — | 479 | |||||||||
Net
cash (used in) provided by financing activities
|
(2,296 | ) | 255,206 | 20,961 | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
$ | 29,952 | (18,512 | ) | 75,486 | |||||||
Cash
and cash equivalents at beginning of the year
|
64,192 | 82,704 | 7,218 | |||||||||
Cash
and cash equivalents at end of the year
|
$ | 94,144 | $ | 64,192 | $ | 82,704 | ||||||
Supplementary
information
|
||||||||||||
Interest
paid in cash
|
$ | 14,099 | $ | 3,699 | $ | 2,121 | ||||||
Interest
received in cash
|
11,560 | 15,130 | 1,513 |
2008
|
2007
|
2006
|
||||||||||
Weighted
average shares outstanding
|
35,970,479 | 30,311,639 | 21,366,140 | |||||||||
Effect
of dilutive service provider stock options
|
— | 161,109 | 89,093 | |||||||||
Effect
of dilutive employee and director options and stock awards
|
— | 340,495 | 2,210 | |||||||||
35,970,479 | 30,813,243 | 21,457,443 |
3.
|
FINANCIAL
INSTRUMENTS
|
Fair
Value Measurements as of December 31, 2008
|
||||||||||||||||
Description
|
Quoted
Prices in
Active
Markets
(Level
1)
|
Significant
Other
Observable
Inputs
(Level
2)
|
Significant
Unobservable
Inputs
(Level
3)
|
Total
as of
December
31, 2008
|
||||||||||||
($
in thousands)
|
||||||||||||||||
Debt
securities
|
$
|
—
|
$
|
66,099
|
$
|
4,115
|
$
|
70,214
|
||||||||
Listed
equity securities
|
409,329
|
—
|
—
|
409,329
|
||||||||||||
Private
equity securities
|
—
|
121
|
11,776
|
11,897
|
||||||||||||
Call
options
|
2,526
|
—
|
—
|
2,526
|
||||||||||||
Financial
contracts receivable (payable), net
|
—
|
4,279
|
—
|
4,279
|
||||||||||||
$
|
411,855
|
$
|
70,499
|
$
|
15,891
|
$
|
498,245
|
|||||||||
Listed
equity securities, sold not yet purchased
|
$
|
(234,301
|
)
|
$
|
—
|
$
|
—
|
$
|
(234,301
|
)
|
||||||
$
|
177,554
|
$
|
70,499
|
$
|
15,891
|
$
|
263,944
|
Fair
Value Measurements Using Significant Unobservable Inputs (Level
3)
|
||||||||||||
December
31, 2008
|
||||||||||||
Debt
Securities
|
Private
Equity
Securities
|
Total
|
||||||||||
($
in thousands)
|
||||||||||||
Beginning
balance
|
$
|
865
|
$
|
8,115
|
$
|
8,980
|
||||||
Purchases,
sales, issuances, and settlements, net
|
5,250
|
9,466
|
14,716
|
|||||||||
Total
realized and unrealized gains (losses) included in earnings,
net
|
(2,000
|
)
|
(600
|
)
|
(2,600
|
)
|
||||||
Transfers
in and/or (out of) Level 3
|
—
|
(5,205
|
)
|
(5,205
|
)
|
|||||||
Ending
balance
|
$
|
4,115
|
$
|
11,776
|
$
|
15,891
|
2008
|
Cost/
amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
market
value
|
||||||||||||
($
in thousands)
|
||||||||||||||||
Corporate
debt – U.S
|
$ | 74,833 | $ | 1,204 | $ | (8,750 | ) | $ | 67,287 | |||||||
Corporate
debt – Non U.S
|
2,978 | 109 | (160 | ) | 2,927 | |||||||||||
Total
debt securities
|
$ | 77,811 | $ | 1,313 | $ | (8,910 | ) | $ | 70,214 |
2007
|
Cost/
amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
market
value
|
||||||||||||
($
in thousands)
|
||||||||||||||||
Corporate
debt – U.S
|
$ | 1,458 | $ | 78 | $ | (16 | ) | $ | 1,520 |
Cost/
amortized
cost
|
Fair
market
value
|
|||||||
($
in thousands)
|
||||||||
Within
one year
|
$ | 2,738 | $ | 2,052 | ||||
From
one to five years
|
32,690 | 30,673 | ||||||
From
five to ten years
|
34,924 | 30,655 | ||||||
More
than ten years
|
7,459 | 6,834 | ||||||
$ | 77,811 | $ | 70,214 |
2008
|
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
market
value
|
||||||||||||
($
in thousands)
|
||||||||||||||||
Equities
– listed
|
$ | 552,941 | $ | 14,822 | $ | (219,173 | ) | $ | 348,590 | |||||||
Exchange
traded funds
|
53,364 | 8,092 | (717 | ) | 60,739 | |||||||||||
$ | 606,305 | $ | 22,914 | $ | (219,890 | ) | $ | 409,329 |
2007
|
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
market
value
|
||||||||||||
($
in thousands)
|
||||||||||||||||
Equities
– listed
|
$ | 561,419 | $ | 53,957 | $ | (44,936 | ) | $ | 570,440 |
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
market
value
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Equities
– unlisted
|
$ | 15,395 | $ | 1,236 | $ | (4,734 | ) | $ | 11,897 | |||||||
Call
options
|
2,133 | 393 | — | 2,526 | ||||||||||||
$ | 17,528 | $ | 1,629 | $ | (4,734 | ) | $ | 14,423 |
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
market
value
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Equities
– unlisted
|
$ | 10,932 | $ | 150 | $ | (247 | ) | $ | 10,835 | |||||||
Call
options
|
1,943 | 776 | (1,409 | ) | 1,310 | |||||||||||
Put
options
|
2,821 | 3,266 | (1,182 | ) | 4,905 | |||||||||||
Futures
|
— | 1,526 | — | 1,526 | ||||||||||||
$ | 15,696 | $ | 5,718 | $ | (2,838 | ) | $ | 18,576 |
2008 | Proceeds |
Unrealized
gains
|
Unrealized
losses
|
Fair
market
value
|
||||||||||||
($ in thousands) | ||||||||||||||||
Equities
- listed
|
$ | 343,079 | $ | (115,619 | ) | $ | 6,841 | $ |
234,301
|
2007 | Proceeds |
Unrealized
gains
|
Unrealized
losses
|
Fair
market
value
|
||||||||||||
($ in thousands) | ||||||||||||||||
Equities
- listed
|
$ | 394,988 | $ |
(73,37
9
|
) | $ | 11,097 | $ |
332,706
|
Underlying
security
|
Position
|
Listing
currency
|
Fair
market
value
of
underlying
|
Net
assets/
(obligations)
on
financial
contracts
|
|||
($
in thousands)
|
|||||||
Interest
rate options
|
Long
|
USD
|
85,935
|
$ | 2,564 | ||
Credit
default swaps, purchased – Corporate debt
|
Short
|
USD
|
54,509
|
5,956 | |||
Credit
default swaps, purchased – Sovereign debt
|
Short
|
USD
|
322,516
|
12,881 | |||
Total
return swaps - Equities
|
Long
|
USD
|
3,249
|
18 | |||
Total
financial contracts receivable, at fair value
|
$ | 21,419 | |||||
Credit
default swaps, issued – Corporate debt
|
Short
|
USD
|
11,089
|
$ | (7,024 | ) | |
Total
return swaps - Equities
|
Long
|
USD
|
26,844
|
(10,116 | ) | ||
Total
financial contracts payable, at fair value
|
$ | (17,140 | ) |
Underlying
security
|
Position
|
Listing
currency
|
Fair
market
value
of
underlying
|
Net
assets/
(obligations)
on
financial
contracts
|
||||||
($
in thousands)
|
||||||||||
Total
return swaps - Commodities
|
Short
|
USD
|
108 | $ | 108 | |||||
Total
return swaps - Equities
|
Long
|
CAD
|
512 | 114 | ||||||
Total
financial contracts receivable, at fair value
|
$ | 222 | ||||||||
Total
return swaps - Equities
|
Long
|
USD
|
31,368 | $ | (10,315 | ) | ||||
Total
return swaps - Commodities
|
Short
|
USD
|
(7,431 | ) | (7,431 | ) | ||||
Total
financial contracts payable, at fair value
|
$ | (17,746 | ) |
2008
|
2007
|
|||||||
($
in thousands)
|
||||||||
Cash
at banks
|
$ | 17,179 | $ | 2,306 | ||||
Cash
held with (due to) brokers
|
(89,048 | ) | 1,888 | |||||
Money
market funds held with brokers
|
166,013 | 59,998 | ||||||
$ | 94,144 | $ | 64,192 |
2008
|
2007
|
|||||||
($
in thousands)
|
||||||||
Cash
held by
prime
brokers
|
$ | 230,481 | $ | 332,998 | ||||
Cash
held by swap counter-parties
|
17,849 | 38,609 | ||||||
$ | 248,330 | $ | 371,607 |
2008
|
2007
|
2006
|
||||||||||
($
in thousands)
|
||||||||||||
Gross
balance at January 1
|
$ | 42,377 | $ | 4,977 | $ | — | ||||||
Less:
Losses recoverable
|
(6,721 | ) | — | — | ||||||||
Net
balance at January 1
|
35,656 | 4,977 | — | |||||||||
Incurred
losses related to:
|
||||||||||||
Current
year
|
67,473 | 40,584 | 9,671 | |||||||||
Prior
year
|
(11,988 | ) | (1,077 | ) | — | |||||||
Total
incurred
|
55,485 | 39,507 | 9,671 | |||||||||
Paid
losses related to:
|
||||||||||||
Current
year
|
(14,069 | ) | (7,126 | ) | (4,694 | ) | ||||||
Prior
year
|
(7,282 | ) | (1,702 | ) | — | |||||||
Total
paid
|
(21,351 | ) | (8,828 | ) | (4,694 | ) | ||||||
Foreign
currency revaluation
|
(27 | ) | — | — | ||||||||
Net
balance at December 31
|
69,763 | 35,656 | 4,977 | |||||||||
Add:
Losses recoverable
|
11,662 | 6,721 | — | |||||||||
Gross
balance at December 31
|
$ | 81,425 | $ | 42,377 | $ | 4,977 |
|
·
|
Favorable
loss development of $12.4 million on a personal lines contract entered
into during the year ended December 31, 2006. The favorable loss
development was a result of reserves being released based on
updated information received from the client indicating lower than
expected claims development;
|
|
·
|
Extinguishing $1.2
million of reserves held on two frequency contracts covering
excess of loss medical malpractice due to commutation without
any
reported losses;
|
|
·
|
Adverse
loss development of $1.4 million on a casualty clash severity
contract due to notification of claims relating to sub-prime related
events; and
|
|
·
|
The remaining net unfavorable
loss development, excluding the above developments, was as a result
of re-estimation of loss reserves performed on a quarterly and annual
basis by the actuaries and underwriters based on cession statements and
other information received on a contract by contract basis. There were no
other significant adjustments (favorable or unfavorable) to the reserves
on any given
contract.
|
2008
|
2007
|
|||||||
($
in thousands)
|
||||||||
Case
reserves
|
$ | 6,666 | $ | 1,712 | ||||
IBNR
|
74,759 | 40,665 | ||||||
Total
|
$ | 81,425 | $ | 42,377 |
2008
|
2007
|
2006
|
||||||||||||||||||||||
As
at December 31,
|
Class
A
|
Class
B
|
Class
A
|
Class
B
|
Class
A
|
Class
B
|
||||||||||||||||||
Balance
– beginning of year
|
29,847,787 | 6,254,949 | 16,507,228 | 5,050,000 | 16,181,666 | 5,050,000 | ||||||||||||||||||
Issue
of ordinary shares
|
162,849 | — | 11,913,929 | 2,631,579 | 325,562 | — | ||||||||||||||||||
Transfer
from Class B to
Class
A
|
— | — | 1,426,630 | (1,426,630 | ) | — | — | |||||||||||||||||
Repurchase
of ordinary shares
|
(228,900 | ) | — | — | — | — | — | |||||||||||||||||
Balance
– end of year
|
29,781,736 | 6,254,949 | 29,847,787 | 6,254,949 | 16,507,228 | 5,050,000 |
Number
of
non-vested
restricted
shares
|
Weighted
average
grant
date
fair
value
|
|||||||
Balance
at December 31, 2007
|
121,424 | $ | 16.43 | |||||
Granted
|
162,189 | 18.93 | ||||||
Vested
|
(13,264 | ) | 19.00 | |||||
Forfeited
|
— | — | ||||||
Balance
at December 31, 2008
|
270,349 | $ | 17.80 |
2008
|
2007
|
2006
|
||||||||||
Risk
free rate
|
3.99 | % | 4.79 | % | 4.36% – 5.14 | % | ||||||
Estimated
volatility
|
30 | % | 30 | % | 30 | % | ||||||
Expected
term
|
10
|
years |
10
|
years |
10
|
years | ||||||
Dividend
yield
|
0 | % | 0 | % | 0 | % |
Number
of
options
|
Weighted
average
exercise
price
|
Weighted
average
grant
date
fair
value
|
||||||||||
Balance
at December 31, 2006
|
1,131,000 | $ | 11.83 | $ | 6.01 | |||||||
Granted
|
50,000 | 19.60 | 10.18 | |||||||||
Exercised
|
— | — | — | |||||||||
Forfeited
|
(2,000 | ) | 12.05 | 6.17 | ||||||||
Expired
|
— | — | — | |||||||||
Balance
at December 31, 2007
|
1,179,000 | $ | 12.19 | $ | 6.20 | |||||||
Granted
|
80,000 | 29.39 | 8.69 | |||||||||
Exercised
|
(660 | ) | 13.85 | 7.13 | ||||||||
Forfeited
|
— | — | — | |||||||||
Expired
|
— | — | — | |||||||||
Balance
at December 31, 2008
|
1,258,340 | $ | 13.27 | $ | 6.35 |
2008
|
2007
|
2006
|
||||||||||
($
in thousands)
|
||||||||||||
Realized
gains (losses) and change in unrealized gains and losses,
net
|
$ | (118,667 | ) | $ | 28,051 | $ | 70,272 | |||||
Interest,
dividend and other income
|
31,093 | 23,443 | 11,704 | |||||||||
Interest,
dividend and other expenses
|
(28,651 | ) | (9,219 | ) | (4,775 | ) | ||||||
Investment
advisor compensation
|
(9,901 | ) | (14,633 | ) | (18,692 | ) | ||||||
Net
investment income (loss)
|
$ | (126,126 | ) | $ | 27,642 | $ | 58,509 |
2008
|
2007
|
2006
|
||||||||||
($
in thousands)
|
||||||||||||
General
expenses
|
$ | 10,756 | $ | 9,034 | $ | 6,199 | ||||||
Share-based
compensation expense
|
3,000 | 2,884 | 2,864 | |||||||||
$ | 13,756 | $ | 11,918 | $ | 9,063 |
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||
Operating
lease obligations
|
$ | 376 | $ | 345 | $ | 276 | $ | 276 | $ | 276 | $ | 1,243 | $ | 2,792 | ||||||||||||||
Specialist
service agreement
|
610 | 400 | 150 | — | — | — | 1,160 | |||||||||||||||||||||
Private
equity and limited partnerships
(1)
|
19,695 | — | — | — | — | — | 19,695 | |||||||||||||||||||||
$ | 20,681 | $ | 745 | $ | 426 | $ | 276 | $ | 276 | $ | 1,243 | $ | 23,647 |
Year
Ended
December
31,
2008
|
Year
Ended
December
31,
2007
|
Year
Ended
December
31,
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
Property
|
||||||||||||||||||||||||
Commercial
lines
|
$ | 13,591 | 8.4 | % | $ | 17,532 | 13.8 | % | $ | 9,875 | 13.3 | % | ||||||||||||
Personal
lines
|
(4,071 | ) (1) | (2.5 | ) | 41,291 | 32.5 | 58,063 | 78.3 | ||||||||||||||||
Casualty
|
||||||||||||||||||||||||
General
liability
|
16,948 | 10.4 | 17,597 | 13.8 | 4,388 | 5.9 | ||||||||||||||||||
Marine
|
— | — | — | — | 1,825 | 2.5 | ||||||||||||||||||
Motor
liability.
|
72,578 | 44.7 | 795 | 0.6 | — | — | ||||||||||||||||||
Professional
liability
|
2,150 | 1.3 | 27,230 | 21.4 | — | — | ||||||||||||||||||
Specialty
|
||||||||||||||||||||||||
Health
|
40,210 | 24.7 | 16,489 | 13.0 | — | — | ||||||||||||||||||
Medical
malpractice
|
4,641 | 2.9 | 6,197 | 4.9 | — | — | ||||||||||||||||||
Workers
compensation
|
16,348 | 10.1 | — | — | — | — | ||||||||||||||||||
$ | 162,395 | 100.0 | % | $ | 127,131 | 100.0 | % | $ | 74,151 | 100.0 | % |
Year
Ended
December
31,
2008
|
Year
Ended
December
31,
2007
|
Year
Ended
December
31,
2006
|
||||||||||||||||||||||
($
in thousands)
|
||||||||||||||||||||||||
USA
|
$ | 142,604 | 87.8 | % | $ | 79,647 | 62.6 | % | $ | 64,409 | 86.9 | % | ||||||||||||
Worldwide
(1)
|
18,991 | 11.7 | 44,722 | 35.2 | 4,388 | 5.9 | ||||||||||||||||||
Europe
|
— | — | 2,157 | 1.7 | 3,521 | 4.7 | ||||||||||||||||||
Caribbean
|
800 | 0.5 | 605 | 0.5 | 500 | 0.7 | ||||||||||||||||||
Japan
|
— | — | — | — | 1,333 | 1.8 | ||||||||||||||||||
162,395 | 100.0 | % | $ | 127,131 | 100.0 | % | $ | 74,151 | 100.0 | % |
December
31,
2008
|
December
31,
2007
|
|||||||
($
in thousands)
|
||||||||
Total
assets
|
$ | 960,793 | $ | 1,094,620 | ||||
Total
liabilities
|
472,623 | 488,563 | ||||||
Shareholders’
equity
|
488,170 | 606,057 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 960,793 | $ | 1,094,620 |
2008
|
2007
|
2006
|
||||||||||
($
in thousands)
|
||||||||||||
Total
revenues
|
$ | (11,177 | ) | $ | 125,687 | $ | 85,132 | |||||
Total
expenses
|
106,710 | 87,430 | 26,176 | |||||||||
Net
income (loss)
|
$ | (117,887 | ) | $ | 38,257 | $ | 58,956 |
2008
Quarter
ended
|
||||||||||||||||
March
31
|
June
30
|
September
30
|
December
31
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues
|
||||||||||||||||
Gross
premiums written
|
$ | 70,766 | $ | 25,360 | $ | 37,684 | $ | 28,585 | ||||||||
Gross
premiums ceded
|
(9,272 | ) | (5,615 | ) | 1,169 | (2,678 | ) | |||||||||
Net
premiums written
|
61,494 | 19,745 | 38,853 | 25,907 | ||||||||||||
Changes
in net unearned premium reserves
|
(34,002 | ) | 4,937 | (10,256 | ) | 8,271 | ||||||||||
Net
premiums earned
|
27,492 | 24,682 | 28,597 | 34,178 | ||||||||||||
Net
investment income (loss)
|
(5,762 | ) | 31,025 | (118,053 | ) | (33,336 | ) | |||||||||
Total
revenues
|
21,730 | 55,707 | (89,456 | ) | 842 | |||||||||||
Expenses
|
||||||||||||||||
Loss
and loss adjustment expenses incurred, net
|
12,124 | 9,337 | 14,777 | 19,247 | ||||||||||||
Acquisition
costs, net
|
9,929 | 9,228 | 12,204 | 10,288 | ||||||||||||
General
and administrative expenses
|
4,460 | 3,210 | 3,208 | 2,878 | ||||||||||||
Total
expenses
|
26,513 | 21,775 | 30,189 | 32,413 | ||||||||||||
Net
income (loss) before minority interest
|
(4,783 | ) | 33,932 | (119,645 | ) | (31,571 | ) | |||||||||
Minority
interest in loss (income) of joint venture
|
33 | (394 | ) | 1,212 | 312 | |||||||||||
Net
income (loss)
|
$ | (4,750 | ) | $ | 33,538 | $ | (118,433 | ) | $ | (31,259 | ) | |||||
Earnings
(loss) per share
|
||||||||||||||||
Basic
|
$ | (0.13 | ) | $ | 0.93 | (3.29 | ) | (0.87 | ) | |||||||
Diluted
|
(0.13 | ) | 0.92 | (3.29 | ) | (0.87 | ) | |||||||||
Weighted
average number of ordinary shares used in the determination
of
|
||||||||||||||||
Basic
|
35,981,312 | 35,981,386 | 35,995,236 | 35,918,309 | ||||||||||||
Diluted
|
35,981,312 | 36,652,441 | 35,995,236 | 35,918,309 |
2007
Quarter
ended
|
||||||||||||||||
March
31
|
June
30
|
September
30
|
December
31
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues
|
||||||||||||||||
Gross
premiums written
|
$ | 38,064 | $ | 65,445 | $ | 19,766 | $ | 3,856 | ||||||||
Gross
premiums ceded
|
(13,743 | ) | (14,534 | ) | (209 | ) | 2,336 | |||||||||
Net
premiums written
|
24,321 | 50,911 | 19,557 | 6,192 | ||||||||||||
Changes
in net unearned premium reserves
|
(3,400 | ) | (25,939 | ) | 11,155 | 15,250 | ||||||||||
Net
premiums earned
|
20,921 | 24,972 | 30,712 | 21,442 | ||||||||||||
Net
investment income (loss)
|
(14,381 | ) | 19,924 | (4,776 | ) | 26,875 | ||||||||||
Total
revenues
|
6,540 | 44,896 | 25,936 | 48,317 | ||||||||||||
Expenses
|
||||||||||||||||
Loss
and loss adjustment expenses incurred, net
|
8,988 | 11,138 | 11,339 | 8,042 | ||||||||||||
Acquisition
costs, net
|
7,712 | 9,515 | 13,458 | 8,254 | ||||||||||||
General
and administrative expenses
|
2,980 | 2,926 | 3,232 | 2,780 | ||||||||||||
Total
expenses
|
19,680 | 23,579 | 28,029 | 19,076 | ||||||||||||
Net
income (loss)
|
$ | (13,140 | ) | $ | 21,317 | $ | (2,093 | ) | $ | 29,241 | ||||||
Earnings
(loss) per share
|
||||||||||||||||
Basic
|
$ | (0.61 | ) | $ | 0.78 | $ | (0.06 | ) | $ | 0.81 | ||||||
Diluted
|
(0.61 | ) | 0.76 | (0.06 | ) | 0.80 | ||||||||||
Weighted
average number of ordinary shares used in the determination
of
|
||||||||||||||||
Basic
|
21,558,915 | 27,472,993 | 35,981,312 | 35,981,312 | ||||||||||||
Diluted
|
21,558,915 | 27,980,421 | 35,981,312 | 36,639,928 |
Type
of Investment
|
Cost
|
Fair
Value
|
Balance
Sheet
Value
|
|||||||||
($
in thousands)
|
||||||||||||
Debt
securities, trading, at fair value
|
$ | 77,811 | $ | 70,214 | $ | 70,214 | ||||||
Equity
securities, trading, at fair value
|
||||||||||||
Common
stocks, listed
|
552,941 | 348,590 | 348,590 | |||||||||
Exchange
traded funds
|
53,364 | 60,739 | 60,739 | |||||||||
Total
equity securities, trading, at fair value
|
606,305 | 409,329 | 409,329 | |||||||||
Total
investments, trading
|
$ | 684,116 | $ | 479,543 | $ | 479,543 | ||||||
Other
investments, at fair value
|
Equities,
unlisted
|
$ | 15,395 | $ | 11,897 | $ | 11,897 | ||||||
Call
options
|
2,133 | 2,526 | 2,526 | |||||||||
Total
other investments, at fair value
|
$ | 17,528 | $ | 14,423 | $ | 14,423 | ||||||
Total
investments in securities
|
$ | 701,644 | $ | 493,966 | $ | 493,966 |
December
31,
2008
|
December
31,
2007
|
|||||||
($
in thousands)
|
||||||||
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 37 | $ | 25 | ||||
Investment
in subsidiaries
|
488,170 | 606,057 | ||||||
Total
assets
|
$ | 488,207 | $ | 606,082 | ||||
Liabilities
and shareholders’ equity
|
||||||||
Liabilities
|
||||||||
Due
to subsidiaries
|
$ | 2,825 | $ | 500 | ||||
Shareholders’
equity
|
||||||||
Share
capital
|
3,604 | 3,610 | ||||||
Additional
paid-in capital
|
477,571 | 476,861 | ||||||
Retained
earnings
|
4,207 | 125,111 | ||||||
Total
shareholders’ equity
|
485,382 | 605,582 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 488,207 | $ | 606,082 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
($
in thousands)
|
||||||||||||
Revenue
|
||||||||||||
Investment
income
|
$ | — | $ | 2 | $ | 1,016 | ||||||
Expenses
|
||||||||||||
General
and administrative expenses
|
3,017 | 2,934 | 2,973 | |||||||||
Net
loss before equity in earnings (loss) of consolidated
subsidiaries
|
(3,017 | ) | (2,932 | ) | (1,957 | ) | ||||||
Equity
in earnings (loss) of consolidated subsidiaries
|
(117,887 | ) | 38,257 | 58,956 | ||||||||
Consolidated
net income (loss)
|
$ | (120,904 | ) | $ | 35,325 | $ | 56,999 |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
($
in thousands)
|
||||||||||||
Cash provided by (used in) | ||||||||||||
Operating
activities
|
||||||||||||
Net
income (loss)
|
$ | (120,904 | ) | $ | 35,325 | $ | 56,999 | |||||
Adjustments
to reconcile net income to cash provided by operating
activities
|
||||||||||||
Equity
in loss (earnings) of consolidated subsidiaries
|
117,887 | (38,257 | ) | (58,956 | ) | |||||||
Stock
options and stock awards expense
|
3,000 | 2,884 | 2,864 | |||||||||
Due
to subsidiaries
|
2,825 | 500 | — | |||||||||
Change
in accounts payable and accrued expenses
|
— | — | (59 | ) | ||||||||
Total
operating activities
|
2,808 | 452 | 848 | |||||||||
Investing
activity
|
||||||||||||
Contributed
surplus to subsidiaries
|
(500 | ) | (255,656 | ) | (21,972 | ) | ||||||
Financing
activities
|
||||||||||||
Proceeds
from share issue
|
17 | 255,706 | 4,270 | |||||||||
Repurchase
of Class A ordinary shares
|
(2,334 | ) | — | — | ||||||||
Short-swing
sale profit from shareholder
|
12 | — | — | |||||||||
Net
proceeds from exercise of stock options
|
9 | — | — | |||||||||
Options
repurchased
|
— | (500 | ) | — | ||||||||
Collection
of related party promissory note receivable
|
— | — | 16,212 | |||||||||
Change
in interest receivable on related party promissory note
receivable
|
— | — | 479 | |||||||||
Total
financing activities
|
(2,296 | ) | 255,206 | 20,961 | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
12 | 2 | (163 | ) | ||||||||
Cash
and cash equivalents at beginning of the year
|
25 | 23 | 186 | |||||||||
Cash
and cash equivalents at end of the year
|
$ | 37 | $ | 25 | $ | 23 |
Year
and Segment
|
Deferred
acquisition
costs
|
Reserves
for
losses
and
loss
adjustment
expenses
–
gross
|
Unearned
premiums
–
gross
|
Net
premiums
earned
|
Net
investment
income
(loss)
|
Net
losses,
and
loss
adjustment
expenses
|
Amortization
of
deferred
acquisition
costs
|
Other
operating
expenses
|
Gross
premiums
written
|
|||||||||||||||||||||||||||
2008
Property & Casualty
|
$ | 17,629 | $ | 81,425 | $ | 88,926 | $ | 114,949 | $ | (126,126 | ) | $ | 55,485 | $ | 41,649 | $ | 13,756 | $ | 162,395 | |||||||||||||||||
2007
Property & Casualty
|
$ | 7,302 | $ | 42,377 | $ | 59,298 | $ | 98,047 | $ | 27,642 | $ | 39,507 | $ | 38,939 | $ | 11,918 | $ | 127,131 | ||||||||||||||||||
2006
Property & Casualty
|
$ | 16,282 | $ | 4,977 | $ | 47,546 | $ | 26,605 | $ | 58,509 | $ | 9,671 | $ | 10,415 | $ | 9,063 | $ | 74,151 |
Year
and Segment
|
Direct
gross
premiums
|
Premiums
ceded
to
other
companies
|
Premiums
assumed
from
other
companies
|
Net
amount
|
Percentage
of
amount
assumed
to net
|
|||||||||||||||
2008
Property & Casualty
|
$ | — | $ | 16,396 | $ | 162,395 | $ | 145,999 | 111 | % | ||||||||||
2007
Property & Casualty
|
$ | — | $ | 26,150 | $ | 127,131 | $ | 100,981 | 126 | % | ||||||||||
2006
Property & Casualty
|
$ | — | $ | — | $ | 74,151 | $ | 74,151 | 100 | % |
Full
Name of Subsidiary
|
Place
of Incorporation
|
Greenlight
Reinsurance, Ltd.
|
Cayman
Islands
|
1.
|
I
have reviewed this annual report on Form 10-K of Greenlight Capital Re,
Ltd.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal
control over financial reporting (as defined in Exchange Act Rule
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
February 23,
200
9
|
/s/
Leonard Goldberg
|
Name:
Leonard Goldberg
Chief
Executive Officer
|
1.
|
I
have reviewed this annual report on Form 10-K of Greenlight Capital Re,
Ltd.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal
control over financial reporting (as defined in Exchange Act Rule
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
February 23,
2009
|
/s/
Tim Courtis
|
Name:
Tim Courtis
Chief
Financial Officer
|
Date:
February 23,
200
9
|
/s/
Leonard Goldberg
|
Name:
Leonard Goldberg
Title:
Chief Executive Officer
|
Date:
February 23
,
200
9
|
/s/
Tim Courtis
|
Name:
Tim Courtis
Title:
Chief Financial Officer
|
GREENLIGHT CAPITAL RE, LTD. | ||
|
By: /s/ Leonard Goldberg | |
Name: Leonard Goldberg | ||
Title: CEO and Director |
GREENLIGHT REINSURANCE, LTD. | ||
|
By: /s/ Leonard Goldberg | |
Name: Leonard Goldberg | ||
Title: CEO and Director |
EXECUTIVE
|
||
/s/ Tim Courtis | ||
Tim Courtis |
GREENLIGHT REINSURANCE, LTD. | ||
By: /s/
Leonard Goldberg
|
||
Name: Leonard Goldberg | ||
Title: CEO
and Director
|
EXECUTIVE | ||
/s/ Barton Hedges | ||
Barton
Hedges
|
|
As
of the first day after the close of each Performance Period for such
Participant (prior to giving effect to the Performance Allocation, if
any), the balance of the Carryforward Account (a) is increased by the
amount, if any, equal to two and one half times such Participant’s
Negative Performance Change for such Performance Period and (b) is reduced
(but not below zero) by the amount, if any, of such Participant’s Positive
Performance Change for such Performance
Period.”
|