x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Cayman Islands
|
N/A
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
Title of Class
|
Name of Exchange on Which Registered
|
Class A ordinary shares,
$0.10 par value per share
|
The Nasdaq Stock Market LLC
|
Page
|
||||
3
|
||||
BUSINESS
|
4
|
|||
RISK FACTORS
|
14
|
|||
UNRESOLVED STAFF COMMENTS
|
28
|
|||
PROPERTIES
|
29
|
|||
LEGAL PROCEEDINGS
|
29
|
|||
MINE SAFETY DISCLOSURES
|
29
|
|||
|
29
|
|||
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
29
|
|||
SELECTED FINANCIAL DATA
|
30
|
|||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
32
|
|||
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
49
|
|||
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
51
|
|||
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
51
|
|||
CONTROLS AND PROCEDURES
|
51
|
|||
OTHER INFORMATION
|
52
|
|||
|
52
|
|||
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
52
|
|||
EXECUTIVE COMPENSATION
|
52
|
|||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
52
|
|||
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
52
|
|||
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
52
|
|||
|
53
|
|||
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
53
|
|||
EXHIBIT INDEX | 54 | |||
SIGNATURES | 55 |
|
●
|
Our results will fluctuate from period to period and may not be indicative of our long-term prospects;
|
|
●
|
If our losses and loss adjustment expenses greatly exceed our loss reserves, our financial condition may be significantly and negatively affected;
|
|
●
|
The property and casualty reinsurance market may be affected by cyclical trends;
|
|
● |
The effect of emerging claim and coverage issues on our business is uncertain;
|
|
●
|
Rating agencies may downgrade or withdraw our rating;
|
|
●
|
We depend on DME Advisors, LP, or DME Advisors, to implement our investment strategy;
|
●
|
Loss of key executives could adversely impact our ability to implement our business strategy; and
|
|
●
|
Currency fluctuations could result in exchange rate losses and negatively impact our business.
|
|
|
BUSINESS
|
|
●
|
we focus on offering customized reinsurance solutions to select customers 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 reported 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 services each reinsurance contract rather than separating underwriting and servicing 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;
|
|
●
|
seek clients with appropriate expertise in their line of business;
|
|
●
|
employ strict underwriting discipline;
|
|
●
|
select reinsurance opportunities with favorable returns on capital over the life of the contract; and
|
|
●
|
strengthen and expand relationships with existing clients.
|
|
2011
|
2010
|
2009
(1)
|
|||||||||||||||
($ in thousands)
|
|||||||||||||||||
Property
|
|||||||||||||||||
Commercial lines
|
$
|
10,019
|
2.5
|
%
|
$
|
15,468
|
3.7
|
%
|
$
|
12,363
|
4.8
|
%
|
|||||
Personal lines
|
158,482
|
39.9
|
185,216
|
44.7
|
48,183
|
18.6
|
|||||||||||
Total Property
|
168,501
|
42.4
|
200,684
|
48.4
|
60,546
|
23.4
|
|||||||||||
Casualty
|
|||||||||||||||||
General liability
|
34,379
|
8.6
|
42,979
|
10.4
|
28,273
|
10.9
|
|||||||||||
Marine liability
|
360
|
0.1
|
483
|
0.1
|
—
|
—
|
|||||||||||
Motor liability
|
86,937
|
21.9
|
55,278
|
13.3
|
95,335
|
36.9
|
|||||||||||
Motor physical damage
|
7,026
|
1.8
|
3,712
|
0.9
|
—
|
—
|
|||||||||||
Professional liability
|
20,631
|
5.2
|
8,877
|
2.1
|
4,650
|
1.8
|
|||||||||||
Total Casualty
|
149,333
|
37.6
|
111,329
|
26.8
|
128,258
|
49.6
|
|||||||||||
Specialty
|
|||||||||||||||||
Financial
|
12,364
|
3.1
|
16,650
|
4.0
|
—
|
—
|
|||||||||||
Health
|
38,640
|
9.7
|
66,649
|
16.1
|
48,955
|
18.9
|
|||||||||||
Medical malpractice
|
—
|
—
|
(1,929
|
)
(2)
|
(0.5
|
)
|
1,033
|
0.4
|
|||||||||
Workers’ compensation
|
28,821
|
7.2
|
21,467
|
5.2
|
20,026
|
7.7
|
|||||||||||
Total Specialty
|
79,825
|
20.0
|
102,837
|
24.8
|
70,014
|
27.0
|
|||||||||||
$
|
397,659
|
100.0
|
%
|
$
|
414,850
|
100.0
|
%
|
$
|
258,818
|
100.0
|
%
|
|
(1)
During 2010, we refined our method of presenting the lines of business and geographic area of risks insured within our one
|
|
operating segment. The historical comparative balances for the year ended December 31, 2009 presented above, have been
|
|
reclassified to conform to the current period presentation.
|
|
|
|
(2)
The negative balance represents reversal of premiums due to termination of contracts or premiums returned upon commutation of contracts.
|
2011
|
2010
|
2009
|
|||||||||||||||
($ in thousands)
|
|||||||||||||||||
USA
|
$
|
353,999
|
89.0
|
%
|
$
|
374,330
|
90.2
|
%
|
$
|
233,058
|
90.0
|
%
|
|||||
Worldwide
(1)
|
22,595
|
5.7
|
32,549
|
7.8
|
24,015
|
9.3
|
|||||||||||
Europe
|
20,765
|
5.2
|
7,671
|
1.9
|
—
|
—
|
|||||||||||
Caribbean
|
300
|
0.1
|
300
|
0.1
|
1,745
|
0.7
|
|||||||||||
$
|
397,659
|
100.0
|
%
|
$
|
414,850
|
100.0
|
%
|
$
|
258,818
|
100.0
|
%
|
|
●
|
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.
|
2011
|
2010
|
2009
|
|||||||||||||||
($ in thousands)
|
|||||||||||||||||
Largest broker
|
$
|
139,251
|
35.0
|
%
|
$
|
122,558
|
29.6
|
%
|
$
|
79,419
|
30.7
|
%
|
|||||
2
nd
largest broker
|
107,641
|
27.1
|
117,842
|
28.4
|
62,346
|
24.1
|
|||||||||||
3
rd
largest broker
|
50,985
|
12.8
|
87,818
|
21.2
|
60,043
|
23.2
|
|||||||||||
4 th largest broker | 49,398 | 12.4 | — | — | — | — | |||||||||||
$
|
347,275
|
87.3
|
%
|
$
|
328,218
|
79.2
|
%
|
$
|
201,808
|
78.0
|
%
|
|
●
|
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;
|
●
|
provide that the client pays a predetermined amount of all losses before our reinsurance policy incurs a loss payment, 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 reinsurance coverage to the full amount, which we refer to as reinstatement premium, if coverage has been reduced as a result of a reinsurance loss payment.
|
|
●
|
the client’s and industry's 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 for 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 practices 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 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 monthly payment based on an annual rate of 1.5% of the capital account balance of each participant; and
|
●
|
a performance allocation based on the positive performance change in such participant’s capital account equal to 20% of net profits calculated per annum, subject to a loss carry forward 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 Greenlight Re’s or GRIL’s 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 will be held in debt or equity securities (including swaps) of publicly-traded companies (or their subsidiaries) and governments of the Organization of Economic Co-operation and Development; or OECD, high income countries, cash, cash equivalents and gold. No more than 10% of the assets in the investment portfolio will be held in private equity securities.
|
|
●
|
Concentration of Investments:
Other than cash, cash equivalents and United States government obligations, no single investment in the investment portfolio will constitute more than 20% of the portfolio.
|
|
●
|
Liquidity:
Assets will be invested in such fashion that Greenlight Re has a reasonable expectation that it can meet any of its liabilities as they become due. Greenlight Re will review with the investment advisor the liquidity of the portfolio on a periodic basis.
|
|
●
|
Monitoring:
Greenlight Re will require the 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 Greenlight Re or as Greenlight Re 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.
|
|
●
|
Concentration of Investments:
Other than cash, cash equivalents and United States government obligations, (1) no single investment in the investment portfolio will constitute more than 10% of the portfolio, (2) the 10 largest investments shall not constitute more than 50% of the total investment portfolio and (3) the investment portfolio shall at all times be comprised of a minimum of 50 debt or equity securities of publicly traded companies (or their subsidiaries).
|
2011
|
2010
|
|||||||||||||||
($ in thousands)
|
||||||||||||||||
Debt instruments
|
$
|
10,639
|
1.0
|
%
|
$
|
15,610
|
1.4
|
%
|
||||||||
Listed Equity Securities
|
830,789
|
75.3
|
808,209
|
71.5
|
||||||||||||
Exchange traded funds
|
60,033
|
5.5
|
31,712
|
2.8
|
||||||||||||
Commodities
|
97,506
|
8.8
|
132,466
|
11.7
|
||||||||||||
Private and unlisted equity securities
|
31,179
|
2.8
|
46,557
|
4.1
|
||||||||||||
1,030,146
|
93.4
|
1,034,554
|
91.5
|
|||||||||||||
Funds and cash held with brokers and swap counterparties
|
55,645
|
5.0
|
73,144
|
6.5
|
||||||||||||
Financial contracts, net
|
17,349
|
1.6
|
22,675
|
2.0
|
||||||||||||
Total long investments
|
$
|
1,103,140
|
100.0
|
%
|
$
|
1,130,373
|
100.0
|
%
|
2011
|
2010
|
|||||||||||||||
($ in thousands)
|
||||||||||||||||
Equities – listed
|
$
|
539,197
|
78.9
|
%
|
$
|
675,464
|
93.0
|
%
|
||||||||
Exchange traded funds
|
—
|
—
|
48,709
|
6.7
|
||||||||||||
Debt instruments
|
144,619
|
21.1
|
1,817
|
0.3
|
||||||||||||
Total short investments
|
$
|
683,816
|
100.0
|
%
|
$
|
725,990
|
100.0
|
%
|
2011
|
2010
|
|||||||||||||||
Long %
|
Short %
|
Long %
|
Short %
|
|||||||||||||
Debt instruments
|
0.7
|
%
|
(0.2
|
)%
|
1.6
|
%
|
(0.2
|
)%
|
||||||||
Equities & related derivatives
|
86.3
|
(51.9
|
)
|
89.9
|
(72.4
|
)
|
||||||||||
Private and unlisted equity securities
|
2.0
|
—
|
1.3
|
0.0
|
||||||||||||
Total
|
89.0
|
%
|
(52.1
|
)%
|
92.8
|
%
|
(72.6
|
)%
|
Sector
|
Long %
|
Short %
|
Net %
|
|||||||||
Basic Materials
|
6.4
|
%
|
(5.3
|
)%
|
1.1
|
%
|
||||||
Consumer Cyclical
|
12.7
|
(9.2
|
)
|
3.5
|
||||||||
Consumer Non-Cyclical
|
2.2
|
(7.1
|
)
|
(4.9
|
)
|
|||||||
Energy
|
3.9
|
(0.9
|
)
|
3.0
|
||||||||
Financial
|
11.2
|
(14.4
|
)
|
(3.2
|
)
|
|||||||
Healthcare
|
6.0
|
—
|
6.0
|
|||||||||
Industrial
|
8.3
|
(5.1
|
)
|
3.2
|
||||||||
Technology
|
37.8
|
(10.1
|
)
|
27.7
|
||||||||
Utilities
|
0.5
|
—
|
0.5
|
|||||||||
Total
|
89.0
|
%
|
(52.1
|
)%
|
36.9
|
%
|
Capitalization
|
Long %
|
Short %
|
Net %
|
|||||||||
Large Cap Equity (≥$5 billion)
|
61.1
|
%
|
(28.6
|
)%
|
32.5
|
%
|
||||||
Mid Cap Equity (≥$1 billion)
|
21.7
|
(22.7
|
)
|
(1.0
|
)
|
|||||||
Small Cap Equity (<$1 billion)
|
3.5
|
(0.7
|
)
|
2.8
|
||||||||
Debt Instruments
|
0.7
|
(0.1
|
)
|
0.6
|
||||||||
Other Investments
|
2.0
|
—
|
2.0
|
|||||||||
Total
|
89.0
|
%
|
(52.1
|
)%
|
36.9
|
%
|
2011
|
2010
|
2009
|
|||||||||
($ in thousands)
|
|||||||||||
Realized gains (losses) and change in unrealized gains and losses, net
|
$
|
57,088
|
$
|
134,280
|
$
|
232,410
|
|||||
Interest, dividend and other income
|
17,528
|
18,969
|
17,038
|
||||||||
Interest, dividend and other expenses
|
(30,837
|
)
|
(22,939
|
)
|
(16,886
|
)
|
|||||
Investment advisor compensation
|
(20,661
|
)
|
(26,304
|
)
|
(32,701
|
)
|
|||||
Net investment income
|
$
|
23,118
|
$
|
104,006
|
$
|
199,861
|
Quarter
|
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
1st
|
(3.4
|
)%
|
(1.9
|
)%
|
4.6
|
%
|
(0.9
|
)%
|
(4.2
|
)%
|
7.5
|
%
|
2.2
|
%
|
—
|
%
|
|||||||
2nd
|
(1.9
|
)
|
2.6
|
13.9
|
4.5
|
6.8
|
2.9
|
5.4
|
—
|
||||||||||||||
3rd
|
0.1
|
3.6
|
4.3
|
(15.9
|
)
|
(0.8
|
)
|
6.2
|
3.0
|
1.3
|
|||||||||||||
4th
|
7.6
|
6.5
|
6.4
|
(5.3
|
)
|
4.2
|
5.9
|
2.9
|
3.9
|
||||||||||||||
Full Year
|
2.1
|
%
|
11.0
|
%
|
32.1
|
%
|
(17.6
|
)%
|
5.9
|
%
|
24.4
|
%
|
14.2
|
%
|
5.2
|
%
(2)
|
|
●
|
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;
|
|
●
|
the performance of our investment portfolio; and
|
|
●
|
our ability to assess and integrate our risk management strategy properly.
|
|
●
|
premium charges;
|
|
●
|
ability to obtain terms and conditions appropriate with the risk being assumed and in accordance with our underwriting guidelines;
|
|
●
|
the general reputation and perceived financial strength of the reinsurer;
|
|
●
|
relationships with reinsurance brokers;
|
|
●
|
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 our A.M. Best ratings;
|
|
●
|
if unfavorable financial or market trends impact us;
|
|
●
|
if our actual 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
|
|
●
|
a performance allocation based on the positive performance change in the investment account equal to 20% of net profits calculated per annum, subject to a loss carry forward 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 Greenlight Re’s or GRIL’s 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,
|
2011
|
2010
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First Quarter
|
$
|
29.49
|
$
|
25.08
|
$
|
27.17
|
$
|
22.10
|
||||||||
Second Quarter
|
$
|
28.58
|
$
|
23.66
|
$
|
27.40
|
$
|
21.56
|
||||||||
Third Quarter
|
$
|
26.96
|
$
|
20.22
|
$
|
27.16
|
$
|
21.92
|
||||||||
Fourth Quarter
|
$
|
24.84
|
$
|
20.01
|
$
|
29.96
|
$
|
25.08
|
SELECTED FINANCIAL DATA
|
|
|
Year Ended December 31,
|
|||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||||
($ in thousands, except per share and share amounts)
|
|||||||||||||||||
Summary Consolidated Statement of Income Data
|
|||||||||||||||||
Gross premiums written
|
$
|
397,659
|
$
|
414,850
|
$
|
258,818
|
$
|
162,395
|
$
|
127,131
|
|||||||
Net premiums earned
|
379,775
|
287,701
|
214,680
|
114,949
|
98,047
|
||||||||||||
Net investment income (loss)
|
23,118
|
104,006
|
199,861
|
(126,126
|
)
|
27,642
|
|||||||||||
Loss and loss adjustment expenses incurred, net
|
241,690
|
177,018
|
119,045
|
55,485
|
39,507
|
||||||||||||
Acquisition costs, net
|
138,751
|
102,645
|
69,232
|
41,649
|
38,939
|
||||||||||||
General and administrative expenses
|
13,892
|
16,187
|
18,994
|
13,756
|
11,918
|
||||||||||||
Net income (loss)
|
$
|
6,769
|
$
|
90,642
|
$
|
209,545
|
$
|
(120,904
|
)
|
$
|
35,325
|
||||||
Earnings (Loss) Per Share Data
(1)
|
|||||||||||||||||
Basic
|
$
|
0.19
|
$
|
2.49
|
$
|
5.78
|
$
|
(3.36
|
)
|
$
|
1.16
|
||||||
Diluted
|
0.18
|
2.44
|
5.71
|
(3.36
|
)
|
1.14
|
|||||||||||
Weighted average number of ordinary shares used in the determination of earnings and loss per share
|
|||||||||||||||||
Basic
|
36,548,466
|
36,420,719
|
36,230,501
|
35,970,479
|
30,405,007
|
||||||||||||
Diluted
|
37,286,454
|
37,224,173
|
36,723,552
|
35,970,479
|
30,866,016
|
||||||||||||
Selected Ratios (based on U.S. GAAP Consolidated Statement of Income data)
|
|||||||||||||||||
Loss ratio
(2)
|
63.6
|
%
|
61.5
|
%
|
55.4
|
%
|
48.3
|
%
|
40.3
|
%
|
|||||||
Acquisition cost ratio
(3)
|
36.5
|
%
|
35.7
|
%
|
32.3
|
%
|
36.2
|
%
|
39.7
|
%
|
|||||||
Internal expense ratio
(4)
|
3.7
|
%
|
5.6
|
%
|
8.8
|
%
|
12.0
|
%
|
12.2
|
%
|
|||||||
Combined ratio
(5)
|
103.8
|
%
|
102.8
|
%
|
96.5
|
%
|
96.5
|
%
|
92.2
|
%
|
As of December 31,
|
|||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||
($ in thousands, except per share and share amounts)
|
|||||||||||||||
Selected Consolidated Balance Sheet Data:
|
|||||||||||||||
Total investments
|
$
|
1,030,146
|
$
|
1,034,554
|
$
|
830,600
|
$
|
493,966
|
$
|
590,536
|
|||||
Cash and cash equivalents
|
42,284
|
45,540
|
31,717
|
94,144
|
64,192
|
||||||||||
Restricted cash and cash equivalents
|
957,462
|
977,293
|
590,871
|
248,330
|
371,607
|
||||||||||
Total assets
|
2,343,488
|
2,338,002
|
1,634,380
|
958,005
|
1,094,145
|
||||||||||
Securities sold, not yet purchased, at fair value
|
683,816
|
725,990
|
570,875
|
234,301
|
332,706
|
||||||||||
Due to prime brokers
|
260,359
|
273,071
|
—
|
—
|
—
|
||||||||||
Loss and loss adjustment expense reserves
|
241,279
|
186,467
|
137,360
|
81,425
|
42,377
|
||||||||||
Unearned premium reserves
|
225,735
|
234,983
|
118,899
|
88,926
|
59,298
|
||||||||||
Total liabilities
|
1,497,790
|
1,498,841
|
905,142
|
466,565
|
488,563
|
||||||||||
Total equity
|
845,698
|
839,161
|
729,238
|
491,440
|
605,582
|
||||||||||
Adjusted book value*
(6)
|
803,103
|
793,403
|
698,641
|
485,382
|
605,582
|
||||||||||
Diluted adjusted book value*
(7)
|
821,318
|
809,993
|
715,264
|
500,108
|
623,460
|
||||||||||
Ordinary shares outstanding:
|
|||||||||||||||
Basic
|
36,538,149
|
36,455,784
|
36,318,842
|
36,036,685
|
36,102,736
|
||||||||||
Diluted
(8)
|
38,007,149
|
37,874,784
|
37,740,182
|
37,357,685
|
37,631,736
|
||||||||||
Per Share Data:
|
|||||||||||||||
Basic adjusted book value per share*
(9)
|
$
|
21.98
|
$
|
21.76
|
$
|
19.24
|
$
|
13.47
|
$
|
16.77
|
|||||
Fully diluted adjusted book value per share*
(10)
|
21.61
|
21.39
|
18.95
|
13.39
|
16.57
|
(2)
|
The loss ratio is calculated by dividing net loss and loss adjustment expenses incurred 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 equity minus non-controlling interest in joint venture.
|
(7)
|
Diluted adjusted book value is the adjusted book value plus the proceeds from the exercise of in-the-money options issued and outstanding at year end.
|
(8)
|
Diluted number of shares outstanding is the sum of basic shares outstanding and the in-the-money options issued and outstanding at year end.
|
(9)
|
Basic adjusted book value per share is calculated by dividing adjusted book value by the number of shares and share equivalents issued and outstanding at year end.
|
(10)
|
Fully diluted adjusted book value per share is calculated by dividing the diluted adjusted book value by the diluted number of shares 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.
|
|
●
|
case reserves resulting from claims notified to us by our clients;
|
|
●
|
incurred but not reported (“IBNR”) losses; and
|
|
●
|
estimated loss adjustment expenses.
|
|
●
|
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.
|
|
●
|
Bornhuetter-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 generally use this method for lines of business and contracts where there are limited historical paid losses.
|
|
●
|
Bornhuetter-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 generally use this method for lines of business and contracts where there are limited historical reported losses.
|
Calendar Year
|
Effect on prior year reserves
|
Effect on net income
|
|||
($ in thousands)
|
|||||
2011
|
$
|
26,015 increase
|
$
|
26,015 decrease
|
|
2010
|
$
|
8,678 increase
|
$
|
8,678 decrease
|
|
2009
|
$
|
7,597 decrease
|
$
|
7,597 increase
|
|
2008
|
$
|
11,988 decrease
|
$
|
11,988 increase
|
|
2007
|
$
|
1,077 decrease
|
$
|
1,077 increase
|
●
|
that experience significant losses;
|
●
|
where current market participants are experiencing financial distress or uncertainty; and
|
●
|
that are premium and capital intensive due to regulatory and other requirements.
|
December 31, 2011 | December 31, 2010 | December 31, 2009 | |||||||
($ in thousands, except per share and share amounts) | |||||||||
Basic adjusted and fully diluted adjusted book value per share numerator: | |||||||||
Total equity (GAAP)
|
$
|
845,698
|
$
|
839,161
|
$
|
729,238
|
|||
Less: Non-controlling interest in joint venture
|
(42,595
|
)
|
(45,758
|
)
|
(30,597
|
)
|
|||
Basic adjusted book value per share numerator
|
$
|
803,103
|
$
|
793,403
|
$
|
698,641
|
|||
Add: Proceeds from in-the-money options issued and outstanding
|
18,215
|
16,590
|
16,623
|
||||||
Fully diluted adjusted book value per share numerator
|
$
|
821,318
|
$
|
809,993
|
$
|
715,264
|
|||
Basic adjusted and fully diluted adjusted book value per share denominator:
|
|||||||||
Ordinary shares issued and outstanding for basic adjusted book value per share
denominator
|
36,538,149
|
36,455,784
|
36,318,842
|
||||||
Add: In-the-money stock options issued and outstanding
|
1,469,000
|
1,419,000
|
1,421,340
|
||||||
Fully diluted adjusted book value per share denominator
|
38,007,149
|
37,874,784
|
37,740,182
|
||||||
Basic adjusted book value per share
|
$
|
21.98
|
$
|
21.76
|
$
|
19.24
|
|||
Fully diluted adjusted book value per share
|
$
|
21.61
|
$
|
21.39
|
$
|
18.95
|
2011
|
2010
|
2009
|
||||||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||
Frequency
|
$
|
381,109
|
95.8
|
%
|
$
|
391,932
|
94.5
|
%
|
$
|
226,949
|
87.7
|
%
|
||||||||||||
Severity
|
16,550
|
4.2
|
22,918
|
5.5
|
31,869
|
12.3
|
||||||||||||||||||
Total
|
$
|
397,659
|
100.0
|
%
|
$
|
414,850
|
100.0
|
%
|
$
|
258,818
|
100.0
|
%
|
2011
|
2010
|
2009
|
||||||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||
Frequency
|
$
|
334,189
|
95.3
|
%
|
$
|
379,921
|
94.3
|
%
|
$
|
213,673
|
87.0
|
%
|
||||||||||||
Severity
|
16,550
|
4.7
|
22,918
|
5.7
|
31,869
|
13.0
|
||||||||||||||||||
Total
|
$
|
350,739
|
100.0
|
%
|
$
|
402,839
|
100.0
|
%
|
$
|
245,542
|
100.0
|
%
|
2011
|
2010
|
2009
|
||||||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||
Frequency
|
$
|
360,231
|
94.9
|
%
|
$
|
258,877
|
90.0
|
%
|
$
|
169,530
|
79.0
|
%
|
||||||||||||
Severity
|
19,544
|
5.1
|
28,824
|
10.0
|
45,150
|
21.0
|
||||||||||||||||||
Total
|
$
|
379,775
|
100.0
|
%
|
$
|
287,701
|
100.0
|
%
|
$
|
214,680
|
100.0
|
%
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||
($ in thousands)
|
|||||||||||||||||||||||||
Frequency
|
$
|
236,729
|
98.0
|
%
|
$
|
178,242
|
100.7
|
%
|
$
|
95,934
|
80.6
|
%
|
|||||||||||||
Severity
|
4,961
|
2.0
|
(1,224
|
)
|
(0.7
|
)
|
23,111
|
19.4
|
|||||||||||||||||
Total
|
$
|
241,690
|
100.0
|
%
|
$
|
177,018
|
100.0
|
%
|
$
|
119,045
|
100.0
|
%
|
2011 | 2010 | 2009 | |||||||||||||||||||||||||
Gross | Ceded | Net | Gross | Ceded | Net | Gross | Ceded | Net | |||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
Losses paid
(recovered)
|
$
|
215,176
|
$
|
(10,546
|
)
|
$
|
204,630
|
$
|
135,767
|
$
|
(3,169
|
)
|
$
|
132,598
|
$
|
62,070
|
$
|
(3,329
|
)
|
$
|
58,741
|
||||||
Change in reserves
|
54,641
|
(17,581
|
)
|
37,060
|
49,126
|
(4,706
|
)
|
44,420
|
55,911
|
4,393
|
60,304
|
||||||||||||||||
Total losses incurred
|
$
|
269,817
|
$
|
(28,127
|
)
|
$
|
241,690
|
$
|
184,893
|
$
|
(7,875
|
)
|
$
|
177,018
|
$
|
117,981
|
$ |
1,064
|
$
|
119,045
|
●
|
Adverse loss development of $15.7 million based on data received from the client and our reserve analysis relating to prior year commercial motor liability contracts that are in run-off. We received additional loss data from the client during 2011 that indicated higher than expected paid and incurred losses. During 2011, based on a review of the client’s actual loss data and as part of our quarterly reserve analysis, we increased our loss reserves accordingly;
|
●
|
Adverse loss development of $9.7 million, net of recoveries from related retroceded contracts, on multi-line quota share contracts based on data received from the clients and a reassessment in connection with our quarterly reserve analysis which indicated higher large loss activity on the accounts than originally expected;
|
●
|
Adverse loss development of $1.6 million on Florida homeowners’ contracts based on data received from the client and a reassessment in connection with our quarterly reserve analysis;
|
●
|
Favorable loss development of $1.3 million relating to a specialty health contract based on data received from the client and a reassessment in connection with our quarterly reserve analysis;
|
●
|
Adverse loss development of $1.0 million on a 2010 natural peril contract relating to the 2010 New Zealand earthquake. This loss development resulted from revised estimated losses expected to breach into our layer of coverage solely as a result of changes in foreign currency exchange rates for the New Zealand dollar and the Australian dollar against the U.S. dollar; and
|
●
|
Elimination of $0.6 million of reserves on a professional liability excess of loss contracts, based on data received from the client and a reassessment in connection with our quarterly reserve analysis.
|
●
|
Adverse loss development of $15.4 million relating to prior year motor liability contracts, as a result of higher than expected paid and incurred losses included in the data received from the client. Based on a review of the client’s actual loss data and a reassessment in connection with our quarterly reserve analysis, we increased our loss reserves accordingly.
|
●
|
Adverse loss development of $3.4 million based on data received from the client and a reassessment in connection with our quarterly reserve analysis, relating to California wildfires on a 2007 casualty clash contract, resulting in losses being reserved at the full contract limit;
|
●
|
Adverse loss development of $0.7 million on a 2008 professional liability excess of loss contract, based on data received from the client and a reassessment in connection with our quarterly reserve analysis;
|
●
|
Adverse loss development of $0.6 million on a 2007 quota share motor contract, based on data received from the client and a reassessment in connection with our quarterly reserve analysis;
|
●
|
Favorable loss development of $4.1 million on a multi-year professional liability excess of loss contract, based on data received from the client and a reassessment in connection with our quarterly reserve analysis;
|
●
|
Elimination of $1.9 million of reserves held on a medical malpractice contract commuted during 2010;
|
●
|
Favorable loss development of $1.8 million in aggregate, on two catastrophe contracts based on data received from the clients and a reassessment in connection with our quarterly reserve analysis;
|
●
|
Favorable loss development of $1.4 million in aggregate, on two 2007 professional liability excess of loss contracts, based on data received from the clients and a reassessment in connection with our quarterly reserve analysis;
|
●
|
Favorable loss development of $1.3 million in aggregate, on specialty health contracts relating to 2007 and 2008 years, based on data received from the clients and a reassessment in connection with our quarterly reserve analysis;
|
●
|
Favorable loss development of $0.6 million on a 2008 clash contract, based on loss data received from the client and our quarterly reserve analysis; and
|
●
|
Favorable loss development of $0.4 million on a 2008 multi-line frequency quota share contract, net of retrocession, based on loss data received from the client and a reassessment in connection with our quarterly reserve analysis.
|
2011
|
2010
|
2009
|
||||||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||
Frequency
|
$
|
134,658
|
97.0
|
%
|
$
|
95,052
|
92.6
|
%
|
$
|
65,497
|
94.6
|
%
|
||||||||||||
Severity
|
4,093
|
3.0
|
7,593
|
7.4
|
3,735
|
5.4
|
||||||||||||||||||
Total
|
$
|
138,751
|
100.0
|
%
|
$
|
102,645
|
100.0
|
%
|
$
|
69,232
|
100.0
|
%
|
2011
|
2010
|
2009
|
||||||||
($ in thousands)
|
||||||||||
Realized gains (losses) and change in unrealized gains and losses, net
|
$
|
57,088
|
$
|
134,280
|
$
|
232,410
|
||||
Interest, dividend and other income
|
17,528
|
18,969
|
17,038
|
|||||||
Interest, dividend and other expenses
|
(30,837
|
)
|
(22,939
|
)
|
(16,886
|
)
|
||||
Investment advisor compensation
|
(20,661
|
)
|
(26,304
|
)
|
(32,701
|
)
|
||||
Net investment income
|
$
|
23,118
|
$
|
104,006
|
$
|
199,861
|
2011
|
2010
|
2009
|
|||||||||
($ in thousands)
|
|||||||||||
Current tax expense
|
$
|
(226
|
)
|
$
|
(406
|
)
|
$
|
(20
|
)
|
||
Deferred tax (expense) benefit
|
(21
|
)
|
10
|
69
|
|||||||
Income tax (expense) benefit
|
$
|
(247
|
)
|
$
|
(396
|
)
|
$
|
49
|
2011
|
2010
|
2009
|
||||||||||||||||||
Frequency
|
Severity
|
Total
|
Frequency
|
Severity
|
Total
|
Frequency
|
Severity
|
Total
|
||||||||||||
Loss ratio
|
65.7
|
%
|
25.4
|
%
|
63.6
|
%
|
68.9
|
%
|
(4.3
|
)%
|
61.5
|
%
|
56.6
|
%
|
51.2
|
%
|
55.4
|
%
|
||
Acquisition
cost ratio
|
37.4
|
%
|
20.9
|
%
|
36.5
|
%
|
36.7
|
%
|
26.3
|
%
|
35.7
|
%
|
38.6
|
%
|
8.3
|
%
|
32.3
|
%
|
||
Composite ratio
|
103.1
|
%
|
46.3
|
%
|
100.1
|
%
|
105.6
|
%
|
22.0
|
%
|
97.2
|
%
|
95.2
|
%
|
59.5
|
%
|
87.7
|
%
|
||
Internal
expense ratio
|
3.7
|
%
|
5.6
|
%
|
8.8
|
%
|
||||||||||||||
Combined ratio
|
103.8
|
%
|
102.8
|
%
|
96.5
|
%
|
December 31, 2011
|
December 31, 2010
|
|||||||||||||||||||||||
Case Reserves
|
IBNR
|
Total
|
Case Reserves
|
IBNR
|
Total
|
|||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||
Frequency
|
$
|
85,186
|
$
|
117,850
|
$
|
203,036
|
$
|
59,216
|
$
|
87,504
|
$
|
146,720
|
||||||||||||
Severity
|
18,136
|
20,107
|
38,243
|
18,114
|
21,633
|
39,747
|
||||||||||||||||||
Total
|
$
|
103,322
|
$
|
137,957
|
$
|
241,279
|
$
|
77,330
|
$
|
109,137
|
$
|
186,467
|
Zone
|
Single Event
Loss
|
Aggregate
Loss
|
||||||
($ in thousands)
|
||||||||
United States
(1)
|
$
|
70,627
|
$
|
98,577
|
||||
Europe
|
38,300
|
39,500
|
||||||
Japan
|
39,500
|
39,500
|
||||||
Rest of the world
|
20,000
|
20,000
|
||||||
Maximum aggregate
|
70,627
|
98,577
|
(1)
|
Includes the Caribbean
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
Total
|
||||||||||||||||
($ in thousands)
|
||||||||||||||||||||
Operating lease obligations
(1)
|
$
|
372
|
$
|
744
|
$
|
684
|
$
|
415
|
$
|
2,215
|
||||||||||
Specialist service agreement
|
734
|
550
|
—
|
—
|
1,284
|
|||||||||||||||
Private equity and limited partnerships
(2)
|
19,079
|
—
|
—
|
—
|
19,079
|
|||||||||||||||
Loss and loss adjustment expense reserves
(3)
|
109,000
|
96,288
|
28,887
|
7,104
|
241,279
|
|||||||||||||||
Total
|
$
|
129,185
|
$
|
97,582
|
$
|
29,571
|
$
|
7,519
|
$
|
263,857
|
(1)
|
Reflects our contractual obligations pursuant to the lease agreements as described below.
|
(2)
|
As of December 31, 2011 we have made total commitments of $41.2 million in private investments, of which we have invested $22.1 million, and our remaining commitments to these investments total $19.1 million. Given the nature of the private equity investments, we are unable to determine with any degree of accuracy on when the commitments will be called. As such, for the purposes of the above table, we have assumed that all commitments with no fixed payment schedule will be made within one year. Under our investment guidelines, in effect as of the date hereof, no more than 10% of the assets in the investment portfolio may be held in private equity securities without specific approval from the Board of Directors.
|
(3)
|
Due to the nature of our reinsurance operations, the amount and timing of the cash flows associated with our reinsurance contractual liabilities will fluctuate, perhaps materially, and, therefore, are highly uncertain.
|
|
●
|
equity price risk;
|
|
●
|
foreign currency risk;
|
|
●
|
interest rate risk;
|
|
●
|
credit risk; and
|
|
●
|
political risk
|
10% increase in U.S. dollar
|
10% decrease in U.S. dollar
|
|||||||||||||||
Foreign Currency
|
Change in
fair value of net investment portfolio
|
Change in fair value as % of net
investment portfolio
|
Change in
fair value of net investment portfolio
|
Change in fair value as % of net
investment portfolio
|
||||||||||||
($ in thousands)
|
||||||||||||||||
British Pounds
|
$
|
(423
|
)
|
0.0
|
%
|
$
|
423
|
0.0
|
%
|
|||||||
Danish Kroner
|
116
|
0.0
|
(116
|
)
|
0.0
|
|||||||||||
Euro Dollar
|
8,755
|
0.8
|
(3,220
|
)
|
(0.3
|
)
|
||||||||||
Japanese Yen
|
15,108
|
1.4
|
(5,313
|
)
|
(0.5
|
)
|
||||||||||
Norwegian Krone
|
(108
|
)
|
0.0
|
108
|
0.0
|
|||||||||||
South Korean Won
|
(267
|
)
|
0.0
|
267
|
0.0
|
|||||||||||
Swiss Franc
|
431
|
0.0
|
(431)
|
0.0
|
||||||||||||
Other
|
(30
|
)
|
0.0
|
30
|
0.0
|
|||||||||||
Total
|
$
|
23,582
|
2.2
|
%
|
$
|
(8,252
|
)
|
(0.8
|
)%
|
100 basis point increase
in interest rates
|
100 basis point decrease
in interest rates
|
|||||||||||||
Change in
fair value of net investment portfolio
|
Change in fair value as % of
net investment portfolio
|
Change in
fair value of net investment portfolio
|
Change in fair value as % of net
investment portfolio
|
|||||||||||
($ in thousands)
|
||||||||||||||
Debt instruments - long
|
$
|
(275
|
)
|
0.0
|
%
|
$
|
293
|
0.0
|
%
|
|||||
Debt instruments - short
|
10,531
|
1.0
|
(11,563
|
)
|
(1.1
|
)
|
||||||||
Credit default swaps
|
58
|
0.0
|
(58
|
)
|
0.0
|
|||||||||
Interest rate options
|
3,567
|
0.3
|
(1,616
|
)
|
(0.1
|
)
|
||||||||
Futures
|
10,199
|
0.9
|
(11,095
|
)
|
(1.0
|
)
|
||||||||
Net exposure to interest rate risk
|
$
|
24,080
|
2.2
|
%
|
$
|
(24,039
|
)
|
(2.1
|
)%
|
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
|
Page
|
|||||
(a)(1)
|
Financial Statements
|
||||
F-1
|
|||||
F-2
|
|||||
F-3
|
|||||
F-4
|
|||||
F-5
|
|||||
F-6
|
|||||
F-7
|
|||||
(a)(2)
|
Financial Statement Schedules
|
||||
F-29
|
|||||
F-30
|
|||||
F-32
|
|||||
F-32
|
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 | 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) |
10.2 | 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) |
10.3 | 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) |
10.4 | Form of Stock Option Agreement (incorporated by reference to Exhibit 10.7 of the Company’s Registration Statement No. 333-139993) |
10.5 | 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) |
10.6 | 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) |
10.7 | 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) |
10.8 | 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) |
10.9 | 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 on January 2, 2009) |
10.10
|
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)
|
10.11
|
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)
|
10.12
|
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 (incorporated by reference to Exhibit 10.26 of the Company’s Form 10-K filed on February 23, 2009)
|
10.13
|
Letter of Credit Agreement executed July 21, 2009 between Greenlight Reinsurance, Ltd. and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on November 2, 2009)
|
10.14
|
Greenlight Capital Re, Ltd. Amended and Restated 2004 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on May 4, 2010)
|
10.15
|
Amended and restated letter of credit agreement executed June 17, 2010 between Greenlight Reinsurance, Ltd. and Butterfield Bank (Cayman) Limited (incorporated by reference to Exhibit 10.3 of the Company’s Form 10-Q filed on August 2, 2010)
|
10.16
|
Amended letter of credit agreement executed June 14, 2010 between Greenlight Reinsurance, Ltd. and Bank of America, N.A (incorporated by reference to Exhibit 10.2 of the Company’s Form 10-Q filed August 2, 2010)
|
10.17
|
Letter of understanding dated June 10, 2010 between Greenlight Reinsurance, Ltd. and Citibank, N.A (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on August 2, 2010)
|
10.18
|
Letter of Credit Agreement, dated August 20, 2010, between Greenlight Reinsurance, Ltd. and Citibank Europe plc. (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on November 2, 2010)
|
10.19
|
Master Reimbursement Agreement dated August 20, 2010, between Greenlight Reinsurance, Ltd. and Citibank Europe plc (incorporated by reference to Exhibit 10.2 of the Company’s Form 10-Q filed on November 2, 2010)
|
10.20
|
Reinsurance Deposit Agreement, dated August 20, 2010, between Greenlight Reinsurance, Ltd. and Citibank Europe plc. (incorporated by reference to Exhibit 10.3 of the Company’s Form 10-Q filed on November 2, 2010)
|
10.21
|
Amended and Restated Agreement, effective as of August 31, 2010, between Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd., Greenlight Reinsurance Ireland, Ltd., and DME Advisors, LP (incorporated by reference to Exhibit 10.4 of the Company’s Form 10-Q filed on November 2, 2010)
|
10.22
|
Letter of Credit Agreement effective as of February 3, 2011, between Greenlight Reinsurance, Ltd. and JPMorgan Chase Bank N.A. (incorporated by reference to Exhibit 10.38 of the Company’s Form 10-K filed on February 22, 2011)
|
10.23
|
Employment Agreement, dated July 27, 2011, by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd. and Barton Hedges (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on October 31, 2011)
|
10.24 | Employment Agreement, dated August 15, 2006 , by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd. and Brendan Barry |
10.25 | Employment Agreement, dated September 28, 2006 , by and among Greenlight Capital Re, Ltd., Greenlight Reinsurance, Ltd. and Claude Wagner |
10.26
|
Amendment to amended letter of credit agreement executed on December 16, 2011 between Greenlight Reinsurance, Ltd. and Bank of America, N.A.
|
10.27
|
Amended letter of credit agreement effective as of December 16, 2011, between Greenlight Reinsurance, Ltd. and JPMorgan Chase Bank N.A.
|
12.1
|
Ratio of earnings to fixed charges and preferred share dividends
|
21.1
|
Subsidiaries of the registrant (incorporated by reference to Exhibit 21.1 of the Company's Form 10-K filed on February 22, 2011)
|
23.1
|
Consent of BDO USA, LLP
|
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
|
101
|
The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Shareholders’ Equity; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements. (*)
|
*
|
The XBRL related information in Exhibits 101 to this Annual Report on Form 10-K shall not be deemed “filed” or a part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of those sections.
|
GREENLIGHT CAPITAL RE, LTD.
|
|
By:
|
/s/ Barton Hedges
|
Barton Hedges
Chief Executive Officer
|
|
Date: February 21, 2012
|
/s/ DAVID M. EINHORN
|
/s/ LEONARD GOLDBERG
|
|
David M. Einhorn
Director
|
Leonard Goldberg
Director
|
|
Date: February 21, 2012
|
Date: February 21, 2012
|
|
/s/ FRANK D. LACKNER
|
/s/ ALAN BROOKS
|
|
Frank D. Lackner
Director
|
Alan Brooks
Director
|
|
Date: February 21, 2012
|
Date: February 21, 2012
|
|
/s/ IAN ISAACS
|
/s/ JOSEPH P. PLATT
|
|
Ian Isaacs
Director
|
Joseph P. Platt
Director
|
|
Date: February 21, 2012
|
Date: February 21, 2012
|
|
/s/ TIM COURTIS
|
/s/ BRYAN MURPHY
|
|
Tim Courtis
Chief Financial Officer
(principal financial and accounting officer)
|
Bryan Murphy
Director
Date: February 21, 2012
|
|
Date: February 21, 2012
|
||
/s/ BARTON HEDGES
|
||
Barton Hedges
Director & Chief Executive Officer
(principal executive officer)
|
||
Date: February 21, 2012
|
2011
|
2010
|
||||||||||
Assets
|
|||||||||||
Investments
|
|||||||||||
Debt instruments, trading, at fair value
|
$
|
10,639
|
$
|
15,610
|
|||||||
Equity securities, trading, at fair value
|
890,822
|
839,921
|
|||||||||
Other investments, at fair value
|
128,685
|
179,023
|
|||||||||
Total investments
|
1,030,146
|
1,034,554
|
|||||||||
Cash and cash equivalents
|
42,284
|
45,540
|
|||||||||
Restricted cash and cash equivalents
|
957,462
|
977,293
|
|||||||||
Financial contracts receivable, at fair value
|
23,673
|
46,168
|
|||||||||
Reinsurance balances receivable
|
141,278
|
109,567
|
|||||||||
Loss and loss adjustment expenses recoverable
|
29,758
|
11,976
|
|||||||||
Deferred acquisition costs, net
|
68,725
|
87,389
|
|||||||||
Unearned premiums ceded
|
27,233
|
7,424
|
|||||||||
Notes receivable
|
17,437
|
14,205
|
|||||||||
Other assets
|
5,492
|
3,886
|
|||||||||
Total assets
|
$
|
2,343,488
|
$
|
2,338,002
|
|||||||
Liabilities and shareholders’ equity
|
|||||||||||
Liabilities
|
|||||||||||
Securities sold, not yet purchased, at fair value
|
$
|
683,816
|
$
|
725,990
|
|||||||
Financial contracts payable, at fair value
|
6,324
|
23,493
|
|||||||||
Due to prime brokers
|
260,359
|
273,071
|
|||||||||
Loss and loss adjustment expense reserves
|
241,279
|
186,467
|
|||||||||
Unearned premium reserves
|
225,735
|
234,983
|
|||||||||
Reinsurance balances payable
|
38,379
|
20,164
|
|||||||||
Funds withheld
|
31,844
|
22,887
|
|||||||||
Other liabilities
|
10,054
|
11,786
|
|||||||||
Total liabilities
|
1,497,790
|
1,498,841
|
|||||||||
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, 30,283,200 (2010: 30,200,835): Class B: par value $0.10; authorized, 25,000,000; issued and outstanding, 6,254,949 (2010: 6,254,949)
|
3,6544
|
3,646
|
|||||||||
Additional paid-in capital
|
488,478
|
485,555
|
|||||||||
Retained earnings
|
310,971
|
304,202
|
|||||||||
Shareholders’ equity attributable to shareholders
|
803,103
|
793,403
|
|||||||||
Non-controlling interest in joint venture
|
42,595
|
45,758
|
|||||||||
Total equity
|
845,698
|
839,161
|
|
||||||||
Total liabilities and equity
|
$
|
2,343,488
|
$
|
2,338,002
|
2011
|
2010
|
2009
|
|||||||
Revenues
|
|||||||||
Gross premiums written
|
$
|
397,659
|
$
|
414,850
|
$
|
258,818
|
|||
Gross premiums ceded
|
(46,920
|
)
|
(12,011
|
)
|
(13,276
|
)
|
|||
Net premiums written
|
350,739
|
402,839
|
245,542
|
||||||
Change in net unearned premium reserves
|
29,036
|
(115,138
|
)
|
(30,862
|
)
|
||||
Net premiums earned
|
379,775
|
287,701
|
214,680
|
||||||
Net investment income
|
23,118
|
104,006
|
199,861
|
||||||
Other income (expense), net
|
253
|
(1,079
|
)
|
4,538
|
|||||
Total revenues
|
403,146
|
390,628
|
419,079
|
||||||
Expenses
|
|||||||||
Loss and loss adjustment expenses incurred, net
|
241,690
|
177,018
|
119,045
|
||||||
Acquisition costs, net
|
138,751
|
102,645
|
69,232
|
||||||
General and administrative expenses
|
13,892
|
16,187
|
18,994
|
||||||
Total expenses
|
394,333
|
295,850
|
207,271
|
||||||
Income from continuing operations before income tax expense
|
8,813
|
94,778
|
211,808
|
||||||
Income tax (expense) benefit
|
(247
|
)
|
(396
|
)
|
49
|
||||
Net income including non-controlling interest
|
8,566
|
94,382
|
211,857
|
||||||
Income attributable to non-controlling interest in joint venture
|
(1,797
|
)
|
(3,740
|
)
|
(2,312
|
)
|
|||
Net income
|
$
|
6,769
|
$
|
90,642
|
$
|
209,545
|
|||
Earnings per share
|
|||||||||
Basic
|
$
|
0.19
|
$
|
2.49
|
$
|
5.78
|
|||
Diluted
|
0.18
|
2.44
|
5.71
|
||||||
Weighted average number of ordinary shares used in the determination of earnings per share:
|
|||||||||
Basic
|
36,548,466
|
36,420,719
|
36,230,501
|
||||||
Diluted
|
37,286,454
|
37,224,173
|
36,723,552
|
Ordinary share capital
|
Additional paid-in capital
|
Retained earnings
|
Shareholders’ equity attributable to shareholders
|
Non-controlling
interest in joint venture
|
Total equity
|
||||||||
Balance at December 31, 2008
|
$
|
3,604
|
$
|
477,571
|
$
|
4,207
|
$
|
485,382
|
$
|
6,058
|
$
|
491,440
|
|
Issue of Class A ordinary shares, net of forfeitures
|
28
|
716
|
—
|
744
|
—
|
744
|
|||||||
Share-based compensation expense, net of forfeitures
|
—
|
3,410
|
—
|
3,410
|
—
|
3,410
|
|||||||
Options repurchased
|
—
|
(248
|
) |
(192
|
) |
(440
|
) |
—
|
(440
|
)
|
|||
Non-controlling interest contribution in (withdrawal from) joint venture, net
|
—
|
—
|
—
|
—
|
22,227
|
22,227
|
|||||||
Income attributable to non-controlling interest in joint venture
|
—
|
—
|
—
|
—
|
2,312
|
2,312
|
|||||||
Net income
|
—
|
—
|
209,545
|
209,545
|
—
|
209,545
|
|||||||
Balance at December 31, 2009
|
$
|
3,632
|
$
|
481,449
|
$
|
213,560
|
$
|
698,641
|
$
|
30,597
|
$
|
729,238
|
|
Issue of Class A ordinary shares, net of forfeitures
|
14
|
18
|
—
|
32
|
—
|
32
|
|||||||
Share-based compensation expense, net of forfeitures
|
—
|
4,088
|
—
|
4,088
|
—
|
4,088
|
|||||||
Non-controlling interest contribution in (withdrawal from) joint venture, net
|
—
|
—
|
—
|
—
|
11,421
|
11,421
|
|||||||
Income attributable to non-controlling interest in joint venture
|
—
|
—
|
—
|
—
|
3,740
|
3,740
|
|||||||
Net income
|
—
|
—
|
90,642
|
90,642
|
—
|
90,642
|
|||||||
Balance at December 31, 2010
|
$
|
3,646
|
$
|
485,555
|
$
|
304,202
|
$
|
793,403
|
$
|
45,758
|
$
|
839,161
|
|
Issue of Class A ordinary shares, net of forfeitures
|
8
|
—
|
—
|
8
|
—
|
8
|
|||||||
Share-based compensation expense, net of forfeitures
|
—
|
2,923
|
—
|
2,923
|
—
|
2,923
|
|||||||
Non-controlling interest contribution in (withdrawal from) joint venture, net
|
—
|
—
|
—
|
—
|
(4,960
|
)
|
(4,960
|
)
|
|||||
Income attributable to non-controlling interest in joint venture
|
—
|
—
|
—
|
—
|
1,797
|
1,797
|
|||||||
Net income
|
—
|
—
|
6,769
|
6,769
|
—
|
6,769
|
|||||||
Balance at December 31, 2011
|
$
|
3,654
|
$
|
488,478
|
$
|
310,971
|
$
|
803,103
|
$
|
42,595
|
$
|
845,698
|
2011
|
2010
|
2009
|
||||||||||
Cash provided by (used in)
|
||||||||||||
Operating activities
|
||||||||||||
Net income
|
$
|
6,769
|
$
|
90,642
|
$
|
209,545
|
||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities
|
||||||||||||
Net change in unrealized gains and losses on investments and financial contracts
|
75,670
|
(48,154
|
)
|
(192,319
|
)
|
|||||||
Net realized gains on investments and financial contracts
|
(139,760
|
)
|
(79,088
|
)
|
(38,512
|
)
|
||||||
Foreign exchange (gains) losses on restricted cash and cash equivalents
|
6,953
|
(6,397
|
)
|
(1,580
|
)
|
|||||||
Income attributable to non-controlling interest in joint venture
|
1,797
|
3,740
|
2,312
|
|||||||||
Share-based compensation expense, net of forfeitures
|
2,923
|
4,088
|
3,410
|
|||||||||
Depreciation expense
|
232
|
225
|
117
|
|||||||||
Net change in
|
||||||||||||
Reinsurance balances receivable
|
(31,711
|
)
|
(26,819
|
)
|
(23,175
|
)
|
||||||
Loss and loss adjustment expenses recoverable
|
(17,782
|
)
|
(4,706
|
)
|
4,392
|
|||||||
Deferred acquisition costs, net
|
18,664
|
(52,988
|
)
|
(16,772
|
)
|
|||||||
Unearned premiums ceded
|
(19,809
|
)
|
(946
|
)
|
889
|
|||||||
Other assets
|
(1,378
|
)
|
643
|
(1,247
|
)
|
|||||||
Loss and loss adjustment expense reserves
|
54,812
|
49,107
|
55,935
|
|||||||||
Unearned premium reserves
|
(9,248
|
)
|
116,084
|
29,973
|
||||||||
Reinsurance balances payable
|
18,215
|
(14,137
|
)
|
(377
|
)
|
|||||||
Funds withheld
|
8,957
|
8,176
|
10,845
|
|||||||||
Other liabilities
|
(1,732
|
)
|
(1,010
|
)
|
6,567
|
|||||||
Net cash provided by (used in) operating activities
|
(26,428
|
) |
38,460
|
50,003
|
||||||||
Investing activities
|
||||||||||||
Purchases of investments and financial contracts
|
(1,677,795
|
) |
(1,067,595
|
)
|
(1,226,298
|
)
|
||||||
Sales of investments and financial contracts
|
1,709,445
|
1,137,240
|
1,447,431
|
|||||||||
Change in due to prime brokers
|
(12,712
|
) |
273,071
|
—
|
||||||||
Change in restricted cash and cash equivalents, net
|
12,878
|
(380,025
|
)
|
(340,961
|
)
|
|||||||
Change in notes receivable, net
|
(3,232
|
)
|
1,219
|
(13,655
|
)
|
|||||||
Non-controlling interest contribution in (withdrawal from) joint venture, net
|
(4,960
|
)
|
11,421
|
22,227
|
||||||||
Fixed assets additions
|
(460
|
)
|
—
|
(1,478
|
)
|
|||||||
Net cash provided by (used in) investing activities
|
23,164
|
(24,669
|
)
|
(112,734)
|
||||||||
Financing activities
|
||||||||||||
Net proceeds from share issue
|
8
|
—
|
28
|
|||||||||
Options repurchased
|
—
|
—
|
(440
|
)
|
||||||||
Net proceeds from exercise of stock options
|
—
|
32
|
716
|
|||||||||
Net cash provided by (used in) financing activities
|
8
|
32
|
304
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
$
|
(3,256
|
)
|
13,823
|
(62,427
|
)
|
||||||
Cash and cash equivalents at beginning of the year
|
45,540
|
31,717
|
94,144
|
|||||||||
Cash and cash equivalents at end of the year
|
$
|
42,284
|
$
|
45,540
|
$
|
31,717
|
||||||
Supplementary information
|
||||||||||||
Interest paid in cash
|
$
|
15,882
|
$
|
10,944
|
$
|
5,629
|
||||||
Interest received in cash
|
530
|
13,888
|
6,350
|
|||||||||
Income tax paid in cash
|
499
|
92
|
—
|
Cost
|
Accumulated depreciation
|
Net book value
|
||||||||
($ in thousands)
|
||||||||||
Computer software
|
$
|
200
|
$
|
(200)
|
$
|
—
|
||||
Furniture and fixtures
|
451
|
(142)
|
309
|
|||||||
Leasehold improvements
|
1,487
|
(332)
|
1,155
|
|||||||
Total
|
$
|
2,138
|
$
|
(674)
|
$
|
1,464
|
Cost
|
Accumulated depreciation
|
Net book value
|
||||||||
($ in thousands)
|
||||||||||
Computer software
|
$
|
200
|
$
|
(180)
|
$
|
20
|
||||
Furniture and fixtures
|
261
|
(74)
|
187
|
|||||||
Leasehold improvements
|
1,217
|
(188)
|
1,029
|
|||||||
Total
|
$
|
1,678
|
$
|
(442)
|
$
|
1,236
|
2011
|
2010
|
2009
|
|||||||
Weighted average shares outstanding
|
36,548,466
|
36,420,719
|
36,230,501
|
||||||
Effect of dilutive service provider share-based awards
|
170,056
|
182,559
|
131,163
|
||||||
Effect of dilutive employee and director share-based awards
|
567,932
|
620,895
|
361,888
|
||||||
37,286,454
|
37,224,173
|
36,723,552
|
|||||||
Anti-dilutive stock options outstanding
|
180,000
|
240,000
|
210,000
|
3.
|
FINANCIAL INSTRUMENTS
|
Fair Value Measurements as of December 31, 2010
|
||||||||||||||||
Description
|
Quoted prices in
active markets
(Level 1)
|
Significant other
observable
inputs
(Level 2)
|
Significant
unobservable
inputs
(Level 3)
|
Total
|
||||||||||||
Assets:
|
($ in thousands)
|
|||||||||||||||
Debt instruments
|
$
|
—
|
$
|
12,365
|
$
|
3,245
|
$
|
15,610
|
||||||||
Listed equity securities
|
839,921
|
—
|
—
|
839,921
|
||||||||||||
Commodities
|
132,466
|
—
|
—
|
132,466
|
||||||||||||
Private and unlisted equity securities
|
—
|
3,610
|
42,947
|
46,557
|
||||||||||||
Financial contracts receivable
|
103
|
45,851
|
214
|
46,168
|
||||||||||||
$
|
972,490
|
$
|
61,826
|
$
|
46,406
|
$
|
1,080,722
|
|||||||||
Liabilities:
|
||||||||||||||||
Listed equity securities, sold not yet purchased
|
$
|
(724,173
|
) |
$
|
—
|
$
|
—
|
$
|
(724,173
|
) | ||||||
Debt instruments, sold not yet purchased
|
—
|
(1,817
|
) |
—
|
(1,817
|
) | ||||||||||
Financial contracts payable
|
(427
|
)
|
(23,066
|
) |
—
|
(23,493
|
) | |||||||||
$
|
(724,600
|
) |
$
|
(24,883
|
) |
$
|
—
|
$
|
(749,483
|
) |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
December 31, 2011
|
||||||||||||||
Debt
instruments
|
Private and unlisted equity securities
|
Financial contracts receivable
|
Total
|
|||||||||||
($ in thousands)
|
||||||||||||||
Beginning balance
|
$
|
3,245
|
$
|
42,947
|
$
|
214
|
$
|
46,406
|
||||||
Purchases
|
—
|
8,192
|
500
|
8,692
|
||||||||||
Sales
|
(2,408
|
)
|
(12,214
|
)
|
—
|
(14,622
|
)
|
|||||||
Total realized and unrealized gains (losses) and amortization included in earnings, net
|
(372
|
)
|
1,916
|
(451
|
)
|
1,093
|
||||||||
Transfers into Level 3
|
—
|
—
|
—
|
—
|
||||||||||
Transfers out of Level 3
|
—
|
(9,662
|
)
|
—
|
(9,662
|
)
|
||||||||
Ending balance
|
$
|
465
|
$
|
31,179
|
$
|
263
|
$
|
31,907
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
December 31, 2010
|
||||||||||||||
Debt
instruments
|
Private and unlisted equity securities
|
Financial contracts receivable
|
Total
|
|||||||||||
($ in thousands)
|
||||||||||||||
Beginning balance
|
$
|
1,537
|
$
|
25,228
|
$
|
—
|
$
|
26,765
|
||||||
Purchases, sales, issuances, and settlements, net
|
1,558
|
14,483
|
855
|
16,896
|
||||||||||
Total gains (losses) realized and unrealized included in earnings, net
|
150
|
3,236
|
(641
|
)
|
2,745
|
|||||||||
Transfers into Level 3, net
|
—
|
—
|
—
|
—
|
||||||||||
Ending balance
|
$
|
3,245
|
$
|
42,947
|
$
|
214
|
$
|
46,406
|
2011
|
Cost/
amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
value
|
||||||||||||
($ in thousands)
|
||||||||||||||||
Corporate debt – U.S.
|
$
|
4,064
|
$
|
49
|
$
|
(1,685
|
)
|
$
|
2,428
|
|||||||
Corporate debt – Non U.S.
|
5,010
|
435
|
—
|
5,445
|
||||||||||||
Sovereign debt – Non U.S.
|
2,481
|
285
|
— |
2,766
|
||||||||||||
Total debt instruments
|
$
|
11,555
|
$
|
769
|
$
|
(1,685
|
)
|
$
|
10,639
|
2010
|
Cost/
amortized
cost
|
Unrealized
gains
|
Unrealized
Losses
|
Fair
value
|
||||||||||||
($ in thousands)
|
||||||||||||||||
Corporate debt – U.S.
|
$
|
11,384
|
$
|
5,574
|
$
|
(1,349
|
) |
$
|
15,609
|
|||||||
Corporate debt – Non U.S.
|
16
|
—
|
(15
|
) |
1
|
|||||||||||
Total debt instruments
|
$
|
11,400
|
$
|
5,574
|
$
|
(1,364
|
) |
$
|
15,610
|
2011 | 2010 | |||||||||||||
Cost/
amortized
cost
|
Fair
value
|
Cost/
amortized
cost
|
Fair
value
|
|||||||||||
($ in thousands) | ||||||||||||||
Within one year
|
$
|
2,482
|
$
|
2,767
|
$
|
3,691
|
$
|
4,377
|
||||||
From one to five years
|
—
|
—
|
3,544
|
6,331
|
||||||||||
From five to ten years
|
6,755
|
7,158
|
1,831
|
3,918
|
||||||||||
More than ten years
|
2,318
|
714
|
2,334
|
984
|
||||||||||
$
|
11,555
|
$
|
10,639
|
$
|
11,400
|
$
|
15,610
|
2011
|
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
value
|
||||||||||||
($ in thousands)
|
||||||||||||||||
Equities – listed
|
$
|
827,435
|
$
|
78,947
|
$
|
(75,593
|
)
|
$
|
830,789
|
|||||||
Exchange traded funds
|
57,011
|
6,037
|
(3,015
|
)
|
60,033
|
|||||||||||
$
|
884,446
|
$
|
84,984
|
$
|
(78,608
|
)
|
$
|
890,822
|
2010
|
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
value
|
||||||||||||
($ in thousands)
|
||||||||||||||||
Equities – listed
|
$
|
661,695
|
$
|
164,861
|
$
|
(18,347
|
) |
$
|
808,209
|
|||||||
Exchange traded funds
|
16,564
|
15,148
|
—
|
31,712
|
||||||||||||
$
|
678,259
|
$
|
180,009
|
$
|
(18,347
|
) |
$
|
839,921
|
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
value
|
|||||||||||||
($ in thousands)
|
||||||||||||||||
Commodities
|
$
|
65,365
|
$
|
32,141
|
$
|
—
|
$
|
97,506
|
||||||||
Private and unlisted equity securities
|
32,157
|
2,146
|
(3,124
|
)
|
31,179
|
|||||||||||
$
|
97,522
|
$
|
34,287
|
$
|
(3,124
|
)
|
$
|
128,685
|
Cost
|
Unrealized
gains
|
Unrealized
losses
|
Fair
value
|
|||||||||||||
($ in thousands)
|
||||||||||||||||
Commodities
|
$
|
96,551
|
$
|
35,915
|
$
|
—
|
$
|
132,466
|
||||||||
Private and unlisted equity securities
|
46,438
|
3,280
|
(3,161
|
)
|
46,557
|
|||||||||||
$
|
142,989
|
$
|
39,195
|
$
|
(3,161
|
)
|
$
|
179,023
|
Proceeds
|
Unrealized gains
|
Unrealized losses
|
Fair
value
|
||||||||||||
($ in thousands)
|
|||||||||||||||
Equities – listed
|
$
|
(583,078
|
)
|
$
|
98,726
|
$
|
(54,845
|
)
|
$
|
(539,197
|
)
|
||||
Corporate debt – U.S
|
(1,870
|
)
|
11
|
—
|
(1,859
|
)
|
|||||||||
Sovereign debt – Non U.S
|
(153,828
|
)
|
11,068
|
—
|
(142,760
|
)
|
|||||||||
$
|
(738,776
|
)
|
$
|
109,805
|
$
|
(54,845
|
)
|
$
|
(683,816
|
)
|
Proceeds
|
Unrealized gains
|
Unrealized losses
|
Fair
value
|
||||||||||||
($ in thousands)
|
|||||||||||||||
Equities – listed
|
$
|
(634,720
|
)
|
$
|
61,216
|
$
|
(101,960
|
)
|
$
|
(675,464
|
)
|
||||
Exchange traded funds
|
(42,380
|
)
|
—
|
(6,329
|
)
|
(48,709
|
)
|
||||||||
Corporate debt – U.S
|
(1,870
|
)
|
53
|
—
|
(1,817
|
)
|
|||||||||
$
|
(678,970
|
)
|
$
|
61,269
|
$
|
(108,289
|
)
|
$
|
(725,990
|
)
|
Financial Contracts
|
Listing
currency
|
Notional amount of
underlying instruments
|
Fair value of net assets
(obligations)
on financial
contracts
|
|||||
($ in thousands)
|
||||||||
Financial contracts receivable
|
||||||||
Interest rate options
|
USD
|
3,049,338
|
$
|
2,236
|
||||
Credit default swaps, purchased – sovereign debt
|
USD
|
32,952
|
6,160
|
|||||
Credit default swaps, purchased – corporate debt
|
USD
|
260,862
|
1,614
|
|||||
Total return swaps - equities
|
USD
|
45,458
|
5,390
|
|||||
Put Options
|
USD
|
132,966
|
6,849
|
|||||
Call Options
|
USD
|
2,714
|
280
|
|||||
Futures
|
USD
|
9,075
|
881
|
|||||
Weather derivative swap
|
USD
|
5,000
|
263
|
|||||
Total financial contracts receivable, at fair value
|
$
|
23,673
|
||||||
Financial contracts payable
|
||||||||
Credit default swaps, purchased – sovereign debt
|
USD
|
251,467
|
$
|
(2,675
|
)
|
|||
Credit default swaps, purchased – corporate debt
|
USD
|
26,029
|
(799
|
)
|
||||
Futures
|
USD
|
149,201
|
(887
|
)
|
||||
Total return swaps - equities
|
USD
|
11,795
|
(1,714
|
)
|
||||
Warrants and rights on listed equities
|
USD
|
183
|
(183
|
)
|
||||
Call options
|
USD
|
718
|
(66
|
)
|
||||
Total financial contracts payable, at fair value
|
$
|
(6,324
|
)
|
Financial Contracts
|
Listing
currency
|
Notional amount of
underlying instruments
|
Fair value of net assets
(obligations)
on financial
contracts
|
|||||
($ in thousands)
|
||||||||
Financial contracts receivable
|
||||||||
Interest rate options
|
USD
|
3,086,442
|
$
|
11,860
|
||||
Credit default swaps, purchased – sovereign debt
|
USD
|
258,299
|
10,507
|
|||||
Total return swaps - equities
|
USD
|
39,426
|
6,120
|
|||||
Put options
|
USD
|
200,315
|
13,935
|
|||||
Call options
|
USD
|
31,180
|
3,429
|
|||||
Futures
|
USD
|
28,613
|
103
|
|||||
Weather derivative swap
|
USD
|
10,000
|
214
|
|||||
Total financial contracts receivable, at fair value
|
$
|
46,168
|
||||||
Financial contracts payable
|
||||||||
Credit default swaps, purchased – sovereign debt
|
USD
|
296,903
|
$
|
(4,563
|
)
|
|||
Credit default swaps, purchased – corporate debt
|
USD
|
286,891
|
(3,496
|
)
|
||||
Credit default swaps, issued – corporate debt
|
USD
|
35,890
|
(12,037
|
)
|
||||
Total return swaps - equities
|
USD
|
33,881
|
(2,650
|
)
|
||||
Warrants and rights on listed equities
|
USD
|
427
|
(427
|
)
|
||||
Call options
|
USD
|
2,881
|
(320
|
)
|
||||
Total financial contracts payable, at fair value
|
$
|
(23,493
|
)
|
Derivatives not designated as hedging instruments
|
Location of gains and losses on derivatives recognized in income
|
Gain (loss) on derivatives recognized
in income for the years ended
December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||||
($ in thousands)
|
||||||||||||||
Interest rate options
|
Net investment income
|
$
|
(9,625
|
)
|
$
|
(11,666
|
)
|
$
|
7,793
|
|||||
Credit default swaps, purchased – corporate debt
|
Net investment income
|
1,042
|
(4,188
|
)
|
(14,922
|
)
|
||||||||
Credit default swaps, purchased – sovereign debt
|
Net investment income
|
14,957
|
9,071
|
(8,273
|
)
|
|||||||||
Total return swaps – equities
|
Net investment income
|
8,094
|
9,792
|
6,563
|
||||||||||
Credit default swaps, issued – corporate debt
|
Net investment income
|
4,785
|
7,722
|
(1,016
|
)
|
|||||||||
Currency forwards
|
Net investment income
|
(3,612
|
)
|
—
|
—
|
|||||||||
Options, warrants, and rights
|
Net investment income
|
(29,185
|
)
|
(21,676
|
)
|
(6,666
|
)
|
|||||||
Futures
|
Net investment income
|
(2,365
|
)
|
4,901
|
—
|
|||||||||
Weather derivative swap
|
Other income (expense), net
|
451
|
641
|
—
|
||||||||||
Total
|
$
|
(15,458
|
)
|
$
|
(5,403
|
)
|
$
|
(16,521
|
)
|
2011
|
2010
|
||||||||||||||
Derivatives not designated as hedging instruments
|
Entered
|
Exited
|
Entered
|
Exited
|
|||||||||||
($ in thousands)
|
|||||||||||||||
Credit default swaps
|
$
|
279,613
|
$
|
468,419
|
$
|
674,511
|
$
|
268,087
|
|||||||
Total return swaps
|
37,045
|
45,507
|
34,471
|
20,284
|
|||||||||||
Interest rate options
|
—
|
—
|
1,362,488
|
—
|
|||||||||||
Options
|
677,506
|
230,490
|
639,486
|
203,840
|
|||||||||||
Currency forwards
|
372,843
|
376,455
|
—
|
—
|
|||||||||||
Futures
|
854,155
|
718,998
|
100,224
|
72,053
|
|||||||||||
Weather derivative swap
|
5,000
|
10,000
|
10,000
|
—
|
|||||||||||
Total
|
$
|
2,226,162
|
$
|
1,849,869
|
$
|
2,821,180
|
$
|
564,264
|
2011
|
2010
|
|||||||
($ in thousands)
|
||||||||
Cash at banks
|
$
|
4,004
|
$
|
4,673
|
||||
Cash held with brokers
|
38,280
|
40,867
|
||||||
$
|
42,284
|
$
|
45,540
|
2011
|
2010
|
|||||||
($ in thousands)
|
||||||||
Cash held by prime brokers relating to securities sold, not yet purchased
|
$
|
683,999
|
$
|
726,279
|
||||
Cash collateral relating to letters of credit issued
|
256,098
|
218,737
|
||||||
Cash and cash equivalents held by swap counterparties
|
17,365
|
32,277
|
||||||
$
|
957,462
|
$
|
977,293
|
2011
|
2010
|
2009
|
||||||||||
($ in thousands)
|
||||||||||||
Gross balance at January 1
|
$
|
186,467
|
$
|
137,360
|
$
|
81,425
|
||||||
Less: Losses recoverable
|
(11,976
|
)
|
(7,270
|
)
|
(11,662
|
)
|
||||||
Net balance at January 1
|
174,491
|
130,090
|
69,763
|
|||||||||
Incurred losses related to:
|
||||||||||||
Current year
|
215,675
|
168,340
|
126,642
|
|||||||||
Prior years
|
26,015
|
8,678
|
(7,597
|
)
|
||||||||
Total incurred
|
241,690
|
177,018
|
119,045
|
|||||||||
Paid losses related to:
|
||||||||||||
Current year
|
(81,732
|
)
|
(38,571
|
)
|
(34,080
|
)
|
||||||
Prior years
|
(122,898
|
)
|
(94,027
|
)
|
(24,661
|
)
|
||||||
Total paid
|
(204,630
|
)
|
(132,598
|
)
|
(58,741
|
)
|
||||||
Foreign currency revaluation
|
(30
|
)
|
(19
|
)
|
23
|
|||||||
Net balance at December 31
|
211,521
|
174,491
|
130,090
|
|||||||||
Add: Losses recoverable
|
29,758
|
11,976
|
7,270
|
|||||||||
Gross balance at December 31
|
$
|
241,279
|
$
|
186,467
|
$
|
137,360
|
●
|
Adverse loss development of $15.7 million based on data received from the client and the Company’s reserve analysis relating to prior year commercial motor liability contracts that are in run-off. The Company received additional loss data from the client during 2011 that indicated higher than expected paid and incurred losses. During 2011, based on a review of the client’s actual loss data and a reassessment in connection with the Company’s quarterly reserve analysis, the loss reserves were increased accordingly;
|
●
|
Adverse loss development of $9.7 million, net of recoveries from related retroceded contracts, on multi-line quota share contracts based on data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis which indicated higher large loss activity on the account than originally expected;
|
●
|
Adverse loss development of $1.6 million on Florida homeowners’ contracts based on data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis;
|
●
|
Favorable loss development of $1.3 million relating to a specialty health contract based on data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis;
|
●
|
Adverse loss development of $1.0 million on a 2010 natural peril contract relating to the 2010 New Zealand earthquake. This loss development resulted from revised estimated losses expected to breach into the Company’s layer of coverage solely as a result of changes in foreign currency exchange rates for the New Zealand dollar and the Australian dollar against the U.S. dollar; and
|
●
|
Elimination of $0.6 million of reserves on a professional liability excess of loss contracts, based on data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis.
|
●
|
Adverse loss development of $15.4 million relating to prior years' motor liability contracts, as a result of higher than expected paid and incurred losses included in the data received from the client. Based on a review of the client’s actual loss data and a reassessment in connection with the Company’s quarterly reserve analysis, the loss reserves were increased accordingly.
|
●
|
Adverse loss development of $3.4 million based on data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis, relating to California wildfires on a 2007 casualty clash contract, resulting in losses being reserved at the full contract limit;
|
●
|
Adverse loss development of $0.7 million on a 2008 professional liability excess of loss contract, based on data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis;
|
●
|
Adverse loss development of $0.6 million on a 2007 quota share motor contract, based on data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis;
|
●
|
Favorable loss development of $4.1 million on a multi-year professional liability excess of loss contract, based on data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis;
|
●
|
Elimination of $1.9 million of reserves held on a medical malpractice contract commuted during 2010;
|
●
|
Favorable loss development of $1.8 million in aggregate, on two catastrophe contracts based on data received from the clients and a reassessment in connection with the Company’s quarterly reserve analysis;
|
●
|
Favorable loss development of $1.4 million in aggregate, on two 2007 professional liability excess of loss contracts, based on data received from the clients and a reassessment in connection with the Company’s quarterly reserve analysis;
|
●
|
Favorable loss development of $1.3 million in aggregate, on specialty health contracts relating to 2007 and 2008 years, based on data received from the clients and a reassessment in connection with the Company’s quarterly reserve analysis;
|
●
|
Favorable loss development of $0.6 million on a 2008 clash contract, based on loss data received from the client and the Company’s quarterly reserve analysis; and
|
●
|
Favorable loss development of $0.4 million on a 2008 multi-line frequency quota share contract, net of retrocession, based on loss data received from the client and a reassessment in connection with the Company’s quarterly reserve analysis.
|
|
●
|
Favorable loss development of $8.0 million on a 2006 Florida personal lines contract. During each quarter of 2009, the client reported favorable development of claims data resulting from lower than expected paid and incurred losses which impacted the internal reserve analysis and correspondingly caused the reserves to be reduced;
|
|
●
|
Favorable loss development of $1.5 million on a 2008 motor liability contract. The reserves on this contract were adjusted in the fourth quarter of 2009 based on data received from the client as well as the Company’s internal quarterly reserve analysis;
|
|
●
|
Favorable loss development of $0.7 million on a 2008 severity medical malpractice contract based on a reassessment in connection with the Company’s internal quarterly reserve analysis;
|
|
●
|
Favorable loss development of $0.7 million on a 2008 workers' compensation contract. The reserves on this contract were adjusted in the fourth quarter of 2009 based on data received from the client as well as a reassessment in connection with the Company’s internal quarterly reserve analysis;
|
|
●
|
Eliminating $1.0 million of reserves held on two casualty clash contracts which were commuted during the year ended December 31, 2009, without any reported losses;
|
|
|
|
●
|
Adverse loss development of $3.4 million on a 2007 casualty clash contract resulting from claims relating to California wildfires; and
|
|
|
|
●
|
Adverse loss development of $1.1 million on a 2007 health contract based on a reassessment in connection with the Company’s internal quarterly reserve analysis.
|
2011
|
2010
|
||||||
($ in thousands)
|
|||||||
Case reserves
|
$
|
103,322
|
$
|
77,330
|
|||
IBNR
|
137,957
|
109,137
|
|||||
Total
|
$
|
241,279
|
$
|
186,467
|
|
The following table is a summary of voting ordinary shares issued and outstanding:
|
2011
|
2010
|
2009
|
||||||||||||||||||||||
As of December 31,
|
Class A
|
Class B
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||||||||
Balance – beginning of year
|
30,200,835
|
6,254,949
|
30,063,893
|
6,254,949
|
29,781,736
|
6,254,949
|
||||||||||||||||||
Issue of ordinary shares, net of forfeitures
|
82,365
|
—
|
136,942
|
—
|
282,157
|
—
|
||||||||||||||||||
Repurchase of ordinary shares
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Balance – end of year
|
30,283,200
|
6,254,949
|
30,200,835
|
6,254,949
|
30,063,893
|
6,254,949
|
Number of
non-vested
restricted
shares
|
Weighted
average
grant date
fair value
|
|||||||
Balance at December 31, 2010
|
469,099
|
19.00
|
||||||
Granted
|
136,138
|
25.69
|
||||||
Vested
|
(167,058
|
)
|
19.95
|
|||||
Forfeited
|
(79,616
|
)
|
19.27
|
|||||
Balance at December 31, 2011
|
358,563
|
21.03
|
2011
|
2010
|
2009
|
|||||
Risk free rate
|
2.27
|
%
|
2.94
|
%
|
3.55
|
%
|
|
Estimated volatility
|
35.00
|
%
|
35.00
|
%
|
30.00
|
%
|
|
Expected term
|
10
|
years
|
10
|
years
|
10
|
years
|
|
Dividend yield
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
|
Forfeiture rate
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
Number of
options
|
Weighted
average
exercise
price
|
Weighted
average
grant date
fair value
|
||||||||||
Balance at December 31, 2009
|
1,281,340
|
$
|
14.24
|
$
|
6.33
|
|||||||
Granted
|
80,000
|
32.42
|
10.39
|
|||||||||
Exercised
|
(2,340
|
)
|
13.85
|
7.13
|
||||||||
Forfeited
|
—
|
—
|
—
|
|||||||||
Expired
|
—
|
—
|
—
|
|||||||||
Balance at December 31, 2010
|
1,359,000
|
$
|
15.31
|
$
|
6.57
|
|||||||
Granted
|
100,000
|
21.25
|
10.32
|
|||||||||
Exercised
|
—
|
—
|
—
|
|||||||||
Forfeited
|
(60,000
|
)
|
31.09
|
9.01
|
||||||||
Expired
|
—
|
—
|
—
|
|||||||||
Balance at December 31, 2011
|
1,399,000
|
$ |
15.06
|
$ |
6.73
|
2011
|
2010
|
2009
|
||||||||||||
($ in thousands)
|
||||||||||||||
Realized gains (losses) and change in unrealized gains and losses, net
|
$
|
57,088
|
$
|
134,280
|
|
$
|
232,410
|
|
||||||
Interest, dividend and other income
|
17,528
|
|
18,969
|
17,038
|
|
|||||||||
Interest, dividend and other expenses
|
(30,837
|
)
|
(22,939
|
)
|
(16,886
|
)
|
||||||||
Investment advisor compensation
|
(20,661
|
)
|
|
(26,304
|
)
|
(32,701
|
)
|
|||||||
Net investment income
|
$
|
23,118
|
$
|
104,006
|
$
|
199,861
|
|
2011
|
2010
|
2009
|
||||||||
($ in thousands)
|
||||||||||
Current tax expense
|
$
|
(226
|
)
|
$
|
(406
|
)
|
$
|
(20
|
)
|
|
Deferred tax (expense) benefit
|
(21
|
)
|
10
|
69
|
||||||
Income tax (expense) benefit
|
$
|
(247
|
)
|
$
|
(396
|
)
|
$
|
49
|
Facility
|
Termination Date
|
Notice period required for termination
|
||||||||
($ in thousands)
|
||||||||||
Bank of America, N.A
|
$ |
200,000
|
July 20, 2012
|
90 days prior to termination date
|
||||||
Butterfield Bank (Cayman) Limited
|
60,000
|
June 30, 2012
|
90 days prior to termination date
|
|||||||
Citibank Europe plc
|
|
400,000
|
October 11, 2012
|
120 days prior to termination date
|
||||||
JP Morgan Chase Bank N.A
|
100,000
|
January 27, 2013
|
120 days prior to termination date
|
|||||||
$
|
760,000
|
2012
|
2013
|
2014
|
2015
|
2016
|
There after
|
Total
|
||||||||||||||||||||||
($ in thousands)
|
||||||||||||||||||||||||||||
Operating lease obligations
|
$
|
372
|
$
|
372
|
$
|
372
|
$
|
372
|
$
|
312
|
$
|
415
|
$
|
2,215
|
||||||||||||||
Specialist service agreement
|
734
|
400
|
150
|
—
|
—
|
—
|
1,284
|
|||||||||||||||||||||
Private equity and limited partnerships
(1)
|
19,079
|
—
|
—
|
—
|
—
|
—
|
19,079
|
|||||||||||||||||||||
$
|
20,185
|
$
|
772
|
$
|
522
|
$
|
372
|
$
|
312
|
$
|
415
|
$
|
22,578
|
2011
|
2010
|
2009
|
|||||||||||||||
($ in thousands)
|
|||||||||||||||||
Largest broker
|
$
|
139,251
|
35.0
|
%
|
$
|
122,558
|
29.6
|
%
|
$
|
79,419
|
30.7
|
%
|
|||||
2
nd
largest broker
|
107,641
|
27.1
|
117,842
|
28.4
|
62,346
|
24.1
|
|||||||||||
3
rd
largest broker
|
50,985
|
12.8
|
87,818
|
21.2
|
60,043
|
23.2
|
|||||||||||
4 th largest broker | 49,398 | 12.4 | — | — | — | — | |||||||||||
$
|
347,275
|
87.3
|
%
|
$
|
328,218
|
79.2
|
%
|
$
|
201,808
|
78.0
|
%
|
2011
|
2010
|
2009
(1)
|
|||||||||||||
($ in thousands)
|
|||||||||||||||
Property
|
|||||||||||||||
Commercial lines
|
$
|
10,019
|
2.5
|
%
|
$
|
15,468
|
3.7
|
%
|
$
|
12,363
|
4.8
|
%
|
|||
Personal lines
|
158,482
|
39.9
|
185,216
|
44.7
|
48,183
|
18.6
|
|||||||||
Total property
|
168,501
|
42.4
|
200,684
|
48.4
|
60,546
|
23.4
|
|||||||||
Casualty
|
|||||||||||||||
General liability
|
34,379
|
8.6
|
42,979
|
10.4
|
28,273
|
10.9
|
|||||||||
Marine liability
|
360
|
0.1
|
483
|
0.1
|
—
|
—
|
|||||||||
Motor liability
|
86,937
|
21.9
|
55,278
|
13.3
|
95,335
|
36.9
|
|||||||||
Motor physical damage
|
7,026
|
1.8
|
3,712
|
0.9
|
—
|
—
|
|||||||||
Professional liability
|
20,631
|
5.2
|
8,877
|
2.1
|
4,650
|
1.8
|
|||||||||
Total Casualty
|
149,333
|
37.6
|
111,329
|
26.8
|
128,258
|
49.6
|
|||||||||
Specialty
|
|||||||||||||||
Financial
|
12,364
|
3.1
|
16,650
|
4.0
|
—
|
—
|
|||||||||
Health
|
38,640
|
9.7
|
66,649
|
16.1
|
48,955
|
18.9
|
|||||||||
Medical malpractice
|
—
|
—
|
(1,929
|
)
(2)
|
(0.5
|
)
|
1,033
|
0.4
|
|||||||
Workers’ compensation
|
28,821
|
7.2
|
21,467
|
5.2
|
20,026
|
7.7
|
|||||||||
Total Specialty
|
79,825
|
20.0
|
102,837
|
24.8
|
70,014
|
27.0
|
|||||||||
$
|
397,659
|
100.0
|
%
|
$
|
414,850
|
100.0
|
%
|
$
|
258,818
|
100.0
|
%
|
2011
|
2010
|
2009
|
|||||||||||||
($ in thousands)
|
|||||||||||||||
USA
|
$
|
353,999
|
89.0
|
%
|
$
|
374,330
|
90.2
|
%
|
$
|
233,058
|
90.0
|
%
|
|||
Worldwide
(1)
|
22,595
|
5.7
|
32,549
|
7.8
|
24,015
|
9.3
|
|||||||||
Europe
|
20,765
|
5.2
|
7,671
|
1.9
|
—
|
—
|
|||||||||
Caribbean
|
300
|
0.1
|
300
|
0.1
|
1,745
|
0.7
|
|||||||||
$
|
397,659
|
100.0
|
%
|
$
|
414,850
|
100.0
|
%
|
$
|
258,818
|
100.0
|
%
|
(1)
|
“Worldwide” is comprised of contracts that reinsure risks in more than one geographic area and do not specifically exclude the USA.
|
2011
Quarter ended
|
|||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||
($ in thousands)
|
|||||||||||||
Revenues
|
|||||||||||||
Gross premiums written
|
$
|
100,739
|
$
|
113,266
|
$
|
93,156
|
$
|
90,498
|
|||||
Gross premiums ceded
|
(3,476
|
)
|
(17,183
|
)
|
(9,308
|
)
|
(16,953
|
)
|
|||||
Net premiums written
|
97,263
|
96,083
|
83,848
|
73,545
|
|||||||||
Changes in net unearned premium reserves
|
7,894
|
11,068
|
6,500
|
3,574
|
|||||||||
Net premiums earned
|
105,157
|
107,151
|
90,348
|
77,119
|
|||||||||
Net investment income (loss)
|
(36,176
|
)
|
(19,469
|
)
|
1,070
|
77,693
|
|||||||
Other income (expense), net
|
(261
|
)
|
(86
|
)
|
184
|
416
|
|||||||
Total revenues
|
68,720
|
87,596
|
91,602
|
155,228
|
|||||||||
Expenses
|
|||||||||||||
Loss and loss adjustment expenses incurred, net
|
65,725
|
56,870
|
62,399
|
56,696
|
|||||||||
Acquisition costs, net
|
42,121
|
42,824
|
31,847
|
21,959
|
|||||||||
General and administrative expenses
|
4,999
|
4,336
|
1,532
|
3,025
|
|||||||||
Total expenses
|
112,845
|
104,030
|
95,778
|
81,680
|
|||||||||
Income (loss) from continuing operations before income tax expense
|
(44,125
|
)
|
(16,434
|
)
|
(4,176
|
)
|
73,548
|
||||||
Income tax (expense) benefit
|
(1
|
)
|
(40
|
)
|
(148
|
)
|
(58
|
)
|
|||||
Net income (loss) before non-controlling interest
|
(44,126
|
)
|
(16,474
|
)
|
(4,324
|
)
|
73,490
|
||||||
Net (income) loss attributable to non-controlling interest in joint venture
|
1,136
|
513
|
(156
|
)
|
(3,290
|
)
|
|||||||
Net income (loss)
|
$
|
(42,990
|
)
|
$
|
(15,961
|
)
|
$
|
(4,480
|
)
|
$
|
70,200
|
||
Earnings (loss) per share
|
|||||||||||||
Basic
|
$
|
(1.19
|
)
|
$
|
(0.44
|
)
|
$
|
(0.12
|
)
|
$
|
1.92
|
||
Diluted
|
(1.19
|
)
|
(0.44
|
)
|
(0.12
|
)
|
1.89
|
||||||
Weighted average number of ordinary shares used in the determination of earnings and loss per share:
|
|||||||||||||
Basic
|
36,118,963
|
36,153,743
|
36,153,743
|
36,536,976
|
|||||||||
Diluted
|
36,118,963
|
36,153,743
|
36,153,743
|
37,203,696
|
2010
Quarter ended
|
|||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||
($ in thousands)
|
|||||||||||||
Revenues
|
|||||||||||||
Gross premiums written
|
$
|
66,887
|
$
|
88,956
|
$
|
151,247
|
$
|
107,760
|
|||||
Gross premiums ceded
|
(578
|
)
|
(4,011
|
)
|
(3,639
|
)
|
(3,783
|
)
|
|||||
Net premiums written
|
66,309
|
84,945
|
147,608
|
103,977
|
|||||||||
Changes in net unearned premium reserves
|
(10,993
|
)
|
(35,544
|
)
|
(68,207
|
)
|
(394
|
)
|
|||||
Net premiums earned
|
55,316
|
49,401
|
79,401
|
103,583
|
|||||||||
Net investment income (loss)
|
(16,831
|
)
|
22,632
|
33,881
|
64,324
|
||||||||
Other income (expense), net
|
(154
|
)
|
(374
|
)
|
(474
|
)
|
(77
|
)
|
|||||
Total revenues
|
38,331
|
71,659
|
112,808
|
167,830
|
|||||||||
Expenses
|
|||||||||||||
Loss and loss adjustment expenses incurred, net
|
29,135
|
35,544
|
50,257
|
62,082
|
|||||||||
Acquisition costs, net
|
16,910
|
14,465
|
28,807
|
42,463
|
|||||||||
General and administrative expenses
|
5,147
|
3,094
|
3,392
|
4,554
|
|||||||||
Total expenses
|
51,192
|
53,103
|
82,456
|
109,099
|
|||||||||
Income (loss) from continuing operations before income tax expense
|
(12,861
|
)
|
18,556
|
30,352
|
58,731
|
||||||||
Income tax (expense) benefit
|
(9
|
)
|
(50
|
)
|
(25
|
)
|
(312
|
)
|
|||||
Net income (loss) before non-controlling interest
|
(12,870
|
)
|
18,506
|
30,327
|
58,419
|
||||||||
Net (income) loss attributable to non-controlling interest in joint venture
|
479
|
(854
|
)
|
(1,313
|
)
|
(2,052
|
)
|
||||||
Net income (loss)
|
$
|
(12,391
|
)
|
$
|
17,652
|
$
|
29,014
|
$
|
56,367
|
||||
Earnings (loss) per share
|
|||||||||||||
Basic
|
$
|
(0.34
|
)
|
$
|
0.48
|
$
|
0.80
|
$
|
1.55
|
||||
Diluted
|
(0.34
|
)
|
0.47
|
0.78
|
1.51
|
||||||||
Weighted average number of ordinary shares used in the determination of earnings and loss per share:
|
|||||||||||||
Basic
|
35,949,107
|
36,436,903
|
36,452,224
|
36,455,784
|
|||||||||
Diluted
|
35,949,107
|
37,218,783
|
37,218,906
|
37,362,378
|
Type of Investment
|
Cost
|
Fair Value
|
Balance
Sheet Value
|
|||||||||
($ in thousands)
|
||||||||||||
Debt instruments, trading, at fair value
|
$
|
11,555
|
$
|
10,639
|
$
|
10,639
|
||||||
Equity securities, trading, at fair value
|
||||||||||||
Common stocks, listed
|
827,435
|
830,789
|
830,789
|
|||||||||
Exchange traded funds
|
57,011
|
60,033
|
60,033
|
|||||||||
Total equity securities, trading, at fair value
|
884,446
|
890,822
|
890,822
|
|||||||||
Total investments, trading
|
$
|
896,001
|
$
|
901,461
|
$
|
901,461
|
||||||
Other investments, at fair value
|
||||||||||||
Private and unlisted equities securities
|
$
|
32,157
|
$
|
31,179
|
$
|
31,179
|
|
|||||
Commodities
|
65,365
|
97,506
|
97,506
|
|||||||||
Total other investments, at fair value
|
$
|
97,522
|
$
|
128,685
|
$
|
128,685
|
||||||
Total investments
|
$
|
993,523
|
$
|
1,030,146
|
$
|
1,030,146
|
December 31,
2011
|
December 31,
2010
|
|||||||
($ in thousands)
|
||||||||
Assets
|
||||||||
Cash and cash equivalents
|
$
|
25
|
$
|
25
|
||||
Investment in subsidiaries
|
789,672
|
780,712
|
||||||
Due from subsidiaries
|
14,189
|
12,666
|
||||||
Total assets
|
$
|
803,886
|
$
|
793,403
|
||||
Liabilities and shareholders’ equity
|
||||||||
Liabilities
|
||||||||
Due to subsidiaries
|
$
|
783
|
$
|
—
|
||||
Total liabilities
|
783
|
—
|
||||||
Shareholders’ equity
|
||||||||
Share capital
|
3,654
|
3,646
|
||||||
Additional paid-in capital
|
488,478
|
485,555
|
||||||
Retained earnings
|
310,971
|
304,202
|
||||||
Total shareholders’ equity
|
803,103
|
793,403
|
||||||
Total liabilities and shareholders’ equity
|
$
|
803,886
|
$
|
793,403
|
Year ended December 31
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
($ in thousands)
|
||||||||||||
Revenue
|
||||||||||||
Investment income (loss)
|
$
|
740
|
$
|
56,407
|
$
|
(42
|
)
|
|||||
Other income, net
|
—
|
—
|
1,800
|
|||||||||
Total revenues
|
740
|
56,407
|
1,758
|
|||||||||
Expenses
|
||||||||||||
General and administrative expenses
|
2,884
|
4,088
|
3,432
|
|||||||||
Net income (loss) before equity in earnings (loss) of consolidated subsidiaries
|
(2,144
|
)
|
52,319
|
(1,674
|
)
|
|||||||
Equity in earnings of consolidated subsidiaries
|
8,913
|
38,323
|
211,219
|
|||||||||
Consolidated net income
|
$
|
6,769
|
$
|
90,642
|
$
|
209,545
|
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
($ in thousands)
|
||||||||||||
Cash provided by (used in)
|
||||||||||||
Operating activities
|
||||||||||||
Net income
|
$
|
6,769
|
$
|
90,642
|
$
|
209,545
|
||||||
Adjustments to reconcile net income (loss) to cash provided by operating activities
|
||||||||||||
Equity in earnings of consolidated subsidiaries
|
(8,913
|
)
|
(38,323
|
)
|
(211,219
|
)
|
||||||
Share-based compensation expense
|
2,876
|
4,088
|
3,410
|
|||||||||
Change in
|
||||||||||||
Due from subsidiaries
|
(1,523
|
)
|
(53
|
)
|
(12,613
|
)
|
||||||
Due to subsidiaries
|
783
|
(16,536
|
)
|
13,711
|
||||||||
Total operating activities
|
(8
|
)
|
39,818
|
2,834
|
||||||||
Investing activity
|
||||||||||||
Contributed surplus to subsidiaries, net
|
—
|
(40,000
|
)
|
(3,000
|
)
|
|||||||
Financing activities
|
||||||||||||
Issue of Class A ordinary shares, net of forfeitures
|
8
|
—
|
28
|
|||||||||
Net proceeds from exercise of stock options
|
—
|
32
|
716
|
|||||||||
Options repurchased
|
—
|
—
|
(440
|
)
|
||||||||
Total financing activities
|
8
|
32
|
304
|
|||||||||
Net (decrease) increase in cash and cash equivalents
|
—
|
(150
|
)
|
138
|
||||||||
Cash and cash equivalents at beginning of the year
|
25
|
175
|
37
|
|||||||||
Cash and cash equivalents at end of the year
|
$
|
25
|
$
|
25
|
$
|
175
|
Year and Segment
|
Deferred
acquisition
costs, net
|
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
|
|||||||||||||||||||
2011 Property & Casualty
|
$
|
68,725
|
$
|
241,279
|
$
|
225,735
|
$
|
379,775
|
$
|
23,118
|
$
|
241,690
|
$
|
138,751
|
$
|
13,892
|
$
|
379,659
|
||||||||||
2010 Property & Casualty
|
$
|
87,389
|
$
|
186,467
|
$
|
234,983
|
$
|
287,701
|
$
|
104,006
|
$
|
177,018
|
$
|
102,645
|
$
|
16,187
|
$
|
414,850
|
||||||||||
2009 Property & Casualty
|
$
|
34,401
|
$
|
137,360
|
$
|
118,899
|
$
|
214,680
|
$
|
199,861
|
$
|
119,045
|
$
|
69,232
|
$
|
18,994
|
$
|
258,818
|
Year and Segment
|
Direct gross
premiums
|
Premiums
ceded to
other companies
|
Premiums
assumed from
other companies
|
Net amount
|
Percentage of
amount
assumed to net
|
|||||||||||||||
2011 Property & Casualty
|
$
|
—
|
$
|
46,920
|
$
|
397,659
|
$
|
350,739
|
113
|
%
|
||||||||||
2010 Property & Casualty
|
$
|
—
|
$
|
12,011
|
$
|
414,850
|
$
|
402,839
|
103
|
%
|
||||||||||
2009 Property & Casualty
|
$
|
—
|
$
|
13,276
|
$
|
258,818
|
$
|
245,542
|
105
|
%
|
·
|
Start Date
: November 1, 2006, subject to Immigration Approval
|
·
|
Place of Employment
: The Company’s offices located in The Grand Pavilion, 802 West Bay Road, Grand Cayman Island, B.W.I.
|
·
|
Job Description
: See attached Schedule A
|
·
|
Employment Status:
Employee at will. Your employment may be terminated by the Company for any reason upon 90 days written notice and may be terminated immediately by the Company for cause, which shall include, without limitation, your violation of the Company’s Code of Conduct, the Tax Operating Guidelines or any other Operating Guidelines or the revocation of your Cayman Work permit as a result of any action or inaction taken by you.
|
·
|
Work Hours
: The standard work hours are 8:30 a.m. to 6:00 p.m., Monday through Friday. As a professional employee you will be expected to work overtime without any additional remuneration. Cayman does not observe Daylight Savings Time, so the Company may switch the normal hours of operation to 7:30 a.m. to 5:00 p.m. during the summer months.
|
·
|
Holidays
: The Company will observe a mixture of Caymanian and US holidays totaling at least 10 days each year.
|
·
|
Travel and Expenses
: You will be required to travel as necessary to perform your job duties. The Company will reimburse you for reasonable and customary expenses incurred during the course of business travel upon presentation of expense statements or vouchers or such other information as the Company may reasonably require in accordance with Company policies.
|
·
|
Vacation
: You will be entitled to 20 days of vacation leave per year. Scheduling of vacation time will be subject to prior approval. Vacation time does not rollover without prior approval of the President.
|
·
|
Sick days
: You will be entitled to 10 sick days per year for actual illness. If you are absent from work for more than three consecutive days, you will be required to produce a doctor’s note.
|
·
|
Benefits
: You will be entitled to participate in such employee benefit plans and insurance programs offered by the Company, or which it may adopt from time to time, for its employees, in accordance with the eligibility requirements for participation therein and applicable law.
|
·
|
Remuneration
:
|
o
|
Base Salary:
Annual Base Salary of $180,000.00, which will be paid monthly on or about the 23
rd
of each month to a local Caymanian bank account in $US. Salary reviews will take place annually in February of the year following performance and such changes in salary, if any, will be instituted in March of the year following performance effective as of January 1 of the year following performance. For sake of clarity, the performance year of 2006 will be reviewed in February of 2007, with changes, if any, instituted in March 2007 effective as of January 1, 2007.
|
o
|
Living Allowance:
An annual living allowance of $60,000.00, will be paid monthly in addition to your base salary.
|
o
|
Bonus:
Your annual target bonus is 35% of base salary. The bonus, if any, will be evaluated annually in February of the following year, with bonuses declared shortly thereafter and paid in accordance with the Company’s approved compensation plan. Bonus awards will be based on the Company’s performance in relation to targets established by the Board of Directors annually and your individual performance in relation to your assigned duties. You will not be eligible to participate in the 2006 performance year bonus pool. Your bonus for the 2007 performance year will be guaranteed at 35% of base salary, or higher.
|
o
|
Options:
In connection with your accepting the position offered hereby, the Company will recommend to the Board that you will be awarded 35,000 options to purchase Class A Ordinary shares of the Company’s ordinary stock at a strike price equal to the fair market value of the shares on the date the options are granted, as determined by the Company. The options shall be evidenced by, and subject to, the terms and conditions of the Greenlight Capital Re, Ltd. 2004 Stock Incentive Plan and such other terms and conditions as are set forth in your individual option agreement.
|
o
|
Long-term Incentive Plan:
You will be eligible for further option grants as well as grants of restricted shares, from time to time, subject to the approval of the Board. Vesting of options or restricted shares grants and other terms and conditions of any such awards will be specified in your award agreement(s), if any.
|
o
|
Pension:
The Company has established a Pension plan in compliance with the Cayman Pension Act. The will deposit CI$6,000.00 (roughly $7,200.00) into your pension account annually. The pension amounts vest 100% after two years of continuous employment with the Company.
|
o
|
Sign-On Bonus
: A sign-on bonus of $75,000 will be paid to you at the earlier of March 15, 2007, or closing date for the purchase of a house. If you voluntarily terminate your employment prior to 36 months after your commencement of employment, you will be required to re-pay a pro-rata portion of the Sign-On Bonus.
|
·
|
Tax Advice
: For US and Canadian citizens filing tax returns, the Company has arranged with KPMG to have Federal Tax returns prepared at the Company’s expense.
|
·
|
Work Permit
: As a non-Caymanian, the Company will be required to obtain a work permit for you from the Caymanian Immigration authorities prior to your employment by the Company. This offer is predicated on the work permit being acquired and becomes null and void if the Company is unable to obtain the work permit from the said Immigration authorities.
|
·
|
Relocation Expense Allowance
: The Company will pay you a one time moving expense allowance of $25,000.00, to be used as you see fit. The Company will not be obligated to pay relocation costs in excess of this amount. If you voluntarily terminate your employment prior to 36 months after your commencement of employment, you will be required to re-pay a pro-rata portion of the Relocation Expense Allowance. For the sake of clarity, if you elect to terminate your employment with the Company after 24 months from the commencement of your employment, you will be required to repay 33% of the initial Relocation Expense Allowance.
|
·
|
Notice
: You may terminate your employment with the Company upon 90 days written notice. Upon your voluntary termination and satisfaction of the 90 day notice period, you will be paid any accrued but unpaid base salary and any unused vacation time. If you do not satisfy the 90 day notice period, all unused vacation time shall be forfeited.
|
·
|
Contingencies
: Your employment will be contingent upon compliance with the Code of Conduct (to be promulgated by the Company), the Tax Operating Guidelines, and any other Operating Guidelines promulgated by the Company.
|
·
|
Representation
: You represent and warrant to the Company, and you acknowledge that the Company has relied on such representation in offering employment to you, that the performance of your duties to the Company hereunder will not violate the terms of any agreement with any third party.
|
·
|
Restrictive Covenants
: Your employment is contingent upon your execution of our Non-competition, Non-solicitation, Intellectual Property and Confidentiality agreement.
|
1.
|
Amendment to Facility Letter
.
|
(a)
|
Effective as of the date of this Amendment, the reference to “US$100,000,000” in the definition of “Commitment” in the first paragraph of the Facility Letter is hereby replaced with “$200,000,000.”
|
2.
|
Amendment to Hypothecation Agreement
.
|
(a)
|
Effective as of the date of this Amendment, the reference to “$100,000,000” in the introductory paragraph of the Hypothecation Agreement is hereby replaced with “$200,000,000.”
|
(b)
|
Effective as of the date of this Amendment, the reference to “$100,000,000” in clause (g) of Section III of the Hypothecation Agreement is hereby replaced with “$200,000,000.”
|
3.
|
Miscellaneous
.
|
(a)
|
Effective as of the date of this Amendment, all references in the Facility Letter, Hypothecation Agreement or any documents executed in connection therewith to either the Facility Letter or the Hypothecation Agreement shall mean the Facility Letter or the Hypothecation Agreement, as applicable, as amended by this Amendment.
|
(b)
|
Except as otherwise set forth expressly herein, the terms of the Facility Letter and the Hypothecation Agreement shall remain unchanged and GRL and GRIL hereby ratify and confirm all provisions thereof, as amended by this Amendment.
|
(c)
|
This Amendment shall be governed by, and construed and interpreted in accordance with the laws of the State of New York.
|
(d)
|
This Amendment may be executed in any number of counterparts with the same effect as if all signatories had signed the same document, and all of such counterparts shall be construed together to constitute the same document.
|
(e)
|
This Amendment represents the final agreement between the parties with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties
.
|
(a)
|
in Section 1, the “Commitment” is increased from $50,000,0000 to $100,000,000; and
|
(b)
|
in Section 8(i), the minimum statutory surplus is amended from being at least equal to U.S. $430,000,000 to $500,000,000.
|
|
By:
/s/ Melvin D. Jackson
|
|
Name: Melvin D. Jackson
|
|
Title: Vice President
|
Year Ended December 31, 2011
(2)
|
Year Ended December 31, 2010
(2)
|
||
Ratio of Earnings to Fixed Charges
(1)
|
1.43
|
9.38
|
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 Rules 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 21, 2012
|
/s/ Barton Hedges
|
|
Name: Barton Hedges
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 Rules 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 21, 2012
|
/s/ Tim Courtis
|
|
Name: Tim Courtis
Chief Financial Officer
|
Date: February 21, 2012
|
/s/ Barton Hedges
|
|
Name: Barton Hedges
Title: Chief Executive Officer
|
Date: February 21, 2012
|
/s/ Tim Courtis
|
|
Name: Tim Courtis
Title: Chief Financial Officer
|