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Greenlight Re underwriting loss jumps to $13mn after $26mn cat hit

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The underwriting loss at hedge fund reinsurer Greenlight Re widened to $13mn in the third quarter, with the streak of consecutive profitable underwriting quarters halted after the company took $26mn in catastrophe losses in the third quarter.

The Cayman Islands-based reinsurer said on Wednesday it recorded a $0.42 net loss per share, a setback after generating a $0.06 per share profit a year ago. The overall net loss in the quarter stood at $14mn, compared with the $2mn profit last year.

The company was hurt primarily by the catastrophe losses, which came from Hurricane Ida, the European floods and hailstorms, and the South African riots.

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Net investment income totaled $10mn, despite a negative 2.7% return on its investment portfolio, managed by Greenlight chairman David Einhorn's DME Advisors.

Gross premiums written fell by 5% to $129mn, as the company scaled back on motor and workers’ compensation contracts. That pullback was offset by increased writings of Lloyd’s and financial lines business.

Simon Burton, Greenlight’s CEO, said: “The high level of catastrophes in the quarter led to an underwriting loss with a combined ratio of 109.3%. Adjusted for this impact, the underlying combined ratio for the quarter was 90.3% which is a significant improvement compared to 93.6% a year ago.”

“The underwriting loss was partly offset by a positive investment return led by our Innovations unit, which continues to deliver both strategic and economic value,” he added.

Einhorn said: “The third quarter results do not reflect the significant progress we have made this year. With our revamped underwriting, reaffirmation of our rating, progress on Innovations and new board members, we are excited about our near-term prospects.”

In August, ratings agency AM Best upgraded its outlook on the company to "stable" from "negative", a view AM Best held on the company for two years.

Greenlight also added three new members to its board of directors in August.

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