Greenlight Re Posts Fourth-Straight Loss on Einhorn Slump

  • 2015 was challenging year for value investors, chairman says
  • Insurance underwriting improved from year-earlier period

Greenlight Capital Re Ltd. posted its fourth-straight quarterly loss, capping the reinsurer’s worst year since its 2007 initial public offering, as Chairman David Einhorn’s investments faltered.

The net loss for the three months ended Dec. 31 was $43.1 million, or $1.17 a share, and compares with profit of $60.7 million, or $1.60 a year earlier, the Cayman Islands-based company said in a statement Monday. For the full year, the net loss was $326.4 million.

Investors who bet on hedge fund-reinsurance ventures have been burned lately as famous money managers failed to match their investing results from prior years, and underwriting margins were pressured industrywide by increased competition. Greenlight Re has dropped 38 percent since the end of 2014 and Dan Loeb’s Third Point Reinsurance Ltd. slumped 22 percent. Validus Holdings Ltd. said last month that it shut a reinsurance venture backed by John Paulson’s hedge fund firm.

“It was a challenging investment environment for value investors,” Einhorn said of 2015 in the statement. “We continue to believe the company is well positioned to grow book value per share from both underwriting and investment activities over the long term.”

Greenlight Re posted an investing loss of $281.9 million for 2015 compared with income of $122.6 million the year earlier. Einhorn’s main Greenlight Capital hedge fund lost 20 percent in 2015, only the second losing year in its almost 20-year history. The money manager was hurt by declines in holdings such as SunEdison Inc., Micron Technology Inc. and Consol Energy Inc. Apple Inc., which had been a top performer in the past, fell in 2015 and extended its slump this year.

Reinsurers take on risks from primary carriers and can reinvest funds that are held to back obligations to policyholders. As more pension and hedge funds pushed into reinsurance, seeking bets that are uncorrelated with bond markets, it became hard to find profitable contracts. Insurance underwriting generated a profit of $6.8 million in the fourth quarter, compared with a loss of $4.6 million a year earlier.

Book value, a measure of assets minus liabilities, was $22.17 per share as of Dec. 31, down from $23.29 as of Sept. 30. The stock closed Monday at $20.14, compared with the IPO price of $19 in 2007.

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