Greenlight Re Posts $219M Loss as Reinsurer Grapples With Poor Investment Performance

Oct 23 2015 | 6:58pm ET

If David Einhorn’s Greenlight Capital Re’s quarterly results are any guide, the offshore reinsurance operations set up to funnel fresh capital to hedge fund managers have not escaped the market’s recent volatility. 

Greenlight Re released third-quarter results after the bell on Friday, revealing a net loss of $219.7 million, or $5.98 per share, marking the firm’s third consecutive unprofitable quarter. In last year’s comparable quarter, the company lost $51 million. 

Breaking the results down, investment losses for the period totaled $191.3 million as a number of Einhorn’s positions were hammered, including Consol Energy, SunEdison, Micron Technology and even Apple. “Our investment portfolio was adversely affected by declining prices in three of our largest investments,” said Einhorn in a statement. Underwriting losses, meanwhile, accounting for $27.6 million during the period. 

For the nine months through September 30, Greenlight Re’s net loss has reached $283.3 million. Also on Friday, rating company A.M. Best cut the reinsurer’s outlook from stable to negative. 

A number of hedge fund managers have created offshore reinsurance vehicles as a way to lower taxes and provide a source of investment capital less susceptible to redemptions. In Greenlight’s case, the reinsurer is public and considered by investors as a way to play the investment portfolio of Einhorn’s flagship hedge fund without needing to meet the high minimums and lockup periods.

However, Greenlight Re’s share price has fallen more than 24% so far this year, more than the 18% year to date losses in the hedge fund itself.

Other well-known hedge fund managers that have pursued reinsurance operations include Dan Loeb’s Third Point and John Paulson’s Paulson & Co


In Depth

Q&A: Commodities 2.0 with Argon Capital Management

Oct 27 2015 | 12:57pm ET

Commodity markets have been under significant pressure this year from a perfect...

Lifestyle

Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

The Role of Investors in the Hedge Fund Service Model

Oct 23 2015 | 5:00pm ET

Investors have been at the forefront of the evolution in hedge fund administration...

 

Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…