David Einhorn - Chairman Simon Burton - CEO Tim Courtis - CFO Brendan Barry - Chief Underwriting Officer Mike Belfatti - COO.

Bob Glasspiegel - Janney Montgomery Scott.

Thank you for joining the Greenlight Re Conference Call for Third Quarter 2017 Earnings. Joining us on the call this morning are David Einhorn, Chairman; Simon Burton, Chief Executive Officer; Tim Courtis, Chief Financial Officer; Brendan Barry, Chief Underwriting Officer; and Mike Belfatti, Chief Operating Officer.

All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. Please note this even is being recorded.

The company reminds you that forward-looking statements that may be made in this call are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are not statements of historical fact, but rather reflect the company's current expectations, estimates and predictions about future results and events and are subject to risks, uncertainties and assumptions, including those enumerated in the company's Form 10-K dated February 22, 2017, and other documents filed by the company with the SEC.

If one or more risks or uncertainties materialize or if the company's underlying assumptions prove to be incorrect, actual results may vary materially from what the company projects. The company undertakes no obligation to update publicly or revise any forward-looking statements whether as a result of new information, future events or otherwise.

I would now like to turn the conference over to Greenlight Re’s CEO, Simon Burton. Please go ahead, sir..

Good morning and thank you for joining us today. I’m joined by my colleagues, David, Tim and Brendan, along with Mike Belfatti, who joined the team in August as Chief Operating Officer. Mike’s responsibilities include oversight of our quantitative and data efforts, as well as risk management and reserving.

He brings deep expertise in these areas and has significantly strengthened our executive team.

The financial highlights for the third quarter of 2017 include, net income of $19.9 million or $0.53 per share; net investment income of $64 million, an underwriting loss before general and administrative expenses of $34.2 million, which includes net losses of $37.9 million or approximately 4% of fully valued and adjusted book value resulting from third quarter catastrophes including hurricanes Harvey, Irma and Mariah and the Mexican earthquakes.

Our results were affected by an increase of ultimate losses related to prior accident years of $12.7 million. These increases were in response to reported claim experienced on several contracts in our specialty health, auto and other casualty classes.

We continue analyze closely our reserves to understand emerging claim trends and improve the shape of the portfolio. Overall, our fully diluted adjusted book value per share increased by 2.4% during the quarter to $23.18.

During the third quarter, Green Light reported strong premium growth acceptable underwriting results ex cat and a favorable investment returns that led to a possible quarterly result. The dominant third quarter theme for us and the industry was a natural catastrophe events and the impacts on our underwriting results.

I believe these events have caused significant loss of life and hardship and our thoughts go out to all those affected. Total insured losses are as usual not borne evenly across our industry, with a significant portion either unreported or under the shade of private risk bearing mechanisms.

There will be a market response as we approach renewals, but the degree may depend on the ability of cat funds and high cost to replace income to capital.

We should be prepared for the scenario that rates improvements are muted by large capital injections and so far we see no sign of improved pricing and other classes of business, but continue to monitor the changing markets.

As we better understand the sources of price tension, we are positioned to deploy our capacity efficiently, with regard first to our long standing clients and an open mind to both and inwards and outwards [re-positional] opportunities.

Our overall appetite to catastrophe risk as a proportionate surplus will not materially increase in to 2018 based on our reviews of the likely margin expansion.

As we discussed last quarter, there is a critical balance of both leveraging our long term client relationships with exploring opportunities in the subscription markets in London, Bermuda and the US.

Our portfolio is relatively diverse, but we are exploring options to reshape our exposure to the non-standard auto market, which is an area of concentration for us. Our objective is to use reposition as a tool to manage our net exposure while maintaining our close client relationships and prominent market role in the class.

I’m pleased to report that we have concluded a transaction with one partner so far and continue to look at others. As we move in to the busy January 1, renewal season, we are continuing to build on the next phase of Greenlight Re transformation establishing broader market presence and constructing an increasingly balanced portfolio.

Now I’d like to turn the call over to our Chairman, David Einhorn to discuss our investment results and the progress in our overall strategy. .

Thanks Simon and good morning everyone. Happy Halloween. The Greenlight Re investment portfolio is up 5.5% in the third quarter; our long has contributed 9.1% and our short detracted 2.9%. The biggest winners in the quarter were CONSOL Energy, General Motors and Uniper; our largest detractors were Caterpillar short position and Mylan.

CONSOL recovered its loss from the prior quarter, as the market focused on the upcoming separation between CONSOL’s coal and natural gas businesses. Once the two businesses are separated, we believe the market rerate to natural gas pure play with a focus on CONSOL’s vast and valuable assets.

GM advanced 16% during the quarter, as the company continued to post strong operating results, close the sale of its money-losing European business and showed progress in its Auto 2.0 position, which includes investments in electric vehicles, autonomous driving and lift.

We are encouraged by the steps management took to improve its cost of capita as GM continued a significant stock buyback and completed a $1 billion perpetual preferred stock offering.

Uniper shares were 41% on rumors that Uniper was a buy-out target, and at the end of the quarter Finnish utility, Fortum announced an agreement to purchase E.ON’s 47% stake in Uniper at 22 euros per share. Management rebuffed the bid as it was materially below its estimate of fair value.

The company continues to execute and in August Uniper announced strong earnings, rates at the low end of its earnings guidance for next year and dividends guidance from 15% growth to 25% growth. On the other hand, Caterpillar shares rose 16% in the third quarter, as the company raised earnings guidance.

This was the company’s second straight beat and raise, which has led analyst to conclude that Caterpillar is entering a new up cycle. Caterpillar traded at 26 times the shares earnings implying investors to believe that it’s still well below mid-cycle earnings.

We believe the biggest drivers of Caterpillar’s business are mining, which is played by over-capacity from the China led deal super-cycle; the energy sector, where oversupply is leading slower investment in construction where are already half way near the cyclical peak.

We see short term inventory builds and double ordering influencing recent results, and we believe the company is poised for a significant disappointment next year. Mylan fell 19% during the quarter, as delays in new drug approvals and accelerated price deflation for generic drugs weighed on the stock and led management to reduce guidance.

This month the FDA approved a few of Mylan’s products including a generic form of Copaxone. Mylan landed the first approval with potential exclusivity for generic Copaxone and as a result the stock has retraced its entire third quarter decline. Lastly, Greenlight Capita led to her to its hedge fund clients discussing its quarterly performance.

While most understood the rhetorical argument the letter made on value investing, some misconstrued the letter as an abandonment of value investing as a strategy, nothing could be further from the truth.

We have been challenged last few years as value investing has made headwinds, however we believe this simply a cyclical phenomenon and do not plan to change our strategy. I just spent several days in the Cayman Islands for a Board meeting, and the team is energized under its new leadership.

In a very short time, Simon and Mike have made tremendous impact and we’re excited to see the progress in the upcoming year. Despite the unfortunate headwinds from the natural catastrophe events during the quarter, we’ve shown the benefits of our dual engine strategy. Now I would like to turn the call over to Tim to discuss the financial results. .

Thanks David. I’ll briefly go through the financial results, starting with the third quarter where Greenlight Re reported net income of $19.9 million, compared to net income of $30 million for the comparable three month period in 2016.

Fully diluted net income per share was $0.53 for the third quarter of 2017, compared to net income per share of $0.80 in the prior year period.

Gross premiums written during the third quarter were only slightly higher than those written during the second quarter, both of which were significantly higher than prior year periods due to increased premium written on non-standard automobile business and a new home-owners property quota share contract that incepted during the fourth quarter of 2016.

As Simon indicated, our gross premium ceded increased during the third quarter, and we ceded off a portion of our non-standard automobile business which we expect will continue in subsequent quarters.

Composite ratio for the third quarter of 2017 was 119.8% included there in was $37.9 million of estimated third quarter catastrophe losses, which included losses from hurricanes Harvey, Irma and Mariah and the Mexican earthquakes. These cat losses added 21.9 points to the third quarter composite ratio.

We reported net investment income of $64 million during the third quarter of 2017, reflecting a net gain of 5.5% on our investment portfolio. Moving to the year-to-date results, for the nine months ended September 30, 2017, we reported net loss of $7.2 million, compared to a net loss of $4.3 million for the first nine months of 2016.

Net loss per share was $0.20 for the nine months ended September 30, ’17, compared to a net loss of $0.12 per share for the same period in 2016. Gross premiums written were $553.7 million for the nine months ended, September 30, 2017, an increase of approximately 43% from gross premiums written of $387.2 million during the first nine months of 2016.

Similar to our quarterly results, increase in premiums written is attributable to our non-centered automobile and homeowners property quota share contracts. Our net earned premiums for the first nine months of 2017 increased by approximately 29% to $484.9 million from the prior year period, primarily due to our higher premium writing.

For the first nine months of 2017, our composite ratio was 104.4% catastrophe losses adding 7.9 points. Total general and administrative expenses incurred during the first nine months of 2017 increased to $21.3 million, compared to $18.9 million incurred during the prior year period.

Underwriting expenses of $12.3 million for the first nine months of 2017 were in line with prior year underwriting expenses of $12.9 million. The underwriting expense ratio for the first nine months of 2017 was 2.6%, resulting in a combined ratio of 107% for the year-to-date.

Combined ratio for the first nine months of the year before the effects of the catastrophe losses was 99.2%. Corporate expenses of $9 million for the first nine months of 2017 compared to $6 million reported during the same period in 2016.

The increase in corporate expenses in the current year includes $2.2 million of non-reoccurring expenses primarily relating to consulting and professional fees incurred. For the first nine months of 2017, we reported net investment income of $36.4 million, reflecting a net investment gain of 2.9%. September 28 A.M.

Best affirms the financial strength rating of A minus (Excellent) for both Greenlight operating entities. The outlook for these credit ratings remained stable. Fully diluted adjusted book value per share as of September 30, 2017 was $23.18, a 5.2% increase from $22.04 per share reported at September 30, 2016.

Now I’ll turn the call back to Simon to provide some concluding remarks. .

Thanks Tim. As my tenure here at Greenlight is now four months long, I wanted to take the opportunity to update you on where we are headed in the coming months and years. As this quarters’ results underscores, the two engines of potentially compelling earnings comprise of power business model.

The company is able to seek returns from both sides of the balance sheet in a highly disciplined manner and this will remain a core of our strategy. In my observation over the past months however, it is clear that we have only scratched the surface of the strategic potential, and we are now well underway in taking steps to realize that potential.

The core strength we have and will vigorously protect is an operational footprint that does not contain this broad and over investment that many companies in our industry are dealing with.

As we continue to face rapidly shifting industry changes in the areas of distribution, technology, capital sources and many others, a small company like ours can response to new opportunities, scale only judiciously and maintain an industry leading expense ratio.

We continue to expect that advances in the efficiency with which business is placed will play directly to our strength and we have taken steps to be an adopter of those efforts. We are already seeing significant progress in the range and depth of our pipeline, supported by clear indications to customers and brokers regarding our appetite for risk.

Our future success will be built upon differentiated expertise. As a smaller firm, we believe that obtaining access to industry-leading knowledge via partnership, hiring or acquisition will be central to our success.

Part of this will be leadership in analytics and data, but equally we will access the best of main expertise to understand hazards fully and underwrite them wisely.

In my first four months, we have already embarked on numerous dialogues to discuss partnerships and the delivery of expertise and we expect to have more to say on this in the coming quarters.

The industry structure for distribution, underwriting and risk bearing will remain influx for the foreseeable future, and we will look to create value for our counter parties on numerous parts of the chain, as the auto example I discussed earlier with [strings], we plan to be able to use expertise to access and acquire business while managing net appetite in a flexible way.

Combined with the asset written engine, becoming technologically advanced and remaining operationally lean should create a compelling strategic position and a bright future for the company. With that we’ll take questions. .

[Operator Instructions] And your first question this morning will come from Bob Glasspiegel of Janney. Please go ahead..

Simon, I got a couple of questions for you and one for David. Starting with you, your retro commentary seems to suggest that you think there’s going to be an impact but not enough for you to commit much more capital.

Was that a correct characterization, so you’re just going to rise whatever rate increases happen and not write more business?.

Yes, Bob that’s accurate. Our view is that rates will have to move significantly considerably further than we are expecting to see to consider committing more capital to the back half of the business. We’re not at all a cat company, we do assume some cats, it is fairly moderate compared to our peers.

We have some concerns about the way the industry transacts cats and some of the fundamental arithmetic that supports that. And we’ve seen many years of rate reductions now. But I don’t expect we’ll be completely reversed without the coming renewals. So that’s our assessment. .

So sort of 5% to 10% rate increases, but you need 30, 40, 50 or is that a rough quarter magnitude?.

Well we’re not predicting a particular increase, but there will of course be some movement. But I’m an old fashioned guy Bob, I believe in the fundamentals of demand and supply, and so far there doesn’t seem to be as much tension as perhaps the industry hopes on either demand or supply side of the equation.

So, I think we’re a little bit more bearish than many of our peers, let’s leave it at that..

Simon what is your general philosophy on reserving. I see in the quarter there was a property of lot of launch that was touched with reserve increases not huge but more than the prior run rate.

Was there a review in the quarter that triggered this? And more specifically are you the type of CEO that likes to avoid negative surprises in reserving and wants to get out a head of it, so that any future reserve increases would annoy you or are you more the type of a, look each quarter as it happens and we’ll let the results drive quarterly reserving methodology..

It’s a good question. So I’ll help Mike jump in a moment. To the second part on what sort of personality I am Bob, look we strife to get the right answer at all times on reserving and that’s really the outcome that will satisfy me. From time-to-time we’ll see developments positive and negative that’s my view.

But let me take it over to Mike for a more detailed answer to that. .

Bob, our process for this quarter was unchanged from prior quarters. We look at all our accounts every quarter and build it up very much in detail. So that’s a little bit of a process note. In terms of the target, if you will, as Simon said, we’re aiming to get the right estimate of the cost of our contracts.

We’re focused on the fact of reserving feeds in to pricing and pricing feeds in to reserving. So it’s both a requirement obviously under financial reporting to try to get the best estimate and to not overshoot and undershoot.

And it’s also a business and strategic imperative in terms of figuring out what you want to write and figuring out where to grow in strength. So that’s the philosophy. We probably want to have more balanced reserve errors than probably some of our peers as you well know, but we are aiming for best estimate. .

David, one for you, any comment on how October has been, we’ll get it to know that.

But market up a little bit, were you able to keep up and more significantly how do you have the portfolio positioned relative to tax rate cuts, would you benefit, be hurt or take no position and have no idea of how it works through?.

Yeah, October started off relatively strong for us. But the last few days have been very challenging and I don’t expect a result that is materially different from zero for the month at this point. We’ll see what happens today.

Relating to taxes, we fundamentally believe that most of our longs are profitable and needs to pay taxes, and a good number of our shorts do not. So we would imagine that a lower tax rate should have a disproportionate positive effect on the long side of our book. .

But you haven’t taken a tactical position on whether it will happen or not. .

I personally believe that it’s more likely to happen. And my belief has been for a long time that tax reform is much more likely to happen than healthcare ever was..

[Operator Instructions] And I’m showing no additional questions. We will conclude the question-and-answer session. Should you have any follow-up question, please direct them to Adam Prior of The Equity Group on 212-836-9606, and he will be happy to assist you.

We also remind you that a replay of this call and other pertinent information about Greenlight Re is available on our website at www.greenlightre.ky. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines. And once again the conference has concluded, you may disconnect your lines..