Greenlight Capital Re, Ltd. (GLRE) Earnings

Management highlights

### Overall Financial Result * Greenlight Re reported a net loss of $29.6 million ($0.89 per diluted share) for Q2 2026, driven primarily by investment losses from the Solus Glass portfolio and a marginal $0.2 million overall underwriting loss. The combined ratio for the quarter was 100.1%, including 17.1 percentage points from catastrophe and large losses. * The majority of Q2 2026 investment losses reversed in July, bringing the year-to-date 2026 return for Solus Glass to 6.1% as of the end of July. ### Underwriting Reserving & Exposure Management * The quarter included $20 million in additional reserves for losses related to the ongoing Middle East conflict (bringing total reserves to $25 million as of Q2 end), plus a $6.5 million reserve for a non-war related oil and gas facility fire in Qatar. * Reserving for the Middle East conflict carries high uncertainty due to limited information on incurred losses. Management is actively reducing net exposure in the region via non-renewal of multiple accounts, and no major Q3 2026 losses had been identified as of the call. * Excluding catastrophe and large losses, underwriting performance was solid: the attritional loss ratio improved 4.3 percentage points year-over-year to 51.7%, and prior year reserve development improved to 0.4% from 1.9% in Q2 2025, driven mostly by reserve releases for 2025 California wildfires. ### Investment Portfolio Performance (Solus Glass Fund) * The Solus Glass Fund returned -5.4% in Q2 2026: long positions contributed +12%, while short positions detracted 12.3% and macro positions detracted 5.4%, against a 15.2% gain in the S&P 500. * Top long performers were Centene, Greenbrick Partners, and Penn Entertainment, which all posted double-digit to triple-digit share gains in the quarter. The largest detractors were a short basket of AI-adjacent stocks (which rose sharply amid AI market enthusiasm), a long SOFR futures position (hurt by rising rate hike expectations), and a long gold position (hurt by a 14% quarterly decline in gold prices). * Net portfolio exposure fell from 41% at Q1 end to 33% at Q2 end, and stood at 39% at the end of July. ### Strategic Milestones * In July 2026, the company received in-principle approval from the Council of Lloyds to transition its existing Syndicate in a Box (Greenlight Re-Innovations Syndicate 3456) to a full Lloyd's syndicate, effective January 1, 2027. This transition will enable further growth of the innovations segment and allow expansion into two new channels: an MGA channel for traditional business and a treaty reinsurance channel. ### Capital Management * The company repurchased $14.2 million of shares in Q2 2026, with an additional $3.9 million repurchased after quarter end. Year-to-date 2026, it has repurchased 4% of outstanding shares for a total of $23.1 million, with $36 million remaining under the current board-approved repurchase plan for opportunistic repurchases. * Fully diluted book value per share was $20.61 at the end of Q2 2026, up 0.9% for the first half of 2026.

Guidance

No explicit formal numerical guidance was provided in the call. Management confirmed it is actively evaluating capital allocation options given the current softening reinsurance market, with increased allocation to the high-performing Solus Glass Fund a possible outcome alongside ongoing opportunistic share repurchases. Management maintained its long-term strategy of prioritizing underwriting discipline amid continued softening market trends across most reinsurance lines that began in Q1 2026.

Segment performance

1. Open Market Segment: Pre-tax income of $3.4 million, consisting of a $1 million underwriting loss and $4.4 million in investment income. Net written premiums decreased 10% year-over-year to $128.2 million, while net earned premiums decreased 3%. It reported a combined ratio of 100.7%, with catastrophe and large losses contributing 20.3 percentage points to the combined ratio. This segment accounts for approximately 83.7% of total net earned premiums. 2. Innovation Segment: Pre-tax income of $1.5 million, consisting of a $2.6 million underwriting profit, $0.5 million in investment loss, and $0.6 million in other expenses. Gross written premiums increased 12% year-over-year to $30.9 million, and net earned premiums increased 16% year-over-year to $24.9 million. It reported a combined ratio of 89.7% (down from 107% in Q2 2025), with 9.5 percentage points of improvement in the loss ratio, 5.4 percentage points of improvement in the acquisition cost ratio, and 2.4 percentage points of improvement in the expense ratio compared to the prior year period. This segment accounts for approximately 16.3% of total net earned premiums.

Risks & headwinds

* Ongoing uncertainty around final loss amounts from the Middle East conflict, due to limited access to affected areas and restricted information, creating the potential for additional reserve increases in future quarters if actual losses exceed current estimates. * The specialty reinsurance book, a core profitable segment for the company, is exposed to large severity loss events like the Middle East conflict, leading to potential material quarterly underwriting losses when such events occur. * Continued softening of reinsurance market conditions across most lines, which pressures premium levels and has led management to intentionally reduce net exposure, resulting in an 11% year-over-year decline in net written premium for Q2 2026. * Investment volatility from the Solus Glass Fund's short and macro positions: in Q2 2026, sharp runs in AI-adjacent stocks and unexpected shifts in interest rate and gold prices led to material quarterly investment losses (though these losses largely reversed in July).

Analyst Q&A

• Q: An analyst asked management to elaborate on the company's total direct and reinsurance exposure to Middle East facilities. /

  A: CEO Greg Richardson noted that marine and aviation specialty lines in the Middle East are a concentration area for Greenlight Re, where the company is a leading player rather than a follower market. Management stated that losses from the conflict are well within the company's existing risk management guidelines and expectations, similar to prior loss experience from the Ukraine war, and the company is comfortable with the current reserved amounts.

• Q: A private investor asked for additional context on the increase in the company's liquidity fund balance between year-end 2025 and Q2 2026. /

  A: CFO Faramarz Romer explained that the increase reflects the completion of transferring all Lloyd's Syndicate backing funds (previously held as cash on the balance sheet under reinsurance receivables) into a Lloyds-approved liquidity fund during the first half of 2026, with only $12 million transferred at year-end 2025.

• Q: A private investor asked for an update on potential board discussions to remove the current investment ceiling on the Solus Glass Fund, noting the fund's consistent high long-term returns and low market correlation, and questioned why quarterly volatility is still a concern given the company's strong balance sheet. /

  A: Management agreed that Solus Glass is a high-performing asset, and confirmed that the company is actively evaluating capital redeployment options amid the current soft reinsurance market. Increasing allocation to Solus Glass is a very possible outcome, alongside the ongoing strategy of opportunistically repurchasing undervalued shares, which is currently accretive for shareholders.