AM Best Revises Outlooks to Negative for Greenlight Capital Re, Ltd. and Its Subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has revised the outlooks to negative from stable and
affirmed the Financial Strength Rating of A- (Excellent) and the
Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Greenlight
Reinsurance, Ltd. (Cayman Islands) and Greenlight Reinsurance Ireland,
Designated Activity Company (Ireland). Additionally, AM Best has revised
the outlook to negative from stable and affirmed the Long-Term ICR of
“bbb-” of Greenlight Capital Re, Ltd. (Cayman Islands) (GLRE)
[NASDAQ: GLRE], the ultimate holding company.

The ratings reflect GLRE’s balance sheet strength, which AM Best
categorizes as very strong, as well as its marginal operating
performance, neutral business profile and appropriate enterprise risk
management (ERM).

The negative outlooks reflect AM Best’s concern over the company’s
business profile, owing to its track record of negative underwriting
performance, which has led to a five-year average company reported
combined ratio of 105.3% (2014-2018) and has contributed to a five-year
average return on equity of -13.3% (2014-2018). Going forward, AM Best
expects GLRE to improve its underwriting profitability. Failure to do so
may result in further negative rating actions.

GLRE’s consolidated surplus has decreased materially in recent years, to
USD 480 million as of year-end 2018 from USD 1.2 billion at year-end
2014, primarily due to the outsized losses generated by its investment
adviser. However, management has taken appropriate actions to de-risk
the balance sheet significantly, thereby reducing the potential for
volatility in the investment portfolio going forward. In the medium to
long term, AM Best expects the company to stabilize its earnings and
gradually replenish its capital position through internal capital
generation.

The rating affirmations and revised outlooks follow an accepted appeal
from the rated company in which new material information was provided
that enhanced AM Best’s opinion of the company’s risk-adjusted
capitalization and forward-looking operating performance volatility.

This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Filippo Novella
Financial Analyst
+1 908 439
2200, ext. 5486
filippo.novella@ambest.com

Steven Chirico, CPA
Director
+1 908 439 2200,
ext. 5087
steven.chirico@ambest.com

Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
james.peavy@ambest.com