Greenlight Capital Re, Ltd. Class A Aktie

Greetings, and welcome to the Greenlight Capital Re First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to David Sigmon, Greenlight Re's General Counsel. David, please go ahead.

Thank you, and good morning. I would like to remind you that this conference call is being recorded and will be available for replay following the conclusion of the event. An audio replay will also be available under the Investors section of the company's website at www.greenlightre.com.

Joining us on the call today will be our Chief Executive Officer, Greg Richardson; Chairman of the Board, David Einhorn; and Chief Financial Officer, Faramarz Romer. On behalf of the company, I'd like to remind you that forward-looking statements may be made during this call and are intended to be covered by the safe harbor provisions of the federal securities laws. These forward-looking statements reflect the company's current expectations, estimates and predictions about future results and are subject to risks and uncertainties. As a result, actual results may differ materially from those expressed or implied. For more information on the risks and other factors that may impact future performance, investors should review the periodic reports that are filed by the company with the SEC from time to time.

Additionally, management may refer to certain non-GAAP financial measures. The reconciliations to these measures can be found in the company's filings with the SEC, including the company's Form 10-K for the year ended December 31, 2025. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, it is now my pleasure to turn the call over to Greg.

Thank you, David. Good morning, everyone, and thank you for joining us.

We reported net income of $35.8 million in Q1 2026, driving an increase in fully diluted book value per share of 4.7%. Our net income was driven by a combination of strong investment performance with the Solasglas portfolio returning 6.8% in the quarter, an excellent result in a challenging market and an underwriting profit of $6.2 million, which equates to a combined ratio of 96.0%. Our underwriting results in the first quarter includes a $5 million provision linked to the Middle East conflict. This added 3.2 points to our combined ratio. As we referenced on our earnings call in early March, the Middle East conflict remains a fluid situation. While a cease-fire is currently in place, and we hope the conflict will end soon, significant uncertainty remains.

In Q1, we received an immaterial amount of formal loss notifications. However, given the high degree of uncertainty, we felt it was prudent to establish a $5 million general provision for potential losses. On our Q4 2025 call, I provided an update on our 1/1/26 renewal season and the market environment at the time. While April 1 is not a major renewal date for us, market trends are unchanged with softening across most lines.

April 1 is the primary renewal date for Japanese business. Due to significant rate decreases this year, we decided to nonrenew our direct Japanese cat business. Given the relatively small amount of premium, the limited margin potential no longer made sense for the portfolio. We remain disciplined.

We expect Open Market reinsurance written premium this year to be lower than in the prior year given the soft reinsurance market. On the other hand, we expect our Innovations segment premium to continue to increase, given the organic growth of our existing client portfolio, a strong flow of new business opportunities, more favorable rate trends and our ability to monitor and influence terms and conditions.

As a management team, we are focused on delivering consistent profitability over the long term. While our shares have been trading at a discount to our growing book value, we have all along maintained that strong underwriting and investment results will ultimately be reflected in our share price.

We have started to see this recently following the release of our full year 2025 results. Meanwhile, we have returned $14.5 million of capital to our shareholders year-to-date via share repurchases under our Board-approved share repurchase plan. As I have noted previously, we are optimistic about the opportunities ahead and Greenlight Re's positioning.

Now I'd like to turn the call over to David.

Thanks, Greg, and good morning, everyone. The Solasglas fund returned 6.8% in the first quarter. The long portfolio contributed 1%, the short portfolio contributed 5.7% and macro contributed 1.2%. During the quarter, the S&P 500 Index declined 4.4%. The largest positive contributors were long investments in gold, Acadia Healthcare and DHT Holdings. The largest detractors included our macro position in short-term interest rates and our long investments in Kyndryl Holdings and Graphic Packaging.

Gold was the largest positive contributor as its price advanced 8% during the quarter. Gold spiked through the end of February amid dedollarization concerns leading to gains in both our physical and call option positions. We took some profits, which lowered our total exposure and allowed us to preserve most of our gains in gold as it declined in March.

Acadia Healthcare shares advanced 65% during the quarter. We established a small position in late 2024 when the shares came under pressure following the New York Times investigation into patient treatment. The decline continued as the company's aggressive expansion strategy weighed on results.

In late January, shares recovered when the company removed the incumbent CEO and announced the return of its well-regarded former CEO. Should the company be successful in improving occupancy to its target levels, we believe annual earnings per share can double.

DHT Holdings shares advanced 53% during the quarter. The company owns and charters very large crude carriers, which were in short supply even prior to the war. With day rates increasing to 5x the long-term average level, these elevated rates, we expect will allow the company to pay a dividend that is nearly quadruple this year.

The largest detractor for the quarter was our long SOFR futures position. After the war began and oil prices spiked, the market [indiscernible] to doubt the Fed's ability to cut rates, resulting in losses for the quarter. We maintained the position as we view the oil price shock as ultimately a headwind to growth, creating a viable pathway for the incoming Chairman of the Federal Reserve to lower rates.

Kyndryl shares declined 58% during the quarter. We owned Kyndryl for more than 4 years through a successful turnaround following its spin-off from IBM. Recently, it became more difficult for the company to win new business and the shares were on [indiscernible] back near our entry price. Fortunately, along the way, we took some profits at higher prices.

We exited our remaining position during the quarter. Graphic Packaging shares declined 33% during the quarter. The company missed earnings expectations and lowered guidance as costs for its new paper mill came in well over budget. Also, the company replaced its experienced CEO with a new one who recently oversaw a major disappointment at its prior company and has yet to outline a clear strategy.

While the shares have suffered, we believe they are extremely cheap relative to reasonable mid-cycle operating results. We initiated a medium-sized position in Versant Media Group following its recent spin-off from Comcast. Shares declined after the spin-off as Comcast shareholders sold stock they received, and the index removals triggered additional selling. This resulted in Versant trading at under 4x adjusted EBITDA and an implied cash flow yield that we believe will allow the company to return almost all its entire market cap to shareholders within 4 years.

Prior to the war, we cautiously positioned with relatively low gross and net exposure. While most market participants are optimistic that the conflict will be resolved soon and with minimal repercussions, we continue to prioritize capital preservation and maintain some dry powder.

Our net exposure at the end of the quarter was about 41% compared to about 40% at the end of 2025. Solasglas returned 0.4% in April, bringing the year-to-date 2026 return to 7.2%. Net exposure in the investment portfolio was approximately 30% at the end of April.

We continue to be pleased with the performance of the company's underwriting portfolio and investments. We remain disciplined in our capital allocation and are being deliberate on where we can generate the best returns on our invested capital given the many levers we have at our disposal, including share buybacks.

And now I'd like to turn the call over to Faramarz to discuss the financial results in more detail.

Thank you, David. Good morning, everyone.

During the first quarter of 2026, Greenlight Re reported net income of $35.8 million or $1.05 per diluted share. Total underwriting income was $6.2 million, resulting in a combined ratio of 96%, which was 8.6 points better than the same period last year. The 2026 first quarter combined ratio benefited from 10.5 points of improvement due to lower cat and event losses contributing 5.8 combined ratio points compared to the same period last year, which included 18.1 combined ratio points related to the California wildfires.

Favorable loss development contributed 4.1 points of improvement in the combined ratio and was offset by 4 points of higher acquisition cost ratio and 1.2 points of higher expense ratio. Our net investment income for the quarter was $40.4 million compared to $40.5 million in the first quarter of 2025. $33.7 million of the investment income related to our investment in Solasglas, which posted a strong 6.8% return in the quarter, the remainder related to interest income on our collateral and funds withheld balances.

I will now break down the first quarter results by segment, starting with the Open Market segment. The Open Market segment reported a pretax income of $11.9 million composed of underwriting income of $6.8 million and investment income of $5.1 million. For the quarter, the Open Market segment net written premiums decreased by 22.7% to $151.3 million, while net earned premiums decreased by 13.8%.

A decrease in net earned premium was expected as it related to the casualty book, which we had decided to nonrenew early in 2025. The remainder of the decrease was mostly related to downward premium adjustments on quota share specialty property and multiline contracts.

The Open Market combined ratio for the first quarter improved by 11.2 points to 94.8% compared to the same period in 2025 due to favorable loss development and lower cat losses. First quarter favorable reserve development was 2.2 percentage points compared to adverse development of 3.3% in first quarter last year. Cat losses were $5 million related to the Middle East conflict in the first quarter of this year versus $27 million relating to the California wildfires in Q1 last year.

The improvement in combined ratio was partially offset by higher acquisition cost ratio due to higher commissions reported on the FAL programs and higher expense ratio attributed to performance-based long-term incentive compensation.

Overall, the Open Market segment had a strong performance during the quarter. Now let's turn to the Innovations segment. The Innovations segment produced an underwriting loss of $0.6 million and an investment income of $1.1 million. During the quarter, the Innovations gross written premiums increased by $20.1 million or 73% to $47.6 million, mainly driven by new business and exposure growth from existing treaties in casualty, financial and specialty lines, combined with growth in Syndicate 3456, which is presented under Multiline.

We renewed our Innovations whole account retrocession program on January 1, 2026, increasing the ceded share from 28.5% to 33%. Therefore, the ceded premiums in the first quarter increased due to the combination of growth in underlying business and a higher portion ceded.

The net earned premiums for Innovations segment increased by $6.2 million or 32% to $25.2 million. The combined ratio for the Innovations segment was 102.3% during the first quarter, which included 1.4 points related to adverse prior year development compared to 3 points of favorable development in the first quarter last year.

The attritional loss ratio was 4.4 points higher, mainly related to a financial lines program where the past loss experience warranted a higher current year loss ratio. The expense ratio for this Innovations segment was unchanged at 8.2% in spite of the increase in earned premiums.

We continue to invest in talent and technology in readiness for future growth of this segment. During the first quarter, we repurchased 298,701 shares for $5 million at an average price of $16.7 per share. Subsequently, during the month of April, we repurchased an additional $9.5 million of shares, bringing our year-to-date repurchases to $14.5 million.

On April 28, the Board approved a new share repurchase authorization of $40 million effective May 15, 2026, and expiring at the end of May 2027. At the end of the first quarter, our fully diluted book value per share was $21.40, an increase of 4.7% for the quarter.

Our primary metric continues to be growth in fully diluted book value per share, and we are pleased with the first quarter 2026 results. That concludes our prepared remarks. The operator will now open the line for your questions.

Thank you. We'll now be conducting your question-and-answer session.

[Operator Instructions]

Thank you. As there are no questions at this time. Should you have any follow-up questions, please direct them to Jeremy Hellman at -- The Equity Group Inc. at [email protected], and he'll be happy to assist you.

This does conclude Greenlight Re's First Quarter 2026 Earnings Conference Call. Thank you. You may now disconnect.

Thank you for joining the Greenlight Capital Re Ltd. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the call over to David Sigmon, Greenlight Re's General Counsel. You may begin.

Thank you, Kevin, and good morning. I would like to remind you that this conference call is being recorded and will be available for replay following the conclusion of the event. An audio replay will also be available under the Investors section of the company's website at www.greenlightre.com. Joining us on the call today will be our Chief Executive Officer, Greg Richardson; Chairman of the Board, David Einhorn; and Chief Financial Officer, Faramarz Romer.

On behalf of the company, I'd like to remind you that forward-looking statements may be made during this call and are intended to be covered by the safe harbor provisions of the federal securities laws. These forward-looking statements reflect the company's current expectations, estimates and predictions about future results and are subject to risks and uncertainties. As a result, actual results may differ materially from those expressed or implied.

For more information on the risks and other factors that may impact future performance, investors should review the periodic reports that are filed by the company with the SEC from time to time. Additionally, management may refer to certain non-GAAP financial measures. The reconciliations to these measures can be found in the company's filings with the SEC, including the company's Form 10-K for the year ended December 31, 2025. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, it is now my pleasure to turn the call over to Greg.

Thank you, David. Good morning, everyone, and thank you for joining us. I am pleased to report strong results for both Q4 2025 and full year 2025. We have been indicating for some time the confidence we have in our strategy and our positioning. It is gratifying to see this reflected in our results. In particular, we are making significant progress in generating underwriting profits. Q4 2025 is the 10th quarter out of the last 12 quarters in which we have delivered an underwriting profit.

I'm excited about Greenlight Re's potential as we enter 2026. The fourth quarter of 2025 was an excellent quarter for Greenlight Re with strong performance in both the underwriting and investment components of our strategy. We reported a net underwriting profit of $13 million or a combined ratio of 92.1% and a strong investment return from Solasglas of $36 million or a 7.9% gain, driving net income for the quarter of $49.3 million.

Our underwriting profit was driven by strong performance on our open market book, which delivered a 90.7% combined ratio. This was driven by strong core profitability assisted by relatively benign cat and large loss activity, partially offset by some prior year reserve development. On the large loss side, we booked $2 million of losses in the fourth quarter related to Hurricane Melissa, which made landfall in Jamaica in late October and $2.7 million related to an oil refinery fire loss.

With regard to prior year development, we strengthened reserves on our open market book by $5.5 million, driven primarily by casualty programs that are in runoff. Our innovations book recorded a modest underwriting loss for the quarter of $0.4 million or a combined ratio of 101.7%. This was primarily driven by a large loss of $2.1 million on a surety account.

For the full year 2025, we demonstrated solid underwriting performance with profitable underwriting each quarter, except the first quarter, which was hit by the California wildfires. Overall, we delivered record underwriting income for 2025 with an underwriting profit of $35.7 million or a combined ratio of 94.6%. Net income for the year was $74.8 million, which drove a 13.8% increase in fully diluted book value per share to $20.43.

Turning to the 1/1 renewal season. It is a key renewal season for Greenlight Re with approximately 60% of our business incepting on January 1. We are very pleased with how this key renewal period progressed. While market conditions showed softening across most lines, we believe pricing in general remains adequate, and we executed broadly in line with our business plan.

I'll provide an overview of our 1/1 book in key areas. Generally, our funds at Lloyd's book incepts at 1/1. We have written a significant FAL book for several years, and we are optimistic for the prospects of Lloyd's in 2026 despite the softening market. Lloyd's is committed to maintaining underwriting discipline, and we support this focus. There has been an influx of capital seeking to target the Lloyd's market after several years of strong profitability.

As we have been active in this market for several years, we have strong relationships, and we are able to maintain and grow our relationships with key partners despite the increased capital entering the market. This year, we grew our FAL book by approximately 21% due to attractive opportunities that were available to us.

A material portion of our specialty book also renews at 1/1. In general, the specialty market saw some significant softening. We estimate rates were down 11%, although terms and conditions generally held firm. With many of our competitors looking to grow their specialty books, the market was very competitive on signings. Our standing in the market and our timely upgrade to an A A.M. Best rating helped protect our specialty book, which grew by 6%.

The third element of our book with a strong 1/1 focus is property. We saw some significant weakening in the property line and estimate rates are down 12%. Our property book was broadly flat year-over-year, indicating exposure is up given the rate decreases. Our North Atlantic hurricane exposure on a 1 in 250 occurrence basis increased by 7% to $139 million, reflecting this increased exposure.

Our innovations portfolio renewals are not heavily weighted towards 1/1. Rather, they are more evenly spread throughout the year. For the business that did renew at 1/1, we saw strong growth with premium up 83%. Our Innovations business is less susceptible to market trends. This can be seen in the risk-adjusted rate change at 1/1, which was relatively flat. Importantly, we renewed our outwards Innovations whole account quota share treaty at 1/1 with an increased session from 28% to 33% and materially improved terms.

In addition, we accepted third-party capital into Syndicate 3456 for the first time. This provides a strong external validation of our Syndicate performance to date. In recent days, we have seen an increase in tensions in the Middle East with the U.S. and Israel launching attacks on Iran and Iran retaliating by bombing several other neighboring countries.

Our thoughts are with the people in this region. It is difficult to comment on this fluid situation other than to say we hope that the war ends soon, thereby minimizing physical damage and loss of life. At this stage, while there have been media reports of isolated insured losses, we have not been notified of any large losses. In general, our policies contain a war exclusion. However, we do have some exposure to the conflict from specific marine war, aviation war and war on land covers that we offer as part of our specialty book. We continue to closely monitor developments in the region. As we look ahead towards 2026, we are optimistic about the opportunities ahead and Greenlight Re's positioning. Now I'd like to turn the call over to David.

Thanks, Greg, and good morning, everyone. The Solasglas fund returned 7.9% in the fourth quarter. The long portfolio contributed 1.4%, the short portfolio contributed 4.6% and macro contributed 3.1%. During the quarter, the S&P 500 Index advanced 2.7%. The largest positive contributors were long investments in Gold, Brighthouse Financial and Victoria's Secret. Largest detractors included long positions in Green Brick Partners, PENN Entertainment and a macro position in inflation swaps.

Gold was the largest positive contributor as its price advanced 12% over the quarter. It was an exceptional year for gold as it appreciated 64% and was our largest positive contributor in every quarter of 2025. Brighthouse Financial shares advanced 22% during the quarter. After years of frustration with this investment, the company announced in November that it will be sold to a private equity firm for $70 a share. While this valuation represents just 2/3 of book value, it provides us with a reasonable and welcome path to exit.

Victoria's Secret shares doubled during the quarter. In the past, the company built its brand around a highly aspirational image supported by super model-led campaigns. However, in recent years, management moved away from this approach to make the brand more inclusive. New management has since taken over and begun reversing those changes, including reinstating the company's annual fashion show. During the quarter, the company posted strong results, delivering the largest revenue beat since its 2021 spin-off and significantly raising annual profit guidance.

Green Brick Partners shares declined 15% during the quarter. After several years of strength, cyclical headwinds are now weighing on the housing sector as declining demand and home prices have created a more challenging environment for builders. As we remain negative on the state of the broad housing market, we've continued to fully hedge our exposure and most of the Green Brick loss was offset by gains from our short basket of homebuilders.

PENN Entertainment shares fell 23% during the quarter. The company faced competitive pressure and weaker results in its regional casino business, while the market continued to question PENN's ability to reach breakeven in its digital sports betting and digital casino businesses. Encouragingly, PENN recently announced fourth quarter results highlighted the profitability in December within its digital segment and included improved guidance for regional casino growth and free cash flow in fiscal 2026.

Inflation swaps were a detractor as inflation expectations declined modestly during the quarter. We initiated several small long positions, including Antero Resources, a natural gas exploration and production company; Deckers Outdoor, a football -- excuse me, a footwear and apparel company; Henry Schein, a medical product distributor; and Spectrum Brand Holdings, a consumer products company focused on pet care, home and personal care.

The Solasglas fund returned 7.5% in 2025 compared to a 17.9% return for the S&P 500. Solasglas returned 3.4% in January and 6.3% in February, bringing the 2026 year-to-date return to 9.8%. We continue to be concerned about the equity market valuations in the U.S. and believe that in the long term, this is not a great time to have a lot of equity exposure. Net exposure in the investment portfolio was approximately 29% at the end of February, down from about 40% at year-end.

Greg, Tom and the team have done a fantastic job with the underwriting portfolio while continuing our disciplined approach to risk taking. I believe this is a key factor that led to our upgrade from A.M. Best from A- to A in November. While Greenlight Re is performing well and earning its cost of capital, I believe our share price does not reflect this. We believe that the company has the financial flexibility and capital strength as exemplified by the rating upgrade to be more aggressive on share repurchases to capture the discount being offered in the market. Now I'd like to turn the call over to Faramarz to discuss the financial results in more detail.

Thank you, David, and good morning, everyone. During the fourth quarter of 2025, Greenlight Re reported net income of $49.3 million or $1.44 per diluted share. Total underwriting income was $13 million, resulting in a combined ratio of 92.1%, which was 20 points better than the same period last year, which included 10 combined ratio points related to the Russia-Ukraine reserve strengthening.

The 2025 fourth quarter combined ratio also benefited from 8 points of improvement due to lower cat and event losses and 2.3 points of improvement related to underlying current year attritional loss ratio. The improvement in combined ratio was partially offset by 1.8 points of higher expense ratio, mainly relating to variable performance-based compensation. Our net investment income for the quarter was $44.8 million compared to $2.6 million in the fourth quarter of 2024. $36.2 million of the investment income related to our investment in Solasglas, which posted a strong 7.9% return in the quarter. The remainder related to interest income on our collateral and funds withheld balances.

In December, we appointed an insurance-focused well-established third-party investment manager to manage a portion of our collateral assets that were previously invested in money market funds and other short-term deposits. We have allocated around $100 million to be managed in a fixed maturity portfolio under Board-approved investment guidelines.

As of the year-end, half of this had been deployed in the fixed maturity portfolio and the remainder is being deployed in the first quarter of 2026. You will see that we have added new disclosures in our 10-K relating to the fixed maturity portfolio. This new initiative is expected to yield high returns on our collateral assets while preserving a short duration and high credit quality.

I will now break down the fourth quarter results by segment, starting with the Open Market segment. The Open Market segment reported a pretax income of $28.2 million, composed of underwriting income of $13.2 million and investment income of $15 million. For the quarter, the Open Market segment grew net written premiums by 9% to $123.6 million, while net earned premiums grew by 11%. The increase in net earned premiums was spread across all lines of business with the exception of the casualty book, majority of which we had decided to non-renew early in 2025.

The Open Market combined ratio for the fourth quarter improved by 20.4 points to 90.7% compared to the same period in 2024. A lower attritional loss ratio and improved prior year reserve development and lower cat and event losses contributed to the improved combined ratio. Overall, the Open Market segment had a strong performance during the quarter.

Turning to the Innovation segment. We continue to see growth opportunities within this segment. The Innovation segment grew gross written premiums by $16.5 million or 80% to $37.1 million during the quarter, mainly driven by the casualty line and by Syndicate 3456, which is presented under multiline. The net earned premiums increased by $5.2 million or 27% to $24.2 million. The combined ratio for the Innovation segment was 101.7% during the fourth quarter, which included 8.7 points related to a large loss event on a surety contract.

The composite ratio improved by 6 points to 92.2%, driven by improvement in the attritional loss ratio and release of reserves due to favorable loss development. Compared to the same quarter last year, the expense ratio for the Innovation segment was 9.5% versus 3.3% due to a combination of growth in personnel, higher incentive-based compensation and an increase in non-payroll costs related to the segment.

We are investing in this business in preparation for growth in this segment, and we expect the expense ratio to normalize as the segment, including Syndicate 3456 gain scale over the next 18 to 24 months. During the quarter, the Innovation segment produced an underwriting loss of $0.4 million and an overall net loss of $0.9 million. For the full year 2025, we reported $74.8 million of net income or $2.17 of diluted earnings per share, driven by $35.7 million of underwriting income and $35.7 million of investment income from Solasglas.

Our full year combined ratio was 94.6%, while Solasglas returned 7.5%. So both sides of our balance sheet contributed to a strong full year performance. The Open Market segment generated $69.7 million of net income in 2025, of which $37.6 million related to underwriting with a combined ratio of 93.4%, which improved by 5.6 points over 2024.

The majority of the improvement came from a lower attritional loss ratio, while an improvement in prior year reserve development also contributed to a lower loss ratio. The Innovation segment reported a combined ratio of 100.2% for the year, resulting in a modest underwriting loss of $0.2 million.

The gross written premiums for this segment increased by 28% to $121.6 million, representing 16% of our total premiums. While the loss ratio and acquisition cost ratio were consistent with the prior year, the expense ratio rose by 4.5 points for the reasons I mentioned earlier.

Now let's turn to capital and debt management. During the quarter, we repurchased 201,000 shares for $2.8 million, bringing our full year share repurchases to $9.8 million at an average price of $13.76 per share. We have $20.2 million remaining under the authorized share repurchase plan, and we plan to continue repurchasing shares given the discount to book value.

During the quarter, we repaid $30 million of our debt and currently have $5 million of debt outstanding. During the year, we reduced our debt leverage ratio from 9.5% to 0.7%. At the end of the fourth quarter, our fully diluted book value per share was $20.43, an increase of 13.8% for the year. Over the last 3 years, we have grown our fully diluted book value per share by 42.6% or 12.5% annually.

To recap our performance during 2025 year, our premiums grew to the highest level in our history. We had a record year of underwriting income. A.M. Best upgraded our rating to A, and we significantly delevered our balance sheet. We feel the company is in a strong position going into 2026, and we believe we are well positioned to deliver another outstanding year of performance for our shareholders. That concludes our prepared remarks. The operator will now open the line for your questions.

[Operator Instructions] Our first question today is coming from Eric Hagen with BTIG.

Lots of attention right now on private credit, some of the blue-chip asset managers taking in redemptions. It's hard to handicap some of the credit risk out there for certain areas of the debt market, especially. I mean -- I think two questions related to that. One, is there a strong connection that you see between the capital flow in the reinsurance market and private credit, maybe just the competitive landscape for other reinsurers, which may be attached to larger asset managers?

And then number two, I mean, how does this narrative around private credit play into your thesis that this is a riskier time for the equity market right now? How do you think it maybe drives the broader capital allocation policy over the near term?

David, do you want to take that and then maybe Faramarz could comment.

All right. Look, in terms of the asset side of our business, we don't have any private credit. We are public market investors and almost everything in the portfolio is public and able to mark-to-market on a quoted price. I think the broader concern that you're suggesting relating to private credit is fundamentally peripheral to our investment strategy, and I don't expect it to have much impact one way or another on what we're doing.

Faramarz, do you want to comment?

Yes. I think David covered it from an asset side, what we're seeing on the reinsurance side is generally the private credit is more prevalent on the asset-intensive reinsurers that are playing in the life annuity side. We don't have any life annuity business. All of our book is property casualty. And as David said, we have no direct exposure to private credit.

That's really helpful. Another one, the move to retire some of your debt, was that an opportunistic move to maybe just manage your leverage over the near term? Or can you envision eventually returning to the debt market at certain valuations and how do you think about that?

Yes. Thanks, Eric. Good question. So back in 2018, we had entered -- we had issued our convertible notes. And then when they came up for maturity, we converted those from convertible notes into a term loan. And then earlier last year, we converted a term loan into a revolving credit facility for $50 million. So we feel that we have a pretty good ability now to -- with the cash that's being generated from the business, our investment portfolio is well positioned and given the interest rates where they were, we felt that it was better to pay down the remaining debt. We still have the ability on the revolver or if we ever needed to lever back up. But at this point, the best use of that cash was to pay down the debt and still have the ability in the future to increase our leverage if we needed to.

[Operator Instructions] Our next question is coming from Kevin English, a private investor.

And congrats again on a strong quarter. I guess, yes, just to start as well, I wanted to commend management for being in the Open Market and backing up conviction with purchases. I think that shows a lot of faith in what you all are building.

My question is really just around the investment ratio, which remains at 70%. I know we're up from the 50%. That was a reflection of the 2018 volatility. But it does seem like the risk management of the investment portfolio has been revised since then. I think on an unlevered ROI basis, it is the most profitable business line. So I understand not wanting to take excess exposure, particularly at an inopportune time, this month is probably not the right to be bringing it up. So coming off a really nice set of months here. But just want to hear if there's any update there, particularly given the ability, as David said, to flex the net exposure to kind of dictate kind of market exposure in that way. So yes, I appreciate any context there, maybe update on timing as to how you're thinking about it.

David, do you want to start on that one?

Why don't you start? I'll add in.

Yes. Listen, the performance of Solasglas has been terrific. We have a multi-pillar strategy. One of the great things about our investment strategy, it's very scalable. We can increase it, we can decrease it. We don't do it willy-nilly. It's Board governed. But in addition to the sort of 10-ish percent return we've been averaging over the past several years on that book, one of the nice things is that we don't get a 100% capital charge for it.

So from our standpoint, in terms of use of the scarce resources, which we refer to as our A.M. Best capital capacity, it is actually a levered return. So it's a very attractive return to us. It is volatile from quarter-to-quarter, so we have to mitigate that. But it is something we look at. And if reinsurance market should soften, that's an avenue we have to enhance our ROE. Does that help?

Thank you. We reached the end of our question-and-answer session. And ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Thank you for joining the Greenlight Capital Re Limited Third Quarter 2025 Earnings Conference Call. [Operator Instructions] It's now my pleasure to turn the call over to David Sigmon, Greenlight Re's General Counsel. You may begin.

Thank you, Kevin, and good morning. I would like to remind you that this conference call is being recorded and will be available for replay following the conclusion of the event. An audio replay will also be available under the Investors section of the company's website at www.greenlightre.com.

Joining us on the call today will be our Chief Executive Officer, Greg Richardson; Chairman of the Board, David Einhorn; and Chief Financial Officer, Faramarz Romer. On behalf of the company, I'd like to remind you that forward-looking statements may be made during this call and are intended to be covered by the safe harbor provisions of the federal securities laws.

These forward-looking statements reflect the company's current expectations, estimates and predictions regarding future results and are subject to risks and uncertainties. As a result, actual results may differ materially from those expressed or implied. For more information on the risks and other factors that may impact future performance, investors should review the periodic reports that are filed by the company with the SEC from time to time.

Additionally, management may refer to certain non-GAAP financial measures. The reconciliations to these measures can be found in the company's filings with the SEC, including the company's Form 10-K for the year ended December 31, 2024. The company undertakes no obligation to publicly update or revise any forward-looking statements.

With that, it is now my pleasure to turn the call over to Greg.

Thank you, David. Good morning, everyone, and thank you for joining us. Q3 2025 was a mixed quarter with an exceptional underwriting result, offset by investment losses. Overall, we reported a net loss of $4.4 million in Q3 2025, which brings our year-to-date net income to $25.6 million. Fully diluted book value per share decreased 0.4% in the quarter to $18.90 and increased 5.3% for the first 9 months of the year.

We reported our best quarterly combined ratio of 86.6%, translating to a record $22.3 million of underwriting income. This result was driven by a combination of the strong underlying profitability of the book assisted by a benign cat quarter. We would be remiss not to comment on Hurricane Melissa. There are strong historical ties between the Cayman Islands and Jamaica, and our hearts are with all those who have been affected by this incredibly powerful storm.

As a reinsurance professional that has closely monitored hurricanes for nearly 30 years, I was impressed by and grateful for the forecasters and their models in predicting both the erratic track and extreme intensity of Melissa. While property is fixed in place, people can get out of the way of the path of the storm with this information. The forecasters certainly saved many lives as a result.

From a financial perspective, Melissa is a fourth quarter event. It is early days, but we do not expect a significant loss to Greenlight Re given positioning in the cat space and the fact that it missed the Southeastern United States. We have been confident that our underwriting portfolio is positioned to deliver a strong underwriting return. So it is encouraging to see that reflected in our results in Q3.

Our open market book delivered an 84.5% combined ratio, while our innovations book delivered a 96.7% combined ratio. Both segments showed meaningful premium growth. Growth in open market was driven by our funds at Lloyd's book, modest property and financial lines growth, offset by declines in casualty based on underwriting actions discussed last quarter.

For our Innovation segment, a good portion of our accounts incept in the second half of the year, and we can see evidence of previously anticipated organic top line growth beginning to emerge. Unfortunately, our investment performance for the quarter was a loss of $17.4 million. There are 2 main components of this. Our investment in the Solasglas portfolio was down 3.2% in the quarter. David will provide more color on this in his remarks.

In addition, we suffered a net unrealized loss of $11.3 million on our innovations investment portfolio. The net unrealized loss on our innovations portfolio was primarily driven by a $16.4 million write-down of our highest valued investment. Our innovation investments are generally illiquid, and we revalue them as soon as we believe the valuation may be impaired or when a new funding round closes. This particular situation is idiosyncratic in that the lead investor was able to secure a new round of equity financing at a substantial discount due to a debt refinancing that fell through at the last minute.

We still believe the company's prospects are bright and the financing removes an overhang from the investment. While this write-down in Q3 is disappointing, I would highlight that we hold our innovations investments for the long term, and we are focused on realized gains and the associated underwriting and fee income opportunities generated from these investments rather than mark-to-market gains and losses.

Further, this position was outsized from a carried value perspective due to prior upward adjustments based on previous financing rounds.

Currently, we have no single investment valued at more than $10 million and only 3 investments valued at over $5 million. So the risk of a similar write-down on a single investment going forward is mitigated absent an industry-wide event. We are now focused on 1:1 renewals. While the market is clearly softening, we believe rates and terms will remain attractive for our open market reinsurance business.

Consequently, we expect to renew most of our non-casualty business and perhaps grow somewhat. As noted previously, our innovations book is less susceptible to the supply-demand pressures of the reinsurance market. We anticipate continued strong organic growth from our existing innovations clients and attractive new business opportunities.

Now I'd like to turn the call over to David.

Thanks, Greg, and good morning, everyone. The Solasglas fund returned negative 3.2% in the third quarter. The long portfolio and macro contributed 1.7% and 3.3%, respectively, and the short portfolio detracted 8.1%. During the quarter, the S&P 500 Index advanced 8.1%. The largest positive contributors were long investments in Gold, Green Brick Partners and Core Natural Resources. The largest detractors included a short position in a profitless financial services company, a short basket of homebuilder stocks and our long position in Kyndryl Holdings.

Gold is the largest positive contributor as its price rose 17% over the quarter. Green Brick Partners shares also advanced 17% during the quarter as the market's expectation for lower rates lifted homebuilder stocks. While the company continues to execute well on its regionally focused strategy, we remain cautious on the broader housing market and have maintained a nearly fully hedged position by shorting a basket of national homebuilders. This hedge basket offset most of Green Brick's positive contribution during the quarter.

Core Natural Resources shares advanced 20% during the quarter, recouping some of its decline from the first half of the year. The company announced significantly improved quarterly results, including an increase in free cash flow. Core used the majority of this cash flow to repurchase shares under the $1 billion share buyback program it announced earlier in the year after successfully completing its merger with Arch Resources.

In addition to the homebuilder hedge basket, the largest detractors for the quarter included a short position in a profitless financial services company that transitioned from a near-term bankruptcy candidate to immune stock and our long position in Kyndryl Holdings. Kyndryl shares declined 28% during the quarter, giving back some gains after the company posted a less exciting quarterly update than its previously recent couple of quarterly results.

Earlier in the year, we established a new large position in a stub created by being Long Fluor Corporation and short NuScale Power. More recently, we established a new medium-sized position in Pacific Gas and Electric. Fluor is a global engineering and construction company. In the spring, Fluor experienced a slowdown in capital spending from its customers due to tariff uncertainty, which we expect to reverse and for the business to return to growth in 2026. Away from its core business, Fluor holds approximately a 40% stake in NuScale Power, a small modular nuclear reactor company. Fluor's stake is worth nearly $5 billion pretax, which represents over 60% of its market cap. Fluor has announced plans to divest its holding and use a significant portion of the proceeds towards share buybacks.

Pacific Gas & Electric is a California-based regulated utility that transmits and distributes electricity and natural gas. While the company was not exposed to January's catastrophic L.A. wildfires, its earnings multiple collapsed to below 10x on concerns that the California Wildfire Fund, an important defense against wildfire-related damage claims that its shares with Edison International will be depleted. We invested with a view that the legislature is likely to put in place funding support and make further wildfire risk reform a priority. We have since seen progress in these initiatives and expect PG&E to re-rate closer to the nearly 18x average peer multiple.

In our view that outside of the boom surrounding a handful of AI and AI adjacent companies, most of the rest of the economy is floundering. In the midst of this excitement, we are simply not comfortable underwriting a long investments within the AI ecosystem and have decided for the most part, not to participate. Unfortunately, it has been difficult to make money on the long investments outside of this small cohort of stocks. Our net exposure ended the quarter at about 25%, up from about 2% at the end of the second quarter.

Solasglas returned 1.6% in October, bringing the year-to-date return to 1.2%. Net exposure in the investment portfolio was approximately 20% at the end of October.

Now I'd like to turn the call over to Faramarz to discuss the financial results in more detail.

Thank you, David. Good morning, everyone. During the third quarter of 2025, Greenlight Re reported a net loss of $4.4 million or negative $0.13 per diluted share compared to a net income of $35.2 million or $1.01 per diluted share during the third quarter of 2024. The total underwriting income was $22.3 million, resulting in a combined ratio of 86.6%, which was 9.3 points better than the same period last year. This included 8 points of improvement due to lack of cat losses in the quarter and 6 points of improvement related to underlying current year attritional loss ratio.

We had 50 basis points of reserve development during the quarter compared to 3.7 points of reserve releases in the third quarter of last year. Our net investment loss was $17.4 million compared to $30.3 million of investment income in the third quarter of 2024.

As Greg mentioned, most of the investment losses related to Solasglas and innovations. However, these losses were partially offset by other investment and interest income of $8.9 million.

I will now break down the third quarter results by segment, starting with the Open Market segment. The Open Market segment reported a pretax income of $27.9 million, composed of underwriting income of $22.2 million and investment income of $5.6 million. For the quarter, the Open Market segment grew net written premiums by 9.5% to $140.4 million, while net earned premiums grew by 14.1%. The increase was driven primarily from growth in the funds at Lloyd's business and the Financial, Property and Specialty lines from a combination of new programs and growth in underlying premium volume on renewing programs.

These were offset by the casualty premiums decreasing during the quarter as a result of our decision earlier this year to nonrenew most of the open market casualty book. The open market combined ratio for the third quarter improved by 10 points to 84.5% compared to 94.5% for the same period in 2024. The lower loss ratio and a lower acquisition ratio contributed to the improved combined ratio. The current year loss ratio improved by 11.8 points, driven by 8.3 point improvement in attritional losses and 3.5 point improvement in event losses.

The segment reported a small prior year adverse loss development of $0.9 million or 60 basis points compared to favorable reserve releases of $5.3 million or 4.2 loss ratio points in the same quarter last. The acquisition cost ratio and the expense ratio improved 2.5% and 0.3%, respectively, on the back of higher earned premiums. Overall, the Open Market segment had a strong performance for the quarter.

Now let's turn to the Innovation segment. The Innovation segment grew net written premiums by 57.5% to $22.3 million during the quarter. The increase was mainly driven by Syndicate 3456 and Financial lines, partially offset by the increase in ceded premiums under the Innovations whole account retro program compared to the third quarter of last year.

Net earned premiums decreased by $0.8 million, mainly driven by the increase in retro ceded premiums compared to the same quarter last year. The combined ratio for Innovation segment was 96.7% during the third quarter compared to 93.6% in Q3 last year. The composite ratio improved by 1 point to 87.1%. Favorable prior year reserve development contributed 3.1 points to the combined ratio compared to unfavorable development of 0.4 points in the third quarter of 2024.

Compared to the same quarter last year, the expense ratio for the Innovation segment was 9.6% compared to 5.5% due to a combination of growth in personnel and an increase in nonpayroll-related costs for this segment. We are investing in this business in preparation for higher future premiums, leading to the higher expense ratio. We expect this to normalize as we scale this segment. While the Innovation segment is an underwriting income of $0.7 million, the investment impairment that Greg mentioned led to an overall net loss of $11.3 million for the segment.

Now I would like to make a couple of quick points on capital and debt management. During the first 9 months of 2025, we have repurchased 512,000 shares for $7 million, which has been accretive to our book value per share. At the end of the third quarter of 2025, our fully diluted book value per share was $18.90, an increase of 5.3% year-to-date.

During the quarter, we refinanced our term loan, replacing it with a 5-year $50 million revolving line of credit. As of the end of the third quarter, we reduced our debt leverage ratio down to 5.3% from 9.5% at the beginning of the year. Subsequently, in October, we repaid an additional $15 million and currently have $20 million of debt outstanding.

We have also entered into a letter of credit facility with Citibank exclusively for our funds at Lloyd's business. In October, we issued an LLC for GBP 45 million to Lloyd's, and Lloyd's simultaneously released $60.7 million of cash, which we had previously provided for funds at Lloyd's.

The new revolving line of credit and the new funds at Lloyd's letter of credit facility provides us added flexibility to optimize our cash management while further strengthening our balance sheet and improving our return on equity.

That concludes our prepared remarks. The operator will now open the line for your questions.

[Operator Instructions] our first question is coming from Ben Olesh from WA Capital.

This is a question to David. Could you please provide an update on the macro part of the Solasglas fund? What is your view and your position regarding to U.S. dollar, gold and short-term interest?

Sure. Thanks for the question. We've maintained a core position in gold that now goes back pretty much to the near the inception of the company, certainly since the IPO of the company. The gold is structured in 2 different components. One is physical gold, which we consider to just sort of be the core position that we occasionally trade around. Additionally, we buy binary digital options that are call options on rapid appreciation in gold. And those actually proved to be successful in the third quarter and also in our October results.

We -- from an interest rate perspective, our position is that we are long SOFR futures out into 2026, which is essentially a view that the Fed will reduce interest rates more than the market currently expects. And finally, we maintain inflation swaps, which are a view that reported inflation over the next 2, 5 and 10 years will be larger than the amount that the market has priced in.

Our next question today is coming from Daniel De Jong, a private investor.

This is more of a long-term question for David. I believe a few years ago, you evaluated the future of the company and one of the options considered given the discount to book value was closing the company. With all the work put to the company since and 7 years in a row of positive investment performance, at least year-to-date, do you see a long-term future for the company? Also, investors like Howard Marks and Warren Buffett work well past regular retirement age, could you see yourself doing that?

Yes. Look, I think that the company -- and we expressed this at last year's investor presentation. I actually think that the company has made enough structural improvement that we should be earning a return on equity that is greater than our cost of equity. And I believe that the shares should actually justifiably trade at or above book value as a result. It's been frustrating to us and everybody around that the shares continue to trade at a discount. But I don't believe that the solution is to liquidate the company.

Were we to liquidate the company, there also would be substantial expenses that I could not quantify for you because we haven't done the exercise, but it would be unlikely that we would recognize like the full book value in the liquidation were we to go through with that.

Regarding my longevity, I'm presently 56 years old, and I expect to be doing this for a substantial additional amount of time.

We reached the end of our question-and-answer session, and that does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Thank you for joining the Greenlight Capital Re, Ltd. Second Quarter 2025 Earnings Conference Call. [Operator Instructions]

It's now my pleasure to turn the call over to David Sigmon, Greenlight Re's General Counsel. You may begin.

Thank you, Kevin, and good morning. I would like to remind you that this conference call is being recorded and will be available for replay following the conclusion of the event. An audio replay will also be available under the Investors section of the company's website at www.greenlightre.com.

Joining us on the call today will be our Chief Executive Officer, Greg Richardson; Chairman of the Board, David Einhorn; and Chief Financial Officer, Faramarz Romer.

On behalf of the company, I'd like to remind you that forward-looking statements may be made during this call and are intended to be covered by the safe harbor provisions of the federal securities laws.

These forward-looking statements reflect the company's current expectations, estimates and predictions about future results and are subject to risks and uncertainties. As a result, actual results may differ materially from those expressed or implied. For more information on the risks and other factors that may impact future performance, investors should review the periodic reports that are filed by the company with the SEC from time to time.

Additionally, management may refer to certain non-GAAP financial measures. The reconciliations to these measures can be found in the company's filings with the SEC, including the company's Form 10-K. The company undertakes no obligation to publicly update or revise any forward-looking statements.

With that, it is now my pleasure to turn the call over to Greg.

Thank you, David. Good morning, everyone, and thank you for joining us. We reported net income of $0.3 million in Q2 2025, which brings our year-to-date net income to $30 million.

Fully diluted book value per share increased 0.5% in the quarter and 5.7% for the first half of the year.

We reported a combined ratio of 95.0% for the quarter, translating to $8.1 million of underwriting income. Our investment in Solasglas portfolio was down 4% in the quarter, reversing a portion of the Q1 outperformance. David will provide more color on this in his remarks.

Q2 was a benign quarter from a cat activity perspective. We have updated the definition of cat event loss to be individual catastrophe loss to us of $5 million or more net of reinsurance recoveries.

We also started reporting known large loss events defined as losses between $1 million and $5 million. The net financial impact of prior year adverse loss development was $2.6 million or 1.6 combined ratio points. Faramarz will elaborate on the loss development for each segment momentarily.

Our underwriting result in the second quarter was largely unaffected by our previous reserving actions related to the California wildfires and the Russia-Ukraine aviation losses. On the latter, we had strengthened our reserves in Q4 of last year and the long-awaited outcome of a U.K. trial in the second quarter validated our early decisive action on this.

As mentioned on our previous quarter call, we have started to non-renew a significant portion of our open market casualty book. The impact of these nonrenewals started to flow through our top line in Q2, which was offset by growth in other areas, including FAL and the specialty book. We don't have a large renewal book for 7/1, but we are seeing overall market conditions remaining similar to 1/1 and 4/1 with flat to mild single-digit decreases in risk-adjusted rate change.

As we head into the peak of cat season, we feel good about our exposures and are well positioned to weather any storms.

During the second quarter, we repurchased $5 million worth of our stock at an average cost of $13.99 per share. We continue to monitor our capital position in light of our various capital metrics, and we will carefully evaluate opportunities for further share repurchases as part of our overall capital management.

Finally, this quarter, we have prepared an investor presentation summarizing our results and strategy, which is available in the Investor Relations section of our corporate website. We hope it provides additional context as we continue our efforts to communicate more broadly with shareholders.

Now I'd like to turn the call over to David.

Thanks, Greg, and good morning, everyone. The Solasglas fund returned negative 4% in the second quarter. The long portfolio and macro contributed 1.2% and 3.5%, respectively, while the short portfolio detracted 8.9%.

During the quarter, the S&P 500 Index advanced 10.9%. Our biggest problem during the quarter were the lack of winners in our long portfolio and a strongly rising market. The largest positive contributors were long investments in gold and Kyndryl Holdings, equity index hedges and macro positions tied to a weaker U.S. dollar and lower short-term interest rates. The largest detractors included a short position in a profitless technology company and health care equipment business. Gold was the largest positive contributor as its price appreciated about 6% over the quarter. Kyndryl Holdings shares advanced 34% during the quarter.

In May, the company announced strong quarterly results, marked by a return to positive net revenue growth and a significant increase in new customer signings.

Also, the company raised its guidance for fiscal year 2026. In macro, our SOFR futures position benefited as the market priced in additional interest rate cuts from the Federal Reserve. Also, our long euro and yen positions were positive contributors as the dollar weakened further. The largest detractors included several short positions, primarily in profitless tech and similarly speculative companies, which all rallied significantly.

We found ourselves on the wrong side of a couple of short squeezes, which we had to risk manage, which means taking a partial loss. In the long portfolio, Brighthouse Financial declined 7% as the market speculated that a possible takeover may happen at a smaller premium than originally expected or possibly not at all.

Throughout the quarter, there was a lot of economic activity designed to get ahead of the tariff implementation. As tariffs have now mostly come into effect on August 1, we believe that there will be a reversal of some of that front running and expect it to show in the data over the next several months.

While the losses were mostly on the shorts, our underperformance came mostly on the longs. As we contemplate the reason why we believe that the economy is doing worse than generally understood as many of the companies actually on both sides of our book are reporting weak results. The main difference is that the investors had more commitment to look through the weakness on our short names than on our long names.

Our net exposure ended the quarter at about 2%, down from 20% at the end of the first quarter. Solasglas returned negative 4% in July, bringing the 2025 year-to-date return to negative 1.2%. Net exposure for the investment portfolio was approximately 7% at the end of July.

We continue to make progress on our underwriting portfolio and expect that the repositioning away from open market casualty into other better risk-adjusted lines will contribute to our results over the intermediate term. Last week, we held our Annual Shareholders Meeting, and I'm pleased to announce that all the proposals passed by over 90%. I want to thank all of our shareholders for their vote of confidence.

And now I'd like to turn the call over to Faramarz to discuss the financial results.

Thank you, David, and good morning, everyone. During the second quarter of 2025, Greenlight Re reported a net income of $0.3 million or $0.01 per diluted share compared to a net income of $8 million or $0.23 per diluted share during the second quarter of 2024.

The consolidated underwriting income was $8.1 million, resulting in a combined ratio of 95%, which was 4.9 points better than second quarter last year, primarily due to no cat losses in the quarter. Our investments in the Solasglas fund lost $18.3 million during the second quarter, while other investments earned $10.5 million income, the majority of which related to interest on restricted cash and cash equivalents collateralizing our obligations to cedents.

Now let's look at the second quarter results by segment. For the quarter, the Open Market segment grew net written premiums by 8% to $142.1 million. The increase was driven primarily from growth in the FAL business. Meanwhile, the casualty premiums decreased during the quarter as a result of nonrenewing the casualty book.

The Open Market combined ratio for the second quarter improved by 2.1 points to 92% compared to 94.1% for the same period in 2024.

The current year loss ratio increased by 1.8 points, primarily related to the casualty book and a transactional liability program. The higher loss ratio was offset by lower acquisition cost ratio, which improved by 3.1 points on lower commissions.

The segment reported a net favorable loss development of $0.9 million or 0.7 combined ratio points, resulting from $9.7 million release of our specialty reserves, partially offset by reserve strengthening of casualty and multiline programs and a transaction liability program.

The Open Market segment reported a pretax income of $16.8 million, composed of underwriting income of $11.2 million and investment income of $5.6 million.

The Innovations segment grew net written premiums by 2.3% to $22.7 million during Q2. The increase was mainly driven by Syndicate 3456 and some specialty programs, partially offset by decrease in casualty premiums. Our whole account quota share retro program, which incepted in Q4 2024, also contributed to lower net earned premiums compared to the same quarter of last year.

The combined ratio for Innovations segment was 107% during the second quarter compared to 90.9% in Q2 last year. Unfavorable prior year reserve development contributed 11.8 points to the Innovations segment combined ratio compared to favorable development of 6.5 points in Q2 2024.

The $2.5 million of adverse reserve development related to two specific programs that reported greater number of claims than expected. We are already working with our partners to implement corrective actions on these programs. The combined ratio benefited from lower attritional loss ratio and lower acquisition cost ratio, which improved by 0.8 points and 5.1 points, respectively.

The expense ratio for the Innovations segment this quarter was 7.6% compared to 3.9% during the same quarter last year due to a combination of growth in personnel and increase in direct costs attributable to the segment and lower earned premiums.

Outside of the two segments, the runoff homeowners property contracts suffered adverse development of $1.5 million during the second quarter. Foreign exchange gains in the quarter were $6.3 million, primarily driven by a British pound sterling-denominated balances as the pound strengthened against the U.S. dollar.

We ended the second quarter of 2025 with our fully diluted book value per share growing to $18.70 -- sorry, $18.97, an increase of 7.5% since the second quarter of 2024. This included the impact of the $5 million of shares repurchased in the second quarter. That concludes our prepared comments. The operator will now open the line for questions.

Thank you. [Operator Instructions] We reached the end of our question-and-answer session. Should you have any follow-up questions, please direct them to Karin Daly of the Equity Group Inc. at [email protected], and we'll be happy to assist you. This now concludes Greenlight Re's Second Quarter 2025 Earnings Conference Call. Thank you. You may now disconnect.