Company: GLRE
Filing Date: 2025-03-10
Form Type: 10-K
Source: 0001385613-25-000007
Chunk: 485

Company: GREENLIGHT CAPITAL RE, LTD.
Filing Date: 2025-03-10
Form: 10-K
Item: Item 1A
Chunk 485
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The compensation arrangements of Solasglas may create an incentive to effect transactions that are risky or speculative.

Pursuant to the Solasglas LPA, each of Greenlight Re and GRIL is obligated to pay a performance allocation of 20% to DME II at the end of each performance period based on its positive performance change to its capital account, subject to a modified loss carry forward provision.

The loss carry forward provision contained in the Solasglas LPA allows DME II to earn a reduced performance allocation of 10% of profits in any year subsequent to the year in which Solasglas has incurred a loss until all losses are recouped and an additional amount equal to 150% of the loss is earned.

While the performance compensation arrangement contained in the Solasglas LPA provides that losses will be carried forward as an offset against net profits in subsequent periods, DME II and DME Advisors generally will not otherwise be penalized for losses or decreases in the value of our portfolio under the Solasglas LPA. These performance compensation arrangements may incentivize DME Advisors to engage in transactions that focus on the potential for short-term gains rather than long-term growth or that are particularly risky or speculative.

DME Advisors’ representatives’ service on boards and committees may place trading restrictions on our investments and may subject us to indemnification liability.

DME Advisors may, from time to time, place its or its affiliates’ representatives on creditors’ committees and/or boards of certain companies in which Solasglas has invested. While such representation may enable DME Advisors to enhance the sale value of Solasglas’ investments, it may also prevent Solasglas from freely disposing of investments.  The IAA provides for the indemnification of DME Advisors or any other person designated by DME Advisors for claims arising from such board representation.  

We and Solasglas are exposed to credit risk from counterparties that may default on their obligations to us.

We and Solasglas are exposed to credit risk from counterparties that may default on their obligations to us or it. The amount of the maximum exposure to credit risk is indicated by the carrying value of our and Solasglas’ financial assets. In addition, Solasglas holds the securities of our investment portfolio with prime brokers and has credit risk from the possibility that one or more of them may default on their obligations to Solasglas.

Issuers or borrowers whose securities or debt Solasglas holds, customers, reinsurers, clearing agents, exchanges, clearing houses, and other