Company: GLRE
Filing Date: 2025-03-10
Form Type: 10-K
Source: 0001385613-25-000007
Chunk: 259

Company: GREENLIGHT CAPITAL RE, LTD.
Filing Date: 2025-03-10
Form: 10-K
Item: Item 1
Chunk 259
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. Although the methods for establishing reserves are well established, many assumptions about anticipated loss emergence patterns are subject to unanticipated fluctuation. We base our estimates on our assessment of facts and circumstances, future trends in claim severity and frequency, judicial theories of liability, and other factors, including inflation, interest rate changes, political risks and the actions of third parties, which are beyond our control. 

Another significant component of reserving risk relates to the estimation of losses in the aftermath of a major catastrophe event. Accordingly, we believe the most significant accounting judgment made by management is our estimate of loss and loss adjustment expense reserves. For more information on our reserving process and methodology, refer to the “Critical Accounting Policies and Estimates - Loss and Loss Adjustment Expense Reserves” under “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

See Note 7 “Loss and Loss Adjustment Expense Reserves” of the consolidated financial statements for a reconciliation of claims reserves, loss development tables by accident year, and explanations of significant prior period loss development movements.  For a discussion on risk factors relating to loss reserves, see “Item 1A. Risk Factors — Risks Relating to Our Business — If our losses and LAE greatly exceed our loss reserves, our financial condition may be materially and adversely affected.”

Collateral Arrangements and Letter of Credit Facilities

We are licensed and admitted as a reinsurer only in the Cayman Islands and the European Economic Area (the “EEA”). Many jurisdictions, including the United States, do not permit clients to take credit for reinsurance on their statutory financial statements if they obtain such reinsurance from unlicensed or non-admitted insurers without appropriate collateral. As a result, our U.S. clients and some non-U.S. clients require us to provide collateral for the contracts we bind with them. We provide collateral as funds withheld, trust arrangements, or letters of credit (“LOC”). For further information, see Note 9 - “Debt and Credit Facilities” of the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data”.

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Competition

We compete for reinsurance business in the Cayman Islands and European markets, The global reinsurance market is highly competitive. Competition is generally influenced by a variety of factors, including available capacity, service, financial strength ratings, prior history and relationships, and price. We compete with major global reinsurers, most of which are well-established and have significant operating histories, strong financial strength ratings, and long