Greenlight Capital Re, Ltd. (GLRE) Earnings Call Transcript & Summary

Well, hello, everybody. Welcome to the Greenlight Re Investor Day. It's great to see so many of you in person after all these years we've had tremendous number of Zoom calls. And this is my first time in the city since early 2020. So it's great to be back. I think I haven't been given instructions here. I think there's a presumption I know how to do this, but -- there we go. So before we get started, I'm going to have you read 2 slides. There we go and this one. There'll be a test later. So I'm joined by a few of my colleagues, obviously, our Chairman, David Einhorn is here, and several members of the management team. Pat O'Brien, who's CEO of Cayman Island; Neil Greenspan is our CFO; Faramarz Romer is Chief Accounting Officer and Treasurer; and Brian O'Reilly, is Head of Innovations. The rest of the team are doing real jobs today back at their offices. You've seen the agenda, I'm sure. I'm going to cover an overview of strategy and recap our past performance, give you an idea of what the future opportunity looks like and then hand it over to Brian and Pat for underwriting innovations, David's next for Solasglas and Neil and Faramarz will cover final update, which we're all looking forward to. There'll be Q&A at the end. So if you don't mind holding your questions, we'll give you plenty of time to engage with us after the prepared remarks. Okay. So here's a snapshot of the company. We have 3 regulated and licensed and rated entities, Greenlight Re in Cayman, Greenlight Re in Ireland are both licensed as reinsurance companies. The Syndicates in Lloyd's 3456 is a new addition this year. That's licensed to write both insurance and reinsurance business. And that's a critical addition to the group because a lot of the innovations derived business that we're seeing now -- we're going to cover that later is, in fact, insurance business. So now we have a home for much of it in the Lloyd's Syndicate. Each of the entities carries an A.M. Best rating, were A-rated in the group and the Lloyds Syndicate benefits from the Lloyd's Global A rating and global licenses. Our objective is quite straightforward or at least simply stated, I should say, which is to maximize growth in book value per share subject to risk and operating constraints. I'll just make one comment here on the operating constraints. They can be meaningful, but they do tend to be external as opposed to derived from internal or organizational inertia. We don't have silos of fixed expense that we have to cover that can distort decision-making. So our external constituents, people like the regulator rate agency clients and brokers. They all care, how we're structured, they care how we transact. But otherwise, internally, we're extremely agile. So I'm going to dwell on this slide for a few minutes, so get comfortable. Our strategy is threefold. Not least, there are 3 pillars to our strategy. Let's start with open market underwriting. There are 2 themes here I want to focus on. One is our agility. And the second is our relative focus on short-tail specialized risks versus long tail risks. Why do we do that? If you look at the short tail exposure, on the face of it, it seems that there's a fair amount of volatility. This is [ CAT ] business. We had hurricane Ian recently. The Ukraine war was a hit to some short tail business. Satellites malfunction, planes crash, there are riots and distractions around the globe. There is some short-tail volatility to this, but we get very rapid claim discovery. First of all, they tend to be events that you read about in the headlines. Secondly, the Ukraine war side, which is a rather slower burning event and quite unusual. Otherwise, they tend to be quite rapidly discovered from a claims perspective. And that's critical because we get to then -- the industry gets to reflect on the policies we sold, the terms and conditions under which they've been sold, the price that we got for this and reconsider every year at renewal, whether that was the right price, whether to reprice and what to do about it. And in fact, we're in exactly that dynamic now. In a few minutes, I'm going to talk about the prospects for the company and the industry but there is thorough repricing of risk going on, on the short tail side today. Long-tail risks are almost an entirely different skill set to address. We've not focused on those skill sets. We do write some long-tail risks. They tend to be story risks where there are reasons that the industry have overlooked them or mispriced them in some way, we're very selective. But the considerations on the long tail side are look, you wrote some business. You wrote some policies 20 years ago. Now we're reflecting on an opioid crisis, which is devastating for communities, people are dying. We call it a crisis today, but we didn't call it a crisis 20 years ago. And there were many years of liability coverage sold to counterparties under the premise that this sort of event was very unlikely to happen, but it did happen. You might say, well, why is that different to short tail risks? That's because the discovery of the claims and the losses can happen decades later, and you have no ability to reprice or readjust your exposure. Now that's not to say that the long-term casualty business is not viable in our industry. It most certainly is. My view is though that, that tends to be the domain of large companies, large insurance companies with giant operational reach and complete visibility and market power. It's not a class that a relatively small agile reinsurer should be dabbling in. As I said, we do write some longer-tail business, but it tends to be the story -- the story placements. The agility really goes hand-in-hand with that long tail versus short tail. We don't build silos of expense we're covering deep amounts of fixed expense that can distort decision-making. Frankly, if you're presented with an opportunity, you may consider it necessary to cover a fixed expense in a team. We don't have that problem. We're able to deploy our capital in the best ideas. And the live example of that was the auto class. The company was very heavy in the auto business a few years ago. I think it represents low single digits of our portfolio today. We made the decision right around the middle of the pandemic as the frequency and inflation started to kick in on auto repair bills and frequency of events to basically come out of the class. That would not have been possible if we were a large company with greater operational reach and silos of underwriters. On to innovations. So the thesis here is that we live and work in a tremendously inefficient industry, the insurance industry. The statistic I've heard is upwards of 40% of every dollar of premium that's paid into the insurance industry in aggregate ends up being absorbed by expenses or capital servicing. And that is a horrifying statistic. The innovation thesis is -- and of course, why is that happening? We -- it's not unusual for a risk to be touched by something like 100 people you have an agent that may place it into an MGA, an insurance company paper behind that, perhaps a reinsurance company. Each one has its own level of claims and underwriting and processes and made in back office and financial employees. There could be 100 people touching your home insurance policy in some form or other until it's done. And that is really horrifying. And I think a bit of an embarrassment for the industry. Our view on the innovations -- of our innovation strategy is designed to leverage the gap that exists between the 60% and the 100% of premium that's actually returned versus paid. There's a tremendous amount of room there for good ideas. Going into this, we had no particular view of what those good ideas were. We've since come across a tremendous number of them. Brian will cover that in more detail later. And it's been a very successful business for us. Why do we focus on early-stage investments. For the investment that we make, we have a high level of both influence diversification. This is a bigger portfolio and optionality on future business flows that we wouldn't get with medium to later-stage innovations opportunities. Solasglas is a critical element of our strategy, obviously. The company was founded by David and is built around the Solasglas investments. It is designed to achieve a higher rate of return over time. Critically, it is also uncorrelated to our underwriting operations. Okay. So I'm going to want to spend the next few minutes. I've got a couple of slides here examining our performance over the past few years by strategy. First up is underwriting. We have the combined ratio here, which is the generally accepted measure of underwriting performance in the industry. I might argue with that, but that's what we use. We have result in 2020, 100.4%. So we did pretty well. 2020 was dominated by COVID. We are relatively light on the casualty side. So it shouldn't be a surprise that we did relatively better than our peers through the COVID-dominated year. We're only 1 point behind the leader of the chart there and a good 11 points ahead of the other end. 2021 was more of a car year, Hurricane Ide and floods in Europe dominated. So that tended to be more impactful for short-tail specialty companies a bit like us. That left us mid pack just over 100% combined ratio. This year, not a dissimilar situation. Ukraine extremely unusual and unexpected events. And then Hurricane Ian a few weeks ago, which really messed up everyone's Q3. The -- we don't have Q4 yet, of course, a number of companies yet to report. They tend to be -- some of the London companies that haven't reported yet. My best guess is we'll end up somewhere in the middle of the pack. I would say, though, that the industry experience in 2022 has -- is fairly deep into the tail between a combination of Ukraine and Hurricane Ian. This is not a normal year, but the rates have been increasing at such a pace over the past few years that we all have a pretty good shot at breaking even. And the pace of the rate increases continue to accelerate. So I'll leave you with that. We -- I have some more to say on that in a few slides. On innovations, I won't get too deep into it. Brian will cover it later. We've deployed -- we've invested a total of $21.5 million from this section. And this team was put together in 2018, not long after I joined the company. So we've been doing this for a while. Our current carry value is just over $60 million. Neil, will have something to say about that. So I consider it quite a conservative position we're taking on the carry value. It has been a tremendously successful venture. It is not done. The objective of the innovations unit is not to necessarily to generate outsized investment returns. We will take it. We're happy to see that. The objective is to connect high quality, to drive high-quality underwriting opportunities through investments and partners, but the investment side has performed exceptionally well. Here's the Solasglas performance over the past 2 years. David will cover this in some more detail later. Obviously, it's running tremendously well this year, in particular. So that being the elements of our performance, let's look at what's happening to equity in the industry this year. So this is change in GAAP shareholders' equity in 2022 year-to-date. And this is most of our peer group. The only absent peers or some of the private companies that have reported. What's going on? We've lost 2% of equity. I assure you nobody is happy about that. Our intent is to grow book value. Having said that, on a relative measure, we're doing exceptionally well against our peers. The difference is the investment strategy. So many of our peers, the traditional investment strategy of the industry tends to be fixed income. Bonds of various durations, ostensibly matched to liabilities. And with the expansion of the yield curve that we've seen over the past few months that appears to be continuing today, there was a Fed quote this morning, which has rattled markets again, indicating that policy rate could well exceed 5% or should exceed 5% going forward. I think there's every chance that there's going to be more carnage in Q4 among those that are holding fixed income as the backbone of their investment strategy. There is a school of thought that this is academic. This is not real losses. These bonds will be held to maturity. The rate agencies will not necessarily agree with that. My point is that we're not -- I don't present this to declare victory over the industry. I present this as a background for a tremendously strengthening marketplace with a vast exit of reinsurance capital that's really yet to be counted. And here we are in middle of November, and clearing the reinsurance market at year-end is going to be potentially a challenge and that's the first time I've ever said that in my career. Where does the market place us? These are price-to-book ratios in the industry is a capital -- reinsurance is a capital heavy business. So price to book is a reasonable scorecard of how we're doing. This is how the market views Greenlight Re. It's easy for me to say that I consider us underpriced. I do certainly in the context of the last few slides our performance. But what I will say is that in my view, as long as we continue to execute and generate the performance that we've shown, that we're capable of and in immensely improving marketplace I think there's a tremendous amount of upside potential in our store. So what does the next year or 2 look like is from an underwriting perspective. We came into 2022 with the view that these conditions were probably the best we've seen in at least a decade. And I think that was a conservative view. Since then, we've had the Ukraine war. We've had a rapid increase in inflation, which is pressuring particularly the long tail business that is inflation sensitive and reserves for that. We've had the bond valuation issue, which you've just seen, and we've had hurricane Ian and which was a tremendous impact on industry capital. So coming into '22, exceptional conditions. We are entering potentially unprecedented territory in terms of the attractiveness of reinsurance pricing. There's no doubt in my mind that whereas for the past couple of decades, reinsurance pricing tends to be fairly tightly coupled to pricing, a technical pricing perspective. Here's what we think this risk will cost us, here's what we think we need in terms of premium and the delta is the profit expectation. Now it seems to me that reinsurance pricing is dominated by supply and demand and there is a potential decoupling of premium against risk. To back this up, we have a couple of charts here. One on the left is Guy Carpenter's Rate Online Index. That's for Cat-only. It's not terribly credible if you look at bars, 10 years apart, but directionally, it is super accurate. And the takeaway here is that 2023 will be the sixth year -- sixth successive year of rate improvements in the CAT business. On the right, Lloyd's published their risk-adjusted rate change. And that's what this looks like. They've had 19 consecutive quarters of rate improvements. That's through the first half of 2022. And that's likely to continue through the end of the year and into next year. What's the investment outlook look like? So from an innovation perspective, valuations are somewhat off their peaks of 2021, but that only strengthens our thesis. We believe that early stage valuations, which is why we play consider to be more attractive today. And to the extent that many of the partners that we work with are building -- developing their own MGAs with a path to profitability. MGAs continue to be, and I expect will always be likely highly valued. These are not speculative investments in that sense. Our 5 largest partners have raised capital since October '21, we consider them well funded. Solasglas, David will cover in a few minutes. Just before I pass on to Pat and Brian, just a word on ESG. So across our underwriting book, we intend to support a responsible net zero transition. We support diversity, quality and inclusion in -- among the workforce and that's backed up by published statistics and in 2022, we heard the feedback from some of our shareholders, and we revised executive compensation plans to better align the plan to performance and to shareholder returns. And 2021, the Board was refreshed and diversity was improved. Pat?

And good afternoon all. It's nice to be here and have the opportunity to talk to you about our underwriting strategy. So Simon has alluded to the underwriting strategy at a high level. I'm going to try to get into a little bit more detail around some of the specifics of that. So the first thing to say, as Simon alluded to is we have 2 reinsurance platforms. We have a platform in Dublin and the platform in Cayman. We have a very consistent approach as to how we approach underwriting in both those geographies. It was exactly the same process, the same people involved ultimately in making the underwriting decisions but we have slightly different strategies in each of the companies, and that's based on a mix of expertise and geography. So the Dublin company focuses predominantly on London market specialty business. So we focus on London and international business. From a class of business perspective, it's classed as aviation of the space, marine and energy, terrorism and political risk, and funds at Lloyd's. And I'll talk a little bit about funds at Lloyds a little bit later on because that's becoming a material part of our book. Our Cayman operation then focuses predominantly on U.S. and Bermuda markets. And from a line of business perspective, this is a slightly different focus. So the main classes of business there, our mortgage, some property. I'll talk a little bit about property later on. Financial lines and casualty. As Simon said, we're relatively light on the casualty side and the business that we write ourselves. Professional liability and a little bit of cyber again, we're cautious on the cyber class. We've got a good underwriting team. We've been building the resources on the underwriting side over the last couple of years. And indeed, we announced some promotions in the underwriting team back in October. So we feel we've got a strong solid team now in place to take advantage of the market opportunity in 2023. And we're very much focused on generating underwriting profits in a disciplined manner. And I'll talk a little bit about how we've changed the mix of business over the last couple of years in order to achieve that. So on to the mix of business. So what we've got here are a couple of slides which show how the portfolio has evolved between June 2017 and the current in-force book now. And I guess the reason why we're using June 2017 is that's more or less when Simon joins. So at that point in time, we decided that we wanted to look at our strategy and change the strategy to something which could generate better underwriting profits for us as we go forward. So the business we had in 2017 was heavily dominated first of all, by the auto class, and it was also heavily concentrated in a small number of seedings. So when we looked at that book of business, I guess we felt that it didn't have the long-term potential to generate the type of underwriting profits that we want to generate. So we embarked on a change of underwriting strategy to change the mix of business and also to diversify the business so that we would have much less focus on individual seedings and we have a much better balanced book of business. So we think we've achieved that over the last couple of years. It's a slow process to take an underwriting portfolio and changes, particularly in difficult market conditions, but we feel we've achieved that over the last couple of years. We've now got a book of business, which is well diversified. So we have key lines such as property, casualty and specialty with financial lines also a major contributor and we're much more balanced from a diversification perspective. We have no real concentration now in any one seed. And the best way really to show the change and the radical change that we've had over the last couple of years, is a statistic there that we have only 7% of the business that we have on the books today was on the books a point time in July in 2017. So this is a very different book of business. It's a book of business that we have specifically designed in order to generate underwriting profits going forward, and we're very optimistic that we'll be able to do that in 2023 and beyond. I want to talk now about 2 aspects of our business, which we feel are worthy of mentioning today. So the first one is what we call our funds at Lloyd's book. And everybody may not be familiar with that. So just to explain that a little bit upfront. So what we do with funds at Lloyd's is we provide capital and reinsurance capacity to Lloyd's syndicates. So it's effectively a quota share of an individual Lloyd syndicate. We first started doing this in 2015 in a small manner. And in 2021, we significantly increased our exposure to Lloyd's to the extent now that we're now providing funds at Lloyd's capacity to 15 syndicates for the 2022 year of account. So first of all, maybe to explain why we took that approach and why we decided that we wanted to be more heavily engaged in the Lloyd's market. So the first issue is that Lloyd's itself has an excellent track record of recording profits in hardening reinsurance market. As we look to the market opportunity, we felt that the market was going in the right direction, that Lloyd's was a good place to be for 2022 and 2023. Lloyd's itself has had some challenges over the last couple of years, but let's put its house in order. There's been a change of management there and a strong focus on underwriting profitability. We've seen improvements in the non-cash loss ratio, so it's down 10 points between 2017 and 2021. The expense ratio was down 4 points. So between them, that's a 14-point improvement in underwriting profit. And as Simon alluded to earlier, they've had very significant consecutive quarters, so 19 quarters of rate increases and more to come. We're a small specialty reinsurer, and I guess that poses some limits as to what we can do with the size of the staff that we have, the technology spend that we have and so on. So I think Lloyd's offers us the opportunity to leverage what's there. So there's a lot of expertise there, there's access to business. There's a lot of risk management skills. There's a lot of reinsurance within each of the syndicates, which we get advantage of. So it's a way of us getting a very diversified portfolio without necessarily investing in increasing our overall profile and maintaining the agility that Simon alluded to. And finally, our Lloyd strategy means that we build strategic partnerships with 15 different Lloyd syndicates and we get access to their outwards reinsurance. So that's a great source of business for us in writing some of our core specialty lines. So that's our funds at Lloyd's strategy. The second part of the strategy I want to talk about is property and property cash specifically. So it'd be sort of remiss of us to have a presentation here and not at least touch on property cat. We're not a major property cat writer. So we do write some property cash, but we've been somewhat cautious on us over the last couple of years. But it would be fair to say it's had a material impact on our results over the last few years, too. So as recently as Q3, we took a $19.5 million hit on Hurricane Ian. So it is an impact on our results. Our view of the property cat market is over the last couple of years, it's been quite dysfunctional. And as a result, we've scaled back our capacity. The market hasn't evolved to reflect the increase in severity or the increase in frequency that we've been seeing over the last couple of years and that needed to change. So we consciously have reduced our exposure to the property cat market. And maybe a good way to show that is the exhibit that we have, which looks at the hurricanes, Harvey, Irma and Maria, which happened back in 2017. So those hurricanes happened a quick succession between August and September 2017, and they cost us $55 million at that point in time. We monitor our portfolio on an ongoing basis. We have hired a head of exposure management in the last 12 months, and we've got a lot of sophistication around how we model our cat exposure. As we look at the cat exposure that we have now, if that event was to reoccur, it would be cost to 60% less than it did in 2017. So that gives you an indication of how we reduced our property cat capacity over the last couple of years. I should say, as Simon alluded to, that the property cat market is changing somewhat as we speak. So where the market was in some distressed pre-hurricane Ian. Hurricane Ian obviously has added additional distress to it. So we're watching very closely to see what might happen over the next couple of months. And it may be if the opportunity is right, that we will allocate a little bit more capital to property cash because we continue to be generally cautious in that space. So that's a whistle stop tour of what we have on the underwriting side. I'll turn it over now to Brian who's going to talk a little bit about the innovations unit. Thank you.

Okay. So Brian O'Reilly, so I'm the Head of Innovations here at Greenlight and what did I just kill it? -- so yes, the innovations group started in 2018. So I was part of that founding team there and we've really gone to market with the early stage because, as Simon pointed out, we bring a lot of value to these companies. And I think that's important to point out here. So as a reinsurance company, we have access to a lot of market intelligence. We know exactly what's going on. We even know what classes of business they're doing well, which ones are doing poorly, inefficiencies and things like that. And so when companies come to us, we can bring a lot more than just an equity investment or just reinsurance capital to the table. So we really try to be an extension of these companies. And so most of the work that we do is actually around partner selection, finding companies who have a similar view of the underwriting space and where they're actually going to contribute to our underwriting margin rather than just enter a market and get it through high acquisition costs and are really not focused on underwriting profitability. So we do a lot of work around that. And so I just thought it be good to point out that a lot of things we add. So capital is one, of course, equity investments that we make. We have 29 investments that we've made and the average investment size is around 700,000. So it's meaningful for these early-stage companies, but it's still not massive for them as well. So we're -- we think that's the right size to be in for these companies. We bring outside of capital like I said, the expertise. And one of the things we've built over the last 4 years is a significant investor network and carrier partner network. So a lot of the companies that we work with are fronting companies in the U.S. And so engaging with them, being good partners of them, bringing them opportunities has been very helpful for the companies we're involved in as well as our partners on the carrier side. I'll touch on the syndicate in a bit but now that we have insurance paper that really changes our positioning in the market where typically, we're just a reinsurance capacity provider, now we can actually be on the front lines and capitalize on a lot of the work and effort that we've done. So yes. As far as how many opportunities we've seen, it's clearly over 1,200, 1,300 companies that we've seen. So we get a lot of access to opportunities just by one, being active and also word of mouth with our partner companies. So just making sure that they echo the value that we bring to them has been extremely fruitful. And so a lot of the companies are now coming inbound. So 2018, there was more proactive reach-out, hey, here's what we're thinking about doing. But nowadays, it's kind of coming the other way. So that's been a really positive story and turnaround from when we first started. Also here just on that point too. So we are considering opportunities to monetize that. That's more on the leveraging our position as being the insurance paper at Lloyd's. So now we can also be on the other side, where typically we're paying fees or overrides to get access to business, now we can leverage that position to improve it. Additionally, with some of these companies, because capacity is so important to their survival, there's opportunities to get warrants for providing that capacity, too. So that's something we have done and we'll opportunistically do in the future as well. So again, just kind of reiterating a couple of things that I was just saying, when we set up the unit it was really to kind of do some repositioning of our -- of the company. And I kind of settled on these 4 kind of pillars, not pillars, but 4 points here where we've really seen the benefits from setting up the innovation unit. So accessing differentiated markets, and I'll talk about some of these on the next slide. But being the reinsurance position, we're typically seeing higher volatility business. But now when we're engaging with partners on a more direct basis, is lower volatility. We can expand in other geographies. We can leverage expertise of individuals that are starting this business. So that's been hugely beneficial. Also, as I said, with partner selection, that's a key thing that we look at in the reinsurance space, there's often a bit of an adversarial relationship. When we're taking a long-term view, there's kind of better transparency, better sharing of information, better understanding of how the companies are going. And so that's been hugely helpful. And so one of the key things that we look for when we're engaging with partners. Also, yes, like I said, we're seeing so many opportunities. We're getting access to markets that we haven't seen in the past and really broadening the scope of what we're able to do both innovations unit and also kind of feeding that back into the reinsurance underwriting team. And then obviously, the investment upside. So one thing to point out is we are looking at opportunities. We are -- the first question we're kind of asking ourselves and our team of 5 is how does this benefit the reinsurance enterprise. We're not making an investment because we think this is going to produce sky high returns. We're saying, how is it going to benefit our company. And so we look at the investment upside as kind of an alignment balancers a way to enhance the total relationship. So that's been pretty key over the last 2 years just making sure that, that's how we're looking at opportunities. And I thought also just to be helpful. These are not -- this is not the entire portfolio, but I thought I'd just give a couple of highlights of companies. And there's a bunch of different ways we could have split it up but kind of settled on niche and established products because established products are kind of traditional markets. They're the most efficient, but where we have been starting to be more active is what we're calling niche here and so a couple of examples here. We just announced an investment in a company called Safely that does kind of a unique commercial insurance policy for vacation rental owners. So when they're renting a property to somebody through a booking engine, there's now a policy that covers it. And so it gets rid of that kind of adversarial kind of short-term tenant versus landlord relationship. Another company that we got involved with is Player's Health. So they're active in the amateur sports world and that's a very unique space because it's both health and general liability. And so they've also developed risk management tools to help these companies derisk their entire portfolio of athletes and parents and things like that. So by providing them with the capacity to get to market in somewhat of a distress base, it's been very accretive to the portfolio. Another one that we got involved with early this year is MIC Global. So it's Micro Insurance Company -- Micro Insurance Company Global. So they're active in a lot of emerging markets and have been -- they've actually been around about 20 years, but have really pivoted towards an embedded model for emerging markets and sample products that they have, one of them is porch theft insurance. So like stuff like your Amazon package on the front door, if that gets stolen, this pays out. And so what's interesting about that from our perspective is these are $100, $200 limit policies, we're not typically covering that type of insurance. So that's been an interesting example of now how we're getting access to business that we haven't historically, less volatility, should be profitable. They've been around for many years and have done this for about 4 years on the underwriting side, but they've been active in enabling that. So another example. And then just on the traditional side, which we're calling established. I thought I'd point out kind of openly in Shepherd. So on the partner selection side, openly, the CEO as an actuary. The entire team is comes from an underwriting background. So they're kind of insurance people that put a technology bent on their business model, making it tech-enabled and they truly understood our value prop. And that's been a very good partnership that we've had to date. Another one is Shepherd. So similarly, they're a bit more early stage. We got involved with them last year. So they went to market this year. Interesting fact on them is they've got 13 employees in the company, 6 of them are on the underwriting side. So we look at how important is underwriting to their operation, how much they value underwriting and how much focus do they put on that. So that's been another one that's worked out quite well. But I just gave a highlight, there's more in there, but I wanted to illustrate the diversity of the opportunities that diversity of the partnerships that we have. And last one here, just kind of reiterating what we're doing on the underwriting side. So as Simon pointed out, we have a Syndicate at Lloyd's, which has been huge now that we're sitting in an insurance position. We've got more global reach. Our opportunity set is growing even more or even more important to our partners. But historically, we've been involved with fronting companies in the U.S. and so we have a significant amount of partnerships there, where we're the reinsurer. And then last one here, as I pointed out a couple of times is where we're looking for opportunities is where it's accretive to the underwriting portfolio because in reality, we see to get an underwriting deal over the line, we're competing with opportunities in the market. As Simon's also pointed out, it's a hard market right now. So this is very -- this is a scarce capacity all around. So we are competing for access to our portfolio just like everybody else is. So to date, we've had 15 underwriting capacity relationships with our partners. And other ones in the portfolio are in the works. So this is just as of now. We've got quite a few investments that we've made earlier in the year that we expect to turn into underwriting partnerships. And to date, we're at 12% of the net written premium through September 30, 2022. So excited about how things are going and expect that number to grow in the future. So that's it. And I think David is up next.

Well, hello, everybody. And first, let me say I'm really excited. We're here live together in New York and in-person event. It's been a long time coming. And Zooms and conference calls are nowhere near as much fun as I'll call it cocktail hours afterwards, but sandwiches before and just seeing faces and getting to talk to you all in person. So thank you for being here. And I hope we keep your interest so that you want to come back again in future years. I founded and managed Greenlight Capital in -- starting in the hedge fund starting in 1996. In 2003, we founded Greenlight Capital Re and the goal was the same investment strategy as the hedge fund to generate profit through the reinsurance cycle by hiring great underwriters. Our investment strategy, obviously, is different from other reinsurance companies. DME Advisors, which is an affiliate of Greenlight Capital with very convenient initials, manages the capital the same as we manage Greenlight capital funds with some tighter investment guidelines and constraints that the Board oversees. We invest long and short in equities and distressed debt when cyclically attractive. The investment portfolio has returned 4.7% annualized since inception with a net average exposure of 32%. Greenlight Re invest through a fund of one structure, which is called Solasglas Investments. DME Advisors is the general partner and currently owns about 20% of the assets of the fund. We have closely risk-managed the portfolio exposures post our 2018 loss and the risk assets have not been static. Currently, 50% of Greenlight Re's book value is invested in the strategy. Our largest positions don't change often and we continue to manage single-name shorts prudently and use indices and baskets to manage overall net exposure. We've created significant alpha this year despite both equity and fixed income markets generating double-digit losses. Here's the historical annual returns for the Greenlight reinvestment portfolio. For the first 10 years, we compounded at an attractive absolute rate of return of 10.1% annually. Since then, we had 2 very poor years 2015 and 2018. And you can see on the top right, our 1-, 3- and 5-year analyzed returns through the end of October and how we have improved performance since 2018. I'll talk a bit more about some of the changes that we've made in a minute. Our return since inception is obviously weighed down though by those 2 bad years. We've tightened our risk parameter since 2018. Our investment guidelines have now tighter leverage and lower concentration limits. We are in a bear market today, we think, and we've been managing to a lower gross and net exposures over the last year. Beginning in early 2021, we reduced single name stock exposure in reaction to the NIM stock craze and the reductions were on the short side of the portfolio. We reduced the size of individual short positions and used index hedges and baskets to help manage our net exposure. In addition, we changed our internal policy and stopped talking about individual shorts. All of these changes, we think, has served us well in 2022, and the short book generated almost all of the returns so far this year. Finally, we're proactively risk managing our largest long positions to reduce sector exposure. Part of our difficulties came from a multiyear period where value investing strategies underperformed. We believe this was caused by an enormous shift of several trillion dollars in the U.S. from active management to passive management. Active managers in general try to buy stocks that are undervalued. Passive managers don't care what anything is worth. In fact, market capitalization indexes, like the S&P 500 effectively overweight overvalued stocks and underweight undervalued stocks. The result is that when funds are switched from active management to passive management, undervalued stocks get sold and overvalued stocks get bought. The impact is that undervalued stocks become even more undervalued while overvalued stocks become even more overvalued. This put many value investors into retirement. Today, as a result, we face much less competition. And the undervalued stocks have become even more undervalued to the point where they are absurdly cheap. But the punch line is, is that so much money has left value investing as an industry they will likely never recover. But our value investing strategy is likely to perform very well and has already begun to do so. We correctly identified inflation would become a problem in May of 2020. Our strong results over the last 2 years reflect our positioning to take advantage of that. This year, we pivoted from being cautious to bearish in January that also contributed to our good performance this year. Right now, we believe we're in the middle of a bear market that has followed an enormous speculative boom. It takes both lower prices and time to work off prior excesses. The economic environment is unusually uncertain with a wide range of potential outcomes. The Fed was embarrassed by its transitory inflation call and is determined to stamp it out. Unfortunately, the Fed's tools only impact demand. In many of the ongoing issues, including shortage of supply caused by underinvestment of capital have starved old economy industries. In addition, CPI will continue to be stubbornly high due to the way it's measured. Housing inflation works on a lag as measured by owner's equivalent rent and lagged apartment rents and makes up about 40% of the core CPI. This means that high inflation is all but baked into until the middle -- at least the middle of next year. Eventually, financial stability, as measured by the difficulty in the sovereign debt markets is likely to be threatened which would cause the Fed to finally pivot. Until then, we are likely to remain in a bear market. Our positioning has not changed significantly since we took a more bearish view in January. The bar is very high for new long positions. In fact, we've only had one new sizable long-haul year, which was Twitter, which, of course, we've now exited. We're currently focused on opportunities where we expect significant cash-on-cash return through good capital allocation. Our current largest long positions all fall into this category. On the short side, we're trying to focus on ideas where we expect particular events and unprofitable companies that will face difficult challenges in the face of a recession and a lack of funding. Our goal is to be prudent with our capital management until we can more clearly see where the economy is ultimately headed. We have built a cash buffer to deploy into emerging opportunities. While we focus on our core long short portfolio, we have a macro overlay, which we've had in place since 2008 to protect from various exogenous shocks. These are things our companies cannot control like financial and monetary policy and geopolitical events. As you can see this year, our short portfolio has generated most of our returns, but macro has contributed nicely. In our longs while generating a small loss have generated significant alpha in the bear market. We have a macro position on high-yield corporate credit that should benefit as we move toward a recession. We have built a significant position in inflation swaps since 2020, and we've added some interest rate derivatives as we expect inflation to be much more persistent than what is implied by the market. We've increased our gold exposure given the difficulties that governments will face with fiscal and monetary policy. The Fed is in a tough spot to aggressively fight inflation, but the treasury still needs to finance itself and very high interest rates are a problem given our current fiscal position. The Fed might face an unpalatable choice. Gold will be -- was the only significant loser in the macro portfolio so far this year. Lastly, I'd like to discuss Greenlight Re's capital management for a moment. Our stock has been trading at a discount to book value, a big one for a long time and it's frustrating. There are several competing uses of capital. First, supporting our underwriting activities as we begin -- as we believe we are entering a great hard market. Second, to continue making small insurtech investments that can generate outsized returns and provide us unique competitive advantage. Third, investing in Solasglas and finally, buying back our shares. There's a tension among these competing uses of capital, and we spend lots of time discussing these at the Board. Given our large discount to book value, mathematically, buying back shares would seem to be the best use of capital. However, it reduces our equity and makes the business less competitive and more expensive to run given our fixed overhead. We also need to take into account the views of the rating agency. Nonetheless, we've bought back 5 million shares in the last 6 years and hope to be in a position to repurchase more shares in the future. Greenlight Re issued $100 million of senior unsecured convertible notes in August of 2018. The convert matures next August. And we've begun taking steps to repay it. We purchased about 20% of it back at a slight discount. We expect to repay the balance without issuing any equity or convertible instrument. The Board just approved increasing the allocation to the Solasglas investment strategy from 50% to 60% of surplus as of January 1, 2023. I think this is a step in the right direction and hope that we can have further increases down the line. Next, I'd like to turn it over now to Neil and Faramarz, who will dive even deeper into the finance.

Update. Everyone fired up for accounting policy discussions. Yes. All right. So just a few slides to talk about. First thing on just sitting in the context of what I'm going to be talking about is I was thinking about -- when I first entered the industry, sometime in the late '90s, a reinsurance executive, I don't know the exact one, but it was something like I'm a balance sheet guy. And the thing I like about insurance is there's a lot on the balance sheet that I can play with. And I was thinking about in terms of when I think of Greenlight, if you think of a spectrum of a balance sheet where there's a lot of stuff to play with and stuff where there's very little play with. Why not very little play with that. Now in fairness, one thing to highlight is some of it -- some of that being on that end of the spectrum is really an industry-wide shift. When I -- I mean, back in the late '90s there were entire business plans, lots of business clients devoted to large, very large, very highly structured, very complicated transactions. I mean, this is the time of -- I don't know if anyone recognize the term, finite risk and smoothing covers that the whole industry, including Greenlight, has really shifted very, very much away from that. So I mean, look at me, if I were here 20 years ago, looking at a slide like this, I would have looked at it -- I just told this is some reinsurance company. I would have looked at that big reinsurance balances receivable part of the pie and thought I wonder what's in there. Now I can tell you that now, not just Greenlight, but across the whole industry, there's not very much interesting in there, the premium receivable, and it's basically balances that we could offset. There's very, very little credit risk in there. But back to now Greenlight specifically, it goes beyond just that industry shift. We have a very, very simple, very transparent balance sheet. You look at that and you say there's no -- we have no goodwill. We have no intangible assets. We have a very simple corporate structure. And again, in terms of what you're print, I mean, you look at that biggest piece of the pie, Faramarz is going to talk to why the background for the restricted cash. But take it for me as an accountant, not a lot in cash that you can play with. It's really straight forward, as David just talked about, the Solasglas balance, these are publicly traded instruments. The one Simon alluded to right at the beginning, I want to just want to touch on quickly is the innovation investments that Brian spoke to, those are in that 4% other investment pie. That $60 million is most of that. Now Simon alluded to the way we accounted this. Our valuations are not currently based on discounted cash flow models that cut a lot of assumptions. Every single markup we've taken on those investments was based on actual transactions involving essentially identical instruments. There are future capital raises at higher valuations. Now what I'm describing here and before I move on, just emphasize, I'm talking about Greenlight as it currently stands. Who knows what the future holds? We get a few years from now or any time we could have an acquisition and something we have goodwill on the books or we could decide to account for one or some of those investments using models and using a fair value option. But as we stand right now, it's a very, very straightforward, transparent balance sheet. Talking about the -- on the liability side, now obviously, as you might imagine, what I'm going to talk about the only other slide I have is talking about that right side of the pie, that loss reserves number. We're going to talk about that. The rest of the stuff, again, very straightforward balances. Faramarz is also going to talk about that reinsurance balance is payable. That's the one thing I'll just sort of foreshadow. I won't dig into it now. One component there is deposit liabilities. Faramarz will talk to that. But the only remaining point on main subject really want to address is that loss reserves. So you see that wherever that number, I want to say, about $540 million right now, half of our liabilities is basically an estimate of how much we think we're going to pay for losses that have already happened. And from an investment perspective, the concern is, obviously, how do we know that number is reasonably -- the number is accurate. It's not going to be precise. It's an estimate. But how confident can we be in that number? And I think the best way, and it's a standard way sort of in reinsurance, the way to look at it is to think about prior year development and that's, again, my one remaining slide. So this is a picture of our prior year development since 2011. Now first, just for those not -- don't fit a lot of time in reinsurance. I just want to explain what you're looking at. Those [indiscernible] losing those downward movements. Those are not new losses. What those, let's say, downward -- what the spikes mean is the reestimation of losses that occurred in prior years. So couple -- all right. So a couple of things stand out about this. So let's look at -- if you go past that Q1 2019, looks pretty stable. We had a little bit of what we call adverse development that dipped down is where we reestimated losses. It looks a little bit worse than it did. Then we have kind of a bigger spike up, but overall, nice and stable. Now during Q1 2019 and back, that picture is not quite as rosy. And a few things months, but the key -- the biggest reason for that change is something that Pat referred to. And the one slide that he made reference is about the change in the portfolio. What I really want to point to is on that slide, he talks about the number of -- that's why I talked about the number of programs we had in 2017 and the average premium size and then how those numbers have changed now? And what that really speaks to the change, that's I think is Slide 19, but I don't trust myself to go back and look. But what that slide really speaks to there is counterparty risk. So our average premium, the average size of the programs we write is much, much smaller than it was. So let's talk to that Q1 2019, the most recent one. That -- what is that number, it's about $35 million of that adverse development. Now that was almost completely related to one cedent. It was an auto insurer and that cedent had some specific problems. As Simon called them on the earnings call, there were idiosyncratic losses that just affected that one cedent. Now it wasn't -- so to contrast, it wasn't that the entire auto industry had this huge spike. It was just this one seed. So that's the thing about how we've -- with something like -- if you like year-to-date 2022, if you can look at the slide, it's something like over 5, 6x the number of programs we're write. And the premium is correspondingly lower with each. So we're not -- it's not that we're completely immune from these idiosyncratic losses. It's just their impact would be much, much more muted because they're smaller parts of our portfolio. And so the further we get -- now that account that it had in 2019, the last time we wrote the contract with that cedent was 2017 before Simon joined. And the further that underwriting strategy goes in the past. Again, the less susceptible we get to these one-off idiosyncratic cedent specific loss because of that decreased counterparty risk. So that's really just what I wanted to highlight from the sort of the stroll down the balance sheet. I now think I'm now we're going to turn it over to Faramarz to discuss a few other items.

Thanks, Neil. Good afternoon, everyone. It's great to see so many familiar faces in person again. What we wanted to do was throughout the various investor analysts and other calls and questions we get, there's a common theme that runs through a lot of those questions. So we wanted to take this opportunity to spend a couple of minutes talking about some of those and providing a little bit more color on them. For each of these questions before we get to the answers, I'll probably give a little bit of background for those that are new to Greenlight Re. Let's get started. So this question goes back to what Neil alluded to earlier about that balance on our balance sheet for reinsurance balance payable. What is deposit interest expense. I'll get to that in a second. But to give a bit of background, in 2017, 2018 and 2019, we wrote a number of workers' compensation contracts which were highly structured. As a result, they did not meet the requirements for significant risk transfer in order for them to qualify for reinsurance accounting under U.S. GAAP. It's a technical accounting thing, but we had to treat them as deposit accounted deals. While the accounting treatment is different, the potential for adverse development on those deposit accounted contracts is pretty much the same. The difference being is the impact of adverse development on those deposit accounted contracts get reported as interest expense rather than underwriting incurred losses. However, when we report our combined ratio, we do include those deposit accounted expense in our underwriting expenses and our combined ratios. Those 3 contracts accounted for the deposit interest expense in 2021 and 2022, for those numbers that you see on the screen. Prior to 2021, the impact was negligible. Now as Neil mentioned, similar to reinsurance contracts, counterparty risk also impacts the deposit interest expense. All 3 of those contracts that I mentioned were written with 1 single counterparty. Under our current strategy, we definitely would not be writing such large contracts with 1 single counterparty. Furthermore, our current plan does not contemplate entering into any more highly structured contracts, which would not qualify for reinsurance accounting. I was a bit behind on the slides, but I think you guys get the gist of it. The next question we get is on our restricted cash. A couple of slides back, Neil showed the chart, think restricted cash is about 43% of our total assets. That's a pretty big chunk of assets, so it's fair for someone to ask what are we doing with that? What is the best use of it? So [indiscernible] common questions are, can you invest it in Solasglas fund. Can you use it to buy back shares? Can you use it to buy back your convertible notes? What kind of investment return is it generating? Before I get into the answer of that, let me give you some background on what is the restricted cash. Because Greenlight Re is not an admitted reinsurer in the U.S., our U.S. cedents require us to collateralize our reinsurance obligations. Sorry, can you guys hear me because I'm walking around, I'm not sure which mic is picking up. So our reinsurance cedents require us to collateralize our reinsurance obligations. We do that by posting collateral based on the contractual terms that are in our contracts. Generally, it's based on our reinsurance reserves and our unearned premium reserves. Those balances get trued up on a quarterly basis and, in some cases, on an annual basis, depending on the contract. We provide those -- that collateral through either LOCs, letters of credits or trust. And trust make up about 2/3 of that collateral, letters of credit are about 1/3 -- about a quarter. Those -- that collateral is invested in highly liquid short-term investments. They generate investment return, which is credited back to Greenlight Re and over the last year, as you can see in the graph, in 2022, with interest rates rising, the yield has risen in tandem with that. So to answer some of those questions now, can we invest the collateral in Solasglas, our cedents do not permit us to invest the collateral in the Solasglas fund of one or another risky asset. So they have to be fairly liquid in short tail. Can we use it to repurchase shares and convertible notes, unfortunately, no, because they're restricted. Do they earn investment return? Yes, they do. In Q3 of this year, we earned about $3 million of interest income on that collateral. We're projecting that in Q4, we'll earn between $4 million and $5 million of interest income on that collateral. One more thing. The collateral balance itself. So as you can see on the graph, over the last few years, we've been proactively bringing down the amount of collateral, especially on our old legacy contracts. As our mix of business has shifted, we expect that this trend to continue with fewer -- lower collateral requirements in the future. Now there could be spikes along the way, as you can see that in the first quarter of this year, there was some spike. But over the next couple of years, given as long as our mix between U.S. and non-U.S. cedents remains the same as it is at the moment, we expect the collateral requirements to continue going down. As the collateral is released from those the LOCs and the funds, they will be available then to use either invest in Solasglas or for the [ uses ] that we discussed earlier. I will now ask Simon to provide the concluding remarks before we get into the Q&A.

Thanks. Great. We're almost there. Just give me 1 more minute on the right slide. Okay. So we'll wrap it up here. Underwriting looks great. We think the conditions are best in, well, more than a decade. We think there is a decoupling of pricing from risk. 2 days ago, a very prominent CEO in our industry said he thought that reinsurance rates might be rising by 50% January 1. I think that's an extraordinary forecast. I don't necessarily share it, but that sentiment is starting to prevail. On the innovation side, we're a market leader. Our brand is a tremendous and Brian deserves a great deal of credit for building that over the past few years. The underwriting and investment market conditions are both highly compelling on the innovation side. And Solasglas you've heard is -- has been a tremendous contributor during a period of huge turmoil from the market and has supported the preservation of capital that we see now that we can now deploy into one of the best markets we've ever seen. So that concludes our presentation. I think we just need a minute to array ourselves up here and we'll take your questions.

Great. So do we have some questions? I hope so. This is more fun for us.

[ On the ] insurance side. So it's encouraging that the results have improved on underwriting, but we're still losing money on insurance. With the hardening market, what would you expect sort of through cycle combined ratio to be? And what are the risks possibly unknowns to this new strategy. Obviously, the company thought the concentration in auto was a good idea 7 years ago. As you look forward, what could go wrong.

Yes. So we're -- it's tremendously difficult to forecast cross-cycle returns. What I can do is perhaps guide you towards some arithmetic. So let's look at 2022, as I said earlier, this year has been, in my view, a tail -- in aggregate, a tail scenario here. This is not a normal year. This is somewhat out in the tail of extreme events for a short-tail specialty writer. It was a bull's eye for us in not the best sense being the combination of the Ukraine/Russia war and Hurricane Ian. Having said that, there, I don't want to preface Q4 performance, we're only halfway through the quarter. Nothing big has happened yet. But the industry as a whole still has a pretty good shot including Greenlight of being somewhere around breakeven, depending on where the -- where Q4 lands. That's not a forecast. That is an assessment of likelihood. And that is -- that's quite an extraordinary outcome for the year we've had. Now if you take -- if you cast forward into 2023, you overlay a significant improvement in the reinsurance market. I don't know if it's 10% or 20% or more percent. Certainly, some of my peers in the industry think it's considerably more than that and overlay a more normal a loss situation, which is I would presume, be rather more benign than this year, then the arithmetic works out pretty well in our favor for next year. Your question was as much related to cross cycle returns, I understand that and not necessarily 2023. I can definitively say we're extremely excited about the prospects coming into 2023. I can also say that the characteristic, as Neil described a few minutes ago, which I found very helpful, the characteristic of the volatility that Greenlight's experienced in the past as you recognized, is not repeating itself. Your question was, well, what new risks do we have? We are a -- we're always going to be susceptible to headline risk. Our commitment to you, our investors, is that we'll risk manage the heck out of that. And when these headline risks occur that they're manageable, that we get paid for them upfront and that we maximize the -- any opportunities that come off the back of them.

That's helpful.

Do you think you can make money over time?

Well, to be clear, if I didn't think that, then, honestly, I wouldn't be here. I have no interest in posting 103% combined ratios for the rest of my career. However, long that may last. I have no interest whatsoever. I am rather more ambitious.

Great. Is maybe a bit of a follow-on just on the underwriting economics and so forth. The chart on page 9 sort of showed your relative performance versus the industry group, which I thought was sort of quite encouraging that you're sort of in the mid to upper probably over each of those 3 years. Obviously, you don't have perfect insight into what really was in everyone else's books. But when you think about sort of the way in which the dice were actually rolled in all these different events over the last couple of years, if you were to sort of consider you versus your peer group on an ex ante basis in each of those years and really going forward. Would you still say that, that's about the range you'd follow in your peer group? How do you sort of feel about where you should be on an ex ante basis?

Yes. That's a good question. I think that I -- we're -- we're multifaceted, number one. So we have the benefit compared to our peers of having 3 uneven but very exciting elements to our strategy. You've heard what they are. It's underwriting, it's Solasglas, it's Innovations. Uneven because they're relatively different in scale, Innovations is increasing over time. That is different to many of our peers. And the reason I say that is that from an underwriting-only perspective -- look, it's easy for me to say, hey, I think I'm [indiscernible] quartile underwriter. I may tell myself that privately. But every underwriter does, right? I don't think you'll ever speak to an underwriter in the industry that says, hey, maybe I'm third quartile or maybe fourth even. Everyone's top quartile, everyone thinks they're top quartile. But our strategy has predicated on us being a careful, sensible market participant. So my -- I think the best way I can respond is to say that, hey, if we can post mid-market returns, I assure you I'm more ambitious than that. But if we can post mid-market returns on underwriting, be in the middle of that pack and our strategy functions across all 3 elements. That is a tremendously interesting shareholder proposition.

This is a question for Brian. The Innovations returns look excellent. And you have 29 investments, but typically in venture capital type investing. There's like 1 or 2 big hits [ 20, 0s and 5 okays ]. So you haven't disclosed that, that's okay. But I guess the question is, is this portfolio a portfolio of a lot of little, little bets and you just picked well? Or was there 1 or 2 big winners? And you're writing an average check of $700,000. That seems going forward, not enough. So I was wondering how you can have the capacity to compete because insurance species is getting more and more attention.

I think we do have it disclosed that I think there's 5 positions that are about 77%. So that is -- I mean, there is some disparity between them, but there is more -- yes, I don't think it's as concentrated as 1 or 2. I think there are much more, and we really are focusing on partner selection more than anything, and it may take longer for some of these to be realized as we focus on the underwriting side. So I think it's a bit different, but it certainly does have some element of that, yes, of that.

And there have been a couple or a few, maybe 3 or 4 that we have taken the valuation allowance on so written down. So it's not that they're all going up.

How should we think about the maximum potential allocation to Solasglas? You said it's up to 60%, but you hope to increase it further, I believe. Where could it go as a ceiling.

I don't know that there -- where ceiling actually is. It's an ongoing discussion between ourselves, between the Board, the management, the rating agency. And I can only express my personal view, which is we should be trying to increase it. And I think it's a solid step in the right direction that we are now moving in the right direction as of January of next year. And I think it's my hope and I think it's management's hope and the Board's hope to be able to be in a position to increase that further as we go.

I've got a couple 3 somewhat random questions. The first one is on reserves. And could you talk about the development by accident year. And if they've been materially different? Obviously, the 2017 and prior have not been great because [ that's a lot of the auto losses ]. But is there a material difference in the development that's come out of '19 or '20 that you can demonstrate a change in the persistency of or the consistency of the reserves.

Interesting question. I mean the tail we showed is an accident year basis in the sense of -- so we're not -- there's nothing in there about which underwriting year those happened given the calendar year in which we recognized that. In terms of which accident -- sorry, which underwriting years, we are driving it, I mean, we disclosed, and there's a lot of triangle information in our case to dig into that. But beyond that, I don't know, Simon, if you have any thoughts to say like an underwriting year. If that is that the question, like which underwriting years are driving it?

I mean actually [indiscernible] just idea being that have you been able to do a better job of picking the right loss picks. More near term years versus the old ones, and can you demonstrate that?

Well, I mean it's a good question. Thank you for that. I think, again, with that slide was trying to [ get it and saying ] with my remarks is that if you take -- really, it was not many [ cedents ] that drove all of those -- practically all of those depths. So -- and for a lot of -- and this is also true of the deposit accounting expense -- it's because of that counterparty risk, the concentration issue. It's not stuff that shows up in traditional actuarial loss triangles. That's the issue. Without going -- there's limited information I can give about any given counterparty, but that's full of issue that it's not as much an actuarial exercise as it is a counterparty exposure issue. And that's what we really -- we've taken. I mean it's not a direct answer, but that's [ a complete ] answer, but I mean it's the best I can give.

If I could just overlay my [ woolly ] CEO view on that? Neil's answer is much better than mine. Look, from my perspective, the present portfolio that as it's undergone its transformation over the past 5 years, with considerably less counterparty risk and different counterparties and focuses the relative emphasis in different areas is a far higher quality. That's my opinion. We are seeing it manifest in results with the exception of there having recently been an unusual series of events. That sounds like a bot 4, right? I hear you. So Ukraine and Hurricane Ian this year were really [ branches ] in the machine. Having said that, where we came through it pretty well and are extremely well positioned. I'm very optimistic. I'm very happy with where the portfolio is currently positioned and very optimistic about where we're going.

I wanted to ask a question about the Innovations portfolio, and I apologize for my own ignorance, but it sounds like a lot of those are MGAs. My sense of the MGA market is that, in general, maybe not specific to your business. There have been a lot of use of leverage in those business models. And I'm curious if that's aided case. And if you think that the rise in interest rates will have a material impact on the valuation of those kinds of businesses given that they may have been, some of them may use a lot of leverage.

Go ahead.

I guess when we think about our MGA partners, one of the things we look for is market validation and not being the only counterparty on the reinsurance side. It's not a direct answer to your question, but it is something that we look for is that we're not the only ones that are providing capacity to them. I certainly think there's an element that interest rates are going to have a play with it. But going forward, there's been a lot of data recently about the growth in the MGA market so there's a lot of interest, and there's a lot of growth, particularly in the [ E&S ] market. So I think there's a balancing act between kind of your suggestion and what's happening on the ground, so.

There's not a great deal of leverage inherent in the capital structure of our partners. That's for sure. So we're not anticipating that alone to be a big driver.

Question for David or Simon. With your good team and producing good operating results, in an environment which looks good, what is your latest thinking on trying to capture some of the discount in the stock price? I'm sure you give that quite a bit of thought and I think we'd all be interested in hearing it.

Yes. In the immediate term, we're going to concentrate on getting the results that we can achieve. The optimism that is being expressed for later this year for 2023, has not yet been realized. It's a point of view. It's a perspective. It's a forward-looking statement or however you want to characterize it. If we can achieve a year with an excellent actual growth in the book value. It will leave us more flexibility to be able to be more aggressive on capital returns. So we've been opportunistic about it so far. Hopefully, we can accelerate that but I think to have a meaningful tranche, we actually need to have some meaningful actual results and not just kind of this perspective that we're sharing today because we don't know if wars and hurricanes and [ defense ] might transpire in 2023. So we have to take it -- something about a [ cart in a horse and one coming first ].

Okay. Great. Thanks. So I have 3 questions. And I'll start with, it will go, I guess, Simon, and then Brian and then David. And so as a generalist, Simon, you mentioned I think, and maybe I got this wrong, it might be my vaguest question is, challenges to the book at the end of the year, clearing the reinsurance book, just what does that really mean? And then second, for Brian, we learned from Neil about marking the book in the Innovations sector and marking the book is something this group should know a tremendous amount about. So to go from $22 million to $60 million, you described it by ancillary transactions really proving that mark very well. So it is like a create a customer kind of area, create a customer fund, innovations fund. So for Brian, what is -- 12% of net premiums written, so maybe we can take a look at it that way for the valuation that was generated. And you obviously have partners going through [ 2,3,4,5,6 or 3,4,5,6 ]. 8 of the 15 payers and the other 7 are going directly through you for reinsurance. So just back side to create a customer business. okay? And now more specifically the end would be what is 10% of the surplus so we could kind of take a look at what that actual number is going into Solas. And then you've obviously taken a look and talked to the regulators and the rating agencies, which is the most important thing kind of for an insurance company, kind of for new business is they've obviously -- you figured out a Greenlight to what that 10% can be. So what are the -- what would be the long -- the short-term tension between buying back stock and other things, what would be the long-term tension because there's like a 60% return sitting there, just get back to book value. So it's got to be pretty frustrating to look at that. So how do the agencies look at a pass-through to the new leverage that would come into the reinsurer through the investment through the levered, I guess, hedge fund. So they're obviously -- how far do the agencies look through to that? And I guess the second part of the question, [indiscernible] would be, you obviously through investing in things like coal, et cetera, know exactly about capital returns of when you have a structured capital return from a company what that can benefit you as a holder? So maybe we could talk a little bit about a structured capital return to Greenlight Re holders. So I'll just start with Simon on the big question on the books at year end. Brian, the specifics on 12% of net premiums written, what that means. And then David, it's a 2-part question at the end.

Sure. David, would you like to go first? We do backwards.

It's really good because otherwise, I was going to forget it. For certain. The first question is how much is 10% increment, and our book value is [ $400 million and... ]

[ $77 million ].

[ $477 million ]. So 10% is another $47 million and we will update that based upon whatever the December 31 balance sheet turns out to be, and then we update it on an ongoing basis going forward. Relating to how the rating agencies look through with the leverage, I don't really think there's a lot of leverage within the investment strategy. It's levered in the sense that if you look at the investment in Solasglas on the balance sheet, it doesn't correspond to 50% of the surplus, right? So there's leverage within the structure that way, which is being provided effectively by prime brokerage. And it's being supplemented part of the reason why the general partner has 20% of the asset is to provide additional credit to support the needed leverage because due to the very high restricted cash balances. The company doesn't actually have available liquidity to fully fund even the 50% contribution to Solasglas. So there's a little bit of leverage that's baked in there. I'm certain -- I don't know, mechanically how the rating agencies take that into account. But then once you actually look at the Solasglas portfolio it's not levered. There's -- there are -- there's a gross investment balance, which is more than [ $100 million ], but the gross [ loan ] balance is less than [ $100 million ] and so there's some shorts. So on that basis, it's technically levered, but it's not -- we're not investing [ $140 million ] gross long against [ $100 million ] of assets. It's not -- well, it's not even really gross long levered either. Okay. And then the third has to do with a structured return. And the truth is, we need to have an adequate amount of recurring capital generation in order be able to come in a way that is balanced, appropriate, not misleading and so forth, we need to have that level of recurring income in order to come up with a structured program of return of capital because we don't have adequate profits, then we aren't able to do that. And it's obviously been frustrating, right? The investment returns for the last 5 years until this year have not been adequate. And the insurance results going back essentially to the inception of the company after the first couple of years until maybe the most couple of recent years have also been inadequate. So we need to improve the performance on both sides of the balance sheet in order to generate attractive-enough returns in order to generate capital that can be returned to shareholders on an ongoing basis. And perhaps if we actually succeeded that, the market will appreciate that we've created a return engine that is adequate, and we don't need to have a 50% or 40% discount to book value. But that is on the company -- the reason the stock trades at a discount, I believe, is because we haven't earned a premium. We haven't earned being at even book value because we have not earned an adequate return on capital on a sustained basis for a number of years. In order to fix that, we have to fix that. And that is on -- that is the responsibility of us and the management and we're trying to convey to you today how we are trying to go about it and how we are looking at it and why we have some hope and optimism for being able to do that. But it would not be unfair to say if we were sitting here 5 years ago, we also had hope and optimism and thought that we would be able to do that, and we haven't been able to achieve it. So we need to actually achieve it. And then we can argue with everybody about what the appropriate stock price is. And if the stock price is not appropriate, we're in a better position to capitalize on discounts that might remain available in the market. Okay. No, no, no. I was only 1/3 of 3. Brian, your turn.

You're in the middle, Brian.

Although I think I'm an [ older ]. Yes. And I may need a [ refresher ] I'll start answering and if I don't get it all, please jump in. But I guess one thing to say, and I kind of touched on it with my last answer is all these companies, we're not the only capacity provider. If we were supporting all of them, it would be massive and there's significant counterparty risk. So obviously, one of the things we just highlighted on the reserve development side, single-party concentration risk is something we're very sensitive to. So we can be a material piece of the pie starting out, but there is kind of a natural graduation, if you will, where we just don't have the ability to support them the entire way on the capacity side nor do we really want to. So I think and I think another thing you asked around is, there is a bit of kind of incubator element to it. So there's some partners where we are very high touch, and we do a lot of work with them on getting their product to market. But there's also other ones who are more established companies and where we're not really as involved in supporting them. It's our capacity and an equity investment, but these are experienced underwriters who have done this many years, and we think they're going to deliver differentiated returns on the underwriting side. So there are somewhere we're high touch, somewhere we're a low touch, and there is kind of a natural graduation to it. But is there something else that. Yes.

And I think you referred to challenges in the fourth quarter, I'm sorry, perhaps I misunderstood the question.

It was more [indiscernible].

So that's referring to the possibility that post Q3, there's further expansion in the yield curve that has been. Where that lands on December 31, I'm not sure. But should that stick, then we could see more capital destruction among peers who are running large bond portfolios, large fixed income portfolios not a Greenlight.

It seems to me that everything you're doing is in the right direction, but you're expressed frustration about trading at a discount to book. And to me for years, I thought one of the most obvious solutions is to simply imitate [ Warren Buffett ], who used to take 25% as a performance fee of its hedge fund and now it takes 0 but simply has a stake. So Mr. Einhorn, have you considered giving up your performance fee that would all go right to the bottom line and help eliminate the discount and buying stock in the company and simply increasing your wealth like [ Warren Buffett ] has. By the way, this has been one of the most enjoyable investor meetings I've ever attended. But 75 Rockefeller Plaza is the exact opposite of Allegheny Avenue in Philadelphia, where [ Peter Lynch ] found one of his greatest investments because the cab driver refused to take his junior analysts there because the neighborhood was so bad. So even though I thoroughly enjoyed this, it makes me wonder about your cost containment in [ all kinds ] of other areas.

I don't think -- I think this is probably the first time in my professional life that someone has suggested that our offices might be too lavish. If you go to the [indiscernible], if you go to the Cayman Islands and you see the Greenlight Re corporate office, I think you would judge it to be appropriate for what it is.

Great. Then I'm [indiscernible].

Okay. I'm glad we're able to provide you a safe venue to come here today. Look, I'm by far the largest shareholder of the company. My stock is already limited in the sense that in order to comply with the various tax requirements. I actually have a separate class of stock, which effectively has a lower voting than my economic ownership in the company. And I've been advised where [ I do ] personally be buying additional regular stock with regular voting, we could really screw up the tax situation of the company. So that opportunity is not available to me. So I really don't have the ability to do that. Regarding the internal management or external management. Look, I've seen a number of companies convert and you say, "Well, you give up your fees, but you wind up taking an equity interest or you take a lump sum," or something like that. And I think with the stock trading at the discount that it is and the company needing the capital resources that it needs. I think it would be inappropriate to try to exchange an investment management agreement for a lump sum payment, which would take capital out of the company that it otherwise needs or to take advantage and be rewarded with stock at a time when it's trading at 2 -- at a deep discount to book value. I think -- I don't think that would be the right thing to do. So I think the company is better off. And I think the shareholders of the company are better off, hoping that we make the kinds of investment returns we would like to, so that the incentive fees are actually terrific and that we can actually generate growth in the retained earnings in the book value of the company.

A few years ago, as I understood you had no high watermark [indiscernible] did have a higher watermark. [ What it says of them now ]?

Sorry, we have what's called a modified high watermark. But the modified high watermark means is, let's just say you started at $1 and you go to $0.90. It's true that for other hedge funds until you get back to $1, you don't get an incentive fee. What we have is we go from $1 to $0.90, let's say, the year ended at that point. As we go from $0.90 back to $1, we get half of an incentive fee. But also then as we go from $1 to $1.10, we continue to earn only half of an incentive fee and to pay interest effectively on that. As we go from $1.10 to $1.15, we continue to earn only half of an incentive fee. And then once we get back to $1.15, we would begin charging normal incentive fee.

Two questions, totally unrelated. First, it might just be my naivety about the reinsurance business, but I saw on the -- on your slides, you're going to short and medium tail risk. How does that match up to the investment portfolio, which tends to be a little longer term from my understanding, you're not looking at a 1, 2, 3-year horizon with the investing. And the second question is, you get about $0.5 billion of gross premium written today. What does it take to go to $1 billion or $2 billion of gross premiums? Is that only going to be organic? Are there other thoughts in mind to grow this business meaningfully.

Yes. Thanks. So the -- I think you're referring to matching of the liabilities and the assets. First of all, if there were to be matching done, then that might be done in the reserves as opposed to in Solasglas in terms of which assets are matched. Our duration is quite short. So we don't agonize too much of a duration matching of our liabilities. Our duration is running about 2 years as it is today, approximately 2 years. Solasglas, I would certainly not describe Solasglas' longer-term duration. It is a highly liquid long-short value strategy with a whole host of David's best ideas. And they will they as long as they need to last to generate the sort of return that we all want. So there's tremendous liquidity there to service the needs of the company. So again, we don't consider that to be at all mismatched or any additional need for matching. There's quite a lot of flexibility that comes from having relatively short duration of risks and reserves. Do you want to add to anything to that? Okay. How do we get to twice the premium? Sure, to -- clearly, you need more capital to support a much larger premium base. So how to get more capital? Our existing plan is to organically grow our capital, and we think we have tremendous ideas to compound capital at an attractive rate. M&A is a discussion that we often have. We come across all sorts of ideas and companies that could be interesting to us and we kick the tires once in a while. We have a pretty high bar. We don't want to disrupt our culture or our strategy, as you know, M&A has the potential to be a pitfall for a company. If we were to embark on it, it would be deliberate and careful. But of course, it's in our toolbox, and it's always a consideration.

You said that you trade at a discount to book because you don't earn an adequate ROE essentially. You're going from 0% to 4% to 5% on $650 million of cash. Can you comment on how that helps you generate, say, a 10% ROE to get to a book value type valuation, by covering your fixed costs?

I mean 4% down to $600 million is $24 million. If we have a net worth of approaching $0.5 billion that's a nice chunk of incremental ROE that one could baseline into 2023, if one were trying to make a forecast. I guess it would add about 3 points.

Could you comment on the rest of the [ forecast goes ] back to what would be a sustainable combined ratio that would be to target because I assume that you're trying to get to a 10% or higher level. So if you could just keep commenting.

Yes, we can't do that. We can't do that. But the pieces are you have probably a decent sense of what the premium is because it hasn't really changed all that much over the last few years. And then you can figure out what the combined ratio you can make a guess as to what you think the combined ratio will be. The difference between those 2 is going to be the underwriting profit or the underwriting loss. And then in addition to that, you can figure out about 60% of the capital will be invested in Solasglas and what the return on that is likely to be. And I think with the some -- and then you'll have whatever happens to the Innovations portfolio as potential markups or not markups depends on how things go. And I think those are essentially the pieces of the income statement. And they're hard to forecast. It's hard to forecast new investment results. Hard to forecast precisely a combined ratio. But those are the big variables.

It's been a -- really great. I have a question [ on ] nuts and bolts. The -- David, you briefly talked about the bond debt, and I think Faramarz did also. But just some clarity, you said you're going to pay it off with cash and not reissue a convertible, if you all can be as detailed as possible on that. And I know it's an intention, but that would be nice.

We've begun working on this. We've repaid about 20% of the debt by just simply buying it in the open market. The company should have some cash resources of its own that are [ created ] between now and the maturity in order to satisfy and to the extent that there is a shortage from that, we will be looking for straight debt to replace it. And we've engaged in some discussions along those lines. So this is an active project that the company is working on. But we do not intend to issue another convert, and we don't intend to issue equity in order to satisfy that obligation. And we're confident we will succeed at this.

[indiscernible]

We borrow money. I'm sorry. It could be a bond, it could be a bank loan. We're exploring the different options.

When you said earlier I thought [indiscernible]

No. Well, look, the company should generate cash in the next year, ahead of the next 10 months before that. And some of that cash could be available to pay a portion or maybe more than a portion of what remains and to the extent we need to finance more because we don't have the complete capital from the company or we choose not to. We will borrow.

I've got 2 questions about the Innovations unit. I guess, first is, it's impressive that on my calculations, you've been able to push maybe $65 million of net premiums through a $20 million investment. And there's opportunity to do more, where do you think that stabilizes? And the second question is just pushing you on the competitive advantage offered by the Innovations unit and why you don't think better capitalized and larger competitors also see the opportunity and maybe what the drawback from their perspective of a similar strategy.

Let me kick this off and have Brian jump in. So the underwriting prospects of the Innovation units are tremendous. As you quite correctly noted that this is a relatively small capital commitment. And it's driving optionality on insurance flows that are quite significant. That is going to grow not only for the existing portfolio as they move through their execution phase and build their own MGAs or otherwise, but design and implement their products. But as the portfolio itself grows with incremental new investments. I don't want to forecast how big Innovations could be for us. But I will say that we've talked today a bit about the next year or 2 and the tremendous market conditions and the tailwinds we see in the reinsurance business. I do spend a lot of my time thinking about what years 3, 4, 5 and 6 look like. Those headwinds, those tailwinds are going to abate at some point. And there will be a time in the future where margins are contracting and we're in a super competitive environment again. We're looking -- I'm looking at Innovations -- there's a reasonable time frame there, but I'm looking at Innovations as potentially a cornerstone of our underwriting business 5 years out. I'm not going to tell you what cornerstone means in terms of dollar amount, but there's no reason that this couldn't be -- I'm not saying necessarily the dominant contributor to our underwriting platform. But I expect and hope that it will be very significant. On the second part of the question, look, we've done well. We've executed well. There's no doubt about that. Competitors are, in general, a bit not late to the party, but they didn't start as early as us. We started and we launched the unit in 2018. I actually pitched an idea that looked a bit like that [ so this ] to the Board when I interviewed with David and his colleagues in early 2017. So I've been thinking about this for a long time. We've been very deliberate. We've never felt the need to massively increase our check size in order to catch up and make a statement. We've been executing our strategy with a lot of discipline. It's not -- I don't think it's necessarily easy to replicate what we've been doing here because if you start today, you've got 5 years ahead of you to put this together in my view. And I think anecdotally, certainly, Brian tells me that there appears to be a new [indiscernible] for what we're doing, which is the Greenlight model. And some of our peers have recognized that we've -- that our plan and our execution has been particularly good. But look, it's not that it couldn't be replicated. What I will say is I'm pleased that we started as early as we did. And I think it's served us well. Anything you want to?

Yes. The only thing I'd add is certainly a small team size and the ability to be agile and nimble. So a lot of the start-ups we're talking to, time is very important to them. And so some of the peers that we have, it does take a lot longer to get through their processes and their cycles and things like that. So there's an advantage in that. Not to say that time is all that we're competing on, but there is a distinct advantage, I'd say, on that, just being -- a smaller team being able to act quickly and decisively.

I just add to that, actually, it is an integral part of our strategy. And for larger peers, they may have an innovation strategy, but it's not as integral to what they do. What you find is that they didn't have conflicts within their business. So if you -- with that say, we see a marine opportunity in the [ insurtech ] space, a larger competitor will have a big marine units, and they may not want to support that opportunity. We don't have those type of issues because it's completely integrated in what we do, and we approach it in that way.

I have a question here about the basic underwriting risk. Could you tell us the primary -- the person -- the company that you were reinsuring, do they have less incentive to be careful and thoughtful about the risk they're taking because they know they're laying it off on the reinsurer. I just -- because so many things, it's like bond underwriters. They sell the bonds to somebody, it becomes a customer's problem, not their own. And I wonder if you have to wrestle with that kind of reality.

It's a good question. We -- it's one of our underwriting criteria that there are a couple of things. One is that there needs to be paying on both sides if things don't go well. So there's going to be a meaningful retention or some other mechanism that -- it's not pure arbitrage [ of offloading ] the risk. And the entire industry has that view, by the way. So that's critical. I would say that there was a time in Greenlight's past where we talked a lot about concentration of individual counterparties where some of the relationships were more characteristic of what you just described. And it was one of the reasons for the significant change in the strategy 5 years ago that we're now really through to the end of -- but it's a very good question. It's absolutely a central underwriting consideration.

Since we have time, we might as well go to the biggest thing, which is gold. So being a parent, we have some tension in the house between crypto and gold. And you can probably tell who bodes for what. So I was introduced to a book called The Bitcoin Standard, which is kind of their bible in bitcoin, okay? And if you ripped out the first 6 chapters, it's exactly the [ gold bugs ] bible because it's all about the currency. So the tension is healthy tension so far, but lately, it's getting a little more intense. But I'm just curious because as a gold investor, when you see what's happened recently, gold had a little tick up because of I think the dollar getting a little weaker recently. But maybe it was because [ Michael Burry ] said, [ Burry ] said that, hey, when a crypto exchange, goes bad, it will finally put light back on gold. So could just get a little more thoughts on the biggest thing, gold.

I'm not sure that gold is the biggest thing, but I can still go after the question as best I can. We've spent a lot of time on this because if you're worried about the fiscal and monetary situation that we are within the major developed sovereign nation. It leads you to wonder what your other choices are. And around 2008 before crypto was really a thing, we sort of settled on gold. Then, we bought a bunch of gold. And since then, obviously, crypto has become a very big deal. And we've thought a lot about it, and we spent a lot of time looking into it. And I think there are pluses and there are minuses. And I think digital money is certainly coming in one form or another, whether it's going to be private digital money or backed by governments or central banks is a question that's yet to be out there. And we've watched a lot of people say things like, you don't own crypto, have funds staying poor. And we've not gotten there yet. And it's not philosophical. It's not like, well, we would never do this. It just hasn't felt developed or safe enough or right enough for us. We've been concerned about the energy usage. Now some of that's beginning to get addressed. So we're sort of keeping an open mind. When we saw what was going on as speculatively as it was in the last couple of years, we've asked some questions, and we've looked into things a bit. And it hasn't really led to a change in gold versus crypto but like when people are like lending out their crypto and they're getting 15% interest for it, you asked the question, well, what is the person doing with that money that enables them to be so comfortable paying out such a high rate of interest. And we never really got great answers to things like that. And then we've looked into some of the [ stable point ] type of situations. And without getting into the details, these seem to be very, very large unregulated banks. And you don't really know what's going on, on some of those balance sheets. And so there's a whole network and industry which apparently got to $3 trillion, and it's very unclear to us. Why this is a store of value, right? If the gold is there, like, well, if the system has a problem, is crypto going to be there if the system has a problem. And we're beginning to see at least at this stage of crypto that, that's a little bit more questionable. I don't know -- I do know or I did hear sometime in the last couple of years was a very popular trade to be long crypto and be short gold. And so to the extent there are people who are unwinding that, maybe that's providing some support to the price of gold. I don't know that it's important to our thesis for holding gold, which is not really a short-term trading thing. So to wrap up the question, we're happy with the gold. We're going to continue [ only ] in the gold. I have an open mind towards deciding to own crypto at some point in the future, and we could even come out of this cycle, deciding that this is something that we want to do. But so far, we haven't got comfortable that, that is going to get us what it is that we're hoping to achieve.

Are you able to provide any color on maybe conversations with the insurance rating agencies, if there are actions that can be taken in the near term that would lead to improved ratings, potentially better market power, except for not taking capital out of the business through share repurchases? And maybe just some sense of the incremental returns from a market power perspective of improved ratings.

Yes. So we have a very good relationship with the rating agency, it's very open and collaborative. And we've enjoyed that for many years. I don't share the nature of those discussions, but I can tell you that it's -- they're very constructive. The ratings that we have, you saw them, it's [ A minus ] A.M. Best for the 2 Greenlight operating companies and an A A.M. Best for the globally licensed Lloyd Syndicate. The ratings we have are a perfectly good match for the business plan that we're operating. Let me say it another way, should there be a ratings uplift, let's say, to A from A.M. Best for our [ opcos ]. I don't think it would be that material in terms of portfolio quality, certainly in the short term. I think over the medium term, it would open up a greater array medium and longer tail risks where today, counterparties do generally prefer an A-rated company for the longer tail risks. But that's not a match for our appetite today. Could we have an appetite for that 3 years from now, it's possible, might that rating be helpful at that time it's possible. My expertise is short to medium tail specialty business. So my tendency is to stay in my wheelhouse and do what I understand. So in the short term, this is not a point of tension for the company or between us and the rating agency. Over time, of course, an improved rating is always a good thing, and we all are always ambitious to get there, but it is no point of tension today.

Are there any final remarks before we move out to the [indiscernible]?

Well, look, thank you, everybody, again. It's been great to see everyone. I do hope many of you are able to stick around for a few more minutes at least, we'll all be there. So if you'd like to grab us and complain about something, please do. [indiscernible] thank you.

Thank you.