Greenlight Capital Re Ltd., the reinsurer seeking to reverse underwriting losses, is pushing into the mortgage guaranty market after being burned by fraudulent claims on property policies in Florida.
Greenlight Re has been struggling to find profitable insurance underwriting opportunities after activist investor David Einhorn formed the company partly as vehicle to generate capital that he can invest through his hedge fund strategies. The Cayman Islands-based posted its fifth quarterly loss in six periods. The reinsurer is exiting money-losing forays into construction-defect coverage and commercial-vehicle policies while scaling back in Florida.
"One part of the portfolio that we are growing is U.S.
Greenlight Re follows Dan Loeb's Third Point Reinsurance Ltd. in betting on mortgage insurance, which covers losses for lenders when homeowners default and foreclosure fails to recoup costs. Primary carriers such as MGIC Investment Corp. and Radian Group Inc. have been
The second-quarter net loss widened to $63 million from $39.6 million a year earlier, hurt by both Einhorn's slipping investing results and higher-than-expected insurance claims costs, the company said late Monday in a statement.
Greenlight Re has been backing Florida home insurers since 2007 and has been hurt recently by the "phenomenon of fraudulent water-damage claims," Hedges said. "These higher costs have not translated into higher premium rates, and thus profitability is decreasing."
