All right. Hello, everyone. Welcome to Greenlight Re's 2024 Investor Day. I'm David Sigmon, Greenlight Re's General Counsel. Speaking today will be David Einhorn, Greenlight Re's Chairman, Greg Richardson, CEO, and Faramarz Romer, CFO. We will also hold a Q&A at the conclusion of the event. A few administrative items before we get started. First, this will be recorded and available for replay following the conclusion of the event. Second, this presentation contains forward-looking statements that are intended to be covered by the safe harbor provisions of the U.S. Federal Securities Laws. Further, non-GAAP financial reconciliations are located at the end of the slides. With that, it is my pleasure to turn the stage over to David Einhorn, our Chairman.
All right, well, I'm glad to see so many of you here. Thank you for coming out. We're going to have plenty of time for questions and answers. We won't ramble on too long. But we have a lot to say, and we have a lot we've accomplished, I think, in the last couple of years, and I think we have an interesting outlook for the next period. You know, Greenlight Re turned 20 this year. We celebrated by having our board meeting in Dublin, and it's a milestone to make it through two decades. I'd say, as thinking about what's happened over, the thing I would conclude the most is running a reinsurance business is very difficult. It's much harder than I thought that it would be when we started, and honestly, we've made a lot of mistakes along the way.
We've had to adjust our strategy several times. And we are now on our fourth Chief Executive Officer. So learnings are learnings. And hopefully, when you have a chance to see Greg Richardson today, many of you will probably be seeing him for the first time. You'll see he's an industry veteran, 30 years experience. We actually had dinner at his house last night. And it was like he was able to bring essentially a who's who of insurance and reinsurance veterans just out for dinner. The level of experience and connections he has is something that we have not had the opportunity to benefit from previously. I think it's been less than a year since he's joined us. He's already installed a different type of leadership than we had immediately preceding. The team is far more positive. The team is far more energized.
And the team is far more cohesive than it has been in quite some time. When we were here a couple of years ago, the stock traded, as you know, at a large discount to book value. The question at the time legitimately was, can we earn our cost of capital adequate to even justify our continued existence? While we were optimistic, we recognized at the time that the jury was really out on those questions. I think what you'll see today is that we're now earning an adequate return. And we should exist. The continued, even if reduced, discount to book value, at least in my judgment, is no longer warranted. Let's see if at the end of the presentation you agree with that. Since our last investor day, we've performed well. We've eight consecutive quarters of underwriting profitability, coupled with strong investment performance.
It has led to growth and fully diluted book value per share of 38%. The stock price has appreciated 83% during this period through the end of September and a bit more since then. AM Best has affirmed our rating recently and changed our outlook to positive. We've benefited over the last couple of years from a much better pricing of reinsurance in what is called a hard market. Hard markets have been unusual in our history. For many years, whenever there would be an event where there was a large industry loss, the world would anticipate a hard market. But instead, new entrants with fresh balance sheets would be formed to take advantage of the expected opportunity. The added capacity had a negative impact on pricing, and the hard market everybody expected often would not appear, or if it did, it would not last.
What's the difference this time is there's been a lack of new entrants. I suspect this is because the last several rounds of new players did not succeed. Many of them hoped to go public and be rewarded with premiums to book value. But the IPO market hasn't been open and willing to do that. So this has discouraged new entrants. There's no reason to start something new with fresh capital that will immediately be valued at a discount. The result is that there is a decent chance that this hard market continues longer than one might otherwise expect. Another interesting change that has happened in the reinsurance industry is that some primary business has moved to many emerging fronting carriers that are backing specialized MGAs, and they need more reinsurance support. This shift has generated more demand for reinsurance capacity. We're excited about the Greenlight Re story.
We will discuss our multi-pillar strategy, which is generating strong and improving return on equity. The board is focused on capital allocation and our best opportunities and is making changes proactively. We believe our stock is still undervalued and presents an attractive opportunity with excellent upside potential. Our objective today is to demonstrate to you that we are well positioned to execute. Greg will start by reviewing our overall strategy. I'll come back to discuss Solasg las towards the end of the presentation. And here's Greg.
All right. Good morning, everybody. I'll echo what David said. Thank you all for being here. We're excited that you're spending some time to learn more about Greenlight. We're very excited about it. I think we have a good story to tell. I hope it's clear to you. David promised that we won't ramble on. I can't quite promise that. One of my development needs is to become more succinct. But we'll see. You know, you're never too old to learn, right? So anyway, let me give you a quick, okay, strategic overview. I'm going to give you kind of this page is a little bit my journey. So a little more than a year ago, I spoke with Dan and David. And they offered me the job. And I decided with my wife to take this opportunity.
By then, I knew every member of the board intimately, really, really well. They grilled me. They contacted every friend I knew in the industry. And I knew them. I felt I knew them personally well. I'd also had the opportunity to meet the senior management team. They're all here today with us. And so I felt I knew them. But I hadn't met the staff. So on January 1st, I felt the incredible urgency to get to know the company. I traveled to, well, we made a trip to Bermuda with one of our senior underwriters, met a lot of clients there, made a trip to Dublin and London, met clients and key brokers, all these places, and really got to my feeling for the book of the business, the clients and the relationships.
Many of the clients with Brian O'Reilly on the innovation side, a difficult business to understand without understanding the people. Our innovation story cannot be told just by the numbers, but it really needs to be told by understanding the caliber and the quality of the people, so I've met with Brian well over half of those people, at least most of them in person and many of them over one-on-one Zoom calls, so that's been a great experience.
What I'm left with from that experience was a sense of a great respect for Greenlight, the sense that from the top of the company to the bottom of the company, it's a very cohesive, resilient company that's been through a lot of challenges, but that brought them together in the market external marketplace, whether it's AM Best, who really respects us and has a longstanding respect for David and his investment strategy, to brokers and clients. I feel like this is. People are rooting for us. An industry which is increasingly concentrated, they're looking for innovation. They're looking for differentiation. They're looking for agility. They're looking for competition, quite frankly, and we bring that. I feel like the wind is at our back. You can see that in the accelerating stock price. We're determined to keep that trend going, so smooth CEO transition.
Next thing, the strategy. This is not a turnaround. I started my career at a turnaround company. This is not a turnaround. The strategy is sound. I didn't come in with that conclusion. I challenged everything, but I'm convinced of that. We went from a few large bespoke transactions to sort of what you might call an open market beta play, where we're sort of saying, let's first and foremost make sure that we're getting terms and conditions at least as good as everybody else, and in the reinsurance business, it's a syndicated market. You can do that. Size is not a disadvantage in that, and in fact, one of the themes you're going to get today is we're turning our size not into a disadvantage, but into a competitive advantage through agility.
So I think the team here on this table, as well as everybody else at the board on down, really saw that transition. And it's executed that strategy really well. You'll see the growth not only in premium from firm size, but also contract count. The size of the company has grown a lot. And our systems and processes have grown along with that. So we created this open market business. But then along the way, we also created this innovations business, really interesting, truly differentiating. I'll give you plenty of that in the coming slides. So I don't need to go about that now. But the team also, it's also a people business. You know, how good is the team? Are they strong enough? You know, and do I need to make major changes? And I've grown to believe we have a great team.
I've worked with some of the best talent in this industry, names you would recognize and legendary names. And so I know good talent. And I've been around talent. I've learned from them. I will take our team, stack them up against any team that I've ever known, not just in caliber, but also more importantly in the cohesiveness. Everybody is in a job that fits their skills and personality and style perfectly. And we've made a few tweaks on the organization to do that. But I couldn't be happier with that. And think of how much easier it makes my job, right? I don't have to change people. Think of the risk of hiring a senior person, how much you have to pay. What if they don't fit in culturally? We've avoided that problem. And these people have a lot of runway in front of them.
We've got a team that's solid and is going to be with us. I'm excited about that. It sounds like, Greg, you know, you don't have to do anything. What's the job? You know, everything's working. You just sit back and watch the profits roll in. There's some truth to that. But we can always do better. What are the priorities? First and foremost, this company is trading below book value. That is unacceptable. I can understand historically why that might be. But if you look at the recent track record, you know, we're making strong ROEs. We're making underwriting profits. But people need to be cynical. I tell all of our underwriters, I like people that are cynical and skeptical. Think about the downside first. And then ask how much you're getting paid in order to take that risk. I respect that.
But I'm absolutely convinced, you know, we're going to generate good ROEs. It is our top priority. We're going to be profit-focused over growth. We're going to make sure that we deliver returns for our shareholders. And so that is our number one priority. How do we do that? Well, it's a subtle game. This is not a game like heavy manufacturing where you've got your cost structure. You make huge capital investments. It's a people business. It's a capabilities business. And so it's the capabilities of those people on this table and the teams that they lead. How do they work together cohesively to deliver that profit? What's the metrics that we use to judge transactions? What are the operational capabilities, the infrastructure that we have to do that efficiently, making good decisions? That's the key. Underwriting focus.
Underwriting excellence, top of the list is the key to that. Innovations, again, you're going to hear a lot about that exciting opportunity. And we've got something very unique and special there. I think it's a key growth engine for us going forward. Operational excellence, ideas, strategy, easy in a sense. Everyone knows, right? Profitable business. It's execution that wins. Operational excellence is critical. And we have in Pat O’Brien, one of the best veteran operating guys, insurance, reinsurance, Bermuda, Ireland. He's been around. He knows how to get this done. And he's taken on that job to make sure that the mere image of underwriting excellence is the operating environment to deliver that and execute that, the systems, the metrics, the processes, the controls. That's terrific. We also, obviously, Faramarz is going to be speaking to you. You're going to get to see him.
We also have Richard Stocker, our Chief Actuary. He and I get along really, really well. I trust him. Actually, our reserving has always been good. So that was never an issue. But I think we're even making that stronger, and then David Sigmon, you've heard from David. He's here also to answer Q&A, any questions you may have. So that's my initial journey with the company. Let's turn to this slide. This slide is sort of a reprise of a slide. If you were here two years ago, you would have seen slightly cosmetically different, but essentially the same content. Four pillars. So a key differentiator for Greenlight from inception has been that we strategically take risk on the liability side of the balance sheet, but also the asset side of the balance sheet, right? And so you all know that, and that's a key differentiator with David's strategy.
That's always been the case. But then a few years ago, we added two more pillars, innovations, investments in innovations, underwriting, very small at first, not very consequential at first, but becoming more consequential. So a key strategic question for me going in there, okay, how big can this get? How much do we want to emphasize it? How much do I believe in it? How much do we believe in it? Okay? And we actually had some hiccups in that one particular contract that we've spoken about at our earnings calls. But that is now ancient history. And I am dead convinced that the book and the business we've got, the investments and the underwriting opportunities are real and substantial with tremendous growth opportunities. So I think that's an exciting part of the story today that we're going to talk about. You all know about David.
You're going to hear about that. For me, it's a great match for reinsurance portfolio. It's long, short, hedging out a lot of macroeconomic risk. We have very little credit or interest rate risk on our balance sheet. We're insulated from a lot of those pressures. I wanted Faramarz to recap a slide that we had two years ago where you looked in 2022, where every company had huge hits to equity. Some companies lost 50% of their GAAP equity because of the interest rate shocks, right? Ours went down, I don't know, what was it, 4%? Absolutely in parallel. That all demonstrates we have very little credit and interest rate risk on our balance sheet, right? Macroeconomic risk as well. Open market, we're going to talk about that. That strategy was the core of our revitalization strategy. It's worked.
We have got industry standard returns. We have a chart that shows the risk return on that portfolio is basically the industry risk return, which is what you would expect. It's a beta play, you know, so that's our four-pillar strategy, and excuse me there, so is it working? Yes. The evidence is beginning to show it is indeed working, so start about the profitability. David mentioned eight years consecutive of underwriting profit. It's terrific, right? That's coupled with terrific results on what we call Solas Glas, and so we use those two terms interchangeably in today's presentation, terrific returns over the past five, six years, and even better more recently than that, so that's all combined together, underwriting, plus investments, delivering really good book value per share growth, okay, but that is really only part of the story.
The really important thing to understand that is that's done in a very low conservative risk profile, right? So when the company had its challenges five or six years ago, tremendous de-risking of the balance sheet and the portfolio, right? We're in the risk return business. If you're not taking much risk, how the heck do you make return, right? Yet they did. Yes, not eye-popping returns, but measured, earning the credibility of AM Best and the street and everybody back. We've gradually been taking more risk. And as confidence in our results and capabilities has grown, and we're now poised to even do more of that. So let's go through some of these key points about why it's a low-risk profile, highly diversified underwriting portfolio. We have many lines of business. We've got a chart that shows that. It tends to be very short tail.
So we're not very exposed to any really long legacy liabilities. But even the bad years and casualty, very little exposure to those going there. So it's short tail, lower risk, prudent CAT aggregates. We're always cautious about shock losses. So we have very prudent CAT aggregates. Tom Curnock's been around for years. His track record in managing the cycle in property lines, amazing, best I've ever seen. And partly that's because we don't rely on CAT. We don't need to write it. If he doesn't like the returns, we don't write it, okay? So that's a terrific track record. The innovations business, what's neat about it is it's quasi-independent. Of course, it's not independent completely. It's still underwriting risk. But it is targeting the new economy. It's targeting startup business, growth industries. It's insulated to some extent from the macro cycles that govern liability or property CAT.
We have virtually no systemic risk in it. We have tried to avoid that completely. Very idiosyncratic, highly diversified portfolio, not immune to the cycle, but insulated. And we think somewhat uncoupled and uncorrelated with the cycle. So that's very exciting. Again, limiting risk. We talked about Richard's reserve practices, actually great track record there. And again, building up that better. But again, the shorter tail means limited inflation risk and other things that are plaguing other competitors. Low financial leverage, we'll show some slides on that. Moderate underwriting leverage, about one to one. That's not a very high premium to surplus ratio. I talked about the systemic macroeconomic risk. One of the things I really like about our investment portfolio is the fact that it's hedging. It's hedging out macroeconomic risk. And if you ask yourself, what are the things that put reinsurance companies out of business?
First thing comes to mind, oh, big cap risk. Nope. Almost never is that the answer. Then the more astute observer will say, well, okay, it's systematic mispricing of casualty risk. Think about the late 1990s. That'll put them out on the wind. Yes, that's a better answer. But the real answer is systematic macroeconomic risk coupled with a major shock loss where you've got assets which are undervalued completely. Maybe there's no market for it. They may not even be able to find marks to some of the assets. And then a shock loss happens. You have to liquidate those assets when they're underwater. That's a systematic risk that can put a company out of business. We don't have that risk. We manage our systematic risk very prudently. We always have. But on the economic side, very little credit risk. We don't have a bond portfolio to speak of.
We don't have interest rate risk in terms of duration of that. We have a long, short equity strategy, which hedges out a ton of beta. It's a very low beta strategy. And it's actually been decreasing. David will have a slide on that. So I'm not saying it's always going to be that way. Sometimes we're going to go along the market. We might go short. But on average, over the history of Greenlight, the beta of the portfolio has been around 0.3. And so that means we're hedging out a lot of macroeconomic risk that would otherwise be a threat. So the strategy of this multi-pillar strategy and that investment strategy matches well. It's a good pairing, right? And we've got some slides that show the recent anti-correlation of those things, which is kind of cool.
Now we're saying we're anti-correlate, but it's been the pattern of recent quarters, and then the last couple of points I'll make is optionality, right? We have a multi-pillar strategy. It's not one trick pony. We've got not just a two-trick pony. We now have three or four arrows in our quiver that we can deploy, and if we don't like the opportunities for that, we won't do it, and we'll buy back stock, okay? So we have a low-risk profile, so you've got to take our returns in that context, you know. Is that maybe our returns haven't been as high as some of them, although they're catching up, but the risk has been lower, okay? And then David mentioned we are upgraded by AM Best to positive, so we're pleased by that endorsement, obviously, okay?
Moving forward, and I'm probably, I'm sure, talking a little bit too much. Should I move forward? Okay. January 1st, this is the way the company felt to me when I joined. We had these multiple pillars. And this was the mental map that I kind of perceived. So you're seeing a good image of what was in my brain. But we actually have, these are real numbers behind this, okay? So let me first explain the chart. We're plotting on the y-axis return on capital, return on allocated risk capital, which is heavily based on our rating agency capital BCAR model, right? So we allocate capital in a fully diversified benefit method. So it's all additive, right? And on the x-axis, we're showing what was the direction, you know, what was sort of the first derivative of our capital allocation, our strategic direction of those, right?
Were we growing at par with the company faster than the company was growing or a little bit less than the company was growing? That's what that dashed line you see. The horizontal dashed line is the hurdle rate. It's something in the neighborhood of 15%, which is, if you look at market to book versus ROE and you said, what's the required rate of return to have a market book value of one, it's somewhere in the vicinity of 15%, okay? So think of that as what that line is meant to say. Okay, so that's what the chart means. Growth, profitability, and growth, strategic growth are the dimensions. Let's look at our four pillars. On the upper right, you see Solas Glas. It's our star, not surprisingly, right? If there's one thing that people will first think about with Greenlight, let's be honest, it's David Einhorn, right?
That's been performing extraordinarily well. Now, these returns are above the line, but even more than you might think because you saw numbers like 12%, 15%, 16%. That's the absolute gross return. In our risk capital framework, those returns get levered because we don't have to, of our finite risk capacity, we don't have to have a dollar-for-dollar investment. There's actually leveraging that return in it because there's a diversification benefit that is explicitly recognized by our capital framework and by AM Best. It's been delivering terrific returns, continues to be a star for us. Now, there are limits to that, how much we can grow, because when you allocate more and more capital to a given strategy, the capital you allocate grows in a non-linear way. If you grow an allocation by 10%, the capital you allocate will actually grow by more than 20%.
So it's like a two-for-one kind of thing. So it's sort of a self-regulating thing. The framework wants diversification, okay? And you overspend on one strategy too much, it punishes you, okay? But anyway, SILPE is our star. You could call open market underwriting our cash cow. So it's been a strong market. The strategy was a great strategy to implement, and the timing was good. The market was in a soft phase. We'd avoided a lot of the property losses that had plagued other reinsurers. We dug into that, built our capabilities, built out a great book of business, short tail focus, and the returns are really starting to materialize. So that's been our cash cow. Innovations has been a terrific success.
If you look at our investor day two years ago, you saw fantastic returns, very measured investments in some of these startup companies, terrific capital gains that we've enjoyed. And what's interesting now is those companies that were just starting out are now delivering premium. And our investment strategy was always underwriting led, okay? And so we're now beginning to see the harvest come from those seeds that were planted three, four, five, six years ago, okay? And it's starting to come fruit. And you're going to see some charts that demonstrate that. There was one contract we've talked about on earnings call that in our innovations that was oversized, was not a good bet. And that has hurt us. And that made my job a little bit difficult because, you know, and I've dealt with this in underwriter.
Anybody that's been an underwriter has had losses, right? And you might be the smartest guy. You think you're God. Everything's you walk on water. You have a loss, suddenly you became an idiot. And so people ask the question, understandably, was that loss, was that a bad decision, or were you just unlucky, or some of both? And you don't really know, so you got to figure that out. But we understand that thing, and we fixed that. And the book of business, I'm dead convinced, is going to deliver solid margins going forward. So that's the history of where we were. Where are we going? So strategic direction, let's go one by one. SILPE, let's grow, let's continue. We've allocated a little bit more. We can't grow gangbusters because of that self-regulating diversification phenomenon. We won't, you know, we can't do that to extreme limits.
But as you know, this year we've increased our, well, last year I think we increased from 50%-60% of cat equity. And in the Q3, we increased from 60%-70%. And that's the direction that we've been going. And that's why it's in that upper right quadrant, is we've been allocating more of our finite capacity to that strategy. I think there's room to do more, okay? So that's SILPE. Open market, it's increasingly profitable. And we've been in a hard market. And I think David, I'll have a slide that talks a little bit about it. So I won't repeat all the points that David made. But it's somewhat of an unusual hard market that it's sustaining for longer than other hard markets in the past have. And so we'll talk more about that.
So we are bullish on open market, but mindful that all good things come to an end. So whether it's three years or four years out, at some point, things will soften, and we're going to be absolutely prepared to pull back if we have to, okay? So that's open market. Innovations, I'm going to have some great slides on that, but we're bullish on that with a tremendous growth potential there. Margins are good and improving. And innovations, investments, there was kind of a moratorium almost. There was a lot of hiccups with insurtech. A lot of the insurtech went from being the best, most exciting word to almost becoming a dirty word. We don't really use the word insurtech, although it's usually a tech angle to a lot of our companies. I like the word innovations.
That market is beginning to loosen up, and we are seeing a pipeline of opportunities there. I expect we will, and we are, in fact, making some small investments to keep that flow and that engine of growth going for years to come. That's our strategic direction. Oh, no, wait, the most important one. Those are the four pillars, but there's kind of a fifth pillar, a hidden one, capital management. We never once been, I've never felt any pressure for premium growth. Always we're focusing on profitability. What if we're in a world where David said, "I'm not liking anything I see," or we're saying in open market underwriting, you know, the market's getting soft. Innovations maybe is going to be good, but it's not big enough to drive the ROE of the company. What do we do? We've got excess capital.
What are we going to do? The right price, we're going to buy back the stock. We've started on that journey, and I think you can expect us to continue on it. That's the philosophy. We're going to deliver ROE. And if we can't deliver it on our own, we're going to buy back the stocks until we're comfortably above book value, okay? Okay, so this is more of a soft, touchy-feely side, but it's so important. You know, I'm a quant by background. You think, oh, this is an industry that's all about numbers. Yes or no. People that only focus on the numbers are dangerous. This is a business that depends on judgment, experience, intuition, gut feel. So underwriting culture is critical. And there's a couple of elements that I'd talk about. First of all, we have centralized underwriting authority.
Tom sees every single deal, and I see most of them, okay? That's a huge advantage. That creates consistency of capital allocation, risk capital allocation. You don't have some underwriter in your office, well, I want to write this deal because I don't have anything else to write. I know I've only got a $1 million authority, but I'm going to write it. Or so they might write a bad deal, or they might have a great deal, but they only write to their authority when you say, no, we want to take a $5 million line on that, not a $1 million line. By having that centralized authority, you're going to optimize and allocate risk, capital, and capacity more efficiently. Consistency of culture, consistency of appetite, and standards. So Tom and the people that report to him deliver that.
Underwriting is, you might think, well, underwriting is a person sitting around thinking about, okay, let's write that risk. It's like a point-in-time decision. No. Underwriting is a continuous ongoing process, and that's what this flow chart is intended to show. It starts with, what's our appetite for risk? What capabilities do we have? What kind of expertise do we have? When we go meet with brokers, they'll say, what are you looking for? What is that? Tell them what we're looking for, and you're setting the initial flow of business that comes into the company. That's absolutely critical to underwriting. Who are the relationships you're building with? What clients? What brokers? All of that is critical. Pricing and risk selection, obviously that's what you're doing. You're pricing a deal, you're saying what kind of line size you want. Okay, obviously that's a critical juncture.
Servicing the account, collecting the cash, managing collateral, you know, saying, wait, something's funny in the numbers here, working with the accountants and the actuaries on the other side. Are the numbers right? Getting all the data right, and then obviously claims and reserving is critical. That's the end of the process, and is this making money or not? Are we getting what we expected? If not, why? Okay, and that then is a virtuous learning circle, so companies that are great at cycle management understand this chart and do this really well. Very difficult to do in a big company. Very few do it that are big companies. Much easier for us, so for us, our size, our agility is a competitive advantage, okay? I see it, and it's hard to quantify and measure, but I've been around for a long time in this industry.
It's real, and this company has it. Okay, that's the philosophy of how we deliver it and the culture that we have. How do we actually deliver it? Well, we've got three platforms. Obviously, we started out in the Cayman Islands. But since then, over the past 10, 5 to 10, 12 years, we added an Ireland operation, great access to very well-educated, talented people with a lot of insurance knowledge, not just on the underwriting side, but accountants, lawyers, all that. Great source. And obviously terrific access to London. So it's a great place. Oh, I'm sorry, thank you. I forgot that. I forgot to slide one of the slides for you. But anyway, so Dublin. And then more recently, we've added this London operation. So we have a Lloyd's syndicate there, A-plus ratings.
Lloyd's, you know, the oldest brand, the biggest brand in our industry, really. Licenses around the world, an A-plus rating. For us, critically, for our innovation strategy, it offers us insurance paper. So we can write insurance out of our Lloyd's syndicate. They also, Lloyd's has a big push for innovations. They have a great thing. They call it the Lloyd's Lab. We are one of their closest partners with that. Tremendous mutual respect and symbiotic synergy between their initiatives and our initiatives. They know the companies and the clients often support them. It's just terrific. Lloyd's has been a great platform for us as well. All of these companies, and of course, we're supporting with these other companies in London and Dublin, we're supporting with capital, right? It gets quota shared.
A lot of those profits flow back into Cayman Islands, where the mothership is, if you will. A little bit on the cycle and where we see it. There's not one cycle. There's many cycles within the industry. I think David captured, I'll start with the rates since David brought it up. The macro environment is underpinning the extended hard market, I think. I think some of it is just sectoral shift to other more glamorous sectors, which seem to be more in vogue. I think some of it is, you know, the sort of failed promises of hard markets as ILS and other capital has flowed into our industry and suppressed rates, certainly in property cat and some other areas.
I think there has been a spate of five or six years where investors were just hammered with losses in anemically low industries, ROEs, you know, in the sub 5% range, and I think investors and boards just got tired of it enough. So that's keeping underwriting discipline, and the industry as a whole is focusing on profitability over growth right now. So I think that's underpinning all of the strength that we're seeing in our outlook. Let's go through now the middle one, which is I'm doing this slide backwards, but the business outlook, our property line. Property has been in a terrifically hard market because of tremendous losses over the 2017, 2018, 2019, 2020 years. All these hurricanes and typhoons in Japan. People got fed up and the terms and conditions were too low. The retentions were too low.
Terms and conditions have improved in the underlying reinsurance market. Rates have improved tremendously. That market, while I would say it's peaked, it hasn't fallen off much in the past two years. We were looking forward to a pretty strong renewal at 1/1. I expect we will write a little bit more, governed by our appetite, though. We're not trying to be a great, you know, huge property cat writer, but I think we have the opportunity to grow there and a really strong positive outlook there. Specialty, that is an area of strength for us. We punch above our weight there. We like it because we have expertise. We have access to the market. It doesn't have a ton of systematic risk. To the extent it does, we're hedging out a lot of that on an excess of loss basis.
Rates remain strong there. There's been some really still yet to be determined Ukraine war losses affecting the industry, not us so much, but the industry that's boiling rates. There's been the Francis Scott Key Bridge collapse, which was a big shock loss in the industry. Cost us $10 million in the Q1. And then there's been other attritional losses you don't necessarily read about, but they chip away at the margins, and that's keeping the profitability up there. Financial lines, this is an area where we're probably underweight a little bit. We have a terrific underwriter with a very quantitative financial accounting background, and we've been growing in these little areas, not a little bit of mortgage business. We have room to grow there. Credit, surety, political risk, agriculture, and some other lines that we do out of that.
While I have agriculture, I guess I put in specialty. But the dynamics of these lines, they've been very profitable, so there is some rate pressure there. But we are underweight there. So normally if rates are going down, you want to cut your book. But I think we have the, you know, because we're underweight, we can hold our book, maybe even grow a little bit in that business. So we're positive there, but not strongly positive. Cash flow, you'll hear a lot about in the press, and people are worried about what happened in 2015, 2016, 2019, the reserves. You know, they've been adversely developing, and people had thought we're running business at a 70% loss ratio. Oops, might be 90% or so. Nothing like the late 1990s.
It's not anywhere close to that, but enough to have people worried about it, and they talk a lot about it. For us, we don't have a lot of exposure to it. We do see the rates going. And I feel like as a company, we have in effect dry powder. We're very cautious about it. We don't like big limits. We like small limits. We like, you know, not the huge billion dollar towers. We like smaller million dollar limits where it's more frequency than severity driven. And so we're cautiously optimistic about it, and we're kind of on our front feet because we're not suffering the pain that others have. So we're not, we don't have to play defense. We're going to play a little bit of offense, but cautiously.
And then the, I was supposed to start on this side, but on the right, left side of this slide, you see diversification by line. Our shorter tail lines dominate. It's a lot. If you look at the fine print underneath, you'll see lots of little segments. We're a highly diversified book with a short tail focus. Now, innovations. This is something I'm really excited to talk to you about. Everybody I've spoke to in the marketplace, brokers, they talk about our innovations book. They know about it. They know it differentiates Greenlight. And why is that? First of all, we have these four boxes on the left. These are the capabilities we can deliver to a client. So let's say you're a veteran insurance person, but you've been working at a big company. You say, I've got a better idea.
I see an opportunity here where we can do it better, faster, cheaper, smarter, often again using technology. Some might be AI technology. Some might be an innovative distribution channel where you're tagging on to someone else's sale and embedding your product into another existing distribution channel that's technology driven. All sorts, every flavor you can think of. You might have a completely new product idea. It doesn't have to be tech driven, but it's a completely new product idea. And that also we will call innovations, okay? So you're that person. You've got a track record. You've got this idea. You can come to our team headed by Brian O'Reilly, and we can put you in business single-handedly. If we don't have all the capacity, guess what? We've got a network of like-minded people that we will help. We'll pair you up. So we're almost broking these deals, right?
It's incredible what we do. And so as we can do the investment bit, we can provide the reinsurance or insurance paper if you need it. We have the Lloyd's syndicate, and we also recently, in the past year, have opened up what we call a captive, a turnkey captive right in Cayman Islands. A lot of the time, the principals in these startup companies, they want to take risks themselves. They believe in the product, and we like that because that aligns their interests with ours, right? They're taking their own personal risk, and we can set up captives to help facilitate them doing that, okay? So we have all of the capabilities to get you going in business. And when I walk around with our team at these MGA and insurance insurtech conferences, it's remarkable. You'll see these huge companies with their big booths and all that stuff.
I walk around with our team, and it is like walking around with rock stars. They know us. They respect us. They all want to be part of Greenlight Re. And yes, we have supported them, but it's beyond that. The intimacy with our customers and the connection, it's almost like family. It's really remarkable. So that's our capabilities. It really is unique, and it's different. Let's give one indication of how that manifests itself in the investment decisions on the right. So we have a very outstanding track record. We're making relatively small bets at seed stage. And why at seed stage? The idea that we had as a company was, where can we compete in this space where our size isn't an issue? And seed stage was the right place to do that.
You write a $250,000 check or a $1 million check, almost even for us. That's not a lot of downside. That's it. That's the downside. Tremendous upside, but we're very meaningful to them. Most of our competitors will say, oh, first of all, that's immaterial to us. It's not worth our time to go through a committee of 12 senior people up there. It's just not even worth the trouble, right? So it's too small for others to think about, and also people are risk averse. Come on, you don't have any track record. They're not up and running. You know, what's the success rate of these things? You might think. What I thought when I came here, what would the success rate be? My view was one in 10. Starting from nothing, starting up, it's not easy to start up a business. It's hard, right?
Dave talked about starting up a reinsurance business. It's hard. You know, how do you do it? What's the score? So I was thinking one in 10. Our track record is the exact opposite. Not one in 10 succeed, one in 10 fail. And if you measure success, which we do, both on the underwriting side and the investment side, you will easily come to a conclusion that over 60% of these investment decisions have been great successes with a lot of future promise. The other 30% unaccounted for, okay, they're in the bubble. Time will tell. We'll manage them accordingly. But to me, that's just an astounding track record. And its proof is in the numbers, okay? So that's the investment side of it. How about the underwriting side of it?
If you look at what's going on in the industry, here's some charts that we borrowed from brokers and some friends of ours in the industry that show a lot of this is startup MGAs, right? They don't have a balance sheet. They're renting our balance sheet or they're renting the industry's balance sheet, but they've got an idea. They've got capabilities. They've got systems. They've got contacts. They've got market distribution, what you need. MGAs are a huge growth engine in the industry. That's on the left. I think you see it globally. It's even more pronounced on the right if you see it in the U.S., so this is a tremendous growth sector, and it's continuing and perhaps even accelerating, so to begin with, the innovations companies we're supporting in that strategy is targeting an inherently strong and growing market, okay? That's the industry dynamics.
How about our companies? Well, we started investing in them from nothing. They had no product or they had no systems. They had no revenue whatsoever. What would it be? Two, three, four years ago, these companies, guess what? Now they've developed a product. They're starting to sell that product, and they're gaining momentum. And so, you know, any innovative company has a kind of an S curve, penetration curve. You've all seen that from marketing classes in your business school, right? You see that S curve. Well, we're at that important accelerating point of that S curve, well before the inflection point where competition comes in and margins get squeezed and all those kinds of things. We're at this rapid growth, not the initial nascent bit where you're just figuring things out. No, we're selling real products, getting real revenues, and building momentum.
So we've got growth compounded with growth. We have sort of the tiger by the tail, you might say. And what's happening on the profit side was these companies start up, there's a lot of fixed costs, right? So you start up, you're not making a lot of revenue. So a lot of your margin is consumed with management expense and startup fixed one-time startup costs. So your margins are going to look pretty anemic. And yes, they were subpar, you know, negative, not hugely negative a couple of years ago, but the book we're looking at now is moving in that 10%-15% margin range. And we're confident we can manage that going forward. If we don't see that, we're in no obligation to renew the business. We don't have to. We're not obligated in any way. So if we don't see the margin, we won't do it.
If we see they're getting in difficulty sometimes, and we have had this experience, they'll come to us and talk to our actuaries, and we'll help them price and fix their pricing. We've actually done that, right? So we don't, we have a lot of influence over them, and they look to us for that kind of expertise and guidance. It gives us a lot of ability to control our margins through portfolio management and through collaboration with our clients, okay? So we see the margins being very attractive there. Finally, and I know I'm guilty of rambling on, this is my last slide, so you'll get to hear Faramarz in a second. Also, we're developing third-party capital. So one of the problems when you're trading below book value, what if you want to grow? It's not very attractive to raise capital at 80% of book, right?
Well, another way to raise capital is through third-party capital or through reinsurance capital that's in at book and out at book. So you're not paying some deep discount as a frictional cost to your capital. So that's one way to grow and manage your portfolio and manage your ROEs through third-party capital. So one of the things we've done is we've actually hedged a little bit more by more excess of loss reinsurance, and that manages our risk return, and we want to avoid the big mistakes, or it might not be a mistake, big unlucky bet. So we're making sure there's balance and make sure diversification is our friend, okay? So that's a big priority for Tom. And one thing we've done is to actually hedge a little bit more. We bought another $4 million of excess of loss reinsurance.
Finally, one thing that we're really excited about. This is maybe a bit of an announcement. We put in place a strategic whole account quota share for our innovations portfolio. The portfolio I was just bragging about. You say, well, why do you want to do that? We didn't need to do that. We have no problem with capital. We have excess capital now, and we're not short of capital in our business plan next year. So why are we doing this? Because this is growing so fast. I believe this business can be much bigger than it is now. And what I don't want to do is throttle that growth, right? It's easy to cut business. It's not easy to grow, to nurture a business and really make it something special and big. So we see a tremendous opportunity there.
If that growth projection, which I have in my mind, manifests itself, we're going to need quota share support, not next year, but the year after that or the year after that, because we want to maintain that portfolio balance, right? How do we do that? With a, we've got this fast-growing business, let's find partners. We originally said we had a strategy meeting this summer, let's go out and do this. We all rallied about an absolutely brilliant idea. Came actually from a guy who's not in the room today, but a great underwriter we've got in Dublin. Bingo, you got it. We're going to do that. We made it our top priority, not because we needed to do it, but we saw the strategic value of it. We targeted, how much do we do?
Tom and Brian and I sat down, well, 15%-20%. So we said, let's do 20%, and that's a nice round number. We got so much support over that. We very quickly secured a lean line for 10%. A bunch of others followed. All of a sudden, we had much more than 20%. So we're actually placing more than 20%. We've capped it at 30%. It'll be less than 30% because we don't want to see that much right now. The goal is to put that in place, build the trust, build the confidence in the profitability. Then, as the profitability and the value of this business grows, we can scale that accordingly. That'll generate fee income. It's hedging our risk and making what we hope is a stable, growing profit stream for us for years to come.
So we're really excited about that because it's not only strategic, as I've said, but it also feels good, right? It's validating that not only do we believe in this business, we had markets falling all over themselves to support us. We had, I'm not sure you put AM Best on the spot, but AM Best believed in this idea so much that they said, told us they would look favorably on companies that supported us for their own innovation strategy because not everybody can do what we've done. And AM Best recognizes, gives very high scores on our innovations capabilities. They will actually look favorably on people that support us in our innovation strategy as evidence that they are also supporting innovation in the industry. So we are excited for that validation. We're excited for the strategic value of it going forward. So that's really plenty.
I'm sorry I've talked a lot. I think Faramarz will be more succinct, but let me turn it over to him.
Good afternoon, everyone. Thank you for being here. It's so good to see so many familiar faces again. I've been with Greenlight pretty much since its inception in 2004, and it's kind of nice to see the 20-year anniversary, as David mentioned. You know, I kind of put Greenlight in kind of a life cycle of it got up and running on its feet with the IPO in 2007, then had some troublesome teenage years in its mid-teens, early teens, and now it's coming of age and we can see how it's matured and on its path to adulthood. You know, throughout today's presentation, the common theme you're going to hear is the turnaround story of the last few years.
I like to use the analogy of the dynamic sailboats in the America's Cup, right? Greenlight has navigated some choppy waters. It has a dedicated team that's cohesive and talented that has turned the ship around. It's put us back on the course. We're now competing with the best in the field, and we have a new skipper at the helm. So let's dig into that story a little bit. Over the next 10 to 15 minutes, I'll just kind of go through a little bit more detail of what Greg went through. But let's start with premiums, right? The chart on the left is our growth in premiums over the last five years, six years. It's, I should keep my notes handy.
You know, what's fascinating is while the premium has grown about 40%, the number of contracts and the treaties, which is the line, the gray line, has grown 4.5x over the last six years. And that's a testament to the strong underwriting team and all the support that's gone behind it. But we've always said that we're not going to be top-line driven. And you can see in 2021 to 2022, our premiums actually dipped a bit. That's because we had a few large contracts where we did not believe that the performance was going to satisfy what we needed, and we weren't shy to shed that business. And that continues to be our motto going forward, whether it's on the open market side or on the innovation side. But we've always believed that profitable underwriting is better than just top-line growth.
The chart on the top right kind of shows the profitability of the underwriting improving. As a combined ratio trend has been coming down over the last few years, in fact, 2023 was our best underwriting year ever. 2024 is also shaping to be a very good year. All of that is driving our return on average equity. Our ROE is also driven by the investment side on the SILP. Let's look at how our ROE compares then over the years to our peers. The graph on the left shows our ROE relative to the average of our industry peers. And yes, we're slightly below in some of the years. What's interesting is if you look at 2022, as Greg mentioned, that's when the interest rates were going up. Our peers had fixed asset investment portfolios, and that suffered, right? A lot of their surplus dropped.
In fact, the average ROE on that group was negative. We grew our surplus in ROE in that year. The graph on the right talks a little bit about the risk relative to ROE because we don't think you can only look at ROE in isolation. You have to look at it in the context of risk. One way to measure risk is through volatility, and when we kind of look at what the peer group average is, which is the black dot in the middle on the graph, that's kind of the average risk return of that group, and if you draw that line to the Y-axis, and assuming at zero volatility, you would expect a risk-free return, so the risk-free return over the last five years would have been, let's say, the five-year U.S. Treasury. It was about 2.5% average.
So that line is where the risk-return equation meets. Where is Greenlight in that? Over that last five-year period, we are slightly above that risk-return average, which means we probably had the lowest amount of risk. And that makes sense because in 2019, we de-risked our underwriting side and we de-risked our investment side. Given our risk, we performed above average in our ROE. That's kind of the one takeaway from that slide. Then, as we dissect our earnings per share, within our multi-pillar strategy, you'll notice that we have the investment side on the balance sheet, and the SILPI returns along with the underwriting are very lowly correlated. So there's a very low correlation between the underwriting and the investment side. And as you look at our last eight quarters of EPS, you can see the dark green graph bar is the SILPI returns.
Four out of those eight quarters where we had the highest EPS, Solas Glas performed really well, and underwriting had a moderate performance. Underwriting is the lighter shade of green. Then there were two quarters in the middle there where underwriting outperformed the Solas Glas investment portfolio. We still had a really good EPS in those quarters. And then there are two quarters with the lowest EPS where neither Solas Glas nor underwriting performed really well, but we still had positive EPS in those quarters. The pale green shaded bars are the interest we earn on the restricted cash and the collateral that we post for our cedings. So, you know, that is driving some of the EPS every quarter as well. And then the dark lines are other FX and corporate expenses and other income that's not underwriting-related.
I really like this chart because it talks a little bit about how the intersection of SILPI returns and our underwriting performance can result in ROE, and while we said that they're not correlated or they're very lowly correlated, if you look at the middle part, the 96% combined underwriting ratio, at a 10% Solasglas return, that produces a 14% ROE, right? That's kind of the midpoint. 2023 was actually slightly better than that. We had 95% combined ratio and Solasglas was just under 10% and we produced a 16% ROE, right, so that kind of puts it into perspective, but if underwriting does really well and it produces, let's say, a 90% combined ratio and Solasglas is a flat year or a flat period, you're still producing mid-teens ROE.
On the flip side, if underwriting is flat, if we have a break-even underwriting period, but Solas Glas performs really well, 15%-20% return, we're still in the teens and high teens of ROE. Those two engines, if they work together and they outperform together, the potential for our ROE is quite significant. That's kind of the power and the uniqueness of the Greenlight story. I've talked quite a bit about our income statement and ROE and EPS, but let's talk a little bit about a balance sheet. AM Best in their most recent assessment have assessed our balance sheet strength as very strong. As you can see on the top right chart, I'll go through some of these, our reserving has been very stable. Over the last five years, our reserve development overall has been pretty flat. It's been neutral.
As Greg mentioned, Richard and his team have done a really good job of making sure that the reserves are strong. They're also very short-tailed. More than two-thirds of our reserves currently on the books relate to underwriting years over the last three years. So there's not a lot of tail on the risk side of the liability. Moving down to our debt side, we've been reducing our debt leverage. We had $100 million convertible note last time we talked at the investor day. We refinanced that. We've put that into a term loan, and we've started repaying some of that. As the surplus has grown, debt has come down. Our leverage is in a very good place right now, and it's likely to continue going down as surplus grows and we keep paying down that debt.
Moving to the asset side, last time at the investor day, I had mentioned that one of the largest assets on our books is the collateral that we post for our cedings, right? We're in a jurisdiction which is not accredited by the NAIC, which is the U.S. regulators, on the insurance side, and they require us to post collateral. The Cayman Islands Monetary Authority is currently working very hard with the NAIC to obtain qualified jurisdiction status for the Cayman Islands, which will allow Greenlight to then benefit from the qualified jurisdiction, and that will reduce and in some cases remove the need for us to post collateral.
As that collateral balance starts coming down over the last few years, it's freeing up cash flow for us, and that is then being used to either increase our allocation to Solas Glas, fund more into that investment strategy, or to pay back the debt or also to buy back our shares. So it's a really powerful tool as it comes down for us to have multiple uses for it. All of that has now resulted in our shareholders' equity growing. Over the years, our shareholders' equity has grown 32%. And that in itself is a good story, but book value per share is our main metric. So what does that mean for a book value per share? Well, our book value per share over the last three years has kept up with the peer average.
If you see, we're at 34%, which is right at the peer average over that three-year period, and when I say we're competing with the best in the field, that's a testament. We're right there competing and producing book value per share growth that is keeping up with some of those peers, but what does that mean for our share price, so I'll walk you through this chart a little bit because there's a lot there. The main point there is we've always maintained that the cure for the discount to our book value is going to be consistent underwriting and investment profits and profitability, and as we've shown that over the last few years, you can see how the book value per share has been growing, and it's probably grown around 11-12% annualized, where the share price has been growing at a 22% return.
Not only has the share price outperformed the S&P, it has managed to shrink and narrow that discount in our book value. Last time we had our investor day, we were trading at about 60% of book value. Today, we're trading at about 80%. We haven't focused on the share price. We focused on growing our book value per share, making sure the underwriting profitability and the investment profitability will take care of the stock by itself, and it has done that. Our team is dedicated to continue working towards making the book value equivalent to our share price. We believe that Greenlight Re shares warrant to be traded at or above book value, and our team is committed to continue doing that. Finally, I want to talk a little bit about capital management. When I think about capital management, we have multiple levers.
And again, to use the analogy of the America's Cup sailing boats, you got to adjust the sails just right so that you're keeping the boat balanced, you're keeping it stable, minimizing risk, but propelling it forward with the maximum amount of wind that you can get into the sails. And that's kind of how we manage our capital. First and foremost, capital for us is to make sure we have sufficient capital for our ratings. Not only do we want to keep the minimum amount of capital for what AM Best requires, we want to have a buffer. A prudent buffer helps us in the uncertain times and the inherent uncertainty within the business. Anything in excess of that buffer is excess capital. And we have multiple ways where we can deploy excess capital.
Over the last few years, some of the four ways we've deployed that capital is mainly in underwriting. We've grown our premium volume. We've added the Syndicate-in-a-Box strategy, and that's going to help with our growth and our market acceptance. And the innovation book, that's continued to be growing. So all of that on the underwriting side is using up some of that excess capital. We've increased our allocation to Solas Glas from 50% in 2023 to 60%. In 2024, we've increased it to 70%. So again, allocating capital, balancing it, like Greg mentioned, without making it overly on one side and keeping it balanced. We've also repaid some of our debt. Last quarter, we paid back, I think, $10 million of our outstanding debt. And we've also, last quarter, bought back some of the shares.
We spent $7.5 million off the $25 million that the board has authorized for share buybacks, and we bought back some stock. So there are multiple levers. We're continuing to make sure we are maximizing those levers in a balanced way and allocating our capital where it's going to give us the best return on equity. And that's it for me. So I'll turn it back to David to talk about Solas Glas.
I'm just going to give a brief update on Solas Glas, and then we'll get to questions of which, having heard all of this, I'm sure you have about a zillion of them. Let's see. As you all know, I founded Greenlight in 1996, and I've been running the hedge fund ever since then. In 2004, we started Greenlight Re, and the goal was essentially to use the same investment strategy as the hedge funds to generate profits through the reinsurance cycle, through superior and opportunistic underwriting. It was not supposed to be driven by the need for top-line growth because of the expected adequate returns from the investment strategy. Our investment strategy is obviously different from other reinsurance companies, which primarily hold relatively intermediate duration bond portfolios. DME Advisors is an affiliate of Greenlight Capital.
It manages the investments the same as we manage the Greenlight Capital hedge funds with some tighter guidelines and constraints. So we wind up with a bit less invested here. Even when you say we're 70%, it's not quite 70% of the hedge fund because there's constraints on the investment strategy as part of our investment policy agreed to by the board, the rating agencies, and everybody else. But the rhyme and the flavor is very much the same as what we have going on in the hedge fund strategies. We invest long and short in equities and distressed debt when it's cyclically attractive, which it hasn't been for about the last 15 years, but hey, you never know. And we have a macro overlay to protect the portfolio and to enhance returns when we find macro-oriented investments.
The investment has portfolio over the since Solas Glas or since Greenlight Re, since the reinsurance company was formed, the annualized return has been 5.6%, and the net average exposure has been 33%. Is that the right one? Yes? Okay. It's hard to see. Greenlight Re invests through a fund of one structure called Solas Glas Investments. DME Advisors is the general partner of Solas Glas and currently owns about 22% of the assets in the fund. Greenlight Re is the other 78%. We have closely risk managed the portfolio exposure post our 2018 loss, and the risk assets has not been what you'd call static. At our last investor day, we were investing 50% of Greenlight Re's book value, and Solas Glas currently we're up to 70%. Personally, I hope to be able to expand that further in the coming years.
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. Given it's our 20th year anniversary, I want to take a time to reflect on the 20-year record. Here is the historical annual returns for Greenlight Re through the end of the Q3. We decided to use it versus an aggregate bond index, which is a good proxy for what our peers are doing in terms of how they invest money mostly in bonds. It's notable that when rates rise, bond portfolios do lose money. We had a difficult stretch from 2015 to 2018. The results over the last five years have been at least adequate, and sometimes they've been better than that.
We've had periods where we failed to appreciate the impact of trillions of dollars shifting from active to passive management that related destruction to valuation-sensitive investors and strategies. We've adjusted our strategy and to accept this new market reality. We're not complaining about it. We're adapting to it, and the results have improved since. Through this period, we're up over 200% or 5.6% annualized versus the bond index, which is up 93% or 3.3% annualized. Let's zoom in on the last five years through September. During this time period, we generated a 65% return or 10.6% annualized, while the aggregate bond index has been roughly flat. This has obviously been a tough market for bonds as rates have moved away from zero, but notably, during this period, our volatility has been only moderately higher than bonds, and most of that volatility has been to the upside, which is obviously welcome.
Let's turn to the environment we see today. The economy continues to be strong. I think there's no sign of recession. The job market is doing well, and wages are growing despite recent signs of a very small slowdown. The election, which I was worried about, was decisive and calm, which is a good outcome in support of political stability. I expect less regulation and more pro-growth policies coupled with lower taxes other than tariffs leading to higher deficits, and the tax cuts are likely to be deeper than the spending cuts. I also expect a resurgence of inflation. The fiscal stimulus, the tariffs, the modified immigration policy are all inflationary. So too is the effort to reverse the substitution of low-cost foreign labor with high-cost American labor. We think the rising deficit combined with rising inflation will be a real challenge for the Fed.
The other important consideration is that while we're in a bull market with a growing economy, this is the most expensive market that I've ever seen in my career. Let me just say a few words about the existing portfolio. The largest longs, they really haven't changed too much. Probably four of them, or three of them, were on the list when we were here two years ago: Brighthouse Financial, CONSOL Energy, and Green Brick Partners. Newer are HP, which stands for Hewlett-Packard, and Solvay, which is a European chemicals company. We've had some new positions added to the portfolio in recent months, including Alight, CNH Industrial, Peloton, and Viatris.
As we have adjusted the strategy, the basic adjustment is this: because we really don't believe that there are significant assets trying to invest in a way of finding undervalued securities, buying them, holding them for a long period of time, and waiting for valuation to converge, we have increased our focus on companies that are essentially paying us the return directly. So we're focusing on companies that pay large dividends and repurchase large percentages of their shares. Generally speaking, double-digit is preferred. If I look at the list here today, Brighthouse, Solvay, HP, CNH Industrial, and Viatris, the names I've just mentioned, are all yielding roughly double-digit cash-on-cash returns to shareholders at current share prices. Our short side is a mix of things. It's very idiosyncratic, so it's hard to characterize it as a theme.
But if we were to find a few, I'd say one theme is companies that over-benefited from COVID have expanded their margins in ways that the market believes are more permanent and we believe to be more temporary. We believe there are shorting opportunities in credit-sensitive companies where there's large exposures to commercial real estate or to consumer credit. We have, as known, a large position in Green Brick Partners. My overall outlook on housing is not particularly bullish at the moment. So we have a large hedge of home-building peers. And additionally, we obviously have the idiosyncratic shorts where we think there's just specific problems with the business, the capital structure, the management strategy, or whatnot. Our net exposure is at the upper range of where we've been the last several years. Right now, it's around 40%. It's about 40%.
The market feels expensive, and so this may quickly change if we see any sign of a sort of a rollover. But in the meantime, it seems to me the market wants to go up and to the right, and we don't want to be too negative. While we focus on our core long-short portfolio, we construct from the bottom, which we do construct from the bottom up. We use macro to manage the portfolio from the top down and to take advantage of opportunities. If our insight is about a company, we should buy the company, or we should sell short the company. If our insight is about the economy, we should invest in a macro instrument that directly reflects our insight. This year, through the Q3, the long portfolio has generated most of our returns. Our macro, and particularly gold, has contributed nicely.
Our shorts have generated a small loss but contributed significant alpha. We've built a significant position in inflation swaps since 2020, as we expected inflation to be much more persistent than what is implied by the market. Post-election, we have increased our investment in inflation swaps. As I've just covered, we think that the administration changes next year, its policies will reignite inflation. Gold continues to be a large holding, and the difficulties in the government will continue facing with fiscal and monetary policy. We have nearly a 7% fiscal deficit at the top or near the top of an economic cycle, and gold is a nice hedge for things going badly economically or geopolitically. Despite our net exposure remaining around 33% on average during the last several years, our correlation to the S&P 500 has changed dramatically. You can see three distinct periods on the chart.
In 2021, our correlation to the index averaged about 0.4, which was a little bit above average. Then, starting in 2022, the correlation decreased dramatically and averaged 0.25, but really, we started the year around 0.45 and ended the year at the lows. Since then, it's remained very low, around 0.1 on average, basically uncorrelated to the equity markets. Our return in the last two years has been almost entirely alpha generation. While we're not bearish, the very high valuation of the market leaves me not very interested in having large net exposure to the market. Relatedly, we don't expect to keep up with a steadily rising market, but we should outperform a choppy or a declining market significantly, so that covers Solas Glas, and so before we turn it back up to questions and answers, I'm just going to give a couple of conclusions for today.
I hope we've shown you that Greenlight Re is well-positioned for the future, that our strategy is taking hold. We have an experienced and capable management team led by Greg, who I'm now going to deem the professor. We have a solid underwriting strategy that is well risk-managed. Our innovations unit is highly differentiated and provides us unique underwriting opportunities and potential for capital appreciation. We continue to be an attractive underwriting market and expect favorable conditions to continue for some time, and the board is focused on allocating capital proactively to our best opportunities, including share repurchases. Our stock is still undervalued, and we continue working on increasing our fully diluted book value per share and reducing the discount to book. Let me conclude. Last time we were here, people asked a bunch about the discount to book.
And it was hard because a lot of ways I kind of felt like it was justified, that our performance didn't really merit. We weren't earning our cost of capital, or we weren't demonstrating that. Sitting here today, I think that we've demonstrated over the last while that there's no reason we need to continue to be in the penalty box. There's no reason the stock needs to continue trading at a discount to book value. And we are focused on this discount in a way that we weren't able to be before. We have the capital flexibility to repurchase shares when we need to repurchase shares, and we have the ability to pursue attractive business growth opportunities that should earn at least our cost of capital, if not better than that. And that's the message I'd like to leave you with today.
Let's have questions if you'd like any for me, for Greg, for Faramarz, anybody else.
Okay. So we've got Pat O'Brien, Global Chief Operating Officer, David Sigmon, General Counsel, Richard Stromer, Chief Actuary, Brian O'Reilly, Head of Innovation, and Tom Curnock, Global Chief Underwriting Officer.
Okay.
Thank you. Do you think of the innovation strategy as being primarily to make money as a venture capitalist or primarily to build great new customers for underwriting business?
I'm going to start by saying we think of it as underwriting-led, underwriting-driven, but that also supports capital preservation. The central idea is we're investing in people that have good ideas, a track record, good tech, good distribution, good reputations. And that only works. That's only going to be valuable in the long run if they're generating underwriting margins.
So that's always been our focus, not momentum investing, not trading on some multiple based on some speculative model. That was a strategy from the get-go, and that's exactly why we've avoided the pitfalls that many others in this space have had, because they're saying, "Oh, here's a company that's starting. Look at their revenue growth. Let's think about the multiple it might trade at without focusing on the profitability." So it's underwriting-led, but that drives both sides of the equation. I'll let Brian expand on that.
Yeah. Yeah. I guess the only thing I'd add is, yeah, let's kind of what we look at from the beginning is that we're looking for areas of the market that can produce a good underwriting margin. So we shouldn't be bringing business on our books that we can get elsewhere.
So finding companies that have a different differentiated strategy can grow into areas that we're currently not active and really build a unique portfolio. So a lot of these businesses we're supporting are kind of niche markets, kind of smaller TAMs as far as size of the market. But that also means they probably have higher expense ratios or are less efficient. So it's really targeting those types of businesses. And then investment is really good for alignment reasons. And then there's obviously the benefit of capital appreciation in the future. So that's kind of how we're approaching the partnerships that we've developed.
I believe over time, the economics of the underwriting side will come to dominate the investment side. You can have a question over here.
Anthony Mottolese with Dowling & Partners. Could we just spend a little bit of time sort of on the decision-making tree, when to allocate capital and resources across your four pillars in the context of balanced growth versus when you might want to lean into a certain area because of market conditions or because of projected returns?
Well, I'll start. I'll give this to Tom if you can prepare for that. But I think the key for me is to maintain balance. What you don't want is outsized losses. You don't want to be against the rope on your back heels when the opportunities are strongest. And you can see that now in the cash flow market right now. Some markets on their back heels, they're playing defense. Now, it isn't obvious where if it's a great opportunity you're going to, but other markets on their front foot.
And you want to be in control of your destiny. You want to have that not merely financial capacity, the psychological capacity in our business, the courage, the willingness, the confidence of the board and your investment to lean in when the opportunities are best. That takes confidence, but you can lose confidence easily in our business if you're reeling from a big blow. You want to avoid those big blows. So that, to me, is sort of a philosophical answer to it. Tom, can you add any meat on those bones?
Sure. I mean, it's going to be driven by market conditions. So I'm very lucky as CEO, but we don't have top-line targets we have to meet. So if the conditions are good, I'll go to Greg and to the board and say we should grow our portfolio on the underwriting side.
If I don't think we're quite so good, we have all these other pillars that we can choose from. So we're compensated on the bottom line, and we're going to focus just on profitability across the pillars. And that's what's going to drive decisions as to where we allocate capital.
You've made it 20 years. Greg, you've been there one year. What do you think the changes are over the next three to five and beyond for the company?
I think for me, single-minded focus right now is on profitability and ROE. We have to fix that problem. And I think we're well on our way, and I think we're going to do that. Once you have that, you have optionality. You can grow. You could invest in new operations. You could look at partnerships, other things like that that we can grow. There's strategic optionality.
I think it's all going to depend on market conditions, but the foundation will always be pretty much, I think, what it is now. We have this multi-pillar strategy. The core of it is value-based underwriting and good, solid underwriting with cycle management. Our goal is not to be the biggest. We want to be the most profitable we possibly can. So I think it's looking on beyond five years. Our goal isn't to be some grand top 10 reinsurers. I think it's going to be nimble following the strategy. I think we'll be bigger. I think I'll be surprised if we aren't comfortably over $1 billion of equity in certainly in my tenure here. And beyond that, it's an interesting dynamic industry. And I think there's also lots of exciting things that might happen opportunistically. I don't know. David, do you want to add to that?
Nope. I think that's great. Profits. Okay.
Hello. Nathan Mantina from NYU. I have a question specifically for Mr. Einhorn. Historically, Buffett and AG at Berkshire Hathaway seem to have focused or preferred taking on very large and concentrated exposure, specifically through kind of retroactive reinsurance agreements or supercat exposure. Over Greenlight's kind of 20-year history, it seems to have faced difficulty in trying to replicate that type of strategy, and they seem to have moved more towards a little bit more diversified approach. So what has been some of the learnings over that 20 years of trying to replicate the Berkshire strategy, and why have you got to change your focus?
Yeah. Look, I think when we started, we were trying to do more of that. And we wanted to do proprietary deals. We wanted to do deals where we were the lead.
We wanted to do deals that were complicated. We wanted to do deals where we thought we could figure things out that the rest of the market wasn't seeing, and the first deal that we did along those lines was a spectacular deal, and we made a ton of money, and it was probably the best deal we've had in the history of the company in 20 years, was deal number one, and so that made us feel very confident in what we were doing, and then what ultimately happened was some of the later deals or actually all of the later deals weren't as good as that deal, and occasionally, we would run into a deal that was problematic. I won't go so far as to say catastrophic, but in ways, it felt catastrophic.
And you'd have a portfolio of 10 large deals, and nine of them were fine, and we were making decent but not exceptional returns. And then you had one, and it would be worse than the model, and it would be worse than the worst case of the model. And you'd say, "What is it that we didn't understand?" And obviously, there was something that we didn't understand. And it would take us two years to feel the full pain of a single bad contract. And it would eat up the underwriting profits plus on most of the rest of the business.
And you would just be like, "Oh, if we can just get done with this one, then we'll have a clean thing." And then maybe two quarters would go by, and then you'd see the beginning signs of whatever the next problem one was. And that's even continued. I mean, we have one in the innovations portfolio, which for the last year, year and a half, we've been suffering through what was obviously a bad underwriting decision on that particular one. And that one has now bled itself out. And I think we're substantially done, if not done with that. But we need to stop having this happen. And so we've changed the strategy. We're trying to stop being the latest and the greatest and the best and the smartest.
What we're trying to do is find places where we can make some money and not necessarily a lot of money, but not have over-large exposures to any particular thing. We're content to take industry pricing, particularly since we think that the market is a hard market and be very diversified in doing that. I'm sure we're even tightening up what we're doing on the innovation side so that we don't have another contract such as the one that we just completed. If we can ever get ourselves through a year where we're not bleeding out some loss on one individual or two individual contracts, we're going to show really nice underwriting results.
I can't tell you how many times I've sat there in the September annual planning where I look at the budget for next year and see that we're going to have a combined ratio that then has nothing to do or does not relate to the combined ratio, which ultimately would prove out by the next year. And invariably, it wasn't because the market was bad, and it wasn't because we had a hurricane. It was because there'd be one contract that we kind of got screwed up. And so we're really trying to cut down on that particular risk. We're not going to try to compete with the brilliance of AIG and whatever's going on over at Berkshire. Those guys are fabulous at it, and they've proven they can do it. And pending further notice, I think we've kind of proven that we can't do that.
So we have to do something else. And we're going to try to make some decent returns and stop having individual contracts that blow us up for a year, year and a half, and two years. And I think if we do that, we're going to show results that are going to be much more satisfactory to everybody involved.
I'll just add to that. I've been in this role for about two months now, and the first thing I did was go through our portfolio and look for outsized positions. And we have trimmed a handful of positions along those lines. You have a question over there?
Great. Brett Reiss, Janney Montgomery Scott, the question is for David. Viatris, is that an example of a stock where you'll tolerate or put up with anemic growth provided they buy back stock or committed to buying back stock and paying a high dividend? Is that our generation's equivalent of the cigar butts that Graham and Schloss would buy in the past?
We're here to try to take the opportunities that the market gives to us. We don't always choose what the opportunity set is. There's periods in the market where we can buy leading companies in the market, which are very exciting at times when other people don't find them to be exciting. So we had four years or five years where Microsoft was a very large position in the portfolio. We had seven or eight years where Apple was a very large position in the portfolio.
But when we own those, we own them at barely double-digit PE multiples, or in some cases, single-digit PE multiples for Apple during a number of years when we held it. Those opportunities aren't there right now. The market's very expensive. We're talking 23-24 times earnings for a market that's showing earnings per share growth as a whole in the mid-single digits. So the average company is at 24 times earnings and growing 5%. So you can look at something like Viatris and say, "Is it a cigar butt?" No. Viatris is growing about 3%. It's growing about 2% less than the overall market. But you don't have to pay 23 times earnings. You're paying five times after-tax-free cash flow, with half of that cash being dedicated to us in terms of buybacks and dividends.
So we're getting about a 10% cash-on-cash return, and the company still has another 10% cash flow that they can use to either deleverage a bit or to acquire different products to grow. I don't believe that Viatris is a secularly declining business. The top line is not negative. The profits is not negative. Is it as exciting as Apple? Well, Apple's top-line growth is also about 3%. It trades at 32 times earnings. So maybe it is as exciting as Apple. I don't really know. But I don't believe that we own companies that people are right now going to be very excited to talk about at cocktail hours. We're not going to own a lot of AI companies and other things that people are paying huge values for. We're going to find the opportunities where we can see them.
Something like Viatris is an opportunity we can see at a price that we like at a company where not only is it just growing a little bit, on the margin, the very, very difficult industry that they're in has gotten better because a bunch of competition has disappeared. So when they introduce a new product, they're not competing against 12 companies. They're competing against two or three. As a result, they're able to kind of sustain where they're going. Is it a great business? It's not a great business, but it's okay. I wouldn't compare it the same as a cigar butt.
I own it, so it's music to my ears what you just said.
That was a baited question. Good job.
Thank you.
Dan McLean. You guys bought back shares. Obviously, you think the stock is cheap, but can you walk through the opportunity cost across the board of the other options you had for the capital within the business?
Faramarz, why don't you take that?
Yeah. Look, we've always said that we're going to deploy our capital in multiple ways with multiple levers. And one lever has always been a stock buyback. Over the last three, four years, we felt that our capital, our excess capital, as I mentioned, hasn't been at the level let me stand up so you can see it hasn't been at the level that we could justify spending it on reducing our capital. We were trying to grow our capital. Two years ago, our surplus was around $500 million. Now it's at $660 million.
As we grow the surplus and we find the opportunities where we have deployed what we need on the underwriting side, on the investment side, our debt leverage has come down. And at the same time, as the discount to book is still attractive enough, we will deploy that capital and buy back shares. That helps not just the go-forward ROE, but it also helps us keep our capital manageable and returning it back to the shareholders at what is an accretive and interesting value and makes sense. We still have out of the $25 million, we've only spent $7.5 million. We still have some more room to continue buying back the stock over the next six to eight months, which is when our buyback plan expires. But we're going to look at it in the context of all of those things that I mentioned, right?
The other thing you have to keep in mind is our trading volume is also low enough that for us to use up the entire allocated buyback plan, it's going to take some time, right? The 7.5 million that we bought back in Q3, that pretty much was at the maximum average trading volume per day that we can execute on, right? So it takes time. It's not as if we're going to be able to trade very quickly, but that in itself is accretive to our return to the shareholders.
The next question I had was Brighthouse. For David, just curious how the change in the interest rate environment, the performance of that, just a little bit of color would be great.
Yeah. Brighthouse has been an extremely frustrating investment, as everybody in this room knows.
And when we first invested in Brighthouse, they had a lot of exposure to downside in interest rates. And there was a period of time when rates essentially went to zero where you could look at some tail outcomes that were pretty ugly. As rates have risen in the last couple of years, the company has moved towards more of a strategic hedge such that I think they've removed most of the right tail risk to lower interest rates. So now the question really becomes a question of can they actually generate adequate capital and adequate returns through the business.
They have an active buyback, and they have over $1 billion of cash on the balance sheet, which is enough to at the holding company, which is enough to continue funding the buyback at their current pace for about another at least four years, even if they don't get any dividends from the subsidiary. But the company, in order to really succeed, is going to have to start generating more profits on the operating business. The last year has really been a struggle for them for reasons that are at best convoluted. I think I'll just leave it at that.
Thank you. Another question on the underwriting side. How do you think about, on Lloyd's market, follow-on underwriting versus Greenlight's own go-to-market strategy as a lead underwriter themselves? And just, Greg, I would love to hear your comments in this year.
What did you like about what Greenlight's done on its underwriting book? We've seen eight consecutive quarters of underwriting profitability. What do you think attributes to that sort of turnaround from less than stellar results in the past?
Well, I think. Let me start with the second part. I mean, I think it's. I like the portfolio a lot. I think there's some areas where we are probably a little underweight that we can grow. I think the market environment remains very strong. So we're going to lean into that market. And the interesting thing is we're writing business today, but that earns out over a couple of years, right? So we think the environment is going to be good for two, three, and maybe four years beyond that. So I think it's a good opportunity. I think I like the talent that we've got.
We have very quantitative underwriters. Tom is very quantitative with a PhD. We have underwriters that studied actuarial science or are certified accountants and very, very quantitative, and then another lead underwriter that is an actuary, but they also have great business and market savvy too, so it's a great balance of bringing the science of underwriting together with the experience, and both of those are critical. Numbers, analysis models by themselves could be just downright dangerous, and I'm a guy that's made a living on the quantitative side as much as anything. That was my entry ticket into this industry, but the older I've gotten, you realize how important experience and judgment is, so I like very much the balance between that, and this is a company that is battle-hardened, and yes, everybody makes mistakes or you get unlucky.
But the question is, do you learn from that and you adapt to it? And I like our portfolio. I like its position. I think there's areas I won't go into every day, but there's areas where I think we can grow and improve and get more premium, profitable premium. On Lloyd's, we do support Lloyd's through what we call funds at Lloyd's strategies. But we look at that strategically. We don't just sort of wholesale, "Oh, do whatever you want." We're looking at we have relationships with each of the lead underwriters in those syndicates. And we're thinking about them as alternatives to us writing it ourselves. So in fact, an example of that would be like on Property Cat. We write very little direct reinsurance cat. A lot of it is retrocession or a few key strategic quota shares.
So rather than replicate all the expense to have a proper global CAT portfolio, you probably have to write 400 programs, something like that, a lot. That's a lot of work. It's a lot of administrative effort, a lot of contract count. How about we simply underwrite really good, trusted underwriters that we respect and deliver profit? That's a way of maintaining lean expense ratio and not in terms of the diversity of the expertise you have to have and become more savvy dealmakers as opposed to just heads down, line of business, narrow-focused underwriters. Lloyd's strategy of Funds at Lloyd's also fits into that. When the opportunities are good and Lloyd's has a good track record lately and the outlook for the next few years is strong, that remains attractive to us.
But if that changes, we'll step back and either take it on board ourselves or we'll just exit, right? We don't have to write premium.
How do you guys feel like shorter-term returns in the investment portfolio drive your thresholds for risk in the underwriting side?
Say that again. How do we feel what?
Shorter-term returns in the investment portfolio driving your thresholds for risk on the underwriting side?
I don't think we correlate or impound our investment returns into our underwriting decisions. The underwriting decisions need to stand under their own weight, right? They don't, so we acknowledge and we expect that they're largely uncorrelated, but we expect each pillar to be inherently profitable in itself. The game about balancing that portfolio to make sure that you're not getting overweight in one area or another is another question. But we're not impounding expected returns into our underwriting decisions.
That's what they used to call cash flow underwriting, and we don't do that.
I would just add it's very hard to predict when short-term returns in the investment portfolio are going to be unusually good or unusually bad. I would say sometimes when they prove to be unusually good, that's right at a bottom when there's a big turn, and it's super hard to even realize that they're about to be unusually good because you're suffering on a day-to-day basis with how unusually bad they are moments before they start becoming unusually good. So I don't think this is. We don't micromanage the portfolio from the company's perspective in the sense of how much do we allocate to Solas Glas based upon a short-term opportunity that's available.
What we've done is we've raised the overall allocation to Solas Glas over the last few years from 50% to 60% to 70%. And if we continue executing on our plan, there's further opportunity to increase that. But that's not going to be in relationship to identifying particular opportunities. Within Solas Glas, I can manage the portfolio somewhat relating to opportunities. So if there's less to do, we can have a lower level of investment and have more dry powder. And when things feel maybe like we should be more aggressive, then we can have less dry powder within the investment strategy. And the company doesn't have to change its allocations for me to make those kinds of decisions.
I'm just curious if you guys could talk a little bit about how you think about gearing your capital on premiums to surplus? I know in the past you've had years where you guys were writing $500 million in premium with $1 billion in capital, and now we're more like one-to-one, and just wondering just what's the thought process and under what conditions would you push your capital harder or even go back in the other direction? Thank you.
I think we're about one-to-one. We could probably run 1.2, 1.3, I think, and still have enough capital. We have, from an AM Best standpoint, excess capital. We're comfortable with that. But we also like the flexibility. I think Farmers talked about maintaining a buffer, and we like that. So reinsurance is not going to be like an insurance business. We're in the volatility business, and it takes a lot of capital.
So we run the models, and we know the models, and we know exactly how much we need to make sure our ratings are sound, and there's a comfortable buffer there. As I think Farmers pointed out, we do have excess capital, and we'll buy back shares if we want to. But then we'll deploy capital in underwriting in proportion to what we see the opportunities are. We think the opportunities are good. We plan to grow. I think you'll see that. Is that a forward-looking statement? It gets me in trouble. But I think we have caveats around that. But we see opportunities there. But we don't really have a target premium to surplus. It's a function of the mix of business. And every line of business has a different capital leverage ratio that you can apply.
Your cash flow is a lot more. It can be capital-intensive, especially a little bit less cat. If it's very PML exposed, it can have really punitive capital ratios. So it all depends on the capital charges. The more profitable you are, the lower the capital charges. So the more we can demonstrate sustained periods of profitability, the more capital we'll have to deploy. Not a great answer, but did you have a second question or is that a million questions?
But one of them was kind of a technical question, and this could be me misunderstanding. You talked a little bit about, from what I understood, you're ceding some of your innovation premiums in your quota share program. I'm just trying to understand if that's such an attractive line of business, why you'd want to cede any of the premium.
That's a really good question.
It is a little counterintuitive, but it's really setting the stage for the future. We did not need to seed that or necessarily want to. And so we targeted enough of that simply because we want to develop capital partners, if you will. And it's a nascent book of business, right? So we see the business, but the margins are just now emerging. So how does a person, if you think about it as a quota share partner, it's like an investor in that business, right? They're sitting side by side proportional to our returns. We know those companies. How have I gotten comfortable with that? I've met with almost all of the clients personally. And it's not something you can just look at the numbers and say because you can't say, "Well, look at our 10-year track record." Let's do that. Oh, that's it. Do a calculation.
We'll take that line. So these partners are buying into our strategy. They're buying into our reputation. They're buying into Brian and his team. They're buying into my commitment that we're going to deliver profits here. It's not proven by five-year track record, okay? So what that brings to us in the short run is validation. Once you get a strong lead, all of a sudden, we had lots and lots of interest and more than we needed. We could have placed a lot more than this. And so it validates the strategy. But then longer term, the growth potential is really big. And what I don't want to do is constrain that with our own balance sheet. I want to put in place the capacity today, and you got to work with them.
You got to we're going to have they're going to want to come to Cayman Islands and meet with us. They're going to want to meet with some of our clients. They're going to want to get to know us. This is a relationship that we're building now for the future two or three years from now. And then two or three years ago, from now, I expect we will need that capacity to support it. And why not build as big a franchise as you possibly can and leverage it with other people's capital and generate some fees along with it too? Why not? We're not going to be egregious on that, but why not? We have something really valuable we're building. Why not monetize it?
Okay. Is that a good point to anybody dying to ask a question or we want to get a drink?
I'm here to get a drink. Okay. Thank you all. We're really excited about the company. We appreciate you came out to join us, and we hope you're excited about Greenlight Re.