Genie Energy, Ltd. (NYSE: GNE) has made significant advancements in its insurance strategy, as detailed in its recent press release. The company has expanded its consumer products portfolio with insurance offerings and established a wholly-owned, "captive" self-insurance subsidiary to bolster its risk management strategy.
Genie has secured insurance broker licenses in seven key states and has begun offering third-party insurance solutions through existing sales channels to its customer base. The company expects the economics of its offerings to strengthen gradually as it introduces internally-generated consumer offerings in the coming months.
In the fourth quarter of 2024, Genie anticipates paying approximately $40 million in premiums to its captive insurance subsidiary for expanded insurance coverage to address various additional risks. This payment will result in a non-recurring, non-cash charge of about $31 million in the same period as an insurance loss reserve related to the expanded coverage, as required by GAAP. However, the company does not expect this charge to impact its reported measure of adjusted EBITDA.
The $40 million in premium payments made to the captive will be reflected on Genie's consolidated balance sheet within its reported measures of short and long-term restricted cash, and other short and long-term assets. These funds will be available for investment by the captive as determined by Genie management to support the company's strategic objectives, consistent with regulations and the captive's position.
As of September 30, 2024, Genie reported cash and cash equivalents, short and long-term restricted cash, and marketable equity securities totaling $191.7 million.
Genie Energy Ltd. is a retail energy and renewable energy solutions provider, supplying electricity, including electricity from renewable resources, and natural gas to residential and small business customers in the United States. The company's renewables division is a vertically-integrated provider of community and utility-scale solar energy solutions. The market has reacted to these announcements by moving the company's shares -1.8% to a price of $14.49. For more information, read the company's full 8-K submission here.
