Third Point Re Reports Third Quarter 2015 Earnings Results

2015 / 11 / 03

Gross Premiums Written of $205.6 million, an Increase of 62.6%
Combined Ratio of 102.8% for the Property and Casualty Reinsurance Segment

HAMILTON, Bermuda, Nov. 3, 2015 /PRNewswire/ -- Third Point Reinsurance Ltd. ("Third Point Re" or the "Company") (NYSE: TPRE) today announced results for its third quarter ended September 30, 2015.

Third Point Re reported a net loss of $195.7 million, or $(1.88) per diluted common share, for the third quarter of 2015, compared with a net loss of $6.0 million, or $(0.06) per diluted common share, for the third quarter of 2014. For the nine months ended September 30, 2015, Third Point Re reported a net loss of $129.6 million, or $(1.25) per diluted common share compared with net income of $65.1 million, or $0.61 per diluted common share, for the nine months ended September 30, 2014.

For the three months ended September 30, 2015, diluted book value per share decreased by $1.67 per share, or 11.8%, to $12.45 per share from $14.12 per share as of June 30, 2015. For the nine months ended September 30, 2015, diluted book value per share decreased by $1.10 per share, or 8.1%, to $12.45 per share from $13.55 per share as of December 31, 2014.

"During the third quarter, we were adversely affected by difficult market conditions that resulted in a net investment loss of $193.2 million in the quarter, representing an (8.7)% return in the quarter and a (4.3)% return for the year to date period.  Based on our estimated investment return for October of 4.6%, as posted on our website, our investment return for the year through October was 0.1%," commented John Berger, Chairman and Chief Executive Officer. "In the third quarter, we generated premiums written of $205.6 million, an increase of 62.6%, bringing our gross premiums for the year to date period to $603.3 million. We completed a $91.6 million adverse development cover in the quarter which was the main driver of the premium increase as well as the largest contributor to growth in investment float which totaled $601.5 million as of September 30, 2015. Our underwriting results for the period were as expected, and we believe we are well positioned to take advantage of improvements in investment performance in future periods."

The following table shows certain key financial metrics for the three and nine months ended September 30, 2015 and 2014:


Three months ended


Nine months ended


September 30,
 2015


September 30,
 2014


September 30,
 2015


September 30,
 2014


(In millions, except for per share data and ratios)

Gross premiums written

$

205.6



$

126.4



$

603.3



$

359.5


Net premiums earned

$

208.8



$

108.9



$

468.5



$

261.0


Net underwriting loss (1) (2)

$

(5.8)



$

(1.8)



$

(19.1)



$

(9.0)


Combined ratio (1) (2)

102.8%



101.7%



104.1%



103.6%


Net investment return on investments managed by Third Point LLC

(8.7)%



(0.04)%



(4.3)%



5.5%


Net investment income (loss)

$

(193.2)



$

1.6



$

(89.6)



$

92.1


Net investment income (loss) on float (3)

$

(52.0)



$

(0.1)



$

(23.6)



$

13.5


Net income (loss)

$

(195.7)



$

(6.0)



$

(129.6)



$

65.1


Diluted earnings (loss) per share

$

(1.88)



$

(0.06)



$

(1.25)



$

0.61


Growth in diluted book value per share (3)

(11.8)%



(0.3)%



(8.1)%



4.3%


Return on beginning shareholders' equity (3)

(12.8)%



(0.4)%



(8.9)%



4.7%


Net investments managed by Third Point LLC (4)

$

2,092.6



$

1,802.2



$

2,092.6



$

1,802.2












(1)

Property and Casualty Reinsurance segment only.

(2)

See the accompanying Segment Reporting for a calculation of net underwriting loss and combined ratio.

(3)

Net investment income on float, diluted book value per share and return on beginning shareholders' equity are non-GAAP financial measures. See the accompanying Reconciliation of Non-GAAP Measures and Key Performance Indicators for an explanation and calculation of net investment income on float, diluted book value per share and return on beginning shareholders' equity.

(4)

Prior year comparative represents amount at December 31, 2014.

 

Segment Highlights

Property and Casualty Reinsurance Segment

Gross premiums written increased by $80.8 million, or 64.7%, to $205.7 million for the three months ended September 30, 2015 from $124.9 million for the three months ended September 30, 2014. Gross premiums written increased by $255.8 million, or 73.6%, to $603.3 million for the nine months ended September 30, 2015 from $347.5 million for the nine months ended September 30, 2014.  The increase in premiums for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 was primarily due to one new adverse development cover, new business written by our U.S. office, where we have seen additional opportunities as a result of our U.S. presence, and contracts that renewed in 2015 that did not have comparable premiums in the 2014 periods. The increase in premiums in the three and nine months ended September 30, 2015 was partially offset by contracts written or amended in 2014 that did not have comparable premiums in the current year periods and contracts for which we made a decision not to renew due to changes in pricing and/or terms and conditions. Since Third Point Re focuses on large transactions, which in some cases may not renew, period over period comparisons of gross premiums written may not be meaningful.

Net premiums earned for the three months ended September 30, 2015 increased by $107.5 million, or 105.9%, to $209.0 million. Net premiums earned for the nine months ended September 30, 2015 increased by $217.2 million, or 86.4%, to $468.5 million.  The results for the three and nine months ended September 30, 2015 reflect net premiums earned related to the large adverse development cover written in the third quarter and net premiums earned on a larger in-force underwriting portfolio, including new business written, compared to the three and nine months ended September 30, 2014.

The net underwriting loss and combined ratio for the nine months ended September 30, 2015 included a $3.1 million loss related to windstorms and other weather activity that took place in the state of Texas in the second quarter. In addition, we recorded an increase in the net underwriting loss of $1.4 million and $4.5 million for the three and nine months ended September 30, 2015, respectively, related to development of reserves on prior years' contracts. This compares to a $0.2 million decrease in the net underwriting loss for the three months ended September 30, 2014 and a $1.4 million increase in net underwriting loss for the nine months ended September 30, 2014. These increases to the combined ratio compared to the prior year periods were partially offset by a lower general and administrative expense ratio due to proportionately higher net premiums earned.

Catastrophe Risk Management

The Catastrophe Risk Management segment includes the combined results of Third Point Reinsurance Opportunities Fund Ltd. (the "Catastrophe Fund"), Third Point Reinsurance Investment Management Ltd., and Third Point Re Cat Ltd. (the "Catastrophe Reinsurer").  In December 2014, the Company announced that it would no longer accept investments in the Catastrophe Fund, that no new business would be written in the Catastrophe Reinsurer and that the Company would be redeeming all existing investments in the Catastrophe Fund. Net assets under management for the Catastrophe Fund were $0.7 million as of September 30, 2015 compared to $119.7 million as of December 31, 2014.  During the nine months ended September 30, 2015, the Catastrophe Fund distributed $118.7 million (Third Point Re's share - $59.0 million) to its investors.

Investments

For the three months ended September 30, 2015, Third Point Re recorded a net investment loss of $193.2 million, compared to net investment income of $1.6 million for the three months ended September 30, 2014.  The return on investments managed by the Company's investment manager, Third Point LLC, was (8.7)% for the three months ended September 30, 2015 compared to (0.04)% for the three months ended September 30, 2014.  

For the nine months ended September 30, 2015, Third Point Re recorded a net investment loss of $89.6 million, compared to net investment income of $92.1 million for the nine months ended September 30, 2014. The return on investments managed by the Company's investment manager, Third Point LLC, was (4.3)% for the nine months ended September 30, 2015 compared to 5.5% for the nine months ended September 30, 2014.

The net investment results for the three and nine months ended September 30, 2015 were attributable to losses in the Company's long equity portfolio, which was partially offset by strong performance in equity short positions, structured credit and sovereign credit. During the third quarter, the equity portfolio posted negative returns in most sectors amidst a broader market decline. Specifically, several large positions in the healthcare sector detracted meaningfully from investment returns. The returns generated by the Company's investment portfolio will vary based on a number of factors, including the overall markets, individual security selection, and allocation of exposure by the investment manager across strategies.

Conference Call Details

The Company will hold a conference call to discuss its third quarter 2015 results at 8:30 a.m. Eastern Time on November 4, 2015. The call will be webcast live over the Internet from the Company's website at www.thirdpointre.bm under "Investors". Participants should follow the instructions provided on the website to download and install any necessary audio applications. The conference call is also available by dialing 1-877-407-0789 (domestic) or 1-201-689-8562 (international). Participants should ask for the Third Point Reinsurance Ltd. third quarter earnings conference call.

A replay of the live conference call will be available approximately three hours after the call. The replay will be available on the Company's website or by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the replay passcode 13622747. The telephonic replay will be available until 11:59 p.m. (Eastern Time) on November 11, 2015.

Safe Harbor Statement Regarding Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company's control. The Company cautions you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "comfortable with," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Actual events, results and outcomes may differ materially from the Company's expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: (i) limited historical information about the Company; (ii) operational structure currently is being developed; (iii) fluctuation in results of operations; (iv) more established competitors; (v) losses exceeding reserves; (vi) downgrades or withdrawal of ratings by rating agencies; (vii) dependence on key executives; (viii) dependence on letter of credit facilities that may not be available on commercially acceptable terms; (ix) potential inability to pay dividends; (x) inability to service the Company's indebtedness; (xi) limited cash flow and liquidity due to indebtedness; (xii) unavailability of capital in the future; (xiii) fluctuations in market price of the Company's common shares; (xiv) dependence on clients' evaluations of risks associated with such clients' insurance underwriting; (xv) suspension or revocation of reinsurance licenses; (xvi) potentially being deemed an investment company under United States federal securities law; (xvii) potential characterization of Third Point Re and/or Third Point Reinsurance Company Ltd. as a passive foreign investment company; (xviii) future strategic transactions such as acquisitions, dispositions, merger or joint ventures; (xix) dependence on Third Point LLC to implement the Company's investment strategy; (xx) termination by Third Point LLC of the investment management agreements; (xxi) risks associated with the Company's investment strategy being greater than those faced by competitors; (xxii) increased regulation or scrutiny of alternative investment advisers affecting the Company's reputation; (xxiii) the Company potentially becoming subject to United States federal income taxation; (xxiv) the Company potentially becoming subject to United States withholding and information reporting requirements under the Foreign Account Tax Compliance Act provisions; and (xxv) other risks and factors listed under "Risk Factors" in our most recent Annual Report on Form 10-K and other periodic and current disclosures filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the date made and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

In presenting Third Point Re's results, management has included financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (GAAP). Such measures, including net investment income on float, book value per share, diluted book value per share and return on beginning shareholders' equity, are referred to as non-GAAP measures. These non-GAAP measures may be defined or calculated differently by other companies. Management believes these measures allow for a more complete understanding of the underlying business. These measures are used to monitor our results and should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included in the attached financial information in accordance with Regulation G.

About the Company

The Company is a public company listed on the New York Stock Exchange which, through its wholly-owned subsidiaries Third Point Reinsurance Company Ltd. and Third Point Reinsurance (USA) Ltd., writes property and casualty reinsurance business.  Third Point Reinsurance Company Ltd. was incorporated in October 2011 and commenced underwriting business on January 1, 2012.  Third Point Reinsurance (USA) Ltd. was incorporated in November 2014 and commenced underwriting business in February 2015.  Third Point Reinsurance Company Ltd. and Third Point Reinsurance (USA) Ltd. each have an "A-" (Excellent) financial strength rating from A.M. Best Company, Inc.

Contact
Third Point Reinsurance Ltd.
Manoj Gupta - Head of Investor Relations and Business Development
investorrelations@thirdpointre.bm
+1 441-542-3333

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of September 30, 2015 and December 31, 2014

(expressed in thousands of U.S. dollars, except per share and share amounts)



September 30,
 2015


December 31,
 2014

Assets




Equity securities, trading, at fair value (cost - $1,343,437; 2014 - $1,078,859)

$

1,289,840



$

1,177,796


Debt securities, trading, at fair value (cost - $739,897; 2014 - $546,933)

737,039



569,648


Other investments, at fair value

52,882



83,394


Total investments in securities and commodities

2,079,761



1,830,838


Cash and cash equivalents

10,819



28,734


Restricted cash and cash equivalents

604,428



417,307


Due from brokers

303,597



58,241


Securities purchased under an agreement to sell



29,852


Derivative assets, at fair value

27,337



21,130


Interest and dividends receivable

10,030



2,602


Reinsurance balances receivable

314,693



303,649


Deferred acquisition costs, net

192,451



155,901


Unearned premiums ceded

808




Loss and loss adjustment expenses recoverable

184



814


Other assets

14,231



3,512


Total assets

$

3,558,339



$

2,852,580


Liabilities and shareholders' equity




Liabilities




Accounts payable and accrued expenses

$

12,298



$

10,085


Reinsurance balances payable

34,833



27,040


Deposit liabilities

167,210



145,430


Unearned premium reserves

567,565



433,809


Loss and loss adjustment expense reserves

420,649



277,362


Securities sold, not yet purchased, at fair value

172,074



82,485


Due to brokers

695,019



312,609


Derivative liabilities, at fair value

22,495



11,015


Interest and dividends payable

1,673



697


Senior notes payable, net of deferred costs

113,332




Total liabilities

2,207,148



1,300,532


Commitments and contingent liabilities




Shareholders' equity




Preference shares (par value $0.10; authorized, 30,000,000; none issued)




Common shares (par value $0.10; authorized, 300,000,000; issued and outstanding,105,479,341 (2014: 104,473,402))

10,548



10,447


Additional paid-in capital

1,078,327



1,065,489


Retained earnings

246,394



375,977


Shareholders' equity attributable to shareholders

1,335,269



1,451,913


Non-controlling interests

15,922



100,135


Total shareholders' equity

1,351,191



1,552,048


Total liabilities and shareholders' equity

$

3,558,339



$

2,852,580


 

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

For the three and nine months ended September 30, 2015 and 2014

(expressed in thousands of U.S. dollars, except per share and share amounts)



Three months ended


Nine months ended


September 30,
 2015


September 30,
 2014


September 30,
 2015


September 30,
 2014

Revenues








Gross premiums written

$

205,583



$

126,403



$

603,259



$

359,498


Gross premiums ceded

(375)



(150)



(1,852)



(150)


Net premiums written

205,208



126,253



601,407



359,348


Change in net unearned premium reserves

3,597



(17,305)



(132,949)



(98,388)


Net premiums earned

208,805



108,948



468,458



260,960


Net investment income (loss)

(193,156)



1,552



(89,627)



92,072


Total revenues

15,649



110,500



378,831



353,032


Expenses








Loss and loss adjustment expenses incurred, net

158,537



60,115



316,336



150,783


Acquisition costs, net

50,509



38,317



152,664



93,331


General and administrative expenses

9,822



10,124



35,797



29,698


Other expenses

670



2,982



5,686



4,789


Interest expense

2,074





5,162




Foreign exchange gains

(746)





(800)




Total expenses

220,866



111,538



514,845



278,601


Income (loss) before income tax (expense) benefit

(205,217)



(1,038)



(136,014)



74,431


Income tax (expense) benefit

7,781



(1,542)



5,768



(3,917)


Income (loss) including non-controlling interests

(197,436)



(2,580)



(130,246)



70,514


(Income) loss attributable to non-controlling interests

1,721



(3,417)



663



(5,440)


Net income (loss)

$

(195,715)



$

(5,997)



$

(129,583)



$

65,074


Earnings (loss) per share








Basic

$

(1.88)



$

(0.06)



$

(1.25)



$

0.63


Diluted

$

(1.88)



$

(0.06)



$

(1.25)



$

0.61


Weighted average number of ordinary shares used in the determination of earnings (loss) per share








Basic

104,117,448



103,295,920



103,931,871



103,275,204


Diluted

104,117,448



103,295,920



103,931,871



106,454,775










 

THIRD POINT REINSURANCE LTD.

SEGMENT REPORTING



Three months ended September 30, 2015


Property and Casualty Reinsurance


Catastrophe Risk Management


Corporate


Total

Revenues

($ in thousands)

Gross premiums written

$

205,729



$

(146)



$



$

205,583


Gross premiums ceded

(375)







(375)


Net premiums written

205,354



(146)





205,208


Change in net unearned premium reserves

3,597







3,597


Net premiums earned

208,951



(146)





208,805


Expenses








Loss and loss adjustment expenses incurred, net

158,387



150





158,537


Acquisition costs, net

50,527



(18)





50,509


General and administrative expenses

5,872



32



3,918



9,822


Total expenses

214,786



164



3,918



218,868


Net underwriting loss

(5,835)



 n/a


 n/a


 n/a

Net investment income (loss)

(51,988)



1



(141,169)



(193,156)


Other expenses

(670)







(670)


Interest expense





(2,074)



(2,074)


Foreign exchange gains





746



746


Income tax benefit





7,781



7,781


Segment loss including non-controlling interests

(58,493)



(309)



(138,634)



(197,436)


Segment loss attributable to non-controlling interests



140



1,581



1,721


Segment loss

$

(58,493)



$

(169)



$

(137,053)



$

(195,715)


Property and Casualty Reinsurance - Underwriting Ratios (1):







Loss ratio

75.8

%







Acquisition cost ratio

24.2

%







Composite ratio

100.0

%







General and administrative expense ratio

2.8

%







Combined ratio

102.8

%
















Nine months ended September 30, 2015


Property and Casualty Reinsurance


Catastrophe Risk Management


Corporate


Total

Revenues

($ in thousands)

Gross premiums written

$

603,303



$

(44)



$



$

603,259


Gross premiums ceded

(1,852)







(1,852)


Net premiums written

601,451



(44)





601,407


Change in net unearned premium reserves

(133,001)



52





(132,949)


Net premiums earned

468,450



8





468,458


Expenses








Loss and loss adjustment expenses incurred, net

316,186



150





316,336


Acquisition costs, net

152,665



(1)





152,664


General and administrative expenses

18,681



463



16,653



35,797


Total expenses

487,532



612



16,653



504,797


Net underwriting loss

(19,082)



 n/a


 n/a


 n/a

Net investment income (loss)

(23,623)



69



(66,073)



(89,627)


Other expenses

(5,686)







(5,686)


Interest expense





(5,162)



(5,162)


Foreign exchange gains





800



800


Income tax benefit





5,768



5,768


Segment loss including non-controlling interests

(48,391)



(535)



(81,320)



(130,246)


Segment loss attributable to non-controlling interests



156



507



663


Segment loss

$

(48,391)



$

(379)



$

(80,813)



$

(129,583)


Property and Casualty Reinsurance - Underwriting Ratios (1):







Loss ratio

67.5

%







Acquisition cost ratio

32.6

%







Composite ratio

100.1

%







General and administrative expense ratio

4.0

%







Combined ratio

104.1

%









(1)

Underwriting ratios are calculated by dividing the related expense by net premiums earned.

 


Three months ended September 30, 2014


Property and Casualty Reinsurance


Catastrophe Risk Management


Corporate


Total

Revenues

($ in thousands)

Gross premiums written

$

124,931



$

1,472



$



$

126,403


Gross premiums ceded

(150)







(150)


Net premiums written

124,781



1,472





126,253


Change in net unearned premium reserves

(23,294)



5,989





(17,305)


Net premiums earned

101,487



7,461





108,948


Expenses








Loss and loss adjustment expenses incurred, net

60,121



(6)





60,115


Acquisition costs, net

37,571



746





38,317


General and administrative expenses

5,556



648



3,920



10,124


Total expenses

103,248



1,388



3,920



108,556


Net underwriting loss

(1,761)



 n/a


 n/a


 n/a

Net investment income (loss)

(137)



882



807



1,552


Other expenses

(2,982)







(2,982)


Income tax expense





(1,542)



(1,542)


Segment income (loss) including non-controlling interests

(4,880)



6,955



(4,655)



(2,580)


Segment income attributable to non-controlling interests



(3,325)



(92)



(3,417)


Segment income (loss)

$

(4,880)



$

3,630



$

(4,747)



$

(5,997)


Property and Casualty Reinsurance - Underwriting Ratios (1):







Loss ratio

59.2

%







Acquisition cost ratio

37.0

%







Composite ratio

96.2

%







General and administrative expense ratio

5.5

%







Combined ratio

101.7

%
















Nine months ended September 30, 2014


Property and Casualty Reinsurance


Catastrophe Risk Management


Corporate


Total

Revenues

($ in thousands)

Gross premiums written

$

347,495



$

12,003



$



$

359,498


Gross premiums ceded

(150)







(150)


Net premiums written

347,345



12,003





359,348


Change in net unearned premium reserves

(96,069)



(2,319)





(98,388)


Net premiums earned

251,276



9,684





260,960


Expenses








Loss and loss adjustment expenses incurred, net

150,789



(6)





150,783


Acquisition costs, net

92,477



854





93,331


General and administrative expenses

17,020



2,160



10,518



29,698


Total expenses

260,286



3,008



10,518



273,812


Net underwriting loss

(9,010)



 n/a


 n/a


 n/a

Net investment income

13,458



944



77,670



92,072


Other expenses

(4,789)







(4,789)


Income tax expense





(3,917)



(3,917)


Segment income (loss) including non-controlling interests

(341)



7,620



63,235



70,514


Segment income attributable to non-controlling interests



(3,854)



(1,586)



(5,440)


Segment income (loss)

$

(341)



$

3,766



$

61,649



$

65,074


Property and Casualty Reinsurance - Underwriting Ratios (1):







Loss ratio

60.0

%







Acquisition cost ratio

36.8

%







Composite ratio

96.8

%







General and administrative expense ratio

6.8

%







Combined ratio

103.6

%









(1)

Underwriting ratios are calculated by dividing the related expense by net premiums earned.

 

THIRD POINT REINSURANCE LTD.

RECONCILIATION OF NON-GAAP MEASURES AND KEY PERFORMANCE INDICATORS



September 30,
 2015


December 31,
2014

Basic and diluted book value per share numerator:

($ in thousands, except share and per share amounts)

Total shareholders' equity

$

1,351,191



$

1,552,048


Less: non-controlling interests

(15,922)



(100,135)


Shareholders' equity attributable to shareholders

1,335,269



1,451,913


Effect of dilutive warrants issued to founders and an advisor

46,512



46,512


Effect of dilutive stock options issued to directors and employees

58,070



61,705


Diluted book value per share numerator

$

1,439,851



$

1,560,130


Basic and diluted book value per share denominator:


Issued and outstanding shares

104,217,321



103,397,542


Effect of dilutive warrants issued to founders and an advisor

4,651,163



4,651,163


Effect of dilutive stock options issued to directors and employees

5,788,391



6,151,903


Effect of dilutive restricted shares issued to directors and employees

954,829



922,610


Diluted book value per share denominator

115,611,704



115,123,218






Basic book value per share

$

12.81



$

14.04


Diluted book value per share

$

12.45



$

13.55


 


Three months ended


Nine months ended


September 30,
 2015


September 30,
 2014


September 30,
 2015


September 30,
 2014


($ in thousands)

Net investment income (loss) on float

$

(51,988)



$

(137)



$

(23,623)



$

13,458


Net investment income (loss) on capital

(141,971)



807



(67,057)



77,670


Net investment income (loss) on investments managed by Third Point LLC

(193,959)



670



(90,680)



91,128


Investment income on cash held by the Catastrophe Reinsurer and Catastrophe Fund

2



27



29



84


Net gain on catastrophe bond held by Catastrophe Reinsurer



75



10



80


Net gain on investment in Kiskadee Fund

801





984




Net gain on reinsurance contract derivatives written by the Catastrophe Reinsurer



780



30



780



$

(193,156)



$

1,552



$

(89,627)



$

92,072


 


Three months ended


Nine months ended


September 30,
 2015


September 30,
 2014


September 30,
 2015


September 30,
 2014


($ in thousands)

Net income (loss)

$

(195,715)



$

(5,997)



$

(129,583)



$

65,074


Shareholders' equity attributable to shareholders -  beginning of period

$

1,526,004



$

1,467,229



$

1,451,913



$

1,391,661


Return on beginning shareholders' equity

(12.8)%



(0.4)%



(8.9)%



4.7%


 

Non-GAAP Financial Measures and Key Performance Indicators

Book Value per Share and Diluted Book Value per Share

Book value per share and diluted book value per share are non-GAAP financial measures. Book value per share is calculated by dividing shareholders' equity attributable to shareholders by the number of issued and outstanding shares at period end. Diluted book value per share is calculated by dividing shareholders' equity attributable to shareholders and adjusted to include unvested restricted shares and the exercise of all in-the-money options and warrants. For unvested restricted shares with a performance condition, we include the unvested restricted shares for which we consider vesting to be probable. We believe that long-term growth in diluted book value per share is the most important measure of our financial performance because it allows management and investors to track over time the value created by the retention of earnings.  In addition, we believe this metric is used by investors because it provides a basis for comparison with other companies in our industry that also report a similar measure.

Net Investment Income on Float

Net investment income on float is an important aspect of our property and casualty reinsurance operation. In an insurance or reinsurance operation, float arises because premiums from reinsurance contracts and proceeds from deposit accounted contracts are collected before losses are paid. In some instances, the interval between receipts and payments can extend over many years. During this time interval, insurance and reinsurance companies invest the premiums received and generate investment returns. Float is not a concept defined by U.S. GAAP and therefore, there are no comparable U.S. GAAP measures and as a result, is considered to be a non-GAAP measure. We believe that net investment income generated on float is an important consideration in evaluating the overall contribution of our property and casualty reinsurance operation to our consolidated results. It is also explicitly considered as part of the evaluation of management's performance for purposes of incentive compensation.

Net Investment Return on Investments Managed by Third Point LLC

Net investment return represents the return on our investments managed by Third Point LLC, net of fees. The net investment return on investments managed by Third Point LLC is the percentage change in value of a dollar invested over the reporting period on our investment assets managed by Third Point LLC, net of non-controlling interest. The stated return is net of withholding taxes, which are presented as a component of income tax expense in our condensed consolidated statements of income (loss). Net investment return is the key indicator by which we measure the performance of Third Point LLC, our investment manager.

Return on Beginning Shareholders' Equity

Return on beginning shareholders' equity as presented is a non-GAAP financial measure. Return on beginning shareholders' equity is calculated by dividing net income (loss) by the beginning of year shareholders' equity attributable to shareholders. We believe this metric is used by investors to supplement measures of our profitability.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/third-point-re-reports-third-quarter-2015-earnings-results-300171630.html

SOURCE Third Point Reinsurance Ltd.