NYSE: TPRE

Volume:

Third Point Re Reports Third Quarter 2016 Earnings Results

2016 / 11 / 03

Gross Premiums Written of $142.6 million
Net Income of $72.1 million

HAMILTON, Bermuda, Nov. 3, 2016 /PRNewswire/ -- Third Point Reinsurance Ltd. ("Third Point Re" or the "Company") (NYSE:TPRE) today announced results for its third quarter ended September 30, 2016.

Third Point Re reported net income of $72.1 million, or $0.68 per diluted common share, for the third quarter of 2016, compared to a net loss of $195.7 million, or $(1.88) per diluted common share, for the third quarter of 2015. For the nine months ended September 30, 2016, Third Point Re reported net income of $74.3 million, or $0.70 per diluted common share, compared with a net loss of $129.6 million, or $(1.25) per diluted common share, for the nine months ended September 30, 2015.

As of September 30, 2016, diluted book value per share increased by $0.67 per share, or 5.2%, to $13.55 per share from $12.88 per share as of June 30, 2016 and increased by $0.70 per share, or 5.4%, to $13.55 per share from $12.85 per share as of December 31, 2015.

"During the third quarter, we generated premiums written of $142.6 million, a decrease of 30.6% compared to the prior year's third quarter, primarily due to one large reserve cover that was written in the prior year period. Our combined ratio for the quarter was 106.5%, which was in line with expectations given current market conditions and lines of business on which we focus," commented John Berger, Chairman and Chief Executive Officer. "Our investments continued to perform well through the third quarter resulting in a 5.2% increase in diluted book value per share for the quarter."

The following table shows certain key financial metrics for the three and nine months ended September 30, 2016 and 2015:

 


Three months ended


Nine months ended


September 30,
 2016


September 30,
 2015


September 30,
 2016


September 30,
 2015


($ in millions, except for per share data and ratios)

Gross premiums written

$

142.6



$

205.6



$

536.6



$

603.3


Net premiums earned

$

128.2



$

208.8



$

398.1



$

468.5


Net underwriting loss (1) (2)

$

(8.3)



$

(5.8)



$

(40.5)



$

(19.1)


Combined ratio (1) (2)

106.5

%


102.8

%


110.2

%


104.1

%

Net investment return on investments managed by Third Point LLC

4.0

%


(8.7)

%


6.0

%


(4.3)

%

Net investment income (loss)

$

88.4



$

(193.2)



$

134.6



$

(89.6)


Net investment income (loss) on float (3)

$

22.0



$

(52.0)



$

32.9



$

(23.6)


Net income (loss)

$

72.1



$

(195.7)



$

74.3



$

(129.6)


Diluted earnings (loss) per common share

$

0.68



$

(1.88)



$

0.70



$

(1.25)


Increase in diluted book value per share (3)

5.2

%


(11.8)

%


5.4

%


(8.1)

%

Return on beginning shareholders' equity (3)

5.2

%


(12.8)

%


5.4

%


(8.9)

%

Net investments managed by Third Point LLC (4)

$

2,202.9



$

2,062.8



$

2,202.9



$

2,062.8



















(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. There are no comparable GAAP measures. See the accompanying Reconciliation of Non-GAAP Measures and Key Performance Indicators for an explanation and calculation of net investment income (loss) on float, diluted book value per share and return on beginning shareholders' equity.

(4)     Prior year comparatives represent amounts as of December 31, 2015.

 

Segment Highlights

Property and Casualty Reinsurance Segment

Gross premiums written decreased by $63.2 million, or 30.7%, to $142.6 million for the three months ended September 30, 2016 from $205.7 million for the three months ended September 30, 2015. Gross premiums written decreased by $66.7 million, or 11.1%, to $536.6 million for the nine months ended September 30, 2016 from $603.3 million for the nine months ended September 30, 2015. The decrease in the three and nine months ended September 30, 2016 compared to prior year periods was primarily a result of contracts that were not subject to renewal and contracts that did not renew due to pricing and/or terms and conditions, partially offset by new and renewal business.

Net premiums earned for the three months ended September 30, 2016 decreased by $80.8 million, or 38.7%, to $128.2 million. Net premiums earned for the nine months ended September 30, 2016 decreased by $70.3 million, or 15.0%, to $398.1 million. The decrease in net premiums earned was primarily due to retroactive reinsurance contracts of $91.6 million and $108.1 million that were written and earned in the three and nine months ended September 30, 2015, respectively. We did not write any retroactive reinsurance contracts in the comparable 2016 periods.

The net underwriting loss for the three months ended September 30, 2016 included $0.04 million of net favorable development compared to net adverse development of $1.4 million for the three months ended September 30, 2015 as a result of changes in estimates of prior years' loss reserves net of the impact of acquisition costs. The $0.04 million net favorable development for the quarter was a result of small offsetting movements within several lines of business.

The net underwriting loss for the nine months ended September 30, 2016 and 2015 included net adverse development of $12.5 million and $4.5 million, respectively, related to changes in estimates of prior years' loss reserves and the related impact of acquisition costs. The net adverse development for the nine months ended September 30, 2016 was primarily due to:

  • $4.8 million of net adverse underwriting loss development relating to one multi-line contract;
  • $3.5 million of net adverse underwriting loss development relating to our Florida homeowners' reinsurance contracts;
  • $3.3 million of net adverse underwriting loss development relating to a workers' compensation contract; and
  • $3.1 million of net adverse underwriting loss development relating to non-standard auto contracts.

Investments

The return on investments managed by Third Point LLC by asset class for the three and nine months ended September 30, 2016 and 2015 was as follows:

 






Three months ended


Nine months ended






September 30,
 2016


September 30,
 2015


September 30,
 2016


September 30,
 2015

Long/short equities





1.9

%


(8.2)

%


1.3

%


(8.9)

%

Credit





2.0

%


(0.6)

%


5.8

%


4.3

%

Macro and other





0.1

%


0.1

%


(1.1)

%


0.3

%






4.0

%


(8.7)

%


6.0

%


(4.3)

%

For the three months ended September 30, 2016, we generated positive performance in each of our investment strategies.  Within equities, we generated positive returns within each long equity sub-sector/strategy, with consumer and technology, media and telecommunications being notable performers.  The gains in our long equity portfolio were partially offset by losses in our short equity positions, including equity hedges.  Within our credit strategy, performing credit was the primary contributor to the positive returns for the quarter.  The macro and other strategy also contributed modestly to returns.

For the nine months ended September 30, 2016, we generated positive results despite a volatile market environment.  Within equities, positive performance within our long equity portfolio was reduced by losses from one long equity healthcare position. The net gains in our long equity portfolio were partially offset by losses in our short equity positions, including equity hedges.  Within credit, our sovereign and performing credit portfolios contributed positive performance with positions traded within the energy sector driving performing credit and one sovereign position contributing significantly to returns for the year to date period.  The macro and other category reduced returns for the nine months ended September 30, 2016 primarily due to negative performance from several currency and portfolio macroeconomic hedges.

Share Repurchase Program

During the three months ended September 30, 2016, we did not repurchase any of our common shares.

During the nine months ended September 30, 2016, we repurchased 644,768 of our common shares in the open market for an aggregate cost of $7.4 million at a weighted average cost, including commissions, of $11.46 per share. Common shares repurchased by the Company were not cancelled and are classified as treasury shares.

As of September 30, 2016, the Company may repurchase up to an aggregate of $92.6 million of additional common shares under its share repurchase program.

Conference Call Details

The Company will hold a conference call to discuss its third quarter 2016 results at 8:30 a.m. Eastern Time on November 4, 2016. 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 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the replay passcode 13646898. The telephonic replay will be available until 11:59 p.m. (Eastern Time) on November 11, 2016.

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) fluctuation in results of operations; (iii) more established competitors; (iv) losses exceeding reserves; (v) downgrades or withdrawal of ratings by rating agencies; (vi) dependence on key executives; (vii) dependence on letter of credit facilities that may not be available on commercially acceptable terms; (viii) potential inability to pay dividends; (ix) inability to service the Company's indebtedness; (x) limited cash flow and liquidity due to indebtedness; (xi) unavailability of capital in the future; (xii) fluctuations in market price of the Company's common shares; (xiii) dependence on clients' evaluations of risks associated with such clients' insurance underwriting; (xiv) suspension or revocation of reinsurance licenses; (xv) potentially being deemed an investment company under United States federal securities law; (xvi) potential characterization of Third Point Re and/or Third Point Reinsurance Company Ltd. as a passive foreign investment company; (xvii) future strategic transactions such as acquisitions, dispositions, merger or joint ventures; (xviii) dependence on Third Point LLC to implement the Company's investment strategy; (xix) termination by Third Point LLC of the investment management agreements; (xx) risks associated with the Company's investment strategy being greater than those faced by competitors; (xxi) increased regulation or scrutiny of alternative investment advisers affecting the Company's reputation; (xxii) Third Point Reinsurance Ltd.  potentially becoming subject to United States federal income taxation; (xxiii) potentially becoming subject to United States withholding and information reporting requirements under the Foreign Account Tax Compliance Act provisions; (xxiv) changes in Bermuda law or other regulation that may have an adverse impact on the Company's operations; 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 and Other Financial Metrics

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. 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, 2016 and December 31, 2015

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






September 30,
 2016


December 31,
 2015

Assets




Equity securities, trading, at fair value (cost - $1,502,824; 2015 - $1,156,369)

$

1,622,938



$

1,231,077


Debt securities, trading, at fair value (cost - $1,030,848; 2015 - $1,049,652)

1,079,132



1,034,247


Other investments, at fair value

49,664



51,920


Total investments in securities

2,751,734



2,317,244


Cash and cash equivalents

20,982



20,407


Restricted cash and cash equivalents

365,451



330,915


Due from brokers

284,170



326,971


Derivative assets, at fair value

22,565



35,337


Interest and dividends receivable

11,756



10,687


Reinsurance balances receivable

448,450



294,313


Deferred acquisition costs, net

255,379



197,093


Other assets

17,101



12,141


Total assets

$

4,177,588



$

3,545,108


Liabilities and shareholders' equity




Liabilities




Accounts payable and accrued expenses

$

13,508



$

11,966


Reinsurance balances payable

47,713



24,119


Deposit liabilities

105,207



83,955


Unearned premium reserves

668,980



531,710


Loss and loss adjustment expense reserves

565,682



466,047


Securities sold, not yet purchased, at fair value

198,393



314,353


Securities sold under an agreement to repurchase

55,880



8,944


Due to brokers

894,856



574,962


Derivative liabilities, at fair value

11,472



15,392


Performance fee payable to related party

24,846




Interest and dividends payable

1,772



4,400


Senior notes payable, net of deferred costs

113,510



113,377


Total liabilities

2,701,819



2,149,225


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, 106,383,928 (2015 - 105,479,341))

10,638



10,548


Treasury shares (644,768 shares (2015 - nil shares))

(7,389)




Additional paid-in capital

1,090,975



1,080,591


Retained earnings

362,915



288,587


Shareholders' equity attributable to shareholders

1,457,139



1,379,726


Non-controlling interests

18,630



16,157


Total shareholders' equity

1,475,769



1,395,883


Total liabilities and shareholders' equity

$

4,177,588



$

3,545,108


 

 

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

For the three and nine months ended September 30, 2016 and 2015

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






Three months ended


Nine months ended


September 30,
 2016


September 30,
 2015


September 30,
 2016


September 30,
 2015

Revenues








Gross premiums written

$

142,573



$

205,583



$

536,595



$

603,259


Gross premiums ceded

(927)



(375)



(2,352)



(1,852)


Net premiums written

141,646



205,208



534,243



601,407


Change in net unearned premium reserves

(13,463)



3,597



(136,136)



(132,949)


Net premiums earned

128,183



208,805



398,107



468,458


Net investment income (loss)

88,356



(193,156)



134,592



(89,627)


Total revenues

216,539



15,649



532,699



378,831


Expenses








Loss and loss adjustment expenses incurred, net

85,015



158,537



273,822



316,336


Acquisition costs, net

45,127



50,509



145,296



152,664


General and administrative expenses

12,354



9,822



33,885



35,797


Other expenses

347



670



6,226



5,686


Interest expense

2,069



2,074



6,163



5,162


Foreign exchange gains

(3,905)



(746)



(14,359)



(800)


Total expenses

141,007



220,866



451,033



514,845


Income (loss) before income tax (expense) benefit

75,532



(205,217)



81,666



(136,014)


Income tax (expense) benefit

(2,484)



7,781



(5,865)



5,768


Income (loss) including non-controlling interests

73,048



(197,436)



75,801



(130,246)


(Income) loss attributable to non-controlling interests

(967)



1,721



(1,473)



663


Net income (loss)

$

72,081



$

(195,715)



$

74,328



$

(129,583)


Earnings (loss) per share








Basic

$

0.69



$

(1.88)



$

0.71



$

(1.25)


Diluted

$

0.68



$

(1.88)



$

0.70



$

(1.25)


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








Basic

103,780,196



104,117,448



104,055,946



103,931,871


Diluted

105,795,313



104,117,448



105,590,668



103,931,871


 

 

THIRD POINT REINSURANCE LTD.

SEGMENT REPORTING




Three months ended September 30, 2016


Property and Casualty Reinsurance


Catastrophe Risk

Management (2)


Corporate


Total

Revenues

($ in thousands)

Gross premiums written

$

142,573



$



$



$

142,573


Gross premiums ceded

(927)







(927)


Net premiums written

141,646







141,646


Change in net unearned premium reserves

(13,463)







(13,463)


Net premiums earned

128,183







128,183


Expenses








Loss and loss adjustment expenses incurred, net

85,015







85,015


Acquisition costs, net

45,127







45,127


General and administrative expenses

6,380





5,974



12,354


Total expenses

136,522





5,974



142,496


Net underwriting loss

(8,339)



 n/a



 n/a



 n/a


Net investment income

22,031





66,325



88,356


Other expenses

(347)







(347)


Interest expense





(2,069)



(2,069)


Foreign exchange gains





3,905



3,905


Income tax expense





(2,484)



(2,484)


Segment income including non-controlling interests

13,345





59,703



73,048


Segment income attributable to non-controlling interests





(967)



(967)


Segment income

$

13,345



$



$

58,736



$

72,081


Property and Casualty Reinsurance - Underwriting Ratios (1):







Loss ratio

66.3

%







Acquisition cost ratio

35.2

%







Composite ratio

101.5

%







General and administrative expense ratio

5.0

%







Combined ratio

106.5

%
















Nine months ended September 30, 2016


Property and Casualty Reinsurance


Catastrophe Risk Management (2)


Corporate


Total

Revenues

($ in thousands)

Gross premiums written

$

536,595



$



$



$

536,595


Gross premiums ceded

(2,352)







(2,352)


Net premiums written

534,243







534,243


Change in net unearned premium reserves

(136,136)







(136,136)


Net premiums earned

398,107







398,107


Expenses








Loss and loss adjustment expenses incurred, net

273,822







273,822


Acquisition costs, net

145,296







145,296


General and administrative expenses

19,527





14,358



33,885


Total expenses

438,645





14,358



453,003


Net underwriting loss

(40,538)



 n/a



 n/a



 n/a


Net investment income

32,868





101,724



134,592


Other expenses

(6,226)







(6,226)


Interest expense





(6,163)



(6,163)


Foreign exchange gains





14,359



14,359


Income tax expense





(5,865)



(5,865)


Segment income (loss) including non-controlling interests

(13,896)





89,697



75,801


Segment income attributable to non-controlling interests





(1,473)



(1,473)


Segment income (loss)

$

(13,896)



$



$

88,224



$

74,328


Property and Casualty Reinsurance - Underwriting Ratios (1):







Loss ratio

68.8

%







Acquisition cost ratio

36.5

%







Composite ratio

105.3

%







General and administrative expense ratio

4.9

%







Combined ratio

110.2

%








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

(2)       As of December 31, 2015, all investments in the Catastrophe Fund had been redeemed. In February 2016, the Company completed the dissolution of the Catastrophe Fund and Catastrophe Reinsurer. As a result, there is no further activity in the Catastrophe Risk Management segment.

 

 


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.

 

 

THIRD POINT REINSURANCE LTD.

RECONCILIATION OF NON-GAAP MEASURES AND KEY PERFORMANCE INDICATORS



September 30,
 2016


December 31,
 2015

Basic and diluted book value per share numerator:

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

Total shareholders' equity

$

1,475,769



$

1,395,883


Less: non-controlling interests

(18,630)



(16,157)


Shareholders' equity attributable to shareholders

1,457,139



1,379,726


Effect of dilutive warrants issued to founders and an advisor

46,512



46,512


Effect of dilutive stock options issued to directors and employees

54,189



58,070


Diluted book value per share numerator

$

1,557,840



$

1,484,308


Basic and diluted book value per share denominator:


Issued and outstanding shares, net of treasury shares

104,000,129



104,256,745


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

5,400,240



5,788,391


Effect of dilutive restricted shares issued to directors and employees

937,377



837,277


Diluted book value per share denominator

114,988,909



115,533,576






Basic book value per share

$

14.01



$

13.23


Diluted book value per share

$

13.55



$

12.85


 

 


Three months ended


Nine months ended


September 30,
 2016


September 30,
 2015


September 30,
 2016


September 30,
 2015


($ in thousands)

Net investment income (loss) on float

$

22,031



$

(51,988)



$

32,868



$

(23,623)


Net investment income (loss) on capital

65,729



(141,971)



100,646



(67,057)


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

87,760



(193,959)



133,514



(90,680)


Net gain on investment in Kiskadee Fund

596



801



1,078



984


Net investment income related to Catastrophe Reinsurer and Catastrophe Fund



2





69



$

88,356



$

(193,156)



$

134,592



$

(89,627)


 

 


Three months ended


Nine months ended


September 30,
 2016


September 30,
 2015


September 30,
 2016


September 30,
 2015


($ in thousands)

Net income (loss)

$

72,081



$

(195,715)



$

74,328



$

(129,583)


Shareholders' equity attributable to shareholders -  beginning of period

1,380,332



1,526,004



1,379,726



1,451,913


Impact of weighting related to shareholders' equity from shares repurchased





(3,348)




Adjusted shareholders' equity attributable to shareholders - beginning of period

$

1,380,332



$

1,526,004



$

1,376,378



$

1,451,913


Return on beginning shareholders' equity

5.2

%


(12.8)%



5.4

%


(8.9)%


 

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 and there are no comparable GAAP 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, net of treasury shares. Diluted book value per share represents book value per share combined with the impact from dilution of all in-the-money share options issued, warrants and unvested restricted shares outstanding as of any period end. We believe that long-term growth in diluted book value per share is the most important measure of our financial performance because it allows our 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 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. Float, as a result, is considered to be a non-GAAP financial 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 long-term 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 by the beginning shareholders' equity attributable to shareholders. We believe this metric is used by investors to supplement measures of our profitability. For the nine month ended September 30, 2016, we have also adjusted the beginning shareholders' equity for the impact of the shares repurchased on a weighted average basis. This adjustment increased the stated returns on beginning shareholders' equity.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/third-point-re-reports-third-quarter-2016-earnings-results-300357215.html

SOURCE Third Point Reinsurance Ltd.