Third Point Re Announces Third Quarter 2020 Earnings Results

2020 / 11 / 05
Net income of $68.7 million, or $0.73 per diluted common share, for the third quarter of 2020
Return on beginning shareholders' equity of 5.1% for the third quarter of 2020

HAMILTON, Bermuda, Nov. 5, 2020 /PRNewswire/ -- Third Point Reinsurance Ltd. ("Third Point Re" or the "Company") (NYSE:TPRE) today announced results for its third quarter ended September 30, 2020.

Earnings Summary

Third Point Re reported net income available to common shareholders of $68.7 million, or $0.73 per diluted common share, for the three months ended September 30, 2020, compared to a net loss attributable to common shareholders of $15.1 million, or $0.16 per diluted common share, for the three months ended September 30, 2019. For the nine months ended September 30, 2020, Third Point Re reported net income available to common shareholders of $9.1 million, or $0.10 per diluted common share, compared to net income available to common shareholders of $170.9 million, or $1.84 per diluted common share, for the nine months ended September 30, 2019.

"We produced solid third quarter results with a return on equity for the quarter of 5.1% driven by strong investment performance. Our diluted book value per share at the end of the quarter was $15.06. The combined ratio for the third quarter was 119.9%, of which $29.6 million was attributable to catastrophe losses and $15.6 million was attributable to the ongoing impacts of COVID-19, for a total impact of 31.9% on the combined ratio," commented Dan Malloy, Chief Executive Officer. "The impact on our results from catastrophe losses and ongoing impacts of COVID-19 were within expectations given the large number of events during the quarter. We continue to see improvements in market conditions across many lines of business. In particular, our recently announced partnership to form a new MGA, Arcadian Risk Capital, will allow us to take advantage of opportunities in excess casualty and professional lines insurance. Our previously announced merger with the Sirius Group remains on track to close in the first quarter of 2021. Our capital position remains strong and SiriusPoint will be well-positioned to take advantage of improving underwriting conditions."

Additional Information on Financial Results

The following table shows certain key financial metrics for the three and nine months ended September 30, 2020 and 2019:


Three months ended


Nine months ended


September 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019


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

Gross premiums written

$

60.8



$

95.4



$

422.5



$

497.6


Net premiums earned

$

141.7



$

203.2



$

428.8



$

501.8


Net underwriting loss (1)

$

(28.1)



$

(5.5)



$

(21.3)



$

(12.9)


Combined ratio (1)

119.9

%


102.7

%


105.0

%


102.6

%

Net investment return on investments managed by Third Point LLC

4.8

%


(0.2)

%


2.8

%


10.2

%

Net investment income (loss)

$

122.0



$

(3.1)



$

74.1



$

220.9


Net income (loss) available to Third Point Re common shareholders

$

68.7



$

(15.1)



$

9.1



$

170.9


Diluted earnings (loss) per share available to Third Point Re
common shareholders

$

0.73



$

(0.16)



$

0.10



$

1.84


Change in diluted book value per share (2)

4.8

%


(0.8)

%


0.1

%


13.7

%

Return on beginning shareholders' equity attributable to Third Point
Re common shareholders (2)

5.1

%


(1.1)

%


0.6

%


14.2

%

Net investments managed by Third Point LLC (3)

$

2,673.0



$

2,590.1



$

2,673.0



$

2,590.1




(1)

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

(2)

Change in diluted book value per share and return on beginning shareholders' equity attributable to Third Point Re common shareholders 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 diluted book value per share and return on beginning shareholders' equity attributable to Third Point Re common shareholders.

(3)

Prior year comparatives represent amounts as of December 31, 2019.

Property and Casualty Reinsurance Segment

Gross premiums written

Gross premiums written decreased by $34.6 million, or 36.3%, to $60.8 million for the three months ended September 30, 2020 from $95.4 million for the three months ended September 30, 2019. The decrease in gross premiums written was primarily due to one retroactive reinsurance contract of $58.7 million recognized in the prior year quarter with no comparable premium in the current period. This decrease was partially offset by new contracts bound in the current year period and other timing differences.

Gross premiums written decreased by $75.1 million, or 15.1%, to $422.5 million for the nine months ended September 30, 2020 from $497.6 million for the nine months ended September 30, 2019. The decrease in gross premiums written was primarily due to certain contracts that we did not renew, including certain contracts which no longer fit our underwriting criteria as a result of our shift in underwriting strategy. In addition, the prior year period included $58.7 million related to one retroactive reinsurance contract that did not have a comparable premium in the current year period.  These decreases were partially offset by new contracts bound in the current year period and other timing differences.

Net underwriting results

For the three and nine months ended September 30, 2020, we incurred net catastrophe losses of $29.6 million, net of reinstatement premiums and profit commission adjustments, related to Hurricane Laura and other third quarter catastrophes. This resulted in an increase in the combined ratio of 20.9 and 6.9 percentage points for the three and nine months ended September 30, 2020, respectively.

For the three and nine months ended September 30, 2019, we incurred net catastrophe losses of $12.7 million, net of reinstatement premiums and profit commission adjustments, related to Hurricane Dorian and Typhoon Faxai. This resulted in an increase in the combined ratio of 6.2 and 2.5 percentage points for the three and nine months ended September 30, 2019, respectively.

The COVID-19 outbreak is causing unprecedented social disruption, global economic volatility, reduced liquidity of capital markets and intervention by various governments around the world.  For the three and nine months ended September 30, 2020, we recognized net losses of $15.6 million and $35.0 million, respectively, net of additional premiums, or 11.0 and 8.2 percentage points, respectively, on the combined ratio, relating to COVID-19. These losses were driven primarily by event cancellation, property business interruption, and certain casualty and multi-line quota share contracts.

The economic impact of the ongoing pandemic will continue to create uncertainty around the ultimate scope of claims and potential for additional insurance losses. Our estimate is based on currently available information derived from information provided by cedents. These estimates include losses only related to our estimate of claims incurred as of September 30, 2020.

For the three and nine months ended September 30, 2020, we recorded improvement in the net underwriting results of $0.1 million and $2.6 million, respectively, related to net favorable development of prior years' loss reserves net of the related impact of acquisition costs.

For the three and nine months ended September 30, 2019, we recorded a net $3.8 million and $4.3 million improvement in the net underwriting results, respectively, related to net favorable development of prior years' loss reserves net of the related impact of acquisition costs.

Investments

The following is a summary of our total net investments managed by Third Point LLC as of September 30, 2020 and December 31, 2019:


September 30,
2020


December 31,
2019






($ in thousands)

TP Fund

$

868,971



$

860,630


Collateral and other investment assets (1)

1,804,053



1,729,497


Total net investments managed by Third Point LLC

$

2,673,024



$

2,590,127




(1)

Collateral assets primarily consist of fixed income securities such as U.S. Treasuries, money markets funds, and sovereign debt. Other investment assets primarily consist of U.S Treasuries, structured and corporate credit fixed income securities such as corporate bonds, asset-backed securities and bank debt as well as interest rate hedges in the form of short positions on U.S. Treasuries.



The following is a summary of the net investment return for our total net investments managed by Third Point LLC for the three and nine months ended September 30, 2020 and 2019:



Three months ended


Nine months ended


September 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019

TP Fund

14.6

%


(0.7)

%


1.0

%


16.9

%

Collateral and other investments

0.6

%


0.2

%


3.8

%


1.2

%

Net investment return on investments managed by Third
Point LLC  (1)

4.8

%


(0.2)

%


2.8

%


10.2

%



(1)

Refer to "Non-GAAP Financial Measures and Other Financial Metrics" for a description of the net investment return on investments managed by Third Point LLC.



The following is a summary of the net investment income (loss) for our total net investments managed by Third Point LLC for the three and nine months ended September 30, 2020 and 2019:



Three months ended


Nine months ended


September 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019


($ in thousands)

TP Fund

$

110,552



$

(5,751)



$

8,341



$

207,597


Collateral and other investments (1)

11,216



2,289



65,274



12,452


Net investment income (loss) on investments managed by Third
Point LLC  (2)

$

121,768



$

(3,462)



$

73,615



$

220,049




(1)

Includes foreign exchange gains (losses) of $6.8 million and $(4.1) million in the three and nine months ended September 30, 2020, respectively (2019 - $(5.2) million and $(5.9) million, respectively) resulting from the revaluation of foreign currency reinsurance collateral held in trust accounts. Non-U.S. dollar reinsurance assets, or balances held in trust accounts securing reinsurance liabilities generally offset reinsurance liabilities in the same non-U.S. dollar currencies resulting in minimal net exposure. As a result, the foreign exchange gains (losses) from the revaluation of foreign currency reinsurance collateral held in trust accounts are offset by corresponding foreign exchange gains (losses) from the revaluation of foreign currency loss and loss adjustment expense reserves.

(2)

Refer to "Non-GAAP Financial Measures and Other Financial Metrics" for a description of the net investment return on investments managed by Third Point LLC.



The following is a summary of the net investment return by investment strategy on total net investments managed by Third Point LLC for the three and nine months ended September 30, 2020 and 2019:



Three months ended


September 30, 2020


September 30, 2019


Long


Short


Net


Long


Short


Net

Equity

4.2

%


(1.2)

%


3.0

%


1.4

%


(0.7)

%


0.7

%

Credit

0.8

%


%


0.8

%


(0.7)

%


%


(0.7)

%

Other

0.9

%


0.1

%


1.0

%


(0.1)

%


(0.1)

%


(0.2)

%

Net investment return on investments managed
by Third Point LLC

5.9

%


(1.1)

%


4.8

%


0.6

%


(0.8)

%


(0.2)

%














Nine months ended


September 30, 2020


September 30, 2019


Long


Short


Net


Long


Short


Net

Equity

(1.5)

%


(0.5)

%


(2.0)

%


13.3

%


(4.1)

%


9.2

%

Credit

4.6

%


(0.2)

%


4.4

%


0.9

%


(0.5)

%


0.4

%

Other

0.5

%


(0.1)

%


0.4

%


1.0

%


(0.4)

%


0.6

%

Net investment return on investments managed
by Third Point LLC

3.6

%


(0.8)

%


2.8

%


15.2

%


(5.0)

%


10.2

%













For the three months ended September 30, 2020, the investment portfolio generated positive results across each strategy with long equity investments driving the majority of gains for the quarter. Within equities, most sectors contributed to positive results on the long side while short equity investments and hedges partially offset overall gains for the equity strategy. The credit strategy contributed gains from both the corporate credit and structured credit portfolios. Investments in residential mortgage backed securities also produced profits. In the other strategy, gains were driven by private investments. 

For the nine months ended September 30, 2020, gains were driven primarily by the credit portfolio. Investments in investment grade corporate credit and residential mortgage backed securities contributed strong performance. The equities strategy detracted from overall positive performance for the portfolio as losses from investments in industrials and consumer discretionary offset gains from technology investments. The other strategy contributed modestly to net gains for the year to date due to private investments.

Sirius Merger

On August 6, 2020, Third Point Re, entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and among the Company, Sirius International Insurance Group, Ltd. ("Sirius"), a Bermuda exempted company limited by shares, and Yoga Merger Sub Limited ("Merger Sub"), a Bermuda exempted company limited by shares and wholly owned subsidiary of the Company.  Pursuant to the Merger Agreement, Merger Sub will be merged with and into Sirius (the "Merger"), with Sirius continuing as the surviving company in the Merger, as a wholly owned subsidiary of the Company. The Company is to be renamed SiriusPoint Ltd. following the Merger.

The total deal consideration was estimated at the time of announcement as $788.0 million, which comprises stock, cash, and other contingent value components.

The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the first quarter of 2021. Please refer to our Current Report on Form 8-K filed with the SEC on August 7, 2020, for additional description of the Merger and related transactions.

Conference Call Details

The Company will hold a conference call to discuss its third quarter 2020 results at 8:30 a.m. Eastern Time on November 6, 2020. The call will be webcast live over the Internet from the Company's website at www.thirdpointre.bm under the "Investors" section. Participants should follow the instructions provided on the website to download and install any necessary audio applications. The conference call will also be 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 two 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 13711826. The telephonic replay will be available until 11:59 p.m. (Eastern Time) on November 13, 2020.

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: results of operations fluctuate and may not be indicative of our prospects; a pandemic or other catastrophic event, such as the ongoing COVID-19 outbreak, may adversely impact our financial condition or results of operations; more established competitors; losses exceeding reserves; highly cyclical property and casualty reinsurance industry; losses from catastrophe exposure; downgrade, withdrawal of ratings or change in rating outlook by rating agencies; significant decrease in our capital or surplus; dependence on key executives; inability to service our indebtedness; limited cash flow and liquidity due to our indebtedness; inability to raise necessary funds to pay principal or interest on debt; potential lack of availability of capital in the future; credit risk associated with the use of reinsurance brokers; future strategic transactions such as acquisitions, dispositions, mergers or joint ventures; technology breaches or failures, including cyber-attacks; lack of control over Third Point Enhanced LP ("TP Fund"); lack of control over the allocation and performance of TP Fund's investment portfolio; dependence on Third Point LLC to implement TP Fund's investment strategy; limited ability to withdraw our capital accounts from TP Fund; decline in revenue due to poor performance of TP Fund's investment portfolio; TP Fund's investment strategy involves risks that are greater than those faced by competitors; termination by Third Point LLC of our or TP Fund's investment management agreements; potential conflicts of interest with Third Point LLC; losses resulting from significant investment positions; credit risk associated with the default on obligations of counterparties; ineffective investment risk management systems; fluctuations in the market value of TP Fund's investment portfolio; trading restrictions being placed on TP Fund's investments; limited termination provisions in our investment management agreements; limited liquidity and lack of valuation data on certain TP Fund's investments; fluctuations in market value of our fixed-income securities; U.S. and global economic downturns; specific characteristics of investments in mortgage-backed securities and other asset-backed securities, in securities of issues based outside the U.S., and in special situation or distressed companies; loss of key employees at Third Point LLC; Third Point LLC's compensation arrangements may incentivize investments that are risky or speculative; increased regulation or scrutiny of alternative investment advisers affecting our reputation; suspension or revocation of our reinsurance licenses; potentially being deemed an investment company under U.S. federal securities law; failure of reinsurance subsidiaries to meet minimum capital and surplus requirements; changes in Bermuda or other law and regulation that may have an adverse impact on our operations; Third Point Re and/or Third Point Re BDA potentially becoming subject to U.S. federal income taxation; potential characterization of Third Point Re and/or Third Point Re BDA as a passive foreign investment company; subjection of our affiliates to the base erosion and anti-abuse tax; potentially becoming subject to U.S. withholding and information reporting requirements under the Foreign Account Tax Compliance Act; risks associated with the failure to complete, or the failure to realize the expected benefits of the merger with Sirius International Insurance Group, Ltd.; and other risks and factors listed under "Risk Factors" in the Company's most recent Annual Report on Form 10-K, as updated by our Quarterly Report on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020, 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 basic and diluted book value per share and return on beginning shareholders' equity attributable to Third Point Re common shareholders, 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 Re BDA and Third Point Reinsurance (USA) Ltd. ("Third Point Re USA"), writes property and casualty reinsurance business. Third Point Re BDA and Third Point Re USA each have an "A-" (Excellent) financial strength rating from A.M. Best Company, Inc.

Contact

Third Point Reinsurance Ltd.
Christopher S. Coleman - Chief Financial Officer
investorrelations@thirdpointre.bm
+1 441-542-3333

 

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, 2020 and December 31, 2019

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



(Unaudited)


(Audited)


September 30,
2020


December 31,
2019

Assets




Investment in related party investment fund, at fair value (cost - $891,850; 2019 - $891,850)

$

868,971



$

860,630


Debt securities, trading, at fair value (cost - $176,521; 2019 - $129,330)

186,260



125,071


Other investments, at fair value

4,000



4,000


Total investments

1,059,231



989,701


Cash and cash equivalents

513,783



639,415


Restricted cash and cash equivalents

1,101,693



1,014,543


Due from brokers

81,142




Interest and dividends receivable

1,835



2,178


Reinsurance balances receivable, net

572,672



596,120


Deferred acquisition costs, net

142,846



154,717


Unearned premiums ceded

27,463



16,945


Loss and loss adjustment expenses recoverable, net

13,626



5,520


Other assets

20,171



20,555


Total assets

$

3,534,462



$

3,439,694


Liabilities




Accounts payable and accrued expenses

$

13,963



$

17,816


Reinsurance balances payable

120,469



81,941


Deposit liabilities

155,697



172,259


Unearned premium reserves

498,893



524,768


Loss and loss adjustment expense reserves

1,186,149



1,111,692


Securities sold, not yet purchased, at fair value

15,389




Interest and dividends payable

1,110



3,055


Senior notes payable, net of deferred costs

114,222



114,089


Total liabilities

2,105,892



2,025,620


Commitments and contingent liabilities




Shareholders' equity




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




Common shares (issued and outstanding: 95,314,893; 2019 - 94,225,498)

9,531



9,423


Additional paid-in capital

931,972



927,704


Retained earnings

486,068



476,947


Shareholders' equity attributable to Third Point Re common shareholders

1,427,571



1,414,074


Noncontrolling interests

999




Total shareholders' equity

1,428,570



1,414,074


Total liabilities, noncontrolling interests and shareholders' equity

$

3,534,462



$

3,439,694


 

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

For the three and nine months ended September 30, 2020 and 2019

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



Three months ended


Nine months ended


September 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019

Revenues








Gross premiums written

$

60,779



$

95,388



$

422,481



$

497,616


Gross premiums ceded

185



(1,116)



(30,037)



(3,301)


Net premiums written

60,964



94,272



392,444



494,315


Change in net unearned premium reserves

80,748



108,976



36,393



7,435


Net premiums earned

141,712



203,248



428,837



501,750


Net investment income (loss) from investment in related party
investment fund

110,552



(5,751)



8,341



207,597


Net realized and unrealized investment gains (losses)

6,965



(2,646)



54,554



2,700


Other net investment income

4,439



5,259



11,245



10,649


Net investment income (loss)

121,956



(3,138)



74,140



220,946


Total revenues

263,668



200,110



502,977



722,696


Expenses








Loss and loss adjustment expenses incurred, net

110,487



85,703



287,379



263,105


Acquisition costs, net

54,817



118,271



147,741



233,775


General and administrative expenses

21,320



9,237



44,934



41,019


Other (income) expense

(283)



5,058



6,410



12,994


Interest expense

2,068



2,074



6,162



6,154


Foreign exchange (gains) losses

5,885



(4,921)



(3,129)



(6,663)


Total expenses

194,294



215,422



489,497



550,384


Income (loss) before income tax (expense) benefit

69,374



(15,312)



13,480



172,312


Income tax (expense) benefit

(652)



213



(4,380)



(1,431)


Net income (loss)

68,722



(15,099)



9,100



170,881


Net loss attributable to noncontrolling interests

21





21




Net income (loss) available to Third Point Re common
shareholders

$

68,743



$

(15,099)



$

9,121



$

170,881


Earnings (loss) per share available to Third Point Re common
shareholders








Basic earnings (loss) per share available to Third Point Re
common shareholders

$

0.74



$

(0.16)



$

0.10



$

1.86


Diluted earnings (loss) per share available to Third Point Re
common shareholders

$

0.73



$

(0.16)



$

0.10



$

1.84


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








Basic

92,613,393



91,903,556



92,466,813



91,784,268


Diluted

92,969,646



91,903,556



92,877,674



92,709,421


 

THIRD POINT REINSURANCE LTD.

SEGMENT REPORTING



Three months ended September 30, 2020


Three months ended September 30, 2019


Property and
Casualty
Reinsurance


Total


Property and
Casualty
Reinsurance


Total

Revenues

($ in thousands)


($ in thousands)

Gross premiums written

$

60,779



$

60,779



$

95,388



$

95,388



Gross premiums ceded

185



185



(1,116)



(1,116)



Net premiums written

60,964



60,964



94,272



94,272



Change in net unearned premium reserves

80,748



80,748



108,976



108,976



Net premiums earned

141,712



141,712



203,248



203,248



Expenses








Loss and loss adjustment expenses incurred, net

110,487



110,487



85,703



85,703



Acquisition costs, net

54,817



54,817



118,271



118,271



General and administrative expenses

4,556



4,556



4,769



4,769



Total expenses

169,860



169,860



208,743



208,743



Net underwriting loss

$

(28,148)



(28,148)



$

(5,495)



(5,495)



Net investment income (loss)



121,956





(3,138)


Corporate expenses



(16,764)





(4,468)


Other income (expense)



283





(5,058)


Interest expense



(2,068)





(2,074)


Foreign exchange gains (losses)



(5,885)





4,921


Income tax benefit (expense)



(652)





213


Net loss attributable to noncontrolling interests



21







Net income (loss) available to Third Point Re common shareholders



$

68,743





$

(15,099)



Property and Casualty Reinsurance - Underwriting Ratios (1):

















Loss ratio

78.0

%




42.2

%




Acquisition cost ratio

38.7

%




58.2

%




Composite ratio

116.7

%




100.4

%




General and administrative expense ratio

3.2

%




2.3

%




Combined ratio

119.9

%




102.7

%













Nine months ended September 30, 2020


Nine months ended September 30, 2019


Property and
Casualty
Reinsurance


Total


Property and
Casualty
Reinsurance


Total

Revenues

($ in thousands)


($ in thousands)

Gross premiums written

$

422,481



$

422,481



$

497,616



$

497,616



Gross premiums ceded

(30,037)



(30,037)



(3,301)



(3,301)



Net premiums written

392,444



392,444



494,315



494,315



Change in net unearned premium reserves

36,393



36,393



7,435



7,435



Net premiums earned

428,837



428,837



501,750



501,750



Expenses








Loss and loss adjustment expenses incurred, net

287,379



287,379



263,105



263,105



Acquisition costs, net

147,741



147,741



233,775



233,775



General and administrative expenses

15,031



15,031



17,762



17,762



Total expenses

450,151



450,151



514,642



514,642



Net underwriting loss

$

(21,314)



(21,314)



$

(12,892)



(12,892)



Net investment income



74,140





220,946


Corporate expenses



(29,903)





(23,257)


Other expenses



(6,410)





(12,994)


Interest expense



(6,162)





(6,154)


Foreign exchange gains



3,129





6,663


Income tax expense



(4,380)





(1,431)


Net loss attributable to noncontrolling interests



21







Net income available to Third Point Re common shareholders



$

9,121





$

170,881



Property and Casualty Reinsurance - Underwriting Ratios (1):

















Loss ratio

67.0

%




52.4

%




Acquisition cost ratio

34.5

%




46.6

%




Composite ratio

101.5

%




99.0

%




General and administrative expense ratio

3.5

%




3.6

%




Combined ratio

105.0

%




102.6

%






(1)

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

 

THIRD POINT REINSURANCE LTD.
NON-GAAP MEASURES AND RECONCILIATIONS & KEY PERFORMANCE INDICATORS

Non-GAAP Measures

Basic Book Value per Share and Diluted Book Value per Share

Basic book value per share and diluted book value per share are non-GAAP financial measures and there are no comparable GAAP measures. Basic book value per share, as presented, is a non-GAAP financial measure and is calculated by dividing shareholders' equity attributable to Third Point Re common shareholders by the number of common shares outstanding, excluding the total number of unvested restricted shares, at period end. Diluted book value per share, as presented, is a non-GAAP financial measure and is calculated using the treasury stock method. Under the treasury stock method, we assume that proceeds received from in-the-money options and/or warrants exercised are used to repurchase common shares in the market. For unvested restricted shares with a performance condition, we include the unvested restricted shares for which we consider vesting to be probable. Change in basic book value per share is calculated by taking the difference in basic book value per share for the periods presented divided by the beginning of period book value per share. Change in diluted book value per share is calculated by taking the difference in diluted book value per share for the periods presented divided by the beginning of period diluted book value per share. 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.


September 30,
2020


December 31,
2019

Basic and diluted book value per share numerator:

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

Shareholders' equity attributable to Third Point Re common shareholders

$

1,427,571



$

1,414,074


Basic and diluted book value per share denominator:




Common shares outstanding

95,314,893



94,225,498


Unvested restricted shares

(2,695,127)



(2,231,296)


Basic book value per share denominator:

92,619,766



91,994,202


Effect of dilutive warrants issued to founders and an advisor (1)



172,756


Effect of dilutive stock options issued to directors and employees (1)



225,666


Effect of dilutive restricted shares issued to directors and employees

2,182,214



1,654,803


Diluted book value per share denominator

94,801,980



94,047,427






Basic book value per share

$

15.41



$

15.37


Diluted book value per share

$

15.06



$

15.04




(1)

As of September 30, 2020, there was no dilution as a result of the Company's share price being under the lowest exercise price for warrants and options.

 

Return on Beginning Shareholders' Equity Attributable to Third Point Re Common Shareholders

Return on beginning shareholders' equity attributable to Third Point Re common shareholders, as presented, is a non-GAAP financial measure. Return on beginning shareholders' equity attributable to Third Point Re common shareholders is calculated by dividing net income (loss) available to Third Point Re common shareholders by the beginning shareholders' equity attributable to Third Point Re common shareholders. We believe that return on beginning shareholders' equity attributable to Third Point Re common shareholders is an important measure because it assists our management and investors in evaluating the Company's profitability. When we repurchase our common shares, we also adjust the beginning shareholders' equity attributable to Third Point Re common shareholders for the impact of the shares repurchased on a weighted average basis. For a period where there was a loss, this adjustment decreased the stated returns on beginning shareholders' equity and for a period where there was a gain, this adjustment increased the stated returns on beginning shareholders' equity.


Three months ended


Nine months ended


September 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019


($ in thousands)

Net income (loss) available to Third Point Re common shareholders

$

68,743



$

(15,099)



$

9,121



$

170,881


Shareholders' equity attributable to Third Point Re common
shareholders - beginning of period

$

1,357,304



$

1,395,898



$

1,414,074



$

1,204,574


Return on beginning shareholders' equity attributable to Third
Point Re common shareholders

5.1

%


(1.1)

%


0.6

%


14.2

%

 

Key Performance Indicator

Net Investment Return on Investments Managed by Third Point LLC

Net investment return represents the return on our net investments managed by Third Point LLC, net of fees. The net investment return on net investments managed by Third Point LLC is the percentage change in value of a dollar invested over the reporting period on our net investment assets managed by Third Point LLC. The net investment return reflects the combined results of our investments in TP Fund, collateral assets and certain other investment assets managed by Third Point LLC. Net investment return is the key indicator by which we measure the performance of Third Point LLC, our investment manager.

 

Cision View original content:http://www.prnewswire.com/news-releases/third-point-re-announces-third-quarter-2020-earnings-results-301167406.html

SOURCE Third Point Reinsurance Ltd.