HAMILTON, Bermuda, Aug. 2, 2017 /PRNewswire/ -- Third Point
Reinsurance Ltd. ("Third Point Re" or the "Company") (NYSE: TPRE)
today announced results for its second quarter ended June 30,
2017.
Third Point Re reported net income of $74.6 million, or $0.71 per diluted common share, for the second
quarter of 2017, compared to net income of $53.4 million, or $0.51 per diluted common share, for the second
quarter of 2016. For the six months ended June 30, 2017, Third
Point Re reported net income of $178.8
million, or $1.70 per diluted
common share, compared to net income of $2.2
million, or $0.02 per diluted
common share, for the six months ended June 30, 2016.
For the three months ended June 30, 2017, diluted book
value per share increased by $0.70
per share, or 5.0%, to $14.74 per
share as of June 30, 2017, from $14.04 per share as of March 31, 2017. For
the six months ended June 30, 2017, diluted book value per
share increased by $1.58 per share,
or 12.0%, to $14.74 per share from
$13.16 per share as of
December 31, 2016.
"Our strong performance for 2017 continued through the second
quarter with a return on beginning shareholders' equity of 5.0%,
bringing our six month return to 12.8%," commented Rob Bredahl, President and Chief Executive
Officer. "Our investment manager, Third Point LLC continues
to have a great year and has generated an investment return of
10.6% through six months and 11.7% through July 2017. Although
difficult reinsurance market conditions persist, we have
successfully generated stable, long-term float and our asset
leverage is within our target range of 1.50 to 1.75. This
allows us to remain selective in our underwriting without
diminishing our earnings potential. We took advantage of
attractive share price levels during the quarter and repurchased
1,767,281 shares at an average price of $12.44 per share and have $51.7 million remaining under our existing share
repurchase plan."
The following table shows certain key financial metrics for the
three and six months ended June 30, 2017 and 2016:
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
($ in millions,
except for per share data and ratios)
|
Gross premiums
written
|
$
|
156.6
|
|
$
|
196.9
|
|
$
|
302.9
|
|
$
|
394.0
|
Net premiums
earned
|
$
|
173.6
|
|
$
|
133.1
|
|
$
|
311.6
|
|
$
|
269.9
|
Net underwriting loss
(1)
|
$
|
(12.1)
|
|
$
|
(25.6)
|
|
$
|
(20.8)
|
|
$
|
(32.2)
|
Combined ratio
(1)
|
107.0%
|
|
119.2%
|
|
106.6%
|
|
111.9%
|
Net investment return
on investments managed by Third Point LLC
|
|
4.5%
|
|
|
4.0%
|
|
|
10.6%
|
|
1.9%
|
Net investment
income
|
$
|
107.3
|
|
$
|
86.3
|
|
$
|
235.8
|
|
$
|
46.2
|
Net investment income
on float (2)
|
$
|
31.2
|
|
$
|
19.1
|
|
$
|
67.3
|
|
$
|
10.8
|
Net income
|
$
|
74.6
|
|
$
|
53.4
|
|
$
|
178.8
|
|
$
|
2.2
|
Diluted earnings per
common share
|
$
|
0.71
|
|
$
|
0.51
|
|
$
|
1.70
|
|
$
|
0.02
|
Change in diluted
book value per share (2)
|
5.0%
|
|
4.1%
|
|
12.0%
|
|
0.2%
|
Return on beginning
shareholders' equity (2)
|
5.0%
|
|
4.0%
|
|
12.8%
|
|
0.2%
|
Net investments
managed by Third Point LLC (3)
|
$
|
2,385.5
|
|
$
|
2,191.6
|
|
$
|
2,385.5
|
|
$
|
2,191.6
|
Invested asset
leverage (3)
|
1.53
|
|
1.55
|
|
1.53
|
|
1.55
|
|
|
(1)
|
See the accompanying
Segment Reporting for a calculation of net underwriting loss and
combined ratio.
|
(2)
|
Net investment income
on float, change in 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 on float, diluted book
value per share and return on beginning shareholders'
equity.
|
(3)
|
Prior year
comparatives represent amounts as of December 31, 2016.
|
Segment Highlights
Property and Casualty Reinsurance Segment
Gross premiums written decreased by $40.3
million, or 20.5%, to $156.6
million for the three months ended June 30, 2017 from
$196.9 million for the three months
ended June 30, 2016. Gross premiums written decreased by
$91.1 million, or 23.1%, to
$302.9 million for the six months
ended June 30, 2017 from $394.0
million for the six months ended June 30, 2016.
The decrease in the three and six months ended June 30,
2017 compared to the prior year periods was primarily due to
contracts that we did not renew as a result of underlying terms and
conditions, lower premium adjustments in the current year periods
and other timing differences partially offset by new premium.
The increase in net premiums earned was primarily due to the
addition of $83.9 million of new
retroactive exposures in reinsurance contracts included in net
premiums earned in the three and six months ended June 30,
2017, partially offset by a lower in-force underwriting
portfolio. We did not write any retroactive reinsurance
contracts in the three and six months ended June 30, 2016.
The net underwriting loss and combined ratio for the three and
six months ended June 30, 2017 included an insignificant
amount related to changes in estimates of prior years' loss
reserves net of the related impact of acquisition costs.
The net underwriting loss and combined ratio for the three and
six months ended June 30, 2016 included increases (adverse
development) in the net underwriting loss of $12.9 million and $12.5
million, respectively, related to changes in estimates of
prior years' loss reserves net of the related impact of acquisition
costs.
Investments
The return on investments managed by Third Point LLC by strategy
for the three and six months ended June 30, 2017 and 2016 was
as follows:
|
Three months
ended
|
|
June 30,
2017
|
|
June 30,
2016
|
|
Long
|
|
Short
|
|
Net
|
|
Long
|
|
Short
|
|
Net
|
Equity
|
6.5%
|
|
(1.1)%
|
|
5.4%
|
|
0.6%
|
|
(0.3)%
|
|
0.3%
|
Credit
|
(0.3)%
|
|
(0.3)%
|
|
(0.6)%
|
|
4.0%
|
|
(0.2)%
|
|
3.8%
|
Other
|
0.2%
|
|
(0.5)%
|
|
(0.3)%
|
|
(0.1)%
|
|
—%
|
|
(0.1)%
|
Net investment return
on investments
managed by Third Point LLC
|
6.4%
|
|
(1.9)%
|
|
4.5%
|
|
4.5%
|
|
(0.5)%
|
|
4.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
|
|
June 30,
2017
|
|
June 30,
2016
|
|
Long
|
|
Short
|
|
Net
|
|
Long
|
|
Short
|
|
Net
|
Equity
|
13.0%
|
|
(2.2)%
|
|
10.8%
|
|
—%
|
|
(0.7)%
|
|
(0.7)%
|
Credit
|
0.1%
|
|
(0.4)%
|
|
(0.3)%
|
|
4.1%
|
|
(0.4)%
|
|
3.7%
|
Other
|
1.0%
|
|
(0.9)%
|
|
0.1%
|
|
(0.2)%
|
|
(0.9)%
|
|
(1.1)%
|
Net investment return
on investments
managed by Third Point LLC
|
14.1%
|
|
(3.5)%
|
|
10.6%
|
|
3.9%
|
|
(2.0)%
|
|
1.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30,
2017, the long equity strategy was the primary driver of
returns. Within equities, we saw positive attribution across
every sector with large long investments in the healthcare and
industrials portfolios contributing the majority of positive
returns. Gains in our long equity strategy were partially
offset by losses in market hedges and short equity positions.
Modest losses in the credit strategy were primarily driven by both
long and short performing credit investments. Losses from
macroeconomic hedges were partially offset by gains in currency,
private and risk arbitrage investments in the other
strategy.
For the six months ended June 30,
2017, the net investment results were led by strong gains in
the long equity strategy, outpacing the S&P 500 for the same
period with significantly less exposure at risk. The strategy
saw positive attribution from every sector in which the portfolio
is invested. The long equity portfolio performance was
partially offset by negative performance from short equity
positions, including market hedges. The credit strategy
detracted modestly with flat or negative performance from each
sub-strategy. In the other strategy, losses from
macroeconomic hedges were offset by positive contribution from risk
arbitrage, private and currency investments.
Share Repurchase Program
During the three months ended June 30, 2017, we repurchased
1,767,281 of our common shares in the open market for an aggregate
cost of $22.0 million at a weighted
average cost, including commissions, of $12.44 per share. During the six months
ended June 30, 2017, we repurchased 3,300,152 of our common
shares in the open market for an aggregate cost of $40.9 million at a weighted average cost,
including commissions, of $12.38 per
share. Common shares repurchased by the Company were not canceled
and are classified as treasury shares.
As of June 30, 2017, the Company may repurchase up to an
aggregate of $51.7 million of
additional common shares under its share repurchase program.
Conference Call Details
The Company will hold a conference call to discuss its second
quarter 2017 results at 8:30 a.m. Eastern
Time on August 3, 2017. 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. second 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 13665530. The telephonic replay will be available
until 11:59 p.m. (Eastern Time) on
August 10, 2017.
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)
fluctuation in results of operations; (ii) more established
competitors; (iii) losses exceeding reserves; (iv) downgrades or
withdrawal of ratings by rating agencies; (v) dependence on key
executives; (vi) dependence on letter of credit facilities that may
not be available on commercially acceptable terms; (vii) dependence
on financing available through our investment accounts to secure
letters of credit and collateral for reinsurance contracts; (viii)
potential inability to pay dividends; (ix) inability to service our
indebtedness; (x) limited cash flow and liquidity due to our
indebtedness; (xi) unavailability of capital in the future; (xii)
fluctuations in market price of our common shares; (xiii)
dependence on clients' evaluations of risks associated with such
clients' insurance underwriting; (xiv) suspension or revocation of
our reinsurance licenses; (xv) potentially being deemed an
investment company under U.S. federal securities law; (xvi)
potential characterization of Third Point Reinsurance Ltd. and/or
Third Point Re 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 our investment strategy; (xix) termination by Third Point
LLC of our investment management agreements; (xx) risks associated
with our investment strategy being greater than those faced by
competitors; (xxi) increased regulation or scrutiny of alternative
investment advisers affecting our reputation; (xxii) Third Point
Reinsurance Ltd. and/or Third Point Re potentially becoming subject
to U.S. federal income taxation; (xxiii) potentially becoming
subject to U.S. withholding and information reporting requirements
under the Foreign Account Tax Compliance Act; (xxiv) changes in
Bermuda or other law and
regulation that may have an adverse impact on our 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
June 30, 2017 and December 31, 2016
(expressed in
thousands of U.S. dollars, except per share and share
amounts)
|
|
|
|
|
June 30,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
|
Equity securities,
trading, at fair value (cost - $1,654,011; 2016 -
$1,385,866)
|
|
$
|
1,941,170
|
|
|
$
|
1,506,854
|
|
Debt securities,
trading, at fair value (cost - $736,060; 2016 -
$1,036,716)
|
|
702,515
|
|
|
1,057,957
|
|
Other investments, at
fair value
|
|
29,091
|
|
|
82,701
|
|
Total investments in
securities
|
|
2,672,776
|
|
|
2,647,512
|
|
Cash and cash
equivalents
|
|
8,255
|
|
|
9,951
|
|
Restricted cash and
cash equivalents
|
|
372,068
|
|
|
298,940
|
|
Due from
brokers
|
|
424,163
|
|
|
284,591
|
|
Derivative assets, at
fair value
|
|
45,110
|
|
|
27,432
|
|
Interest and
dividends receivable
|
|
3,947
|
|
|
6,505
|
|
Reinsurance balances
receivable
|
|
472,570
|
|
|
381,951
|
|
Deferred acquisition
costs, net
|
|
203,193
|
|
|
221,618
|
|
Other
assets
|
|
14,648
|
|
|
17,144
|
|
Total
assets
|
|
$
|
4,216,730
|
|
|
$
|
3,895,644
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
17,929
|
|
|
$
|
10,321
|
|
Reinsurance balances
payable
|
|
65,456
|
|
|
43,171
|
|
Deposit
liabilities
|
|
105,208
|
|
|
104,905
|
|
Unearned premium
reserves
|
|
547,815
|
|
|
557,076
|
|
Loss and loss
adjustment expense reserves
|
|
678,459
|
|
|
605,129
|
|
Securities sold, not
yet purchased, at fair value
|
|
265,667
|
|
|
92,668
|
|
Due to
brokers
|
|
777,179
|
|
|
899,601
|
|
Derivative
liabilities, at fair value
|
|
11,949
|
|
|
16,050
|
|
Performance fee
payable to related party
|
|
53,455
|
|
|
—
|
|
Interest and
dividends payable
|
|
3,838
|
|
|
3,443
|
|
Senior notes payable,
net of deferred costs
|
|
113,643
|
|
|
113,555
|
|
Total
liabilities
|
|
2,640,598
|
|
|
2,445,919
|
|
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,
107,332,603 (2016 - 106,501,299))
|
|
10,733
|
|
|
10,650
|
|
Treasury shares
(3,944,920 shares (2016 - 644,768 shares))
|
|
(48,253)
|
|
|
(7,389)
|
|
Additional paid-in
capital
|
|
1,098,857
|
|
|
1,094,568
|
|
Retained
earnings
|
|
494,986
|
|
|
316,222
|
|
Shareholders'
equity attributable to shareholders
|
|
1,556,323
|
|
|
1,414,051
|
|
Non-controlling
interests
|
|
19,809
|
|
|
35,674
|
|
Total
shareholders' equity
|
|
1,576,132
|
|
|
1,449,725
|
|
Total liabilities
and shareholders' equity
|
|
$
|
4,216,730
|
|
|
$
|
3,895,644
|
|
THIRD POINT
REINSURANCE LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the three and
six months ended June 30, 2017 and 2016
(expressed in
thousands of U.S. dollars, except per share and share
amounts)
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
Revenues
|
|
|
|
|
|
|
|
Gross premiums
written
|
$
|
156,564
|
|
|
$
|
196,866
|
|
|
$
|
302,918
|
|
|
$
|
394,022
|
|
Gross premiums
ceded
|
(1,425)
|
|
|
(1,425)
|
|
|
(2,550)
|
|
|
(1,425)
|
|
Net premiums
written
|
155,139
|
|
|
195,441
|
|
|
300,368
|
|
|
392,597
|
|
Change in net
unearned premium reserves
|
18,419
|
|
|
(62,319)
|
|
|
11,199
|
|
|
(122,673)
|
|
Net premiums
earned
|
173,558
|
|
|
133,122
|
|
|
311,567
|
|
|
269,924
|
|
Net investment
income
|
107,325
|
|
|
86,346
|
|
|
235,835
|
|
|
46,236
|
|
Total
revenues
|
280,883
|
|
|
219,468
|
|
|
547,402
|
|
|
316,160
|
|
Expenses
|
|
|
|
|
|
|
|
Loss and loss
adjustment expenses incurred, net
|
107,379
|
|
|
104,131
|
|
|
193,274
|
|
|
188,807
|
|
Acquisition costs,
net
|
68,641
|
|
|
48,482
|
|
|
123,093
|
|
|
100,169
|
|
General and
administrative expenses
|
15,014
|
|
|
10,243
|
|
|
25,586
|
|
|
21,531
|
|
Other
expenses
|
2,105
|
|
|
3,173
|
|
|
5,006
|
|
|
5,879
|
|
Interest
expense
|
2,051
|
|
|
2,046
|
|
|
4,077
|
|
|
4,094
|
|
Foreign exchange
(gains) losses
|
4,781
|
|
|
(8,068)
|
|
|
4,796
|
|
|
(10,454)
|
|
Total
expenses
|
199,971
|
|
|
160,007
|
|
|
355,832
|
|
|
310,026
|
|
Income before income
tax expense
|
80,912
|
|
|
59,461
|
|
|
191,570
|
|
|
6,134
|
|
Income tax
expense
|
(5,307)
|
|
|
(5,310)
|
|
|
(10,605)
|
|
|
(3,381)
|
|
Income including
non-controlling interests
|
75,605
|
|
|
54,151
|
|
|
180,965
|
|
|
2,753
|
|
Income attributable
to non-controlling interests
|
(1,027)
|
|
|
(775)
|
|
|
(2,201)
|
|
|
(506)
|
|
Net income
|
$
|
74,578
|
|
|
$
|
53,376
|
|
|
$
|
178,764
|
|
|
$
|
2,247
|
|
Earnings per
share
|
|
|
|
|
|
|
|
Basic
|
$
|
0.73
|
|
|
$
|
0.51
|
|
|
$
|
1.73
|
|
|
$
|
0.02
|
|
Diluted
|
$
|
0.71
|
|
|
$
|
0.51
|
|
|
$
|
1.70
|
|
|
$
|
0.02
|
|
Weighted average
number of common shares used in the
determination of earnings per share
|
|
|
|
|
|
|
|
Basic
|
102,283,844
|
|
|
104,132,797
|
|
|
103,144,078
|
|
|
104,195,336
|
|
Diluted
|
104,569,226
|
|
|
105,233,921
|
|
|
105,149,710
|
|
|
105,228,174
|
|
THIRD POINT
REINSURANCE LTD.
SEGMENT
REPORTING
|
|
|
|
Three months ended
June 30, 2017
|
|
Property and
Casualty
Reinsurance
|
|
Corporate
|
|
Total
|
Revenues
|
($ in
thousands)
|
Gross premiums
written
|
$
|
156,564
|
|
$
|
—
|
|
$
|
156,564
|
Gross premiums
ceded
|
(1,425)
|
|
—
|
|
(1,425)
|
Net premiums
written
|
155,139
|
|
—
|
|
155,139
|
Change in net
unearned premium reserves
|
18,419
|
|
—
|
|
18,419
|
Net premiums
earned
|
173,558
|
|
—
|
|
173,558
|
Expenses
|
|
|
|
|
|
|
Loss and loss
adjustment expenses incurred, net
|
107,379
|
|
|
—
|
|
107,379
|
Acquisition costs,
net
|
68,641
|
|
—
|
|
68,641
|
General and
administrative expenses
|
9,649
|
|
5,365
|
|
15,014
|
Total
expenses
|
185,669
|
|
5,365
|
|
191,034
|
Net underwriting
loss
|
(12,111)
|
|
n/a
|
|
n/a
|
Net investment
income
|
31,206
|
|
76,119
|
|
107,325
|
Other
expenses
|
(2,105)
|
|
—
|
|
(2,105)
|
Interest
expense
|
—
|
|
(2,051)
|
|
(2,051)
|
Foreign exchange
losses
|
|
—
|
|
(4,781)
|
|
(4,781)
|
Income tax
expense
|
—
|
|
(5,307)
|
|
(5,307)
|
Segment income
including non-controlling interests
|
16,990
|
|
58,615
|
|
75,605
|
Segment income
attributable to non-controlling interests
|
—
|
|
(1,027)
|
|
(1,027)
|
Segment
income
|
$
|
16,990
|
|
$
|
57,588
|
|
$
|
74,578
|
Property and
Casualty Reinsurance - Underwriting Ratios (1):
|
|
|
|
|
Loss ratio
|
|
61.9%
|
|
|
|
|
Acquisition cost
ratio
|
39.5%
|
|
|
|
|
Composite
ratio
|
101.4%
|
|
|
|
|
General and
administrative expense ratio
|
5.6%
|
|
|
|
|
Combined
ratio
|
107.0%
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2017
|
|
Property and
Casualty
Reinsurance
|
|
Corporate
|
|
Total
|
Revenues
|
($ in
thousands)
|
Gross premiums
written
|
$
|
302,918
|
|
$
|
—
|
|
$
|
302,918
|
Gross premiums
ceded
|
(2,550)
|
|
—
|
|
(2,550)
|
Net premiums
written
|
300,368
|
|
—
|
|
300,368
|
Change in net
unearned premium reserves
|
11,199
|
|
—
|
|
11,199
|
Net premiums
earned
|
311,567
|
|
|
—
|
|
311,567
|
Expenses
|
|
|
|
|
|
Loss and loss
adjustment expenses incurred, net
|
193,274
|
|
—
|
|
193,274
|
Acquisition costs,
net
|
123,093
|
|
—
|
|
123,093
|
General and
administrative expenses
|
15,961
|
|
9,625
|
|
25,586
|
Total
expenses
|
332,328
|
|
9,625
|
|
341,953
|
Net underwriting
loss
|
(20,761)
|
|
n/a
|
|
n/a
|
Net investment
income
|
67,326
|
|
168,509
|
|
235,835
|
Other
expenses
|
(5,006)
|
|
—
|
|
(5,006)
|
Interest
expense
|
—
|
|
(4,077)
|
|
(4,077)
|
Foreign exchange
losses
|
—
|
|
(4,796)
|
|
(4,796)
|
Income tax
expense
|
—
|
|
(10,605)
|
|
(10,605)
|
Segment income
including non-controlling interests
|
41,559
|
|
139,406
|
|
180,965
|
Segment income
attributable to non-controlling interests
|
—
|
|
(2,201)
|
|
(2,201)
|
Segment
income
|
$
|
41,559
|
|
$
|
137,205
|
|
$
|
178,764
|
Property and
Casualty Reinsurance - Underwriting Ratios (1):
|
|
|
|
|
|
|
|
Loss ratio
|
|
62.0%
|
|
|
|
|
Acquisition cost
ratio
|
39.5%
|
|
|
|
|
Composite
ratio
|
101.5%
|
|
|
|
|
General and
administrative expense ratio
|
5.1%
|
|
|
|
|
Combined
ratio
|
106.6%
|
|
|
|
|
|
(1) Underwriting ratios
are calculated by dividing the related expense by net premiums
earned.
|
|
Three months ended
June 30, 2016
|
|
Property and
Casualty Reinsurance
|
|
Corporate
|
|
Total
|
Revenues
|
($ in
thousands)
|
Gross premiums
written
|
$
|
196,866
|
|
$
|
—
|
|
$
|
196,866
|
Gross premiums
ceded
|
(1,425)
|
|
—
|
|
(1,425)
|
Net premiums
written
|
195,441
|
|
—
|
|
195,441
|
Change in net
unearned premium reserves
|
(62,319)
|
|
—
|
|
(62,319)
|
Net premiums
earned
|
133,122
|
|
—
|
|
133,122
|
Expenses
|
|
|
|
|
|
Loss and loss
adjustment expenses incurred, net
|
104,131
|
|
—
|
|
104,131
|
Acquisition costs,
net
|
48,482
|
|
—
|
|
48,482
|
General and
administrative expenses
|
6,085
|
|
4,158
|
|
10,243
|
Total
expenses
|
158,698
|
|
4,158
|
|
162,856
|
Net underwriting
loss
|
(25,576)
|
|
n/a
|
|
n/a
|
Net investment
income
|
19,098
|
|
67,248
|
|
86,346
|
Other
expenses
|
(3,173)
|
|
—
|
|
(3,173)
|
Interest
expense
|
—
|
|
(2,046)
|
|
(2,046)
|
Foreign exchange
gains
|
—
|
|
8,068
|
|
8,068
|
Income tax
expense
|
—
|
|
(5,310)
|
|
(5,310)
|
Segment income (loss)
including non-controlling interests
|
(9,651)
|
|
63,802
|
|
54,151
|
Segment income
attributable to non-controlling interests
|
—
|
|
(775)
|
|
(775)
|
Segment income
(loss)
|
$
|
(9,651)
|
|
$
|
63,027
|
|
$
|
53,376
|
Property and
Casualty Reinsurance - Underwriting Ratios (1):
|
|
|
|
|
Loss ratio
|
78.2%
|
|
|
|
|
Acquisition cost
ratio
|
36.4%
|
|
|
|
|
Composite
ratio
|
114.6%
|
|
|
|
|
General and
administrative expense ratio
|
4.6%
|
|
|
|
|
Combined
ratio
|
119.2%
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2016
|
|
Property and
Casualty Reinsurance
|
|
Corporate
|
|
Total
|
Revenues
|
($ in
thousands)
|
Gross premiums
written
|
$
|
394,022
|
|
$
|
—
|
|
$
|
394,022
|
Gross premiums
ceded
|
(1,425)
|
|
—
|
|
(1,425)
|
Net premiums
written
|
392,597
|
|
—
|
|
392,597
|
Change in net
unearned premium reserves
|
(122,673)
|
|
|
—
|
|
(122,673)
|
Net premiums
earned
|
269,924
|
|
—
|
|
269,924
|
Expenses
|
|
|
|
|
|
Loss and loss
adjustment expenses incurred, net
|
188,807
|
|
—
|
|
188,807
|
Acquisition costs,
net
|
100,169
|
|
—
|
|
100,169
|
General and
administrative expenses
|
13,147
|
|
8,384
|
|
21,531
|
Total
expenses
|
302,123
|
|
8,384
|
|
310,507
|
Net underwriting
loss
|
(32,199)
|
|
n/a
|
|
n/a
|
Net investment
income
|
10,837
|
|
35,399
|
|
46,236
|
Other
expenses
|
(5,879)
|
|
—
|
|
(5,879)
|
Interest
expense
|
—
|
|
(4,094)
|
|
(4,094)
|
Foreign exchange
gains
|
—
|
|
10,454
|
|
10,454
|
Income tax
expense
|
—
|
|
(3,381)
|
|
(3,381)
|
Segment income (loss)
including non-controlling interests
|
(27,241)
|
|
29,994
|
|
2,753
|
Segment income
attributable to non-controlling interests
|
—
|
|
(506)
|
|
(506)
|
Segment income
(loss)
|
$
|
(27,241)
|
|
$
|
29,488
|
|
$
|
2,247
|
Property and
Casualty Reinsurance - Underwriting Ratios (1):
|
|
|
|
|
|
|
|
Loss ratio
|
69.9%
|
|
|
|
|
Acquisition cost
ratio
|
37.1%
|
|
|
|
|
Composite
ratio
|
107.0%
|
|
|
|
|
General and
administrative expense ratio
|
4.9%
|
|
|
|
|
Combined
ratio
|
111.9%
|
|
|
|
|
|
(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
|
|
|
|
|
|
|
|
|
June 30,
2017
|
|
December 31,
2016
|
Basic and diluted
book value per share numerator:
|
|
|
|
|
|
($ in thousands,
except share and
per share amounts)
|
Total shareholders'
equity
|
|
|
|
|
|
$
|
1,576,132
|
|
$
|
1,449,725
|
Less: non-controlling
interests
|
|
|
|
|
|
(19,809)
|
|
(35,674)
|
Shareholders' equity
attributable to shareholders
|
|
|
|
|
|
1,556,323
|
|
1,414,051
|
Effect of dilutive
warrants issued to founders and an advisor
|
|
|
|
|
|
|
46,512
|
|
46,512
|
Effect of dilutive
stock options issued to directors and employees
|
|
|
|
|
|
51,930
|
|
52,930
|
Diluted book value
per share numerator
|
|
|
|
|
|
$
|
1,654,765
|
|
$
|
1,513,493
|
Basic and diluted
book value per share denominator:
|
|
|
|
|
|
|
|
|
Issued and
outstanding shares, net of treasury shares
|
|
|
|
|
|
101,339,828
|
|
104,173,748
|
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
|
|
|
|
|
|
5,174,333
|
|
5,274,333
|
Effect of dilutive
restricted shares issued to employees
|
|
|
|
|
|
1,127,928
|
|
878,529
|
Diluted book value
per share denominator
|
|
|
|
|
|
112,293,252
|
|
114,977,773
|
|
|
|
|
|
|
|
|
|
Basic book value
per share
|
|
|
|
|
|
$
|
15.36
|
|
$
|
13.57
|
Diluted book value
per share
|
|
|
|
|
|
$
|
14.74
|
|
$
|
13.16
|
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
($ in
thousands)
|
Net investment income
on float
|
$
|
31,206
|
|
$
|
19,098
|
|
$
|
67,326
|
|
$
|
10,837
|
Net investment income
on capital
|
75,926
|
|
67,014
|
|
168,049
|
|
34,918
|
Net investment income
on investments managed by
Third Point LLC
|
107,132
|
|
86,112
|
|
235,375
|
|
45,755
|
Net gain on
investment in Kiskadee Fund
|
|
193
|
|
|
234
|
|
|
460
|
|
|
481
|
|
$
|
107,325
|
|
$
|
86,346
|
|
$
|
235,835
|
|
$
|
46,236
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
($ in
thousands)
|
Net income
|
$
|
74,578
|
|
$
|
53,376
|
|
$
|
178,764
|
|
$
|
2,247
|
Shareholders' equity
attributable to shareholders - beginning
of period
|
1,501,681
|
|
1,331,247
|
|
1,414,051
|
|
|
1,379,726
|
Impact of weighting
related to shareholders' equity from shares
repurchased
|
|
(9,863)
|
|
|
(2,609)
|
|
|
(16,882)
|
|
|
(1,305)
|
Adjusted
shareholders' equity attributable to shareholders -
beginning of
period
|
$
|
1,491,818
|
|
$
|
1,328,638
|
|
$
|
1,397,169
|
|
$
|
1,378,421
|
Return on beginning
shareholders' equity
|
|
5.0%
|
|
|
4.0%
|
|
|
12.8%
|
|
|
0.2%
|
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. For unvested restricted shares
with a performance condition, we include the unvested restricted
shares for which we consider vesting to be probable. Change in book
value per share is calculated by taking the change in book value
per share divided by the beginning of period book value per share.
Change in diluted book value per share is calculated by taking the
change in diluted book value per share 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.
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. 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
shareholders' equity attributable to shareholders. We believe that
return on beginning shareholders' equity is an important measure
because it assists our management and investors in evaluating the
Company's profitability. For the six months ended June 30,
2017, 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.
Invested Asset Leverage
Invested asset leverage is a ratio calculated by dividing our
net investments managed by Third Point LLC by shareholders' equity
attributable to shareholders and is a key metric in assessing the
amount of insurance float generated by our reinsurance operation
that has been invested by our investment manager, Third Point
LLC. Given the sensitivity of our return on beginning
shareholders' equity to our net investment return on investments
managed by Third Point LLC, invested asset leverage is an important
metric that management monitors. It is also an important
metric by which we evaluate our capital adequacy for rating agency
and regulatory purposes. Maintaining an appropriate invested
asset leverage to optimize the return potential of the Company,
while maintaining sufficient rating agency and regulatory capital
is an important aspect of how we manage the Company.
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content:http://www.prnewswire.com/news-releases/third-point-re-reports-second-quarter-2017-earnings-results-300498717.html
SOURCE Third Point Reinsurance Ltd.