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.
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.
