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Third Point Reinsurance Ltd.




Financial Supplement
September 30, 2019



(UNAUDITED)



This financial supplement is for informational purposes only. It should be read in conjunction with documents filed with the Securities and Exchange Commission by Third Point Reinsurance Ltd., including the Company’s Quarterly Report on Form 10-Q.


                                                                                                                                                                                                                                                                                   


Point House
Christopher S. Coleman - Chief Financial Officer
3 Waterloo Lane
Tel: (441) 542-3333
Pembroke HM 08
Email: investorrelations@thirdpointre.bm
Bermuda
Website: www.thirdpointre.bm





Third Point Reinsurance Ltd.
Basis of Presentation and Non-GAAP Financial Measures:
Unless the context otherwise indicates or requires, as used in this financial supplement references to “we,” “our,” “us,” and the “Company,” refer to Third Point Reinsurance Ltd. (“Third Point Re”) and its directly and indirectly owned subsidiaries, including Third Point Reinsurance Company Ltd. (“Third Point Re BDA”) and Third Point Reinsurance (USA) Ltd. (“Third Point Re USA”), as a combined entity, except where otherwise stated or where it is clear that the terms mean only Third Point Reinsurance Ltd. exclusive of its subsidiaries. We have made rounding adjustments to reach some of the figures included in this financial supplement and, unless otherwise indicated, percentages presented in this financial supplement are approximate.
In presenting the Company’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 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 financial 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, if any, are included in the attached financial information in accordance with Regulation G.
Safe Harbor Statement Regarding Forward-Looking Statements:
This Financial Supplement 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 our 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; 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; dependence on letter of credit facilities that may not be available on commercially acceptable terms; 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; 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; and and other risks and factors listed under “Risk Factors” in the Company’s 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 we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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Third Point Reinsurance Ltd.
Table of Contents

 
 
 
Key Performance Indicators
 
 
 
 
 
 
Consolidated Financial Statements
 
 
 
 
 
 
 
 
Operating Segment Information
 
 
Segment Reporting - Three and nine months ended September 30, 2019 and 2018
 
 
Gross Premiums Written by Lines and Type of Business - by Quarter
 
Underwriting Ratios - by Quarter
 
 
 
 
Investments
 
 
 
Net Investment Return by Investment Strategy - by Quarter
 
 
 
 
Other
 
 
General and Administrative Expenses - by Quarter
 
Basic and Diluted Book Value per Share - by Quarter
 
Earnings (Loss) per Share - by Quarter
 
Return on Beginning Shareholders’ Equity - by Quarter
 


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Third Point Reinsurance Ltd.
Key Performance Indicators
September 30, 2019 and 2018
(expressed in thousands of U.S. dollars, except per share data and ratios)

 
Three months ended
 
Nine months ended
 
September 30,
2019
 
September 30,
2018
 
September 30,
2019
 
September 30,
2018
 
 
 
 
 
 
 
 
Key underwriting metrics for Property and Casualty Reinsurance segment:
 
 
 
 
 
 
 
Net underwriting loss (1)
$
(5,495
)
 
$
(6,317
)
 
$
(12,892
)
 
$
(17,734
)
Combined ratio (1)
102.7
 %
 
104.9
 %
 
102.6
%
 
104.3
 %
 
 
 
 
 
 
 
 
Key investment return metrics:
 
 
 
 
 
 
 
Net investment income (loss)
$
(3,138
)
 
$
(3,590
)
 
$
220,946

 
$
25,377

Net investment return on net investments managed by Third Point LLC
(0.2
)%
 
(0.2
)%
 
10.2
%
 
0.6
 %
 
 
 
 
 
 
 
 
Key shareholders’ value creation metrics:
 
 
 
 
 
 
 
Basic book value per share (2) (3)
$
15.04

 
$
13.15

 
$
15.04

 
$
13.15

Diluted book value per share (2) (3)
$
14.76

 
$
12.98

 
$
14.76

 
$
12.98

Increase (decrease) in diluted book value per share (2)
(0.8
)%
 
(0.4
)%
 
13.7
%
 
0.4
 %
Return on beginning shareholders’ equity attributable to Third Point Re common shareholders (2)
(1.1
)%
 
(0.8
)%
 
14.2
%
 
(1.2
)%

(1)
Refer to accompanying “Segment Reporting - Three and nine months ended September 30, 2019 and 2018” for a calculation of net underwriting loss and combined ratio.
(2)
Basic book value per share, 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. In the third quarter of 2019, the Company changed its method for calculating the impact of options and warrants on diluted book value per share to the treasury stock method, refer to accompanying “Basic book value per share and diluted book value per share - by Quarter” for calculation of basic and diluted book value per share and “Return on beginning shareholders’ equity - by Quarter” for calculation of return on beginning shareholders' equity attributable to Third Point Re common shareholders.
(3)
Prior year comparatives represent amounts as of December 31, 2018.




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Third Point Reinsurance Ltd.
Condensed Consolidated Balance Sheets - by Quarter
(expressed in thousands of U.S. dollars)
 
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Assets
 
 
 
 
 
 
 
 
 
 
Investment in related party investment fund, at fair value
 
$
818,600

 
$
824,352

 
$
1,475,995

 
$
1,284,004

 
$
1,627,924

Debt securities, trading, at fair value
 
220,045

 
567,354

 
241,059

 
239,640

 
244,876

Other investments, at fair value
 
3,500

 
3,010

 
3,087

 
84

 
196

Total investments
 
1,042,145

 
1,394,716

 
1,720,141

 
1,523,728

 
1,872,996

Cash and cash equivalents
 
693,105

 
93,757

 
54,319

 
104,183

 
49,786

Restricted cash and cash equivalents
 
816,519

 
656,146

 
616,844

 
609,154

 
581,134

Subscription receivable from related party investment fund
 
—

 
—

 
15,000

 
—

 
30,000

Redemption receivable from related party investment fund
 
—

 
400,000

 
—

 
—

 
—

Due from brokers
 
—

 
—

 
637

 
1,411

 
12,853

Interest and dividends receivable
 
2,932

 
1,792

 
1,891

 
1,316

 
1,975

Reinsurance balances receivable
 
680,630

 
696,170

 
758,816

 
602,448

 
577,382

Deferred acquisition costs, net
 
166,968

 
208,027

 
233,108

 
203,842

 
231,286

Unearned premiums ceded
 
14,370

 
15,473

 
16,139

 
17,552

 
16,772

Loss and loss adjustment expenses recoverable
 
4,270

 
3,655

 
2,751

 
2,031

 
1,576

Other assets
 
17,808

 
19,715

 
20,488

 
20,569

 
13,082

Total assets
 
$
3,438,747

 
$
3,489,451

 
$
3,440,134

 
$
3,086,234

 
$
3,388,842

Liabilities
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
$
14,607

 
$
14,843

 
$
9,225

 
$
7,261

 
$
9,200

Reinsurance balances payable
 
98,766

 
88,670

 
76,766

 
69,701

 
71,070

Deposit liabilities
 
174,405

 
148,845

 
144,782

 
145,342

 
146,961

Unearned premium reserves
 
592,319

 
702,398

 
767,352

 
602,936

 
693,333

Loss and loss adjustment expense reserves
 
1,060,000

 
1,021,776

 
986,639

 
937,157

 
822,180

Due to brokers
 
—

 
—

 
—

 
—

 
16

Participation agreement with related party investment fund
 
—

 
—

 
1,521

 
2,297

 
23,149

Interest and dividends payable
 
1,026

 
3,022

 
1,015

 
3,055

 
1,157

Senior notes payable, net of deferred costs
 
114,044

 
113,999

 
113,955

 
113,911

 
113,866

Total liabilities
 
2,055,167

 
2,093,553

 
2,101,255

 
1,881,660

 
1,880,932

Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
 
Shareholders’ equity
 
 
 
 
 
 
 
 
 
 
Preference shares
 
—

 
—

 
—

 
—

 
—

Common shares
 
9,422

 
9,399

 
9,429

 
9,364

 
9,417

Additional paid-in capital
 
926,949

 
924,191

 
920,207

 
918,882

 
924,153

Retained earnings
 
447,209

 
462,308

 
409,243

 
276,328

 
574,340

Shareholders’ equity attributable to Third Point Re common shareholders
 
1,383,580

 
1,395,898

 
1,338,879

 
1,204,574

 
1,507,910

Total liabilities, noncontrolling interests and shareholders’ equity
 
$
3,438,747

 
$
3,489,451

 
$
3,440,134

 
$
3,086,234

 
$
3,388,842


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Third Point Reinsurance Ltd.
Condensed Consolidated Statements of Income (Loss)
(expressed in thousands of U.S. dollars, except share and per share data)
 
Three months ended
 
Nine months ended
 
September 30,
2019
 
September 30,
2018
 
September 30,
2019
 
September 30,
2018
Revenues
 
 
 
 
 
 
 
Gross premiums written
$
95,388

 
$
30,064

 
$
497,616

 
$
458,189

Gross premiums ceded
(1,116
)
 
—

 
(3,301
)
 
(18,125
)
Net premiums written
94,272

 
30,064

 
494,315


440,064

Change in net unearned premium reserves
108,976

 
97,929

 
7,435

 
(28,092
)
Net premiums earned
203,248

 
127,993

 
501,750

 
411,972

Net investment income (loss) from investment in related party investment fund (1)
(5,751
)
 
(1,926
)
 
207,597

 
(1,926
)
Net investment income before management and performance fees to related parties
2,613

 
3,641

 
13,349

 
57,148

Management and performance fees to related parties
—

 
(5,305
)
 
—

 
(29,845
)
Net investment income (loss)
(3,138
)
 
(3,590
)
 
220,946

 
25,377

Total revenues
200,110

 
124,403

 
722,696

 
437,349

Expenses
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
85,703

 
88,706

 
263,105

 
265,326

Acquisition costs, net
118,271

 
40,841

 
233,775

 
149,830

General and administrative expenses
9,237

 
9,511

 
41,019

 
28,688

Other (income) expenses
5,058

 
(1,362
)
 
12,994

 
6,616

Interest expense
2,074

 
2,074

 
6,154

 
6,154

Foreign exchange gains
(4,921
)
 
(1,979
)
 
(6,663
)
 
(4,215
)
Total expenses
215,422

 
137,791

 
550,384

 
452,399

Income (loss) before income tax (expense) benefit
(15,312
)
 
(13,388
)
 
172,312

 
(15,050
)
Income tax (expense) benefit
213

 
111

 
(1,431
)
 
(4,407
)
Net income (loss)
(15,099
)
 
(13,277
)
 
170,881

 
(19,457
)
Net income attributable to noncontrolling interests in related party
—

 
(4
)
 
—

 
(223
)
Net income (loss) available to Third Point Re common shareholders
$
(15,099
)
 
$
(13,281
)
 
$
170,881

 
$
(19,680
)
Earnings (loss) per share available to Third Point Re common shareholders
 
 
 
 
 
 
 
Basic earnings (loss) per share available to Third Point Re common shareholders (2)
$
(0.16
)
 
$
(0.14
)
 
$
1.86

 
$
(0.20
)
Diluted earnings (loss) per share available to Third Point Re common shareholders (2)
$
(0.16
)
 
$
(0.14
)
 
$
1.84

 
$
(0.20
)
Weighted average number of common shares used in the determination of earnings (loss) per share
 
 
 
 
 
 
 
Basic
91,903,556

 
95,671,385

 
91,784,268

 
98,768,442

Diluted
91,903,556

 
95,671,385

 
92,709,421

 
98,768,442

(1) Effective August 31, 2018, Third Point Reinsurance Ltd., Third Point Reinsurance Company Ltd. (“Third Point Re BDA”) and Third Point Reinsurance (USA) Ltd. (“Third Point Re USA”) and together with Third Point Re BDA, the “TPRE Limited Partners”, entered into a Limited Partnership Agreement (the “2018 LPA”) to invest in Third Point Enhanced LP (“TP Fund”), a related party investment fund. As a result, the management and performance fees are presented within net investment income from investment in related party investment fund from the effective date of the 2018 LPA. Management and performance fees incurred prior to the effective date of the 2018 LPA are reflected in management and performance fees to related parties.
(2) Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. The weighted average number of common shares excludes any dilutive effect of outstanding warrants, options and unvested restricted shares. Diluted earnings per share is based on the weighted average number of common shares and participating securities outstanding and includes any dilutive effects of warrants, options and unvested restricted shares under share plans and are determined using the treasury stock method. U.S. GAAP requires that unvested share awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid (referred to as “participating securities”), be treated in the same manner as outstanding shares for earnings per share calculations. The Company treats certain of its unvested restricted shares as participating securities. In the event of a net loss, all participating securities, outstanding warrants, options and restricted shares are excluded from both basic and diluted loss per share since their inclusion would be anti-dilutive.

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Third Point Reinsurance Ltd.
Condensed Consolidated Statements of Income (Loss) - by Quarter
(expressed in thousands of U.S. dollars, except share and per share data)
 
 
Three months ended
 
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Revenues
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
95,388

 
$
82,637

 
$
319,591

 
$
120,063

 
$
30,064

Gross premiums ceded
 
(1,116
)
 
(1,473
)
 
(712
)
 
(1,770
)
 
—

Net premiums written
 
94,272

 
81,164

 
318,879

 
118,293

 
30,064

Change in net unearned premium reserves
 
108,976

 
64,288

 
(165,829
)
 
91,177

 
97,929

Net premiums earned
 
203,248

 
145,452

 
153,050

 
209,470

 
127,993

Net investment income (loss) from investment in related party investment fund (1)
 
(5,751
)
 
66,357

 
146,991

 
(278,921
)
 
(1,926
)
Net investment income before management and performance fees to related parties
 
2,613

 
2,774

 
7,962

 
2,111

 
3,641

Management and performance fees to related parties
 
—

 
—

 
—

 
—

 
(5,305
)
Net investment income (loss)
 
(3,138
)
 
69,131

 
154,953

 
(276,810
)
 
(3,590
)
Total revenues
 
200,110

 
214,583

 
308,003

 
(67,340
)
 
124,403

Expenses
 
 
 
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
 
85,703

 
82,334

 
95,068

 
173,088

 
88,706

Acquisition costs, net
 
118,271

 
58,006

 
57,498

 
56,668

 
40,841

General and administrative expenses
 
9,237

 
19,650

 
12,132

 
7,553

 
9,511

Other (income) expenses
 
5,058

 
3,811

 
4,125

 
2,994

 
(1,362
)
Interest expense
 
2,074

 
2,051

 
2,029

 
2,074

 
2,074

Foreign exchange (gains) losses
 
(4,921
)
 
(4,260
)
 
2,518

 
(3,288
)
 
(1,979
)
Total expenses
 
215,422

 
161,592

 
173,370

 
239,089

 
137,791

Income (loss) before income tax (expense) benefit
 
(15,312
)
 
52,991

 
134,633

 
(306,429
)
 
(13,388
)
Income tax (expense) benefit
 
213

 
74

 
(1,718
)
 
8,417

 
111

Net income (loss)
 
(15,099
)
 
53,065

 
132,915

 
(298,012
)
 
(13,277
)
Net income attributable to noncontrolling interests in related party
 
—

 
—

 
—

 
—

 
(4
)
Net income (loss) available to Third Point Re common shareholders
 
$
(15,099
)
 
$
53,065

 
$
132,915

 
$
(298,012
)
 
$
(13,281
)
Earnings (loss) per share available to Third Point Re common shareholders
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share available to Third Point Re common shareholders (2)
 
$
(0.16
)
 
$
0.58

 
$
1.45

 
$
(3.24
)
 
$
(0.14
)
Diluted earnings (loss) per share available to Third Point Re common shareholders (2)
 
$
(0.16
)
 
$
0.57

 
$
1.43

 
$
(3.24
)
 
$
(0.14
)
Weighted average number of common shares used in the determination of earnings (loss) per common share
 
 
 
 
 
 
 
 
 
 
Basic
 
91,903,556

 
91,776,870

 
91,669,810

 
91,967,831

 
95,671,385

Diluted
 
91,903,556

 
92,801,799

 
92,578,933

 
91,967,831

 
95,671,385

(1) As a result of the 2018 LPA, the management and performance fees are presented within net investment income (loss) from investment in related party investment fund from the effective date of the 2018 LPA. Management and performance fees incurred prior to the effective date of the 2018 LPA are reflected in management and performance fees to related parties.
(2) Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. The weighted average number of common shares excludes any dilutive effect of outstanding warrants, options and unvested restricted shares. Diluted earnings per share is based on the weighted average number of common shares and participating securities outstanding and includes any dilutive effects of warrants, options and unvested restricted shares under share plans and are determined using the treasury stock method. U.S. GAAP requires that unvested share awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid (referred to as “participating securities”), be treated in the same manner as outstanding shares for earnings per share calculations. The Company treats certain of its unvested restricted shares as participating securities. In the event of a net loss, all participating securities, outstanding warrants, options and restricted shares are excluded from both basic and diluted loss per share since their inclusion would be anti-dilutive.

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Third Point Reinsurance Ltd.
Segment Reporting - Three and nine months ended September 30, 2019 and 2018
(expressed in thousands of U.S. dollars)
 
Three months ended
 
Nine months ended
 
September 30, 2019
 
September 30, 2018
 
September 30, 2019
 
September 30, 2018
 
Property and Casualty Reinsurance
 
Total
 
Property and Casualty Reinsurance
 
Total
 
Property and Casualty Reinsurance
 
Total (1)
 
Property and Casualty Reinsurance
 
Total (1)
Revenues
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
$
95,388

 
$
95,388

 
$
30,064

 
$
30,064

 
$
497,616

 
$
497,616

 
$
458,189

 
$
458,189

Gross premiums ceded
(1,116
)
 
(1,116
)
 
—

 
—

 
(3,301
)
 
(3,301
)
 
(18,125
)
 
(18,125
)
Net premiums written
94,272

 
94,272

 
30,064

 
30,064

 
494,315

 
494,315

 
440,064

 
440,064

Change in net unearned premium reserves
108,976

 
108,976

 
97,929

 
97,929

 
7,435

 
7,435

 
(28,092
)
 
(28,092
)
Net premiums earned
203,248

 
203,248

 
127,993

 
127,993

 
501,750

 
501,750

 
411,972

 
411,972

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
85,703

 
85,703

 
88,706

 
88,706

 
263,105

 
263,105

 
265,326

 
265,326

Acquisition costs, net
118,271

 
118,271

 
40,841

 
40,841

 
233,775

 
233,775

 
149,830

 
149,830

General and administrative expenses
4,769

 
4,769

 
4,763

 
4,763

 
17,762

 
17,762

 
14,550

 
14,550

Total expenses
208,743

 
208,743

 
134,310

 
134,310

 
514,642

 
514,642

 
429,706

 
429,706

Net underwriting loss
$
(5,495
)
 
(5,495
)
 
$
(6,317
)
 
(6,317
)
 
$
(12,892
)
 
(12,892
)
 
$
(17,734
)
 
(17,734
)
Net investment income (loss)
 
 
(3,138
)
 
 
 
(3,590
)
 
 
 
220,946

 
 
 
25,377

Corporate expenses
 
 
(4,468
)
 
 
 
(4,748
)
 
 
 
(23,257
)
 
 
 
(14,138
)
Other income (expense)
 
 
(5,058
)
 
 
 
1,362

 
 
 
(12,994
)
 
 
 
(6,616
)
Interest expense
 
 
(2,074
)
 
 
 
(2,074
)
 
 
 
(6,154
)
 
 
 
(6,154
)
Foreign exchange gains
 
 
4,921

 
 
 
1,979

 
 
 
6,663

 
 
 
4,215

Income tax (expense) benefit
 
 
213

 
 
 
111

 
 
 
(1,431
)
 
 
 
(4,407
)
Net income attributable to noncontrolling interests in related party
 
 
—

 
 
 
(4
)
 
 
 
—

 
 
 
(223
)
Net income (loss) available to Third Point Re common shareholders
 
 
$
(15,099
)
 
 
 
$
(13,281
)
 
 
 
$
170,881

 
 
 
$
(19,680
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and Casualty Reinsurance - Underwriting Ratios (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss ratio
42.2
%
 
 
 
69.3
%
 
 
 
52.4
%
 
 
 
64.4
%
 
 
Acquisition cost ratio
58.2
%
 
 
 
31.9
%
 
 
 
46.6
%
 
 
 
36.4
%
 
 
Composite ratio
100.4
%
 
 
 
101.2
%
 
 
 
99.0
%
 
 
 
100.8
%
 
 
General and administrative expense ratio
2.3
%
 
 
 
3.7
%
 
 
 
3.6
%
 
 
 
3.5
%
 
 
Combined ratio
102.7
%
 
 
 
104.9
%
 
 
 
102.6
%
 
 
 
104.3
%
 
 
(1) Underwriting ratios are calculated by dividing the related expense by net premiums earned.

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Third Point Reinsurance Ltd.
Property and Casualty Reinsurance Segment - by Quarter (1) 
(expressed in thousands of U.S. dollars)
 
 
Three months ended
 
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Revenues
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
95,388

 
$
82,637

 
$
319,591

 
$
120,063

 
$
30,064

Gross premiums ceded
 
(1,116
)
 
(1,473
)
 
(712
)
 
(1,770
)
 
—

Net premiums written
 
94,272

 
81,164

 
318,879

 
118,293

 
30,064

Change in net unearned premium reserves
 
108,976

 
64,288

 
(165,829
)
 
91,177

 
97,929

Net premiums earned
 
203,248

 
145,452

 
153,050

 
209,470

 
127,993

Expenses
 
 
 
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
 
85,703

 
82,334

 
95,068

 
173,088

 
88,706

Acquisition costs, net
 
118,271

 
58,006

 
57,498

 
56,668

 
40,841

General and administrative expenses
 
4,769

 
6,769

 
6,224

 
4,085

 
4,763

Total expenses
 
208,743

 
147,109

 
158,790

 
233,841

 
134,310

Net underwriting loss
 
$
(5,495
)
 
$
(1,657
)
 
$
(5,740
)
 
$
(24,371
)
 
$
(6,317
)
 
 
 
 
 
 
 
 
 
 
 
Underwriting ratios (1)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
42.2
%
 
56.6
%
 
62.1
%
 
82.6
%
 
69.3
%
Acquisition cost ratio
 
58.2
%
 
39.9
%
 
37.6
%
 
27.0
%
 
31.9
%
Composite ratio
 
100.4
%
 
96.5
%
 
99.7
%
 
109.6
%
 
101.2
%
General and administrative expense ratio
 
2.3
%
 
4.6
%
 
4.1
%
 
2.0
%
 
3.7
%
Combined ratio
 
102.7
%
 
101.1
%
 
103.8
%
 
111.6
%
 
104.9
%
(1) Underwriting ratios are calculated by dividing the related expense by net premiums earned.




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Third Point Reinsurance Ltd.
Gross Premiums Written by Lines and Type of Business - by Quarter
(expressed in thousands of U.S. dollars)

 
 
Three months ended
 
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Line and Type of Business
 
 
 
 
 
 
 
 
 
 
Property Catastrophe
 
$
6,127

 
$
15,843

 
$
41,514

 
$
—

 
$
—

Other Property
 
578

 
26,019

 
12,467

 
10,619

 
(3,578
)
Property
 
6,705

 
41,862

 
53,981

 
10,619

 
(3,578
)
 
 
 
 
 
 
 
 
 
 
 
Workers Compensation
 
2,227

 
312

 
22,810

 
202

 
6,948

Auto
 
10,574

 
14,136

 
26,568

 
(5,790
)
 
(1,295
)
Other Casualty
 
2,931

 
9,081

 
28,514

 
7,619

 
31,375

Casualty
 
15,732

 
23,529

 
77,892

 
2,031

 
37,028

 
 
 
 
 
 
 
 
 
 
 
Credit & Financial Lines
 
7,265

 
16,417

 
17,310

 
21,547

 
1,190

Multi-line
 
2,345

 
(1,028
)
 
174,130

 
17,333

 
(4,607
)
Other Specialty
 
4,649

 
1,857

 
1,631

 
(1,346
)
 
31

Specialty
 
14,259

 
17,246

 
193,071

 
37,534

 
(3,386
)
 
 
 
 
 
 
 
 
 
 
 
Total prospective reinsurance contracts
 
$
36,696

 
$
82,637

 
$
324,944

 
$
50,184

 
$
30,064

Retroactive reinsurance contracts
 
58,692

 
—

 
(5,353
)
 
69,879

 
—

Total property and casualty reinsurance segment
 
$
95,388

 
$
82,637

 
$
319,591

 
$
120,063

 
$
30,064

 
 
 
 
 
 
 
 
 
 
 






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Third Point Reinsurance Ltd.
Underwriting Ratios - by Quarter (1) 
(expressed in thousands of U.S. dollars)

 
 
Three months ended
 
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Underwriting ratios (1)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
42.2
 %
 
56.6
 %
 
62.1
 %
 
82.6
 %
 
69.3
 %
Acquisition cost ratio
 
58.2
 %
 
39.9
 %
 
37.6
 %
 
27.0
 %
 
31.9
 %
Composite ratio
 
100.4
 %
 
96.5
 %
 
99.7
 %
 
109.6
 %
 
101.2
 %
General and administrative expense ratio
 
2.3
 %
 
4.6
 %
 
4.1
 %
 
2.0
 %
 
3.7
 %
Combined ratio
 
102.7
 %
 
101.1
 %
 
103.8
 %
 
111.6
 %
 
104.9
 %
 
 
 
 
 
 
 
 
 
 
 
Impact of catastrophe losses (2)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
7.1
 %
 
—
 %
 
—
 %
 
8.8
 %
 
—
 %
Acquisition cost ratio
 
(0.9
)%
 
—
 %
 
—
 %
 
—
 %
 
—
 %
Composite ratio
 
6.2
 %
 
—
 %
 
—
 %
 
8.8
 %
 
—
 %
 
 
 
 
 
 
 
 
 
 
 
Impact of reserve developments (2)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
(37.6
)%
 
(5.6
)%
 
(2.6
)%
 
(2.8
)%
 
1.1
 %
Acquisition cost ratio
 
35.7
 %
 
5.5
 %
 
2.4
 %
 
2.6
 %
 
(2.7
)%
Composite ratio
 
(1.9
)%
 
(0.1
)%
 
(0.2
)%
 
(0.2
)%
 
(1.6
)%
 
 
 
 
 
 
 
 
 
 
 
Accident year ex-CAT underwriting ratios
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
72.7
 %
 
62.2
 %
 
64.7
 %
 
76.6
 %
 
68.2
 %
Acquisition cost ratio
 
23.4
 %
 
34.4
 %
 
35.2
 %
 
24.4
 %
 
34.6
 %
Composite ratio
 
96.1
 %
 
96.6
 %
 
99.9
 %
 
101.0
 %
 
102.8
 %
General and administrative expense ratio
 
2.3
 %
 
4.6
 %
 
4.1
 %
 
2.0
 %
 
3.7
 %
Combined ratio
 
98.4
 %
 
101.2
 %
 
104.0
 %
 
103.0
 %
 
106.5
 %
 
 
 
 
 
 
 
 
 
 
 
(1) Underwriting ratios are calculated by dividing the related expense by net premiums earned.
(2) General and administrative expense ratio excluded because catastrophe losses and impact of reserve developments do not impact this ratio.

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Third Point Reinsurance Ltd.
Net Investments Managed by Third Point LLC - by Quarter(1) 
(expressed in thousands of U.S. dollars)

 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Assets
 
 
 
 
 
 
 
 
 
TP Fund
$
818,600

 
$
824,352

 
$
1,475,995

 
$
1,284,004

 
$
1,627,924

Debt securities, trading, at fair value
220,045

 
567,354

 
241,059

 
239,640

 
244,876

Total investments
1,038,645

 
1,391,706

 
1,717,054

 
1,523,644

 
1,872,800

Cash and cash equivalents
611,442

 
22,563

 
3,647

 
1,017

 
10,387

Restricted cash and cash equivalents
816,519

 
656,146

 
616,844

 
609,154

 
581,134

Redemption receivable from related party investment fund
—

 
400,000

 
—

 
—

 
—

Due from brokers
—

 
—

 
637

 
1,411

 
12,853

Interest and dividends receivable
2,932

 
1,792

 
1,891

 
1,316

 
1,975

Other assets
6

 
7

 
—

 
—

 
—

Total assets
$
2,469,544

 
$
2,472,214

 
$
2,340,073

 
$
2,136,542

 
$
2,479,149

Liabilities and noncontrolling interests in related party
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
324

 
$
227

 
$
188

 
$
114

 
$
740

Due to brokers
—

 
—

 
—

 
—

 
16

Participation agreement with related party investment fund
—

 
—

 
1,521

 
2,297

 
23,149

Interest and dividends payable
—

 
—

 
—

 
—

 
131

Total liabilities and noncontrolling interests in related party
324

 
227

 
1,709

 
2,411

 
24,036

Total net investments managed by Third Point LLC
$
2,469,220

 
$
2,471,987

 
$
2,338,364

 
$
2,134,131

 
$
2,455,113

 
 
 
 
 
 
 
 
 
 



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Third Point Reinsurance Ltd.
Net Investment Return by Investment Strategy - by Quarter

Summary of net investment return on investments managed by Third Point LLC (1)
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
 
 
 
 
 
 
 
 
 
Long
 
 
 
 
 
 
 
 
 
Equity
1.4
 %
 
3.2
 %
 
8.4
 %
 
(13.3
)%
 
1.9
 %
Credit
(0.7
)%
 
0.6
 %
 
0.9
 %
 
(1.0
)%
 
0.2
 %
Other
(0.1
)%
 
0.5
 %
 
0.7
 %
 
(0.7
)%
 
(1.2
)%
 
0.6
 %
 
4.3
 %
 
10.0
 %
 
(15.0
)%
 
0.9
 %
 
 
 
 
 
 
 
 
 
 
Short
 
 
 
 
 
 
 
 
 
Equity
(0.7
)%
 
(1.2
)%
 
(2.4
)%
 
3.1
 %
 
(1.1
)%
Credit
—
 %
 
—
 %
 
(0.3
)%
 
0.1
 %
 
—
 %
Other
(0.1
)%
 
(0.2
)%
 
(0.1
)%
 
0.4
 %
 
—
 %
 
(0.8
)%
 
(1.4
)%
 
(2.8
)%
 
3.6
 %
 
(1.1
)%
 
 
 
 
 
 
 
 
 
 
Net
 
 
 
 
 
 
 
 
 
Equity
0.7
 %
 
2.0
 %
 
6.0
 %
 
(10.2
)%
 
0.8
 %
Credit
(0.7
)%
 
0.6
 %
 
0.6
 %
 
(0.9
)%
 
0.2
 %
Other
(0.2
)%
 
0.3
 %
 
0.6
 %
 
(0.3
)%
 
(1.2
)%
 
(0.2
)%
 
2.9
 %
 
7.2
 %
 
(11.4
)%
 
(0.2
)%
 
 
 
 
 
 
 
 
 
 
(1) 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. Effective August 31, 2018, we transitioned from our separately managed account structure to investing in TP Fund. In addition, collateral assets and certain other investment assets are managed by Third Point LLC. The net investment return reflects the combined results of investments managed on behalf of Third Point Re BDA and Third Point Re USA prior to the transition date of August 31, 2018 and the investments in TP Fund, collateral assets and certain other investment assets subsequent to the date of transition. Prior to the transition date of August 31, 2018, the stated return was net of noncontrolling interests and net of withholding taxes, which were 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, TP Fund’s investment manager.




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Third Point Reinsurance Ltd.
General and Administrative Expenses - by Quarter
(expressed in thousands of U.S. dollars)

 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Payroll and related
$
4,626

 
$
9,983

 
$
5,352

 
$
3,105

 
$
2,555

Share compensation expenses
894

 
3,954

 
1,458

 
—

 
2,398

Legal and accounting
1,376

 
1,933

 
1,917

 
983

 
1,651

Travel and entertainment
119

 
713

 
527

 
460

 
554

IT related
635

 
730

 
659

 
656

 
470

Occupancy
285

 
345

 
427

 
396

 
325

Corporate insurance
190

 
202

 
175

 
187

 
170

Board of director and related
233

 
245

 
203

 
232

 
242

Credit facility fees
380

 
1,084

 
962

 
1,143

 
756

Other general and administrative expenses
499

 
461

 
452

 
391

 
390

 
$
9,237

 
$
19,650

 
$
12,132

 
$
7,553

 
$
9,511

 
 
 
 
 
 
 
 
 
 
G&A related to underwriting activities
$
4,769

 
$
6,769

 
$
6,224

 
$
4,085

 
$
4,763

Corporate expenses
4,468

 
12,881

 
5,908

 
3,468

 
4,748

 
$
9,237

 
$
19,650

 
$
12,132

 
$
7,553

 
$
9,511



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Third Point Reinsurance Ltd.
Basic and Diluted Book Value per Share - by Quarter
(expressed in thousands of U.S. dollars)

 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Basic and diluted book value per share numerator:
 
 
 
 
 
 
 
 
 
Shareholders' equity attributable to Third Point Re common shareholders
$
1,383,580

 
$
1,395,898

 
$
1,338,879

 
$
1,204,574

 
$
1,507,910

Basic and diluted book value per share denominator:
 
 
 
 
 
 
 
 
 
Common shares outstanding
94,220,567

 
93,994,924

 
94,292,914

 
93,639,610

 
94,169,725

Unvested restricted shares
(2,240,410
)
 
(2,214,087
)
 
(2,524,109
)
 
(2,025,113
)
 
(2,041,475
)
Basic book value per share denominator:
91,980,157

 
91,780,837

 
91,768,805

 
91,614,497

 
92,128,250

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

 
108,371

 
127,947

 
—

 
806,534

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

 
152,379

 
179,904

 
—

 
1,166,589

Effect of dilutive restricted shares issued to directors and employees (2)
1,731,384

 
1,777,266

 
1,848,791

 
1,209,285

 
1,462,358

Diluted book value per share denominator:
93,711,541

 
93,818,853

 
93,925,447

 
92,823,782

 
95,563,731

 
 
 
 
 
 
 
 
 
 
Basic book value per share (2)
$
15.04

 
$
15.21

 
$
14.59

 
$
13.15

 
$
16.37

Diluted book value per share (2)
$
14.76

 
$
14.88

 
$
14.25

 
$
12.98

 
$
15.78

 
 
 
 
 
 
 
 
 
 
Increase (decrease) in diluted book value per share
(0.8
)%
 
4.4
%
 
9.8
%
 
(17.7
)%
 
(0.4
)%

(1)
As of September 30, 2019 and December 31, 2018, there was no dilution a result of the Company’s share price being under the lowest exercise price for warrants and options.
(2)
In the third quarter of 2019, we changed the method used for calculating diluted book value per share (“DBVPS”) to the treasury stock method. Under the treasury stock method, we compute the number of new shares that can potentially be created by unexercised in-the-money warrants and options. We then assume that the proceeds received from the exercise of in-the-money warrant and/or option are used to repurchase outstanding common shares in the market. The number of additional shares that are added back to the basic book value per share denominator is equal to the difference between (i) the number of new shares potentially created by unexercised in-the-money warrants and options and (ii) the number of shares that could be repurchased in the market. The previous method used did not contemplate repurchasing shares in the market, which we believe overstated the impact of dilution. 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.




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Third Point Reinsurance Ltd.
Earnings (Loss) per Share - by Quarter
(expressed in thousands of U.S. dollars)

 
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Weighted-average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic number of common shares outstanding
 
91,903,556

 
91,776,870

 
91,669,810

 
91,967,831

 
95,671,385

Dilutive effect of options
 
—

 
321,492

 
291,248

 
—

 
—

Dilutive effect of warrants
 
—

 
228,643

 
207,134

 
—

 
—

Dilutive effect of restricted shares with service and performance condition
 
—

 
474,794

 
410,741

 
—

 
—

Diluted number of common shares outstanding
 
91,903,556

 
92,801,799

 
92,578,933

 
91,967,831

 
95,671,385

 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to Third Point Re common shareholders
 
$
(15,099
)
 
$
53,065

 
$
132,915

 
$
(298,012
)
 
$
(13,281
)
Net income allocated to Third Point Re participating common shareholders
 
—

 
(85
)
 
(173
)
 
—

 
—

Net income (loss) allocated to Third Point Re common shareholders
 
$
(15,099
)
 
$
52,980

 
$
132,742

 
$
(298,012
)
 
$
(13,281
)
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share available to Third Point Re common shareholders (1)
 
$
(0.16
)
 
$
0.58

 
$
1.45

 
$
(3.24
)
 
$
(0.14
)
 
 
 
 
 
 
 
 
 
 
 
 Diluted earnings (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to Third Point Re common shareholders
 
$
(15,099
)
 
$
53,065

 
$
132,915

 
$
(298,012
)
 
$
(13,281
)
Net income allocated to Third Point Re participating common shareholders
 
—

 
(84
)
 
(171
)
 
—

 
—

Net income (loss) allocated to Third Point Re common shareholders
 
$
(15,099
)
 
$
52,981

 
$
132,744

 
$
(298,012
)
 
$
(13,281
)
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share available to Third Point Re common shareholders (1)
 
$
(0.16
)
 
$
0.57

 
$
1.43

 
$
(3.24
)
 
$
(0.14
)

(1)
Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period. The weighted average number of common shares excludes any dilutive effect of outstanding warrants, options and unvested restricted shares. Diluted earnings per share is based on the weighted average number of common shares and participating securities outstanding and includes any dilutive effects of warrants, options and unvested restricted shares under share plans and are determined using the treasury stock method. U.S. GAAP requires that unvested share awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid (referred to as “participating securities”), be treated in the same manner as outstanding shares for earnings per share calculations. The Company treats certain of its unvested restricted shares as participating securities. In the event of a net loss, all participating securities, outstanding warrants, options and restricted shares are excluded from both basic and diluted loss per share since their inclusion would be anti-dilutive.

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Third Point Reinsurance Ltd.
Return on Beginning Shareholders’ Equity - by Quarter
(expressed in thousands of U.S. dollars)


 
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
Net income (loss) available to Third Point Re common shareholders
 
$
(15,099
)
 
$
53,065

 
$
132,915

 
$
(298,012
)
 
$
(13,281
)
Shareholders’ equity attributable to Third Point Re common shareholders - beginning of period
 
1,395,898

 
1,338,879

 
1,204,574

 
1,507,910

 
1,591,754

Impact of weighting related to shareholders’ equity from shares repurchased
 
—

 
—

 
—

 
(1,750
)
 
(24,447
)
Adjusted shareholders’ equity attributable to Third Point Re common shareholders - beginning of period
 
$
1,395,898

 
$
1,338,879

 
$
1,204,574

 
$
1,506,160

 
$
1,567,307

Return on beginning shareholders’ equity attributable to Third Point Re common shareholders (1)
 
(1.1
)%
 
4.0
%
 
11.0
%
 
(19.8
)%
 
(0.8
)%

(1)
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. We have also adjusted the beginning shareholders’ equity for the impact of the shares repurchased on a weighted average basis. For period where there is a loss, this adjustment decreased the stated returns on beginning shareholders’ equity and for period where there is a gain, this adjustment increased the stated returns on beginning shareholders’ equity.

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