Document
false0001576018 0001576018 2020-02-27 2020-02-27


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 FORM 8-K
  
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 27, 2020 (February 27, 2020)
 
 THIRD POINT REINSURANCE LTD.
(Exact name of registrant as specified in its charter)
  
 
 
 
 
 
 
Bermuda
 
001-36052
 
98-1039994
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
Point House
3 Waterloo Lane
Pembroke HM 08 Bermuda
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code: +1 441 542-3300
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
Name of each exchange on which registered
Common Shares, $0.10 par value
TPRE
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02
Results of Operations and Financial Condition.
On February 27, 2020, Third Point Reinsurance Ltd. issued a press release reporting its financial results as of and for the fourth quarter ended December 31, 2019. A copy of the press release is furnished herewith as Exhibit 99.1. In addition, a copy of the Third Point Reinsurance Ltd. Financial Supplement as of and for the fourth quarter ended December 31, 2019 is furnished herewith as Exhibit 99.2.
The information hereunder is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, is not otherwise subject to the liabilities of that section and is not incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
 
 
 
 
Exhibit
No.
  
Description
 
 
99.1
  
Earnings Press Release dated February 27, 2020.
99.2
 
Financial Supplement.
101
 
Pursuant to Rule 406 of Regulation S-T, the cover page information in formatted in Inline XBRL
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
Date: February 27, 2020
 
/s/ Christopher S. Coleman
 
 
Name:
Christopher S. Coleman
 
 
Title:
Chief Financial Officer


EXHIBIT INDEX
 
 
 
Exhibit
No.
  
Description
 
 
99.1
  
99.2
 
101
 
Pursuant to Rule 406 of Regulation S-T, the cover page information in formatted in Inline XBRL
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)




Third Point Re Announces Fourth Quarter 2019 Earnings Results
 
Net income of $29.7 million, or $0.32 per diluted common share, for the fourth quarter of 2019
Net income of $200.6 million, or $2.16 per diluted common share, for the year ended 2019
Return on beginning shareholders’ equity of 16.7% for the year ended 2019
Combined ratio of 103.2% for the year ended 2019
HAMILTON, Bermuda, February 27, 2020, Third Point Reinsurance Ltd. (“Third Point Re” or the “Company”) (NYSE:TPRE) today announced results for its fourth quarter ended December 31, 2019.
Earnings Summary
Third Point Re reported net income available to common shareholders of $29.7 million, or $0.32 per diluted common share, for the three months ended December 31, 2019, compared to a net loss attributable to common shareholders of $298.0 million, or $3.24 per diluted common share, for the three months ended December 31, 2018. For the year ended December 31, 2019, Third Point Re reported net income available to common shareholders of $200.6 million, or $2.16 per diluted common share, compared to a net loss available to common shareholders of $317.7 million, or $3.27 per diluted common share, for the year ended December 31, 2018.
“We are very pleased with our results for the fourth quarter and full year of 2019. Our return on equity was 2.1% in the fourth quarter bringing the full year to 16.7% and our diluted book value per share at the end of the year was $15.04,” commented Dan Malloy, Chief Executive Officer. “Our combined ratio for the year was 103.2%, of which 4.1 percentage points, or $29.0 million, was attributable to catastrophe events that occurred during the year. Our combined ratio continues to improve as we execute on our shift in underwriting strategy. Our year to date investment return of 12.8% has contributed significantly to overall profits for the year. With underlying insurance and reinsurance market conditions both improving across many of the lines of business that we write, we believe we are well positioned to deliver increasingly attractive returns to shareholders and remain on track to achieve our goal of underwriting profitability in 2020.”
Additional Information on Financial Results
The following table shows certain key financial metrics for the three and twelve months ended December 31, 2019 and 2018:
 
Three months ended
 
Twelve months ended
 
December 31,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
 
($ in millions, except for per share data and ratios)
Gross premiums written
$
134.2

 
$
120.1

 
$
631.8

 
$
578.3

Net premiums earned
$
198.4

 
$
209.5

 
$
700.1

 
$
621.4

Net underwriting loss (1)
$
(9.6
)
 
$
(24.4
)
 
$
(22.3
)
 
$
(42.1
)
Combined ratio (1)
104.8
%
 
111.6
 %
 
103.2
%
 
106.8
 %
Net investment return on investments managed by Third Point LLC
2.4
%
 
(11.4
)%
 
12.8
%
 
(10.8
)%
Net investment income (loss)
$
61.6

 
$
(276.8
)
 
$
282.6

 
$
(251.4
)
Net income (loss) available to Third Point Re common shareholders
$
29.7

 
$
(298.0
)
 
$
200.6

 
$
(317.7
)
Diluted earnings (loss) per share available to Third Point Re common shareholders
$
0.32

 
$
(3.24
)
 
$
2.16

 
$
(3.27
)
Change in diluted book value per share (2)
1.9
%
 
(17.7
)%
 
15.9
%
 
(17.4
)%
Return on beginning shareholders’ equity attributable to Third Point Re common shareholders (2)
2.1
%
 
(19.8
)%
 
16.7
%
 
(20.0
)%
Net investments managed by Third Point LLC
$
2,590.1

 
$
2,134.1

 
$
2,590.1

 
$
2,134.1

(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. In the third quarter of 2019, we changed our method for calculating the impact of options and warrants on diluted book value per share to the treasury stock method. 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.




Property and Casualty Reinsurance Segment
Gross premiums written
Gross premiums written increased by $14.1 million, or 11.7%, to $134.2 million for the three months ended December 31, 2019 from $120.1 million for the three months ended December 31, 2018. The increase in gross premiums written was primarily due to $85.6 million of new premium written in the period, partially offset by the net impact of contract extensions, cancellations and contracts renewed with no comparable premium in the comparable period.
Gross premiums written increased by $53.5 million, or 9.3%, to $631.8 million for the year ended December 31, 2019 from $578.3 million for the year ended December 31, 2018. The increase in gross premiums written was primarily due to $93.0 million related to two retroactive reinsurance contracts written in the period and $68.3 million of new property catastrophe business. This increase was partially offset by contracts that we did not renew in the current year as well as the net impact of contract extensions, cancellations and contracts renewed with no comparable premium in the comparable period.
Net premiums earned
The decrease in net premiums earned in the three months ended December 31, 2019 compared to the three months ended December 31, 2018 was primarily due to retroactive exposures in reinsurance contracts that were written and fully earned in the prior year period of $69.9 million compared to $34.3 million in the current year period, partially offset by a higher in-force underwriting portfolio in the current year period.
The increase in net premiums earned in the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily due to a higher in-force underwriting portfolio and retroactive exposures in reinsurance contracts that were written and fully earned in the current year period of $85.1 million compared to $74.2 million for the year ended December 31, 2018.
Net underwriting results
For the three months ended December 31, 2019, we incurred net catastrophe losses of $16.3 million, net of reinstatement premiums and profit commission adjustments, or 8.2 percentage points on the combined ratio, primarily related to Typhoon Hagibis, compared to $18.5 million in the three months ended December 31, 2018, or 8.8 percentage points on the combined ratio, related to the California wildfires and other catastrophe events.
For the year ended December 31, 2019, we incurred net catastrophe losses of $29.0 million, net of reinstatement premiums and profit commission adjustments, or 4.1 percentage points on the combined ratio, primarily related to Hurricane Dorian, Typhoon Faxai and Typhoon Hagibis, compared to $18.5 million in the year ended December 31, 2018, or 3.0 percentage points on the combined ratio, related to the California wildfires and other 2018 catastrophe events.
Although we did not specifically write property catastrophe contracts in 2018 or in prior years, we were exposed to California wildfire losses through liability reinsurance of the utilities in California during 2018 and incidental exposure that we had to catastrophic events on two Florida homeowners contracts, as a result of Hurricane Michael, and on two whole account reinsurance contracts.
For the three and twelve months ended December 31, 2019, we recorded a net $1.1 million and $5.4 million improvement in the net underwriting results, respectively, related to favorable development of prior years’ loss reserves net of the related impact of acquisition costs.
The improvement in the net underwriting results for the three and twelve months ended December 31, 2019 compared to prior year periods, after giving effect to catastrophe losses and reserve development, was primarily due to a shift in the mix of business, including earnings on new property catastrophe and specialty business.
For the three and twelve months ended December 31, 2018, we recorded a net $0.3 million and $5.2 million improvement in the net underwriting results, respectively, related to favorable development of prior years’ loss reserves net of the related impact of acquisition costs.




Investments
The following is a summary of the net investment return for our total net investments managed by Third Point LLC for the three and twelve months ended December 31, 2019 and 2018:
 
Three months ended
 
Twelve months ended
 
December 31,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
Net investment return from separate account investment structure
—
%
 
—
 %
 
—
%
 
0.7
 %
TP Fund
5.1
%
 
(17.2
)%
 
22.9
%
 
(17.3
)%
Collateral and other investments
1.1
%
 
0.2
 %
 
2.3
%
 
0.4
 %
Net investment return on investments managed by Third Point LLC (1)
2.4
%
 
(11.4
)%
 
12.8
%
 
(10.8
)%
(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 twelve months ended December 31, 2019 and 2018:
 
Three months ended
 
Twelve months ended
 
December 31,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
 
($ in thousands)
Net investment income from separate account investment structure
$
—

 
$
—

 
$
—

 
$
25,971

TP Fund
42,029

 
(278,921
)
 
249,626

 
(280,847
)
Collateral and other investments
18,450

 
1,906

 
30,902

 
3,253

Net investment income (loss) on investments managed by Third Point LLC (1)
$
60,479

 
$
(277,015
)
 
$
280,528

 
$
(251,623
)
(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 return by investment strategy on total net investments managed by Third Point LLC for the three and twelve months ended December 31, 2019 and 2018:
 
Three months ended
 
December 31, 2019
 
December 31, 2018
 
Long
 
Short
 
Net
 
Long
 
Short
 
Net
Equity
3.3
%
 
(1.8
)%
 
1.5
%
 
(13.3
)%
 
3.1
 %
 
(10.2
)%
Credit
0.1
%
 
—
 %
 
0.1
%
 
(1.0
)%
 
0.1
 %
 
(0.9
)%
Other
0.7
%
 
0.1
 %
 
0.8
%
 
(0.7
)%
 
0.4
 %
 
(0.3
)%
Net investment return on investments managed by Third Point LLC
4.1
%
 
(1.7
)%
 
2.4
%
 
(15.0
)%
 
3.6
 %
 
(11.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve months ended
 
December 31, 2019
 
December 31, 2018
 
Long
 
Short
 
Net
 
Long
 
Short
 
Net
Equity
16.6
%
 
(6.1
)%
 
10.5
%
 
(8.7
)%
 
0.1
 %
 
(8.6
)%
Credit
1.1
%
 
(0.5
)%
 
0.6
%
 
—
 %
 
(0.2
)%
 
(0.2
)%
Other
1.7
%
 
—
 %
 
1.7
%
 
(2.8
)%
 
0.8
 %
 
(2.0
)%
Net investment return on investments managed by Third Point LLC
19.4
%
 
(6.6
)%
 
12.8
%
 
(11.5
)%
 
0.7
 %
 
(10.8
)%
For the three months ended December 31, 2019, the portfolio generated positive performance across each investment strategy.  The majority of returns were derived from the long equity portfolio with strong contributors across different sectors, strategies, and geographies.  Within credit, both corporate and structured credit added to gains for the period.  In the other portfolio, private investments contributed modest gains for the quarter.




For the year ended December 31, 2019, the net investment results were primarily attributable to strong returns in all core activist long equity positions. In credit, profits in the structured credit book were partially offset by losses from one large sovereign credit investment.  In the other portfolio, private investments contributed modest gains for the year.
Conference Call Details
The Company will hold a conference call to discuss its fourth quarter 2019 results at 8:30 a.m. Eastern Time on February 28, 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. fourth 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 13697802. The telephonic replay will be available until 11:59 p.m. (Eastern Time) on March 6, 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; 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; 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 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
[email protected]
+1 441-542-3333




THIRD POINT REINSURANCE LTD.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2019 and December 31, 2018
(expressed in thousands of U.S. dollars, except per share and share amounts)
 
(Unaudited)
 
(Audited)
 
December 31,
2019
 
December 31,
2018
Assets
 
 
 
Investment in related party investment fund, at fair value (cost - $891,850; 2018 - $1,564,850)
$
860,630

 
$
1,284,004

Debt securities, trading, at fair value (cost - $129,330; 2018 - $252,362)
125,071

 
239,640

Other investments, at fair value
4,000

 
84

Total investments
989,701

 
1,523,728

Cash and cash equivalents
639,415

 
104,183

Restricted cash and cash equivalents
1,014,543

 
609,154

Due from brokers
—

 
1,411

Interest and dividends receivable
2,178

 
1,316

Reinsurance balances receivable
596,120

 
602,448

Deferred acquisition costs, net
154,717

 
203,842

Unearned premiums ceded
16,945

 
17,552

Loss and loss adjustment expenses recoverable
5,520

 
2,031

Other assets
20,555

 
20,569

Total assets
$
3,439,694

 
$
3,086,234

Liabilities
 
 
 
Accounts payable and accrued expenses
$
17,816

 
$
7,261

Reinsurance balances payable
81,941

 
69,701

Deposit liabilities
172,259

 
145,342

Unearned premium reserves
524,768

 
602,936

Loss and loss adjustment expense reserves
1,111,692

 
937,157

Participation agreement with related party investment fund
—

 
2,297

Interest and dividends payable
3,055

 
3,055

Senior notes payable, net of deferred costs
114,089

 
113,911

Total liabilities
2,025,620

 
1,881,660

Commitments and contingent liabilities

 

Shareholders' equity
 
 
 
Preference shares (par value $0.10; authorized, 30,000,000; none issued)
—

 
—

Common shares (issued and outstanding: 94,225,498; 2018 - 93,639,610)
9,423

 
9,364

Additional paid-in capital
927,704

 
918,882

Retained earnings
476,947

 
276,328

Shareholders’ equity attributable to Third Point Re common shareholders
1,414,074

 
1,204,574

Total liabilities and shareholders’ equity
$
3,439,694

 
$
3,086,234





THIRD POINT REINSURANCE LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)
For the three and twelve months ended December 31, 2019 and 2018
(expressed in thousands of U.S. dollars, except per share and share amounts)
 
Three months ended
 
Twelve months ended
 
December 31,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
Revenues
 
 
 
 
 
 
 
Gross premiums written
$
134,230

 
$
120,063

 
$
631,846

 
$
578,252

Gross premiums ceded
(5,964
)
 
(1,770
)
 
(9,265
)
 
(19,895
)
Net premiums written
128,266

 
118,293

 
622,581

 
558,357

Change in net unearned premium reserves
70,126

 
91,177

 
77,561

 
63,085

Net premiums earned
198,392

 
209,470

 
700,142

 
621,442

Net investment income (loss) from investment in related party investment fund
42,029

 
(278,921
)
 
249,626

 
(280,847
)
Net investment income before management and performance fees to related parties
19,585

 
2,111

 
32,934

 
59,259

Management and performance fees to related parties (1)
—

 
—

 
—

 
(29,845
)
Net investment income (loss)
61,614

 
(276,810
)
 
282,560

 
(251,433
)
Total revenues
260,006

 
(67,340
)
 
982,702

 
370,009

Expenses
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
140,394

 
173,088

 
403,499

 
438,414

Acquisition costs, net
61,851

 
56,668

 
295,626

 
206,498

General and administrative expenses
12,744

 
7,553

 
53,763

 
36,241

Other expenses
3,625

 
2,994

 
16,619

 
9,610

Interest expense
2,074

 
2,074

 
8,228

 
8,228

Foreign exchange (gains) losses
10,298

 
(3,288
)
 
3,635

 
(7,503
)
Total expenses
230,986

 
239,089

 
781,370

 
691,488

Income (loss) before income tax (expense) benefit
29,020

 
(306,429
)
 
201,332

 
(321,479
)
Income tax (expense) benefit
718

 
8,417

 
(713
)
 
4,010

Net income (loss)
29,738

 
(298,012
)
 
200,619

 
(317,469
)
Net income attributable to noncontrolling interests in related party
—

 
—

 
—

 
(223
)
Net income (loss) available to Third Point Re common shareholders
$
29,738

 
$
(298,012
)
 
$
200,619

 
$
(317,692
)
Earnings (loss) per share available to Third Point Re common shareholders
 
 
 
 
 
 
 
Basic earnings (loss) per share available to Third Point Re common shareholders
$
0.32

 
$
(3.24
)
 
$
2.18

 
$
(3.27
)
Diluted earnings (loss) per share available to Third Point Re common shareholders
$
0.32

 
$
(3.24
)
 
$
2.16

 
$
(3.27
)
Weighted average number of common shares used in the determination of earnings (loss) per share
 
 
 
 
 
 
 
Basic
91,989,469

 
91,967,831

 
91,835,990

 
97,054,315

Diluted
92,696,491

 
91,967,831

 
92,652,316

 
97,054,315

(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.






THIRD POINT REINSURANCE LTD.
SEGMENT REPORTING
 
Three months ended December 31, 2019
 
Three months ended December 31, 2018
 
Property and Casualty Reinsurance
 
Total
 
Property and Casualty Reinsurance
 
Total
Revenues
($ in thousands)
 
($ in thousands)
Gross premiums written
$
134,230

 
$
134,230

 
$
120,063

 
$
120,063

Gross premiums ceded
(5,964
)
 
(5,964
)
 
(1,770
)
 
(1,770
)
Net premiums written
128,266

 
128,266

 
118,293

 
118,293

Change in net unearned premium reserves
70,126

 
70,126

 
91,177

 
91,177

Net premiums earned
198,392

 
198,392

 
209,470

 
209,470

Expenses
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
140,394

 
140,394

 
173,088

 
173,088

Acquisition costs, net
61,851

 
61,851

 
56,668

 
56,668

General and administrative expenses
5,724

 
5,724

 
4,085

 
4,085

Total expenses
207,969

 
207,969

 
233,841

 
233,841

Net underwriting loss
$
(9,577
)
 
(9,577
)
 
$
(24,371
)
 
(24,371
)
Net investment income (loss)
 
 
61,614

 
 
 
(276,810
)
Corporate expenses
 
 
(7,020
)
 
 
 
(3,468
)
Other expenses
 
 
(3,625
)
 
 
 
(2,994
)
Interest expense
 
 
(2,074
)
 
 
 
(2,074
)
Foreign exchange gains (losses)
 
 
(10,298
)
 
 
 
3,288

Income tax benefit
 
 
718

 
 
 
8,417

Net income attributable to noncontrolling interests in related party
 
 
—

 
 
 
—

Net income (loss) available to Third Point Re common shareholders
 
 
$
29,738

 
 
 
$
(298,012
)
Property and Casualty Reinsurance - Underwriting Ratios (1):
Loss ratio
70.7
%
 
 
 
82.6
%
 
 
Acquisition cost ratio
31.2
%
 
 
 
27.0
%
 
 
Composite ratio
101.9
%
 
 
 
109.6
%
 
 
General and administrative expense ratio
2.9
%
 
 
 
2.0
%
 
 
Combined ratio
104.8
%
 
 
 
111.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve months ended December 31, 2019
 
Twelve months ended December 31, 2018
 
Property and Casualty Reinsurance
 
Total
 
Property and Casualty Reinsurance
 
Total
Revenues
($ in thousands)
 
($ in thousands)
Gross premiums written
$
631,846

 
$
631,846

 
$
578,252

 
$
578,252

Gross premiums ceded
(9,265
)
 
(9,265
)
 
(19,895
)
 
(19,895
)
Net premiums written
622,581

 
622,581

 
558,357

 
558,357

Change in net unearned premium reserves
77,561

 
77,561

 
63,085

 
63,085

Net premiums earned
700,142

 
700,142

 
621,442

 
621,442

Expenses
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
403,499

 
403,499

 
438,414

 
438,414

Acquisition costs, net
295,626

 
295,626

 
206,498

 
206,498

General and administrative expenses
23,366

 
23,366

 
18,635

 
18,635

Total expenses
722,491

 
722,491

 
663,547

 
663,547

Net underwriting loss
$
(22,349
)
 
(22,349
)
 
$
(42,105
)
 
(42,105
)
Net investment income (loss)
 
 
282,560

 
 
 
(251,433
)
Corporate expenses
 
 
(30,397
)
 
 
 
(17,606
)
Other expenses
 
 
(16,619
)
 
 
 
(9,610
)
Interest expense
 
 
(8,228
)
 
 
 
(8,228
)
Foreign exchange gains (losses)
 
 
(3,635
)
 
 
 
7,503

Income tax benefit (expense)
 
 
(713
)
 
 
 
4,010

Net income attributable to noncontrolling interests in related party
 
 
—

 
 
 
(223
)
Net income (loss) available to Third Point Re common shareholders
 
 
$
200,619

 
 
 
$
(317,692
)
Property and Casualty Reinsurance - Underwriting Ratios (1):
Loss ratio
57.6
%
 
 
 
70.6
%
 
 
Acquisition cost ratio
42.2
%
 
 
 
33.2
%
 
 
Composite ratio
99.8
%
 
 
 
103.8
%
 
 
General and administrative expense ratio
3.4
%
 
 
 
3.0
%
 
 
Combined ratio
103.2
%
 
 
 
106.8
%
 
 
(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
In the third quarter of 2019, the Company changed the method used for calculating diluted book value per share (“DBVPS”) to the treasury stock method. Under the treasury stock method, the Company computes the number of new shares that can potentially be created by unexercised in-the-money warrants and options. The Company then assumes that the proceeds received from the exercise of in-the-money warrant and/or options 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 the Company believes overstated the impact of dilution. This change had no impact on basic book value per share. The following table shows the revised DBVPS compared to the DBVPS as previously presented:
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
DBVPS
$
14.88

 
$
14.25

 
$
12.98

 
$
15.78

 
$
15.84

 
$
15.48

DBVPS, as previously presented
14.51

 
13.95

 
12.98

 
15.60

 
15.63

 
15.39

Difference
$
0.37

 
$
0.30

 
$
—

 
$
0.18

 
$
0.21

 
$
0.09

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.
 
December 31,
2019
 
December 31,
2018
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
$
1,414,074

 
$
1,204,574

Basic and diluted book value per share denominator:
 
 
 
Common shares outstanding
94,225,498

 
93,639,610

Unvested restricted shares
(2,231,296
)
 
(2,025,113
)
Basic book value per share denominator:
91,994,202

 
91,614,497

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
1,654,803

 
1,209,285

Diluted book value per share denominator
94,047,427

 
92,823,782

 
 
 
 
Basic book value per share
$
15.37

 
$
13.15

Diluted book value per share
$
15.04

 
$
12.98

(1)
As of December 31, 2018, 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
 
Twelve months ended
 
December 31,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
 
($ in thousands)
Net income (loss) available to Third Point Re common shareholders
$
29,738

 
$
(298,012
)
 
$
200,619

 
$
(317,692
)
Shareholders’ equity attributable to Third Point Re common shareholders - beginning of period
1,383,580

 
1,507,910

 
1,204,574

 
1,656,089

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

 
(1,750
)
 
—

 
(65,120
)
Adjusted shareholders’ equity attributable to Third Point Re common shareholders - beginning of period
$
1,383,580

 
$
1,506,160

 
$
1,204,574

 
$
1,590,969

Return on beginning shareholders’ equity attributable to Third Point Re common shareholders
2.1
%
 
(19.8
)%
 
16.7
%
 
(20.0
)%
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. 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, including fixed income securities, 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 consolidated statements of income (loss). Net investment return is the key indicator by which we measure the performance of Third Point LLC, TP Fund’s investment manager.





image1d49.jpg



Third Point Reinsurance Ltd.




Financial Supplement
December 31, 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 Annual Report on Form 10-K.


                                                                                                                                                                                                                                                                                   


Point House
Christopher S. Coleman - Chief Financial Officer
3 Waterloo Lane
Tel: (441) 542-3333
Pembroke HM 08
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; 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; 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.

image0d75.jpg
Page 1 of 16


Third Point Reinsurance Ltd.
Table of Contents

 
 
 
Key Performance Indicators
 
 
 
 
 
 
Consolidated Financial Statements
 
 
 
 
 
 
 
 
Operating Segment Information
 
 
Segment Reporting - Three and twelve months ended December 31, 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
 


image0d75.jpg
Page 2 of 16


Third Point Reinsurance Ltd.
Key Performance Indicators
December 31, 2019 and 2018
(expressed in thousands of U.S. dollars, except per share data and ratios)

 
Three months ended
 
Twelve months ended
 
December 31,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
 
 
 
 
 
 
 
 
Key underwriting metrics for Property and Casualty Reinsurance segment:
 
 
 
 
 
 
 
Net underwriting loss (1)
$
(9,577
)
 
$
(24,371
)
 
$
(22,349
)
 
$
(42,105
)
Combined ratio (1)
104.8
%
 
111.6
 %
 
103.2
%
 
106.8
 %
 
 
 
 
 
 
 
 
Key investment return metrics:
 
 
 
 
 
 
 
Net investment income (loss)
$
61,614

 
$
(276,810
)
 
$
282,560

 
$
(251,433
)
Net investment return on net investments managed by Third Point LLC
2.4
%
 
(11.4
)%
 
12.8
%
 
(10.8
)%
 
 
 
 
 
 
 
 
Key shareholders’ value creation metrics:
 
 
 
 
 
 
 
Basic book value per share (2)
$
15.37

 
$
13.15

 
$
15.37

 
$
13.15

Diluted book value per share (2)
$
15.04

 
$
12.98

 
$
15.04

 
$
12.98

Increase (decrease) in diluted book value per share (2)
1.9
%
 
(17.7
)%
 
15.9
%
 
(17.4
)%
Return on beginning shareholders’ equity attributable to Third Point Re common shareholders (2)
2.1
%
 
(19.8
)%
 
16.7
%
 
(20.0
)%

(1)
Refer to accompanying “Segment Reporting - Three and twelve months ended December 31, 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.




image0d75.jpg
Page 3 of 16


Third Point Reinsurance Ltd.
Condensed Consolidated Balance Sheets - by Quarter
(expressed in thousands of U.S. dollars)
 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Assets
 
 
 
 
 
 
 
 
 
 
Investment in related party investment fund, at fair value
 
$
860,630

 
$
818,600

 
$
824,352

 
$
1,475,995

 
$
1,284,004

Debt securities, trading, at fair value
 
125,071

 
220,045

 
567,354

 
241,059

 
239,640

Other investments, at fair value
 
4,000

 
3,500

 
3,010

 
3,087

 
84

Total investments
 
989,701

 
1,042,145

 
1,394,716

 
1,720,141

 
1,523,728

Cash and cash equivalents
 
639,415

 
693,105

 
93,757

 
54,319

 
104,183

Restricted cash and cash equivalents
 
1,014,543

 
816,519

 
656,146

 
616,844

 
609,154

Subscription receivable from related party investment fund
 
—

 
—

 
—

 
15,000

 
—

Redemption receivable from related party investment fund
 
—

 
—

 
400,000

 
—

 
—

Due from brokers
 
—

 
—

 
—

 
637

 
1,411

Interest and dividends receivable
 
2,178

 
2,932

 
1,792

 
1,891

 
1,316

Reinsurance balances receivable
 
596,120

 
680,630

 
696,170

 
758,816

 
602,448

Deferred acquisition costs, net
 
154,717

 
166,968

 
208,027

 
233,108

 
203,842

Unearned premiums ceded
 
16,945

 
14,370

 
15,473

 
16,139

 
17,552

Loss and loss adjustment expenses recoverable
 
5,520

 
4,270

 
3,655

 
2,751

 
2,031

Other assets
 
20,555

 
17,808

 
19,715

 
20,488

 
20,569

Total assets
 
$
3,439,694

 
$
3,438,747

 
$
3,489,451

 
$
3,440,134

 
$
3,086,234

Liabilities
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
$
17,816

 
$
14,607

 
$
14,843

 
$
9,225

 
$
7,261

Reinsurance balances payable
 
81,941

 
98,766

 
88,670

 
76,766

 
69,701

Deposit liabilities
 
172,259

 
174,405

 
148,845

 
144,782

 
145,342

Unearned premium reserves
 
524,768

 
592,319

 
702,398

 
767,352

 
602,936

Loss and loss adjustment expense reserves
 
1,111,692

 
1,060,000

 
1,021,776

 
986,639

 
937,157

Participation agreement with related party investment fund
 
—

 
—

 
—

 
1,521

 
2,297

Interest and dividends payable
 
3,055

 
1,026

 
3,022

 
1,015

 
3,055

Senior notes payable, net of deferred costs
 
114,089

 
114,044

 
113,999

 
113,955

 
113,911

Total liabilities
 
2,025,620

 
2,055,167

 
2,093,553

 
2,101,255

 
1,881,660

Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
 
Shareholders’ equity
 
 
 
 
 
 
 
 
 
 
Preference shares
 
—

 
—

 
—

 
—

 
—

Common shares
 
9,423

 
9,422

 
9,399

 
9,429

 
9,364

Additional paid-in capital
 
927,704

 
926,949

 
924,191

 
920,207

 
918,882

Retained earnings
 
476,947

 
447,209

 
462,308

 
409,243

 
276,328

Shareholders’ equity attributable to Third Point Re common shareholders
 
1,414,074

 
1,383,580

 
1,395,898

 
1,338,879

 
1,204,574

Total liabilities and shareholders’ equity
 
$
3,439,694

 
$
3,438,747

 
$
3,489,451

 
$
3,440,134

 
$
3,086,234


image0d75.jpg
Page 4 of 16


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
 
Twelve months ended
 
December 31,
2019
 
December 31,
2018
 
December 31,
2019
 
December 31,
2018
Revenues
 
 
 
 
 
 
 
Gross premiums written
$
134,230

 
$
120,063

 
$
631,846

 
$
578,252

Gross premiums ceded
(5,964
)
 
(1,770
)
 
(9,265
)
 
(19,895
)
Net premiums written
128,266

 
118,293

 
622,581


558,357

Change in net unearned premium reserves
70,126

 
91,177

 
77,561

 
63,085

Net premiums earned
198,392

 
209,470

 
700,142

 
621,442

Net investment income (loss) from investment in related party investment fund (1)
42,029

 
(278,921
)
 
249,626

 
(280,847
)
Net investment income before management and performance fees to related parties
19,585

 
2,111

 
32,934

 
59,259

Management and performance fees to related parties
—

 
—

 
—

 
(29,845
)
Net investment income (loss)
61,614

 
(276,810
)
 
282,560

 
(251,433
)
Total revenues
260,006

 
(67,340
)
 
982,702

 
370,009

Expenses
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
140,394

 
173,088

 
403,499

 
438,414

Acquisition costs, net
61,851

 
56,668

 
295,626

 
206,498

General and administrative expenses
12,744

 
7,553

 
53,763

 
36,241

Other expenses
3,625

 
2,994

 
16,619

 
9,610

Interest expense
2,074

 
2,074

 
8,228

 
8,228

Foreign exchange (gains) losses
10,298

 
(3,288
)
 
3,635

 
(7,503
)
Total expenses
230,986

 
239,089

 
781,370

 
691,488

Income (loss) before income tax (expense) benefit
29,020

 
(306,429
)
 
201,332

 
(321,479
)
Income tax (expense) benefit
718

 
8,417

 
(713
)
 
4,010

Net income (loss)
29,738

 
(298,012
)
 
200,619

 
(317,469
)
Net income attributable to noncontrolling interests in related party
—

 
—

 
—

 
(223
)
Net income (loss) available to Third Point Re common shareholders
$
29,738

 
$
(298,012
)
 
$
200,619

 
$
(317,692
)
Earnings (loss) per share available to Third Point Re common shareholders
 
 
 
 
 
 
 
Basic earnings (loss) per share available to Third Point Re common shareholders (2)
$
0.32

 
$
(3.24
)
 
$
2.18

 
$
(3.27
)
Diluted earnings (loss) per share available to Third Point Re common shareholders (2)
$
0.32

 
$
(3.24
)
 
$
2.16

 
$
(3.27
)
Weighted average number of common shares used in the determination of earnings (loss) per share
 
 
 
 
 
 
 
Basic
91,989,469

 
91,967,831

 
91,835,990

 
97,054,315

Diluted
92,696,491

 
91,967,831

 
92,652,316

 
97,054,315

(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.

image0d75.jpg
Page 5 of 16


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
 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Revenues
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
134,230

 
$
95,388

 
$
82,637

 
$
319,591

 
$
120,063

Gross premiums ceded
 
(5,964
)
 
(1,116
)
 
(1,473
)
 
(712
)
 
(1,770
)
Net premiums written
 
128,266

 
94,272

 
81,164

 
318,879

 
118,293

Change in net unearned premium reserves
 
70,126

 
108,976

 
64,288

 
(165,829
)
 
91,177

Net premiums earned
 
198,392

 
203,248

 
145,452

 
153,050

 
209,470

Net investment income (loss) from investment in related party investment fund
 
42,029

 
(5,751
)
 
66,357

 
146,991

 
(278,921
)
Net investment income before management and performance fees to related parties
 
19,585

 
2,613

 
2,774

 
7,962

 
2,111

Net investment income (loss)
 
61,614

 
(3,138
)
 
69,131

 
154,953

 
(276,810
)
Total revenues
 
260,006

 
200,110

 
214,583

 
308,003

 
(67,340
)
Expenses
 
 
 
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
 
140,394

 
85,703

 
82,334

 
95,068

 
173,088

Acquisition costs, net
 
61,851

 
118,271

 
58,006

 
57,498

 
56,668

General and administrative expenses
 
12,744

 
9,237

 
19,650

 
12,132

 
7,553

Other expenses
 
3,625

 
5,058

 
3,811

 
4,125

 
2,994

Interest expense
 
2,074

 
2,074

 
2,051

 
2,029

 
2,074

Foreign exchange (gains) losses
 
10,298

 
(4,921
)
 
(4,260
)
 
2,518

 
(3,288
)
Total expenses
 
230,986

 
215,422

 
161,592

 
173,370

 
239,089

Income (loss) before income tax (expense) benefit
 
29,020

 
(15,312
)
 
52,991

 
134,633

 
(306,429
)
Income tax (expense) benefit
 
718

 
213

 
74

 
(1,718
)
 
8,417

Net income (loss)
 
29,738

 
(15,099
)
 
53,065

 
132,915

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

 
—

 
—

 
—

 
—

Net income (loss) available to Third Point Re common shareholders
 
$
29,738

 
$
(15,099
)
 
$
53,065

 
$
132,915

 
$
(298,012
)
Earnings (loss) per share available to Third Point Re common shareholders
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share available to Third Point Re common shareholders (1)
 
$
0.32

 
$
(0.16
)
 
$
0.58

 
$
1.45

 
$
(3.24
)
Diluted earnings (loss) per share available to Third Point Re common shareholders (1)
 
$
0.32

 
$
(0.16
)
 
$
0.57

 
$
1.43

 
$
(3.24
)
Weighted average number of common shares used in the determination of earnings (loss) per common share
 
 
 
 
 
 
 
 
 
 
Basic
 
91,989,469

 
91,903,556

 
91,776,870

 
91,669,810

 
91,967,831

Diluted
 
92,696,491

 
91,903,556

 
92,801,799

 
92,578,933

 
91,967,831

(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.

image0d75.jpg
Page 6 of 16


Third Point Reinsurance Ltd.
Segment Reporting - Three and twelve months ended December 31, 2019 and 2018
(expressed in thousands of U.S. dollars)
 
Three months ended
 
Twelve months ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 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
$
134,230

 
$
134,230

 
$
120,063

 
$
120,063

 
$
631,846

 
$
631,846

 
$
578,252

 
$
578,252

Gross premiums ceded
(5,964
)
 
(5,964
)
 
(1,770
)
 
(1,770
)
 
(9,265
)
 
(9,265
)
 
(19,895
)
 
(19,895
)
Net premiums written
128,266

 
128,266

 
118,293

 
118,293

 
622,581

 
622,581

 
558,357

 
558,357

Change in net unearned premium reserves
70,126

 
70,126

 
91,177

 
91,177

 
77,561

 
77,561

 
63,085

 
63,085

Net premiums earned
198,392

 
198,392

 
209,470

 
209,470

 
700,142

 
700,142

 
621,442

 
621,442

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
140,394

 
140,394

 
173,088

 
173,088

 
403,499

 
403,499

 
438,414

 
438,414

Acquisition costs, net
61,851

 
61,851

 
56,668

 
56,668

 
295,626

 
295,626

 
206,498

 
206,498

General and administrative expenses
5,724

 
5,724

 
4,085

 
4,085

 
23,366

 
23,366

 
18,635

 
18,635

Total expenses
207,969

 
207,969

 
233,841

 
233,841

 
722,491

 
722,491

 
663,547

 
663,547

Net underwriting loss
$
(9,577
)
 
(9,577
)
 
$
(24,371
)
 
(24,371
)
 
$
(22,349
)
 
(22,349
)
 
$
(42,105
)
 
(42,105
)
Net investment income (loss)
 
 
61,614

 
 
 
(276,810
)
 
 
 
282,560

 
 
 
(251,433
)
Corporate expenses
 
 
(7,020
)
 
 
 
(3,468
)
 
 
 
(30,397
)
 
 
 
(17,606
)
Other expenses
 
 
(3,625
)
 
 
 
(2,994
)
 
 
 
(16,619
)
 
 
 
(9,610
)
Interest expense
 
 
(2,074
)
 
 
 
(2,074
)
 
 
 
(8,228
)
 
 
 
(8,228
)
Foreign exchange gains (losses)
 
 
(10,298
)
 
 
 
3,288

 
 
 
(3,635
)
 
 
 
7,503

Income tax (expense) benefit
 
 
718

 
 
 
8,417

 
 
 
(713
)
 
 
 
4,010

Net income attributable to noncontrolling interests in related party
 
 
—

 
 
 
—

 
 
 
—

 
 
 
(223
)
Net income (loss) available to Third Point Re common shareholders
 
 
$
29,738

 
 
 
$
(298,012
)
 
 
 
$
200,619

 
 
 
$
(317,692
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and Casualty Reinsurance - Underwriting Ratios (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss ratio
70.7
%
 
 
 
82.6
%
 
 
 
57.6
%
 
 
 
70.6
%
 
 
Acquisition cost ratio
31.2
%
 
 
 
27.0
%
 
 
 
42.2
%
 
 
 
33.2
%
 
 
Composite ratio
101.9
%
 
 
 
109.6
%
 
 
 
99.8
%
 
 
 
103.8
%
 
 
General and administrative expense ratio
2.9
%
 
 
 
2.0
%
 
 
 
3.4
%
 
 
 
3.0
%
 
 
Combined ratio
104.8
%
 
 
 
111.6
%
 
 
 
103.2
%
 
 
 
106.8
%
 
 
(1) Underwriting ratios are calculated by dividing the related expense by net premiums earned.

image0d75.jpg
Page 7 of 16


Third Point Reinsurance Ltd.
Property and Casualty Reinsurance Segment - by Quarter (1) 
(expressed in thousands of U.S. dollars)
 
 
Three months ended
 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Revenues
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
134,230

 
$
95,388

 
$
82,637

 
$
319,591

 
$
120,063

Gross premiums ceded
 
(5,964
)
 
(1,116
)
 
(1,473
)
 
(712
)
 
(1,770
)
Net premiums written
 
128,266

 
94,272

 
81,164

 
318,879

 
118,293

Change in net unearned premium reserves
 
70,126

 
108,976

 
64,288

 
(165,829
)
 
91,177

Net premiums earned
 
198,392

 
203,248

 
145,452

 
153,050

 
209,470

Expenses
 
 
 
 
 
 
 
 
 
 
Loss and loss adjustment expenses incurred, net
 
140,394

 
85,703

 
82,334

 
95,068

 
173,088

Acquisition costs, net
 
61,851

 
118,271

 
58,006

 
57,498

 
56,668

General and administrative expenses
 
5,724

 
4,769

 
6,769

 
6,224

 
4,085

Total expenses
 
207,969

 
208,743

 
147,109

 
158,790

 
233,841

Net underwriting loss
 
$
(9,577
)
 
$
(5,495
)
 
$
(1,657
)
 
$
(5,740
)
 
$
(24,371
)
 
 
 
 
 
 
 
 
 
 
 
Underwriting ratios (1)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
70.7
%
 
42.2
%
 
56.6
%
 
62.1
%
 
82.6
%
Acquisition cost ratio
 
31.2
%
 
58.2
%
 
39.9
%
 
37.6
%
 
27.0
%
Composite ratio
 
101.9
%
 
100.4
%
 
96.5
%
 
99.7
%
 
109.6
%
General and administrative expense ratio
 
2.9
%
 
2.3
%
 
4.6
%
 
4.1
%
 
2.0
%
Combined ratio
 
104.8
%
 
102.7
%
 
101.1
%
 
103.8
%
 
111.6
%
(1) Underwriting ratios are calculated by dividing the related expense by net premiums earned.




image0d75.jpg
Page 8 of 16


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
 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Line and Type of Business
 
 
 
 
 
 
 
 
 
 
Property Catastrophe
 
$
4,831

 
$
6,127

 
$
15,843

 
$
41,514

 
$
—

Other Property
 
36,892

 
578

 
26,019

 
12,467

 
10,619

Property
 
41,723

 
6,705

 
41,862

 
53,981

 
10,619

 
 
 
 
 
 
 
 
 
 
 
Workers Compensation
 
121

 
3,519

 
1,221

 
22,810

 
202

Auto
 
(2,897
)
 
10,574

 
14,136

 
26,568

 
(5,790
)
Other Casualty
 
35,315

 
2,931

 
9,081

 
28,514

 
7,619

Casualty
 
32,539

 
17,024

 
24,438

 
77,892

 
2,031

 
 
 
 
 
 
 
 
 
 
 
Credit & Financial Lines
 
3,633

 
7,265

 
16,417

 
17,310

 
21,547

Multi-line
 
16,268

 
2,345

 
(1,028
)
 
174,130

 
17,333

Other Specialty
 
5,768

 
3,357

 
948

 
1,631

 
(1,346
)
Specialty
 
25,669

 
12,967

 
16,337

 
193,071

 
37,534

 
 
 
 
 
 
 
 
 
 
 
Total prospective reinsurance contracts
 
$
99,931

 
$
36,696

 
$
82,637

 
$
324,944

 
$
50,184

Retroactive reinsurance contracts
 
34,299

 
58,692

 
—

 
(5,353
)
 
69,879

Total property and casualty reinsurance segment
 
$
134,230

 
$
95,388

 
$
82,637

 
$
319,591

 
$
120,063

 
 
 
 
 
 
 
 
 
 
 






image0d75.jpg
Page 9 of 16


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

 
 
Three months ended
 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Underwriting ratios (1)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
70.7
 %
 
42.2
 %
 
56.6
 %
 
62.1
 %
 
82.6
 %
Acquisition cost ratio
 
31.2
 %
 
58.2
 %
 
39.9
 %
 
37.6
 %
 
27.0
 %
Composite ratio
 
101.9
 %
 
100.4
 %
 
96.5
 %
 
99.7
 %
 
109.6
 %
General and administrative expense ratio
 
2.9
 %
 
2.3
 %
 
4.6
 %
 
4.1
 %
 
2.0
 %
Combined ratio
 
104.8
 %
 
102.7
 %
 
101.1
 %
 
103.8
 %
 
111.6
 %
 
 
 
 
 
 
 
 
 
 
 
Impact of catastrophe losses (2)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
9.1
 %
 
7.1
 %
 
—
 %
 
—
 %
 
8.8
 %
Acquisition cost ratio
 
(0.9
)%
 
(0.9
)%
 
—
 %
 
—
 %
 
—
 %
Composite ratio
 
8.2
 %
 
6.2
 %
 
—
 %
 
—
 %
 
8.8
 %
 
 
 
 
 
 
 
 
 
 
 
Impact of reserve developments (2)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
(4.9
)%
 
(37.6
)%
 
(5.6
)%
 
(2.6
)%
 
(2.8
)%
Acquisition cost ratio
 
4.3
 %
 
35.7
 %
 
5.5
 %
 
2.4
 %
 
2.6
 %
Composite ratio
 
(0.6
)%
 
(1.9
)%
 
(0.1
)%
 
(0.2
)%
 
(0.2
)%
 
 
 
 
 
 
 
 
 
 
 
Accident year ex-CAT underwriting ratios (3)
 
 
 
 
 
 
 
 
 
 
Loss ratio
 
66.5
 %
 
72.7
 %
 
62.2
 %
 
64.7
 %
 
76.6
 %
Acquisition cost ratio
 
27.8
 %
 
23.4
 %
 
34.4
 %
 
35.2
 %
 
24.4
 %
Composite ratio
 
94.3
 %
 
96.1
 %
 
96.6
 %
 
99.9
 %
 
101.0
 %
General and administrative expense ratio
 
2.9
 %
 
2.3
 %
 
4.6
 %
 
4.1
 %
 
2.0
 %
Combined ratio
 
97.2
 %
 
98.4
 %
 
101.2
 %
 
104.0
 %
 
103.0
 %
 
 
 
 
 
 
 
 
 
 
 
(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.
(3)
The accident year ex-CAT underwriting ratios exclude catastrophe losses, net of reinstatement premiums and profit commission adjustments, and prior year loss development. We believe that the adjusted ratios are meaningful measures of our underwriting results on an ongoing basis as they exclude catastrophes losses which are outside of management’s control. We also exclude prior year development to provide transparency related to current accident year results.


image0d75.jpg
Page 10 of 16


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


 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Assets
 
 
 
 
 
 
 
 
 
TP Fund
$
860,630

 
$
818,600

 
$
824,352

 
$
1,475,995

 
$
1,284,004

Debt securities, trading, at fair value
125,071

 
220,045

 
567,354

 
241,059

 
239,640

Total investments
985,701

 
1,038,645

 
1,391,706

 
1,717,054

 
1,523,644

Cash and cash equivalents
588,196

 
611,442

 
22,563

 
3,647

 
1,017

Restricted cash and cash equivalents
1,014,543

 
816,519

 
656,146

 
616,844

 
609,154

Redemption receivable from related party investment fund
—

 
—

 
400,000

 
—

 
—

Due from brokers
—

 
—

 
—

 
637

 
1,411

Interest and dividends receivable
2,178

 
2,932

 
1,792

 
1,891

 
1,316

Other assets
18

 
6

 
7

 
—

 
—

Total assets
$
2,590,636

 
$
2,469,544

 
$
2,472,214

 
$
2,340,073

 
$
2,136,542

Liabilities and noncontrolling interests in related party
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
509

 
$
324

 
$
227

 
$
188

 
$
114

Participation agreement with related party investment fund
—

 
—

 
—

 
1,521

 
2,297

Total liabilities and noncontrolling interests in related party
509

 
324

 
227

 
1,709

 
2,411

Total net investments managed by Third Point LLC
$
2,590,127

 
$
2,469,220

 
$
2,471,987

 
$
2,338,364

 
$
2,134,131

 
 
 
 
 
 
 
 
 
 



image0d75.jpg
Page 11 of 16


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)
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
 
 
 
 
 
 
 
 
 
 
Long
 
 
 
 
 
 
 
 
 
Equity
3.3
 %
 
1.4
 %
 
3.2
 %
 
8.4
 %
 
(13.3
)%
Credit
0.1
 %
 
(0.7
)%
 
0.6
 %
 
0.9
 %
 
(1.0
)%
Other
0.7
 %
 
(0.1
)%
 
0.5
 %
 
0.7
 %
 
(0.7
)%
 
4.1
 %
 
0.6
 %
 
4.3
 %
 
10.0
 %
 
(15.0
)%
 
 
 
 
 
 
 
 
 
 
Short
 
 
 
 
 
 
 
 
 
Equity
(1.8
)%
 
(0.7
)%
 
(1.2
)%
 
(2.4
)%
 
3.1
 %
Credit
—
 %
 
—
 %
 
—
 %
 
(0.3
)%
 
0.1
 %
Other
0.1
 %
 
(0.1
)%
 
(0.2
)%
 
(0.1
)%
 
0.4
 %
 
(1.7
)%
 
(0.8
)%
 
(1.4
)%
 
(2.8
)%
 
3.6
 %
 
 
 
 
 
 
 
 
 
 
Net
 
 
 
 
 
 
 
 
 
Equity
1.5
 %
 
0.7
 %
 
2.0
 %
 
6.0
 %
 
(10.2
)%
Credit
0.1
 %
 
(0.7
)%
 
0.6
 %
 
0.6
 %
 
(0.9
)%
Other
0.8
 %
 
(0.2
)%
 
0.3
 %
 
0.6
 %
 
(0.3
)%
 
2.4
 %
 
(0.2
)%
 
2.9
 %
 
7.2
 %
 
(11.4
)%
 
 
 
 
 
 
 
 
 
 
(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, including fixed income securities, 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 consolidated statements of income (loss). Net investment return is the key indicator by which we measure the performance of Third Point LLC, TP Fund’s investment manager.




image0d75.jpg
Page 12 of 16


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

 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Payroll and related
$
6,188

 
$
4,626

 
$
9,983

 
$
5,352

 
$
3,105

Share compensation expenses
755

 
894

 
3,954

 
1,458

 
—

Legal and accounting
3,451

 
1,376

 
1,933

 
1,917

 
983

Travel and entertainment
283

 
119

 
713

 
527

 
460

IT related
699

 
635

 
730

 
659

 
656

Occupancy
284

 
285

 
345

 
427

 
396

Corporate insurance
221

 
190

 
202

 
175

 
187

Board of director and related
287

 
233

 
245

 
203

 
232

Credit facility fees
79

 
380

 
1,084

 
962

 
1,143

Other general and administrative expenses
497

 
499

 
461

 
452

 
391

 
$
12,744

 
$
9,237

 
$
19,650

 
$
12,132

 
$
7,553

 
 
 
 
 
 
 
 
 
 
G&A related to underwriting activities
$
5,724

 
$
4,769

 
$
6,769

 
$
6,224

 
$
4,085

Corporate expenses
7,020

 
4,468

 
12,881

 
5,908

 
3,468

 
$
12,744

 
$
9,237

 
$
19,650

 
$
12,132

 
$
7,553



image0d75.jpg
Page 13 of 16


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

 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Basic and diluted book value per share numerator:
 
 
 
 
 
 
 
 
 
Shareholders' equity attributable to Third Point Re common shareholders
$
1,414,074

 
$
1,383,580

 
$
1,395,898

 
$
1,338,879

 
$
1,204,574

Basic and diluted book value per share denominator:
 
 
 
 
 
 
 
 
 
Common shares outstanding
94,225,498

 
94,220,567

 
93,994,924

 
94,292,914

 
93,639,610

Unvested restricted shares
(2,231,296
)
 
(2,240,410
)
 
(2,214,087
)
 
(2,524,109
)
 
(2,025,113
)
Basic book value per share denominator:
91,994,202

 
91,980,157

 
91,780,837

 
91,768,805

 
91,614,497

Effect of dilutive warrants issued to founders and an advisor (1)
172,756

 
—

 
108,371

 
127,947

 
—

Effect of dilutive stock options issued to directors and employees (1)
225,666

 
—

 
152,379

 
179,904

 
—

Effect of dilutive restricted shares issued to directors and employees (2)
1,654,803

 
1,731,384

 
1,777,266

 
1,848,791

 
1,209,285

Diluted book value per share denominator:
94,047,427

 
93,711,541

 
93,818,853

 
93,925,447

 
92,823,782

 
 
 
 
 
 
 
 
 
 
Basic book value per share (2)
$
15.37

 
$
15.04

 
$
15.21

 
$
14.59

 
$
13.15

Diluted book value per share (2)
$
15.04

 
$
14.76

 
$
14.88

 
$
14.25

 
$
12.98

 
 
 
 
 
 
 
 
 
 
Increase (decrease) in diluted book value per share
1.9
%
 
(0.8
)%
 
4.4
%
 
9.8
%
 
(17.7
)%

(1)
As of September 30, 2019 and December 31, 2018, there was no dilution as 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 options 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.




image0d75.jpg
Page 14 of 16


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

 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Weighted-average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic number of common shares outstanding
 
91,989,469

 
91,903,556

 
91,776,870

 
91,669,810

 
91,967,831

Dilutive effect of options (1)
 
—

 
—

 
321,492

 
291,248

 
—

Dilutive effect of warrants (1)
 
—

 
—

 
228,643

 
207,134

 
—

Dilutive effect of restricted shares with service and performance condition
 
707,022

 
—

 
474,794

 
410,741

 
—

Diluted number of common shares outstanding
 
92,696,491

 
91,903,556

 
92,801,799

 
92,578,933

 
91,967,831

 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to Third Point Re common shareholders
 
$
29,738

 
$
(15,099
)
 
$
53,065

 
$
132,915

 
$
(298,012
)
Net income allocated to Third Point Re participating common shareholders
 
(111
)
 
—

 
(85
)
 
(173
)
 
—

Net income (loss) allocated to Third Point Re common shareholders
 
$
29,627

 
$
(15,099
)
 
$
52,980

 
$
132,742

 
$
(298,012
)
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share available to Third Point Re common shareholders (2)
 
$
0.32

 
$
(0.16
)
 
$
0.58

 
$
1.45

 
$
(3.24
)
 
 
 
 
 
 
 
 
 
 
 
 Diluted earnings (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to Third Point Re common shareholders
 
$
29,738

 
$
(15,099
)
 
$
53,065

 
$
132,915

 
$
(298,012
)
Net income allocated to Third Point Re participating common shareholders
 
(110
)
 
—

 
(84
)
 
(171
)
 
—

Net income (loss) allocated to Third Point Re common shareholders
 
$
29,628

 
$
(15,099
)
 
$
52,981

 
$
132,744

 
$
(298,012
)
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share available to Third Point Re common shareholders (2)
 
$
0.32

 
$
(0.16
)
 
$
0.57

 
$
1.43

 
$
(3.24
)

(1)
As of December 31, 2019, there was no dilution as a result of the Company’s average share price for the quarter being under the lowest exercise price for warrants and options. As of September 30, 2019 and December 31, 2018, there was no dilution as a result of the net loss allocated to Third Point Re common shareholders in the quarter.
(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.

image0d75.jpg
Page 15 of 16


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


 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31,
2019
 
December 31,
2018
Net income (loss) available to Third Point Re common shareholders
 
$
29,738

 
$
(15,099
)
 
$
53,065

 
$
132,915

 
$
(298,012
)
Shareholders’ equity attributable to Third Point Re common shareholders - beginning of period
 
1,383,580

 
1,395,898

 
1,338,879

 
1,204,574

 
1,507,910

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

 
—

 
—

 
—

 
(1,750
)
Adjusted shareholders’ equity attributable to Third Point Re common shareholders - beginning of period
 
$
1,383,580

 
$
1,395,898

 
$
1,338,879

 
$
1,204,574

 
$
1,506,160

Return on beginning shareholders’ equity attributable to Third Point Re common shareholders (1)
 
2.1
%
 
(1.1
)%
 
4.0
%
 
11.0
%
 
(19.8
)%

(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.

image0d75.jpg
Page 16 of 16