Form 8-K Third Point Reinsurance For: Nov 03
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E-mailUNITED 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): November 3, 2015 (November 3, 2015)
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.) | ||
The Waterfront, Chesney House
96 Pitts Bay Road
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)) |
Item 2.02 | Results of Operations and Financial Condition. |
On November 3, 2015, Third Point Reinsurance Ltd. issued a press release reporting its financial results as of and for the third quarter ended September 30, 2015. 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 third quarter ended September 30, 2015 is attached hereto 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 | Press Release dated November 3, 2015. | |
99.2 | Financial Supplement. | |
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: November 3, 2015 | /s/ Christopher S. Coleman | ||
Name: | Christopher S. Coleman | ||
Title: | Chief Financial Officer | ||
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release dated November 3, 2015. | |
99.2 | Financial Supplement. | |
Exhibit 99.1
Third Point Re Reports Third Quarter 2015 Earnings Results
Gross Premiums Written of $205.6 million, an Increase of 62.6%
Combined Ratio of 102.8% for the Property and Casualty Reinsurance Segment
HAMILTON, Bermuda, November 3, 2015, Third Point Reinsurance Ltd. (“Third Point Re” or the “Company”) (NYSE: TPRE) today announced results for its third quarter ended September 30, 2015.
Third Point Re reported a net loss of $195.7 million, or $(1.88) per diluted common share, for the third quarter of 2015, compared with a net loss of $6.0 million, or $(0.06) per diluted common share, for the third quarter of 2014. For the nine months ended September 30, 2015, Third Point Re reported a net loss of $129.6 million, or $(1.25) per diluted common share compared with net income of $65.1 million, or $0.61 per diluted common share, for the nine months ended September 30, 2014.
For the three months ended September 30, 2015, diluted book value per share decreased by $1.67 per share, or 11.8%, to $12.45 per share from $14.12 per share as of June 30, 2015. For the nine months ended September 30, 2015, diluted book value per share decreased by $1.10 per share, or 8.1%, to $12.45 per share from $13.55 per share as of December 31, 2014.
“During the third quarter, we were adversely affected by difficult market conditions that resulted in a net investment loss of $193.2 million in the quarter, representing an (8.7)% return in the quarter and a (4.3)% return for the year to date period. Based on our estimated investment return for October of 4.6%, as posted on our website, our investment return for the year through October was 0.1%,” commented John Berger, Chairman and Chief Executive Officer. “In the third quarter, we generated premiums written of $205.6 million, an increase of 62.6%, bringing our gross premiums for the year to date period to $603.3 million. We completed a $91.6 million adverse development cover in the quarter which was the main driver of the premium increase as well as the largest contributor to growth in investment float which totaled $601.5 million as of September 30, 2015. Our underwriting results for the period were as expected, and we believe we are well positioned to take advantage of improvements in investment performance in future periods.”
The following table shows certain key financial metrics for the three and nine months ended September 30, 2015 and 2014:
Three months ended | Nine months ended | ||||||||||||||
September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||||||
(In millions, except for per share data and ratios) | |||||||||||||||
Gross premiums written | $ | 205.6 | $ | 126.4 | $ | 603.3 | $ | 359.5 | |||||||
Net premiums earned | $ | 208.8 | $ | 108.9 | $ | 468.5 | $ | 261.0 | |||||||
Net underwriting loss (1) (2) | $ | (5.8 | ) | $ | (1.8 | ) | $ | (19.1 | ) | $ | (9.0 | ) | |||
Combined ratio (1) (2) | 102.8 | % | 101.7 | % | 104.1 | % | 103.6 | % | |||||||
Net investment return on investments managed by Third Point LLC | (8.7 | )% | (0.04 | )% | (4.3 | )% | 5.5 | % | |||||||
Net investment income (loss) | $ | (193.2 | ) | $ | 1.6 | $ | (89.6 | ) | $ | 92.1 | |||||
Net investment income (loss) on float (3) | $ | (52.0 | ) | $ | (0.1 | ) | $ | (23.6 | ) | $ | 13.5 | ||||
Net income (loss) | $ | (195.7 | ) | $ | (6.0 | ) | $ | (129.6 | ) | $ | 65.1 | ||||
Diluted earnings (loss) per share | $ | (1.88 | ) | $ | (0.06 | ) | $ | (1.25 | ) | $ | 0.61 | ||||
Growth in diluted book value per share (3) | (11.8 | )% | (0.3 | )% | (8.1 | )% | 4.3 | % | |||||||
Return on beginning shareholders’ equity (3) | (12.8 | )% | (0.4 | )% | (8.9 | )% | 4.7 | % | |||||||
Net investments managed by Third Point LLC (4) | $ | 2,092.6 | $ | 1,802.2 | $ | 2,092.6 | $ | 1,802.2 | |||||||
(1) | Property and Casualty Reinsurance segment only. |
(2) | See the accompanying Segment Reporting for a calculation of net underwriting loss and combined ratio. |
(3) | Net investment income on float, diluted book value per share and return on beginning shareholders’ equity are non-GAAP financial measures. See the accompanying Reconciliation of Non-GAAP Measures and Key Performance Indicators for an explanation and calculation of net investment income on float, diluted book value per share and return on beginning shareholders’ equity. |
(4) | Prior year comparative represents amount at December 31, 2014. |
Segment Highlights
Property and Casualty Reinsurance Segment
Gross premiums written increased by $80.8 million, or 64.7%, to $205.7 million for the three months ended September 30, 2015 from $124.9 million for the three months ended September 30, 2014. Gross premiums written increased by $255.8 million, or 73.6%, to $603.3 million for the nine months ended September 30, 2015 from $347.5 million for the nine months ended September 30, 2014. The increase in premiums for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 was primarily due to one new adverse development cover, new business written by our U.S. office, where we have seen additional opportunities as a result of our U.S. presence, and contracts that renewed in 2015 that did not have comparable premiums in the 2014 periods. The increase in premiums in the three and nine months ended September 30, 2015 was partially offset by contracts written or amended in 2014 that did not have comparable premiums in the current year periods and contracts for which we made a decision not to renew due to changes in pricing and/or terms and conditions. Since Third Point Re focuses on large transactions, which in some cases may not renew, period over period comparisons of gross premiums written may not be meaningful.
Net premiums earned for the three months ended September 30, 2015 increased by $107.5 million, or 105.9%, to $209.0 million. Net premiums earned for the nine months ended September 30, 2015 increased by $217.2 million, or 86.4%, to $468.5 million. The results for the three and nine months ended September 30, 2015 reflect net premiums earned related to the large adverse development cover written in the third quarter and net premiums earned on a larger in-force underwriting portfolio, including new business written, compared to the three and nine months ended September 30, 2014.
The net underwriting loss and combined ratio for the nine months ended September 30, 2015 included a $3.1 million loss related to windstorms and other weather activity that took place in the state of Texas in the second quarter. In addition, we recorded an increase in the net underwriting loss of $1.4 million and $4.5 million for the three and nine months ended September 30, 2015, respectively, related to development of reserves on prior years’ contracts. This compares to a $0.2 million decrease in the net underwriting loss for the three months ended September 30, 2014 and a $1.4 million increase in net underwriting loss for the nine months ended September 30, 2014. These increases to the combined ratio compared to the prior year periods were partially offset by a lower general and administrative expense ratio due to proportionately higher net premiums earned.
Catastrophe Risk Management
The Catastrophe Risk Management segment includes the combined results of Third Point Reinsurance Opportunities Fund Ltd. (the “Catastrophe Fund”), Third Point Reinsurance Investment Management Ltd., and Third Point Re Cat Ltd. (the “Catastrophe Reinsurer”). In December 2014, the Company announced that it would no longer accept investments in the Catastrophe Fund, that no new business would be written in the Catastrophe Reinsurer and that the Company would be redeeming all existing investments in the Catastrophe Fund. Net assets under management for the Catastrophe Fund were $0.7 million as of September 30, 2015 compared to $119.7 million as of December 31, 2014. During the nine months ended September 30, 2015, the Catastrophe Fund distributed $118.7 million (Third Point Re’s share - $59.0 million) to its investors.
Investments
For the three months ended September 30, 2015, Third Point Re recorded a net investment loss of $193.2 million, compared to net investment income of $1.6 million for the three months ended September 30, 2014. The return on investments managed by the Company’s investment manager, Third Point LLC, was (8.7)% for the three months ended September 30, 2015 compared to (0.04)% for the three months ended September 30, 2014.
For the nine months ended September 30, 2015, Third Point Re recorded a net investment loss of $89.6 million, compared to net investment income of $92.1 million for the nine months ended September 30, 2014. The return on investments managed by the Company’s investment manager, Third Point LLC, was (4.3)% for the nine months ended September 30, 2015 compared to 5.5% for the nine months ended September 30, 2014.
The net investment results for the three and nine months ended September 30, 2015 were attributable to losses in the Company’s long equity portfolio, which was partially offset by strong performance in equity short positions, structured credit and sovereign credit. During the third quarter, the equity portfolio posted negative returns in most sectors amidst a broader market decline. Specifically, several large positions in the healthcare sector detracted meaningfully from investment returns. The returns generated by the Company’s investment portfolio will vary based on a number of factors, including the overall markets, individual security selection, and allocation of exposure by the investment manager across strategies.
Conference Call Details
The Company will hold a conference call to discuss its third quarter 2015 results at 8:30 a.m. Eastern Time on November 4, 2015. The call will be webcast live over the Internet from the Company’s website at www.thirdpointre.bm under “Investors”. Participants should follow the instructions provided on the website to download and install any necessary audio applications. The conference call is also available by dialing 1-877-407-0789 (domestic) or 1-201-689-8562 (international). Participants should ask for the Third Point Reinsurance Ltd. third 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 1-877-870-5176 (domestic) or 1-858-384-5517 (international) and entering the replay passcode 13622747. The telephonic replay will be available until 11:59 p.m. (Eastern Time) on November 11, 2015.
Safe Harbor Statement Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. The Company cautions you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Actual events, results and outcomes may differ materially from the Company’s expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: (i) limited historical information about the Company; (ii) operational structure currently is being developed; (iii) fluctuation in results of operations; (iv) more established competitors; (v) losses exceeding reserves; (vi) downgrades or withdrawal of ratings by rating agencies; (vii) dependence on key executives; (viii) dependence on letter of credit facilities that may not be available on commercially acceptable terms; (ix) potential inability to pay dividends; (x) inability to service the Company’s indebtedness; (xi) limited cash flow and liquidity due to indebtedness; (xii) unavailability of capital in the future; (xiii) fluctuations in market price of the Company’s common shares; (xiv) dependence on clients’ evaluations of risks associated with such clients’ insurance underwriting; (xv) suspension or revocation of reinsurance licenses; (xvi) potentially being deemed an investment company under United States federal securities law; (xvii) potential characterization of Third Point Re and/or Third Point Reinsurance Company Ltd. as a passive foreign investment company; (xviii) future strategic transactions such as acquisitions, dispositions, merger or joint ventures; (xix) dependence on Third Point LLC to implement the Company’s investment strategy; (xx) termination by Third Point LLC of the investment management agreements; (xxi) risks associated with the Company’s investment strategy being greater than those faced by competitors; (xxii) increased regulation or scrutiny of alternative investment advisers affecting the Company’s reputation; (xxiii) the Company potentially becoming subject to United States federal income taxation; (xxiv) the Company potentially becoming subject to United States withholding and information reporting requirements under the Foreign Account Tax Compliance Act provisions; and (xxv) other risks and factors listed under “Risk Factors” in our most recent Annual Report on Form 10-K and other periodic and current disclosures filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the date made and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
In presenting Third Point Re’s results, management has included financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (GAAP). Such measures, including net investment income on float, book value per share, diluted book value per share and return on beginning shareholders’ equity, are referred to as non-GAAP measures. These non-GAAP measures may be defined or calculated differently by other companies. Management believes these measures allow for a more complete understanding of the underlying business. These measures are used to monitor our results and should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included in the attached financial information in accordance with Regulation G.
About the Company
The Company is a public company listed on the New York Stock Exchange which, through its wholly-owned subsidiaries Third Point Reinsurance Company Ltd. and Third Point Reinsurance (USA) Ltd., writes property and casualty reinsurance business. Third Point Reinsurance Company Ltd. was incorporated in October 2011 and commenced underwriting business on January 1, 2012. Third Point Reinsurance (USA) Ltd. was incorporated in November 2014 and commenced underwriting business in
February 2015. Third Point Reinsurance Company Ltd. and Third Point Reinsurance (USA) Ltd. each have an “A-” (Excellent) financial strength rating from A.M. Best Company, Inc.
Contact
Third Point Reinsurance Ltd.
Manoj Gupta - Head of Investor Relations and Business Development
+1 441-542-3333
THIRD POINT REINSURANCE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of September 30, 2015 and December 31, 2014
(expressed in thousands of U.S. dollars, except per share and share amounts)
September 30, 2015 | December 31, 2014 | ||||||
Assets | |||||||
Equity securities, trading, at fair value (cost - $1,343,437; 2014 - $1,078,859) | $ | 1,289,840 | $ | 1,177,796 | |||
Debt securities, trading, at fair value (cost - $739,897; 2014 - $546,933) | 737,039 | 569,648 | |||||
Other investments, at fair value | 52,882 | 83,394 | |||||
Total investments in securities and commodities | 2,079,761 | 1,830,838 | |||||
Cash and cash equivalents | 10,819 | 28,734 | |||||
Restricted cash and cash equivalents | 604,428 | 417,307 | |||||
Due from brokers | 303,597 | 58,241 | |||||
Securities purchased under an agreement to sell | — | 29,852 | |||||
Derivative assets, at fair value | 27,337 | 21,130 | |||||
Interest and dividends receivable | 10,030 | 2,602 | |||||
Reinsurance balances receivable | 314,693 | 303,649 | |||||
Deferred acquisition costs, net | 192,451 | 155,901 | |||||
Unearned premiums ceded | 808 | — | |||||
Loss and loss adjustment expenses recoverable | 184 | 814 | |||||
Other assets | 14,231 | 3,512 | |||||
Total assets | $ | 3,558,339 | $ | 2,852,580 | |||
Liabilities and shareholders’ equity | |||||||
Liabilities | |||||||
Accounts payable and accrued expenses | $ | 12,298 | $ | 10,085 | |||
Reinsurance balances payable | 34,833 | 27,040 | |||||
Deposit liabilities | 167,210 | 145,430 | |||||
Unearned premium reserves | 567,565 | 433,809 | |||||
Loss and loss adjustment expense reserves | 420,649 | 277,362 | |||||
Securities sold, not yet purchased, at fair value | 172,074 | 82,485 | |||||
Due to brokers | 695,019 | 312,609 | |||||
Derivative liabilities, at fair value | 22,495 | 11,015 | |||||
Interest and dividends payable | 1,673 | 697 | |||||
Senior notes payable, net of deferred costs | 113,332 | — | |||||
Total liabilities | 2,207,148 | 1,300,532 | |||||
Commitments and contingent liabilities | |||||||
Shareholders’ equity | |||||||
Preference shares (par value $0.10; authorized, 30,000,000; none issued) | — | — | |||||
Common shares (par value $0.10; authorized, 300,000,000; issued and outstanding,105,479,341 (2014: 104,473,402)) | 10,548 | 10,447 | |||||
Additional paid-in capital | 1,078,327 | 1,065,489 | |||||
Retained earnings | 246,394 | 375,977 | |||||
Shareholders’ equity attributable to shareholders | 1,335,269 | 1,451,913 | |||||
Non-controlling interests | 15,922 | 100,135 | |||||
Total shareholders’ equity | 1,351,191 | 1,552,048 | |||||
Total liabilities and shareholders’ equity | $ | 3,558,339 | $ | 2,852,580 | |||
THIRD POINT REINSURANCE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)
For the three and nine months ended September 30, 2015 and 2014
(expressed in thousands of U.S. dollars, except per share and share amounts)
Three months ended | Nine months ended | ||||||||||||||
September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||||||
Revenues | |||||||||||||||
Gross premiums written | $ | 205,583 | $ | 126,403 | $ | 603,259 | $ | 359,498 | |||||||
Gross premiums ceded | (375 | ) | (150 | ) | (1,852 | ) | (150 | ) | |||||||
Net premiums written | 205,208 | 126,253 | 601,407 | 359,348 | |||||||||||
Change in net unearned premium reserves | 3,597 | (17,305 | ) | (132,949 | ) | (98,388 | ) | ||||||||
Net premiums earned | 208,805 | 108,948 | 468,458 | 260,960 | |||||||||||
Net investment income (loss) | (193,156 | ) | 1,552 | (89,627 | ) | 92,072 | |||||||||
Total revenues | 15,649 | 110,500 | 378,831 | 353,032 | |||||||||||
Expenses | |||||||||||||||
Loss and loss adjustment expenses incurred, net | 158,537 | 60,115 | 316,336 | 150,783 | |||||||||||
Acquisition costs, net | 50,509 | 38,317 | 152,664 | 93,331 | |||||||||||
General and administrative expenses | 9,822 | 10,124 | 35,797 | 29,698 | |||||||||||
Other expenses | 670 | 2,982 | 5,686 | 4,789 | |||||||||||
Interest expense | 2,074 | — | 5,162 | — | |||||||||||
Foreign exchange gains | (746 | ) | — | (800 | ) | — | |||||||||
Total expenses | 220,866 | 111,538 | 514,845 | 278,601 | |||||||||||
Income (loss) before income tax (expense) benefit | (205,217 | ) | (1,038 | ) | (136,014 | ) | 74,431 | ||||||||
Income tax (expense) benefit | 7,781 | (1,542 | ) | 5,768 | (3,917 | ) | |||||||||
Income (loss) including non-controlling interests | (197,436 | ) | (2,580 | ) | (130,246 | ) | 70,514 | ||||||||
(Income) loss attributable to non-controlling interests | 1,721 | (3,417 | ) | 663 | (5,440 | ) | |||||||||
Net income (loss) | $ | (195,715 | ) | $ | (5,997 | ) | $ | (129,583 | ) | $ | 65,074 | ||||
Earnings (loss) per share | |||||||||||||||
Basic | $ | (1.88 | ) | $ | (0.06 | ) | $ | (1.25 | ) | $ | 0.63 | ||||
Diluted | $ | (1.88 | ) | $ | (0.06 | ) | $ | (1.25 | ) | $ | 0.61 | ||||
Weighted average number of ordinary shares used in the determination of earnings (loss) per share | |||||||||||||||
Basic | 104,117,448 | 103,295,920 | 103,931,871 | 103,275,204 | |||||||||||
Diluted | 104,117,448 | 103,295,920 | 103,931,871 | 106,454,775 | |||||||||||
THIRD POINT REINSURANCE LTD.
SEGMENT REPORTING
Three months ended September 30, 2015 | |||||||||||||||
Property and Casualty Reinsurance | Catastrophe Risk Management | Corporate | Total | ||||||||||||
Revenues | ($ in thousands) | ||||||||||||||
Gross premiums written | $ | 205,729 | $ | (146 | ) | $ | — | $ | 205,583 | ||||||
Gross premiums ceded | (375 | ) | — | — | (375 | ) | |||||||||
Net premiums written | 205,354 | (146 | ) | — | 205,208 | ||||||||||
Change in net unearned premium reserves | 3,597 | — | — | 3,597 | |||||||||||
Net premiums earned | 208,951 | (146 | ) | — | 208,805 | ||||||||||
Expenses | |||||||||||||||
Loss and loss adjustment expenses incurred, net | 158,387 | 150 | — | 158,537 | |||||||||||
Acquisition costs, net | 50,527 | (18 | ) | — | 50,509 | ||||||||||
General and administrative expenses | 5,872 | 32 | 3,918 | 9,822 | |||||||||||
Total expenses | 214,786 | 164 | 3,918 | 218,868 | |||||||||||
Net underwriting loss | (5,835 | ) | n/a | n/a | n/a | ||||||||||
Net investment income (loss) | (51,988 | ) | 1 | (141,169 | ) | (193,156 | ) | ||||||||
Other expenses | (670 | ) | — | — | (670 | ) | |||||||||
Interest expense | — | — | (2,074 | ) | (2,074 | ) | |||||||||
Foreign exchange gains | — | — | 746 | 746 | |||||||||||
Income tax benefit | — | — | 7,781 | 7,781 | |||||||||||
Segment loss including non-controlling interests | (58,493 | ) | (309 | ) | (138,634 | ) | (197,436 | ) | |||||||
Segment loss attributable to non-controlling interests | — | 140 | 1,581 | 1,721 | |||||||||||
Segment loss | $ | (58,493 | ) | $ | (169 | ) | $ | (137,053 | ) | $ | (195,715 | ) | |||
Property and Casualty Reinsurance - Underwriting Ratios (1): | |||||||||||||||
Loss ratio | 75.8 | % | |||||||||||||
Acquisition cost ratio | 24.2 | % | |||||||||||||
Composite ratio | 100.0 | % | |||||||||||||
General and administrative expense ratio | 2.8 | % | |||||||||||||
Combined ratio | 102.8 | % | |||||||||||||
Nine months ended September 30, 2015 | |||||||||||||||
Property and Casualty Reinsurance | Catastrophe Risk Management | Corporate | Total | ||||||||||||
Revenues | ($ in thousands) | ||||||||||||||
Gross premiums written | $ | 603,303 | $ | (44 | ) | $ | — | $ | 603,259 | ||||||
Gross premiums ceded | (1,852 | ) | — | — | (1,852 | ) | |||||||||
Net premiums written | 601,451 | (44 | ) | — | 601,407 | ||||||||||
Change in net unearned premium reserves | (133,001 | ) | 52 | — | (132,949 | ) | |||||||||
Net premiums earned | 468,450 | 8 | — | 468,458 | |||||||||||
Expenses | |||||||||||||||
Loss and loss adjustment expenses incurred, net | 316,186 | 150 | — | 316,336 | |||||||||||
Acquisition costs, net | 152,665 | (1 | ) | — | 152,664 | ||||||||||
General and administrative expenses | 18,681 | 463 | 16,653 | 35,797 | |||||||||||
Total expenses | 487,532 | 612 | 16,653 | 504,797 | |||||||||||
Net underwriting loss | (19,082 | ) | n/a | n/a | n/a | ||||||||||
Net investment income (loss) | (23,623 | ) | 69 | (66,073 | ) | (89,627 | ) | ||||||||
Other expenses | (5,686 | ) | — | — | (5,686 | ) | |||||||||
Interest expense | — | — | (5,162 | ) | (5,162 | ) | |||||||||
Foreign exchange gains | — | — | 800 | 800 | |||||||||||
Income tax benefit | — | — | 5,768 | 5,768 | |||||||||||
Segment loss including non-controlling interests | (48,391 | ) | (535 | ) | (81,320 | ) | (130,246 | ) | |||||||
Segment loss attributable to non-controlling interests | — | 156 | 507 | 663 | |||||||||||
Segment loss | $ | (48,391 | ) | $ | (379 | ) | $ | (80,813 | ) | $ | (129,583 | ) | |||
Property and Casualty Reinsurance - Underwriting Ratios (1): | |||||||||||||||
Loss ratio | 67.5 | % | |||||||||||||
Acquisition cost ratio | 32.6 | % | |||||||||||||
Composite ratio | 100.1 | % | |||||||||||||
General and administrative expense ratio | 4.0 | % | |||||||||||||
Combined ratio | 104.1 | % | |||||||||||||
(1) | Underwriting ratios are calculated by dividing the related expense by net premiums earned. |
Three months ended September 30, 2014 | |||||||||||||||
Property and Casualty Reinsurance | Catastrophe Risk Management | Corporate | Total | ||||||||||||
Revenues | ($ in thousands) | ||||||||||||||
Gross premiums written | $ | 124,931 | $ | 1,472 | $ | — | $ | 126,403 | |||||||
Gross premiums ceded | (150 | ) | — | — | (150 | ) | |||||||||
Net premiums written | 124,781 | 1,472 | — | 126,253 | |||||||||||
Change in net unearned premium reserves | (23,294 | ) | 5,989 | — | (17,305 | ) | |||||||||
Net premiums earned | 101,487 | 7,461 | — | 108,948 | |||||||||||
Expenses | |||||||||||||||
Loss and loss adjustment expenses incurred, net | 60,121 | (6 | ) | — | 60,115 | ||||||||||
Acquisition costs, net | 37,571 | 746 | — | 38,317 | |||||||||||
General and administrative expenses | 5,556 | 648 | 3,920 | 10,124 | |||||||||||
Total expenses | 103,248 | 1,388 | 3,920 | 108,556 | |||||||||||
Net underwriting loss | (1,761 | ) | n/a | n/a | n/a | ||||||||||
Net investment income (loss) | (137 | ) | 882 | 807 | 1,552 | ||||||||||
Other expenses | (2,982 | ) | — | — | (2,982 | ) | |||||||||
Income tax expense | — | — | (1,542 | ) | (1,542 | ) | |||||||||
Segment income (loss) including non-controlling interests | (4,880 | ) | 6,955 | (4,655 | ) | (2,580 | ) | ||||||||
Segment income attributable to non-controlling interests | — | (3,325 | ) | (92 | ) | (3,417 | ) | ||||||||
Segment income (loss) | $ | (4,880 | ) | $ | 3,630 | $ | (4,747 | ) | $ | (5,997 | ) | ||||
Property and Casualty Reinsurance - Underwriting Ratios (1): | |||||||||||||||
Loss ratio | 59.2 | % | |||||||||||||
Acquisition cost ratio | 37.0 | % | |||||||||||||
Composite ratio | 96.2 | % | |||||||||||||
General and administrative expense ratio | 5.5 | % | |||||||||||||
Combined ratio | 101.7 | % | |||||||||||||
Nine months ended September 30, 2014 | |||||||||||||||
Property and Casualty Reinsurance | Catastrophe Risk Management | Corporate | Total | ||||||||||||
Revenues | ($ in thousands) | ||||||||||||||
Gross premiums written | $ | 347,495 | $ | 12,003 | $ | — | $ | 359,498 | |||||||
Gross premiums ceded | (150 | ) | — | — | (150 | ) | |||||||||
Net premiums written | 347,345 | 12,003 | — | 359,348 | |||||||||||
Change in net unearned premium reserves | (96,069 | ) | (2,319 | ) | — | (98,388 | ) | ||||||||
Net premiums earned | 251,276 | 9,684 | — | 260,960 | |||||||||||
Expenses | |||||||||||||||
Loss and loss adjustment expenses incurred, net | 150,789 | (6 | ) | — | 150,783 | ||||||||||
Acquisition costs, net | 92,477 | 854 | — | 93,331 | |||||||||||
General and administrative expenses | 17,020 | 2,160 | 10,518 | 29,698 | |||||||||||
Total expenses | 260,286 | 3,008 | 10,518 | 273,812 | |||||||||||
Net underwriting loss | (9,010 | ) | n/a | n/a | n/a | ||||||||||
Net investment income | 13,458 | 944 | 77,670 | 92,072 | |||||||||||
Other expenses | (4,789 | ) | — | — | (4,789 | ) | |||||||||
Income tax expense | — | — | (3,917 | ) | (3,917 | ) | |||||||||
Segment income (loss) including non-controlling interests | (341 | ) | 7,620 | 63,235 | 70,514 | ||||||||||
Segment income attributable to non-controlling interests | — | (3,854 | ) | (1,586 | ) | (5,440 | ) | ||||||||
Segment income (loss) | $ | (341 | ) | $ | 3,766 | $ | 61,649 | $ | 65,074 | ||||||
Property and Casualty Reinsurance - Underwriting Ratios (1): | |||||||||||||||
Loss ratio | 60.0 | % | |||||||||||||
Acquisition cost ratio | 36.8 | % | |||||||||||||
Composite ratio | 96.8 | % | |||||||||||||
General and administrative expense ratio | 6.8 | % | |||||||||||||
Combined ratio | 103.6 | % | |||||||||||||
(1) | Underwriting ratios are calculated by dividing the related expense by net premiums earned. |
THIRD POINT REINSURANCE LTD.
RECONCILIATION OF NON-GAAP MEASURES AND KEY PERFORMANCE INDICATORS
September 30, 2015 | December 31, 2014 | ||||||
Basic and diluted book value per share numerator: | ($ in thousands, except share and per share amounts) | ||||||
Total shareholders’ equity | $ | 1,351,191 | $ | 1,552,048 | |||
Less: non-controlling interests | (15,922 | ) | (100,135 | ) | |||
Shareholders’ equity attributable to shareholders | 1,335,269 | 1,451,913 | |||||
Effect of dilutive warrants issued to founders and an advisor | 46,512 | 46,512 | |||||
Effect of dilutive stock options issued to directors and employees | 58,070 | 61,705 | |||||
Diluted book value per share numerator | $ | 1,439,851 | $ | 1,560,130 | |||
Basic and diluted book value per share denominator: | |||||||
Issued and outstanding shares | 104,217,321 | 103,397,542 | |||||
Effect of dilutive warrants issued to founders and an advisor | 4,651,163 | 4,651,163 | |||||
Effect of dilutive stock options issued to directors and employees | 5,788,391 | 6,151,903 | |||||
Effect of dilutive restricted shares issued to directors and employees | 954,829 | 922,610 | |||||
Diluted book value per share denominator | 115,611,704 | 115,123,218 | |||||
Basic book value per share | $ | 12.81 | $ | 14.04 | |||
Diluted book value per share | $ | 12.45 | $ | 13.55 | |||
Three months ended | Nine months ended | ||||||||||||||
September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||||||
($ in thousands) | |||||||||||||||
Net investment income (loss) on float | $ | (51,988 | ) | $ | (137 | ) | $ | (23,623 | ) | $ | 13,458 | ||||
Net investment income (loss) on capital | (141,971 | ) | 807 | (67,057 | ) | 77,670 | |||||||||
Net investment income (loss) on investments managed by Third Point LLC | (193,959 | ) | 670 | (90,680 | ) | 91,128 | |||||||||
Investment income on cash held by the Catastrophe Reinsurer and Catastrophe Fund | 2 | 27 | 29 | 84 | |||||||||||
Net gain on catastrophe bond held by Catastrophe Reinsurer | — | 75 | 10 | 80 | |||||||||||
Net gain on investment in Kiskadee Fund | 801 | — | 984 | — | |||||||||||
Net gain on reinsurance contract derivatives written by the Catastrophe Reinsurer | — | 780 | 30 | 780 | |||||||||||
$ | (193,156 | ) | $ | 1,552 | $ | (89,627 | ) | $ | 92,072 | ||||||
Three months ended | Nine months ended | ||||||||||||||
September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||||||
($ in thousands) | |||||||||||||||
Net income (loss) | $ | (195,715 | ) | $ | (5,997 | ) | $ | (129,583 | ) | $ | 65,074 | ||||
Shareholders’ equity attributable to shareholders - beginning of period | $ | 1,526,004 | $ | 1,467,229 | $ | 1,451,913 | $ | 1,391,661 | |||||||
Return on beginning shareholders’ equity | (12.8 | )% | (0.4 | )% | (8.9 | )% | 4.7 | % | |||||||
Non-GAAP Financial Measures and Key Performance Indicators
Book Value per Share and Diluted Book Value per Share
Book value per share and diluted book value per share are non-GAAP financial measures. Book value per share is calculated by dividing shareholders’ equity attributable to shareholders by the number of issued and outstanding shares at period end. Diluted book value per share is calculated by dividing shareholders’ equity attributable to shareholders and adjusted to include unvested restricted shares and the exercise of all in-the-money options and warrants. For unvested restricted shares with a performance condition, we include the unvested restricted shares for which we consider vesting to be probable. We believe that long-term growth in diluted book value per share is the most important measure of our financial performance because it allows management and investors to track over time the value created by the retention of earnings. In addition, we believe this metric is used by investors because it provides a basis for comparison with other companies in our industry that also report a similar measure.
Net Investment Income on Float
Net investment income on float is an important aspect of our property and casualty reinsurance operation. In an insurance or reinsurance operation, float arises because premiums from reinsurance contracts and proceeds from deposit accounted contracts are collected before losses are paid. In some instances, the interval between receipts and payments can extend over many years. During this time interval, insurance and reinsurance companies invest the premiums received and generate investment returns. Float is not a concept defined by U.S. GAAP and therefore, there are no comparable U.S. GAAP measures and as a result, is considered to be a non-GAAP measure. We believe that net investment income generated on float is an important consideration in evaluating the overall contribution of our property and casualty reinsurance operation to our consolidated results. It is also explicitly considered as part of the evaluation of management’s performance for purposes of incentive compensation.
Net Investment Return on Investments Managed by Third Point LLC
Net investment return represents the return on our investments managed by Third Point LLC, net of fees. The net investment return on investments managed by Third Point LLC is the percentage change in value of a dollar invested over the reporting period on our investment assets managed by Third Point LLC, net of non-controlling interest. The stated return is net of withholding taxes, which are presented as a component of income tax expense in our condensed consolidated statements of income (loss). Net investment return is the key indicator by which we measure the performance of Third Point LLC, our investment manager.
Return on Beginning Shareholders’ Equity
Return on beginning shareholders’ equity as presented is a non-GAAP financial measure. Return on beginning shareholders’ equity is calculated by dividing net income (loss) by the beginning of year shareholders’ equity attributable to shareholders. We believe this metric is used by investors to supplement measures of our profitability.
Third Point Reinsurance Ltd.
Financial Supplement
September 30, 2015
(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.
The Waterfront, Chesney House, 1st Floor | Manoj Gupta - Head of Investor Relations and Business Development | |
96 Pitts Bays Road | Tel: (441) 542-3333 | |
Pembroke HM 08 | Email: [email protected] | |
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. and its directly and indirectly owned subsidiaries, including Third Point Reinsurance Company Ltd. (“Third Point Re”) 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 refer to Third Point Reinsurance Investment Management Ltd. as the “Catastrophe Fund Manager,” Third Point Reinsurance Opportunities Fund Ltd. as the “Catastrophe Fund” and Third Point Re Cat Ltd. as the “Catastrophe Reinsurer.” 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 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 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 the Company’s expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: (i) limited historical information about the Company; (ii) operational structure currently is being developed; (iii) fluctuation in results of operations; (iv) more established competitors; (v) losses exceeding reserves; (vi) downgrades or withdrawal of ratings by rating agencies; (vii) dependence on key executives; (viii) dependence on letter of credit facilities that may not be available on commercially acceptable terms; (ix) potential inability to pay dividends; (x) inability to service the Company’s indebtedness; (xi) limited cash flow and liquidity due to indebtedness; (xii) unavailability of capital in the future; (xiii) fluctuations in market price of the Company's common shares; (xiv) dependence on clients’ evaluations of risks associated with such clients’ insurance underwriting; (xv) suspension or revocation of reinsurance licenses; (xvi) potentially being deemed an investment company under U.S. federal securities law; (xvii) potential characterization of the Company and/or Third Point Reinsurance Company Ltd. as a passive foreign investment company; (xviii) future strategic transactions such as acquisitions, dispositions, merger or joint ventures; (xix) dependence on Third Point LLC to implement the Company’s investment strategy; (xx) termination by Third Point LLC of the investment management agreements; (xxi) risks associated with the Company’s investment strategy being greater than those faced by competitors; (xxii) increased regulation or scrutiny of alternative investment advisers affecting the Company’s reputation; (xxiii) the Company potentially becoming subject to U.S. federal income taxation; (xxiv) the Company potentially becoming subject to U.S. withholding and information reporting requirements under the Foreign Account Tax Compliance Act provisions; and (xxv) other risks and factors listed under “Risk Factors” in our most recent Annual Report on Form 10-K and other periodic and current disclosures filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the date made and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Page 1 of 18
Third Point Reinsurance Ltd.
Table of Contents
Key Performance Indicators | ||
Consolidated Financial Statements | ||
Operating Segment Information | ||
Segment Reporting - Three months ended September 30, 2015 and 2014 | ||
Segment Reporting - Nine months ended September 30, 2015 and 2014 | ||
Investments | ||
Investment Return by Investment Strategy - by Quarter | ||
Other | ||
General and Administrative Expenses - by Quarter | ||
Book Value per Share and Diluted Book Value per Share - by Quarter | ||
Earnings (Loss) per Share - by Quarter | ||
Return on Beginning Shareholders’ Equity - by Quarter | ||
Page 2 of 18
Third Point Reinsurance Ltd.
Key Performance Indicators
September 30, 2015 and 2014
(expressed in thousands of U.S. dollars, except per share data and ratios)
Three months ended | Nine months ended | ||||||||||||||
September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | ||||||||||||
Key underwriting metrics for Property and Casualty Reinsurance segment: | |||||||||||||||
Net underwriting loss(1) | $ | (5,835 | ) | $ | (1,761 | ) | $ | (19,082 | ) | $ | (9,010 | ) | |||
Combined ratio(1) | 102.8 | % | 101.7 | % | 104.1 | % | 103.6 | % | |||||||
Key investment return metrics: | |||||||||||||||
Net investment income (loss) | $ | (193,156 | ) | $ | 1,552 | $ | (89,627 | ) | $ | 92,072 | |||||
Net investment return on investments managed by Third Point LLC | (8.7 | )% | (0.04 | )% | (4.3 | )% | 5.5 | % | |||||||
Key shareholders’ value creation metrics: | |||||||||||||||
Book value per share(2) (3) | $ | 12.81 | $ | 14.04 | $ | 12.81 | $ | 14.04 | |||||||
Diluted book value per share(2) (3) | $ | 12.45 | $ | 13.55 | $ | 12.45 | $ | 13.55 | |||||||
Growth in diluted book value per share(2) | (11.8 | )% | (0.3 | )% | (8.1 | )% | 4.3 | % | |||||||
Return on beginning shareholders’ equity(2) | (12.8 | )% | (0.4 | )% | (8.9 | )% | 4.7 | % | |||||||
(1) | Refer to accompanying “Segment Reporting - Three and nine months ended September 30, 2015 and 2014” results for a calculation of net underwriting loss and combined ratio. |
(2) | Book value per share, diluted book value per share and return on beginning shareholders’ equity are non-GAAP financial measures. Refer to accompanying “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. |
(3) | Prior year comparative represents amounts as of December 31, 2014. |
Page 3 of 18
Third Point Reinsurance Ltd.
Condensed Consolidated Balance Sheets - by Quarter
(expressed in thousands of U.S. dollars)
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Assets | ||||||||||||||||||||
Equity securities, trading, at fair value | $ | 1,289,840 | $ | 1,332,489 | $ | 1,239,988 | $ | 1,177,796 | $ | 956,604 | ||||||||||
Debt securities, trading, at fair value | 737,039 | 801,725 | 736,243 | 569,648 | 660,677 | |||||||||||||||
Other investments, at fair value | 52,882 | 72,699 | 61,466 | 83,394 | 97,765 | |||||||||||||||
Total investments in securities and commodities | 2,079,761 | 2,206,913 | 2,037,697 | 1,830,838 | 1,715,046 | |||||||||||||||
Cash and cash equivalents | 10,819 | 46,800 | 12,348 | 28,734 | 32,693 | |||||||||||||||
Restricted cash and cash equivalents | 604,428 | 589,231 | 583,474 | 417,307 | 261,966 | |||||||||||||||
Due from brokers | 303,597 | 263,440 | 228,793 | 58,241 | 182,927 | |||||||||||||||
Securities purchased under an agreement to sell | — | 17,963 | 17,630 | 29,852 | 19,897 | |||||||||||||||
Derivative assets, at fair value | 27,337 | 27,995 | 25,223 | 21,130 | 37,260 | |||||||||||||||
Interest and dividends receivable | 10,030 | 5,508 | 5,902 | 2,602 | 5,032 | |||||||||||||||
Reinsurance balances receivable | 314,693 | 291,226 | 250,154 | 303,649 | 269,747 | |||||||||||||||
Deferred acquisition costs, net | 192,451 | 180,452 | 164,096 | 155,901 | 124,373 | |||||||||||||||
Unearned premiums ceded | 808 | 1,226 | — | — | 91 | |||||||||||||||
Loss and loss adjustment expenses recoverable | 184 | 184 | 408 | 814 | 1,412 | |||||||||||||||
Other assets | 14,231 | 5,923 | 6,857 | 3,512 | 3,701 | |||||||||||||||
Total assets | $ | 3,558,339 | $ | 3,636,861 | $ | 3,332,582 | $ | 2,852,580 | $ | 2,654,145 | ||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Accounts payable and accrued expenses | $ | 12,298 | $ | 12,356 | $ | 8,792 | $ | 10,085 | $ | 7,521 | ||||||||||
Reinsurance balances payable | 34,833 | 32,662 | 53,798 | 27,040 | 21,651 | |||||||||||||||
Deposit liabilities | 167,210 | 147,161 | 146,719 | 145,430 | 142,990 | |||||||||||||||
Unearned premium reserves | 567,565 | 571,580 | 508,014 | 433,809 | 363,666 | |||||||||||||||
Loss and loss adjustment expense reserves | 420,649 | 312,945 | 273,937 | 277,362 | 187,313 | |||||||||||||||
Securities sold, not yet purchased, at fair value | 172,074 | 151,115 | 104,857 | 82,485 | 45,667 | |||||||||||||||
Securities sold under an agreement to repurchase | — | 10,992 | 61,939 | — | — | |||||||||||||||
Due to brokers | 695,019 | 681,280 | 465,558 | 312,609 | 306,927 | |||||||||||||||
Derivative liabilities, at fair value | 22,495 | 19,139 | 17,020 | 11,015 | 12,346 | |||||||||||||||
Performance fee payable to related party | — | 25,059 | 15,844 | — | 21,837 | |||||||||||||||
Interest and dividends payable | 1,673 | 3,678 | 1,617 | 697 | 589 | |||||||||||||||
Senior notes payable, net of deferred costs | 113,332 | 113,290 | 113,315 | — | — | |||||||||||||||
Total liabilities | 2,207,148 | 2,081,257 | 1,771,410 | 1,300,532 | 1,110,507 | |||||||||||||||
Commitments and contingent liabilities | ||||||||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Preference shares | — | — | — | — | — | |||||||||||||||
Common shares | 10,548 | 10,526 | 10,517 | 10,447 | 10,403 | |||||||||||||||
Additional paid-in capital | 1,078,327 | 1,073,369 | 1,069,617 | 1,065,489 | 1,063,254 | |||||||||||||||
Retained earnings | 246,394 | 442,109 | 426,447 | 375,977 | 390,656 | |||||||||||||||
Shareholders’ equity attributable to shareholders | 1,335,269 | 1,526,004 | 1,506,581 | 1,451,913 | 1,464,313 | |||||||||||||||
Non-controlling interests | 15,922 | 29,600 | 54,591 | 100,135 | 79,325 | |||||||||||||||
Total shareholders’ equity | 1,351,191 | 1,555,604 | 1,561,172 | 1,552,048 | 1,543,638 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,558,339 | $ | 3,636,861 | $ | 3,332,582 | $ | 2,852,580 | $ | 2,654,145 | ||||||||||
Page 4 of 18
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, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | |||||||||||||
Revenues | ||||||||||||||||
Gross premiums written | $ | 205,583 | $ | 126,403 | $ | 603,259 | $ | 359,498 | ||||||||
Gross premiums ceded | (375 | ) | (150 | ) | (1,852 | ) | (150 | ) | ||||||||
Net premiums written | 205,208 | 126,253 | 601,407 | 359,348 | ||||||||||||
Change in net unearned premium reserves | 3,597 | (17,305 | ) | (132,949 | ) | (98,388 | ) | |||||||||
Net premiums earned | 208,805 | 108,948 | 468,458 | 260,960 | ||||||||||||
Net investment income (loss) | (193,156 | ) | 1,552 | (89,627 | ) | 92,072 | ||||||||||
Total revenues | 15,649 | 110,500 | 378,831 | 353,032 | ||||||||||||
Expenses | ||||||||||||||||
Loss and loss adjustment expenses incurred, net | 158,537 | 60,115 | 316,336 | 150,783 | ||||||||||||
Acquisition costs, net | 50,509 | 38,317 | 152,664 | 93,331 | ||||||||||||
General and administrative expenses | 9,822 | 10,124 | 35,797 | 29,698 | ||||||||||||
Other expenses | 670 | 2,982 | 5,686 | 4,789 | ||||||||||||
Interest expense | 2,074 | — | 5,162 | — | ||||||||||||
Foreign exchange gains | (746 | ) | — | (800 | ) | — | ||||||||||
Total expenses | 220,866 | 111,538 | 514,845 | 278,601 | ||||||||||||
Income (loss) before income tax (expense) benefit | (205,217 | ) | (1,038 | ) | (136,014 | ) | 74,431 | |||||||||
Income tax (expense) benefit | 7,781 | (1,542 | ) | 5,768 | (3,917 | ) | ||||||||||
Income (loss) including non-controlling interests | (197,436 | ) | (2,580 | ) | (130,246 | ) | 70,514 | |||||||||
(Income) loss attributable to non-controlling interests | 1,721 | (3,417 | ) | 663 | (5,440 | ) | ||||||||||
Net income (loss) | $ | (195,715 | ) | $ | (5,997 | ) | $ | (129,583 | ) | $ | 65,074 | |||||
Earnings (loss) per share | ||||||||||||||||
Basic | $ | (1.88 | ) | $ | (0.06 | ) | $ | (1.25 | ) | $ | 0.63 | |||||
Diluted | $ | (1.88 | ) | $ | (0.06 | ) | $ | (1.25 | ) | $ | 0.61 | |||||
Weighted average number of ordinary shares used in the determination of earnings (loss) per share | ||||||||||||||||
Basic | 104,117,448 | 103,295,920 | 103,931,871 | 103,275,204 | ||||||||||||
Diluted | 104,117,448 | 103,295,920 | 103,931,871 | 106,454,775 | ||||||||||||
(1) | Basic earnings (loss) 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 convertible securities such as unvested restricted shares. Diluted earnings (loss) per share are based on the weighted average number of common shares and share equivalents including any dilutive effects of warrants, options and other awards 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 included in the number of shares outstanding for both basic and diluted earnings (loss) per share calculations. We treat certain of our unvested restricted shares as participating securities. In the event of a net loss, the participating securities are excluded from the calculation of both basic and diluted loss per share. |
Page 5 of 18
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, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | $ | 205,583 | $ | 184,342 | $ | 213,334 | $ | 253,802 | $ | 126,403 | ||||||||||
Gross premiums ceded | (375 | ) | (1,425 | ) | (52 | ) | — | (150 | ) | |||||||||||
Net premiums written | 205,208 | 182,917 | 213,282 | 253,802 | 126,253 | |||||||||||||||
Change in net unearned premium reserves | 3,597 | (62,339 | ) | (74,207 | ) | (70,230 | ) | (17,305 | ) | |||||||||||
Net premiums earned | 208,805 | 120,578 | 139,075 | 183,572 | 108,948 | |||||||||||||||
Net investment income (loss) | (193,156 | ) | 38,611 | 64,918 | (6,490 | ) | 1,552 | |||||||||||||
Total revenues | 15,649 | 159,189 | 203,993 | 177,082 | 110,500 | |||||||||||||||
Expenses | ||||||||||||||||||||
Loss and loss adjustment expenses incurred, net | 158,537 | 76,053 | 81,746 | 132,364 | 60,115 | |||||||||||||||
Acquisition costs, net | 50,509 | 47,498 | 54,657 | 43,875 | 38,317 | |||||||||||||||
General and administrative expenses | 9,822 | 14,267 | 11,708 | 10,310 | 10,124 | |||||||||||||||
Other expenses | 670 | 2,315 | 2,701 | 2,606 | 2,982 | |||||||||||||||
Interest expense | 2,074 | 2,052 | 1,036 | — | — | |||||||||||||||
Foreign exchange (gains) losses | (746 | ) | 139 | (193 | ) | — | — | |||||||||||||
Total expenses | 220,866 | 142,324 | 151,655 | 189,155 | 111,538 | |||||||||||||||
Income (loss) before income tax (expense) benefit | (205,217 | ) | 16,865 | 52,338 | (12,073 | ) | (1,038 | ) | ||||||||||||
Income tax (expense) benefit | 7,781 | (708 | ) | (1,305 | ) | (1,731 | ) | (1,542 | ) | |||||||||||
Income (loss) including non-controlling interests | (197,436 | ) | 16,157 | 51,033 | (13,804 | ) | (2,580 | ) | ||||||||||||
(Income) loss attributable to non-controlling interests | 1,721 | (495 | ) | (563 | ) | (875 | ) | (3,417 | ) | |||||||||||
Net income (loss) | $ | (195,715 | ) | $ | 15,662 | $ | 50,470 | $ | (14,679 | ) | $ | (5,997 | ) | |||||||
Earnings (loss) per share | ||||||||||||||||||||
Basic | $ | (1.88 | ) | $ | 0.15 | $ | 0.48 | $ | (0.14 | ) | $ | (0.06 | ) | |||||||
Diluted | $ | (1.88 | ) | $ | 0.15 | $ | 0.47 | $ | (0.14 | ) | $ | (0.06 | ) | |||||||
Weighted average number of ordinary shares used in the determination of earnings (loss) per share | ||||||||||||||||||||
Basic | 104,117,448 | 103,927,761 | 103,753,065 | 103,324,616 | 103,295,920 | |||||||||||||||
Diluted | 104,117,448 | 106,696,874 | 106,144,183 | 103,324,616 | 103,295,920 | |||||||||||||||
(1) | Basic earnings (loss) 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 convertible securities such as unvested restricted shares. Diluted earnings (loss) per share are based on the weighted average number of common shares and share equivalents including any dilutive effects of warrants, options and other awards 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 included in the number of shares outstanding for both basic and diluted earnings (loss) per share calculations. We treat certain of our unvested restricted shares as participating securities. In the event of a net loss, the participating securities are excluded from the calculation of both basic and diluted loss per share. |
Page 6 of 18
Third Point Reinsurance Ltd.
Segment Reporting - Three months ended September 30, 2015 and 2014
(expressed in thousands of U.S. dollars)
Three months ended September 30, 2015 | Three months ended September 30, 2014 | |||||||||||||||||||||||||||||||
Property and Casualty Reinsurance | Catastrophe Risk Management | Corporate | Total | Property and Casualty Reinsurance | Catastrophe Risk Management | Corporate | Total | |||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Gross premiums written | $ | 205,729 | $ | (146 | ) | $ | — | $ | 205,583 | $ | 124,931 | $ | 1,472 | $ | — | $ | 126,403 | |||||||||||||||
Gross premiums ceded | (375 | ) | — | — | (375 | ) | (150 | ) | — | — | (150 | ) | ||||||||||||||||||||
Net premiums written | 205,354 | (146 | ) | — | 205,208 | 124,781 | 1,472 | — | 126,253 | |||||||||||||||||||||||
Change in net unearned premium reserves | 3,597 | — | — | 3,597 | (23,294 | ) | 5,989 | — | (17,305 | ) | ||||||||||||||||||||||
Net premiums earned | 208,951 | (146 | ) | — | 208,805 | 101,487 | 7,461 | — | 108,948 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||
Loss and loss adjustment expenses incurred, net | 158,387 | 150 | — | 158,537 | 60,121 | (6 | ) | — | 60,115 | |||||||||||||||||||||||
Acquisition costs, net | 50,527 | (18 | ) | — | 50,509 | 37,571 | 746 | — | 38,317 | |||||||||||||||||||||||
General and administrative expenses | 5,872 | 32 | 3,918 | 9,822 | 5,556 | 648 | 3,920 | 10,124 | ||||||||||||||||||||||||
Total expenses | 214,786 | 164 | 3,918 | 218,868 | 103,248 | 1,388 | 3,920 | 108,556 | ||||||||||||||||||||||||
Net underwriting loss | (5,835 | ) | n/a | n/a | n/a | (1,761 | ) | n/a | n/a | n/a | ||||||||||||||||||||||
Net investment income (loss) | (51,988 | ) | 1 | (141,169 | ) | (193,156 | ) | (137 | ) | 882 | 807 | 1,552 | ||||||||||||||||||||
Other expenses | (670 | ) | — | — | (670 | ) | (2,982 | ) | — | — | (2,982 | ) | ||||||||||||||||||||
Interest expense | — | — | (2,074 | ) | (2,074 | ) | — | — | — | — | ||||||||||||||||||||||
Foreign exchange gains | — | — | 746 | 746 | — | — | — | — | ||||||||||||||||||||||||
Income tax (expense) benefit | — | — | 7,781 | 7,781 | — | — | (1,542 | ) | (1,542 | ) | ||||||||||||||||||||||
Segment income (loss) including non-controlling interests | (58,493 | ) | (309 | ) | (138,634 | ) | (197,436 | ) | (4,880 | ) | 6,955 | (4,655 | ) | (2,580 | ) | |||||||||||||||||
Segment (income) loss attributable to non-controlling interests | — | 140 | 1,581 | 1,721 | — | (3,325 | ) | (92 | ) | (3,417 | ) | |||||||||||||||||||||
Segment income (loss) | $ | (58,493 | ) | $ | (169 | ) | $ | (137,053 | ) | $ | (195,715 | ) | $ | (4,880 | ) | $ | 3,630 | $ | (4,747 | ) | $ | (5,997 | ) | |||||||||
Property and Casualty Reinsurance - Underwriting Ratios (1): | ||||||||||||||||||||||||||||||||
Loss ratio | 75.8 | % | 59.2 | % | ||||||||||||||||||||||||||||
Acquisition cost ratio | 24.2 | % | 37.0 | % | ||||||||||||||||||||||||||||
Composite ratio | 100.0 | % | 96.2 | % | ||||||||||||||||||||||||||||
General and administrative expense ratio | 2.8 | % | 5.5 | % | ||||||||||||||||||||||||||||
Combined ratio | 102.8 | % | 101.7 | % | ||||||||||||||||||||||||||||
(1) | Underwriting ratios are calculated by dividing the related expense by net premiums earned. |
Page 7 of 18
Third Point Reinsurance Ltd.
Segment Reporting - Nine months ended September 30, 2015 and 2014
(expressed in thousands of U.S. dollars)
Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | |||||||||||||||||||||||||||||||
Property and Casualty Reinsurance | Catastrophe Risk Management | Corporate | Total | Property and Casualty Reinsurance | Catastrophe Risk Management | Corporate | Total | |||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Gross premiums written | $ | 603,303 | $ | (44 | ) | $ | — | $ | 603,259 | $ | 347,495 | $ | 12,003 | $ | — | $ | 359,498 | |||||||||||||||
Gross premiums ceded | (1,852 | ) | — | — | (1,852 | ) | (150 | ) | — | — | (150 | ) | ||||||||||||||||||||
Net premiums written | 601,451 | (44 | ) | — | 601,407 | 347,345 | 12,003 | — | 359,348 | |||||||||||||||||||||||
Change in net unearned premium reserves | (133,001 | ) | 52 | — | (132,949 | ) | (96,069 | ) | (2,319 | ) | — | (98,388 | ) | |||||||||||||||||||
Net premiums earned | 468,450 | 8 | — | 468,458 | 251,276 | 9,684 | — | 260,960 | ||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||
Loss and loss adjustment expenses incurred, net | 316,186 | 150 | — | 316,336 | 150,789 | (6 | ) | — | 150,783 | |||||||||||||||||||||||
Acquisition costs, net | 152,665 | (1 | ) | — | 152,664 | 92,477 | 854 | — | 93,331 | |||||||||||||||||||||||
General and administrative expenses | 18,681 | 463 | 16,653 | 35,797 | 17,020 | 2,160 | 10,518 | 29,698 | ||||||||||||||||||||||||
Total expenses | 487,532 | 612 | 16,653 | 504,797 | 260,286 | 3,008 | 10,518 | 273,812 | ||||||||||||||||||||||||
Net underwriting loss | (19,082 | ) | n/a | n/a | n/a | (9,010 | ) | n/a | n/a | n/a | ||||||||||||||||||||||
Net investment income (loss) | (23,623 | ) | 69 | (66,073 | ) | (89,627 | ) | 13,458 | 944 | 77,670 | 92,072 | |||||||||||||||||||||
Other expenses | (5,686 | ) | — | — | (5,686 | ) | (4,789 | ) | — | — | (4,789 | ) | ||||||||||||||||||||
Interest expense | — | — | (5,162 | ) | (5,162 | ) | — | — | — | — | ||||||||||||||||||||||
Foreign exchange gains | — | — | 800 | 800 | — | — | — | — | ||||||||||||||||||||||||
Income tax (expense) benefit | — | — | 5,768 | 5,768 | — | — | (3,917 | ) | (3,917 | ) | ||||||||||||||||||||||
Segment income (loss) including non-controlling interests | (48,391 | ) | (535 | ) | (81,320 | ) | (130,246 | ) | (341 | ) | 7,620 | 63,235 | 70,514 | |||||||||||||||||||
Segment (income) loss attributable to non-controlling interests | — | 156 | 507 | 663 | — | (3,854 | ) | (1,586 | ) | (5,440 | ) | |||||||||||||||||||||
Segment income (loss) | $ | (48,391 | ) | $ | (379 | ) | $ | (80,813 | ) | $ | (129,583 | ) | $ | (341 | ) | $ | 3,766 | $ | 61,649 | $ | 65,074 | |||||||||||
Property and Casualty Reinsurance - Underwriting Ratios (1): | ||||||||||||||||||||||||||||||||
Loss ratio | 67.5 | % | 60.0 | % | ||||||||||||||||||||||||||||
Acquisition cost ratio | 32.6 | % | 36.8 | % | ||||||||||||||||||||||||||||
Composite ratio | 100.1 | % | 96.8 | % | ||||||||||||||||||||||||||||
General and administrative expense ratio | 4.0 | % | 6.8 | % | ||||||||||||||||||||||||||||
Combined ratio | 104.1 | % | 103.6 | % | ||||||||||||||||||||||||||||
(1) | Underwriting ratios are calculated by dividing the related expense by net premiums earned. |
Page 8 of 18
Third Point Reinsurance Ltd.
Property and Casualty Reinsurance Segment - by Quarter
(expressed in thousands of U.S. dollars)
Three Months Ended | ||||||||||||||||||||
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | $ | 205,729 | $ | 184,191 | $ | 213,383 | $ | 253,810 | $ | 124,931 | ||||||||||
Gross premiums ceded | (375 | ) | (1,425 | ) | (52 | ) | — | (150 | ) | |||||||||||
Net premiums written | 205,354 | 182,766 | 213,331 | 253,810 | 124,781 | |||||||||||||||
Change in net unearned premium reserves | 3,597 | (62,384 | ) | (74,214 | ) | (72,789 | ) | (23,294 | ) | |||||||||||
Net premiums earned | 208,951 | 120,382 | 139,117 | 181,021 | 101,487 | |||||||||||||||
Expenses | ||||||||||||||||||||
Loss and loss adjustment expenses incurred, net | 158,387 | 76,053 | 81,746 | 132,391 | 60,121 | |||||||||||||||
Acquisition costs, net | 50,527 | 47,475 | 54,663 | 43,677 | 37,571 | |||||||||||||||
General and administrative expenses | 5,872 | 6,242 | 6,567 | 5,495 | 5,556 | |||||||||||||||
Total expenses | 214,786 | 129,770 | 142,976 | 181,563 | 103,248 | |||||||||||||||
Net underwriting loss | (5,835 | ) | (9,388 | ) | (3,859 | ) | (542 | ) | (1,761 | ) | ||||||||||
Net investment income (loss) | (51,988 | ) | 9,790 | 18,575 | (2,153 | ) | (137 | ) | ||||||||||||
Other expenses | (670 | ) | (2,315 | ) | (2,701 | ) | (2,606 | ) | (2,982 | ) | ||||||||||
Segment income (loss) | $ | (58,493 | ) | $ | (1,913 | ) | $ | 12,015 | $ | (5,301 | ) | $ | (4,880 | ) | ||||||
Underwriting ratios (1): | ||||||||||||||||||||
Loss ratio | 75.8 | % | 63.2 | % | 58.8 | % | 73.1 | % | 59.2 | % | ||||||||||
Acquisition cost ratio | 24.2 | % | 39.4 | % | 39.3 | % | 24.1 | % | 37.0 | % | ||||||||||
Composite ratio | 100.0 | % | 102.6 | % | 98.1 | % | 97.2 | % | 96.2 | % | ||||||||||
General and administrative expense ratio | 2.8 | % | 5.2 | % | 4.7 | % | 3.0 | % | 5.5 | % | ||||||||||
Combined ratio | 102.8 | % | 107.8 | % | 102.8 | % | 100.2 | % | 101.7 | % | ||||||||||
(1) | Underwriting ratios are calculated by dividing the related expense by net premiums earned. |
Page 9 of 18
Third Point Reinsurance Ltd.
Catastrophe Risk Management Segment - by Quarter
(expressed in thousands of U.S. dollars)
Three Months Ended | ||||||||||||||||||||
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | $ | (146 | ) | $ | 151 | $ | (49 | ) | $ | (8 | ) | $ | 1,472 | |||||||
Gross premiums ceded | — | — | — | — | — | |||||||||||||||
Net premiums written | (146 | ) | 151 | (49 | ) | (8 | ) | 1,472 | ||||||||||||
Change in net unearned premium reserves | — | 45 | 7 | 2,559 | 5,989 | |||||||||||||||
Net premiums earned | (146 | ) | 196 | (42 | ) | 2,551 | 7,461 | |||||||||||||
Expenses | ||||||||||||||||||||
Loss and loss adjustment expenses incurred, net | 150 | — | — | (27 | ) | (6 | ) | |||||||||||||
Acquisition costs, net | (18 | ) | 23 | (6 | ) | 198 | 746 | |||||||||||||
General and administrative expenses | 32 | 198 | 233 | 953 | 648 | |||||||||||||||
Total expenses | 164 | 221 | 227 | 1,124 | 1,388 | |||||||||||||||
Net investment income | 1 | 43 | 25 | 284 | 882 | |||||||||||||||
Segment income (loss) including non-controlling interests | (309 | ) | 18 | (244 | ) | 1,711 | 6,955 | |||||||||||||
Segment (income) loss attributable to non-controlling interests | 140 | (64 | ) | 80 | (871 | ) | (3,325 | ) | ||||||||||||
Segment income (loss) | $ | (169 | ) | $ | (46 | ) | $ | (164 | ) | $ | 840 | $ | 3,630 | |||||||
Note: In December 2014, we announced that we would no longer accept investments in the Catastrophe Fund, that no new business would be written in the Catastrophe Reinsurer and that we would be redeeming all existing investments in the Catastrophe Fund.
Page 10 of 18
Third Point Reinsurance Ltd.
Corporate Function - by Quarter
(expressed in thousands of U.S. dollars)
Three Months Ended | ||||||||||||||||||||
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Revenues | ||||||||||||||||||||
Gross premiums written | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Gross premiums ceded | — | — | — | — | — | |||||||||||||||
Net premiums written | — | — | — | — | — | |||||||||||||||
Change in net unearned premium reserves | — | — | — | — | — | |||||||||||||||
Net premiums earned | — | — | — | — | — | |||||||||||||||
Expenses | ||||||||||||||||||||
Loss and loss adjustment expenses incurred, net | — | — | — | — | — | |||||||||||||||
Acquisition costs, net | — | — | — | — | — | |||||||||||||||
General and administrative expenses | 3,918 | 7,827 | 4,908 | 3,862 | 3,920 | |||||||||||||||
Total expenses | 3,918 | 7,827 | 4,908 | 3,862 | 3,920 | |||||||||||||||
Net investment income (loss) | (141,169 | ) | 28,778 | 46,318 | (4,621 | ) | 807 | |||||||||||||
Interest expense | (2,074 | ) | (2,052 | ) | (1,036 | ) | — | — | ||||||||||||
Foreign exchange gains (losses) | 746 | (139 | ) | 193 | — | — | ||||||||||||||
Income tax (expense) benefit | 7,781 | (708 | ) | (1,305 | ) | (1,731 | ) | (1,542 | ) | |||||||||||
Segment income (loss) including non-controlling interests | (138,634 | ) | 18,052 | 39,262 | (10,214 | ) | (4,655 | ) | ||||||||||||
Segment income attributable to non-controlling interests | 1,581 | (431 | ) | (643 | ) | (4 | ) | (92 | ) | |||||||||||
Segment income (loss) | $ | (137,053 | ) | $ | 17,621 | $ | 38,619 | $ | (10,218 | ) | $ | (4,747 | ) | |||||||
Page 11 of 18
Third Point Reinsurance Ltd.
Gross Premiums Written by Lines of Business - by Quarter
(expressed in thousands of U.S. dollars)
Three Months Ended | ||||||||||||||||||||
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Property | $ | 21,863 | $ | 27,535 | $ | 21,456 | $ | 28,258 | $ | (2,810 | ) | |||||||||
Workers Compensation | 14,769 | 44,357 | 5,729 | 8,327 | 17,698 | |||||||||||||||
Auto | 91,565 | 73,666 | (16,241 | ) | 14,029 | 70,581 | ||||||||||||||
General Liability | 55,646 | 21,134 | 20,365 | 172 | 40,190 | |||||||||||||||
Professional Liability | — | 10,000 | — | — | — | |||||||||||||||
Casualty | 161,980 | 149,157 | 9,853 | 22,528 | 128,469 | |||||||||||||||
Agriculture | — | (1 | ) | — | 26 | 84 | ||||||||||||||
Credit & Financial lines | 20,611 | 7,500 | 18,875 | 8,026 | (141 | ) | ||||||||||||||
Multi-line | 1,275 | — | 163,199 | 194,972 | (671 | ) | ||||||||||||||
Specialty | 21,886 | 7,499 | 182,074 | 203,024 | (728 | ) | ||||||||||||||
Total property and casualty reinsurance segment | 205,729 | 184,191 | 213,383 | 253,810 | 124,931 | |||||||||||||||
Catastrophe risk management | (146 | ) | 151 | (49 | ) | (8 | ) | 1,472 | ||||||||||||
$ | 205,583 | $ | 184,342 | $ | 213,334 | $ | 253,802 | $ | 126,403 | |||||||||||
Page 12 of 18
Third Point Reinsurance Ltd.
Investments Managed by Third Point LLC - by Quarter
(expressed in thousands of U.S. dollars)
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | |||||||||||||||
Assets | |||||||||||||||||||
Total investments in securities and commodities | $ | 2,053,777 | $ | 2,181,728 | $ | 2,032,653 | $ | 1,828,761 | $ | 1,713,000 | |||||||||
Cash and cash equivalents | 10 | 25,221 | 29 | 3 | 10,003 | ||||||||||||||
Restricted cash and cash equivalents (1) | 604,428 | 566,716 | 508,049 | 308,763 | 160,618 | ||||||||||||||
Due from brokers | 303,597 | 263,440 | 228,793 | 58,241 | 182,927 | ||||||||||||||
Securities purchased under an agreement to sell | — | 17,963 | 17,630 | 29,852 | 19,897 | ||||||||||||||
Derivative assets | 27,337 | 27,995 | 25,223 | 21,130 | 37,260 | ||||||||||||||
Interest and dividends receivable | 10,030 | 5,505 | 5,898 | 2,590 | 5,021 | ||||||||||||||
Other assets | — | — | — | 325 | 799 | ||||||||||||||
Total assets | $ | 2,999,179 | $ | 3,088,568 | $ | 2,818,275 | $ | 2,249,665 | $ | 2,129,525 | |||||||||
Liabilities and non-controlling interest | |||||||||||||||||||
Accounts payable and accrued expenses | $ | 714 | $ | 846 | $ | 506 | $ | 464 | $ | 299 | |||||||||
Securities sold, not yet purchased, at fair value | 172,074 | 151,115 | 104,857 | 82,485 | 45,667 | ||||||||||||||
Securities sold under an agreement to repurchase | — | 10,992 | 61,939 | — | — | ||||||||||||||
Due to brokers | 695,019 | 681,280 | 465,558 | 312,609 | 306,927 | ||||||||||||||
Derivative liabilities | 22,495 | 19,139 | 16,990 | 10,985 | 12,113 | ||||||||||||||
Performance fee payable to related party | — | 25,059 | 15,844 | — | 21,837 | ||||||||||||||
Interest and dividends payable | 647 | 657 | 602 | 697 | 589 | ||||||||||||||
Capital contributions received in advance | — | 25,214 | — | — | 10,000 | ||||||||||||||
Non-controlling interest | 15,597 | 16,317 | 15,885 | 40,241 | 20,302 | ||||||||||||||
Total liabilities and non-controlling interest | 906,546 | 930,619 | 682,181 | 447,481 | 417,734 | ||||||||||||||
Total net investments managed by Third Point LLC | $ | 2,092,633 | $ | 2,157,949 | $ | 2,136,094 | $ | 1,802,184 | $ | 1,711,791 | |||||||||
Net investments - Capital | $ | 1,491,118 | $ | 1,573,864 | $ | 1,566,798 | $ | 1,413,019 | $ | 1,418,473 | |||||||||
Net investments - Float | 601,515 | 584,085 | 569,296 | 389,165 | 293,318 | ||||||||||||||
Total net investments managed by Third Point LLC | $ | 2,092,633 | $ | 2,157,949 | $ | 2,136,094 | $ | 1,802,184 | $ | 1,711,791 | |||||||||
(1) | Includes amounts advanced to Third Point Re to fund collateral held in trust accounts. |
Page 13 of 18
Third Point Reinsurance Ltd.
Investment Return by Investment Strategy - by Quarter
Summary of investment return on investments managed by Third Point LLC | September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | |||||||||
Long/short equities | (8.2 | )% | 1.1 | % | 1.0 | % | 0.9 | % | 0.3 | % | ||||
Asset-backed securities | 0.4 | % | 1.1 | % | 1.8 | % | 0.0 | % | 0.5 | % | ||||
Corporate and sovereign credit (1) | (1.0 | )% | (0.4 | )% | 0.3 | % | (0.8 | )% | (0.8 | )% | ||||
Macro and other | 0.1 | % | (0.1 | )% | (0.1 | )% | (0.5 | )% | 0.0 | % | ||||
(8.7 | )% | 1.7 | % | 3.0 | % | (0.4 | )% | (0.04 | )% | |||||
(1) | Effective January 1, 2015, we modified the presentation of our net investment return by investment strategy to include sovereign credit into the corporate and sovereign credit strategy from the macro and other strategy. We believe this classification better represents our portfolio. We have reclassified the 2014 returns in the table above to correspond to the current year’s presentation. |
Page 14 of 18
Third Point Reinsurance Ltd.
General and Administrative Expenses - by Quarter
(expressed in thousands of U.S. dollars)
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | |||||||||||||||
Payroll and related | $ | 3,500 | $ | 7,295 | $ | 4,663 | $ | 3,638 | $ | 4,184 | |||||||||
Share compensation expenses | 2,807 | 2,714 | 3,083 | 2,279 | 2,481 | ||||||||||||||
Legal and accounting | 1,090 | 1,385 | 1,290 | 1,691 | 1,462 | ||||||||||||||
Travel and entertainment | 649 | 789 | 985 | 818 | 672 | ||||||||||||||
Credit facility fees | 466 | 519 | 431 | 418 | 200 | ||||||||||||||
IT related | 366 | 347 | 366 | 500 | 329 | ||||||||||||||
Corporate insurance | 222 | 276 | 295 | 262 | 273 | ||||||||||||||
Board of director and related | 192 | 239 | 170 | 157 | 193 | ||||||||||||||
Occupancy | 182 | 205 | 150 | 123 | 124 | ||||||||||||||
Other general and administrative expenses | 348 | 498 | 275 | 424 | 206 | ||||||||||||||
$ | 9,822 | $ | 14,267 | $ | 11,708 | $ | 10,310 | $ | 10,124 | ||||||||||
Page 15 of 18
Third Point Reinsurance Ltd.
Book Value per Share and Diluted Book Value per Share - by Quarter
(expressed in thousands of U.S. dollars)
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | |||||||||||||||
Basic and diluted book value per share numerator: | |||||||||||||||||||
Total shareholders’ equity | $ | 1,351,191 | $ | 1,555,604 | $ | 1,561,172 | $ | 1,552,048 | $ | 1,543,638 | |||||||||
Less: non-controlling interests | (15,922 | ) | (29,600 | ) | (54,591 | ) | (100,135 | ) | (79,325 | ) | |||||||||
Shareholders’ equity attributable to shareholders | 1,335,269 | 1,526,004 | 1,506,581 | 1,451,913 | 1,464,313 | ||||||||||||||
Effect of dilutive warrants issued to founders and an advisor | 46,512 | 46,512 | 46,512 | 46,512 | 46,512 | ||||||||||||||
Effect of dilutive stock options issued to directors and employees | 58,070 | 60,240 | 60,589 | 61,705 | 65,473 | ||||||||||||||
Fully diluted book value per share numerator: | $ | 1,439,851 | $ | 1,632,756 | $ | 1,613,682 | $ | 1,560,130 | $ | 1,576,298 | |||||||||
Basic and diluted book value per share denominator: | |||||||||||||||||||
Issued and outstanding shares | 104,217,321 | 104,000,321 | 103,890,670 | 103,397,542 | 103,324,616 | ||||||||||||||
Effect of dilutive warrants issued to founders and an advisor | 4,651,163 | 4,651,163 | 4,651,163 | 4,651,163 | 4,651,163 | ||||||||||||||
Effect of dilutive stock options issued to directors and employees | 5,788,391 | 6,005,391 | 6,040,275 | 6,151,903 | 6,528,647 | ||||||||||||||
Effect of dilutive restricted shares issued to employees | 954,829 | 954,829 | 955,385 | 922,610 | 706,840 | ||||||||||||||
Diluted book value per share denominator: | 115,611,704 | 115,611,704 | 115,537,493 | 115,123,218 | 115,211,266 | ||||||||||||||
Basic book value per share(1) | $ | 12.81 | $ | 14.67 | $ | 14.50 | $ | 14.04 | $ | 14.17 | |||||||||
Diluted book value per share(1) | $ | 12.45 | $ | 14.12 | $ | 13.97 | $ | 13.55 | $ | 13.68 | |||||||||
Change in diluted book value per share | (11.8 | )% | 1.1 | % | 3.1 | % | (1.0 | )% | (0.3 | )% | |||||||||
(1) | Book value per share and diluted book value per share are non-GAAP financial measures. Book value per share is calculated by dividing shareholders’ equity attributable to shareholders by the number of issued and outstanding shares at period end. Diluted book value per share is calculated by dividing shareholders’ equity attributable to shareholders and adjusted to include unvested restricted shares and the exercise of all in-the-money options and warrants. For unvested restricted shares with a performance condition, we include the unvested restricted shares that we consider vesting to be probable. 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, 2015(1) | June 30, 2015 | March 31, 2015 | December 31, 2014(1) | September 30, 2014(1) | ||||||||||||||||
Weighted-average number of common shares outstanding | ||||||||||||||||||||
Basic number of common shares outstanding | 104,117,448 | 103,927,761 | 103,753,065 | 103,324,616 | 103,295,920 | |||||||||||||||
Dilutive effect of options | — | 1,341,209 | 1,093,353 | — | — | |||||||||||||||
Dilutive effect of warrants | — | 1,427,904 | 1,297,765 | — | — | |||||||||||||||
Diluted number of common shares outstanding | 104,117,448 | 106,696,874 | 106,144,183 | 103,324,616 | 103,295,920 | |||||||||||||||
Basic net income (loss) per common share: | ||||||||||||||||||||
Net income (loss) | $ | (195,715 | ) | $ | 15,662 | $ | 50,470 | $ | (14,679 | ) | $ | (5,997 | ) | |||||||
Income allocated to participating shares | — | (50 | ) | (179 | ) | — | — | |||||||||||||
Net income (loss) available to common shareholders | $ | (195,715 | ) | $ | 15,612 | $ | 50,291 | $ | (14,679 | ) | $ | (5,997 | ) | |||||||
Basic net income (loss) per common share | $ | (1.88 | ) | $ | 0.15 | $ | 0.48 | $ | (0.14 | ) | $ | (0.06 | ) | |||||||
Diluted net income (loss) per common share | ||||||||||||||||||||
Net income (loss) | $ | (195,715 | ) | $ | 15,662 | $ | 50,470 | $ | (14,679 | ) | $ | (5,997 | ) | |||||||
Income allocated to participating securities | — | (49 | ) | (175 | ) | — | — | |||||||||||||
Net income (loss) available to common shareholders | $ | (195,715 | ) | $ | 15,613 | $ | 50,295 | $ | (14,679 | ) | $ | (5,997 | ) | |||||||
Diluted net income (loss) per common share | $ | (1.88 | ) | $ | 0.15 | $ | 0.47 | $ | (0.14 | ) | $ | (0.06 | ) | |||||||
(1) | Basic earnings (loss) 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 convertible securities such as unvested restricted shares. Diluted earnings (loss) per share are based on the weighted average number of common shares and share equivalents including any dilutive effects of warrants, options and other awards 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 included in the number of shares outstanding for both basic and diluted earnings (loss) per share calculations. We treat certain of our unvested restricted shares as participating securities. In the event of a net loss, the participating securities are excluded from the calculation of both basic and diluted loss per share. |
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Third Point Reinsurance Ltd.
Return on Beginning Shareholders’ Equity - by Quarter
(expressed in thousands of U.S. dollars)
September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||
Net income (loss) | $ | (195,715 | ) | $ | 15,662 | $ | 50,470 | $ | (14,679 | ) | $ | (5,997 | ) | |||||||
Shareholders’ equity attributable to shareholders - beginning of period | $ | 1,526,004 | $ | 1,506,581 | $ | 1,451,913 | $ | 1,464,313 | $ | 1,467,229 | ||||||||||
Return on beginning shareholders’ equity | (12.8 | )% | 1.0 | % | 3.5 | % | (1.0 | )% | (0.4 | )% | ||||||||||
(1) | Return on beginning shareholders’ equity as presented is a non-GAAP financial measure. Return on beginning shareholders’ equity is calculated by dividing net income by the beginning of period shareholders’ equity attributable to shareholders. |
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