Third Point RE’s investor presentation for the month of September 2017.
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Our Company
- Specialty property & casualty reinsurer based in Bermuda
- A-(Excellent) financial strength rating from A.M. Best Company
- Began operations in January 2012 and completed IPO in August 2013
- Investment portfolio managed by Third Point LLC
- Total return focused
- Flexible and opportunistic reinsurance underwriting
- Superior investment management
Key Metrics
Total Return Business Model Designed To Deliver Superior Returns
Experienced Senior Management Team
- Strong business relationships
- Expertise in writing all lines of property, casualty &specialty reinsurance
- Track record of capitalizing on market opportunities and producing strong underwriting results
- Significant business-building experience
Organizational Structure – Key Entities
Flexible & Opportunistic Underwriting Strategy
- Our total return model provides crucial flexibility in today’s market environment
- We leverage strong relationships to access attractive opportunities
- We are the lead underwriter on many of our transactions
- Limited property cat exposure
Traditional Quota Shares
- We focus on lines of business with volatility we believe is typically lower than that of most other reinsurance companies
- We provide reinsurance support to small and medium size insurers seeking surplus relief
- These transactions are typically relationship-driven, since reinsurance plays a key role in the client’s capital structure
Opportunistic Deals
- Our relationships allow us to often be the first call for many special situations
- We look for dislocated markets and distressed situations where higher riskadjusted returns may be available
- We manage our downside exposure with structural features and contract terms and conditions
Reserve Covers
- Reserve covers provide clients with reinsurance protection, capital relief and potentially enhanced investment returns
- Relationships are key – decision-maker is typically the client’s CEO or CFO
- Our team has a reputation for sophisticated structuring to meet each client’s specific needs
Evolution Of Our Portfolio
- Portfolio of primarily Florida carriers built from past relationships. The portfolio now also includes a Northeast carrier
- Identified Assignment of Benefits (AOB) issue in Florida early, but did not fully price for it
- Attempted to adjust ceding commission on renewals, but the market did not follow us
- Portfolio has decreased to $66 million from three clients, and is likely to decrease further in 2017
- Portfolio includes mostly California specialty writers and MGAs
- Market conditions vary widely by state, segment and carrier
- The portfolio has performed reasonably well, though not as well as originally expected (due to underperformance of one large contract)
- We will reduce this portfolio in 2017 if we cannot achieve adequate pricing improvement on renewals
- Portfolio of MGA-driven nonstandard auto business built from past relationships
- Underlying rate increases not enough to counter increasing loss severity (due to more expensive car parts) and frequency (due to distracted driving and increased miles driven)
- Re-oriented our approach to focus on best-in-class carriers/MGAs with the size and differentiation to navigate difficult market conditions
See the full presentation below.
