Investment gains drive Third Point profit

  • Reinsurance veteran: John Berger will step down as chairman of Third Point Re next month

Third Point Reinsurance Ltd reported third-quarter earnings of $54.7 million, as its investment returns comfortably outstripped underwriting losses.

The Bermudian reinsurer also announced that John Berger will step down as chairman on December 22, to be replaced in the interim by existing director Steven Fass, while chief executive officer Rob Bredahl will join the board.

The company, whose assets are managed by Dan Loeb’s hedge fund company Third Point LLC, said it achieved positive returns on each of its investment strategies during the quarter.

Third Point Re said it made a net underwriting loss of $12.6 million and saw net catastrophe losses of $5.3 million. Its combined ratio for the quarter was 111.9 per cent.

The assets managed by Third Point LLC generated a 3.6 per cent return during the third quarter, helping the reinsurer to investment income of $89 million. For the first nine months of the year, the hedge fund-managed investments have gained 14.6 per cent and investment income has totalled $324.8 million.

So far this year, Third Point Re’s shares have gained 42 per cent and closed down 2 per cent at $16.40 in yesterday’s trading.

Mr Bredahl said: “Our strong performance for 2017 continued through the third quarter with a return on beginning shareholders’ equity of 3.5 per cent, bringing our nine-month return to 16.8 per cent.

“Our investment manager, Third Point LLC continues to have a great year and has generated an investment return of 14.6 per cent through the first nine months of the year and 17.6 per cent through October 2017.”

The $5.3 million net loss from catastrophes was “within expectations given our limited exposure and reflects our decision to avoid highly volatile forms of reinsurance such as catastrophe excess of loss treaties”, Mr Bredahl added.

Outgoing chairman Mr Berger, a Bermuda reinsurance veteran who was Third Point Re’s founding CEO, said: “I am very proud of what we have accomplished at Third Point Re over the past six years and couldn’t be more confident of their continued success.”