Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - SiriusPoint Ltd | d626979d8k.htm |
Exhibit 99.1
Third Point Re Reports Third Quarter 2013 Earnings Results
Net Income of $46.6 Million, or $0.46 Per Diluted Common Share
HAMILTON, Bermuda, November 12, 2013, Third Point Reinsurance Ltd. (“Third Point Re” or the “Company”) (NYSE:TPRE) today announced results for its fiscal third quarter ended September 30, 2013.
“Following our initial public offering in August 2013, we are off to a strong start as a public company thanks to improving underwriting results and excellent investment results,” commented John Berger, Chairman, Chief Executive Officer and Chief Underwriting Officer. “While reinsurance market conditions remain challenging, we expect further improvement in our underwriting results as our reinsurance operation continues to gain scale.”
Third Point Re reported net income during the third quarter of 2013 of $46.6 million, or $0.46 per diluted common share, compared with $39.6 million, or $0.45 per diluted common share, for the third quarter of 2012. For the nine months ended September 30, 2013, Third Point Re reported net income of $147.2 million, or $1.59 per diluted common share, compared with $38.7 million, or $0.44 per diluted common share, for the nine months ended September 30, 2012.
Diluted book value per share was $12.35 as of September 30, 2013, an increase of $0.28, or 2.3%, for the third quarter and an increase of $1.46, or 13.4%, for the first nine months of 2013. The increase in diluted book value per share reflects earnings per share for the quarter partially offset by the costs associated with Third Point Re’s initial public offering (IPO), including underwriting and exchange listing, legal, accounting and related fees. These non-recurring costs were netted against the capital raised and were not expensed through the income statement.
The following table shows certain key financial metrics for the three and nine months ended September 30, 2013 and 2012:
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2013 |
September 30, 2012 |
September 30, 2013 |
September 30, 2012 |
|||||||||||||
| (In millions, except for per share data and ratios) | ||||||||||||||||
| Gross premiums written |
$ | 45.4 | $ | 41.7 | $ | 239.7 | $ | 162.5 | ||||||||
| Net premiums earned |
$ | 66.3 | $ | 34.3 | $ | 162.2 | $ | 63.0 | ||||||||
| Underwriting loss (1) (2) |
$ | (4.9 | ) | $ | (5.8 | ) | $ | (12.1 | ) | $ | (19.7 | ) | ||||
| Combined ratio (1) (2) |
107.9 | % | 117.0 | % | 107.7 | % | 131.3 | % | ||||||||
| Net investment return on investments managed by Third Point LLC |
4.3 | % | 6.1 | % | 16.9 | % | 8.4 | % | ||||||||
| Net investment income |
$ | 53.4 | $ | 47.7 | $ | 166.1 | $ | 63.9 | ||||||||
| Net investment income on float (3) |
$ | 7.1 | $ | 0.1 | $ | 15.1 | $ | 0.1 | ||||||||
| Net income |
$ | 46.6 | $ | 39.6 | $ | 147.2 | $ | 38.7 | ||||||||
| Diluted earnings per share |
$ | 0.46 | $ | 0.45 | $ | 1.59 | $ | 0.44 | ||||||||
| Growth in diluted book value per share (3) |
2.3 | % | 5.1 | % | 13.4 | % | 4.6 | % | ||||||||
| Return on beginning shareholders’ equity (3) |
4.2 | % | 5.2 | % | 16.1 | % | 5.1 | % | ||||||||
| (1) | - | Property and Casualty Reinsurance segment only. | ||
| (2) | - | Underwriting loss and combined ratio are Non-GAAP financial measures. See the accompanying Segment Reporting for an explanation and calculation of 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 for an explanation and calculation of net investment income on float, diluted book value per share and return on beginning shareholders’ equity. |
Segment Highlights
Property and Casualty Reinsurance Segment
Gross premiums written increased by $2.0 million, or 4.8%, to $43.7 million for the three months ended September 30, 2013 from $41.7 million for the three months ended September 30, 2012. Gross premiums written increased by $68.7 million, or 42.3%, to $231.2 million for the nine months ended September 30, 2013 from $162.5 million for the nine months ended September 30, 2012. Third Point Re, through its class 4 reinsurance company Third Point Reinsurance Company Ltd., began underwriting on January 1, 2012. Increases in gross premiums written in 2013 are the result of the successful development of underwriting relationships with intermediaries and reinsurance buyers.
Net premiums earned for the three months ended September 30, 2013 increased $27.5 million, or 80.1%, to $61.8 million. Net premiums earned for the nine months ended September 30, 2013 increased $92.8 million, or 147.3%, to $155.8 million. The three and nine months ended September 30, 2013 reflects net premiums earned on a larger in-force underwriting portfolio compared to the three and nine month periods ended September 30, 2012. In addition, the three and nine month periods ended September 30, 2013 include net premiums earned of $17.5 million and $39.8 million, respectively, related to retroactive reinsurance contracts where we record the gross premiums written and earned at the inception of the contract.
The underwriting loss from the Property and Casualty Reinsurance segment for the third quarter was $4.9 million and for the nine months ended September 30, 2013 was $12.1 million. These results compare to underwriting losses of $5.8 million and $19.7 million in the three and nine month periods ended September 30, 2012, respectively. The combined ratio for the first nine months of 2013 was 107.7% compared to 131.3% in the previous year’s first nine months. The improvement in underwriting results was due primarily to crop losses recorded in the 2012 period and a drop in general and administrative expenses as a percentage of earned premium. For the nine months ended September 30, 2012, Third Point Re recorded a $5.2 million underwriting loss from its crop reinsurance portfolio due to the severe drought suffered by most of the US farm belt.
Catastrophe Risk Management
The Catastrophe Risk Management segment includes the combined results of Third Point Reinsurance Opportunities Fund Ltd. (“Catastrophe Fund”), Third Point Reinsurance Investment Management Ltd. (“Catastrophe Fund Manager”), and Third Point Re Cat Ltd. (the “Catastrophe Reinsurer”). Results of the Catastrophe Risk Management segment are consolidated with Third Point Re’s results because Third Point Re currently controls a majority of the outstanding interests in these entities. Since 2013 was the first year of operation for the Catastrophe Risk Management segment, there is no previous period to which to compare this year’s financial results.
After attributing income to non-controlling interests (i.e., the minority investors in the Catastrophe Fund), net income from the Catastrophe Risk Management segment was $2.7 million in the third quarter of 2013 and $2.6 million in the nine months ending September 30, 2013. Net assets under management were $100.5 million at September 30, 2013.
Investments
For the three months ended September 30, 2013, Third Point Re recorded net investment income of $53.4 million, compared to $47.7 million for the three months ended September 30, 2012. The return on investments managed by the Company’s investment manager, Third Point LLC, was 4.3% for the three months ended September 30, 2013 compared to 6.1% for the three months ended September 30, 2012.
For the nine months ended September 30, 2013, the Company recorded net investment income of $166.1 million, compared to $63.9 million for the nine months ended September 30, 2012. The return on the Company’s investments, as managed by Third Point LLC, was 16.9% for the nine months ended September 30, 2013 compared to 8.4% for the nine months ended September 30, 2012.
The primary driver of Third Point Re’s net investment income is the returns generated by its investment manager, Third Point LLC. Consistent with the first half of 2013, the returns for the three months ended September 30, 2013 were driven by equity positions and to a lesser extent by gains in structured credit. Net investment income for the three and nine months ended September 30, 2013 also benefited from higher average investments managed by Third Point LLC compared to the prior year periods due to the net proceeds generated by Third Point Re’s IPO and float contributed by its reinsurance operations.
Also impacting net investment income for the three months ended September 30, 2013 and for the nine months ended September 30, 2013 was the allocation of net investment income related to deposit and reinsurance contracts of $1.2 million and $2.7 million, respectively. The 2012 periods had an insignificant amount of net investment income allocated to deposit liability contracts.
Conference Call Details
The Company will hold a conference call to discuss its third quarter 2013 results at 9:00 a.m. ET on November 12, 2013. The call will be webcast live over the Internet from the Company’s website at 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) and entering passcode 10000697. Participants should ask for the Third Point Reinsurance third quarter earnings conference call.
A replay of the live conference call will be available approximately one hour 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 10000697. The telephonic replay will be available until Tuesday, November 19, 2013.
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 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: (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) unavailability of capital in the future; (xi) dependence on clients’ evaluations of risks associated with such clients’ insurance underwriting; (xii) suspension or revocation of reinsurance license; (xiii) potentially being deemed an investment company under U.S. federal securities law; (xiv) potential characterization of Third Point Re and/or Third Point Reinsurance Company Ltd. as a PFIC; (xv) dependence on Third Point LLC to implement the Company’s investment strategy; (xvi) termination by Third Point LLC of the investment management agreement; (xvii) risks associated with the Company’s investment strategy being greater than those faced by competitors (xviii) increased regulation or scrutiny of alternative investment advisers affecting the Company’s reputation; (xix) potentially becoming subject to United States federal income taxation; (xx) potentially becoming subject to U.S. withholding and information reporting requirements under the FATCA provisions; and other risks and factors listed under “Risk Factors” in the prospectus on Form 424(b) dated as of August 14, 2013 and filed with the Securities and Exchange Commission on August 19, 2013. 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 underwriting income or loss, combined ratio, 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’s wholly owned subsidiary Third Point Reinsurance Company Ltd. is a Bermuda property and casualty reinsurance company with an “A-” (Excellent) financial strength rating from A.M. Best Company, Inc. Third Point Reinsurance Company Ltd. was incorporated in October 2011 and commenced underwriting business on January 1, 2012.
Contacts
Third Point Reinsurance Ltd.
Rob Bredahl
Chief Financial Officer & Chief Operating Officer
investorrelations@thirdpointre.bm
441-542-3333
THIRD POINT REINSURANCE LTD.
CONSOLIDATED BALANCE SHEETS
As of September 30, 2013 and December 31, 2012
(expressed in thousands of U.S. dollars, except per share and share amounts)
| September 30, 2013 |
December 31, 2012 |
|||||||
| (unaudited) | (audited) | |||||||
| Assets |
||||||||
| Equity securities, trading, at fair value (cost - $507,618; 2012 - $450,766) |
$ | 593,879 | $ | 500,929 | ||||
| Debt securities, trading, at fair value (cost - $402,563; 2012 - $249,110) |
437,596 | 279,331 | ||||||
| Other investments, at fair value |
63,277 | 157,430 | ||||||
|
|
|
|
|
|||||
| Total investments in securities and commodities |
1,094,752 | 937,690 | ||||||
| Cash and cash equivalents |
18,663 | 34,005 | ||||||
| Restricted cash and cash equivalents |
159,290 | 77,627 | ||||||
| Due from brokers |
418,246 | 131,785 | ||||||
| Securities purchased under an agreement to sell |
37,921 | 60,408 | ||||||
| Derivative assets, at fair value |
27,532 | 25,628 | ||||||
| Interest and dividends receivable |
3,024 | 2,088 | ||||||
| Reinsurance balances receivable |
168,683 | 84,280 | ||||||
| Deferred acquisition costs, net |
58,563 | 45,383 | ||||||
| Unearned premiums ceded |
2,494 | — | ||||||
| Loss and loss adjustment expenses recoverable |
6,284 | — | ||||||
| Other assets |
4,054 | 3,123 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,999,506 | $ | 1,402,017 | ||||
|
|
|
|
|
|||||
| Liabilities and shareholders’ equity |
||||||||
| Liabilities |
||||||||
| Accounts payable and accrued expenses |
$ | 5,457 | $ | 5,278 | ||||
| Reinsurance balances payable |
8,579 | — | ||||||
| Deposit liabilities |
118,973 | 50,446 | ||||||
| Unearned premium reserves |
163,915 | 93,893 | ||||||
| Loss and loss adjustment expense reserves |
143,707 | 67,271 | ||||||
| Securities sold, not yet purchased, at fair value |
90,492 | 176,454 | ||||||
| Due to brokers |
41,065 | 66,107 | ||||||
| Derivative liabilities, at fair value |
21,240 | 12,992 | ||||||
| Performance fee payable to related party |
40,264 | — | ||||||
| Interest and dividends payable |
1,416 | 1,255 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
635,108 | 473,696 | ||||||
| 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, 103,888,916 (2012: 78,432,132)) |
10,389 | 7,843 | ||||||
| Additional paid-in capital |
1,053,501 | 762,430 | ||||||
| Retained earnings |
245,494 | 98,271 | ||||||
|
|
|
|
|
|||||
| Shareholders’ equity attributable to shareholders |
1,309,384 | 868,544 | ||||||
| Non-controlling interests |
55,014 | 59,777 | ||||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
1,364,398 | 928,321 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
$ | 1,999,506 | $ | 1,402,017 | ||||
|
|
|
|
|
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THIRD POINT REINSURANCE LTD.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For the three and nine months ended September 30, 2013 and 2012
(expressed in thousands of U.S. dollars, except per share and share amounts)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2013 |
September 30, 2012 |
September 30, 2013 |
September 30, 2012 |
|||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 45,425 | $ | 41,651 | $ | 239,660 | $ | 162,479 | ||||||||
| Gross premiums ceded |
— | — | (9,975 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net premiums written |
45,425 | 41,651 | 229,685 | 162,479 | ||||||||||||
| Change in net unearned premium reserves |
20,904 | (7,333 | ) | (67,528 | ) | (99,483 | ) | |||||||||
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|
|
|
|||||||||
| Net premiums earned |
66,329 | 34,318 | 162,157 | 62,996 | ||||||||||||
| Net investment income |
53,371 | 47,686 | 166,129 | 63,911 | ||||||||||||
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|
|||||||||
| Total revenues |
119,700 | 82,004 | 328,286 | 126,907 | ||||||||||||
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|
|||||||||
| Expenses |
||||||||||||||||
| Loss and loss adjustment expenses incurred, net |
39,349 | 24,709 | 103,679 | 53,680 | ||||||||||||
| Acquisition costs, net |
21,117 | 10,856 | 49,111 | 13,706 | ||||||||||||
| General and administrative expenses |
9,846 | 6,440 | 24,071 | 20,221 | ||||||||||||
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|||||||||
| Total expenses |
70,312 | 42,005 | 176,861 | 87,607 | ||||||||||||
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|
|||||||||
| Income including non-controlling interests |
49,388 | 39,999 | 151,425 | 39,300 | ||||||||||||
| Income attributable to non-controlling interests |
(2,818 | ) | (423 | ) | (4,202 | ) | (609 | ) | ||||||||
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|
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| Net income |
$ | 46,570 | $ | 39,576 | $ | 147,223 | $ | 38,691 | ||||||||
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| Earnings per share |
||||||||||||||||
| Basic |
$ | 0.52 | $ | 0.50 | $ | 1.77 | $ | 0.49 | ||||||||
| Diluted |
$ | 0.46 | $ | 0.45 | $ | 1.59 | $ | 0.44 | ||||||||
| Weighted average number of common shares used in the determination of earnings per share |
||||||||||||||||
| Basic |
90,244,694 | 79,073,932 | 83,252,120 | 79,003,405 | ||||||||||||
| Diluted |
100,176,416 | 87,888,983 | 92,438,629 | 87,031,196 | ||||||||||||
THIRD POINT REINSURANCE LTD.
SEGMENT REPORTING
(UNAUDITED)
| Three Months Ended September 30, 2013 | ||||||||||||||||
| Property and Casualty Reinsurance |
Catastrophe Risk Management |
Corporate | Total | |||||||||||||
| ($ in thousands) | ||||||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 43,714 | $ | 1,711 | $ | — | $ | 45,425 | ||||||||
| Gross premiums ceded |
— | — | — | — | ||||||||||||
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|
|||||||||
| Net premiums written |
43,714 | 1,711 | — | 45,425 | ||||||||||||
| Change in net unearned premium reserves |
18,051 | 2,853 | — | 20,904 | ||||||||||||
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|||||||||
| Net premiums earned |
61,765 | 4,564 | — | 66,329 | ||||||||||||
| Net investment income |
— | 2,089 | 51,282 | 53,371 | ||||||||||||
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|||||||||
| Total revenues |
61,765 | 6,653 | 51,282 | 119,700 | ||||||||||||
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| Expenses |
||||||||||||||||
| Loss and loss adjustment expenses incurred, net |
39,349 | — | — | 39,349 | ||||||||||||
| Acquisition costs, net |
20,541 | 576 | — | 21,117 | ||||||||||||
| General and administrative expenses |
6,739 | 949 | 2,158 | 9,846 | ||||||||||||
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|
|||||||||
| Total expenses |
66,629 | 1,525 | 2,158 | 70,312 | ||||||||||||
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|
|
|
|||||||||
| Underwriting loss |
(4,864 | ) | n/a | n/a | n/a | |||||||||||
| Income including non-controlling interests |
n/a | 5,128 | 49,124 | 49,388 | ||||||||||||
| Income attributable to non-controlling interests |
n/a | (2,432 | ) | (386 | ) | (2,818 | ) | |||||||||
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| Net income (loss) |
$ | (4,864 | ) | $ | 2,696 | $ | 48,738 | $ | 46,570 | |||||||
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| Property and Casualty Reinsurance - Underwriting Ratios: |
||||||||||||||||
| Loss ratio (1) |
63.7 | % | ||||||||||||||
| Acquisition cost ratio (2) |
33.3 | % | ||||||||||||||
| General and administrative expense ratio (3) |
10.9 | % | ||||||||||||||
|
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|
|||||||||||||||
| Combined ratio (4) |
107.9 | % | ||||||||||||||
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| Nine Months Ended September 30, 2013 | ||||||||||||||||
| Property and Casualty Reinsurance |
Catastrophe Risk Management |
Corporate | Total | |||||||||||||
| ($ in thousands) | ||||||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 231,229 | $ | 8,431 | $ | — | $ | 239,660 | ||||||||
| Gross premiums ceded |
(9,975 | ) | — | — | (9,975 | ) | ||||||||||
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|||||||||
| Net premiums written |
221,254 | 8,431 | — | 229,685 | ||||||||||||
| Change in net unearned premium reserves |
(65,408 | ) | (2,120 | ) | — | (67,528 | ) | |||||||||
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|
|||||||||
| Net premiums earned |
155,846 | 6,311 | — | 162,157 | ||||||||||||
| Net investment income |
— | 3,210 | 162,919 | 166,129 | ||||||||||||
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|
|||||||||
| Total revenues |
155,846 | 9,521 | 162,919 | 328,286 | ||||||||||||
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|
|
|
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|
|
|||||||||
| Expenses |
— | |||||||||||||||
| Loss and loss adjustment expenses incurred, net |
103,291 | 388 | — | 103,679 | ||||||||||||
| Acquisition costs, net |
48,353 | 758 | — | 49,111 | ||||||||||||
| General and administrative expenses |
16,265 | 2,721 | 5,085 | 24,071 | ||||||||||||
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|||||||||
| Total expenses |
167,909 | 3,867 | 5,085 | 176,861 | ||||||||||||
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|||||||||
| Underwriting loss |
(12,063 | ) | n/a | n/a | n/a | |||||||||||
| Income including non-controlling interests |
n/a | 5,654 | 157,834 | 151,425 | ||||||||||||
| Income attributable to non-controlling interests |
n/a | (3,027 | ) | (1,175 | ) | (4,202 | ) | |||||||||
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| Net income (loss) |
$ | (12,063 | ) | $ | 2,627 | $ | 156,659 | $ | 147,223 | |||||||
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| Property and Casualty Reinsurance - Underwriting Ratios: |
||||||||||||||||
| Loss ratio (1) |
66.3 | % | ||||||||||||||
| Acquisition cost ratio (2) |
31.0 | % | ||||||||||||||
| General and administrative expense ratio (3) |
10.4 | % | ||||||||||||||
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|
|||||||||||||||
| Combined ratio (4) |
107.7 | % | ||||||||||||||
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| (1) | Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned. |
| (2) | Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned. |
| (3) | General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned. |
| (4) | Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned. |
THIRD POINT REINSURANCE LTD.
SEGMENT REPORTING
(UNAUDITED)
| Three Months Ended September 30, 2012 | ||||||||||||||||
| Property and Casualty Reinsurance |
Catastrophe Risk Management |
Corporate | Total | |||||||||||||
| ($ in thousands) | ||||||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 41,651 | $ | — | $ | — | $ | 41,651 | ||||||||
| Gross premiums ceded |
— | — | — | — | ||||||||||||
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|||||||||
| Net premiums written |
41,651 | — | — | 41,651 | ||||||||||||
| Change in net unearned premium reserves |
(7,333 | ) | — | — | (7,333 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net premiums earned |
34,318 | — | — | 34,318 | ||||||||||||
| Net investment income |
— | — | 47,686 | 47,686 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
34,318 | — | 47,686 | 82,004 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Expenses |
||||||||||||||||
| Loss and loss adjustment expenses incurred, net |
24,709 | — | — | 24,709 | ||||||||||||
| Acquisition costs, net |
10,856 | — | — | 10,856 | ||||||||||||
| General and administrative expenses |
4,571 | 995 | 874 | 6,440 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total expenses |
40,136 | 995 | 874 | 42,005 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Underwriting loss |
(5,818 | ) | n/a | n/a | n/a | |||||||||||
| Income (loss) including non-controlling interests |
n/a | (995 | ) | 46,812 | 39,999 | |||||||||||
| Income attributable to non-controlling interests |
n/a | — | (423 | ) | (423 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
$ | (5,818 | ) | $ | (995 | ) | $ | 46,389 | $ | 39,576 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Property and Casualty Reinsurance - Underwriting ratios: |
||||||||||||||||
| Loss ratio (1) |
72.0 | % | ||||||||||||||
| Acquisition cost ratio (2) |
31.6 | % | ||||||||||||||
| General and administrative expense ratio (3) |
13.4 | % | ||||||||||||||
|
|
|
|||||||||||||||
| Combined ratio (4) |
117.0 | % | ||||||||||||||
|
|
|
|||||||||||||||
| Nine Months Ended September 30, 2012 | ||||||||||||||||
| Property and Casualty Reinsurance |
Catastrophe Risk Management |
Corporate | Total | |||||||||||||
| ($ in thousands) | ||||||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 162,479 | $ | — | $ | — | $ | 162,479 | ||||||||
| Gross premiums ceded |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net premiums written |
162,479 | — | — | 162,479 | ||||||||||||
| Change in net unearned premium reserves |
(99,483 | ) | — | — | (99,483 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net premiums earned |
62,996 | — | — | 62,996 | ||||||||||||
| Net investment income |
— | — | 63,911 | 63,911 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
62,996 | — | 63,911 | 126,907 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Expenses |
||||||||||||||||
| Loss and loss adjustment expenses incurred, net |
53,680 | — | — | 53,680 | ||||||||||||
| Acquisition costs, net |
13,706 | — | — | 13,706 | ||||||||||||
| General and administrative expenses |
15,299 | 995 | 3,927 | 20,221 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total expenses |
82,685 | 995 | 3,927 | 87,607 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Underwriting loss |
(19,689 | ) | n/a | n/a | n/a | |||||||||||
| Income (loss) including non-controlling interests |
n/a | (995 | ) | 59,984 | 39,300 | |||||||||||
| Income attributable to non-controlling interests |
n/a | — | (609 | ) | (609 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
$ | (19,689 | ) | $ | (995 | ) | $ | 59,375 | $ | 38,691 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Property and Casualty Reinsurance - Underwriting ratios: |
||||||||||||||||
| Loss ratio (1) |
85.2 | % | ||||||||||||||
| Acquisition cost ratio (2) |
21.8 | % | ||||||||||||||
| General and administrative expense ratio (3) |
24.3 | % | ||||||||||||||
|
|
|
|||||||||||||||
| Combined ratio (4) |
131.3 | % | ||||||||||||||
|
|
|
|||||||||||||||
| (1) | Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned. |
| (2) | Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned. |
| (3) | General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned. |
| (4) | Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned. |
THIRD POINT REINSURANCE LTD.
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
| September 30, 2013 |
December 31, 2012 |
|||||||
| (In thousands, except share and per share amounts) |
||||||||
| Basic and diluted book value per share numerator: |
||||||||
| Total shareholders’ equity |
$ | 1,364,398 | $ | 928,321 | ||||
| Less: non-controlling interests |
55,014 | 59,777 | ||||||
|
|
|
|
|
|||||
| Shareholders’ equity attributable to shareholders |
1,309,384 | 868,544 | ||||||
| Effect of dilutive warrants issued to founders and an advisor |
46,512 | 36,480 | ||||||
| Effect of dilutive stock options issued to directors and employees |
66,276 | 51,670 | ||||||
|
|
|
|
|
|||||
| Fully diluted book value per share numerator: |
$ | 1,422,172 | $ | 956,694 | ||||
|
|
|
|
|
|||||
| Basic and diluted book value per share denominator: |
||||||||
| Issued and outstanding shares |
103,264,616 | 78,432,132 | ||||||
| Effect of dilutive warrants issued to founders and an advisor |
4,651,163 | 3,648,006 | ||||||
| Effect of dilutive stock options issued to directors and employees |
6,608,987 | 5,167,045 | ||||||
| Effect of dilutive restricted shares issued to employees |
624,300 | 619,300 | ||||||
|
|
|
|
|
|||||
| Diluted book value per share denominator: |
115,149,066 | 87,866,483 | ||||||
|
|
|
|
|
|||||
| Basic book value per share |
$ | 12.68 | $ | 11.07 | ||||
| Diluted book value per share |
$ | 12.35 | $ | 10.89 | ||||
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2013 |
September 30, 2012 |
September 30, 2013 |
September 30, 2012 |
|||||||||||||
| ($ in thousands) | ||||||||||||||||
| Net investment income on float |
$ | 7,072 | $ | 91 | $ | 15,128 | $ | 91 | ||||||||
| Net investment income on capital |
45,455 | 47,595 | 150,465 | 63,820 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net investment income on investments managed by Third Point LLC |
52,527 | 47,686 | 165,593 | 63,911 | ||||||||||||
| Other investment income |
28 | — | 44 | — | ||||||||||||
| Deposit liabilities and reinsurance contracts investment income allocation |
(1,246 | ) | — | (2,675 | ) | — | ||||||||||
| Net unrealized gain on catastrophe risk derivatives |
2,062 | — | 3,167 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net investment income |
$ | 53,371 | $ | 47,686 | $ | 166,129 | $ | 63,911 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2013 |
September 30, 2012 |
September 30, 2013 |
September 30, 2012 |
|||||||||||||
| ($ in thousands) | ||||||||||||||||
| Net income |
$ | 46,570 | $ | 39,576 | $ | 147,223 | $ | 38,691 | ||||||||
| Shareholders’ equity attributable to shareholders - beginning of period |
972,665 | 764,856 | 868,544 | 585,425 | ||||||||||||
| Subscriptions receivable |
— | — | — | 177,507 | ||||||||||||
| Impact of weighting related to shareholders’ equity from IPO |
128,860 | — | 43,111 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted shareholders’ equity attributable to shareholders - beginning of period |
$ | 1,101,525 | $ | 764,856 | $ | 911,655 | $ | 762,932 | ||||||||
| Return on beginning shareholders’ equity |
4.2 | % | 5.2 | % | 16.1 | % | 5.1 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Book Value per Share
Book value per share as used by our management is a non-GAAP measure, as it is calculated after deducting the impact of non-controlling interests, and adding back subscriptions receivable. In addition, diluted book value per share is also a non-GAAP measure and represents book value per share combined with the impact from dilution of all in-the-money share options issued, warrants and unvested restricted shares outstanding as of any period end. 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.
Net Investment Income on Float
Insurance float is an important aspect of our property and casualty reinsurance operation. In an insurance or reinsurance operation, float arises because premiums and proceeds associated with deposit accounted reinsurance contracts are collected before losses are paid. In some instances, the interval between premium receipts and loss payments can extend over many years. During this time interval, insurance and reinsurance companies invest the premiums received and generate investment returns. Although float can be calculated using numbers determined under U.S. GAAP, float is a non-GAAP financial measure and, therefore, there is no comparable U.S. GAAP measure.
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 by the beginning shareholders’ equity attributable to shareholders and is a commonly used calculation to measure profitability. For purposes of this calculation, we add back the impact of subscriptions receivable to shareholders’ equity attributable to shareholders as of December 31, 2011. For the three and nine months ended September 30, 2013, we have also adjusted the beginning shareholders’ equity for the impact of the issuance of shares in our IPO on a weighted average basis. These adjustments lower the stated returns on beginning shareholders’ equity.