Third Point Re: A Differentiated Equity Story

 

  • Specialty property and casualty reinsurance

 

 

  • Class 4 Bermuda-domiciled reinsurer

 

  • A- financial strength rating from A.M. Best

 

  • $1.31 billion of shareholders equity as of September 30, 2013

 

 

  • Third Point LLC, an SEC-registered investment manager, manages Third Point Re’s investment portfolio under a long-term investment management agreement

 

  • Daniel S. Loeb, founder of Third Point LLC, and related personal investment vehicles provided 10.8% of founding capital ($85 million) in Third Point Re

 

  • Year end 2012: 13.0%

 

  • YTD through 9/30/13: 16.1%1

Disciplined and Opportunistic Reinsurance Strategy

 

 

 

 

 

Generating ROE from underwriting and positive asset leverage

 

  • Reinsurance strategy

 

–  Identify profitable reinsurance opportunities that generate stable underwriting profits

 

–  Target sub-sectors and specific situations where capacity and alternatives may be constrained

 

–  Flexibility to adjust level of volatility according to market conditions and expected margins

 

–  Current focus on quota share contracts

 

  • Third Point Re’s approach is to position itself for the expected improvement in P&C pricing over the medium term

 

– Management has a track record of entering new lines of business to capitalize on market opportunities and produce strong underwriting results

 

–  Strong management relationships provide access to attractive underwriting opportunities

 

  • Asset leverage is expected to grow over time and help drive ROE

 

– The Company expects to capture net investment income generated by float* primarily from the time-lag between receipt of premiums and payment of claims

 

 

Disciplined and

Positive

Reinsurance

Opportunistic

Asset Leverage

Operations

Underwriting

(i.e. Float)*

Contribution to ROE

Third Point Re’s Relationship With Third Point LLC

 

Third Point LLC manages Third Point Re’s assets under a long-term investment management agreement

 

  • Third Point LLC manages virtually all of Third Point Re’s investable assets

 

 

  • Exclusive relationship for an initial contractual term through 2016, followed by successive three-year terms on renewal

 

–  The company pays a standard 2% management fee and 20% performance allocation

 

–  Performance allocation is subject to a standard high water mark, loss carry-forward provision

 

 

  • Third Point Re investments are held in a separate account and managed by Third Point LLC on substantially the same basis as its main hedge funds

 

– The account is subject to certain additional investment guidelines and parameters not employed by the main funds (i.e. limitations on exposure, increased liquidity, etc.)

 

  • Third Point Re has full ownership of and access to the investment portfolio to provide liquidity to pay claims and expenses 

Full presentation here TPRE – Investor Presentation February 2014 v1_v001_v7uxei