Slides from the Third Point Reinsurance investors presentation for the period ended May 2015
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
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 most of our transactions
- Limited property cat exposure on rated balance sheet
Traditional Quota Shares
- We focus on lines of business with lower volatility
- We provide reinsurance support to small and medium size insurers seeking surplus relief
- These transactions are typically relationship-driven, since reinsurance plays such 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 risk-adjusted returns are available
- We manage our downside exposure with structural features and contract terms & 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
Third Point: Reinsurance Risk Management
Risk Management Culture
- Reinsurance business plan complements our investment management strategy: no property catastrophe excess treaties on rated balance sheet and premium and reserve leverage lower than peer group
- Company-wide focus on risk management
- Robust underwriting and operational controls
Holistic Risk Control Framework
- Measure use of risk capital using internally-developed capital model, AM Best BCAR model and Bermuda Monetary Authority BSCR model
- Developed a comprehensive Risk Register that is appropriate for our business model
- Instituted a Risk Appetite Statement that governs overall sensitivities in underwriting, investment, and enterprise portfolio
Ongoing Risk Oversight
- Own Risk Self Assessment (ORSA) report produced quarterly and provided to management / Board of Directors
- Provides management with meaningful statistics on our current capital requirement and comparisons to our risk appetite statement
- Growing in scope
New U.S. Platform
New Hires to Help Establish & Manage U.S. Operations
Thomas Wafer
- Chairman Reinsurance, Alterra Capital
- CEO Reinsurance, Alterra Capital & President, Alterra Re USA
- President, Harbor Point Re U.S.
- MD International Underwriting, Harbor Point Re
- MD International Underwriting, Chubb Re
Jonathan Norton
- Chief Actuary, Alterra Re USA
- Chief Actuary, Harbor Point Re
- Chief Actuary, Chubb Re
- Managing Director, Guy Carpenter
- U.S. onshore presence a key component of overall growth strategy
– Strengthen relationships with U.S. cedents and brokers
– Develop first-hand knowledge of cedent underwriting and claims capabilities - Structure optimized for our investment strategy: Third Point Reinsurance (USA) Ltd. is a Bermuda-domiciled reinsurer that will apply for a 953D U.S. federal tax election
– Assets can be invested in a separate account managed by Third Point LLC
– U.S. activity is permitted, including a new office in New Jersey - Strong financial support from Third Point Re group
– Senior unsecured notes benefit from a full guarantee from Third Point Reinsurance Ltd.
– 75% quota share with Third Point Reinsurance Company Ltd.
– Net worth maintenance agreement with Third Point Reinsurance Ltd. ($250m minimum surplus)
Relationship With Third Point LLC
Investment Management Agreement
- Exclusive relationship through 2016, followed by successive 3-year terms on renewal
- Investments are managed on substantially the same basis as the main Third Point LLC hedge funds
- We pay the standard 2% management fee and 20% performance allocation. The performance allocation is subject to a standard high water mark
Risk Management
- Restrictions on leverage, position concentrations and illiquid, private investments
- Key man and performance termination provisions
- Allowed to diversify portfolio to address concerns of A.M. Best or regulator
Liquidity
- Investments are held in a separate account – Third Point Re has full ownership of investment portfolio to provide liquidity for claims and expenses
- More than 95% of investments are within FAS 157 Levels 1 & 21
- Separate account may be used at any time to pay claims and expenses
See full slides below.
