TPRE - Earnings call transcript Q3 2017

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Operator

Greetings and welcome to the Third Point Reinsurance Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Mr. CFO. Coleman, Chris sir. Please begin

Chris Coleman

Leading filings contain of forward-looking our materially begin, be we expectations. Rob call refer results financial and release statements. operator. on earnings the like would statements Welcome Last Point could XXXX based factors on you, and Actual factors the we the projected that Please to to risks for the and available that company’s quarter from today’s actual Limited But a will remarks release may call and press XXXX. public an many in will to current Reinsurance those President from results of CEO. these find earnings which the as will differ www.thirdpointre.bm. press third website cause is before to uncertainties. I certain materially Bredahl, company’s issued forward-looking remind differ Thank the third you earnings including a Third XX-K supplement other result the quarter where risks night, of today you

speak no statements or to as Forward-looking or events them are date information, otherwise. revise new light future obligation in of update company the of made and they only assumes the

presented these Rob will of In call over the measures complete allow company’s for to turn understanding time, the measures, most to a in refer I addition, reconciliation At which this the management GAAP Bredahl. more results. earnings financial of non-GAAP certain management to is measure A will believes press the release. comparable Rob? company’s

Rob Bredahl

join our you for call. thank the third morning to earnings Good time Chris. and Thanks quarter XXXX taking

Third is CEO Financial Chief Re Third Point addition Investment with of me our Chris Daniel today In LLC Manager. of to Officer Loeb, Point Coleman,

up And portfolio, the of financial open and questions. your detail. of results in investment our Here’s provide more for conditions, brief discuss will performance call, I’ll market our then will results the discuss Chris Dan the overview call a we’ll for the plan our

the from the behalf On want we would be Third there our founders to like would discussion of and Point John of the the down John the of directors. company, John CEO and however, not he to stepping changes our get him aware executives to one from the end seat the Chairman standpoint, original thank caused. Without of to Interim for you board quarter from even I lead work and Re. board’s and director at year. our an third will I quarter, that Chairman the now the fill John’s into extremely by Point a events personal human the board Third like I’d catastrophe who tragedy the left all of him has of course all-time of of currently And has Re was John disasters, for for truly and contributed thank Before results of to success. great for be make Berger, to quarter these as John for replace vacant will departure. opportunity active for the be him. as being. remembered human will natural And will as reinsurance XXXX Steven independent Fass, better and is previously served a more I a learn one

forecasters history time the industry for only and cat fires, the in many go recent expect thoughts losses the affected. insured insurance smaller industry exceed to billion, California which Including log prayers the exceeded events everyone this that level. Our losses third in earlier will and to $XXX out be year

we we’ve our loss these losses combined added and had in share points treaties exposure booked we’ve minimal these five net property quota had As cat we which from rate not Lloyd’s The to we repeated events exposure cap owner of home companies, momentum was million home oil only contracts to primarily where do net instances, quota any exposure many We to buy share In have insurers. entities home of to events. small times assume with $X.X some we cat ratio. our renewing therefore This owner all we treaties. excess exposure. protection further cat retro laid owner amount still reduce contracts a on and coverage while net

$X.XX months proved Our good decision We the a our this of interception brings to best avoid $XX years of the our ago. per our were be quarter year. $XXX to first income month This and generated for million nine was almost million. six months quarter. in nine nine property one profits which third upto in period Earnings this share $X.XX since diluted net cat

full ratio returns generated investment The is out quarterly and through the now end for continued leverage. amount we strong by XXXX, quarter date our diluted can The October strong were nine the an with of first share X.X% investment and by therefore returns The float little Third of a in a is year. few value With times, had months a XX.X% the since results. of Point per manager, have meaningful return X.XX to With but strong is very was advantage at good now this we driven and with LLC. investment XXXX return year investment the was asset of the periods that results results investment $XX.XX. Our XX.X%. book take invested third higher quarter for before at leverage investment we delivered

was Our the quarter return X.X% for of for the nine on and XX.X% first months beginning year. the equity

talk let’s Now about our results. underwriting

is in losses year’s XXX.X%. ratio which quarter was was quarter combined third third last ratio similar combined Our the XXX.X; this cat for the to excluding

react million and recent capital non-cat in and terms is, structures. but any few priced reinsurance focus. dollar in especially the an uncertain. the once to – for events; conditions of deterioration believe has seeing of have magnitude inquiries been how losses question cat we ended, since is the were A deals pricing improvement the So market business which the in the will We the we increase

for to pricing for on pushing to terms has to very and big conditions peak and plan after pricing, remain years improved taken are patient. two deals and events. it Historically all We up

Before buyback with you an our update I conclude, share program. on provide I’ll

have to price whenever we back As book lower. share diluted advised, buy value our or XX% is shares been we intend of

traded quarter back well XX% third we our value the buy During book shares. of shares any not above and therefore do

XX% on use Daniel September plan million will call investment drops of XX, detail. in As I Loeb share program hand discuss the which we book. price if over had of performance our capacity more remaining we XX.X authorised to our below will now to who buyback our

Daniel Loeb

of Third Reinsurance account expected has Third of by Point the in fees X.X% of and the U.S. pace fueled by LLC returned versus and domestically quarter. respectively XX.X% Point CS year-to-date Thanks for event-driven approximately assets XXXX in managed The account expenses. growth of the rate returns managed Reinsurance represents hikes LLC. Rob, quarter investment combined this Third third net XX% slower weaker with good morning. Third returned and fees for The of a De-regulation Fed has net Point X.X% Point of and XXXX, than portfolio expenses and X.X% indices dollar S&P year. The and

we to event developed more established exposure. we meaningful remain year X of growth Japan. has quarter; returned finding this U.S. created best XXX, handily for conditions in opportunities QX, the are in in average returns and in in we’ve X global continued opportunities and the equities and backdrop, S&P In same Credit emerging favorable synchronized concentrated the indices Third outpaced and to this both driven XX.X% portfolio the economic performance markets while HFRI investments Point’s importantly, returns period. X.X% of EM the and in the in equity see Suisse of market the on economies. Year-to-date the Europe times With are More equity third

were For performing TMT the sectors. the quarter, industrials and best

their ABS sectors the and across strong We Nevertheless, respectively on our are near-term. return trends tax continued, we credit, corporate In average credit next cycle. currently patiently continue quarter. favorable credit, both portfolio in are large positive with we for and We and Point quarter, investment of portfolio possible XX% Sovereign approximately constructive in the XX.X% warning weighted across exposure capital believe including monitoring allocations for for the the aspect focus strategies exposure. management. move and a the adjust as points exposure return ability maintain with recession balanced is XX%. creating constructive X.X% strategy backdrop approximately key wait Global Third anticipate equity geographies average investments In needed. we short and A signs equity GDP possible on of and growth earnings discipline engagement credit assets to the performing distressed opportunistically. to third credit companies, under to X.X% economic will while we well-positioned the investment both We growth is on across long with represent combined portfolio an of exposure with credit Currently, structure reform

like over Now, call to I’d turn discuss to results. our financial to the Chris

Chris Coleman

Thanks, Daniel.

For by XX, months diluted book or per share. value per per ended increased the $X.XX share XXXX to three X.X% September $XX.XX share

under due compared retroactive timing a the XX, the fully premiums increase to contracts million the decrease offset and ended increase from differences second due current retroactive reinsurance September ended $XXX prior the partially net was September did ended of XXXX the per written primarily year inforce as quarter which contracts $XXX Gross loss the loss XXXX year lower net the ended or The XXX.X%. by prior the the year from timing any million value due million year XX, primarily year prior portfolio. months new XX, generated XX, reinsurance underlying terms quarter. in prior underwriting and decrease XX, We written for months compared lower the new year’s not $XXX earned a million differences. premiums net nine partially was to adjustments XXX.X% contracts increased $XX book million contracts for diluted We months September XX.X%. periods. when The XXXX was increased to XXXX underwriting not million earned three premium. partially September were prior months share quarter conditions, or nine to months result share compared period and for to the million was did by XX% offset we primarily lower premium ended ended $X.XX premium For per Gross write by three for primarily we to to nine due by combined ratio other portfolio. by months. $X.X by earned underwriting inforce an new of a million XXXX, million was the written in our XX% premiums prior the in XXXX renew to in offset are September nine in $XXX The to writing prior $XX.X decreased to in the to of The year year’s the $XX period September in three period in XX, months compared or $XX compared a that in

also periods For X.X year lots XX.X our XX, we reserve prior year’s for prior the an three ratio nine million combined impact year combined the five ended year compared million generated The accounted a impact the the was net quarterly period insignificant while included The combined the nine period for adverse loss period of months This for for nine underwriting reserve quarterly the points ratio. development. to third loss net month related compared XXX.X%. net September months XX.X underwriting our development. months nine ended in ratio on XX.X of net was million XXX% quarter net the The included and in to September underwriting XX, prior and underwriting related million impact included and the prior catastrophes. insignificant XXXX and of to percentage to three loss XXXX

prior For XXXX the September net million compared the recognize $XX three income $XX we of year. to million ended months XX, investment for

and prior million to quarter investment the million nine income we were the administrative year. the nine million periods $XX in in to expenses $XX an $XX was that period. million respective million changes and for the third cost XX, by in primarily driven the of discussed recognized prior were the plan and compared to months General annual our September but compensation prior ended for in $XXX net compared compared of in also XXXX net XXXX of accruals XXXX primarily year detail, first the months the income expenses year compensation year was General expense partially due investment net for by XXXX increase million to year incentive prior in The $XXX For increase in period offset the The current in period. for administrative stock $XX the impacted separation periods. returns the were higher Daniel investment by period.

the generated on was the and compared nine is expense company adjustment compared primarily British by our annual income change U.S. XXXX were revaluation and for plan of loss our in the XX, subsidiaries. period expense gains dollar incentive Our The to accruals reserves pounds the for year-to-date. we company's the where tax increased and months ended currency due average performance nine to denominated primarily foreign income year in the dollar XXXX weakened taxable loss reflect exchange on The year current due equity in increase of in to strengthened. XX, U.S. return higher ended loss to the U.S. period the September months September the to prior foreign based

reinsurance foreign collateral currency contracts a amount at similar the exposure net minimal a of currency foreign foreign with movements accounts net liabilities. we we As from our currency have assets reinsurance as have typically reminder, to

FX hand these will over Rob. call flow net back offsetting losses I through to However and income. gains investment the now

Rob Bredahl

Thank Chris. you,

results the stopped strong for any conditions lines Our such losses are we have reserve by the we and business magnitude capital and We produce but our reinsurance improvement inevitably given deteriorating, significant as nine on XXXX suffered months is quota the insurance since believe non-cat the results contracts structures, continued uncertain. share reinsurance We market third focus inception. quarter primarily industry. best of of relief the covers well-positioned through as

We inquiries when in improvement pricing seen We’ve in questions. will total the generating to million long-term stable done open and is now our XXX above that and remain flow, go strong our the range. seeing call market be you our coming will float X.X for if tepid, Even We’re job the thank our return asset target improve. within potential of further will to slightly due good earnings our business increase number model. time, has and remains your for to times invested leverage quarters of grown a Operator? is and

Operator

Thank comes your proceed Please Kai you. Morgan from question. [Operator Stanley. question Instructions] first Our with Pan with

Kai Pan

Thank you and good morning.

to have First, I first. Dan retirement this John a questions congratulations to full for And Loeb his few time.

is on the tax reform. one First

proposed and what’s So market? impact think what [Indiscernible] you do the potential on the

Daniel Loeb

its tax have but favorable don’t I you discussed not can Obviously influx. tax Look, are crystal I the anyone don’t what's predict have being going Congress just Kai. so special Hey, think about reform on that to this, corporate going comment I’m right reforms now. don’t on any are ball in mean now? I right

Kai Pan

Then gross here? you funds quite about fair. exposure, That’s from bit year, on you XX% confidence beginning increased your opportunity equity about Are presented market the more saw XXX%. its a feel have the the or now at Okay. long-short of the

Chris Coleman

just I we positions. mean, equity think look that I that’s just But includes not exposure. isn’t like that – our

We’re firing very cylinders. confident we in actually them are and on all

have much, that we’re short, our our – the long but nets We’re quality a on and that the our we we’re moved gross exposure, hasn't in the there’s there. our reflection making of think of don’t up taken shorts part finding and having success I money so net some

Kai Pan

course Okay, to great. mapping your year Then of condition. you the letter that in same out of see mentioned you more end the the

So side in mind to what either the this positive could the your market? be negative or to surprises,

Chris Coleman

– Sorry, I [Indiscernible]. what’s didn’t

Kai Pan

condition, same the in that of or surprises that surprise Is either letter Yes. in mind, mentioned I’m could the be basically market? negative see the more you What marketplace. surprise in condition positive your sorry. to you stable your

Chris Coleman

going then whether companies would on index disruption the or across beyond market to cognizant tax are to would have being different And if of is through any there’s There’s lot a related suggest. something just wouldn't in surprise. are I stable dispersion think that I not reform industries more the think market said economy under disrupted. high-level disrupted it's signs and certainly I of But what’s being moves obviously we going by retail consumer negative, --and moves slowing energy be be a friendly market, other or surface down. more the technology that things relatively risk Well, a on be going

Kai Pan

Dan, the data Okay. maybe is been sort macro teams. you have and Last one of in science that hiring for

you your how help exactly how could so that investment And discuss – process? bit more little

Daniel Loeb

Yes.

So processes think business. any need continually look, than technological different staying improve hedge cutting-edge no involves use. other part and relevant We of I our think our we expanding about tools we are to funds that how the that technology, of use in

additional companies I’m and just We've looking helpful, and that markets strategy particularly out in-house. types sets. of it's the far but when you effort with about data team. building been going looking think been and have macro we've helping at individual We've So, infusing science stand-alone broadly industries combine been on also been not more new our technology, very our our at data with us so process data different economy we our

just On I going of This geography, of the to as not just and expression and our long-short we’re positioning again that. terms want also to front, terms not concentrations trades point our macro in strategy out. and enhanced macro both is an emphasize were

Kai Pan

been you, it change on the Well, is Dan. your questions pricing but One that years, the Switching the getting talking like Would like would underwriting outlook because next a getting front have ratio for outlook the the going two few better. to Rob Chris, that there. site forward, thank about combined for I looks on pricing XXX, you and better. have XXX-ish

Rob Bredahl

more come is ratio down. Kai, expect optimistic. do to recent We combined events the

we’re and to how since On the the out that we lowered ceding actually one think commission we’ve events priced two were I deal, much surprised conditions deals turned be. better. terms, and pricing

dramatic any better expect slow don't think improvement, we We points. data two that's XXXX I but but through hopeful, we’re grind see. so a And

Kai Pan

sort do do proposed the on test? like – in rule how the stand against you basic Okay. house deal. new you Last that of one, How

Rob Bredahl

a that a company we falls any PFIC reserves would But and So, think was which company below reasonable deemed where of set test to think the assets in total there if There's don’t of that legislation to that excludes their all There’s reasonable. language we XX%. be out it’s the the definition reserves don't PFIC we’re reinsurance reasonable. UPR, a metrics. using we draft of is think some some language

you and to reserves XX%, include about And so comes total be out include if the Chris. UPR number

Chris Coleman

It’s right.

Rob Bredahl

is language legislation, And we the if current would so then under fall current used. draft

and contingency be We have plans up, number of where we’ll ends okay. regardless it

Kai Pan

Great. the for thank all answers. you much Well, so

Operator

[Operator Instructions].

question questions. at Campbell proceed Christopher Our comes from Please KBW. next with your

Christopher Campbell

Hi, good morning.

Rob Bredahl

Hey, Chris.

Christopher Campbell

So Kai's on just higher on just one U.S.-based potential…? impact deeper. little reform, thinking I businesses. know going the the proposals tax question going excise from tax a of out is bit you there How are that's coming for about about

Rob Bredahl

should is moving this messy process. I legislative stress bill Yes. that very very

a the excise interpretation bill foreign to of of so that over our also understanding is actual the tax the and its tax And U.S. bill be hurdle But place. made now. entities, the but averaged applies well subject total to payments to wording is of it cash all that to the over is and affiliates which three current paying under payment right project an so subject annual years, of hurdle, the to

Christopher Campbell

like that your did present through, that alter Would did through with something the great. law go that, Okay, if go plans? growth U.S. if would it

Rob Bredahl

No.

under current are five project about that based as we the far that's out next projections on amount. will as be We hurdle years for

Christopher Campbell

Great. Okay.

a write any about are of retro categorize then And you market? demand how for had relief Third how little would did Point -- quarter? capital that covers -- mentioned kind bit just you increasing, this Now you

Rob Bredahl

mean retro, retro you you When cat?

Christopher Campbell

really capital active you think yes, related know retro I deals? reinsurance,

Rob Bredahl

Yes.

in not wrote So did quarter. in the couple in quarter? contracts written whether Is reinsurance quarter? of terms this ones of we have large retroactive There We second is the answer any no. written the

Christopher Campbell

how court submissions your [Indiscernible]? on kind then on of And would your Okay. you you’re [ph] – what power categorize through seeing

Rob Bredahl

in Demand for see up are quarter inquiries we surplus relief, weeks. – substantially few substantially this last

the covers, that's because capital form I well both cover and and or share known. in their so think quota of inquiries Lloyd’s more is And impact reserve reserve of the contracts are out reserve coming covers of on

at seniors model little in because is Lloyd's the it into tougher capital can cover and out the reserve as the rating spits a count benefit put as Its that is it on. treatment prescribed Lloyd's. U.S. the agencies the You not

Christopher Campbell

Okay, great.

dollar the growth on but moving million acquisition just just significantly. down absolute up was the your side, costs year-over-year, about the So $XX basis for on premium quarter were net the costs written

thinking between those So, the how we two? about just should be relationship

Rob Bredahl

Sure. total I tend previously we’ve than we trends rather total I ratio. said the composite underwriting of mean, more think on to income the component parts in in as focus ratio composite

we’ve change parts. they of have as past think individual contracts talked and earning the contracts And how I can different given therefore are very our in in mix. component any many quarter the

where as to many have cost thing loss offset structures other of contracts commission by is our The acquisition development movements.

reduction really quarter unusual just through lower the current quarter So if the of flowing and contracts then, coming last looking absolute other dollar premium reduction at earnings is you're looking this acquisition quarter that's on earned quarter a amount there’s compared through dollar lower really at just proportion driving than costs. period. that what's the a nothing so this with of just this higher this to quarter And

Christopher Campbell

just quarter Maria And continue one, non-recurring to were that forward? from and one there any you this or expense impact Irma Harvey you expect then don't going again that had final

Rob Bredahl

events. that losses of million X.X the is relate cat to those There

million we So to X.X expect that non-recurring. be

Chris Coleman

losses. That’s the through Yes. flowing just all

Rob Bredahl

No, that expenses. include

Christopher Campbell

Okay.

guys expenses higher that there like adjustment have to So incur? is no you

Chris Coleman

That expense No. are that million we the refer really to loss line. net X.X is cat loss flowing through

Christopher Campbell

the all great. answers. for Very helpful. Okay, Thanks

Operator

like time, remarks. At call this Bredahl concluding turn the you. Thank Mr. over I for will to to

Rob Bredahl

earnings In Thanks look to forward everyone us meantime, the bye. questions, the a you call. have any quarter. if Bye, We for joining call. next us please you to give talking for

Operator

teleconference. today’s conclude Thank you. This does

time lines your your participation. you thank for may You at and disconnect this

SiriusPoint (SPNT) 9 Nov 172017 Q3 Earnings call transcript