TPRE - Earnings call transcript Q1 2018

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Operator

Greetings, and welcome to the Third Point Reinsurance First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Officer. Financial Chief Coleman, Chris Thank you.

may You begin.

Chris Coleman

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

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

loss. with flat small loss $X a the investment million We quarter a Chris. first you, produced Thank results and underwriting in

well and XXX.X% for improved XXX.X% returns first continues solid of in of risk-adjusted ratio XXXX in first relative return XXXX. XXXX. in broader XX.X% the for after producing to investment from to Third to our us XXX.X% Point quarter, combined the and our indices quarter manager, market the In first LLC, all a quarter generate performed from

composite is business believe basis pushing non-cat up earns covers was XX%. blended premium, better by to increasing of writing pricing forms lines, quarter, quota for by the business industry the in and to, combined writing XXXX. renewals Outsized leading to a XXXX write, into higher-margin in carefully to quarter excess are ratings masking expenses, and cat increased years of shorter-tail the business. ratio to improved conditions. historically increase our a for will lower-layer ratio in and improvement the ratio the driving In rampant XXX in The points over profits manage first wrote we Please in event-type of gradually market cat of writings shares improvement We this record and activity The some carefully addition $XXX part, heavy low been includes reinsurance. improve specialty quarter our We blended lines on and note which higher-margin covers. in on million underpricing lower we due losses had us focus business to ratio lines some in our business the experienced quarters due of composite XXX to committed of premium in cat at our an currently recent as writings higher-margin of than continuing composite mortgage the to expanding time.

end at I minute last to tax of of impact and on repeat of what the said passed call earnings the like the I'd legislation year. last a take some Now U.S. our regarding

requirement potentially our financial impact piece passive that determining generally exception results. insurance emphasized, PFIC. of relevant modifies adding constitute a than act test have the company's tax more a to assets foreign have that the we the status investment reserves impact year. total we do believe is will The active for only the could not must material us a the for company new As by tax legislation or The on XX% PFIC

However, and adjustment not used formula are reserves. UEP reserves loss the reserves. loss uses odd in the an Only expense definition tax of and law

be the of traditional limited sheet, investments our balance asset gross reserves, related only our portfolio so and process investment account loss the restructuring account value reflected. our through account. on Our gross which the third Point asset of arrangement sheet assets, of LLC a balance as a with portfolio percentage through only structure, investment by below billion. separate and a assets against XX%, and investing restructuring we value exceed investment plan We're will present XX% us asset in our than of our its our of current loss investment One net managed to our of is adjustment net our Under where liabilities are factor would working currently that the the more is total our the gross activities have threshold. Third assets structure investment to in presented quarter. managed that forward is value investment account by net $X completed our Instead the partnership our on going

with who the result a shareholder Loeb, returns investment to results will this I our call operations. in discuss greater we meet will hand the over minimal Daniel now expect XX% impact change, to As threshold to detail. and year-end of at expected

Daniel Loeb

in Point of managed XX% The Reinsurance account shift XXX quarter quarter. decline was approximately Third in of Third for to markets LLC the Rob. Thanks, first the X.X% Third X.X% for S&P the And the An of by The and expenses, Point net same Point Reinsurance first XXXX happened down good portfolio important compared of fees investment managed period. assets morning. LLC. by Third Point represents

inflation, of uncertainty years, Investors the in seen during alternative each concerned to positive markets in start finally X the first elevated decline become to benign rates, equities increasingly money. areas. Over by quarter, riskless but past were in particularly surprises form years growth returned these there's We've and have boosted after indices an of from many the relatively levels. of multiples, since manufacturing also low X-year about

we're the which to which and see closer. be don't of on in today Positive of primarily might sectors, In about minus in, getting As grapple a quarter, we recession, cycle closely close, return and generated other late inning the losses our multiples assets think and in a if X.X%. were is industrials. first by equity watching financials returns portfolio TMT offset the with we're markets consumer

with XXXX on X.X% short market exposure. portfolio single increase and positive exposure further and hedges in We to equity return limited opportunities. rely exposure Credit less generally light minus exposure, and minus to credit X.X% the returned line names a average market Our tight reduce in returned spreads short iBoxx in on remains X%. baskets volatility index to intend of roughly exposure. and dampen high-yield with derived Corporate quantitative fundamental net average on

produced of quarter. strength exposure positive by comparing X.X% a to Structured to emerging credit the for The favorably performing up index return driven minimal X.X% book mortgage strongest the sovereign on credit same period. markets. of X.X% for in of the our portfolio was the quarter, was assets Our credit return HFN

market volatility. supported the and that growth we We anticipate ahead, focused remain across across cycles adjust a S&P expected can in we'll risk-adjusted stimulus portfolio returns XXXX. Looking in maintaining by the opportunistically waves U.S. fiscal of portfolio compelling on deliver still further

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

Chris Coleman

Daniel. Thanks,

negative was share XX, first book first of December $XX.XX, value Our X.X% return of at X.X% from a decrease end which our a and quarter on XXXX. the for equity the the was diluted quarter or was per $X.XX

million X.X our repurchased approximately of $XX we During the quarter, million. shares for common

smart of We continue buying that below our use book capital. a believe to back is shares

repurchase in value we buy during $XXX As per at share, of the available and past, net back have the million noted share loss quarter we've and when negative was which plan book period, in we return discussed trade the detail. investment to the plan. we million under Daniel open for diluted XX% existing for our below reflects small or $X shares windows The

Our largest of from written share quarterly inception or million, which first $XX increase X $XXX was $XXX included large including million. our premium year's business, quarter. an contract prior multi-line first for since This of quarter was $XXX gross for new written our was million million premiums XXX% the and the quota

also the in the written of have contracts current premium comparable in included quarter in the renewed did of million year were in that third originally XXXX to quarter and first However, period it XXXX. related not XXXX, $XXX and therefore

not we may a As contracts, reminder, comparable tend to on renew in focus period. large which a

quarter. was line in As of can a The significant be from result, premiums viewed the growth expense very reserve not quarter the compared the the a impact our primarily an underwriting quarter. indication ratio XXX.X% combined our $X combined in to prior the be the year million quarter in There should generated in to increase ratio We net trends. quarter XXX.X% development expected quarter year's first top compared our and premium a quarter. as lumpy prior reflects in loss was current and gross lower G&A written improvement ratio to from little

contracts see period. conditions improvement and in in renewed earlier, some mentioned Rob number we a terms did that As on of the

was prior The written The would continue expense. to XXXX were XXXX, in result, denominated lower period. a to the and the million due million exchange adjustment quarter increase the expenses due the primarily reserves primarily administrative our late revaluation XXXX expense we losses costs British the $X in As at stock year period total expect weakened loss foreign in to foreign will compensation and in States pounds, compared for where the United the lower prior improved to and compared payroll-related dollar year were that year general first current of $XX improve as currency loss to and for ratio period. decrease business of combined in

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

questions. for on these investment flow income. collateral open thank net through FX you the However, your for the gains offsetting and time call we'll now Operator? We

Operator

the Stanley. Kai question. Pan first with Our [Operator proceed from question line Instructions] Please of your with Morgan comes

Kai Pan

side, on for and investment I have for on Chris Dan, a the underwriting few couple the questions Rob a then side. first

forward First of reduced see the on view market net gross the in little in as have as I your like elaborate guys prepared your can sort more, exposure. remarks a probably well you why market? you bearish wonder, bit more and with and turmoil more just you Dan, going you letter, for

Daniel Loeb

now concentrated environment do trading the that and short in you more longs wouldn't long positions to just we'll think of we're we it think is feel to side, a bearish. of can us short time right feels long characterize exposure And I taking to a the time aren't lot have market aren't, the like be time it's to risk. but necessarily that in on so as we on good money of and I balance where be range I side. feel on for this improving the the shorts. a a more make I it the where for you're have going I shorting, on continue also have I do we like feel rewarded portfolio

Kai Pan

Okay.

the XX% exposure risk where that, you your most on of is that now, the the and short seeing? Just see market position do now

Daniel Loeb

go we on most think I the more less apply and see the the in, disruption, kind portfolio. where that of we're a about that And find it's more side. just stock-picking or we risk? of on the about are more do opportunities to apply materially to environment seeing same think that markets the long the and the the there's side, I at least nature going underperform also just rest we're think, lot companies short down of skills Where

Kai Pan

Like Any think, particular shorting areas? opportunities? like you potential

Daniel Loeb

our of away calls. these secrets all give can't we on I,

Kai Pan

Great. trade for right. then you, that what the you war And do with and about the investments? one All potential last China is for think implication

Daniel Loeb

just the as and and it's are Look, market it's going soon impact a what say than the some it's to too -- back-and-forth too very end but specific has very that, market to I Obviously, to based that we're China on have closely, lose soon more it's broadly. have large something Yes. following the I analysis China there having we're on companies do but U.S. said think the to that here We we've done, say. we're think closely. think -- following just

Kai Pan

of little premium term the Great. about the Rob contract that growth and see a mentioned Chris, nature jump you particular big Then a in in talk the you Could of of and for points more X You've quarter. ratio. XX bit and contract? the

means add G&A ratio, better. you points If breakeven X or much of expense it's which even pretty

time So, do you over expect [indiscernible].

Rob Bredahl

probably of fully take it and If years, a out, going I the comment. earned combined seen track certainly to our in think last a of I couple we're of to now. XXX, Sorry, year. question, a to part we've down right To goal, get I on improvement which was that's your guess will we're couple ratio would just and be breakeven, years answer this our but out, an good

the to happened had the quarter, first a of X:X. lot at a just done We with to had do the As timing. far premium renew in that as increase deals of off-cycle number

I XX Chris, think deals? had we

Chris Coleman

was There or million, placement margin you Yes. aggregate, the mix and was other a mix X deal said to business. small as margins. opening and float-generating mix I lines of traditional was of happened come is a that company, a -- sort fits up its a retro first higher there we towards slightly It our an It It's a a multi-line quarter. contract. heavily expect new renewals the in as about good more mentioned lines strategy contracts the in think to have large specialty XX just where more off-cycle And is deals in the looking into specialty generate Kai, that and that's then that mentioned, casualty established of reinsurance Rob so just new market. of underlying that bit was the we $XXX weighted said, into and right, specialty we little at of at sort remarks,

Rob Bredahl

Yes.

little I did bit its And there overstate and don't so, did improvement. of deals expect of a not a We was lot we that. couple that improvement some saw but a did of to that we to renew want timing, And see renew.

And we're slightly also timing, market it's happy way improved. conditions -- so, we're but with the that

Kai Pan

on Great. Last buyback one side. the me for

You now. is at right quarter. stock trading like book bought in at on book first XX% XX% of The average the

guys Are of there plan is are So, buybacks? the I -- just a term limitation do have -- given they pace in a market you you wonder, or time? on is stock at valuation well any of as depending

Chris Coleman

really I mean, Kai, think, I Yes. no change.

quarter. consistent narrow our course the was window, the timing our for making been of within quarter back the filing our XX-K of in intent messaging you open-market think And we've pretty again open first first window, repurchases. repurchases in then which given the repurchases quarter share around a I fairly and of first closing the is a down our reflection saw for around

our be the book open So, as we in to open windows, plans during repurchase to said at in shares the XX% opening market continue remarks, around of lower. value or

to relative limitations the you normal buying our the limited trade just opportunity are in shares million of daily shares open in that's of volume of depending, the open of what to And day how a worth so back per shares limitations $X.X window give or course, to market. We book. within is, roughly sense

Kai Pan

so you Thank much.

Operator

Thank you.

your line proceed of with with next comes question. Please Our question the from Christopher KBW. Campbell

Christopher Campbell

good hi, Yes, gentlemen. morning,

Rob Bredahl

Good morning.

Christopher Campbell

Okay.

And the seeing in seeing just XXXX? lines? expectations then on pricing? on for And Just first rest we trends is, of you're casualty general get the update an question can what you're

Rob Bredahl

cat. I'll about maybe with And start Yes. talking

And renewing so, And we've others, you've the what's were peers the from the heard Chris, and is very in cat too going think, company heard many that is on disappointed of couple cat bad. past reinsurance I flat, many submissions our brokers market which renewals. in weeks, of in from Florida as

that the sort years have some been might on, underpricing. XXXX been cats think they of lucky, low-cat but have interestingly, think we relief time, leading had to impact that impact pricing, Now, up the which just on we types type we a of activity, underpriced masked positive And to a focus the for deals. on had surplus date bigger deals

we losses, cat improvement. the seen with have some So,

basis renewing would first better. of It in at Just the noticeable maybe happened roughly, our that a improvement XXX XXX an say, we're deals I saw to of quarter points we but there's mix, more because improvement. in portfolio

positive about of trend that pretty I a not, good rest the guess moderate year. whether Now continues we'll feeling see. We're for the or

Christopher Campbell

guess Like retro market, there? some are of some getting there deals submissions do quarter, would imply which Got you an the are that I - in casualty we're there. people seeing it. but in are it? then you guys didn't that interested in because what Just switching more losses just any side uptick seeing And - this hardening

Just...

Rob Bredahl

me seeing just in think an what retro let we're casualty I don't we're - uptick explain And doing submissions. with contracts.

So, we a offices, have a of small couple relatively team.

are well-connected the in very companies. reinsurance We relationship-wise with brokers other

we when retro underlying, get think reasonable we of so, instead to look deal casualty a economic we overrides. the do with And the writing

we points fair us us the And it a cost X we infrastructure companies at believe reinsurance averaged so, is of for build global that sort the would deal have. and out X%, these because that overrides think to least

Now underlying and success, already the we're the after over we that to retro. we'll time, the we're some and business going have successful, from peel extent

Christopher Campbell

then How it. you had, mentioned you had just think is And the That's script, in expanding should was we one coverages. event-type thing I Got mentioned had business shorter-tail and cat, I opening one that? about then higher-margin one. it? property into final think not Rob

Rob Bredahl

going cat not this cat when of loss. write we any we We're a excess time and, property might follow year, it, write to come No. there property

We couple that portfolio, we of would another there, and do event-type in now the of is some So marine there higher-layer that the cat the cover some write some is bucket. we so have we have company mortgage total stop-loss written this results contracts that's write, examples, that excess a one in be covers, example. in

that incrementally. combined bring to down, different from move rata to we're the and to do in excess we And start, so, written we've from forms, need pro some to order ratio going in our so

Operator

of America. with question. your Our Please with Instructions] the next [Operator Bank from question of proceed Cohen line Jay comes

Jay Cohen

looking to forward I talk premiums. wanted for about your

could you Those differences simply quarter for timing a of the tough, going year-over-year the comps timing quarter. are a aided tougher differences? because Can maybe comparison. this quarters don't the where things talked just You highlight timing renew in some same comparison when of cause differences these particular be to about

Chris Coleman

start Rob view give here. can a Jay, sort you Yes. of then Maybe couple forward I'll, premium. sense with Chris our specifics and on going I'll a of of

example, quarter, actually, of you think covers don't, renewal. second a large are the subject was sorry, And as quarter. we it year's, those know, necessarily wrote those in third and, reserve last For to I not couple

or some part, base. a in some course deals renewed don't X-year result in quarter Now, a couple of of upsize may in the were on last a written reserve covers renewable result we we that but cases, for year, most changes premium, in fourth make the And that premium basis. homeowner's large contracts property of

And won't year's in for renewal up so come this those again quarter. fourth

are mean, just the our for I top the comparisons, quarter-to-quarter bit in couple those a about to or annual the this a of premium course often the nature predict over quite examples. of of difficult. is I line talked we've very past, portfolio So difficult reasonably even us think is

Rob Bredahl

And than top. bigger near in the to average transactions maybe much somewhere we're our the emphasize industry, of the just is that, size the average

especially renewal And dates clients. causes terms so the when and that around issues, get of by contracts moved

sort as Just before underwriters this up and this senior to meeting much as year, the with we just to we is given mentioned, our guess estimate, written XX% guess, discuss of is we best factors premium a this and a year. what the our is flat gross likely all had the call, to be

Jay Cohen

That’s and lot. a thanks helpful guys,

Operator

would any time. the at questions this There turn for like Rob are call Bredahl remarks. to Mr. over no to closing back I further

Rob Bredahl

give you call. quarter. questions If to up, talking Thanks, your today. any to forward a Otherwise, time look everybody, please we other next Bye-bye. for us come

Operator

today's teleconference. This concludes you. Thank

for You your disconnect wonderful a at day. and your participation time. this lines have you may Thank

SiriusPoint (SPNT) 13 May 182018 Q1 Earnings call transcript