TPRE - Earnings call transcript Q1 2019

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Operator

Greetings, and welcome to the Third Point Reinsurance First Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I now like to turn the conference over to your host, Chris Coleman. Thank you.

You may begin.

Chris Coleman

operator. you, Thank Third the Ltd. Welcome Point to Reinsurance call the quarter first XXXX. of earnings for night, press on is earnings issued our and www.thirdpointre.bm. Last an which release we financial supplement, website, available

many the first quarter would factors other statements risks forward-looking XXXX on and earnings of those current factors may remind and begin, XX-K, release company's projected will company's including actual results that based results find the like Actual press public uncertainties. materially we remarks to today from Please I you the where Before certain that differ of expectations. as the filings, contain differ result to to statements. risk cause will the in from materially refer you forward-looking these a could

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

will a is the these Last release, management the with certain the management reconciliation along of comparable non-GAAP measures addition, understanding to earnings press announced financial company's press A in night, our which transition company's measure GAAP Officer. complete we the of more Chief our most Executive earnings measures, refer results. In for presented to allow release. believes of

also you beginning. would will has been known helping Re release, Malloy our Dan for as best. guidance and Third his form As Third be Third was very was wish press Dan the Point and like we Rob to him of new thank many mentioned and leadership. in resigned all also like with Rob in I from has instrumental would introduce Bredahl personally to the Point Point since the to Re. CEO. to Rob Re I already

Third and Dan over Point We excited that for will turn new call Malloy. to begin with to the I Re are chapter very this

Dan Malloy

you, morning. Chris, good Thank and

I for friend really Point Re a Chris’ last I with Rob First, enjoyed been the colleague him like Bredahl Third comments. and has over decades. good to echo years. building X.X

a will promotions Reinsurance we the position assume night, Catastrophe. will Re, Turning in now a of the be issued more business. Gupta; our well Last U.S. also Manoj President to Head of make to and Global discuss replacing on release Point press regarding Third in role of to USA, plans, will David operation. David Property role These the assuming Govrin which of moment. us Drury progress the underwriting changes I detail continue in

morning, financial plans our U.S. to will our of our have LLC the caliber then an Both forward. going discuss such This would underwriting thankful then operation lead We’re high I briefly individuals. like I performance, of will our Loeb, and first more results to CEO investment extensive review detail. and XXXX. Chris in quarter update with provide experience for will Third speak conditions. Daniel on the to Point market results

We up your will then open call for questions. the

the X.X%. income are quarter, of of pleased with quarter increased We a the in quarter quarter the We income total a and XXXX. first for net XX%. generated was by record by investment first solid the for $XXX we shareholders’ net driven performance of equity very million return

quarter per value first book diluted the at $XX.XX. ended Our share

of for the results we XXX.X% higher improve quarter. underwriting our in of first ratio as increase a Our to writing business, continue combined margin resulting

plan this improve later underwriting to We expect to XXXX, profitability year course XXXX. our combined over ratio and or in early achieve the of to continue

Now, our underwriting market let’s plans. conditions update to an and on move

to ratio continue underwriting for quarters, about business. below drive combined changes several shifting These platform and margin we talked XXX%. As building portfolio to we’ve projected our are our higher are our

at catastrophe property writing started we mentioned, previously January As X.

wrote premium. catastrophe $XX property we quarter, approximately first of the During million

written premium access gone portfolio well expected. has all very to business, and metrics, plan better with Our than

look also X June attractive. Our prospects very for

opportunities will $XX further this of million market. a review premium of number to catastrophe in We and hardening to accounts have a write Florida large expect

we the of accident her and book terror, various lines compensation Tracey a during XXXX premium kidnap and $X contingency, life also hiring There specialty personal that will will at X. During violence. portfolio and and reinsurance as develop war, January team remainder will quarter, renews including to by million this consist only announced Tracy $X a in the first of worker’s of of ransom, Gibbons. specialty likely be and most cat, Bermuda written underwriting political million the led of team lines, cat,

during the million We will expect I of $XX the over specialty the in hand premium discuss will Daniel $XX volume XXXX. to results detail. million who performance to our in call portfolio reinsurance more now approximately investments to be Loeb,

Daniel Loeb

The morning. Point. managed The believe the lower XX%, S&P cycle is to These with than of pleased about Third Point generation the is exposure came in Point by We of decrease good Reinsurance results Third LLC managed so adjusted return in a XX% generated year. Third positioning the portfolio our net expenses. first investment a of and Point and you quarter we are at represents of net Thank Third assets this for X.X% appropriate reflects alpha in number Reinsurance fees that point XXXX of by This approximately exposure. XXXX. XX% positive and account beta year-over-year which far with XX% our this

Investors QX. XXX hold Mark up which on cash taking and years management through focused Nestle, great a a years our turnaround and We including XX%; Clouse changed is it and of by out. was return growth which as earnings names, QX, constructive which as book Campbell’s, points XX%; and XX%; Baxter stories play gained shareholders. new are Nestle gained active XX% our on by trajectory narrative active gained United names example to of which happens lens]. basis that portfolio two typically its for the a in margins Technologies, were to equity team installed CEO, company what past when [risk growth the improving generated the and our has average when Nestle representing three five by driven for constructive led shifts. alpha exposure over of Returns is XX.X% around viewed note. streamlining Our returning

portfolio Our during short-selling end market the alpha modestly March, through book for the was move. dedicated of year the detracted big QX, our despite but short neutral

select on XX.X%. to our We on idiosyncratic better credit, hedges individual returns while isolate corporate additional exposure, factor also In positions of X.X% risks. increased and credit sector sovereign credit sidestep returned market returned average

distressed quarter, we credit in substantial a smaller During and similar the in situation security. a a complex investment a made established position

meaningful increase several exposure a to credit, added will further we year. in anticipate the time and first In exposure. structured position generated also return years We on this have we credit sovereign X.X% we chance to this for the

residential, student, We on profiles and the underbanked loans. are consumer building commercial personal, continuing to and risk securitizations focus of through own our

higher that cycle, is modest year. markets. alpha generating beta, our and generating on lower activism we continued exposure pleased compounders In returns environment focus strategies volatility, for credit, with and remain more and believe this will we levels We’re an late short in idiosyncratic selling, the deployed quality emerging XXXX well-positioned macro of for

management call to Now, our back I'd like turn discuss results. to financial over team to the the TPRE

Chris Coleman

Daniel. Thanks,

and the which increase XXXX. for Our of return or our shareholder's $XX.XX, from equity share $X.XX X.X% was an first end the the on at book quarter diluted per XX% was was first December value quarter beginning of XX,

of as diluted warrants, quarter was and in and strategies million reflects money increase all to and impact other Point from for the the options which XXXX, lower Third equity up the some we we March capital to to with price included the in in which our results the now that free with quarter, the and the detail. dilution Daniel reduced in on move our year strike book for investments at of diversify end our Our below period, these and of mentioned Last Net continue increase warrants, investment the to share plans share and credit LLC portfolio, per XX, investment possibly share. $XXX investment was of have activities. price options our discussed income underwriting support return the the value into we work price possibly volatility

we $XX the comparable million property over The first year related contracts underwriting year build premium included the current contribute the new offset $XXX in premiums profit period. will which expect did in quarter. the was This due pricing, a underlying written quarter was and terms the by decrease to current for to multi-year to first found which year million conditions the no the on portfolio. was and renew, and basis quarter in of quarter written period the not we further that business with out contributed year's decrease contracts course gross certain the prior decrease the from written contracts a Our first gross year due primarily XX% $XX of was premiums The in portfolio, cat in new as prior or million, partially in the period.

write a a reminder, period. As contracts, we comparable in may renew which not

a result, viewed lumpy As not premium quarter written the as should of premiums be an trends. can first from quarter-to-quarter. indication written The gross decrease our be expected in

the XXXX. of expenses, higher were that contributes the costs. due to net $X.X related prior increase of to Our our earlier. benefit execute million, the loss as and the period. improvement XXX.X% $XX gradually underwriting compared and an reserves, as in Total facility for out we've We prior acquisition to favorable year was compared compared full more as turns in prior expected plans quarter, employees on related as year The margin time general net for of to and year support proportionately number year the team development in the mentioned to $X to of in calendar a takes increase expenses quarter related for The underwriting recorded higher our progressing staff and ratio built results first business million credit well primarily XXX.X% XXXX impact combined first to the to of the period, improved year's combined results. administrative the our quarter of underwriting million ratio Dan of the in is as to

did we not shares. quarter, any the repurchase During

remaining amongst buying balancing evaluating from discount repurchase our benefits of retained evolving the plan, back sufficient capital factors. sufficient capital repurchase with to back agency rating accretive whether and maintaining existing we We support to periods. per to have share at under a book to shares earnings $XX maintaining look share other our may underwriting shares, plan value buy are In million future opportunistically in we shares

exposed In for catastrophes that. potential time, your you addition, we are call We loss the open now for will also Operator? mindful are more and that of natural from to thank now we questions.

Operator

[Operator from go KBW. first ahead. question Please Instructions] Meyer from Shields here Our is

Meyer Shields

Thanks. Great. two I questions. guess related

of to going focus be a is that what an from that Property forward? first, this significant Catastrophe, going we does of Global Head appointing fact the increasingly The business understand you’re that imply line should

Dan Malloy

X. January Catastrophe as Property Meyer, we know, you started writing

be portfolio. it the increasing three David years of with brings him. Drury So, an part cat for will XX experience of property XXXX, and Certainly underwriting

highlight his it we definitely recognize to a Dave of worthwhile So, part think efforts for that our strategy. significant becoming it’s was to and

Chris Coleman

in Meyer, I the of of year we about which just Chris with here. is all as the that mentioned first over range XX writing previously talked a Malloy course at about looking Dan so that written will roughly XX million-ish quarter of in in we kind on line expectations. the with the Florida, million XX and portfolio add or original call, are at

Meyer Shields

just growth head and I that, am expect No, XXXX whether Right. maybe wondering continued understand into should we on? I so we as completely

Chris Coleman

that the cat we of just proportionally this overall else portfolio, company is nothing I might anticipated grows, the as increase think beyond at size but point. the

Meyer Shields

Okay, helpful. that’s

I let it] cat, quarter a the sense pricing not, last the it still [seeing our relative we as little January is I’m on might still discussed that if expectations mid-year correctly, expectation? question, was think me be for and but weaker, paused I X, Second property bit guess to I’m

Dan Malloy

firm is market out significantly giving of the are changing reflecting The on views Florida losses late the risk. very are The up year that development. this orders

We that are needed. seeing capacity our is

facts definitive in reasonable, in – other could terms obviously layers terms the layer, to I put relative not of layer up affected XX% program particularly were [indiscernible] to to wanting program situated how of seems by on it, of a number So, by by losses. – plus but sort

a there’s of on So, moving lot pieces that.

Meyer Shields

you so Thank much. fantastic. Okay,

Chris Coleman

Thanks, Meyer.

Operator

back over This answer floor Dan question for any concludes Mr. like the the session. and I’d closing to Malloy turn to comments.

Dan Malloy

next for forward thanks to us. to talking look you quarter. joining Well, And

Operator

teleconference. today’s concludes This

this your participation. disconnect at may time. You you for your Thank again lines

SiriusPoint (SPNT) 10 May 192019 Q1 Earnings call transcript