TPRE - Earnings call transcript Q2 2019

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Third Point Reinsurance Second Quarter 2019 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Chris Coleman, Chief Financial Officer. ahead. go Please

Chris Coleman

which Welcome Chief Call operator. night Third Reinsurance will financial Point issued www.thirdpointre.bm. our Thank today's Officer. Leading the to Second Earnings call supplement and release for earnings Dan Last available Quarter Ltd. on an website Malloy, you, be; press the is Executive of we XXXX.

joining Directors CEO we Board affirmed the immediately. night in and he Last that that included of our announced earnings the would be as effective press the Board release, Dan

Before the and to those to from results I uncertainties. based Dan I remind you Actual the call risks materially turn over will projected statements would as that remarks forward-looking expectations. differ like many contain a current of result on may certain today of

to could release quarter where to public actual refer in the other company's risk that press XX-K differ the from including forward-looking company's the factors cause earnings filings find XXXX statements. and the you those results materially will factors second Please

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

management will believes for the certain release. measure GAAP more the earnings non-GAAP refer measures in company's allow these of A which press company's the complete management understanding reconciliation results. comparable most to a financial of addition to In measures is presented

time turn to At Malloy. the will I over this call Dan

Dan Malloy

recent financial joining followed developments strategy morning Re for provide earnings and our Good on overview Today, Thank market thanks update conditions. Point Third our by an results quarter Chris. our and second I'll you, at call. an of underwriting XXXX

our will in will detail more and to investment Loeb, the cover of speak Daniel then results. Third LLC Chris CEO Point financial performance

open then We your up the for questions. will call

pleased are quarter's this financial performance. We very with

with strong improve another to returns. the and market underwriting shift our in continue benefits strategy investment results had quarter see we of of improving as along conditions underwriting Our we

of XXX.X% was bringing a to on return the later to We year-to-date second subject underwriting ratio profitability year combined and catastrophe quarter, quarter this equity for achieve quantum on-track generated we Our the our for property ultimate events. are X% the of XX.X%. return to

pleased are the quarter developments our underwriting second to relating of number during report positive strategy. We a to

has The cedents. our key expected with we better property than number of the buildout of market accounts catastrophe important metrics. and portfolio June renewal on Florida acceptance gone were all X, based were with at our pleased date top on signed well-priced a We

premium our quarter, $XX During this bringing the approximately class in wrote second of written total million business XXXX we cat property to of $XX million.

Our portfolio non-catastrophe represents show majority to the the business evidence still of which improvement. of continues

conditions. about benefiting and pricing reinsurance primary improvement well contract both which this terms CEOs earnings of as a during We from have in number are trends as talked season,

the and Our new specialty joined that lines during quarters second underwriting has than first written more team to-date. budgeted

$XX to remember January that calls on are previous and may to specialty we to that is million And response we their our portfolio we XXXX. write weighted from increasingly client on of the $XX X that You business. broker far, new during business confident deliver based will million expect so heavily our

be Market initiatives, in business that XX-year new announced Building David remain conditions lines office recently veteran industry Sinclair, on in September. these we stable. will a our our joining London

this reinsurance access for already unique business efforts expanding equity Europe we've where new long-term area. strategic reinsurance as We with our stakes, develop and Lloyd's as focus he forward success the in well opportunities traditional about opportunities. excited are We look to will reinsurance exchanged on taking to a in had both in small investments

that expansion in risk appetite concurrent Our we new changes require underwriting strategy. make our of and initiatives investment

for in $XXX redemption initial QX, million, $XXX at our close TP bringing the million. to redemption the May notice $XXX from of Fund redemption total a in million an we Following submitted

have We more results. contribute believe in of Third We overall returns the under investments to and Point in underwriting for our management lower impact will of income balanced amounts contribution our high-grade LLC. result fixed strategy that a will the to short-term shift invested these in underwriting volatility

are We in return our on while our the of taking has capitalize to which investments, well-positioned ability Third LLC's goal to underwriting of Point advantage been outperform opportunities total managing always model.

discount-to-book our of value demonstrate changes our book underwriting allow ability value very full business delivering more the are build in potential the and the the model. us over Point of on and profits as confident about that good the Third feel consistently will are Re benefit expect gap shareholders to for of We grow we to that taking time. place franchise close value We our

now I call performance who Daniel will of more results the to the investment our discuss Loeb will hand in detail. over

Daniel Loeb

and you good Thank morning.

like I'd CEO. Dan in TPRE's working with dialogue productive look Dan and to First, already started to Malloy future. with him as welcome new We've forward the we

Reinsurance Point combined the generated actively quarter managed X.X%. LLC for net When the Third the by returns with X.X% Third Point LP, of of second positive fixed consolidated were quarter income portfolio, fees for the Enhanced portfolio results expenses. Point and investment company's XXXX Third of investment

Point account by Reinsurance assets XX% Third Point. represents The managed approximately Third of

strategies in specialized risk to reduce concentrating an have In by our plans we with exposures we TPRE's on beta market the and we outlined investing net generate previous communications lower shareholders, where portfolio. our less believe and in XXXX via edge for alpha

averaged exposure have June. we're The Our generated reduction in net same returned XX.X% year. positive and portfolio through TPE for consolidated during this pleased XX% exposures Considering to XX.X% the beta, of period. gains throughout the

also equities returns XX% profits. in the combined strategies investment of driving year for the our with to-date of positive and QX Each to

repositioning to of our investments such five active new equity proportion and beginning event-driven at in has the result market of and past our in several years. of and as situations, highest a other the risk XXXX of As the types portfolio factor sector idiosyncratic

positions performance year. an with of due activist were Our half strong equity book X.X% for on especially for loan largely was those the return Gains component. average to XX.X% the equity core exposure and first QX in

was investment announced recently in QX Our gains. largest contributor Sony the

If www.astrongersony.com. more shared upside we case to about learn on you'd our our like and position thesis

for returned on X.X% QX X.X% average exposure the year. credit corporate for credit, In and

largest in debt the Pacific this unsecured utility performer the been best so and business, year. Our in California position far of has Electric portfolio the Gas

X.X% bringing credit Our returned to year-to-date portfolio for XX%. returns modest QX sovereign

Returns invested for this country strategy are primarily LatAm of attributable investment to sovereign recent debt successfully the we a have in where before.

and the ABS Finally, X.X% ROA well, quarter generating also for year. performed the of an for X.X%

us second prepared capital market year, half we corrections opportunistically. As the and the structure across take advantage portfolio especially into our cycle allows shift the late investments economic the we believe focus positioning of and to of strategic be to then in move

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

Chris Coleman

Thanks Daniel.

per quarter, return equity second $XXX the diluted of bringing second net into the on $XX and income to for quarter or share, share, million XX.X% income net or For $X.XX our beginning of year-to-date. million translates $X X% a per year-to-date we generated which diluted

quarter portfolio began in mix, XXXX. property we primarily second which of for net due in value XXX.X%, from diluted was an Our per our XXXX. XX.X% combined quarter. including December to book a second generated increase business the ratio We a XX, XXX.X% share was and at loss underwriting writing of catastrophe quarter $XX.XX, million end The to shift in that was the the year on improvement was second prior the $X earnings compared a

underwriting related year's we the changes impact of estimates quarter, improvement loss second the recorded acquisition a small reserves, net results, to related in in of net For prior of costs.

We net prior flat have impact of reserve quarters in year of a development. had row now XX favorable or

increase $XX catastrophe was new quarter business. second the for was the million, including year the written gross current new in in found of primarily million $XX premiums to quarter. gross The compares property year due period $XX contracts Our written to million premiums which in prior

new decrease Gross for for current was the property $XXX and the the in written Daniel contracts Net the million and $XXX period written the million six-month discussed in first quarter $XX that not decrease million business. in new half $XX year was in of periods effect including million of we which contracts a investment timing first the $XXX X%. reflects for the premiums the which gross half period, current catastrophe written returns income premiums renew million of was of differences, detail. to XXXX, six-month did compared the for year net for XXXX the of period, was The for

the Total for general million to expenses XXXX, for the second were of quarter million and period. year $XX $XX compared administrative prior

and period, to For the the general year compared in million million prior administrative expenses period. six-month were $XX $XX

of costs, severance expansion; to The compared targets support as are well increases incentive plan purposes; part G&A to both accruals periods. an reporting due which costs, due reflecting year to relative and higher prior performance share higher to for as as compensation as to our underwriting payroll-related improved to incentive date, increasing as segment corporate headcount headcount well the primarily expense, reflected increased were

not we book which During the our capital been discount management a quarter have significant would common shares. to repurchased at tool. we've XXXX, We share recognize and make trading that an value, attractive any thus far repurchases in of

discount sufficient the capitalization our the and to buying maintaining to as are capital a business, with capital, capital market we balance back of we'll also of agency book, well other rating at mindful and and However, our regulatory growth support of size continue considerations. the to shares accretive base of as benefits

now questions. time open thank for we'll We you for and your the call Operator?

Operator

you. Thank

Sean from [Operator of being question-and-answer Reitenbach Please the go now question comes KBW. first Instructions] We will ahead. session. The

Sean Reitenbach

there morning. driving Good costs the the the quantify the of year-over-year? other corporate versus to Or... corporate things way -- any Is G&A impacts separation total

Chris Coleman

to agreement other that corporate around about costs There's nonrecurring G&A $X coming that. Sure. million related disclosed separation current through was the in related the costs previously quarter of and

Sean Reitenbach

the composition people tied some company? then, And packages perfect. is staying at compensation Okay, elevated to or higher retention -- the for of

Chris Coleman

the bonus No, returns a combined our well nothing function side well on as compensation of plans. budget on cash really targets. of it just the exceeded our of retention our higher compensation Both date criteria share-based terms reflect overall annual ratio as the investment performance that packages, on to -- returns in as incentive both as but

Sean Reitenbach

Okay. Great.

cost little the looks there? last ratio. higher it -- to bit should seasonality driving there's other It been ratio. persist? like looks the three acquisition it XQ the to will the the What's some And compared quarters. a Turning has seasonality It years in like

Chris Coleman

is -- the profit of about contracts really any There's really line loss ratio. ratio many commission vary that less throws our acquisition sometimes have cost What features off and trend to there It's isn't the with seasonality. Yes. other movements. seasonality

have a movements, that's you positively acquisition contract negatively cost loss captured and a have reserve line. the can or commission you development where in offset profit is by So situations which

you quarter last has been the recent items, the those including over for quarters year. adjust several cost constant relatively When acquisition second ratio

lower a Now, to what loss cost start you and higher downwards ratio have of both cost other subject property business to towards line. acquisition as but we're loss mix course, line in acquisition will you'll start property ratio, the on cat shifting time over of to see contracts of time excess a over the proportion that see the also events shift cat that

So the you adjust and when really has question, guess first there there's I answer to your of been it really actually isn't consistent seasonality relatively -- for impact reserves.

Sean Reitenbach

That's the that portfolio is for do or assess very likelihood how U.S. you. Dan, do global then recession? positioned a for you well? helpful. think Thank of possibility And And the you

Dan Malloy

really one It's we more Yes. with indication coming it we're much We think in nets of see term. I near and last been some signs recession. mean up time of that, and looking recognize about all we it's to question set a it that lower be said is and much anywhere But flexible really a the any the time long for the up lower beta. don't portfolio having the a since

for we and when that year. inevitably it ready happens positioned before, last better than one downturn for market we'll So we'll example does if be be come, were

Sean Reitenbach

management's Okay. developments one, one there How's PFIC about any Great. are management updates how that? re-queue. I'll thinking And -- on then last or

Dan Malloy

regulations of guidance. insurance I would additional as There's been the conduct regard to lot some on now recently proposed have attempt with or seen, regulations you mean clarification to right how uncertainty to apply a those Sure. company. issued how interpret regulations provide an that to with around proposed there's active defining

to with we're paying to and how advisers early closely attention including to broader too We work exactly us, continue it. this the understand tell it's the regulations. industry our but And affect industry close groups to tax certainly it'll at better point, really

Sean Reitenbach

Okay. Great. much. very Thank you

Operator

Chief session. I concludes like back closing turn question-and-answer Dan Thank you. to Malloy, to the would for conference This any the over Officer now Mr. Executive remarks.

Dan Malloy

and joining for you everyone us look to forward I talking next Thanks to quarter.

Operator

today's conference This call. concludes

You may you disconnect your participating pleasant have lines. Thank for day. and a

SiriusPoint (SPNT) 9 Aug 192019 Q2 Earnings call transcript