TPRE - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to the Third Point Reinsurance First Quarter 2020 Earnings Conference. 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.

It is now my pleasure to introduce your host, Mr. Officer. Financial Chief Coleman, Chris Thank you, begin. you may sir,

Christopher Coleman

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

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

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

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

Daniel Malloy

detail. will quarter Good the cover followed of provide for we will you and our earnings will then results and open market financial with I joining underwriting more will then finish are call the for morning Today, Chris call. our by we I the first experiencing. our thank of questions. concluding overview highlights remarks XXXX results, an that in and conditions financial

would work especially the employees to to very COVID-XX and for take a our all by moment affected challenging go also their in hearts to times out uncertain living hard this are like We global environment. during pandemic. I thank those our

to business have in enormously have run how Our has creatively continuing to our clients' working I proud responded. individuals our moved to and company been needs. addressing the entire see while team remote the

net XXXX. quarter a and Re equity results, negative first to return on our a Point loss was of our million, of the Turning generated Third $XXX for XX%

Our primarily equity first volatility COVID-XX by was investment negative the the resulting to pandemic. of from X.X%, result market driven quarter return due

value book quarter share having Since generating decrease of a portfolio losses, end since approximately has a April, $XX.XX, XX.X% of quarter-end, income the first for of was portion XXXX. representing of the million year-end our diluted in Our the risen per investment at $XX net investment recovered month. X.X% the

combined estimate benefit for a the points prior which reserve development. COVID-XX now ratio quarter percentage Our the our current year is or losses with row X.X XX%, on included ratio. combined a was first reported This of development We our adverse reserve in a XXth $X.X million quarter. quarter in small favorable no of from

primarily event were in share losses The driven COVID-XX recorded quarter cancellation, first specialty, that underwriting as contingency well the exposures or multiline certain quota contracts. casualty, as we by and

current record our quarter estimate a being expected which this one. our majority business best future our they losses the largest related are said, is of of by to to will on in in seasons for recognized related the source COVID-XX We cancellation estimated line based were wet our our expect quarters. effect losses and incurred to continued That estimate of of as COVID-XX, for losses

subject It unknown given own, to our insurance and important uncertainty severity to the pandemic. the high well the related is note as of to as loss, duration degree industry's that of a are COVID-XX

our that in revised higher underwriters, reducing ratings no our of Third and underwriting am property position overall our first line our of our and our very business with the to to margin Despite strategy. our a testament cat history, in report profitability loss, pleased Point remains Re’s other underwriting and quarter in which strong talented capital expansion fit longer I business is

have Now turn according XXXX. to an number new property our and underwriting market The catastrophe we of and current a let plan in portfolio so build-out continues far update me added to on conditions. of clients

pricing expect from improvements this of As to the our in expected a business risk. portfolio, margins we our and market increase line increasing repositioning without result of of

There is market business resulting property a COVID-XX how potential and of the through significant uncertainty insurance. lot from as particular, reinsurance for property markets, commercial losses will insurance and discussion from flow in interruption

lines, property meaning While to property portfolio we less this issue, exposure writing clients to on not entirely catastrophe focused commercial insurance. we our are immune has have personal

Our are is of Since business most still non-catastrophe for reinsurance improvement. an contract and rata terms to underwriting primary represents trends conditions. the and majority which reinsurance both improvement business, from we benefiting pro show our in of our premium pricing continues specific

pro However, of our contract result of also in premium COVID-XX the resulting by of business nature volatility, volume contract will many the clients' rata from impact our businesses. on

market non-cat away reduction reposition toward profitability We driver improving the margin from float business, a premium segments. the portfolio is strategy shift this in first continue And increased to in in generating, in which offers the in low contracts quarter.

several as or some non-comparable and or renew have However, may stated not we cases contracts in times, given any quarter. periods thus premium and may in to many not renew large we trying movements have we're in extrapolate not may

The terms while at downs business lines COVID-XX in cause the mortgage new loans a the increased to actions of practical exposed drop short-term, business, these reduction abated. reinsurance once provide crisis material of term. difficult, it will in we effect specialty of the for in of a likely the in the Within may opportunities expect countries in has production business mortgage improved make new volumes the credit short business, in see origination of lock implications particular risk our place in significant many

lines specialty and other catastrophe and market and improvements significant specialty significant in with write, focused, rate of are from opportunities we terms which expect see new potential many to we In conditions. COVID-XX impacts increases

long-term our we to rights reinsurance reinsurance and profitable area business is creating cases, our I'm responsiveness, combine partnerships in Lastly, transactions, capital premium. on with selective can our future of strategic some an that about excited investment capital, focus where

We transactions, capital successful differentiating and markets in have to our efficient origination transactions in a and believe we time. premium our proportion our volume these will combined closed our skill the with underwriting of over expect execution could of come both operating of a believe our for XX% is year date Reinsurance We and these several model up XXXX which sets represent to factor that initiatives. from growing

to I will will the results over our discuss who hand call detail. more in now financial Chris,

Christopher Coleman

Dan. Thanks,

our we the quarter, net quarter a of equity translate diluted negative first of loss for of or $X.XX mix on million $X.X first $XXX improvement XX%, first which was XXX.X% net reflects to ratio higher in business. the for underwriting combined in the beginning prior the quarter For shift compared strategy a income generated year margin XX%. business towards return share, the million per underwriting our and generated into and quarter. We The

improve $XXX written we first prior including in compares no million, our to one million, criteria certain $XXX primarily that due not in written strategy to million longer for of in $XXX for fit the multi-line renew quarter. which Our contract was shift contracts year The decrease to margins. which underwriting quarter did underwriting premiums as gross the underwriting our part gross premiums was

by new were catastrophe year offset line partially period, contracts contracts that specialty property the and underwriting new including in was with decrease found more focus. This in current our

Enhanced million was the investments. loss from of by net partially Point of million, other income from our $XX million and a quarter which the for loss $XXX collateral in investment Third investment $XXX offset Fund, investment Net reflects

The XXXX crisis. the first quarter of financial of challenging the presented most one XXXX investing environments,

Third Enhanced fund Third pandemic Point equity reducing unfolded, the Shortly investment LLC Point decline. Fund's market net sharp was selloff the in began, our portfolio exposures. the the repositioned As the to exposed by after

credit also in within investments shifted fund Third Point to LLC structured meaningfully the securities. corporate

million purchased debt invest high Point well which Enhanced our credit. they and additional non-investment opportunities LLC of a in securities, quality investments $XXX further as fund, from as also credit corporate manage in in position consist mortgage-backed loans. portfolio outside the residential saw we credit to behalf, issuers grade consumer addition, Third on securities of Point In primarily liquid of a structured as These Third

significant which a through our was in negative to portfolio, net bringing XX% return return investment and returns credit our consolidated net Third April year-to-date from new Our the X.X%, fund X%. gains consolidated April investment Point investment Enhanced included on the

March March or equivalents The a or balance new in in XX% billion. the million Third money $XX the $XXX in million approximately of collateral Enhanced of includes gain approximately which investment mentioned market purchases of investments our treasuries represented our of with U.S. investment fund just $X.X also Point XX% instruments, total approximately remaining total assets. or credit approximately represent invested XX-XXXX, XX% after of As of million our $XXX

The period. lower of plan $XX prior $XX decrease Total million result general XXXX credit the million to for primarily fees. for and XXXX, facility compared annual for quarter and the year administrative were first was lower incentive accruals expenses of the

in in XXXX, XXXX, to Our reflecting against periods incentive plan compared was accrual performance the metrics. target respective lower

Foreign currencies. exchange reinsurance represent FX in on gains foreign net liabilities held our gains

as in currency. and As retain held the which assets, a of in collateral result are on little contracts, losses. and losses similar natural between investment a offset very accounts held net keeping these reminder, generally of FX exposure trust as were net reserves on in amounts, reinsurance by recorded same balances our loss part other hedges FX We

to concluding Now call remarks. me the turn back let Dan for

Daniel Malloy

across economic an the technical. the been impact undoubtedly conservatively and pandemic with COVID-XX and felt believe focused and has It the prudent, globe. Chris. approaches remain We you, our Thank unusual are we quarter, positioned being of social

are a market result, prepared we continued As volatility. to withstand

returns. at brokers remain with and to our trading capture we customers industry committed our looking Importantly, opportunities aiming ability always to shareholder improve create address coverages. conditions new support to innovative to developments attractive business and as and confident are in reinsurance opportunities, new as We

more We investment also business prudent of a remain and risk. establishing committed to and through underwriting a mix diversified balanced

to close with at execute more book time, to shares that and discount the we trade over results valuation expect level value our consistent persistent peer more and to As deliver a trade we our group. consistent

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

Operator

you for I'm or is queue. closing Thank [Operator questions. you. no comments? The any Instructions] Gentlemen, additional now showing in questions floor open Do have

Christopher Coleman

Thank again first quarter you listening for talking We and to to and healthy. Thanks quarter, XXXX look next our you. call. the into stay Sure. in safe meantime forward

Operator

thank may wonderful Ladies lines you this participation, your you for your time have and and a at day. disconnect gentlemen,

Daniel Malloy	CEO
Christopher Coleman	CFO
Daniel Loeb	CEO, Third Point LLC

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