Third Point Re swings to net loss as investment portfolio hit

Bermuda-based Third Point Re swung to a first-quarter net loss as economic fallout from the COVID-19 pandemic negatively impacted its investment portfolio. However, chief executive Dan Malloy highlighted its "improved underwriting result" and overall "strong capital position".

The reinsurer reported a net loss of $183.6 million for the three months ended March 31, 2020, compared with net income of $132.9 million for the same period a year ago.

Gross premiums written decreased by $115.5 million to $204.1 million from Q1 2019's $319.6 million. The decrease was primarily due to certain contracts that the company did not renew, including one multi-line contract for $103.2 million which the company says "longer fit our underwriting criteria as part of our shift in underwriting strategy to improve underwriting margins".

For the first quarter of 2020, the company recognised net losses of $9.5 million relating to COVID-19, driven primarily by contingency exposures (event cancellation) as well as certain casualty and multi-line quota share contracts.

The combined ratio for the quarter was 97 percent, an improvement from 103.8 percent in the first quarter of 2019.

Malloy said: "Despite the overall loss in the quarter, our capital and liquidity positions remain strong and I would like to commend the efforts of our team, working remotely, who helped produce a combined ratio of 97.0% for the quarter. This improved underwriting result is a significant milestone in the ongoing transformation of the company to a specialty reinsurer."

He added: "Our diluted book value per share at the end of the quarter was $13.05, representing a 13.2% decrease from year end. The decrease was primarily due to a first quarter investment return of negative 7.3% reflecting the market volatility caused by COVID-19. The investment portfolio has already partially recovered some of this loss with a positive 3.5% investment return for April. With our strong capital position, we believe we are well positioned to continue our prudent underwriting and investment strategies."