Third Point Reinsurance Ltd. (NYSE:TPRE) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 10, 2018 • 08:30 am ET

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Third Point Reinsurance Ltd. (NYSE:TPRE) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
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. Chris Coleman, Chief Financial Officer. Thank you. You may begin.

Executive
Chris Coleman

Thank you, operator. Welcome to the Third Point Reinsurance Limited Earnings Call for the First Quarter of 2018. Last night, we issued an earnings press release and financial supplement, which is available on our website, www.thirdpointre.bm. Leading today's call will be Rob Bredahl, President and CEO. But before we begin, I would like to remind you that many of the remarks today will contain forward-looking statements based on current expectations.

Actual results may differ materially from those projected as a result of certain risks and uncertainties. Please refer to the first quarter 2018 earnings press release and the company's other public filings, including the Risk Factors in the company's 10-K, where you will find factors that could cause actual results to differ materially from those forward-looking statements. Forward-looking statements speak only as of the date they are made and the company assumes no obligation to update or revise them in light of new information, future events or otherwise.

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

At this time, I will turn the call over to Rob Bredahl. Rob?

Executive
Rob Bredahl

Thank you, Chris. We produced a small loss in the first quarter with flat investment results and a $6 million underwriting loss. Third Point LLC, our investment manager, continues to generate solid risk-adjusted returns and performed well in the first quarter relative to broader market indices after producing a 17.7% return for us in 2017. In the first quarter, our combined ratio improved to 104.5% from 106.3% in the first quarter of 2017 and from 107.7% for all of 2017. We are committed to driving our combined ratio lower by continuing to carefully manage expenses, pushing for improved pricing on renewals and carefully expanding our writings into higher-margin lines of business and forms of reinsurance. The increased focus on higher-margin business includes increasing our ratings of specialty lines, writing lower-layer excess covers in addition to quota shares which we currently write, and writing some shorter-tail event-type covers.

In the first quarter, we wrote $378 million in premium, a record quarter for us at a blended composite ratio of 96%. Please note this business will gradually improve our composite ratio as the premium earns in over time. The blended composite ratio was 300 to 400 basis points better than recent quarters due to an increase in writings of higher-margin mortgage business in the quarter and some improvement in market conditions. We believe the improvement is due