Against backdrop of poor investment performance and substantial catastrophe losses, the fourth quarter of 2018 proved challenging for Bermuda reinsurer Third Point Re, which posted a net loss for both the period and the full year.
For the three month ended December 31, 2018, Third Point Re reported a net loss of $298.0 million, compared with a net income of $44.3 million for the same period year-on-year.
Third Point Re recorded catastrophe losses of $18.5 million in the fourth quarter, relating to the California wildfires and other catastrophe events.
Overall, the reinsurer posted a net loss of $317.7 million for 2018, compared with a net income of $277.8 million for the previous year.
"The fourth quarter of 2018 was a difficult quarter for us,” said Rob Bredahl, president and CEO. “Poor investment performance combined with modest catastrophe losses led to a significant net loss for the quarter and year. Equity market weakness during the fourth quarter of 2018 led to an investment return of negative 11.4 percent in the quarter and negative 10.8 percent for the year. We remain committed to Third Point LLC given their long-term track record and their ability to navigate challenging investment conditions.”
The combined ratio of 111.6 percent for the quarter was notably higher than the same period in 2017 (107.1). However, the full year combined ratio was 106.8 percent, an improvement from 107.7 percent in 2017.
Gross premiums written in 2018 were $578.3 million, a 9.9 percent decrease from 2017. The decrease was attributed primarily to the net impact of contract extensions, cancellations and contracts renewed with no comparable premium in the comparable period, as well as, contracts that were not renewed in the current year. This decrease was partially offset by new contracts in the current year period.
Bredahl continued: "Consistent with our previously announced plans, we began writing a modest amount of property catastrophe business in the first quarter of 2019. We are pleased with the portfolio that we have constructed at the important January 1 renewal date, which benefited from some modest improvements in pricing, and we continue to expect our combined ratio to trend to below 100 percent as we earn in the catastrophe premium and continue to expand our underwriting platform into other higher margin types of reinsurance and lines of business."
Third Point Re, Results, Catastrophe, Bermuda