Third Point Re ratings outlook revised to ‘negative’


Ratings agency AM Best has revised the outlook to negative from stable of Bermuda-based Third Point Re (TPRE) and its subsidiaries.

The negative outlook reflect AM Best’s concern over the company’s business profile given its prolonged inability to generate an underwriting profit, which has resulted in an average combined ratio of 105.6 percent for the five years from 2014 to 2018.

"Third Point Re has achieved a level of marginal operating results on average over recent years. The company has not reported an underwriting profit since inception, and its investment results have been volatile and below AM Best’s expectations over the cycle," the agency said. "AM Best will continue to monitor the company’s underwriting performance closely in future years."

Furthermore, recent changes in senior management will need to prove beneficial to Third Point Re’s market profile over the medium to long term.

It said that the company will need to enhance its business profile gradually and achieve a core portfolio of business that can deliver a sustainable level of technical profitability going forward.

AM Best has also revised the outlook from stable to negative of the $115 million 7 percent fixed senior unsecured notes due 2025 of TP USA.

The financial strength ratings of A- (Excellent) for Third Point Re and its subsidiaries remains unchanged, however. These ratings reflect TPRE’s balance sheet strength, categorised as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.

Dan Malloy, the recently appointed CEO of Third Point Re, commented: “We are pleased to note AM Best’s recognition of our significant balance sheet strength and their confidence in our ability to maintain the strongest level of risk-adjusted capitalization. Having announced record first quarter profits, we remain focused on improving underwriting profitability to complement our investment returns, a key driver of shareholder value in our model. We are encouraged that our recent expansion into property catastrophe and specialty lines reinsurance is being well supported by brokers and clients who understand our approach and appreciate our innovation, expertise, and responsiveness.”

Third Point Re, Ratings, AM Best, Bermuda

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