Third Point Investors Presentation May 2015 [SLIDES]

Slides from the Third Point Reinsurance investors presentation for the period ended May 2015

Our Company

  • Specialty property & casualty reinsurer based in Bermuda
  • A- (Excellent) financial strength rating from A.M. Best Company
  • Began operations in January 2012 and completed IPO in August 2013
  • Investment portfolio managed by Third Point LLC
  • Total return focused
    – Flexible and opportunistic reinsurance underwriting
    – Superior investment management

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Third Point Reinsurance

Flexible & Opportunistic Underwriting Strategy

  • Our total return model provides crucial flexibility in today’s market environment
  • We leverage strong relationships to access attractive opportunities
  • We are the lead underwriter on most of our transactions
  • Limited property cat exposure on rated balance sheet

Traditional Quota Shares

  • We focus on lines of business with lower volatility
  • We provide reinsurance support to small and medium size insurers seeking surplus relief
  • These transactions are typically relationship-driven, since reinsurance plays such a key role in the client’s capital structure

Opportunistic Deals

  • Our relationships allow us to often be the first call for many special situations
  • We look for dislocated markets and distressed situations where higher risk-adjusted returns are available
  • We manage our downside exposure with structural features and contract terms & conditions

Reserve Covers

  • Reserve covers provide clients with reinsurance protection, capital relief and potentially enhanced investment returns
  • Relationships are key – decision-maker is typically the client’s CEO or CFO
  • Our team has a reputation for sophisticated structuring to meet each client’s specific needs

Third Point Reinsurance

Third Point: Reinsurance Risk Management

Risk Management Culture

  • Reinsurance business plan complements our investment management strategy: no property catastrophe excess treaties on rated balance sheet and premium and reserve leverage lower than peer group
  • Company-wide focus on risk management
  • Robust underwriting and operational controls

Holistic Risk Control Framework

  • Measure use of risk capital using internally-developed capital model, AM Best BCAR model and Bermuda Monetary Authority BSCR model
  • Developed a comprehensive Risk Register that is appropriate for our business model
  • Instituted a Risk Appetite Statement that governs overall sensitivities in underwriting, investment, and enterprise portfolio

Ongoing Risk Oversight

  • Own Risk Self Assessment (ORSA) report produced quarterly and provided to management / Board of Directors
  • Provides management with meaningful statistics on our current capital requirement and comparisons to our risk appetite statement
  • Growing in scope

New U.S. Platform

New Hires to Help Establish & Manage U.S. Operations

Thomas Wafer

  • Chairman Reinsurance, Alterra Capital
  • CEO Reinsurance, Alterra Capital & President, Alterra Re USA
  • President, Harbor Point Re U.S.
  • MD International Underwriting, Harbor Point Re
  • MD International Underwriting, Chubb Re

Jonathan Norton

  • Chief Actuary, Alterra Re USA
  • Chief Actuary, Harbor Point Re
  • Chief Actuary, Chubb Re
  • Managing Director, Guy Carpenter

Third Point Reinsurance

  • U.S. onshore presence a key component of overall growth strategy
    – Strengthen relationships with U.S. cedents and brokers
    – Develop first-hand knowledge of cedent underwriting and claims capabilities
  • Structure optimized for our investment strategy: Third Point Reinsurance (USA) Ltd. is a Bermuda-domiciled reinsurer that will apply for a 953D U.S. federal tax election
    – Assets can be invested in a separate account managed by Third Point LLC
    – U.S. activity is permitted, including a new office in New Jersey
  • Strong financial support from Third Point Re group
    – Senior unsecured notes benefit from a full guarantee from Third Point Reinsurance Ltd.
    – 75% quota share with Third Point Reinsurance Company Ltd.
    – Net worth maintenance agreement with Third Point Reinsurance Ltd. ($250m minimum surplus)

Relationship With Third Point LLC

Investment Management Agreement

  • Exclusive relationship through 2016, followed by successive 3-year terms on renewal
  • Investments are managed on substantially the same basis as the main Third Point LLC hedge funds
  • We pay the standard 2% management fee and 20% performance allocation. The performance allocation is subject to a standard high water mark

Risk Management

  • Restrictions on leverage, position concentrations and illiquid, private investments
  • Key man and performance termination provisions
  • Allowed to diversify portfolio to address concerns of A.M. Best or regulator

Liquidity

  • Investments are held in a separate account – Third Point Re has full ownership of investment portfolio to provide liquidity for claims and expenses
  • More than 95% of investments are within FAS 157 Levels 1 & 21
  • Separate account may be used at any time to pay claims and expenses

See full slides below.

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