Third Point Re (TPRE) reported the quarter on the 5th.
music selection: “#1 Crush” — Garbage
Today’s song might be ‘Crush’ but Loeb and Co. failed to crush it this quarter. Our most important metric for the health of a insurance company is the combined ratio. And TPRE performed miserably. The CR increased to 107.8 from 102.7. It isn’t as bad of a performance as GLRE but there is nothing to cheer here.
TPRE did a little better when it came to investing its float. The portfolio returned 1.7% net of fees for the quarter, soundly beating the quarterly investing performance of rival GLRE. We shouldn’t pin our hopes on a single quarter though. It is investment returns over decades that draw us to TPRE.
The net result is best judged by change in net book value. Per the earnings call transcript: “Diluted book value per share as of June 30, 2015, was $14.12, an increase of $0.15 per share or 1.1% compared to diluted book value per share of $13.97 as of March 31, 2015.” We are hoping for a long term gain in book value per share in excess of the broad market return and this doesn’t get it. I’m not giving up on Dan Loeb yet though. It is still early in the reinsurance game.
In corporate governance news, TPRE will be giving shareholders an advisory vote on executive compensation. So called ‘say-on-pay’ initiates are intended to keep companies appraised of when the market feels compensation has grown excessive relative to performance. This is a non-binding but good sign for shareholders.
Devour your prey raptors!