Third Point Re (TPRE) reported the quarter after market close on 3NOV2015.
music selection: “I Was Made For Lovin’ You” — Kiss
weigh-in: 216.8 (1.6) #loser
We have bad news again but not as bad as with GLRE. Daniel Loeb’s reinsurer suffered market losses in the investment portfolio. The portfolio was down 8.7% for the quarter and 4.3% for the year. Estimates are that as of the close of November the year to date portfolio return has improved to 0.1%.
Net loss from operations was 195.7 million (1.88/share) for the quarter and 129.6 million (1.25/share) year to date. Total investments (invested with Daniel Loeb’s hedge fund) increased from 1.8 billion to 2.1 billion, driven largely by an increase of 62.6% in premiums written in the quarter. The company is gaining scale but it is unfortunately not translating into improved underwriting performance. Combined ratio for the nine months ended 30SEP2015 deteriorated from 103.6 for the same period last year to 104.1. This is a much better performance than we saw from David Einhorn’s insurer (GLRE) but still not good enough.
One thing I find positive is that the company is exiting its Catastrophe Risk Management segment. Underwriting has to improve and the best way to do that is to be bold enough to walk away from market segments where experience proves you can not effectively compete. We have evidence that Mr. Loeb is not willing to do anything to garner market share. This is promising.
Diluted book value per share has fallen to 12.45. Shares are trading at 13.98 after hours following the announcement. That is a 1.12 multiple to book value and pushes shares out of the 1.1 multiple buy range. Do not buy shares above 13.69. Shares currently held are a hold until a multiple of 1.4 (17.43).
Devour your prey raptors!