A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of “a-” of Third Point Reinsurance Company Ltd. (TPRCL) (Bermuda) and Third Point Reinsurance (USA) Ltd. (TPRUSA) (Bermuda).
A.M. Best also has affirmed the ICR of “bbb-” of Third Point Re (USA) Holdings Inc. (TP USA) (Wilmington, DE) and the ultimate holding company, Third Point Reinsurance Ltd. (TP Re) (Bermuda). The outlook for all ratings is stable.
The ratings of TPRCL are based on its excellent risk-adjusted capitalization, continued successful implementation of its business plan, which includes adherence to financial projections, measured growth, acceptance in the marketplace and the strong performance of its investment portfolio. The ratings also consider TPRCL’s seasoned management team and the dynamic and evolving enterprise risk management that is in place.
TPRUSA’s ratings are based on its strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, its experienced management team and broad-based business plan. Furthermore, the ratings recognize the support TPRUSA receives from TP Re, its ultimate parent, and TPRCL.
Partially offsetting these positive rating factors are the start-up nature of TPRCL and TPRUSA, the greater investment risk associated with their alternative investment strategy and the increasing competition in the reinsurance marketplace.
TPRCL and TPRUSA could be exposed to a convergence of events that could test their capital strength. The underwriting and significant investment risks could have a duplicative adverse effect on their risk-adjusted capital levels. However, the companies’ low underwriting leverage, experienced underwriting teams and their investment manager’s 20-year successful investment track record help to alleviate A.M. Best’s concerns.
The assets of TPRCL and TPRUSA are managed by Third Point LLC, a New York-based SEC-registered investment manager with more than $17 billion of assets under management. TPRCL’s and TPRUSA’s assets are in separate portfolios managed by Third Point LLC, which are not combined with assets of other investors at Third Point LLC.
Positive rating actions could occur if TPRCL and TPRUSA meet and/or exceed their business plans over the long term, and maintain robust risk-adjusted capital levels and positive operating performances through market cycles. Key rating triggers that could result in negative rating actions would be TPRCL and TPRUSA not executing their business plans over the long term, significant adverse reserve development, outsized investment losses and/or a departure of key management.
Source: A.M. Best Company
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