Loeb’s Third Point Re Reports Q1 Loss of $51.1M – 4th Loss in 7 Quarters

By and | May 6, 2016

Third Point Reinsurance Ltd., the company that counts on hedge fund manager Dan Loeb to oversee investments, posted its fourth loss in seven quarters as the portfolio slumped and underwriting was unprofitable.

The first-quarter net loss was $51.1 million, or 49 cents a share, compared with profit of $50.5 million, or 47 cents, a year earlier, the Bermuda-based company said Thursday in a statement. The average estimate of six analysts surveyed by Bloomberg was a loss of 50 cents a share, adjusted for one-time items.

Loeb’s hedge fund said in a letter to shareholders last month that the quarter was one of the most “catastrophic periods” for hedge funds since the firm was founded. Hedge funds lost 1.9 percent in the period, according to Hedge Fund Research’s global index, the poorest performance since 2008.

“Despite challenging conditions in both the financial and reinsurance markets, we continue to believe in our total return model,” Chief Executive Officer John Berger said in the statement.

Third Point Re has slipped 17 percent this year through 4:02 p.m. Thursday, when shares traded for $11.17 a piece. That compares with its $12.50 initial public offering price from 2013.

Third Point Re’s book value, a measure of assets minus liabilities, declined to $12.37 a share as of March 31 from $12.85 at the end of 2015. The first-quarter investment loss was $40.1 million, compared with income of $64.9 million a year earlier.

Allergan Plc, the pharmaceutical company that was among the Third Point hedge fund’s top holdings as of Dec. 31, slumped 14 percent in the first quarter. Loeb’s firm disclosed in February that it took a stake in Morgan Stanley in the last period of 2015. The bank fell more than 20 percent in the first three months of this year.

‘Silly Prices’

Loeb said in February that he boosted equity bets amid a market rout, saying a selloff had created “silly prices” for securities.

The insurance underwriting loss widened to $6.6 million, from $3.9 million in the first quarter of 2015. The combined ratio was 104.9, meaning the company spent about $1.05 in claims and expenses for every premium dollar. That deteriorated from a ratio of 102.8 a year earlier.

The push by other money managers into insurance has made it harder to find profitable contracts. Policy sales slipped about 7.5 percent to $197.2 million from $213.3 million.

David Einhorn’s Cayman Islands-based reinsurer, Greenlight Capital Re Ltd., reported Monday that net income was $28.7 million in the three months ended March 31, the company’s first profitable quarter since 2014. Greenlight Re has surged 12 percent since Dec. 31 in New York trading after plunging 43 percent in 2015.

Topics Profit Loss

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