Investor Presentation March 2014 Chesney House, 96 Pitts Bay Road | - - PowerPoint PPT Presentation

Chesney House, 96 Pitts Bay Road | Pembroke HM 08, Bermuda | www.thirdpointre.bm

Investor Presentation

March 2014

Forward‐Looking Statements and Non‐GAAP Measures

1 This presentation contains “forward-looking statements” that are based on management’s beliefs and assumptions and on information currently available to

• management. Most forward-looking statements contain words that identify them as forward-looking, such as “anticipates,” “believes,” “continues,” “could,” “seeks,”

“estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms that relate to future events. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Third Point Reinsurance Ltd. (“Third Point Re”) to be materially different from any projected results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent the beliefs and assumptions of Third Point Re only as of the date of this presentation and Third Point Re undertakes no obligation to update or revise publicly any such forward-looking statements, whether as a result of new information, future events or otherwise. As such, Third Point Re’s future results may vary from any expectations or goals expressed in, or implied by, the forward-looking statements included in this presentation, possibly to a material degree. Third Point Re cannot assure you that the assumptions made in preparing any of the forward-looking statements will prove accurate or that any long-term financial or

• perational goals and targets will be realized. For a discussion of some of the important factors that could cause Third Point Re’s results to differ materially from those

expressed in, or implied by, the forward-looking statements included in this presentation, investors should read the Risk Factors set forth in the registration statement on file with the SEC related to our initial public offering completely and with the understanding that our actual future results may be materially different from what we

• expect. Any forward-looking statements made by us in this presentation speak only as of the date of this presentation. We undertake no obligation to publicly update any

forward- looking statement, whether as a result of new information, future developments or otherwise. Note to Certain Operating and Financial Data In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), Third Point Re also discloses in this presentation certain non-GAAP financial information, including combined ratio, return on beginning shareholders’ equity, insurance float, book value per share, diluted book value per share and growth in diluted book value per share. These financial measures are not recognized measures under GAAP and are not intended to be, and should not be considered, in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Please see the definition and reconciliation to GAAP financials at the end of this presentation for further detail. In addition, this presentation contains various metrics and operating information that are based on internal company data. While management believes such information and data are reliable, they have not been verified by an independent source and there are inherent challenges and limitations involved in compiling data across various sources. This presentation includes certain non-GAAP financial measures. See pages 17 and 18 for a definition of such non-GAAP measures and a reconciliation of those measures to the most directly comparable GAAP measures.

Third Point Re: A Differentiated Equity Story

2

Key Facts and Figures:

Business

• Specialty property and casualty reinsurance

Reinsurance Subsidiary

• Class 4 Bermuda-domiciled reinsurer
• A- financial strength rating from A.M. Best
• $1.39 billion of shareholders’ equity attributable to shareholders as of year end 2013

Investment Manager

• Third Point LLC, an SEC-registered investment manager, manages Third Point Re’s

investment portfolio under a long-term investment management agreement

• Daniel S. Loeb, founder of Third Point LLC, and related personal investment vehicles

provided 10.8% of founding capital ($85 million) in Third Point Re

Profitable reinsurance underwriting with superior investment management drives opportunity for equity returns

Return on Beginning Shareholders’ Equity*

• Year ended 2012: 13.0%
• Year ended 2013: 23.4%

* Non-GAAP measure; Please see descriptions and reconciliations on slides 17 and 18.

Investment Highlights

3

Total return business model

Potential to perform in all market cycles

Attractive financial profile

Successful first two years

• f operations:

2012: $190mm in GWP; 13.0% ROE*; 2013: $402mm in GWP; 23.4% ROE*

Best-in-class investment manager

21.1% net annualized returns since inception

1,2,3

Aligned investor sponsorship

With reinsurance investment experience

Deeply experienced and credentialed management team

Disciplined and

• pportunistic underwriting

approach

Profitable reinsurance underwriting with superior investment management designed to deliver attractive equity returns

• ver time

* Non-GAAP measure; please see descriptions and reconciliations on slides 17 and 18; 1 From formation of Third Point Partners L.P., Third Point LLC’s oldest fund, in June 1995 through January 31, 2014; 2 Past performance is not necessarily indicative of future results. All investments involve risk including the loss of principal; 3 The historical performance of Third Point Partners L.P. (i) for the years 2001 through January 31, 2014 reflects the total return after incentive allocation for each such year as included in the audited statement of financial condition of Third Point Partners L.P. for those years and (ii) for the years 1995 through 2000 reflects the total return after incentive allocation for each such year as reported by Third Point Partners L.P. Total return after incentive allocation for the years 2001 through December 31, 2012 is based on the net asset value for all limited partners of Third Point Partners L.P. taken as a whole, some of whom pay no incentive allocation or management fees, whereas total return after incentive allocation for the years 1995 through 2000 is based on the net asset value for only those limited partners of Third Point Partners L.P. that paid incentive allocation and management fees. In each case, results are presented net of management fees, brokerage commissions, administrative expenses, and accrued performance allocation, if any, and include the reinvestment of all dividends, interest, and capital gains.

Total Return Business Model Offers Upside In Varying Markets

4

Dynamic Business Model

Reinsurance: World-class underwriting team Investment Portfolio: World-class investment manager “Hard” Reinsurance Market Robust underwriting margin Superior investment returns Asset leverage

Potential for attractive ROEs across underwriting cycles

“Soft” Reinsurance Market Modest underwriting margin Superior investment returns Asset leverage

Deeply Experienced and Highly Credentialed Management Team

5

John Berger Chairman & CEO

• CEO, Reinsurance, Vice Chairman of the Board, Alterra Capital Holdings Limited
• CEO & President, Harbor Point Re Limited (Chubb Re spin-out)
• CEO & President, Chubb Re, Inc.
• President, F&G Re



Michael McKnight, Chief Actuary & Chief Risk Officer

• Chief Actuary of Reinsurance, Alterra Capital Holdings Limited
• Managing Director & Chief Underwriting Officer, Gerling Global International Reinsurance Co. Ltd.
• Consulting Actuary and Profit Center Manager, Milliman, USA

Manoj Gupta SVP, Underwriting

• Lead Portfolio Manager, Catastrophe Reinsurance, Goldman Sachs Asset Management
• Leader of Alternative Capacity and Credit Risk Solutions, Benfield

Tonya Marshall EVP, General Counsel & Secretary

• General Counsel & Board Secretary, The Bank of N.T. Butterfield & Son Limited
• Associate Attorney, Conyers Dill & Pearman

CEO Experience Robert Bredahl CFO & COO

• CEO, Aon Benfield Securities
• President, Aon Benfield Americas
• CEO, Benfield U.S. Inc. & CEO, Benfield Advisory
• Board Member, Benfield Group PLC



Tony Urban EVP, Underwriting

• President & CEO, JRG Reinsurance Company, Ltd.
• Chief Underwriting Officer & Head of Reinsurance Operations, Endurance Reinsurance

Corporation of America

• Executive Vice President & Chief Underwriting Officer, AXA Corporate Solutions Reinsurance

Company



Dan Malloy EVP, Underwriting

• Executive VP, Co Head of Specialty Lines, Aon Benfield
• President & CEO, Stockton Reinsurance Ltd.
• President, Center Re Bermuda



Disciplined and Opportunistic Reinsurance Strategy

6

• Reinsurance strategy

– Identify profitable reinsurance opportunities that generate stable underwriting profits – Target sub-sectors and specific situations where capacity and alternatives may be constrained – Flexibility to adjust level of volatility according to market conditions and expected margins – Current focus on quota share contracts

• Third Point Re’s approach is to position itself for the expected improvement in P&C pricing over the

medium term

– Management has a track record of entering new lines of business to capitalize on market opportunities

and produce strong underwriting results

– Strong management relationships provide access to attractive underwriting opportunities

• Asset leverage is expected to grow over time and help drive ROE

– The Company expects to capture net investment income generated by float* primarily from the time-lag

between receipt of premiums and payment of claims Disciplined and Opportunistic Underwriting Positive Asset Leverage (i.e. Float)* Reinsurance Operations Contribution to ROE

Generating ROE from underwriting and positive asset leverage

* Non-GAAP measure; please see descriptions and reconciliations on slides 17 and 18.

Strong Relationships with Diverse and Leading Reinsurance Brokers

7

Aon Benfield 27% Guy Carpenter 21% Towers Watson 5% BMS 4% Willis Re 8% All others (44 brokers) 31% Advocate 4%

Submissions Key Success Factors

Multiple sources of submissions Access to desired types of business Long-standing relationships

Submissions by broker (January 2012 – December 2013)*: 356 submissions, 33 bound reinsurance contracts

* Excludes catastrophe excess of loss submissions

Property 29% Casualty 43% Specialty 27% Cat Fund 1%

Growing and Diversified Reinsurance Portfolio

8

Strong Premium Growth ($ millions) Portfolio Construction

Expertise in writing all lines of property, casualty and specialty reinsurance Generate stable underwriting results over time Provide reinsurance where capacity/alternatives may be limited Level of reinsurance portfolio volatility will be driven by market conditions Limited catastrophe exposure

$27.9 $162.2 $190.4 $401.9 Q4 2012 Q4 2013 FY 2012 FY 2013

GWP: $592.3 million

Business Mix – Inception Through 12/31/13

Third Point Re’s Relationship With Third Point LLC

9

• Third Point LLC manages virtually all of Third Point Re’s investable assets
• Exclusive relationship for an initial contractual term through 2016, followed by successive

three-year terms on renewal

– The company pays a standard 2% management fee and 20% performance allocation – Performance allocation is subject to a standard high water mark, loss carry-forward provision

• Third Point Re investments are held in a separate account and managed by Third Point LLC
• n substantially the same basis as its main hedge funds

– The account is subject to certain additional investment guidelines and parameters not employed

by the main funds (i.e. limitations on exposure, increased liquidity, etc.)

• Third Point Re has full ownership of and access to the investment portfolio to provide

liquidity to pay claims and expenses

Third Point LLC manages Third Point Re’s assets under a long-term investment management agreement

Best‐in‐Class Investment Management

10

21.1% net annualized returns since inception in 19955 Third Point LLC owned and led by Daniel S. Loeb Risk-adjusted returns driven by superior security selection and lower volatility 70 employees including 25 investment professionals6 Significant focus on risk management

Illustrative Net Return

1 Since Inception 2,3,4

Third Point LLC Overview

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Third Point Partners LP S&P 500 (TR) HFRI Event-Driven (Total) Index DJ CS Event Driven Index

Investment Management Strategy

11

• Investment philosophy

– Value-oriented, event-driven approach to single security selection supplemented by a top-down

view of portfolio construction and risk management

– Value unlocked by discrete events or “catalysts” – Single portfolio composed of diversified investments

• Investment process

– Fundamental, bottom-up analysis using proprietary framework – Tactical considerations of entry points, position sizing and hedging

• Investment areas of focus:

ABS 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14

Long / Short Equity Credit Macro ABS Arb Other

Attractive Financial Profile

12

Strong Balance Sheet

• No debt
• Low premium leverage
• Liquid investment portfolio – More than 95% of investments within FAS 157

Levels 1 and 2 Earnings Transparency/ Stability

• Net investment income drops to the bottom line and is a key driver of

profitability

• Limited legacy reserves mitigate risk of adverse reserve development
• Catastrophe exposure largely limited to Third Point Re’s $54 million investment

in our Cat Fund ROE Expansion Potential

• Potential to expand ROE due to increasing asset leverage and a potentially

improving reinsurance market

Rigorous Risk Management

13

• Carefully defined risk appetite and controls
• Quarterly reporting to the Board of Directors
• Comprehensive internal capital model

Underwriting Investment Management

• Rigorous procedures
• Lead underwriter on

most transactions

• Robust controls
• Real time access to

reports

• Bi-annual operational

review by independent investment advisory firm

• Work closely with Third

Point LLC risk management team

Key Financial Highlights

14 Year ended 12/31/13 Year ended 12/31/12 Gross premiums written $401,937 $190,374 Gross premiums ceded (9,975) Net premiums earned 220,667 96,481 Net investment income 253,203 136,422 Total revenues $473,870 $232,903 Loss and loss adjustment expenses incurred, net 139,812 80,306 Acquisition costs, net 67,944 24,604 General and administrative expenses 33,036 27,376 Total expenses $240,792 $132,286 Income including non-controlling interests 233,078 100,617 Income attributable to non-controlling interests (5,767) (1,216) Net income $227,311 $99,401 Year ended 12/31/13 Year ended 12/31/12 Loss ratio2 65.7% 83.2% Acquisition cost ratio3 31.5% 25.5% General and administrative expense ratio4 10.3% 21.0% Combined ratio5 107.5% 129.7% Net investment return6 23.9% 17.7%

Consolidated Income Statement ($000s) Selected Income Statement Ratios¹

• Generated $592 million of gross

premium in first two years of

• peration
• Gross premium written in the

Property and Casualty Segment increased by $203.2 million or 106.7% in 2013

• Combined ratio dropped to

107.5% in 2013 due to an increase in earned premium relative to G & A expenses and a drop in crop losses

• Strong investment returns from

investments managed by Third Point LLC of 17.7% in 2012 and 23.9% in 2013

• YTD February 28, 2014 return
• n investments managed by

Third Point LLC was 2.3%

Highlights

earned; 4 General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned; 5 Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned; 6 Net investment return represents the return on our investments managed by Third Point LLC, net of fees.

Key Financial Highlights (Cont’d)

15 As of 12/31/13 As of 12/31/12 Total assets $2,159,890 $1,402,017 Total liabilities 649,494 473,696 Total shareholders’ equity $1,510,396 $928,321 Non-controlling interests (118,735) (59,777) Shareholders' equity attributable to shareholders $1,391,661 $868,544 Year ended 12/31/13 Year ended 12/31/12 Diluted book value per share* $13.12 $10.89 Growth in diluted book value per share* 20.5% 11.9% Return on beginning shareholders’ equity* 23.4% 13.0%

Selected Balance Sheet Data ($000s) Selected Balance Sheet Metrics

* Non-GAAP measure; please see descriptions and reconciliations on slides 17 and 18.

As of 12/31/13 As of 12/31/12 Total investments managed by Third Point LLC $1,559,442 $925,453

Investments ($000s)

Investment Highlights

16

Total return business model Attractive financial profile Best-in-class investment manager Aligned investor sponsorship Deeply experienced and credentialed management team

Profitable reinsurance underwriting with superior investment management designed to deliver attractive equity returns

• ver time

Non‐GAAP Measures

17

Book value per share Book value per share as used by our management is a non-GAAP measure, as it is calculated after deducting the impact of non- controlling interests, and adding back subscriptions receivable. In addition, diluted book value per share is also a non-GAAP measure and represents book value per share combined with the impact from dilution of all in-the-money share options issued, warrants and unvested restricted shares outstanding as of any period end. We believe that long-term growth in diluted book value per share is the most important measure of our financial performance because it allows our management and investors to track over time the value created by the retention of earnings. In addition, we believe this metric is used by investors because it provides a basis for comparison with other companies in our industry that also report a similar measure. The following table sets forth the computation of basic and diluted book value per share as of December 31, 2013 and 2012:

As of 12/31/13 As of 12/31/12 Basic and diluted book value per share numerator: Total shareholders’ equity $1,510,396 $928,321 Less: Non-controlling interests (118,735) (59,777) Shareholders’ equity attributable to shareholders $1,391,661 $868,544 Effect of dilutive warrants issued to founders and an advisor 46,512 36,480 Effect of dilutive share options issued to directors and employees 101,274 51,670 Diluted book value per share numerator $1,539,447 $956,694 Basic and diluted book value per share denominator: Issued and outstanding shares 103,264,616 78,432,132 Effect of dilutive warrants issued to founders and an advisor 4,651,163 3,648,006 Effect of dilutive share options issued to directors and employees 8,784,861 5,167,045 Effect of dilutive restricted shares issued to directors and employees 657,156 619,300 Diluted book value per share denominator 117,357,796 87,866,483 Basic book value per share $13.48 $11.07 Diluted book value per share $13.12 $10.89

($000s, Except Share and Per Share Amounts)

Non‐GAAP Measures (Cont’d)

18

Growth in diluted book value per share Calculated by taking the change in diluted book value per share divided by the beginning of period diluted book value per share. Return on beginning shareholders’ equity Calculated by dividing net income by the beginning shareholders’ equity attributable to shareholders and is a commonly used calculation to measure profitability. For purposes of this calculation, we add back the impact of subscriptions receivable to shareholders’ equity attributable to shareholders as of December 31, 2011. For the year ended December 31, 2013, we have also adjusted the beginning shareholders’ equity for the impact of the issuance of shares in our IPO on a weighted average basis. These adjustments lower the stated return on beginning shareholders’ equity attributable to shareholders. Insurance float In an insurance or reinsurance operation, float arises because premiums and proceeds associated with deposit accounted reinsurance contracts are collected before losses are paid. In some instances, the interval between premium receipts and loss payments can extend

• ver many years. During this time interval, insurance and reinsurance companies invest the premiums received and generate investment
• returns. Although float can be calculated using numbers determined under U.S. GAAP, float is a non-GAAP financial measure and,

therefore, there is no comparable U.S. GAAP measure.