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CEO: Third Point Re anticipates underwriting profitability 'later this year'

Third Point Reinsurance Ltd. CEO Daniel Malloy said the company is on track to achieve underwriting profitability "later this year," subject to property catastrophe events.

Malloy said the company's combined ratio was 101.1% in the second quarter, an improvement from 103.6% in the prior year. Third Point Re also generated a return on equity of 4% for the most recent quarter, bringing the company's year-to-date return to 15.4%.

Malloy, who was confirmed as CEO after serving as interim chief since May, said during a conference call to discuss second-quarter earnings that the company was pleased with market acceptance at the June 1 renewals, where Third Point Re signed on a number of well-priced accounts with "top cedants." He disclosed that the company wrote approximately $16 million of property catastrophe premium during the second quarter, bringing the total for 2019 to $57 million.

The non-catastrophe business is also showing signs of improvement, benefiting from primary pricing trends and better reinsurance contract terms and conditions. The CEO said the company is gaining confidence in its goal of writing $20 million to $25 million of new specialty business during 2020.

Because of its new underwriting initiatives and expansion of risk appetite, Third Point Re has made changes to its investment strategy. After redeeming $350 million in May from the TP Fund, Third Point Re submitted a redemption notice for a further $400 million.

These amounts have been invested in high-grade and short-term fixed income investments managed by Third Point LLC.

"We believe that the impact of our shift in underwriting strategy will result in a more balanced contribution for underwriting to our overall returns and will contribute to a lower volatility results," Malloy said.

The company reported second-quarter net income available to common shareholders of $53.1 million, or 57 cents per share, up from $19.6 million, or 19 cents per share, in the year-ago quarter.