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TPRE - Third Point Reinsurance


giofranchi

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Interesting presentation.  The one thing that concerns me is that the combined ratio is so high (107-120).  They are claiming that G&A will drop in percentage terms as they ramp up but even excluding it, the remaining combined ratio has been running near 96-98.  It seems they will always be running a combined above 100, if present trends continue.  I really don't know the insurance industry very well, do you think there is room for the combined to drop below 100?

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Interesting presentation.  The one thing that concerns me is that the combined ratio is so high (107-120).  They are claiming that G&A will drop in percentage terms as they ramp up but even excluding it, the remaining combined ratio has been running near 96-98.  It seems they will always be running a combined above 100, if present trends continue.  I really don't know the insurance industry very well, do you think there is room for the combined to drop below 100?

 

I think insurance underwriting is much like investing: you are looking for inefficiencies to exploit. Now, let me ask you: in investing, the fact you have suffered 2 or 3 years of underperformance means that you are bound to underperform forever? It is not so, isn’t it? Imo, the same holds true with insurance underwriting: what matters is how management thinks and behaves. Are they thoughtful and disciplined? If the answer is yes, I am ready to bet CRs will fall below 100%. Otherwise, they will keep on staying above the threshold of profitable reinsurance underwriting…

 

giofranchi

 

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Does anyone know much about the CEO John Berger and his past results? It looks like he was head of Chubb that merged with Alterra eventually. Analyzing how CR's did and loss reserving etc under his direction at these companies may give us better insight into what will happen here.

 

I'm invested in TPOU for Dan Loeb's alpha skill and willing to pay for the management. The question here really is can they keep the cost of float low and not blow up. I think they entered into the IPO at a time where Loeb has had a few good beta-adjusted years in a row and their underwriting has looked ok (assuming G and A costs were to come down - this did occur for GLRE when it first IPO'd) I speculate this will likely shoot down at the first sign of a poor underwriting or investing quarter from selling by the investor types that jump in for recent short term outperformance. Hopefully then it would trade below book value like GLRE has and then may be worthwhile looking into further.

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Regarding John Berger, he's produced lifetime combined underwriting ratio of 91% across three organizations over 30 years spanning two full P&C cycles. This is ~1,700 bps better than the reinsurance industry average of 108%. He's been CEO of F&G Re/St. Paul, Chubb Re, and Harbor Point Re/Alterra. His operations have outperformed the reinsurance industry every year except 2012 and he failed to produce an underwriting profit just twice (2001 and 2012).

 

 

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Regarding John Berger, he's produced lifetime combined underwriting ratio of 91% across three organizations over 30 years spanning two full P&C cycles. This is ~1,700 bps better than the reinsurance industry average of 108%. He's been CEO of F&G Re/St. Paul, Chubb Re, and Harbor Point Re/Alterra. His operations have outperformed the reinsurance industry every year except 2012 and he failed to produce an underwriting profit just twice (2001 and 2012).

 

 

 

Thanks accutronman, this info is very helpful. Do you have any links for this info? I skimmed the prospectus and presentations but didn't find it...

 

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  • 2 weeks later...

Third Point Addresses Sotheby’s Adoption of a Poison Pill – A Relic from the 1980’s

 

NEW YORK--(BUSINESS WIRE)--

 

Third Point is disappointed that Sotheby’s (BID) Board of Directors has trotted out the poison pill – a relic from the 1980’s – as its disproportionate response to the valid concerns expressed in our October 2nd letter. Rather than address our well-documented citations of mismanagement and initiate a constructive dialogue with its largest shareholder, the Board and the CEO have attempted to further entrench themselves.

 

Third Point’s involvement does not pose a threat to either the Company or our fellow shareholders, all of whom will benefit from our considerable efforts. It is clear that today, the Chief Executive Officer and his hand-picked directors have put their job security ahead of shareholders.

 

Given their personal interests and miniscule shareholdings of Sotheby's, the Board’s actions – disenfranchising its owners who may wish to acquire a more significant stake – come as no surprise. We hope this will be the Ruprecht Board’s final snub to its shareholders. It would be unfortunate if they instead refuse to undertake a fresh start until one is imposed upon them during proxy season.

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Discussion with consultant regarding some reasons why these hedgies are all starting up reinsurance operations.  I guess most of the companies discussed on this board are sort of in this same vein (BRK, MKL, FFH, maybe SHLD).  Markel has better insurance ops than most of these newbies for sure, but gayner is sort of eh...

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Just caught the business week story about Mr. Watsa's acquisition of BBRY and there is a discussion of Loeb's role in the short seller litigation from FFH.  I wasn't aware of that.  They had some less than flattering quotes from Loeb's e-mails in the article.  Not sure how I feel about that.  Sort of demonstrates a lack of foresight and professionalism, to say nothing of the ethical questions.

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