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) [NYSE:TPRE]. 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 (BCAR), 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.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
-
Catastrophe Analysis in A.M. Best Ratings
-
Evaluating Country Risk
-
Rating Members of Insurance Groups
-
Rating New Company Formations
-
Risk Management and the Rating Process for Insurance Companies
-
Understanding BCAR for Property/Casualty Insurers
-
Insurance Holding Company and Debt Ratings
This press release relates to rating(s) that have been published on
A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please visit A.M. Best’s Ratings
& Criteria Center.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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