Third Point Re investment portfolio gains ground in Q2

Third Point Reinsurance, the Bermuda-based casualty insurance unit of hedge fund firm Third Point, reported healthy investment gains as it plans to purchase Swedish insurer Sirius International Group.

The transaction is expected to close in the first quarter of 2021. The sale is in collaboration with its majority shareholder, China Minsheng Investment Group Corp.

According to Third Point Re’s latest earnings report, it had net income of $124 million in the second quarter, which is more than double the gains the firm reported over the same time period in 2019. Still, for the first half of the year, however, the reinsurance portfolio is down by almost $60 million.

“We are very pleased with our second quarter results with a return on equity for the quarter of 10.1%,” said Dan Malloy, CEO.

He added that the investment portfolio had a significant bounce back with a 5.8% return with contributions from the Third Point Enhanced Fund as well as from opportunistic credit investments that were made at the end of the first quarter. The majority of the portfolio or approximately $2.5 billion is managed by Dan Loeb’s Third Point Management LLC.

For the three months ended June 30, officials said the portfolio generated positive results across asset classes with long credit investments driving the majority of gains for the quarter. The credit strategy performed well with strength in the corporate credit portfolio leading positive performance as the portfolio benefited from tightening spreads within the investment grade credit market. Investments in ABS also produced profits.

According to the firm’s latest earnings report most equity sectors contributed to positive results on the long side while short equity investments and hedges modestly offset overall gains for the strategy. The other strategy, which includes ventures and macroeconomic investments, was net flat during the quarter.