Hedge fund leader Dan Loeb is sticking by his firm’s plans to expand its U.S. book of the reinsurance business with a domestic operation despite two recent underwriting defections and a relatively slow start.
Loeb argued that Third Point Re’s deep bench of marketing and underwriting talent will eventually win out.
“We have very good people on the ground meeting with brokers, meeting with potential clients go on a daily, weekly basis,” Loeb said during Third Point Re’s third quarter earnings conference call Friday. “Without that we would be sitting 900 miles of the coast of North Carolina trying to drum up opportunities.”
In reaction to an analyst question during Friday’s earnings conference, Loeb said that two underwriters that “we very active in areas we are emphasizing” had recently resigned. Third Point disclosed a $1.8 million impact during the quarter tied “separation cost.”
Loeb added that Third Point’s U.S. operations remain “well staffed” and he remains sure the firm can increase it’s share of the U.S business domestically.
“[We] are optimistic that as we really start to push a smaller US based loss reserves deals and we can have success there, and some more of [what] I call the E&S approach,” Loeb said. “[Those] same things like the loss reserve deals, residue value deals and legal indemnity type deals; we are hoping to be able to generate those types of opportunities in the U.S.”
In 2014 Third Point hired Tom Wafer and Jonathan Norton of Alterra Capital to make a push in the U.S., choosing a Short Hills, New Jersey location. Last year the firm floated $115 billion debt sale to help fund the push.
“The U.S. is important and when we formed it, we said hey there is no magic,” Loeb added. “It is a very competitive market out there but purpose of the US office is that its access to business. So despite two people leaving we are in very good shape there.”
During the third quarter Third Point Re reported net income of $72.1 million, or $0.68 per diluted common share,compared to a net loss of $195.7 million, or -$1.88 per diluted common share a year ago