Bermuda-based hedge fund backed reinsurance firm Third Point Re is looking to establish a U.S. presence, either through establishing a separate U.S. domiciled company or a Bermudian entity which is a U.S. tax payer, to improve access to business.
Third Point Reinsurance Ltd., backed by hedge fund manager Dan Loeb’s Third Point LLC, is one of the more interesting hedge fund backed startups to watch. With an ambition to underwrite profitably as well as leverage the returns possible through Dan Loeb acting as investment manager, the firm seeks to outperform its peers.
As Third Point Re grows the need to be close to clients in the U.S. market, the largest reinsurance market in the world, increases in importance. Also, as Third Point Re is a Bermudian reinsurer, so offshore to the U.S., it is restricted to a degree in how it does business there.
A.M. Best quotes Third Point Re’s Chief Executive Officer John Berger on this topic from his talk at the recent Keefe, Bruyette and Woods insurance conference.
“As an offshore company, we’re really restricted on what our people can do in the United States. There’s no substitute for having people on the ground talking to people,” Berger said.
Berger explained that aggressive travel in the U.S. by Third Point Re representatives could lead to tax issues, which leads other companies to establish a U.S. presence to remove this risk.
Berger said that the reinsurer is considering capitalising a U.S. company or setting up a Bermuda entity which can pay U.S. tax and would allow Third Point Re to set up a U.S. office and its staff to travel more freely there.
The ambition to set up a U.S. office is all part of Third Point Re’s ambition to double in size from a reinsurer dealing with $500m of premium to one dealing with $1 billion of premiums. Being closer to both brokers and clients is important for the firm to achieve this growth, so U.S. access is vital.
The firm is optimistic about growth opportunities in non-standard auto, limited wind homeowners as well as reserve covers, according to KBW analysts. Its strong relationships in the Florida market in particular give it access to business as a lead underwriter, by gaining broader and easier access to the U.S. it will be hoping to increase its lead positions.