Third Point Reinsurance Ltd. (Form: 10-Q, Received: 07/31/2018 16:52:57)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number 001-35039

THIRD POINT REINSURANCE LTD.

(Exact name of registrant as specified in its charter)



Bermuda		98-1039994
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Point House

3 Waterloo Lane

Pembroke HM 08, Bermuda

+1 441 542-3300

(Address, including Zip Code and Telephone Number, including Area Code of Registrant’s Principal Executive Office)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The registrant’s common shares began trading on the New York Stock Exchange on August 15, 2013.

As of July 30, 2018, there were 99,627,399 common shares of the registrant’s common shares issued and outstanding, including 2,050,115 restricted shares.

Third Point Reinsurance Ltd.

INDEX



	Page
PART I . FINANCIAL INFORMATION	1
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	54
Item 3. Quantitative and Qualitative Disclosures About Market Risk	75
Item 4. Controls and Procedures	80
PART II . OTHER INFORMATION	80
Item 1. Legal Proceedings	80
Item 1A. Risk Factors	80
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3. Defaults Upon Senior Securities	83
Item 4. Mine Safety Disclosures	83
Item 5. Other Information	83
Item 6. Exhibits	84

PART I - Financial Information

ITEM 1. Financial Statements

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of June 30, 2018 and December 31, 2017

(expressed in thousands of U.S. dollars, except per share and share amounts)



	June 30, 2018		December 31, 2017
Assets
Equity securities, trading, at fair value (cost - $2,065,215; 2017 - $1,868,735)	$	2,427,768	$	2,283,050
Debt securities, trading, at fair value (cost - $674,673; 2017 - $711,322)	617,913		675,158
Other investments, at fair value	52,444		37,731
Total investments in securities	3,098,125		2,995,939
Cash and cash equivalents	17,451		8,197
Restricted cash and cash equivalents	569,968		541,136
Due from brokers	258,764		305,093
Derivative assets, at fair value	34,738		73,372
Interest and dividends receivable	4,385		3,774
Reinsurance balances receivable	631,952		476,008
Deferred acquisition costs, net	264,408		258,793
Unearned premiums ceded	17,606		1,049
Loss and loss adjustment expenses recoverable	1,414		1,113
Other assets	10,808		7,320
Total assets	$	4,909,619	$	4,671,794
Liabilities
Accounts payable and accrued expenses	$	12,044	$	34,632
Reinsurance balances payable	74,013		41,614
Deposit liabilities	129,700		129,133
Unearned premium reserves	792,096		649,518
Loss and loss adjustment expense reserves	791,313		720,570
Securities sold, not yet purchased, at fair value	443,216		394,278
Securities sold under an agreement to repurchase	—		29,618
Due to brokers	926,588		770,205
Derivative liabilities, at fair value	12,380		14,503
Performance fee payable to related party	4,641		—
Interest and dividends payable	5,718		4,275
Senior notes payable, net of deferred costs	113,821		113,733
Total liabilities	3,305,530		2,902,079
Commitments and contingent liabilities
Redeemable noncontrolling interests in related party	7,179		108,219
Shareholders’ equity
Preference shares (par value $0.10; authorized, 30,000,000; none issued)	—		—
Common shares (Issued: 2018 - 99,627,399; 2017 - 107,227,347; Outstanding: 2018 - 99,627,399; 2017 - 103,282,427)	9,963		10,723
Treasury shares (2018 - 0; 2017 - 3,944,920)	—		(48,253		)
Additional paid-in capital	994,170		1,099,599
Retained earnings	587,621		594,020
Shareholders’ equity attributable to Third Point Re common shareholders	1,591,754		1,656,089
Noncontrolling interests in related party	5,156		5,407
Total shareholders’ equity	1,596,910		1,661,496
Total liabilities, noncontrolling interests and shareholders’ equity	$	4,909,619	$	4,671,794

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

For the three and six months ended June 30, 2018 and 2017

(expressed in thousands of U.S. dollars, except per share and share amounts)



	Three months ended						Six months ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Revenues
Gross premiums written	$	49,765		$	156,564		$	428,125		$	302,918
Gross premiums ceded	(3,479		)	(1,425		)	(18,125		)	(2,550		)
Net premiums written	46,286			155,139			410,000			300,368
Change in net unearned premium reserves	95,207			18,419			(126,021		)	11,199
Net premiums earned	141,493			173,558			283,979			311,567
Net investment income before management and performance fees to related parties	45,668			140,631			53,507			308,466
Management and performance fees to related parties	(14,493		)	(33,306		)	(24,540		)	(72,631		)
Net investment income	31,175			107,325			28,967			235,835
Total revenues	172,668			280,883			312,946			547,402
Expenses
Loss and loss adjustment expenses incurred, net	84,000			107,379			176,620			193,274
Acquisition costs, net	57,584			68,641			108,989			123,093
General and administrative expenses	9,696			15,014			19,177			25,586
Other expenses	3,983			2,105			7,978			5,006
Interest expense	2,051			2,051			4,080			4,077
Foreign exchange (gains) losses	(8,847		)	4,781			(2,236		)	4,796
Total expenses	148,467			199,971			314,608			355,832
Income (loss) before income tax expense	24,201			80,912			(1,662		)	191,570
Income tax expense	(4,390		)	(5,307		)	(4,518		)	(10,605		)
Net income (loss)	19,811			75,605			(6,180		)	180,965
Net income attributable to noncontrolling interests in related party	(209		)	(1,027		)	(219		)	(2,201		)
Net income (loss) available to Third Point Re common shareholders	$	19,602		$	74,578		$	(6,399	)	$	178,764
Earnings (loss) per share available to Third Point Re common shareholders
Basic earnings (loss) per share available to Third Point Re common shareholders	$	0.20		$	0.73		$	(0.06	)	$	1.73
Diluted earnings (loss) per share available to Third Point Re common shareholders	$	0.19		$	0.71		$	(0.06	)	$	1.70
Weighted average number of common shares used in the determination of earnings (loss) per share
Basic	99,498,901			102,283,844			100,342,636			103,144,078
Diluted	102,032,485			104,569,226			100,342,636			105,149,710

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

For the six months ended June 30, 2018 and 2017

(expressed in thousands of U.S. dollars)



	2018			2017
Common shares
Balance, beginning of period	$	10,723		$	10,650
Issuance of common shares, net	67			83
Common shares repurchased and retired	(827		)	—
Balance, end of period	9,963			10,733
Treasury shares
Balance, beginning of period	(48,253		)	(7,389		)
Repurchase of common shares	—			(40,864		)
Retirement of treasury shares	48,253			—
Balance, end of period	—			(48,253		)
Additional paid-in capital
Balance, beginning of period	1,099,599			1,094,568
Issuance of common shares, net	(141		)	915
Share compensation expense	2,558			3,374
Common shares repurchased and retired	(107,846		)	—
Balance, end of period	994,170			1,098,857
Retained earnings
Balance, beginning of period	594,020			316,222
Net income (loss)	(6,180		)	180,965
Net income attributable to noncontrolling interests in related party	(219		)	(2,201		)
Balance, end of period	587,621			494,986
Shareholders’ equity attributable to Third Point Re common shareholders	1,591,754			1,556,323
Noncontrolling interests in related party	5,156			19,809
Total shareholders' equity	$	1,596,910		$	1,576,132

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.

THIRD POINT REINSURANCE LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the six months ended June 30, 2018 and 2017

(expressed in thousands of U.S. dollars)



	2018			2017
Operating activities
Net income (loss)	$	(6,180	)	$	180,965
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Share compensation expense	2,558			3,374
Net interest expense on deposit liabilities	2,449			312
Net unrealized (gain) loss on investments and derivatives	95,513			(128,168		)
Net realized gain on investments and derivatives	(130,500		)	(154,504		)
Net foreign exchange (gains) losses	(2,236		)	4,796
Amortization of premium and accretion of discount, net	2,913			(122		)
Changes in assets and liabilities:
Reinsurance balances receivable	(157,498		)	(85,733		)
Deferred acquisition costs, net	(5,615		)	18,425
Unearned premiums ceded	(16,557		)	(1,938		)
Loss and loss adjustment expenses recoverable	(301		)	(1,712		)
Other assets	(3,537		)	6,158
Interest and dividends receivable, net	832			2,953
Unearned premium reserves	142,578			(9,261		)
Loss and loss adjustment expense reserves	74,655			63,769
Accounts payable and accrued expenses	(22,564		)	7,549
Reinsurance balances payable	32,208			22,237
Performance fee payable to related party	4,641			53,455
Net cash provided by (used in) operating activities	13,359			(17,445		)
Investing activities
Purchases of investments	(2,180,138		)	(1,712,929		)
Proceeds from sales of investments	2,156,754			1,966,027
Purchases of investments to cover short sales	(590,113		)	(306,237		)
Proceeds from short sales of investments	628,913			462,066
Change in due to/from brokers, net	202,712			(261,994		)
Decrease in securities sold under an agreement to repurchase	(29,618		)	—
Net cash provided by investing activities	188,510			146,933
Financing activities
Proceeds from issuance of Third Point Re common shares, net of costs	—			998
Taxes paid on withholding shares	(74		)	—
Purchases of Third Point Re common shares under share repurchase program	(60,420		)	(40,864		)
Decrease in deposit liabilities, net	(1,779		)	(124		)
Change in total noncontrolling interests in related party, net	(101,510		)	(18,066		)
Net cash used in financing activities	(163,783		)	(58,056		)
Net increase in cash, cash equivalents and restricted cash	38,086			71,432
Cash, cash equivalents and restricted cash at beginning of period	549,333			308,891
Cash, cash equivalents and restricted cash at end of period	$	587,419		$	380,323
Supplementary information
Interest paid in cash	$	13,939		$	10,262
Income taxes paid in cash	$	5,852		$	4,954

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of the Condensed Consolidated Financial Statements.

Third Point Reinsurance Ltd.

Notes to the Condensed Consolidated Financial Statements (UNAUDITED)

(Expressed in United States Dollars)

1. Organization

Third Point Reinsurance Ltd. (together with its wholly owned subsidiaries, “Third Point Re” or the “Company”) was incorporated under the laws of Bermuda on October 6, 2011. Through its reinsurance subsidiaries, the Company is a provider of global specialty property and casualty reinsurance products. The Company operates through two licensed reinsurance subsidiaries, Third Point Reinsurance Company Ltd. (“Third Point Re BDA”), a Bermuda reinsurance company that commenced operations in January 2012, and Third Point Reinsurance (USA) Ltd. (“Third Point Re USA”).

Third Point Re USA is a Bermuda reinsurance company that was incorporated on November 21, 2014 and commenced operations in February 2015. Third Point Re USA made an election under Section 953(d) of the U.S. Internal Revenue Code of 1986, as amended, to be taxed as a U.S. entity. Third Point Re USA prices and underwrites U.S. domiciled reinsurance business from an office in the United States. Third Point Re USA is a wholly owned subsidiary of Third Point Re (USA) Holdings, Inc. (“TPRUSA”), an intermediate holding company based in the U.S., which is a wholly owned subsidiary of Third Point Re (UK) Holdings Ltd. (“Third Point Re UK”), an intermediate holding company based in the United Kingdom. Third Point Re UK is a wholly owned subsidiary of Third Point Re.

In August 2012, the Company established a wholly-owned subsidiary in the United Kingdom, Third Point Re Marketing (UK) Limited (“TPRUK”). In May 2013, TPRUK was licensed as an insurance intermediary by the UK Financial Conduct Authority.

These unaudited condensed consolidated financial statements include the results of Third Point Re and its wholly owned subsidiaries (together, the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 in Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In addition, the year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. This Quarterly Report should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “ 2017 10-K”), as filed with the U.S. Securities and Exchange Commission on March 1, 2018.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position and results of operations as at the end of and for the periods presented. All significant intercompany accounts and transactions have been eliminated.

The results for the six months ended June 30, 2018 are not necessarily indicative of the results expected for the full calendar year.

Tabular amounts are in U.S. Dollars in thousands, except share amounts, unless otherwise noted.

2. Significant accounting policies

There have been no material changes to the Company’s significant accounting policies as described in its 2017 10-K.

Prior year changes in the presentation of condensed consolidated financial statements

The Company had previously included unearned premium ceded and loss and loss adjustment expenses recoverable in other assets in the condensed consolidated balance sheets and changes in these balances in the condensed consolidated statements of cash flows. These balances have grown and are now disclosed as separate line items in the condensed consolidated balance sheets and changes in these balances in the condensed consolidated statements of cash flows.

Recently issued accounting standards

Issued and effective as of June 30, 2018

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01). ASU 2016-01 is intended to provide users of financial statements with more useful information on the recognition, measurement, presentation and disclosure of financial instruments. The new standard affects all entities that hold financial assets or owe financial liabilities. ASU 2016-01 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. This new accounting standard did not have a material impact on the Company’s condensed consolidated financial statements since all of the Company’s investments are valued at fair market value as the Company's investments are classified as "trading securities" and therefore the change in unrealized is included in the consolidated statement of income (loss).

In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15). ASU 2016-15 is intended at reducing diversity in practice and addresses eight specific issues in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. To date, the Company has not entered into any of the eight types of transactions addressed in ASU 2016-15. As a result, the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

In November 2016, the FASB issued Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18). ASU 2016-18 clarifies guidance on the classification and presentation of restricted cash in the statement of cash flows, specifically, the Company should include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and cash equivalents. An entity with a material balance of amounts generally described as restricted cash and cash equivalents must disclose information about the nature of the restrictions. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods therein. As a result of the adoption of ASU 2016-18, the Company retrospectively classified its restricted cash and cash equivalents within the condensed consolidated statement of cash flows and has included additional disclosures in accordance with ASU 2016-18 in its condensed consolidated financial statements. Prior to adoption, changes in restricted cash had been presented within cash flow from investing activities. Consequently, the condensed consolidated statement of cash flows for the six months ended June 30, 2017 includes adjustments to increase net cash used in investing activities by $73.1 million .

In May 2017, the FASB issued Accounting Standards Update 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting (ASU 2017-09). ASU 2017-09 is intended to reduce diversity in practice and subsequent to its adoption, an entity will not apply modification accounting as a result of changes to terms and conditions of a share-based payment award if certain conditions are met. The amendments in ASU 2019-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. This new accounting standard did not have a material impact on the Company’s condensed consolidated financial statements.

Issued but not yet effective as of June 30, 2018

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842): Section A - Leases, Section B - Conforming Amendments Related to Leases and Section C - Background Information and Basis for Conclusions (ASU 2016-02). ASU 2016-02 intends to improve financial reporting related to leasing transactions. The new standard affects all entities that lease assets such as real estate, airplanes and manufacturing equipment. ASU 2016-02 will require entities that lease assets, referred to as “lessees”, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. ASU 2016-02 is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance; however, it is not expected to have a material impact on the Company’s condensed consolidated financial statements as a result of the limited number of leases the Company currently has in place.

In July 2018, the FASB issued Accounting Standards Update 2018-10, Codification Improvements to Topic 842, Leases (ASU 2018-10). The update makes improvements to clarify or to correct unintended application of guidance in ASC 842. Those items generally are not expected to have a significant effect on the Company. ASU 2018-18 will be effective when the Company adopts ASU 2016-02 in 2019.

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 amends the guidance on the impairment of financial instruments. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on the Company’s condensed consolidated financial statements.

In March 2017, the FASB issued Accounting Standards Update 2017-08, Premium Amortization on Purchased Callable Debt Securities (ASU 2017-08). ASU 2017-08 is intended to enhance the accounting for the amortization of premiums for purchased callable debt securities.The amendments are effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the impact of this guidance on the Company’s condensed consolidated financial statements.

In July 2017, the FASB issued Accounting Standards Update 2017-11, (Part I) Accounting for Certain Financial Instruments With Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests With a Scope Exception (ASU 2017-11). ASU 2017-11 is intended to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. Specifically, a down round feature would no longer cause a freestanding equity-linked financial instrument (or an embedded conversion option) to be accounted for as a derivative liability at fair value with changes in fair value recognized in current earnings. In addition, ASU 2017-11 re-characterizes the indefinite deferral of certain provisions of Topic 480 to a scope exception. The recharacterization has no accounting effect. The amendments are effective for interim and annual periods beginning after December 15, 2018. The Company does not currently have financial instruments with down round features, therefore, the Company does not expect any impact to the Company’s condensed consolidated financial statements.

3. Cash, cash equivalents, restricted cash and restricted investments

The following table provides a reconciliation of cash and cash equivalents, restricted cash and restricted investments as of June 30, 2018 and December 31, 2017 :



	June 30, 2018		December 31, 2017
Cash and cash equivalents	$	17,451	$	8,197
Restricted cash securing letter of credit facilities (1)	240,545		250,487
Restricted cash securing other reinsurance contracts (2)	329,423		290,649
Total cash, cash equivalents and restricted cash (3)	587,419		549,333
Restricted investments securing other reinsurance contracts (2)	310,205		326,429
Total cash, cash equivalents, restricted cash and restricted investments	$	897,624	$	875,762


(1)	Restricted cash securing letter of credit facilities primarily pertains to letters of credit issued to clients and cash securing these obligations that the Company will not be released until the underlying reserves have been settled. The time period for which the Company expects these letters of credit to be in place varies from contract to contract, but can last several years.

(2)

Restricted cash and restricted investments securing other reinsurance contracts pertain to trust accounts securing the Company’s contractual obligations under certain reinsurance contracts that the Company will not be released from until all underlying risks have expired or have been settled. Restricted investments include certain investments in debt securities including U.S. Treasury securities and sovereign debt. The time period for which the Company expects these trust accounts to be in place varies from contract to contract, but can last several years.


(3)	Cash, cash equivalents and restricted cash as reported in the Company’s condensed consolidated statements of cash flows.

4. Investments

The Company’s investments are managed by its investment manager, Third Point LLC (“Third Point LLC” or the “Investment Manager”), under long-term investment management contracts. The Company directly owns the investments that are held in separate accounts and managed by Third Point LLC. The following is a summary of the separate accounts managed by Third Point LLC:



	June 30, 2018		December 31, 2017
Assets
Total investments in securities	$	3,097,918	$	2,995,097
Cash and cash equivalents	43		8
Restricted cash and cash equivalents	569,968		541,136
Due from brokers	258,764		305,093
Derivative assets, at fair value	34,738		73,372
Interest and dividends receivable	4,385		3,774
Total assets	3,965,816		3,918,480
Liabilities and noncontrolling interests in related party
Accounts payable and accrued expenses	3,070		5,137
Securities sold, not yet purchased	443,216		394,278
Securities sold under an agreement to repurchase	—		29,618
Due to brokers	926,588		770,205
Derivative liabilities, at fair value	12,380		14,503
Performance fee payable to related party	4,641		—
Interest and dividends payable	2,696		1,218
Total noncontrolling interests in related party ⁽¹⁾	12,335		113,626
Total liabilities and noncontrolling interests in related party	1,404,926		1,328,585
Total net investments managed by Third Point LLC	$	2,560,890	$	2,589,895


(1)	See Note 17 for additional information.

Fair Value Measurements

The Company’s Investment Manager has a formal valuation policy that sets forth the pricing methodology for investments to be used in determining the fair value of each security in the Company’s portfolio. The valuation policy is updated and approved at least on an annual basis by Third Point LLC’s valuation committee (the “Committee”). The Committee meets monthly and is comprised of officers and employees who are senior business management personnel of Third Point LLC. The Committee’s role is to review and verify the propriety and consistency of the valuation methodology to determine the fair value of investments. The Committee also reviews any due diligence performed and approves any changes to current or potential external pricing vendors.

Investments are carried at fair value. The fair values of investments are estimated using prices obtained from third-party pricing services, when available. However, situations may arise where the Company believes that the fair value provided by the third-party pricing service does not represent current market conditions. In those situations, Third Point LLC may use dealer quotes to value the investments. The methodology for valuation is generally determined based on the investment’s asset class per the Company’s Investment Manager’s valuation policy. For investments where fair values from pricing services or brokers are unavailable, fair values are estimated using information obtained by the Company’s Investment Manager.

U.S. GAAP disclosure requirements establish a framework for measuring fair value, including a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. The three-level hierarchy of inputs is summarized below:


•	Level 1 – Quoted prices available in active markets/exchanges for identical investments as of the reporting date.

•

Level 2 – Observable inputs to the valuation methodology other than unadjusted quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include, but are not limited to, prices quoted for similar assets or liabilities in active markets/exchanges, prices quoted for identical or similar assets or liabilities in markets that are not active and fair values determined through the use of models or other valuation methodologies.


•	Level 3 – Pricing inputs unobservable for the investment and include activities where there is little, if any, market activity for the investment. The inputs applied in the determination of fair value require significant management judgment and estimation.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. For example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable.

Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources other than those of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and considers factors specific to the investment.

The key inputs for corporate, government and sovereign bond valuation are coupon frequency, coupon rate and underlying bond spreads. The key inputs for ABS are yield, probability of default, loss severity and prepayment.

Key inputs for over-the-counter (“OTC”) valuations vary based on the type of underlying security on which the contract was written:


•	The key inputs for most OTC option contracts include notional, strike price, maturity, payout structure, current foreign exchange forward and spot rates, current market price of the underlying security and volatility of the underlying security.


•	The key inputs for most forward contracts include notional, maturity, forward rate, spot rate, various interest rate curves and discount factor.


•	The key inputs for swap valuation will vary based on the type of underlying security on which the contract was written. Generally, the key inputs for most swap contracts include notional, swap period, fixed rate, credit or interest rate curves, current market or spot price of the underlying security and the volatility of the underlying security.

Situations may arise when market quotations or valuations provided by external pricing vendors are available but the fair value may not represent current market conditions. In those cases, Third Point LLC may substitute valuations provided by external pricing vendors with multiple broker-dealer quotations.

Securities listed on a national securities exchange or quoted on NASDAQ are valued at their last sales price as of the last business day of the period. Listed securities with no reported sales on such date and OTC securities are valued at their last closing bid price if held long by the Company, and last closing ask price if held short by the Company. As of June 30, 2018 , securities valued at $158.2 million ( December 31, 2017 - $ 234.4 million), representing 5.1% ( December 31, 2017 - 7.6% ) of investments in securities and derivative assets, and $2.1 million ( December 31, 2017

- $ 2.1 million), representing 0.5% ( December 31, 2017 - 0.5% ) of securities sold, not yet purchased and derivative liabilities, are valued based on broker quotes.

Private securities, real estate and related debt investments are those not registered for public sale and are carried at an estimated fair value at the end of the period, as determined by Third Point LLC. Valuation techniques used by Third Point LLC may include market approach, last transaction analysis, liquidation analysis and/or using discounted cash flow models where the significant inputs could include but are not limited to additional rounds of equity financing, financial metrics such as revenue multiples or price-earnings ratio, discount rates and other factors. In addition, third party valuation firms may be employed to conduct investment valuations of such private securities. The third party valuation firms provide written reports documenting their recommended valuation as of the determination date for the specified investments.

As of June 30, 2018 , the Company had $90.8 million ( December 31, 2017 - $ 83.4 million) of investments fair valued by the Company’s Investment Manager representing approximately 2.9% ( December 31, 2017 - 2.7% ) of total investments in securities and derivative assets of which 98.3% were also separately valued by third party valuation firms using information obtained from the Company’s Investment Manager. As a result of the inherent uncertainty of valuation for private securities, the estimated fair value may differ materially from the value that would have been used had a ready market existed for these investments. The actual value at which these securities could be sold or settled with a willing buyer or seller may differ from the Company’s estimated fair values depending on a number of factors including, but not limited to, current and future economic conditions, the quantity sold or settled, the presence of an active market and the availability of a willing buyer or seller.

The Company’s free standing derivatives are recorded at fair value, and are included in the condensed consolidated balance sheets in derivative assets and derivative liabilities. Third Point LLC values exchange-traded derivatives at their last sales price on the exchange where they are primarily traded. OTC derivatives, which include swap, option, swaption, forward, future and contract for differences, are valued by an industry recognized third party valuation vendor when available; otherwise, fair values are obtained from broker quotes that are based on pricing models that consider the time value of money, volatility, and the current market and contractual prices of the underlying financial instruments.

The Company values its investments in limited partnerships at fair value, which is estimated based on the Company’s share of the net asset value (“NAV”) of the limited partnerships as provided by the investment managers of the underlying investment funds. The resulting net gains or net losses are reflected in the condensed consolidated statements of income (loss) . These investments are included in investment in funds valued at NAV and excluded from the presentation of investments categorized by the level of the fair value hierarchy. These investments are non-redeemable and distributions are made by the investment funds as underlying investments are monetized.

As of June 30, 2018 and December 31, 2017 , the Company’s asset-backed securities (“ABS”) holdings were as follows:



	June 30, 2018				December 31, 2017
Reperforming loans	$	109,117	60.4	%	$	160,354	71.1	%
Market place loans	60,664		33.6	%	52,584		23.3	%
Other (1)	10,990		6.0	%	12,561		5.6	%
	$	180,771	100.0	%	$	225,499	100.0	%


(1)	Other includes: U.S. Alt-A positions, collateralized debt obligations, commercial mortgage-backed securities, non-U.S. RMBS and aircraft ABS.

As of June 30, 2018 , all of the Company’s ABS holdings were private-label issued, non-investment grade securities, and none of these securities were guaranteed by a government sponsored entity. These investments are valued using broker quotes or a recognized third-party pricing vendor. All of these classes of ABS are sensitive to changes in interest rates and any resulting change in the rate at which borrowers sell their properties, refinance, or otherwise pre-pay their loans. As an investor in these classes of ABS, the Company may be exposed to the credit risk of underlying borrowers not being able to make timely payments on loans or the likelihood of borrowers defaulting on their loans. In addition, the Company may be exposed to significant market and liquidity risks.

The following tables present the Company’s investments, categorized by the level of the fair value hierarchy as of June 30, 2018 and December 31, 2017 :



	June 30, 2018
	Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs		Total
	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Equity securities	$	2,360,825	$	5,812	$	—	$	2,366,637
Private common equity securities	—		—		4,362		4,362
Private preferred equity securities	—		—		56,769		56,769
Total equities	2,360,825		5,812		61,131		2,427,768
Asset-backed securities	—		152,632		28,139		180,771
Bank debt	—		22,566		—		22,566
Corporate bonds	—		43,207		9,968		53,175
Municipal bonds	—		40,432		—		40,432
U.S. Treasury securities	—		236,600		—		236,600
Sovereign debt	—		83,244		—		83,244
Other debt securities	—		1,125		—		1,125
Total debt securities	—		579,806		38,107		617,913
Options	962		8,443		—		9,405
Rights and warrants	214		1		424		639
Real estate	—		—		7,351		7,351
Trade claims	—		3,068		—		3,068
Total other investments	1,176		11,512		7,775		20,463
Derivative assets (free standing)	—		27,852		6,886		34,738
	$	2,362,001	$	624,982	$	113,899	3,100,882
Investments in funds valued at NAV							31,981
Total assets							$	3,132,863
Liabilities
Equity securities	$	417,577	$	—	$	—	$	417,577
Corporate bonds	—		20,181		—		20,181
Options	1,396		4,062		—		5,458
Total securities sold, not yet purchased	418,973		24,243		—		443,216
Derivative liabilities (free standing)	—		10,541		1,839		12,380
Derivative liabilities (embedded)	—		—		164		164
Total liabilities	$	418,973	$	34,784	$	2,003	$	455,760



	December 31, 2017
	Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs		Total
	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Equity securities	$	2,200,379	$	20,751	$	—	$	2,221,130
Private common equity securities	—		—		4,794		4,794
Private preferred equity securities	—		—		57,126		57,126
Total equities	2,200,379		20,751		61,920		2,283,050
Asset-backed securities	—		198,191		27,308		225,499
Bank debt	—		14,550		—		14,550
Corporate bonds	—		67,218		9,868		77,086
U.S. Treasury securities	—		249,994		—		249,994
Sovereign debt	—		102,569		—		102,569
Other debt securities	—		4,747		713		5,460
Total debt securities	—		637,269		37,889		675,158
Options	1,973		2,978		—		4,951
Rights and warrants	—		168		435		603
Real estate	—		—		6,831		6,831
Trade claims	—		7,496		—		7,496
Total other investments	1,973		10,642		7,266		19,881
Derivative assets (free standing)	—		73,372		—		73,372
	$	2,202,352	$	742,034	$	107,075	3,051,461
Investments in funds valued at NAV							17,850
Total assets							$	3,069,311
Liabilities
Equity securities	$	364,215	$	—	$	—	$	364,215
Corporate bonds	—		21,699		—		21,699
Options	2,668		5,696		—		8,364
Total securities sold, not yet purchased	366,883		27,395		—		394,278
Derivative liabilities (free standing)	—		12,418		2,085		14,503
Derivative liabilities (embedded)	—		—		171		171
Total liabilities	$	366,883	$	39,813	$	2,256	$	408,952

During the six months ended June 30, 2018 , the Company made $0.2m ( December 31, 2017 - $nil ) of reclassifications of assets or liabilities between Levels 1 and 2.

The total change in unrealized gains (losses) on equity and debt securities held at the three months ended June 30, 2018 were $2.9 million and $(17.7) million , respectively ( 2017 - $71.2 million and $(10.8) million , respectively). The total change in unrealized gains (losses) on equity and debt securities held at the six months ended June 30, 2018 were $(21.0) million and $(18.4) million , respectively ( 2017 - $176.3 million and $(9.1) million , respectively).

The following table presents the reconciliation of all investments measured at fair value using Level 3 inputs for the three and six months ended June 30, 2018 and 2017 :



	April 1, 2018			Transfers in to (out of) Level 3			Purchases		Sales			Realized and Unrealized Gains (Losses) (1)			June 30, 2018
Assets
Private common equity securities	$	4,352		$	—		$	21	$	—		$	(11	)	$	4,362
Private preferred equity securities	55,231			—			2,350		(977		)	165			56,769
Asset-backed securities	27,256			3,622			18,350		(21,188		)	99			28,139
Corporate bonds	10,081			—			512		(817		)	192			9,968
Rights and warrants	819			(1		)	—		(388		)	(6		)	424
Real estate	6,937			—			—		—			414			7,351
Derivative assets (free standing)	—			8,397			—		390			(1,901		)	6,886
Total assets	$	104,676		$	12,018		$	21,233	$	(22,980	)	$	(1,048	)	$	113,899
Liabilities
Derivative liabilities (free standing)	$	(1,996	)	$	10		$	—	$	—		$	147		$	(1,839	)
Derivative liabilities (embedded)	(124		)	—			—		—			(40		)	(164		)
Total liabilities	$	(2,120	)	$	10		$	—	$	—		$	107		$	(2,003	)


	January 1, 2018			Transfers in to (out of) Level 3			Purchases		Sales			Realized and Unrealized Gains (Losses) (1)			June 30, 2018
Assets
Private common equity securities	$	4,794		$	—		$	22	$	—		$	(454	)	$	4,362
Private preferred equity securities	57,126			—			2,509		(992		)	(1,874		)	56,769
Asset-backed securities	27,308			6,104			30,610		(35,522		)	(361		)	28,139
Corporate bonds	9,868			—			532		(817		)	385			9,968
Other debt securities	713			—			—		(913		)	200			—
Rights and warrants	435			(1		)	582		(593		)	1			424
Real estate	6,831			—			—		(153		)	673			7,351
Derivative assets (free standing)	—			7,701			—		1,499			(2,314		)	6,886
Total assets	$	107,075		$	13,804		$	34,255	$	(37,491	)	$	(3,744	)	$	113,899
Liabilities
Derivative liabilities (free standing)	$	(2,085	)	$	13		$	—	$	—		$	233		$	(1,839	)
Derivative liabilities (embedded)	(171		)	—			—		—			7			(164		)
Total liabilities	$	(2,256	)	$	13		$	—	$	—		$	240		$	(2,003	)



	April 1, 2017			Transfers in to (out of) Level 3			Purchases		Sales			Realized and Unrealized Gains (Losses) (1)			June 30, 2017
Assets
Private common equity securities	$	4,745		$	—		$	—	$	—		$	30		$	4,775
Private preferred equity securities	48,350			—			939		(123		)	1,593			50,759
Asset-backed securities	20,785			15,642			22,038		(20,545		)	(2,209		)	35,711
Bank debt	8,722			(189		)	3		(23		)	1,733			10,246
Corporate bonds	8,984			—			92		(320		)	339			9,095
Other debt securities	—			—			3,312		—			—			3,312
Total assets	$	91,586		$	15,453		$	26,384	$	(21,011	)	$	1,486		$	113,898
Liabilities
Derivative liabilities (free standing)	$	(1,326	)	$	—		$	—	$	(41	)	$	—		$	(1,367	)
Derivative liabilities (embedded)	(111		)	—			—		—			(69		)	(180		)
Total liabilities	$	(1,437	)	$	—		$	—	$	(41	)	$	(69	)	$	(1,547	)

	January 1, 2017			Transfers in to (out of) Level 3			Purchases		Sales			Realized and Unrealized Gains (Losses) ⁽¹⁾			June 30, 2017
Assets
Private common equity securities	$	4,799		$	—		$	—	$	—		$	(24	)	$	4,775
Private preferred equity securities	48,834			—			939		(495		)	1,481			50,759
Asset-backed securities	17,628			20,016			31,958		(32,237		)	(1,654		)	35,711
Bank debt	8,350			(446		)	4		(272		)	2,610			10,246
Corporate bonds	9,255			—			93		(587		)	334			9,095
Other debt securities	—			—			3,312		—			—			3,312
Total assets	$	88,866		$	19,570		$	36,306	$	(33,591	)	$	2,747		$	113,898
Liabilities
Derivative liabilities (free standing)	$	(1,326	)	$	—		$	—	$	(41	)	$	—		$	(1,367	)
Derivative liabilities (embedded)	(92		)	—			—		—			(88		)	(180		)
Total liabilities	$	(1,418	)	$	—		$	—	$	(41	)	$	(88	)	$	(1,547	)


(1)	Total change in realized and unrealized gains (losses) recorded on Level 3 financial instruments is included in net investment income in the condensed consolidated statements of income (loss) .

Total change in unrealized gains (losses) on fair value of assets using significant unobservable inputs (Level 3) held at the three and six months ended June 30, 2018 were $(2.9) million and $(6.9) million , respectively ( 2017 - $ 1.9 million and $0.6 million , respectively).

For assets and liabilities that were transferred into Level 3 during the period, gains (losses) are presented as if the assets or liabilities had been transferred into Level 3 at the beginning of the period; similarly, for assets and liabilities that were transferred out of Level 3 during the period, gains (losses) are presented as if the assets or liabilities had been transferred out of Level 3 at the beginning of the period.

The following table summarizes information about the significant unobservable inputs used in determining the fair value of the Level 3 investments held by the Company. Level 3 investments not presented in the table are insignificant or do not have any unobservable inputs to disclose, as they are valued primarily using dealer quotes or at cost.



June 30, 2018
Assets	Fair value		Valuation technique	Unobservable input	Range
Private equity investments	$	4,969	Market approach	Volatility	40.0% - 45.0%
				Multiple	6.5 - 10.0x
Real estate	7,054		Discounted cash flow	Discount rate	9.5	%
				Capitalization rate	6.5	%
Rights and warrants	424		Discounted cash flow	Discount rate	15.5	%
				Time to exit	5.0 years
			Market approach	Multiple	3.0 - 3.6x
December 31, 2017
Assets	Fair value		Valuation technique	Unobservable input	Range
Private equity investments	$	37,507	Market approach	Volatility	35.0% - 65.0%
				Time to exit	0.5 - 1.8 years
				Multiple	7.8 - 24.4x
Real estate	6,831		Discounted cash flow	Discount rate	9.5	%
				Capitalization rate	6.5% - 10.0%
Other debt securities	713		Discounted cash flow	Capitalization rate	10.0	%
Rights and warrants	433		Discounted cash flow	Discount rate	13.5	%
				Time to exit	5.0 years
			Market approach	Multiple	3.8 - 4.6x

Private equity investments

T he Company measures the fair value of these investments using a market approach which typically utilizes guideline comparable company trading multiples and/or a discounted cash flow analysis. Under the guideline comparable company multiples approach, the Company determines comparable public companies based on industry, size, developmental stage, strategy, etc., and then calculates a trading multiple for each comparable company. The trading multiple may then be discounted for various considerations as appropriate. The concluded multiple is then applied to the subject company to calculate the value of the subject company. The discounted cash flow model involves using the financial information of the portfolio companies to develop revenue and income projections for the subject company for future years based on information on growth rates relative to the company’s development stage. The enterprise value of the subject company is calculated by discounting the projected cash flows and the terminal value to net present value. The fair value of the company’s debt is reduced from the enterprise value to determine the equity value.

Real estate and other debt securities

The values of the investments are based upon available information concerning the market for real estate property investments and the underlying assets of the other debt investments. The valuation methods include, but are not limited to the following: (1) forecasts of future net cash flows based on the Investment Manager’s analysis of future earnings from the investment plus anticipated net proceeds from the sale, disposition or resolution of the investment; (2) discounted earnings multiples applied to stabilized income or adjusted earnings from the investment; (3) recent sales of comparable investments.

Rights and warrants

The values of the investments are based on the valuation techniques discussed in private equity investments above as they relate to the same underlying securities.

For the six months ended June 30, 2018 and 2017 , there were no changes in the valuation techniques as they relate to the above.

5. Due from/to brokers

The Company holds substantially all of its investments through prime brokers pursuant to agreements between the Company and each prime broker. The brokerage arrangements differ from broker to broker, but generally cash and investments in securities are available as collateral against investments in securities sold, not yet purchased and derivative positions, if required.

As of June 30, 2018 and December 31, 2017 , the Company’s due from/to brokers were comprised of the following:



	June 30, 2018		December 31, 2017
Due from brokers
Cash held at brokers	$	247,145	$	295,467
Receivable from unsettled trades (1)	11,619		9,626
	$	258,764	$	305,093
Due to brokers
Borrowing from prime brokers	$	862,774	$	759,267
Payable from unsettled trades	63,814		10,938
	$	926,588	$	770,205

(1) Receivables relating to securities sold by the Company are recorded as receivable from unsettled trades in due from brokers in the Company’s condensed consolidated balance sheets.

Due from/to brokers include cash balances maintained with the Company’s prime brokers, receivables and payables from unsettled trades and proceeds from securities sold, not yet purchased. In addition, due from/to brokers includes cash collateral received and posted from OTC and repurchase agreement counterparties. As of June 30, 2018 , the Company’s borrowing from prime brokers includes a total non-U.S. currency balance of $100.3 million ( December 31, 2017 - $70.1 million ).

The Company uses prime brokerage borrowing arrangements to provide collateral for its letter of credit facilities and to fund trust accounts securing certain reinsurance contracts. As of June 30, 2018 , the Company had $880.2 million ( December 31, 2017 - $867.6 million ) of restricted cash and investments securing letter of credit facilities and certain reinsurance contracts. Margin debt balances were collateralized by cash held by the broker and certain of the Company’s securities. Margin interest was paid either at the daily broker call rate or based on London Inter-bank Offered Rate. Amounts are borrowed through committed facilities with terms of up to 90 days, secured by assets of the Company held by the prime broker, and incur interest based on the Company’s negotiated rates. This interest expense is reflected in net investment income in the condensed consolidated statements of income (loss) .

6. Derivatives

The following tables identify the listing currency, fair value and notional amounts of derivative instruments included in the condensed consolidated balance sheets, categorized by primary underlying risk. Balances are presented on a gross basis.



	As of June 30, 2018
	Listing currency (1)	Fair Value		Notional Amounts (2)
Derivative Assets by Primary Underlying Risk
Credit
Credit Default Swaps - Protection Purchased	EUR/USD	$	7,426	$	72,960
Total Return Swaps - Long Contracts	EGP	6,681		6,681
Equity Price
Contracts for Differences - Long Contracts	BRL/EUR/USD	9,641		104,549
Contracts for Differences - Short Contracts	CHF/EUR/JPY	3,062		19,382
Interest Rates
Interest Rate Swaptions	JPY/USD	452		488,780
Foreign Currency Exchange Rates
Foreign Currency Forward Contracts	BRL/CHF/CNH/EUR/HKD/JPY	6,386		613,867
Foreign Currency Options - Purchased	USD	1,090		69,438
Total Derivative Assets		$	34,738	$	1,375,657


	Listing currency (1)	Fair Value		Notional Amounts (2)
Derivative Liabilities by Primary Underlying Risk
Credit
Credit Default Swaps - Protection Purchased	USD	$	95	$	17,004
Credit Default Swaps - Protection Sold	USD	2,147		5,003
Equity Price
Contracts for Differences - Long Contracts	BRL/EUR/GBP	3,726		79,109
Contracts for Differences - Short Contracts	CHF/EUR/GBP/JPY/SEK/USD	1,528		58,391
Interest Rates
Interest Rate Swaptions	JPY/USD	89		488,417
Sovereign Debt Futures - Short Contracts	EUR	644		106,600
Total Return Swaps - Long Contracts	ARS	3,277		19,175
Foreign Currency Exchange Rates
Foreign Currency Forward Contracts	ARS/HKD/SAR	347		221,008
Foreign Currency Options - Sold	USD	527		107,312
Total Derivative Liabilities (free standing)		$	12,380	$	1,102,019

Embedded derivative liabilities in reinsurance contracts (3)	USD	$	164	$	20,000
Total Derivative Liabilities (embedded)		$	164	$	20,000


(1)	ARS = Argentine peso, BRL = Brazilian Real, CHF = Swiss Franc, CNH = Chinese Yuan, EGP = Egyptian Pound, EUR = Euro, HKD = Hong Kong Dollar, GBP = British Pound, JPY = Japanese Yen, SAR = Saudi Arabian Riyal, SEK = Swedish Krona, USD = US Dollar.


(2)	The absolute notional exposure represents the Company’s derivative activity as of June 30, 2018 , which is representative of the volume of derivatives held during the period.


(3)	The fair value of embedded derivatives in reinsurance contracts is included in reinsurance balances payable in the condensed consolidated balance sheets.



	As of December 31, 2017
	Listing currency (1)	Fair Value		Notional Amounts (2)
Derivative Assets by Primary Underlying Risk
Credit
Credit Default Swaps - Protection Purchased	USD	$	8,205	$	50,593
Total Return Swaps - Long Contracts	EGP	25,245		25,245
Equity Price
Contracts for Differences - Long Contracts	BRL / CHF / EUR / USD	17,298		163,868
Contracts for Differences - Short Contracts	DKK / NOK / SEK / USD	4,384		31,992
Total Return Swaps - Long Contracts	BRL / USD	15,936		96,388
Total Return Swaps - Short Contracts	USD	1		—
Interest Rates
Interest Rate Swaptions	JPY	539		64,950
Foreign Currency Exchange Rates
Foreign Currency Forward Contracts	HKD / JPY	1,764		511,937
Total Derivative Assets		$	73,372	$	944,973


	Listing currency (1)	Fair Value		Notional Amounts (2)
Derivative Liabilities by Primary Underlying Risk
Credit
Credit Default Swaps - Protection Purchased	USD	$	1,250	$	19,418
Credit Default Swaps - Protection Sold	USD	2,085		2,351
Equity Price
Contracts for Differences - Long Contracts	BRL / EUR / USD	2,200		93,200
Contracts for Differences - Short Contracts	DKK / EUR / USD	776		8,483
Total Return Swaps - Long Contracts	BRL / USD	73		50,858
Total Return Swaps - Short Contracts	USD	1,885		52,657
Interest Rates
Interest Rate Swaptions	JPY	70		64,482
Foreign Currency Exchange Rates
Foreign Currency Forward Contracts	BRL / CHF / CNH / EUR / HKD / SAR	6,164		573,498
Total Derivative Liabilities (free standing)		$	14,503	$	864,947

Embedded derivative liabilities in reinsurance contracts (3)	USD	$	171	$	20,000
Total Derivative Liabilities (embedded)		$	171	$	20,000


(1)	BRL = Brazilian Real, CHF = Swiss Franc, CNH = Chinese Yuan, DKK = Danish Krone, EGP = Egyptian Pound, EUR = Euro, HKD = Hong Kong Dollar, JPY = Japanese Yen, NOK = Norwegian Krone, SAR = Saudi Arabian Riyal, SEK = Swedish Krona, USD = US Dollar.


(2)	The absolute notional exposure represents the Company’s derivative activity as of December 31, 2017 , which is representative of the volume of derivatives held during the period.


(3)	The fair value of embedded derivatives in reinsurance contracts is included in reinsurance balances payable in the condensed consolidated balance sheets.

The following table sets forth, by major risk type, the Company’s realized and unrealized gains (losses) relating to derivatives for the three and six months ended June 30, 2018 and 2017 . Realized and unrealized gains (losses) related to free standing derivatives are included in net investment income in the condensed consolidated statements of income (loss) . Realized and unrealized gains (losses) related to embedded derivatives are included in other expenses in the condensed consolidated statements of income (loss) .



	Three months ended
	June 30, 2018						June 30, 2017
Free standing Derivatives - Primary Underlying Risk	Realized Gain (Loss)			Unrealized Gain (Loss)*			Realized Gain (Loss)			Unrealized Gain (Loss)*
Credit
Credit Default Swaps - Protection Purchased	$	130		$	(2,581	)	$	(1,137	)	$	(1,590	)
Credit Default Swaps - Protection Sold	(718		)	1,053			18			(35		)
Total Return Swaps - Long Contracts	1,377			(1,981		)	(29		)	(37		)
Equity Price
Contracts for Differences - Long Contracts	11,107			(606		)	39,055			1,211
Contracts for Differences - Short Contracts	1,650			(1,994		)	(993		)	1,821
Total Return Swaps - Long Contracts	(1,632		)	(787		)	61			3,545
Total Return Swaps - Short Contracts	(9,517		)	118			(1,014		)	1,201
Interest Rates
Interest Rate Swaps	—			—			(4,550		)	(2,105		)
Interest Rate Swaptions	—			(180		)	(720		)	(573		)
Sovereign Future Options - Long Contracts	403			—			—			—
Sovereign Future Options - Short Contracts	50			—			—			—
Sovereign Futures - Long Contracts	639			—			—			—
Sovereign Debt Futures - Short Contracts	(560		)	(620		)	(6,874		)	(106		)
Total Return Swaps - Long Contracts	—			(3,277		)	—			—
Foreign Currency Exchange Rates
Foreign Currency Forward Contracts	4,182			7,776			(4,161		)	(2,653		)
Foreign Currency Future Options - Purchased	(108		)	—			—			—
Foreign Currency Options - Purchased	4,571			1,045			(1,318		)	661
Foreign Currency Options - Sold	(485		)	(375		)	(1		)	—
	$	11,089		$	(2,409	)	$	18,337		$	1,340
Embedded Derivatives
Embedded derivatives in reinsurance contracts	$	—		$	(40	)	$	—		$	(69	)
Total Derivative Liabilities (embedded)	$	—		$	(40	)	$	—		$	(69	)



	Six months ended
	June 30, 2018						June 30, 2017
Free standing Derivatives - Primary Underlying Risk	Realized Gain (Loss)			Unrealized Gain (Loss)*			Realized Gain (Loss)			Unrealized Gain (Loss)*
Credit
Credit Default Swaps - Protection Purchased	$	(1,118	)	$	(2,022	)	$	(2,465	)	$	30
Credit Default Swaps - Protection Sold	130			292			37			(59		)
Total Return Swaps - Long Contracts	1,819			(1,176		)	(29		)	(37		)
Equity Price
Contracts for Differences - Long Contracts	25,307			(9,184		)	46,925			6,687
Contracts for Differences - Short Contracts	5,710			(2,075		)	(4,205		)	2,945
Total Return Swaps - Long Contracts	17,559			(15,864		)	3,862			8,547
Total Return Swaps - Short Contracts	(16,373		)	1,883			(3,743		)	788
Interest Rates
Interest Rate Swaps	—			—			(3,097		)	(1,740		)
Interest Rate Swaptions	—			(401		)	522			(2,342		)
Sovereign Future Options - Long Contracts	403			—			—			—
Sovereign Future Options - Short Contracts	50			—			—			—
Sovereign Futures - Long Contracts	639			—			—			—
Sovereign Debt Futures - Short Contracts	(561		)	(644		)	(8,656		)	658
Total Return Swaps - Long Contracts	—			(3,277		)	—			—
Foreign Currency Exchange Rates
Foreign Currency Forward Contracts	(9,634		)	10,441			(10,035		)	(1,268		)
Foreign Currency Future Options - Purchased	(108		)	—			—			—
Foreign Currency Options - Purchased	4,571			469			(6,187		)	1,163
Foreign Currency Options - Sold	(485		)	(292		)	2,184			(80		)
	$	27,909		$	(21,850	)	$	15,113		$	15,292
Embedded Derivatives
Embedded derivatives in reinsurance contracts	$	—		$	7		$	—		$	(88	)
Total Derivative Liabilities (embedded)	$	—		$	7		$	—		$	(88	)

*Unrealized gain (loss) relates to derivatives still held at reporting date.

The Company’s derivative contracts are generally subject to International Swaps and Derivatives Association (“ISDA”) Master Agreements or other similar agreements that contain provisions setting forth events of default and/or termination events (“credit-risk-related contingent features”), including but not limited to provisions setting forth maximum permissible declines in the Company’s net asset value. Upon the occurrence of a termination event with respect to an ISDA Agreement, the Company’s counterparty could elect to terminate the derivative contracts governed by such agreement, resulting in the realization of any net gains or losses with respect to such derivative contracts and the return of collateral held by such party.

The Company obtains/provides collateral from/to various counterparties for OTC derivative and futures contracts in accordance with bilateral collateral agreements. During the period ended June 30, 2018 , no termination events were triggered under the ISDA Master Agreements. As of June 30, 2018 , the aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position was $3.1 million ( December 31, 2017 - $3.6 million ) for which the Company posted collateral in the form of cash of $59.1 million ( December 31, 2017 - $103.0 million ) in the normal course of business. Similarly, the Company held collateral (approximately $2.2 million ) in cash from certain counterparties as of June 30, 2018 . If the credit-risk-related contingent features underlying these instruments had been triggered as of June 30, 2018 and the Company had to settle these instruments immediately, no additional amounts would be required to be posted that would exceed the settlement amounts of open derivative contracts or in the case of cross margining relationships, the assets in the Company’s prime brokerage accounts are sufficient to offset the derivative liabilities.

The Company’s derivatives do not qualify as hedges for financial reporting purposes and are recorded in the condensed consolidated financial statements on a gross basis and not offset against any collateral pledged or received. Pursuant to ISDA master agreements and other counterparty agreements, the Company and its counterparties typically have the ability to net certain payments owed to each other in specified circumstances. In addition, in the event a party to one of the ISDA master agreements or other derivatives agreements defaults, or a transaction is otherwise subject to termination, the non-defaulting party generally has the right to offset against payments owed to the defaulting party or collateral held by the non-defaulting party.

The Company has pledged cash collateral to counterparties to support the current value of amounts due to the counterparties based on the value of the underlying security. As of June 30, 2018 and December 31, 2017 , the gross and net amounts of derivative instruments and repurchase and reverse repurchase agreements that are subject to enforceable master netting arrangements or similar agreements were as follows:



	Gross Amounts not Offset in the Condensed Consolidated Balance Sheet
June 30, 2018 Derivative Contracts	Gross Amount (1)		Financial Instruments		Cash Collateral Received		Net Amount
Financial assets, derivative assets and collateral received
Counterparty 1	$	190	$	190	$	—	$	—
Counterparty 2	1,197		1,197		—		—
Counterparty 3	17,207		4,303		—		12,904
Counterparty 4	2,926		2,889		—		37
Counterparty 5	6,477		1,345		40		5,092
Counterparty 6	3,713		33		1,314		2,366
Counterparty 7	1,059		—		850		209
Counterparty 8	8,233		1,222		—		7,011
Counterparty 9	2,180		2,180		—		—
	$	43,182	$	13,359	$	2,204	$	27,619

	Gross Amounts not Offset in the Condensed Consolidated Balance Sheet
June 30, 2018 Derivative Contracts	Gross Amount (2)		Financial Instruments		Cash Collateral Pledged		Net Amount
Financial liabilities, derivative liabilities and collateral pledged
Counterparty 1	$	539	$	190	$	349	$	—
Counterparty 2	1,482		1,197		285		—
Counterparty 3	4,303		4,303		—		—
Counterparty 4	3,000		2,889		111		—
Counterparty 5	1,345		1,345		—		—
Counterparty 6	33		33		—		—
Counterparty 8	1,222		1,222		—		—
Counterparty 9	4,520		2,180		2,340		—
	$	16,444	$	13,359	$	3,085	$	—

Securities lending transactions
Counterparty 5	$	7,341	$	7,341	$	—	$	—
	$	7,341	$	7,341	$	—	$	—


(1)	The gross amounts of assets presented in the condensed consolidated balance sheets presented above includes the fair value of derivative contract assets as well as gross OTC option contract assets of $8.5 million included in other investments in the condensed consolidated balance sheets.


(2)	The gross amounts of liabilities presented in the condensed consolidated balance sheets presented above includes the fair value of derivative contract liabilities as well as gross OTC option contract liabilities of $4.1 million included in securities sold, not yet purchased in the condensed consolidated balance sheets.



	Gross Amounts not Offset in the Condensed Consolidated Balance Sheet
December 31, 2017 Derivative Contracts	Gross Amount (1)		Financial Instruments		Cash Collateral Received		Net Amount
Financial assets, derivative assets and collateral received
Counterparty 1	$	167	$	167	$	—	$	—
Counterparty 2	1,343		706		—		637
Counterparty 3	37,313		2,705		—		34,608
Counterparty 4	2,683		2,683		—		—
Counterparty 5	14,798		6,647		—		8,151
Counterparty 6	5,338		9		2,122		3,207
Counterparty 7	1,377		—		1,100		277
Counterparty 8	12,628		2,963		—		9,665
Counterparty 9	703		703		—		—
	$	76,350	$	16,583	$	3,222	$	56,545

	Gross Amounts not Offset in the Condensed Consolidated Balance Sheet
December 31, 2017 Derivative Contracts	Gross Amount (2)		Financial Instruments		Cash Collateral Pledged		Net Amount
Financial liabilities, derivative liabilities and collateral pledged
Counterparty 1	$	1,340	$	167	$	1,173	$	—
Counterparty 2	706		706		—		—
Counterparty 3	2,705		2,705		—		—
Counterparty 4	3,812		2,683		1,129		—
Counterparty 5	6,647		6,647		—		—
Counterparty 6	9		9		—		—
Counterparty 8	2,963		2,963		—		—
Counterparty 9	1,181		703		478		—
Counterparty 15	836		—		732		104
	$	20,199	$	16,583	$	3,512	$	104

Securities sold under an agreement to repurchase
Counterparty 4	$	29,618	$	29,618	$	—	$	—
	$	29,618	$	29,618	$	—	$	—


(1)	The gross amounts of assets presented in the condensed consolidated balance sheets presented above includes the fair value of derivative contract assets as well as gross OTC option contract assets of $3.0 million included in other investments in the condensed consolidated balance sheets.


(2)	The gross amounts of liabilities presented in the condensed consolidated balance sheets presented above includes the fair value of derivative contract liabilities as well as gross OTC option contract liabilities of $5.7 million included in securities sold, not yet purchased in the condensed consolidated balance sheets.

7. Loss and loss adjustment expense reserves

As of June 30, 2018 and December 31, 2017 , loss and loss adjustment expense reserves in the condensed consolidated balance sheets was comprised of the following:



	June 30, 2018		December 31, 2017
Case loss and loss adjustment expense reserves	$	116,957	$	115,622
Incurred but not reported loss and loss adjustment expense reserves	673,840		604,260
Deferred gains on retroactive reinsurance contracts	516		688
	$	791,313	$	720,570

The following table represents the activity in the loss and loss adjustment expense reserves for the six months ended June 30, 2018 and 2017 :



	June 30, 2018			June 30, 2017
Gross reserves for loss and loss adjustment expenses, beginning of period	$	720,570		$	605,129
Less: loss and loss adjustment expenses recoverable, beginning of period	(1,113		)	(1		)
Net reserves for loss and loss adjustment expenses, beginning of period	719,457			605,128
Increase (decrease) in net loss and loss adjustment expenses incurred in respect of losses occurring in:
Current year	167,419			218,559
Prior years (1)	9,201			(25,285		)
Total incurred loss and loss adjustment expenses	176,620			193,274
Net loss and loss adjustment expenses paid in respect of losses occurring in:
Current year	(35,471		)	(19,737		)
Prior years	(70,781		)	(111,480		)
Total net paid losses	(106,252		)	(131,217		)
Foreign currency translation	(3,912		)	9,561
Net reserves for loss and loss adjustment expenses, end of period	785,913			676,746
Plus: loss and loss adjustment expenses recoverable, end of period	1,414			1,713
Plus: deferred charges on retroactive reinsurance contracts	3,986			—
Gross reserves for loss and loss adjustment expenses, end of period	$	791,313		$	678,459

(1) In the period ended June 30, 2018, the Company started including the amortization of deferred gains on retroactive reinsurance contracts in prior year loss development. This line item was previously presented separately in the loss reserves roll forward presented above. The prior year presentation has been adjusted to conform with the current year presentation.

Changes in the Company’s loss and loss adjustment expense reserves result from re-estimating loss reserves and from changes in premium earnings estimates. Furthermore, many of the Company’s contracts have sliding scale or profit commissions whereby loss reserve development can be offset by changes in acquisition costs that vary inversely with loss experience. In some instances, the Company can have loss reserve development on contracts where there is no sliding scale or profit commission or where the loss ratio falls outside of the loss ratio range to which the sliding scale or profit commission applies.

The $9.2 million net increase in prior years’ reserves for the six months ended June 30, 2018 includes a $17.7 million increase in loss reserves resulting from increase s in premium earnings estimates on certain contracts, partially offset by $8.5 million of net favorable reserve development related to decrease s in loss reserve estimates. The net increase in loss reserves as well as the impact of any offsetting changes in acquisition costs as a result of sliding scale or profit commissions is explained as follows:

•

The $17.7 million net increase in loss and loss adjustment expenses incurred resulting from increase s in premium earnings estimates was accompanied by a $5.2 million increase in acquisition costs, for a total of $22.9 million increase in loss and loss adjustment expenses incurred and acquisition costs. The increase in loss and loss adjustment expenses incurred and acquisition costs was due to an increase in prior period earned premium of $23.2 million . The increase in prior period earned premium was the result of changes in ultimate premium and earning pattern estimates. The net impact was a $0.3 million improvement in the net underwriting results for the six months ended June 30, 2018 .


•	The $8.5 million of net favorable prior years’ reserve development for the six months ended June 30, 2018 was accompanied by net increase s of $5.7 million in acquisition costs, resulting in a $2.8 million improvement in the net underwriting results , primarily due to:


•	$5.4 million of net favorable underwriting loss development relating to several workers’ compensation contracts written from 2012 to 2017, driven by better than expected loss experience;


•	$2.9 million of net favorable underwriting loss development primarily relating to one multi-line contract written from 2014 to 2017, driven by better than expected loss experience;


•	$1.9 million of net favorable underwriting loss development from several other contracts as a result of better than expected loss experience; partially offset by

•

$7.4 million of net adverse underwriting loss development primarily relating to our Florida homeowners’ quota share reinsurance contracts. This development is a result of higher than anticipated water damage claims and an increase in the practice of assignment of benefits whereby homeowners assign their rights for filing and settling claims to attorneys and public adjusters. This practice has led to increases in the frequency of claims reported as well as the severity of losses and loss adjustment expenses.


•	In total, the change in net underwriting loss for prior periods due to loss reserve development and adjustments to premium earnings estimates resulted in a $3.1 million improvement in the net underwriting results for the six months ended June 30, 2018 .

In the six months ended June 30, 2018 , the Company recorded a deferred charge of $4.0 million relating to retroactive reinsurance contracts written in the period. Deferred charge on retroactive contracts are recorded in other assets on the Company’s balance sheet.

The $25.3 million net decrease in prior years’ reserves, which includes $1.4 million for the amortization of deferred gains, for the six months ended June 30, 2017 includes $32.5 million of net favorable reserve development related to decreases in loss reserve estimates, partially offset by $7.2 million of additional loss reserves resulting from increases in premium earnings estimates on certain contracts. The net decrease in loss reserves as well as the impact of any offsetting changes in acquisition costs as a result of sliding scale or profit commissions is explained as follows:

•

The $32.5 million of net favorable prior years’ reserve development for the six months ended June 30, 2017 was primarily a result of having favorable loss development on certain retroactive reinsurance contracts. These retroactive reinsurance contracts had profit commission terms such that the favorable reserve development associated with these contracts was offset by similar increases in acquisition costs. The total net increases in acquisition costs associated with the prior year loss development for the six months ended June 30, 2017 was $32.5 million , resulting in minimal impact in the net underwriting loss.

•

The $7.2 million increase in loss and loss adjustment expenses incurred related to the increase in premium earnings estimates on certain contracts was accompanied by a $0.4 million increase in acquisition costs, for a total of $7.6 million increase in loss and loss adjustment expenses incurred and acquisition costs. The related increase in earned premium related to the increase in premium earnings estimates was $7.6 million , resulting in minimal impact in net underwriting loss for the six months ended June 30, 2017 .


•	In total, there was minimal change in net underwriting loss for prior periods due to loss reserve development and adjustments to premium earnings estimates for the six months ended June 30, 2017 .

8. Reinsurance premiums ceded

From time to time, the Company purchases retrocessional coverage for one or more of the following reasons: to manage its overall exposure, to reduce its net liability on individual risks, to obtain additional underwriting capacity and to balance its underwriting portfolio. Additionally, retrocession can be used as a mechanism to share the risks and rewards of business written and therefore can be used as a tool to align the Company’s interests with those of its counterparties. In the six months ended June 30, 2018 , the Company entered into a quota share contract that provides coverage for recovery of a portion of its mortgage assumed reinsurance contracts. Premiums ceded for the three and six months ended June 30, 2018 were $3.5 million and $18.1 million , respectively ( 2017 - $1.4 million and $2.6 million , respectively). Loss and loss adjustment expenses recoverable from the retrocessionaire are recorded as assets. Retrocession contracts do not relieve the Company from its obligations to the insureds. Failure of retrocessionaires to honor their obligations could result in losses to the Company. As of June 30, 2018 , the Company had loss and loss adjustment expenses recoverable of $1.4 million (December 31, 2017 - $1.1 million ). The Company generally obtains retrocessional coverage from companies rated “A-” or better by A.M. Best Company, Inc. unless the retrocessionaire’s obligations are collateralized.

9. Management and performance fees

Third Point Re, Third Point Re BDA, TPRUSA and Third Point Re USA are parties to Joint Venture and Investment Management Agreements (the “Investment Agreements”) with Third Point LLC and Third Point Advisors LLC (“TP GP”) under which Third Point LLC manages certain jointly held assets.

Pursuant to the Investment Agreements, TP GP receives a performance fee allocation equal to 20% of the net investment income of the applicable company’s share of the investment assets managed by Third Point LLC. The performance fee accrued on net investment income is included in liabilities as a performance fee payable to related party during the period, unless funds are redeemed from the Joint Venture accounts, in which case, the proportionate share of performance fee, as described in Note 17 , associated with the redemption is earned and allocated to noncontrolling interests in related party. At the end of each year, the remaining portion of the performance fee payable that has not been included in noncontrolling interests in related party through redemptions is earned and then allocated to TP GP’s capital account in accordance with the Investment Agreements.

The performance fee is subject to a loss carryforward provision pursuant to which TP GP is required to maintain a loss recovery account, which represents the sum of all prior period net loss amounts, not offset by prior year net profit amounts, and that is allocated to future profit amounts until the loss recovery account has returned to a positive balance. Until such time, no performance fees are payable under the Investment Agreements.

Additionally, Third Point LLC is entitled to receive management fees, which are paid monthly. Pursuant to the Investment Agreements, a total management fee of 1.5% of net investments managed by Third Point LLC was paid to Third Point LLC.

For the three and six months ended June 30, 2018 and 2017 , management and performance fees to related parties are as follows:



	Three months ended				Six months ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Management fees - Third Point LLC	$	9,635	$	8,777	$	19,410	$	17,244
Performance fees - Third Point Advisors LLC	4,858		24,529		5,130		55,387
	$	14,493	$	33,306	$	24,540	$	72,631

As of June 30, 2018 , $4.6 million related to performance fees due under the Investment Agreements were included in performance fee payable to related party in the condensed consolidated balance sheets. As of June 30, 2018 , $0.5 million ( December 31, 2017 , $94.0 million ) related to performance fees earned by TP GP were included in noncontrolling interests in related party. See Note 17 for additional information.

10. Deposit accounted contracts

The following table represents activity for the deposit contracts for the six months ended June 30, 2018 and year ended December 31, 2017 :



	June 30, 2018			December 31, 2017
Balance, beginning of period	$	129,133		$	104,905
Consideration received	1,114			22,658
Consideration receivable	—			2,080
Net investment expense allocation	2,449			2,800
Payments	(2,893		)	(3,545		)
Foreign currency translation	(103		)	235
Balance, end of period	$	129,700		$	129,133

11. Senior Notes payable and letter of credit facilities

Senior Notes payable

As of June 30, 2018 , TPRUSA had outstanding debt obligations consisting of an aggregate principal amount of $115.0 million of senior unsecured notes (the “Notes”) due February 13, 2025. The Notes bear interest at 7.0% and interest is payable semi-annually on February 13 and August 13 of each year. The Notes are fully and unconditionally guaranteed by Third Point Re, and, in certain circumstances specified in the indenture governing the Notes, certain existing or future subsidiaries of the Company may be required to guarantee the Notes. As of June 30, 2018 , the Company had capitalized $1.2 million of costs associated with the Notes, which are presented as a direct deduction from the principal amount of the Notes on the condensed consolidated balance sheets. As of June 30, 2018 , the Notes had an estimated fair value of $114.5 million ( December 31, 2017 - $116.7 million ). The fair value measurements were based on observable inputs and therefore were considered to be Level 2. The Company was in compliance with all debt covenants as of June 30, 2018 and December 31, 2017 .

Letters of credit

As of June 30, 2018 , the Company had entered into the following letter of credit facilities:



	Facility		Utilized		Collateral
Citibank	$	300,000	$	158,312	$	158,312
Lloyds Bank	125,000		82,233		82,233
	$	425,000	$	240,545	$	240,545

The Company’s letter of credit facilities are bilateral agreements that generally renew on an annual basis. The letters of credit issued under the letter of credit facilities are fully collateralized. See Note 3 for additional information.

12. Net investment income

Net investment income for the three and six months ended June 30, 2018 and 2017 consisted of the following:



	Three months ended						Six months ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Net investment income by type
Net realized gains on investments and investment derivatives	$	64,731		$	96,869		$	130,500		$	157,945
Net change in unrealized gains (losses) on investments and investment derivatives	(32,532		)	29,140			(95,520		)	124,814
Net losses on foreign currencies	(1,830		)	(1,601		)	(2,617		)	(2,153		)
Dividend and interest income	24,493			22,440			37,717			39,707
Dividends paid on securities sold, not yet purchased	(2,329		)	(1,143		)	(4,221		)	(1,668		)
Other expenses	(6,865		)	(5,074		)	(12,352		)	(10,179		)
Net investment income before management and performance fees to related parties	45,668			140,631			53,507			308,466
Management and performance fees to related parties	(14,493		)	(33,306		)	(24,540		)	(72,631		)
Net investment income	$	31,175		$	107,325		$	28,967		$	235,835

The following table provides an additional breakdown of our net investment income by asset and liability type for the three and six months ended June 30, 2018 and 2017 :



	Three months ended						Six months ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Net investment income (loss) by asset type
Equity securities	$	58,881		$	111,622		$	40,556		$	261,891
Private common equity securities	(11		)	3			(453		)	(24		)
Private preferred equity securities	166			1,362			(1,874		)	1,624
Total equities	59,036			112,987			38,229			263,491
Asset-backed securities	7,033			2,300			19,482			5,133
Bank debt	800			2,072			3,321			6,214
Corporate bonds	(737		)	2,335			(3,413		)	11,250
Municipal bonds	2,470			—			6,248			—
U.S. Treasury securities	478			1,205			(159		)	2,365
Sovereign debt	(8,533		)	5,396			(4,402		)	11,848
Other debt securities	31			—			469			—
Total debt securities	1,542			13,308			21,546			36,810
Options	(5,562		)	(10,383		)	(6,619		)	(17,848		)
Rights and warrants	63			(6		)	47			38
Real estate	414			—			501			—
Trade claims	(284		)	56			(287		)	219
Total other investments	(5,369		)	(10,333		)	(6,358		)	(17,591		)
Net investment income (loss) in funds valued at NAV	282			3,394			(625		)	7,017
Total net investment income from invested assets	55,491			119,356			52,792			289,727
Net investment income (loss) by liability type
Equity securities	(23,844		)	(1,469		)	(10,926		)	(7,467		)
Sovereign debt	—			2			—			2
Corporate bonds	(1,934		)	(1,221		)	(1,969		)	(2,914		)
Options	9,174			6,056			12,907			4,363
Total net investment income (loss) from securities sold, not yet purchased	(16,604		)	3,368			12			(6,016		)
Other investment income (losses) and other expenses not presented above
Other investment expenses	(673		)	(2,098		)	(1,026		)	(4,012		)
Net investment income on derivative contracts	8,680			19,677			6,059			30,405
Net investment loss on cash, including foreign exchange loss	(5,485		)	(3,057		)	(9,345		)	(5,993		)
Net investment losses on securities purchased under an agreement to sell and securities sold under an agreement to repurchase	(32		)	(19		)	(241		)	(39		)
Withholding taxes reclassified to income tax expense	4,291			3,404			5,256			4,394
Total other investment income and other expenses	6,781			17,907			703			24,755
Net investment income before management and performance fees to related parties	45,668			140,631			53,507			308,466
Management and performance fees to related parties	(14,493		)	(33,306		)	(24,540		)	(72,631		)
Net investment income	$	31,175		$	107,325		$	28,967		$	235,835

13. Other expenses

Other expenses for the three and six months ended June 30, 2018 and 2017 consisted of the following:



	Three months ended					Six months ended
	June 30, 2018		June 30, 2017			June 30, 2018		June 30, 2017
Investment expense (income) on deposit liabilities	$	1,188	$	(97	)	$	2,449	$	312
Investment expense and change in fair value of embedded derivatives in reinsurance contracts	2,795		2,202			5,529		4,694
	$	3,983	$	2,105		$	7,978	$	5,006

14. Income taxes

The Company provides for income tax expense or benefit based upon pre-tax income or loss reported in the condensed consolidated statements of income (loss) and the provisions of currently enacted tax laws. The Company and its Bermuda subsidiaries are incorporated under the laws of Bermuda and are subject to Bermuda law with respect to taxation. Under current Bermuda law, the Company and its Bermuda subsidiaries are not subject to any income or capital gains taxes in Bermuda. In the event that such taxes are imposed, the Company and its Bermuda subsidiaries would be exempted from any such taxes until March 2035 under the Tax Assurance Certificates issued to such entities pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966, as amended.

The Company has an operating subsidiary incorporated in Bermuda, Third Point Re USA, which made an election to pay tax in the United States of America under Section 953(d) of the U.S. Internal Revenue Code of 1986, as amended. Our non-U.S. subsidiaries would become subject to U.S. federal income tax only to the extent that they derive income from activity that is deemed to be the conduct of a trade or business within the United States. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; (3) creating the base erosion anti-abuse tax (BEAT), a new minimum tax; and (4) creating a new limitation on deductible interest expense. Although the Company believes that it has accounted for the most significant tax effects of the Tax Act, there may be further changes that could impact the Company’s calculations of certain deferred tax amounts.

The Company also has subsidiaries in the United Kingdom, TPRUK and Third Point Re UK, which are subject to applicable taxes in that jurisdiction.

The Company is subject to withholding taxes on income sourced in the United States and in other countries, subject to each countries’ specific tax regulations. Income subject to withholding taxes includes, but is not limited to, dividends, capital gains and interest on certain investments. The Company has recorded uncertain tax positions related to investment transactions in certain foreign jurisdictions. As of June 30, 2018 , the Company has accrued $1.9 million (December 31, 2017 - $1.9 million ) for uncertain tax positions.

For the three and six months ended June 30, 2018 and 2017 , the Company recorded income tax expense, as follows:



	Three months ended				Six months ended
	June 30, 2018		June 30, 2017		June 30, 2018			June 30, 2017
Income tax expense (benefit) related to U.S. and U.K. subsidiaries	$	61	$	1,844	$	(788	)	$	6,027
Change in uncertain tax positions	38		59		50			184
Withholding taxes on certain investment transactions	4,291		3,404		5,256			4,394
	$	4,390	$	5,307	$	4,518		$	10,605

15. Share capital

The following tables present a summary of the common shares issued and outstanding and shares repurchased held as treasury shares as of and for the six months ended June 30, 2018 and 2017 :



Common shares	2018		2017
Common shares issued, beginning of period	107,227,347		106,501,299
Options exercised	—		100,000
Restricted shares granted, net of forfeitures	50,644		36,418
Performance restricted shares granted, net of forfeitures and shares withheld	257,045		694,886
Retirement of treasury shares and shares repurchased (1)	(8,269,193	)	—
Warrants exercised, net (2)	361,556		—
Common shares issued, end of period	99,627,399		107,332,603
Treasury shares, end of period	—		(3,944,920	)
Common shares outstanding, end of period	99,627,399		103,387,683


(1)	Prior to December 31, 2017, common shares repurchased by the Company were not canceled and were classified as treasury shares. Effective January 1, 2018, all treasury shares were retired and future shares repurchased will be retired.


(2)	During the six months ended June 30, 2018 , 1,156,184 warrants were exercised. As a result of the warrant holder electing net settlement, 794,628 of those common shares were withheld by the Company and were subsequently retired, resulting in a net issuance of 361,556 common shares.

Authorized and issued

The Company’s authorized share capital of $33.0 million is comprised of 300,000,000 common shares with a par value of $0.10 each and 30,000,000 preference shares with a par value of $0.10 each. No preference shares have been issued to date.

Share repurchases

On February 28, 2018, the Company’s Board of Directors authorized the repurchase of an additional $148.3 million common shares, which together with the shares remaining under the previously announced share repurchase program would allow the Company to repurchase up to $200.0 million more of the Company’s outstanding common shares in the aggregate. Under the common share repurchase program, the Company may repurchase shares from time to time in privately negotiated transactions or in open-market purchases in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

During the three months ended June 30, 2018 , the Company repurchased 2,685,965 of its common shares in the open market for $36.6 million at a weighted average cost, including commissions, of $13.62 per share. Common shares repurchased by the Company during the period were retired.

During the six months ended June 30, 2018 , the Company repurchased 4,324,273 of its common shares in the open market for $60.4 million at a weighted average cost, including commissions, of $ 13.97 per share. Common shares repurchased by the Company during the period were retired. In the three months ended March 31, 2018, the Company also retired all shares previously held in treasury.

As of June 30, 2018 , the Company was authorized to repurchase up to an aggregate of $139.6 million of additional common shares under its share repurchase program.

16. Share-based compensation

The following table provides the total share-based compensation expense included in general and administrative expenses during the three and six months ended June 30, 2018 and 2017 :



	Three months ended				Six months ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Management and director options	$	60	$	111	$	155	$	459
Restricted shares with service condition	139		154		279		278
Restricted shares with service and performance condition	1,114		1,279		2,124		2,637
	$	1,313	$	1,544	$	2,558	$	3,374

As of June 30, 2018 , the Company had $9.2 million ( December 31, 2017 - $5.8 million ) of unamortized share compensation expense, which is expected to be amortized over a weighted average period of 1.6 years ( December 31, 2017 - 1.5 years ).

Management and director options

The management and director options activity for the six months ended June 30, 2018 and year ended December 31, 2017 were as follows:



	Number of options		Weighted average exercise price
Balance as of January 1, 2017	9,596,993		$	13.64
Forfeited	(558,138	)	18.00
Exercised	(150,802	)	10.00
Balance as of January 1, 2018	8,888,053		13.43
Forfeited	—		—
Exercised	—		—
Balance as of June 30, 2018	8,888,053		$	13.43

As of June 30, 2018 , the weighted average remaining contractual term for options outstanding and exercisable was 3.7 years and 3.7 years , respectively ( December 31, 2017 - 4.2 years and 4.1 years , respectively).

The following table summarizes information about the Company’s management and director share options outstanding as of June 30, 2018 :



	Options outstanding				Options exercisable
Range of exercise prices	Number of options	Weighted average exercise price		Remaining contractual life	Number of options	Weighted average exercise price
$10.00 - $10.89	5,123,532	$	10.04	3.6 years	5,123,531	$	10.04
$15.05 - $16.89	1,917,145	15.93		3.8 years	1,875,285	15.95
$20.00 - $25.05	1,847,376	20.26		3.7 years	1,819,471	20.22
	8,888,053	$	13.43	3.7 years	8,818,287	$	13.40

Restricted shares with service condition

Restricted share award activity for the six months ended June 30, 2018 and year ended December 31, 2017 was as follows:



	Number of non- vested restricted shares		Weighted average grant date fair value
Balance as of January 1, 2017	301,043		$	11.12
Granted	36,418		12.15
Forfeited	(71,429	)	14.00
Vested	(247,823	)	10.36
Balance as of January 1, 2018	18,209		12.15
Granted	50,644		13.45
Vested	(20,724	)	12.53
Balance as of June 30, 2018	48,129		$	13.35

Restricted shares with service condition vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment or service and transferability.

Restricted shares with service and performance condition

Restricted share award activity for the restricted shares with a service and performance condition for the six months ended June 30, 2018 and year ended December 31, 2017 were as follows:



	Number of non- vested restricted shares		Number of non- vested restricted shares probable of vesting		Weighted average grant date fair value of shares probable of vesting
Balance as of January 1, 2017	1,381,740		577,486		$	12.91
Granted	935,825		623,882		12.66
Forfeited	(325,568	)	(45,617	)	12.57
Vested	(136,618	)	(136,618	)	14.60
Change in estimated restricted shares considered probable of vesting	n/a		(131,930	)	12.17
Balance as of January 1, 2018	1,855,379		887,203		12.60
Granted	551,065		353,380		14.03
Forfeited	(288,700	)	—		14.00
Vested	(115,757	)	(115,757	)	14.00
Change in estimated restricted shares considered probable of vesting	n/a		29,509		12.39
Balance as of June 30, 2018	2,001,987		1,154,335		$	12.65

17. Noncontrolling interests in related party

Noncontrolling interests in related party represents the portion of equity in consolidated subsidiaries not attributable, directly or indirectly, to the Company. The joint ventures created through the Investment Agreements ( Note 9 ) have been considered variable interest entities and have been consolidated in accordance with ASC 810, Consolidation (ASC 810). Since the Company was deemed to be the primary beneficiary, the Company has consolidated the joint ventures and has recorded TP GP’s minority interests as redeemable noncontrolling interests in related party and noncontrolling interests in related party in the condensed consolidated balance sheets.

A portion of the noncontrolling interest in investment affiliates is subject to contractual withdrawal rights of TP GP, whereas TP GP, at its sole discretion, can withdraw the capital over the minimum capital required to be maintained in its capital accounts. This excess capital is therefore recorded on the Company’s condensed consolidated balance sheets as redeemable noncontrolling interest in related party whereas the required minimum capital is recorded as noncontrolling interests in related party within shareholders’ equity on the Company’s condensed consolidated balance sheets since it does not have withdrawal rights.

Changes in the presentation of noncontrolling interests

During the quarter ended September 30, 2017, the Company identified that a portion of its noncontrolling interests were redeemable. This portion of the noncontrolling interests had previously been presented in noncontrolling interests to related party within shareholders’ equity when it should have been presented in the mezzanine section of the condensed consolidated balance sheets as redeemable noncontrolling interests in related party. As of June 30, 2017, $14.9 million of the noncontrolling interests in related party should have been presented in the mezzanine section of the condensed consolidated balance sheets as redeemable noncontrolling interests in related party and should have been excluded from noncontrolling interests in related party in shareholders’ equity. Although this impacted total shareholders’ equity, it did not impact shareholders’ equity attributable to Third Point Re common shareholders or retained earnings. In addition, this change did not impact the consolidated statements of income, earnings per share or consolidated statement of cash flows. The Company has evaluated the effect of the incorrect presentation, both qualitatively and quantitatively, and concluded that it did not have a material impact on, nor require amendment of, any previously filed annual or quarterly consolidated financial statements.

The following table is a reconciliation of the beginning and ending carrying amounts of redeemable noncontrolling interests in related party, noncontrolling interests in related party and total noncontrolling interests in related party for the six months ended June 30, 2018 and 2017 :



	Redeemable noncontrolling interests in related party					Noncontrolling interests in related party						Total noncontrolling interests in related party
	June 30, 2018			June 30, 2017		June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Balance, beginning of period	$	108,219		$	—	$	5,407		$	35,674		$	113,626		$	35,674
Changes in capital account allocation	(101,040		)	—		(251		)	(15,865		)	(101,291		)	(15,865		)
Balance, end of period	$	7,179		$	—	$	5,156		$	19,809		$	12,335		$	19,809

In addition, the following table is a reconciliation of beginning and ending carrying amount of total noncontrolling interests in related party resulting from the consolidation of the Company’s joint venture in Third Point Re BDA and Third Point Re USA:



	Third Point Re BDA						Third Point Re USA						Total
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Balance, beginning of period	$	97,619		$	30,358		$	16,007		$	5,316		$	113,626		$	35,674
Net income attributable to total noncontrolling interests in related party	137			1,764			82			437			219			2,201
Contributions (1)	476			1,818			14			115			490			1,933
Redemptions	(89,000		)	(17,999		)	(13,000		)	(2,000		)	(102,000		)	(19,999		)
Balance, end of period	$	9,232		$	15,941		$	3,103		$	3,868		$	12,335		$	19,809

(1) Contributions include performance fees earned during the period. See Note 9 for additional information.

Non-consolidated variable interest entities

The Company invests in limited partnerships and other investment vehicles as part of its overall investment strategy. Some of these entities are affiliated with our investment manager, Third Point LLC. The activities of these variable

interest entities are generally limited to holding investments and the Company’s involvement in these entities is passive in nature. The Company does not have the power to direct the activities which most significantly impact the variable interest entities economic performance and therefore, the Company is not the primary beneficiary of these variable interest entities.

The following variable interest entities were not consolidated as per ASC 810:

TP Lux Holdco LP

The Company is a limited partner in TP Lux Holdco LP (the “Cayman HoldCo”), which is an affiliate of the Investment Manager. The Cayman HoldCo was formed as a limited partnership under the laws of the Cayman Islands and invests and holds debt and equity interests in TP Lux HoldCo S.a.r.l, a Luxembourg private limited liability company (the “LuxCo”) established under the laws of the Grand-Duchy of Luxembourg, which is also an affiliate of the Investment Manager.

LuxCo’s principal objective is to act as a collective investment vehicle to purchase Euro debt and equity investments. The Company invests in the Cayman HoldCo alongside other investment funds managed by the Investment Manager. As of June 30, 2018 , the Company held a 14.6% ( December 31, 2017 - 15.6% ) interest in the Cayman Holdco. The Company accounts for its investment in the limited partnership under the variable interest model, in which the Company is not the primary beneficiary, at NAV, as a practical expedient for fair value, in the condensed consolidated balance sheets. The Company records changes in the fair value of this investment in the condensed consolidated statements of income (loss) .

As of June 30, 2018 , the estimated fair value of the investment in the limited partnership was $1.2 million ( December 31, 2017 - $ 0.6 million). The Company contributed $0.3 million to the Cayman HoldCo during the six months ended June 30, 2018 due to the purchase of underlying investments ( 2017 - $39.6 million net distributions). The valuation policy with respect to this investment in a limited partnership is further described in Note 4 . The Company’s maximum exposure to loss as a result of its involvement with this investment is limited to the carrying value of the investment.

Third Point Hellenic Recovery US Feeder Fund, L.P.

The Company is a limited partner in Third Point Hellenic Recovery US Feeder Fund, L.P. (the “Hellenic Fund”), which is an affiliate of the Investment Manager. The Hellenic Fund was formed as a limited partnership under the laws of the Cayman Islands on April 12, 2013 and invests and holds debt and equity interests.

The Company has committed to invest $10.7 million ( December 31, 2017 - $10.9 million ) in the Hellenic Fund and as of June 30, 2018 , had an unfunded capital commitment of $3.2 million . No capital distributions or calls were made during the six months ended June 30, 2018 ( 2017 - $1.3 million net distributions).

As of June 30, 2018 , the estimated fair value of the Company’s investment in the Hellenic Fund was $4.9 million ( December 31, 2017 - $4.9 million), representing a 2.9% interest ( December 31, 2017 - 2.9% ). The Company accounts for its investment in the limited partnership under the variable interest model, in which the Company is not the primary beneficiary, at NAV, as a practical expedient for fair value, in the condensed consolidated balance sheets. The Company records changes in the fair value of this investment in the condensed consolidated statements of income (loss) .

The valuation policy with respect to this investment in a limited partnership is further described in Note 4 . The Company’s maximum exposure to loss as a result of its involvement with this investment is limited to the carrying value of the investment.

TP DR Holdings LLC

The Company holds an equity and debt investment in TP DR Holdings LLC (“TP DR”), which is an affiliate of the Investment Manager. In December 2016, TP DR was formed as a limited liability company under the laws of the Cayman Islands to invest and own 100% equity interest in DCA Holdings Six Ltd. and its wholly owned subsidiary group. TP DR’s principal objective is to own, develop and manage properties in the Dominican Republic.

The Company invests in TP DR alongside other investment funds managed by the Investment Manager and third-party investors. As of June 30, 2018 , the Company held a 7.0% equity ( December 31, 2017 - 7.0% ) and 14.0% debt interest ( December 31, 2017 - 13.1% ) in TP DR. The Company accounts for its equity investment in TP DR under the variable interest model, in which the Company is not the primary beneficiary, at NAV, as a practical expedient for fair value, in the condensed consolidated balance sheets. The Company records changes in the fair value of this investment in the condensed consolidated statements of income (loss) .

As of June 30, 2018 , the estimated fair value of the investment was $13.8 million ( December 31, 2017 - $12.7 million ), corresponding to $3.9 million of equity ( December 31, 2017 - $3.7 million ) and $9.9 million of debt interest ( December 31, 2017 - $9.0 million ). During the six months ended June 30, 2018 , the Company contributed cash of $1.9 million ( 2017 - $ 0.4 million ) to TP DR. The Company has no further commitments or guarantees with respect to TP DR. The valuation policy with respect to this investment in investment funds is further described in Note 4. The Company’s maximum exposure to loss as a result of its involvement with this investment is limited to the carrying value of the investment.

Cloudbreak II Cayman Ltd and TP Trading II LLC

The Company holds an equity interest in Cloudbreak II Cayman Ltd, Cloudbreak II US LLC (collectively, the “Cloudbreak entities”) and TP Trading II LLC which are affiliates of the Investment Manager. The Company invests in the Cloudbreak entities and TP Trading II LLC alongside other investment funds managed by the Investment Manager. These entities’ are invested in a structure whose primary purpose is to purchase consumer loans for securitization and warrants from a marketplace lending platform.

As of June 30, 2018 , the Cloudbreak entities held $5.1 million ( December 31, 2017 - $4.6 million ) of the Company’s asset-backed security investments, which are included in investments in securities in the condensed consolidated balance sheet. The Company’s pro rata interest in the underlying investments is registered in the name of Cloudbreak II US LLC and the related income and expense are reflected in the condensed consolidated balance sheets and the condensed consolidated statements of income (loss) .

As of June 30, 2018 , the Company held a 9.4% ( December 31, 2017 - 9.3% ) interest in TP Trading II LLC. The Company accounts for its equity investment in TP Trading II LLC under the variable interest model, in which the Company is not the primary beneficiary, at NAV, as a practical expedient for fair value, in the condensed consolidated balance sheets. The Company records changes in the fair value of this investment in the condensed consolidated statements of income (loss) . As of June 30, 2018 , the estimated fair value of the investment was $5.9 million ( December 31, 2017 - $6.0 million ). The valuation policy with respect to this investment is further described in Note 4. The Company’s maximum exposure to loss as a result of its involvement with these investments are limited to the carrying value of the investments.

Ventures Entities

The Company holds equity interests in Venture Three Holdings LLC, Venture Four Holdings LLC, Venture Five Holdings LLC and Venture Six Holdings LLC (collectively, the “Ventures entities”), which are affiliates of the Investment Manager. The Company invests in the Ventures entities alongside other investment funds managed by the Investment Manager. The primary purpose of these entities is to make investments in direct commercial real estate, real estate debt and a publicly traded telecommunications company.

The Company accounts for its equity interests in the Ventures entities under the variable interest model, in which the Company is not the primary beneficiary. As of June 30, 2018 , the Ventures entities held $17.8 million ( December 31, 2017 - $7.5 million ) of the Company’s investments, which are included in investments in securities in the condensed consolidated balance sheets. The Company records changes in the fair value of this investment in the condensed consolidated statements of income (loss) . The valuation policy with respect to this investment is further described in Note 4. The Company’s maximum exposure to loss as a result of its involvement with this investment is limited to the carrying value of the investment.

Cloudbreak Aggregator LP

The Company holds equity interests in Cloudbreak Aggregator LP, which is an affiliate of the Investment Manager. The Company invests in the Cloudbreak Aggregator LP alongside other investment funds managed by the Investment Manager. The primary purpose of this entity is to invest in Far Point LLC, the sponsor of Far Point Acquisition Corporation “FPAC”. FPAC is a NYSE listed special acquisition corporation.

The Company accounts for its equity interests in the Cloudbreak Aggregator LP under the variable interest model, in which the Company is not the primary beneficiary. As of June 30, 2018 , the Cloudbreak Aggregator LP held $3.2 million ( December 31, 2017 - $ nil ) of the Company’s investments in limited partnerships which are included in investments in securities in the condensed consolidated balance sheets. The Company records changes in the fair value of this investment in the condensed consolidated statements of income (loss) . The valuation policy with respect to this investment is further described in Note 4. The Company’s maximum commitment amount is $58.5 million . The Company’s maximum exposure to loss as a result of its involvement with this investment is limited to the carrying value of the investment and the commitment.

18. Earnings (loss) per share available to Third Point Re common shareholders

The following sets forth the computation of basic and diluted earnings (loss) per share available to Third Point Re common shareholders for the three and six months ended June 30, 2018 and 2017 :



		Three months ended						Six months ended
		June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Weighted-average number of common shares outstanding:		($ in thousands, except share and per share amounts)
	Basic number of common shares outstanding	99,498,901			102,283,844			100,342,636			103,144,078
	Dilutive effect of options	1,274,609			1,084,217			—			937,864
	Dilutive effect of warrants	878,977			988,830			—			860,484
	Dilutive effect of restricted shares with service and performance condition	379,998			212,335			—			207,284
	Diluted number of common shares outstanding	102,032,485			104,569,226			100,342,636			105,149,710
Basic earnings (loss) per common share:
	Net income (loss) available to Third Point Re common shareholders	$	19,602		$	74,578		$	(6,399	)	$	178,764
	Net income allocated to Third Point Re participating common shareholders	(6		)	(71		)	—			(204		)
	Net income (loss) allocated to Third Point Re common shareholders	$	19,596		$	74,507		$	(6,399	)	$	178,560
	Basic earnings (loss) per common share	$	0.20		$	0.73		$	(0.06	)	$	1.73
Diluted earnings (loss) per common share:
	Net income (loss) available to Third Point Re common shareholders	$	19,602		$	74,578		$	(6,399	)	$	178,764
	Net income allocated to Third Point Re participating common shareholders	(6		)	(69		)	—			(200		)
	Net income (loss) allocated to Third Point Re common shareholders	$	19,596		$	74,509		$	(6,399	)	$	178,564
	Diluted earnings (loss) per common share	$	0.19		$	0.71		$	(0.06	)	$	1.70

For the three months ended June 30, 2018 and 2017 , anti-dilutive options of 3,764,521 and 4,322,659 , respectively, were excluded from the computation of diluted earnings per share. For the six months ended June 30, 2018 and 2017 , anti-dilutive options of 3,764,521 and 4,322,659 , respectively, were excluded from the computation of diluted earnings per share.

Additionally, as a result of the net loss for the six months ended June 30, 2018 , dilutive options, warrants and restricted shares with service and performance conditions totaling 10,003,738 were considered anti-dilutive and were excluded

from the computation of diluted loss per common share. No allocation of the net loss has been made to participating shares in the calculation of diluted net loss per common share.

19. Related party transactions

In addition to the transactions disclosed in Notes 4 , 9 and 17 to these condensed consolidated financial statements, the following transactions are classified as related party transactions, as the counterparties have either a direct or indirect shareholding in the Company or the Company has an investment in such counterparty.

Third Point Loan L.L.C. (“Loan LLC”) and Third Point Ventures LLC (“Ventures LLC” and, together with Loan LLC, “Nominees”) serve as nominees of the Company and other affiliated investment management clients of the Investment Manager for certain investments. The Nominees have appointed the Investment Manager as its true and lawful agent and attorney. As of June 30, 2018 , Loan LLC held $126.0 million ( December 31, 2017 - $ 99.6 million ) and Ventures LLC held $38.9 million ( December 31, 2017 - $ 6.3 million ) of the Company’s investments, which are included in investments in securities and derivative contracts in the condensed consolidated balance sheets. The Company’s pro rata interest in the underlying investments registered in the name of the Nominees and the related income and expense are reflected in the condensed consolidated balance sheets and the condensed consolidated statements of income (loss) . The valuation policy, with respect to investments held by the nominees, is further discussed in Note 4.

BlackRock, Inc. (“BlackRock”) reported a beneficial ownership interest of more than 10% of the Company’s common shares as of December 31, 2017. As a result, BlackRock is considered a related party as defined by U.S. GAAP. As of June 30, 2018 , $46.9 million ( December 31, 2017 - $106.5 million ) of equity securities in BlackRock were included in the Company’s condensed consolidated balance sheets. Included in the Company’s net investment income in its condensed consolidated statements of income (loss) for the three and six months ended June 30, 2018 was $(5.1) million and $1.4 million , respectively ( 2017 - $3.6 million and $3.6 million , respectively) of investment income associated with the Company’s investment in BlackRock.

20. Financial instruments with off-balance sheet risk or concentrations of credit risk

Off-balance sheet risk

In the normal course of business, the Company trades various financial instruments and engages in various investment activities with off-balance sheet risk. These financial instruments include securities sold, not yet purchased, forwards, futures, options, swaptions, swaps and contracts for differences. Generally, these financial instruments represent future commitments to purchase or sell other financial instruments at specific terms at specified future dates. Each of these financial instruments contains varying degrees of off-balance sheet risk whereby changes in the fair values of the securities underlying the financial instruments or fluctuations in interest rates and index values may exceed the amounts recognized in the condensed consolidated balance sheets.

Securities sold, not yet purchased are recorded as liabilities in the condensed consolidated balance sheets and have market risk to the extent that the Company, in satisfying its obligations, may be required to purchase securities at a higher value than that recorded in the condensed consolidated balance sheets. The Company’s investments in securities and commodities and amounts due from brokers are partially restricted until the Company satisfies the obligation to deliver securities sold, not yet purchased.

Forward and futures contracts are a commitment to purchase or sell financial instruments, currencies or commodities at a future date at a negotiated rate. Forward and futures contracts expose the Company to market risks to the extent that adverse changes occur to the underlying financial instruments such as currency rates or equity index fluctuations.

Option contracts give the purchaser the right, but not the obligation, to purchase from or sell to the option writer financial instruments, commodities or currencies within a defined time period for a specified price. The premium received by the Company upon writing an option contract is recorded as a liability, marked to market on a daily basis and is included in securities sold, not yet purchased in the condensed consolidated balance sheets. In writing an option, the Company bears the market risk of an unfavorable change in the financial instrument underlying the written option. Exercise of an option written by the Company could result in the Company selling or buying a financial instrument at a price different from the current fair value.

In the normal course of trading activities in its investment portfolio, the Company trades and holds certain derivative contracts, such as written options, which constitute guarantees. The maximum payout for written put options is limited to the number of contracts written and the related strike prices and the maximum payout for written call options is dependent upon the market price of the underlying security at the date of a payout event. As of June 30, 2018 , the investment portfolio had a maximum payout amount of approximately $653.4 million ( December 31, 2017 - $ 399.2 million ) relating to written put option contracts with expiration ranging from one month to seven months from the balance sheet date. The maximum payout amount could be offset by the subsequent sale, if any, of assets obtained via the settlement of a payout event. The fair value of these written put options as of June 30, 2018 was $4.4 million ( December 31, 2017 - $ 3.5 million) and is included in securities sold, not yet purchased in the condensed consolidated balance sheets.

Swaption contracts give the Company the right, but not the obligation, to enter into a specified interest-rate swap within a specified period of time. The Company’s market and counterparty credit risk is limited to the premium paid to enter into the swaption contract and net unrealized gains.

Total return swaps, contracts for differences, index swaps, and interest rate swaps that involve the exchange of cash flows between the Company and counterparties are based on the change in the fair value of a particular equity, index, or interest rate on a specified notional holding. The use of these contracts exposes the Company to market risks equivalent to actually holding securities of the notional value but typically involve little capital commitment relative to the exposure achieved. The gains or losses of the Company may therefore be magnified on the capital commitment.

Credit derivatives

Credit default swaps protect the buyer against the loss of principal on one or more underlying bonds, loans, or mortgages in the event the issuer suffers a credit event. Typical credit events include failure to pay or restructuring of obligations, bankruptcy, dissolution or insolvency of the underlying issuer. The buyer of the protection pays an initial and/or a periodic premium to the seller and receives protection for the period of the contract. If there is not a credit event, as defined in the contract, the buyer receives no payments from the seller. If there is a credit event, the buyer receives a payment from the seller of protection as calculated by the contract between the two parties.

The Company may also enter into index and/or basket credit default swaps where the credit derivative may reference a basket of single-name credit default swaps or a broad-based index. Generally, in the event of a default on one of the underlying names, the buyer will receive a pro-rata portion of the total notional amount of the credit default index or basket contract from the seller. When the Company purchases single-name, index and basket credit default swaps, the Company is exposed to counterparty nonperformance.

Upon selling credit default swap protection, the Company may expose itself to the risk of loss from related credit events specified in the contract. Credit spreads of the underlying positions together with the period of expiration is indicative of the likelihood of a credit event under the credit default swap contract and the Company’s risk of loss. Higher credit spreads and shorter expiration dates are indicative of a higher likelihood of a credit event resulting in the Company’s payment to the buyer of protection. Lower credit spreads and longer expiration dates would indicate the opposite and lowers the likelihood the Company needs to pay the buyer of protection. As of June 30, 2018 , there was no cash collateral received specifically related to written credit default swaps as collateral is based on the net exposure associated with all derivative instruments subject to applicable netting agreements with counterparties and may not be specific to any individual derivative contract.

The following table sets forth certain information related to the Company’s written credit derivatives as of June 30, 2018 and December 31, 2017 :



June 30, 2018	Maximum Payout/ Notional Amount (by period of expiration)						Fair Value of Written Credit Derivatives ⁽²⁾
Credit Spreads on underlying (basis points)	0-5 years		5 years or Greater Expiring Through 2047		Total Written Credit Default Swaps ⁽¹⁾		Asset		Liability		Net Asset/(Liability)
Single name (0 - 250)	$	2,375	$	2,628	$	5,003	$	—	$	2,147	$	(2,147	)

December 31, 2017	Maximum Payout/ Notional Amount (by period of expiration)						Fair Value of Written Credit Derivatives ⁽²⁾
Credit Spreads on underlying (basis points)	0-5 years		5 years or Greater Expiring Through 2047		Total Written Credit Default Swaps ⁽¹⁾		Asset		Liability		Net Asset/(Liability)
Single name (0 - 250)	$	—	$	2,351	$	2,351	$	—	$	2,085	$	(2,085	)


(1)	As of June 30, 2018 and December 31, 2017 , the Company did not hold any offsetting buy protection credit derivatives with the same underlying reference obligation.


(2)	Fair value amounts of derivative contracts are shown on a gross basis prior to cash collateral or counterparty netting.

Concentrations of credit risk

Investments

In addition to off-balance sheet risks related to specific financial instruments, the Company may be subject to concentrations of credit risk with certain counterparties. Substantially all securities transactions and individual counterparty concentrations are with major securities firms, such as prime brokers or their affiliates. However, the Company reduces its credit risk with counterparties by entering into master netting agreements. Therefore, assets represent the Company’s greater unrealized gains less unrealized losses for derivative contracts in which the Company has master netting agreements. Similarly, liabilities represent the Company’s greater unrealized losses less unrealized gains for derivative contracts in which the Company has master netting agreements. Furthermore, the Company obtains collateral from counterparties to reduce its exposure to counterparty credit risk.

The Company’s maximum exposure to credit risk associated with counterparty nonperformance on derivative contracts is limited to the net unrealized gains by counterparties inherent in such contracts which are recognized in the condensed consolidated balance sheets. As of June 30, 2018 , the Company’s maximum counterparty credit risk exposure was $43.2 million ( December 31, 2017 - $ 76.4 million).

Underwriting

The Company is exposed to credit risk through reinsurance contracts with companies that write credit risk insurance. The Company’s portfolio of risk is predominantly U.S. mortgage insurance and mortgage credit risk transfer. The Company provides its clients in these lines of business with reinsurance protection against credit deterioration, defaults or other types of financial non-performance. Loss experience in these lines of business has been very good but is cyclical and is affected by the state of the general economic environment. The Company proactively manages the risks associated with these credit-sensitive lines of business by closely monitoring its risk aggregation and by diversifying the underlying risks where possible. The Company has bought some retrocessional coverage against a subset of these risks.

The Company has exposure to credit risk as it relates to its business written through brokers, if any of the Company’s brokers are unable to fulfill their contractual obligations with respect to payments to the Company. In addition, in some jurisdictions, if the broker fails to make payments to the insured under the Company’s policy, the Company may remain liable to the insured for the deficiency. The Company’s exposure to such credit risk is somewhat mitigated in certain jurisdictions by contractual terms.

The Company has exposure to credit risk related to balances receivable under our reinsurance contracts, including funds withheld and premiums receivable, and the possibility that counterparties may default on their obligations to the Company. The risk of counterparty default is partially mitigated by the fact that any amount owed from a reinsurance

counterparty would be netted against any losses or acquisition costs the Company would pay in the future. The Company monitors the collectability of these balances on a regular basis.

21. Commitments and Contingencies

Investments

Loan and other participation interests purchased by the Company, such as bank debt, may include revolving credit arrangements or other financing commitments obligating the Company to advance additional amounts on demand.

In the normal course of business, the Company, as part of its investment strategy, enters into contracts that contain a variety of indemnifications and warranties. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. Thus, no amounts have been accrued related to such indemnifications. The Company also indemnifies TP GP, Third Point LLC and its employees from and against any loss or expense, including, without limitation any judgment, settlement, legal fees and other costs. Any expenses related to this indemnification are reflected in net investment income in the condensed consolidated statements of income (loss) .

Financing

In February 2015, TPRUSA issued $ 115.0 million of Notes due February 13, 2025. The Notes bear interest at 7.0% and interest is payable semi-annually on February 13 and August 13 of each year. The Notes are fully and unconditionally guaranteed by Third Point Re, and, in certain circumstances specified in the indenture governing the Notes, certain existing or future subsidiaries of the Company may be required to guarantee the Notes.

Litigation

From time to time in the normal course of business, the Company may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation, the outcomes of which determine the rights and obligations under the Company’s reinsurance contracts and other contractual agreements. In some disputes, the Company may seek to enforce its rights under an agreement or to collect funds owing to it. In other matters, the Company may resist attempts by others to collect funds or enforce alleged rights. The Company is not currently involved in any material formal or informal dispute resolution procedures.

22. Segment reporting

The determination of the Company’s business segments is based on the manner in which management monitors the performance of its operations. The Company reports one operating segment, Property and Casualty Reinsurance. The Company has also identified a corporate function that includes the Company’s investment income on capital, certain general and administrative expenses related to corporate activities, interest expense and income tax expense . The Company does not manage its assets by segment; accordingly, total assets are not allocated to the segments.

The following is a summary of the Company’s operating segment results for the three and six months ended June 30, 2018 and 2017 :



	Three months ended June 30, 2018
	Property and Casualty Reinsurance			Corporate			Total
Revenues
Gross premiums written	$	49,765		$	—		$	49,765
Gross premiums ceded	(3,479		)	—			(3,479		)
Net premiums written	46,286			—			46,286
Change in net unearned premium reserves	95,207			—			95,207
Net premiums earned	141,493			—			141,493
Expenses
Loss and loss adjustment expenses incurred, net	84,000			—			84,000
Acquisition costs, net	57,584			—			57,584
General and administrative expenses	4,963			4,733			9,696
Total expenses	146,547			4,733			151,280
Net underwriting loss	(5,054		)	n/a			n/a
Net investment income	4,922			26,253			31,175
Other expenses	(3,983		)	—			(3,983		)
Interest expense	—			(2,051		)	(2,051		)
Foreign exchange gains (1)	8,847			—			8,847
Income tax expense	—			(4,390		)	(4,390		)
Net income attributable to noncontrolling interests in related party	—			(209		)	(209		)
Segment income	$	4,732		$	14,870
Net loss attributable to Third Point Re common shareholders							$	19,602

Property and Casualty Reinsurance - Underwriting Ratios (2):
Loss ratio	59.4		%
Acquisition cost ratio	40.7		%
Composite ratio	100.1		%
General and administrative expense ratio	3.5		%
Combined ratio	103.6		%

(1) Foreign exchange gains (losses) primarily result from the revaluation of foreign currency loss and loss adjustment expense reserves denominated in non-U.S. dollar. Non-U.S. dollar reinsurance assets, or balances held in trust accounts securing reinsurance liabilities generally offset reinsurance liabilities in the same non-U.S. dollar currencies resulting in minimal net exposure. As a result, the foreign exchange gains (losses) on loss and loss adjustment expense reserves in the period are offset by corresponding foreign exchange gains (losses) included in net investment income resulting from the revaluation of foreign currency reinsurance collateral held in trust accounts, which is presented as part of the Property and Casualty segment. In the three months ended March 31, 2018, the Company modified the presentation of its operating segment to allocate foreign exchange gains (losses) to the Property and Casualty Reinsurance Segment to better align with the reinsurance activities that result in these foreign exchange gains and losses. These amounts had previously been presented as part of the Company’s corporate function. Prior period segment results have been adjusted to conform to this presentation.
(2) Underwriting ratios are calculated by dividing the related expense by net premiums earned.



	Six months ended June 30, 2018
	Property and Casualty Reinsurance			Corporate			Total
Revenues
Gross premiums written	$	428,125		$	—		$	428,125
Gross premiums ceded	(18,125		)	—			(18,125		)
Net premiums written	410,000			—			410,000
Change in net unearned premium reserves	(126,021		)	—			(126,021		)
Net premiums earned	283,979			—			283,979
Expenses
Loss and loss adjustment expenses incurred, net	176,620			—			176,620
Acquisition costs, net	108,989			—			108,989
General and administrative expenses	9,787			9,390			19,177
Total expenses	295,396			9,390			304,786
Net underwriting loss	(11,417		)	n/a			n/a
Net investment income	7,521			21,446			28,967
Other expenses	(7,978		)	—			(7,978		)
Interest expense	—			(4,080		)	(4,080		)
Foreign exchange gains (1)	2,236			—			2,236
Income tax expense	—			(4,518		)	(4,518		)
Net income attributable to noncontrolling interests in related party	—			(219		)	(219		)
Segment income (loss)	$	(9,638	)	$	3,239
Net loss attributable to Third Point Re common shareholders							$	(6,399	)

Property and Casualty Reinsurance - Underwriting Ratios (2):
Loss ratio	62.2		%
Acquisition cost ratio	38.4		%
Composite ratio	100.6		%
General and administrative expense ratio	3.4		%
Combined ratio	104.0		%

(1) Foreign exchange gains (losses) primarily result from the revaluation of foreign currency loss and loss adjustment expense reserves denominated in non-U.S. dollar. Non-U.S. dollar reinsurance assets, or balances held in trust accounts securing reinsurance liabilities generally offset reinsurance liabilities in the same non-U.S. dollar currencies resulting in minimal net exposure. As a result, the foreign exchange gains (losses) on loss and loss adjustment expense reserves in the period are offset by corresponding foreign exchange gains (losses) included in net investment income resulting from the revaluation of foreign currency reinsurance collateral held in trust accounts, which is presented as part of the Property and Casualty segment. In the three months ended March 31, 2018, the Company modified the presentation of its operating segment to allocate foreign exchange gains (losses) to the Property and Casualty Reinsurance Segment to better align with the reinsurance activities that result in these foreign exchange gains and losses. These amounts had previously been presented as part of the Company’s corporate function. Prior period segment results have been adjusted to conform to this presentation.
(2) Underwriting ratios are calculated by dividing the related expense by net premiums earned.



	Three months ended June 30, 2017
	Property and Casualty Reinsurance			Corporate			Total
Revenues
Gross premiums written	$	156,564		$	—		$	156,564
Gross premiums ceded	(1,425		)	—			(1,425		)
Net premiums written	155,139			—			155,139
Change in net unearned premium reserves	18,419			—			18,419
Net premiums earned	173,558			—			173,558
Expenses
Loss and loss adjustment expenses incurred, net	107,379			—			107,379
Acquisition costs, net	68,641			—			68,641
General and administrative expenses	9,649			5,365			15,014
Total expenses	185,669			5,365			191,034
Net underwriting loss	(12,111		)	n/a			n/a
Net investment income	31,206			76,119			107,325
Other expenses	(2,105		)	—			(2,105		)
Interest expense	—			(2,051		)	(2,051		)
Foreign exchange losses (1)	(4,781		)	—			(4,781		)
Income tax expense	—			(5,307		)	(5,307		)
Net income attributable to noncontrolling interests in related party	—			(1,027		)	(1,027		)
Segment income	$	12,209		$	62,369
Net income available to Third Point Re common shareholders							$	74,578

Property and Casualty Reinsurance - Underwriting Ratios (2):
Loss ratio	61.9		%
Acquisition cost ratio	39.5		%
Composite ratio	101.4		%
General and administrative expense ratio	5.6		%
Combined ratio	107.0		%

(1) Foreign exchange gains (losses) primarily result from the revaluation of foreign currency loss and loss adjustment expense reserves denominated in non-U.S. dollar. Non-U.S. dollar reinsurance assets, or balances held in trust accounts securing reinsurance liabilities generally offset reinsurance liabilities in the same non-U.S. dollar currencies resulting in minimal net exposure. As a result, the foreign exchange gains (losses) on loss and loss adjustment expense reserves in the period are offset by corresponding foreign exchange gains (losses) included in net investment income resulting from the revaluation of foreign currency reinsurance collateral held in trust accounts, which is presented as part of the Property and Casualty segment. In the three months ended March 31, 2018, the Company modified the presentation of its operating segment to allocate foreign exchange gains (losses) to the Property and Casualty Reinsurance Segment to better align with the reinsurance activities that result in these foreign exchange gains and losses. These amounts had previously been presented as part of the Company’s corporate function. Prior period segment results have been adjusted to conform to this presentation.
(2) Underwriting ratios are calculated by dividing the related expense by net premiums earned.



	Six months ended June 30, 2017
	Property and Casualty Reinsurance			Corporate			Total
Revenues
Gross premiums written	$	302,918		$	—		$	302,918
Gross premiums ceded	(2,550		)	—			(2,550		)
Net premiums written	300,368			—			300,368
Change in net unearned premium reserves	11,199			—			11,199
Net premiums earned	311,567			—			311,567
Expenses
Loss and loss adjustment expenses incurred, net	193,274			—			193,274
Acquisition costs, net	123,093			—			123,093
General and administrative expenses	15,961			9,625			25,586
Total expenses	332,328			9,625			341,953
Net underwriting loss	(20,761		)	n/a			n/a
Net investment income	67,326			168,509			235,835
Other expenses	(5,006		)	—			(5,006		)
Interest expense	—			(4,077		)	(4,077		)
Foreign exchange losses (1)	(4,796		)	—			(4,796		)
Income tax expense	—			(10,605		)	(10,605		)
Net income attributable to noncontrolling interests in related party	—			(2,201		)	(2,201		)
Segment income	$	36,763		$	142,001
Net income available to Third Point Re common shareholders							$	178,764

Property and Casualty Reinsurance - Underwriting Ratios (2):
Loss ratio	62.0		%
Acquisition cost ratio	39.5		%
Composite ratio	101.5		%
General and administrative expense ratio	5.1		%
Combined ratio	106.6		%

(1) Foreign exchange gains (losses) primarily result from the revaluation of foreign currency loss and loss adjustment expense reserves denominated in non-U.S. dollar. Non-U.S. dollar reinsurance assets, or balances held in trust accounts securing reinsurance liabilities generally offset reinsurance liabilities in the same non-U.S. dollar currencies resulting in minimal net exposure. As a result, the foreign exchange gains (losses) on loss and loss adjustment expense reserves in the period are offset by corresponding foreign exchange gains (losses) included in net investment income resulting from the revaluation of foreign currency reinsurance collateral held in trust accounts, which is presented as part of the Property and Casualty segment. In the three months ended March 31, 2018, the Company modified the presentation of its operating segment to allocate foreign exchange gains (losses) to the Property and Casualty Reinsurance Segment to better align with the reinsurance activities that result in these foreign exchange gains and losses. These amounts had previously been presented as part of the Company’s corporate function. Prior period segment results have been adjusted to conform to this presentation.
(2) Underwriting ratios are calculated by dividing the related expense by net premiums earned.

The following table lists the number of contracts that individually contributed more than 10% of total gross premiums written for the three and six months ended June 30, 2018 and 2017 as a percentage of total gross premiums written in the relevant period:



	Three months ended				Six months ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Largest contract	32.8	%	65.9	%	21.4	%	34.0	%
Second largest contract	15.4	%	12.9	%	n/a		17.9	%
Third largest contract	13.8	%	n/a		n/a		n/a
Total for contracts contributing greater than 10% each	62.0	%	78.8	%	21.4	%	51.9	%
Total for contracts contributing less than 10% each	38.0	%	21.2	%	78.6	%	48.1	%
	100.0	%	100.0	%	100.0	%	100.0	%

The following table provides a breakdown of the Company’s gross premiums written by line of business for the three and six months ended June 30, 2018 and 2017 :



	Three months ended									Six months ended
	June 30, 2018				June 30, 2017					June 30, 2018				June 30, 2017
Property	$	1,660	3.3	%	$	(8,827	)	(5.6	)%	$	2,029	0.5	%	$	(8,815	)	(2.9	)%
Casualty	43,510		87.4	%	15,008			9.6	%	196,730		46.0	%	102,213			33.7	%
Specialty	254		0.6	%	41,032			26.2	%	225,025		52.5	%	100,169			33.1	%
Total prospective reinsurance contracts	45,424		91.3	%	47,213			30.2	%	423,784		99.0	%	193,567			63.9	%
Retroactive reinsurance contracts	4,341		8.7	%	109,351			69.8	%	4,341		1.0	%	109,351			36.1	%
	$	49,765	100.0	%	$	156,564		100.0	%	$	428,125	100.0	%	$	302,918		100.0	%

Substantially all of the Company’s business is sourced through reinsurance brokers. The following table sets forth the Company’s premiums written by source that individually contributed more than 10% of total gross premiums written for the three and six months ended June 30, 2018 and 2017 :



	Three months ended								Six months ended
	June 30, 2018				June 30, 2017				June 30, 2018				June 30, 2017
Largest broker	$	19,858	39.9	%	$	107,612	68.7	%	$	165,582	38.7	%	$	107,612	35.5	%
Second largest broker	n/a		n/a		22,448		14.3	%	159,413		37.2	%	73,499		24.3	%
Third largest broker	n/a		n/a		n/a		n/a		52,982		12.4	%	35,269		11.6	%
Fourth largest broker	n/a		n/a		n/a		n/a		n/a		n/a		31,853		10.5	%
Other	29,907		60.1	%	26,504		17.0	%	50,148		11.7	%	54,685		18.1	%
	$	49,765	100.0	%	$	156,564	100.0	%	$	428,125	100.0	%	$	302,918	100.0	%

The following table provides a breakdown of the Company’s gross premiums written by domicile of the ceding companies for the three and six months ended June 30, 2018 and 2017 :



	Three months ended								Six months ended
	June 30, 2018				June 30, 2017				June 30, 2018				June 30, 2017
United States	$	31,400	63.1	%	$	1,340	0.8	%	$	264,271	61.7	%	$	43,769	14.4	%
Bermuda	3,357		6.7	%	—		—	%	73,710		17.2	%	54,075		17.9	%
United Kingdom	15,008		30.2	%	150,744		96.3	%	66,993		15.7	%	200,594		66.2	%
Other	—		—	%	4,480		2.9	%	23,151		5.4	%	4,480		1.5	%
	$	49,765	100.0	%	$	156,564	100.0	%	$	428,125	100.0	%	$	302,918	100.0	%

23. Subsequent events

Change in Investment Management Structure

On July 31, 2018, Third Point Re, Third Point Re BDA and Third Point Re USA entered into the Amended and Restated Exempted Limited Partnership Agreement (“LPA”) of Third Point Enhanced LP (“TP Fund”) with Third Point Advisors LLC (“TP GP”) and others, effective August 31, 2018. In accordance with the LPA, TP GP will serve as the general partner of TP Fund. On July 31, 2018, Third Point Re BDA and Third Point Re USA, together the “TPRE Limited Partners”, and TP Fund executed a Subscription Agreement, pursuant to which the TPRE Limited Partners will transfer assets and related liabilities (other than certain collateral assets) from their separate accounts to TP Fund, and TP Fund will issue limited partner interests to the TPRE Limited Partners proportionate to and based on the net asset value of the assets and related liabilities transferred by each such entity on the applicable transfer date. Certain collateral assets consisting of debt securities and restricted cash will not be transferred to TP Fund. Such collateral assets will be managed by Third Point LLC under a separate investment management agreement. Third Point Re BDA and Third Point Re USA will begin transferring the assets and related liabilities from their separate accounts to TP Fund on August 31, 2018, and substantially all of the assets are expected to be transferred by September 30, 2018. Amended and Restated Joint Venture and Investment Management Agreement dated June 22, 2016 between Third Point Re, Third Point Re BDA, Third Point LLC and TP GP and the Amended and Restated Joint Venture and Investment Management Agreement dated June 22, 2016 between Third Point Re USA, Third Point Re (USA) Holdings Inc., Third Point LLC and TP GP (the “Existing Agreements”) will terminate on the date that all assets and related liabilities to be transferred to TP Fund under the Subscription Agreement have been transferred to TP Fund.

The Company expects its overall investment exposures, returns, fees paid to Third Point LLC and TP GP as well as the investment guidelines, liquidity and redemption rights to be generally similar under the new LPA and TP Fund compared to what would have been expected under the separate accounts managed under the Existing Agreements, assuming similar underlying investment portfolio returns and exposure levels. However, there can be no assurance of such results.

As a result of the change described above, the Company’s investments in TP Fund will be presented on the condensed consolidated balance sheets as an investment in a related party investment fund. The Company does not expect significant changes to the presentation of its condensed consolidated statements of income as a result of this change. If the LPA had been in effect on June 30, 2018, we anticipate that the Company’s selected consolidated balance sheets data as of June 30, 2018 would have appeared as follows:



	June 30, 2018
	As previously reported		Pro-forma under new investment structure
Selected Consolidated Balance Sheets Data:
Total investments in securities ⁽¹⁾	$	3,098,125	$	1,991,129
Total assets	4,909,619		3,504,693
Total liabilities	3,305,530		1,912,939
Shareholders’ equity attributable to Third Point Re common shareholders	1,591,754		1,591,754
Total shareholders’ equity	$	1,596,910	$	1,591,754

(1) Total investments in securities included in “Pro-forma under new investment structure” include the Company’s investment in related party investment fund, Third Point Enhanced LP, and collateral assets consisting of debt securities.

Unsecured Revolving Credit and Letter of Credit Facility Agreement

On July 31, 2018, Third Point Re, Third Point Re BDA and Third Point Re USA entered into an Unsecured Revolving Credit and Letter of Credit Facility Agreement (the “Credit Agreement”) with SunTrust Bank, SunTrust Robinson Humphrey, Inc., RBC Capital Markets and ING Capital.

The Credit Agreement provides for the issuance of up to $200.0 million of letters of credit to support obligations in connection with the reinsurance business of Third Point Re BDA and Third Point Re USA. Letters of credit fees are payable on account of each letter of credit issued under the unsecured facility at a rate of 1.50% per annum and the commitment fee is 0.20% per annum. The Credit Agreement expires on July 30, 2019.

The Credit Agreement contains covenants that include, among other things:


(i)	the requirement that the Company initially maintain a minimum level of consolidated net worth of at least $1,114.2 million,


(ii)	the requirement that the Company maintain at all times a consolidated total debt to consolidated total capital ratio not greater than 0.35 : 1.00 , and


(iii)	the requirement that Third Point Re BDA and Third Point Re USA both maintain a financial strength rating of at least “A-” through November 30, 2018 and “B++” thereafter by A.M. Best.

In addition, the Credit Agreement contains customary negative covenants applicable to the Company and its subsidiaries, including limitations on the ability to pay dividends and other payments in respect of equity interests at any time that the Company is otherwise in default with respect to certain provisions under the respective Credit Agreement, limitations on the ability to incur liens, sell assets, merge or consolidate with others, enter into transactions with affiliates, and limitations on the ability of its subsidiaries to incur indebtedness. The Credit Agreement also contains customary affirmative covenants, representations and warranties and events of default for credit facilities of its type.

24. Supplemental guarantor information

Third Point Re fully and unconditionally guarantees the $115.0 million of Notes issued by TPRUSA, a wholly owned subsidiary.

The following information sets forth condensed consolidating balance sheets as of June 30, 2018 and December 31, 2017 , condensed consolidating statements of income for the three and six months ended June 30, 2018 and 2017 and condensed consolidating statements of cash flows for the six months ended June 30, 2018 and 2017 for Third Point Re, TPRUSA and the non-guarantor subsidiaries of Third Point Re. Investments in subsidiaries are accounted for on the equity method; accordingly, entries necessary to consolidate the parent guarantor, TPRUSA and all other subsidiaries are reflected in the eliminations column.



CONDENSED CONSOLIDATING BALANCE SHEET
As of June 30, 2018

	Third Point Re			TPRUSA			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Equity securities	$	—		$	—		$	2,427,768	$	—		$	2,427,768
Debt securities	—			—			617,913		—			617,913
Other investments	—			—			52,444		—			52,444
Total investments in securities	—			—			3,098,125		—			3,098,125
Cash and cash equivalents	1			190			17,260		—			17,451
Restricted cash and cash equivalents	—			—			569,968		—			569,968
Investment in subsidiaries	1,630,308			271,249			165,315		(2,066,872		)	—
Due from brokers	—			—			258,764		—			258,764
Derivative assets, at fair value	—			—			34,738		—			34,738
Interest and dividends receivable	—			—			4,385		—			4,385
Reinsurance balances receivable	—			—			631,952		—			631,952
Deferred acquisition costs, net	—			—			264,408		—			264,408
Unearned premiums ceded	—			—			17,606		—			17,606
Loss and loss adjustment expenses recoverable	—			—			1,414		—			1,414
Amounts due from (to) affiliates	(37,588		)	77			37,511		—			—
Other assets	254			—			10,554		—			10,808
Total assets	$	1,592,975		$	271,516		$	5,112,000	$	(2,066,872	)	$	4,909,619
Liabilities
Accounts payable and accrued expenses (1)	$	1,221		$	(9,663	)	$	20,486	$	—		$	12,044
Reinsurance balances payable	—			—			74,013		—			74,013
Deposit liabilities	—			—			129,700		—			129,700
Unearned premium reserves	—			—			792,096		—			792,096
Loss and loss adjustment expense reserves	—			—			791,313		—			791,313
Securities sold, not yet purchased, at fair value	—			—			443,216		—			443,216
Due to brokers	—			—			926,588		—			926,588
Derivative liabilities, at fair value	—			—			12,380		—			12,380
Performance fee payable to related party	—			—			4,641		—			4,641
Interest and dividends payable	—			3,022			2,696		—			5,718
Senior notes payable, net of deferred costs	—			113,821			—		—			113,821
Total liabilities	1,221			107,180			3,197,129		—			3,305,530
Redeemable noncontrolling interests in related party	—			—			7,179		—			7,179
Shareholders’ equity
Common shares	9,963			—			1,239		(1,239		)	9,963
Additional paid-in capital	994,170			165,535			1,534,496		(1,700,031		)	994,170
Retained earnings (deficit)	587,621			(1,199		)	366,801		(365,602		)	587,621
Shareholders’ equity attributable to Third Point Re common shareholders	1,591,754			164,336			1,902,536		(2,066,872		)	1,591,754
Noncontrolling interests in related party	—			—			5,156		—			5,156
Total shareholders’ equity	1,591,754			164,336			1,907,692		(2,066,872		)	1,596,910
Total liabilities, noncontrolling interests and shareholders’ equity	$	1,592,975		$	271,516		$	5,112,000	$	(2,066,872	)	$	4,909,619

(1) Negative balance of $9.7 million represents net deferred tax assets that are offset by net deferred tax liabilities in Third Point Re USA of $10.0 million , resulting in a net liability position as of June 30, 2018 .



CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2017

	Third Point Re			TPRUSA			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Equity securities	$	—		$	—		$	2,283,050	$	—		$	2,283,050
Debt securities	—			—			675,158		—			675,158
Other investments	—			—			37,731		—			37,731
Total investments in securities	—			—			2,995,939		—			2,995,939
Cash and cash equivalents	9			199			7,989		—			8,197
Restricted cash and cash equivalents	—			—			541,136		—			541,136
Investment in subsidiaries	1,657,467			274,272			164,909		(2,096,648		)	—
Due from brokers	—			—			305,093		—			305,093
Derivative assets, at fair value	—			—			73,372		—			73,372
Interest and dividends receivable	—			—			3,774		—			3,774
Reinsurance balances receivable	—			—			476,008		—			476,008
Deferred acquisition costs, net	—			—			258,793		—			258,793
Unearned premiums ceded	—			—			1,049		—			1,049
Loss and loss adjustment expenses recoverable	—			—			1,113		—			1,113
Amounts due from (to) affiliates	(1,288		)	412			876		—			—
Other assets	664			—			6,656		—			7,320
Total assets	$	1,656,852		$	274,883		$	4,836,707	$	(2,096,648	)	$	4,671,794
Liabilities
Accounts payable and accrued expenses (1)	$	763		$	(8,805	)	$	42,674	$	—		$	34,632
Reinsurance balances payable	—			—			41,614		—			41,614
Deposit liabilities	—			—			129,133		—			129,133
Unearned premium reserves	—			—			649,518		—			649,518
Loss and loss adjustment expense reserves	—			—			720,570		—			720,570
Securities sold, not yet purchased, at fair value	—			—			394,278		—			394,278
Securities sold under an agreement to repurchase	—			—			29,618		—			29,618
Due to brokers	—			—			770,205		—			770,205
Derivative liabilities, at fair value	—			—			14,503		—			14,503
Interest and dividends payable	—			3,055			1,220		—			4,275
Senior notes payable, net of deferred costs	—			113,733			—		—			113,733
Total liabilities	763			107,983			2,793,333		—			2,902,079
Redeemable noncontrolling interests in related party	—			—			108,219		—			108,219
Shareholders’ equity
Common shares	10,723			—			1,250		(1,250		)	10,723
Treasury shares	(48,253		)	—			—		—			(48,253		)
Additional paid-in capital	1,099,599			165,097			1,531,770		(1,696,867		)	1,099,599
Retained earnings (deficit)	594,020			1,803			396,728		(398,531		)	594,020
Shareholders' equity attributable to Third Point Re common shareholders	1,656,089			166,900			1,929,748		(2,096,648		)	1,656,089
Noncontrolling interests in related party	—			—			5,407		—			5,407
Total shareholders' equity	1,656,089			166,900			1,935,155		(2,096,648		)	1,661,496
Total liabilities, noncontrolling interests and shareholders’ equity	$	1,656,852		$	274,883		$	4,836,707	$	(2,096,648	)	$	4,671,794

(1) Negative balance of $8.8 million represents net deferred tax assets that are offset by net deferred tax liabilities in Third Point Re USA of $9.9 million , resulting in a net liability position as of December 31, 2017.



CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)

For the three months ended June 30, 2018	Third Point Re			TPRUSA			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues
Gross premiums written	$	—		$	—		$	49,765		$	—		$	49,765
Gross premiums ceded	—			—			(3,479		)	—			(3,479		)
Net premiums written	—			—			46,286			—			46,286
Change in net unearned premium reserves	—			—			95,207			—			95,207
Net premiums earned	—			—			141,493			—			141,493
Net investment income	—			—			31,175			—			31,175
Equity in earnings (losses) of subsidiaries	21,319			1,847			(13		)	(23,153		)	—
Total revenues	21,319			1,847			172,655			(23,153		)	172,668
Expenses
Loss and loss adjustment expenses incurred, net	—			—			84,000			—			84,000
Acquisition costs, net	—			—			57,584			—			57,584
General and administrative expenses	1,717			19			7,960			—			9,696
Other expenses	—			—			3,983			—			3,983
Interest expense	—			2,051			—			—			2,051
Foreign exchange gains	—			—			(8,847		)	—			(8,847		)
Total expenses	1,717			2,070			144,680			—			148,467
Income (loss) before income tax (expense) benefit	19,602			(223		)	27,975			(23,153		)	24,201
Income tax (expense) benefit	—			435			(4,825		)	—			(4,390		)
Net income	19,602			212			23,150			(23,153		)	19,811
Net income attributable to noncontrolling interests in related party	—			—			(209		)	—			(209		)
Net income available to Third Point Re common shareholders	$	19,602		$	212		$	22,941		$	(23,153	)	$	19,602


For the six months ended June 30, 2018	Third Point Re			TPRUSA			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues
Gross premiums written	$	—		$	—		$	428,125		$	—		$	428,125
Gross premiums ceded	—			—			(18,125		)	—			(18,125		)
Net premiums written	—			—			410,000			—			410,000
Change in net unearned premium reserves	—			—			(126,021		)	—			(126,021		)
Net premiums earned	—			—			283,979			—			283,979
Net investment income	—			—			28,967			—			28,967
Equity in earnings (losses) of subsidiaries	(3,038		)	239			(30		)	2,829			—
Total revenues	(3,038		)	239			312,916			2,829			312,946
Expenses
Loss and loss adjustment expenses incurred, net	—			—			176,620			—			176,620
Acquisition costs, net	—			—			108,989			—			108,989
General and administrative expenses	3,361			22			15,794			—			19,177
Other expenses	—			—			7,978			—			7,978
Interest expense	—			4,080			—			—			4,080
Foreign exchange gains	—			—			(2,236		)	—			(2,236		)
Total expenses	3,361			4,102			307,145			—			314,608
Income (loss) before income tax (expense) benefit	(6,399		)	(3,863		)	5,771			2,829			(1,662		)
Income tax (expense) benefit	—			861			(5,379		)	—			(4,518		)
Net income (loss)	(6,399		)	(3,002		)	392			2,829			(6,180		)
Net income attributable to noncontrolling interests in related party	—			—			(219		)	—			(219		)
Net income (loss) available (attributable) to Third Point Re common shareholders	$	(6,399	)	$	(3,002	)	$	173		$	2,829		$	(6,399	)



CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the three months ended June 30, 2017	Third Point Re		TPRUSA		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues
Gross premiums written	$	—	$	—	$	156,564		$	—		$	156,564
Gross premiums ceded	—		—		(1,425		)	—			(1,425		)
Net premiums written	—		—		155,139			—			155,139
Change in net unearned premium reserves	—		—		18,419			—			18,419
Net premiums earned	—		—		173,558			—			173,558
Net investment income	—		—		107,325			—			107,325
Equity in earnings (losses) of subsidiaries	75,843		4,843		(10		)	(80,676		)	—
Total revenues	75,843		4,843		280,873			(80,676		)	280,883
Expenses
Loss and loss adjustment expenses incurred, net	—		—		107,379			—			107,379
Acquisition costs, net	—		—		68,641			—			68,641
General and administrative expenses	1,265		12		13,737			—			15,014
Other expenses	—		—		2,105			—			2,105
Interest expense	—		2,051		—			—			2,051
Foreign exchange losses	—		—		4,781			—			4,781
Total expenses	1,265		2,063		196,643			—			199,971
Income before income tax (expense) benefit	74,578		2,780		84,230			(80,676		)	80,912
Income tax (expense) benefit	—		722		(6,029		)	—			(5,307		)
Net income	74,578		3,502		78,201			(80,676		)	75,605
Net income attributable to noncontrolling interests in related party	—		—		(1,027		)	—			(1,027		)
Net income available to Third Point Re common shareholders	$	74,578	$	3,502	$	77,174		$	(80,676	)	$	74,578


For the six months ended June 30, 2017	Third Point Re		TPRUSA		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues
Gross premiums written	$	—	$	—	$	302,918		$	—		$	302,918
Gross premiums ceded	—		—		(2,550		)	—			(2,550		)
Net premiums written	—		—		300,368			—			300,368
Change in net unearned premium reserves	—		—		11,199			—			11,199
Net premiums earned	—		—		311,567			—			311,567
Net investment income	—		—		235,835			—			235,835
Equity in earnings (losses) of subsidiaries	181,213		13,832		(5		)	(195,040		)	—
Total revenues	181,213		13,832		547,397			(195,040		)	547,402
Expenses
Loss and loss adjustment expenses incurred, net	—		—		193,274			—			193,274
Acquisition costs, net	—		—		123,093			—			123,093
General and administrative expenses	2,449		20		23,117			—			25,586
Other expenses	—		—		5,006			—			5,006
Interest expense	—		4,077		—			—			4,077
Foreign exchange losses	—		—		4,796			—			4,796
Total expenses	2,449		4,097		349,286			—			355,832
Income before income tax (expense) benefit	178,764		9,735		198,111			(195,040		)	191,570
Income tax (expense) benefit	—		1,434		(12,039		)	—			(10,605		)
Net income	178,764		11,169		186,072			(195,040		)	180,965
Net income attributable to noncontrolling interests in related party	—		—		(2,201		)	—			(2,201		)
Net income available to Third Point Re common shareholders	$	178,764	$	11,169	$	183,871		$	(195,040	)	$	178,764



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the six months ended June 30, 2018	Third Point Re			TPRUSA			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating activities
Net income (loss)	$	(6,399	)	$	(3,002	)	$	392		$	2,829		$	(6,180	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Equity in (earnings) losses of subsidiaries	3,038			(239		)	30			(2,829		)	—
Share compensation expense	279			—			2,279			—			2,558
Net interest expense on deposit liabilities	—			—			2,449			—			2,449
Net unrealized loss on investments and derivatives	—			—			95,513			—			95,513
Net realized gain on investments and derivatives	—			—			(130,500		)	—			(130,500		)
Net foreign exchange gains	—			—			(2,236		)	—			(2,236		)
Amortization of premium and accretion of discount, net	—			88			2,825			—			2,913
Changes in assets and liabilities:
Reinsurance balances receivable	—			—			(157,498		)	—			(157,498		)
Deferred acquisition costs, net	—			—			(5,615		)	—			(5,615		)
Unearned premiums ceded	—			—			(16,557		)	—			(16,557		)
Loss and loss adjustment expenses recoverable	—			—			(301		)	—			(301		)
Other assets	410			—			(3,947		)	—			(3,537		)
Interest and dividends receivable, net	—			(33		)	865			—			832
Unearned premium reserves	—			—			142,578			—			142,578
Loss and loss adjustment expense reserves	—			—			74,655			—			74,655
Accounts payable and accrued expenses	458			(858		)	(22,164		)	—			(22,564		)
Reinsurance balances payable	—			—			32,208			—			32,208
Performance fees payable to related party	—			—			4,641			—			4,641
Amounts due from (to) affiliates	36,300			335			(36,635		)	—			—
Net cash provided by (used in) operating activities	34,086			(3,709		)	(17,018		)	—			13,359
Investing activities
Purchases of investments	—			—			(2,180,138		)	—			(2,180,138		)
Proceeds from sales of investments	—			—			2,156,754			—			2,156,754
Purchases of investments to cover short sales	—			—			(590,113		)	—			(590,113		)
Proceeds from short sales of investments	—			—			628,913			—			628,913
Change in due to/from brokers, net	—			—			202,712			—			202,712
Decrease in securities sold under an agreement to repurchase	—			—			(29,618		)	—			(29,618		)
Net cash provided by investing activities	—			—			188,510			—			188,510
Financing activities
Proceeds from issuance of Third Point Re common shares, net of costs	—			—			—			—			—
Taxes paid on withholding shares	(74		)	—			—			—			(74		)
Purchases of Third Point Re common shares under share repurchase program	(60,420		)	—			—			—			(60,420		)
Decrease in deposit liabilities, net	—			—			(1,779		)	—			(1,779		)
Change in total noncontrolling interests in related party, net	—			—			(101,510		)	—			(101,510		)
Dividend received by (paid to) parent	26,400			3,700			(30,100		)	—			—
Net cash provided by (used in) financing activities	(34,094		)	3,700			(133,389		)	—			(163,783		)
Net increase (decrease) in cash, cash equivalents and restricted cash	(8		)	(9		)	38,103			—			38,086
Cash, cash equivalents and restricted cash at beginning of period	9			199			549,125			—			549,333
Cash, cash equivalents and restricted cash at end of period	$	1		$	190		$	587,228		$	—		$	587,419



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the six months ended June 30, 2017	Third Point Re			TPRUSA			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating activities
Net income	$	178,764		$	11,169		$	186,072		$	(195,040	)	$	180,965
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in (earnings) losses of subsidiaries	(181,213		)	(13,832		)	5			195,040			—
Share compensation expense	73			—			3,301			—			3,374
Net interest expense on deposit liabilities	—			—			312			—			312
Net unrealized gain on investments and derivatives	—			—			(128,168		)	—			(128,168		)
Net realized gain on investments and derivatives	—			—			(154,504		)	—			(154,504		)
Net foreign exchange losses	—			—			4,796			—			4,796
Amortization of premium and accretion of discount, net	—			88			(210		)	—			(122		)
Changes in assets and liabilities:
Reinsurance balances receivable	—			—			(85,733		)	—			(85,733		)
Deferred acquisition costs, net	—			—			18,425			—			18,425
Unearned premiums ceded	—			—			(1,938		)	—			(1,938		)
Loss and loss adjustment expenses recoverable	—			—			(1,712		)	—			(1,712		)
Other assets	302			(1,663		)	7,519			—			6,158
Interest and dividends receivable, net	—			(35		)	2,988			—			2,953
Unearned premium reserves	—			—			(9,261		)	—			(9,261		)
Loss and loss adjustment expense reserves	—			—			63,769			—			63,769
Accounts payable and accrued expenses	67			—			7,482			—			7,549
Reinsurance balances payable	—			—			22,237			—			22,237
Performance fees payable to related party	—			—			53,455			—			53,455
Amounts due from (to) affiliates	40,523			(3,831		)	(36,692		)	—			—
Net cash provided by (used in) operating activities	38,516			(8,104		)	(47,857		)	—			(17,445		)
Investing activities
Purchases of investments	—			—			(1,712,929		)	—			(1,712,929		)
Proceeds from sales of investments	—			—			1,966,027			—			1,966,027
Purchases of investments to cover short sales	—			—			(306,237		)	—			(306,237		)
Proceeds from short sales of investments	—			—			462,066			—			462,066
Change in due to/from brokers, net	—			—			(261,994		)	—			(261,994		)
Net cash provided by investing activities	—			—			146,933			—			146,933
Financing activities
Proceeds from issuance of Third Point Re common shares, net of costs	998			—			—			—			998
Purchases of Third Point Re common shares under share repurchase program	(40,864		)	—			—			—			(40,864		)
Decrease in deposit liabilities, net	—			—			(124		)	—			(124		)
Change in total noncontrolling interests in related party, net	—			—			(18,066		)	—			(18,066		)
Dividend received by (paid to) parent	—			8,300			(8,300		)	—			—
Net cash provided by (used in) financing activities	(39,866		)	8,300			(26,490		)	—			(58,056		)
Net increase (decrease) in cash, cash equivalents and restricted cash	(1,350		)	196			72,586			—			71,432
Cash, cash equivalents and restricted cash at beginning of period	1,629			79			307,183			—			308,891
Cash, cash equivalents and restricted cash at end of period	$	279		$	275		$	379,769		$	—		$	380,323

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with our unaudited condensed consolidated interim financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q.

The statements in this discussion regarding business outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and ”Special Note Regarding Forward-Looking Statements”. Our actual results may differ materially from those contained in or implied by any forward looking statements.

Special Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding our industry, business strategy, plans, goals and expectations concerning our market position, international expansion, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “may,” “believes,” “intends,” “seeks,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this Quarterly Report on Form 10-Q.

Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following:


•	results of operations fluctuate and may not be indicative of our prospects;


•	more established competitors;


•	losses exceeding reserves;


•	highly cyclical property and casualty reinsurance industry;


•	downgrade or withdrawal of ratings by rating agencies;


•	significant decrease in our capital or surplus;


•	dependence on key executives;


•	dependence on letter of credit facilities that may not be available on commercially acceptable terms;


•	inability to service our indebtedness;


•	limited cash flow and liquidity due to our indebtedness;


•	inability to raise necessary funds to pay principal or interest on debt;


•	potential lack of availability of capital in the future;


•	credit risk associated with the use of reinsurance brokers;


•	future strategic transactions such as acquisitions, dispositions, mergers or joint ventures;


•	dependence on Third Point LLC to implement our investment strategy;


•	decline in revenue due to poor performance of our investment portfolio;


•	risks associated with our investment strategy being greater than those faced by competitors;


•	termination by Third Point LLC of our investment management agreements;


•	potential conflicts of interest with Third Point LLC;


•	losses resulting from significant investment positions;


•	credit risk associated with the default on obligations of counterparties;


•	ineffective investment risk management systems;


•	fluctuations in the market value of our investment portfolio;


•	trading restrictions being placed on our investments;


•	limited termination provisions in our investment management agreements;


•	limited liquidity and lack of valuation data on our investments;


•	U.S. and global economic downturns;


•	specific characteristics of investments in mortgage-backed securities and other asset-backed securities, in securities of issues based outside the U.S., and in special situation or distressed companies;


•	loss of key employees at Third Point LLC;


•	Third Point LLC’s compensation arrangements may incentivize investments that are risky or speculative;


•	increased regulation or scrutiny of alternative investment advisers affecting our reputation;


•	suspension or revocation of our reinsurance licenses;


•	potentially being deemed an investment company under U.S. federal securities law;


•	failure of reinsurance subsidiaries to meet minimum capital and surplus requirements;


•	changes in Bermuda or other law and regulation that may have an adverse impact on our operations;


•	Third Point Re and/or Third Point Re BDA potentially becoming subject to U.S. federal income taxation;


•	potential characterization of Third Point Re and/or Third Point Re BDA as a passive foreign investment company;


•	subjection of our affiliates to the base erosion and anti-abuse tax;


•	potentially becoming subject to U.S. withholding and information reporting requirements under the Foreign Account Tax Compliance Act;


•	risks associated with the expected change in our investment management structure; and


•	other risks and factors listed under “Risk Factors” in our most recent Annual Report on Form 10-K, as updated by this Quarterly Report on Form 10-Q, and other periodic reports filed with the Securities and Exchange Commission.

Any one of these factors or a combination of these factors could materially affect our financial condition or future results of operations and could influence whether any forward-looking statements contained in this report ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

In addition, while we do, from time to time, communicate with security analysts, it is against our policy to disclose to them any material non-public information or other confidential information. Accordingly, shareholders should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts, or opinions, such reports are not our responsibility.

Unless the context otherwise indicates or requires, the terms “we,” “our,” “us,” and the “Company,” as used in this report, refer to Third Point Reinsurance Ltd. (“Third Point Re”) and its directly and indirectly owned subsidiaries, including Third Point Reinsurance Company Ltd. (“Third Point Re BDA”) and Third Point Reinsurance (USA) Ltd. (“Third Point Re USA”), as a combined entity, except where otherwise stated or where it is clear that the terms mean only Third Point Re exclusive of its subsidiaries.

Overview

We are a holding company domiciled in Bermuda. Through our reinsurance subsidiaries, we provide specialty property and casualty reinsurance products to insurance and reinsurance companies on a worldwide basis. Our goal is to deliver attractive equity returns to our shareholders by combining profitable reinsurance underwriting with superior investment management provided by Third Point LLC, our investment manager. We believe that our reinsurance and investment strategy differentiates us from our competitors.

We manage our business on the basis of one operating segment, Property and Casualty Reinsurance. We also have a corporate function that includes our investment income on capital, certain general and administrative expenses related to corporate activities, interest expense, foreign exchange (gains) losses and income tax expense .

Property and Casualty Reinsurance

We provide reinsurance products to insurance and reinsurance companies, government entities, and other risk bearing vehicles. Contracts can be written on an excess of loss basis or quota share basis, although the majority of contracts written to date have been on a quota share basis. In addition, we write contracts on both a prospective basis and a retroactive basis. Prospective reinsurance contracts cover losses incurred as a result of future insurable events. Retroactive reinsurance contracts cover the potential for changes in estimates of loss and loss adjustment expense reserves related to loss events that have occurred in the past. Retroactive reinsurance contracts can be an attractive type of contract for us as they can generate an underwriting profit should the ultimate loss and loss adjustment expenses settle for less than the initial estimate of reserves and the premiums received at the inception of the contract generate insurance float. The product lines that we currently underwrite for this operating segment are: property, casualty and specialty. We currently assume a minimal amount of property catastrophe risk and our property catastrophe exposures have remained low when compared to many other reinsurers with whom we compete.

Insurance float is an important aspect of our property and casualty reinsurance operation. In an insurance or reinsurance operation, float arises because premiums from reinsurance contracts and consideration received for deposit accounted contracts are collected before losses are paid on reinsurance contracts and payments are made on deposit accounted contracts. In some instances, the interval between cash receipts and payments can extend over many years. During this time interval, we invest the cash received and seek to generate investment returns.

We believe that over time, our property and casualty reinsurance segment will contribute to our results by both generating underwriting income as well as generating float. In addition, we hope to grow float over time as our reinsurance operations expand.

Investment Management

Our investment strategy is implemented by our investment manager, Third Point LLC, under two long-term investment management contracts. We directly own the investments that are held in two separate accounts and managed by Third Point LLC on substantially the same basis as Third Point LLC’s main hedge funds.

Change in Investment Management Structure

On July 31, 2018, Third Point Re, Third Point Re BDA and Third Point Re USA entered into the Amended and Restated Exempted Limited Partnership Agreement (“LPA”) of Third Point Enhanced LP (“TP Fund”) with Third Point Advisors LLC (“TP GP”) and others, effective August 31, 2018. In accordance with the LPA, TP GP will serve as the general partner of TP Fund. On July 31, 2018, Third Point Re BDA and Third Point Re USA, together the “TPRE Limited Partners”, and TP Fund executed a Subscription Agreement pursuant to which the TPRE Limited Partners will transfer assets and related liabilities (other than certain collateral assets) from their separate accounts to TP Fund, and TP Fund will issue limited partner interests to the TPRE Limited Partners proportionate to and based on the net asset value of the assets and related liabilities transferred by each such entity on the applicable transfer date. Certain collateral assets consisting of debt securities and restricted cash will not be transferred to TP Fund. Such collateral assets will be managed by Third Point LLC under a separate investment management agreement. Third Point Re BDA and Third Point Re USA will begin transferring the assets and related liabilities from their separate accounts to TP Fund on August 31, 2018, and substantially all of the assets are expected to be transferred by September 30, 2018. The Amended and Restated

Joint Venture and Investment Management Agreement dated June 22, 2016 between Third Point Re, Third Point Re BDA, Third Point LLC and TP GP and the Amended and Restated Joint Venture and Investment Management Agreement dated June 22, 2016 between Third Point Re USA, Third Point Re (USA) Holdings Inc., Third Point LLC and TP GP (the “Existing Agreements”) will terminate on the date that all assets and related liabilities to be transferred to TP Fund under the Subscription Agreement, described below, have been transferred to TP Fund.

Pursuant to an Investment Management Agreement between Third Point LLC and TP Fund dated July 31, 2018 (the “TP Fund IMA”), Third Point LLC will be the investment manager for TP Fund. The TP Fund IMA will continue until terminated by any party thereto upon 90 days’ prior written notice to the other party. Pursuant to the TP Fund IMA, TP Fund will pay to Third Point LLC a monthly management fee equal to 0.125% (1.5% per annum) of the net asset value of TP Fund (determined as of the beginning of the month before the accrual of the performance allocation) multiplied by an exposure multiplier. The exposure multiplier will be computed by dividing the average of the daily investment exposure leverage of TP Fund by the average of the daily investment exposure leverage of Third Point Offshore Master Fund L.P. In addition, TP Fund will reimburse Third Point LLC for certain expenses incurred by Third Point LLC in connection with the TP Fund IMA. The TP Fund IMA includes provisions limiting liability of Third Point LLC and its affiliates to specified circumstances and providing for indemnification by TP Fund for certain losses suffered by Third Point LLC or its affiliates.

We expect our overall investment exposures, returns, fees paid to Third Point LLC and TP GP as well as the investment guidelines, liquidity and redemption rights to be generally similar under the new LPA and TP Fund compared to what would have been expected under the separate accounts managed under the Existing Agreements, assuming similar underlying investment portfolio returns and exposure levels. However, there can be no assurance of such results.

In accordance with the investment guidelines under the LPA, the underlying investment portfolio of TP Fund will be managed on a basis that is substantially equivalent to Third Point Offshore Master Fund L.P., which is managed by Third Point LLC, but with increased exposures through the use of additional financial leverage. The leverage of TP Fund will be managed based on the terms of the LPA to generally target a “leverage factor” of (a) one and one half times (1.5x) for investments in liquid securities and (b) one time (1x) for investments in illiquid securities and ABS securities, in each case, as determined by TP GP in its sole discretion. In addition, pursuant to the LPA, TP GP will be required to apply the following limitations for TP Fund: (1) Composition of Investments : at least 60% of the investment portfolio will be held in debt and equity securities of publicly traded companies and governments of the Organization of Economic Co-operation and Development (“OECD”) high income countries, asset backed securities, cash, cash equivalents and gold and other precious metals; (2) Concentration of Investments : other than cash, cash equivalents and United States government obligations, TP Fund’s total exposure to any one issuer or entity will constitute no more than 15% (multiplied by the exposure multiplier described above) of the investment portfolio’s total exposure; (3) Liquidity : the portfolio of TP Fund will be invested in such fashion that the Company has a reasonable expectation that it can meet any of its liabilities as they become due; and (4) Net Exposure Limits : the net exposure may not exceed two times net asset value for more than 10 trading days in any 30-trading day period. Net exposure represents the short exposure subtracted from the long exposure in a given category. Under the LPA, the TPRE Limited Partners will have the right to withdraw funds weekly from TP Fund to pay claims and expenses as needed, to meet capital adequacy requirements and to satisfy financing obligations. The TPRE Limited Partners may also withdraw their investment upon the occurrence of certain events specified in the LPA and may withdraw their investment in full on December 31, 2021 and each successive three-year anniversary of such date. The term of TP Fund shall continue until the occurrence of certain events described in the LPA.

With respect to each of the TPRE Limited Partners, TP GP will receive a performance allocation equal to 20% of the net investment income allocated to each limited partner’s capital account in TP Fund. The performance allocation will be calculated at the end of each fiscal year of TP Fund as 20% of the net increase, if any, allocated to the limited partner’s capital account in TP Fund for such fiscal year, minus the management fee and any loss recovery account balance relating to such capital account.

As discussed above, on July 31, 2018, the TPRE Limited Partners and TP Fund executed a Subscription Agreement pursuant to which the TPRE Limited Partners will transfer certain assets and related liabilities from their separate accounts to TP Fund over a number of transfer dates beginning on August 31, 2018, and TP Fund will issue limited

partner interests proportionate to and based on the net asset value of the assets and related liabilities transferred on each applicable transfer date.

The Subscription Agreement includes provisions limiting liability of TP GP and its affiliates to specified circumstances and providing for indemnification by the TPRE Limited Partners for certain losses incurred by TP GP and its affiliates.

On July 31, 2018, Third Point Re BDA and Third Point Re USA entered into an investment management agreement with Third Point LLC (the “Collateral Assets IMA”), effective August 31, 2018, pursuant to which Third Point LLC will serve as investment manager of certain collateral assets that are not expected to be transferred to TP Fund. The Collateral Assets IMA will continue in effect for so long as either Third Point Re BDA or Third Point Re USA remains a limited partner of TP Fund.

The Collateral Assets IMA includes provisions limiting liability of Third Point LLC and its affiliates to specified circumstances and providing for indemnification by Third Point Re BDA and Third Point Re USA for certain losses incurred by Third Point LLC and its affiliates.

Third Point Re BDA and Third Point Re USA will be responsible for any and all third party expenses incurred by them or on their behalf that are directly attributable to the management of the collateral assets, other than those borne by Third Point LLC. No asset-based or performance-based compensation will be paid to Third Point LLC by Third Point Re BDA or Third Point Re USA under the Collateral Assets IMA.

Upon three business days’ prior written notice, Third Point Re BDA and Third Point Re USA may withdraw all or a portion of the collateral assets effective as of any calendar month end or on the close of business on each Wednesday during a month.

As a result of the change described above, the Company’s investments in TP Fund will be presented on the condensed consolidated balance sheets as an investment in a related party investment fund.

See Note 23 to our condensed consolidated financial statements for additional information.

Business Outlook

The reinsurance markets in which we operate have historically been cyclical. During periods of excess underwriting capacity, as defined by the availability of capital, competition can result in lower pricing and less favorable policy terms and conditions for insurers and reinsurers. During periods of reduced underwriting capacity, pricing and policy terms and conditions are generally more favorable for insurers and reinsurers. Historically, underwriting capacity has been affected by several factors, including industry losses, the impact of catastrophes, changes in legal and regulatory guidelines, new entrants and investment results including interest rate levels and the credit ratings and financial strength of competitors.

There continues to be significant underwriting capacity available and market conditions remain challenging. We believe this excess capacity is due to strong retained earnings in the reinsurance industry as a result of low catastrophe losses in recent years, an influx of capacity from collateralized reinsurance and other insurance-linked securities vehicles and increased competition from new entrants. During the third quarter of 2017, the insurance industry was impacted by significant catastrophe losses, including losses caused by hurricanes Harvey, Irma and Maria and two earthquakes in Mexico. Considering the significant third quarter catastrophe losses, losses sustained in the fourth quarter from California wildfires and other smaller catastrophe losses incurred throughout the year, AIR Worldwide, Risk Management Solutions, Inc., and most other industry experts believe that the amount of insured catastrophe losses for 2017 will exceed $100 billion. While many market participants were hopeful that the significant catastrophe losses would lead to significant improvements in pricing, terms and conditions within the property catastrophe line of business with the possibility of improvements in other reinsurance lines, improvements within the property catastrophe line of business at the January 1 and June 30 renewals date were generally lower than market expectations. However, we are seeing some signs of improvement in reinsurance terms and conditions and underlying pricing in some of the lines of business that we focus on. We renewed several contracts during the fourth quarter of 2017 and the first half of 2018 where we were able to achieve improved reinsurance terms and/or believe there was some modest improvement in the

pricing of the underlying insurance policies. We are cautiously optimistic that we will continue to see similar improvements across our in force portfolio as well as new business opportunities.

We focus on segments and clients where we believe we benefit from relatively more attractive pricing opportunities due to the strength of our relationships, the tailored nature of our reinsurance solutions, an acute need for reinsurance capital as a result of market dislocation, a client’s growth or historically poor performance. We expect to see increased demand for our products as companies that sustained significant catastrophe losses look for ways to bolster their capital positions but it is unclear how the supply of capacity to unaffected lines of business will be impacted. As our capital position has strengthened and market conditions improve, we expect to expand the lines of business and forms of reinsurance on which we focus. This may include lines of business and forms of reinsurance with increased risk profiles where we believe the higher expected margins adequately compensate us for the increased risk.

Key Performance Indicators

We believe that by combining a disciplined and opportunistic approach to reinsurance underwriting with investment results from the active management of our investment portfolio, we will be able to generate attractive returns for our shareholders. The key financial measures that we believe are most meaningful in analyzing our performance are: net underwriting income (loss) for our property and casualty reinsurance segment, combined ratio for our property and casualty reinsurance segment, net investment income , net investment return on investments managed by Third Point LLC, book value per share, diluted book value per share, growth in diluted book value per share, return on beginning shareholders’ equity attributable to Third Point Re common shareholders and invested asset leverage.

The table below shows the key performance indicators for our consolidated business for the three and six months ended June 30, 2018 and 2017 :



	Three months ended						Six months ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Key underwriting metrics for Property and Casualty Reinsurance segment:	($ in thousands, except for per share data and ratios)
Net underwriting loss ⁽¹⁾	$	(5,054	)	$	(12,111	)	$	(11,417	)	$	(20,761	)
Combined ratio ⁽¹⁾	103.6		%	107.0		%	104.0		%	106.6		%

Key investment return metrics:
Net investment income	$	31,175		$	107,325		$	28,967		$	235,835
Net investment return on investments managed by Third Point LLC	1.0		%	4.5		%	0.8		%	10.6		%

Key shareholders’ value creation metrics:
Basic book value per share ^{(2) (3)}	$	16.31		$	16.33		$	16.31		$	16.33
Diluted book value per share ^{(2) (3)}	$	15.63		$	15.65		$	15.63		$	15.65
Change in diluted book value per share ⁽²⁾	1.6		%	5.0		%	(0.1		)%	12.0		%
Return on beginning shareholders’ equity attributable to Third Point Re common shareholders ⁽²⁾	1.2		%	5.0		%	(0.4		)%	12.8		%
Invested asset leverage ⁽³⁾	1.6			1.6			1.6			1.6


(1)	See Note 22 to the accompanying condensed consolidated financial statements for a calculation of net underwriting loss and combined ratio.


(2)	Basic book value per share, diluted book value per share, change in diluted book value per share and return on beginning shareholders’ equity attributable to Third Point Re common shareholders are non-GAAP financial measures. There are no comparable GAAP measures. See reconciliations in “Non-GAAP Financial Measures and Other Financial Metrics”.


(3)	Prior year comparatives represent amounts as of December 31, 2017 .

Key Underwriting Metrics for Property and Casualty Reinsurance segment

See “Segment Results - Property and Casualty Reinsurance ” below for additional details.

Key Investment Return Metrics

Net investment income is an important measure that affects overall profitability. Net investment income is primarily affected by the performance of Third Point LLC as our exclusive investment manager and the amount of investable cash, or float, generated by our reinsurance operations. Pursuant to our investment management agreements, Third Point LLC is required to manage our investment portfolio on substantially the same basis as its main hedge funds, subject to certain conditions set forth in our investment guidelines. These conditions include limitations on investing in private securities, a limitation on portfolio leverage, and a limitation on portfolio concentration in individual securities. Our investment management agreements allow us to withdraw cash from our investment accounts with Third Point LLC at any time with three days’ notice to pay claims and with five days’ notice to pay expenses. Net investment income is net of investment fee expenses, which include performance and management fees to related parties.

See “Investment Results” below for additional information regarding investment performance and net investment return on investments managed by Third Point LLC.

Key Shareholders’ Value Creation Metrics

Basic Book Value Per Share and Diluted Book Value Per Share

Basic book value per share and diluted book value per share are non-GAAP financial measures and there are no comparable GAAP measures. See “Non-GAAP Financial Measures and Other Financial Metrics” for reconciliations.

As of June 30, 2018 , basic book value per share was $16.31 , representing an increase of $0.28 per share, or 1.7% , from $16.03 per share as of March 31, 2018 . As of June 30, 2018 , diluted book value per share was $15.63 , representing an increase of $0.24 per share, or 1.6% , from $15.39 per share as of March 31, 2018 . The increases were primarily due to net income in the period.

As of June 30, 2018 , basic book value per share was $16.31 , representing a decrease of $0.02 per share, or 0.1% , from $16.33 per share as of December 31, 2017 . As of June 30, 2018 , diluted book value per share was $15.63 , representing a decrease of $0.02 per share, or 0.1% , from $15.65 per share as of December 31, 2017 . The decreases were primarily due to a net loss in the period.

The changes in basic book value per share and diluted book value per share were also impacted by share activity including share repurchases and the issuance of performance restricted shares.

Return on Beginning Shareholders’ Equity Attributable to Third Point Re Common Shareholders

Return on beginning shareholders’ equity attributable to Third Point Re common shareholders as presented is a non-GAAP financial measure. See “Non-GAAP Financial Measures and Other Financial Metrics” for reconciliation.

The decrease in return on beginning shareholders’ equity attributable to Third Point Re common shareholders for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 was primarily due to a decrease in net income in the current year periods.

Invested Asset Leverage

Invested asset leverage is a ratio calculated by dividing our net investments managed by Third Point LLC by shareholders’ equity attributable to Third Point Re common shareholders and is a key metric in assessing the amount of insurance float generated by our reinsurance operation that has been invested by our investment manager, Third Point LLC. Given the sensitivity of our return on beginning shareholders’ equity to our net investment return on investments managed by Third Point LLC, invested asset leverage is an important metric that management monitors. It is also an important metric by which we evaluate our capital adequacy for rating agency and regulatory purposes. Maintaining an appropriate invested asset leverage in order to optimize our return potential, while maintaining sufficient rating agency and regulatory capital is an important aspect of how we manage the Company. We generally target an invested asset leverage ratio within a range of approximately 1.5 to 1.6, which we believe appropriately balances our return potential against the risk within our investment portfolio. Invested asset leverage was consistent between June 30, 2018 and December 31, 2017 .

Consolidated Results of Operations— Three and six months ended June 30, 2018 and 2017 :

The following table sets forth the key items discussed in the consolidated results of operations section, and the period over period change, for the three and six months ended June 30, 2018 and 2017 :



	Three months ended									Six months ended
	June 30, 2018			June 30, 2017			Change			June 30, 2018			June 30, 2017			Change
	($ in thousands)
Net underwriting income (loss) (1)	$	(5,054	)	$	(12,111	)	$	7,057		$	(11,417	)	$	(20,761	)	$	9,344
Net investment income	31,175			107,325			(76,150		)	28,967			235,835			(206,868		)
Net investment return on investments managed by Third Point LLC	1.0		%	4.5		%	(3.5		)%	0.8		%	10.6		%	(9.8		)%
General and administrative expenses (2)	(4,733		)	(5,365		)	632			(9,390		)	(9,625		)	235
Other expenses	(3,983		)	(2,105		)	(1,878		)	(7,978		)	(5,006		)	(2,972		)
Interest expense	(2,051		)	(2,051		)	—			(4,080		)	(4,077		)	(3		)
Foreign exchange gains (losses)	8,847			(4,781		)	13,628			2,236			(4,796		)	7,032
Income tax expense	(4,390		)	(5,307		)	917			(4,518		)	(10,605		)	6,087
Net income (loss) available to Third Point Re common shareholders	$	19,602		$	74,578		$	(54,976	)	$	(6,399	)	$	178,764		$	(185,163	)

(1) Property and Casualty Reinsurance segment only.

(2) Corporate function only.

The key driver of our results of operations is the performance of our investments managed by Third Point LLC. Given the nature of the underlying investment strategies, we expect volatility in our investment returns and net investment income and therefore in our consolidated results. See additional information regarding investment performance in “Investment Results” section below.

The other key changes in net income (loss) for the three and six months ended June 30, 2018 compared to the prior year periods were primarily due to the following:

Change in net underwriting results:

•

The improvement in our net underwriting results for the three and six months ended June 30, 2018 compared to three and six months ended June 30, 2017 was primarily due to a decrease in general and administrative expenses allocated to underwriting activities in the three and six months ended June 30, 2018 . The decrease in our general and administrative expenses allocated to underwriting activities was due to lower payroll related costs as result of lower annual incentive plan compensation expense accruals and lower stock compensation expense in the current year periods . Our annual incentive plan is based on a formula derived from certain financial performance metrics and as a result of the Company’s lower performance in the three and six months ended June 30, 2018 , the incentive plan compensation accrual was lower then the prior year periods.

Other key variances:

•

The foreign exchange gains were primarily due to the revaluation of foreign currency loss and loss adjustment expense reserves denominated in British pounds to the United States dollar, which had strengthened during the current year period compared to the prior year period. For these contracts, non-U.S. dollar reinsurance assets, or balances held in trust accounts securing reinsurance liabilities generally offset reinsurance liabilities in the same non-U.S. dollar currencies resulting in minimal net exposure. As a result, the foreign exchange gains on loss and loss adjustment expense reserves in the current year periods were offset by corresponding foreign exchange losses included in net investment income resulting from the revaluation of foreign currency reinsurance collateral held in trust accounts.


•	The decrease in income tax expense for the three and six months ended June 30, 2018 was primarily the result of a decrease in taxable income generated by our U.S. subsidiaries in the current year periods .

Segment Results— Three and six months ended June 30, 2018 and 2017 .

The determination of our reportable segments is based on the manner in which management monitors the performance of our operations. For the periods presented, our business comprises one operating segment, Property and Casualty Reinsurance. We have also identified a corporate function that includes investment results, certain general and administrative expenses related to corporate activities, interest expense and income tax expense .

Property and Casualty Reinsurance

The following table sets forth net underwriting results and ratios, and the period over period changes for the Property and Casualty Reinsurance segment for the three and six months ended June 30, 2018 and 2017 :



	Three months ended									Six months ended
	June 30, 2018			June 30, 2017			Change			June 30, 2018			June 30, 2017			Change
	($ in thousands)
Gross premiums written	$	49,765		$	156,564		$	(106,799	)	$	428,125		$	302,918		$	125,207
Gross premiums ceded	(3,479		)	(1,425		)	(2,054		)	(18,125		)	(2,550		)	(15,575		)
Net premiums earned	141,493			173,558			(32,065		)	283,979			311,567			(27,588		)
Loss and loss adjustment expenses incurred, net	84,000			107,379			(23,379		)	176,620			193,274			(16,654		)
Acquisition costs, net	57,584			68,641			(11,057		)	108,989			123,093			(14,104		)
General and administrative expenses	4,963			9,649			(4,686		)	9,787			15,961			(6,174		)
Net underwriting income (loss)	(5,054		)	(12,111		)	7,057			(11,417		)	(20,761		)	9,344
Net investment income on float	4,922			31,206			(26,284		)	7,521			67,326			(59,805		)
Other expenses	(3,983		)	(2,105		)	(1,878		)	(7,978		)	(5,006		)	(2,972		)
Foreign exchange gains (losses)	8,847			(4,781		)	13,628			2,236			(4,796		)	7,032
Segment income (loss)	$	4,732		$	12,209		$	(7,477	)	$	(9,638	)	$	36,763		$	(46,401	)
Underwriting ratios (1):
Loss ratio	59.4		%	61.9		%	(2.5		)%	62.2		%	62.0		%	0.2		%
Acquisition cost ratio	40.7		%	39.5		%	1.2		%	38.4		%	39.5		%	(1.1		)%
Composite ratio	100.1		%	101.4		%	(1.3		)%	100.6		%	101.5		%	(0.9		)%
General and administrative expense ratio	3.5		%	5.6		%	(2.1		)%	3.4		%	5.1		%	(1.7		)%
Combined ratio	103.6		%	107.0		%	(3.4		)%	104.0		%	106.6		%	(2.6		)%


(1)	Underwriting ratios are calculated by dividing the related expense by net premiums earned.

Gross Premiums Written

The amount of gross premiums written and earned that we recognize can vary significantly from period to period due to several reasons, which include:


•	We write a small number of large contracts; therefore individual renewals or new business can have a significant impact on premiums recognized in a period;


•	We offer customized solutions to our clients, including reserve covers, on which we may not have a regular renewal opportunity;


•	We record gross premiums written and earned for reserve covers, which are considered retroactive reinsurance contracts, at the inception of the contract;


•	We write multi-year contracts that will not necessarily renew in a comparable period;


•	We may extend and/or amend contracts resulting in premium that will not necessarily renew in a comparable period;


•	Our reinsurance contracts often contain commutation and/or cancellation provisions; and


•	Our quota share reinsurance contracts are subject to significant judgment in the amount of premiums that we expect to recognize and changes in premium estimates are recorded in the period they are determined.

As a result of these factors, we may experience volatility in the amount of gross premiums written and net premiums earned and period to period comparisons may not be meaningful.

The following table provides a breakdown of our Property and Casualty Reinsurance segment’s gross premiums written by line of business for the three and six months ended June 30, 2018 and 2017 :



	Three months ended									Six months ended
	June 30, 2018				June 30, 2017					June 30, 2018				June 30, 2017
	($ in thousands)
Property	$	1,660	3.3	%	$	(8,827	)	(5.6	)%	$	2,029	0.5	%	$	(8,815	)	(2.9	)%
Casualty	43,510		87.4	%	15,008			9.6	%	196,730		46.0	%	102,213			33.7	%
Specialty	254		0.6	%	41,032			26.2	%	225,025		52.5	%	100,169			33.1	%
Total prospective reinsurance contracts	$	45,424	91.3	%	$	47,213		30.2	%	$	423,784	99.0	%	$	193,567		63.9	%
Retroactive reinsurance contracts	4,341		8.7	%	109,351			69.8	%	4,341		1.0	%	109,351			36.1	%
	$	49,765	100.0	%	$	156,564		100.0	%	$	428,125	100.0	%	$	302,918		100.0	%

The decrease in gross premiums written of $106.8 million , or 68.2% , for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 was driven by:

Factors resulting in decreases:

•

We recognized a net increase in premium of $35.5 million in the three months ended June 30, 2018 compared to a net increase of $110.8 million in the three months ended June 30, 2017 related to the net impact of contract extensions, cancellations and contracts renewed with no comparable premium in the comparable period. In addition, the three months ended June 30, 2017 included $109.4 million of premium related to new retroactive exposures in reinsurance contracts compared to only $4.3 million in the current year period.


•	Changes in renewal premiums for the three months ended June 30, 2018 resulted in a net decrease in premiums of $22.6 million. Premiums can change on renewals of contracts due to a number of factors, including changes in our line size or participation, changes in the underlying premium volume and pricing trends of the client’s program as well as other contractual terms and conditions.

•

We recorded net increases in premium estimates relating to prior periods of $0.4 million and $14.3 million for the three months ended June 30, 2018 and 2017 , respectively. The increases in premium estimates for the three months ended June 30, 2018 and 2017 were due to several contracts for which clients provided updated projections indicating that they expected to write more business than initially estimated.


•	We recognized $11.2 million of premium in the three months ended June 30, 2017 related to contracts that we did not renew in the three months ended June 30, 2018 as a result of underlying terms and conditions.

Factor resulting in an increase:


•	For the three months ended June 30, 2018 , we wrote $16.2 million of new premium, of which $8.2 million was casualty business, $7.7 million was specialty business and $0.3 million was property business.

The increase in gross premiums written of $125.2 million , or 41.3% , for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 was driven by:

Factors resulting in increases:


•	For the six months ended June 30, 2018 , we wrote $122.6 million of new premium, of which $110.7 million was specialty business, including one multi-line contract covering casualty and specialty risks for $91.6 million, $11.6 million was casualty business and $0.3 million was property business.


•	We recognized a net increase in premium of $162.6 million in the six months ended June 30, 2018 compared to a net increase of $118.3 million in the six months ended June 30, 2017 related to the net impact of contract extensions, cancellations and contracts renewed with no comparable premium in the comparable period.

Factors resulting in decreases:


•	We recognized $26.1 million of premium in the six months ended June 30, 2017 related to contracts that we did not renew in the six months ended June 30, 2018 as a result of underlying terms and conditions.


•	Changes in renewal premiums for the six months ended June 30, 2018 resulted in a net decrease in premiums of $14.5 million. Premiums can change on renewals of contracts due to a number of factors, including: changes in our line size or participation, changes in the underlying premium volume and pricing trends of the client’s program as well as other contractual terms and conditions.

•

We recorded net increases in premium estimates relating to prior periods of $14.5 million and $15.6 million for the six months ended June 30, 2018 and 2017 , respectively. The increases in premium estimates for the six months ended June 30, 2018 and 2017 were due to several contracts for which clients provided updated projections indicating that they expected to write more business than initially estimated.

Gross Premiums Ceded

The increase in gross premiums ceded for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 was primarily due to a new ceded contract covering certain of our 2018 mortgage contracts.

Net Premiums Earned

The decrease in net premiums earned in the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 was primarily due to retroactive exposures in reinsurance contracts in the prior year periods , partially offset by a higher in-force underwriting portfolio in the current year periods .

Net Loss and Loss Adjustment Expenses

The reinsurance contracts we write have a wide range of initial loss ratio estimates. As a result, our net loss and loss expense ratio can vary significantly from period to period depending on the mix of business. The change in our net loss and loss adjustment expenses and related ratio was primarily affected by changes in mix of business and a higher in-force underwriting portfolio.

The following is a summary of the net impact from loss reserve development for the three and six months ended June 30, 2018 and 2017 :

For the three months ended June 30, 2018 , we recognized $8.0 million , or 5.7 percentage points on the combined ratio, of net favorable prior years’ reserve development as a result of decrease s in loss reserve estimates, offset by net increase s of $5.6 million , or 4.0 percentage points on the combined ratio, in acquisition costs, resulting in a $2.4 million , or 1.7 percentage points on the combined ratio improvement in the net underwriting results . The net underwriting results impact of the favorable loss development was primarily due to the following factors:


•	$3.1 million of net favorable underwriting loss development relating to several workers’ compensation contracts written from 2012 to 2017, driven by better than expected loss experience;


•	$2.7 million of net favorable underwriting loss development from several other contracts, as a result of better than expected loss experience; partially offset by

•

$3.4 million of net adverse underwriting loss development primarily relating to our Florida homeowners’ reinsurance contracts. This development is a result of higher than anticipated water damage claims and an increase in the practice of assignment of benefits whereby homeowners assign their rights for filing and settling claims to attorneys and public adjusters. This practice has led to increases in the frequency of claims reported as well as the severity of losses and loss adjustment expenses.

For the three months ended June 30, 2017 , we recognized $30.9 million of net favorable prior years’ reserve development which was primarily a result of having favorable loss development on certain retroactive reinsurance contracts. These retroactive reinsurance contracts had profit commission terms such that the favorable reserve development associated with these contracts was offset by similar increases in acquisition costs, resulting in minimal impact in the net underwriting loss.

For the six months ended June 30, 2018 , we recognized $8.5 million , or 3.0 percentage points on the combined ratio, of net favorable prior years’ reserve development as a result of decrease s in loss reserve estimates, offset by net increase s of $5.7 million , or 2.0 percentage points on the combined ratio, in acquisition costs, resulting in a $2.8 million improvement in the net underwriting results . The net underwriting results impact of the favorable loss development was primarily due to the following factors:


•	$5.4 million of net favorable underwriting loss development relating to several workers’ compensation contracts written from 2012 to 2017, driven by better than expected loss experience;


•	$2.9 million of net favorable underwriting loss development primarily relating to one multi-line contract written from 2014 to 2017, driven by better than expected loss experience;


•	$1.9 million of net favorable underwriting loss development from several other contracts, as a result of better than expected loss experience; partially offset by

•

For the six months ended June 30, 2017 , we recognized $32.5 million of net favorable prior years’ reserve development. The $32.5 million of net favorable prior years’ reserve development for the six months ended June 30, 2017 was primarily a result of having favorable loss development on certain retroactive reinsurance contracts. These retroactive reinsurance contracts had profit commission terms such that the favorable reserve development associated with these contracts was offset by similar increases in acquisition costs, resulting in minimal impact in the net underwriting loss.

Acquisition Costs

Acquisition costs include commissions, brokerage and excise taxes. Acquisition costs are presented net of commissions on reinsurance ceded. The reinsurance contracts we write have a wide range of acquisition cost ratios. As a result, our acquisition cost ratio can vary significantly from period to period depending on the mix of business. Furthermore, a number of our contracts have a sliding scale commission or profit commission feature that will vary depending on the expected loss expense for the contract. As a result, changes in estimates of loss and loss adjustment expenses on a contract can result in changes in the sliding scale commissions or profit commissions and a contract’s overall acquisition cost ratio.

Many of our contracts have similar expected composite ratios (combined ratio before general and administrative expenses); therefore, contracts with higher initial loss ratio estimates have lower acquisition cost ratios and contracts with lower initial loss ratios have higher acquisition cost ratios.

The decrease in acquisition costs, net and the related acquisition cost ratio for the three and six months ended June 30, 2018 was primarily due to favorable development on two retroactive reinsurance contracts in the prior year periods which had profit commission terms such that the favorable development associated with these contracts was entirely offset by similar increases in acquisition costs.

See additional information in Net Loss and Loss Adjustment Expenses section above.

Net Investment Income

Net investment income allocated to the Property and Casualty Reinsurance segment consists of net investment income on float . The decrease in net investment income on float for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 was primarily due to the decrease in investment returns compared to the prior year periods and higher amount of investments attributable to float managed by Third Point LLC. See the discussion of net investment income under “Corporate Function” below for explanations of the investment returns on investments managed by Third Point LLC and total net investment income for the years presented.

General and Administrative Expenses

The decrease in general and administrative expenses allocated to underwriting activities and the related general and administrative expenses ratio for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 decreased as result of lower payroll related costs primarily due to lower annual incentive plan compensation expense accruals and lower stock compensation expense. Our annual incentive plan is based on a formula derived from certain financial performance metrics. Our accrual was lower for the three and six months ended June 30, 2018 comp ared to the three and six months ended June 30, 2017 to reflect the lower performance of the Company in the periods relative to the bonus pool performance metrics.

Other Expenses

Other expenses are comprised of expenses relating to interest crediting features in certain reinsurance and deposit contracts. The increase in other expenses for the three and six months ended June 30, 2018 was primarily due to revised estimates of underlying assumptions on our deposit liability contracts as well as to an increase in the amount of total deposit liabilities compared to the three and six months ended June 30, 2017 .

Foreign Exchange Gains (Losses)

The foreign exchange gains for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017 was primarily due to the revaluation of foreign currency loss and loss adjustment expense reserves denominated in British pounds into the United States dollar, which had strengthened during the current year periods compared to the prior year periods. For these contracts, non-U.S. dollar reinsurance assets, or balances held in trust accounts securing reinsurance liabilities generally offset reinsurance liabilities in the same non-U.S. dollar currencies resulting in minimal net exposure. As a result, the foreign exchange gains on loss and loss adjustment expense reserves in the current year periods were offset by corresponding foreign exchange losses included in net investment income resulting from the revaluation of foreign currency reinsurance collateral held in trust accounts. Refer to “ ITEM 3. Quantitative and Qualitative Disclosures about Market Risks ” for further discussion on foreign currency risk related to our reinsurance contracts.

Corporate Function

The following table sets forth net income and the period over period changes for the corporate function for the three and six months ended June 30, 2018 and 2017 :



	Three months ended									Six months ended
	June 30, 2018			June 30, 2017			Change			June 30, 2018			June 30, 2017			Change
	($ in thousands)
Less: net investment income on capital	$	26,253		$	76,119		$	(49,866	)	$	21,446		$	168,509		$	(147,063	)
General and administrative expenses	(4,733		)	(5,365		)	632			(9,390		)	(9,625		)	235
Interest expense	(2,051		)	(2,051		)	—			(4,080		)	(4,077		)	(3		)
Income tax expense	(4,390		)	(5,307		)	917			(4,518		)	(10,605		)	6,087
Segment income attributable to noncontrolling interests in related party	(209		)	(1,027		)	818			(219		)	(2,201		)	1,982
Segment income	$	14,870		$	62,369		$	(47,499	)	$	3,239		$	142,001		$	(138,762	)

Investment Results

The primary driver of our net investment income is the returns generated by our investment portfolio managed by our investment manager, Third Point LLC. The following is a summary of the net investment return on investments managed by Third Point LLC by investment strategy for the three and six months ended June 30, 2018 and 2017 :



	Three months ended
	June 30, 2018						June 30, 2017
	Long		Short		Net		Long		Short		Net
Equity	3.4	%	(1.9	)%	1.5	%	6.5	%	(1.1	)%	5.4	%
Credit	0.3	%	(0.2	)%	0.1	%	(0.3	)%	(0.3	)%	(0.6	)%
Other	(1.3	)%	0.7	%	(0.6	)%	0.2	%	(0.5	)%	(0.3	)%
Net investment return on investments managed by Third Point LLC	2.4	%	(1.4	)%	1.0	%	6.4	%	(1.9	)%	4.5	%

S&P 500 Total Return Index					3.4	%					3.1	%

	Six months ended
	June 30, 2018						June 30, 2017
	Long		Short		Net		Long		Short		Net
Equity	2.7	%	(2.0	)%	0.7	%	13.0	%	(2.2	)%	10.8	%
Credit	0.7	%	(0.2	)%	0.5	%	0.1	%	(0.4	)%	(0.3	)%
Other	(0.9	)%	0.5	%	(0.4	)%	1.0	%	(0.9	)%	0.1	%
Net investment return on investments managed by Third Point LLC	2.5	%	(1.7	)%	0.8	%	14.1	%	(3.5	)%	10.6	%

S&P 500 Total Return Index					2.6	%					9.3	%

For the three months ended June 30, 2018, positive performance was primarily attributable to positive returns generated by the long equity portfolio, with all sectors contributing positive returns except financials. Gains in the long equity portfolio were partially offset by losses in short equity investments and market hedges. The credit portfolio posted modest net gains from strength in long structured product investments. The macroeconomic and other portfolio detracted from overall returns due to negative performance from some currency hedges and a merger arbitrage position.

For the six months ended June 30, 2018, the investment portfolio performance was modestly positive as strong results for several core long equity positions were offset by losses from short investments, market hedges, and investments in emerging markets. Within equities, gains from long investments in the healthcare and technology, media and

telecommunication sectors were offset by losses in the consumer sector. Across the remaining portfolio, positive performance in structured credit was partially offset by losses in the macroeconomic and other portfolio, primarily driven by weakness in currency hedges.

For the three months ended June 30, 2017, the long equity strategy was the primary driver of returns. Within equities, we saw positive attribution across every sector with large long investments in the healthcare and industrials portfolios contributing the majority of positive returns. Gains in our long equity strategy were partially offset by losses in market hedges and short equity positions. Modest losses in the credit strategy were primarily driven by both long and short performing credit investments. Losses from macroeconomic hedges were partially offset by gains in currency, private and risk arbitrage investments in the other strategy.

For the six months ended June 30, 2017, the net investment results were led by strong gains in the long equity strategy, outpacing the S&P 500 for the same period with significantly less exposure at risk. The strategy saw positive attribution from every sector in which the portfolio is invested. The long equity portfolio performance was partially offset by negative performance from short equity positions, including market hedges. The credit strategy detracted modestly with flat or negative performance from each sub-strategy. In the other strategy, losses from macroeconomic hedges were offset by positive contribution from risk arbitrage, private and currency investments.

Refer to “ ITEM 3. Quantitative and Qualitative Disclosures about Market Risks ” for a list of risks and factors that could adversely impact our investments results.

General and Administrative Expenses

General and administrative expenses allocated to corporate activities include allocations of payroll and related costs for certain executives and non-underwriting activities. We also allocate a portion of overhead and other related costs based on a headcount analysis. The decrease in general and administrative expenses related to corporate activities for the three and six months ended June 30, 2018 was primarily due to a decrease in our annual incentive plan compensation expense. Our accrual was lower for the three and six months ended June 30, 2018 comp ared to the three and six months ended June 30, 2017 to reflect the lower performance of the Company in the periods relative to the bonus pool performance metrics.

Interest Expense

In February 2015, TPRUSA issued $115.0 million of senior notes bearing 7.0% interest. As a result, our consolidated results of operations include interest expense related to the senior notes.

Income Taxes

See Note 14 to our condensed consolidated financial statements for additional information regarding income taxes. The decrease in income tax expense for the three and six months ended June 30, 2018 was primarily the result of a decrease in taxable income generated by our U.S. subsidiaries.

Non-GAAP Financial Measures and Other Financial Metrics

We have included certain financial measures that are not calculated under standards or rules that comprise GAAP. Such measures, including net investment income on float , book value per share, diluted book value per share, change in diluted book value per share and return on beginning shareholders’ equity attributable to Third Point Re common shareholders, are referred to as non-GAAP financial measures. These non-GAAP financial measures may be defined or calculated differently by other companies. We believe these measures allow for a more complete understanding of our underlying business. These measures are used by management to monitor our results and should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations of non-GAAP measures to the most comparable GAAP figures are included below.

In addition, we refer to certain financial metrics such as net investment return on investments managed by Third Point LLC, which is an important metric to measure the performance of our investment manager, Third Point LLC. A more detailed description of this financial metric is included below. We also refer to other financial metrics such as invested asset leverage and other generic performance metrics which are described and explained in this subsection.

Non-GAAP Financial Measures

Net Investment Income on Float

Net investment income on float is an important aspect of our property and casualty reinsurance operation. In an insurance or reinsurance operation, float arises because premiums and proceeds from deposit accounted contracts are collected before losses are paid. In some instances, the interval between receipts and payments can extend over many years. During this time interval, insurance and reinsurance companies invest the premiums received and generate investment returns.We track cash flows generated by our property and casualty reinsurance operations, or float, in separate accounts that allow us to also track the net investment income generated on the float. We believe that net investment income generated on float is an important consideration in evaluating the overall contribution of our property and casualty reinsurance operation to our consolidated results. It is also explicitly considered as part of the evaluation of management’s performance for purposes of long-term incentive compensation. Net investment income on float as presented is a non-GAAP financial measure. See the table below for a reconciliation of net investment income on float to net investment income for the three and six months ended June 30, 2018 and 2017 .



	Three months ended					Six months ended
	June 30, 2018			June 30, 2017		June 30, 2018			June 30, 2017
	($ in thousands)
Net investment income	$	31,175		$	107,325	$	28,967		$	235,835
Less: other investment income (loss)	(9		)	193		(12		)	460
Net investment income on investments managed by Third Point LLC	31,184			107,132		28,979			235,375
Less: net investment income on capital	26,262			75,926		21,458			168,049
Net investment income on float	$	4,922		$	31,206	$	7,521		$	67,326

Net Investment Return on Investments Managed by Third Point LLC

Net investment return represents the return on our investments managed by Third Point LLC, net of fees. The net investment return on investments managed by Third Point LLC is the percentage change in value of a dollar invested over the reporting period on our investment assets managed by Third Point LLC, net of total noncontrolling interests. The stated return is net of withholding taxes, which are presented as a component of income tax expense in our condensed consolidated statements of income (loss) . Net investment return is the key indicator by which we measure the performance of Third Point LLC, our investment manager.

Basic Book Value Per Share and Diluted Book Value Per Share

Basic book value per share and diluted book value per share are non-GAAP financial measures and there are no comparable GAAP measures. Basic book value per share, as presented, is a non-GAAP financial measure and is calculated by dividing shareholders’ equity attributable to Third Point Re common shareholders by the number of common shares outstanding, excluding the total number of unvested restricted shares, at period end. Diluted book value per share, as presented, is a non-GAAP financial measure and represents basic book value per share combined with the impact from dilution of all in-the-money share options issued, warrants and unvested restricted shares outstanding as of any period end. For unvested restricted shares with a performance condition, we include the unvested restricted shares for which we consider vesting to be probable. Change in basic book value per share is calculated by taking the change in basic book value per share divided by the beginning of period book value per share. Change in diluted book value per share is calculated by taking the change in diluted book value per share divided by the beginning of period diluted book value per share. We believe that long-term growth in diluted book value per share is the most important measure of our financial performance because it allows our management and investors to track over time the value created by the retention of earnings. In addition, we believe this metric is used by investors because it provides a basis for comparison with other companies in our industry that also report a similar measure.

The following table sets forth the computation of basic and diluted book value per share as of June 30, 2018 and December 31, 2017 :



	June 30, 2018			December 31, 2017
Basic and diluted book value per share numerator:	($ in thousands, except share and per share amounts)
Shareholders' equity attributable to Third Point Re common shareholders	$	1,591,754		$	1,656,089
Effect of dilutive warrants issued to founders and an advisor	34,950			46,512
Effect of dilutive stock options issued to directors and employees	51,422			51,422
Diluted book value per share numerator:	$	1,678,126		$	1,754,023
Basic and diluted book value per share denominator:
Common shares outstanding	99,627,399			103,282,427
Unvested restricted shares	(2,050,115		)	(1,873,588		)
Basic book value per share denominator:	97,577,284			101,408,839
Effect of dilutive warrants issued to founders and an advisor	3,494,979			4,651,163
Effect of dilutive stock options issued to directors and employees	5,123,531			5,123,531
Effect of dilutive restricted shares issued to directors and employees (1)	1,202,464			905,412
Diluted book value per share denominator:	107,398,258			112,088,945

Basic book value per share	$	16.31		$	16.33
Diluted book value per share	$	15.63		$	15.65


(1)	As of June 30, 2018 , the effect of dilutive restricted shares issued to directors and employees was comprised of 48,129 restricted shares with a service condition only and 1,154,335 restricted shares with a service and performance condition that were considered probable of vesting.

Return on Beginning Shareholders’ Equity Attributable to Third Point Re Common Shareholders

Return on beginning shareholders’ equity attributable to Third Point Re common shareholders, as presented, is a non-GAAP financial measure. Return on beginning shareholders’ equity attributable to Third Point Re common shareholders is calculated by dividing net income available to Third Point Re common shareholders by the beginning shareholders’ equity attributable to Third Point Re common shareholders. We believe that return on beginning shareholders’ equity attributable to Third Point Re common shareholders is an important measure because it assists our management and investors in evaluating the Company’s profitability. For the three and six months ended June 30, 2018 , we have also adjusted the beginning shareholders’ equity attributable to Third Point Re common shareholders for the impact of the shares repurchased on a weighted average basis. For a period where there was a loss, this adjustment decreased the stated returns on beginning shareholders’ equity and for a period where there was a gain, this adjustment increased the stated returns on beginning shareholders’ equity.

Return on beginning shareholders’ equity for the three and six months ended June 30, 2018 and 2017 was calculated as follows:



	Three months ended						Six months ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
	($ in thousands)
Net income (loss) available to Third Point Re common shareholders	$	19,602		$	74,578		$	(6,399	)	$	178,764
Shareholders’ equity attributable to Third Point Re common shareholders - beginning of period	1,607,422			1,501,681			1,656,089			1,414,051
Impact of weighting related to shareholders’ equity from shares repurchased	(7,606		)	(9,863		)	(13,673		)	(16,882		)
Adjusted shareholders’ equity attributable to Third Point Re common shareholders - beginning of period	$	1,599,816		$	1,491,818		$	1,642,416		$	1,397,169
Return on beginning shareholders’ equity attributable to Third Point Re common shareholders	1.2		%	5.0		%	(0.4		)%	12.8		%

Other Financial Metrics

Net Underwriting Income (Loss) for Property and Casualty Reinsurance Segment

One way that we evaluate the performance of our property and casualty reinsurance results is by measuring net underwriting income (loss). We do not measure performance based on the amount of gross premiums written. Net underwriting income or loss is calculated from net premiums earned, less net loss and loss adjustment expenses, acquisition costs and general and administrative expenses related to underwriting activities. See additional information in Note 22 to our condensed consolidated financial statements.

Combined Ratio for Property and Casualty Reinsurance Segment

Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned. This ratio is a key indicator of a reinsurance company’s underwriting profitability. A combined ratio of greater than 100% means that loss and loss adjustment expenses, acquisition costs and general and administrative expenses related to underwriting activities exceeded net premiums earned. See additional information in Note 22 to our condensed consolidated financial statements.

Liquidity and Capital Resources

Liquidity Requirements

Third Point Re is a holding company and has no substantial operations of its own and has moderate cash needs, most of which are related to the payment of corporate expenses. Its assets consist primarily of its investments in subsidiaries. Third Point Re’s ability to pay dividends or return capital to shareholders will depend upon the availability of dividends or other statutorily permissible distributions from those subsidiaries. Cash is used primarily to pay loss and loss adjustment expenses, reinsurance premiums, acquisition costs, interest expense, taxes, general and administrative expenses, and to purchase investments.

We and our Bermuda subsidiaries are subject to Bermuda regulatory constraints that affect our ability to pay dividends. Under the Companies Act, as amended, a Bermuda company may declare or pay a dividend out of distributable reserves only if it has reasonable grounds for believing that it is, or would after the payment, be able to pay its liabilities as they become due and if the realizable value of its assets would thereby not be less than its liabilities. Under the Insurance Act, Third Point Re BDA and Third Point Re USA, as Class 4 insurers, are prohibited from declaring or paying a dividend if they are in breach of their respective minimum solvency margin (“MSM”), enhanced capital requirement (“ECR”) or minimum liquidity ratio or if the declaration or payment of such dividend would cause such a breach. Where either Third Point Re BDA or Third Point Re USA, as Class 4 insurers, fails to meet its MSM or minimum liquidity ratio on the last day of any financial year, it is prohibited from declaring or paying any dividends during the next financial year without the approval of the BMA.

In addition, each of Third Point Re BDA and Third Point Re USA, as Class 4 insurers, is prohibited from declaring or paying in any financial year dividends of more than 25% of its respective total statutory capital and surplus (as shown on its previous financial year’s statutory balance sheet) unless it files (at least seven days before payment of such dividend) with the BMA an affidavit signed by at least two directors (one of whom must be a Bermuda resident director if any of the insurer’s directors are resident in Bermuda) and the principal representative stating that it will continue to meet its solvency margin and minimum liquidity ratio.

As of December 31, 2017 , Third Point Re BDA could pay dividends to Third Point Re of approximately $357.5 million. Third Point Re USA has also entered into a Net Worth Maintenance Agreement that further restricts the amount of capital and surplus it has available for the payment of dividends. In order to remain in compliance with the Net Worth Maintenance Agreement we have entered into with Third Point Re USA (the “Net Worth Maintenance Agreement”), we have committed to ensuring that Third Point Re USA will maintain a minimum level of capital of $250.0 million. Failure of Third Point Re USA to maintain the minimum level of capital required by the Net Worth Maintenance Agreement could limit or prevent Third Point Re USA from paying dividends to us. As a result, Third Point Re USA could pay dividends ultimately to Third Point Re of approximately $24.3 million as of December 31, 2017 .

In addition to the regulatory and other contractual constraints to paying dividends, we manage the capital of the group and each of our operating subsidiaries to support our current ratings from A.M. Best. This could further reduce the ability and amount of dividends that could be paid from Third Point Re BDA or Third Point Re USA to Third Point Re.

Other Liquidity Requirements

Third Point Re fully and unconditionally guarantees the $115.0 million of debt obligations issued by TPRUSA, a wholly owned subsidiary. See Note 11 to our condensed consolidated financial statements for detailed information on our Senior Notes.

Third Point Re may also require cash to fund share repurchases. See Note 15 to our condensed consolidated financial statements for detailed information on our share repurchases.

Sources of Liquidity

Historically, our sources of funds have primarily consisted of premiums written, reinsurance recoveries, investment income and proceeds from sales and redemptions of investments.

Our investment portfolio is concentrated in tradeable securities and is marked to market each day. Pursuant to our investment guidelines as specified in our two investment management agreements with Third Point LLC, at least 60% of our portfolio must be invested in securities of publicly traded companies and governments of Organization of Economic Co-operation and Development high income countries, asset-backed securities, cash, cash equivalents and gold and other precious metals. We can liquidate all or a portion of our investment portfolio at any time with not less than three days’ notice to pay claims on our reinsurance contracts, and with not less than five days’ notice to pay for expenses, and on not less than three days’ notice in order to satisfy a requirement of A.M. Best. Since we do not write excess of loss property catastrophe contracts or other types of reinsurance contracts that are typically subject to sudden, acute, liquidity demands, we believe the liquidity provided by our investment portfolio will be sufficient to satisfy our liquidity requirements to manage our operations.

As of June 30, 2018 , $2,362.0 million , or 76.2% (December 31, 2017 - $2,202.4 million , or 73.5% ) of our total investments in securities were classified as Level 1 assets, which are defined as securities valued using quoted prices available in active markets. See Note 4 to our condensed consolidated financial statements for additional information on the framework for measuring fair value established by U.S. GAAP disclosure requirements.

In addition, we expect that our cash and cash equivalents on the balance sheet and cash flow from operations will provide us with the financial flexibility to execute our strategic objectives. Our ability to generate cash, however, is subject to our performance, general economic conditions, industry trends and other factors. To the extent cash and cash equivalents on the balance sheet, investment returns and cash flow from operations are insufficient to fund our future activities and requirements, we may need to raise additional funds through public or private equity or debt financing. If we issue equity securities in order to raise additional funds, substantial dilution to existing shareholders may occur. If we raise cash through the issuance of additional indebtedness, we may be subject to additional contractual restrictions on our business. There is no assurance that we would be able to raise the additional funds on favorable terms or at all. There are regulatory and contractual restrictions and rating agency considerations that might impact the ability of our reinsurance subsidiaries to pay dividends to their respective parent companies, including for purposes of servicing TPRUSA’s debt obligations.

We do not believe that inflation has had a material effect on our consolidated results of operations to date. The effects of inflation are considered implicitly in pricing our reinsurance contracts. Loss reserves are established to recognize likely loss settlements at the date payment is made. Those reserves inherently recognize the effects of inflation. However, the actual effects of inflation on our results cannot be accurately known until claims are ultimately resolved.

Cash Flows

Our cash flows from operations generally represent the difference between: (l) premiums collected and investment earnings realized and (2) loss and loss expenses paid, reinsurance purchased, underwriting and other expenses paid. Cash flows from operations may differ substantially from net income (loss) and may be volatile from period to period

depending on the underwriting opportunities available to us and other factors. Due to the nature of our underwriting portfolio, claim payments can be unpredictable and may need to be made within relatively short periods of time. Claim payments can also be required several months or years after premiums are collected.

Operating, investing and financing cash flows for the six months ended June 30, 2018 and 2017 were as follows:



	2018			2017
	($ in thousands)
Net cash provided by (used in) operating activities	$	13,359		$	(17,445	)
Net cash provided by investing activities	188,510			146,933
Net cash used in financing activities	(163,783		)	(58,056		)
Net increase in cash, cash equivalents and restricted cash	38,086			71,432
Cash, cash equivalents and restricted cash at beginning of period	549,333			308,891
Cash, cash equivalents and restricted cash at end of period	$	587,419		$	380,323

Operating Activities

Cash flows from operating activities generally represent net premiums collected less loss and loss adjustment expenses, acquisition costs and general and administrative expenses paid.

The increase in cash flows provided by operating activities in the six months ended June 30, 2018 compared to the six months ended June 30, 2017 is primarily due to higher float generated from our reinsurance operations. Excess cash generated from our operating activities is typically then invested by Third Point LLC.

For the six months ended June 30, 2018 and 2017 , we contributed $11.9 million and redeemed $15.1 million, respectively, from our separate accounts managed by Third Point LLC. These amounts do not correspond to the net cash provided by operating activities as presented in the condensed consolidated statements of cash flows prepared in accordance with U.S. GAAP.

The amount of float can vary significantly from period to period depending on the timing, type and size of reinsurance contracts we bind. Refer to “ ITEM 2. Management’s Discussion and Analysis - Property and Casualty Reinsurance ” for a definition of insurance float.

Investing Activities

Cash flows provided by investing activities primarily reflects investment activities related to our separate accounts managed by Third Point LLC. Cash flows provided by investing activities for the six months ended June 30, 2018 primarily relates to proceeds from the sale of certain investments to fund cash flows from operations, $101.5 million of net withdrawals from total noncontrolling interests and share repurchases of $60.4 million . Cash flows provided by investing activities for the six months ended June 30, 2017 primarily relates to proceeds from the sale of certain investments to fund cash flows from operations and share repurchases.

Financing Activities

Cash flows used in financing activities for the six months ended June 30, 2018 consisted of $101.5 million of net withdrawals from total noncontrolling interests and $60.4 million for shares repurchased. Cash flows used in financing activities for the six months ended June 30, 2017 consisted of $18.1 million of withdrawals from total noncontrolling interests and $40.9 million for shares repurchased.

For the period from inception until June 30, 2018 , we have had sufficient cash flow from the proceeds of our initial capitalization and IPO, the issuance of Notes in February 2015, and from our operations to meet our liquidity requirements. We expect that projected operating and capital expenditure requirements and debt service requirements for at least the next twelve months will be met by our balance of cash, cash flows generated from operating activities and investment income. We may incur additional indebtedness in the future if we determine that it would be an efficient part of our capital structure.

Cash, Restricted Cash and Cash Equivalents and Restricted Investments

Cash and cash equivalents consist of cash held in banks and other short-term, highly liquid investments with original maturity dates of ninety days or less.

See Note 3 to our condensed consolidated financial statements for additional information on restricted cash, cash equivalents and investments.

Restricted cash and cash equivalents and restricted investments increase d by $12.6 million , or 1.4% , to $880.2 million as of June 30, 2018 from $867.6 million as of December 31, 2017 . The increase was primarily due to an increase in the number of reinsurance contracts that required collateral. In addition, we are now investing a portion of the collateral securing certain reinsurance contracts in U.S. treasury securities and sovereign debt. This portion of the collateral is included in debt securities in the condensed consolidated balance sheets and is disclosed as part of restricted investments.

Letter of Credit Facilities

See Note 11 to our condensed consolidated financial statements for additional information regarding our letter of credit facilities.

Cash Secured Letter of Credit Agreements

As of June 30, 2018 , $240.5 million ( December 31, 2017 - $250.5 million ) of letters of credit, representing 57% of the total available facilities of $425.0 million , had been issued ( December 31, 2017 - 59% (based on total available facilities of $425.0 million )).

Under the cash secured letter of credit facilities, we provide collateral that consists of cash and cash equivalents. As of June 30, 2018 , total cash and cash equivalents with a fair value of $240.5 million ( December 31, 2017 - $250.5 million ) was pledged as collateral against the letters of credit issued. Our ability to post collateral securing letters of credit and certain reinsurance contracts depends in part on our ability to borrow against certain assets in our Investment Accounts through prime brokerage arrangements. See Note 5 to our condensed consolidated financial statements for additional information regarding our prime brokerage arrangements. The loss or reduction in this borrowing capacity could reduce the amount of reinsurance we write or reduce the amount of float that we contribute to our Investment Accounts.The collateral amounts securing letters of credit are included in restricted cash and cash equivalents in the condensed consolidated balance sheets. Each of the facilities contain customary events of default and restrictive covenants, including but not limited to, limitations on liens on collateral, transactions with affiliates, mergers and sales of assets, as well as solvency and maintenance of certain minimum pledged equity requirements and an A.M. Best Company rating of “A-“ or higher. Each restricts issuance of any debt without the consent of the letter of credit provider. Additionally, if an event of default exists, as defined in the letter of credit facilities, we will be prohibited from paying dividends. We were in compliance with all of the covenants under the aforementioned facilities as of June 30, 2018 .

Unsecured Revolving Credit and Letter of Credit Facility Agreement

On July 31, 2018, we entered into a one-year, $200.0 million Unsecured Revolving Credit and letter of Credit Facility Agreement with various financial institutions (the "Credit Agreement") to support obligations in connection with our reinsurance business. Letters of credit fees are payable on account of each letter of credit issued under the unsecured facility at a rate of 1.50% per annum and the commitment fee is 0.20% per annum. The Credit Agreement expires on July 30, 2019. See Note 23 to the accompanying condensed consolidated financial statements for additional information on the Syndicated Credit Facility.

Financial Condition

Shareholders’ equity

As of June 30, 2018 , total shareholders’ equity was $1,596.9 million , compared to $1,661.5 million as of December 31, 2017 . The decrease was primarily due to a net loss available to Third Point Re common shareholders of $6.4 million and share repurchases of $60.4 million .

Investments

As of June 30, 2018 , total cash and net investments managed by Third Point LLC was $2,560.9 million , compared to $2,589.9 million as of December 31, 2017 . The decrease was primarily due to net redemptions of $52.5 million , primarily to fund share repurchases and cash flows from operations, partially offset by the net investment income on net investments managed by Third Point LLC of $29.0 million .

Contractual Obligations

There have been no other material changes to our contractual obligations from our most recent Annual Report on Form 10-K, as filed with the SEC.

Off-Balance Sheet Commitments and Arrangements

We have no obligations, assets or liabilities, other than those derivatives in our investment portfolio and disclosed in the notes to our condensed consolidated financial statements, which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

Critical Accounting Policies and Estimates

For a summary of our significant accounting and reporting policies, please refer to Note 2, “Significant accounting policies”, included in our 2017 Form 10-K.

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions. We believe that the accounting policies that require the most significant judgments and estimations by management are: (1) premium revenue recognition including evaluation of risk transfer, (2) loss and loss adjustment expense reserves, and (3) fair value measurements related to our investments. If actual events differ significantly from the underlying judgments or estimates used by management in the application of these accounting policies, there could be a material adverse effect on our results of operations and financial condition.

There have been no material changes in our critical accounting estimates for the six months ended June 30, 2018 . Refer to Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations”, included in our 2017 Form 10-K.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

We believe we are principally exposed to the following types of market risk:


•	equity price risk;


•	foreign currency risk;


•	interest rate risk;


•	commodity price risk;


•	credit risk;


•	liquidity risk; and


•	political risk.

Equity Price Risk

Our investment manager, Third Point LLC, tracks the performance and exposures of our investment portfolio, each strategy and sector, and selective individual securities. A particular focus is placed on “beta” exposure, which is the

portion of the portfolio that is directly correlated to risks and movements of the equity market as a whole (usually represented by the S&P 500 index) as opposed to idiosyncratic risks and factors associated with a specific position. Further, the performance of our investment portfolio has historically been compared to several market indices, including the S&P 500, CS/Tremont Event Driven Index, HFRI Event Driven Index, and others.

As of June 30, 2018 , our investment portfolio included long and short equity securities, along with certain equity-based derivative instruments, the carrying values of which are primarily based on quoted market prices. Generally, market prices of common equity securities are subject to fluctuation, which could cause the amount to be realized upon the closing of the position to differ significantly from their current reported value. This risk is partly mitigated by the presence of both long and short equity securities in our investment portfolio. As of June 30, 2018 , a 10% decline in the value of all equity and equity-linked derivatives would result in a loss of $190.5 million, or 7.4% of our total net investments managed by Third Point LLC.

Computations of the prospective effects of hypothetical equity price changes are based on numerous assumptions, including the maintenance of the existing level and composition of investment securities and should not be relied on as indicative of future results.

Foreign Currency Risk

Reinsurance Contracts

We have foreign currency exposure related to non-U.S. dollar denominated reinsurance contracts. Of our gross premiums written from inception, $421.5 million, or 11.8%, were written in currencies other than the U.S. dollar. As of June 30, 2018 , loss and loss adjustment expense reserves included $169.9 million (December 31, 2017 - $177.2 million) and net reinsurance balances receivable included $16.4 million ( December 31, 2017 - $27.0 million) in foreign currencies. These foreign currency liability exposures were generally offset by foreign currencies held in trust accounts of $181.3 million as of June 30, 2018 ( December 31, 2017 - $179.9 million). The foreign currency cash and cash equivalents and investments held in reinsurance trust accounts are included in net investments managed by Third Point LLC. The exposure to foreign currency collateral held in trust accounts is excluded from the foreign currency investment exposure table below.

Investments

Third Point LLC continually measures foreign currency exposures in the investment portfolio and compares current exposures to historical movement within the relevant currencies. Within the ordinary course of business, Third Point LLC may decide to hedge foreign currency risk within our investment portfolio by using short-term forward contracts; however, from time to time Third Point LLC may determine not to hedge based on its views of the likely movements of the underlying currency.

We are exposed to foreign currency risk through cash, forwards, options and investments in securities denominated in foreign currencies. Foreign currency exchange rate risk is the potential for adverse changes in the U.S. dollar value of investments (long and short) and foreign currency derivative instruments, which we employ from both a speculative and risk management perspective, due to a change in the exchange rate of the foreign currency in which cash and financial instruments are denominated. As of June 30, 2018 , our total net short exposure to foreign denominated securities represented 22.4% ( December 31, 2017 - 26.2%) of our investment portfolio including cash and cash equivalents, of $577.8 million ( December 31, 2017 - $695.0 million).

The following table summarizes the net impact that a 10% increase and decrease in the value of the U.S. dollar against select foreign currencies would have had on the value of our investment portfolio as of June 30, 2018 :



	10% increase in U.S. dollar					10% decrease in U.S. dollar
	Change in fair value			Change in fair value as % of investment portfolio		Change in fair value			Change in fair value as % of investment portfolio
	($ in thousands)
Hong Kong Dollar	$	52,617		2.0	%	$	(52,617	)	(2.0	)%
Saudi Arabian Riyal	11,406			0.4	%	(11,406		)	(0.4	)%
Swiss Franc	(7,413		)	(0.3	)%	7,413			0.3	%
Other	1,166			0.1	%	(1,166		)	(0.1	)%
Total	$	57,776		2.2	%	$	(57,776	)	(2.2	)%

Interest Rate Risk

Our investment portfolio includes interest rate sensitive securities, such as U.S. treasury securities and sovereign debt instruments, ABS, and interest rate options and derivatives. One key market risk exposure for any debt instrument is interest rate risk. As interest rates rise, the fair value of our long fixed-income portfolio falls, and the opposite is also true as interest rates fall. Additionally, some of our sovereign debt instruments, ABS and derivative investments may also be credit sensitive and their value may indirectly fluctuate with changes in interest rates.

The effect of interest rate movements have historically not had a material impact on the performance of our investment portfolio as managed by Third Point LLC. However, our investment manager monitors the potential effects of interest rate shifts by performing stress tests against the portfolio composition using a proprietary in-house risk system.

The following table summarizes the impact that a 100 basis point increase or decrease in interest rates would have on the value of our investment portfolio as of June 30, 2018 :



	100 basis point increase in interest rates					100 basis point decrease in interest rates
	Change in fair value			Change in fair value as % of investment portfolio		Change in fair value			Change in fair value as % of investment portfolio
	($ in thousands)
U.S. treasuries and sovereign debt instruments ⁽¹⁾	$	(1,297	)	—	%	$	2,946		—	%
Asset-backed securities ⁽²⁾	(2,473		)	(0.1	)%	2,498			(0.1	)%
Interest rate swaps and derivatives	857			—	%	(857		)	—	%
Net exposure to interest rate risk	$	(2,913	)	(0.1	)%	$	4,587		(0.1	)%


(1)	Includes interest rate risk associated with investments held in reinsurance trust accounts.


(2)	Includes instruments for which durations are available on June 30, 2018 . Includes a convexity adjustment if convexity is available. Not included are mortgage hedges which would reduce the impact of interest rate changes.

For the purposes of the above table, the hypothetical impact of changes in interest rates on debt instruments, ABS, and interest rate options was determined based on the interest rates and credit spreads applicable to each instrument individually. We and our investment manager periodically monitor our net exposure to interest rate risk and generally do not expect changes in interest rates to have a materially adverse impact on our operations.

Commodity Price Risk

In managing our investment portfolio, Third Point LLC periodically monitors and actively trades to take advantage of, and/or seeks to minimize any losses from, fluctuations in commodity prices. As our investment manager, Third Point LLC may choose to opportunistically make a long or short investment in a commodity or in a security directly affected

by the price of a commodity as a response to market developments. From time to time, we invest in commodities or commodities exposures in the form of derivative contracts from both a speculative and risk management perspective. Generally, market prices of commodities are subject to fluctuation.

As of June 30, 2018 , our investment portfolio had de minimis ( December 31, 2017 - de minimis) commodity exposure.

We and our investment manager periodically monitor our exposure to commodity price fluctuations and generally do not expect changes in commodity prices to have a material adverse impact on our operations.

Credit Risk

Reinsurance Contracts

We have exposure to credit risk through reinsurance contracts with companies that write credit risk insurance. Our portfolio of risk is predominantly U.S. mortgage insurance and mortgage credit risk transfer. We provide our clients in these lines of business with reinsurance protection against credit deterioration, defaults or other types of financial non-performance. Loss experience in these lines of business has been very good but is cyclical and is affected by the state of the general economic environment. We proactively manage the risks associated with these credit-sensitive lines of business by closely monitoring its risk aggregation and by diversifying the underlying risks where possible. We have bought some retrocessional coverage against a subset of these risks. We have written $340.5 million, or 9.5%, of credit and financial lines premium since inception, of which $77.8 million was written in the six months ended June 30, 2018 . The majority of the mortgage insurance premium has been written as quota shares of private mortgage insurers, primarily in the United States.

We have exposure to credit risk as it relates to its business written through brokers, if any of our brokers are unable to fulfill their contractual obligations with respect to payments to us. In addition, in some jurisdictions, if the broker fails to make payments to the insured under our policy, we may remain liable to the insured for the deficiency. Our exposure to such credit risk is somewhat mitigated in certain jurisdictions by contractual terms.

We are exposed to credit risk relating to balances receivable under our reinsurance contracts, including premiums receivable, and the possibility that counterparties may default on their obligations to us. The risk of counterparty default is partially mitigated by the fact that any amount owed to us from a reinsurance counterparty would be netted against any losses we would pay in the future. We monitor the collectability of these balances on a regular basis.

Investments

We are also exposed to credit risk through our investment activities related to our separate accounts managed by Third Point LLC. Third Point LLC typically performs intensive fundamental analysis on the broader markets, credit spreads, security-specific information, and the underlying issuers of debt securities that are contained in our investment portfolio.

In addition, the securities and cash in our investment portfolio are held with several prime brokers, subjecting us to the related credit risk from the possibility that one or more of them may default on their obligations to us. Our investment manager closely and regularly monitors the concentration of credit risk with each broker and if necessary, transfers cash or securities among brokers to diversify and mitigate our credit risk.

As of June 30, 2018 and December 31, 2017 , the Company’s holdings in non-investment grade securities, those having a rating lower than BBB- as determined by Standard & Poor's or Fitch Ratings, Baa3 by Moody's Investor Services and securities not rated by any rating agency, were as follows:



	June 30, 2018		December 31, 2017
	($ in thousands)
Assets:
Asset-backed securities	$	180,771	$	225,499
Bank debt	22,566		14,550
Corporate bonds	53,175		77,086
Municipal bonds	40,432		—
Sovereign debt	9,638		26,134
Trade claims	3,068		7,496
Other debt securities	1,125		5,460
	$	310,775	$	356,225
Liabilities:
Corporate bonds	$	20,181	$	21,699
	$	20,181	$	21,699

As of June 30, 2018 and December 31, 2017 , all of our ABS holdings were private-label issued, non-investment grade securities, and none of these securities were guaranteed by a government sponsored entity. As of June 30, 2018 and December 31, 2017 , the largest concentration of our ABS holdings were as follows:



	June 30, 2018				December 31, 2017
	($ in thousands)
Reperforming loans	$	109,117	60.4	%	$	160,354	71.1	%
Market place loans	60,664		33.6	%	52,584		23.3	%
Other (1)	10,990		6.0	%	12,561		5.6	%
	$	180,771	100.0	%	$	225,499	100.0	%


(1)	Other includes: U.S. Alt-A positions, collateralized debt obligations, commercial mortgage-backed securities, non-U.S. RMBS and aircraft ABS.

The Company may also be exposed to non-investment grade securities held within certain investments in limited partnerships and derivatives. As a result of its investment in this type of ABS and certain other non-investment grade securities, our investment portfolio is exposed to credit risk of underlying borrowers, which may not be able to make timely payments on loans or which may default on their loans. All of these classes of ABS and certain other non-investment grade securities are sensitive to changes in interest rates and any resulting change in the rate at which borrowers sell their properties (in the case of mortgage backed securities), refinance or otherwise pre-pay loans. As an investor in these classes of ABS and certain other non-investment grade securities, we may be exposed to the credit risk of underlying borrowers not being able to make timely payments on loans or the likelihood of borrowers defaulting on their loans. In addition, we may be exposed to significant market and liquidity risks.

Liquidity Risk

Certain of our investments may become illiquid. Disruptions in the credit markets may materially affect the liquidity of certain investments, including ABS, which represent 5.8% ( December 31, 2017 - 7.5%) of total cash and investments as of June 30, 2018 . If we require significant amounts of cash on short notice in excess of normal cash requirements, which could include the payment of claims expenses or to satisfy a requirement of A.M. Best, in a period of market illiquidity, certain investments may be difficult to sell in a timely manner and may have to be disposed of for less than what may otherwise have been possible under normal conditions. As of June 30, 2018 , we had $2,362.0 million

( December 31, 2017 - $2,202.4 million) of unrestricted, liquid investment assets, defined as unrestricted cash and investments and securities with quoted prices available in active markets/exchanges.

Political Risk

Investments

We are exposed to political risk to the extent our investment manager trades securities that are listed on various U.S. and foreign exchanges and markets. The governments in any of these jurisdictions could impose restrictions, regulations or other measures, which may have a material impact on our investment strategy and underwriting operations.

In managing our investment portfolio, Third Point LLC routinely monitors and assesses relative levels of risk associated with local political and market conditions and focuses its investments primarily in countries in which it believes the rule of law is respected and followed, thereby affording more predictable outcomes of investments in that country.

Reinsurance Contracts

We also have limited political risk exposure in several reinsurance contracts with companies that write political risk insurance.

Recent Accounting Pronouncements

Refer to Note 2 to our condensed consolidated financial statements for the six months ended June 30, 2018 included in Item 1 of this Quarterly Report on Form 10-Q for details of recently issued accounting standards.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of June 30, 2018 . Based upon this evaluation, our Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2018 .

Changes in Internal Control over Financial Reporting

There have been no material changes to our internal control over financial reporting in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - Other Information

ITEM 1. Legal Proceedings

We anticipate that, similar to the rest of the reinsurance industry, we will be subject to litigation and arbitration from time to time in the ordinary course of business.

If we are subject to disputes in the ordinary course of our business, we anticipate engaging in discussions with the parties to the applicable contract to seek to resolve the matter. If such discussions are unsuccessful, we anticipate invoking the dispute resolution provisions of the relevant contract, which typically provide for the parties to submit to arbitration or litigation, as applicable, to resolve the dispute.

There are currently no material legal proceedings to which we or our subsidiaries are a party.

ITEM 1A. Risk Factors

The following should be read in conjunction with, and supplements and amends the factors that may affect the Company’s business, financial condition or results of operations described under “Risk Factors” in the Company’s Annual Report

on Form 10-K for the year ended December 31, 2017 (the “2017 10-K”). Other than described herein, there have been no material changes to our risk factors from the risk factors previously disclosed in the 2017 10-K. This report also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.

Risks Relating to Our Investment Strategy and Investment Manager

We expect to transition to a new investment management structure, which could subject us to various risks and uncertainties, any of which could impact our investment results and could materially and adversely affect our business, financial condition and results of operations.

On July 31, 2018, Third Point Re, Third Point Re BDA and Third Point Re USA entered into the Amended and Restated Exempted Limited Partnership Agreement (“LPA”) of Third Point Enhanced LP (“TP Fund”) with Third Point Advisors LLC (“TP GP”) and others, effective August 31, 2018. In accordance with the LPA, TP GP will serve as the general partner of TP Fund. On July 31, 2018, Third Point Re BDA and Third Point Re USA, together the “TPRE Limited Partners”, and TP Fund executed a Subscription Agreement pursuant to which the TPRE Limited Partners will transfer assets and related liabilities (other than certain collateral assets) from their separate accounts to TP Fund, and TP Fund will issue limited partner interests to the TPRE Limited Partners proportionate to and based on the net asset value of the assets and related liabilities transferred by each such entity on the applicable transfer date. Certain collateral assets consisting of debt securities and restricted cash will not be transferred to TP Fund. The collateral assets will be managed by Third Point LLC under a separate investment management agreement. Third Point Re BDA and Third Point Re USA will begin transferring the assets and related liabilities from their separate accounts to TP Fund on August 31, 2018, and substantially all of the assets are expected to be transferred by September 30, 2018. The Existing Agreements with TP GP and Third Point LLC will terminate on the date that all assets and related liabilities to be transferred to TP Fund under the Subscription Agreement have been transferred to TP Fund.

Pursuant to an Investment Management Agreement between Third Point LLC and TP Fund dated July 31, 2018 (the “TP Fund IMA”), Third Point LLC will be the investment manager for TP Fund. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Change in Investment Management Structure” for additional information on the new investment management structure. Following the change in our investment management structure, we may derive a significant portion of our income from our investment in TP Fund. Our operating results will therefore depend in part on the performance of TP Fund’s investment portfolio and on Third Point LLC as the investment manager of such portfolio.

TP Fund is not, and is not expected to be, registered as an “investment company” under the Investment Company Act of 1940 or any comparable regulatory requirements. Therefore, investors in TP Fund, including the TPRE Limited Partners, will not have the benefit of the protections afforded by such registration and regulation.

In addition, we will be subject to various existing and new risks and uncertainties, some of which we may not be able to identify at this time. These risks and uncertainties could impact our investment results and could materially and adversely affect our business, financial condition and results of operations.

Many of the risks we are currently subject to will continue to apply under our new investment management structure.

Many of the risks we are currently subject to, including those relating to our existing investment strategy and investment manager, will continue to apply to us under our new investment structure. In particular, many of the risks relating to Third Point LLC as our investment manager will continue to apply due to Third Point LLC’s role as the investment manager of TP Fund. For example, the risks relating to Third Point LLC’s strategy in managing investments, Third Point LLC’s risk management systems, and Third Point LLC’s use of hedging and derivative transactions in executing trades each generally remain applicable to us due to Third Point LLC’s management of TP Fund. In addition, economic and other risks remain applicable to us as a result of their impact on TP Fund’s investment portfolio, such as the potential impact of U.S. and global economic downturns. See “Risk Factors-Risks Relating to Our Investment Strategy and Investment Manager” in our 2017 10-K for additional factors that may affect the Company’s business, financial condition and results of operations.

Under our new investment management structure, we will not have control over TP Fund.

Under the LPA, TP GP will have exclusive management and control of the business of TP Fund, including the authority to undertake on behalf of TP Fund all actions that, in its sole judgment, are necessary or desirable to carry out its duties and responsibilities. These broad rights of TP GP include the power to delegate its authorities under the LPA. Pursuant to the TP Fund IMA, TP GP will delegate to Third Point LLC the authority to direct the investments of TP Fund and other day-to-day business of TP Fund. In addition, TP GP may resign or, subject to its minimum investment requirement, withdraw from TP Fund and may admit new limited partners without our consent. The TPRE Limited Partners will have no right to remove TP GP as general partner of TP Fund and will not have any right to participate in the management and conduct of TP Fund.

We expect to terminate our existing investment management agreements and have entered into a new investment management agreement with Third Point LLC to govern certain collateral assets that will not be transferred to TP Fund.

Upon the completion of the transfer of assets and related liabilities from Third Point Re BDA and Third Point Re USA to TP Fund and pursuant to the Subscription Agreement, we will terminate our existing investment management agreements with Third Point LLC. On July 31, 2018, Third Point Re BDA and Third Point Re USA entered into a new investment management agreement with Third Point LLC, effective August 31, 2018, pursuant to which Third Point LLC will serve as investment manager of certain collateral assets that are not transferred to TP Fund. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Change in Investment Management Structure” for a description of the material terms of the new investment management agreement.

Under our new investment management structure, we will have limited control over the allocation and performance of TP Fund’s investment portfolio.

Pursuant to the LPA, TP GP will be required to apply certain investment guidelines to TP Fund’s investment portfolio. In addition, the TP Fund IMA will contractually obligate Third Point LLC, as TP Fund’s investment manager, to comply with the investment guidelines. However, we cannot assure shareholders as to exactly how assets will be allocated to different investment opportunities, including long and short positions and derivatives trading, which could increase the level of risk in our investment in TP Fund. The performance of our investment in TP Fund will depend to a great extent on the ability of Third Point LLC, as TP Fund’s investment manager, to select and manage appropriate investments for TP Fund’s investment portfolio. We cannot assure you that Third Point LLC will be successful in meeting our investment objectives.

The failure of Third Point LLC to perform adequately could significantly and negatively affect the results of our investment in TP Fund and consequently could significantly and negatively affect our business, results of operations and financial condition.

In addition, under the LPA, TP GP will have the authority to dismiss from employment any and all agents, managers, consultants, advisors and other persons, including Third Point LLC. If TP GP chooses to dismiss Third Point LLC from employment as TP Fund’s investment manager, there is no assurance that TP GP will find or hire a suitable replacement. If TP GP were to hire a suitable replacement, there is no guarantee that any such replacement would provide TP Fund with comparable or better investment results than those that Third Point LLC may provide to TP Fund or than those that Third Point LLC has provided in the past to us.

TP Fund may be expected to indemnify Third Point LLC under certain circumstances in accordance with the TP Fund IMA. As a result, the capital accounts of TPRE Limited Partners in TP Fund could be reduced, which could have a material and adverse impact on our financial conditions and results of operations.

TP GP and its affiliates may engage in other business ventures and investment opportunities that may not be allocated equitably among us and such other business ventures.

Under the LPA, TP GP and its affiliates will have the ability to engage in or possess interests in other business activities, including investing or disposing of securities in which TP Fund may from time to time invest. TP GP or Third Point LLC may organize and manage one or more entities or accounts that may parallel the investment activities of TP Fund.

TP GP or Third Point LLC, as the case may be, may allocate investment opportunities among such entities or accounts, other affiliated funds and TP Fund as it deems to be fair and equitable in its sole discretion. However, we cannot be assured that the allocation of investment opportunities between TP Fund and such other entities, accounts or funds will be equitable.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes our repurchase of common shares during the three months ended June 30, 2018 :



	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share (1)		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 1, 2018 - April 30, 2018	—	$	—	—	$	176,162,892
May 1, 2018 - May 31, 2018	1,080,056	13.37		1,080,056	161,725,228
June 1, 2018 - June 30, 2018	1,605,909	13.79		1,605,909	139,579,994
Total	2,685,965	$	13.62	2,685,965	$	139,579,994

(1) Including commissions.

(2) On February 28, 2018, the Company’s Board of Directors authorized the repurchase of an additional $148.3 million common shares, which, together with the shares remaining under the share repurchase program previously authorized on May 4, 2016, will allow the Company to repurchase up to $200.0 million more of the Company’s outstanding common shares in the aggregate.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

Not applicable.

ITEM 6. Exhibits



3.2.1	Amended and Restated Bye-laws of Third Point Reinsurance Ltd.
10.33	Amended and Restated Exempted Limited Partnership Agreement of Third Point Enhanced LP, between Third Point Advisors LLC, as General Partner, Third Point Reinsurance Ltd., Third Point Reinsurance Company Ltd., Third Point Reinsurance (USA) Ltd., and the initial limited partner, dated as of July 31, 2018 (incorporated by reference to Exhibit 10.33 to the Company’s Current Report on Form 8-K filed with the SEC on July 31, 2018)
10.34	Subscription Agreement among Third Point Enhanced LP, Third Point Reinsurance Company Ltd., and Third Point Reinsurance (USA) Ltd., dated as of July 31, 2018 (incorporated by reference to Exhibit 10.34 to the Company’s Current Report on Form 8-K filed with the SEC on July 31, 2018)
10.35	Collateral Assets Investment Management Agreement among Third Point LLC, Third Point Reinsurance Company Ltd., and Third Point Reinsurance (USA) Ltd., dated as of July 31, 2018 (incorporated by reference to Exhibit 10.35 to the Company’s Current Report on Form 8-K filed with the SEC on July 31, 2018)
10.36	Unsecured Revolving Credit and Letter of Credit Facility Agreement among Third Point Reinsurance Ltd., Third Point Reinsurance Company Ltd., and Third Point Reinsurance (USA) Ltd., and SunTrust Bank, SunTrust Robinson Humphrey, Inc., RBC Capital Markets and ING Capital as Joint Lead Arrangers and Joint Bookrunners, dated as of July 31, 2018 (incorporated by reference to Exhibit 10.36 to the Company’s Current Report on Form 8-K filed with the SEC on July 31, 2018)
10.37	Termination Agreement among Third Point Reinsurance Company Ltd., Third Point Reinsurance Ltd., Third Point LLC and Third Point Advisors LLC, dated July 31, 2018 (incorporated by reference to Exhibit 10.37 to the Company’s Current Report on Form 8-K filed with the SEC on July 31, 2018)
10.38	Termination Agreement among Third Point Re (USA) Holdings Inc., Third Point Reinsurance (USA) Ltd., Third Point LLC and Third Point Advisors LLC, dated as of July 31, 2018 (incorporated by reference to Exhibit 10.38 to the Company’s Current Report on Form 8-K filed with the SEC on July 31, 2018)
10.4.5	Amendment No. 5 to Employment Agreement between Third Point Reinsurance Ltd. and Daniel Victor Malloy III, entered into as of April 1, 2018.
10.9.1	Amendment No. 1 to Employment Agreement between Third Point Reinsurance Ltd. and Nicholas Campbell, entered into as of April 1, 2018.
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	Third Point Reinsurance Ltd.
Date: July 31, 2018
	/s/ J. Robert Bredahl
	J. Robert Bredahl
	President and Chief Executive Officer
	(Principal Executive Officer)

	/s/ Christopher S. Coleman
	Christopher S. Coleman
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

AMENDED AND RESTATED

BYE-LAWS

THIRD POINT REINSURANCE LTD.

TABLE OF CONTENTS

INTERPRETATION


1.	Definitions


2.	Power to Issue Shares


3.	Power and Obligation of the Company to Purchase its Shares


4.	Rights Attaching to Shares


5.	Adjustment to Voting Power


6.	Certain Subsidiaries


7.	Special Actions


8.	Calls on Shares


9.	Forfeiture of Shares


10.	Share Certificates


11.	Fractional Shares

REGISTRATION OF SHARES


12.	Register of Members


13.	Registered Holder Absolute Owner


14.	Transfer of Registered Shares


15.	Transmission of Registered Shares

ALTERATION OF SHARE CAPITAL


16.	Power to Alter Capital


17.	Variation of Rights Attaching to Shares

DIVIDENDS AND CAPITALISATION


18.	Dividends


19.	Power to Set Aside Profits


20.	Method of Payment


21.	Capitalisation

MEETINGS OF MEMBERS


22.	Annual General Meetings


23.	Special General Meetings


24.	Requisitioned General Meetings


25.	Notice


26.	Giving Notice and Access


27.	Notice of Nominations and Member Business


28.	Postponement or Cancellation of General Meeting


29.	Electronic Participation and Security in Meetings


30.	Quorum at General Meetings


31.	Chairman to Preside at General Meetings


32.	Voting on Resolutions


33.	Power to Demand a Vote on a Poll


34.	Voting by Joint Holders of Shares


35.	Instrument of Proxy


36.	Representation of Corporate Member


37.	Adjournment of General Meeting


38.	Written Resolutions


39.	Directors Attendance at General Meetings

DIRECTORS AND OFFICERS


40.	Election of Directors


41.	Number of Directors


42.	Term of Office of Directors


43.	Alternate Directors; Board Observers


44.	Removal of Directors


45.	Vacancy in the Office of Director


46.	Remuneration of Directors


47.	Defect in Appointment


48.	Directors to Manage Business


49.	Powers of the Board of Directors


50.	[ Intentionally Omitted ]


51.	Register of Directors and Officers


52.	Appointment of Officers


53.	Appointment of Secretary


54.	Duties of Officers


55.	Remuneration of Officers


56.	Conflicts of Interest


57.	Indemnification and Exculpation of Directors and Officers

MEETINGS OF THE BOARD OF DIRECTORS


58.	Board Meetings


59.	Notice of Board Meetings


60.	Electronic Participation in Meetings


61.	Quorum at Board Meetings


62.	Board to Continue in the Event of Vacancy


63.	Chairman to Preside


64.	Written Resolutions


65.	Validity of Prior Acts of the Board

CORPORATE RECORDS


66.	Minutes


67.	Place Where Corporate Records Kept


68.	Form and Use of Seal

ACCOUNTS


69.	Records of Account


70.	Financial Year End

AUDITS


71.	Annual Audit


72.	Appointment of Auditor


73.	Remuneration of Auditor


74.	Duties of Auditor


75.	Access to Records


76.	Financial Statements


77.	Distribution of Auditor’s Report


78.	Vacancy in the Office of Auditor


79.	Business Combinations

VOLUNTARY WINDING-UP AND DISSOLUTION


80.	Winding-Up

CHANGES TO CONSTITUTION


81.	Changes to Bye-laws


82.	Changes to the Memorandum of Association


83.	Discontinuance

INTERPRETATION


1.	Definitions


1.1	In these Bye-laws, the following words and expressions shall, where not inconsistent with the context, have the following meanings, respectively:


9.5% Shareholder	a U.S. Person that (a) owns (within the meaning of Section 958(a) of the Code) any shares and (b) owns, is deemed to own, or constructively owns Controlled Shares which confer votes in excess of 9.5% of the votes conferred by all of the issued and outstanding shares;


Act	the Companies Act 1981 as amended from time to time;


Affiliate	with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person.


Alternate Director	an alternate director appointed in accordance with these Bye-laws;


Auditor	includes an individual or partnership;


Board	the board of directors appointed or elected pursuant to these Bye-laws and acting by resolution in accordance with the Act and these Bye-laws or the directors present at a meeting of directors at which there is a quorum;

Book Value

as of any date of determination, the fully diluted tangible book value per share of the Company, as reflected on the then most recent quarterly consolidated balance sheet of the Company and its consolidated subsidiaries, prepared in accordance with U.S. generally accepted accounting principles; provided that the Board shall have the authority to determine Book Value with reference to a then more recent balance sheet of the Company prepared in accordance with U.S. generally accepted accounting principles;


Code	The Internal Revenue Code of 1986, as amended, of the United States of America;


Company	Third Point Reinsurance Ltd., the company for which these Bye-laws are approved and confirmed;


Company Sale	the sale of all or substantially all of the issued and outstanding Shares of the Company and/or TP Re.


Controlled Group	with respect to any person, all shares directly owned by such person and all shares directly owned by each other Member any of whose shares are included in the Controlled Shares of such person;


Controlled Shares	in reference to any person, all shares that such person is deemed to own directly, indirectly (within the meaning of Section 958(a) of the Code) or, in the case of any U.S. Person, constructively (within the meaning of Section 958(b) of the Code);


Daily Share Price	with respect to the shares of the Company as of any Trading Day, the closing price of the shares of the Company on the New York Stock Exchange (or such other principal stock exchange or automated quotation system on which the shares of the Company are then traded) on such Trading Day;


Director	a director of the Company and shall include an Alternate Director;


Disinterested Board Members	Directors, other than Daniel S. Loeb or any other Director affiliated with or employed by the Sponsor or its Affiliates;


Effective Date	the first date on which Kelso (as defined in Bye-law 7.1) and their affiliates, Pine Brook (as defined in Bye-law 7.1) and their affiliates, and Daniel S. Loeb and his affiliates (collectively, “Daniel S. Loeb”), taken together, no longer beneficially own more than 35% of the voting power of the Company;

Fair Market Value

with respect to a repurchase of any shares of the Company in accordance with these Bye-laws, (i) if such shares are listed on a securities exchange (or quoted in a securities quotation system), the average closing sale price of such shares on such exchange (or in such quotation system), or, if such shares are listed on (or quoted in) more than one exchange (or quotation system), the average closing sale price of the shares on the principal securities exchange (or quotation system) on which such shares are then traded, or, if such shares are not then listed on a securities exchange (or quotation system) but are traded in the over-the-counter market, the average of the latest bid and asked quotations for such shares in such market, in each case for the last five trading days immediately preceding the day on which notice of the repurchase of such shares is sent pursuant to these Bye-laws or (ii) if no such closing sales prices or quotations are available because such shares are not publicly traded or otherwise, the fair value of such shares as determined by one independent nationally recognised investment banking firm chosen by the Board and reasonably satisfactory to the Member whose shares are to be so repurchased by the Company, provided , that the calculation of the Fair Market Value of the shares made by such appointed investment banking firm (i) shall not include any discount relating to the absence of a public trading market for, or any transfer restrictions on, such shares, and (ii) such calculation shall be final and the fees and expenses stemming from such calculation shall be borne by the Company or its assignee, as the case may be;

Initial Public Offering

the first registered public offering of any class of common shares of the Company or TP Re under the United States securities laws or any amalgamation, scheme of arrangement or consolidation as a result of which the Members receive, as the consideration in such amalgamation, scheme of arrangement or consolidation, equity securities of a class that (i) has been registered as part of a public offering under the United States securities laws and (ii) is publicly traded on the New York Stock Exchange (or such other principal stock exchange or automated quotation system on which the shares of the Company or TP Re are then traded);


Investment Manager	the Person appointed to manage the assets of TP Re pursuant to an investment management agreement;

Joint Venture and Investment the Joint Venture and Investment Management Agreement Management Agreement by and among TP Re, the Company, Sponsor and Third Point Advisors LLC, dated as of December 22, 2011


Member	a person registered in the Register of Members as the holder of shares in the Company and, when two or more persons are so registered as joint holders of shares, means the person whose name stands first in the Register of Members as one of such joint holders or all of such persons, as the context so requires;


Notice	written notice as further provided in these Bye-laws unless otherwise specifically stated;


Officer	any person appointed by the Board to hold an office in the Company;


Person	any individual, corporation, association, partnership, limited liability company, joint venture, joint stock or other company, business trust, trust, organization, governmental authority or other entity of any kind;

Qualified Initial Public Offering

(i) a registered public offering or registered public offerings on a national securities exchange of any class of common shares of the Company or TP Re under the United States securities laws, or (ii) any amalgamation, scheme of arrangement or consolidation as a result of which the Members receive, as the consideration in such amalgamation, scheme of arrangement or consolidation, equity securities of a class that (a) has been registered as part of a public offering under the United States securities laws and (b) is publicly traded on a national securities exchange, in either of case (i) or (ii), immediately following which the Company and TP Re together shall have received no less than U.S. $150,000,000;


Register of Directors and Officers	the register of directors and officers referred to in these Bye-laws;


Register of Members	the register of members referred to in these Bye-laws;


Regulatory Authority	any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization;


Resident Representative	any person appointed to act as resident representative and includes any deputy or assistant resident representative;


Secretary	the person appointed to perform any or all of the duties of secretary of the Company and includes any deputy or assistant secretary and any person appointed by the Board to perform any of the duties of the Secretary;


Shares	shall be deemed to include the authorized shares of the Company, and other common shares of the Company and any options, warrants or securities exercisable for, or convertible or redeemable into, common shares of the Company;


Sponsor	Third Point LLC;


Subsidiary	with respect to any Person, means a company, more than fifty percent (50%) (or, in the case of a wholly owned subsidiary, one hundred percent (100%)) of the outstanding voting shares of which are owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person, or any such Person and one or more other Subsidiaries;


TP Re	Third Point Reinsurance Company Ltd.;


Trading Day	any day on which the New York Stock Exchange (or such other principal stock exchange or automated quotation system on which the shares of the Company are then traded) is open for trading in securities listed thereon;


Treasury Share	a share of the Company that was or is treated as having been acquired and held by the Company and has been held continuously by the Company since it was so acquired and has not been cancelled;


United States	the United States of America and its dependent territories or any part thereof;


U.S. Person	a “United States person” as defined in Section 957(c) of the Code; and


1.2	In these Bye-laws, where not inconsistent with the context:


(a)	words denoting the plural number include the singular number and vice versa;


(b)	words denoting the masculine gender include the feminine and neuter genders;


(c)	words importing persons include companies, associations or bodies of persons whether corporate or not;


(d)	the words:


(i)	"may" shall be construed as permissive; and


(ii)	"shall" shall be construed as imperative; and


(e)	a reference to statutory provision shall be deemed to include any amendment or re-enactment thereof;


(f)	the word “corporation” means a corporation whether or not a company within the meaning of the Act;


(g)	unless otherwise provided herein, words or expressions defined in the Act shall bear the same meaning in these Bye-laws.


1.3	In these Bye-laws expressions referring to writing or its cognates shall, unless the contrary intention appears, include facsimile, printing, lithography, photography, electronic mail and other modes of representing words in visible form.


1.4	Headings used in these Bye-laws are for convenience only and are not to be used or relied upon in the construction hereof.


2.	Power to Issue Shares

2.1

Subject to these Bye-laws and to any resolution of the Members to the contrary, and without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, the Board shall have the power to issue any unissued shares on such terms and conditions as it may determine and any shares or class of shares may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital, or otherwise as the Company may by resolution of the Members prescribe.


2.2	Subject to the Act, any preference shares may be issued or converted into shares that (at a determinable date or at the option of the Company or the holder) are liable to be redeemed on such terms and in such manner as may be determined by the Board (before the issue or conversion).


3.	Power and Obligation of the Company to Purchase its Shares


3.1	The Company may purchase its own shares for cancellation or acquire them as Treasury Shares in accordance with the Act on such terms as the Board shall think fit.


3.2	The Board may exercise all the powers of the Company to purchase or acquire all or any part of its own shares in accordance with the Act.

3.3

If at any time following the first anniversary of an Initial Public Offering, the average of the Daily Share Price for each Trading Day in the then most recent 12 month period is 90% or less of the Book Value, then the Company shall make an offer to repurchase a number of shares of the Company that, when combined with all prior repurchases pursuant to this Bye-Law 3.3, does not exceed 15% of the sum of (a) the number of shares of the Company outstanding after such repurchase and (b) the aggregate number of shares repurchased, provided that the majority of the Disinterested Board Members may, in its sole discretion, determine not to offer to make such a repurchase. Any offer to repurchase the Repurchase Offer Shares pursuant to Bye-law 3.3 shall be for a price per share determined by the Board, but in no event greater than Book Value.


3.4	No repurchase offer pursuant to Bye-law 3.3 shall be required if such repurchase does not comply with the Act or would result in (i) an adverse ratings action against the Company or TP Re by A.M. Best & Company, or (ii) any adverse action against the Company or TP Re by any Regulatory Authority.

3.5

Subject to the Act, if the Board in its sole discretion determines that ownership of shares of the Company by any Person may result in adverse tax consequences or materially adverse legal or regulatory treatment to the Company, any Subsidiary of the Company or any other Person (including if such consequence arises as a result of any U.S. Person owning Controlled Shares of 9.5% or more of the value of the Company or the voting shares of the Company after giving effect to any adjustment to voting power required by Bye-law 5), the Company will have the option, but not the obligation, to purchase all or part of the shares of the Company held by such Person to the extent the Board, in the reasonable exercise of its discretion, determines it is necessary to avoid or cure such adverse consequences) for immediately available funds in an amount equal to the Fair Market Value of such shares on the business day immediately prior to the date the Company sends the Repurchase Notice referred to below (the “Repurchase Price”); provided , that the Board will use reasonable efforts to exercise this option equally among similarly situated Persons (to the extent possible under the circumstances). In the event that the Company determines to purchase any such shares, the Company will be entitled to assign its purchase right to a third party or parties, including one or more of the other Persons, with the consent of such assignee. Each Person shall be bound by the determination by the Company to purchase or assign its right to purchase such Person’s shares and, if so required by the Company, shall sell the number of shares of the Company that the Company requires it to sell.

3.6

In the event that the Company or its assignee(s) determines to purchase any such shares, the Company shall provide each Member concerned with written notice of such determination (a “Repurchase Notice”) at least seven (7) calendar days prior to such purchase or such shorter period as each such Member may authorise, specifying the date on which any such shares are to be purchased and the Repurchase Price. The Company may revoke the Repurchase Notice at any time before it (or its assignee(s)) pays for the shares. Neither the Company nor its assignee(s) shall be obligated to give general notice to any Person of any intention to purchase or the conclusion of any purchase of shares of the Company. The closing of any such purchase of shares of the Company shall be no less than seven (7) calendar days after receipt of the Repurchase Notice by the Member, unless such Member agrees to a shorter period, and payment of the Repurchase Price by the Company or its assignee(s) shall be by wire transfer or certified check.

3.7

If the Company purchases any shares pursuant to Bye-laws 3.5 and 3.6, it shall do so only in a manner that the Board believes would not result, upon consummation of such transaction, in any U.S. Person owning Controlled Shares of 9.5% or more of the value of the Company or the voting shares of the Company (after giving effect to any adjustment to voting power required by Bye-law 5). Notwithstanding the foregoing, the Board, in its sole discretion and by unanimous consent of all of the Directors then in office, may waive the provisions of Bye-laws 3.5 and 3.6.


4.	Rights Attaching to Shares


4.1	At the date these Bye-laws are adopted, the share capital of the Company is divided into two classes: (i) common shares (the “Common Shares”) and (ii) preference shares (the “Preference Shares”).


4.2	The holders of the Common Shares shall, subject to these Bye-laws (including, without limitation, the rights attaching to Preference Shares):


(a)	be entitled to one vote per share;


(b)	be entitled to such dividends as the Board may from time to time declare;


(c)	in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganisation or otherwise or upon any distribution of capital, be entitled to the surplus assets of the Company; and


(d)	generally be entitled to enjoy all of the rights attaching to shares.

4.3

The Board is authorised to provide for the issuance of the Preference Shares in one or more series, and to establish from time to time the number of shares to be included in each such series, and to establish from time to time the number of shares to be included in each series, and to fix the terms, including designation, powers, preferences, rights, qualifications, limitations and restrictions of the shares of each such series (and, for the avoidance of doubt, such matters and the issuance of such Preference Shares shall not be deemed to vary the rights attached to the Common Shares or, subject to the terms of any other series of Preference Shares, to vary the rights attached to any other series of Preference Shares). The authority of the Board with respect to each series shall include, but not be limited to, determination of the following:


(a)	the number of shares constituting that series and the distinctive designation of that series;


(b)	the dividend rate on the shares of that series, whether dividends shall be cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of the payment of dividends on shares of that series;


(c)	whether the series shall have voting rights, in addition to the voting rights provided by law and, if so, the terms of such voting rights;


(d)	whether the series shall have conversion or exchange privileges (including, without limitation, conversion into Common Shares) and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the Board shall determine;

(e)

whether or not the shares of that series shall be redeemable or repurchaseable and, if so, the terms and conditions of such redemption or repurchase, including the manner of selecting shares for redemption or repurchase if less than all shares are to be redeemed or repurchased, the date or dates upon or after which they shall be redeemable or repurchaseable, and the amount per share payable in case of redemption or repurchase, which amount may vary under different conditions and at different redemption or repurchase dates;


(f)	whether that series shall have a sinking fund for the redemption or repurchase of shares of that series and, if so, the terms and amount of such sinking fund;

(g)

the right of the shares of that series to the benefit of conditions and restrictions upon the creation of indebtedness of the Company or any Subsidiary, upon the issue of any additional shares (including additional shares of such series or any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Company or any Subsidiary of any issued shares of the Company;


(h)	the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, and the relative rights of priority, if any, of payment in respect of shares of that series; and


(i)	any other relative participating, optional or other special rights, qualifications, limitations or restrictions of that series.

4.4

Any Preference Shares of any series which have been redeemed (whether through the operation of a sinking fund or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of any other class or classes shall have the status of authorised and unissued Preference Shares of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of Preference Shares to be created by resolution or resolutions of the Board or as part of any other series of Preference Shares, all subject to the conditions and the restrictions on issuance set forth in the resolution or resolutions adopted by the Board providing for the issue of any series of Preference Shares.

4.5

At the discretion of the Board, whether or not in connection with the issuance and sale of any shares or other securities of the Company, the Company may issue securities, contracts, warrants or other instruments evidencing any shares, option rights, securities having conversion or option rights, or obligations on such terms, conditions and other provisions as are fixed by the Board including, without limiting the generality of this authority, conditions that preclude or limit any person or persons owning or offering to acquire a specified number or percentage of the issued Common Shares, other shares, option rights, securities having conversion or option rights, or obligations of the Company or transferee of the person or persons from exercising, converting, transferring or receiving the shares, option rights, securities having conversion or option rights, or obligations.


4.6	All the rights attaching to a Treasury Share shall be suspended and shall not be exercised by the Company while it holds such Treasury Share and, except where required by the Act, all Treasury Shares shall be excluded from the calculation of any percentage or fraction of the share capital, or shares, of the Company.


5.	Adjustment to Voting Power

5.1

If the votes conferred by the Controlled Shares of any Person would otherwise cause such Person or any other Person to be treated as a 9.5% Shareholder with respect to any matter (including, without limitation, election of directors), the votes with respect to such matter conferred by the shares of such Person’s Controlled Group are hereby reduced (and shall be automatically reduced in the future) by whatever amount is necessary so that, after any such reduction, the votes conferred by the Controlled Shares of such Person shall not result in such Person or any other Person being treated as a 9.5% Shareholder with respect to the vote on such matter.


5.2	The reduction in votes pursuant to the preceding Bye-law shall be determined as follows:

(a)

Beginning with the Controlled Group of the Person whose Controlled Shares have the largest number of votes and continuing, as required, with the Controlled Group of each Person whose Controlled Shares successively have a smaller number of votes (after giving effect to prior reductions), the reduction in votes conferred by the shares of a Controlled Group shall be effected proportionately among all the shares of such Controlled Group in accordance with the relative voting power of such shares. Generally, the Board will effectuate the reduction of votes in the manner and order described in the preceding sentence. If varying the order in which votes are reduced would result in a more equitable allocation of the reduction of votes as determined by the Board, the Board shall have the discretion to vary the order in which votes are reduced.

(b)

If there is a Person whose activities have been determined by the Board to have caused the application of subparagraph (a), after all required reductions in votes conferred on shares of Controlled Groups are effected pursuant to subparagraph (a), (i) the amount of any reduction in the votes of the shares of each Controlled Group effected by application of subparagraph (a) above shall be reallocated within such Controlled Group and conferred on the shares held directly by the Person whose actions have been determined by the Board to have caused the application of such subparagraph and (ii) the voting power of the shares held by each other Person holding shares in such Controlled Group shall be increased by such Person’s proportionate share of such reduction, in each case, to the extent that so doing does not cause any Person to be treated as a 9.5% Shareholder.

5.3

The Board shall implement the foregoing in the manner set forth in this Bye-law 5. In addition to any other provision of this Bye-law 5, any shares shall not carry rights to vote or shall have reduced voting rights to the extent that the Board reasonably determines, by the affirmative vote of a majority of the Directors, that it is reasonably necessary that such shares should not carry the right to vote or shall have reduced voting rights in order to avoid adverse tax consequences or materially adverse legal or regulatory treatment to the Company, any Subsidiary of the Company or any Person or its Affiliates; provided that the Board will use reasonable efforts to ensure equal treatment to similarly situated Persons to the extent possible under the circumstances and; provided further that the Board shall reallocate the amount of any reduction in vote in the manner described in Bye-law 5.2(b).

5.4

The Board shall have the authority to request from any Member such information as the Board may reasonably request for the purpose of determining whether any Member’s voting rights are to be adjusted. If any Member fails to respond to such a request, or submits incomplete or inaccurate information in response to such a request, the Board may in its sole discretion determine that such Member’s shares shall carry no voting rights, in which case such shares shall not carry any voting rights until otherwise determined by the Board in its absolute discretion.

Any Member shall give notice to the Company within ten days following the date that such Member acquires actual knowledge that it or, to the extent practicable, any Person who is a deemed or constructive owner of such Member’s Controlled Shares, is the actual, deemed or constructive owner of Controlled Shares of 9.5% or more of the Company.

The determination by the Board, taking into account any written advice of outside legal counsel which the Board determines to obtain, as to any adjustments to voting power of any share made pursuant to this Bye-law 5 shall be final and binding on all Persons.


6.	Certain Subsidiaries

6.1

Notwithstanding any other provision of these Bye-laws to the contrary, if the Company is required or entitled to vote at a general meeting of any subsidiary of the Company that is not a corporation organized under the laws of the United States or any state (or limited liability company organized under the laws of the United States or any state that is taxable as a corporation for United States Federal income tax purposes) or that is not treated as a pass-through vehicle or disregarded entity for United States federal income tax purposes (unless such disregarded entity owns, directly or indirectly, any subsidiary organized under the laws of a jurisdiction outside the United States that is treated as a corporation for United States federal income tax purposes) (together, the “Designated Companies”), the Board shall refer the subject matter of the vote (other than the removal and remuneration of auditors, the approval of financial statements and reports thereon, and the remuneration of Directors) to the Members of the Company on a poll (subject to Bye-law 5) and seek authority from the Members for the Company's corporate representative or proxy to vote in favour of the resolution proposed by the Designated Company. The Board shall cause the Company's corporate representative or proxy to vote the Company's shares in the Designated Company pro rata to the votes received at the general meeting of the Company, with votes for or against the directing resolution being taken, respectively, as an instruction for the Company's corporate representative or proxy to vote the appropriate proportion of its shares for and the appropriate proportion of its shares against the resolution proposed by the Designated Company. The Board shall have authority to resolve any ambiguity.

6.2

The Board in its discretion shall require that the Bye-laws or Articles of Association or similar organizational documents of each Designated Company shall contain provisions substantially similar to this Bye-law 6. The Company shall enter into agreements, as and when determined by the Board, with each such Designated Company, only if and to the extent reasonably necessary and permitted under applicable law, to effectuate or implement this Bye-law 6.


7.	Special Actions

7.1

Notwithstanding anything to the contrary in these Bye-laws, the Company shall not and shall cause TP Re not to subject to Bye-Law 7.2 without the prior and express written consent of each of Daniel S. Loeb, KEP TP Holdings, L.P. and KIA TP Holdings, L.P. (collectively, “Kelso”) and Pine Brook LVR, L.P. (“Pine Brook” and together with Kelso (the “Lead Investors”) and together with Daniel S. Loeb, the “Founders”) enter into any transaction with any (i) Affiliate of the Company, (ii) Member and/or director, officer, employee, and/or Affiliate of any Member, and/or (iii) director, officer, employee, and/or Affiliate of any of the foregoing.


7.2	Notwithstanding anything to the contrary in these Bye-Laws, the consent right of each Founder set forth in Bye-Law 7.1 shall survive an Initial Public Offering until such time as such Founder holds shares representing less than 25% of the shares held by such Founder on December 22, 2011.


8.	Calls on Shares

8.1

The Board may make such calls as it thinks fit upon the Members in respect of any moneys (whether in respect of nominal value or premium) unpaid on the shares allotted to or held by such Members (and not made payable at fixed times by the terms and conditions of issue) and, if a call is not paid on or before the day appointed for payment thereof, the Member may at the discretion of the Board be liable to pay the Company interest on the amount of such call at such rate as the Board may determine, from the date when such call was payable up to the actual date of payment. The Board may differentiate between the holders as to the amount of calls to be paid and the times of payment of such calls.

8.2

Any amount which, by the terms of allotment of a share, becomes payable upon issue or at any fixed date, whether on account of the nominal value of the share or by way of premium, shall for the purposes of these Bye-laws be deemed to be an amount on which a call has been duly made and payable on the date on which, by the terms of issue, the same becomes payable, and in case of non-payment all the relevant provisions of these Bye-laws as to payment of interest, costs and expenses, forfeiture or otherwise shall apply as if such amount had become payable by virtue of a duly made and notified call.


8.3	The joint holders of a share shall be jointly and severally liable to pay all calls and any interest, costs and expenses in respect thereof.


8.4	The Company may accept from any Member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up or become payable.


9.	Forfeiture of Shares


9.1	If any Member fails to pay, on the day appointed for payment thereof, any call pursuant to Bye-law 8 in respect of any share allotted to or held by such Member, the Board may, at any time thereafter during such time as the call remains unpaid, direct the Secretary to forward such Member a notice in writing in the form, or as near thereto as circumstances admit, of the following:

Notice of Liability to Forfeiture for Non-Payment of Call
Third Point Reinsurance Ltd. (the "Company")

You have failed to pay the call of [amount of call] made on the [date], in respect of the [number] share(s) [number in figures] standing in your name in the Register of Members of the Company, on the [date], the day appointed for payment of such call. You are hereby notified that unless you pay such call together with interest thereon at the rate of [●] per annum computed from the said [date] at the registered office of the Company the share(s) will be liable to be forfeited.

Dated this [date]

[Signature of Secretary] By Order of the Board

9.2

If the requirements of such notice are not complied with, any such share may at any time thereafter before the payment of such call and the interest due in respect thereof be forfeited by a resolution of the Board to that effect, and such share shall thereupon become the property of the Company and may be disposed of as the Board shall determine. Without limiting the generality of the foregoing, the disposal may take place by sale, repurchase, redemption or any other method of disposal permitted by and consistent with these Bye-laws and the Act.


9.3	A Member whose share or shares have been so forfeited shall, notwithstanding such forfeiture, be liable to pay to the Company all calls owing on such share or shares at the time of the forfeiture, together with all interest due thereon and any costs and expenses incurred by the Company in connection therewith.


9.4	The Board may accept the surrender of any shares which it is in a position to forfeit on such terms and conditions as may be agreed. Subject to those terms and conditions, a surrendered share shall be treated as if it had been forfeited.


10.	Share Certificates

10.1

Every Member shall be entitled to a certificate under the common seal (or a facsimile thereof) of the Company or bearing the signature (or a facsimile thereof) of a Director or the Secretary or a person expressly authorised to sign specifying the number and, where appropriate, the class of shares held by such Member and whether the same are fully paid up and, if not, specifying the amount paid on such shares. The Board may by resolution determine, either generally or in a particular case, that any or all signatures on certificates may be printed thereon or affixed by mechanical means.


10.2	The Company shall be under no obligation to complete and deliver a share certificate unless specifically called upon to do so by the person to whom the shares have been allotted.


10.3	If any share certificate shall be proved to the satisfaction of the Board to have been worn out, lost, mislaid, or destroyed the Board may cause a new certificate to be issued and request an indemnity for the lost certificate if it sees fit.


10.4	Notwithstanding any provisions of these Bye-laws:

(a)

the Board shall, subject always to the Act and any other applicable laws and regulations and the facilities and requirements of any relevant system concerned, have power to implement any arrangements it may, in its absolute discretion, think fit in relation to the evidencing of title to and transfer of uncertificated shares and to the extent such arrangements are so implemented, no provision of these Bye-laws shall apply or have effect to the extent that it is in any respect inconsistent with the holding or transfer of shares in uncertificated form; and

(b)

unless otherwise determined by the Board and as permitted by the Act and any other applicable laws and regulations including applicable rules of the New York Stock Exchange, no person shall be entitled to receive a certificate in respect of any share for so long as the title to that share is evidenced otherwise than by a certificate and for so long as transfers of that share may be made otherwise than by a written instrument.


11.	Fractional Shares

The Company may issue its shares in fractional denominations and deal with such fractions to the same extent as its whole shares and shares in fractional denominations shall have in proportion to the respective fractions represented thereby all of the rights of whole shares including (but without limiting the generality of the foregoing) the right to vote, to receive dividends and distributions and to participate in a winding-up.

REGISTRATION OF SHARES


12.	Register of Members


12.1	The Board shall cause to be kept in one or more books a Register of Members and shall enter therein the particulars required by the Act.

12.2

The Register of Members shall be open to inspection without charge at the registered office of the Company on every business day, subject to such reasonable restrictions as the Board may impose, so that not less than two hours in each business day be allowed for inspection. The Register of Members may, after notice has been given in accordance with the Act, be closed for any time or times not exceeding in the whole thirty days in each year.


13.	Registered Holder Absolute Owner

The Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable claim or other claim to, or interest in, such share on the part of any other person.


14.	Transfer of Registered Shares


14.1	An instrument of transfer shall be in writing in the form of the following, or as near thereto as circumstances admit, or in such other form as the Board may accept:

Transfer of a Share or Shares
Third Point Reinsurance Ltd. (the "Company")

FOR VALUE RECEIVED……………….. [amount], I, [name of transferor] hereby sell, assign and transfer unto [transferee] of [address], [number] shares of the Company.

DATED this [date]

Signed by: In the presence of:

____________________ __________________

Transferor Witness

Signed by: In the presence of:

____________________ ________________

Transferee Witness

14.2

Such instrument of transfer shall be signed by (or in the case of a party that is a corporation, on behalf of) the transferor and transferee, provided that, in the case of a fully paid share, the Board may accept the instrument signed by or on behalf of the transferor alone. The transferor shall be deemed to remain the holder of such share until the same has been registered as having been transferred to the transferee in the Register of Members.


14.3	The Board may refuse to recognise any instrument of transfer unless it is accompanied by the certificate in respect of the shares to which it relates and by such other evidence as the Board may reasonably require showing the right of the transferor to make the transfer.


14.4	The joint holders of any share may transfer such share to one or more of such joint holders, and the surviving holder or holders of any share previously held by them jointly with a deceased Member may transfer any such share to the executors or administrators of such deceased Member.

14.5

The Board may in its absolute discretion and without assigning any reason therefore refuse to register the transfer of a share which is not fully paid up. The Board shall refuse to register a transfer unless all applicable consents, authorisations and permissions of any governmental body or agency in Bermuda have been obtained. If the Board refuses to register a transfer of any share the Secretary shall, within three months after the date on which the transfer was lodged with the Company, send to the transferor and transferee notice of the refusal.


14.6	Shares may be transferred without a written instrument if transferred by an appointed agent or otherwise in accordance with the Act.


15.	Transmission of Registered Shares

15.1

In the case of the death of a Member, the survivor or survivors where the deceased Member was a joint holder, and the legal personal representatives of the deceased Member where the deceased Member was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Member's interest in the shares. Nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by such deceased Member with other persons. Subject to the Act, for the purpose of this Bye-law, legal personal representative means the executor or administrator of a deceased Member or such other person as the Board may, in its absolute discretion, decide as being properly authorised to deal with the shares of a deceased Member.

15.2

Any person becoming entitled to a share in consequence of the death or bankruptcy of any Member may be registered as a Member upon such evidence as the Board may deem sufficient or may elect to nominate some person to be registered as a transferee of such share, and in such case the person becoming entitled shall execute in favour of such nominee an instrument of transfer in writing in the form, or as near thereto as circumstances admit, of the following:

Transfer by a Person Becoming Entitled on Death/Bankruptcy of a Member
Third Point Reinsurance Ltd. (the "Company")

I/We, having become entitled in consequence of the [death/bankruptcy] of [name and address of deceased/bankrupt Member] to [number] share(s) standing in the Register of Members of the Company in the name of the said [name of deceased/bankrupt Member] instead of being registered myself/ourselves, elect to have [name of transferee] (the "Transferee") registered as a transferee of such share(s) and I/we do hereby accordingly transfer the said share(s) to the Transferee to hold the same unto the Transferee, his or her executors, administrators and assigns, subject to the conditions on which the same were held at the time of the execution hereof; and the Transferee does hereby agree to take the said share(s) subject to the same conditions.

DATED this [date]

Signed by: In the presence of:

____________________ __________________

Transferor Witness

Signed by: In the presence of:

____________________ ________________

Transferee Witness

15.3

On the presentation of the foregoing materials to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Member. Notwithstanding the foregoing, the Board shall, in any case, have the same right to decline or suspend registration as it would have had in the case of a transfer of the share by that Member before such Member's death or bankruptcy, as the case may be.


15.4	Where two or more persons are registered as joint holders of a share or shares, then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to such share or shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.

ALTERATION OF SHARE CAPITAL


16.	Power to Alter Capital


16.1	The Company may if authorised by resolution of the Members increase, divide, consolidate, subdivide, change the currency denomination of, diminish or otherwise alter or reduce its share capital in any manner permitted by the Act.


16.2	Where, on any alteration or reduction of share capital, fractions of shares or some other difficulty would arise, the Board may deal with or resolve the same in such manner as it thinks fit.


17.	Variation of Rights Attaching to Shares

If, at any time, the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class or with the sanction of a resolution passed by a majority of the votes cast at a separate general meeting of the holders of the shares of the class at which meeting the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class. The rights conferred upon the holders of the shares of any class or series issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class or series, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

DIVIDENDS AND CAPITALISATION


18.	Dividends


18.1	The Board may, subject to these Bye-laws and in accordance with the Act, declare a dividend to be paid to the Members, in proportion to the number of shares held by them, and such dividend may be paid in cash or wholly or partly in specie in which case the Board may fix the value for distribution in specie of any assets. No unpaid dividend shall bear interest as against the Company.


18.2	The Board may fix any date as the record date for determining the Members entitled to receive any dividend.


18.3	The Company may pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.


18.4	The Board may declare and make such other distributions (in cash or in specie) to the Members as may be lawfully made out of the assets of the Company. No unpaid distribution shall bear interest as against the Company.


19.	Power to Set Aside Profits

The Board may, before declaring a dividend, set aside out of the surplus or profits of the Company, such amount as it thinks proper as a reserve to be used to meet contingencies or for equalising dividends or for any other purpose.


20.	Method of Payment


20.1	Any dividend, interest, or other moneys payable in cash in respect of the shares may be paid by cheque or draft sent through the post directed to the Member at such Member's address in the Register of Members, or to such person and to such address as the holder may in writing direct.

20.2

In the case of joint holders of shares, any dividend, interest or other moneys payable in cash in respect of shares may be paid by cheque or draft sent through the post directed to the address of the holder first named in the Register of Members, or to such person and to such address as the joint holders may in writing direct. If two or more persons are registered as joint holders of any shares any one can give an effectual receipt for any dividend paid in respect of such shares.


20.3	The Board may deduct from the dividends or distributions payable to any Member all moneys due from such Member to the Company on account of calls or otherwise.

20.4

The Company shall be entitled to cease sending dividend cheques and warrants by post or otherwise to a Member if those instruments have been returned undelivered to, or left uncashed by, that Member on at least two consecutive occasions or, following one such occasion, reasonable enquiries have failed to establish the Member’s new address. The entitlement conferred on the Company by this Bye-law in respect of any Member shall cease if the Member claims a dividend or cashes a dividend cheque or warrant.


21.	Capitalisation

21.1

The Board may capitalise any amount for the time being standing to the credit of any of the Company's share premium or other reserve accounts or to the credit of the profit and loss account or otherwise available for distribution by applying such amount in paying up unissued shares to be allotted as fully paid bonus shares pro rata (except in connection with the conversion of shares of one class to shares of another class ) to the Members.


21.2	The Board may capitalise any amount for the time being standing to the credit of a reserve account or amounts otherwise available for dividend or distribution by applying such amounts in paying up in full, partly or nil paid shares of those Members who would have been entitled to such amounts if they were distributed by way of dividend or distribution.

MEETINGS OF MEMBERS


22.	Annual General Meetings

Notwithstanding the provisions of the Act entitling the Members of the Company to elect to dispense with the holding of an annual general meeting , an annual general meeting shall be held in each year (other than the year of incorporation) at such time and place, which shall not be in the United States, as the Chairman (if any) or any two Directors or any Director and the Secretary or the Board shall appoint.


23.	Special General Meetings

The Chairman (if any) or any two Directors or any Director and the Secretary or the Board may convene a special general meeting which shall not be in the United States whenever in their judgment such a meeting is necessary.


24.	Requisitioned General Meetings

The Board shall, on the requisition of Members holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up share capital of the Company as at the date of the deposit carries the right to vote at general meetings, forthwith proceed to convene a special general meeting and the provisions of the Act shall apply.


25.	Notice


25.1	At least 21 days' notice of an annual general meeting shall be given to each Member entitled to attend and vote thereat, stating the date, place and time which shall not be in the United States at which the meeting is to be held, that the election of Directors will take place thereat, and as far as practicable, the other business to be conducted at the meeting.


25.2	At least 21 days' notice of a special general meeting shall be given to each Member entitled to attend and vote thereat, stating the date, time, place which shall not be in the United States and the general nature of the business to be considered at the meeting.


25.3	The Board may fix any date as the record date for determining the Members entitled to receive notice of and to vote at any general meeting.

25.4

A general meeting shall, notwithstanding that it is called on shorter notice than that specified in these Bye-laws, be deemed to have been properly called if it is so agreed by (i) all the Members entitled to attend and vote thereat in the case of an annual general meeting; and (ii) by a majority in number of the Members having the right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of the shares giving a right to attend and vote thereat in the case of a special general meeting.


25.5	The accidental omission to give notice of a general meeting to, or the non-receipt of a notice of a general meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.


26.	Giving Notice and Access


26.1	A notice may be given by the Company to a Member:


(a)	by delivering it to such Member in person, in which case the notice shall be deemed to have been served upon such delivery; or


(b)	by sending it by letter mail or courier to such Member's address in the Register of Members, in which case the notice shall be deemed to have been served seven days after the date on which it is deposited, with postage prepaid, in the mail; or


(c)	by sending it by courier to such Member’s address in the Register of Members, in which case the notice shall be deemed to have been served two days after the date on which it is deposited, with courier fees paid, with the courier service; or


(d)	by transmitting it by electronic means (including facsimile and electronic mail, but not telephone) in accordance with such directions as may be given by such Member to the Company for such purpose in which case the notice shall be deemed to have been served at the time that it would in the ordinary course be transmitted; or


(e)	by delivering it in accordance with the provisions of the Act pertaining to delivery of electronic records by publication on a website, in which case the notice shall be deemed to have been served at the time when the requirements of the Act in that regard have been met.


26.2	Any notice required to be given to a Member shall, with respect to any shares held jointly by two or more persons, be given to whichever of such persons is named first in the Register of Members and notice so given shall be sufficient notice to all the holders of such shares.


26.3	In proving service under paragraphs 26.1 (b), (c) and (d), it shall be sufficient to prove that the notice was properly addressed and prepaid, if posted or sent by courier, and the time when it was posted, deposited with the courier, or transmitted by electronic means.


27.	Notice of Nominations and Member Business


27.1	Annual General Meetings

(a)

Nominations of persons for election to the Board or the proposal of other business to be transacted by the Members may be made at an annual general meeting only (A) pursuant to the Company’s notice of meeting (or any supplement thereto), (B) by or at the direction of the Board or (C) subject to any applicable law, by Members of record at the time of giving of notice as provided for in this Bye-law 27.1 and who comply with the notice procedures set forth in this Bye-law 27.1;

(b)

For nominations or other business to be properly brought before an annual general meeting by a Member pursuant to clause (C) of Bye-law 27.1(a), the Member must have given timely notice thereof in writing to the Secretary and any such proposed business must constitute a proper matter for Member action. To be timely, a Member’s notice shall be delivered to or mailed and received by the Secretary at the registered office of the Company not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual general meeting; provided , that in the event that the date of the annual general meeting is advanced more than 30 days prior to such anniversary date or delayed more than 30 days after such anniversary date then to be timely such notice must be received at the registered office of the Company no earlier than 120 days prior to such annual general meeting and no later than the later of 70 days prior to the date of the general meeting or the 10th day following the day on which public announcement of the date of the general meeting was first made by the Company. In no event shall the public announcement of an adjournment or postponement of an annual general meeting commence a new time period (or extend any time period) for the giving of a Member’s notice as described above. For purposes of Bye-laws 27.1(b) and 27.2, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, the Associated Press, PR Newswire, Businesswire, Bloomberg or any comparable news service in the United States or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934;

(c)

A Member’s notice to the Secretary shall set forth (A) as to each person whom the Member proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14(a) of the Securities Exchange Act of 1934 (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (B) as to any other business that the Member proposes to bring before the general meeting, a brief description of the business desired to be brought before the general meeting, the text of the proposal or business, the reasons for conducting such business at the general meeting and any material interest in such business of such Member and the beneficial owner, if any, on whose behalf the proposal is made, and (C) as to the Member giving the notice and the beneficial owner, if any, on whose behalf the proposal is made:


(i)	the name and address of such Member (as they appear in the Register of Members) and any such beneficial owner;


(ii)	the class or series and number of shares of the Company which are held of record or are beneficially owned by such Member and by any such beneficial owner;


(iii)	a description of any agreement, arrangement or understanding between or among such Member and any such beneficial owner, any of their respective affiliates or associates, and any other person or persons (including their names) in connection with the proposal of such nomination or other business;

(iv)

a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, share appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such Member or any such beneficial owner or any such nominee with respect to the Company’s securities (a “Derivative Instrument”);

(v)

to the extent not disclosed pursuant to clause (iv) above, the principal amount of any indebtedness of the Company or any of its subsidiaries beneficially owned by such Member or by any such beneficial owner, together with the title of the instrument under which such indebtedness was issued and a description of any Derivative Instrument entered into by or on behalf of such Member or such beneficial owner relating to the value or payment of any indebtedness of the Company or any such Subsidiary;


(vi)	a representation that the Member is a holder of record of shares of the Company entitled to vote at such general meeting and intends to appear in person or by proxy at the general meeting to bring such nomination or other business before the general meeting; and

(vii)

a representation as to whether such Member or any such beneficial owner intends or is part of a group that intends to (i) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding shares required to approve or adopt the proposal or to elect each such nominee and/or (ii) otherwise to solicit proxies from Members in support of such proposal or nomination;


(d)	If requested by the Company, the information required under clauses (ii), (iii), (iv) and (v) of Bye-law 27.1(c) shall be supplemented by such Member and any such beneficial owner not later than 10 days after the record date for notice of the general meeting to disclose such information as of such record date;

(e)

Notwithstanding anything to the contrary, the notice requirements set forth herein with respect to the proposal of any business pursuant to this Bye-law 27.1 other than a nomination shall be deemed satisfied by a Member if such Member has submitted a proposal to the Company in compliance with Rule 14a-8 promulgated under the Securities and Exchange Act of 1934 and such Member’s proposal has been included in a proxy statement that has been prepared by the Company to solicit proxies for the general meeting.


27.2	Special General Meetings


(a)	Only such business shall be conducted at a special general meeting as shall have been brought before the general meeting in accordance with the Company’s notice of meeting pursuant to Bye-laws 25 and 26.

(b)

Nominations of persons for election to the Board at a special general meeting may be made (i) by or at the direction of the Board or (ii) provided that the Board has determined that Members may nominate persons for election to the Board at such general meeting, by any Member of the Company who is a Member of record at the time of giving of notice provided for in this Bye-law 27.2(b), who shall be entitled to vote at the general meeting and who complies with the notice procedures set forth in this Bye-law 27.

(c)

For nominations to be properly brought before a special general meeting by a Member pursuant to this Bye-law 27.2(b)(ii), the Member must have given timely notice thereof in writing to the Secretary. To be timely, a Member’s notice shall be delivered to or mailed and received at the registered office of the Company (A) not earlier than 120 days prior to the date of the special general meeting nor (B) later than the later of 90 days prior to the date of the special general meeting or the 10th day following the day on which public announcement of the date of the special general meeting was first made.


(d)	A Member’s notice to the Secretary, including any notice of requisition pursuant to Bye-law 24, shall comply with the notice requirements of Bye-law 27.1(c) and (d).


27.3	General


(a)	At the request of the Board, any person nominated by the Board for election as a director shall furnish to the Secretary the information that is required to be set forth in a Member’s notice of nomination pursuant to Bye-law 27.1(c).


(b)	No person shall be eligible to be nominated by a Member to serve as a director of the Company unless nominated in accordance with the procedures set forth in this Bye-law 27.

(c)

The chairman of the general meeting shall, if the facts warrant, determine and declare to the general meeting that a nomination was not made in accordance with the procedures prescribed by these Bye-laws or that business was not properly brought before the general meeting, and if he should so determine and declare, the defective nomination shall be disregarded or such business shall not be transacted, as the case may be.

(d)

Notwithstanding the foregoing provisions of this Bye-law 27, unless otherwise required by the Act, if the Member (or a qualified representative of the Member) does not appear at the annual or special general meeting to present a nomination or other proposed business, such nomination shall be disregarded or such proposed business shall not be transacted, as the case may be, notwithstanding that proxies in respect of such vote may have been received by the Company. For purposes of this Bye-law 27.3, to be considered a qualified representative of the Member, a person must be a duly authorized officer, manager or partner of such Member or must be authorized by a writing executed by such Member or an electronic transmission delivered by such Member to act for such Member as proxy at the general meeting and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the general meeting.

27.4

Without limiting the foregoing provisions of this Bye-law 27, a Member shall also comply with all applicable requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder with respect to the matters set forth in this Bye-law 27; provided , that any references in these Bye-laws to the Securities Exchange Act of 1934 or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Bye-law, and compliance with Bye-law 27.1 or 27.2 shall be the exclusive means for a Member to make nominations or submit other business (other than as provided in Bye-law 27.1(e)).


28.	Postponement or Cancellation of General Meeting

The Secretary may, and on instruction of the Chairman or president the Secretary shall, postpone or cancel any general meeting called in accordance with these Bye-laws (other than a meeting requisitioned under these Bye-laws) provided that notice of postponement or cancellation is given to the Members before the time for such meeting. Fresh notice of the date, time and place for the postponed or cancelled meeting shall be given to each Member in accordance with these Bye-laws.


29.	Electronic Participation and Security in Meetings


29.1	Members may participate in any general meeting by such telephonic, electronic or other communication facilities or means as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

29.2

The Board may, and at any general meeting, the Chairman of such meeting may, make any arrangement and impose any requirement or restriction it or he considers appropriate to ensure the security of the general meeting including, without limitation, requirements for evidence of identity to be produced by those attending the meeting, the searching of their personal property and the restriction of items that may be taken into the meeting place. The Board and, at any general meeting, the chairman of such meeting are entitled to refuse entry to a person who refuses to comply with any such arrangements, requirements or restrictions.


30.	Quorum at General Meetings

30.1

At any general meeting two or more persons present in person throughout the meeting and representing in person or by proxy in excess of 50% of the total issued voting shares in the Company throughout the meeting shall form a quorum for the transaction of business, provided, however that no Member may participate in any general meeting during which that Member (or, if any Member is an entity, its representative) is physically present in the United States.

30.2

If within half an hour from the time appointed for the meeting a quorum is not present, then, in the case of a meeting convened on a requisition, the meeting shall be deemed cancelled and, in any other case, the meeting shall stand adjourned to the same day one week later, at the same time and place (which shall not be in the United States) or to such other day, time or place (which shall not be in the United States) as the Secretary may determine. Unless the meeting is adjourned to a specific date, time and place (which shall not be in the United States) announced at the meeting being adjourned, fresh notice of the resumption of the meeting shall be given to each Member entitled to attend and vote thereat in accordance with these Bye-laws.


31.	Chairman to Preside at General Meetings

Unless otherwise agreed by a majority of those attending and entitled to vote thereat, the Chairman, if there be one, shall act as chairman of the meeting at all general meetings at which such person is present. In their absence a chairman of the meeting shall be appointed or elected by those present at the meeting and entitled to vote.


32.	Voting on Resolutions


32.1	Subject to the Act and these Bye-laws, any question proposed for the consideration of the Members at any general meeting shall be decided by the affirmative votes of a majority of the votes cast in accordance with these Bye-laws and in the case of an equality of votes the resolution shall fail.


32.2	No Member shall be entitled to vote at a general meeting unless such Member has paid all the calls on all shares held by such Member.

32.3

At any general meeting a resolution put to the vote of the meeting shall, in the first instance, be voted upon by a show of hands and, subject to any rights or restrictions for the time being lawfully attached to any class of shares and subject to these Bye-laws, every Member present in person and every person holding a valid proxy at such meeting shall be entitled to one vote and shall cast such vote by raising his hand.


32.4	In the event that a Member participates in a general meeting by telephone, electronic or other communication facilities or means, the chairman of the meeting shall direct the manner in which such Member may cast his vote on a show of hands.


32.5	At any general meeting if an amendment is proposed to any resolution under consideration and the chairman of the meeting rules on whether or not the proposed amendment is out of order, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling.


32.6	At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to these Bye-laws, be conclusive evidence of that fact.


33.	Power to Demand a Vote on a Poll


33.1	Notwithstanding the foregoing, a poll may be demanded by any of the following persons:


(a)	the chairman of such meeting; or


(b)	at least three Members present in person or represented by proxy; or


(c)	any Member or Members present in person or represented by proxy and holding between them not less than one-tenth of the total voting rights of all the Members having the right to vote at such meeting; or


(d)	any Member or Members present in person or represented by proxy holding shares in the Company conferring the right to vote at such meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total amount paid up on all such shares conferring such right.

33.2

Where a poll is demanded, subject to any rights or restrictions for the time being lawfully attached to any class of shares, every person present at such meeting shall have one vote for each share of which such person is the holder or for which such person holds a proxy and such vote shall be counted by ballot as described herein, or in the case of a general meeting at which one or more Members are present by telephone, electronic or other communication facilities or means, in such manner as the chairman of the meeting may direct and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded and shall replace any previous resolution upon the same matter which has been the subject of a show of hands. A person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

33.3

A poll demanded for the purpose of electing a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time and in such manner during such meeting as the chairman (or acting chairman) of the meeting may direct. Any business other than that upon which a poll has been demanded may be conducted pending the taking of the poll.

33.4

Where a vote is taken by poll, each person physically present and entitled to vote shall be furnished with a ballot paper on which such person shall record his vote in such manner as shall be determined at the meeting having regard to the nature of the question on which the vote is taken, and each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter and the registered holder in the case of a proxy. Each person present by telephone, electronic or other communication facilities or means shall cast his vote in such manner as the chairman of the meeting shall direct. At the conclusion of the poll, the ballot papers and votes cast in accordance with such directions shall be examined and counted by a committee of not less than two Members or proxy holders appointed by the chairman of the meeting for the purpose and the result of the poll shall be declared by the chairman of the meeting.


34.	Voting by Joint Holders of Shares

In the case of joint holders, the vote of the senior who tenders a vote (whether in person or by proxy) shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.


35.	Instrument of Proxy


35.1	An instrument appointing a proxy shall be in writing in substantially the following form or such other form as the chairman of the meeting shall accept:

Proxy
Third Point Reinsurance Ltd. (the "Company")

I/We, [insert names here], being a Member of the Company with [number] shares, HEREBY APPOINT [name] of [address] or failing him, [name] of [address] to be my/our proxy to vote for me/us at the meeting of the Members to be held on the [date] and at any adjournment thereof. [Any restrictions on voting to be inserted here.]

Signed this [date]

Member(s)

35.2

The instrument appointing a proxy must be received by the Company at the registered office or at such other place or in such manner as is specified in the notice convening the meeting or in any instrument of proxy sent out by the Company in relation to the meeting at which the person named in the instrument appointing a proxy proposes to vote, and an instrument appointing a proxy which is not received in the manner so prescribed shall be invalid.


35.3	A Member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf in respect of different shares.


35.4	Subject to Bye-law 34.5, the decision of the chairman of any general meeting as to the validity of any appointment of a proxy shall be final.

35.5

Any Member may irrevocably appoint a proxy and in such case: (i) such appointment shall be irrevocable in accordance with the terms of the instrument of appointment; (ii) the Company shall be given notice of the appointment, such notice to include the name, address, telephone number and electronic mail address of the proxy, and the Company shall give to such proxy notice of all meetings of shareholders of the Company; (iii) such proxy shall be the only person entitled to vote the relevant Shares at any meeting at which such proxy is present; and (iv) the Company shall be obliged to recognise the proxy until such time as such proxy shall notify the Company in writing that the appointment of such proxy is no longer in force.


36.	Representation of Corporate Member

36.1

A corporation which is a Member may, by written instrument, authorise such person or persons as it thinks fit to act as its representative at any meeting and any person so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person represents as that corporation could exercise if it were an individual Member, and that Member shall be deemed to be present in person at any such meeting attended by its authorised representative or representatives.


36.2	Notwithstanding the foregoing, the chairman of the meeting may accept such assurances as he thinks fit as to the right of any person to attend and vote at general meetings on behalf of a corporation which is a Member.


37.	Adjournment of General Meeting


37.1	The chairman of a general meeting at which quorum is present may, with the consent of the Members holding a majority of the voting rights of those Members present in person or by proxy (and shall if so directed by Members holding a majority of the voting rights of those Members present in person or by proxy) adjourn the meeting.


37.2	The chairman of a general meeting may may adjourn a meeting to another time and place without the consent or direction of the Members if it appears to him that:


(a)	it is likely to be impractical to hold or continue that meeting because of the number of Members wishing to attend who are not present; or


(b)	The unruly conduct of persons attending the meeting prevents, or is likely to prevent, the orderly continuation of the business of the meeting; or


(c)	An adjournment is otherwise necessary so that the business of the meeting may be properly conducted.


37.3	Unless the meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned meeting shall be given to each Member entitled to attend and vote thereat in accordance with these Bye-laws.


38.	Written Resolutions

38.1

Subject to these Bye-laws, anything which may be done by resolution of the Company in general meeting or by resolution of a meeting of any class of the Members may be done without a meeting by written resolution signed by or, in the case of a Member that is a corporation whether or not a company within the meaning of the Act, on behalf of all the Members who at the date of the resolution would be entitled to attend the meeting and vote on the resolution.


38.2	Notice of a written resolution shall be given, and a copy of the resolution shall be circulated, to all Members who would be entitled to attend a meeting and vote thereon. The accidental omission to give notice to, or the non-receipt of a notice by, any Member does not invalidate the passing of a resolution.


38.3	A written resolution is passed when it is signed by, or in the case of a Member that is a corporation, on behalf of, the Members who at the date that the notice is given represent such majority of votes as would be required if the resolution was voted on at a meeting of Members at which all Members entitled to attend and vote thereat were present and voting.


38.4	A resolution in writing may be signed in any number of counterparts.


38.5	A resolution in writing made in accordance with this Bye-law is as valid as if it had been passed by the Company in general meeting or by a meeting of the relevant class of Members, as the case may be, and any reference in any Bye-law to a meeting at which a resolution is passed or to Members voting in favour of a resolution shall be construed accordingly.


38.6	A resolution in writing made in accordance with this Bye-law shall constitute minutes for the purposes of the Act.


38.7	This Bye-law shall not apply to:


(a)	(a) a resolution passed to remove an Auditor from office before the expiration of his term of office; or


(b)	(b) a resolution passed for the purpose of removing a Director before the expiration of his term of office.

38.8

For the purposes of this Bye-law, the effective date of the resolution is the date when the resolution is signed by, or in the case of a Member that is a corporation, on behalf of, the last Member whose signature results in the necessary voting majority being achieved and any reference in any Bye-law to the date of passing of a resolution is, in relation to a resolution made in accordance with this Bye-law, a reference to such date.


38.9	This Bye-law 38 shall no longer apply or have effect from and after the Effective Date, and, from and after the Effective Date, no resolution of the Company may be adopted by written resolution.


39.	Directors Attendance at General Meetings

The Directors shall be entitled to receive notice of, attend and be heard at any general meeting.

DIRECTORS AND OFFICERS


40.	Election of Directors


40.1	Only persons who are proposed or nominated in accordance with Bye-law 27 shall be eligible for election as Directors.


40.2	Where persons are validly proposed for re-election or election as a Director, the persons receiving the most votes (up to the number of Directors to be elected) shall be elected as Directors, and an absolute majority of the votes cast shall not be a prerequisite to the election of such Directors.


40.3	For so long as a Lead Investor holds Shares representing at least 25% of the total number of Shares held by such Lead Investor on December 22, 2011, such Lead Investor shall have the right to appoint one Class III director to the Board of Directors of the Company at each annual general meeting at which the term of such Lead Investor’s appointee expires.


40.4	At any general meeting the Members may authorise the Board to fill any vacancy in their number left unfilled at a general meeting.


41.	Number of Directors

The Board shall consist of such number of Directors, not fewer than five Directors, as the Board may from time to time determine in its sole discretion, up to a maximum of eleven Directors.


42.	Term of Office of Directors

42.1

The Directors shall be classified with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, one class (“Class I”) whose initial term expires at the 2014 annual general meeting of the Members will be elected for a three year term, another class (“Class II”) whose initial term expires at the 2015 annual general meeting of the Members will be elected for a three year term, and another class (“Class III”) whose initial term expires at the 2016 annual general meeting of the Members will be elected for a three year term, with each class to hold office until its successors are elected and qualified.

42.2

At each succeeding annual general meeting, successors to the class of Directors whose term expires at that annual general meeting shall be elected for a three year term. If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, and any Director of any class elected to fill a vacancy shall hold office for a term that shall coincide with the remaining term of the other Directors of that class, but in no case shall a decrease in the number of Directors shorten the term of any Director then in office. A Director shall hold office until the annual general meeting for the year in which his term expires, subject to his office being vacated pursuant to Bye-law 45.1.


43.	Alternate Directors; Board Observers


43.1	At any general meeting, the Members may elect a person or persons to act as a Director in the alternative to any one or more Directors or may authorise the Board to appoint such Alternate Directors.

43.2

Unless the Members otherwise resolve, any Director may appoint a person or persons to act as a Director in the alternative to himself by notice deposited with the Secretary. Any person so elected or appointed shall have all the rights and powers of the Director or Directors for whom such person is elected or appointed in the alternative provided that such person shall not be counted more than once in determining whether or not a quorum is present.


43.3	An Alternate Director shall be entitled to receive notice of all Board meetings and to attend and vote at any such meeting at which a Director for whom such Alternate Director was appointed in the alternative is not personally present and generally to perform at such meeting all the functions of such Director for whom such Alternate Director was appointed.


43.4	An Alternate Director shall cease to be such if the Director for whom he was appointed to act as a Director in the alternative ceases for any reason to be a Director, but he may be re-appointed by the Board as an alternate to the person appointed to fill the vacancy in accordance with these Bye-laws.

43.5

The Company shall permit one representative of each of Daniel S. Loeb, Kelso, Pine Brook and P RE Opportunities Ltd. (“PROL”) (but only for so long as Daniel S. Loeb, Kelso, Pine Brook or PROL, as applicable, hold Shares) to attend all meetings of the Board of Directors as observers, and shall provide such person with such notice and other information with respect to such meetings as are delivered to the directors of the Company. Notwithstanding the foregoing, the Company (i) may condition the right of any such person to attend meetings of the Board of Directors and receive notice and other information with respect to such meetings on the execution of a confidentiality agreement reasonably satisfactory to the Company, and (ii) may prevent such person from attending a meeting of the Board of Directors (or portion thereof) or receiving certain information with respect thereto if the Company believes, after consultation with counsel, that it is necessary to do so to ensure preservation of the attorney-client privilege.


44.	Removal of Directors

44.1

From the date of the adoption of these Bye-laws until the Effective Date, subject to any provision to the contrary in these Bye-laws, the Members holding a majority of the voting shares of the Company may, at any special general meeting convened and held in accordance with these Bye-laws, by the affirmative vote of all such Members, remove a Director, provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than 14 days before the meeting and at such meeting the Director shall be entitled to be heard on the motion for such Director's removal.

44.2

From the Effective Date, subject to any provision to the contrary in these Bye-laws, the Members holding a majority of the voting shares of the Company may, at any special general meeting convened and held in accordance with these Bye-laws, by the affirmative vote of all such Members, remove a Director only with cause, provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than 14 days before the meeting and at such meeting the Director shall be entitled to be heard on the motion for such Director's removal.


44.3	If a Director is removed from the Board under this Bye-law the Members may fill the vacancy at the meeting at which such Director is removed. In the absence of such election or appointment, the Board may fill the vacancy.


44.4	For the purposes of this Bye-law, “cause” shall mean a conviction for a criminal offence involving dishonesty or engaging in conduct which brings the Director or the Company into disrepute and which results in material financial detriment to the Company.


45.	Vacancy in the Office of Director


45.1	The office of Director shall be vacated if the Director:


(a)	is removed from office pursuant to these Bye-laws or is prohibited from being a Director by law;


(b)	is or becomes bankrupt, or makes any arrangement or composition with his creditors generally;


(c)	is or becomes of unsound mind or dies; or


(d)	resigns his office by notice to the Company.

45.2

The Members in general meeting or the Board shall have the power to appoint any person as a Director to fill a vacancy on the Board occurring as a result of the death, disability, disqualification or resignation of any Director or as a result of an increase in the size of the Board and to appoint an Alternate Director to any Director so appointed, provided that in the event the vacancy to be filled is for a Lead Investor’s appointee and such Lead Investor meets the qualifications set forth in Bye-Law 40.3 for its entitlement to appoint a Director, then such Lead Investor shall appoint the Director to fill such vacancy.


46.	Remuneration of Directors

The remuneration (if any) of the Directors shall be determined by the Board of Directors or a committee thereof and shall be deemed to accrue from day to day. The Directors and any board observers appointed pursuant to Bye-law 43.5 will also be paid all travel, hotel and other expenses properly incurred by them in attending and returning from the Board meetings, any committee appointed by the Board, general meetings, or in connection with the business of the Company or their duties as Directors generally.


47.	Defect in Appointment

All acts done in good faith by the Board, any Director, a member of a committee appointed by the Board, any person to whom the Board may have delegated any of its powers, or any person acting as a Director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or person acting as aforesaid, or that he was, or any of them were, disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director or act in the relevant capacity.


48.	Directors to Manage Business

The business of the Company shall be managed and conducted by the Board. In managing the business of the Company, the Board may exercise all such powers of the Company as are not, by the Act or by these Bye-laws, required to be exercised by the Company in general meeting.


49.	Powers of the Board of Directors

The Board may:


(a)	appoint, suspend, or remove any manager, secretary, clerk, agent or employee of the Company and may fix their remuneration and determine their duties;


(b)	exercise all the powers of the Company to borrow money and to mortgage or charge or otherwise grant a security interest in its undertaking, property and uncalled capital, or any part thereof, and may issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party;


(c)	appoint one or more Directors to the office of managing director or chief executive office of the Company, who shall, subject to the control of the Board, supervise and administer all of the general business and affairs of the Company;


(d)	appoint a person to act as manager of the Company's day-to-day business and may entrust to and confer upon such manager such powers and duties as it deems appropriate for the transaction or conduct of such business;

(e)

by power of attorney, appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board) and for such period and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions so vested in the attorney;


(f)	procure that the Company pays all expenses incurred in promoting and incorporating the Company;

(g)

delegate any of its powers (including the power to sub-delegate) to a committee of one or more persons appointed by the Board which may consist partly or entirely of non-Directors, provided that every such committee shall conform to such directions as the Board shall impose on them and provided further that the meetings and proceedings of any such committee shall be governed by the provisions of these Bye-laws regulating the meetings and proceedings of the Board, so far as the same are applicable and are not superseded by directions imposed by the Board;


(h)	delegate any of its powers (including the power to sub-delegate) to any person on such terms and in such manner as the Board may see fit;


(i)	present any petition and make any application in connection with the liquidation or reorganisation of the Company;


(j)	in connection with the issue of any share, pay such commission and brokerage as may be permitted by law; and


(k)	authorise any company, firm, person or body of persons to act on behalf of the Company for any specific purpose and in connection therewith to execute any deed, agreement, document or instrument on behalf of the Company.


50.	[ Intentionally Omitted ]


51.	Register of Directors and Officers

The Board shall cause to be kept in one or more books at the registered office of the Company a Register of Directors and Officers and shall enter therein the particulars required by the Act.


52.	Appointment of Officers

The Board may appoint such Officers (who may or may not be Directors) as the Board may determine for such terms as the Board deems fit.


53.	Appointment of Secretary

The Secretary shall be appointed by the Board from time to time for such term as the Board deems fit.


54.	Duties of Officers

The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Board from time to time.


55.	Remuneration of Officers

The Officers shall receive such remuneration as the Board or a committee thereof may determine.


56.	Conflicts of Interest


56.1	Any Director, or any Director's firm, partner or any company with whom any Director is associated, may act in any capacity for, be employed by or render services to the Company on such terms, including with respect to remuneration, as may be agreed between the parties. Nothing herein contained shall authorise a Director or Director's firm, partner or company to act as Auditor to the Company.


56.2	A Director who is directly or indirectly interested in a contract or proposed contract or arrangement with the Company shall declare the nature of such interest as required by the Act and such Director shall be required to recuse himself from any board meeting at which such contract or arrangement is to be considered.

56.3

Following a declaration being made pursuant to this Bye-law, a Director shall not vote in respect of any contract or proposed contract or arrangement in which such Director is interested, shall not be counted in the quorum for such meeting and shall be required to recuse himself from any discussion, provided that such restrictions shall not apply to the investment management agreement, dated December 22, 2011, by and between the Company, TP Re or any of their respective affiliates (including, without limitation, the Joint Venture and Investment Management Agreement but except as expressly set forth in such Joint Venture and Investment Management Agreement), and the Sponsor, or any of its affiliates, or any amendment, modifications or waivers thereof or any successor agreement thereto. For the avoidance of doubt, no Director shall be considered "interested" with respect to any transactions in which all the Members participate or are offered to participate.


57.	Indemnification and Exculpation of Directors and Officers

57.1

The Directors, Resident Representative, Secretary and other Officers (such term to include any person appointed to any committee by the Board) for the time being acting in relation to any of the affairs of the Company or any Subsidiary thereof and the liquidator or trustees (if any) for the time being acting in relation to any of the affairs of the Company or any Subsidiary thereof and every one of them, and their heirs, executors and administrators, shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs, executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and none of them shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, or in relation thereto, PROVIDED THAT this indemnity shall not extend to any matter in respect of any fraud, gross negligence or wilful misconduct which may attach to any of the said persons. Each Member agrees to waive any claim or right of action such Member might have, whether individually or by or in the right of the Company, against any Director or Officer on account of any action taken by such Director or Officer, or the failure of such Director or Officer to take any action in the performance of his duties with or for the Company or any Subsidiary thereof, PROVIDED THAT such waiver shall not extend to any matter in respect of any fraud, gross negligence or wilful misconduct which may attach to such Director or Officer.

57.2

The Company may purchase and maintain insurance for the benefit of any Director or Officer against any liability incurred by him under the Act in his capacity as a Director or Officer or indemnifying such Director or Officer in respect of any loss arising or liability attaching to him by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which the Director or Officer may be guilty in relation to the Company or any Subsidiary thereof.


57.3	The Company may advance moneys to a Director or Officer for the costs, charges and expenses incurred by the Director or Officer in defending any civil or criminal proceedings against him, on condition that the Director or Officer shall repay the advance if any allegation of fraud or dishonesty is proved against him.

MEETINGS OF THE BOARD OF DIRECTORS


58.	Board Meetings

The Board may meet for the transaction of business, adjourn and otherwise regulate its meetings as it sees fit provided, however, that no Director may participate in any meeting of the Board or committee thereof while physically present in the United States. A resolution put to the vote at a Board meeting shall be carried by the affirmative votes of a majority of the votes cast and in the case of an equality of votes the resolution shall fail.


59.	Notice of Board Meetings

A Director may, and the Secretary on the requisition of a Director shall, at any time summon a Board meeting or a meeting of a committee of the Board. Notice of a Board meeting shall be deemed to be duly given to a Director if it is given to such Director verbally (including in person or by telephone) or otherwise communicated or sent to such Director by post, electronic means or other mode of representing words in a visible form at such Director's last known address or in accordance with any other instructions given by such Director to the Company for this purpose at least 48 hours prior to such Board meeting, unless each Director attends or gives his prior written consent to the meeting being held on such shorter notice.


60.	Electronic Participation in Meetings

Directors may participate in any meeting by such telephonic, electronic or other communication facilities or means as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting provided, however, that no Director may participate in any meeting of the Board or a committee thereof while physically present in the United States.


61.	Quorum at Board Meetings

The quorum necessary for the transaction of business at a Board meeting shall be a majority of the Directors then in office.


62.	Board to Continue in the Event of Vacancy

The Board may act notwithstanding any vacancy in its number but, if and so long as its number is reduced below the number fixed by these Bye-laws as the quorum necessary for the transaction of business at Board meetings, the continuing Directors or Director may act for the purpose of (i) summoning a general meeting; or (ii) preserving the assets of the Company.


63.	Chairman to Preside

Unless otherwise agreed by a majority of the Directors attending, the Chairman, if there be one, shall act as chairman at all Board meetings at which such person is present. In his absence a chairman shall be appointed or elected by the Directors present at the meeting.


64.	Written Resolutions

A resolution signed by all the Directors, which may be in counterparts, shall be as valid as if it had been passed at a Board meeting or the applicable committee thereof, duly called and constituted, such resolution to be effective on the date on which the last Director signs the resolution, provided that no such resolution shall be valid unless the last signature of a Director is affixed outside the United States (but, notwithstanding Bye-laws 58 and 60 hereof, a Director who is not the last Director to sign may sign a resolution in writing even though he is in the United States). Such resolution shall be deemed to be adopted as an act of the Board or the applicable committee thereof, at the place where, and at the time when, the last signature of a Director is affixed thereto. For the purposes of this Bye-law only, "the Directors" shall not include an Alternate Director.


65.	Validity of Prior Acts of the Board

No regulation or alteration to these Bye-laws made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation or alteration had not been made.

CORPORATE RECORDS


66.	Minutes

The Board shall cause minutes to be duly entered in books provided for the purpose:


(a)	of all elections and appointments of Officers;


(b)	of the names of the Directors present at each Board meeting and of any committee appointed by the Board; and


(c)	of all resolutions and proceedings of general meetings of the Members, Board meetings, meetings of managers and meetings of committees appointed by the Board.


67.	Place Where Corporate Records Kept

Minutes prepared in accordance with the Act and these Bye-laws shall be kept by the Secretary at the registered office of the Company.


68.	Form and Use of Seal


68.1	The Company may adopt a seal in such form as the Board may determine. The Board may adopt one or more duplicate seals for use in or outside Bermuda.


68.2	A seal may, but need not, be affixed to any deed, instrument or document, and if the seal is to be affixed thereto, it shall be attested by the signature of (i) any Director, or (ii) any Officer, or (iii) the Secretary, or (iv) any person authorised by the Board for that purpose.


68.3	A Resident Representative may, but need not, affix the seal of the Company to certify the authenticity of any copies of documents.

ACCOUNTS


69.	Records of Account


69.1	The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:


(a)	all amounts of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;


(b)	all sales and purchases of goods by the Company; and


(c)	all assets and liabilities of the Company.


69.2	Such records of account shall be kept at the registered office of the Company, or subject to the Act, at such other place as the Board thinks fit and shall be available for inspection by the Directors during normal business hours.


69.3	Such records of account shall be retained for a minimum period of five years from the date on which they are prepared.


70.	Financial Year End

The financial year end of the Company may be determined by resolution of the Board and failing such resolution shall be 31st December in each year.

AUDITS


71.	Annual Audit

Subject to any rights to waive laying of accounts or appointment of an Auditor pursuant to the Act, the accounts of the Company shall be audited at least once in every year.


72.	Appointment of Auditor


72.1	Subject to the Act, at the annual general meeting or at a subsequent special general meeting in each year, an independent representative of the Members shall be appointed by them as Auditor of the accounts of the Company.


72.2	The Auditor may be a Member but no Director, Officer or employee of the Company shall, during his continuance in office, be eligible to act as an Auditor of the Company.


73.	Remuneration of Auditor


73.1	The remuneration of an Auditor appointed by the Members shall be fixed by the Company in general meeting or in such manner as the Members may determine.


73.2	The remuneration of an Auditor appointed by the Board to fill a casual vacancy in accordance with these Bye-laws shall be fixed by the Board.


74.	Duties of Auditor


74.1	The financial statements provided for by these Bye-laws shall be audited by the Auditor in accordance with generally accepted auditing standards. The Auditor shall make a written report thereon in accordance with generally accepted auditing standards.


74.2	The generally accepted auditing standards referred to in this Bye-law may be those of a country or jurisdiction other than Bermuda or such other generally accepted auditing standards as may be provided for in the Act. If so, the financial statements and the report of the Auditor shall identify the generally accepted auditing standards used.


75.	Access to Records

The Auditor shall at all reasonable times have access to all books kept by the Company and to all accounts and vouchers relating thereto, and the Auditor may call on the Directors or Officers for any information in their possession relating to the books or affairs of the Company.


76.	Financial Statements

76.1

Subject to any rights to waive laying of accounts pursuant to the Act, financial statements, as required by the Act, shall be laid before the Members in a general meeting annually. A resolution in writing made in accordance with Bye-law 37 receiving, accepting, adopting, approving or otherwise acknowledging financial statements shall be deemed to be the laying of such statements before the Members in general meeting.


77.	Distribution of Auditor’s Report

The report of the Auditor shall be submitted to the Members in general meeting.


78.	Vacancy in the Office of Auditor

The Board may fill any casual vacancy in the office of the auditor.

BUSINESS COMBINATIONS


79.	Business Combinations

79.1

Any Business Combination with any Interested Shareholder within a period of three years following the time of the transaction in which the person became an Interested Shareholder must be approved by the Board and authorised at an annual or special general meeting, by the affirmative vote of at least 66.67% of the issued and outstanding voting shares of the Company that are not owned by the Interested Shareholder, unless:


(a)	prior to the time that the person became an Interested Shareholder, the Board approved either the Business Combination or the transaction which resulted in the person becoming an Interested Shareholder; or

(b)

upon consummation of the transaction which resulted in the person becoming an Interested Shareholder, the Interested Shareholder owned at least 85% of the number of issued and outstanding voting shares of the Company at the time the transaction commenced, excluding for the purposes of determining the number of shares issued and outstanding those shares owned (i) by persons who are directors and also officers and (ii) employee share plans in which employee participants do not have the right to determine whether shares held subject to the plan will be tendered in a tender or exchange offer.


79.2	The restrictions contained in this Bye-law 79 shall not apply if:

(a)

a Member becomes an Interested Shareholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the Member ceases to be an Interested Shareholder; and (ii) would not, at any time within the three-year period immediately prior to a Business Combination between the Company and such Member, have been an Interested Shareholder but for the inadvertent acquisition of ownership; or

(b)

the Business Combination is proposed prior to the consummation or abandonment of, and subsequent to the earlier of the public announcement or the notice required hereunder of, a proposed transaction which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an Interested Shareholder during the previous three years or who became an Interested Shareholder with the approval of the Board; and (iii) is approved or not opposed by a majority of the members of the Board then in office who were Directors prior to any person becoming an Interested Shareholder during the previous three years or were recommended for election or elected to succeed such Directors by resolution of the Board approved by a majority of such Directors. The proposed transactions referred to in the preceding sentence are limited to:


(i)	a merger, amalgamation or consolidation of the Company (except an amalgamation in respect of which, pursuant to the Act, no vote of the shareholders of the Company is required);

(ii)

a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Company or of any entity directly or indirectly wholly-owned or majority-owned by the Company (other than to the Company or any entity directly or indirectly wholly-owned by the Company) having an aggregate market value equal to 50% or more of either the aggregate market value of all of the assets of the Company determined on a consolidated basis or the aggregate market value of all the issued and outstanding shares of the Company; or


(iii)	a proposed tender or exchange offer for 50% or more of the issued and outstanding voting shares of the Company.


(c)	For the purposes of this Bye-law 79.2 only, the term:


(i)	"affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person;

(ii)

“associate," when used to indicate a relationship with any person, means: (i) any company, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting shares; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person;


(iii)	"Business Combination," when used in reference to the Company and any Interested Shareholder of the Company, means:


(a)	any merger, amalgamation or consolidation of the Company or any entity directly or indirectly wholly-owned or majority-owned by the Company, wherever incorporated, with (A) the Interested Shareholder or any of its affiliates, or (B) with any other company, partnership, unincorporated association or other entity if the merger, amalgamation or consolidation is caused by the Interested Shareholder;

(b)

any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a shareholder of the Company, to or with the Interested Shareholder, whether as part of a dissolution or otherwise, of assets of the Company or of any entity directly or indirectly wholly-owned or majority-owned by the Company which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Company determined on a consolidated basis or the aggregate market value of all the issued and outstanding shares of the Company;

(c)

any transaction which results in the issuance or transfer by the Company or by any entity directly or indirectly wholly-owned or majority-owned by the Company of any shares of the Company, or any share of such entity, to the Interested Shareholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company, or shares of any such entity, which securities were issued and outstanding prior to the time that the Interested Shareholder became such; (B) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company, or shares of any such entity, which security is distributed, pro rata to all holders of a class or series of shares subsequent to the time the Interested Shareholder became such; (C) pursuant to an exchange offer by the Company to purchase shares made on the same terms to all holders of such shares; or (D) any issuance or transfer of shares by the Company; provided however, that in no case under items (B)-(D) of this subparagraph shall there be an increase in the Interested Shareholder's proportionate share of the any class or series of shares;

(d)

any transaction involving the Company or any entity directly or indirectly wholly-owned or majority-owned by the Company which has the effect, directly or indirectly, of increasing the proportionate share of any class or series of shares, or securities convertible into any class or series of shares of the Company, or shares of any such entity, or securities convertible into such shares, which is owned by the Interested Shareholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any repurchase or redemption of any shares not caused, directly or indirectly, by the Interested Shareholder; or

(e)

any receipt by the Interested Shareholder of the benefit, directly or indirectly (except proportionately as a shareholder of the Company), of any loans, advances, guarantees, pledges or other financial benefits (other than those expressly permitted in subparagraphs (a)-(d) of this paragraph) provided by or through the Company or any entity directly or indirectly wholly-owned or majority-owned by the Company;

(iv)

“control”, including the terms "controlling," "controlled by" and "under common control with," means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract or otherwise. A person who is the owner of 20% or more of the issued and outstanding voting shares of any company, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary; provided that notwithstanding the foregoing, such presumption of control shall not apply where such person holds voting shares, in good faith and not for the purpose of circumventing this provision, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity;

(v)

"Interested Shareholder" means any person (other than the Company and any entity directly or indirectly wholly-owned or majority-owned by the Company) that (i) is the owner of 15% or more of the issued and outstanding voting shares of the Company, (ii) is an affiliate or associate of the Company and was the owner of 15% or more of the issued and outstanding voting shares of the Company at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an Interested Shareholder or (iii) is an affiliate or associate of any person listed in (i) or (ii) above; provided, however, that the term "Interested Shareholder" shall not include any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of action taken solely by the Company unless such person referred to in this proviso acquires additional voting shares of the Company otherwise than as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an Interested Shareholder, the voting shares of the Company deemed to be issued and outstanding shall include voting shares deemed to be owned by the person through application of paragraph (viii) below, but shall not include any other unissued shares which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise;


(vi)	"person" means any individual, company, partnership, unincorporated association or other entity;


(vii)	"voting shares" means, with respect to any company, shares of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a company, any equity interest entitled to vote generally in the election of the governing body of such entity;


(viii)	"owner," including the terms "own" and "owned," when used with respect to any shares, means a person that individually or with or through any of its affiliates or associates:


(a)	beneficially owns such shares, directly or indirectly; or

(b)

has (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of shares tendered pursuant to a tender or exchange offer made by such person or any of such person's affiliates or associates until such tendered shares are accepted for purchase or exchange; or (B) the right to vote such shares pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any shares because of such person's right to vote such shares if the agreement, arrangement or understanding to vote such shares arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or


(c)	has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subparagraph (b) of this paragraph), or disposing of such shares with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such shares.


79.3	In respect of any Business Combination to which the restrictions contained in Bye-law 79.1 do not apply but which the Act requires to be approved by the Members, the necessary general meeting quorum and Members’ approval shall be as set out in Bye-laws 30 and 32 respectively.


79.4	The Board shall ensure that the bye-laws or other constitutional documents of each entity wholly-owned or majority-owned by the Company shall contain any provisions necessary to ensure that the intent of Bye-law 79.1, as it relates to the actions of such entities, is achieved.

VOLUNTARY WINDING-UP AND DISSOLUTION


80.	Winding-Up

If the Company shall be wound up the liquidator may, with the sanction of a resolution of the Members, divide amongst the Members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in the trustees upon such trusts for the benefit of the Members as the liquidator shall think fit, but so that no Member shall be compelled to accept any shares or other securities or assets whereon there is any liability.

CHANGES TO CONSTITUTION


81.	Changes to Bye-laws

81.1

No Bye-law may be rescinded, altered or amended and no new Bye-law may be made save in accordance with the Act and until the same has been approved by a resolution of the Board and by a resolution of the Members. In addition, no amendment to these Bye-laws which would have a material adverse effect on the rights of Kelso, Pine Brook or Daniel S. Loeb may be made without such party’s consent but only for so long as such party holds a number of Shares equal to at least 25% of the total number of Shares held by such party on December 22, 2011.

81.2

Bye-laws 32, 40, 42.1, 44 and 81 may not be rescinded, altered or amended and no new Bye-law may be made which would have the effect of rescinding, altering or amending the provisions of such Bye-laws, until the same has been approved by a resolution of the Board including the affirmative vote of not less than 66.67% of the Directors then in office and by a resolution of the Members including the affirmative vote of not less than 66.67% of the votes attaching to all shares in issue.


82.	Changes to the Memorandum of Association

No alteration or amendment to the Memorandum of Association may be made save in accordance with the Act and until same has been approved by a resolution of the Board and, prior to the Effective Date, by a resolution of the Members including the affirmative vote of not less than the majority of the votes attaching to all shares in issue, and, after the Effective Date, by a resolution of the Members including the affirmative vote of not less than 66.67% of the votes attaching to all shares in issue. In addition, no amendment to the Memorandum of Association which would have a material adverse effect on the rights of Kelso, Pine Brook or Daniel S. Loeb may be made without such party’s consent but only for so long as such party holds a number of Shares equal to at least 25% of the total number of Shares held by such party on December 22, 2011.


83.	Discontinuance

The Board may exercise all the powers of the Company to discontinue the Company to a jurisdiction outside Bermuda pursuant to the Act.

AMENDMENT No. 5 TO EMPLOYMENT AGREEMENT

THIS AMENDMENT No. 5 to EMPLOYMENT AGREEMENT (" Amendment No. 5 "), is entered into as of April 1, 2018, by and between Third Point Reinsurance Ltd., a Bermuda company (the " Company "), and Daniel Victor Malloy III (the " Executive ").

WHEREAS, the Company and the Executive entered into a certain Employment Agreement dated as of January 23, 2012, an Amendment No. 1 to Employment Agreement dated as of April 1, 2015, an Amendment No. 2 dated as of May 5, 2016, an Amendment No. 3 dated as of March 1, 2017 and an Amendment No 4 dated as of August 3, 2017 (the initial Employment Agreement and Amendments thereto, collectively, the " Employment Agreement "); and

WHEREAS, in consideration of the mutual agreements set forth below and for other good and valuable consideration given by each party to this Amendment No. 5 to the other, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree to amend the Employment Agreement on the terms set forth below;

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:


1.	Section 3(a), Base Salary, of the Employment Agreement shall be amended to read as follows:

“3 (a) Base Salary . With effect from April 1, 2018, during the Employment Term, in full consideration of the performance by the Executive of the Executive’s obligations hereunder (including any services as an officer, director, employee, or member of any committee of any affiliate of the Company, or otherwise on behalf of the Company), the Executive shall receive from the Company a base salary (the “Base Salary”) at an annual rate of $725,000 per year, payable in accordance with the normal payroll practices of the Company then in effect.”

[Signature Page Follows]

IN WITNESS WHEREOF, the Company has caused this Amendment No. 5 to Employment Agreement to be executed, and the Executive has hereunto set his hand, in each case effective as of the day and year first above written.

THIRD POINT REINSURANCE LTD.

By: /s/ J. Robert Bredahl

_____________________________________
Name: J. Robert Bredahl
Title: President & Chief Executive Officer

By: /s/ Janice R. Weidenborner

_____________________________________
Name: Janice R. Weidenborner
Title: EVP, Group General Counsel & Secretary

EXECUTIVE

/s/ Daniel Victor Malloy III _______________________________________
Daniel Victor Malloy III

AMENDMENT No. 1 TO EMPLOYMENT AGREEMENT

THIS AMENDMENT No. 1 TO EMPLOYMENT AGREEMENT (the “ Amendment No. 1 ”), is entered into as of April 1, 2018 by and between Third Point Reinsurance Ltd., a Bermuda company (the “ Company ”), and Nicholas Campbell (the “ Executive ”).

WHEREAS, the Company and the Executive entered into a certain Employment Agreement dated as of December 13, 2013 (the “ Employment Agreement ”); and

WHEREAS, in consideration of the mutual agreements set forth below and for other good and valuable consideration given by each party to this Amendment No. 1 to the other, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree to amend the Employment Agreement on the terms set forth below;

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:


1.	Section 6, Termination Payments, sub-section (c) Termination without Cause or for Good Reason, shall be amended to read in its entirety as follows:

6 (c) Termination without Cause or for Good Reason. In the event that the Executive's employment is terminated pursuant to Section 5(a)(iv) or 5(a)(v) hereof, the Executive shall be entitled to receive: (i) the Accrued Compensation; (ii) the Pro Rata Bonus, payable in cash in a lump sum after the end of the calendar year in which the Termination Date occurs and no later than March 15th following such calendar year; (iii) severance pay equal to eighteen (18) months of Base Salary at the rate in effect on the Termination Date, payable as provided in the next following sentence; and (iv) eighteen (18) months of continued medical and life insurance benefits at the same premium rate that active employees pay for such coverage, with such life insurance benefits payable as provided in the last sentence of this Section 6(c). The severance pay contemplated by clause (iii) of the immediately preceding sentence shall be paid as follows: (x) an amount equal to eighteen (18) months of Base Salary shall be paid in eighteen (18) monthly installments over the eighteen (18) months following the Termination Date (and subject to Section 6(d), the first of such installments shall be paid on the 30th day following the Termination Date. The life insurance premium contributions contemplated by clause (iv) of this Section 6(c) shall be paid as follows: (x) any premium contributions required to be made during the eighteen (18) months following the Termination Date shall be paid upon such required contribution payment dates.


2.	Section 7, Executive Covenants, (g) Certain Definitions, sub-section (i) shall be amended to read in its entirety as follows:

7. (g) (i) The "Noncompetition Term" shall mean the period beginning on the date of this Agreement and ending eighteen (18) months following the Termination Date.

IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to Employment Agreement to be executed, and the Executive has hereunto set his hand, in each case effective as of the day and year first above written.

THIRD POINT REINSURANCE LTD.

By: /s/ J. Robert Bredahl

_____________________________________
Name: J. Robert Bredahl
Title: President & Chief Executive Officer

By: /s/ Janice R. Weidenborner

_____________________________________
Name: Janice R. Weidenborner
Title: EVP, Group General Counsel & Secretary

EXECUTIVE

/s/ Nicholas Campbell

________________________________________
Nicholas Campbell

Exhibit 31.1

Third Point Reinsurance Ltd.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) OF THE EXCHANGE ACT, AS AMENDED,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Robert Bredahl, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Third Point Reinsurance Ltd.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2018



/s/ J. Robert Bredahl
J. Robert Bredahl
President and Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2

Third Point Reinsurance Ltd.

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) OF THE EXCHANGE ACT, AS AMENDED,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher S. Coleman, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Third Point Reinsurance Ltd.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2018



/s/ Christopher S. Coleman
Christopher S. Coleman
Chief Financial Officer
(Principal Financial and Accounting Officer)

Exhibit 32.1

Third Point Reinsurance Ltd.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Robert Bredahl, President and Chief Executive Officer of Third Point Reinsurance Ltd. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:


(1)	the Quarterly Report on Form 10-Q of the Company for the fiscal period ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 31, 2018



/s/ J. Robert Bredahl
J. Robert Bredahl
President and Chief Executive Officer
(Principal Executive Officer)

Exhibit 32.2

Third Point Reinsurance Ltd.

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher S. Coleman, Chief Financial Officer of Third Point Reinsurance Ltd. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:


(1)	the Quarterly Report on Form 10-Q of the Company for the fiscal period ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 31, 2018



/s/ Christopher S. Coleman
Christopher S. Coleman
Chief Financial Officer
(Principal Financial and Accounting Officer)