UPDATE: J.P. Morgan Initiates Coverage on Third Point Reinsurance Ltd. with Neutral Rating, $15 PT on Mixed Factors

In a report published Monday, J.P. Morgan analyst Jimmy S. Bhullar initiated coverage on Third Point Reinsurance Ltd. TPRE with a Neutral rating and $15.00 price target. In the report, J.P. Morgan noted, “We are initiating coverage of TPRE with a Neutral rating and a 12/31/14 price target of $15. In our view, TPRE's low-risk underwriting focus coupled with a higher-risk investment strategy will drive above-average returns and book value growth over time. However, given its lack of underwriting income, near-term earnings and stock performance should be highly dependent on Third Point hedge fund's returns. Besides volatility in short-term results, we are concerned about deterioration in reinsurance pricing and TPRE's high expense ratio. We could get more positive on TPRE if pricing improves, equity market trends remain favorable, or the stock pulls back.” Third Point Reinsurance Ltd. closed on Friday at $12.88.