A.M. Best Affirms Credit Ratings of Third Point Reinsurance Ltd. and Its Subsidiaries

A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a-" of Third Point Reinsurance Company Ltd. (TPRCL) (Bermuda) and Third Point Reinsurance (USA) Ltd. (TPRUSA) (Bermuda). A.M. Best also has affirmed the Long-Term ICRs of "bbb-" of Third Point Re (USA) Holdings, Inc. (TP USA) (Wilmington, DE) and its ultimate holding company, Third Point Reinsurance Ltd. (TP Re) (Bermuda) TPRE. Concurrently, A.M. Best also has affirmed the Long-Term Issue Credit Rating of "bbb-" on the $115 million 7% fixed senior unsecured notes due 2025 of TP USA. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TP Re's balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

TP Re's very strong level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), coupled with strong financial flexibility, as well financial leverage and coverage metrics, which are appropriate for the current rating level collectively contribute to an overall balance sheet assessment of very strong by A.M. Best. While TP Re has been unable to demonstrate underwriting profitability to date, the company reported healthy net income for year-end 2017, driven by exceptional returns on its investment portfolio - leading to an overall operating performance assessment of adequate. A.M. Best continues to have an ongoing dialogue with TP Re's senior management and closely monitors the company's underwriting performance.

Because of its alternative investment strategy, TP Re could be exposed to a convergence of events that could test its capital strength. The underwriting and significant investment risks could have a duplicative adverse effect on their risk-adjusted capital levels. The assets of TPRCL and TPRUSA are managed by Third Point LLC, a New York-based SEC-registered investment manager. TPRCL's and TPRUSA's assets are in separate portfolios managed by Third Point LLC, which are not combined with assets of other investors at Third Point LLC.

A.M. Best believes that the company is well-positioned at the current rating level; however, sustained, material deterioration in operating performance or risk-adjusted capitalization could lead to negative rating pressure in the near to medium term.

A.M. Best views TP Re's business profile as neutral. Although the company is not a market leader, its current management team is able to leverage established relationships and exhibit continued growth since inception, despite challenging market conditions. Through its multiple subsidiaries, the company provides customized reinsurance products on a worldwide basis. Additionally, TP Re's ERM is considers to be developed and appropriate for the group's risk profile.

This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

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