Greetings. Welcome to Third Point Reinsurance Third Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Christopher Coleman, Chief Financial Officer of Third Point Reinsurance. Mr. Coleman, you may now begin.

Thank you, operator. Welcome to the Third Point Reinsurance Limited Earnings Call for the Third Quarter of 2019. Last night, we issued an earnings press release and financial supplement, which is available on our website, www.thirdpointre.bm. Leading today's call will be Dan Malloy, Chief Executive Officer. Before I turn the call over to Dan, I would like to remind you that many of the remarks today will contain forward-looking statements based on current expectations. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Please refer to the third quarter 2019 earnings press release, and the company's other public filings, including the risk factors in the company's 10-K, where you will find factors that could cause actual results to differ materially from these forward-looking statements. Forward-looking statements speak only as of the date they are made and the company assumes no obligation to update or revise them in light of new information, future events or otherwise. In addition, management will refer to certain non-GAAP measures, which management believe allow for a more complete understanding of the company's financial results. A reconciliation of these measures to the most comparable GAAP measure is presented in the company's earnings press release. At this time, I will turn the call over to Dan Malloy.

Thank you, Chris. Good morning and thanks for joining our third quarter 2019 earnings call. Today, I will provide the highlights of our financial results followed by an update on underwriting strategy, other company developments and market conditions. Daniel Loeb, CEO of Third Point LLC, will then speak to the investment performance, and Chris will cover our financial results in more detail. We will then open the call up for your questions. We reported a small net loss for the quarter resulting in a return on equity of negative 1.1%. Our year-to-date return for the 9 months period, however, is a positive 14.2%. Our diluted book value per share at the end of the third quarter was $14.76, representing a growth of 13.7% since year-end 2018. Our combined ratio for the third quarter was 102.7%, which included catastrophe losses of $12.7 million or 6.2 percentage points. The cat losses incurred in Q3 were within our budgeted cat losses for the year-to-date period, and were within expectations given the scope and scale of the events. We remain pleased with the progress we are making in expanding our underwriting platform and expect the 2019 underwriting year to be profitable. Given the catastrophe events in Japan and California over the last few months, however, we expect our calendar year reported combined ratio to drop below 100% in 2020 rather than the initially expected fourth quarter of this year. We are very pleased to have announced last night that Joe Dowling, who serves as the Chief Executive Officer of the Brown University Investment Office, has joined our Board of Directors. You may recall that Sid Sankaran, current CFO of Oscar Health and former CFO and Chief Risk Officer of AIG, also joined earlier this quarter. We believe that both Joe and Sid will bring…

Thank you, Dan and good morning. Third Point Enhanced LP. The Third Point Reinsurance investment portfolio, actively managed by Third Point LLC, was down 0.7% for the third quarter of 2019, net of season expenses. When combined with the company's fixed income portfolio, consolidated investment results for the quarter were minus 0.2%. Equity markets were broadly positive during the quarter. The S&P 500 and MSCI World indices rose 1.7% and 0.7%, respectively. However, despite modest gains, the quarter was marked by tumultuous factor rotation, is positioned with momentum orientation, outperformed in August, but sharply reversed course in September in favor of lower quality value-oriented laggards. The funds equity portfolio and specifically its activist positions made the largest contribution to returns during the quarter, adding 370 basis points to performance. All of the funds top 5 winners for the quarter were activist positions including Sony Corp, Baxter International, Campbell Soup, Nestlé and a new position in EssilorLuxottica. EssilorLuxottica, now the largest eye care company in the world, was the company formed in late 2018 through the merger of Essilor, the world leader in ophthalmic lenses, and Luxottica, the world leader in eyeglass frames and sunglasses. We expect this position to have meaningful upside over the next few years, as we work with management to continue an efficient and valuable merger across 2 best-in-class businesses. Gains in the long equity portfolio were partially offset by losses from the single-name short portfolio as the scale and suddenness of the factor rotation caught us offside in certain short positions resulting in 70 basis points in losses for the quarter. Year-to-date, the funds long equity portfolio is up 24% versus the MSCI World performance of 18.2% and net of its short position has added more than 900 basis points to return. The credit portfolio cost…

Thanks, Daniel. For the third quarter, we generated a net loss of $15 million or $0.16 per diluted share. Our year-to-date net income was $171 million or $1.84 per diluted share. These amounts translate into a return on beginning equity for the quarter of negative 1.1% and a positive 14.2% year-to-date. Our diluted book value per share at the end of the third quarter was $14.76, which was an increase of 13.7% from December 31, 2018. We generated a $5 million net underwriting loss for the third quarter and our combined ratio was 102.7% compared to 104.9% in the prior year third quarter. As Dan noted earlier, our current quarter combined ratio included $12.7 million or 6.2 percentage points attributable to catastrophe events net of reinstatement premiums and profit commission adjustments. There were no cat losses in the prior year period. The current period underwriting results included a benefit of $3.8 million from the net impact of favorable reserve development net of offsetting commission adjustments. The prior period included a $2 million benefit. After adjusting for the impact of reserve development and cat losses, there was a significant improvement in our core underwriting results compared to the prior year period, as the shift in our underwriting strategy and business mix towards higher margin business is impacting our calendar year reported results. The ex-cat accident year combined ratio for the quarter was 98.4%. Our gross premiums written for the third quarter was $95 million, which compares to $30 million in the prior year quarter. The increase in gross premiums written was primarily due to $159 million retroactive reinsurance contract written in the period. As a reminder, retroactive reinsurance premiums are written and earned in the period of contract binding as well as recognizing a similar level of losses incurred. Gross premiums…

[Operator Instructions] Our first question is from the line of Meyer Shields with KBW.

So just a couple of quick ones. First, it looks like the cash and equivalents are about 25% of the invested asset portfolio. Is that the right level going forward?

Yes. I mean some of that -- I mean the easiest way, Meyer, to think of our investment account managed by Third Point is approximately 1/3 of the $2.5 billion is invested in the Third Point Enhance fund, with the remaining 2/3 invested in fixed income. Now depending on -- in the fixed income bucket, some of that is in money markets and short-dated U.S. treasuries, which then end up mapping into the cash equivalent line on the balance sheet. So some of it is just the sort of presentation difference. So it's either going forward, you either expect to see some portion of that in cash equivalent, but over time, I think, you'd start to see a larger proportion of that show up within the debt securities line.

Okay. Yes, that sounds exactly. And that makes sense. Can you clarify the line or lines of business in the third quarter retroactive reinsurance?

It's really just one contract, Meyer. It's with a client that we've supported in the past and during the quarter. We had a -- an additional reserve cover that we put in place.

Okay. I assume it's for something in the casualty world?

It's actually primarily U.K. motor. And you may recall, Meyer, we're not competing in the runoff space. So what this is, is a loss portfolio transfer with the motivating factor for the transaction being capital relief, where they're able to get capital credit for shifting reserves to us.

Okay. And then just one final question. I'm not really sure how to ask this, but how should we think about the catastrophe load associated with the property cat book and the specialty book that should start coming onboard more significantly in 2020?

Yes, I mean, I guess and I think your question was on just expectations for cat load impacting our results?

Yes.

Yes. So I think probably, we've talked about the level of cat losses being -- that we've incurred year-to-date, being kind of roughly in line with sort of budget. And so if you quantify the impact of those cat losses over the year-to-date period, it's roughly 2.5 points. And so I would -- I think you could extrapolate that to a cat load of roughly 2 to 3 points on kind of a budgeted basis.

At this time, I'll turn the floor back to management for closing remarks.

Well, thank you, everyone. Appreciate you listening into our call, and look forward to talking to you in February.

Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation.