Third Point Reinsurance Ltd. Annual Report 2013

FY2013 Annual Report · Third Point Reinsurance Ltd.

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2013
annual RePoRT

TOTAL RETURN
BUSINESS MODEL
POSITIONED TO
PERFORM IN ALL
MARKET CYCLES

Third Point Reinsurance ltd., through its class 4 reinsurance subsidiary,
Third Point Reinsurance Company ltd. (together, “Third Point Re”),
is a Bermuda-based specialty property and casualty reinsurer with a
reinsurance and investment strategy that we believe differentiates
us from our competitors.

our goal is to deliver attractive equity returns to shareholders
by combining profitable reinsurance underwriting with superior
investment management provided by our investment manager,
Third Point llC.

Financial HigHligHts

• growth in diluted book value per share of 20.5% in 2013 and 11.9% in 2012

• generated $592.0 million of gross premium in first two years of operation; $584.0 million p&C,

$8.0 million Cat Fund

• Combined ratio(1) decreased to 107.5% in 2013 due to gain in scale and better underwriting performance
• Strong investment returns from investments managed by our investment manager, third point llC, of

23.9% in 2013 and 17.7% in 2012

• net investments managed by third point llC of $1.6 billion at december 31, 2013

Book Value Per Share (1)
Basic
diluted
Earnings Per Share
Basic
diluted

three Months ended

Year ended

dec. 31, 2013 dec. 31, 2012

$ 13.48
$ 13.12

$ 11.07
$ 10.89

$ 0.77
$ 0.75

$ 0.77
$ 0.76

$ 2.58
$ 2.54

$ 1.26
$ 1.26

Consolidated Statements of Income

dec. 31, 2013 dec. 31, 2012

three Months ended

Year ended

Revenues
gross premiums written
gross premiums ceded

net premiums earned
net investment income

total revenues

Expenses
loss and loss adjustment expenses incurred, net
acquisition costs, net
general and administrative expenses

total expenses

income including non-controlling interests
income attributable to
non-controlling interests

Net income

Selected Balance Sheet Data

Total assets

total liabilities
Shareholders’ equity attributable to shareholders
non-controlling interests
total shareholders’ equity

(expressed in thousands of U.S. dollars)

$162,277
—

$ 27,895
—

$401,937
(9,975)

$190,374
—

58,510
87,074

33,485
72,511

145,584

105,996

36,133
18,833
8,965

63,931

81,653

26,626
10,898
7,155

44,679

61,317

220,667
253,203

473,870

139,812
67,944
33,036

240,792

233,078

96,481
136,422

232,903

80,306
24,604
27,376

132,286

100,617

(1,565)

(607)

(5,767)

(1,216)

$ 80,088

$ 60,710

$227,311

$ 99,401

dec. 31, 2013

dec. 31, 2012

$2,159,890

$1,402,017

649,494
1,391,661
118,735
1,510,396

473,696
868,544
59,777
928,321

Total liabilities and shareholders’ equity

$2,159,890

$1,402,017

(1) Combined ratio and Book Value per Share are non-gaap financial measures. please see the disclosure on non-gaap Financial Measures included in part ii,

item 7, Management’s discussion and analysis of Financial Condition and results of operations of our annual report on Form 10-K included in this annual report
for additional information and reconciliations to the most comparable gaap measures.

third point re 2013 annual report | page 1

a Message FroM tHe
cHairMan and ceo

Dear Fellow Shareholders,

i am proud to share our accomplishments of 2013, our

underperform, on a combined ratio comparison basis,

second full year of operations. in august, we success-

reinsurance companies that have significant property

fully completed an initial public offering and made great

catastrophe exposure. Conversely, in years with signifi-

strides in establishing our “total return” platform, a

cant catastrophe losses, we expect to outperform those

combination of best-in-class underwriting with best-

same companies.

in-class investment management. in 2013, we also

increased diluted book value per share by 20.5%, up

from an increase of 11.9% in 2012. our net income for

We expect our underwriting operations will contribute to

our overall return in two ways:

2013 was $227.3 million versus $99.4 million in 2012.

• underwriting profits when we reach our stated goal of

We continue to strengthen and grow our underwriting

a combined ratio below 100%; and

portfolio. in 2013, we wrote $401.9 million of gross Written

• investment income on the “float,” or excess cash flows

premium versus gross Written premium of $190.4 million

generated by our underwriting activities.

in 2012. our combined ratio improved from 129.7% in

2012 to 107.5% in 2013 as we gained scale, bringing us

closer to achieving our near-term goal of a combined

ratio below 100%. Because of our investment strategy

and current market conditions in reinsurance, we are

not under writing classes of business which we consider

to be more volatile, such as property catastrophe, on

our rated company balance sheet. as a consequence,

in a light catastrophe year like 2013, we expect to

in 2013, underwriting operations, consisting of the com-

bination of our underwriting loss and the investment

returns on our float, already contributed a small profit to

our bottom line. as we move towards generating under-

writing profit and we leverage our investment returns

through generating more income from float, we expect

that the results of our reinsurance operations will con-

tribute increasingly to our overall returns.

Disciplined and
Opportunistic
Underwriting

Positive Asset
Leverage
(i.e., Float)

Reinsurance
Operations
Contribution
to ROE

page 2 | third point re 2013 annual report

Total Return Business Model Offers Upside In Varying Markets

Reinsurance:
Best-in-class
underwriting team

Investment Portfolio:
Best-in-class
investment manager

“Hard” Reinsurance Market

Robust underwriting margin +
Superior investment returns x Asset leverage

Potential for attractive ROEs across underwriting cycles

“Soft” Reinsurance Market

Modest underwriting margin +
Superior investment returns x Asset leverage

our investment manager, third point llC, produced a

challenging right now. reinsurance capacity is growing

23.9% net return on our invested assets in 2013, up

and, in many lines of business, demand for reinsurance

from a net return of 17.7% in 2012. third point llC has

is decreasing. despite these market conditions, we have

produced an annualized return of 21% over the past

been able to source many attractive opportunities due

18 years and our assets are managed on a “pari passu”

to the reputations and relationships of our people. in

basis with third point llC’s other fund portfolios, subject

particular, we have been able to access and write quota

to certain exceptions. We want to thank third point llC

shares of very good small to medium-sized companies

for their excellent efforts in managing our investment

who need reinsurance as a form of capital. We are also

portfolio as its employees continued to prove they are

seeing a flow of distressed situations where our combi-

among the best investors in the market.

nation of underwriting abilities and investment expertise

our initial public offering raised an additional $286.0

position us favorably to provide solutions.

million of capital. these funds, when combined with

i want to thank our shareholders and our clients for their

retained earnings of $325.6 million and our initial capital

support. i also want to thank my colleagues for their

of $784.0 million, brought our surplus to $1.4 billion as of

great efforts. in just two years we have come a long way

year end. We believe this capital base, our a– (excellent)

and we believe we are ready for whatever the markets

a.M. Best Company rating, and our staff of established

bring us.

professionals put us in a great position in any market

to come.

the biggest advantage of our “total return” business

model is that it allows us to be disciplined underwriters

who are under no undue pressure to grow premium just

for the sake of growth. the reinsurance market is very

John Berger
Chairman & Ceo

third point re 2013 annual report | page 3

Bound Premium by Broker
(ITD $592M)

P&C Business Mix

Portfolio
Construction

expertise in
writing all lines
of property,
casualty and
specialty
reinsurance

generate stable
underwriting
results over
time

provide
reinsurance
where capacity/
alternatives
may be limited

347
Submissions

level of
reinsurance
portfolio
27
volatility will
Bound Reinsurance
be driven
Contracts
by market
conditions

limited
catastrophe
exposure

Guy Carpenter & Company, LLC
26%

Alon Benfield–A divison of Aon plc
22.6%

Other
16.7%

Advocate reinsurance Partners, LLC
13.6%

Other Brokers
12.4%
BMS Intermediaries
8.7%

Inception Through

December 2013

($584 Million Bound)

Casualty

44%

Property

29%

Specialty

27%

growing and diversiFied
reinsurance portFolio

Bound Premium by Broker

(ITD $592M)

P&C Business Mix

347

Submissions

Bound Reinsurance

Contracts

Guy Carpenter & Company, LLC

Alon Benfield–A divison of Aon plc

26%

22.6%

Other

16.7%

Advocate reinsurance Partners, LLC

13.6%

Other Brokers

12.4%

BMS Intermediaries

8.7%

Inception Through
December 2013

($584 Million Bound)

Casualty
44%

Property
29%

Specialty
27%

Strong Premium Growth
(in Millions)

$393.6

$190.4

2012

2013

400

350

300

250

200

150

100

page 4 | third point re 2013 annual report

Submission Ratios

(ITD $592M Bound Premium)

356

Submissions

Bound Reinsurance

Contracts

Quoted Converted

to Bound

56.9%

Submissions

Quoted

16.26%

Submissions Converted

to Bound

9.27%

Strong Premium Growth

(in Millions)

$393.6

$190.4

2012

2013

400

350

300

250

200

150

100

Submission Ratios

(ITD $592M Bound Premium)

356

Submissions

Bound Reinsurance

Contracts

Quoted Converted

to Bound

56.9%

Submissions

Quoted

16.26%

Submissions Converted

to Bound

9.27%

Earnings Transparency
• Net investment income drops to the
bottom line and is a key driver of
profitability

• Limited legacy reserves mitigate risk

of adverse reserve development

• Catastrophe exposure largely limited
to third point re’s $54 million invest-
ment in our Cat Fund

Strong Balance Sheet
• No debt

• Low premium leverage

• Liquid investment portfolio—over 95%
of investments classified as level 1
or level 2 based on FaS 157 criteria

ROE Expansion Potential
• Increasing asset leverage

• Positioned for an improving

reinsurance market

a diFFerentiated
equity story

Cumulative Total Shareholder Return(1,2)

$160

$150

$140

$130

$120

$110

$100

$90

AUG 15
2013

AUG 30
2013

SEP 16
2013

SEP 30
2013

OCT 15
2013

OCT 30
2013

NOV 15
2013

NOV 29
2013

DEC 16
2013

DEC 31
2013

Third Point Re

Dow Jones U.S. Property & Casualty Insurance Index

S&P 500

(1) The above graph assumes that the value of the investment was $100 on August 15, 2013.
(2) This graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any filing by us under the Securities Act of 1933
or the Securities and Exchange Act of 1934, whether made before and after the date hereof and irrespactive of any general incorporation language in any such filing.

third point re 2013 annual report | page 5

160

150

140

130

120

110

100

Substantially all of our investable assets are managed by our investment manager, third point llC,

which is wholly owned by daniel S. loeb, one of our founding shareholders. third point llC is an

SeC-registered investment adviser headquartered in new York, managing $13.9 billion in assets as

of december 31, 2013. We directly own our investments, which are held in a separate account and

managed by third point llC on substantially the same basis as its main hedge funds, including

third point partners l.p., the original third point llC hedge fund.

superior investMent
returns

Third Point LLC Returns Vs. Comparative Indices(1,2,3)
(Growth of $1,000 Since Inception)

$40,000

$30,000

$20,000

$10,000

JUN
’95

MAY
’96

APR
’97

MAR
’98

FEB
’99

JAN
’00

DEC
’00

NOV
’01

OCT
’02

SEP
’03

AUG
’04

JUL
’05

JUN
’06

MAY
’07

APR
’08

MAR
’19

FEB
’10

JAN
’11

DEC
’11

NOV
’12

OCT
’13

Third Point Partners L.P.
HFRI Event-Driven (Total) Index

S&P 500 (TR)
Dow Jones Credit Suisse Event Driven Index

(1) past performance is not necessarily indicative of future results. all investments involve risk including the loss of principal.

(2) the historical performance of third point partners l.p. is based on the net asset value of fee-paying investors only and is presented net of management fees, brokerage commissions, administrative

expenses, and accrued performance allocation, if any, and includes the reinvestment of all dividends, interest, and capital gains. the historical performance represents fund-level returns, and is not an
estimate of any specific investor’s actual performance, which may be materially different from such performance depending on numerous factors. all performance results are estimates and should not
be regarded as final until audited financial statements are issued.

(3) the illustrative return is calculated as a theoretical investment of $1,000 in third point partners l.p. at inception relative to the same theoretical investment in two hedge fund indices designed to track
performance of certain “event-driven” hedge funds over the same period of time. all references to the dow Jones Credit Suisse event driven index (“dJ-CS hFi”) and hFri event-driven (total) index
(“hFri”) reflect performance calculated through december 31, 2013. the dJ-CS hFi is an asset-weighted index and includes only funds, as opposed to separate accounts. the dJ-CS hFi uses the
dow Jones Credit Suisse database and consists only of event driven funds deemed to be “event-driven” by the index and that have a minimum of $50 million in assets under management,a minimum
of a 12-month track record, and audited financial statements. the hFri consists only of event driven funds with a minimum of $50 million in assets under management or a minimum of a 12-month track
record. Both indices state that returns are reported net of all fees and expenses. While third point partners l.p. has been compared here with the performance of well-known and widely recognized
indices, the indices have not been selected to represent an appropriate benchmark for third point partners l.p., whose holdings, performance and volatility may differ significantly from the securities
that comprise the indices.

page 6 | third point re 2013 annual report

TOTAL RETURN FOCUS

2013 Form 10-K

3_ThirdPoint_29501_10K.indd 1

2/28/14 11:20 AM

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)








ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013

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
(State or other jurisdiction of incorporation or organization)

98-1039994
(I.R.S. Employer Identification No.)

The Waterfront, Chesney House
96 Pitts Bay Road
Pembroke HM 08, Bermuda
+1 441 542-3300
(Address, including Zip Code and Telephone Number, including Area Code of Registrant’s Principal Executive Office)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Shares, $0.10 par value

Name of each exchange on which registered
New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes  No 

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their
obligations under those sections.

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  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  No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.

Yes  No 

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

Large accelerated filer
Non-accelerated filer (do not check if a smaller reporting company)





Accelerated filer
Smaller reporting company





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No 

The registrant’s common shares began trading on the New York Stock Exchange on August 15, 2013. Accordingly, as of June 30, 2013, there was no public
trading market for the registrant’s common shares.

As of February 27, 2014 there were 103,921,772 common shares of the registrant’s common shares issued and outstanding, including 657,156 restricted shares.

Part III incorporates information from certain portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission
within 120 days after the fiscal year ended December 31, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

Third Point Reinsurance Ltd.

INDEX

INTRODUCTORY NOTE

PART I ..............................................................................................................................................................................

Item 1. Business. ......................................................................................................................................................

Item 1A. Risk Factors ...............................................................................................................................................

Item 1B. Unresolved Staff Comments ......................................................................................................................

Item 2. Properties .....................................................................................................................................................

Item 3. Legal Proceedings. .......................................................................................................................................

Item 4. Mine Safety Disclosures ..............................................................................................................................

Executive Officers of the Registrant ........................................................................................................................

PART II ............................................................................................................................................................................

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities. .................................................................................................................................................................

Item 6. Selected Financial Data ................................................................................................................................

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .......................

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. ..................................................................

Item 8. Financial Statements and Supplementary Data ............................................................................................

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ......................

Item 9A. Controls and Procedures ............................................................................................................................

Item 9B. Other Information ......................................................................................................................................

PART III ..........................................................................................................................................................................

Item 10. Directors, Executive Officers and Corporate Governance .........................................................................

Item 11. Executive Compensation ............................................................................................................................

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ...

Item 13. Certain Relationships and Related Transactions, and Director Independence ...........................................

Item 14. Principal Accounting Fees and Services ....................................................................................................

Page

PART IV ........................................................................................................................................................................... E-1

Item 15. Exhibits and Financial Statement Schedules .............................................................................................. E-1

SIGNATURES ......................................................................................................................................................... E-3

Consolidated Financial Statements ...........................................................................................................................

F-1

INTRODUCTORY NOTE

Unless the context otherwise indicates or requires, as used in this Annual Report on Form 10-K references to “we,”
“our,” “us,” and the “Company,” refer to Third Point Reinsurance Ltd. and its directly and indirectly owned subsidiaries,
including Third Point Reinsurance Company Ltd. (“Third Point Re”), as a combined entity, except where otherwise stated or
where it is clear that the terms mean only Third Point Reinsurance Ltd. exclusive of its subsidiaries. We refer to Third Point
Reinsurance Investment Management Ltd. as the “Catastrophe Fund Manager,” Third Point Reinsurance Opportunities
Fund Ltd. as the “Catastrophe Fund” and Third Point Re Cat Ltd. as the “Catastrophe Reinsurer,” “fiscal,” when used in
reference to any twelve-month period ended December 31, refers to our fiscal years ended December 31. Unless otherwise
indicated, information contained in this Annual Report is as of December 31, 2013. We have made rounding adjustments to
reach some of the figures included in this Annual Report and, unless otherwise indicated, percentages presented in this
Annual Report are approximate.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained or incorporated in this Annual Report include forward-looking statements. 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 Annual Report on Form 10-K.

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:

•

limited historical information about us;

operational structure currently is being developed;

fluctuation in results of operations;

more established competitors;

losses exceeding reserves;

downgrades or withdrawal of ratings by rating agencies;

dependence on key executives;

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

potential inability to pay dividends;

unavailability of capital in the future;

dependence on clients’ evaluations of risks associated with such clients’ insurance underwriting;

suspension or revocation of our reinsurance license;

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

potential characterization of Third Point Reinsurance Ltd. and/or Third Point Reinsurance Company Ltd. as
a PFIC;

dependence on Third Point LLC to implement our investment strategy;

termination by Third Point LLC of our investment management agreement;

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

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

•

potentially becoming subject to United States federal income taxation;

potentially becoming subject to U.S. withholding and information reporting requirements under the
FATCA provisions;

other risks and factors listed under “Item 1A. Risk Factors” and elsewhere in this Annual Report.

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.

Item 1. Business

Overview

PART I.

We are a Bermuda-based property and casualty reinsurer with a reinsurance and investment strategy that we believe
differentiates us from our competitors. Our goal is to deliver attractive equity returns to shareholders by combining profitable
reinsurance underwriting with superior investment management provided by Third Point LLC, our investment manager.

Our reinsurance strategy is to be highly opportunistic and disciplined. During periods of extremely competitive or
soft reinsurance market conditions we intend to be selective with regard to the amount and type of reinsurance we write and
conserve our risk-taking capital for periods when market conditions are more favorable to us from a pricing perspective.

Substantially all of our investable assets are managed by our investment manager, Third Point LLC, which is wholly
owned by Daniel S. Loeb, one of our founding shareholders. Third Point LLC is an SEC-registered investment adviser
headquartered in New York, managing $13.9 billion in assets as of December 31, 2013. We directly own our investments,
which are held in a separate account and are managed by Third Point LLC on substantially the same basis as its main hedge
funds, including Third Point Partners L.P., the original Third Point LLC hedge fund.

We were incorporated on October 6, 2011 and completed our initial capitalization transaction on December 22, 2011
with $784.3 million of equity capital, and commenced underwriting business on January 1, 2012. In January 2012, we
received an A- (Excellent) financial strength rating from A.M. Best Company, Inc., or A.M. Best.

On August 20, 2013, we completed an initial public offering (“IPO”) of 24,832,484 common shares at an offering
price of $12.50 per share. The net proceeds to us of the offering were $286.0 million, after deducting offering costs. Our
common shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “TPRE”.

Our management team is led by John R. Berger, a highly-respected reinsurance industry veteran with over 30 years
of experience, the majority of which was spent as the principal executive officer of three successful reinsurance companies.
In addition, we have recruited a management team around Mr. Berger that also has significant senior leadership and
underwriting experience in the reinsurance industry. We believe that our experience and longstanding relationships with our
insurance company clients, senior reinsurance brokers, insurance regulators and credit rating agencies are an important
competitive advantage.

For the year ended December 31, 2013, we generated net income of $227.3 million, which represented a return on
beginning shareholders’ equity attributable to shareholders, adjusted for the IPO proceeds, of 23.4%. For 2013 our gross
premiums written totaled $401.9 million, and earned premiums totaled $220.7 million. For the same period our net
investment income totaled $253.2 million, reflecting net returns of 23.9% on our investments managed by Third Point LLC.
Our combined ratio for our property and casualty reinsurance segment for the year ended December 31, 2013 was 107.5%
reflective of lower crop losses in 2013 compared to 2012 and a decrease in general and administrative expenses as a
percentage of earned premium compared to the prior year. As of December 31, 2013, we had shareholders’ equity attributable
to shareholders of $1,391.7 million.

Segment Information

Under U.S. GAAP, operating segments are based on the internal information that management uses for allocating
resources and assessing performance as the source of our reportable segments. We report two operating segments - Property
and Casualty Reinsurance and Catastrophe Risk Management. We have also identified a corporate function that includes our
investment results and certain general and administrative expenses related to corporate activities. For more information, see
Note 22 of our audited consolidated financial statements included elsewhere in this Annual Report.

Reinsurance Strategy

Our reinsurance strategy is to build a portfolio that generates stable underwriting profits, with margins
commensurate with the amount of risk assumed, by opportunistically targeting sub-sectors of the market and specific
situations where reinsurance capacity and alternatives may be constrained. Our management team has differentiated expertise
that allows us to identify profitable reinsurance opportunities. The level of volatility in our reinsurance portfolio will be

determined by market conditions but will typically be lower than that of most other reinsurance companies. We manage
reinsurance volatility by focusing on lines of business that have historically demonstrated more stable return characteristics,
such as limited catastrophe exposed property, which we refer to as “property quota share”, auto, workers compensation quota
share, and certain segments of multi-line specialty and crop. These lines of business are often characterized as having
exposure to higher frequency and lower severity claims activity. We seek to further manage the volatility of our reinsurance
results by writing reinsurance contracts on a quota share basis, where we assume an agreed percentage of premiums and
losses for a portfolio of insurance policies. We also make use of contractual terms and conditions within our reinsurance
contracts that include individual or aggregate loss occurrence limits, which limit the dollar amount of loss that we can incur
from a particular occurrence or series of occurrences within the term of a reinsurance contract; loss ratio caps, which limit the
maximum loss we can incur pursuant to a contract to a defined loss ratio; sliding scale commissions that vary in accordance
with the client’s performance; and sub-limits and exclusions for specific risks not covered by a particular reinsurance
contract.

We also write reinsurance contracts that provide protection against adverse development on loss reserves where we
provide an incremental amount of additional coverage limit, usually less than 25%, of the total reserves. We typically provide
coverage where we agree with the client’s reserving practices and reserve levels or where we believe there are structural or
contractual safeguards in place. While these transactions are usually booked at or close to a 100% composite ratio (combined
ratio before general and administrative expenses) and therefore do not initially generate underwriting income, they produce
premiums equal to the reserves at the inception of the contract. In some instances, the level of risk in the reserve cover
contract or the risk mitigating features within the contract including limitations on the amount and timing of loss payments
require us to account for the reserve cover as a deposit contract. Using the deposit method of accounting, a deposit liability,
rather than written premium, is initially recorded based upon the consideration received less any explicitly identified
premiums or fees. In subsequent periods, the deposit liability is adjusted by calculating the effective yield on the deposit to
reflect actual payments to date and future expected payments.

We typically write larger customized reinsurance contracts that require significant interaction during the course of
negotiations between the client, intermediaries and us. We take a lead underwriting position on most of our reinsurance
contracts, meaning that we establish the pricing and terms and conditions of the reinsurance contract. In certain instances, we
will follow terms and conditions established by our competitors if we believe the opportunity meets our return hurdles and
helps us balance our reinsurance portfolio.

Our property and casualty reinsurance operations generate excess cash flows, or float, which we track in managing
our business. We believe that continuing to seek net investment income from float is a key part of our reinsurance strategy
and an important consideration in evaluating the overall contribution of our property and casualty reinsurance operations to
our consolidated results.

For the year ended December 31, 2013, three contracts individually contributed more than 10% of our gross
premiums written. These three contracts contributed 14.9%, 11.2% and 10.5%, respectively, of total gross premiums written
for the year ended December 31, 2013. For the year ended December 31, 2012, three contracts individually contributed more
than 10% of total gross premiums written. These three contracts contributed 22.3%, 20.0% and 11.8%, respectively, of total
gross premiums written for the year ended December 31, 2012. As we expand our business over time, we expect that the
proportion of total gross premiums written represented by individual contracts will decline. Under current market conditions,
we focus primarily on writing quota share agreements pursuant to which we assume an agreed percentage of premiums and
losses for a portfolio of insurance policies.

We intend to grow our book by underwriting a mix of short to medium tail personal lines and commercial lines. We
intend to increase our geographic spread over time by adding reinsurance programs from Europe, Asia and other regions;
however, we expect that a majority of our reinsurance business will continue to be composed of U.S. exposure.

Most of our clients buy reinsurance from us for capital management purposes, primarily to increase their capacity to
write insurance premium and maintain or improve their credit ratings. The most common form of reinsurance used for this
purpose is quota share reinsurance. Many of the clients that buy these contracts are growing as a result of securing primary
rate increases and an increase in the number of policies they write. Because quota share reinsurance typically includes
structural and contractual features that limit the amount of risk assumed by the reinsurer, it therefore carries relatively lower
expected margins than excess of loss reinsurance and other more volatile forms of reinsurance. During periods of less
favorable market conditions, margins on quota share reinsurance written for the capital management purposes of our clients
typically remain stable and are sufficient to support our business plan. As market conditions improve, we may expand the
lines of business and forms of reinsurance on which we focus to increase our risk-adjusted returns.

In contrast to many reinsurers with whom we compete, we have elected to limit our underwriting of property
catastrophe exposures and write excess of loss catastrophe reinsurance through the Catastrophe Fund, which is a separately
capitalized reinsurance fund vehicle. We established the Catastrophe Fund, the Catastrophe Fund Manager and the
Catastrophe Reinsurer on June 15, 2012, in partnership with Hiscox Insurance Company (Bermuda) Limited, or Hiscox. Our
investment in and management of the Catastrophe Fund allow us to provide a product that is critical to most of our
reinsurance clients and to earn fee income over time. Because the Catastrophe Fund is capitalized in part by investments from
unrelated parties, our financial exposure to the higher volatility and liquidity risks associated with property catastrophe losses
is limited to our investment in the Catastrophe Fund, which as of December 31, 2013 was $54.8 million. As there are no
additional guarantees or recourse to us beyond this investment, we anticipate that our property catastrophe exposures will
consistently remain relatively low when compared to our competitors.

The following table provides a breakdown by line of business of gross premiums written for the year ended

December 31, 2013 and 2012:

2013

2012

Amount

Percentage
of Total

Amount

Percentage
of Total

Property and Casualty Reinsurance Segment
Property ....................................................................................
Casualty ....................................................................................
Specialty ...................................................................................

Catastrophe Risk Management Segment ..................................
Total ..........................................................................................

67,612
210,017
115,959
393,588
8,349
$ 401,937

($ in thousands)

16.8% $ 103,174
44,700
52.2%
28.9%
42,500
97.9% 190,374
—
2.1%
100.0% $ 190,374

54.2%
23.5%
22.3%
100.0%
—%
100.0%

Investment Strategy

Our investment strategy distinguishes us from most other reinsurers, who typically concentrate their investment
portfolios on long-only, investment grade, shorter-term, fixed income securities. As implemented by our investment manager,
Third Point LLC, our investment strategy is intended to achieve superior risk-adjusted returns by deploying capital in both
long and short investments with favorable risk/reward characteristics across select asset classes, sectors and geographies.
Third Point LLC identifies investment opportunities via a bottom-up, value-oriented approach to single security analysis
supplemented by a top-down view of portfolio and risk management. Third Point LLC seeks dislocations in certain areas of
the capital markets or in the pricing of particular securities and supplements single security analysis with an approach to
portfolio construction that includes sizing each investment based on upside/downside calculations, all with a view towards
appropriately positioning and managing overall exposures. Dislocations in capital markets refer to any major movements in
prices of the capital markets as a whole, certain segments of the market, or a specific security. If Third Point LLC has what it
considers to be a differentiated view from the perceived market sentiment with respect to such movement, Third Point LLC
may trade securities in our investment account based on that differentiated view. If the ultimate market reaction with respect
to the event or movement ultimately proves to be closer to Third Point LLC’s original viewpoint, we may have investment
gains in our investment portfolio as a result of the shift in market sentiment. Through our investment manager, Third Point
LLC, we make investments globally, in both developed and emerging markets, in all sectors, and in equity, credit,
commodity, currency, options and other instruments.

Third Point LLC has historically favored event-driven situations, in which it believes that a catalyst, either intrinsic
or extrinsic, will unlock value or alter the lens through which the greater market values a particular investment. Third Point
LLC attempts to apply this event framework to each of its single security investments and this approach informs the timing
and risk of each investment. For additional detail regarding Third Point LLC’s investment strategy and event-driven
framework utilized in managing our investment portfolio, please refer to the expanded description under “Investments-
Investment Strategies.”

As our investment manager, Third Point LLC has the contractual right to manage substantially all of our investable
assets pursuant to an investment management agreement that has an initial term expiring on December 22, 2016, subject to
automatic renewal for additional successive three-year terms unless a party notifies the other parties of its intention to
terminate at least six months prior to the end of a term. Third Point LLC is required to follow our investment guidelines and
to act in a manner that is fair and equitable in allocating investment opportunities to us.

However, it is not otherwise restricted with respect to the nature or timing of making investments for our account. Our
investment guidelines require Third Point LLC to manage our investment portfolio on a substantially equivalent basis to its
main funds; but in any event to keep at least 60% of the investment portfolio in debt and equity securities, cash, cash
equivalents or precious metals; limit single position concentration to no more than 15% of the portfolio assets managed; and
limit net exposure to no greater than 1.5 times portfolio assets managed for more than 10 trading days in any 30-day period.
Net exposure represents the short exposure subtracted from the long exposure in a given category. We have the contractual
right to withdraw funds from our managed account to pay claims and expenses as needed. The net increase in the value of our
investment portfolio for the year ended December 31, 2013 was 23.9% compared to 17.7% for the year ended December 31,
2012.

Property and Casualty Segment Products

Our underwriting team has extensive experience in underwriting many forms of property and casualty reinsurance
products. In the current market, which we categorize as being highly competitive, our focus will continue to be on property
and casualty quota share treaties that offer stable returns. We have also considered and written programs such as loss
portfolio transfers and other forms of reserve covers where we are able to leverage our investment capabilities. Expected
margins on quota share reinsurance written for capital management purposes of our clients are typically smaller but, remain
relatively stable and are sufficient to support our business plan even during periods of less favorable market conditions such
as those being experienced currently. We believe there is less competition on reserve covers as expected investment returns
on investable assets backing reserves is very low for most traditional reinsurers in the current interest rate environment.
Margins on this business are determined through bilateral negotiations and comparison of the cost of the reserve cover to
non-reinsurance solutions such as raising additional equity or debt capital. As market conditions improve, we may expand the
lines of business and forms of reinsurance on which we focus to increase our risk-adjusted returns.

While we expect to establish a diversified portfolio, our allocation of risk will vary based on our perception of the
opportunities available in each line of business. Moreover, our focus on certain lines will fluctuate based upon market
conditions and we may only offer or underwrite a limited range of lines in any given period. We intend to:

•

target markets where capacity and alternatives are underserved or capacity constrained;

employ strict underwriting discipline;

select reinsurance opportunities with favorable economics over the life of the contract; and

potentially offer lines that are not identified in this Form 10-K.

Through December 31, 2013, we wrote reinsurance contracts covering the following product lines:

Personal Automobile Insurance. Personal automobile insurance is purchased for individually owned or leased cars
designed to provide the insured with financial protection against bodily injury or physical damage resulting from traffic
accidents and against liability that could arise from such occurrences. In addition, automobile insurance may offer financial
protection against theft or damage of the vehicle from incidents other than collisions. Each state has different rules and
regulations in place for compulsory coverage and the specific terms of automobile insurance policies will vary from company
to company. Third Point Re generally focuses on providing proportional reinsurance to small, single state and regional
carriers that specialize in minimum financial responsibility limits required by their respective states. This business is often
referred to as “non-standard” automobile business and was historically overlooked by standard markets. More recently,
however, standard companies have expanded their appetite for such business and it is written by a broad range of carriers.
Reinsurance contracts covering personal automobile insurance are included in the casualty line of business.

Workers Compensation Insurance. Workers compensation insurance provides wage replacement and medical
benefits to employees injured in the course of employment in exchange for the mandatory relinquishment of the employee’s
right to sue the employer for negligence. While plans differ among jurisdictions, provisions can be made for payments in
place of wages (functioning as a form of disability insurance), compensation for economic loss (past and future),
reimbursement or payment of medical and like expenses (functioning as a form of health insurance), and benefits payable to
dependents of workers killed during employment (functioning as a form of life reinsurance). General damages for pain and
suffering and punitive damages for employer negligence are not generally available in workers compensation plans. Our
approach to workers compensation is very selective and targets insurance companies that are very specialized within the
workers compensation line and geographically focused. We limit the volatility of this line of business by capping our per
occurrence exposures. Reinsurance contracts covering workers compensation insurance are included in the casualty line of
business.

Homeowners’ Insurance. Homeowners’ insurance coverage combines various personal insurance protections, which
can include losses occurring to one’s home, their contents, loss of use (including additional living expenses), or loss of other
personal possessions of the homeowner, as well as liability insurance for accidents that may happen at covered homes or at
the hands of the homeowners. Third Point Re provides quota share reinsurance which limits the amount of catastrophic losses
that can be recovered; in many cases, hurricanes and other serious natural events are excluded totally. There are also often
other loss sensitive features that vary the cost of the reinsurance as results improve or deteriorate, buffering the potential
volatility to us. Reinsurance contracts covering homeowners’ insurance are included in the property line of business.

Crop Insurance. Crop insurance on growing crops in the United States provides protection to farmers for crop losses
caused by weather, disease, and insects. Two types of policies are available. Multiple peril crop insurance, or MPCI, is
subsidized by the U.S. Department of Agriculture and covers most natural perils. Additionally, farmers can purchase single
peril policies such as hail insurance. These products are not subsidized and the farmer pays the entire premium. Other single
peril policies cover the perils such as wind, freeze, and excess rain. We predominantly support MPCI business. As of
December 31, 2013, the majority of our crop portfolio is multiple-peril and written on a quota share basis. Reinsurance
contracts covering crop insurance are included in the specialty line of business.

Mortgage Insurance. Mortgage insurance is an insurance policy which compensates lenders or investors for losses
due to the default of a mortgage loan. Mortgage insurance can refer to private mortgage insurance (“PMI”), mortgage life
insurance or mortgage title insurance. Third Point Re focuses on PMI. PMI is normally required by lenders when a
borrower’s down payment or equity is less than 20% of the loan value. Not all lenders will require PMI but those that follow
the Fannie Mae and Freddie Mac guidelines for home loan approval require PMI. Reinsurance contracts covering mortgage
insurance are included in the specialty line of business.

Multi-line reinsurance. Multi-line reinsurance is reinsurance of an underlying portfolio of several different types of
insurance risks. Third Point Re focuses on multi-line reinsurance opportunities where it has expertise in the underlying lines
of business or where the terms and conditions of the reinsurance contract minimize the volatility of the more difficult to
analyze classes of business in the portfolio. Multi-line reinsurance contracts are included in the specialty line of business.

Marketing

The majority of our business is sourced through reinsurance brokers. Broker distribution channels provide us with
access to an efficient, variable cost, global distribution system without the significant time and expense that would be
incurred in creating a wholly-owned distribution network. We believe that our financial strength rating, unencumbered
balance sheet, well known and respected management team, and responsive client service are enhancing our working
relationships with clients and brokers.

Our objective is to build long-term relationships with senior individuals at reinsurance brokers and with our clients.
We meet frequently in Bermuda and London with brokers, senior representatives of existing clients and prospective clients,
and encourage client visits to our executive offices in Bermuda in order to help distinguish us and to develop mutually
beneficial understandings of our respective businesses. As evidenced by rates of submission flow, open dialogue, and
successful closing of targeted accounts, we believe we have successfully leveraged the underwriting experience and
relationships of our management team. Reinsurance brokers receive a brokerage commission that is usually a percentage of
gross premiums written. We seek to become the first choice of brokers and clients by providing:

•

creative solutions that address the specific business needs of our clients;

rapid and substantive responses to structuring and pricing quote requests;

financial security; and

clear indication of risks we will and will not underwrite.

The following table sets forth our premiums written by brokers or placed directly for the years ended December 31,

2013 and 2012:

2013

2012

Premiums written

% of Total

Premiums written

% of Total

Name of broker
Aon Benfield - a division of Aon plc ....................... $
Guy Carpenter & Company, LLC ............................
Advocate Reinsurance Partners, LLC ......................
BMS Intermediaries .................................................
Other brokers ...........................................................
Total broker placed ..................................................
Other ........................................................................

111,865
89,125
57,994
46,095
40,246
345,325
56,612
401,937

($ in thousands)

27.8% $
22.2%
14.4%
11.5%
10.0%
85.9%
14.1%
100.0% $

22,000
65,073
22,473
5,269
33,059
147,874
42,500
190,374

11.6%
34.2%
11.8%
2.8%
17.4%
77.8%
22.2%
100.0%

We believe that the number of brokers with whom we do business will continue to expand over time, and by
maintaining close working relationships with brokers, we are able to increase our chances of successfully growing our
account and accessing a broader range of potential clients.

Underwriting

We have established a senior team of underwriters and actuaries to develop and manage our reinsurance business.
We believe that their experience, industry presence, and long-standing relationships will allow us to tailor our portfolio to
specific market segments. Our approach to underwriting will allow us to deploy our capital in a variety of lines of business
and to capitalize on opportunities that we believe offer favorable returns on equity over the long term. Our underwriters and
actuaries have expertise in a number of lines of business and we will also look to outside consultants to help us with niche
areas of expertise when we deem it appropriate. From time to time, we may consider investment income in our underwriting
and pricing of a particular transaction.

We generally apply the following underwriting management principles:

Team Approach

Each submission is assigned to an underwriter. If the program meets our underwriting criteria, the actuarial team
participates in the process. The underwriter and actuary work in concert to evaluate the opportunity, determine the optimal
structure, and price the deal. When capital is committed to any transaction, the evaluation team creates a deal analysis
memorandum that highlights the key components of the proposed transaction and presents the proposed transaction to a
senior group of staff including the Chief Executive Officer and Chief Underwriting Officer and representatives of the
underwriting, actuarial and finance teams. This group must agree that the transaction meets or exceeds our profitability
requirements before we submit a binding proposal. Our Chief Executive Officer and Chief Underwriting Officer maintains
the exclusive ultimate authority to bind contracts.

Actuarial Pricing

We have developed proprietary actuarial models and also use several commercially available tools to assist in
pricing our business. Our analysis considers the data and information provided by the potential cedent as well as relevant
industry data, where appropriate. We use this cedent specific and industry data to develop our own point estimate of the
expected losses under each potential contract. We also use a stochastic model to simulate a distribution of potential loss
outcomes and the impact of any contractual features that may exist such as sliding scale ceding commissions or profit
commissions.

One of the key metrics that we consider as a result of this process is the expected combined ratio on a particular
transaction. We also consider the projected outcomes at various percentiles, with a specific focus on outcomes in the tail. As
a part of this process, we also specifically test each transaction to determine if there is sufficient risk transfer to qualify for
reinsurance accounting. The results of this pricing process are shared with the underwriter on a contract, and if a deal is
bound summary exhibits are attached to a memo summarizing the actuarial pricing analysis that was performed.

Act as Lead Underwriter

Typically, one or two reinsurers will act as the lead or co-lead markets in developing and negotiating treaty pricing,
terms and conditions of reinsurance contracts. We act as the lead underwriter for the majority of the premium that we
underwrite. We believe that lead underwriting is a critically important factor in achieving long-term success, as lead
underwriters have greater control of overall economics of their programs. In addition, we believe that reinsurers that lead
policies are generally solicited for a broader range of business and have greater access to attractive risks.

Alignment of Interests

We seek to ensure that every contract we underwrite aligns our interests with our client’s interest. Specifically, we

may seek to:

•

require our clients to maintain a meaningful risk position in their business;

pay our clients a commission based upon their actual expenses and offer an additional commission as an
incentive based upon profitability;

include deficit carry-forward provisions in our multi-year contracts which allows us to potentially offset
underwriting losses from one year to the next;

charge the client a premium for reinstatement of the amount of reinsurance coverage to the full amount
reduced as a result of a reinsurance loss payment, which we refer to as a reinstatement premium;

require specific levels of rate increases on the underlying insurance policies.

We believe these tools help us align our risk with the risk of the client and provide incentive to clients to manage our
mutual interests. We also believe that aligning our interests with our client’s interests promotes profitability, accurate
reporting of information, timely settling and management of claims, and limits the potential for disputes. Adjustments to
profit commissions and other participating features would be recorded in our financial statements based on our estimate of
losses and the contractual provisions of the reinsurance contract.

During the years ended December 31, 2013 and 2012, loss and loss adjustment expenses incurred totaled $139.8
million and $80.3 million, respectively. Subsequent adjustments to our loss reserves for these contracts may result in
corresponding adjustments to profit commission and other participating features based upon the structure of the contract, the
level of losses accounted for in our financial statements and the timing of the subsequent changes. As part of our quarterly
reserving process, profit commissions and other participating features are calculated on an individual contract basis. Profit
commissions and other participating features are considered probable when our actuarial loss estimate results in estimated
profit commission based on the terms of the contract.

Underwriting Operations

We currently have five senior executives who comprise our Underwriting Team. The team consists of our Chief
Executive Officer/Chief Underwriting Officer, two Executive Vice Presidents, Underwriting and two Senior Vice Presidents,
Underwriting. These underwriters have in excess of 25 years of experience, on average, in the reinsurance business. The two
Executive Vice Presidents, Underwriting have held the Chief Executive Officer position in former companies. All
underwriting activity is performed in Bermuda. The Chief Underwriting Officer has exclusive authority to bind Third Point
Re to risk.

Detailed Underwriting Diligence

We employ selective underwriting criteria in the contracts we choose to underwrite and spend a significant amount
of time with our clients and brokers to understand the risks and appropriately structure the contracts. We usually obtain
significant amounts of data from our clients to conduct a thorough actuarial modeling analysis. As part of our pricing and
underwriting process, we assess among other factors:

•

the client’s and industry historical loss data and current market conditions;

the business purpose served by a proposed contract;

•

the client’s pricing and underwriting strategies;

the expected duration for claims to fully develop;

the geographic areas in which the client is doing business and its market share;

the reputation and financial strength of the client;

the reputation and expertise of the broker;

proposed contract terms and conditions; and

reports provided by independent industry specialists.

Retrocessional Coverage

Retrocessional coverage consists of reinsurance purchased to cover a portion of the risks that we reinsure on behalf
of our clients. We purchased retrocessional coverage in 2013, and we may continue to do so in the future. From time to time,
we consider purchases of retrocessional coverage for one or more of the following reasons: to manage our overall exposure,
to reduce our net liability on individual risks, to obtain additional underwriting capacity and to balance our 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 our interests with those of our counterparties. We currently have coverage that
provides for recovery of a portion of loss and loss adjustment expenses incurred on one crop contract. Loss and loss
adjustment expenses recoverable from the retrocessionaires are recorded as assets. For the year ended December 31, 2013,
loss and loss adjustment expenses incurred reported on our consolidated statement of income are net of loss and loss
expenses recovered of $9.3 million. Retrocession contracts do not relieve us from our obligations to the insureds. Failure of
retrocessionaires to honor their obligations could result in losses to us. As of December 31, 2013, we had loss and loss
adjustment expenses recoverable of $9.3 million with one retrocessionaire who was rated “A (Excellent)” by A.M. Best. We
regularly evaluate the financial condition of our retrocessionaires to assess the ability of the retrocessionaires to honor their
obligations.

Claims Management

Our claims management process begins upon receipt of reports from our clients. These statements are reviewed on
an individual basis, evaluated against company expectations and entered in our management system for portfolio analysis and
reporting purposes. In addition to analyzing report statements and results, claims audits are performed on specific contracts
based on results and management direction to ensure the clients are reporting and reserving their claims accurately and
appropriately.

Reserves

On a quarterly basis, our actuaries produce an actuarial central estimate of the gross and net loss reserves for all contracts
bound as of the evaluation date. The reserves are calculated on an undiscounted basis with regards to future investment
income. The projections also include estimates of loss-sensitive contingent terms such as profit commissions and sliding
scale ceding commissions. All calculations are done on a contract-by-contract basis and reflect the most recent premium and
loss information provided by our cedents.

In estimating our reserves for unpaid losses and loss adjustment expenses, it is necessary to project future loss and
loss adjustment expense payments. It is certain that actual future losses and loss adjustment expenses will not develop exactly
as projected and may, in fact, significantly vary from the projections. Further, the projections make no provision for
extraordinary future emergence of new classes of losses or types of losses not sufficiently represented in our or the applicable
cedent’s historical database or which are not yet quantifiable.

The following table represents the activity in the loss and loss adjustment expense reserves for the years ended

December 31, 2013 and 2012:

Gross reserves for loss and loss adjustment expenses, beginning of year ...................................................
Less: loss and loss adjustment expenses recoverable, beginning of year ....................................................
Net reserves for loss and loss adjustment expenses, beginning of year ......................................................
Increase (decrease) in net loss and loss adjustment expenses incurred in respect of losses occurring in:

Current year ............................................................................................................................................
Prior years’..............................................................................................................................................
Total net paid losses ...................................................................................................................................
Net reserve for loss and loss adjustment expenses, end of year ..................................................................
Plus: loss and loss adjustment expenses recoverable, end of year ..............................................................
Gross reserve for loss and loss adjustment expenses, end of year ..............................................................

2013

2012

($ in thousands)

67,271
—
67,271

—
—
—

144,509
(4,697)
139,812

(27,528)
(54,501)
(82,029)
125,054
9,277
134,331

80,306
—
80,306

(13,035)
—
(13,035)
67,271
—
67,271

The $4.7 million decrease in prior years’ reserves reflects $1.3 million of favorable loss experience on several
contracts and $3.4 million related to premium estimate decreases, primarily related to one crop contract. The reduction in loss
and loss adjustment expense reserves related to premium estimates was accompanied by an equal decrease in the premium
written and earned for that contract, resulting in a minimal impact to net underwriting income.

Collateral Arrangement/ Letter of Credit Facility

We are not licensed or admitted as an insurer in any jurisdiction other than Bermuda. Many jurisdictions such as the
United States do not permit clients to take credit for reinsurance on their statutory financial statements if such reinsurance is
obtained from unlicensed or non-admitted insurers without appropriate collateral. As a result, we anticipate that all of our
U.S. clients and a portion of our non-U.S. clients will require us to provide collateral for the contracts we bind with them. We
expect this collateral to take the form of funds withheld, trust arrangements or letters of credit. We had in place letter of credit
facilities from Citibank, N.A., BNP Paribas and J.P. Morgan in a maximum aggregate amount of $300 million, as of
December 31, 2013 and have issued letters of credit totaling $127.3 million in favor of clients. The failure to maintain,
replace or increase our letter of credit facility on commercially acceptable terms may significantly and negatively affect our
ability to implement our business strategy. See “Risk Factors-Risks Relating to Our Business-Our failure to obtain sufficient
letter of credit facilities or to increase our letter of credit capacity on commercially acceptable terms as we grow could
significantly and negatively affect our ability to implement our business strategy.”

Competition

The reinsurance industry is highly competitive. We expect to compete with major reinsurers, most of which are well
established, have a significant operating history and strong financial strength ratings and have developed long-standing client
relationships.

Although we seek to provide coverage where capacity and alternatives are limited, we directly compete with larger
companies due to the breadth of their coverage across the property and casualty market in substantially all lines of business.
We also compete with smaller companies and other niche reinsurers. While we have a limited operating history, we believe
that our unique approach to underwriting and broad relationships will allow us to be successful in underwriting transactions
against more established competitors.

Risk Management

We have developed a comprehensive risk management strategy that is governed by an articulated vision of risk
appetite and control that is conveyed throughout the organization and measured in a transparent and consistent manner. Our
risk management strategy, metrics and progress are summarized in a report that is presented to the board of directors on a
quarterly basis. Our internal capital model incorporates statistics from the pricing, reserving and investment processes to
produce an estimate of the amount of capital used at set points in time (e.g., each quarter-end) as well as the overall
variability in the prospective financial results. We work closely with the risk management personnel of Third Point LLC, as
our investment manager, to measure and report the variability of results from our investment portfolio. We also monitor the
contractual exposure to catastrophic losses as aggregated across all bound reinsurance contracts.

Catastrophe Risk Management

Our goal is to build a fund management business that ultimately offers investors a diverse range of products tied to
the performance of catastrophe reinsurance risk. Catastrophe reinsurance is an asset class that has historically provided
uncorrelated, attractive returns with relatively low volatility. The investor base has grown considerably since 2006, and now
includes pension funds, endowments and foundations and family offices.

Our catastrophe fund management business combines a world-class team and platform with deal flow partly sourced
through a partnership with global reinsurer Hiscox Ltd. Each potential transaction is underwritten and modeled by a
dedicated team with significant experience in a wide range of reinsurance transactions including traditional reinsurance,
retrocession, catastrophe bonds and indexed instruments. We use third-party catastrophe models and portfolio management
tools to evaluate the suitability of each deal, and all transactions must be reviewed and approved by our Chief Risk Officer
and our Chief Underwriting Officer.

The Catastrophe Fund is an open-ended fund providing exposure to a diversified portfolio of peak zone natural
catastrophe risk. The Catastrophe Fund seeks return through a unique portfolio construction that limits exposure to any single
peril or region. The Catastrophe Fund was launched on January 1, 2013.

Ratings

We currently have an A- (Excellent) financial strength rating with a stable outlook from A.M. Best, which is the
fourth highest of 15 ratings. We believe that a strong rating is an important factor in the marketing of reinsurance products to
clients and brokers. This rating reflects the rating agency’s opinion of our financial strength, operating performance and
ability to meet obligations. It is not an evaluation directed toward the protection of investors or a recommendation to buy, sell
or hold our common shares.

Joint Venture and Investment Management Agreement

On December 22, 2011, we entered into the investment management agreement with Third Point LLC, Third Point
Re, and Third Point Advisors LLC (“TP GP”) (Third Point Re and TP GP, together with any other party admitted in the
future as a participant, the “Participants” and each a “Participant”) pursuant to which the parties created a joint venture (the
“Account”) whereby Third Point LLC manages the assets of Third Point Re and TP GP as well as our assets and any of our
subsidiaries’ assets, if any, in accordance with the terms and subject to the conditions set forth in the investment management
agreement.

Management Fee

Pursuant to the investment management agreement, Third Point LLC is entitled to receive a monthly payment in
advance by each Participant (other than TP GP) and is equal to (i) 0.1667% (2.0% annualized) of the capital account of such
Participant (before accounting for any accrual of the Performance Allocation (as defined in the investment management
agreement)) minus (ii) the aggregate amount of Founders payments paid for such month pursuant to the Founders Agreement,
in each case pro-rated for intra-month withdrawals or contributions (see “Certain Relationships and Related Party
Transactions-Related Person Transactions-Founders Agreement”). This payment is debited against the capital account of
each relevant Participant and paid in cash to Third Point LLC.

Performance Allocation

As further set out in the investment management agreement, the Account has established one or more capital
accounts to which capital contributions, withdrawals, net profit and net loss will be allocated in respect of each Participant.
At the end of each fiscal year, the Performance Allocation (equal to 20% of the net profit allocable to the capital account of
each Participant) will be reallocated to the capital account of TP GP from the capital account of each other Participant,
provided, however, that a Performance Allocation will not be made with respect to such capital account until such capital
account has recouped the amount of any unrecouped net capital loss in its Loss Recovery Account (as defined in the
investment management agreement). If a Participant withdraws all or a portion of its capital account other than at the end of a
fiscal year, the Performance Allocation accrued and attributable to the portion withdrawn will be debited against such
Participant’s capital account and credited to TP GP’s capital account at the time of withdrawal.

Third Point LLC is required to maintain a Loss Recovery Account in respect of each Participant, the opening
balance of which will be zero. Thereafter, for any fiscal year, the Loss Recovery Account balance shall be the sum of all prior
year net loss amounts allocated to the Participant and not subsequently offset by prior year net profit amounts allocated to
such Participant; provided that the Loss Recovery Account balance shall be reduced proportionately to reflect any
withdrawals made by such Participant. TP GP may waive or reduce the Performance Allocation, in its sole discretion. Third
Point LLC and TP GP may elect, at the beginning of each fiscal year to restructure the Performance Allocation as a
performance fee to Third Point LLC with the same terms as the Performance Allocation.

Investment Guidelines

As detailed in our Investment Management Agreement, Third Point LLC is required to adhere to the following

investment guidelines:

•

Composition of Investments: At least 60% of the investment portfolio will be held in debt or equity
securities (including swaps) of publicly traded companies (or their subsidiaries) and governments of OECD
(the Organization of Economic Co-operation and Development) high income countries, asset-backed
securities, cash, cash equivalents and gold and other precious metals. Except with the prior written consent
of the investment committee, none of the assets in the investment portfolio will be held in illiquid
investments traditionally considered “venture capital” or private equity investments. In addition, no
investments in third party managed funds or other investment vehicles will be made without the consent of
the investment committee.

Concentration of Investments: Other than cash, cash equivalents and United States government obligations,
no single investment in the investment portfolio will constitute more than 15% of the portfolio.

Liquidity: Assets will be invested in such fashion that Third Point Re has a reasonable expectation that it
can meet any of its liabilities as they become due. Third Point Re reviews the liquidity of the Third Point
LLC portfolio on a periodic basis.

Net Exposure Limits: The investment portfolio may not employ greater than 1.5 times portfolio assets
managed for more than 10 trading days in any 30-trading day period.

Term

The investment management agreement has an initial term of five years, subject to automatic renewal for additional
successive three-year terms unless a party notifies the other parties at least six months prior to the end of a term that it wishes
to terminate the investment management agreement at the end of such term.

We may also terminate the Investment Management Agreement upon the death, long-term disability or retirement of
Daniel S. Loeb, or the occurrence of other circumstances in which Mr. Loeb is no longer directing the investment program of
Third Point LLC.

We may also withdraw as participants under the investment management agreement prior to the expiration of the

investment management agreement’s term at any time only “for cause”, which is defined as:

•

a material violation of applicable law relating to Third Point LLC’s advisory business;

Third Point LLC’s fraud, gross negligence, willful misconduct or reckless disregard of its obligations under
the investment management agreement;

a material breach by Third Point LLC of our investment guidelines that is not cured within a 15-day period;

a conviction or, a plea of guilty or nolo contendere to a felony or a crime affecting the asset management
business of Third Point LLC by certain senior officers of Third Point LLC;

any act of fraud, material misappropriation, material dishonesty, embezzlement, or similar conduct against
or involving us by senior officers of Third Point LLC; or

a formal administrative or other legal proceeding before the SEC, the CFTC, the FINRA, or any other U.S.
or non-U.S. regulatory or self-regulatory organization against Third Point LLC; or certain key personnel
which would likely have a material adverse effect on us.

In addition, we may withdraw as a participant under the investment management agreement prior to the expiration
of its term if net investment performance of Third Point LLC has (a) incurred a loss in two successive calendar years and
(ii) underperformed the S&P 500 Index by at least 10 percentage points for such two successive calendar years, taken as a
whole, or (b) (i) incurred a cumulative loss of 10% or more during any 24-month period and (ii) underperformed the S&P
500 Index by at least 15 percentage points for such 24-month period. We may not withdraw or terminate the investment
management agreement on the basis of performance other than as provided above. If we become dissatisfied with the results
of the investment performance of Third Point LLC, we will be unable to hire new investment managers until the investment
management agreement expires by its terms or is terminated for cause.

For the years ended December 31, 2013 and 2012, we incurred management fees of $3.7 million and $2.4 million,
respectively, payable to Third Point LLC and performance fees of $63.0 million and $33.9 million, respectively, payable to
TP GP.

Investments

Investment Strategy

As our investment manager, Third Point LLC has the contractual right to manage substantially all of our investable
assets until December 22, 2016, and is required to follow our investment guidelines and to act in a manner that is fair and
equitable in allocating investment opportunities to us. However, it is not otherwise restricted with respect to the nature or
timing of making investments for our account. We have the contractual right to withdraw funds from our managed account to
pay claims and expenses as needed. The increase in the value of our investment portfolio assets managed by Third Point LLC
for the year ended December 31, 2013 was 23.9%.

Investment Portfolio

The following table represents the total long and short exposure and geographic exposure of our investment

portfolio as managed by Third Point LLC, as of December 31, 2013 and 2012:

Long/Short Equity
Consumer ................................................................
Energy & Utility .....................................................
Financials ................................................................
Healthcare ...............................................................
Industries & Commodities ......................................
TMT .......................................................................
Market Hedges ........................................................
Total L/S Equity .....................................................
Credit
Distressed ...............................................................
Performing ..............................................................
Asset Backed Securities (1) ....................................
Total Credit .............................................................
Macro
Gold ........................................................................
Government ............................................................
Tail Risk .................................................................
Total Macro ............................................................
Other
Risk Arbitrage ........................................................
Private .....................................................................
Total Other..............................................................

2013 Exposure

2012 Exposure

Long

Short

Net

Long

Short

Net

8%
5%
12%
4%
21%
25%
1%
76%

5%
8%
18%
31%

—%
2%
3%
5%

—%
—%
—%
112%

—%
—%
(2)%
—%
(2)%
(2)%
(2)%
(8)%

—%
(5)%
(1)%
(6)%

—%
(9)%
(2)%
(11)%

—%
—%
—%
(25)%

8%
5%
10%
4%
19%
23%
(1)%
68%

5%
3%
17%
25%

—%
(7)%
1%
(6)%

—%
—%
—%
87%

7%
6%
10%
3%
13%
20%
4%
63%

5%
13%
18%
36%

6%
4%
—%
10%

1%
—%
1%
110%

(3)%
(2)%
(1)%
(3)%
(3)%
(1)%
(7)%
(20)%

4%
4%
9%
—%
10%
19%
(3)%
43%

—%
(5)%
(2)%
(7)%

5%
8%
16%
29%

(1)%
(19)%
—%
(20)%

5%
(15)%
—%
(10)%

—%
—%
—%
(47)%

1%
—%
1%
63%

(1)

Includes residential mortgage-backed securities, commercial mortgage-backed securities, and related indices.

Americas ........................................................
Europe, Middle East and Africa.....................
Asia ................................................................

2013 Exposure

2012 Exposure

Long

Short

Net

Long

Short

Net

78%
15%
19%
112%

(13)%
(7)%
(5)%
(25)%

65%
8%
14%
87%

95%
14%
1%
110%

(30)%
(11)%
(6)%
(47)%

65%
3%
(5)%
63%

In managing our investment account, Third Point LLC assigns every investment position a sector, strategy and
particular geographic category. The dollar exposure of each position under each category is aggregated and the exposure
percentages listed in the exposure table represent the aggregate market exposure of a given category against the total net asset
value of the account. Long and short exposure percentages represent the aggregate relative value of all long and short
positions in a given category, respectively. Net exposure represents the short exposure subtracted from the long exposure in a
given category. Third Point LLC reports the composition of our total managed portfolio on a market exposure basis, which it
believes is the appropriate manner in which to assess the exposure and profile of investments and is the way in which it
manages the portfolio. Under this methodology, the exposure for equity swaps and futures contracts are reported at their full
notional amount. The notional amount of any derivative contract is the underlying value upon which payment obligations are
computed. For an equity total return swap, for example, the notional amount is the number of shares underlying the swap
multiplied by the market price of those shares. Options are reported at their delta adjusted basis. The delta of an equity option
is the sensitivity of the option price to the underlying stock price. The delta adjusted basis is the number of shares underlying
the option multiplied by the delta and the underlying stock price. Credit derivatives are reported in accordance with their
equivalent underlying security exposure. Currency derivatives are reported at fair market value. Cash and cash equivalents
are excluded from exposure calculations.

Investment Returns

A summary of our net investment income for the years ended December 31, 2013 and 2012 is as follows:

Net unrealized gains on investments and investment derivatives ....................................................
Net realized gains on investments and investment derivatives ........................................................
Net gain (loss) on foreign currencies ...............................................................................................
Dividend and interest income, net of withholding taxes ..................................................................
Dividends paid on securities sold, not yet purchased .......................................................................
Management and performance fees .................................................................................................
Other expenses .................................................................................................................................
Net investment income on investments managed by Third Point LLC ............................................
Deposit liabilities and reinsurance contracts investment expense ....................................................
Investment income on cash collateral held by the Catastrophe Reinsurer .......................................
Net gain on reinsurance contract derivatives written by the Catastrophe Reinsurer ........................

2013

2012

($ in thousands)

78,950
236,333
21,106
14,233
(722)
(87,333)
(8,863)
253,704
(4,922)
86
4,335
253,203

113,422
55,632
(219)
25,284
(1,629)
(50,211)
(5,411)
136,868
(446)
—
—
136,422

The investment return is based on the total assets in our investment account managed by Third Point LLC, which
includes the majority of our equity capital and collected premiums. Investment returns for the years ended December 31,
2013 and 2012, net of all fees and expenses, is as follows:(1)

Third Point Reinsurance Ltd. .............................................................................................................
S&P 500 ............................................................................................................................................

2013

2012

23.9%
32.4%

17.7%
16.0%

(1) Past performance is not necessarily indicative of future results.

Our investment manager, Third Point LLC, manages several funds and may manage other client accounts besides
ours, some of which have, or may have, objectives and investment portfolio compositions similar to ours. Because of the
similarity or potential similarity of our investment portfolio to these others, and because, as a matter of ordinary course, Third
Point LLC provides its clients, including us, and investors in its main hedge funds with results of their respective investment
portfolios following the last day of each month, those other clients or investors indirectly may have material nonpublic
information regarding our investment portfolio. To address this issue, and to comply with Regulation FD, we will continue to
post on our website under the heading Investment Portfolio Returns located in the Investors section of the website, following

the close of trading on the New York Stock Exchange on the last business day of each month, our preliminary monthly
investment results for that month, with additional information regarding our monthly investment results to be posted
following the close of trading on the New York Stock Exchange on the first business day of the following month.

Investment Regulatory Concerns and Restrictions

Third Point LLC is involved regularly in trading activities which involve a broad number of U.S. and foreign
securities law regimes, including laws governing trading on inside information, market manipulation and a broad number of
technical trading requirements that involve fundamental market regulation policies. Violation of such laws could result in
severe restrictions on Third Point LLC’s activities and, indirectly, damage to our investment portfolio and/or reputation as
our Investment Management Agreement has limited termination provisions.

Third Point LLC’s failure to comply with applicable laws or regulations could result in fines, censure, suspensions
of personnel or other sanctions. The regulations that Third Point LLC is subject to are designed primarily to ensure the
integrity of the financial markets. They are not designed to protect us or, indirectly, you. Even if a sanction imposed against
Third Point LLC or one of its personnel by a regulator was for a small monetary amount, the adverse publicity related to such
sanction against Third Point LLC by regulators could harm its reputation and, possibly, ours.

In recent years, there has been debate in both the U.S. and foreign governments about new rules or regulations to be

applicable to alternative investment advisers, like Third Point LLC.

In August 2007, the SEC adopted a new rule intended to clarify the SEC’s authority to bring enforcement actions
against investment advisers for fraud against investors and prospective investors in their funds (as opposed to fraud against
the funds themselves). Although we do not believe the SEC’s rule has directly affected us, Third Point LLC and, accordingly,
our investment strategy, may be adversely affected if new or revised legislation or regulations are enacted or by changes to
existing rules and regulations of U.S. or foreign governmental regulatory authorities or self-regulatory organizations that
supervise the financial markets.

It is possible that increased regulation of alternative investment advisers could adversely affect Third Point LLC’s
ability to manage our investment portfolio or its ability to manage our portfolio pursuant to our existing investment strategy,
which could cause us to alter our existing investment strategy and could significantly and negatively affect our business and
results of operations. In addition, adverse publicity regarding alternative investment strategies generally, or Third Point LLC
or its affiliates specifically, could negatively affect our business reputation and attractiveness as a counterparty to brokers and
clients.

Other Trading Restrictions

Third Point LLC may from time to time place it or its affiliates’ representatives on creditors committees or boards of
certain companies in which our portfolio is invested. While such representation may enable Third Point LLC to enhance the
value of our investments, it may place trading restrictions on certain securities included in our investment portfolio.

Regulation

Bermuda Insurance Regulation

The Insurance Act of 1978

The Insurance Act of 1978, as amended, and related regulations of Bermuda (the “Insurance Act”), which regulates
the insurance business of Third Point Re and the Catastrophe Reinsurer, provides that no person shall carry on any insurance
business in or from within Bermuda unless registered as an insurer under the Insurance Act by the BMA. Under the Insurance
Act insurance business includes reinsurance business. The BMA, in deciding whether to grant registration, has broad
discretion to act as it thinks fit in the public interest. The BMA is required by the Insurance Act to determine whether the
applicant is a fit and proper body to be engaged in the insurance business and, in particular, whether it has, or has available to
it, adequate knowledge and expertise. The registration of an applicant as an insurer is subject to its complying with the terms
of its registration and such other conditions as the BMA may impose from time to time. The Insurance Act also grants to the
BMA powers to supervise, investigate and intervene in the affairs of insurance companies.

An insurance advisory committee appointed by the Bermuda Minister of Finance advises the BMA on matters
connected with the discharge of the BMA’s functions and sub-committees thereof supervise and review the law and practice
of insurance in Bermuda, including reviews of accounting and administrative procedures.

The Insurance Act imposes on Bermuda insurance companies solvency and liquidity standards and auditing and
reporting requirements and grants to the BMA powers to supervise, investigate and intervene in the affairs of insurance
companies. Certain significant aspects of the Bermuda insurance regulatory framework are set forth below.

Classification of Insurers

The Insurance Act distinguishes between insurers carrying on long-term business, insurers carrying on general
business and insurers carrying on special purpose business. There are six classifications of insurers carrying on general
business, ranging from Class 1 insurers (pure captives) to Class 4 insurers (very large commercial underwriters). There is
only one classification of special purpose insurer. Third Point Re is registered as a Class 4 insurer and the Catastrophe
Reinsurer is registered as a special purpose insurer.

Classification as a Class 4 Insurer

A body corporate is registrable as a Class 4 insurer where (i) it has at the time of its application for registration, or
will have before it carries on insurance business, a total statutory capital and surplus of not less than $100,000,000; and (ii) it
intends to carry on general insurance business, including excess liability business or property catastrophe reinsurance
business. Class 4 insurers are required to maintain fully paid-up share capital of $1,000,000.

Classification as a Special Purpose Insurer

A special purpose insurer (“SPI”) means an insurer that carries on special purpose business. Special purpose
business is defined under the Insurance Act as insurance business under which an insurer fully funds its liabilities to the
persons insured through (a) the proceeds of any one or more of (i) a debt issuance where the repayment rights of the
providers of such debt are subordinated to the rights of the person insured, or (ii) some other financing mechanism approved
by the BMA; (b) cash; and (c) time deposits.

Principal Representative and Principal Office

Third Point Re and the Catastrophe Reinsurer are each required to maintain a principal office and to appoint and
maintain a principal representative in Bermuda. For the purpose of the Insurance Act, the principal officer of Third Point Re
is at our principal executive offices in Bermuda, and Third Point Re’s principal representative is John Berger. The principal
office of the Catastrophe Reinsurer is at The Waterfront, Chesney House, 96 Pitts Bay Road, Pembroke HM 08 Bermuda and
the Catastrophe Reinsurer’s principal representative is Prime Management Limited. Without a reason acceptable to the BMA,
an insurer may not terminate the appointment of its principal representative, and the principal representative may not cease to
act as such, unless 30 days’ notice in writing to the BMA is given of the intention to do so.

It is the duty of the principal representative to forthwith notify the BMA where the principal representative believes
there is a likelihood of the insurer (for which the principal representative acts) becoming insolvent or that a reportable
“event” has, to the principal representative’s knowledge, occurred or is believed to have occurred. Examples of a reportable
“event” include a failure by Third Point Re to comply substantially with a condition imposed upon it by the BMA relating to
a solvency margin or a liquidity or other ratio, a significant loss likely to cause the insurer to fail to comply with its enhanced
capital requirement (discussed below) and the occurrence of a “material change” (as such term is defined under the Insurance
Act) in its business operations.

Within 14 days of such notification to the BMA, the principal representative must furnish the BMA with a written

report setting out all the particulars of the case that are available to the principal representative.

Loss Reserve Specialist

As a Class 4 insurer, Third Point Re must appoint an individual approved by the BMA to be its loss reserve
specialist. In order to qualify as an approved loss reserve specialist, the applicant must be an individual and possess adequate
professional qualifications as a casualty actuary and/or possess adequate experience to assess the sufficiency of insurance

reserves of the insurer. The Class 4 insurer is required to submit annually an opinion of its approved loss reserve specialist
with its statutory financial return in respect of its loss and loss expense provisions.

As an SPI, the Catastrophe Reinsurer is not required to appoint a loss reserve specialist.

Annual Financial Statements

As a Class 4 insurer, Third Point Re must prepare and submit, on an annual basis, both audited U.S. GAAP and

statutory financial statements.

The Catastrophe Reinsurer, as an SPI, must prepare and submit annual statutory financial statements, unless an
application has been filed under the Insurance Act to have the statutory filing requirement waived. Where such a waiver has
been granted, the BMA will accept unaudited management accounts from the SPI prepared in accordance with generally
accepted accounting principles (GAAP) or international financial reporting standards that apply in Bermuda, Canada, the
United Kingdom or the United States of America. The Catastrophe Reinsurer is also required to provide the BMA with a
copy of the unaudited management statement accounts as soon as practicable after the same have been submitted to the
participants and, at a minimum, within four months of the end of each financial year.

The Insurance Act prescribes rules for the preparation and substance of statutory financial statements (which
include, in statutory form, a balance sheet, income statement, a statement of capital and surplus, and notes thereto). The
statutory financial statements include detailed information and analysis regarding premiums, claims, reinsurance and
investments of the insurer. In addition, as a Class 4 insurer, Third Point Re is also required to prepare and submit to the BMA
financial statements which have been prepared under generally accepted accounting principles or international financial
reporting standards (“GAAP financial statements”).

As a Class 4 insurer, Third Point Re’s annual U.S. GAAP and statutory financial statements are required to be filed

with the BMA within four months from the end of the relevant financial year (unless specifically extended).

The statutory financial statements do not form part of the public records maintained by the BMA but the GAAP

financial statements are available for public inspection.

Annual Statutory Financial Return and Annual Capital and Solvency Return

Third Point Re, as a Class 4 insurer, and the Catastrophe Reinsurer, as an SPI, are required to file with the BMA a
statutory financial return no later than four months after its financial year end (unless specifically extended) unless the
Catastrophe Reinsurer has filed and obtained a waiver, as outlined above. The statutory financial return includes, among
other matters, a report of the approved independent auditor on the statutory financial statements of the insurer, a general
business, or special purpose business, as applicable, solvency certificate, the statutory financial statements themselves and the
opinion of the loss reserve specialist.

The principal representative and at least two directors of the insurer must sign the solvency certificate. The directors
are required to certify whether the minimum solvency margin has been met, and the independent approved auditor is required
to state whether in its opinion it was reasonable for the directors to make this certification.

Where an insurer’s accounts have been audited for any purpose other than compliance with the Insurance Act, a

statement to that effect must be filed with the statutory financial return.

In addition, each year Third Point Re, as a Class 4 insurer, is also required to file with the BMA a capital and
solvency return along with its annual financial statutory return. The prescribed form of capital and solvency return comprises
the insurer’s Bermuda Solvency Capital Requirement (“BSCR”) model or an approved internal capital model in lieu thereof
(more fully described below), a schedule of fixed income investments by rating categories, a schedule of net loss and loss
expense provisions by line of business, a schedule of premiums written by line of business, a schedule of risk management, a
schedule of fixed income securities, a schedule of commercial insurer’s solvency self assessment (“CISSA”), a schedule of
catastrophe risk return, a schedule of loss triangles or reconciliation of net loss reserves and a schedule of eligible capital.

Neither the statutory financial return nor the capital and solvency return is available for public inspection.

Quarterly Financial Statements

Third Point Re, as a Class 4 insurer not being otherwise subject to group supervision (described below), is required
to prepare and file quarterly financial returns with the BMA on or before the last day of the months May, August and
November of each year. The quarterly financial returns consist of (i) quarterly unaudited financial statements for each
financial quarter (which must minimally include a balance sheet and income statement and must also be recent and not reflect
a financial position that exceeds two months) and (ii) a list and details of material intra-group transactions and risk
concentrations that have materialized since the most recent quarterly or annual financial returns, details surrounding all intra-
group reinsurance and retrocession arrangements and other intra-group risk transfer insurance business arrangements that
have materialized since the most re-cent quarterly or annual financial returns and details of the ten largest exposures to
unaffiliated counterparties and any other unaffiliated counterparty exposures exceeding 10% of the insurer’s statutory capital
and surplus. Quarterly financial statements are not required where the Class 4 insurer is subject to group supervision.

Independent Approved Auditor

Third Point Re, as a Class 4 insurer, must appoint an independent auditor who will annually audit and report on the
insurer’s GAAP financial statements, its statutory financial statements and its statutory financial returns, each of which are
required to be filed annually with the BMA. The auditor must be approved by the BMA as the independent auditor of the
insurer. If the insurer fails to appoint an approved auditor or at any time fails to fill a vacancy for such auditor, the BMA may
appoint an approved auditor for the insurer and shall fix the remuneration to be paid to the approved auditor within 14 days,
if not agreed sooner by the insurer and the auditor.

The Catastrophe Reinsurer, as an SPI, may file an application under the Insurance Act to have this requirement

waived, as outlined above.

Non-insurance Business

Third Point Re, as a Class 4 insurer may not engage in non-insurance business unless that non-insurance business is
ancillary to its core business. Non-insurance business means any business other than insurance business and includes carrying
on investment business, managing an investment fund as operator, carrying on business as a fund administrator, carrying on
banking business, underwriting debt or securities or otherwise engaging in investment banking, engaging in commercial or
industrial activities and carrying on the business of management, sales or leasing of real property. Third Point Re, as a Class
4 insurer registered before December 31, 2012, will be permitted to continue engaging in non-insurance business but must
discontinue doing so not later than year-end 2016.

Minimum Liquidity Ratio

The Insurance Act provides a minimum liquidity ratio for general business. As an insurer engaged in general
business, Third Point Re is required to maintain the value of its relevant assets at not less than 75% of the amount of its
relevant liabilities. Relevant assets include cash and time deposits, quoted investments, unquoted bonds and debentures, first
liens on real estate, investment income due and accrued, accounts and premiums receivable, reinsurance balances receivable
and funds held by ceding reinsurers.

There are certain categories of assets which, unless specifically permitted by the BMA, do not automatically qualify
as relevant assets, such as unquoted equity securities, investments in and advances to affiliates and real estate and collateral
loans.

The relevant liabilities are total general business insurance reserves and total other liabilities less deferred income

tax and sundry liabilities (by interpretation, those not specifically defined) and letters of credit and guarantees.

Minimum Solvency Margin and Enhanced Capital Requirements

The Insurance Act provides that the value of the statutory assets of a Class 4 insurer must exceed the value of its

statutory liabilities by an amount greater than its prescribed minimum solvency margin (“MSM”).

The MSM that must be maintained by a Class 4 insurer with respect to its general business is the greater of (i) $100
million, or (ii) 50% of net premium written (with a credit for reinsurance ceded not exceeding 25% of gross premiums) or
(iii) 15% of net discounted aggregate loss and loss expense provisions and other insurance reserves.

The Insurance Act provides that an SPI is required to maintain a minimum solvency margin by which the value of

the special purpose business assets must exceed its special purpose business liabilities by at least $1.

Class 4 insurers are also required to maintain available statutory capital and surplus at a level equal to or in excess of
its enhanced capital requirement (“ECR”) which is established by reference to either the BSCR model or an approved internal
capital model.

The BSCR model is a risk-based capital model which provides a method for determining an insurer’s capital
requirements (statutory capital and surplus) by taking into account the risk characteristics of different aspects of the insurer’s
business. The BSCR formulae establish capital requirements for eight categories of risk: fixed income investment risk, equity
investment risk, interest rate/liquidity risk, premium risk, reserve risk, credit risk, catastrophe risk and operational risk. For
each category, the capital requirement is determined by applying factors to asset, premium, reserve, creditor, probable
maximum loss and operation items, with higher factors applied to items with greater underlying risk and lower factors for
less risky items.

While not specifically referred to in the Insurance Act, the BMA has also established a target capital level (“TCL”)
for each Class 4 insurer equal to 120% of its ECR. While a Class 4 insurer is not currently required to maintain its statutory
capital and surplus at this level, the TCL serves as an early warning tool for the BMA and failure to maintain statutory capital
at least equal to the TCL will likely result in increased regulatory oversight.

Any Class 4 insurer which at any time fails to meet its MSM requirements must, upon becoming aware of such
failure, immediately notify the BMA and, within 14 days thereafter, file a written report with the BMA containing particulars
of the circumstances that gave rise to the failure and setting out its plan detailing specific actions to be taken and the expected
timeframe in which the company intends to rectify the failure.

Any Class 4 insurer which at any time fails to meet its enhanced capital requirement applicable to it shall upon
becoming aware of that failure, or of having reason to believe that such a failure has occurred, immediately notify the BMA
in writing and within 14 days of such notification file with the BMA a written report containing particulars of the
circumstances leading to the failure; and a plan detailing the manner, specific actions to be taken and time within which the
insurer intends to rectify the failure and within 45 days of becoming aware of that failure, or of having reason to believe that
such a failure has occurred, furnish the BMA with (i) unaudited interim statutory financial statements covering such period as
the BMA may require; (ii) the opinion of a loss reserve specialist where applicable; (iii) a general business solvency
certificate in respect of the financial statements; and (iv) a capital and solvency return reflecting an enhanced capital
requirement prepared using post failure data where applicable.

Eligible Capital

To enable the BMA to better assess the quality of the insurer’s capital resources, a Class 4 insurer is required to
disclose the makeup of its capital in accordance with the recently introduced ‘3-tiered capital system’. Under this system, all
of the insurer’s capital instruments will be classified as either basic or ancillary capital which in turn will be classified into
one of 3 tiers based on their “loss absorbency” characteristics. Highest quality capital will be classified as Tier 1 Capital,
lesser quality capital will be classified as either Tier 2 Capital or Tier 3 Capital. Under this regime, up to certain specified
percentages of Tier 1, Tier 2 and Tier 3 Capital may be used to support the insurer’s MSM, ECR and TCL.

The characteristics of the capital instruments that must be satisfied to qualify as Tier 1, Tier 2 and Tier 3 Capital are
set out in the Insurance (Eligible Capital) Rules 2012, and any amendments thereto. Under these rules, Tier 1, Tier 2 and Tier
3 Capital may, until January 1, 2024, include capital instruments that do not satisfy the requirement that the instrument be
non-redeemable or settled only with the issuance of an instrument of equal or higher quality upon a breach, or if it would
cause a breach, of the ECR.

Where the BMA has previously approved the use of certain instruments for capital purposes, the BMA’s consent

will need to be obtained if such instruments are to remain eligible for use in satisfying the MSM and the ECR.

Code of Conduct

Every Bermuda registered insurer must comply with the Insurance Code of Conduct (the “Code”) which prescribes
the duties and standards that must be complied with to ensure sound corporate governance, risk management and internal
controls are implemented. The BMA will assess an insurer’s compliance with the Code in a proportionate manner relative to
the nature, scale and complexity of its business. Failure to comply with the requirements of the Code will be taken into

account by the BMA in determining whether an insurer is conducting its business in a sound and prudent manner as
prescribed by the Insurance Act and may result in the BMA exercising its powers of intervention and investigation (see
below) and, in the case of Third Point Re, as a Class 4 insurer, will be a factor in calculating the operational risk charge under
the insurer’s BSCR or approved internal model.

Restrictions on Dividends and Distributions

A Class 4 insurer is prohibited from declaring or paying a dividend if it is in breach of its MSM, ECR or minimum
liquidity ratio or if the declaration or payment of such dividend would cause such a breach. An SPI is prohibited from
declaring or paying any dividend during any financial year if it is in breach of its minimum solvency margin or if the
declaration or payment of such dividends would cause it to fail to meet such minimum margin. Where a Class 4 insurer fails
to meet its MSM or minimum liquidity ratio or an SPI fails to meet its minimum solvency margin 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, a Class 4 insurer is prohibited from declaring or paying in any financial year dividends of more than
25% of its 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 dividends) with the BMA an affidavit signed by at least 2 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. Where such an affidavit is filed, it shall
be available for public inspection at the offices of the BMA.

Reduction of Capital

Third Point Re, as a general business insurer, may not reduce its total statutory capital by 15% or more, as set out in
its previous year’s financial statements, unless it has received the prior approval of the BMA. Total statutory capital consists
of the insurer’s paid in share capital, its contributed surplus (sometimes called additional paid in capital) and any other fixed
capital designated by the BMA as statutory capital (such as letters of credit).

As a Class 4 insurer, where Third Point Re seeks to reduce its statutory capital by 15% or more, as set out in its
previous year’s financial statements, it must also submit an affidavit signed by at least 2 directors (one of whom must be a
Bermuda resident director if any of the company’s directors are resident in Bermuda) and the principal representative stating
that the proposed reduction will not cause the company to fail its relevant margins. Where such an affidavit is filed, it shall be
available for public inspection at the offices of the BMA.

Fit and Proper Controllers

The BMA maintains supervision over the controllers of all registered insurers in Bermuda. A controller includes
(i) the managing director of the registered insurer or its parent company; (ii) the chief executive of the registered insurer or of
its parent company; (iii) a shareholder controller; and, (iv) any person in accordance with whose directions or instructions the
directors of the registered insurer or of its parent company are accustomed to act.

The definition of shareholder controller is set out in the Insurance Act but generally refers to (i) a person who holds
10% or more of the shares carrying rights to vote at a shareholders’ meeting of the registered insurer or its parent company,
or (ii) a person who is entitled to exercise 10% or more of the voting power at any shareholders’ meeting of such registered
insurer or its parent company, or (iii) a person who is able to exercise significant influence over the management of the
registered insurer or its parent company by virtue of its shareholding or its entitlement to exercise, or control the exercise of,
the voting power at any shareholders’ meeting.

A shareholder controller that owns 10% or more but less than 20% of the shares as described above is defined as a
10% shareholder controller; a shareholder controller that owns 20% or more but less than 33% of the shares as described
above is defined as a 20% shareholder controller; a shareholder controller that owns 33% or more but less than 50% of the
shares as described above is defined as a 33% shareholder controller; and a shareholder controller that owns 50% or more of
the shares as described above is defined as a 50% shareholder controller.

Where the shares of the shareholder of a registered insurer, or the shares of its parent company, are traded on a
recognised stock exchange, and such person becomes a 10%, 20%, 33% or 50% shareholder controller of the insurer, that
person shall, within 45 days, notify the BMA in writing that he has become such a controller.

Where the shares of a shareholder or prospective shareholder of an insurer, or the shares of its parent company, are
not traded on a recognised stock exchange (i.e. private companies), the Insurance Act prohibits such person from becoming a
shareholder controller unless he has first served on the BMA notice in writing stating that he intends to become such a
controller and the BMA has either, before the end of 45 days following the date of notification, provided notice to the
proposed controller that it does not object to his becoming such a controller or the full 45 days has elapsed without the BMA
filing an objection.

Any person who contravenes the Insurance Act by failing to give notice or knowingly becoming a controller of any
description before the required 45 days has elapsed is guilty of an offence and liable to a fine of $25,000 on summary
conviction.

The BMA may file a notice of objection to any person who has become a controller of any description where it
appears that such person is not, or is no longer, a fit and proper person to be a controller of the registered insurer. Before
issuing a notice of objection, the BMA is required to serve upon the person concerned a preliminary written notice stating the
BMA’s intention to issue formal notice of objection. Upon receipt of the preliminary written notice, the person served may,
within 28 days, file written representations with the BMA which shall be taken into account by the BMA in making its final
determination. Any person who continues to be a controller of any description after having received a notice of objection
shall be guilty of an offence and shall be liable on summary conviction to a fine of $25,000 (and a continuing fine of $500
per day for each day that the offence is continuing) or, if convicted on indictment, to a fine of $100,000 and/or 2 years in
prison.

Notification by Registered Person of Change of Controllers and Officers

All registered insurers are required to give written notice to the BMA of the fact that a person has become, or ceased
to be, a controller or officer of the registered insurer within 45 days of becoming aware of such fact. An officer in relation to
a registered insurer means a director, chief executive or senior executive performing duties of underwriting, actuarial, risk
management, compliance, internal audit, finance or investment matters.

Notification of Material Changes

All registered insurers are required to give notice to the BMA of their intention to effect a material change within the
meaning of the Insurance Act. For the purposes of the Insurance Act, the following changes are material: (i) the transfer or
acquisition of insurance business being part of a scheme falling under section 25 of the Insurance Act or section 99 of the
Companies Act, (ii) the amalgamation with or acquisition of another firm, (iii) engaging in unrelated business that is retail
business, (iv) the acquisition of a controlling interest in an undertaking that is engaged in non-insurance business which
offers services and products to persons who are not affiliates of the insurer, (v) outsourcing all or substantially all of the
company’s actuarial, risk management and internal audit functions, (vi) outsourcing all or a material part of an insurer’s
underwriting activity, (vii) the transfer other than by way of reinsurance of all or substantially all of a line of business, and
(viii) the expansion into a material new line of business.

No registered insurer shall take any steps to give effect to a material change unless it has first served notice on the
BMA that it intends to effect such material change and before the end of 14 days, either the BMA has notified such company
in writing that it has no objection to such change or that period has lapsed without the BMA having issued a notice of
objection.

Before issuing a notice of objection, the BMA is required to serve upon the person concerned a preliminary written
notice stating the BMA’s intention to issue formal notice of objection. Upon receipt of the preliminary written notice, the
person served may, within 28 days, file written representations with the BMA which shall be taken into account by the BMA
in making its final determination.

Group Supervision

The BMA may, in respect of an insurance group, determine whether it is appropriate for it to act as its group
supervisor. An insurance group is defined as a group of companies that conducts exclusively, or mainly, insurance business.
The BMA may make such determination where it ascertains that (i) the group is headed by a “specified insurer” (that is to
say, it is headed by either a Class 3A, Class 3B or Class 4 general business insurer or a Class C, Class D or Class E long term
insurer or another class of insurer designated by order of the BMA); or (ii) where the insurance group is not headed by a
“specified insurer”, where it is headed by a parent company which is incorporated in Bermuda or (iii) where the parent

company of the group is not a Bermuda company, in circumstances where the BMA is satisfied that the insurance group is
directed and managed from Bermuda or the insurer with the largest balance sheet total is a specified insurer.

Where the BMA determines that it should act as the group supervisor, it shall designate a specified insurer that is a
member of the insurance group to be the designated insurer (the “Designated Insurer”) and it shall give to the Designated
Insurer and other competent authorities written notice of its intention to act as group supervisor. Once the BMA has been
designated as group supervisor, the Designated Insurer must ensure that an approved group actuary is appointed to provide an
opinion as to the adequacy of the insurance group’s insurance reserves as reported in its group statutory financial statements.

Pursuant to its powers under the Insurance Act, the BMA will maintain a register of particulars for every insurance
group for which it acts as the group supervisor detailing, among other things, the names and addresses of the Designated
Insurer; each member company of the insurance group falling within the scope of group supervision; the principal
representative of the insurance group in Bermuda; other competent authorities supervising other member companies of the
insurance group; and the insurance group auditors. The Designated Insurer must notify the BMA of any changes to the above
details entered on the register of an insurance group.

As group supervisor, the BMA will perform a number of supervisory functions including (i) coordinating the
gathering and dissemination of information which is of importance for the supervisory task of other competent authorities;
(ii) carrying out a supervisory review and assessment of the insurance group; (iii) carrying out an assessment of the insurance
group’s compliance with the rules on solvency, risk concentration, intra-group transactions and good governance procedures;
(iv) planning and coordinating, with other competent authorities, supervisory activities in respect of the insurance group, both
as a going concern and in emergency situations; (v) coordinating any enforcement action that may need to be taken against
the insurance group or any of its members; and (vi) planning and coordinating meetings of colleges of supervisors (consisting
of insurance regulators) in order to facilitate the carrying out of the functions described above.

In carrying out its functions, the BMA may make rules for (i) assessing the financial situation and the solvency
position of the insurance group and/or its members and (ii) regulating intra-group transactions, risk concentration,
governance procedures, risk management and regulatory reporting and disclosure.

We are not currently subject to group supervision, but the BMA may exercise its authority to act as our group

supervisor in the future.

Supervision, Investigation, Intervention and Disclosure

The BMA may, by notice in writing served on an insurer or a designated insurer (as described in “Group
Supervision” above), require the insurer or designated insurer to provide such information and/or documentation as the BMA
may reasonably require with respect to matters that are likely to be material to the performance of its supervisory functions
under the Insurance Act. In addition, it may require such person’s auditor, underwriter, accountant or any other person with
relevant professional skill to prepare a report on any aspect pertaining thereto. In the case of a report, the person so appointed
shall immediately give the BMA written notice of any fact or matter of which he becomes aware or which indicates to him
that any condition attaching to his registration under the Insurance Act is not or has not or may not be or may not have been
fulfilled and that such matters are likely to be material to the performance of its functions under the Insurance Act. If it
appears to the BMA to be desirable in the interests of the clients of an insurer or relevant insurance group, the BMA may also
exercise these powers in relation to subsidiaries, parent companies and other affiliates of the insurer or designated insurer.

If the BMA deems it necessary to protect the interests of the policyholders or potential policyholders of an insurer or
insurance group, it may appoint one or more competent persons to investigate and report on the nature, conduct or state of the
insurer’s or the insurance group’s business, or any aspect thereof, or the ownership or control of the insurer or insurance
group. If the person so appointed thinks it necessary for the purposes of his investigation, he may also investigate the
business of any person who is or has been at any relevant time, a member of the insurance group or of a partnership of which
the person being investigated is a member. In this regard, it shall be the duty of every person who is or was a controller,
officer, employee, agent, banker, auditor, accountant, barrister and attorney or insurance manager to produce to the person
appointed such documentation as he may reasonably require for purposes of his investigation, and to attend and answer
questions relevant to the investigation and to otherwise provide such assistance as may be necessary in connection therewith.

Where the BMA suspects that a person has failed to properly register under the Insurance Act or that an insurer or
designated insurer has failed to comply with a requirement of the Insurance Act or that a person is not, or is no longer, a fit
and proper person to perform functions in relation to a regulated activity, it may, by notice in writing, carry out an
investigation into such person (or any other person connected thereto). In connection therewith, the BMA may require every

person who is or was a controller, officer, employee, agent, banker, auditor, accountant, barrister and attorney or insurance
manager to make a report and produce such documents in his care, custody and control and to attend before the BMA to
answer questions relevant to the BMA’s investigation and to take such actions as the BMA may direct. The BMA may also
enter any premises for the purposes of carrying out its investigation and may petition the court for a warrant if it believes a
person has failed to comply with a notice served on him or there are reasonable grounds for suspecting the completeness of
any information or documentation produced in response to such notice or that its directions will not be complied with or that
any relevant documents would be removed, tampered with or destroyed.

If it appears to the BMA that the business of the insurer is being so conducted that there is a significant risk of the
insurer becoming insolvent, or that the insurer is in breach of the Insurance Act or any conditions imposed upon its
registration, or the minimum criteria stipulated in the Insurance Act is not or has not been fulfilled in respect of a registered
insurer, or that a person has become a controller without providing the BMA with the appropriate notice or in contravention
of a notice of objection, or the registered insurer is in breach of its ECR, or that a designated insurer is in breach of any
provision of the Insurance Act or the regulations or rules applicable to it, the BMA may issue such directions as appear
desirable for safeguarding the interests of policyholders or potential policyholders of the insurer or the insurance group. The
BMA may direct an insurer, for itself and in its capacity as designated insurer of the insurance group of which it is a member,
(1) not to take on any new insurance business, (2) not to vary any insurance contract if the effect would be to increase the
insurer’s liabilities, (3) not to make certain investments, (4) to realize certain investments, (5) to maintain in, or transfer to the
custody of, a specified bank, certain assets, (6) not to declare or pay any dividends or other distributions or to restrict the
making of such payments, (7) to limit its premium income, (8) not to enter into specified transactions with any specified
person or persons of a specified class, (9) to provide such written particulars relating to the financial circumstances of the
insurer as the BMA thinks fit, (10) (as an individual insurer only and not in its capacity as designated insurer) to obtain the
opinion of a loss reserve specialist and submit it to the BMA and/or (11) to remove a controller or officer.

The BMA has the power to assist other regulatory authorities, including foreign insurance regulatory authorities,
with their investigations involving insurance and reinsurance companies in Bermuda if it is satisfied that the assistance being
requested is in connection with the discharge of regulatory responsibilities and that such cooperation is in the public interest.
The grounds for disclosure by the BMA to a foreign regulatory authority without consent of the insurer are limited and the
Insurance Act provides for sanctions for breach of the statutory duty of confidentiality.

Cancellation of Insurer’s Registration

An insurer’s registration may be canceled by the BMA on certain grounds specified in the Insurance Act. Failure by
the insurer to comply with its obligations under the Insurance Act or if, the BMA believes that the insurer has not been
carrying on business in accordance with sound.

In addition to powers under the Insurance Act to investigate the affairs of an insurer, the BMA may require certain
information from an insurer (or certain other persons) to be produced to the BMA. Further, the BMA has been given powers
to assist other regulatory authorities, including foreign insurance regulatory authorities, with their investigations involving
insurance and reinsurance companies in Bermuda but subject to restrictions. For example, the BMA must be satisfied that the
assistance being requested is in connection with the discharge of regulatory responsibilities of the foreign regulatory
authority. Further, the BMA must consider whether cooperation is in the public interest. The grounds for disclosure are
limited and the Insurance Act provides for sanctions for breach of the statutory duty of confidentiality.

Certain Other Bermuda Law Considerations

All Bermuda “exempted companies” are exempt from certain Bermuda laws restricting the percentage of share
capital that may be held by non-Bermudians. However, exempted companies may not participate in certain business
transactions, including (i) the acquisition or holding of land in Bermuda except that required for their business and held by
way of lease or tenancy for terms of not more than 50 years or, with the consent of the Minister of Finance, land which is
used to provide accommodation or recreational facilities for officers and our employees for a term not exceeding 21 years,
(ii) the taking of mortgages on land in Bermuda to secure an amount in excess of $50,000 without the consent of the Minister,
(iii) the acquisition of any bonds or debentures secured by any land in Bermuda, other than certain types of Bermuda
government securities or securities issued by Bermuda public authorities or, (iv) the carrying on of business of any kind in
Bermuda, except in furtherance of the business carried on outside Bermuda or under license granted by the Minister.
Generally it is not permitted without a special license granted by the Minister to insure Bermuda domestic risks or risks of
persons of, in or based in Bermuda.

All Bermuda companies must comply with the provisions of the Companies Act regulating the payment of dividends
and making distributions from contributed surplus. A company may not declare or pay a dividend, or make a distribution out
of contributed surplus, if there are reasonable grounds for believing that: (i) the company is, or would after the payment be,
unable to pay its liabilities as they become due; or (ii) the realizable value of the company’s assets would thereby be less than
its liabilities.

United States Insurance Regulation

Third Point Re is licensed in Bermuda to write reinsurance and is not admitted to do business in any jurisdiction in
the United States or in any country other than Bermuda. The insurance laws of each state of the United States and of many
foreign countries regulate the sale of insurance and reinsurance within their jurisdictions by alien insurers and reinsurers,
such as Third Point Re.

Third Point Re currently intends to conduct its business so as not to be subject to the licensing requirements of
insurance regulators in the United States or elsewhere (other than Bermuda). Many aspects of the activities of Third Point Re
are similar to those employed by other non-admitted reinsurers that provide reinsurance to U.S. and other ceding companies.
There can be no assurance, however, that insurance regulators in the United States or elsewhere will not review the activities
of Third Point Re and claim that Third Point Re is subject to such jurisdiction’s licensing requirements.

In addition to the regulatory requirements imposed by the jurisdictions in which they are licensed, reinsurers are
subject to indirect regulatory requirements imposed by jurisdictions in which their ceding companies are licensed through the
“credit for reinsurance” mechanism. In general, a ceding company which obtains reinsurance from a reinsurer that is licensed,
accredited or approved by the jurisdiction or state in which the insurer files statutory financial statements is permitted to
reflect in its statutory financial statements a credit in an aggregate amount equal to the liability for unearned premiums and
loss reserves and loss adjustment expense reserves ceded to the reinsurer.

In the United States, many states allow credit for reinsurance ceded to a reinsurer that is domiciled and licensed in
another state of the United States and meets certain financial requirements. A few states do not allow credit for reinsurance
ceded to non-licensed reinsurers except in certain limited circumstances and others impose additional requirements that make
it difficult to become accredited. The great majority of states, however, permit the reduction in statutory surplus resulting
from reinsurance obtained from a non-licensed or non-accredited reinsurer to be offset to the extent that the reinsurer
provides a letter of credit or other acceptable security arrangement, and a few states reduce the amount of security to be
posted based on a number of factors, including the credit rating given to a reinsurer from a U.S.-nationally recognised
statistical rating organization.

Information Technology

We have a disaster recovery plan with respect to our information technology infrastructure that includes
arrangements with an offshore data center. Our secondary off-island location for data systems back-up and recovery is
located in Toronto, Canada, due to its non-correlated nature with Bermuda. The environment is configured to be live within
one hour of a disaster scenario and supports all of the business capabilities of our primary Bermuda site.

Employees

As of December 31, 2013 we had 20 employees, 18 of whom were based in Bermuda, one of whom was based in the
United States and one of whom was based in the United Kingdom. We believe that our employee relations are good. None of
our employees are subject to collective bargaining agreements, and we are not aware of any current efforts to implement such
agreements.

Available Information

We are incorporated in Bermuda and our corporate offices are located at The Waterfront, Chesney House, 96 Pitts
Bay Road, Pembroke HM 08, Bermuda. Our telephone number is +1 (441) 542-3300. We file annual, quarterly and current
reports and other information with the SEC. You may read and copy any documents that we file at the SEC’s public reference
room at 100 F Street, N.E., Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 to obtain further information
about the public reference room. In addition, the SEC maintains an Internet website (www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants that file electronically with the SEC, including
us. You may also access, free of charge, our reports filed with the SEC (for example, our Annual Report on Form 10-K, our
Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and any amendments to those forms) through the

“Investors” portion of our Internet website (www.thirdpointre.bm). Reports filed with or furnished to the SEC will be
available as soon as reasonably practicable after they are filed with or furnished to the SEC. Our website is included in this
Annual Report as an inactive textual reference only. The information found on our website is not part of this or any other
report filed with or furnished to the SEC.

Item 1A. Risk Factors

You should consider and read carefully all of the risks and uncertainties described below, as well as other
information included in this Annual Report, including our consolidated financial statements and related notes. The risks
described below are not the only ones facing us. The occurrence of any of the following risks or additional risks and
uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect
our business, financial condition or results of operations. This Annual 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 Related to Our Business

We are a two year old company with limited historical information available for investors to evaluate our performance or
a potential investment in our shares.

We have a limited history of operations. We were incorporated on October 6, 2011 and began underwriting
reinsurance transactions on January 1, 2012. As a result, there is limited historical information available to help prospective
investors evaluate our performance or an investment in our shares.

In general, reinsurance and insurance companies in their initial stages of development present substantial business
and financial risks and may suffer significant losses. They must develop business relationships, establish operating
procedures, hire staff, install information technology systems, implement management processes and complete other tasks
appropriate for the conduct of their intended business activities. In particular, our ability to implement our reinsurance
underwriting strategy will depend on, among other things:

•

our ability to attract clients;

our ability to attract and retain personnel with sufficient underwriting, actuarial and accounting and finance
expertise;

our ability to maintain at least an A- (Excellent) rating from A.M. Best or a similar financial strength rating
from one or more other ratings agencies;

our ability to evaluate the risks we assume under reinsurance contracts that we write; our reliance on third
parties to provide certain services; and

the risk of being deemed a passive foreign investment company or an investment company if we are
deemed to not be in the active conduct of an insurance business or to not be predominantly engaged in an
insurance business. See “Risks Relating to Insurance and Other Regulations-We are subject to the risk of
becoming an investment company under U.S. federal securities law” and “Risks Relating to Taxation-
United States persons who own our shares may be subject to United States federal income taxation on our
undistributed earnings and may recognize ordinary income upon disposition of shares.”

We cannot assure you that there will be sufficient demand for the reinsurance products we plan to write to support

our planned level of operations, or that we will accomplish the tasks necessary to implement our business strategy.

Our operational structure is not fully developed.

We are continuing to develop and implement our operational structure and enterprise framework, including exposure
management, financial reporting, information technology and internal controls, with which we will conduct our business
activities. Our operations are currently supplemented by manual processes, and we expect to migrate over time to a more
automated control system. While we utilize manual processes, our controls may not be adequate to identify or eliminate risks.
There can be no assurance that the development of our operational structure or the implementation of our enterprise risk
management framework will proceed smoothly or on our projected timetable or achieve the aforementioned goals.

The preparation of our financial statements requires us to make many estimates and judgments, which are even more
difficult than those made in a mature company, and which, if inaccurate, could cause volatility in our results.

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. Management believes the
item that requires the most subjective and complex estimates is the reserve for losses and loss expenses. Due to our relatively
short operating history, loss experience is limited and reliable evidence of changes in trends of numbers of claims incurred,
average settlement amounts, numbers of claims outstanding and average losses per claim may take years to develop. In
addition, the possibility of future litigation or legislative change that may affect interpretation of policy terms further
increases the degree of uncertainty in the reserving process. The uncertainties inherent in the reserving process, together with
the potential for unforeseen developments, including changes in laws and the prevailing interpretation of policy terms, may
result in losses and loss expenses materially different from the reserves initially established. Changes to prior year reserves
will affect current underwriting results by increasing net income if the prior year reserves prove to be redundant or by
decreasing net income if the prior year reserves prove to be insufficient. We expect volatility in results in periods in which
significant loss events occur because U.S. GAAP does not permit insurers or reinsurers to reserve for loss events until they
have occurred and are expected to give rise to a claim. As a result, we are not allowed to record contingency reserves to
account for expected future losses. We anticipate that claims arising from future events may require the establishment of
substantial reserves from time to time.

Our results of operations fluctuate from period to period and may not be indicative of our long-term prospects.

The performance of our reinsurance operations and our investment portfolio fluctuate from period to period.

Fluctuations result from a variety of factors, including:

•

reinsurance contract pricing;

our assessment of the quality of available reinsurance opportunities;

the volume and mix of reinsurance products we underwrite;

loss experience on our reinsurance liabilities;

our ability to assess and integrate our risk management strategy properly; and

the performance of our investment portfolio.

In particular, we seek to underwrite products and make investments to achieve favorable return on equity over the
long term. In addition, our opportunistic nature and focus on long-term growth in book value result in fluctuations in total
premiums written from period to period as we concentrate on underwriting contracts that we believe will generate better
long-term, rather than short-term, results. Accordingly, our short-term results of operations may not be indicative of our long-
term prospects.

Established competitors with greater resources may make it difficult for us to effectively market our products or offer our
products at a profit.

The reinsurance industry is highly competitive. We compete with major reinsurers, many of which have
substantially greater financial, marketing and management resources than we do, as well as other potential providers of
capital willing to assume insurance or reinsurance risk. Competition in the types of business that we underwrite is based on
many factors, including:

•

price of reinsurance coverage;

the general reputation and perceived financial strength of the reinsurer;

relationships with reinsurance brokers;

terms and conditions of products offered;

ratings assigned by independent rating agencies;

speed of claims payment and reputation; and

the experience and reputation of the members of our underwriting team in the particular lines of
reinsurance we seek to underwrite.

Our competitors include, among others, Tokio Marine Holdings, Inc., Endurance Specialty Holdings Ltd., AXIS
Capital Holdings Ltd., Arch Capital Group Ltd., ACE Limited, Alleghany Corporation, Hannover Rückversicherung AG,
Everest Re Group, Ltd., Swiss Re Limited, Münchener Rückversicherungs-Gesellschaft AG., Maiden Holdings Ltd.,
PartnerRe Ltd. and Catlin Group Ltd. In addition, Greenlight Reinsurance, Ltd. has a business model similar to ours, and we
expect to compete with them in many lines of business and geographies. In the future, we may also have to compete for the
type of reinsurance we intend to underwrite with new start-up companies that have a business model similar to ours.

We cannot assure you that we will be able to compete successfully in the reinsurance market. Our failure to compete
effectively would significantly and negatively affect our financial condition and results of operations and may increase the
likelihood that we are deemed to be a passive foreign investment company or an investment company. See “Risks Relating to
Insurance and Other Regulations-We are subject to the risk of becoming an investment company under U.S. federal securities
law” and “Risks Relating to Taxation-United States persons who own our shares may be subject to United States federal
income taxation on our undistributed earnings and may recognize ordinary income upon disposition of shares.”

If actual renewals of our existing contracts do not meet expectations, our premiums written in future years and our future
results of operations could be materially adversely affected.

Many of our contracts are generally written for a one-year term. In our financial forecasting process, we make
assumptions about the renewal of our prior year’s contracts. The insurance and reinsurance industries have historically been
cyclical businesses with periods of intense competition, often based on price. If actual renewals do not meet expectations or if
we choose not to write on a renewal basis because of pricing conditions, our premiums written in future years and our future
operations would be materially adversely affected.

The inherent uncertainty of models and the use of such models as a tool to evaluate risk may have an adverse effect on
our financial results.

We license analytic and modeling capabilities software from third parties to facilitate our pricing, capital modeling
software and objective risk assessment relating to risks in our reinsurance portfolio. These models help us to control risk
accumulation, inform management and other stakeholders of capital requirements and to improve the risk/return profile or
minimize the amount of capital required to cover the risks in each reinsurance contract in our overall portfolio of reinsurance
contracts. However, given the inherent uncertainty of modeling techniques and the application of such techniques, these
models and databases may not accurately address the emergence of a variety of matters which might be deemed to impact
certain of our coverages. Accordingly, these models may understate the exposures we are assuming and our financial results
may be adversely impacted, perhaps significantly.

Operational risks, including human or systems failures, are inherent in our business.

Operational risks and losses can result from many sources including fraud, errors by employees, failure to document
transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements or information
technology failures.

We believe our modeling, underwriting and information technology and application systems are critical to our
business and reputation. Moreover, our technology and applications are an important part of our underwriting process and our
ability to compete successfully. We have licensed certain systems and data from third parties. We cannot be certain that we
will have access to these, or comparable systems, or that our technology or applications will continue to operate as intended.
In addition, we cannot be certain that we would be able to replace these systems without slowing our underwriting response
time. A major defect or failure in our internal controls or information technology and application systems could result in
management distraction, harm to our reputation, a loss or delay of revenues or increased expense.

Technology breaches or failures, including those resulting from a malicious cyber-attack on us or our business partners
and service providers, could disrupt or otherwise negatively impact our business.

We rely on information technology systems to process, transmit, store and protect the electronic information,
financial data and proprietary models that are critical to our business. Furthermore, a significant portion of the
communications between our employees and our business, banking and investment partners depends on information
technology and electronic information exchange. Like all companies, our information technology systems are vulnerable to
data breaches, interruptions or failures due to events that may be beyond our control, including, but not limited to, natural
disasters, theft, terrorist attacks, computer viruses, hackers and general technology failures.

We believe that we have established and implemented appropriate security measures, controls and procedures to
safeguard our information technology systems and to prevent unauthorized access to such systems and any data processed or
stored in such systems, and we periodically evaluate and test the adequacy of such systems, controls and procedures. In
addition, we have established a business continuity plan which is designed to ensure that we are able to maintain all aspects
of our key business processes functioning in the midst of certain disruptive events, including any disruptions to or breaches of
our information technology systems. Our business continuity plan is routinely tested and evaluated for adequacy. Despite
these safeguards, disruptions to and breaches of our information technology systems are possible and may negatively impact
our business.

It is possible that insurance policies we have in place with third parties would not entirely protect us in the event that
we experienced a breach, interruption or widespread failure of our information technology systems. Furthermore, we have not
secured insurance coverage designed to specifically protect us from an economic loss resulting from such events.

Although we have never experienced any known or threatened cases involving unauthorized access to our
information technology systems or unauthorized appropriation of the data contained within such systems, we have no
assurance that such technology breaches will not occur in the future.

We may not be able to manage our growth effectively.

We intend to grow our business in the future, which could require additional capital, systems development and
skilled personnel. We cannot assure you that we will be able to meet our capital needs, expand our systems effectively,
allocate our human resources optimally, identify and hire qualified employees or incorporate effectively the components of
any businesses we may acquire in our effort to achieve growth. Additionally, as we grow, the ability of our management to
source sufficient reasonably priced reinsurance business in the segments we target may be limited. The failure to manage our
growth effectively could have a material adverse effect on our business, financial condition, and results of operations.

Our losses may exceed our loss reserves, which could significantly and negatively affect our business.

Our results of operations and financial condition depends upon our ability to assess accurately the potential losses
associated with the risks we reinsure. Reserves are estimates of claims an insurer ultimately expects to pay, based upon facts
and circumstances known at the time, predictions of future events, estimates of future trends in claim severity and other
variable factors. The inherent uncertainties of estimating loss reserves generally are greater for reinsurance companies as
compared to primary insurers, primarily due to:

•

the lapse of time from the occurrence of an event to the reporting of the claim and the ultimate resolution or
settlement of the claim;

the diversity of development patterns among different types of reinsurance treaties; and

heavier reliance on the client for information regarding claims.

Actual losses and loss adjustment expenses paid may deviate substantially from the estimates of our loss reserves, to
our detriment. If we determine our loss reserves to be inadequate, we will increase our loss reserves with a corresponding
reduction in our net income in the period in which we identify the deficiency. Such a reduction would negatively affect our
results of operations. If our losses exceed our loss reserves, our financial condition may be significantly and negatively
affected.

As a recently formed reinsurance company, we do not have the benefit of extended loss experience with our cedents.
With additional time, we may determine that our cedents’ loss emergence, incurred and payment patterns are different from
those implied in the original submission data. Consequently, we may experience greater than average deviation in our loss
reserve estimates when compared to our more established competitors.

The failure of any of the loss limitation methods we employ could have a material adverse effect on our financial
condition and results of operations.

Although we seek to mitigate our loss exposure through a variety of methods, property and casualty reinsurance risk
is inherently unpredictable. It is difficult to predict the timing, frequency and severity of loss events with statistical certainty
or estimate the amount of loss any given occurrence will generate. It is not possible to completely eliminate our exposure to
unforecasted or unpredictable events and, to the extent that losses from such risks occur, our financial condition and results of
operations could be materially adversely affected.

We seek to manage reinsurance volatility by focusing on lines of business that have historically demonstrated more
stable return characteristics, such as property quota share, auto, workers’ compensation and certain segments of crop. These
lines of business are often characterized as having exposure to higher frequency and lower severity claims activity, although
this has not always been the case. We seek to further manage the volatility of our reinsurance results by writing policies on a
quota share basis and through the use of contractual terms and conditions, such as loss ratio caps, within our reinsurance
contracts.

In addition, in contrast to many reinsurers with whom we compete, we write property catastrophe reinsurance on an
excess of loss basis exclusively through the Catastrophe Reinsurer, which is a separately capitalized reinsurance vehicle. We
also write reinsurance contracts that seek to provide protection against adverse development on loss reserves. We seek to
provide this type of coverage only on relatively stable reserves where we agree with the client’s reserving practices and
actuarially determined reserve levels. However, there can be no assurance that these loss limitation methods will be effective
in mitigating our exposure, or that market or other conditions would necessitate a different loss mitigation strategy. The
failure or ineffectiveness of any of our loss limitation methods could have a material adverse effect on our financial condition
and results of operations.

The property and casualty reinsurance industry is highly cyclical, and we expect to continue to experience periods
characterized by excess underwriting capacity and unfavorable premium rates.

Historically, reinsurers have experienced significant fluctuations in operating results due to competition, frequency
of occurrence or severity of catastrophic events, levels of capacity, general economic conditions, changes in equity, debt and
other investment markets, changes in legislation, case law and prevailing concepts of liability and other factors. In particular,
demand for reinsurance is influenced significantly by the underwriting results of primary insurers and prevailing general
economic conditions. The supply of reinsurance is related to prevailing prices and levels of surplus capacity that, in turn, may
fluctuate in response to changes in rates of return being realized in the reinsurance industry on both underwriting and
investment sides.

As a result, the reinsurance business historically has been a cyclical industry characterized by periods of intense
price competition due to high levels of available underwriting capacity as well as periods when shortages of capacity have
permitted favorable premium levels and changes in terms and conditions. The supply of available reinsurance capital has
increased over the past several years and may increase further, either as a result of capital provided by new entrants or by the
commitment of additional capital by existing insurers or reinsurers.

Continued increases in the supply of reinsurance may have consequences for us and for the reinsurance insurance
generally, including fewer contracts written, lower premium rates, increased expenses for customer acquisition and retention,
and less favorable policy terms and conditions. As a result, we may be unable to fully execute our reinsurance strategy of
selling lower-volatility business. The effects of cyclicality could significantly and negatively affect our financial condition
and results of operations.

The effect of emerging claim and coverage issues on our business is uncertain.

As industry practices and legal, judicial and regulatory conditions change, unexpected issues related to claims and
coverage may emerge. Various provisions of our contracts, such as limitations or exclusions from coverage or choice of
forum, may be difficult to enforce in the manner we intend, due to, among other things, disputes relating to coverage and
choice of legal forum. These issues may adversely affect our business by either extending coverage beyond the period that we
intended or by increasing the number or size of claims. In some instances, these changes may not manifest themselves until
many years after we have issued insurance or reinsurance contracts that are affected by these changes. As a result, we may
not be able to ascertain the full extent of our liabilities under our insurance or reinsurance contracts for many years following
the issuance of our contracts. The effects of unforeseen development or substantial government intervention could adversely
impact our ability to adhere to our goals.

A downgrade or withdrawal of our A.M. Best rating would significantly and negatively affect our ability to implement our
business strategy successfully.

Companies, insurers and reinsurance brokers use ratings from independent ratings agencies as an important means
of assessing the financial strength and quality of reinsurers. A.M. Best has assigned us a financial strength rating of A-
(Excellent), which is the fourth highest of 15 ratings that A.M. Best issues. This rating reflects the rating agency’s opinion of
our financial strength, operating performance and ability to meet obligations. It is not an evaluation directed toward the
protection of investors or a recommendation to buy, sell or hold our shares. A.M. Best periodically reviews our rating, and

may revise it downward or revoke it at its sole discretion based primarily on its analysis of our balance sheet strength,
operating performance and business profile. Factors which may affect such an analysis include:

•

if we change our business practices from our organizational business plan in a manner that no longer
supports A.M. Best’s initial rating;

if unfavorable financial or market trends impact us;

if our losses exceed our loss reserves;

if we are unable to retain our senior management and other key personnel;

if our investment portfolio incurs significant losses; or

if A.M. Best alters its capital adequacy assessment methodology in a manner that would adversely affect
Third Point Re’s rating.

If A.M. Best downgrades our rating below A- (Excellent), places us on credit watch or withdraws our rating, we
could be severely limited or prevented from writing any new reinsurance contracts which would significantly and negatively
affect our ability to implement our business strategy. A downgrade may also require us to establish trusts or post letters of
credit for ceding company clients. In addition, almost all of our reinsurance contracts provide the client with the right to
terminate the agreement or require us to transfer premiums on a funds withheld basis if our A- (Excellent) A.M. Best rating is
downgraded. The contracts containing such a termination right represented approximately 86.0% of gross premiums written
during 2013 and 95.8% of gross premiums written during 2012.

A significant decrease in our capital or surplus could enable certain clients to terminate reinsurance agreements or to
require additional collateral.

Certain of our reinsurance contracts contain provisions that permit our clients to cancel the contract or require
additional collateral in the event of a downgrade in our ratings below specified levels or a reduction of our capital or surplus
below specified levels over the course of the agreement. Whether a client would exercise such cancellation rights would
likely depend, among other things, on the reason the provision is triggered, the prevailing market conditions, the degree of
unexpired coverage and the pricing and availability of replacement reinsurance coverage.

If any such provisions were to become exercisable, we cannot predict whether or how many of our clients would
actually exercise such rights or the extent to which they would have a significant and negative effect on our financial
condition, results of operations or future prospects but they could have a significant adverse effect on our operations.

We are dependent on key executives, the loss of whom could adversely affect our business.

Our future success depends to a significant extent on the efforts of our senior management, in particular Mr. Berger,
and other key personnel, such as our chief financial officer and chief operating officer, our chief actuary and chief risk officer
and our senior underwriting executives, to implement our business strategy. We believe there are only a limited number of
available and qualified executives with substantial experience in our industry. Accordingly, the loss of the services of one or
more of the members of our senior management, in particular Mr. Berger, or other key personnel could delay or prevent us
from fully implementing our business strategy and, consequently, significantly and negatively affect our business.

We do not currently maintain key man life insurance with respect to any of our senior management. If any member
of senior management dies or becomes incapacitated, or leaves the company to pursue employment opportunities elsewhere,
we would be solely responsible for locating an adequate replacement for such senior management and for bearing any related
cost. To the extent that we are unable to locate an adequate replacement or are unable to do so within a reasonable period of
time, our business may be significantly and negatively affected.

In addition, our business operations require the services of a number of specialized employees to carry out day-to-
day business operations. There can be no assurance that we can attract and retain the necessary employees to conduct our
business activities on a timely basis or at all.

Our failure to obtain sufficient letter of credit facilities or to increase our letter of credit capacity on commercially
acceptable terms as we grow could significantly and negatively affect our ability to implement our business strategy.

We are not licensed or admitted as a reinsurer in any jurisdiction other than Bermuda. Certain jurisdictions,
including in the United States, do not permit insurance companies to take statutory credit for reinsurance obtained from
unlicensed or non-admitted insurers unless appropriate security measures are implemented. Consequently, certain clients
require us to obtain a letter of credit or provide other collateral through funds withheld or trust arrangements. In connection
with obtaining letter of credit facilities, we are typically required to provide customary collateral to the letter of credit
provider in order to secure our obligations under the facility. Our ability to provide collateral, and the costs at which we
provide collateral, is primarily dependent on the composition of our investment portfolio.

Typically, letters of credit are collateralized with fixed-income securities. Banks may be willing to accept our
investment portfolio as collateral, but on terms that may be less favorable to us than reinsurance companies that invest solely
or predominantly in fixed-income securities. The inability to renew, maintain or obtain letters of credit collateralized by our
investment portfolio may significantly limit the amount of reinsurance we can write or require us to modify our investment
strategy.

We may need additional letter of credit capacity as we grow, and if we are unable to renew, maintain or increase our
letter of credit facilities or are unable to do so on commercially acceptable terms, such a development could significantly and
negatively affect our ability to implement our business strategy.

Our ability to pay dividends may be constrained by our holding company structure and certain regulatory and other
factors.

Third Point Reinsurance Ltd. is a holding company that conducts no reinsurance operations of its own. The majority
of our reinsurance operations are conducted through our wholly-owned operating subsidiary, Third Point Re, and Third Point
Re may also receive income relating to its shareholdings in the Catastrophe Fund. Our cash flows consist primarily of
dividends and other permissible payments from Third Point Re and income generated from management fees payable to the
Catastrophe Fund Manager, our majority owned subsidiary that provides management services to the Catastrophe Fund.
Third Point Reinsurance Ltd. depends on such payments to receive funds to meet its obligations, including the payment of
any dividends and other distributions to our shareholders.

Third Point Reinsurance Ltd. is indirectly subject to Bermuda regulatory constraints placed on Third Point Re and
the Catastrophe Reinsurer, which is the licensed special purpose insurer that writes policies for the Catastrophe Fund. This
affects our ability to pay dividends on the shares and make other payments. Under the Insurance Act, Third Point Re, as a
Class 4 insurer, is prohibited from declaring or paying a dividend if it is in breach of its minimum solvency margin (“MSM”),
enhanced capital ratio (“ECR”) or minimum liquidity ratio or if the declaration or payment of such dividend would cause
such a breach. Where Third Point Re, as a Class 4 insurer, 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, Third Point Re, as a Class 4 insurer, is prohibited from declaring or paying in any financial year
dividends of more than 25% of its 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 dividends) 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. Where such an affidavit is filed, it shall be available for public inspection at the offices of the BMA.

The Catastrophe Reinsurer, as a special purpose insurer, is prohibited from declaring or paying any dividends during
any financial year if it is in breach of its minimum solvency margin or if the declaration or payment of such dividends would
cause it to fail to meet such minimum margin. If the Catastrophe Reinsurer, as a special purpose insurer, were to fail to meet
its minimum solvency margin on the last day of any financial year, it would be prohibited from declaring or paying any
dividends during the next financial year without the approval of the BMA.

In addition, under the Bermuda Companies Act 1981, as amended (the “Companies Act”), Bermuda companies such
as Third Point Reinsurance Ltd., Third Point Re and the Catastrophe Reinsurer may not declare or pay a dividend if there are
reasonable grounds for believing that the relevant Bermuda company is, or would after the payment be, unable to pay its
liabilities as they become due or the realizable value of its assets would thereby be less than its liabilities.

We may need additional capital in the future in order to operate our business, and such capital may not be available to us
or may not be available to us on acceptable terms. Furthermore, additional capital raising could dilute your ownership
interest in our company and may cause the value of the shares to decline.

We may need to raise additional capital in the future through offerings of debt or equity securities or otherwise to:

•

fund liquidity needs caused by underwriting or investment losses;

replace capital lost in the event of significant reinsurance losses or adverse reserve developments;

satisfy letters of credit or guarantee bond requirements that may be imposed by our clients or by regulators;

meet rating agency or regulatory capital requirements; or

respond to competitive pressures.

Additional capital may not be available on terms favorable to us, or at all. Further, any additional capital raised
through the sale of equity could dilute your ownership interest in our company and may cause the value of our shares to
decline. Additional capital raised through the issuance of debt may result in creditors having rights, preferences and
privileges senior or otherwise superior to those of the holders of our shares.

Changing climate conditions may adversely affect our financial condition, profitability or cash flows.

Climate change, to the extent it produces extreme changes in temperatures and changes in weather patterns, could
affect the frequency or severity of weather events and wildfires. Further, it could reduce the affordability and availability of
homeowners insurance, which could have an effect on pricing. Changes in weather patterns could also affect the frequency
and severity of other natural catastrophe events to which we may be exposed. For example, due to the severe drought that
impacted most of the U.S. farm belt in 2012, we suffered a $10.0 million underwriting loss on $42.5 million of earned crop
premium.

Our reinsurance operations may make us vulnerable to losses from catastrophes and may cause our results of operations
to vary significantly from period to period.

While Third Point Re, our Class 4 reinsurer, currently does not directly underwrite catastrophe exposed reinsurance
business on an excess of loss basis, we recently launched an open-ended catastrophe reinsurance fund with an exposure to a
diversified portfolio of peak zone natural catastrophe risk. Involvement in catastrophe exposed excess of loss reinsurance
through our investment in the Catastrophe Fund exposes us to claims arising out of unpredictable catastrophic events, such as
hurricanes, hailstorms, tornadoes, windstorms, severe winter weather, earthquakes, floods, droughts, fires, explosions,
volcanic eruptions, acts of war or terrorism or political unrest and other natural or man-made disasters. The incidence and
severity of catastrophes are inherently unpredictable but the loss experience of property catastrophe reinsurers has been
generally characterized as low frequency and high severity. Claims from catastrophic events could reduce our earnings and
cause volatility in our results of operations for any fiscal quarter or year.

In addition, we are exposed to the impact of catastrophic events in some cases through the property and casualty
quota share reinsurance business of Third Point Re, as significant disasters or weather events can result in increased claims
under such lines of business as auto or crop. If a natural or man-made disaster significantly increased the amount of claims
payable under the types of property and casualty reinsurance written by Third Point Re, our reinsurance results of operation
could be materially and adversely affected.

We depend on our clients’ evaluations of the risks associated with their insurance underwriting, which may subject us to
reinsurance losses.

In most of our quota share reinsurance business we do not separately evaluate each of the original individual risks
assumed under these reinsurance contracts. Therefore, we are dependent on the original underwriting decisions made by
ceding companies. We are subject to the risk that the clients may not have adequately evaluated the insured risks and that the
premiums ceded may not adequately compensate us for the risks we assume. We also do not separately evaluate each of the
individual claims made on the underlying insurance contracts. Therefore, we are dependent on the original claims decisions
made by our clients. We are subject to the risk that the client may pay invalid claims, which could result in reinsurance losses
for us.

The involvement of reinsurance brokers subjects us to their credit risk.

In accordance with industry practice, we frequently pay amounts owed on claims under our policies to reinsurance
brokers, and these brokers, in turn, remit these amounts to the ceding companies that have reinsured a portion of their
liabilities with us. In some jurisdictions, if a broker fails to make such a payment, we might remain liable to the client for the
deficiency notwithstanding the broker’s obligation to make such payment. Conversely, in certain jurisdictions, when the
client pays premiums for policies to reinsurance brokers for payment to us, these premiums are considered to have been paid
and the client will no longer be liable to us for these premiums, whether or not we have actually received them.
Consequently, we assume a degree of credit risk associated with reinsurance brokers around the world.

The inability to obtain business provided from brokers could adversely affect our business strategy and results of
operations.

We market our reinsurance worldwide primarily through reinsurance brokers. Business placed by our top three
reinsurance brokers, Guy Carpenter & Company, LLC, Advocate Reinsurance Partners, LLC, and Aon Benfield, accounted
for approximately 65.9% of our gross premiums written since inception. Affiliates of several brokers have also co-sponsored
the formation of Bermuda reinsurance companies that may compete with us, and these brokers may favor their own
reinsurers over other companies. Loss of all or a substantial portion of the business provided by one or more of these brokers
could have a material adverse effect on our business.

We may be unable to purchase reinsurance for the liabilities we reinsure, and if we successfully purchase such
reinsurance, we may be unable to collect, which could adversely affect our business, financial condition and results of
operations.

While we did not purchase retrocessional coverage in 2012, we began to do so in 2013 and may continue to do so in
the future, in order to mitigate the effect of a potential concentration of losses upon our financial condition. The insolvency or
inability or refusal of a reinsurer to make payments under the terms of its agreement with us could have an adverse effect on
us because we remain liable to our client. From time to time, market conditions have limited, and in some cases have
prevented, reinsurers from obtaining the types and amounts of retrocession that they consider adequate for their business
needs. Accordingly, we may not be able to obtain our desired amounts of retrocessional coverage or negotiate terms that we
deem appropriate or acceptable or obtain retrocession from entities with satisfactory creditworthiness. Our failure to establish
adequate retrocessional arrangements or the failure of our retrocessional arrangements to protect us from overly concentrated
risk exposure could significantly and negatively affect our business, financial condition and results of operations.

Currency fluctuations could result in exchange rate losses and negatively impact our business.

Our functional currency is the U.S. dollar. However, starting in 2014 we will write a portion of our business and
receive premiums in currencies other than the U.S. dollar. In addition, our investment manager, Third Point LLC, invests a
portion of our portfolio in assets denominated in currencies other than the U.S. dollar. Consequently, we may experience
exchange rate losses to the extent our foreign currency exposure is not hedged or is not sufficiently hedged, which could
significantly and negatively affect our business. If we do seek to hedge our foreign currency exposure through the use of
forward foreign currency exchange contracts or currency swaps, we may be subject to the risk that our counterparties to the
arrangements fail to perform.

Our ability to implement our business strategy could be delayed or adversely affected by Bermuda employment restrictions
relating to the ability to obtain and retain work permits for key employees in Bermuda.

Under Bermuda law, non-Bermudians (other than spouses of Bermudians) may not engage in any gainful occupation
in Bermuda without an appropriate governmental work permit. Our success may depend in part on the continued services of
key employees in Bermuda, and none of our chief executive officer, our chief financial officer and chief operating officer,
our chief actuary and chief risk officer or our senior underwriting executives are Bermudians or spouses of Bermudians. A
work permit may be granted or renewed upon showing that, after proper public advertisement, no Bermudian (or spouse of a
Bermudian or a holder of a permanent resident’s certificate or holder of a working resident’s certificate) is available who
meets the minimum standards reasonably required by the employer. A work permit is issued with an expiry date (up to ten
years) and no assurances can be given that any work permit will be issued or, if issued, renewed upon the expiration of the
relevant term. If work permits are not obtained, or are not renewed, for our principal employees, we would lose their services,
which could materially affect our businesses.

Risks Relating to Our Investment Strategy and Investment Manager

We have limited control over how our investment portfolio is allocated, and its performance depends on the ability of our
investment manager, Third Point LLC, to select and manage appropriate investments.

We have engaged Third Point LLC to act as our exclusive investment manager for substantially all of our
investment portfolio and to recommend appropriate investment opportunities. Although Third Point LLC is contractually
obligated to follow our investment guidelines, 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.

The performance of our investment portfolio depends to a great extent on the ability of Third Point LLC, as our
investment manager to select and manage appropriate investments. We have entered into an investment management
agreement with Third Point LLC which terminates on December 22, 2016 and is subject to automatic renewal for additional
successive three-year terms unless a party notifies the other parties at least six months prior to the end of a term that it wishes
to terminate the investment management agreement at the end of such term. We have limited ability to terminate the
investment management agreement earlier. 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 our
business, results of operations and financial condition.

The historical performance of Third Point LLC should not be considered as indicative of the future results of our
investment portfolio or of our future results or of any returns expected on our common shares.

The historical returns of the funds managed by Third Point LLC are not directly linked to returns on our common
shares. Although as our investment manager, Third Point LLC has agreed to invest our portfolio on substantially the same
basis as Third Point LLC’s hedge funds, results for our investment portfolio could differ from results of the funds managed
by Third Point LLC as a result of restrictions imposed by our investment guidelines. In addition, even if our investment
portfolio generates investment income in a given period, our overall performance could be adversely affected by losses
generated by our reinsurance operations. Poor performance of our investment portfolio will cause a decline in our revenue
from that portfolio and will therefore have a negative effect on our financial performance.

Moreover, with respect to the historical performance of funds or accounts managed by Third Point LLC, including

our investment portfolio:

•

the historical performance of funds managed by Third Point LLC should not be considered indicative of the
future results that should be expected from our investment portfolio; and

the returns of funds managed by Third Point LLC have benefited historically from investment opportunities
and general market conditions that currently may not exist and may not repeat themselves, and there can be
no assurance that Third Point LLC will be able to avail itself of profitable investment opportunities in the
future.

The risks associated with Third Point LLC’s strategy in managing our investment portfolio may be substantially greater
than the investment risks faced by other reinsurers with whom we compete.

We may derive a significant portion of our income from our investment portfolio. As a result, our operating results
depend in part on the performance of our investment portfolio. We cannot assure you that Third Point LLC, as our investment
manager, will successfully structure our investments in relation to our anticipated liabilities. Failure to do so could force us to
liquidate investments at a significant loss or at prices that are not optimal, which could significantly and adversely affect our
financial results.

The risks associated with Third Point LLC’s investment strategy may be substantially greater than the risks
associated with traditional fixed-income investment strategies employed by many reinsurers with whom we compete. Third
Point LLC makes investments globally, in both developed and emerging markets, in all sectors, and in equity, credit,
commodity, currency, option and other instruments with a focus on event-driven situations, in which Third Point LLC
believes that a catalyst, either intrinsic or extrinsic, will unlock value or alter the lens through which the greater market values
a particular investment. Making long equity investments in an up or rising market may increase the risk of not generating
profits on these investments and we may incur losses if the market declines. Similarly, making short equity investments in a
down or falling market may increase the risk of not generating profits on these investments and we may incur losses if the

market rises. The market price of our common shares may be volatile and the risk of loss may be greater when compared with
other reinsurance companies.

In addition to risks associated with volatility in our portfolio, although we conduct our business through our Class 4
Bermuda licensed insurance company as an operating reinsurance business actively engaged in writing property and casualty
coverage, because our investment portfolio as managed by Third Point LLC may include a very small number of futures,
options on futures, swaps and other commodity interests from time to time, we are exposed to the risk that the U.S.
Commodity Futures Trading Commission (the “CFTC”) could assert that our business has been operated for the purpose of
trading commodity interests and we are, therefore, a commodity pool. If this were to occur, our investment strategy and our
business could be disrupted as we would be required to have a registered commodity pool operator in order to continue to
include investments in commodity interests in our investment portfolio. Registered commodity pool operators are subject to
disclosure, reporting and recordkeeping requirements with respect to the pools they operate. In addition, if it were established
that we were a commodity pool, the CFTC could pursue remedies against the party or parties it deems to be the commodity
pool operator, and we could under certain circumstances be required to indemnify those individuals or entities.

The termination by Third Point LLC of our investment management agreement at the end of its term or any successive
term could materially adversely affect our investment results.

We depend upon Third Point LLC, our investment manager, to implement our investment strategy. The investment
management agreement, which terminates on December 22, 2016, is subject to automatic renewal for additional successive
three-year terms unless a party notifies the other parties at least six months prior to the end of a term that it wishes to
terminate the investment management agreement at the end of such term. If Third Point LLC chooses to terminate the
investment management agreement at the end of such term, there is no assurance that we could find a suitable replacement.

Potential conflicts of interest with Third Point LLC may exist that could adversely affect us.

Neither Third Point LLC nor its principals, including Daniel S. Loeb, who is one of our shareholders, are obligated
to devote any specific amount of time to our affairs. Affiliates of Third Point LLC manage, and expect to continue to manage,
other client accounts, some of which have objectives similar to ours, including collective investment vehicles managed by
Third Point LLC’s affiliates and in which Third Point LLC or its affiliates may have an equity interest. Pursuant to our
investment management agreement with Third Point LLC, Third Point LLC has the exclusive right to manage our investment
portfolio and is required to follow our investment guidelines and act in a manner that is fair and equitable in allocating
investment opportunities to us, but the agreement does not otherwise impose any specific obligations or requirements
concerning allocation of time, effort or investment opportunities to us or any restriction on the nature or timing of
investments for our account and for Third Point LLC’s own account or other accounts that Third Point LLC or its affiliates
may manage. Third Point LLC’s interest and the interests of its affiliates, may at times conflict, possibly to Third Point
LLC’s detriment, which may potentially adversely affect our investment opportunities and returns.

Our investment portfolio may contain large positions which could result in large losses.

Our investment guidelines provide that as our investment manager, Third Point LLC may commit up to 15% of our
assets under management to any one investment. Our investment portfolio could be subject to significant losses if it holds a
relatively large position in a single issuer, industry, market or a particular type of investment that declines in value, and the
losses could increase even further if the investments cannot be liquidated without adverse market reaction or are otherwise
adversely affected by changes in market conditions or circumstances. As of December 31, 2013 and 2012, the net exposure of
our portfolio was 87% and 63%, respectively, and the largest ten long and short positions comprised an aggregate of 40% and
11% and 41% and 24%, respectively, of our investment portfolio. Since our investment portfolio may not be widely
diversified at times, it may be subject to more rapid changes in value than would be the case if the investment portfolio were
required to maintain a wide diversification among companies, securities and types of securities.

We are exposed to credit risk from the possibility that counterparties may default on their obligations.

To the extent that transactions in our investment portfolio are entered into directly and not through a broker or
clearinghouse, including, but not limited to, forward foreign currency transactions, swap transactions, and the purchase and
sale of bonds and other fixed income securities directly from the current holder thereof, we must rely on the creditworthiness
of the counterparty to the extent it is unable to deliver the promised asset or cash flows in the case of cash settled
transactions, net of any collateral that has been posted by or to the counterparty. The bankruptcy or insolvency of these
counterparties could also result in a loss of any collateral posted against these transactions.

In addition, any prime broker or custodian through whom transactions are effected in our investment portfolio will
each have a lien over assets held in a margin account with such counterparty. Further, should a prime broker or custodian
become insolvent, those assets may become unavailable for redemption and potentially classified as belonging to the
defaulting party. The insolvency of any such prime broker or custodian could result in the loss of a substantial portion or all
of the assets held with such counterparty. Assets which are deposited with brokers as collateral against margin loss may
become available to the creditors of the brokers in the event of the bankruptcy or insolvency of the broker to the extent that it
is needed to satisfy obligations to the insolvent party. Any reduction in our assets as a result of a default by a prime broker
could negatively affect the net asset value of our investment portfolio.

If Third Point LLC’s risk management systems are ineffective, we may be exposed to material unanticipated losses.

Third Point LLC continually refines its risk management techniques, strategies and assessment methods. However,
its risk management techniques and strategies do not fully mitigate the risk exposure of its funds and managed accounts,
including our investment portfolio, in all economic or market environments, or against all types of risk, including risks that
they might fail to identify or anticipate. Some of Third Point LLC’s strategies for managing risk are based upon its use of
historical market behavior statistics. Any failures in Third Point LLC’s risk management techniques and strategies to
accurately quantify such risk exposure could limit the risk-adjusted returns of our investment portfolio. In addition, any risk
management failures could cause losses in the portfolios managed by Third Point LLC, including our managed account, to be
significantly greater than the historical measures predict. Third Point LLC’s approach to managing those risks could prove
insufficient, exposing us to material unanticipated losses in our investment portfolio.

In managing our investment portfolio, Third Point LLC may trade on margin and use other forms of financial leverage,
which could potentially adversely affect our revenues.

Our investment guidelines provide Third Point LLC with the ability to trade on margin and use other forms of
financial leverage. Fluctuations in the market value of our investment portfolio could have a disproportionately large effect in
relation to our capital. As of December 31, 2013, our investment account had $3.1 million of margin debt at its brokers. A
common metric used to determine financial leverage for accounts such as our investment portfolio is the “gross exposure” of
our managed account. The “gross exposure” is shown as a percentage of the Net Asset Value (“NAV”) of the account, and
represents the market exposure in the account (long and short) versus the NAV. In other words, if the NAV of an account is
$100, and the account holds securities “long” with an aggregate market exposure of $100 (100% long), and has sold short
securities with an aggregate market exposure of $25 (25% short), then the gross exposure would be 125% (i.e., $125 of
investments against $100 of NAV). As of December 31, 2013, the gross exposure of our investment portfolio was 112.0%.
Any event which may adversely affect the value of positions we hold could significantly and negatively affect the net asset
value of our investment portfolio and thus our results of operations.

In managing our investment portfolio, Third Point LLC engages in short sales that may subject us to unlimited loss
potential.

As our investment manager, Third Point LLC routinely enters into transactions for our account in which it sells a
security that we do not own, which we refer to as a short sale, in anticipation of a decline in the market value of the security.
Short sales for our account theoretically will involve unlimited loss potential since the market price of securities sold short
may continuously increase. If the market price of the subject security increases considerably, Third Point LLC might have to
cover short sales at suboptimal prices. As of December 31, 2013, short exposure in our investment portfolio was $401.0
million over 126 debt, equity and index positions, including $20.5 million over nine positions in the equity portfolio.

Third Point LLC’s representatives’ service on boards and committees may place trading restrictions on our investments.

Third Point LLC may from time to time place its or its affiliates’ representatives on creditors’ committees or boards
of certain companies in which our portfolio is invested. While such representation may enable Third Point LLC to enhance
the sale value of our investments, it may also place trading restrictions on our investments.

As of the date hereof, representatives of Third Point LLC sat on the board of directors of Enphase Energy, Inc.,

whose securities are publicly traded and included in our investment portfolio.

The ability to use ‘‘soft dollars’’ may provide Third Point LLC with an incentive to select certain brokers that may take
into account benefits to be received by Third Point LLC.

Under certain circumstances and subject to compliance with the safe harbor provided by section 28(e) of the
Exchange Act, Third Point LLC is entitled to use so-called “soft dollars” generated by commissions paid in connection with
transactions for our investment portfolio to pay for certain categories of expenses relating to research and related services
provide by brokers. Soft dollars are a means of paying brokerage firms for their services through commission revenue, rather
than through direct payments. Third Point LLC’s right to use soft dollars may give Third Point LLC an incentive to select
brokers or dealers for our transactions, or to negotiate commission rates or other execution terms, in a manner that takes into
account the soft dollar benefits received by Third Point LLC rather than giving exclusive consideration to the interests of our
investment portfolio and, accordingly, may create a conflict.

Our investment management agreement has limited termination provisions.

Our investment management agreement with Third Point LLC has limited termination provisions which restrict our
ability to manage our investment portfolio outside of Third Point LLC. Because the investment management agreement
contains exclusivity and limited termination provisions, we are unable to use investment managers other than Third Point
LLC for so long as the agreement is in effect. The investment management agreement was entered into on December 22,
2011 and has an initial term of five years, subject to automatic renewal for additional successive three-year terms unless a
party notifies the other parties at least six months prior to the end of a term that it wishes to terminate the investment
management agreement at the end of such term. We may also terminate the investment management agreement upon the
death, long-term disability or retirement of Daniel S. Loeb, or the occurrence of other circumstances in which Mr. Loeb is no
longer directing the investment program of Third Point LLC.

We may also withdraw as participants under the investment management agreement prior to the expiration of the

investment management agreement’s term at any time only “for cause”, which is defined as:

•

a material violation of applicable law relating to Third Point LLC’s advisory business;

Third Point LLC’s fraud, gross negligence, willful misconduct or reckless disregard of its obligations under
the investment management agreement;

a material breach by Third Point LLC of our investment guidelines that is not cured within a 15-day period;

a conviction or, a plea of guilty or nolo contendere to a felony or a crime affecting the asset management
business of Third Point LLC by certain senior officers of Third Point LLC;

any act of fraud, material misappropriation, material dishonesty, embezzlement, or similar conduct against
or involving us by senior officers of Third Point LLC; or

a formal administrative or other legal proceeding before the SEC, the CFTC, FINRA, or any other U.S. or
non-U.S. regulatory or self-regulatory organization against Third Point LLC or certain key personnel which
would likely have a material adverse effect on us.

In addition, we may withdraw as a participant under the investment management agreement prior to the expiration

of its term if our portfolio underperforms as measured against specified benchmarks.

We may not withdraw or terminate the investment management agreement on the basis of performance other than as
provided above. If we become dissatisfied with the results of the investment performance of Third Point LLC as our
investment manager but the contractually specified termination threshold has not been met, we will be unable to hire new
investment managers until the investment management agreement expires by its terms or is terminated for cause.

Certain of our investments may have limited liquidity and lack valuation data, which could create a conflict of interest.

Our investment guidelines provide Third Point LLC, as our investment manager, with the flexibility to invest in
certain securities with limited liquidity or no public market. This lack of liquidity may adversely affect the ability of Third
Point LLC to execute trade orders at desired prices. To the extent that Third Point LLC invests our investable assets in
securities or instruments for which market quotations or other independent pricing sources are not readily available, under the
terms of the investment management agreement the valuation of such securities and instruments for purposes of
compensation to Third Point LLC will be determined by Third Point LLC, whose determination, subject to audit verification,
will be conclusive and binding in the absence of bad faith or manifest error. Because the investment management agreement

gives Third Point LLC the power to determine the value of securities with no readily discernible market value, and because
the calculation of Third Point LLC’s fee is based on the value of the investment account, a conflict may exist or arise.

The U.S. and global economic downturns could harm the performance of our investment portfolio, our liquidity and
financial condition and our share price.

Volatility in the United States and other securities markets may adversely affect our investment portfolio. The ability
of Third Point LLC to manage our investment portfolio profitably is dependent upon conditions in the global financial
markets and economic and geopolitical conditions throughout the world that are outside of our control and difficult to predict.
Factors such as equity prices, equity market volatility, asset or market correlations, interest rates, counterparty risks,
availability of credit, inflation rates, economic uncertainty, changes in laws or regulation (including laws relating to the
financial markets generally or the taxation or regulation of the hedge fund industry), trade barriers, commodity prices, interest
rates, currency exchange rates and controls, and national and international political circumstances (including governmental
instability, wars, terrorist acts or security operations) can have a material impact on the value of our investment portfolio.

If Third Point LLC, as our investment manager, fails to react appropriately to difficult market, economic and

geopolitical conditions, our investment portfolio could incur material losses.

Third Point LLC’s use of hedging and derivative transactions in executing trades for our account may not be successful,
which could materially adversely affect our investment results.

In managing our investment portfolio, Third Point LLC may utilize various financial instruments both for
investment purposes and for risk management purposes in order to protect against possible changes in the market value of our
investment portfolio resulting from fluctuations in the securities markets and changes in interest rates, protect unrealized
gains in the value of our investment portfolio, facilitate the sale of any such investments, enhance or preserve returns, spreads
or gains on any investment in our investment portfolio, hedge the interest rate or currency exchange rate on certain liabilities
or assets, protect against any increase in the price of any securities Third Point LLC anticipates purchasing for our account at
a later date or for any other reason that Third Point LLC, as our investment manager, deems appropriate. The success of such
hedging strategy will be subject to Third Point LLC’s ability to correctly assess the degree of correlation between the
performance of the instruments used in the hedging strategy and the performance of the investments in the portfolio being
hedged. Since the characteristics of many securities change as markets change or time passes, the success of such hedging
strategy will also be subject to Third Point LLC’s ability to continually recalculate, readjust and execute hedges in an
efficient and timely manner. While Third Point LLC may enter into hedging transactions for our account to seek to reduce
risk, such transactions may result in a poorer overall performance for our investment portfolio than if it had not engaged in
any such hedging transactions. For a variety of reasons, in managing our investment portfolio Third Point LLC may not seek
to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such
imperfect correlation may prevent Third Point LLC from achieving the intended hedge or expose our investment portfolio to
risk of loss.

Our investment portfolio includes investments in mortgage-backed securities and other asset-backed securities, whose
investment characteristics differ from corporate debt securities.

Our investment portfolio may from time to time be invested in mortgage-backed securities and other asset-backed
securities, whose investment characteristics differ from corporate debt securities. As of December 31, 2013, the fair value of
asset-backed securities in our investment portfolio was $325.5 million. Among the major differences are that interest and
principal payments are made more frequently, usually monthly, and that principal may be prepaid at any time because the
underlying mortgage loans or other assets generally may be prepaid at any time. Mortgage-backed securities and asset-backed
securities may also be subject to call risk and extension risk. For example, because homeowners have the option to prepay
their mortgages, the duration of a security backed by home mortgages can either shorten or lengthen.

In general, if interest rates on new mortgage loans fall sufficiently below the interest rates on existing outstanding
mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above
the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either
case, a change in the prepayment rate can result in losses to investors. If our investment portfolio includes securities that are
subordinated to other interests in the same mortgage pool, we may only receive payments after the pool’s obligations to other
investors have been satisfied. In addition, our investment portfolio may, from time to time, be invested in structures
commonly known as “Re-REMICS,” in which case a trust is further split between a senior tranche and a junior tranche. Third
Point LLC usually buys the junior tranche for its funds and the accounts it manages in such circumstances. An unexpectedly
high rate of default on mortgages held by a mortgage pool may limit substantially the pool’s ability to make payments to

holders of such securities, reducing the value of those securities or rendering them worthless. The risk of such defaults is
generally higher in the case of mortgage pools that include “sub-prime” mortgages. Changes in laws and other regulatory
developments relating to mortgage loans may impact the investments of our portfolio in mortgage-backed securities in the
future.

Our investment portfolio may include investments in securities of issuers based outside the United States, including
emerging markets, which may be riskier than securities of U.S. issuers.

Under our investment guidelines, Third Point LLC may invest in securities of issuers organized or based outside the
United States that may involve heightened risks in comparison to the risks of investing in domestic securities, including
unfavorable changes in currency rates and exchange control regulations, reduced and less reliable information about issuers
and markets, less stringent accounting standards, illiquidity of securities and markets, higher brokerage commissions, transfer
taxes and custody fees, local economic or political instability and greater market risk in general. In particular, investing in
securities of issuers located in emerging market countries involves additional risks, such as exposure to economic structures
that are generally less diverse and mature than, and to political systems that can be expected to have less stability than, those
of developed countries. Other characteristics of emerging market countries that may affect investment in their markets
include certain national policies that may restrict investment by foreigners in issuers or industries deemed sensitive to
relevant national interests and the absence of developed legal structures governing private and foreign investments and
private property. The typically small size of the markets for securities of issuers located in emerging markets and the
possibility of a low or nonexistent volume of trading in those securities may also result in a lack of liquidity and in price
volatility of those securities. In addition, dividend and interest payments from and capital gains in respect of certain foreign
securities may be subject to foreign taxes that may or may not be reclaimable. Finally, many transactions in these markets are
executed as a “total return swap” or other derivative transaction with a financial institution counterparty, and as a result our
investment portfolio has counterparty credit risk with respect to such counterparty.

In addition, within the Euro-zone, there remains significant market concern as to the potential default of government
issuers. In addition to European sovereign debt, we have other assets in our investment portfolio that are Euro-denominated.
As of December 31, 2013, approximately $97.5 million by market exposure of our invested assets were denominated in
Euros. A devaluation of the Euro could lead to a significant decline in the value of these assets. Should governments default
on their obligations, there could be a negative impact on both our direct holdings within our investment portfolio as well as
non-government issues held within the country of default.

Third Point LLC’s role as an engaged investor in special situation and distressed investments may subject us or Third
Point Re to increased risks including the incurrence of additional legal or other expenses.

As our investment manager, Third Point LLC may invest a portion of our investment portfolio in special situation
companies. This generally involves investments in securities of companies in event-driven special situations such as
acquisitions, tender offers, bankruptcies, recapitalizations, spinoffs, corporate and financial restructurings, litigation or other
liability impairments, turnarounds, management changes, consolidating industries and other catalyst-oriented situations.
Third Point LLC may also invest our portfolio in securities of issuers in weak financial condition, experiencing poor
operating results, having substantial financial needs or negative net worth or facing special competitive or product
obsolescence issues or that are involved in bankruptcy reorganization proceedings, liquidation or other corporate
restructuring. Investments of this type involve substantial financial business risks that can result in substantial or total losses.
Among the problems involved in assessing and making investments in troubled issuers is that fact that it frequently may be
difficult to obtain information as to the condition of such issuer. The market prices of the securities of such issuers are also
subject to abrupt and erratic market movements and above average price volatility and the spread between the bid and asked
prices of such securities may be greater than normally expected. It may take a number of years for the market prices of such
securities to reflect their intrinsic values, if at all. It is anticipated that some of such securities may not be widely traded, and
that a position in such securities may be substantial in relation to the market for such securities.

As a consequence of Third Point LLC’s role as an engaged investor in special situation and distressed investments,
our investment portfolio may be subject to increased risk of incurring additional legal, indemnification or other expenses,
even if we are not named in any action. In distressed or special situations litigation often follows when disgruntled
shareholders, creditors, and other parties seek to recover losses from poorly performing investments. The enhanced litigation
risk for distressed companies is further elevated by the potential that Third Point LLC may have controlling or influential
positions in the companies. Some of the claims that can be asserted against Third Point LLC as a distressed investor include:
aiding and abetting breach of fiduciary duty; equitable subordination of the investor’s claims; recharacterization of the
investor’s claims; and preference or fraudulent transfer claims. Third Point LLC’s use of short-selling for its funds and the
accounts it manages has subjected, and may continue to subject Third Point LLC and the short sellers to increased risk of

litigation. Lawsuits can be brought against short sellers of a company’s stock to discourage short selling. Among other
claims, these suits may allege libel, conspiracy, and market manipulation.

Third Point LLC’s diminution or loss of service or loss of key employees could materially adversely affect our investment
results.

We depend upon Third Point LLC, as our investment manager, to implement our investment strategy. All
investment decisions with respect to our investment portfolio are made by Third Point LLC, subject to our investment
guidelines, under the general supervision of Daniel S. Loeb. As a result, the success of our investment strategy depends
largely upon the abilities of Mr. Loeb. While we may terminate the investment management agreement with Third Point LLC
upon the death, long-term disability or retirement of Mr. Loeb, or the occurrence of other circumstances in which Mr. Loeb is
no longer directing the investment program of Third Point LLC, no assurance can be given that a suitable replacement could
be found.

The compensation arrangements of Third Point LLC, as our investment manager, may create an incentive to effect
transactions that are risky or speculative.

Our investment management agreement provides for the following two forms of compensation to be paid to Third

Point LLC and TP GP:

•

Third Point LLC is entitled to a management fee of 2% annually (less the Founders payment paid to the
Lead Investors and Dowling, as described in our investment management agreement), charged monthly,
based on net assets under management; and

TP GP is entitled to performance compensation based on the appreciation, including unrealized
appreciation, in the value of our investment portfolio equal to 20% of net profits, subject to a loss
carryforward provision.

While the performance compensation arrangement provides that losses will be carried forward as an offset against
net profits in subsequent periods, Third Point LLC generally will not otherwise be penalized for realized losses or decreases
in the value of our portfolio. These performance compensation arrangements may create an incentive for Third Point LLC as
our investment manager to engage in transactions that focus on the potential for short-term gains rather than long-term
growth or that are particularly risky or speculative.

Increased regulation or scrutiny of alternative investment advisers and certain trading methods such as short selling may
affect Third Point LLC’s ability to manage our investment portfolio or affect our business reputation.

The regulatory environment for investment managers is evolving, and changes in the regulation of managers may
adversely affect the ability of Third Point LLC to effect transactions in our investment portfolio that utilize leverage or to
pursue its trading strategies in managing our investment portfolio. In addition, the securities and futures markets are subject
to comprehensive statutes, regulations and margin requirements. The SEC, other regulators and self-regulatory organizations
and exchanges are authorized to take extraordinary actions in the event of market emergencies. The regulation of derivatives
transactions and funds that engage in such transactions is an evolving area of law and is subject to modification by
government and judicial action. Any future regulatory change could have a significant negative impact on our financial
condition and results of operations.

In addition, a number of states and municipal pension plans have adopted so-called “pay-to-play” laws, regulations
or policies which prohibit, restrict or require disclosure of payments to (and/or certain contacts with) state officials by
individuals and entities seeking to do business with state entities, including investments by public retirement funds. The SEC
also has adopted rules that, among other things, prohibit an investment adviser from providing advisory services for
compensation to a government client for a period of up to two years after the adviser or certain of its executives or employees
make a contribution to certain elected officials or candidates. If Third Point LLC, its employees or affiliates or any service
providers acting on their behalf, including, without limitation, a placement agent, fail to comply with such pay-to-play laws,
regulations or policies, such non-compliance could have an adverse effect on Third Point LLC and our investment portfolio.

As our investment manager, Third Point LLC routinely engages in short selling for our account in managing our
investments. Short sale transactions have been subject to increased regulatory scrutiny, including the imposition of restrictions
on short selling certain securities and reporting requirements. Third Point LLC’s ability to execute a short selling strategy in
managing our investment portfolio may be materially and adversely impacted by temporary or new permanent rules,

interpretations, prohibitions, and restrictions adopted in response to these adverse market events. Temporary restrictions or
prohibitions on short selling activity may be imposed by regulatory authorities with little or no advance notice and may impact
prior and future trading activities of our investment portfolio. Additionally, the SEC, its non-U.S. counterparts, other
governmental authorities or self-regulatory organizations may at any time promulgate permanent rules or interpretations
consistent with such temporary restrictions or that impose additional or different permanent or temporary limitations or
prohibitions. The SEC might impose different limitations or prohibitions on short selling from those imposed by various non-
U.S. regulatory authorities. These different regulations, rules or interpretations might have different effective periods.

Regulatory authorities may, from time to time, impose restrictions that adversely affect our ability to borrow certain
securities in connection with short sale transactions. In addition, traditional lenders of securities may be less likely to lend
securities under certain market conditions. As a result, Third Point LLC may not be able to effectively pursue a short selling
strategy due to a limited supply of securities available for borrowing. We may also incur additional costs in connection with
short sale transactions effected in our investment portfolio, including in the event that Third Point LLC is required to enter
into a borrowing arrangement for our account in advance of any short sales. Moreover, the ability to continue to borrow a
security is not guaranteed and our account will be subject to strict delivery requirements. The inability to deliver securities
within the required time frame may subject us to mandatory close out by the executing broker-dealer. A mandatory close out
may subject us to unintended costs and losses. Certain action or inaction by third parties, such as executing broker-dealers or
clearing broker-dealers, may materially impact our ability to effect short sale transactions in our investment portfolio.

An increase in Third Point LLC’s assets under management may adversely affect the returns of our investment portfolio.

It is possible that if the amount of assets Third Point LLC manages for us, in its funds and for other accounts it
manages were to increase materially, it could be more difficult for Third Point LLC to invest profitably for those accounts
because of the difficulty of trading larger positions without adversely affecting prices and managing risks associated with
larger positions. In addition, there can be no assurance that there will be appropriate investment opportunities to
accommodate future increase in assets under management, which may force Third Point LLC to modify its investment
decisions for the accounts it manages because it cannot deploy all the assets in a manner it desires. Furthermore, due to the
overlap of strategies and investments across many of the portfolios managed by Third Point LLC, including its hedge funds,
the accounts may be adversely affected in the event of rapid or large liquidations of investment positions held by the accounts
due to a lack of liquidity resulting from large position sizes in the same investments held by the other accounts. While the
hedge funds managed by Third Point LLC are currently closed for new investment subject to limited exceptions. Third Point
LLC may revisit this decision based on market conditions and any increase in assets under management could adversely
affect the returns of our investment portfolio.

Risks Relating to Insurance and Other Regulations

Any suspension or revocation of Third Point Re’s reinsurance license would materially impact our ability to do business
and implement our business strategy.

Our subsidiary Third Point Re is licensed as a reinsurer only in Bermuda and we do not plan to seek licenses in any
other jurisdiction. The suspension or revocation of Third Point Re’s license to do business as a reinsurance company in
Bermuda for any reason would mean that we would not be able to enter into any new reinsurance contracts until the
suspension ended or Third Point Re became licensed in another jurisdiction. Any such suspension or revocation of our
license would negatively impact our reputation in the reinsurance marketplace and could have a material adverse effect on
our results of operations.

If we become subject to insurance statutes and regulations in jurisdictions other than Bermuda or there is a change to
Bermuda law or regulations or application of Bermuda law or regulations, there could be a significant and negative impact on
our business.

Third Point Re, our wholly owned operating subsidiary, is a registered Bermuda Class 4 insurer. As such, it is
subject to regulation and supervision in Bermuda. Bermuda insurance statutes, regulations and policies of the BMA require
Third Point Re, among other things:

•

maintain a minimum level of capital, surplus and liquidity;

satisfy solvency standards;

restrict dividends and distributions;

•

obtain prior approval of ownership and transfer of shares;

maintain a principal office and appoint and maintain a principal representative in Bermuda; and

provide for the performance of certain periodic examinations of Third Point Re and its financial condition.

These statutes and regulations may, in effect, restrict our ability to write reinsurance policies, to distribute funds and

to pursue our investment strategy.

The process of obtaining licenses is very time consuming and costly, and we may not be able to become licensed in
a jurisdiction other than Bermuda should we choose to do so. The modification of the conduct of our business resulting from
our becoming licensed in certain jurisdictions could significantly and negatively affect our business. In addition, our inability
to comply with insurance statutes and regulations could significantly and adversely affect our business by limiting our ability
to conduct business as well as subjecting us to penalties and fines.

In addition, the BMA could revoke or suspend Third Point Re’s license in certain circumstances, including
circumstances in which (i) it is shown that false, misleading or inaccurate information has been supplied to the BMA by
Third Point Re or on its behalf for the purposes of any provision of the Insurance Act; (ii) we have ceased to carry on
business; (iii) Third Point Re has persistently failed to pay fees due under the Insurance Act; (iv) Third Point Re has been
shown to have not complied with a condition attached to its registration or with a requirement made of us under the Insurance
Act; (v) we are convicted of an offence against a provision of the Insurance Act; (vi) Third Point Re is, in the opinion of the
BMA, found not to have been carrying on business in accordance with sound insurance principles; or (vii) if any of the
minimum criteria for registration under the Insurance Act is not or will not have been fulfilled. If the BMA suspended or
revoked Third Point Re’s license we could lose our exception under the Investment Company Act. See “-We are subject to
the risk of becoming an investment company under U.S. federal securities law.”

We are subject to the risk of becoming an investment company under U.S. federal securities law.

The U.S. Investment Company Act of 1940, as amended, or the “Investment Company Act”, regulates certain
companies that invest in or trade securities. We rely on an exception under the Investment Company Act that is available to a
company organized and regulated as a foreign insurance company which is engaged primarily and predominantly in the
reinsurance of risks on insurance agreements. The law in this area has not been well developed and there is a lack of guidance
as to the meaning of “primarily and predominantly” under the relevant exception under the Investment Company Act. For
example, there is no standard for the amount of premiums that need be written relative to the level of a company’s capital in
order to qualify for the exception. If this exception were deemed inapplicable, we would have to seek to register under the
Investment Company Act as an investment company, which, under the Investment Company Act, would require an order
from the SEC. Our inability to obtain such an order could have a significant adverse impact on our business.

Assuming that we were permitted to register as an investment company, registered investment companies are subject
to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, management,
capital structure, our ability to raise additional debt and equity securities or issue stock options or warrants (which could
impact our ability to compensate key employees), financial leverage, dividends, board of director composition and
transactions with affiliates. Accordingly, if we were required to register as an investment company we would not be able to
operate our business as it is currently conducted, nor would we be permitted to have many of the relationships that we have
with our affiliated companies. Accordingly, we likely would not be permitted to engage Third Point LLC as our investment
manager, unless we obtained board and shareholder approvals under the Investment Company Act. If Third Point LLC were
not our investment manager, we may be required to liquidate our investment portfolio and we would seek to identify and
retain another investment manager with a similar investment philosophy. If we could not identify or retain such an advisor,
we would be required to make substantial modifications to our investment strategy. Any such changes to our investment
strategy could significantly and negatively impact our investment results, financial condition and our ability to implement our
business strategy.

If at any time it were established that we had been operating as an investment company in violation of the
Investment Company Act, there would be a risk, among other material adverse consequences, that we could become subject
to monetary penalties or injunctive relief, or both, that we could be unable to enforce contracts with third parties or that third
parties could seek to obtain rescission of transactions undertaken during the period in which it was established that we were
an unregistered investment company. If, subsequently, we were not permitted or were unable to register as an investment
company, it is likely that we would be forced to cease operations.

To the extent that the laws and regulations change in the future so that contracts we write are deemed not to be
reinsurance contracts, we will be at greater risk of not qualifying for the Investment Company Act exception. Additionally, it
is possible that our classification as an investment company would result in the suspension or revocation of our reinsurance
license.

Insurance regulators in the United States or elsewhere may review our activities and claim that we are subject to
additional licensing requirements.

We do not presently expect that we will be admitted to do business in any jurisdiction other than Bermuda. In
general, Bermuda insurance statutes, regulations and the policies of the BMA are less restrictive than United States state
insurance statutes and regulations. We cannot assure you that insurance regulators in the United States or elsewhere will not
review our activities and claim that we are subject to such jurisdiction’s licensing requirements. In addition, we will be
subject to indirect regulatory requirements imposed by jurisdictions that may limit our ability to provide reinsurance. For
example, our ability to write reinsurance may be subject, in certain cases, to arrangements satisfactory to applicable
regulatory bodies and proposed legislation and regulations may have the effect of imposing additional requirements upon, or
restricting the market for, non-U.S. reinsurers such as us.

If in the future we were to become subject to regulation under the laws of any state in the United States or the laws
of the United States or of any other country, we may consider various alternatives to our operations. If we attempt to become
licensed in another jurisdiction, for instance, we may not be able to do so and the modification of the conduct of our business
or the non-compliance with insurance statutes and regulations could significantly and negatively affect our business.

Our reinsurance subsidiaries are subject to minimum capital and surplus requirements, and our failure to meet these
requirements could subject us to regulatory action.

In 2008, the BMA introduced risk-based capital standards for insurance companies as a tool to assist the BMA both
in measuring risk and in determining appropriate levels of capitalization. The amended Bermuda insurance statutes and
regulations pursuant to the risk-based supervisory approach required additional filings by insurers to be made to the BMA.
The required statutory capital and surplus of our Bermuda-based operating subsidiary increased under the Bermuda Solvency
Capital Requirement model. While Third Point Re, as operating, currently has excess capital and surplus under these new
requirements, there can be no assurance that such requirement or similar regulations, in their current form or as may be
amended in the future, will not have a material adverse effect on our business, financial condition or results of operations.
Any failure to meet applicable requirements or minimum statutory capital requirements could subject us to further
examination or corrective action by regulators, including restrictions on dividend payments, limitations on our writing of
additional business or engaging in finance activities, supervision or liquidation. Further, any changes in existing risk based
capital requirements or minimum statutory capital requirements may require us to increase our statutory capital levels, which
we might be unable to do.

Changes in law or regulations could cause a significant and negative impact on our reinsurance business.

From time to time, various regulatory and legislative changes have been proposed in the insurance and reinsurance
industry. The extreme turmoil in the financial markets has increased the likelihood of changes in the way the financial
services industry is regulated. Governmental authorities worldwide have become increasingly interested in potential risks
posed by the insurance industry as a whole, and to commercial and financial systems in general. While we cannot predict the
exact nature, timing or scope of possible governmental initiatives, there may be increased regulatory intervention in our
industry in the future.

Our exposure to potential regulatory initiatives could be heightened by the fact that we are domiciled in, and operate
exclusively from, Bermuda. Bermuda is a small jurisdiction and may be disadvantaged when participating in global or cross-
border regulatory matters as compared with larger jurisdictions such as the United States or the leading European Union
countries.

Because we are a Bermuda company, we are subject to changes in Bermuda law and regulation that may have an
adverse impact on our operations, including through the imposition of tax liability or increased regulatory supervision. In
addition, we will be exposed to any changes in the political environment in Bermuda.

The Bermuda insurance and reinsurance regulatory framework recently has become subject to increased scrutiny in
many jurisdictions. As a result, the BMA has recently implemented and imposed additional requirements on the companies it
regulates, such as Third Point Re, as part of its efforts to achieve equivalence under Solvency II, the EU regulatory regime

which was enacted in November 2009 and which imposes new solvency and governance requirements across all EU Member
States. Although Solvency II was originally supposed to have become effective by November 1, 2012, a proposed Omnibus
II directive was to set revised dates for transposition and implementation of Solvency II by the EU Member States. However,
there have been a series of delays in the European Parliament vote to approve the Omnibus II directive. Further delay in the
implementation of Solvency II is likely, but the extent and nature of the delay is uncertain. The detail of the Solvency II
project will be set out in “delegated acts” and binding technical standards which will be issued by the European Commission
and will be legally binding. No official drafts for any of these measures have been released. As a result of the delay in
implementation of Solvency II, it is unclear when the European Commission will take a final decision on whether or not it
will recognize the solvency regime in Bermuda to be equivalent to that laid down in Solvency II.

While we cannot predict the future impact on our operations of changes in the laws and regulation to which we are
or may become subject, any such changes could have a material adverse effect on our business, financial condition and
results of operations.

Bermuda insurance laws regarding the change of control of insurance companies may limit the acquisition of our shares.

Under Bermuda law, for so long as we have an insurance subsidiary registered under the Insurance Act, the BMA
may at any time, by written notice, object to a person holding 10% or more of its common shares if it appears to the BMA
that the person is not or is no longer fit and proper to be such a holder. In such a case, the BMA may require the shareholder
to reduce its holding of our common shares and direct, among other things, that such shareholder’s voting rights attaching to
the common shares shall not be exercisable. A person who does not comply with such a notice or direction from the BMA
will be guilty of an offence. This may discourage potential acquisition proposals and may delay, deter or prevent a change of
control of our Company, including through transactions, and in particular unsolicited transactions, that some or all of our
shareholders might consider to be desirable.

Changes in accounting principles and financial reporting requirements could result in material changes to our reported
results and financial condition.

U.S. GAAP and related financial reporting requirements are complex, continually evolving and may be subject to
varied interpretation by the relevant authoritative bodies. Such varied interpretations could result from differing views related
to specific facts and circumstances. Changes in U.S. GAAP and financial reporting requirements, or in the interpretation of
U.S. GAAP or those requirements, could result in material changes to our reported results and financial condition. Moreover,
the SEC is currently evaluating IFRS to determine whether IFRS should be incorporated into the financial reporting system
for U.S. issuers. In addition, U.S. GAAP and IFRS standard setters continue to discuss possible changes to accounting for
insurance contracts. Certain of these standards could result in material changes to our reported results of operation. See
Note 2 to the consolidated financial statements included elsewhere in this Form 10-K for a summary of pending changes in
accounting principles or financial reporting requirements that could affect our results and disclosures.

Risks Relating to Taxation

In addition to the risk factors discussed below, we advise you to read “Certain Tax Considerations” and to consult

your own tax advisor regarding the tax consequences to you of your investment in our shares.

We may be subject to United States federal income taxation.

We are incorporated under the laws of Bermuda and we believe that our activities, as contemplated, will not cause
us to be treated as engaging in a United States trade or business and will not cause us to be subject to current United States
federal income taxation on our net income. However, because there are no definitive standards provided by the Internal
Revenue Code, regulations or court decisions as to the specific activities that constitute being engaged in the conduct of a
trade or business within the United States, and as any such determination is essentially factual in nature and must be made
annually, we cannot assure you that the United States Internal Revenue Service, or the IRS, will not successfully assert that
we are engaged in a trade or business in the United States or, if applicable under the income tax treaty between the U.S. and
Bermuda (the “Bermuda Treaty”), engaged in a trade or business in the United States through a permanent establishment, and
thus are subject to current United States federal income taxation. If we were deemed to be engaged in a trade or business in
the United States (and, if applicable under the Bermuda Treaty, were deemed to be so engaged through a permanent
establishment), Third Point Re generally would become subject to United States federal income tax on its income “effectively
connected” (or treated as effectively connected) with the U.S. trade or business, and would become subject to the “branch
profits” tax on its earnings and profits that are both effectively connected with the U.S. trade or business and deemed
repatriated out of the United States. Any such federal tax liability could materially adversely affect our results of operations.

United States persons who own our shares may be subject to United States federal income taxation on our undistributed
earnings and may recognize ordinary income upon disposition of shares.

PFIC. Significant potential adverse United States federal income tax consequences generally apply to any United
States person who owns shares in a PFIC. In general, either we or Third Point Re would be a PFIC for a taxable year if 75%
or more of its income constitutes “passive income” or 50% or more of its assets were held to produce “passive income.”
Passive income generally includes interest, dividends and other investment income but does not include income derived in
the active conduct of an insurance business by a corporation predominantly engaged in an insurance business. This exception
for insurance companies is intended to ensure that a bona fide insurance company’s income is not treated as passive income,
except to the extent such income is attributable to financial reserves in excess of the reasonable needs of the insurance
business. However, there is very little authority as to what constitutes the active conduct of an insurance business for
purposes of the PFIC rules. The IRS has notified taxpayers in IRS Notice 2003-34 that it intends to scrutinize the activities of
certain insurance companies located outside of the United States, including reinsurance companies that invest a significant
portion of their assets in alternative investment strategies, to determine whether such companies qualify for the active
insurance company exception in the PFIC rules.

We believe that our financial reserves are consistent with industry standards and are not in excess of the reasonable
needs of our insurance business, and that we are actively engaged in insurance activities that involve sufficient transfer of
risk. However, we cannot assure you the IRS will agree with our position and will not successfully assert that we do not
qualify for the insurance exception. Moreover, our expectation with respect to any taxable year is based on the amount of risk
that we expect to underwrite during that year. If we are unable to underwrite sufficient amount of risk for any taxable year,
the Company and/or Third Point Re might be treated as a PFIC. Furthermore, in certain circumstances, we may seek to
manage the volatility of our reinsurance results by writing policies that contain certain contractual terms and conditions (such
as loss ratio caps), which may cause the IRS to assert that such policies lack sufficient risk transfer to constitute insurance for
United States federal income tax purposes, increasing the risk that the Company and/or Third Point Re may be treated as a
PFIC. Counsel to the Company and its subsidiaries (the “Group”) is not providing an opinion regarding the Group’s PFIC
status due to the absence of applicable authority regarding the active insurance company exception and the dependence of the
Group’s PFIC status on the actual operational results and other relevant facts for each taxable year. Prospective investors are
urged to consult their own tax advisors to assess their tolerance of this risk.

Recently proposed legislation (The Tax Reform Act of 2014) would modify the insurance exception to require that,
for any year (1) our premiums constitute more than 50% of our gross receipts and (2) the amount of our insurance related
liabilities (generally, unearned premium reserves and loss and loss adjustment expenses) constitute more than 35% of our
assets. If enacted in its current form, no assurance can be given that we would be able to operate in a manner to satisfy these
requirements in any given year. No assurance can be given as to whether such legislation will be adopted and if so, in what
form.

If a U.S. Holder (as defined below) holds our shares during any taxable year in which the Company and Third Point
Re are treated as PFICs, such shares will generally be treated as stock in a PFIC for all subsequent years. Certain elections
designed to mitigate the adverse consequences of owning shares in a PFIC, including a “Protective QEF Election,” may be
available. If you are a United States person, we advise you to consult your own tax advisor concerning the potential tax
consequences to you under the PFIC rules, the advisability of making one of these elections and to assess your tolerance of
this risk.

CFC. United States persons who, directly or indirectly or through attribution rules, own 10% or more of the voting
power of our shares, which we refer to as United States 10% shareholders, may be subject to the CFC rules. Under the CFC
rules, each United States 10% shareholder must annually include its pro rata share of the CFC’s “subpart F income,” even if
no distributions are made. In general (subject to the special rules applicable to “related person insurance income” described
below), a foreign insurance company will be treated as a CFC only if United States 10% shareholders collectively own more
than 25% of the total combined voting power or total value of the company’s shares for an uninterrupted period of 30 days or
more during any year. We believe that the restrictions placed on the voting power of our shares should generally prevent
shareholders who acquire shares from being treated as United States 10% shareholders of a CFC. We cannot assure you,
however, that these rules will not apply to you. If you are a United States person we strongly urge you to consult your own
tax advisor concerning the controlled foreign corporation rules.

Related Person Insurance Income. If (a) our gross income attributable to insurance or reinsurance policies pursuant
to which the direct or indirect insureds are our direct or indirect United States shareholders or persons related to such United
States shareholders equals or exceeds 20% of our gross insurance income in any taxable year; and (b) direct or indirect
insureds and persons related to such insureds own directly or indirectly 20% or more of the voting power or value of our

shares, a United States person who owns any shares directly or indirectly on the last day of the taxable year would most
likely be required to include its allocable share of our related person insurance income for the taxable year in its income, even
if no distributions are made. We do not expect that it is likely that either or both of the 20% gross insurance income threshold
or the 20% direct or indirect ownership threshold will be met. However, we cannot assure you that this will be the case.
Consequently, we cannot assure you that a person who is a direct or indirect United States shareholder will not be required to
include amounts in its income in respect of related person insurance income in any taxable year.

Dispositions of Our Shares. If a United States shareholder is treated as disposing of shares in a CFC of which it is a
United States 10% shareholder, or of shares in a foreign insurance corporation that has related person insurance income and
in which United States persons collectively own 25% or more of the voting power or value of the company’s share capital,
any gain from the disposition will generally be treated as a dividend to the extent of the United States shareholder’s portion
of the corporation’s undistributed earnings and profits, as the case may be, that were accumulated during the period that the
United States shareholder owned the shares. In addition, the shareholder will be required to comply with certain reporting
requirements, regardless of the amount of shares owned by the direct or indirect United States shareholder. Although not free
from doubt, we believe it would be reasonable for a U.S. person to take the position that these rules should not apply to
dispositions of our shares because we should not have any United States 10% shareholders and will not be directly engaged
in the insurance business. We cannot assure you, however, that the IRS will interpret the proposed regulations potentially
applicable to such dispositions in this manner or that the proposed regulations will not be promulgated in final form in a
manner that would cause these rules to apply to dispositions of our shares.

United States tax-exempt organizations who own our shares may recognize unrelated business taxable income.

A United States tax-exempt organization may recognize unrelated business taxable income if a portion of our
subpart F insurance income is allocated to it. In general, subpart F insurance income will be allocated to a tax-exempt
organization owning (or treated as owning) our shares if we are a CFC as discussed above and it is a United States 10%
shareholder or we earn related person insurance income and the exceptions described above do not apply. We cannot assure
you that United States persons holding our shares (directly or indirectly) will not be allocated subpart F insurance income.
United States tax-exempt organizations should consult their own tax advisors regarding the risk of recognizing unrelated
business taxable income as a result of the ownership of our shares.

We may become subject to U.S. withholding and information reporting requirements under the Foreign Account Tax
Compliance Act (“FATCA”) provisions.

The Foreign Account Tax Compliance provisions of the Code (“FATCA”) generally impose a 30% withholding tax
regime with respect to (i) certain U.S. source income (including interest and dividends) and gross proceeds from any sale or
other disposition after December 31, 2016, of property that can produce U.S. source interest or dividends (“withholdable
payments”) and (ii) ”passthru payments” (generally, withholdable payments and payments that are attributable to
withholdable payments) made by foreign financial institutions (“FFIs”). As a general matter, FATCA was designed to require
U.S. persons’ direct and indirect ownership of certain non-U.S. accounts and non-U.S. entities to be reported to the IRS. The
application of the FATCA withholding rules will be phased in beginning July 1, 2014, with withholding on foreign passthru
payments made by FFIs taking effect no earlier than 2017.

On December 19, 2013, the Bermuda Government entered into a “Model 2” intergovernmental agreement (“IGA”)
with the United States to implement FATCA. If we and/or Third Point Re are treated as FFIs for the purposes of FATCA,
under the Model 2 IGA, we and/or Third Point Re will be directed to ‘register’ with the IRS by July 1, 2014 and required to
comply with the requirements of FATCA, including due diligence, reporting and withholding. Assuming registration and
compliance with the terms of an agreement with the IRS (an “FFI Agreement”) pursuant to a Model 2 IGA, an FFI would be
treated as FATCA compliant and not subject to withholding. An FFI that satisfies the eligibility, information reporting and
other requirements of the IGA will not be subject to the regular FATCA reporting and withholding obligations discussed
below.

If the Company and/or Third Point Re are treated as FFIs for purposes of FATCA, withholdable payments and
passthru payments made to the Company and/or Third Point Re will be subject to a 30% withholding tax unless an FFI
Agreement is in effect, pursuant to which the Company and/or Third Point Re would be required to provide information
regarding its U.S. direct or indirect owners and to comply with other reporting, verification, due diligence and other
procedures established by the IRS, including a requirement to seek waivers of non-U.S. laws that would prevent the reporting
of such information. The IRS may terminate the FFI Agreement if the IRS notifies the Company and/or Third Point Re that it
is out of compliance with the FFI Agreement and the Company and/or Third Point Re does not remediate the compliance
failure. Even if the Company and Third Point Re are subject to an FFI Agreement, distributions to an investor that are treated

as passthru payments generally will be subject to a 30% withholding tax (a) if the investor fails to provide information or take
other actions required for the the Company and/or Third Point Re to comply with the FFI Agreement including, in the case of
a non-U.S. investor, providing information regarding certain U.S. direct and indirect owners of the investor (and, in certain
circumstances, obtaining waivers of non-U.S. law to permit such reporting), or (b) if the investor is an FFI, unless the
investor (i) is subject to an FFI Agreement, (ii) establishes that an exemption applies or (iii) is required to comply with
FATCA under an applicable IGA.

Under the regulations implementing FATCA, a foreign insurance company (or foreign holding company of an
insurance company) that issues or is obligated to make payments with respect to an account is a foreign financial institution.
For this purpose, insurance contracts treated as having “cash value” and annuity contracts issued or maintained by a financial
institution are considered accounts, and certain term life insurance contracts are not considered accounts. Insurance
companies that issue only property and casualty insurance contracts, or that only issue life insurance contracts lacking cash
value (or that provide for limited cash value) generally would not be considered FFIs under the final regulations. However, a
holding company may be treated as an FFI if it is formed in connection with or availed of by a collective investment vehicle,
mutual fund, exchange traded fund, hedge fund, venture capital fund, leveraged buyout fund, or any similar investment
vehicle established with an investment strategy of investing, reinvesting, or trading in financial assets. Moreover, a company
may be treated as an FFI if its gross income is primarily attributable to investing, reinvesting, or trading in financial assets
and the entity is managed by an FFI, or the entity functions or holds itself out as an investment vehicle established with an
investment strategy of investing, reinvesting, or trading in financial assets. Even if the Company and Third Point Re are not
treated as FFIs, then depending on whether the shares of the Company are treated as “regularly traded on one or more more
established securities markets” under the FATCA rules and whether the income and assets of Third Point Re meet the
requirements for the treatment of Third Point Re as an “active NFFE,” withholdable payments to the Company and/or Third
Point Re may be subject to a 30% withholding tax unless the Company and/or Third Point Re provide information regarding
its U.S. direct or indirect owners.

At this early stage, there can be no certainty as to whether the Company and/or Third Point Re will be subject to the
requirements imposed on FFIs under FACTA. We will use reasonable efforts to avoid the imposition of a withholding tax
under FACTA, which may include the entering into of an FFI Agreement.

Potential additional application of the Federal Insurance Excise Tax.

The IRS, in Revenue Ruling 2008-15, has formally announced its position that the U.S. federal insurance excise tax
(the “FET”) is applicable (at a 1% rate on premiums) to all reinsurance cessions or retrocessions of risks by non-U.S. insurers
or reinsurers to non-U.S. reinsurers where the underlying risks are either (i) risks of a U.S. entity or individual located wholly
or partly within the U.S. or (ii) risks of a non-U.S. entity or individual engaged in a trade or business in the U.S. which are
located within the U.S. (“U.S. Situs Risks”), even if the FET has been paid on prior cessions of the same risks. The legal and
jurisdictional basis for, and the method of enforcement of, the IRS’s position is unclear. We have not determined if the FET
should be applicable with respect to risks ceded to us by, or by us to, a non-U.S. insurance company. If the FET is applicable,
it should apply at a 1% rate on premium for all U.S. Situs Risks ceded to us by a non-U.S. insurance company, or by us to a
non-U.S. insurance company, even though the FET also applies at a 1% rate on premium ceded to us with respect to such
risks.

Change in United States tax laws may be retroactive and could subject us and/or United States persons who own our
shares to United States income taxation on our undistributed earnings.

The tax laws and interpretations thereof regarding whether a company is engaged in a United States trade or
business, is a CFC, has related party insurance income or is a PFIC are subject to change, possibly on a retroactive basis.
There are currently no regulations regarding the application of the passive foreign investment company rules to an insurance
company and the regulations regarding related party insurance income are in proposed form. New regulations or
pronouncements interpreting or clarifying such rules may be forthcoming from the IRS. We are not able to predict if, when or
in what form such guidance will be provided and whether such guidance will have a retroactive effect.

We may become subject to taxes in Bermuda after March 31, 2035, which may have a material adverse effect on our
results of operations and your investment.

The Bermuda Minister of Finance, under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, as
amended, has given us an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits
or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax,
then the imposition of any such tax will not be applicable to us or any of our operations, shares, debentures or other

obligations until March 31, 2035, except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes
payable by us in respect of real property owned or leased by us in Bermuda. See “Certain Tax Considerations-Bermuda Tax
Considerations.” Given the limited duration of the Bermuda Minister of Finance’s assurance, we cannot assure you that we
will not be subject to any Bermuda tax after March 31, 2035.

Risks Relating to Our Common Shares

Future sales of shares by existing shareholders could cause our share price to decline.

Sales of substantial amounts of our common shares in the public market, or the perception that these sales could
occur, could cause the market price of our common shares to decline. As of February 27, 2014, we have 103,921,772 issued
and outstanding common shares. A total of 22,252,206 common shares are reserved for issuance under our current share
incentive plans and in connection with restricted share award agreements entered into between us and certain of our
employees and directors. As of December 31, 2013, there were share options outstanding which are exercisable (subject to
vesting) for 10,981,075 common shares. In addition, as of December 31, 2013, we have reserved for issuance common shares
underlying certain warrants to purchase, in the aggregate, up to 4,651,163 common shares.

Approximately 103,921,772 million of our common shares are eligible for sale, subject to the applicable volume,
manner of sale, holding period and other limitations of Rule 144. Such number does not give effect to options or warrants to
purchase common shares. In addition, certain of our significant shareholders may distribute shares that they hold to their
investors who themselves may then sell into the public market. Such sales may not be subject to the volume, manner of sale,
holding period and other limitations of Rule 144A. As resale restrictions end, the market price of our common shares could
decline if the holders of those shares sell them or are perceived by the market as intending to sell them. Existing holders of
our common shares have registration rights, subject to some conditions, to require us to file registration statements covering
the sale of their shares or to include their shares in registration statements that we may file for ourselves or other shareholders
in the future. In the event that we register the common shares for the holders of registration rights, they can be freely sold in
the public market upon issuance, subject to the restrictions contained in the lock-up agreements entered into in connection
with our IPO.

In the future, we may issue additional common shares or other equity or debt securities convertible into common
shares in connection with a financing, acquisition, litigation settlement or employee arrangement or otherwise. Any of these
issuances could result in substantial dilution to our existing shareholders and could cause the trading price of our common
shares to decline.

If securities analysts or industry analysts downgrade our ordinary shares, publish negative research or reports or fail to
publish reports about our business, our share price and trading volume could decline.

The trading market for our common shares is influenced by the research and reports that industry or securities
analysts publish about us, our business and our market. If one or more analysts adversely changes their recommendation
regarding our stock or our competitors’ stock, our share price would likely decline. If one or more analysts cease coverage of
us or fail to regularly publish reports on us, we could lose visibility in the financial markets which in turn could cause our
share price or trading volume to decline.

If the ownership of our common shares continues to be highly concentrated, it could prevent you and other shareholders
from influencing significant corporate decisions.

Third Point Reinsurance Ltd. was incorporated on October 6, 2011. On December 22, 2011, KIA TP Holdings, L.P.
and KEP TP Holdings, L.P., which are affiliates of Kelso & Company (collectively, “Kelso”) and Pine Brook LVR, L.P., an
affiliate of Pine Brook Road Partners, LLC (collectively, “Pine Brook”, and Pine Brook and together with Kelso, the “Lead
Investors” and each individually, a “Lead Investor”), Dowling Capital Partners I, L.P., an affiliate of Dowling Capital
Management, LLC (collectively, “Dowling”), P RE Opportunities Ltd. (“PROL”), Third Point LLC, Daniel S. Loeb and
affiliates associated with Mr. Loeb (collectively, the “Loeb Entities”) and our chief executive officer John R. Berger
(collectively, the “Founders”), together with certain members of management, committed $533.0 million to capitalize Third
Point Reinsurance Ltd. As of December 31, 2013, Kelso, Pine Brook, the Loeb Entities, Dowling, PROL and Mr. Berger own
approximately 25.2%, 12.6%, 5.8%, 1.5%, 5.0%, and 0.5%, of our issued and outstanding common shares, respectively on an
as converted basis after giving effect to the issuance of warrants representing the right to receive 4,651,163 common shares.
As a result, the Founders could exercise significant influence over all matters requiring shareholder approval for the
foreseeable future, including approval of significant corporate transactions, which may reduce the market price of our
common shares.

The interests of our existing shareholders may conflict with the interests of our other shareholders. In connection
with our IPO our board of directors adopted corporate governance guidelines that, among other things, addressed potential
conflicts between a director’s interests and our interests. In addition, we adopted a Code of Business Conduct and Ethics that,
among other things, required our employees to avoid actions or relationships that might conflict or appear to conflict with
their job responsibilities or our interests and to disclose their outside activities, financial interests or relationships that may
present a possible conflict of interest or the appearance of a conflict to our general counsel. These corporate governance
guidelines and Code of Business Conduct and Ethics will not, by themselves, prohibit transactions with our Founders.

We are an “emerging growth company,” and any decision on our part to comply with certain reduced disclosure and other
requirements applicable to emerging growth companies could make our common shares less attractive to investors.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act enacted in April 2012,
and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from
various reporting and other requirements applicable to other public companies including, but not limited to, not being
required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved.

We expect to remain an emerging growth company until the earliest of (a) the last day of our fiscal year following
the fifth anniversary of our initial public offering (b) the last day of our fiscal year in which we have annual gross revenue of
$1.0 billion or more; (c) the date on which we have, during the previous three-year period, issued more than $1.0 billion in
non-convertible debt; and (d) the date on which we are deemed to be a “large accelerated filer,” which will occur at such time
as we (1) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or
more as of the last business day of our most recently completed second fiscal quarter, (2) have been required to file annual,
quarterly and current reports under the Securities Exchange Act of 1934 for a period of at least 12 calendar months, and
(3) have filed at least one annual report pursuant to the Securities Act of 1934. As a result, we may qualify as an emerging
growth company until as late as December 31, 2018.

We cannot predict whether investors will find our common shares less attractive if we choose to rely on one or more
of these exemptions or if our decision to avail ourselves of the reduced requirements may make it more difficult for investors
and securities analysts to evaluate our company. If some investors find our common shares less attractive as a result of our
decision to utilize one or more of the exemptions available to us as an emerging growth company, there may be a less active
trading market for our common shares and the market price of our common shares may be adversely affected.

Under Section 102(b) of the Jumpstart Our Business Startups Act, emerging growth companies can delay adopting
new or revised accounting standards until such time as those standards apply to private companies. Pursuant to
Section 107(b) of the Jumpstart Our Business Startups Act, we have irrevocably elected to “opt out” of this exemption from
new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as
other public companies that are not emerging growth companies.

Fulfilling our obligations incident to being a public company, including with respect to the requirements of and related
rules under the Sarbanes-Oxley Act of 2002, is expensive and time-consuming, and any delays or difficulties in satisfying
these obligations could have a material adverse effect on our future results of operations and our share price.

We are required to file annual, quarterly and other reports with the SEC. We need to prepare and timely file
financial statements that comply with SEC reporting requirements. We are also subject to other reporting and corporate
governance requirements, under the listing standards of the NYSE and the Sarbanes-Oxley Act of 2002, which impose
significant compliance costs and obligations upon us. Being a public company requires a significant commitment of
resources and management oversight which increases our operating costs, including as a result of our engagement of a third
party to assist us in developing our internal audit function. Such requirements also place significant additional demands on
our finance and accounting staff and on our financial accounting and information systems. Other expenses associated with
being a public company include auditing, accounting and legal fees and expenses, investor relations expenses, increased
directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as
other expenses. As a public company, we are required, among other things, to:

•

prepare and file periodic reports, and distribute other shareholder communications, in compliance with the
federal securities laws and NYSE rules;

•

maintain comprehensive compliance, investor relations and internal audit functions; and

evaluate and maintain our system of internal control over financial reporting, and report on management’s
assessment thereof, in compliance with rules and regulations of the SEC and the Public Company
Accounting Oversight Board.

In particular, the Sarbanes-Oxley Act of 2002 requires us to document and test the effectiveness of our internal
control over financial reporting in accordance with an established internal control framework, and to report on our
conclusions as to the effectiveness of our internal controls. Likewise, our independent registered public accounting firm is
required to provide an attestation report on the effectiveness of our internal control over financial reporting pursuant to
Section 404(b) of the Sarbanes-Oxley Act of 2002 unless we choose to utilize the exemption from such attestation
requirement available to “emerging growth companies.” As described above, we expect to qualify as an emerging growth
company until December 31, 2018. In addition, we are required under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), to maintain disclosure controls and procedures and internal control over financial reporting. Any failure to
implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating
results or cause us to fail to meet our reporting obligations. If we are unable to conclude that we have effective internal
control over financial reporting, investors could lose confidence in the reliability of our financial statements. This could result
in a decrease in the value of our common shares. Failure to comply with the Sarbanes-Oxley Act of 2002 could potentially
subject us to sanctions or investigations by the SEC, the NYSE, or other regulatory authorities.

We do not intend to pay dividends on our common shares and, consequently, your ability to achieve a return on your
investment will depend on appreciation in the price of our common shares.

We do not intend to declare and pay dividends on our share capital for the foreseeable future. We currently intend to
invest our future earnings, if any, to fund our growth. Therefore, you are not likely to receive any dividends on your common
shares for the foreseeable future and the success of an investment in our common shares will depend upon any future
appreciation in their value. There is no guarantee that our common shares will appreciate in value or even maintain the price
at which our shareholders have purchased their shares.

We may repurchase our common shares without our shareholders’ consent.

Under our bye-laws and subject to Bermuda law, we have the option, but not the obligation, to require a shareholder
to sell to us at fair market value the minimum number of common shares which is necessary to avoid or cure any adverse tax
consequences or materially adverse legal or regulatory treatment to us, our subsidiaries or our shareholders if our board of
directors reasonably determines, in good faith, that failure to exercise our option would result in such adverse consequences
or treatment.

Holders of our shares may have difficulty effecting service of process on us or enforcing judgments against us in the
United States.

We are incorporated pursuant to the laws of Bermuda and our business is based in Bermuda. In addition, certain of
our directors and officers reside outside the United States, and all or a substantial portion of our assets are located in
jurisdictions outside the United States. As such, we have been advised that there is doubt as to whether:

•

a holder of our shares would be able to enforce, in the courts of Bermuda, judgments of United States
courts against persons who reside in Bermuda based upon the civil liability provisions of the United States
federal securities laws;

a holder of our shares would be able to enforce, in the courts of Bermuda, judgments of United States
courts based upon the civil liability provisions of the United States federal securities laws;

a holder of our shares would be able to bring an original action in the Bermuda courts to enforce liabilities
against us or our directors and officers who reside outside the United States based solely upon United
States federal securities laws.

Further, we have been advised that there is no treaty in effect between the United States and Bermuda providing for
the enforcement of judgments of United States courts, and there are grounds upon which Bermuda courts may not enforce
judgments of United States courts. Because judgments of United States courts are not automatically enforceable in Bermuda,
it may be difficult for you to recover against us based upon such judgments.

U.S. persons who own our shares may have more difficulty in protecting their interests than U.S. persons who are
shareholders of a U.S. corporation.

The Companies Act, which applies to us, differs in certain material respects from laws generally applicable to U.S.
corporations and their shareholders. Set forth below is a summary of certain significant provisions of the Companies Act and
our bye-laws which differ in certain respects from provisions of Delaware corporate law. Because the following statements
are summaries, they do not discuss all aspects of Bermuda law that may be relevant to us and our shareholders.

Interested Directors: Bermuda law provides that we cannot void any transaction we enter into in which a director
has an interest, nor can such director be liable to us for any profit realized pursuant to such transaction, provided the nature of
the interest is disclosed at the first opportunity at a meeting of directors, or in writing, to the directors. Under Delaware law
such transaction would not be voidable if:

•

the material facts as to such interested director’s relationship or interests were disclosed or were known to
the board of directors and the board of directors had in good faith authorized the transaction by the
affirmative vote of a majority of the disinterested directors;

such material facts were disclosed or were known to the shareholders entitled to vote on such transaction
and the transaction were specifically approved in good faith by vote of the majority of shares entitled to
vote thereon; or

the transaction were fair as to the corporation as of the time it was authorized, approved or ratified. Under
Delaware law, the interested director could be held liable for a transaction in which the director derived an
improper personal benefit.

Business Combinations with Large Shareholders or Affiliates: As a Bermuda company, we may enter into business
combinations with our large shareholders or affiliates, including mergers, asset sales and other transactions in which a large
shareholder or affiliate receives, or could receive, a financial benefit that is greater than that received, or to be received, by
other shareholders, without obtaining prior approval from our board of directors or from our shareholders. If we were a
Delaware corporation, we would need prior approval from our board of directors or a super-majority of our shareholders to
enter into a business combination with an interested shareholder for a period of three years from the time the person became
an interested shareholder, unless we opted out of the relevant Delaware statute. Our bye-laws include a provision restricting
business combinations with interested shareholders consistent with the corresponding Delaware statute. See “Description of
Share Capital-Certain Bye-laws Provisions-Business Combinations.”

Shareholders’ Suits: The rights of shareholders under Bermuda law are not as extensive as the rights of shareholders
in many United States jurisdictions. Class actions and derivative actions are generally not available to shareholders under the
laws of Bermuda. However, the Bermuda courts ordinarily would be expected to follow English case law precedent, which
would permit a shareholder to commence an action in the name of the company to remedy a wrong done to the company
where an act is alleged to be beyond the corporate power of the company, is illegal or would result in the violation of our
memorandum of association or bye-laws. Furthermore, a court would consider acts that are alleged to constitute a fraud
against the minority shareholders or where an act requires the approval of a greater percentage of our shareholders than
actually approved it. The winning party in such an action generally would be able to recover a portion of attorneys’ fees
incurred in connection with such action. Our bye-laws provide that shareholders waive all claims or rights of action that they
might have, individually or in the right of the company, against any director or officer for any act or failure to act in the
performance of such director’s or officer’s duties, except with respect to any fraud or dishonesty of such director or officer.
Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things,
breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court
has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action.

Indemnification of Directors: We have entered into indemnification agreements with our directors. The
indemnification agreements provide that we will indemnify our directors or officers or any person appointed to any
committee by the board of directors acting in their capacity as such in relation to any of our affairs for any loss arising or
liability attaching to them by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust
of which such person may be guilty in relation to the company other than in respect of his own fraud or dishonesty. See
“Certain Relationships and Related Party Transactions, and Director Independence.” Under Delaware law, a corporation may
indemnify a director or officer of the corporation against expenses (including attorneys’ fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred in defense of an action, suit or proceeding by reason of such position if
such director or officer acted in good faith and in a manner he or she reasonably believed to be in or not be opposed to the
best interests of the corporation and, with respect to any criminal action or proceeding, such director or officer had no
reasonable cause to believe his or her conduct was unlawful.

Provisions in our bye-laws may reduce or increase the voting rights of our shares.

In general, and except as provided under our bye-laws and as described below, the common shareholders have one
vote for each common share held by them and are entitled to vote, on a non-cumulative basis, at all meetings of shareholders.
However, if, and so long as, the shares of a shareholder are treated as “controlled shares” (as determined pursuant to sections
957 and 958 of the Internal Revenue Code of 1986, as amended (the “Code”)) of any United States person (that owns shares
directly or indirectly through non-U.S. entities) and such controlled shares constitute 9.5% or more of the votes conferred by
our issued shares, the voting rights with respect to the controlled shares owned by such U.S. Person will be limited, in the
aggregate, to a voting power of less than 9.5%, under a formula specified in our bye-laws. The formula is applied repeatedly
until the voting power of all 9.5% U.S. Shareholders has been reduced to less than 9.5%. In addition, our board of directors
may limit a shareholder’s voting rights when it deems it appropriate to do so to (i) avoid the existence of any 9.5% U.S.
Shareholder; and (ii) avoid certain material adverse tax, legal or regulatory consequences to us, any of our subsidiaries or any
direct or indirect shareholder or its affiliates. “Controlled shares” include, among other things, all shares that a U.S. Person is
deemed to own directly, indirectly or constructively (within the meaning of section 958 of the Code). The amount of any
reduction of votes that occurs by operation of the above limitations will generally be reallocated proportionately among our
other shareholders whose shares were not “controlled shares” of the 9.5% U.S. Shareholder so long as such reallocation does
not cause any person to become a 9.5% U.S. Shareholder.

Under these provisions, certain shareholders may have their voting rights limited, while other shareholders may have
voting rights in excess of one vote per share. Moreover, these provisions could have the effect of reducing the votes of certain
shareholders who would not otherwise be subject to the 9.5% limitation by virtue of their direct share ownership.

We are authorized under our bye-laws to request information from any shareholder for the purpose of determining
whether a shareholder’s voting rights are to be reallocated under the bye-laws. If any holder fails to respond to this request or
submits incomplete or inaccurate information, we may, in our sole discretion, eliminate the shareholder’s voting rights. Any
shareholder must give notice to the Company within ten days following the date it owns 9.5% of our common shares.

Our bye-laws contain provisions that could discourage takeovers and business combinations that our shareholders might
consider in their best interests.

Our bye-laws include certain provisions that could have the effect of delaying, deterring, preventing or rendering

more difficult a change in control of us that our shareholders might consider in their best interests.

For example, our bye-laws:

•

provide the right of shareholders to act by majority written consent for so long as the Lead Investors and
the Loeb Entities collectively hold at least 35% of our issued and outstanding common shares;

establish a classified board of directors;

require advance notice of shareholders’ proposals in connection with annual general meetings;

authorize our board to issue “blank cheque” preferred shares;

prohibit us from engaging in a business combination with a person who acquires at least 15% of our
common shares for a period of three years from the date such person acquired such common shares unless
board and shareholder approval is obtained prior to the acquisition;

require that directors only be removed from office for cause by majority shareholder vote once the Lead
Investors and the Loeb Entities cease to collectively hold at least 35% of our issued and outstanding shares;

provide that vacancies on the board, including newly-created directorships, may be filled only by a majority
vote of directors then in office;

allow each of Kelso and Pine Brook to appoint one director for so long as they hold not less than 25% of
the number of shares respectively held as of December 22, 2011;

require a supermajority vote of shareholders to effect certain amendments to our memorandum of
association and bye-laws; and

provide a consent right on the part of Kelso, Pine Brook and Daniel S. Loeb to any amendments to our bye-
laws or memorandum of association which would have a material adverse effect on their rights for so long
as they hold not less than 25% of the number of shares respectively held as of December 22, 2011.

Any such provision could prevent our shareholders from receiving the benefit from any premium to the market price
of our common shares offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of
any of these provisions could adversely affect the prevailing market price of our common shares if they were viewed as
discouraging takeover attempts in the future.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We do not own any facilities or real estate. We lease office space at Chesney House in Pembroke, Bermuda,
pursuant to a two-year lease agreement. This two-year lease is scheduled to expire on November 30, 2015. We believe for the
foreseeable future this office space will be sufficient for us to conduct our operations.

Item 3. Legal Proceedings

We are not currently involved in any litigation or arbitration. 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.

Item 4. Mine Safety Disclosures

Not applicable.

Executive Officers of the Registrant

Set forth below is information, as of February 27, 2014, concerning the Company’s executive officers.

Name
John R. Berger
J. Robert Bredahl
Christopher S. Coleman

Manoj K. Gupta
Daniel V. Malloy
Tonya L. Marshall
Michael McKnight
Anthony Urban

Age
61
51
40

38
54
42
53
53

Position

Chairman of the Board, Chief Executive Officer and Chief Underwriting Officer
Chief Financial Officer and Chief Operating Officer
Chief Accounting Officer
SVP, Underwriting; and Lead Portfolio Manager, Third Point Reinsurance Investment
Management Ltd.
Executive Vice President-Underwriting
Executive Vice President, General Counsel and Secretary
Chief Actuary and Chief Risk Officer
Executive Vice President-Underwriting

John R. Berger - Mr. Berger is our Chairman, Chief Executive Officer and Chief Underwriting Officer and has
served in this position since December 22, 2011. Mr. Berger is an insurance industry veteran with over thirty years of
experience, the majority of which was spent as the principal executive officer of three successful reinsurance companies.
Mr. Berger served as Chief Executive Officer, Reinsurance and Vice Chairman of the Board of Alterra Capital Holdings
Limited (previously known as Max Capital Group Ltd.) from May 2010. He also served as Chairman of Alterra Reinsurance
Limited (previously known as Harbor Point Re Limited), Chief Executive Officer of Alterra Capital Services Inc. (previously
known as Harbor Point Services, Inc.), and as a Director of Alterra Agency Limited (Harbor Point Agency Limited), New
Point III Limited and New Point Re III Limited. From August 1998 to December 2005, he was the Chief Executive Officer
and President of Chubb Re, Inc. From November 1983 to August 1998, he held various positions at F&G Re, including Chief
Executive Officer and President. Following the acquisition of USF&G by The St. Paul Companies, from April 1998 until
August 1998 he served as President of the North American Treaty operation of St. Paul Re and President of F&G Re. Prior to
1983, Mr. Berger was an Underwriter at General Re and Prudential Reinsurance. Mr. Berger is a Member of the Board of
Directors of the Reinsurance Association of America. He earned an undergraduate degree in Economics from Princeton
University and an MBA from Rutgers University.

J. Robert Bredahl - Mr. Bredahl is our Chief Financial Officer and Chief Operating Officer and has served in these
positions since February 2012. Prior to joining the Company in February 2012, Mr. Bredahl was the Chief Executive Officer
of Aon Benfield Securities, Aon’s Investment Banking Group, and the President of the Americas division of Aon Benfield,
the premier reinsurance intermediary and capital advisor, from November 2008 to January 2012. Prior to Aon’s acquisition of
Benfield in November 2008, Mr. Bredahl held various senior level positions at Benfield and at the time of acquisition was
Chief Executive Officer of Benfield U.S. Inc. and of Benfield Advisory. Prior to joining Aon Benfield in March 2002, he
served as Chief Executive Officer of Inreon PLC and Managing Director and Head of U.S. Derivative Sales for Barclays
Capital. Mr. Bredahl earned a Bachelor of Arts degree in Economics from Middlebury College. While at Aon Benfield
Securities he held several securities licenses, including the Series 24, Series 7, and Series 63.

Christopher S. Coleman - Mr. Coleman is our Chief Accounting Officer and has served in this position since April
2013. Prior to joining the Company, Mr. Coleman was the Chief Financial Officer of Alterra Bermuda Limited, the principal
operating subsidiary of Alterra Capital Holdings Limited (“Alterra”). Prior to Max Capital Group Ltd.’s acquisition of Harbor
Point Limited to form Alterra in May 2010, Mr. Coleman was the Senior Vice President, Chief Accounting Officer of Harbor
Point Limited. Mr. Coleman joined Harbor Point Limited in March 2006. From 2002 to 2006, Mr. Coleman worked for
PricewaterhouseCoopers in Bermuda as a Senior Manager within the audit and advisory practice specializing in clients in the
insurance and reinsurance industry. Mr. Coleman started his career with Arthur Andersen in 1995 working in the Hartford
office before relocating to the Bermuda office in 2001. Mr. Coleman graduated from Central Connecticut State University in
1995 with a Bachelor of Science degree in Accounting. Mr. Coleman is a Certified Public Accountant and a Chartered
Accountant and is a member of the American Institute of Certified Public Accountants and the Institute of Chartered
Accounts of Bermuda.

Manoj K. Gupta - Mr. Gupta has held the position of SVP, Underwriting with the Company since April 16, 2012
and the position of Lead Portfolio Manager of Third Point Reinsurance Investment Management Ltd. since June 15, 2012.
Prior to joining the Company Mr. Gupta was the lead portfolio manager for catastrophe reinsurance at Goldman Sachs Asset
Management (“GSAM”), one of the world’s largest asset management firms and a subsidiary of Goldman Sachs Group.
During his tenure at GSAM from October 2006 until April 2012, Mr. Gupta launched three standalone catastrophe risk funds
and also placed reinsurance risk within the firm’s multi-strategy hedge funds. Prior to joining GSAM, Mr. Gupta was a leader
of reinsurance broker Benfield’s alternative capacity and credit risk solutions efforts. Prior to joining Benfield in April 2003,
Mr. Gupta was head of business development and strategic planning at Inreon, a reinsurance trading platform co-sponsored
by Swiss Re and Munich Re, and a management consultant for McKinsey & Company. Mr. Gupta graduated from University
of Waterloo, Canada with a Bachelor of Applied Science in Electrical Engineering.

Daniel V. Malloy - Mr. Malloy is our Executive Vice President-Underwriting, a position he has served in since
January 23, 2012. Prior to joining the Company. Mr. Malloy worked at Aon Benfield from 2003 co-leading the Specialty
Lines practice groups, which were responsible for providing clients and brokers with primary and reinsurance market
updates, peer analytics, new product ideas, growth initiatives and placement assistance. Specialty Lines includes the casualty,
professional liability, surety, workers’ compensation, property risk, environmental, structured reinsurance and MGA
practices. Mr. Malloy has almost 32 years of reinsurance experience including 10 years of structured reinsurance
underwriting. Before joining Aon Benfield, he was President and a board member of Stockton Reinsurance Ltd. in Bermuda
from 1998 to 2003. His experience with structured reinsurance began when he served as President of Centre Re Bermuda
where he was employed from 1993 to 1998. Mr. Malloy began his reinsurance career in 1981 working as a reinsurance
broker for Sedgwick Re for twelve years. Mr. Malloy holds a Bachelor of Arts degree in biology from Dartmouth College.

Tonya L. Marshall - Ms. Marshall is our Executive Vice President, General Counsel and Secretary, a position she
has served in since February 2012. She is responsible for the group legal function and acts as corporate secretary for us. Prior
to joining us, Ms. Marshall was the General Counsel and Board Secretary for The Bank of N.T. Butterfield & Son Limited,
an international banking, asset and wealth management group headquartered in Bermuda, where she was responsible for the
group’s legal function and acted as corporate secretary to the group’s holding company from November 2008 to January
2012. Prior to joining Butterfield in 2008, Ms. Marshall was employed by the international law firm of Conyers Dill &
Pearman Limited (“Conyers”) from September 1998 to August 2008, where her practice included all aspects of corporate and
commercial law with a particular focus on public company and insurance/reinsurance company matters. In the course of her
employment with Conyers, Ms. Marshall also served as a director or alternative director to various Bermuda companies for
which Conyers provided legal advice, corporate secretarial and registered office services. Ms. Marshall holds a B.Comm
from Dalhousie University, an LL.B. from the University of Buckingham and a Diploma in Legal Practice from the Oxford
Institute of Legal Practice.

Michael McKnight - Mr. McKnight is our Chief Actuary and Chief Risk Officer and has served in this position
since February 2012. He was the Chief Actuary of Reinsurance for Alterra Capital Holdings Limited (previously known as
“Max Capital Group Ltd.”) from August 2004 until September 2010. In that position, he reviewed and approved new and
renewal reinsurance transactions, analyzed all bound reinsurance contracts and projected ultimate loss and reserve values, and
maintained and updated the company’s Return on Equity (ROE) models. Prior to Alterra, Mr. McKnight was Managing
Director & Chief Underwriting Officer of Gerling Global International Reinsurance Co. Ltd. (Barbados). In addition to his
underwriting duties, he completed loss and expense actuarial reserve studies on all bound business, and set reserves at
required levels. From July 1994 until August 2001, Mr. McKnight was a Consulting Actuary and Profit Center Manager for
the actuarial firm of Milliman, USA. He worked on a wide variety of actuarial projects, including pricing, reserving, mergers
and acquisitions and Dynamic Financial Analysis. He worked in the Atlanta and London offices, before taking over the
Bermuda practice in February 1998. Mr. McKnight began his actuarial career in 1985 at Atlanta International Insurance
Company (an Alexander & Alexander company-now Aon). He also worked at two personal lines companies (Integon &
Direct Response Group) where he was responsible for pricing and reserving for a variety of books, including auto,
homeowners and warranty. Mr. McKnight has a Bachelor of Science in Applied Mathematics from Valdosta State
University. He is an Associate of the Casualty Actuarial Society and a Member of the American Academy of Actuaries. He is
the former president of the Casualty Actuaries of Bermuda.

Anthony Urban - Mr. Urban is our Executive Vice President-Underwriting, in which position he has served since
October 2011. He is the former President and Chief Executive Officer of JRG Reinsurance Company, Ltd. (“JRG Re”) a
Bermuda based reinsurance company, which he helped establish in January 2008 with an initial capitalization of $250
million. Prior to JRG Re, from December 2002 to July 2007, Mr. Urban was the Chief Underwriting Officer and Head of
Reinsurance Operations of Endurance Reinsurance Corporation of America. Prior to Endurance, from November 2000 to
November 2002, Mr. Urban served as the Executive Vice President and Chief Underwriting Officer of AXA Corporate
Solutions Reinsurance Company (“AXA”), where he managed a reinsurance portfolio of approximately $500 million in
premium and a program book of business of approximately $300 million in premium. Prior to AXA, from June 1986 to
October 2000, Mr. Urban was employed as a Senior Vice President and Chief Production Officer at Constitution Reinsurance
Corporation. Mr. Urban started his career as a Pricing Analyst at North American Reinsurance (Swiss Re) in September
1983. Mr. Urban has a Bachelor of Arts degree from Dartmouth College, Hanover, New Hampshire.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities.

Market Information

Our common shares began trading on the NYSE on August 15, 2013. On February 25, 2014, the latest practicable
date, the last reported sale price of our common shares was $15.05 per share and there were 171 holders of our common
shares. This number does not include shareholders for whom our shares were held in “street” name.

The following table sets forth, for the periods indicated, the high and low sales price per share of our common shares

as reported by the NYSE:

Fiscal 2013
3rd Quarter (starting on August 15, 2013) ................................................................................................
4th Quarter ................................................................................................................................................

High
$ 14.58
18.71

Low
$ 12.88
14.44

Dividends

We do not currently expect to declare or pay dividends on our common shares for the foreseeable future. Instead, we
intend to retain earnings to finance the growth and development of our business and for working capital and general corporate
purposes. Any payment of dividends will be at the discretion of our board of directors and will depend upon various factors
then existing, including earnings, financial condition, results of operations, capital requirements, level of indebtedness,
contractual restrictions with respect to payment of dividends, restrictions imposed by applicable law, general business
conditions and other factors that our board of directors may deem relevant. See “Management’s Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources.” In addition, under the Companies Act, we
may not declare or pay a dividend if there are reasonable grounds for believing that we are, or would after the payment be,
unable to pay our liabilities as they become due or that the realized value of our assets would thereafter be less than our
liabilities.

Recent Sales of Unregistered Securities

From January 1, 2013 through December 31, 2013, we granted an employee options to purchase an aggregate of
348,836 common shares under the Third Point Reinsurance Limited Share Incentive Plan, at exercise prices ranging from
$10.89 to $20.89 per share.

From January 1, 2013 through December 31, 2013, we granted an employee 5,000 restricted shares pursuant to a

Restricted Share Award Agreement, with a fair value of $11.76.

The issuance of the shares and share options were exempt from registration under the Securities Act of 1933, as
amended (the “Securities Act”), under the Section 4(2) of the Securities Act or Rule 701 or Regulation S as promulgated
under the Securities Act.

The above-referenced shares issuable upon exercise of the options were registered pursuant to our registration

statement on Form S-8, File No. 333-190724, on August 20, 2013.

Issuer Purchases of Equity Securities

None.

Equity Compensation Plans

The following table presents information concerning the securities authorized for issuance pursuant to our equity

compensation plans as of December 31, 2013:

Number of
Securities to Be
Issued Upon
Exercise of
Outstanding
Options Warrants
and Rights (1)

Weighted Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights (2)

Number of
Securities
Available for
Future Issuance
Under Equity
Compensation
Plans (excluding
Securities
Reflected in
Column 1) (3)

Equity Compensation plans approved by shareholders ...........................
Equity compensation plans not approved by shareholders......................
Total .......................................................................................................

10,981,075 $

—

10,981,075 $

13.23
N/A
13.23

10,613,975
—
10,613,975

(1) Represents the number of shares associated with options outstanding as of December 31, 2013.

(2) Represents the weighted average exercise price of options disclosed

(3) Represents the number of shares remaining available for issuance with respect to future awards under our Omnibus Equity Incentive Plan.

Performance

The following graph compares the cumulative total shareholder return on our common shares from the date of the
Company’s initial public offering on August 15th, 2013 through to December 31, 2013 to the cumulative total return of (1)
S&P 500 Composite Stock Index (“S&P 500 Index”) and (2) the Dow Jones Property & Casualty Insurance Index. The share
price performance presented below is not necessarily indicative of future results.

CUMULATIVE TOTAL SHAREHOLDER RETURN

Company Name/Index
Third Point Reinsurance

Base Period
15-Aug-13 30-Aug-13 16-Sep-13 30-Sep-13 15-Oct-13 30-Oct-13 15-Nov-13 30-Nov-13 16-Dec-13 31-Dec-13

Ltd - TPRE ................ $
S&P 500 Index .............. $
Dow Jones U.S.

P & C Insurance
Index .......................... $

100.00 $
100.00 $

105.52 $ 109.92 $
98.61 $ 101.61 $

115.92 $
101.83 $

122.80 $
102.94 $

127.20 $
106.66 $

120.24 $
107.78 $

133.28 $ 132.16 $
108.70 $ 107.54 $

148.24
111.26

100.00 $

98.12 $ 100.78 $

103.19 $

104.25 $

106.62 $

108.40 $

110.02 $ 106.55 $

110.31

The above graph assumes that the value of the investment was $100 on August 15, 2013.

This graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any filing by us under the
Securities Act of 1933 or the Securities and Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.

Item 6. Selected Financial Data.

The selected consolidated statements of operations data for fiscal 2013, fiscal 2012 and the period from October 6,
2011 (date of incorporation) to December 31, 2011, and the selected consolidated balance sheet data as of December 31,
2013, 2012 and 2011 have been derived from our audited consolidated financial statements. Our historical results are not
necessarily indicative of the results that may be expected for any future period. The selected financial data should be read in
conjunction with Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and our consolidated financial statements and related notes included elsewhere in this Annual Report.

Selected Statement of Income (Loss) Data:
Gross premiums written ...................................................................................... $
Gross premiums ceded ........................................................................................
Net premiums written .........................................................................................
Change in net unearned premium reserves .........................................................
Net premiums earned ..........................................................................................
Net investment income .......................................................................................
Total revenues ....................................................................................................
Loss and loss adjustment expenses incurred, net ................................................
Acquisition costs, net ..........................................................................................
General and administrative expenses ..................................................................
Total expenses ....................................................................................................
Income (loss) including non-controlling interests ...............................................
Income attributable to non-controlling interests .................................................
Net income (loss) ................................................................................................ $
Earnings (loss) per share (1):
Basic ................................................................................................................... $
Diluted (8) .......................................................................................................... $
Weighted average number of common shares:
Basic ...................................................................................................................
Diluted (8) ..........................................................................................................
Property and Casualty Reinsurance Segment - Selected Ratios (2):
Loss ratio (3) .......................................................................................................
Acquisition cost ratio (4) ....................................................................................
General and administrative expense ratio (5) ......................................................
Combined ratio (6) ..............................................................................................

Net investment return on investments managed by TP LLC (7) .........................

2013
2011
2012
(In thousands, except share and per share data)

401,937
(9,975)
391,962
(171,295)
220,667
253,203
473,870
139,812
67,944
33,036
240,792
233,078
(5,767)
227,311

2.58
2.54

$
$

190,374
—
190,374
(93,893)
96,481
136,422
232,903
80,306
24,604
27,376
132,286
100,617
(1,216)
99,401

1.26
1.26

$
$

—
—
—
—
—
—
—
—
—
1,130
1,130
(1,130)
—
(1,130)

(0.01)
(0.01)

87,505,540
88,970,531

78,432,132
78,598,236

78,432,132
78,432,132

65.7%
31.5%
10.3%
107.5%

23.9%

83.2%
25.5%
21.0%
129.7%

17.7%

n/a
n/a
n/a
n/a

n/a

(1) Basic earnings (loss) per share is based on the weighted average number of common shares and participating securities outstanding during the period.
The weighted average number of common shares excludes any dilutive effect of outstanding warrants, options and convertible securities such as
unvested restricted shares. Diluted earnings (loss) per share are based on the weighted average number of common shares and share equivalents
including any dilutive effects of warrants, options and other awards under stock plans using the treasury stock method. U.S. GAAP requires that
unvested share awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid (referred to as ‘‘participating
securities”), be included in the number of shares outstanding for both basic and diluted earnings per share calculations. We treat our unvested restricted
stock as participating securities. In the event of a net loss, the participating securities are excluded from the calculation of both basic and diluted loss
per share.

(2) Underwriting ratios are for the property and casualty reinsurance segment only. See additional information in Note 22 of the Notes to Consolidated

Financial Statements.

(3) Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net, by net premiums earned.

(4) Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.

(5) General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net

premiums earned.

(6) 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.

(7) Net investment return represents the return on our investments managed by Third Point LLC, net of fees.

(8) During the quarter, it was determined that diluted earnings per share for the prior periods had been calculated incorrectly, which resulted in an

understatement of diluted earnings per share. See additional information in Note 2 of the Notes to the Consolidated Financial Statements.

2013

2012
(In thousands, except per share data)

2011

Selected Balance Sheet Data:
Total investments in securities and commodities ............................................... $
Cash and cash equivalents (1) ............................................................................
Restricted cash and cash equivalents .................................................................
Securities purchased under and agreement to sell ..............................................
Reinsurance balances receivable, net .................................................................
Deferred acquisition costs, net ...........................................................................
Loss and loss adjustment expenses recoverable .................................................
Total assets ........................................................................................................
Reinsurance balances payable ...........................................................................
Deposit liabilities (2) .........................................................................................
Unearned premium reserves ..............................................................................
Loss and loss adjustment expense reserves ........................................................
Total liabilities ...................................................................................................
Shareholders’ equity attributable to shareholders (3).........................................
Non-controlling interests ...................................................................................
Total shareholders’ equity ................................................................................. $

Book value per share data:
Book value per share (4) .................................................................................... $
Diluted book value per share (5) ........................................................................ $

Selected ratios:
Growth in diluted book value per share (6) .......................................................
Return on beginning shareholders’ equity (7) ....................................................

$
$

1,460,864
31,625
193,577
38,147
191,763
91,193
9,277
2,159,890
9,081
120,946
265,187
134,331
649,494
1,391,661
118,735
1,510,396

13.48
13.12

20.5%
23.4%

$
$

937,690
34,005
77,627
60,408
84,280
45,383
—
1,402,017
—
50,446
93,893
67,271
473,696
868,544
59,777
928,321

11.07
10.89

11.9%
13.0%

—
603,841
—
—
—
—
—
605,263
—
—
—
—
19,838
585,425
—
585,425

9.73
9.73

n/a
n/a

(1) Cash and cash equivalents consists of cash held in banks and other short-term, highly liquid investments with original maturity dates of ninety days or

less.

(2) Using the deposit method of accounting, a deposit liability, rather than written premium, is initially recorded based upon the consideration received less
any explicitly identified premiums or fees. In subsequent periods, the deposit liability is adjusted by calculating the effective yield on the deposit to
reflect actual payments to date and future expected payments.

(3) Shareholders’ equity attributable to shareholders and total shareholders’ equity as of December 31, 2011 is reflected net of subscriptions receivable of

$177.5 million in accordance with SEC Regulation S-X.

(4) Book value per share is a non-GAAP financial measure. Book value per share is calculated by dividing shareholders’ equity attributable to
shareholders, adjusted for subscriptions receivable, by the number of issued and outstanding shares at period end. See the reconciliation under
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Book Value Per Share and Diluted Book Value Per
Share.”

(5) Diluted book value per share is a non-GAAP financial measure. Diluted book value per share is calculated by dividing shareholders’ equity attributable
to shareholders, adjusted for subscriptions receivable, and adjusted to include unvested restricted shares and the exercise of all in-the-money options
and warrants. See the reconciliation under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Book Value
Per Share and Diluted Book Value Per Share.”

(6) Growth 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.

(7) Return on beginning shareholders’ equity as presented is a non-GAAP financial measure. Return on beginning shareholders’ equity is calculated by
dividing net income by the beginning of year shareholders’ equity attributable to shareholders. For purposes of determining December 31, 2011
shareholders’ equity attributable to shareholders, we add back the impact of subscriptions receivable to shareholders’ equity attributable to
shareholders. For the year ended December 31, 2013, we have also adjusted the beginning shareholders’ equity for the impact of the issuance of shares
in our IPO on a weighted average basis. These adjustments lower the stated returns on beginning shareholders’ equity. See the reconciliation under
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Return on Beginning Shareholders’ Equity.”

Item 7. 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 Part II, Item 6.
“Selected Financial Data”, and our consolidated financial statements and the related notes contained elsewhere in this
Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (“Annual Report”).

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 our Introductory
Note to this Annual Report and the risks and uncertainties described in Part I, Item 1A “Risk Factors.” Our actual results
may differ materially from those contained in or implied by any forward-looking statements.

Our fiscal year ends December 31 and, unless otherwise noted, references to years or fiscal are for fiscal years

ended December 31.

Overview

We are a Bermuda-based specialty property and casualty reinsurer with a reinsurance and investment strategy that
we believe differentiates us from our competitors. Our objective is to deliver attractive equity returns to shareholders by
combining profitable reinsurance underwriting with our investment manager Third Point LLC’s superior investment
management.

We manage our business on the basis of two operating segments: Property and Casualty Reinsurance and
Catastrophe Risk Management. We also have a corporate function that includes our investment results and certain general
and administrative expenses related to corporate activities.

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.

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
accounting contracts are collected before losses are paid and proceeds are returned on deposit accounting 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 generate investment returns. Although float can be calculated using numbers determined under U.S.
GAAP, float is a non-GAAP financial measure and, therefore, there is no comparable U.S. GAAP measure.

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

Catastrophe Risk Management

In contrast to many reinsurers with whom we compete, we have elected to limit our underwriting of property
catastrophe exposures. We write excess of loss catastrophe reinsurance exclusively through the Catastrophe Fund, which is a
separately capitalized reinsurance fund vehicle. On June 15, 2012, we established the Catastrophe Fund, the Catastrophe
Fund Manager and the Catastrophe Reinsurer, in partnership with Hiscox. Our partnership with Hiscox is governed by a
shareholders’ agreement that provides for certain matters relating to governance of the Catastrophe Fund Manager and
restrictions on the transfers of its shares. Our investment in and management of the Catastrophe Fund allows us to provide a
product that is important to most of our reinsurance clients and to earn fee income over time. Because the Catastrophe Fund
is capitalized in part by investments from unrelated parties, our financial exposure to the higher volatility and liquidity risks
associated with property catastrophe losses is limited to our investment in the Catastrophe Fund, which as of December 31,
2013 was $54.8 million. We anticipate that our property catastrophe exposures will consistently remain relatively low when
compared to many other reinsurers with whom we compete and there are no additional guarantees or recourse to us beyond
our investment.

The Catastrophe Fund Manager is a property catastrophe fund management company, which began writing
catastrophe risk through the Catastrophe Fund and related Catastrophe Reinsurer on January 1, 2013. The Catastrophe Fund
Manager receives fee income in the form of management fees and performance fees from the Catastrophe Fund. We own
85% of the Catastrophe Fund Manager and Hiscox owns the remaining 15%. We consolidate the Catastrophe Fund
Manager’s results in our consolidated results with a non-controlling interest recorded for the 15% Hiscox ownership. The
objective of the Catastrophe Fund is to achieve positive uncorrelated investment returns by transacting, through the
Catastrophe Reinsurer, in a portfolio of collateralized reinsurance treaties and other insurance-linked securities, including
catastrophe bonds and industry loss warranties. The Catastrophe Reinsurer is a Bermuda based special purpose insurer
authorized to write collateralized property catastrophe reinsurance business. The Catastrophe Fund owns 100% of the voting,
non-participating, common shares and 100% of the non-voting, participating, preferred shares of the Catastrophe Reinsurer.

As of December 31, 2013, the Catastrophe Fund had a net asset value of $104.0 million, of which our share was
$54.8 million. As a result of our controlling interest in the Catastrophe Fund, we are required to consolidate the results of the
Catastrophe Fund and the Catastrophe Reinsurer. The Catastrophe Fund is actively seeking new third party investments and
we expect our interest to drop in the future which would potentially allow us to deconsolidate the Catastrophe Fund.
However, market conditions have been challenging due to the recent launch of several similar funds and a drop in catastrophe
reinsurance pricing. Given current market conditions, we expect to limit the size of the Catastrophe Fund to ensure we can
continue to profitably deploy the funds under management until market conditions improve.

Investment Management

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

Limited Operating History and Comparability of Results

We were incorporated on October 6, 2011 and completed our initial capitalization on December 22, 2011. We began
underwriting business on January 1, 2012. We completed an initial public offering of common shares on August 20, 2013
(the “IPO”). As a result, we have a limited operating history and are exposed to volatility in our results of operations. Period
to period comparisons of our results of operations may not be meaningful.

In addition, the amount of premiums written may vary from year to year and from period to period as a result of
several factors, including changes in market conditions and our view of the long-term profit potential of individual lines of
business.

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 and return on beginning shareholders’ equity.

Non-GAAP Financial Measures

We have included financial measures that are not calculated under standards or rules that comprise accounting
principles generally accepted in the United States (GAAP). Such measures, including net underwriting income (loss),
combined ratio, book value per share, diluted book value per share and return on beginning shareholders’ equity, are referred
to as non-GAAP measures. These non-GAAP measures may be defined or calculated differently by other companies. We
believe these measures allow for a more complete understanding of the underlying business. These measures are used to
monitor our results and should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations
of such measures to the most comparable GAAP figures are referenced below in accordance with Regulation G.

The table below shows the key performance indicators for our consolidated business for the years ended

December 31, 2013 and 2012 and the period from October 6, 2011 (incorporation date) to December 31, 2011:

2013

2012

2011

(In thousands, except for per share data and ratios)

Key underwriting metrics for Property and Casualty Reinsurance segment:
Net underwriting loss (1) ............................................................................................... $
Combined ratio (1) .........................................................................................................

(15,828)

(28,719)

107.5%

129.7%

Key investment return metrics:
Net investment income .................................................................................................. $
Net investment return on investments managed by Third Point LLC ............................

253,203

136,422

23.9%

17.7%

Key shareholders’ value creation metrics:
Book value per share (2) ................................................................................................ $
Diluted book value per share (2) .................................................................................... $
Growth in diluted book value per share (2) ...................................................................
Return on beginning shareholders’ equity (3) ................................................................

$
$

13.48
13.12
20.5%
23.4%

$
11.07
10.89
$
11.9%
13.0%

n/a
n/a

9.73
9.73
n/a
n/a

(1) Net underwriting loss and combined ratio are Non-GAAP financial measures. See Note 22 of the accompanying consolidated financial statements for

an explanation and calculation of net underwriting loss and combined ratio.

(2) Book value per share and diluted book value per share are Non-GAAP financial measures. See reconciliation below for calculation of book value per

share and diluted book value per share.

(3) Return on beginning shareholders’ equity is a Non-GAAP financial measure. See reconciliation below for calculation of return on beginning

shareholders’ equity.

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 or 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 the underwriting activities.

Combined Ratio for Property and Casualty Reinsurance Segment

The combined ratio compares the amount of net premiums earned to the amount incurred in claims and underwriting
related expenses. This ratio is a key indicator of a reinsurance company’s profitability. It is calculated by dividing net
premiums earned by the sum of loss and loss adjustment expenses, acquisition costs and general and administrative expenses
related to underwriting activities. A combined ratio 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.

Net Investment Income

Net investment income is an important measure that affects overall profitability. Net investment income is 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 operation. Pursuant to the investment management agreement, 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. The investment management
agreement allows us to withdraw cash from our investment account with Third Point LLC at any time with three days’ notice
to pay claims and with five days’ notice to pay expenses.

We track excess cash flows generated by our property and casualty reinsurance operation, or float, in a separate
account which allows 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 incentive compensation.

Net investment income for the years ended December 31, 2013 and 2012 was comprised of the following:

2013

2012

Net investment income on float ...................................................................................................
Net investment income on capital ................................................................................................
Net investment income on investments managed by Third Point LLC .......................................
Deposit liabilities and reinsurance contracts investment expense ...............................................
Investment income on cash collateral held by the Catastrophe Reinsurer ...................................
Net gain on reinsurance contract derivatives written by the Catastrophe Reinsurer ....................

($ in thousands)
26,953
226,751
253,704
(4,922)
86
4,335
$ 253,203

4,901
131,967
136,868
(446)
—
—
$ 136,422

Net Investment Return on Investments Managed by Third Point LLC

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 non-controlling interest. Net
investment return is the key indicator by which we measure the performance of Third Point LLC, our investment manager.

Return on Beginning Shareholders’ Equity

Return on beginning shareholders’ equity as presented is a non-GAAP financial measure. Return on beginning
shareholders’ equity is calculated by dividing net income by the beginning shareholders’ equity attributable to shareholders
and is a commonly used calculation to measure profitability. For purposes of this calculation, we add back the impact of
subscriptions receivable to shareholders’ equity attributable to shareholders as of December 31, 2011. For the year ended
December 31, 2013, we have also adjusted the beginning shareholders’ equity for the impact of the issuance of shares in our
IPO on a weighted average basis. These adjustments lower the stated returns on beginning shareholders’ equity.

Return on beginning shareholders’ equity for the years ended December 31, 2013 and 2012 was calculated as

follows:

Net income ...................................................................................................................
Shareholders’ equity attributable to shareholders - beginning of period ......................
Subscriptions receivable ...............................................................................................
Impact of weighting related to shareholders’ equity from IPO ....................................
Adjusted shareholders’ equity attributable to shareholders - beginning of period .......
Return on beginning shareholders’ equity ....................................................................

Book Value Per Share and Diluted Book Value Per Share

2013

2012

($ in thousands)

$ 227,311
868,544
—
104,502
973,046

99,401
585,425
177,507
—
762,932

23.4%

13.0%

We believe that long-term growth in diluted book value per share is the most important measure of our financial
performance. Book value per share as used by our management is a non-GAAP measure, as it is calculated after deducting
the impact of non-controlling interests. Diluted book value per share is also a non-GAAP measure and represents book value
per share reduced for the impact from dilution of all in-the-money share options issued, warrants and unvested restricted
shares outstanding as of any period end.

For the year ended December 31, 2013, book value per share increased by $2.41 per share, or 21.8%, to $13.48 per
share from $11.07 per share as of December 31, 2012. For the year ended December 31, 2013, diluted book value per share
increased by $2.23 per share, or 20.5%, to $13.12 per share from $10.89 per share as of December 31, 2012.

The increase in basic and diluted book value per share for the year was driven primarily from net income partially
offset by the offering costs incurred with our IPO. The growth in diluted book value per share was also impacted by warrants
and share compensation issued to our Founders, employees, directors and an advisor, including the additional warrants and
options that became exercisable as a result of meeting the performance condition after the IPO.

The following table sets forth the computation of basic and diluted book value per share as of December 31, 2013

and 2012:

Basic and diluted book value per share numerator:
Total shareholders’ equity ..................................................................................................
Less: non-controlling interests ............................................................................................
Shareholders’ equity attributable to shareholders ...............................................................
Effect of dilutive warrants issued to Founders and an advisor ...........................................
Effect of dilutive share options issued to directors and employees ....................................
Diluted book value per share numerator: ............................................................................
Basic and diluted book value per share denominator:
Issued and outstanding shares .............................................................................................
Effect of dilutive warrants issued to Founders and an advisor ...........................................
Effect of dilutive share options issued to directors and employees ....................................
Effect of dilutive restricted shares issued to directors and employees ................................
Diluted book value per share denominator: ........................................................................

2013
2012
(In thousands, except share
and per share amounts)

1,510,396
118,735
1,391,661
46,512
101,274
1,539,447

928,321
59,777
868,544
36,480
51,670
956,694

103,264,616
4,651,163
8,784,861
657,156
117,357,796

78,432,132
3,648,006
5,167,045
619,300
87,866,483

Basic book value per share ...............................................................................................
Diluted book value per share ...........................................................................................

$
$

13.48
13.12

$
$

11.07
10.89

Revenues

We derive our revenues from two principal sources:

•

premiums from property and casualty reinsurance business assumed; and

income from investments.

Premiums from our property and casualty reinsurance business assumed are directly related to the number, type and
pricing of contracts we write. Premiums are earned over the contract period in proportion to the period of risk covered which
is typically 12 to 24 months.

Income from our investments is primarily comprised of interest income, dividends, and net realized and unrealized

gains on investment securities included in our investment portfolio.

Expenses

Our expenses consist primarily of the following:

•

loss and loss adjustment expenses;

acquisition costs;

investment-related expenses; and

general and administrative expenses.

Loss and loss adjustment expenses are a function of the amount and type of reinsurance contracts we write and loss
experience of the underlying coverage. Loss and loss adjustment expenses are based on an actuarial analysis of the estimated
losses, including losses incurred during the period and changes in estimates from prior periods. Depending on the nature of
the contract, loss and loss adjustment expenses may be paid over a number of years.

Acquisition costs consist primarily of brokerage fees, ceding commissions, premium taxes and other direct expenses
that relate to our writing reinsurance contracts and are presented net of commissions ceded under reinsurance contracts. We
amortize deferred acquisition costs over the related contract term in the same proportion that the premiums are earned.

Investment-related expenses primarily consist of management fees we pay to our investment manager, Third Point
LLC, and certain of our Founders, pursuant to the investment management agreement and performance fees we pay to Third
Point Advisors LLC. A 2% management fee calculated on assets under management is paid monthly to Third Point LLC and

certain of our Founders, and a performance fee equal to 20% of the net investment income is paid annually to Third Point
Advisors LLC. We include these expenses in net investment income in our consolidated statement of income.

General and administrative expenses consist primarily of salaries, benefits and related payroll costs, including costs
associated with our incentive compensation plan, share compensation expenses, legal and accounting fees, travel and client
entertainment, fees relating to our letter of credit facilities, information technology, occupancy and other general operating
expenses.

Critical Accounting Policies and Estimates

See Note 2 of our notes to consolidated financial statements included elsewhere in this Annual Report on Form 10-K

for a summary of our significant accounting and reporting policies.

Our 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.

Premium Revenue Recognition including evaluation of Risk Transfer

We estimate the ultimate premiums for the entire contract period and record this estimate at the inception of the
contract, to the extent that the amount of written premium is estimable. For contracts where the full written premium is not
estimable at inception, we record written premium for the portion of the contract period for which the amount is estimable.
These estimates are based primarily on information in the underlying contracts as well as information provided by our clients
and/or brokers.

Premiums written are earned over the contract period in proportion to the period of risk covered. Unearned

premiums represent the portion of premiums written that relate to the unexpired term of the contracts in force.

Premiums for retroactive reinsurance contracts, where we have evaluated and concluded that risk transfer has
occurred, are earned at the inception of the contract, as all of the underlying loss events covered by these contracts occurred
in the past. Any underwriting profit at inception of a retroactive reinsurance contract is deferred and recognised over the
estimated future payout of the loss and loss adjustment expenses reserves. Any underwriting loss at inception of a retroactive
reinsurance contract is recognised immediately.

Changes in premium estimates are expected and may result in adjustments in any reporting period. These estimates
change over time as additional information regarding the underlying business volume is obtained. Along with uncertainty
regarding the underlying business volume, our contracts also contain a number of contractual features that can significantly
impact the amount of premium that we ultimately recognize. These include commutation provisions, multi-year contracts
with cancellation provisions, provisions to return premium at the expiration of the contract in certain circumstances. In
certain contracts, these provisions can be exercised by the client, in some cases provisions can be exercised by us and in other
cases by mutual consent. In addition, we write a small number of large contracts and the majority of our property and
casualty reinsurance segment premiums written to date has been quota share business. As a result, we may be subject to
greater volatility around our premium estimates compared to other property and casualty companies. We continuously
monitor the premium estimate of each of our contracts considering the cash premiums received, reported premiums,
discussions with our clients regarding their premium projections as well as evaluating the potential impact of contractual
features. Any subsequent adjustments arising on such estimates are recorded in the period in which they are determined.

Changes in premium estimates do not necessarily result in a direct impact to net income or shareholders’ equity
since changes in premium estimates do not necessarily impact the amount of net premiums earned at the time of the premium
estimate change and would generally be offset by pro rata changes in acquisition costs and net loss and loss adjustment
expenses.

During the year ended December 31, 2013, we recorded $(35.7) million of changes in premium estimates on prior
years’ contracts, primarily due to return premiums on certain contracts that expired during the period with a provision within
the contract to return the unearned premiums at expiration. However, there was minimal impact on net income of these
changes in premium estimates for the year ended December 31, 2013.

Determining whether or not a reinsurance contract meets the condition for risk transfer requires judgment. The
determination of risk transfer is critical to reporting premiums written and is based, in part, on the use of actuarial and pricing
models and assumptions and evaluating contractual features that could impact the determination of whether a contract meets
risk transfer. If we determine that a reinsurance contract does not transfer sufficient risk, we use deposit accounting. See Note
12 of the notes to consolidated financial statements for additional information on deposit contracts entered into to date.

Loss and Loss Adjustment Expense Reserves

Our loss and loss adjustment expense reserves include case reserves and reserves for losses incurred but not yet
reported (“IBNR reserves”). Case reserves are established for losses that have been reported, but not yet paid, based on loss
reports from brokers and ceding companies. IBNR reserves represent the estimated loss and loss adjustment expenses that
have been incurred by insureds and reinsureds but not yet reported to the insurer or reinsurer, including unknown future
developments on loss and loss adjustment expenses which are known to us. IBNR reserves are established by management
based on actuarially determined estimates of ultimate loss and loss adjustment expenses.

Inherent in the estimate of ultimate loss and loss adjustment expenses are expected trends in claim severity and
frequency and other factors that may vary significantly as claims are settled. Accordingly, ultimate loss and loss adjustment
expenses may differ materially from the amounts recorded in the financial statements. These estimates are reviewed regularly
and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments,
if any, are recorded in the consolidated statement of income in the period in which they become known.

We perform an actuarial projection of our reserves quarterly and have a third-party actuarial review performed
annually. All reserves are estimated on an individual contract basis; there is no aggregation of contracts for projection of
ultimate loss or reserves.

We initially reserve every individual contract to the expected loss and loss expense ratio in the pricing analysis. As
loss information is received from the cedents, we incorporate other actuarial methods in our projection of ultimate losses and,
hence, reserves. In our pricing analysis, we typically utilize a significant amount of information unique to the individual
client and, when necessary, supplement the analysis with industry data. Industry data primarily takes the form of paid and
incurred development patterns from statutory financial statements and statistical agencies. For our actuarial reserve
projections, the relevant information we receive from our reinsurance clients include premium estimates, paid loss and loss
adjustment expenses and case reserves. We review the data for reasonableness and research any anomalies. On each contract,
we compare the expected paid and incurred amounts at each quarter-end with actual amounts reported. We also compare
premiums received with projected premium receipts at each quarter end.

There is a time lag between when a covered loss event occurs and when it is actually reported to our cedents. The
actuarial methods that we use to estimate losses have been designed to address this lag in loss reporting. There is also a time
lag between reinsurance clients paying claims, establishing case reserves and re-estimating their reserves, and notifying us of
the payments and/or new or revised case reserves. This reporting lag is typically 60 to 90 days after the end of a reporting
period, but can be longer in some cases. We use techniques that adjust for this type of lag. While it would be unusual to have
lags that extend beyond 90 days, our actuarial techniques are designed to adjust for such a circumstance.

The principal actuarial methods (and associated key assumptions) we use to perform our quarterly loss reserve

analysis may include one or more of the following methods:

A Priori Loss Ratio Method. To estimate ultimate losses under the a priori loss ratio method, we multiply earned
premiums by an expected loss ratio. The expected loss ratio is selected as part of the pricing and utilizes individual client
data, supplemented by industry data where necessary. This method is often useful when there is limited historical data due to
few losses being incurred.

Paid Loss Development Method. This method estimates ultimate losses by calculating past paid loss development
factors and applying them to exposure periods with further expected paid loss development. The paid loss development
method assumes that losses are paid at a rate consistent with the historical rate of payment. It provides an objective test of
reported loss projections because paid losses contain no reserve estimates. For some lines of business, claim payments are
made slowly and it may take many years for claims to be fully reported and settled.

Incurred Loss Development Method. This method estimates ultimate losses by using past incurred loss development
factors and applying them to exposure periods with further expected incurred loss development. Since incurred losses include
payments and case reserves, changes in both of these amounts are incorporated in this method. This approach provides a

larger volume of data to estimate ultimate losses than paid loss methods. Thus, incurred loss patterns may be less varied than
paid loss patterns, especially for coverages that have historically been paid out over a long period of time but for which
claims are incurred relatively early and case loss reserve estimates established.

Bornhuetter-Ferguson Paid and Incurred Loss Methods. These methods are a weighted average of the a priori loss
ratio and the relevant development factor method. The weighting between the two methods depends on the maturity of the
business. This means that for the more recent years a greater weight is placed on the a priori loss ratio, while for the more
mature years a greater weight is placed on the development factor methods. These methods avoid some of the distortions that
could result from a large development factor being applied to a small base of paid or incurred losses to calculate ultimate
losses. This method will react slowly if actual paid or incurred loss experience develops differently than historical paid or
incurred loss experience because of major changes in rate levels, retentions or deductibles, the forms and conditions of
coverage, the types of risks covered or a variety of other factors.

IBNR to Outstanding Ratio Method. This method is used in selected cases typically for very mature years that still
have open claims. This method assumes that the estimated future loss development is indicated by the current level of case
reserves.

Key to the projection of ultimate loss is the amount of credibility or weight assigned to each actuarial method. Each
method has advantages and disadvantages, and those can change depending on numerous factors including the reliability of
the underlying data. For most actuaries, the selection and weighting of the projection methods is a highly subjective process.
In order to achieve a desirable amount of consistency from study to study and between contracts, we have implemented a
weighting scheme that incorporates numerous “rules” for the weighting of actuarial methods. These rules attempt to
effectively codify the judgmental process used for selecting weights for the various methods. There can be extenuating
circumstances where the rules would be modified for a specific reinsurance contract; examples would include a large market
event or new information on historical years that may cause us to increase our a priori loss ratio.

As part of our quarterly reserving process, loss-sensitive contingent expenses (e.g., profit commissions, sliding-scale
ceding commissions, etc.) are calculated on an individual contract basis. These expense calculations are based on the updated
ultimate loss estimates derived from our quarterly reserving process.

Our reserving methodologies use a loss reserving model that calculates a point estimate for our ultimate losses.
Although we believe that our assumptions and methodologies are reasonable, we cannot be certain that our ultimate payments
will not vary, potentially materially, from the estimates that we have made.

We do not produce a range of IBNR reserves. However, a 10% increase in IBNR reserves would translate into a
0.7% decrease in total shareholders’ equity as of December 31, 2013 and a 0.7% decrease in total shareholders’ equity as of
December 31, 2012.

Fair value measurements

Our investments are managed by Third Point LLC and are carried at fair value. Our investment manager, Third
Point LLC, 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 our portfolio. The valuation policy is updated and approved at least on an annual basis by
Third Point LLC’s valuation committee (the “Committee”), which is comprised of officers and employees who are senior
business management personnel of Third Point LLC. The Committee meets on a monthly basis. 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.

Private securities are 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, using information obtained from 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, we or Third Point LLC may employ third party

valuation firms to conduct separate valuations of such private securities. The third party valuation firms provide us or Third
Point LLC with a written report documenting their recommended valuation as of the determination date for the specified
investments.

Due to the inherent uncertainty of valuation for private securities, the estimated fair value may differ materially from
the values that would have been used had a ready market existed for these investments. The actual value at which these
securities could actually be sold or settled with a willing buyer or seller may differ from our 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.

Our derivatives are recorded at fair value. Third Point LLC values exchange-traded derivative contracts at their last
sales price on the exchange where it is primarily traded. OTC derivatives, which include swap, option, swaption, forward,
future and contract for differences, are valued by third party sources when available; otherwise, fair values are obtained from
counterparty 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.

As an extension of our underwriting activities, the Catastrophe Reinsurer has sold derivative instruments that
provide reinsurance-like protection to third parties for specific loss events associated with certain lines of business. These
derivatives are recorded in the consolidated balance sheets at fair value, with the offset recorded in net investment income in
the consolidated statements of income (loss). These contracts are valued on the basis of models developed by us, which
approximates fair value.

Our holdings in asset-backed securities (“ABS”) are substantially invested in residential mortgage-backed securities
(“RMBS”). The balance of the ABS positions were held in commercial mortgage-backed securities, collateralized debt
obligations and student loan asset-backed securities. These investments are valued using dealer quotes or recognised third-
party pricing vendors. 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. Investors in these classes of ABS
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, investors may be exposed to significant market and liquidity risks.

We value our investments in affiliated investment funds at fair value, which is an amount equal to the sum of the
capital account in the limited partnership generally determined from financial information provided by the investment
manager of the investment funds. The resulting net gains or net losses are reflected in the consolidated statement of income.

The fair values of investments are estimated using prices obtained from third-party pricing services, when available.
However, situations may arise where we believe 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. For
securities that we are unable to obtain fair values from a pricing service or broker, fair values are estimated using information
obtained from Third Point LLC.

We perform several processes to ascertain the reasonableness of the valuation of all of our investments comprising
our investment portfolio, including securities that are categorized as Level 2 and Level 3 within the fair value hierarchy.
These processes include (i) obtaining and reviewing weekly and monthly investment portfolio reports from Third Point LLC,
(ii) obtaining and reviewing monthly NAV and investment return reports received directly from our third-party fund
administrator which are compared to the reports noted in (i), and (iii) monthly update discussions with Third Point LLC
regarding the investment portfolio, including, their process for reviewing and validating pricing obtained from outside service
providers.

For the years ended December 31, 2013 and 2012, there were no changes in the valuation techniques as it relates to

the above.

Monetary assets and liabilities denominated in foreign currencies are translated at the closing rates of exchange as of
December 31, 2013. Transactions during the period are translated at the rate of exchange prevailing on the date of the
transaction. We do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on
investments, dividends and interest from the fluctuations arising from changes in fair values of securities and derivatives
held. Periodic payments received or paid on swap agreements are recorded as realized gain or loss on investment
transactions. Such fluctuations are included within net investment income in the consolidated statement of income.

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. Our assessment of the significance of a particular input to the fair value measurement in its entirety
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 spread. The key inputs for asset-backed securities are yield, probability of default, loss severity and
prepayment.

Key inputs for 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 underlying and volatility of
underlying.

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 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 and the volatility of the underlying.

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 impacted by
several factors, including industry losses, the impact of catastrophes, changes in legal and regulatory guidelines, new
entrants, investment results including interest rate levels and the credit ratings and financial strength of competitors.

While management believes pricing remains adequate for the types of business on which we focus, there is
significant underwriting capacity currently available. As a result, we believe market conditions will remain challenging in the
near term. The segment with the greatest pricing pressure is property catastrophe reinsurance due to an influx of capacity

from collateralized reinsurance and other ILS vehicles and the absence of significant catastrophe events during 2013. We and
most other market participants believe that pricing for property catastrophe reinsurance treaties that renewed on January 1,
2014 dropped by more than 10% on average. Pricing for other types of traditional reinsurance, which are less attractive to
collateralized reinsurance vehicles due to their longer loss development and claims payment periods, is also under pressure
but not to the same degree as property catastrophe reinsurance.

Our direct exposure to falling property catastrophe prices is contained within the Catastrophe Fund and limited to
our $54.8 million investment in the Catastrophe Fund and the contingent profit commission we receive from managing the
Catastrophe Fund which had assets under management of $104.0 million as of December 31, 2013. The expected overall
impact on our results, however, is tempered by the Catastrophe Fund’s portfolio construction and focus on smaller, regional
companies, which have experienced more modest price decreases. Given current market conditions, we expect to limit the
size of the Catastrophe Fund to ensure we can continue to profitably deploy the funds under management until market
conditions improve.

In non-catastrophe lines of business, we focus on segments and clients where there is relatively more attractive
pricing opportunities due to the strength of our relationships, uniqueness of our reinsurance solutions or an acute need for
reinsurance capital as result of a client’s rapid growth or historical poor performance. Most of our senior management team
have spent decades within the reinsurance market and as they cultivate their relationships with intermediaries and reinsurance
buyers, we are seeing an increased flow of submissions in the lines and types of reinsurance that we target. Although we are
typically presented by brokers with proposed structures on syndicated deals, we work to improve and enhance the proposed
solution for the client while improving our economics and establishing our position as the lead reinsurer in the transaction.
We also look for non-syndicated opportunities where a highly customized solution is needed. These often take the form of
loss portfolio transfers or adverse development reserve covers where clients want capital relief and enhanced investment
returns on the reserves. Many of our primary insurance company clients are growing gross premium primarily through
realizing rate increases and, to a lesser extent, expansion of the number of policies they write. As a consequence, their need
for quota share reinsurance has increased. Finally, the number of distressed insurance company situations, for which our
customized solutions may be helpful, appears to be increasing.

Despite the fact that market conditions have deteriorated over the past year, we believe that there are several market
developments that indicate a potential for improving market conditions in the medium term. These include improving pricing
in several primary insurance lines of business which historically have flowed through to the reinsurance market, decelerating
reserve releases from prior underwriting years, and historically low yields from investment portfolios consisting mostly of
long-only, investment grade, shorter-term, fixed income securities. Companies with historically low yields from their
investment portfolios are now focused on the need for pricing increases to offset the continued drop in investment income or
on increasing the risk profile of their investment portfolios, which consumes more of their risk capital.

Consolidated Results of Operations—Years ended December 31, 2013 and 2012 and Period from October 6, 2011
(date of incorporation) to December 31, 2011

For the year ended December 31, 2013, our net income increased by $127.9 million, or 128.7%, to $227.3 million,
compared to net income of $99.4 million for the year ended December 31, 2012 and a net loss of $1.1 million for the period
from October 6, 2011 (date of incorporation) to December 31, 2011.

The increase in net income for the year ended December 31, 2013 compared to the year ended December 31, 2012

was primarily due to the following:

•

The net underwriting loss from our property and casualty reinsurance segment for the year ended
December 31, 2013 was $15.8 million, compared to a net underwriting loss of $28.7 million for the year
ended December 31, 2012. The combined ratio for the year ended December 31, 2013 was 107.5%
compared to 129.7% for the year ended December 31, 2012.

Our catastrophe risk management segment contributed net income of $3.4 million for the year ended
December 31, 2013 compared to a net loss of $1.5 million for the year ended December 31, 2012. The
Catastrophe Reinsurer wrote no business before January 1, 2013. The year ended December 31, 2012
included certain start-up related expenses related to formation of this segment.

For the year ended December 31, 2013, we recorded net investment income of $253.2 million, compared to
$136.4 million for the year ended December 31, 2012. The return on investments managed by Third Point
LLC was 23.9% for the year ended December 31, 2013 compared to 17.7% for the year ended
December 31, 2012.

We were formed on October 6, 2011 and received proceeds from our initial capitalization in December 2011. For
the period from October 6, 2011 to December 31, 2011, we incurred $1.1m of general and administrative expenses related to
initial start-up costs.

Segment Results—Years ended December 31, 2013 and 2012

The determination of our business segments is based on the manner in which management monitors the performance
of our operations. Our business currently comprises two operating segments—Property and Casualty Reinsurance and
Catastrophe Risk Management. We have also identified a corporate function that includes our investment results and general
and administrative expenses related to our corporate activities.

Property and Casualty Reinsurance

Gross premiums written. Gross premiums written increased by $203.2 million, or 106.7%, to $393.6 million for the

year ended December 31, 2013 from $190.4 million for year ended December 31, 2012.

We began underwriting on January 1, 2012 and continue to cultivate our underwriting relationships with
intermediaries and reinsurance buyers and as a result submission flow continues to increase. We write a small number of
large contracts so individual renewals or new business can have a significant impact on premiums recognised in a period. In
addition, our quota share contracts are subject to significant judgment in the amount of premiums that we ultimately
recognize. Changes in premium estimates are recorded in the period they are determined and can be significant. We also offer
customized solutions to our clients, including adverse development covers, on which we will not have a regular renewal
opportunity. Furthermore, we record gross premiums written and earned for adverse development covers, which are
considered retroactive reinsurance contracts, at the inception of the contract. This premium recognition policy can further
distort the comparability of premiums earned in a period and trends.

As a result of these factors, we may experience volatility in the amount of gross premiums written and 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 years ended December 31, 2013 and 2012:

2013

2012

67,612
210,017
115,959
$ 393,588

($ in thousands)

17.2% $ 103,174
44,700
53.4%
29.4%
42,500
100.0% $ 190,374

54.2%
23.5%
22.3%
100.0%

The change in gross premiums written for the year ended December 31, 2013 compared to the year ended

December 31, 2012 was driven by:

Factors resulting in increases:

•

We wrote $269.0 million of new business for the year ended December 31, 2013, consisting of $19.5
million of new property business, $143.4 million of new casualty business and $106.1 million of new
specialty business.

Changes in renewal premiums during the year ended December 31, 2013 resulted in increased premiums of
$21.7 million. Premiums can change on renewals of contracts for a number of factors including: changes in
our line size or participation, changes in the underlying premium volume of the client’s program, pricing
trends as well as other contractual terms and conditions. The increase was primarily due to one contract that
was written for one year in 2012 and renewed as a two year contract in 2013 with other generally offsetting
changes on other renewal business.

•

We amended two existing contracts to increase coverage resulting in $21.0 million of premium.

Factors resulting in decreases:

•

Reductions in premium estimates relating to prior years’ contracts were $35.7 million for the year ended
December 31, 2013 primarily due to return premiums on contracts that expired during the period that
included provisions within the contract to return the unearned premiums at expiration. For contracts that
renewed or were written in 2013 with these provisions, we considered the expected return premium in
determining our initial premium estimates.

We did not renew four reinsurance contracts accounting for $72.8 million of premiums for the year ended
December 31, 2012, with three of the contracts not renewing as a result of pricing and other changes in
reinsurance contract structure, terms and conditions. In addition, our crop contract which accounted for
$42.5 million of premium for the year ended December 31, 2012 was written in 2013 with a new
counterparty and is included as $35.0 million of new business above.

Premiums ceded. The $10.0 million of premiums ceded for the year ended December 31, 2013 related to the
purchase of retrocessional protection related to our one assumed crop contract. There was no premiums ceded for the year
ended December 31, 2012.

Net premiums earned. Net premiums earned for the year ended December 31, 2013 increased $116.1 million, or
120.3%, to $212.6 million. Third Point Reinsurance Company Ltd. (“Third Point Re”) began underwriting on January 1,
2012. The year ended December 31, 2013 reflects net premiums earned on a larger in-force underwriting portfolio, including
new business written and increased premiums from renewals, compared to the year ended December 31, 2012. In addition,
the year ended December 31, 2013, includes net premiums earned of $39.8 million related to retroactive reinsurance contracts
where we recorded the gross premiums written and earned at the inception of the contract. We did not write any retroactive
reinsurance contracts for the year ended December 31, 2012.

Net loss and loss adjustment expenses. Net loss and loss expenses for the year ended December 31, 2013 was $139.6
million, or 65.7% of net premiums earned, compared to $80.3 million, or 83.2% of net premiums earned, for the year ended
December 31, 2012.

The reinsurance contracts that 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. For example, property
quota share contracts have a lower initial loss ratio compared to other casualty and specialty lines of business. In general, our
contracts have similar expected composite ratios (combined ratio before general and administrative expenses) and; 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. Retroactive reinsurance contracts have a higher initial loss ratio since the premiums are
generally based on the net loss and loss adjustment reserves and do not include acquisition related and other expenses. In
addition, we record the gross premiums written and earned and the net losses as incurred for retroactive reinsurance contracts
at the inception of the contract, which can also impact the mix of premiums earned in a particular period.

The decrease in the loss ratio for the year ended December 31, 2013 was primarily due to the crop losses that were
recorded in the year ended December 31, 2012. During the year ended December 31, 2012, we increased our crop loss from
our initial loss estimate by $13.4 million, or 21.3 percentage points. This crop reinsurance contract accounted for $10.0
million of net underwriting loss for the year ended December 31, 2012.

We recorded $1.3 million, or 0.6 percentage points, of net favorable prior years’ reserve development for the year
ended December 31, 2013. We commenced underwriting in 2012 and therefore did not have any prior years’ reserve
development for the 2012 year.

For the year ended December 31, 2013, we also recorded a decrease of $3.4 million in loss and loss adjustment
expense reserves due to a decrease in our premium estimate related to our crop contract. The reserve and premium
adjustments generally offset resulting in no net underwriting income or net loss ratio impact for the year ended December 31,
2013.

Acquisition costs. Acquisition costs include commissions, brokerage and excise taxes. Acquisition costs are
presented net of commissions ceded under reinsurance contracts. Acquisition costs for the year ended December 31, 2013
were $67.0 million, or 31.5% of net premiums earned, compared to $24.6 million, or 25.5% of net premiums earned, for the
year ended December 31, 2012. The acquisition cost ratio for the year ended December 31, 2013 was higher due to a change
in business mix. The acquisition cost ratio for the year ended December 31, 2012 included a higher proportion of net
premiums earned related to one crop contract which had a lower acquisition cost ratio.

The reinsurance contracts that 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. For example, our property quota share
contracts have a higher initial acquisition cost ratio compared to other casualty and specialty lines of business. Property quota
share contracts have a higher expense component due to inuring catastrophe reinsurance which increases the acquisition cost
ratio on those contracts. Our property quota share contracts are structured to limit the amount of property catastrophe
exposure we assume. As a result, inuring catastrophe reinsurance for the property catastrophe exposure reduces the amount of
premium we assume relative to the acquisition costs or is an additional component of the acquisition costs. In general, our
contracts have similar expected composite ratios (combined ratio before general and administrative expenses) and 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. Retroactive reinsurance contracts generally have a low initial acquisition cost ratio. In
addition, we record the gross premiums written and earned for retroactive reinsurance contracts at the inception of the
contract, which can also impact the mix of premiums earned in a particular period. Furthermore, a number of our contracts
have a sliding scale 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 and a contract’s overall acquisition cost ratio.

General and administrative expenses. General and administrative expenses for the year ended December 31, 2013
were $21.8 million, or 10.3% of net premiums earned, compared to $20.3 million, or 21.0% of net premiums earned, for the
year ended December 31, 2012.

The increase in general and administrative expenses for the year ended December 31, 2013 compared to the prior
year period was primarily due to additional share compensation expense as a result of the performance condition having been
met as a result of the IPO. In addition, we have increased headcount and related staff costs as we continued to build out our
management team and infrastructure throughout 2012 and 2013. These increases were partially offset by employee signing
bonuses included in the year ended December 31, 2012. Although the general and administrative expenses increased
compared to the prior year period, the general and administrative expense ratio is lower due to proportionately higher net
premiums earned compared to the prior year period.

Catastrophe Risk Management

The Catastrophe Reinsurer wrote no business before January 1, 2013. From January 1, 2013, the underwriting
results of the Catastrophe Reinsurer as well as results of the Catastrophe Fund, the entities for which the Catastrophe Fund
Manager underwrites and manages catastrophe risk, are captured with the Catastrophe Fund Manager in this segment. We are
currently required to consolidate the results of the Catastrophe Fund and the Catastrophe Reinsurer with our other operations
because we control a majority of the outstanding interests in these entities. However, as an open-ended investment fund, the
Catastrophe Fund is continuing to market its interests to third-party investors. We expect that the Catastrophe Fund may
achieve levels of third-party investment to potentially allow us to deconsolidate its results in the future.

Gross premiums written. Gross premiums written of $8.3 million for the year ended December 31, 2013 consisted of

property catastrophe business written.

Net premiums earned. Net premiums earned was $8.1 million for the year ended December 31, 2013.

Net investment income. Net investment income of $4.4 million for the year ended December 31, 2013 consisting of

$4.3 million related to net gain on derivative reinsurance contracts written by the Catastrophe Reinsurer.

Net loss and loss adjustment expenses. Net loss and loss adjustment expenses was $0.2 million for the year ended
December 31, 2013 relating to tornadoes, hail and severe thunderstorms that occurred in the United States of America in
March 2013.

Acquisition costs. Acquisition costs include commissions, brokerage and excise taxes. Acquisition costs for the year

ended December 31, 2013 were $1.0 million, or 11.9% of net premiums earned.

General and administrative expenses. General and administrative expenses for the year ended December 31, 2013
were $3.9 million compared to $1.5 million for the year ended December 31, 2012. The Catastrophe Reinsurer and
Catastrophe Fund were incorporated in June 2012 and the Catastrophe Reinsurer did not begin underwriting until January 1,
2013. The 2012 period reflects certain start-up related expenses compared to a full period of operations for 2013. General and
administrative expenses consist of costs associated with the employee leasing agreement, cat modeling and legal and
accounting expenses.

Corporate function

Investment results

For the year ended December 31, 2013, we recorded net investment income of $248.8 million, compared to $136.4

million for the year ended December 31, 2012.

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 return on investments managed by Third Point LLC was 23.9% for the year
ended December 31, 2013 compared to 17.7% for the year ended December 31, 2012. The following is a summary of the net
investment return on investments managed by Third Point LLC by investment strategy:

Long/short equities ..............................................
Asset-backed securities .......................................
Corporate credit...................................................
Macro and other ..................................................

2013

2012

17.5%
3.0%
2.1%
1.3%
23.9%

7.8%
2.3%
3.2%
4.4%
17.7%

The returns for the year ended December 31, 2013 were driven primarily by equity positions and to a lesser extent
by gains in structured credit, corporate credit and macro positions. Net investment income for the year ended December 31,
2013 also benefited from higher average investments managed by Third Point LLC compared to the prior year periods due to
the net proceeds generated by our IPO and float contributed by our property and casualty reinsurance operations.

All of our assets managed by Third Point LLC are held in a separate account and managed under an investment
management agreement whereby Third Point Advisors LLC, an affiliate of Third Point LLC, has a non-controlling interest in
the assets held in the separate account. The value of the non-controlling interest is equal to the amounts invested by Third
Point Advisors LLC, plus performance fees paid by us to Third Point Advisors LLC and investment gains and losses thereon.

Also impacting net investment income for the year ended December 31, 2013 was the allocation of $4.9 million of
net investment expense related to deposit and reinsurance contracts compared to $0.4 million for the year ended December
31, 2012.

General and administrative expenses related to corporate activities

General and administrative expenses allocated to our corporate function include allocations of payroll and related
costs for certain executives and non-underwriting staff that spend a portion of their time on corporate activities. We also
allocate a portion of overhead and other related costs based on a related headcount analysis. For the year ended December 31,
2013, general and administrative expenses allocated to the corporate function were $7.3 million compared to $5.6 million for
the year ended December 31, 2012. The increase compared to the prior year period was primarily due to additional share
compensation expense as a result of a performance condition relating to vesting having been met as a result of the IPO. In
addition, we have increased headcount and related staff costs as we continued to build out our management team and
infrastructure throughout 2012 and 2013. These increases were partially offset by employee signing bonuses included in the
year ended December 31, 2012. We also incurred increased legal and other professional advisor expenses for the year ended
December 31, 2013 as a result of now operating as a public company.

General and administrative expenses for the period from October 6, 2011 (date of incorporation) to December 31,

2011 included $1.1 million related to start-up expenses.

Liquidity and Capital Resources

Our investment portfolio is concentrated in tradeable securities and is valued to market each day. Pursuant to our
investment guidelines as specified in our Investment Management Agreement with Third Point LLC, at least 60% of our
portfolio must be invested in securities of publicly traded companies and governments of OECD 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 or on not less than 30 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 all liquidity requirements.

General

The Company is a holding company and has no substantial operations of its own. Its assets consist primarily of its
investments in subsidiaries. The Company’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.

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, as a Class 4 insurer, is prohibited from declaring or paying a dividend if it is in breach of its minimum
solvency margin (“MSM”), enhanced capital ratio (“ECR”) or minimum liquidity ratio or if the declaration or payment of
such dividend would cause such a breach. Where Third Point Re, as a Class 4 insurer, 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, Third Point Re, as a Class 4 insurer, is prohibited from declaring or paying in any financial year
dividends of more than 25% of its 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 dividends) with the BMA an affidavit signed by at
least 2 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, 2013, Third Point Re could pay dividends in 2014 to the Company of approximately $325.9

million (2012 - $206.1 million) without providing an affidavit to the BMA.

Liquidity and Cash Flows

Our cash flows from operations generally represent the difference between: (l) premiums collected and investment
earnings realized and (2) losses and loss expenses paid reinsurance purchased an underwriting and other expenses paid. Cash
flows from operations may differ substantially from net income. The potential for a large claim under a reinsurance contract
means that substantial and unpredictable payments may need to be made within relatively short periods of time.

Our sources of funds primarily consist of premiums written, reinsurance recoveries, investment income and
proceeds from sales and redemptions of investments. Cash is used primarily to pay loss and loss adjustment expenses,
reinsurance premiums, acquisition costs and general and administrative expenses and to purchase investments.

Cash flows provided by operating activities for the year ended December 31, 2013 were $9.2 million compared to
cash flows used in operating activities of $32.6 million for the year ended December 31, 2012 and cash flows used in
operating activities of $1.6 million for the period from October 6, 2011 (date of incorporation) to December 31, 2011. Cash
flows from operating activities generally represent net premiums collected less loss and loss adjustment expenses, acquisition
costs and general and administrative expenses paid.

Cash flows used in investing activities for the year ended December 31, 2013 were $397.6 million compared to cash
flows used in investment activities of $766.0 million for the year ended December 31, 2012. The cash flows used in investing
activities for the year ended December 31, 2013 reflects the investment of the net proceeds from our IPO and the investment
of float generated by our reinsurance operations. The cash flows used in investing activities for the year ended December 31,
2012, reflected the initial investment of our portfolio. There were no cash flows used for investing activities for the period
from October 6, 2011 (date of incorporation) to December 31, 2011.

Cash flows provided by financing activities for the year ended December 31, 2013 were $386.0 million compared to
$228.7 million for the year ended December 31, 2012 and $605.4 million for the period from October 6, 2011 (date of
incorporation) to December 31, 2011. The cash flows from financing activities for the year ended December 31, 2013 relate
primarily to the net proceeds generated by our IPO and new deposit liability contracts entered into in the year ended
December 31, 2013. The cash flows from financing activities for the year ended December 31, 2012 consisted of the receipt
of subscriptions receivable, net of costs. The cash flows from financing activities for the period from October 6, 2011 (date of
incorporation) to December 31, 2011 consisted of the net proceeds generated from the initial capitalization of the Company.

For the period from inception until December 31, 2013, we have had sufficient cash flow from proceeds of our
initial capitalization and IPO and from operations to meet our liquidity requirements. We expect that projected operating and
capital expenditure requirements for at least the next twelve months will be met by our balance of cash, cash flows generated
from underwriting activities and investment income. We may incur indebtedness in the future if we determine that it would
be an efficient part of our capital structure.

In addition, we expect that the net proceeds from our IPO 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 that the net proceeds from our IPO, combined
with existing cash and cash equivalents, investment returns and operating cash flow 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.

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 and restricted cash and cash equivalents

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.

Restricted cash and cash equivalents consist of cash held with brokers securing letters of credit issued under letter of

credit facilities.

Letter of Credit Facilities

As of December 31, 2013, we had entered into the following letter of credit facilities, which automatically renew

annually unless terminated by either party in accordance with the required notice period:

BNP Paribas ...............................
Citibank (1) ................................
J.P. Morgan ................................

Facility
($ in thousands)
100,000
$
150,000
50,000
300,000

Renewal date

Notice period (Unused Facility Portion)

February 15, 2015
January 23, 2015
August 22, 2014

60 days prior to termination date
90 days prior to termination date
60 days prior to termination date

(1) Effective January 1, 2013, the Citibank facility was reduced from $250 million to $150 million.

As of December 31, 2013, $127.3 million (December 31, 2012 - $60.9 million) of letters of credit, representing 42.4% of
the total available facilities, had been drawn upon (December 31, 2012 – 15.3% (based on total available facilities of $400
million)).

Under the facilities, we provide collateral that may consist of equity securities, repurchase agreements, restricted cash,
and cash and cash equivalents. As of December 31, 2013, total cash and cash equivalents with a fair value of $100.6 million
(December 31, 2012 - $64.8 million) were pledged as security against the letters of credit issued. These amounts are included
in restricted cash and cash equivalents in the 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, A.M.
Best Company rating of “A-” or higher, and 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 as of December 31, 2013.

Financial Condition

Shareholders’ equity

As of December 31, 2013, total shareholders’ equity was $1,510.4 million compared to $928.3 million as of
December 31, 2012. This increase was primarily due to net proceeds of $286.0 million generated in our IPO, net income of
$227.3 million and contributions from non-controlling interests of $88.3 million consisting of $25.3 million related to
additional capital called by the Catastrophe Fund and $62.3 million related to the investment joint venture, primarily as a
result of performance fees earned for 2013. These increases were partially offset by distributions of non-controlling interests
of $35.1 million related to the investment joint venture.

Investments

As of December 31, 2013, total cash and net investments managed by Third Point LLC at fair value was $1,581.0
million compared to $972.3 million as of December 31, 2012. The increase was primarily due to the net proceeds of $286.0
million generated in our IPO, float generated by our reinsurance operations and net investment income for the year ended
December 31, 2013.

Contractual Obligations

As of December 31, 2013:

Total

Less than
1 year

1-3 years
($ in thousands)

3-5 years

More
than 5
years

Loss and loss adjustment expense reserves (1) .....
Other operating agreements (2) ............................
Rental leases (3) ...................................................
Deposit liabilities (4) ............................................

$ 134,221
1,653
770
148,061
$ 284,705

68,922
547
402
679
70,550

36,566
1,106
368
65,402
$ 103,442

$ 12,936 $ 15,797
—
—
38,886
$ 56,030 $ 54,683

—
—
43,094

(1) We have estimated the expected payout pattern of the loss and loss adjustment expense reserves by applying estimated payout patterns by contract. The
amount and timing of actual loss payments could differ materially from the estimated payouts in the table above. Please refer to Critical Accounting
Estimates-Reserve for losses and loss expenses for additional information.

(2) On December 20, 2011, Third Point Reinsurance Company Ltd. acquired from Netjets Sales Inc., two 12.5%, five year, undivided interests in two

aircraft. The agreement with Netjets provides for monthly management fees, occupied hourly fees and other fees.

(3) We lease office space at Chesney House in Bermuda. This two year lease is scheduled to expire on November 30, 2015, with an option to renew for an

additional three years.

(4) See Note 12 to consolidated financial statements for detailed information on deposit liability contracts. For purposes of this contractual obligations
table, we have included estimates of future interest accruals and what we expect the deposit liability contracts would settle for at their probable
commutation dates.

Off-Balance Sheet Commitments and Arrangements

We have no obligations, assets or liabilities, other than those derivatives in our investment portfolio and disclosed in
our notes to 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.

Item 7A. 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; and
political risk.

Equity Price Risk

Our investment manager, Third Point LLC, continually tracks the performance and exposures of our entire
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 December 31, 2013, 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 December 31, 2013, a 10% decline in the
value of all equity and equity-linked derivatives would result in a loss of $111.5 million, or 7.1% in the fair value 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

As of December 31, 2013, 100% of our reinsurance contracts were denominated in U.S. dollars, and any losses
related to these contracts would be paid in U.S. dollars. As such, were not exposed to foreign currency risk with regard to our
underwriting operations as of December 31, 2013.

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 typical 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 December 31, 2013, our total net (short) exposure to foreign denominated securities
represented (6.2)% of our investment portfolio including cash and cash equivalents, was $(97.7) million.

The following table summarizes the net impact that 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 December 31, 2013:

Foreign Currency

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

Euro ........................................................................ $
Japanese Yen ..........................................................
British Pound ..........................................................
Other .......................................................................
Total ....................................................................... $

8,873
341
783
631
10,628

($ in thousands)
0.56% $
0.02%
0.05%
0.04%
0.67% $

(8,873)
(341)
(783)
(631)
(10,628)

(0.56)%
(0.02)%
(0.05)%
(0.04)%
(0.67)%

Interest Rate Risk

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

The effects of interest rate movement 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 December 31, 2013:

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

Corporate and Sovereign Debt Instruments ............. $
Asset Backed Securities(1) ........................................
Net exposure to interest rate risk ............................. $

(1,434)
(9,240)
(10,674)

($ in thousands)
(0.09)% $
(0.59)%
(0.68)% $

2,364
9,471
11,835

0.15%
0.60%
0.75%

(1)

Includes instruments for which durations are available on December 31, 2013. Includes a convexity adjustment if convexity is available. Not
included are mortgage hedges which would reduce the impact of rate changes.

For the purposes of the above tables, 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 damage 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 impacted by
the price of a commodity as a response to market developments.

As of December 31, 2013, our investment portfolio included exposure to changes in commodity prices, through
ownership of physical commodities and commodity-linked securities. We purchase such investments from time to time from
both a speculative and risk management perspective. Generally, market prices of commodities are subject to fluctuation. As
of December 31, 2013, a 10% decline in the price of each of these commodities and commodity-linked securities would have
resulted in a loss of $0.3 million in the fair value of our total net investments managed by Third Point LLC.

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 materially adverse impact on our operations.

Credit Risk

We are exposed to credit risk from our clients 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 is netted
against any claims related losses we would pay in the future. We monitor the collectability of these balances on a regular
basis.

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, commodities, 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.

Political Risk

We are exposed to political risk to the extent that 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. We currently
do not write political risk coverage on our insurance contracts; however, changes in government laws and regulations may
impact our underwriting operations.

In managing our investment portfolio, Third Point LLC routinely monitors and assesses relative levels of risks
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.

Recent Accounting Pronouncements

Please refer to Note 2 to our consolidated financial statements for the year ended December 31, 2013 included in

Item 8 of this Annual Report on Form 10-K for details of recently issued accounting standards.

Under Section 102(b) of the Jumpstart Our Business Startups Act, an “emerging growth company” such as the
Company can delay adopting new or revised accounting standards until such time as those standards apply to private
companies. Pursuant to Section 107(b) of the Jumpstart Our Business Startups Act, we have irrevocably elected to “opt out”
of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised
accounting standards as other public companies that are not emerging growth companies.

Item 8. Financial Statements and Supplementary Data

See our consolidated financial statements and notes thereto and required financial statement schedules commencing

on page F-1.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

(a)

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 December 31, 2013. 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 December 31, 2013.

(b)

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(f) and 15d-15(f) 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.

Item 9B. Other Information

Not applicable.

Item 10. Directors, Executive Officers and Corporate Governance

Part III

Certain of the information required by this item relating to the executive officers of the Company may be found
starting at page 54. The balance of the information required by this item is omitted because a definitive proxy statement that
involves the election of directors will be filed with the Securities and Exchange Commission not later than 120 days after the
close of the fiscal year pursuant to Regulation 14A, which proxy statement is incorporated herein by reference.

Item 11. Executive Compensation

This item is omitted because a definitive proxy statement that involves the election of directors will be filed with the
Securities and Exchange Commission not later than 120 days after the close of the fiscal year pursuant to Regulation 14A,
which proxy statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Information relating to this item is set forth in this Annual Report under the caption “Item 5. Market for Registrant’s
Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities - Equity Compensation Plan
Information”.

The balance of the information required by this item is omitted because a definitive proxy statement that involves
the election of directors will be filed with the Securities and Exchange Commission not later than 120 days after the close of
the fiscal year pursuant to Regulation 14A, which proxy statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

Item 15. Exhibits and Financial Statement Schedules

PART IV

3.1*
3.1.1
3.2
4.1*
4.2*

4.3*
4.4*
4.5*
4.6*
4.7*

4.8*

4.9*

4.10*
10.1*

10.2***

10.3***

10.4***

10.5***
10.6***
10.6.1**
10.7***
10.8***
10.8.1**
10.9***
10.10***
10.11***
10.22*

10.23*

10.24*

10.25*

10.26†
10.27***
10.28***

Memorandum of Association
Certificate of Deposit of Memorandum of Increase of Share Capital
Bye-laws of Third Point Reinsurance Ltd.
Specimen Common Share Certificate
Registration Rights Agreement, by and among the Third Point Reinsurance Ltd. and each of the Members,
dated as of December 22, 2011
Warrant to Purchase Common Shares issued to KEP TP Holdings, L.P., dated as of December 22, 2011
Warrant to Purchase Common Shares issued to KIA TP Holdings, L.P., dated as of December 22, 2011
Warrant to Purchase Common Shares issued to Pine Brook LVR, L.P., dated as of December 22, 2011
Warrant to Purchase Common Shares issued to P RE Opportunities Ltd., dated as of December 22, 2011
Warrant Subscription Agreement, by and among Third Point Reinsurance Ltd. and each of the signatories
thereto, dated as of December 22, 2011
Agreement among Members by and among Third Point Reinsurance Ltd. and each of the Members, dated as
of December 22, 2011
Founders’ Agreement, by and among Third Point Reinsurance Ltd., KEP TP Bermuda Ltd., KIA TP
Bermuda Ltd., Pine Brook LVR, L.P., P RE Opportunities Ltd. and Dowling Capital Partners I, L.P.
Closing Side Letter, dated as of December 22, 201
Joint Venture and Investment Management Agreement, by and among Third Point Reinsurance Ltd., Third
Point Reinsurance Company, Ltd., Third Point Advisors LLC and Third Point LLC, dated as of December
22, 2011
Employment Agreement between Third Point Reinsurance Ltd. and John R. Berger, dated as of December
22, 2011
Employment Agreement between Third Point Reinsurance Ltd. and J. Robert Bredahl, dated as of January
26, 2012
Employment Agreement between Third Point Reinsurance Ltd. and Daniel Victor Malloy III, dated as of
January 23, 2012
Share Incentive Plan
Form of Restricted Share Award Agreement
Form of Director Restricted Share Award Agreement
Form of Nonqualified Share Option Agreement under the Share Incentive Plan
Form of Director Service Agreement
Form of Director Service Agreement (Adopted November 2013)
Management Compensation Cash Bonus Pool
Third Point Reinsurance Ltd. 2013 Omnibus Incentive Plan
Third Point Reinsurance Ltd. Annual Incentive Plan
Trademark License Agreement between Third Point LLC and Third Point Reinsurance Ltd., dated as of
December 22, 2011
Trademark License Agreement between Third Point LLC and Third Point Reinsurance Company Ltd., dated
as of December 22, 2011
Net Retained Lines Quota Share Reinsurance Contract issued to Narragansett Bay Insurance Company,
dated as of January 31, 2013
Shareholders Agreement between Third Point Reinsurance Investment Management Ltd., Third Point
Reinsurance Ltd. and Hiscox Insurance Company (Bermuda) Limited, dated as of December 11, 2012
Letter Agreement dated as of December 22, 2011
Section 409A Specified Employee Policy
Director and Officer Indemnification Agreement

E-1

10.28.1
10.29**
14.1*
21.1*
23.1
24.1
31.1

31.2

32.1±

32.2±

101.INS††
101.SCH††
101.CAL††
101.LAB††
101.PRE††
101.DEF††

Schedule of Signatories to the Director and Officer Indemnification Agreement
Director Compensation Policy
Code of Ethics
List of Subsidiaries
Consent of Independent Registered Public Accounting Firm
Power of Attorney signed by each of the members of the Board of Directors on February 25, 2014.
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as amended.
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as amended.
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.
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.
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Labels Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document

†

††

Incorporated by reference to the exhibit of the same number filed as part of the Company’s registration statement on
Form S-1 (File No. 333-189960) which was declared effective by the Securities and Exchange Commission on
August 14, 2013.

Management contracts or compensatory plans or arrangements.

This certification accompanies the Form 10-K 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-K), irrespective of any general incorporation language contained in such filing.

Registrant has omitted portions of the referenced exhibit pursuant to a request for confidential treatment under Rule
406 promulgated under the Securities Act of 1933, as amended (Securities Act).

In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed
or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is
deemed not filed for purposes of section 18 of the Exchange Act of 1934, and otherwise is not subject to liability
under these sections.

E-2

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Pembroke, Bermuda, on this
27th day of February, 2014.

SIGNATURES

THIRD POINT REINSURANCE LTD.

(Registrant)

/s/ John R. Berger

By:
Name: John R. Berger
Title: Chief Executive Officer and Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, as amended, this report has been signed below by the

following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ John R. Berger
John R. Berger

/s/ J. Robert Bredahl
J. Robert Bredahl

Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)

February 27, 2014

Chief Financial Officer and Chief Operating Officer
(Principal Financial Officer)

February 27, 2014

/s/ Christopher S. Coleman
Christopher S. Coleman

Chief Accounting Officer
(Principal Accounting Officer)

*
Christopher L. Collins

*
Steven E. Fass

*
Rafe de la Gueronniere

*
Mary R. Hennessy

*
Neil McConachie

*
Mark Parkin

*
William Spiegel

*
Joshua L. Targoff

Director

/s/ Tonya L. Marshall

* By:
Name: Name: Tonya L. Marshall
Title: Attorney-in-Fact

E-3

February 27, 2014

THIRD POINT REINSURANCE LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Report of Independent Registered Public Accounting Firm
Audited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2013 and 2012
Consolidated Statements of Income (Loss) for the years ended December 31, 2013 and 2012 and period from

October 6, 2011 (date of incorporation) to December 31, 2011

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2013 and 2012 and

period from October 6, 2011 (date of incorporation) to December 31, 2011

Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012 and period from

October 6, 2011 (date of incorporation) to December 31, 2011

Notes to the Consolidated Financial Statements
Schedule I - Summary of Investments - Other than Investments in Related Parties
Schedule II - Condensed Financial Information of Registrant
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance

Page

F-2

F-3

F-4

F-5

F-6
F-7
F-41
F-42
F-45
F-46

All other schedules and notes specified under Regulation S-X are omitted because they are either not applicable, not
required or the information called for therein appears in response to the items in the Consolidated Financial Statements and
the related Notes to Consolidated Financial Statements of Third Point Reinsurance Ltd. and its subsidiaries listed on the
above index.

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Third Point Reinsurance Ltd.

We have audited the accompanying consolidated balance sheets of Third Point Reinsurance Ltd. as of December 31, 2013
and 2012, and the related consolidated statements of income, shareholders’ equity and cash flows for years ended December
31, 2013 and 2012 and the period from October 6, 2011 (date of incorporation) to December 31, 2011. Our audits also
included the financial statement schedules listed in the Index at Item 15. These financial statements and schedules are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control
over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Third Point Reinsurance Ltd. at December 31, 2013 and 2012, and the consolidated results of its operations and
its cash flows for the years ended December 31, 2013 and 2012 and the period from October 6, 2011 (date of incorporation)
to December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

/s/ Ernst & Young Ltd.

Ernst & Young Ltd.
Hamilton, Bermuda
February 27, 2014

F-2

THIRD POINT REINSURANCE LTD.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2013 and 2012
(expressed in thousands of U.S. dollars, except per share and share amounts)

December 31,
2013

December 31,
2012

Assets
Equity securities, trading, at fair value (cost - $824,723; 2012 - $450,766) ..................... $
Debt securities, trading, at fair value (cost - $408,754; 2012 - $249,110) ........................
Other investments, at fair value ........................................................................................
Total investments in securities and commodities..............................................................
Cash and cash equivalents ................................................................................................
Restricted cash and cash equivalents ................................................................................
Due from brokers ..............................................................................................................
Securities purchased under an agreement to sell ..............................................................
Derivative assets, at fair value ..........................................................................................
Interest and dividends receivable ......................................................................................
Reinsurance balances receivable .......................................................................................
Deferred acquisition costs, net ..........................................................................................
Loss and loss adjustment expenses recoverable ...............................................................
Other assets .......................................................................................................................
Total assets ...................................................................................................................... $
Liabilities and shareholders’ equity
Liabilities
Accounts payable and accrued expenses .......................................................................... $
Reinsurance balances payable ..........................................................................................
Deposit liabilities ..............................................................................................................
Unearned premium reserves .............................................................................................
Loss and loss adjustment expense reserves.......................................................................
Securities sold, not yet purchased, at fair value ................................................................
Due to brokers...................................................................................................................
Derivative liabilities, at fair value .....................................................................................
Interest and dividends payable ..........................................................................................
Total liabilities .................................................................................................................
Commitments and contingent liabilities ...........................................................................
Shareholders’ equity
Preference shares (par value $0.10; authorized, 30,000,000; none issued) .......................
Common shares (par value $0.10; authorized, 300,000,000; issued and outstanding,

103,888,916 (2012: 78,432,132)) ..................................................................................
Additional paid-in capital .................................................................................................
Retained earnings ..............................................................................................................
Shareholders’ equity attributable to shareholders ......................................................
Non-controlling interests ..................................................................................................
Total shareholders’ equity .............................................................................................
Total liabilities and shareholders’ equity...................................................................... $

954,111 $
441,424
65,329
1,460,864
31,625
193,577
98,386
38,147
39,045
2,615
191,763
91,193
9,277
3,398
2,159,890 $

9,456 $
9,081
120,946
265,187
134,331
56,056
44,870
8,819
748
649,494
—

500,929
279,331
157,430
937,690
34,005
77,627
131,785
60,408
25,628
2,088
84,280
45,383
—
3,123
1,402,017

5,278
—
50,446
93,893
67,271
176,454
66,107
12,992
1,255
473,696
—

—

10,389
1,055,690
325,582
1,391,661
118,735
1,510,396
2,159,890 $

7,843
762,430
98,271
868,544
59,777
928,321
1,402,017

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

F-3

THIRD POINT REINSURANCE LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the years ended December 31, 2013 and 2012 and period from October 6, 2011 (date of incorporation)
to December 31, 2011
(expressed in thousands of U.S. dollars, except per share and share amounts)

Revenues
Gross premiums written ........................................................................... $
Gross premiums ceded .............................................................................
Net premiums written ..............................................................................
Change in net unearned premium reserves ..............................................
Net premiums earned ...............................................................................
Net investment income ............................................................................
Total revenues ..........................................................................................
Expenses
Loss and loss adjustment expenses incurred, net .....................................
Acquisition costs, net ...............................................................................
General and administrative expenses .......................................................
Total expenses .........................................................................................
Income (loss) including non-controlling interests....................................
Income attributable to non-controlling interests ......................................
Net income (loss) .................................................................................... $
Earnings (loss) per share
Basic ........................................................................................................ $
Diluted ..................................................................................................... $
Weighted average number of common shares used in the

determination of earnings (loss) per share

2013

2012

2011

401,937 $
(9,975)
391,962
(171,295)
220,667
253,203
473,870

139,812
67,944
33,036
240,792
233,078
(5,767)
227,311 $

190,374 $
—
190,374
(93,893)
96,481
136,422
232,903

80,306
24,604
27,376
132,286
100,617
(1,216)
99,401 $

2.58 $
2.54 $

1.26 $
1.26 $

—
—
—
—
—
—
—

—
—
1,130
1,130
(1,130)
—
(1,130)

(0.01)
(0.01)

Basic ........................................................................................................
Diluted .....................................................................................................

87,505,540
88,970,531

78,432,132
78,598,236

78,432,132
78,432,132

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

F-4

THIRD POINT REINSURANCE LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the years ended December 31, 2013 and 2012 and period from October 6, 2011 (date of incorporation)
to December 31, 2011
(expressed in thousands of U.S. dollars, except share amounts)

2013

2012

2011

Common shares
Balance, beginning of period .................................................................
Issuance of common shares ...................................................................
Balance, end of period ...........................................................................
Common shares
Balance, beginning of period ................................................................. $
Issuance of common shares ...................................................................
Balance, end of period ...........................................................................
Additional paid-in capital
Balance, beginning of period .................................................................
Issuance of common shares, net.............................................................
Fair value of Founder and advisor warrants ...........................................
Fair value of warrants qualifying as shareholders’ equity .....................
Share compensation expense .................................................................
Balance, end of period ...........................................................................
Subscriptions receivable
Balance, beginning of period .................................................................
Subscriptions due from shareholders .....................................................
Receipt of subscriptions due from shareholders ....................................
Balance, end of period ...........................................................................
Retained earnings (deficit)
Balance, beginning of period .................................................................
Net income (loss) ...................................................................................
Balance, end of period ...........................................................................
Shareholders’ equity attributable to shareholders ...........................
Non-controlling interests
Balance, beginning of period .................................................................
Contributions .........................................................................................
Distributions ..........................................................................................
Income attributable to non-controlling interests ....................................
Balance, end of period ...........................................................................
Total shareholders’ equity ..................................................................... $

78,432,132
25,456,784
103,888,916

78,432,132
—
78,432,132

—
78,432,132
78,432,132

7,843 $
2,546
10,389

7,843 $
—
7,843

762,430
283,460
3,747
(3,747)
9,800
1,055,690

—
—
—
—

98,271
227,311
325,582
1,391,661

59,777
88,320
(35,129)
5,767
118,735
1,510,396 $

756,219
(197)
—
—
6,408
762,430

(177,507)
—
177,507
—

(1,130)
99,401
98,271
868,544

—
58,561
—
1,216
59,777
928,321 $

—
7,843
7,843

—
756,219
13,627
(13,627)
—
756,219

—
(177,507)
—
(177,507)

—
(1,130)
(1,130)
585,425

—
—
—
—
—
585,425

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

F-5

THIRD POINT REINSURANCE LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2013 and 2012 and the period from October 6, 2011 (incorporation date)
to December 31, 2011
(expressed in thousands of U.S. dollars, except per share and share amounts)

Operating activities
Net income (loss) .................................................................................. $
Adjustments to reconcile net income (loss) to net cash provided by

(used in) operating activities

Share compensation expense ...............................................................
Net unrealized gain on investments and derivatives .............................
Net realized gain on investments and derivatives .................................
Amortization of premium and accretion of discount, net .....................
Changes in assets and liabilities:
Reinsurance balances receivable ...........................................................
Deferred acquisition costs, net ..............................................................
Loss and loss adjustment expenses recoverable ...................................
Other assets ...........................................................................................
Interest and dividends receivable, net ...................................................
Unearned premium reserves .................................................................
Loss and loss adjustment expense reserves...........................................
Accounts payable and accrued expenses ..............................................
Reinsurance balances payable ..............................................................
Net cash provided by (used in) operating activities ..............................
Investing activities
Purchases of investments ......................................................................
Proceeds from sales of investments ......................................................
Purchases of investments to cover short sales ......................................
Proceeds from short sales of investments .............................................
Change in due to/from brokers, net .......................................................
Increase (decrease) in securities purchased under an agreement to sell
Non-controlling interest in investment affiliate ....................................
Change in restricted cash and cash equivalents ....................................
Net cash used in investing activities .....................................................
Financing activities
Proceeds from issuance of common shares, net of costs ......................
Increase in deposit liabilities .................................................................
Non-controlling interest in Catastrophe Fund .......................................
Non-controlling interest in Catastrophe Fund Manager ........................
Net cash provided by financing activities .............................................
Net (decrease) increase in cash and cash equivalents ...........................
Cash and cash equivalents at beginning of period ................................
Cash and cash equivalents at end of period ...................................... $
Supplementary information
Interest paid in cash .............................................................................. $

2013

2012

2011

227,311 $

99,401 $

(1,130)

9,800
(78,950)
(236,333)
(262)

(107,483)
(45,810)
(9,277)
(275)
(1,034)
171,294
67,060
4,089
9,081
9,211

(2,172,077)
1,943,655
(407,965)
290,770
12,162
22,261
29,588
(115,950)
(397,556)

6,408
(113,421)
(55,632)
(2,434)

(84,280)
(45,383)
—
(1,701)
(833)
93,893
67,271
4,157
—
(32,554)

(2,317,234)
1,521,110
(535,443)
729,182
(65,678)
(60,408)
40,129
(77,627)
(765,969)

—
—
—
—

—
—
—
(1,420)
—
—
—
995
—
(1,555)

—
—
—
—
—
—
—
—
—

286,095
70,500
29,608
(238)
385,965
(2,380)
34,005
31,625 $

158,593
50,446
19,646
2
228,687
(569,836)
603,841
34,005 $

605,396
—
—
—
605,396
603,841
—
603,841

4,221 $

1,823 $

—

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

F-6

Third Point Reinsurance Ltd.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)

Organization

Third Point Reinsurance Ltd. (the “Company”) was incorporated as an exempted company under the laws of Bermuda on
October 6, 2011 and, through its wholly-owned subsidiary Third Point Reinsurance Company Ltd. (“Third Point Re”), is a
provider of global specialty property and casualty reinsurance products. Third Point Re was incorporated in Bermuda and is
registered as a Class 4 insurer under the Insurance Act 1978, as amended, and related regulations (the “Act”). Third Point Re
commenced reinsurance operations in January 2012.

On June 15, 2012, Third Point Reinsurance Opportunities Fund Ltd. (the “Catastrophe Fund”), Third Point Reinsurance
Investment Management Ltd. (the “Catastrophe Fund Manager”), and Third Point Re Cat Ltd. (the “Catastrophe Reinsurer”)
were incorporated in Bermuda. The Company subsequently announced a strategic arrangement with Hiscox Insurance
Company (Bermuda) Limited (“Hiscox”) to launch a collateralized catastrophe reinsurance underwriting fund management
business. The Catastrophe Fund Manager, a Bermuda exempted company, is the investment manager of the Catastrophe Fund
and is 85% owned by Third Point Re and 15% owned by Hiscox. The Catastrophe Fund Manager is responsible for the
investment and management of the Catastrophe Fund’s assets. The Catastrophe Fund is an exempted company incorporated
in Bermuda and is open to both related party and third party investors. The Catastrophe Fund Manager also acts as manager
of the Catastrophe Reinsurer and, in this capacity, is responsible for overseeing the underwriting and investment activities of
the Catastrophe Reinsurer. The Catastrophe Reinsurer is a Bermuda exempted company and is licensed as a special purpose
insurer under the Act.

On August 2, 2012, the Company established a wholly-owned subsidiary in the United Kingdom, Third Point Re Marketing
(UK) Limited. (“TPRUK”). On May 20, 2013, TPRUK was licensed as an insurance intermediary by the UK Financial
Conduct Authority.

On August 20, 2013, the Company completed an initial public offering (“IPO”) of 24,832,484 common shares at an offering
price of $12.50 per share. The net proceeds of the offering were $286.0 million, after deducting offering costs. The
Company’s common shares are listed on the New York Stock Exchange under the symbol “TPRE”.

These consolidated financial statements include the results of the Company and its wholly and majority owned subsidiaries
and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”). All significant intercompany accounts and transactions have been eliminated.

Significant accounting policies

The following is a summary of the significant accounting and reporting policies adopted by the Company:

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported and disclosed amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The major estimates reflected in the Company’s
consolidated financial statements include, but are not limited to, the loss and loss adjustment expense reserves, estimates of
written and earned premiums and fair value of financial instruments.

Cash and restricted cash and cash equivalents

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.

Restricted cash and cash equivalents consist of cash held in trust accounts with the Catastrophe Reinsurer, securing
collateralized reinsurance contracts written and cash held with brokers securing letters of credit issued under credit facilities.

F-7

Premium revenue recognition

The Company estimates the ultimate premiums for the entire contract period and records this estimate at the inception of the
contract, to the extent that the amount of written premium is estimable. For contracts where the full written premium is not
estimable at inception, the Company records written premium for the portion of the contract period for which the amount is
estimable. These estimates are based primarily on information in the underlying contracts as well as information provided by
clients and/or brokers.

Premiums written are earned over the exposure period in proportion to the period of risk covered. Unearned premiums
represent the portion of premiums written that relate to the remaining term of the underlying policies in force.

Premiums for retroactive reinsurance contracts, where the Company has evaluated and concluded that risk transfer has
occured, are earned at the inception of the contract, as all of the underlying loss events covered by these contracts occurred in
the past. Any underwriting profit at inception of a retroactive reinsurance contract is deferred and recognised over the
estimated future payout of the loss and loss adjustment expenses reserves. Any underwriting loss at inception of a retroactive
reinsurance contract is recognised immediately.

Changes in premium estimates are expected and may result in adjustments in any reporting period. These estimates change
over time as additional information regarding the underlying business volume is obtained. Any subsequent adjustments
arising on such estimates are recorded in the period in which they are determined.

Reinsurance premiums ceded

The Company reduces the risk of losses on business written by reinsuring certain risks and exposures with other reinsurers.
The Company remains liable to the extent that any retrocessionaire fails to meet its obligations and to the extent that the
Company does not hold sufficient security for their unpaid obligations. Ceded premiums are written during the period in
which the risks incept and are expensed over the contract period in proportion to the period of risk covered. Unearned
premiums ceded consist of the unexpired portion of reinsurance ceded.

Deferred acquisition costs

Acquisition costs consist of commissions, brokerage and excise taxes that are related directly to the successful acquisition of
new or renewal reinsurance contracts. These costs are deferred and amortized over the period in which the related premiums
are earned. The Company evaluates the recoverability of deferred acquisition costs by determining if the sum of future earned
premiums and anticipated investment income is greater than expected future loss and loss adjustment expenses and
acquisition costs. If a loss is probable on the unexpired portion of contracts in force, a premium deficiency loss is recognized.
As of December 31, 2013, deferred acquisition costs are considered to be fully recoverable and no premium deficiency has
been recorded.

Acquisition costs also include profit commissions that are expensed when incurred. Profit commissions are calculated and
accrued based on the expected loss experience for contracts and recorded when the current loss estimate indicates that a profit
commission is probable under the contract terms.

Loss and loss adjustment expense reserves

The Company’s loss and loss adjustment expense reserves include case reserves and reserves for losses incurred but not yet
reported (“IBNR reserves”). Case reserves are established for losses that have been reported, but not yet paid, based on loss
reports from brokers and ceding companies. IBNR reserves represent the estimated loss and loss adjustment expenses that
have been incurred by insureds and reinsureds but not yet reported to the insurer or reinsurer, including unknown future
developments on loss and loss adjustment expenses which are known to the insurer or reinsurer. IBNR reserves are
established by management based on actuarially determined estimates of ultimate loss and loss adjustment expenses.

Inherent in the estimate of ultimate loss and loss adjustment expenses are expected trends in claim severity and frequency and
other factors that may vary significantly as claims are settled. Accordingly, ultimate loss and loss adjustment expenses may
differ materially from the amounts recorded in the consolidated financial statements. These estimates are reviewed regularly
and, as experience develops and new information becomes known, the reserves are adjusted as necessary. Such adjustments,
if any, are recorded in the consolidated statements of income (loss) in the period in which they become known.

F-8

Deposit liabilities

Certain contracts do not transfer sufficient insurance risk and are accounted for using the deposit method of accounting.
Management exercises judgment in determining whether contracts contain sufficient risk to be accounted for as reinsurance
contracts. Using the deposit method of accounting, a deposit liability, rather than written premium, is initially recorded based
upon the consideration received less any explicitly identified premiums or fees. In subsequent periods, the deposit liability is
adjusted by calculating the effective yield on the deposit to reflect actual payments to date and future expected payments.

Fair value measurement

The Company determines the fair value of financial instruments in accordance with current accounting guidance, which
defines fair value and establishes a three level fair value hierarchy based upon the transparency of inputs used in the valuation
of an asset or liability. Fair value is defined as the price that the Company would receive to sell an asset or would pay to
transfer a liability in an orderly transaction between market participants at the measurement date. The Company determines
the estimated fair value of each individual security utilizing the highest level inputs available.

The fair value of the Company’s assets and liabilities, which qualify as financial instruments, approximates the carrying
amounts presented in the consolidated balance sheets.

Investments

The Company’s investments are classified as “trading securities” and are carried at fair value with changes in fair value
included in earnings in the consolidated statements of income (loss).

The fair value of the Company’s investments are based on quoted market prices, or when such prices are not available, by
reference to broker or underwriter bid indications and/or internal pricing valuation techniques. Investment transactions are
recorded on a trade date basis with balances pending settlement included in due to/from brokers in the consolidated balance
sheets.

Realized gains and losses are determined using cost calculated on a specific identification basis. Dividends are recorded on
the ex-dividend date. Income and expense are recorded on the accrual basis including interest and premiums amortized and
discounts accreted.

Derivatives

Underwriting

The Catastrophe Reinsurer enters into certain contracts under which the potential loss payments are triggered exclusively by
reference to a specified index, such as an industry loss. These contracts are considered derivatives. The Company records the
fair value of these contracts in derivative liabilities, at fair value, in the consolidated balance sheet. Changes in the fair value
of these contracts are recorded in net investment income in the consolidated statement of income.

Investments

Derivative instruments within our investment assets managed by our investment manager Third Point LLC, are recorded in
the consolidated balance sheets at fair value, with changes in fair values and realized gains and losses recognised in net
investment income in the consolidated statements of income (loss).

Derivatives serve as a key component of the Company’s investment strategy and are utilized primarily to structure the
portfolio, or individual investments, and to economically match the investment objectives of the Company. The Company’s
derivatives do not qualify as hedges for financial reporting purposes and are recorded in the consolidated balance sheets on a
gross basis and not offset against any collateral pledged or received. Pursuant to the International Swaps and Derivatives
Association (“ISDA”) master agreements, securities lending agreements and other derivatives 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, securities lending agreements or other derivatives agreements
defaults, or a transaction is otherwise subject to termination, the non-defaulting party generally has the right to set off against
payments owed to the defaulting party or collateral held by the non defaulting party.

F-9

The Company enters into derivative contracts to manage credit risk, interest rate risk, currency exchange risk, and other
exposure risks. The Company uses derivatives in connection with its risk-management activities to economically hedge
certain risks and to gain exposure to certain investments. The utilization of derivative contracts also allows for an efficient
means by which to trade certain asset classes.

Fair values of derivatives are determined by using quoted market prices and counterparty quotes when available; otherwise
fair values are based on pricing models that consider the time value of money, volatility, and the current market and
contractual prices of underlying financial instruments.

Share-based compensation

The Company accounts for its share-based compensation transactions using the fair value of the award at the grant date.
Determining the fair value of share purchase options at the grant date requires estimation and judgment. The Company uses
an option-pricing model (Black-Scholes) to calculate the fair value of share purchase options.

For share purchase options granted that contain both a service and performance condition, the Company recognizes share
compensation expense only for the portion of the options that are considered probable of being exercised. Share
compensation for share purchase options considered probable of being exercised is expensed over the service (vesting) period
on a graded vesting basis. The probability of share purchase options being exercised is evaluated at each reporting period.
When the share purchase options are considered probable of being exercised, the Company records a catch up of share
compensation expense from the grant date (service inception date for existing options) to the current reporting period end
based on the fair value of the options at the grant date.

The Company measures grant date fair value for restricted share awards based on the price of its common shares at the grant
date and the expense is recognised on a straight-line basis over the vesting period.

Warrants

The Company accounts for certain warrant contracts issued to its Founders in conjunction with the initial capitalization of the
Company, and which it may settle by using either the physical settlement or net-share settlement methods. The fair value of
these warrants was recorded in equity as additional paid-in capital. The fair value of warrants issued are estimated on the
grant date using the Black-Scholes option-pricing model.

The Company accounts for certain warrant contracts issued to an advisor, where services have been received by the
Company, in part, in exchange for equity instruments, based on the fair value of such services. The associated cost of these
warrants has been recorded as capital raise costs and is included in additional paid in capital in the consolidated statements of
shareholders’ equity.

Offering costs

Offering costs incurred in connection with the initial capital raise of the Company and the IPO, which included underwriters’
fees, legal and accounting fees, printing and other fees have been deducted from the gross proceeds of the offering. The
proceeds from the issuance of shares net of offering costs is included in additional paid in capital in the consolidated
statements of shareholders’ equity.

Foreign currency transactions

The Company’s functional currency is the U.S. dollar. Transactions in foreign currencies are recorded in U.S. dollars at the
exchange rate in effect on the transaction date. Monetary assets and liabilities in foreign currencies are translated at the
exchange rates in effect at the reporting date and foreign exchange gains and losses are included in the consolidated
statements of income (loss).

Income taxes and uncertain tax positions

Under current Bermuda law, the Company and its Bermuda subsidiaries are not subject to any income or capital gains taxes.
In the event that such taxes are imposed, the Company and its Bermuda subsidiaries would be exempted from any such taxes
until March 2035 pursuant to the Tax Assurance Certificates issued to such entities pursuant to the Bermuda Exempted
Undertakings Tax Protection Act of 1966, as amended.

As of December 31, 2013, the Company did not have any uncertain tax positions.

F-10

Non-controlling interests

The Company consolidates the results of entities in which it has a controlling financial interest. The Company records the
portion of shareholders’ equity attributable to non-controlling interests as a separate line within shareholders’ equity in the
consolidated balance sheets. The Company records the portion of income attributable to non-controlling interests as a
separate line within the consolidated statements of income (loss).

Earnings per share

Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding
during the period. The weighted average number of common shares excludes any dilutive effect of outstanding warrants,
options and convertible securities such as unvested restricted shares. Diluted earnings per share is based on the weighted
average number of common shares and share equivalents including any dilutive effects of warrants, options and other awards
under share plans and are determined using the treasury stock method. U.S. GAAP requires that unvested share awards that
contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid (referred to as ‘‘participating
securities”), be included in the number of shares outstanding for both basic and diluted earnings per share calculations. The
Company treats its unvested restricted shares as participating securities. In the event of a net loss, the participating securities
are excluded from the calculation of both basic and diluted loss per share.

During the fourth quarter of 2013, the Company determined that it had incorrectly calculated diluted earnings per share for
the prior periods, which resulted in an understatement of diluted earnings per share. Basic earnings per share was correctly
presented for the prior periods. The accompanying consolidated financial statements for the years ended December 31, 2013
and 2012 and for the period from October 6, 2011 (incorporation date) to December 31, 2011 correctly present diluted
earnings per share and the weighted average number of dilutive shares outstanding. The following tables summarize the
correct diluted earnings per share amounts and weighted average number of dilutive shares outstanding amounts for the prior
periods.

March 31,
2012

June 30,
2012 (1)

September
30, 2012

March 31,
2013

June 30,
2013

September
30, 2013

Three months ended
December
31, 2012
(unaudited)

Diluted EPS (as originally reported): .............. $
Diluted EPS (as corrected): ............................. $

0.35 $
0.38 $

(0.40) $
(0.40) $

0.45 $
0.50 $

0.69 $
0.76 $

0.85 $
0.93 $

0.30 $
0.33 $

0.46
0.51

Weighted Average Number of Dilutive
Shares Outstanding (as originally
reported): ..................................................... 85,335,404

Weighted Average Number of Dilutive

78,432,132

87,888,983 87,866,613 87,777,462 87,895,953 100,176,416

Shares Outstanding (as corrected): ............. 78,432,132

78,432,132

78,551,830 78,820,844 79,083,675 79,254,268

90,915,805

Six months ended

Nine months ended

June 30,
2012 (1)

June 30,
2013

September
30, 2012

September
30, 2013

(unaudited)

Year ended
December
31, 2012
(audited)

Diluted EPS (as originally reported): ...............
Diluted EPS (as corrected): ..............................

$
$

(0.01) $
(0.01) $

1.15
1.26

$
$

0.44
0.49

$
$

1.59
1.75

$
$

1.14
1.26

Weighted Average Number of Dilutive
Shares Outstanding (as originally
reported): ......................................................

Weighted Average Number of Dilutive

78,432,132

87,836,378

87,031,196

92,438,629

87,253,760

Shares Outstanding (as corrected): ..............

78,432,132

79,147,972

78,492,979

83,453,834

78,598,236

(1) Prior periods with a net loss correctly presented diluted earnings per share.

F-11

Leases

Leases in which substantially all of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are recognised in the
consolidated statements of income (loss) on a straight-line basis over the term of the lease.

Comprehensive income

The Company has no comprehensive income other than net income disclosed in the consolidated statements of income (loss).

Segment information

Under U.S. GAAP, operating segments are based on the internal information that management uses for allocating resources
and assessing performance of the Company. The Company reports two operating segments – Property and Casualty
Reinsurance and Catastrophe Risk Management. The Company also has a corporate function that includes the Company’s
investment results and certain general and administrative expenses related to its corporate activities.

Recently issued accounting standards

Issued and effective as of December 31, 2013

In January 2013, the FASB issued Accounting Standards Update No. 2013-01, Clarifying the Scope of Disclosures about
Offsetting Assets and Liabilities (ASU 2013-01). The objective of ASU 2013-01 is to address implementation issues about
the scope of ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. The amendments clarify that the scope of
ASU 2011-11 applies to derivatives, including bifurcated embedded derivatives, repurchase agreements and reverse
repurchase agreements, and securities borrowing and securities lending transactions. Entities with other types of financial
assets and financial liabilities subject to a master netting arrangement or similar agreement also are affected because these
amendments make them no longer subject to the disclosure requirements in ASU 2011-11. ASU 2013-01 is effective for
interim and annual periods beginning on or after January 1, 2013. The Company has included the required disclosures in
Note 9 of notes to consolidated financial statements.

In February 2013, the FASB issued Accounting Standard Update No. 2013-02, Comprehensive Income (ASU 2013-02). The
objective of ASU 2013-02 is to improve the reporting of reclassifications out of other comprehensive income. ASU 2013-02
is effective for periods subsequent to December 15, 2012. The adoption of this guidance had no impact on the Company’s
consolidated financial statements.

Issued but not yet effective as of December 31, 2013

In June 2013, the FASB issued Accounting Standards Update No. 2013-08, Financial Services - Investment Companies -
Amendments to the Scope, Measurement, and Disclosure Requirements (ASU 2013-08). The amendments in this update
change the assessment of whether an entity is an investment company by developing a new two-tiered approach for that
assessment, which requires an entity to possess certain fundamental characteristics while allowing judgment in assessing
other typical characteristics. The new approach requires an entity to assess all of the characteristics of an investment company
and consider its purpose and design to determine whether it is an investment company. ASU 2013-08 is effective
prospectively for periods subsequent to December 15, 2013. Early adoption is prohibited. The Company is currently
evaluating the impact of this guidance; however, it is not expected to have a material impact on the Company’s consolidated
financial statements.

Restricted cash and cash equivalents

Restricted cash and cash equivalents as of December 31, 2013 and 2012 consisted of the following:

Restricted cash securing collateralized reinsurance contracts written by the

Catastrophe Reinsurer ..................................................................................................... $

Restricted cash securing credit facilities .............................................................................

93,014 $

100,563
193,577 $

12,844
64,783
77,627

December 31,

2013

December 31,
2012

($ in thousands)

F-12

Reinsurance premiums ceded

The Company from time to time 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. The
Company currently has coverage that provides for recovery of a portion of loss and loss adjustment expenses incurred on one
crop contract. Loss and loss adjustment expenses recoverable from the retrocessionaires are recorded as assets. For the year
ended December 31, 2013, loss and loss adjustment expenses incurred and reported on the consolidated statements of income
(loss) are net of loss and loss expenses recovered of $9.3 million. 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
December 31, 2013, the Company had loss and loss adjustment expenses recoverable of $9.3 million with one
retrocessionaire who was rated “A (Excellent)” by A.M. Best Company. The Company regularly evaluates the financial
condition of its retrocessionaires to assess the ability of the retrocessionaires to honor their obligations.

Investments

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

Assets
Total investments in securities and commodities.......................................................... $
Cash and cash equivalents ............................................................................................
Restricted cash and cash equivalents ............................................................................
Due from brokers ..........................................................................................................
Securities purchased under an agreement to sell ..........................................................
Derivative assets ...........................................................................................................
Interest and dividends receivable ..................................................................................
Other assets ...................................................................................................................
Total assets .................................................................................................................. $
Liabilities and non-controlling interest
Accounts payable and accrued expenses ...................................................................... $
Securities sold, not yet purchased, at fair value ............................................................
Due to brokers...............................................................................................................
Derivative liabilities ......................................................................................................
Interest and dividends payable ......................................................................................
Non-controlling interest ................................................................................................
Total liabilities and non-controlling interest .................................................................
Total net investments managed by Third Point LLC .............................................. $

December 31,
2013

December 31,

2012

($ in thousands)

1,460,864 $
869
100,563
98,386
38,147
39,045
2,604
933
1,741,411 $

1,759 $
56,056
44,870
8,819
748
69,717
181,969
1,559,442 $

937,690
4
64,783
131,785
60,408
25,628
2,088
829
1,223,215

825
176,454
66,107
12,992
1,255
40,129
297,762
925,453

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”), which is comprised of
officers and employees who are senior business management personnel of Third Point LLC. The Committee meets monthly.
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.

The fair values of investments are estimated using prices obtained from either third-party pricing services or dealer quotes.
The methodology for valuation is generally determined based on the investment’s asset class as per the Company’s
Investment Manager valuation policy. For investments that the Company is unable to obtain fair values from a pricing service
or broker, fair values are estimated using information obtained from the Company’s Investment Manager.

F-13

Securities and commodities listed on a national securities or commodities 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 over-
the-counter (“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 December 31, 2013, securities valued at $483.2 million (December 31, 2012 -
$248.4 million), representing 33.1% (December 31, 2012 – 26.5%) of investments in securities and commodities, and $41.0
million (December 31, 2012 - $68.8 million), representing 73.1% (December 31, 2012 – 39.0%) of securities sold, not yet
purchased, are valued based on dealer quotes or other quoted market prices for similar securities.

Private securities are not registered for public sale and are carried at an estimated fair value at the end of the period, as
determined by the Company’s Investment Manager. Valuation techniques used by the Company’s Investment Manager 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, the Company or the Company’s Investment
Manager may employ third party valuation firms to conduct separate valuations of such private securities. The third party
valuation firms provide the Company or the Company’s Investment Manager with a written report documenting their
recommended valuation as of the determination date for the specified investments.

As of December 31, 2013, the Company had $3.3 million (December 31, 2012 - $2.8 million) of private securities fair valued
by a third party valuation firm using information obtained from the Company’s Investment Manager. Private securities
represented less than 1% of total investments in securities. The actual value at which these securities could actually 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 derivatives are recorded at fair value, and are included in the consolidated balance sheet in derivative assets
and derivative liabilities. The Company values exchange-traded derivatives at their last sales price on the exchange where it
is primarily traded. OTC derivatives, which include swap, option, swaption, forward, future and contract for differences, are
valued by third party sources when available; otherwise, fair values are obtained from counterparty 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.

As an extension of its underwriting activities, the Catastrophe Reinsurer has sold derivative instruments that provide
reinsurance-like protection to third parties for specific loss events associated with certain lines of business. These derivatives
are recorded in the consolidated balance sheets at fair value, with the offset recorded in net investment income in the
consolidated statements of income (loss). These contracts are valued on the basis of models developed by the Company,
which approximates fair value.

The Company’s holdings in asset-backed securities (“ABS”) are substantially invested in residential mortgage-backed
securities (“RMBS”). The balance of the ABS positions was held in commercial mortgage-backed securities, collateralized
debt obligations and student loan asset-backed securities. These investments are valued using dealer quotes or a recognised
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. Investors in these classes of ABS
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, investors may be exposed to significant market and liquidity risks.

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 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 consolidated statements of income (loss).

The Company performs several processes to ascertain the reasonableness of the valuation of all of the Company’s
investments comprising the Company’s investment portfolio, including securities that are categorized as Level 2 and Level 3
within the fair value hierarchy. These processes include i) obtaining and reviewing weekly and monthly investment portfolio
reports from the Investment Manager, ii) obtaining and reviewing monthly Net Asset Value (“NAV”) and investment return
reports received directly from the Company’s third-party fund administrator which are compared to the reports noted in (i),
and iii) monthly update discussions with the Company’s Investment Manager regarding the investment portfolio, including,
their process for reviewing and validating pricing obtained from outside service providers.

For the years ended December 31, 2013 and 2012, there were no changes in the valuation techniques as it relates to the
above.

F-14

Monetary assets and liabilities denominated in foreign currencies are translated at the closing rates of exchange. Transactions
during the period are translated at the rate of exchange prevailing on the date of the transaction. The Company does not
isolate that portion of the net investment income resulting from changes in foreign exchange rates on investments, dividends
and interest from the fluctuations arising from changes in fair values of securities and derivatives held. Periodic payments
received or paid on swap agreements are recorded as realized gain or loss on investment transactions. Such fluctuations are
included within net investment income in the consolidated statements of income (loss).

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.

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 in its
entirety 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 spread. The key inputs for asset-backed securities 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 underlying and volatility of underlying.

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 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 and the volatility of the underlying.

F-15

The following tables present the Company’s investments, categorized by the level of the fair value hierarchy as of
December 31, 2013 and 2012:

December 31, 2013

Quoted prices in
active markets
(Level 1)

Significant other
observable inputs
(Level 2)

Significant
unobservable
inputs (Level 3)

Total

Assets
Equity securities .......................................................... $
Private common equity securities ................................
Total equities ...............................................................
Asset-backed securities ................................................
Bank debts ...................................................................
Corporate bonds ...........................................................
Municipal bonds ..........................................................
Sovereign debt .............................................................
Total debt securities .....................................................
Investments in limited partnerships .............................
Options ........................................................................
Rights and warrants .....................................................
Trade claims ................................................................
Total other investments ................................................
Derivative assets ..........................................................
Total assets ................................................................. $
Liabilities
Equity securities .......................................................... $
Sovereign debt .............................................................
Corporate bonds ...........................................................
Options ........................................................................
Total securities sold, not yet purchased .......................
Derivative liabilities.....................................................
Total liabilities ........................................................... $

839,903 $
—
839,903
—
—
—
—
—
—
—
6,284
1
—
6,285
321
846,509 $

5,207 $
—
—
4,714
9,921
441
10,362 $

($ in thousands)
17,914 $
94,282
112,196
325,133
8,017
82,139
10,486
10,639
436,414
29,286
6,785
—
17,681
53,752
38,724
641,086 $

— $

37,592
3,372
5,171
46,135
8,378
54,513 $

— $

857,817
96,294
954,111
325,533
8,017
86,749
10,486
10,639
441,424
34,578
13,069
1
17,681
65,329
39,045
12,314 $ 1,499,909

2,012
2,012
400
—
4,610
—
—
5,010
5,292
—
—
—
5,292
—

— $
—
—
—
—
—
— $

5,207
37,592
3,372
9,885
56,056
8,819
64,875

December 31, 2012

Quoted prices in
active markets
(Level 1)

Significant other
observable inputs
(Level 2)

Significant
unobservable
inputs (Level 3)

Total

Assets
Equity securities .......................................................... $
Private common equity securities ................................
Total equities ...............................................................
Asset-backed securities ................................................
Bank debts ...................................................................
Corporate bonds ...........................................................
Sovereign debt .............................................................
Total debt securities .....................................................
Investments in limited partnerships .............................
Commodities ................................................................
Options ........................................................................
Trade claims ................................................................
Total other investments ................................................
Derivative assets ..........................................................
Total assets ................................................................. $
Liabilities
Equity securities .......................................................... $
Sovereign debt .............................................................
Corporate bonds ...........................................................
Options ........................................................................
Total securities sold, not yet purchased .......................
Derivative liabilities.....................................................
Total liabilities ........................................................... $

496,473 $
—
496,473
—
—
—
—
—
—
51,093
3,191
—
54,284
1,025
551,782 $

104,308
—
—
3,259
107,567
10
107,577 $

($ in thousands)
1,699
—
1,699
191,401
22,531
56,814
7,485
278,231
91,287
—
276
11,583
103,146
24,603
407,679 $

—
59,918
8,924
45
68,887
12,982
81,869 $

—
2,757
2,757
—
54
1,046
—
1,100
—
—
—
—
—
—
3,857

—
—
—
—
—
—
—

498,172
2,757
500,929
191,401
22,585
57,860
7,485
279,331
91,287
51,093
3,467
11,583
157,430
25,628
963,318

104,308
59,918
8,924
3,304
176,454
12,992
189,446

During the years ended December 31, 2013 and 2012, the Company made no significant reclassifications of assets or
liabilities between Levels 1 and 2.

F-16

The following table presents the reconciliation for all investments measured at fair value using significant unobservable
inputs (Level 3) for the years ended December 31, 2013 and 2012:

January 1,
2013

Transfers in
to (out of)
Level 3

Purchases

Sales
($ in thousands)

Realized and
Unrealized
Gains
(Losses) (1)

December 31,
2013

Assets
Asset-backed securities ........ $
Bank debt .............................
Corporate bonds ...................
Private common equity

— $
54
1,046

133 $
(54)
—

552 $
—
4,094

(12) $
—
(1,392)

securities ...........................

2,757

(2,757)

2,031

—

(273) $
—
862

(19)

400
—
4,610

2,012

Investments in limited

partnerships ......................

Liabilities
Derivative liabilities ............. $

—
3,857 $

—
(2,678) $

(342)
4,690
11,367 $ (1,746) $

944
1,514 $

5,292
12,314

— $

— $ (4,335) $

4,335 $

—

January 1,
2012

Transfers in to
(out of)
Level 3

Purchases

Sales

($ in thousands)

Realized and
Unrealized
Gains
(Losses) (1)

December 31,
2012

Assets
Corporate bonds ................... $
Bank debt .............................
Private common equity

securities ...........................
Trade claims ........................
Total assets ......................... $

— $
—

—
—
— $

1,093 $
109

5,450
20
6,672 $

— $
—

(488) $
(8)

(2,401)
—
—
(22)
— $ (2,919) $

441 $
(47)

(292)
2
104 $

1,046
54

2,757
—
3,857

(1) Total change in realized and unrealized gain (loss) recorded on Level 3 financial instruments are included in net investment income in

the consolidated statements of income (loss).

Total unrealized gains related to fair value assets using significant unobservable inputs (Level 3) for the year ended
December 31, 2013 was $1.0 million (December 31, 2012 - $(0.7) million).

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 year, gains (losses) are presented as if the assets or liabilities had been transferred out of
Level 3 at the beginning of the year. The Company held no Level 3 investments where quantitative unobservable inputs are
produced by the Company itself when measuring fair value.

6. Securities purchased under an agreement to sell

The Company may enter into repurchase and reverse repurchase agreements with financial institutions in which the financial
institution agrees to resell or repurchase and the Company agrees to repurchase or resell such securities at a mutually agreed
price upon maturity. As of December 31, 2013, the Company held outstanding reverse repurchase agreements valued at $38.1
million (December 31, 2012 - $60.4 million). As of December 31, 2013, the total value of securities received as collateral by
the Company was $37.6 million (December 31, 2012 - $60.0 million). As the Company held only reverse repurchase
agreements as of December 31, 2013, these positions are not impacted by master netting agreements. Interest expense and
income related to these transactions are included in interest payable and receivable in the consolidated balance sheets. For the
year ended December 31, 2013, foreign currency gains of $1.9 million (2012 – gains of $0.6 million) on reverse repurchase
agreements are included in net investment income in the consolidated statements of income (loss). Generally, reverse
repurchase agreements mature within 30 to 90 days.

F-17

Securities sold, not yet purchased, at fair value

Securities sold, not yet purchased are securities that the Company has sold, but does not own, in anticipation of a decline in
the fair value of the security. The Company’s risk is that the value of the security will increase rather than decline.
Consequently, the settlement amount of the liability for securities sold, not yet purchased may exceed the amount recorded in
the consolidated balance sheet as the Company is obligated to purchase the securities sold, not yet purchased in the market at
prevailing prices to settle its obligations. To sell a security sold, not yet purchased, the Company needs to borrow the security
for delivery to the buyer. On each day that the transaction is open, the liability for the obligation to replace the borrowed
security is marked-to-market and an unrealized gain or loss is recorded. At the time that the transaction is closed, the
Company realizes a gain or loss equal to the difference between the price at which the security was sold and the cost of
replacing the borrowed security. While the transaction is open, the Company will also incur an expense for any dividends or
interest that will be paid to the lender of the securities.

Due from/to brokers

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

Margin debt balances are collateralized by cash held by the prime brokers and certain of the Company’s securities. Margin
interest was paid either at the daily broker call rate or based on LIBOR.

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 and to brokers includes cash
collateral received and posted from OTC and repurchase agreement counterparties. As of December 31, 2013, the Company’s
due from/to brokers includes a total non-U.S. currency payable balance of $268.5 million (December 31, 2012 - $90.8
million).

F-18

Derivatives

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

Derivative Assets by Primary Underlying Risk
Commodity Price
Commodity Future Options - Purchased ...............................
Credit
Credit Default Swaps - Protection Purchased .......................
Credit Default Swaps - Protection Sold ................................
Equity Price
Contracts for Differences - Long Contracts ..........................
Contracts for Differences - Short Contracts ..........................
Total Return Swaps - Long Contracts ...................................
Total Return Swaps - Short Contracts...................................
Interest Rates
Bond Futures - Short Contracts ............................................
Interest Rate Swaps ..............................................................
Interest Rate Swaptions ........................................................
Treasury Futures - Short Contracts .......................................
Foreign Currency Exchange Rates
Foreign Currency Forward....................................................
Foreign Currency Options - Purchased .................................
Total Derivative Assets .......................................................

Derivative Liabilities by Primary Underlying Risk
Commodity Price
Commodity Future Options - Sold .........................................
Credit
Credit Default Swaps - Protection Purchased ........................
Credit Default Swaps - Protection Sold .................................
Equity Price
Contracts for Differences - Long Contracts ...........................
Contracts for Differences - Short Contracts ...........................
Total Return Swaps - Long Contracts ....................................
Total Return Swaps - Short Contracts....................................
Index
Index Futures - Short Contracts .............................................
Interest Rates
Bond Futures - Short Contracts .............................................
Interest Rate Swaps ...............................................................
Interest Rate Swaptions .........................................................
Treasury Futures - Short Contracts ........................................
Foreign Currency Exchange Rates
Foreign Currency Forward.....................................................
Foreign Currency Options - Sold ...........................................
Total Derivative Liabilities .................................................

Listing currency (1)

USD

USD
USD

CHF/EUR/GBP/USD
NOK
BRL/JPY/USD
USD

JPY
EUR
EUR/JPY/USD
USD

As of December 31, 2013
Fair Value
($ in thousands)

256

15,397
1,157

10,549
67
2,950
3

212
182
1,269
108

Notional Amounts (2)

12,325

109,520
9,557

62,847
2,758
68,044
290

40,847
212,594
54,884
6,544

59,925
240,062
880,197

AUD/CAD/JPY/TRY
USD

1,332
5,563
39,045

Listing currency (1)

Fair Value
($ in thousands)

Notional Amounts (2)

USD

148

EUR/USD
USD

EUR
DKK
BRL/JPY/USD
USD

USD

EUR/USD
USD/JPY
USD

EUR/GBP
USD

2,634
348

66
425
1,385
140

441

—
821
174
—

709
1,528
8,819

35,484

59,446
875

14,607
7,253
24,807
5,037

8,888

—
465,560
99,587
—

189,030
178,476
1,089,050

(1) USD = US dollar, JPY = Japanese yen, EUR = Euro, GBP = British pound, BRL = Brazilian real, NOK = Norwegian krone, AUD = Australian dollar,

DKK = Danish krone, CAD = Canadian dollar, CHF = Swiss franc, TRY = Turkish lira

(2) The absolute notional exposure represents the Company’s derivative activity as of December 31, 2013, which is representative of the volume of

derivatives held during the period.

F-19

Derivative Assets by Primary Underlying Risk
Commodity Price
Commodity Future - Short Contracts .....................................
Credit
Credit Default Swaps - Protection Purchased ........................
Equity Price
Contracts for Differences - Long Contracts ...........................
Total Return Swaps - Long Contracts ....................................
Total Return Swaps - Short Contracts....................................
Interest Rates
Bond Futures - Short Contracts .............................................
Interest Rate Swaps ...............................................................
Interest Rate Swaptions .........................................................
Treasury Futures - Short Contracts ........................................
Foreign Currency Exchange Rates
Foreign Currency Forward.....................................................
Foreign Currency Options - Purchased ..................................
Total Derivative Assets ........................................................

Derivative Liabilities by Primary Underlying Risk
Commodity Price
Commodity Future Options - Purchased ................................
Credit
Credit Default Swaps - Protection Purchased ........................
Credit Default Swaps - Protection Sold .................................
Equity Price
Contracts for Differences - Long Contracts ...........................
Contracts for Differences - Short Contracts ...........................
Total Return Swaps - Long Contracts ....................................
Total Return Swaps - Short Contracts....................................
Interest Rates
Interest Rate Swaps ...............................................................
Interest Rate Swaptions .........................................................
Foreign Currency Exchange Rates
Foreign Currency Forward.....................................................
Foreign Currency Options - Sold ...........................................
Total Derivative Liabilities .................................................

Listing currency (1)

As of December 31, 2012

Fair Value
($ in thousands)

Notional Amounts (2)

USD

212

JPY/USD

14,176

EUR/GBP/USD
BRL/USD
HKD

JPY
EUR
EUR/JPY/USD
USD

CAD/JPY/USD
EUR/USD

4,913
246
(65)

248
156
584
564

2,090
2,504
25,628

5,363

69,059

40,454
13,710
179

43,108
6,569
584
64,819

57,549
2,504
303,898

Listing currency (1)

Fair Value
($ in thousands)

Notional Amounts (2)

USD

EUR/JPY/USD
USD

EUR/GBP/USD
EUR
BRL/JPY/USD
HKD/USD

JPY/USD
USD

EUR/GBP/USD
USD

10,458
212

710
29
467
38

539
—

211
318
12,992

37,567
438

9,016
1,513
24,499
1,014

478,730
—

41,334
318
594,446

(1) USD = US dollar, JPY = Japanese yen, EUR = Euro, GBP = British pound, BRL = Brazilian real, HKD = Hong Kong dollar, NOK = Norwegian

krone, AUD = Australian dollar, DKK = Danish krone, CAD = Canadian dollar, CHF = Swiss Franc

(2) The absolute notional exposure represents the Company’s derivative activity as of December 31, 2012, which is representative of the volume of

derivatives held during the period.

F-20

The following table sets forth, by major risk type, the Company’s realized and unrealized gains (losses) relating to derivative
trading activities for the years ended December 31, 2013 and 2012. These realized and unrealized gains (losses) are included
in net investment income in the consolidated statements of income (loss).

December 31, 2013

December 31, 2012

Realized Gain
(Loss)

Unrealized Gain
(Loss)*

Realized Gain
(Loss)

Unrealized Gain
(Loss)*

($ in thousands)

Primary Underlying Risk
Commodity Price
Commodities Futures - Long Contracts ............................ $
Commodities Futures - Short Contracts ............................
Commodity Future Options - Purchased ...........................
Commodity Future Options - Sold ....................................
Credit
Credit Default Swaps - Protection Purchased ...................
Credit Default Swaps - Protection Sold ............................
Equity Price
Contracts for Differences - Long Contracts ......................
Contracts for Differences - Short Contracts ......................
Total Return Swaps - Long Contracts ...............................
Total Return Swaps - Short Contracts...............................
Index
Index Futures - Long Contracts ........................................
Index Futures - Short Contracts ........................................
Interest Rates
Bond Futures - Short Contracts ........................................
Interest Rate Swaps ..........................................................
Interest Rate Swaptions ....................................................
Sovereign Debt Futures - Short Contracts ........................
Treasury Futures - Long Contracts ...................................
Treasury Futures - Short Contracts ...................................
Foreign Currency Exchange Rates
Foreign Currency Forward................................................
Foreign Currency Options ................................................
Foreign Currency Options - Purchased .............................
Foreign Currency Options - Sold ......................................
Catastrophe Risk Derivatives .......................................
$

— $
437
264
(81)

4,243
(4,845)

8,900
1,219
1,026
(557)

(2,413)
1,169

(289)
949
(170)
—
(119)
830

5,385
—
5,920
(3,787)
1,250
19,331 $

— $
(212)
15
168

(10,943)
10,690

6,172
(341)
1,786
76

—
(441)

(36)
(255)
913
—
—
(456)

(1,255)
—
1,069
(109)
3,085
9,926 $

1,710 $
127
(17)
—

1,239
—

288
931
(4,666)
2,569

—
(314)

—
312
665
(970)
—
(1,233)

(1,270)
38
(145)
—
—
(736) $

—
212
(10)
—

265
(212)

4,203
(29)
(221)
(103)

—
—

248
(383)
5
—
—
564

1,879
—
198
(87)
—
6,529

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

F-21

The Company’s ISDA agreements with its counterparties provide for various termination events including decline in NAV of
the Company’s investments over a certain period, key-man provisions, document delivery schedules, and Employment
Retirement Income Security Act and bankruptcy provisions. Upon the triggering of a termination event, a counterparty may
avail itself of various remedies including, but not limited to, waiver of the termination event, request for additional collateral,
renegotiation of the ISDA agreement, or immediate settlement of positions.

The Company obtains/provides collateral from/to various counterparties for OTC derivative contracts in accordance with
bilateral collateral agreements. As of December 31, 2013, the Company posted collateral in the form of cash of $35.4 million
(December 31, 2012 - $28.0 million) to certain counterparties to cover collateral requirements for open OTC derivatives.

The Company does not offset its derivative instruments and presents all amounts in the consolidated balance sheets on a
gross basis. 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 December 31, 2013 and December 31, 2012, the gross and
net amounts of derivative instruments that are subject to enforceable master netting arrangements or similar agreements were
as follows:

December 31, 2013
Counterparty

Gross Amounts not Offset in the Consolidated Balance Sheet

Gross Amounts of
Assets Presented
in the Consolidated
Balance Sheet

Financial
Instruments

Cash Collateral
Received

Net
Amount

Counterparty 1 ...................................................... $
Counterparty 2 ......................................................
Counterparty 3 ......................................................
Counterparty 4 ......................................................
Counterparty 5 ......................................................
Counterparty 6 ......................................................
Counterparty 7 ......................................................
Counterparty 8 ......................................................
Counterparty 9 ......................................................

1,128 $
4,998
16,066
1,351
3,198
12,234
2
—
68

($ in thousands)
1,041 $
400
3,509
1,351
1,054
492
2
—
68

— $

1,629
—
—
—
10,465
—
—
—

87
2,969
12,557
—
2,144
1,277
—
—
—

Total ...................................................................... $

39,045 $

7,917 $

12,094 $

19,034

December 31, 2013
Counterparty

Gross Amounts not Offset in the Consolidated Balance Sheet

Gross Amounts of
Liabilities
Presented in the
Consolidated
Balance Sheet

Financial
Instruments

Cash Collateral
Pledged

Net
Amount

1,041 $
400
3,509
1,360
1,054
492
59
—
904

($ in thousands)
1,041 $
400
3,509
1,351
1,054
492
2
—
68

— $
—
—
9
—
—
57
—
836

902 $

—
—
—
—
—
—
—
—
—

—

Total ...................................................................... $

8,819 $

7,917 $

F-22

December 31, 2012
Counterparty

Counterparty 1 .................................................... $
Counterparty 2 ....................................................
Counterparty 3 ....................................................
Counterparty 4 ....................................................
Counterparty 5 ....................................................
Counterparty 6 ....................................................
Counterparty 7 ....................................................
Counterparty 8 ....................................................
Counterparty 9 ....................................................
Counterparty 10 ..................................................
Counterparty 11 ..................................................
Counterparty 12 ..................................................
Total .................................................................... $

December 31, 2012
Counterparty

Gross Amounts not Offset in the Consolidated Balance Sheet

Gross Amounts of
Assets Presented
in the Consolidated
Balance Sheet

Financial
Instruments

Cash Collateral
Received

Net Amount

($ in thousands)

1,381 $
4,987
6,390
124
526
11,607
231
232
—
142
—
8

25,628 $

— $

1,761
4,850
124
526
1,080
231
16
—
—
—
—
8,588 $

— $
—
—
—
—
—
—
—
—
—
—
—
— $

1,381
3,226
1,540
—
—
10,527
—
216
—
142
—
8
17,040

Gross Amounts not Offset in the Consolidated Balance Sheet

Gross Amounts of
Liabilities
Presented in the
Consolidated
Balance Sheet

Financial
Instruments

Cash Collateral
Pledged

Net
Amount

($ in thousands)

Counterparty 1 ..................................................... $
Counterparty 2 .....................................................
Counterparty 3 .....................................................
Counterparty 4 .....................................................
Counterparty 5 .....................................................
Counterparty 6 .....................................................
Counterparty 7 .....................................................
Counterparty 8 .....................................................
Counterparty 9 .....................................................
Counterparty 10 ...................................................
Counterparty 11 ...................................................
Counterparty 12 ...................................................
Total ..................................................................... $

10.

Loss and loss adjustment expense reserves

— $

1,761
4,850
1,812
2,456
1,080
1,017
16
—
—
—
—
12,992 $

— $

1,761
4,850
124
526
1,080
231
16
—
—
—
—
8,588 $

— $
—
—
1,688
1,930
—
786
—
—
—
—
—
4,404 $

—
—
—
—
—
—
—
—
—
—
—
—
—

As of December 31, 2013 and 2012, loss and loss adjustment expense reserves in the consolidated balance sheets was
comprised of the following:

Case loss and loss adjustment expense reserves ............................................................... $
Incurred but not reported loss and loss adjustment expense reserves ...............................

December 31,
2013

December 31,
2012

($ in thousands)
34,307 $

100,024
134,331 $

3,668
63,603
67,271

F-23

The following table represents the activity in the reserve for losses and loss adjustment expenses for the years ended
December 31, 2013 and 2012:

Gross reserves for loss and loss adjustment expenses, beginning of year ..................................... $
Less: loss and loss adjustment expenses recoverable, beginning of year ......................................
Net reserves for loss and loss adjustment expenses, beginning of year .........................................
Increase (decrease) in net loss and loss adjustment expenses incurred in respect of losses

occurring in:
Current year ................................................................................................................................
Prior years’ .................................................................................................................................
Total incurred loss and loss adjustment expenses ..........................................................................
Net loss and loss adjustment expenses paid in respect of losses occurring in:

2013

2012

($ in thousands)
67,271 $
—
67,271

—
—
—

144,509

(4,697)

139,812

80,306
—
80,306

Current year ................................................................................................................................
Prior years’ .................................................................................................................................
Total net paid losses .......................................................................................................................
Net reserve for loss and loss adjustment expenses, end of year .....................................................
Plus: loss and loss adjustment expenses recoverable, end of year .................................................
Gross reserve for loss and loss adjustment expenses, end of year ................................................. $ 134,331 $

(27,528)
(54,501)
(82,029)
125,054
9,277

(13,035)
—
(13,035)
67,271
—
67,271

The $4.7 million decrease in prior years’ reserves reflects $1.3 million of favorable loss experience on several contracts and
$3.4 million related to premium estimate decreases, primarily related to one crop contract. The reduction in loss and loss
adjustment expense reserves related to premium estimates was accompanied by an equal decrease in the premium written and
earned for that contract, resulting in a minimal impact to net underwriting income.

11.

Management, performance and Founders fees

The Company and Third Point Re are party to a Joint Venture and Investment Management Agreement (the “Investment
Agreement”) with Third Point LLC and Third Point Advisors LLC under which Third Point LLC manages certain jointly
held assets.

Pursuant to the Investment Agreement, Third Point Advisors LLC receives an annual performance fee allocation equal to
20% of the net investment income of the Company’s share of the investment assets managed by Third Point LLC, subject to a
loss carry forward provision. Additionally, a total management fee equal to 2% annually of the Company’s share of the
investment assets managed by Third Point LLC is paid to Third Point LLC and various Founders of the Company.
Management fees are paid monthly, whereas performance fees are paid annually, in arrears.

Investment fee expenses related to the Investment Agreement, which are included in net investment income in the
consolidated statements of income (loss) for the years ended December 31, 2013 and 2012 are as follows:

2013

2012

Management fees - Third Point LLC ..........................................................................................
Management fees - Founders ......................................................................................................
Performance fees - Third Point Advisors LLC ...........................................................................

($ in thousands)
3,651
20,686
62,996
87,333

2,444
13,854
33,913
50,211

As of December 31, 2013, $63.0 million (December 31, 2012 - $33.9 million) was included in non-controlling interests
related to the performance fee payable to Third Point Advisors LLC. Since the performance fee allocation is based on annual
performance, the performance fees are included in total liabilities until the performance fee is determined at year end and
allocated to Third Point Advisors LLC’s capital account, in accordance with the Investment Agreement.

F-24

12.

Deposit contracts

Effective October 1, 2012, Third Point Re entered into an aggregate excess of loss agreement for consideration of $50.0
million. Under the terms of the agreement, Third Point Re maintains a notional experience account, the value of which is the
$50.0 million of consideration less claims paid plus a crediting rate multiplied by the annual starting balance of the notional
experience account. The crediting rate varies from a minimum of 3% to a maximum of 6.1%, based on actual investment
returns realized by the Company.

Effective May 1, 2013, Third Point Re entered into an aggregate excess of loss agreement for consideration of $25.0 million.
Under the terms of the agreement, Third Point Re maintains a notional experience account, the value of which is the $25.0
million of consideration less claims paid plus a crediting rate multiplied by the annual starting balance of the notional
experience account. The crediting rate varies from a minimum of 3% to a maximum of 6.5%, based on actual investment
returns realized by the Company.

Effective June 30, 2013, Third Point Re entered into two loss portfolio contracts for consideration of $27.2 million. Under the
terms of the agreements, Third Point Re maintains a notional experience account, the initial value of which is based on the
consideration received less a margin. The value of the experience account is reduced by loss payments as they are made and
increased by a quarterly interest credit of 0.625%.

Effective July 1, 2013, Third Point Re entered into a contract for consideration of $14.2 million. Under the terms of the
agreement, Third Point Re maintains a notional experience account, the initial value of which is based on the consideration
received less a margin. The value of the experience account is reduced by loss payments as they are made and increased by a
quarterly interest credit of 0.625%.

The following table details the deposit liabilities as of December 31, 2013 and 2012:

Initial consideration received ......................................................................................
Net investment expense accrued .................................................................................
Payments .....................................................................................................................

December 31,
2013

December 31,

2012

($ in thousands)

116,369
5,177
(600)
120,946

50,000
446
—
50,446

13.

General and administrative expenses

General and administrative expenses for the years ended December 31, 2013 and 2012 and period from October 6, 2011
(incorporation date) to December 31, 2011 are as follows:

Payroll and related ...............................................................................................
Share compensation expenses ..............................................................................
Legal and accounting ...........................................................................................
Travel and entertainment .....................................................................................
IT related ..............................................................................................................
Corporate insurance .............................................................................................
Credit facility fees ................................................................................................
Occupancy ...........................................................................................................
Director and board costs ......................................................................................
Other general and administrative expenses ..........................................................

2013

2012
($ in thousands)

2011

13,490
9,800
3,312
2,473
1,290
744
605
420
213
689
33,036

13,780
6,408
1,436
1,887
1,417
365
677
595
236
575
27,376

698
—
149
—
—
—
—
34
—
249
1,130

F-25

14.

Net investment income

Net investment income for the years ended December 31, 2013 and 2012 a consisted of the following:

Net investment income by type
Net unrealized gains on investments and investment derivatives ..............................................................
Net realized gains on investments and investment derivatives ..................................................................
Net gain (loss) on foreign currencies .........................................................................................................
Dividend and interest income, net of withholding taxes ............................................................................
Dividends paid on securities sold, not yet purchased .................................................................................
Management and performance fees ...........................................................................................................
Other expenses ...........................................................................................................................................
Net investment income on investments managed by Third Point LLC ......................................................
Deposit liabilities and reinsurance contracts investment expense ..............................................................
Investment income on cash collateral held by the Catastrophe Reinsurer .................................................
Net gain on reinsurance contract derivatives written by the Catastrophe Reinsurer ..................................

Net investment income by asset class
Net investment gains on equity securities ..................................................................................................
Net investment gains on debt securities .....................................................................................................
Net investment gains (losses) on other investments ...................................................................................
Net investment gains on derivatives ..........................................................................................................
Net investment gains (losses) on securities sold, not yet purchased ..........................................................
Net investment income (loss) on cash ........................................................................................................
Net investment gains on securities purchased under and agreement to resell ............................................
Management and performance fees ...........................................................................................................
Other investment expenses ........................................................................................................................
Deposit liabilities and reinsurance contracts investment expense ..............................................................

2013

2012

($ in thousands)

78,950
236,333
21,106
14,233
(722)
(87,333)
(8,863)
253,704
(4,922)
86
4,335
253,203

113,422
55,632
(219)
25,284
(1,629)
(50,211)
(5,411)
136,868
(446)
—
—
136,422

2013

2012

($ in thousands)

243,449
69,194
(5,045)
29,257
(5,974)
17,961
1,863
(87,333)
(5,247)
(4,922)
253,203

96,210
65,040
7,386
5,793
17,076
(1,230)
562
(50,211)
(3,758)
(446)
136,422

15.

Share capital

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. As of December 31, 2013, 103,888,916 common
shares were issued and outstanding. No preference shares have been issued to date.

On August 20, 2013, the Company completed an IPO of 24,832,484 common shares at a purchase price of $12.50 per share.
The net proceeds of the offering were $286.0 million, after deducting offering costs.

Warrants

The Company’s Founders and an advisor provided insurance industry expertise, resources and relationships to ensure that the
Company would be fully operational with key management in place in time for the January 2012 underwriting season. In
consideration of these commitments, the Company reserved for issuance to the Founders and an advisor warrants to purchase,
in the aggregate, up to 4.0% (Founders 3.5% and an advisor 0.5%) of the diluted shares (up to a maximum of $1 billion of
subscribed shares) provided that the Founders and the advisor will not be issued any warrants for common shares issued in
consideration for any capital raised by the Company in excess of $1 billion. The following is a summary of warrants as of
December 31, 2013:

Founders ...................................................................................
Advisor .....................................................................................

$
$

10.00
10.00

4,069,868
581,295
4,651,163

15,203
2,171
17,374

Authorized and
Exercise price
issued
($ in thousands, except for share and per share amounts)

Aggregated fair
value of
warrants

F-26

The warrants were subject to a performance condition that was met as a result of the IPO. Prior to the IPO, 3,648,006 of the
warrants outstanding had met the performance condition. After the IPO, the remaining 1,003,157 warrants met the
performance condition. For the year ended December 31, 2013, the Company recorded $3.7 million related to the additional
warrants that met the performance condition as a result of the IPO. These amounts have been recorded as a component of
capital raise costs in additional paid in capital resulting in no net impact to total shareholders’ equity.

The warrants expire 10 years from the date of issuance, December 22, 2011, and will be exercisable at a price per share of
$10.00, which is equal to the price per share paid by investors in the initial private offering.

16.

Share-based compensation

On July 15, 2013, the Third Point Reinsurance Ltd. 2103 Omnibus Incentive Plan (“Omnibus Plan”) was approved by the
Board of Directors and subsequently on August 2, 2013 by the Shareholders of the Company. An aggregate of 21,627,906
common shares were made available under the Omnibus Plan. This number of shares includes the shares available under the
Third Point Reinsurance Limited Share Incentive Plan (“Share Incentive Plan”). Awards under the Omnibus Plan may be
made in the form of performance awards, restricted shares, restricted share units, share options, share appreciation rights and
other share-based awards.

As of December 31, 2013, 10,613,975 of the Company’s common shares were available for future issuance under the equity
incentive compensation plans.

Share based compensation expense of $9.8 million for the year ended December 31, 2013 (2012 - $6.4 million) was included
in general and administrative expenses, which included $2.1 million related to additional expense incurred due to the
performance condition having been met as a result of the IPO.

As of December 31, 2013, the Company had $23.8 million of unamortized share compensation expense which is expected to
be amortized over a weighted average period of 2.0 years.

(a)

Management and director options

The management options issued under the Share Incentive Plan were subject to a service and performance condition. The
service condition will be met with respect to 20% of the management options on each of the first five anniversary dates
following the grant date of the management options. The performance condition with respect to the management options was
met as a result of the IPO. Prior to the IPO, 8,572,594 of the management options outstanding had met the performance
condition. After the IPO, the remaining 2,357,633 management options had met the performance condition.

The director options contain only a service condition that will be met with respect to 20% of the director options on each of
the five anniversary dates following the grant date of the director options. On November 6, 2013, the director options were
modified so that a total of 60% of the outstanding options vested on that date and the remaining 40% of the director options
were forfeited. These forfeited options were replaced with restricted share awards.

The management and director options activity for the years ended December 31, 2013 and 2012 were as follows:

Balances as of January 1, 2012 ...................................................................................
Granted - employees ...................................................................................................
Granted - directors ......................................................................................................
Forfeited ......................................................................................................................
Exercised ....................................................................................................................
Balances as of December 31, 2012 .............................................................................
Granted - employees ...................................................................................................
Granted - directors ......................................................................................................
Forfeited ......................................................................................................................
Exercised ....................................................................................................................
Balances as of December 31, 2013 .............................................................................

Number of
options

—
10,872,090
84,748
—
—
10,956,838
348,836
—
(324,599)
—
10,981,075

Weighted
average exercise
price

—
13.20
13.20
—

13.20
14.09

13.20

13.23

F-27

The fair value of share options issued were estimated on the grant date using the Black-Scholes option-pricing model. The
estimated share price used for purposes of determining the fair value of share options that were granted in the second quarter
of 2013 (prior to the IPO) was $10.89 (2012 - $10.00). The volatility assumption used of 21.95% (2012 - 31.25%) was based
on the average estimated volatility of a reinsurance company peer group. The other assumptions used in the option-pricing
model were as follows: risk free interest rate of 1.23% (2012 - 1.9%), expected life of 6.5 years (2012 - 10.0 years) and a
0.0% dividend yield (2012 - 0.0%). As of December 31, 2013, the weighted average remaining contractual term for options
outstanding was 8.1 years (2012 - 9.0 years).

The following table summarizes information about the Company’s management and director share options outstanding as of
December 31, 2013:

Range of exercise prices
$10.00-$10.89 ................................
$16.00-$16.89 ................................
$20.00-$20.89 ................................

Options outstanding
Weighted
average
exercise price
10.03
16.03
20.03
13.23

$
$
$
$

Number of
Options
6,588,647
2,196,214
2,196,214
10,981,075

Remaining
contractual
life

8.06
8.06
8.06
8.06

Options exercisable

Number of
options
1,872,367
624,123
624,123
3,120,613

Weighted
average
exercise price
10.00
$
16.00
$
20.00
$
13.20
$

For the year ended December 31, 2013, the Company recorded $8.3 million (2012 - $4.8 million) of share compensation
expense related to share options, which included $2.1 million related to additional expense incurred related to the
performance condition being met as a result of the IPO.

The aggregate intrinsic value of options outstanding and options exercisable as of December 31, 2013 was $61.5 million and
$17.6 million, respectively (2012 - $5.9 million and $0.5 million, respectively).

(b)

Restricted shares

Restricted shares 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 share award activity for the year ended December 31, 2013 and 2012 was as follows:

Balance as of January 1, 2012 .............................................................................
Granted ................................................................................................................
Forfeited ...............................................................................................................
Vested ..................................................................................................................
Balance as of December 31, 2012 ........................................................................
Granted ................................................................................................................
Forfeited ...............................................................................................................
Vested ..................................................................................................................
Balance as of December 31, 2013 ........................................................................

Number of non-
vested restricted
shares

—
641,800
(22,500)
—
619,300
37,856
—
—
657,156

Weighted
average grant
date fair value
$

—
10.00
10.00

10.00
15.22
—
—
10.30

For the year ended December 31, 2013, the Company issued 5,000 (2012 - 641,800) restricted shares to employees. The
restricted shares issued to employees in 2013 will cliff vest after 2 years from the date of issuance, subject to the grantee’s
continued service with the Company. The restricted shares issued in 2012 cliff vest after 3 or 5 years from the date of
issuance, subject to the grantee’s continued service with the Company.

For the year ended December 31, 2013, the Company also awarded 32,856 restricted shares (2012 - none) to non-employee
directors pursuant to the Company’s Omnibus Plan. Each of the restricted shares issued to non-employee directors contain
similar restrictions to those issued to employees and will vest on December 31, 2014, subject to the grantee’s continued
service with the Company.

F-28

For the year ended December 31, 2013, the Company recorded $1.5 million (2012 - $1.6 million) compensation expense
related to restricted share awards.

17.

Non-controlling interests

Non-controlling interests represent the portion of equity in consolidated subsidiaries not attributable, directly or indirectly, to
the Company. The ownership interests in consolidated subsidiaries held by parties other than the Company have been
presented in the consolidated balance sheets, as a separate component of shareholders’ equity. Non-controlling interests as of
December 31, 2013 and 2012 are as follows:

Catastrophe Fund ............................................................................................................ $
Catastrophe Fund Manager .............................................................................................
Joint Venture - Third Point Advisors LLC share ............................................................

($ in thousands)
49,254 $
(236)
69,717

118,735 $

19,646
2
40,129
59,777

December 31,
2013

December 31,
2012

Income (loss) attributable to non-controlling interests for the years ended December 31, 2013 and 2012 was:

2013

2012

($ in thousands)
4,284 $
(238)
1,721
5,767 $

—
—
1,216
1,216

As of December 31, 2013, the following entities were consolidated in line with voting model per ASC 810:

Consolidation:

•

Third Point Reinsurance Opportunities Fund Ltd.

Third Point Re Cat Ltd.

Third Point Reinsurance Investment Management Ltd.

As of December 31, 2013, the following entities were consolidated in line with variable interest model as per ASC 810:
Consolidation:

•

Investment Joint Venture

Third Point Reinsurance Opportunities Fund Ltd. and Third Point Re Cat Ltd.

As of December 31, 2013, Third Point Re’s investment in the Catastrophe Fund was $54.8 million (December 31,
2012 - $22.0 million), representing approximately 53% of the Catastrophe Fund’s issued, non-voting, participating
share capital. The objective of the Catastrophe Fund is to achieve positive uncorrelated investment returns by
investing, through the Catastrophe Reinsurer, in a portfolio of collateralized reinsurance transactions and other
insurance-linked investments, including catastrophe bonds and industry loss warranties.

The Catastrophe Fund Manager holds 100% of the authorized and issued voting, nonparticipating shares of the
Catastrophe Fund, while the Catastrophe Fund’s investors, including Third Point Re, hold 100% of issued non-
voting, participating shares.

Furthermore, 100% of the authorized and issued voting, non-participating share capital of the Catastrophe Reinsurer
and 100% of the issued non-voting, participating share capital of the Catastrophe Reinsurer is held by the
Catastrophe Fund.

F-29

For the year ended December 31, 2013, the Catastrophe Fund called $53.0 million (Third Point Re’s share - $28.0
million) of committed capital resulting in a contribution to non-controlling interests for the Catastrophe Fund of
$25.3 million for the year ended December 31, 2013.

Third Point Reinsurance Investment Management Ltd. (the “Catastrophe Fund Manager”)

The Catastrophe Fund Manager has been consolidated as part of the Company with Hiscox’s 15% interest in the
Catastrophe Fund Manager recorded as a non-controlling interest. The Catastrophe Fund Manager acts as manager
for both the Catastrophe Fund and the Catastrophe Reinsurer and in that capacity is responsible for overseeing:

•

The investment activities of the Catastrophe Fund, and

The underwriting activities of the Catastrophe Reinsurer.

The Catastrophe Fund Manager does not participate in the profits or losses of either the Catastrophe Fund or the
Catastrophe Reinsurer; however, the Catastrophe Fund Manager does receive management and performance fees for
its advisory services.

Third Point Advisors LLC

The joint venture created through the Investment Agreement (Note 11) has been considered a variable interest entity
in accordance with U.S. GAAP. Since the Company was deemed to be the primary beneficiary, the Company has
consolidated the joint venture and has recorded Third Point Advisors LLC’s minority interest as a non-controlling
interest in the consolidated statements of shareholders’ equity.

For the year ended December 31, 2013, $35.1 million (2012 - $nil) was distributed by Third Point Advisors LLC
and reduced the amount of the non-controlling interest.

18.

Earnings per share

The following sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2013 and
2012 and period from October 6, 2011 (date of incorporation) to December 31, 2011:

Weighted-average number of common shares outstanding:

Basic number of common shares outstanding .............................
Dilutive effect of options .............................................................
Dilutive effect of warrants ...........................................................
Diluted number of common shares outstanding ..........................

2013

87,505,540
400,149
1,064,842
88,970,531

2012
($ in thousands)
78,432,132
—
166,104
78,598,236

2011

78,432,132
—
—
78,432,132

Basic net income (loss) per common share:

Net income (loss) ........................................................................ $
Income allocated to participating shares .....................................
Net income (loss) available to common shareholders ................. $

227,311
(1,618)
225,693

Basic net income (loss) per common share ................................. $

2.58

Diluted net income (loss) per common share

Net income (loss) ........................................................................ $
Income allocated to participating securities ................................
Net income (loss) available to common shareholders ................. $

227,311
(1,592)
225,719

Diluted net income (loss) per common share .............................. $

2.54

99,401
(734)
98,667

1.26

99,401
(737)
98,664

1.26

(1,130)
—
(1,130)

(0.01)

(1,130)
—
(1,130)

(0.01)

For the years ended December 31, 2013 and 2012 and period from October 6, 2011 (date of incorporation) to December 31,
2011, anti-dilutive options and warrants of 3,786,173, 3,052,091 and 3,648,006, respectively, were excluded from the
computation of diluted earnings (loss) per share.

F-30

19.

Related party transactions

In addition to the transactions disclosed in Notes 5, 11 and 17 to these consolidated financial statements, the following
additional transactions are classified as related party transactions, as each counterparty has either a direct or indirect
shareholding in the Company or the Company has an investment in such counterparty.

Pine Brook Road Partners, LLC and Narragansett Bay Insurance Company

Third Point Re entered into a quota share reinsurance agreement with Narragansett Bay Insurance Company
(“Narragansett Bay”) effective December 31, 2012, which was renewed on December 31, 2013. The Company
recorded $4.7 million of premiums related to these contracts for the year ended December 31, 2013 (December 31,
2012 - $9.0 million). Pine Brook Road Partners, LLC (“Pine Brook”) is the manager of an investment fund that
owns common shares and warrants issued by the Company. Pine Brook currently owns approximately 12.0% of the
Company’s outstanding common shares. Pine Brook is also the manager of an investment fund that owns common
shares in Narragansett Bay.

TP Lux Holdco LP

Third Point Re entered into a limited partnership agreement, as one of the limited partners of TP Lux Holdco LP (the
“Cayman HoldCo”), which is also 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”), which is also an affiliate of the
Investment Manager.

The LuxCo was established under the laws of the Grand-Duchy of Luxembourg and its principle objective is to act
as a collective investment vehicle to purchase Euro debt and equity investments. Third Point Re invests in the
Cayman HoldCo alongside other investment funds managed by the Investment Manager. As of December 31, 2013
and 2012, Third Point Re held approximately a 10% interest in the Cayman Holdco. As a result, Third Point Re
accounts for its investment in the limited partnership under the variable interest model, in which Third Point Re is
not the primary beneficiary, at fair value in the consolidated balance sheets and records the change in the fair value
in the consolidated statements of income (loss).

As of December 31, 2013, the estimated fair value of the investment in the limited partnership was $29.3 million
(December 31, 2012 - $91.3 million). The valuation policy with respect to this investment in a limited partnership is
further described in Note 5.

Third Point Loan L.L.C.

Third Point Loan L.L.C. (“Loan LLC”) serves as nominee of Third Point Re and other affiliated investment
management clients of the Investment Manager for certain investments. Loan LLC has appointed the Investment
Manager as its true and lawful agent and attorney. As of December 31, 2013, Loan LLC held $147.2 million
(December 31, 2012 - $43.7 million) of Third Point Re’s investments, which are included in investments in
securities and in derivative contracts in the consolidated balance sheets. Third Point Re’s pro rata interest in the
underlying investments registered in the name of the Loan LLC and the related income and expense are reflected
accordingly in the consolidated balance sheets and the consolidated statements of income (loss).

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

Third Point Re is a limited partner in Third Point Hellenic Recovery US Feeder Fund, L.P. (“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 and invests and holds debt and equity interests.

Third Point Re committed $11.4 million in the Hellenic Fund, of which $4.3 million was called during the year
ended December 31, 2013. As of December 31, 2013, the estimated fair value of Third Point Re’s investment in the
Hellenic Fund was $5.3 million. The valuation policy with respect to this investment in a limited partnership is
further described in Note 5.

F-31

As of December 31, 2013, Third Point Re held less than a 2% interest in the Hellenic Fund. As a result, Third Point
Re accounts for its investment in the Hellenic Fund under the variable interest model, in which Third Point Re is not
the primary beneficiary, at fair value in the consolidated balance sheets and records the change in the fair value in
the consolidated statements of income (loss).

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 recognised in the consolidated balance
sheets.

Securities sold, not yet purchased are recorded as liabilities in the 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 consolidated balance sheets. The Company’s investments in securities 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 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 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.

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 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

F-32

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. Cash collateral available to the Company to mitigate potential counterparty
risk related to written credit default swaps amounted to $1.6 million as of December 31, 2013. Cash collateral received 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 December 31,
2013:

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 2046

Total Written
Credit Default
Swaps (1)
($ in thousands)

Asset

Liability

Net Asset/
(Liability)

Single name (0 - 250) ........ $
Single name (251-500) ......
Index (0-250) .....................

368 $

9,514
—
9,882 $

— $
—
550
550 $

368 $ —
1,136
21

9,514
550

10,432 $ 1,157 $

(104)
—
(244)
(348) $

(104)
1,136
(223)
809

(1) As of December 31, 2013, 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.

As of December 31, 2012, the Company sold protection on an index-reference obligation with a maximum potential payout
amount of $0.4 million, a credit spread of 0.44% and maturity in 2046. The fair value of such protection sold totaled $0.2
million as of December 31, 2012.

Concentrations of credit risk

In addition to off-balance sheet risks related to specific financial instruments, the Company may be subject to concentration
of credit risk with particular counterparties. Substantially all securities transactions of the Company are cleared by several
major securities firms. The Company had substantially all such individual counterparty concentration with these brokers or
their affiliates as of December 31, 2013. 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 Joint Venture 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 counterparty inherent in such contracts which are recognised in the consolidated
balance sheets. As of December 31, 2013, the Company’s maximum counterparty credit risk exposure was $19.0 million
(December 31, 2012 - $17.0 million).

21.

Commitments and Contingencies

Operating lease

The Company leases office space at Chesney House in Bermuda. The lease expires on November 30, 2015. The lease has
been accounted for as an operating lease. Total rent expense for the year ended December 31, 2013 was $0.4 million (2012:
$0.4 million, 2011: $0.03 million).

F-33

Future minimum rental commitments as of December 31, 2013 under this lease are expected to be as follows:

2014 ...........................................................................................................................................................
2015 ...........................................................................................................................................................
2016 ...........................................................................................................................................................
2017 ...........................................................................................................................................................

($ in thousands)
402
368
—
—
770

Agreements

Third Point LLC

The Company and Third Point Re (together, the “Companies”) entered into a 5 year investment management agreement with
Third Point LLC on December 22, 2011. The Companies are parties to an Investment Agreement with Third Point LLC
under which the Companies, Third Point LLC and Third Point Advisors LLC formed a joint venture for the purpose of
managing certain jointly held assets. The non-controlling interest in the consolidated balance sheets includes Third Point
Advisors LLC’s share of assets in the investment joint venture.

Netjets

On December 20, 2011, Third Point Re acquired from Netjets Sales Inc. (“Netjets”) an undivided 12.5% interest in two
aircraft for a five year period. The agreement with NetJets provides for monthly management fees, occupied hourly fees and
other fees. Future minimum management fee commitments as of December 31, 2013 under the existing lease are expected to
be as follows:

($ in thousands)
547
567
539
—
1,653

Letters of credit

As of December 31, 2013, the Company had entered into the following letter of credit facilities, which automatically renew
annually unless terminated by either party in accordance with the required notice period:

BNP Paribas ............................... $
Citibank (1) ................................
J.P. Morgan ................................

Facility
($ in thousands)
100,000
150,000
50,000
300,000

Renewal date

Notice period (Unused Facility Portion)

February 15, 2015
January 23, 2015
August 22, 2014

60 days prior to termination date
90 days prior to termination date
60 days prior to termination date

(1) Effective January 1, 2013, the Citibank facility was reduced from $250.0 million to $150.0 million.

As of December 31, 2013, $127.3 million (December 31, 2012 - $60.9 million) of letters of credit, representing 42.4%
(December 31, 2012 – 15.3% (based on total available facilities of $400 million)) of the total available facilities, had been
drawn upon.

Under the facilities, the Company provides collateral that may consist of equity securities, repurchase agreements and cash
and cash equivalents. As of December 31, 2013, cash and cash equivalents with a fair value of $100.6 million (December 31,
2012 - $64.8 million) were pledged as security against the letters of credit issued. These amounts are included in restricted
cash and cash equivalents in the 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, A.M. Best Company
rating of “A-” or higher, and 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, the Company will be prohibited from paying dividends.
The Company was in compliance with all of the covenants as of December 31, 2013.

F-34

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. As of
December 31, 2013, the Company had no unfunded capital commitments.

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 Third Point Advisors LLC, 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 consolidated statements of
income (loss).

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. While the final outcome of legal disputes that may arise cannot be predicted with
certainty, the Company is not currently involved in any 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 two operating segments – Property and Casualty Reinsurance and
Catastrophe Risk Management. The Company has also identified a corporate function that includes the Company’s
investment results and certain general and administrative expenses related to corporate activities.

The following is a summary of the Company’s operating segments results for the years ended December 31, 2013 and 2012:

Year Ended December 31, 2013

Property and
Casualty
Reinsurance

Catastrophe
Risk
Management

Corporate

Total

Revenues
Gross premiums written .....................................................
Gross premiums ceded .......................................................
Net premiums written ........................................................
Change in net unearned premium reserves ........................
Net premiums earned .........................................................
Net investment income ......................................................
Total revenues ....................................................................
Expenses
Loss and loss adjustment expenses incurred, net ...............
Acquisition costs, net .........................................................
General and administrative expenses .................................
Total expenses ...................................................................
Underwriting loss ...............................................................
Income including non-controlling interests .......................
Income attributable to non-controlling interests ................
Net income (loss) ..............................................................

Property and Casualty Reinsurance - Underwriting Ratios:
Loss ratio (1) ......................................................................
Acquisition cost ratio (2) ...................................................
General and administrative expense ratio (3) .....................
Combined ratio (4) .............................................................

393,588
(9,975)
383,613
(171,006)
212,607
—
212,607

139,616
66,981
21,838
228,435
(15,828)
n/a
n/a
(15,828) $

65.7%
31.5%
10.3%
107.5%

($ in thousands)
8,349
$
—
8,349
(289)
8,060
4,421
12,481

—
—
—
—
—
248,782
248,782

196
963
3,852
5,011
n/a
7,470
(4,046)
3,424

—
—
7,346
7,346
n/a
241,436
(1,721 )
$ 239,715

401,937
(9,975)
391,962
(171,295)
220,667
253,203
473,870

139,812
67,944
33,036
240,792
n/a
233,078
(5,767)
227,311

(1) Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned.

F-35

(2) Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.

(3) General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting

activities by net premiums earned.

(4) 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.

Year Ended December 31, 2012

Property and
Casualty
Reinsurance

Catastrophe
Risk
Management

Corporate

Total

Revenues
Gross premiums written ..............................................
Gross premiums ceded ................................................
Net premiums written .................................................
Change in net unearned premium reserves .................
Net premiums earned ..................................................
Net investment income ...............................................
Total revenues .............................................................
Expenses
Loss and loss adjustment expenses incurred, net ........
Acquisition costs, net ..................................................
General and administrative expenses ..........................
Total expenses ............................................................
Underwriting loss ........................................................
Income (loss) including non-controlling interests.......
Income attributable to non-controlling interests .........
Net income (loss) .......................................................

190,374
—
190,374
(93,893)
96,481
—
96,481

80,306
24,604
20,290
125,200
(28,719)
n/a
n/a
(28,719) $

Property and Casualty Reinsurance - Underwriting Ratios:

Loss ratio (1) ...............................................................
Acquisition cost ratio (2) ............................................
General and administrative expense ratio (3) .............
Combined ratio (4) ......................................................

83.2%
25.5%
21.0%
129.7%

($ in thousands)
—
—
—
—
—
—
—

—
—
—
—
—
136,422
136,422

—
—
1,534
1,534
n/a
(1,534)
—

—
—
5,552
5,552
n/a
130,870
(1,216 )
(1,534) $ 129,654

190,374
—
190,374
(93,893)
96,481
136,422
232,903

80,306
24,604
27,376
132,286
n/a
100,617
(1,216)
99,401

(1)

Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned.

(2) Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.

(3) General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting

activities by net premiums earned.

(4) 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.

For the year ended December 31, 2013, three contracts individually contributed greater than 10% of total gross premiums
written. These three contracts individually contributed 14.9%, 11.2% and 10.5%, respectively, of total gross premiums
written for the year ended December 31, 2013. For the year ended December 31, 2012, three contracts each contributed
greater than 10% of total gross premiums written. These three contracts contributed 22.3%, 20.0% and 11.8%, respectively,
of total gross premiums written for the year ended December 31, 2012.

F-36

The following table provides a breakdown of the Company’s gross premiums written by line of business for the years ended
December 31, 2013 and 2012:

Property ......................................................................................
Casualty ......................................................................................
Specialty .....................................................................................
Total property and casualty reinsurance .....................................
Catastrophe risk management .....................................................

2013

2012

67,612
210,017
115,959
393,588
8,349
$ 401,937

($ in thousands)

16.8% $ 103,174
44,700
52.2%
42,500
28.9%
190,374
97.9%
—
2.1%
100.0% $ 190,374

54.2%
23.5%
22.3%
100.0%
—%
100.0%

The following table provides a breakdown of the Company’s gross premiums written by prospective and retroactive
reinsurance contracts for the years ended December 31, 2013 and 2012:

Prospective ..................................................................................
Retroactive ..................................................................................

2013

2012

$ 362,151
39,786
$ 401,937

($ in thousands)

90.1% $ 190,374
—
100.0% $ 190,374

9.9%

100.0%
—%
100.0%

The Company records the gross premium written and earned at the inception of the contract for retroactive reinsurance
contracts.

Substantially all of the Company’s business is sourced through reinsurance brokers. The following table provides a
breakdown of the Company’s gross premiums written from brokers for the years ended December 31, 2013 and 2012:

Aon Benfield - a division of Aon plc .........................................
Guy Carpenter & Company, LLC ..............................................
Advocate Reinsurance Partners, LLC ........................................
BMS Intermediaries ...................................................................
Other brokers .............................................................................
Total broker placed ....................................................................
Other ..........................................................................................

2013

2012

$ 111,865
89,125
57,994
46,095
40,246
345,325
56,612
$ 401,937

($ in thousands)
27.8% $
22.2%
14.4%
11.5%
10.0%
85.9%
14.1%

22,000
65,073
22,473
5,269
33,059
147,874
42,500
100.0% $ 190,374

11.6%
34.2%
11.8%
2.8%
17.4%
77.8%
22.2%
100.0%

The following table provides a breakdown of the Company’s gross premiums written by domicile of the ceding companies
for the years ended December 31, 2013 and 2012:

United States ............................................................................
Bermuda ...................................................................................
Other ........................................................................................

2013

2012

304,141
96,396
1,400
401,937

($ in thousands)

75.7% $ 190,374
—
24.0%
—
0.3%
100.0% $ 190,374

100.0%
—%
—%
100.0%

F-37

23.

Statutory requirements

The following is a summary of actual and required statutory capital and surplus and statutory net income as of December 31,
2013 and 2012 and for the years then ended:

Actual statutory capital ........................................................ $
Required statutory capital and surplus .................................
Statutory net income ............................................................

December 31,
2013

December 31,
2012

($ in thousands)

1,303,487
526,933
229,974

824,453
116,416
101,347

Under the Bermuda Insurance Act, 1978 and related regulations, Third Point Re is subject to capital requirements calculated
using the Bermuda Solvency and Capital Requirement, or BSCR model, which is a standardized statutory risk-based capital
model used to measure the risk associated with Third Point Re’s assets, liabilities and premiums. Third Point Re’s required
statutory capital and surplus under the BSCR model is referred to as the enhanced capital requirement, or ECR. Third Point
Re is required to calculate and submit the ECR to the Bermuda Monetary Authority, or the BMA, annually. Following receipt
of the submission of Third Point Re’s ECR the BMA has the authority to impose additional capital requirements (capital add-
ons) if it deems necessary. If a company fails to maintain or meet its ECR, the BMA may take various degrees of regulatory
action. As of December 31, 2013 and 2012, Third Point Re met its ECR.

The principal difference between statutory capital and surplus and shareholders’ equity presented in accordance with GAAP
is deferred acquisition costs and prepaid expenses, which are non-admitted assets for statutory purposes.

Third Point Re is also required under its Class 4 license to maintain a minimum liquidity ratio whereby the value of its
relevant assets is not less than 75% of the amount of its relevant liabilities for general business. As of December 31, 2013 and
2012, Third Point Re met the minimum liquidity ratio requirement.

Third Point Re may declare dividends subject to it continuing to meet its solvency and capital requirements, which includes
continuing to hold statutory capital and surplus equal to or exceeding its ECR. Third Point Re is prohibited from declaring or
paying in any fiscal year dividends of more than 25% of its prior year’s statutory capital and surplus unless Third Point Re
files with the BMA a signed affidavit by at least two members of the Board of Directors attesting that a dividend would not
cause the company to fail to meet its relevant margins. As of December 31, 2013, Third Point Re could pay dividends in
2014 of approximately $325.9 million (2012 - $206.1 million) without providing an affidavit to the BMA.

F-38

24. Quarterly financial results (UNAUDITED)

Revenues
Gross premiums written .................................
Gross premiums ceded ...................................
Net premiums written ....................................
Change in net unearned premium reserves ....
Net premiums earned .....................................
Net investment income ..................................
Total revenues ................................................
Expenses
Loss and loss adjustment expenses incurred,
net ...............................................................
Acquisition costs, net .....................................
General and administrative expense ..............
Total expenses ...............................................
Income including non-controlling interests ...
Income attributable to non-controlling

interests ......................................................
Net income ....................................................

Earnings per share
Basic ..............................................................
Diluted (1) ......................................................

Weighted average number of common
shares used in the determination of
earnings per share

$
$

December 31,
2013

September 30,
2013

June 30,
2013

March 31,
2013

Quarters ended

($ in thousands)

162,277
—
162,277
(103,767)
58,510
87,074
145,584

36,133
18,833
8,965
63,931
81,653

(1,565)
80,088

0.77
0.75

$
$

45,425
—
45,425
20,904
66,329
53,371
119,700

39,349
21,117
9,846
70,312
49,388

(2,818)
46,570

0.52
0.51

$
$

98,215 $
—
98,215
(35,928)
62,287
32,067
94,354

45,692
14,921
7,217
67,830
26,524

(301)
26,223 $

96,020
(9,975)
86,045
(52,504)
33,541
80,691
114,232

18,638
13,073
7,008
38,719
75,513

(1,083)
74,430

0.33 $
0.33 $

0.94
0.93

Basic ..............................................................
Diluted (1) ......................................................

103,264,616
106,390,339

89,620,394
90,915,805

78,432,132
79,254,268

78,432,132
79,083,675

(1) - During the quarter, it was determined that diluted earnings per share for the prior periods had been calculated incorrectly, which

resulted in an understatement of diluted earnings per share. See Note 2 to the Consolidated Financial Statements.

F-39

December 31,
2012

September 30,
2012

June 30,
2012

March 31,
2012

Quarters ended

($ in thousands)

27,895
—
27,895
5,590
33,485
72,511
105,996

26,626
10,898
7,155
44,679

61,317

(607)
60,710

0.77
0.76

$
$

41,651
—
41,651
(7,333)
34,318
47,686
82,004

24,709
10,856
6,440
42,005

39,999

(423)
39,576

0.50
0.50

$
$

28,178
—
28,178
(13,337)
14,841
(17,623)
(2,782)

16,686
2,138
9,621
28,445

(31,227)

120
(31,107)

(0.40)
(0.40)

$
$

92,650
—
92,650
(78,813)
13,837
33,848
47,685

12,285
712
4,160
17,157

30,528

(306)
30,222

0.38
0.38

Revenues
Gross premiums written ................................
Gross premiums ceded ..................................
Net premiums written ...................................
Change in net unearned premium reserves ...
Net premiums earned ....................................
Net investment income .................................
Total revenues ...............................................
Expenses
Loss and loss adjustment expenses

incurred, net ...............................................
Acquisition costs, net ....................................
General and administrative expense .............
Total expenses ..............................................
Income (loss) including non-controlling

interests .....................................................

(Income) loss attributable to non-

controlling interests ...................................
Net income (loss) .........................................

Earnings (loss) per share
Basic .............................................................
Diluted (1) .....................................................

Weighted average number of common
shares used in the determination of
earnings (loss) per share

$
$

Basic .............................................................
Diluted (1) .....................................................

78,432,132
78,820,844

78,432,132
78,551,830

78,432,132
78,432,132

(1) - During the quarter, it was determined that diluted earnings per share for the prior periods had been calculated incorrectly, which

resulted in an understatement of diluted earnings per share. See Note 2 to the Consolidated Financial Statements.

F-40

THIRD POINT REINSURANCE LTD.
Schedule I - Summary of Investments - Other than Investments in Related Parties
(expressed in thousands of U.S. dollars)

Cost

Fair value

Balance sheet value

Assets
Equity securities...........................................................................
Private common equity securities ................................................
Total equities ...............................................................................
Asset-backed securities ................................................................
Bank debts ...................................................................................
Corporate bonds ...........................................................................
Municipal bonds ..........................................................................
Sovereign debt .............................................................................
Total debt securities .....................................................................
Investments in limited partnerships .............................................
Rights and warrants .....................................................................
Options.........................................................................................
Trade claims ................................................................................
Total other investments ................................................................
Total investments .........................................................................

743,528
81,195
824,723
309,509
7,885
69,570
12,025
9,765
408,754
24,666
1
11,458
11,805
47,930
$ 1,281,407

857,817
96,294
954,111
325,533
8,017
86,749
10,486
10,639
441,424
34,578
1
13,069
17,681
65,329
$ 1,460,864

857,817
96,294
954,111
325,533
8,017
86,749
10,486
10,639
441,424
34,578
1
13,069
17,681
65,329
1,460,864

F-41

THIRD POINT REINSURANCE LTD.
Schedule II - Condensed Financial Information of Registrant
Condensed Balance Sheets - Parent company only
(expressed in thousands of U.S. dollars)

December 31,
2013

December 31,
2012

Assets
Cash and cash equivalents .............................................................................................. $
Investments in subsidiaries .............................................................................................
Prepaid expenses .............................................................................................................
Amounts due from affiliates ...........................................................................................
Total assets .................................................................................................................... $
Liabilities and shareholders’ equity
Liabilities
Accounts payable and accrued expenses ........................................................................ $
Amounts due to affiliates ................................................................................................
Total liabilities ...............................................................................................................
Commitments and contingent liabilities .........................................................................
Shareholders’ equity
Preference shares (par value $0.10; authorized, 30,000,000; none issued) .....................
Common shares (par value $0.10; authorized, 300,000,000; issued and outstanding,

103,888,916 (2012: 78,432,132)) ................................................................................
Additional paid-in capital ...............................................................................................
Retained earnings ............................................................................................................
Total shareholders’ equity ...........................................................................................
Total liabilities and shareholders’ equity.................................................................... $

294 $

1,394,644
720
417
1,396,075 $

242 $

4,172
4,414
—

—

10,389
1,055,690
325,582
1,391,661
1,396,075 $

169
870,116
35
770
871,090

394
2,152
2,546
—

—

7,843
762,430
98,271
868,544
871,090

F-42

THIRD POINT REINSURANCE LTD.
Schedule II - Condensed Financial Information of Registrant
Condensed Statements of Income (Loss) - Parent company only
For the years ended December 31, 2013 and 2012 and period from October 6, 2011 (date of incorporation)
to December 31, 2011
(expressed in thousands of U.S. dollars)

2013

2012

2011

Revenues
Equity in earnings of consolidated subsidiaries ........................................................ $ 228,646 $ 101,346 $
Total revenues ...........................................................................................................
Expenses
General and administrative expenses ........................................................................
Total expenses ..........................................................................................................
Net income (loss) ...................................................................................................... $ 227,311 $

1,945
1,945
99,401 $

1,335
1,335

101,346

228,646

(1,092)
(1,092)

38
38
(1,130)

F-43

THIRD POINT REINSURANCE LTD.
Schedule II - Condensed Financial Information of Registrant
Condensed Statements of Cash flows - Parent company only
For the years ended December 31, 2013 and 2012 and period from October 6, 2011 (date of incorporation)
to December 31, 2011
(expressed in thousands of U.S. dollars)

Operating activities
Net income (loss) ...................................................................................................... $ 227,311 $
Adjustments to reconcile net income (loss) to net cash provided by (used in)

99,401 $

(1,130)

2013

2012

2011

operating activities

Equity in earnings of subsidiaries .............................................................................
Changes in assets and liabilities:
Prepaid expenses .......................................................................................................
Accounts payable and accrued expenses ..................................................................
Amounts due from affiliates .....................................................................................
Amounts due to affiliates ..........................................................................................
Net cash provided by (used in) operating activities ..................................................
Investing activities
Contributed capital to subsidiaries ............................................................................
Net cash used in investing activities .........................................................................
Financing activities
Proceeds from issuance of common shares, net ........................................................
Net cash provided by financing activities .................................................................
Net increase (decrease) in cash and cash equivalents ...............................................
Cash and cash equivalents at beginning of period ....................................................
Cash and cash equivalents at end of period .......................................................... $

(228,646)

(101,346)

1,092

(686)
(66)
353
2,020
286

(33)
682
(770)
2,152
86

(2)
(413)
—
—
(453)

(286,257)
(286,257)

(170,110)
(170,110)

(593,343)
(593,343)

286,096
286,096
125
169
294 $

158,593
158,593
(11,431)
11,600

169 $

605,396
605,396
11,600
—
11,600

Supplemental information:
Dividends received from subsidiaries ....................................................................... $

— $

—

F-44

THIRD POINT REINSURANCE LTD.
Schedule III - Supplementary Insurance Information
For the years ended December 31, 2013 and 2012 and period from October 6, 2011 (date of incorporation)
to December 31, 2011
(expressed in thousands of U.S. dollars)

As of and for the year ended December 31, 2013

Loss and
loss
adjustment
expense
reserves

Deferred
acquisition
costs, net

Unearned
premium

Net
premiums
earned

Net
investment
income

Loss and
loss
adjustment
expenses
incurred,
net

Amortization
of deferred
acquisition
costs, net

Other
operating
expenses

Net
premiums
written

Property and Casualty

Reinsurance ............. $

91,141 $

134,221 $ 264,898 $

212,607 $

— $

139,616 $

66,981 $ 21,838 $

383,613

Catastrophe Risk

Management ............
Corporate .....................

52
—
91,193 $

110
—

289
—

134,331 $ 265,187 $

8,060
—
220,667 $

4,421
248,782
253,203 $

196
—

963
—

3,852
7,346

139,812 $

67,944 $ 33,036 $

8,349
—
391,962

As of and for the year ended December 31, 2012

Loss and
loss
adjustment
expense
reserves

Deferred
acquisition
costs, net

Unearned
premium

Net
premiums
earned

Net
investment
income

Loss and
loss
adjustment
expenses
incurred,
net

Amortization
of deferred
acquisition
costs, net

Other
operating
expenses

Net
premiums
written

45,383 $

67,271 $

93,893 $

96,481 $

— $

80,306 $

24,604 $ 20,290 $ 190,374

—
—
45,383 $

—
—
67,271 $

—
—
93,893 $

—
—

—
136,422

96,481 $ 136,422 $

—
—
80,306 $

—
—

—
1,534
—
5,552
24,604 $ 27,376 $ 190,374

Property and Casualty
Reinsurance .............

Catastrophe Risk

Management ............
Corporate .....................

As of and for the period from October 6, 2011 (date of incorporation) to December 31, 2011

Loss and
loss
adjustment
expense
reserves

Deferred
acquisition
costs, net

Unearned
premium

Net
premiums
earned

Net
investment
income

Loss and
loss
adjustment
expenses
incurred,
net

Amortization
of deferred
acquisition
costs, net

Other
operating
expenses

Net
premiums
written

Property and Casualty

Reinsurance ..............

— $

Catastrophe Risk

Management .............
Corporate ......................

—
—
— $

— $

—
—
— $

— $

—
—
— $

—
1,130
1,130 $

—

—
—
—

F-45

THIRD POINT REINSURANCE LTD.
Schedule IV - Reinsurance
For the years ended December 31, 2013 and 2012 and period from October 6, 2011 (date of incorporation)
to December 31, 2011
(expressed in thousands of U.S. dollars)

Year ended December 31, 2013 ........ $
Year ended December 31, 2012 ........
Period from October 6, 2011 (date

of incorporation) to December 31,
2011 ...............................................

Direct
gross
premiums
written

Ceded to
other
companies

Assumed
from other
companies

Net
amount

Percentage
of amount
assumed to
net

— $
—

9,975 $
—

401,937 $
190,374

391,962
190,374

98%
100%

—

n/a

F-46

CoRPoRaTe InFoRMaTIon

Board of Directors
John R. Berger (Chairman)
Chairman of the Board, Chief Executive Officer
and Chief Underwriting Officer

Christopher L. Collins
Managing Director, Kelso & Company

Rafe de la Gueronniere
Vice Chairman and Co-Founder, New Providence
Asset Management

Steven E. Fass
Retired 2008, White Mountains Insurance Group Ltd.

Mary R. Hennessy
Independent Consultant to P&C industry

Neil McConachie
Retired 2012, Lancashire Group

Mark Parkin
Retired 2013, Deloitte & Touche LLP

William L. Spiegel
Founding Partner and Managing Director,
Pine Brook Road Partner LLC

Joshua L. Targoff
Partner, COO and General Counsel,
Third Point LLC

Audit Committee
Parkin (Chairman), Collins, Fass, Hennessy,
McConachie

Compensation Committee
Collins (Chairman), de la Gueronniere, Fass,
Hennessy, Targoff

Nominating and Governance Committee
Collins (Chairman), Fass, McConachie, Parkin

Management Team
John R. Berger
Chairman of the Board, Chief Executive Officer
and Chief Underwriting Officer

J. Robert Bredahl
Chief Financial Officer and Chief Operating Officer

Nicholas Campbell
Senior Vice President—Underwriting

Christopher S. Coleman
Chief Accounting Officer

Manoj K. Gupta
Senior Vice President—Underwriting; and Lead
Portfolio Manager, Third Point Reinsurance
Investment Management Ltd.

Shane Haverstick
Senior Vice President—Operations

Clare Himmer
Marketing Director, Third Point Re (UK) Limited

Daniel V. Malloy
Executive Vice President—Underwriting

Tonya L. Marshall
Executive Vice President, General Counsel
and Secretary

Michael McKnight
Chief Actuary and Chief Risk Officer

Anthony Urban
Executive Vice President—Underwriting

Transfer Agent
ComputerShare
250 Royall Street
Canton, MA 02021 USA
+1 (877) 373-6374 (U.S., Canada, Puerto Rico)
+1 (781) 575-2879 (non-U.S.)

The Independent Registered Public
Accounting Firm Appointed as Our
Independent Auditor
Ernst & Young Ltd.
#3 Bermudiana Road
Hamilton HM 08 Bermuda

To Request an Annual Report or Form 10-K
Additional copies of this Annual Report
or the Company’s Form 10-K filed with
the Securities and Exchange Commission
are available, without charge, upon request
by contacting Investor Relations at the
address or phone number listed below.

Common Share Information
The Company’s common shares are listed on
the New York Stock Exchange (NYSE). Trading
of the Company’s common shares began on
August 15, 2013 under the symbol TPRE.

Dividends
The Company has never declared or paid
cash dividends on its common shares. The
Company intends to retain future earnings to
finance the growth and development of its
business, and does not anticipate declaring
or paying any cash dividends in the foresee-
able future.

Common Share Performance

Fiscal 2013*
3rd Quarter
4th Quarter
*Since August 15, 2013 IPO

High
$14.58
$18.71

Low
$12.88
$14.44

Executive Offices
The Waterfront, Chesney House
96 Pitts Bay Road
Pembroke HM 08 Bermuda

2014 Annual General Meeting
May 7, 2014
4:00 P.M. AST
Princess Louise Room
Fairmont Hamilton Princess Hotel
76 Pitts Bay Road
Pembroke HM 08 Bermuda

Investor Relations
Requests for information should be
directed to:
E-mail: investorrelations@thirdpointre.bm
Phone: (441) 542-3333
Web: www.thirdpointre.bm

For More Information
For additional information, please visit our
website at www.thirdpointre.bm.

Annual Report Design by Curran & Connors, Inc.
www.curran-connors.com

The Waterfront, Chesney House
96 Pitts Bay Road
Pembroke HM 08 Bermuda