Third Point Re’s US arm has been assigned an A- financial strength rating by ratings agency AM Best.

Best, which also gave an issuer credit rating of a- to Third Point Reinsurance (USA) Ltd (TPRUSA), said the ratings were based on strong risk-adjusted capitalisation, experienced management team, broad-based business plan and its ultimate parent company, Bermuda-based Third Point Re.

“Partially offsetting these positive rating factors are the start-up nature of the company and the risks associated with the company’s hedged investment strategy, managed by Third Point LLC (Third Point), which AM Best believes creates an elevated risk profile,” Best commented.

“Nonetheless, the skilled underwriting team coupled with the investment expertise of Third Point together with the investment returns may mitigate these risks.

“AM Best is concerned that TPRUSA’s management team may be challenged by the increased competition from established carriers as well as other alternative capital insurers, also in the start-up phase.”

Third Point Re’s investment portfolio is managed by Daniel Loeb’s hedge fund, Third Point LLC. The company seeks to underwrite conservatively while taking greater investment risks than fellow property and casualty reinsurers.