Third Point Reinsurance Ltd has been assigned a financial strength rating of A- (excellent) and issuer credit rating of “a-” by AM Best Co.The outlook assigned to both ratings is stable.Best said that the ratings of Third Point Re were based on its excellent risk-adjusted capitalisation, experienced management team and a prudent business plan.Partially offsetting those positive rating factors were the start-up nature of the company and the greater investment risk associated with an alternative investment strategy, as well as the increased competition in the reinsurance marketplace that may challenge some of the tenets of its business plan, said the ratings agency.Best said it was concerned that there is a possibility that Third Point Re could be exposed to a confluence of events that will test its capital strength. Due to the underwriting risk coupled with the asset risk present in an alternative investment strategy, there could be a duplicative result that could adversely affect risk-adjusted capital, said Best.However, the company’s low underwriting leverage, experienced underwriting team, partially hedged nature of the portfolio along with its 16-year successful investment track record helped to mitigate those concerns.The assets of Third Point Re will be managed by Third Point LLC, a New York-based Securities and Exchange Commission-registered investment manager with more than $7.6 billion of assets under management. Third Point Re’s assets will be in a separate portfolio within Third Point LLC and will not be mixed with other investors at Third Point LLC.In addition, Best said that it anticipated that Third Point Re’s management would be challenged by competition from established reinsurers as well as other start-up entities. The addition of more capacity into an already overcapitalised reinsurance marketplace could also put further pressure underwriting margins, it said.Key rating triggers that could result in positive rating actions would be Third Point Re meeting and/or exceeding its business plan over the long-term, while triggers that could result in negative rating actions would include the company failing to execute its business plan over the long-term.