Investments (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Investments Managed by TP LLC

The following is a summary of the net investments managed by Third Point LLC as of December 31, 2019 and 2018:



	2019		2018
Assets
TP Fund	$	860,630	$	1,284,004
Debt securities	125,071		239,640
Total investments	985,701		1,523,644
Cash and cash equivalents	588,196		1,017
Restricted cash and cash equivalents	1,014,543		609,154
Due from brokers	—		1,411
Interest and dividends receivable	2,178		1,316
Other assets	18		—
Total assets	2,590,636		2,136,542
Liabilities
Accounts payable and accrued expenses	509		114
Participation agreement with related party investment fund	—		2,297
Total liabilities	509		2,411
Total net investments managed by Third Point LLC	$	2,590,127	$	2,134,131

The TP Fund investment strategy, as implemented by Third Point LLC, 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.

On July 31, 2018, Third Point Re, Third Point Re BDA and Third Point Re USA entered into the Amended and Restated Exempted Limited Partnership Agreement (the “2018 LPA”) of TP Fund with Third Point Advisors LLC (“TP GP”) and others, effective August 31, 2018. In accordance with the 2018 LPA, TP GP serves as the general partner of TP Fund. TP GP is beneficially owned by Daniel S. Loeb, a founder of the Company, and certain members of his family. Pursuant to the investment management agreement between Third Point LLC and TP Fund, dated July 31, 2018 as amended and restated on February 28, 2019 (the “TP Fund IMA”), Third Point LLC is the investment manager for TP Fund (the “Investment Manager”). In addition, on July 31, 2018, the TPRE Limited Partners, and TP Fund executed a Subscription Agreement pursuant to which the TPRE Limited Partners transferred certain net investment assets and related liabilities from their separate accounts to TP Fund, and TP Fund issued limited partner interests to the TPRE Limited Partners proportionate to and based on the net asset value transferred by each such entity on the applicable transfer date. Certain collateral assets consisting of debt securities and restricted cash were not transferred to TP Fund but are also managed by Third Point LLC under the Collateral Assets IMA, as defined below.

On February 28, 2019, Third Point Re, Third Point Re BDA and Third Point Re USA entered into the Second Amended and Restated Exempted Limited Partnership Agreement of TP Fund (the “Amended LPA”), which amended and restated the 2018 LPA (as amended and restated by the Amended LPA, the “LPA”), with effect from January 1, 2019. The Amended LPA preserves the loss carryforward attributable to the Company’s investment in TP Fund when contributions

to TP Fund are made within nine months of certain types of withdrawals from TP Fund. In addition, the Amended LPA revised the management fee from 1.5% per annum to 1.25% per annum effective from January 1, 2019. See Note 9 for additional information.

On July 31, 2018, Third Point Re BDA and Third Point Re USA entered into the Collateral Assets Investment Management Agreement (the “2018 Collateral Assets IMA”) with Third Point LLC effective August 31, 2018, pursuant to which Third Point LLC serves as investment manager of certain collateral assets not transferred to TP Fund (the “Collateral Assets”). The 2018 Collateral Assets IMA will continue in effect for so long as either Third Point Re BDA or Third Point Re USA remains a limited partner of TP Fund. The collateral assets are presented in the consolidated balance sheets within debt securities and restricted cash and are considered as part of total net investments managed by Third Point LLC.

On May 24, 2019, Third Point Re BDA and Third Point Re USA entered into the Amended and Restated Collateral Assets Investment Management Agreement (the “Amended Collateral Assets IMA” and together with the 2018 Collateral Assets IMA, the “Collateral Assets IMA”) with Third Point LLC, effective May 24, 2019, pursuant to which, in addition to serving as the investment manager for the Company’s collateral assets, Third Point LLC will serve as investment manager of certain investment assets withdrawn from TP Fund. The Amended Collateral Assets IMA will continue in effect thereafter so long as either Third Point Re BDA or Third Point Re USA remains a limited partner of TP Fund. The Company entered into the Amended Collateral Assets IMA to provide for Third Point LLC's management of a substantial portion of the Company’s assets that were reallocated from TP Fund into cash, U.S. Treasuries and other fixed income investments. There are no management or performance fees under the Collateral Assets IMA.

Schedule of investments, categorized by the level of the fair value hierarchy

The following tables present the Company’s investments, categorized by the level of the fair value hierarchy as of December 31, 2019 and 2018:



	December 31, 2019
	Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs		Total
	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Private common equity securities	$	—	$	—	$	1,000	$	1,000
Private preferred equity securities	—		—		3,000		3,000
Total equities	—		—		4,000		4,000
U.S. Treasury securities	—		101,186		—		101,186
Sovereign debt	—		23,885		—		23,885
Total debt securities	—		125,071		—		125,071
	$	—	$	125,071	$	4,000	129,071
Investments in funds valued at NAV							860,630
Total assets							$	989,701
Liabilities
Derivative liabilities (embedded)	$	—	$	—	$	31	$	31
Total liabilities	$	—	$	—	$	31	$	31



	December 31, 2018
	Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs		Total
	(Level 1)		(Level 2)		(Level 3)		Total
Assets
U.S. Treasury securities	$	—	$	197,312	$	—	$	197,312
Sovereign debt	—		42,328		—		42,328
Total debt securities	$	—	$	239,640	$	—	239,640
Investments in funds valued at NAV							1,284,088
Total assets							$	1,523,728
Liabilities
Derivative liabilities (embedded)	$	—	$	—	$	22	$	22
Total liabilities	$	—	$	—	$	22	$	22

Schedule of reconciliation of the balances for all investments measured at fair value using significant unobservable inputs

The following table presents the reconciliation of all investments measured at fair value using Level 3 inputs for the years ended December 31, 2019 and 2018:



	January 1, 2019			Transfers in to (out of) Level 3		Purchases		Sales			Realized and Unrealized Gains(Losses)⁽²⁾			December 31, 2019
Assets
Private common equity securities	$	—		$	—	$	1,000	$	—		$	—		$	1,000
Private preferred equity securities	—			—		3,000		—			—			3,000
Total assets	$	—		$	—	$	4,000	$	—		$	—		$	4,000
Liabilities
Derivative liabilities (embedded)	$	(22	)	$	—	$	—	$	—		$	(9	)	$	(31	)
Total liabilities	$	(22	)	$	—	$	—	$	—		$	(9	)	$	(31	)


	January 1, 2018			Transfers in to (out of) Level 3		Purchases		Sales ⁽¹⁾			Realized and Unrealized Gains(Losses)⁽²⁾			December 31, 2018
Assets
Private common equity securities	$	4,794		$	—	$	567	$	(4,726	)	$	(635	)	$	—
Private preferred equity securities	57,126			—		38,376		(91,065		)	(4,437		)	—
Asset-backed securities	27,308			—		35,905		(60,906		)	(2,307		)	—
Corporate bonds	9,868			—		1,372		(11,763		)	523			—
Other debt securities	713			—		—		(913		)	200			—
Rights and warrants	435			—		753		(1,380		)	192			—
Real estate	6,831			—		—		(6,817		)	(14		)	—
Total assets	$	107,075		$	—	$	76,973	$	(177,570	)	$	(6,478	)	$	—
Liabilities
Derivative liabilities (free standing)	$	(2,085	)	$	—	$	—	$	1,797		$	288		$	—
Derivative liabilities (embedded)	(171		)	—		—		—			149			(22		)
Total liabilities	$	(2,256	)	$	—	$	—	$	1,797		$	437		$	(22	)


(1)	Sales of investments measured at fair value using Level 3 inputs in the year ended December 31, 2018 include the impact of the change in investment account structure as described in Note 4.

(2)

Total change in realized and unrealized gains (losses) recorded on Level 3 financial instruments is included in net investment income (loss) in the consolidated statements of income (loss). Realized and unrealized gains (losses) related to embedded derivatives are included in other expenses in the consolidated statements of income (loss).