Shares of Bermuda-based reinsurer Third Point Reinsurance Ltd gained nearly four percent in New York trading after posting earnings that beat analysts’ expectations.

The company, whose investments are managed by billionaire hedge fund manager Dan Loeb’s Third Point LLC, recorded net income of $31.3 million for the second quarter, up 19 percent from the same period last year.

Diluted book value per share increased by 29 cents per share, or 2.2 percent, during the April through June period to $13.72 per share. Third Point Re shares rose 56 cents, or 3.8 percent, on Friday, to close on $15.27.

Investment income of $40.5 million, up from $32.8 million in the second quarter of 2013, drove profits.

The company’s combined ratio was more than 100 percent — indicating that it made an underwriting loss — but results improved from the prior-year period.

In a conference call with analysts to discuss Third Point Re’s results on Friday, Mr Loeb predicted that the US economic rebound would likely prompt the US Federal Reserve to tighten its monetary policy earlier than most expect — a comment that made headlines.

“We believe Q3 economic data will be decisive and likely drive action by the US Fed during the second half of the year,” Mr Loeb said.

The Federal Reserve has wound down its bond-buying programme, as the US jobs market improves and consumers increase spending. The central bank is also weighing when to lift its target interest rate, which has been near zero since 2008.

Third Point Re operates from offices on Pitts Bay Road and is led by chairman and chief executive officer John Berger.

“Our total return approach continued to generate growth in diluted book value per share in the second quarter,” Mr Berger said. “Our combined ratio dropped to 102.7 percent from 105.5 percent in the prior year’s second quarter as we continue to gain scale and Third Point LLC, our investment manager, successfully navigated market volatility through selective investments in securities and market hedges.

“We have managed to maintain our underwriting margins so far in 2014, despite challenging market conditions.”

Third Point Re, founded in 2012, takes larger risks on the investment side than traditional reinsurers, but attempts to offset this through writing a conservative book of reinsurance.

Mr Loeb focuses on event-driven investment, and trades in stocks of companies going through significant change. As an activist investor, he has sometimes tried to drive events himself, at companies including Yahoo and Sony.

“The environment for event-driven investment continues to be attractive, and we have initiated several new investments recently,” he said on Friday’s call. “We expect market volatility will create compelling entry points across the capital structure during the second half of the year.”