Third Point Reinsurance’s fourth-quarter net income rose 32 percent, the company reported, helped by strong investment income from its hedge fund asset manager.

Profit for the quarter was $80.1 million, or 75 cents per diluted common share, for the fourth quarter of 2013. This compares with $60.7 million, or 76 cents per diluted common share, for the fourth quarter of 2012.

The reinsurer’s investment portfolio, managed by Dan Loeb’s Third Point LLC, returned 23.9 percent for the year.

During the Third Point Reinsurance fourth-quarter and year-end conference call John Berger, chief executive officer and chief underwriting officer, said: “I’m very pleased with our financial performance in Q4 and for the full year and believe our results demonstrate the benefits of our total return business model. It is also gratifying to produce strong results following our IPO.

“In our second year of operation and before we have reached full scale we increased our diluted booked value per share by 20.5 percent.”

Mr Berger pointed to investment returns as important to their 2013 success. He said: “Our 2013 growth in booked value per share was driven by outstanding investment returns produced by our investment manager, Third Point LLC, and a reinsurance operation that is developing according to plan and already contributing to net income.”

Mr Berger also said: “As a reminder, our strategy is to write reinsurance contracts with attractive risk-adjusted returns and to invest the float generated from this activity in a separate investment account managed by Third Point LLC.

“We do not write excess of loss property catastrophe business on our rated balance sheet, but rather write cat reinsurance on behalf of a separate cat risk fund.

“In our property and casualty segment we generated an underwriting loss of $3.6 million for the quarter and $15.8 million for the year, but after including investment income generated by float of $11.8 million and $27.0 million for those periods respectively the property and casualty segment contributed to net income.

“Our reinsurance portfolio continued to perform as expected as we had no meaningful reserve movements in Q4 or for the full year. Our combined ratio for the year was 107.5 percent versus 129.7 percent in 2012. The improvement was due to a drop in crop-related losses — not good, but better than last year — and a drop in overhead expenses as a percentage of earned premium.

“As we continue to grow and assuming we maintain current underwriting margins our underwriting results will continue to improve as the general and administrative expense ratio drops.

“While the reinsurance market remains extremely competitive we have seen a large flow of business from our reinsurance broker partners and continue to identify attractive opportunities. Given today’s competitive market we focus mostly on what we consider to be less volatile lines of business and types of transactions where the insurance company clients are in need of capital in the form of reinsurance.”