SIRIUSPOINT LTD. - A
GLOBAL UNDERWRITER
2023 Nine Months and
Third Quarter Results
November 8, 2023
Disclaimer
Basis of Presentation and Non-GAAP Financial Measures:
Unless the context otherwise indicates or requires, as used in this presentation references to "we," "our," "us," the "Company," and "SiriusPoint" refer to SiriusPoint Ltd. and its directly and indirectly owned subsidiaries, as a combined entity, except where otherwise stated or where it is clear that the terms mean only SiriusPoint Ltd. exclusive of its subsidiaries. We have made rounding adjustments to reach some of the figures included in this presentation and, unless otherwise indicated, percentages presented in this presentation are approximate.
In presenting SiriusPoint's results, management has included financial measures that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States ("GAAP"). SiriusPoint's management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of SiriusPoint's financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. Core underwriting income, Core net services income, Core income, Core combined ratio, accident year loss ratio, accident year combined ratio and attritional loss ratio are non-GAAP financial measures. Management believes it is useful to review Core results as it better reflects how management views the business and reflects the Company's decision to exit the runoff business. Tangible book value per diluted common share is also a non-GAAP financial measure. SiriusPoint's management believes that effects of intangible assets are not indicative of underlying underwriting results or trends and make book value comparisons to less acquisitive peer companies less meaningful. The tangible book value per diluted common share is also useful because it provides a more accurate measure of the realizable value of shareholder returns, excluding intangible assets.
Safe Harbor Statement Regarding Forward-Looking Statements:
This presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company's control. The Company cautions you that the forward-looking information presented in this presentation is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this presentation. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "believes," "intends," "seeks," "anticipates," "aims," "plans," "targets," "estimates," "expects," "assumes," "continues," "should," "could," "will," "may" and the negative of these or similar terms and phrases. Actual events, results and outcomes may differ materially from the Company's expectations due to a variety of known and unknown risks, uncertainties and other factors. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements are the following: our ability to execute on our strategic transformation, including re-underwriting to reduce volatility and improving underwriting performance, de-risking our investment portfolio, and transforming our business, including re-balancing our portfolio and growing the Insurance & Services segment; the impact of unpredictable catastrophic events including uncertainties with respect to current and future COVID-19 losses across many classes of insurance business and the amount of insurance losses that may ultimately be ceded to the reinsurance market, supply chain issues, labor shortages and related increased costs, changing interest rates and equity market volatility; inadequacy of loss and loss adjustment expense reserves, the lack of available capital, and periods characterized by excess underwriting capacity and unfavorable premium rates; the performance of financial markets, impact of inflation and interest rates, and foreign currency fluctuations; our ability to compete successfully in the (re)insurance market and the effect of consolidation in the (re)insurance industry; technology breaches or failures, including those resulting from a malicious cyber-attack on us, our business partners or service providers; the effects of global climate change, including increased severity and frequency of weather-related natural disasters and catastrophes and increased coastal flooding in many geographic areas; geopolitical uncertainty, including the ongoing conflicts in Europe and the Middle East; our ability to retain key senior management and key employees; a downgrade or withdrawal of our financial ratings; fluctuations in our results of operations; legal restrictions on certain of SiriusPoint's insurance and reinsurance subsidiaries' ability to pay dividends and other distributions to SiriusPoint; the outcome of legal and regulatory proceedings and regulatory constraints on our business; reduced returns or losses in SiriusPoint's investment portfolio; our potential exposure to U.S. federal income and withholding taxes and our significant deferred tax assets, which could become devalued if we do not generate future taxable income or applicable corporate tax rates are reduced; risks associated with delegating authority to third party managing general agents; future strategic transactions such as acquisitions, dispositions, investments, mergers or joint ventures; SiriusPoint's response to any acquisition proposal that may be received from any party, including any actions that may be considered by the Company's board of directors or any committee thereof; and other risks and factors listed under "Risk Factors" in the Company's most recent Annual Report on Form 10-K and other subsequent periodic reports filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the date made and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
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Agenda
1
2
Introduction
- Key Messages
- Diversified Business Model
- Reduced Volatility in Underwriting
- Revised KPIs
2 | Nine Months and Quarterly Results Update |
3
Key Messages
4
Key Messages: Continued Progress on Strategic Priorities
Another quarter of strong
underwriting results
Favorable PYD in quarter, continue to hold prudent reserve margin
Net investment income remains strong, increasing guidance
Distribution enhanced and further progress on rationalizing MGA stakes
Strong balance sheet and
ROE7 guidance on track
- Underwriting profit for the Core business at $213m for 9M'23 (vs. loss of $66m in 9M'22) with 87.6% COR1
- 12.0 ppts of COR2 improvement YoY on a like-for-like basis
- $14m Cat losses for 9M'23 (vs. $138m in 9M'22). $7m of Cat losses in Q3'23 (vs. $115m in Q3'22)
- PMLs3 down ~60% since Q2'21 following portfolio actions which are mostly complete
- Favorable Prior Year Development (PYD) of $13m in Core business and $25m for the Consolidated business during Q3
- Adverse PYD in Q3 in Workers' Comp linked to one relationship which we are exiting
- Overall, continue to hold a conservative reserve margin
- Net investment income at $205m in 9M'23 and $75m in Q3'23
- Duration of assets backing loss reserves at ~2.7 years and we remain fully matched
- Average credit rating at AA and have seen no defaults
- FY 2023 NII guidance increased to $250m to $260m from $220m to $240m
- Consolidated MGAs generated $38m in net services fee income with service margin of 21% in 9M'23 (vs. 20% in 9M'22)
- Three new MGA partnerships onboarded in Q3
- MGA equity stakes down to 29 (vs. 36 at Q4'22)
- Bermuda Solvency Capital Ratio (BSCR)4 improved to 238% as of Q2'23 vs. 219% in Q1'23
- Total asset leverage5 (Q3'23: 3.6x) and debt to capital ratio6 stable (Q3'23: 25.3%)
- Reaffirming double-digit ROE7 in 2023
Notes: [1] COR = Combined Ratio. Reflects Core business. [2] COR = Combined Ratio. Reflects Core business and adjusted for $102m of 9M'23 reserve releases linked to LPT and $29m of expenses re-allocated from net corporate and other expenses to the underwriting result. [3] PMLs are on a per | |
occurrence basis for 1-in-100 year events, net of restatements and after-tax. PMLs are an estimate based on industry standard catastrophe modeling with proprietary adjustments. [4] SiriusPoint Group BSCR calculated as available economic capital and surplus divided by the enhanced capital | |
requirement. [5] Total asset leverage calculated as sum of total investments including cash and equivalents over tangible diluted common shareholders' equity attributable to SiriusPoint common shareholders. [6] Debt to Capital Ratio calculated as debt divided by total capital. Total capital represents the | 5 |
sum of shareholders' equity and debt. Debt in this calculation excludes preference shares. [7] Return on average common shareholders' equity attributable to SiriusPoint common shareholders. |
Diversified Business Model: All 3 Engines are Delivering
$ numbers in USD millions
Underwriting1 | Strategic Investments2 |
Investments
9M'23 GPW by Specialism1
9M'23 GPW | $2,591 |
9M'23 COR | 87.6% |
9M'23 UW Income | $213 |
12.0 ppts YoY improvement in COR during 9M'23 on a like-for-like basis
Cat losses1 down to $14m for 9M'23 vs. $138m in 9M'22
Rebalanced portfolio with lower exposure to Property
Consolidated | Others | |
Arcadian | Investments with | |
underwriting capacity: 17 | ||
IMG | ||
Armada | ||
Banyan | Other Investments: 9 | |
Alta Signa | ||
Total MGAs | 5 | |
9M'23 SP Premium3 | $517 | |
9M'23 Net Services Fee Income | $38 | 9M'23 SP Premium3: $439 |
Q3'23 Book Value | $92 |
Fee income from MGAs provides a diversified, capital-light source of earnings
Consolidated MGA revenue grew 7% YoY, with service margin at 21%
9M'23 Net Investment Income:
$205
9M'23 Total Investment Result4:
$208
Increasing FY net investment income guidance to $250m to $260m for 2023
Seeing reduction in P&L volatility given higher percentage of available for sale ("AFS") assets
88% of our fixed income investments5 classified as AFS (vs. 85% as of Q2'23 and none as of Q4'21)
Notes: [1] Reflects Core business. [2] Strategic Investments as of September 30, 2023. Investments also include holdings in Venture Capital (VC) funds. [3] SP premium refers to SiriusPoint Gross Premium Written. [4] Total investment result calculated as the sum of Net realized and unrealized investment gains (losses), Net realized and unrealized investment gains from related party investment funds and Net investment income. [5] Fixed income investments exclude short-term investments.
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Reduced Volatility in Underwriting
PML for 1-in-100 year event1 | Historical Cat losses2 | |
$ numbers in USD millions | $ numbers in USD millions |
~60% reduction
since Q2'21
Cats (as a | 18.8% | 1.2% | 8.1% | 0.8% |
% of NPE3) | ||||
- Portfolio actions having impact given significant reduction in Core Cat losses at $14m for 9M'23 vs. $138m in 9M'22, a 90% decrease YoY
- Q3'23 Core Cat losses of $7m (1% NEP3) vs. $115m in Q3'22 (19% of NEP3)
- ~60% reduction in PML since Q2'21 supported by exposure reduction and retro-purchase at 1/1
- Property accounts for 12% of business mix vs. 20% at 9M'22
Notes: [1] PMLs are on a per occurrence basis for 1-in-100 year events, net of restatements and after-tax. PMLs are an estimate based on industry standard catastrophe modeling with proprietary adjustments. [2] Reflects Core business. [3] Net Earned Premiums.
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Revised KPIs: No Material Change to Our Financial Results
$ numbers in USD millions, except per share data
GPW1
NEP1
Q2'23 | ||
Previously | ||
Reported | Revised4 | Change |
$850 | $805 | ($45) |
$660 | $596 | ($64) |
HY 23 | ||
Previously | ||
Reported | Revised4 | Change |
$1,910 | $1,865 | ($45) |
$1,211 | $1,147 | ($64) |
• | One control issue |
identified and | |
actions taken to | |
remediate | |
• | Revised 2023 interim |
UW Income1
Attritional LR1 (%)
COR1 (%)
AY COR1 (%)
Consolidated COR (%)
Net Income2
Diluted BVPS3
$82 | $63 | ($18) | $189 | $171 | ($18) |
63.6% | 65.2% | 1.6 ppts | 63.0% | 63.8% | 0.8 ppts |
87.7% | 89.4% | 1.7 ppts | 84.4% | 85.1% | 0.7 ppts |
91.4% | 93.6% | 2.2 ppts | 94.1% | 95.3% | 1.2 ppts |
81.9% | 83.0% | 1.1 ppts | 78.2% | 78.5% | 0.3 ppts |
$66 | $56 | ($10) | $205 | $188 | ($17) |
$12.29 | $12.18 | ($0.11) | $12.29 | $12.18 | ($0.11) |
financials | |
• | Elected to revise |
historical data | |
despite no | |
requirement | |
• | BVPS3 impact less |
than 1% | |
• No impact on Q3'23 | |
and 9M'23 numbers |
Notes: [1] Reflects Core business. [2] Net income (loss) available to SiriusPoint common shareholders. [3] Book value per diluted common share. [4] In connection with the preparation of its third quarter 2023 financial statements, the Company identified certain immaterial errors in its previously issued 2023 interim financial | |
statements, primarily relating to a manual calculation in our property catastrophe business, and also an overnight data transfer error. This resulted in the incorrect recognition of Net premiums earned. The Company performed an analysis in accordance with the guidance set forth in SEC Staff Bulletin 99, Materiality, and SEC | |
Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and concluded that the errors were not material, both individually and in the aggregate, to any previously issued financial statements, and were not intentional. Although | 8 |
not required to do so, but in an effort to provide transparency and in line with good practice, Management has elected to revise the previously issued 2023 interim financial statements when they are next presented. The financial statements for the three and nine months ended September 30, 2023 reflect the correction of |
these errors in the manner described above.
Nine Months and Quarterly Results Update
9
Nine Months Financial Results
$ numbers in USD millions
GPW1
NPW1
UW Income1
Net Services Fee Income1
Total Investment Result2
Net Income (Loss)3
COR1 (%)
AY COR1 (%)
Common Shareholders' Equity4
9M'229M'23
$2,663$2,591
$1,969$1,886
($66)$213
$34$38
($375)$208
($376)$245
103.9%87.6%
104.2%95.2%
1,8755$2,050
Key Comments
- GPW1 down 3% despite rate increases
- Driven by Reinsurance (-$202m)
- Offset by growth in Insurance & Services ($129m)
- Core underwriting result up by $279m benefiting from lower expenses, favorable PYD6 and lower Cat losses
- Net services fee income1 at $38m and grew 11%
- Total investment result2 at $208m vs. a loss of $375m in 9M'22
- Net investment income ("NII") at $205m
- Net realized and unrealized gains, including related party investment funds at $2m
- Other notable items impacting income:
- $24m restructuring charge with remaining $1m to occur during Q4'23
- $44m impact from MTM7 on liability-classified capital instruments
- $122m overall net benefit8 linked to LPT (pre-tax)
- Net income3 of $245m, improved $621m vs. 9M'22 and supported by positive underwriting, investment result and net services fee income
- Common shareholders' equity4 at $2.1bn, up 9% since FY 22 and stable during the quarter
Notes: [1] Reflects Core business. [2] Total investment result calculated as the sum of net realized and unrealized investment gains (losses), net realized and unrealized investment gains from related party investment funds and net
investment income. [3] Net income (loss) available to SiriusPoint common shareholders. [4] Common shareholders' equity attributable to SiriusPoint common shareholders at end of period. [5] Common shareholders' equity as of10 12/31/22. [6] PYD = Prior Year Development. [7] MTM = Mark to Market. [8] Excludes transaction costs and interest on funds withheld related to LPT.
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Disclaimer
SiriusPoint Ltd. published this content on 08 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 November 2023 14:00:15 UTC.