Bermuda-based carrier SiriusPoint has fallen to a net loss of $140 million in the fourth quarter of 2021 but reported income of $45 million for the full year, as catastrophe losses dented the company’s underwriting performance.
Across the business, SiriusPoint has announced core underwriting income of $34.7 million in Q4 and an underwriting loss of $173.6 million for the full year 2021, compared with a loss of $44.8 million and $68.7 million in the prior year periods, respectively.
Core net services came in at a loss of $41.3 million in Q4 and at a gain of $11 million for the year, against income of $0.3 million in Q4 2020 and income of $0.4 million in FY 2020.
All in all, SiriusPoint has announced a core loss of $6.6 million in Q4 2021 with a combined ratio of 93.6%, compared with a core loss of $44.5 million and a combined ratio of 128.2% in Q4 2020. For the full year, the core loss increased from $68.3 million in 2020 to $162.6 million in 2021, as the combined ratio strengthened by almost 2 percentage points to 110%.
For the quarter, SiriusPoint attributes the year-on-year change in results to moderate catastrophe loss activity in the fourth quarter and favourable prior year loss development, somewhat offset by net investment losses from its strategic investments valued at fair value.
Net of reinsurance and reinstatement premiums, catastrophe losses for Q4 2021 amounted to $24.1 million, primary related to the December tornadoes and other fourth quarter catastrophes.
For the full year, catastrophe losses, net of reinsurance and reinstatement premiums, reached $326 million, including $133 million for the floods in Europe, and $97 million for Hurricane Ida in the U.S. This is quite the jump in catastrophe losses from the $36.6 million reported in 2020, which is reflected in the larger core loss.
Within its Reinsurance segment, SiriusPoint has reported income of $30.9 million for the quarter and a combined ratio of 91.2%, compared to a loss of $46 million and a combined ratio of 129.4% in Q4 2020. The change in results was primarily driven by moderate cat loss activity, a change in the mix of business as a result of the acquisition of Sirius Group, and favorable prior year loss development of $11.9 million, says the firm.
The segment also grew in the quarter, year-on-year, with Reinsurance gross premiums written (GPW) hitting $418.8 million, which is up by over $275 million on Q4 2020. For the full year, GPW reached $1.4 billion, representing year-on-year growth of $816.3 million.
However, for the full year 2021, the Reinsurance segment has fallen to a loss of $196.6 million with a combined ratio of 116.3%, compared with a loss of $68.3 million and a combined ratio of 111.9% in 2020. The change in segment results was primarily driven by increased catastrophe losses from the European floods and Hurricane Ida, partially offset by favorable prior year loss development of $18.6 million, says the firm.
Turning to the Insurance & Services arm, and this segment has reported a loss of $37.5 million for the quarter against income of $1.5 million in Q4 2020. The segment loss includes an underwriting income of $3.8 million and a combined ratio of 98%, as well as a net service loss of $41.3 million. This is compared with underwriting income of $1.2 million and a combined ratio of 55.5% in Q4 2020.
Insurance & Services GPW for the quarter increased by $249 million to $269.9 million in 2021, and grew by $872.4 million to $897.9 million for the full year 2021.
In 2021, the Insurance & Services segment has recorded income of $34 million, which consists of underwriting income of $23.3 million, a 95.5% combined ratio, and net services income of $10.7 million. This compares with an underwriting loss of $0.4 million and a combined ratio of 105.6% in 2020.
Sid Sankaran, the company’s Chairman and Chief Executive Officer (CEO), commented: “In 2021 we made significant progress in dramatically reshaping our company. Our strategy is focused on a comprehensive re-underwriting of the property and casualty reinsurance portfolio, building value in a newly formed Insurance & Services segment, including our robust and growing MGA platform, and repositioning our capital allocation within our investment portfolio. We believe these actions will reduce our volatility profile and build long-term, differentiated, and sustainable value.
“Our underwriting results for the year reflect a historical overexposure to Cat risk and legacy hedge fund re equity exposure. They are not in line with our expectations, but I am pleased with the significant progress we have made towards re-engineering our business. We have cut our Cat exposure dramatically, reallocated capital to more attractive opportunities, and reduced our risk profile. As a result of these changes, we now have a smaller global property book, an improving and differentiated global specialty and casualty business, and a continuing mix shift from reinsurance to insurance.
“We enjoyed superior returns from our investment portfolio in the first three quarters of the year. The fourth quarter results reflected poor performance in the broader equity markets, during which we completed a planned reallocation of $450 million from hedge fund exposure to cash and fixed income investments, with an additional $100 million reallocation in Q1 2022. We have amended the investment management agreement with Third Point LLC to facilitate the transformation of our investment portfolio from equity to fixed income that is in line with our risk appetite and the strategic direction of the company. Our plan is to reduce capital intensity and volatility on the asset side. This frees up capital to support the growth of our Insurance & Services business.
“Going into 2022, our focus remains on pursuing profitable and sustainable growth, and continuing to shift our business mix as we execute our Insurance & Services strategy. We have financial strength, a flexible underwriting and operating platform, a strong entrepreneurial culture, and a disciplined growth mindset. I am full of enthusiasm for the year ahead.”
