Fitch Ratings, the global ratings agency, has revised the outlook for Bermuda-domiciled insurer and reinsurer SiriusPoint to positive from stable, while the Long-Term Issuer Default Rating (IDR) has been affirmed at ‘BBB’, the senior debt rating at ‘BBB-‘ and its Insurer Financial Strength (IFS) rating at ‘A-‘ (Strong) for SPNT’s operating subsidiaries.
Fitch explains the positive outlook reflects significant underwriting performance improvement in 2024 and 2023 due to repositioning the re/insurance portfolio and exiting non-core lines to improve profitability and reduce overall volatility.
The company reported full year 2024 core income of $244.6 million, as CEO Scott Egan described 2024 as a “remarkable year of delivery” in an interview with Reinsurance News.
Recently, SPNT completed several transactions to fully repurchase all outstanding common shares, preference shares, and settle warrants held by CM Bermuda Limited (CMB) for an aggregate purchase price of $994 million. Fitch believes these transactions are favorable, as they simplify the corporate governance structure and improve financial flexibility.
SPNT’s shareholders’ equity has declined by 23% in 2024 to $1.9 billion on December 31st, 2024 from $2.5 billion at YE 2023. The drop was driven by $0.8 billion of common shares repurchased with existing capital and retired in connection with the buyout of CMB. As a result, SPNT’s financial leverage ratio (FLR) increased to 27.5% at YE 2024 from 25.6% at YE 2023. The FLR should decline as shareholders’ equity recovers through earnings.
According to Fitch, SPNT has a strong prism capital model at YE 2024, compared to ‘very strong’ at YE 2023-2022. The lower score reflects a 20% drop in available capital in 2024 due to the decline in shareholders’ equity.
Fitch expects SPNT to return to a ‘very strong’ prism score as capital grows, the firm’s operating leverage ratios increased in 2024 as lower written premiums were more than offset by the shareholders’ equity decline, but are still viewed as strong.
