SiriusPoint, the new insurer and reinsurer incepted via the combination of Third Point Re and Sirius Group, is determined to focus on the bottom line to ensure underwriting excellence.
This is according to incoming Chief Executive Officer (CEO) of SiriusPoint, Sid Sankaran and Dan Malloy, current Third Point Re CEO who is set to become a senior underwriting executive officer of the new Class of 2020 re/insurer.
In an interview with Reinsurance News, both Sankaran and Malloy emphasised that at SiriusPoint, underwriting comes first.
“We will focus on the bottom line, not the top line – and this is how we will make sure we will have a company that has underwriting excellence,” said Sankaran. “We will also have a global platform that will give us access to admitted and non-admitted paper in Europe, the U.S., Bermuda, and Lloyd’s. We will be able to offer clients and brokers a diverse reinsurance franchise, including a niche, hard-to-replicate European branch network and a specialised Accident and Health (A&H) business.
“Within A&H, we’ll also have the benefit of their dedicated in-house managing general underwriters, ArmadaCorp Capital and International Medical Group, which are established relationships that are profit-aligned.”
In recent times, Third Point Re has adjusted its underwriting strategy, taking on more risk which has helped the reinsurer return to underwriting profitability as it successfully navigated some challenging years and a now firming reinsurance marketplace, against the backdrop of a global pandemic.
According to Malloy, the transaction is both strategic and transformative for Third Point Re, bringing on board a larger team with a wealth of underwriting experience and talent who are extremely focused on broker and client relationships.
“I see it as strategically compelling from an expense savings basis, but it really wasn’t about that,” said Malloy. “What we see as the synergy, is allowing the people that are with Sirius to focus on that underwriting culture which they’ve built as opposed to worrying about preserving that underwriting culture, in some way.”
More recently, Sirius has expanded but importantly for Malloy, the firm didn’t just scale up across the board for the sake of it, despite some incentives to grow.
“I think that when you talk to the underwriters there, they understand where they want to be right now. And, I think clients are going to enjoy that because reinsurance capacity I think is going to be a premium for the next period,” said Malloy.
Following the deal announcement, the company held a media call during which Sankaran highlighted that when compared with other potential new re/insurers that will ultimate form the Class of 2020, SiriusPoint has a head start in terms of underwriting talent, capital structure, and clients.
It’s a valid point. But, while the new company might well be ahead in some aspects, the combination of two risk transfer entities does highlight the potential for legacy issues.
Both Sankaran and Malloy alluded to just this and said that one part of the problem can be addressed with significant investment in technology, which, in turn, will enable the underwriters to do what they do best.
“You want to be able to allow underwriters to be underwriting and to be spending time with clients, so I think the ability to make investments there, and not work with old systems is important,” said Malloy.
Sankaran is an advocate of technology, underpinned by his role with a tech enabled healthcare startup, and “is very excited about what the combined company can do in terms of investing” to make a better business.
Of course, Third Point Re is an affiliate of Daniel Loeb’s investment firm Third Point LLC. But with the Bermuda-based reinsurer set to step away from its hedge fund-backed roots, Reinsurance News was eager to understand how SiriusPoint plans to integrate Loeb’s investment strategies into the new business.
“The deal has an element of a reconstituted partnership between SiriusPoint and Third Point LLC, which is important for investors to understand,” explained Sankaran. “This will be a strategic differentiator on the return side while also reducing volatility and creating a portfolio mix more in line with peer property/casualty reinsurers.
“That said, with the creation of SiriusPoint, we have a unique strategic opportunity to establish a powerful new entity that focuses on underwriting and also strives for excellence on both sides of the balance sheet.”
