Sirius International Insurance Group, Ltd. has fallen to a net loss of $14 million for the second-quarter of 2020, while underwriting profitability returned as the firm recorded a combined ratio of 96% for the period.
The firm’s Q2 2020 net loss compares to net income of $102 million in the same period in 2019, while the operating loss improved to $17 million against an operating loss of $19 million a year earlier.
Comprehensive income did improve year-on-year to $50 million in Q2 2020, compared with income of $8 million in the prior year quarter.
Ralph Salamone, the company’s Chief Financial Officer (CFO), commented: “Comprehensive income was $50 million for the quarter, a strong improvement from the first quarter and a significant increase over the second quarter of last year. The total return on investments of 3.0% also helped our quarterly financial performance.
“Having taken a prudent approach to reserving for COVID in the first quarter, we recorded a modest amount of additional losses in the second quarter. Together with a relatively quiet catastrophe loss quarter, we produced an underwriting profit with a 96% combined ratio. As a result, Book value per common share grew 3.1% during the three months ended June 30, 2020.”
The company’s combined ratio improved by 9 percentage points in Q2 2020 from the 105% announced for last year’s Q2, mainly as a result of lower net unfavourable prior year loss reserve development, partially offset by COVID-19 losses, net of reinsurance.
Pre-tax cat losses, net of reinsurance and reinstatement premiums, totalled $10 million in Q2 2020 against $8 million in Q2 2019, contributing 3 percentage points to the combined ratio.
By segment, and Sirius reports that Global Reinsurance recorded underwriting income of $13 million and a combined ratio of 95%, with the result including $4 million of losses related to the ongoing pandemic. Within Global Reinsurance, cat losses amounted to $10 million while net unfavourable prior year development reached $5 million.
Within the firm’s Global Accident and Health (A&H) division, underwriting income totalled $6 million in the second-quarter with the firm reporting a combined ratio of 96%. These results include $8 million of losses associated to COVID-19, as well as $3 million of net favourable prior year reserve development.
Somewhat offsetting the underwriting gains in Global Reinsurance and Global A&H, Sirius’ U.S. Specialty arm fell to an underwriting loss of $2 million in the second-quarter of 2020, producing a combined ratio of 111%.
Looking at investments, and in Q2 Sirius’ investment portfolio returned 2.4% in original currencies and 3% in U.S. dollars. The total investment result for the quarter stands at $124 million, which is up $68 million on the $55 million announced in the second-quarter of 2019.
Kip Oberting, President and Chief Executive Officer (CEO) of Sirius Group, said: “We produced a solid financial return during the quarter with a 3.1% growth in BVPS. Investment results were strong and incremental COVID losses were modest following our Q1 reserving actions.
“During the quarter we dedicated substantial resources to the firm’s strategic review process and these efforts bore fruit as we announced earlier today. This is a positive outcome for our shareholders, clients and employees as Sirius celebrates its 75th anniversary.”
As we wrote earlier, Sirius has entered into a definitive agreement to combine in a cash and stock transaction with Bermuda-based reinsurer Third Point Re.
Commenting on this, Meyer (Sandy) Frucher, Non-Executive Chairman of the Board of Sirius Group, said: “I am pleased to announce the successful completion of the firm’s strategic review process and am thrilled Sirius Group has entered into a definitive merger agreement with Third Point Reinsurance, Ltd. which will lay the foundation for a long and successful future for the firm.
“I especially want to thank Kip Oberting, Gene Boxer, Monica Cramer Manhém, Jeff Davis and Ralph Salamone who each played key roles in keeping the company laser-focused over the past few years and were instrumental in ensuring the positive resolution of the firm’s strategic review process.”
