Sirius International Group has reported a comprehensive loss of $185 million for the first quarter of 2020, including $140 million of losses from the COVID-19 pandemic, most of which stemmed from the company’s reinsurance business.
The result compared with comprehensive income of $76 million for the first quarter of 2019.
COVID-19 losses included $126 million in Sirius’s Global Reinsurance segment, and $14 million from the Global A&H segment.
Sirius Group’s combined ratio was 124% for the first quarter of 2020 compared to 91% for the first quarter of 2019, impacted by 32 loss ratio points from COVID-19.
On the underwriting side, the pandemic drove losses in lines such as Contingency, Trade Credit, Property, and to a lesser extent Accident & Health and Casualty.
The first quarter of 2020 also included 2 points of current year catastrophe losses, compared to 1 point last year, as well as 1 point of net unfavourable prior year loss reserve development compared to 5 points previously.
Pre-tax catastrophe losses, net of reinsurance and reinstatement premiums, amounted to $9 million for the first quarter of 2020 compared to $2 million for the first quarter of 2019.
Gross written premiums for Q1 2020 increased 31% to $818 million and increased 31% compared to the first quarter of 2019. The first quarter of 2020 included $70 million from a loss portfolio transfer completed by Sirius Global Solutions during the quarter. Excluding the loss portfolio transfer, gross written premiums increased 20% compared to the first quarter of 2019.
The Global Reinsurance segment produced a $99 million underwriting loss and a 142% combined ratio, with catastrophe losses of $9 million and adverse prior year development of $9 million, mainly from the 219 Lion Air crash in the Aviation & Space line of business.
Global A&H, meanwhile, produced $10 million of underwriting income, including net service fee income from Armada and IMG of $11 million, and a combined ratio of 100%.
Within the segment, underwriting profits from the primary medical and reinsurance books were partially offset by underwriting losses in worldwide travel. There was $4 million of favourable prior year loss reserve development and $2 million of drag from the Group’s build out of Armada Health.
“COVID-19 impacted both our underwriting and investment results in the quarter,” said Kip Oberting, President and Chief Executive Officer of Sirius Group.
“Despite the challenges of running a strategic process during the pandemic, we continue to pursue our previously announced strategic review and sales process. This process is providing the Company with an ongoing opportunity to evaluate various strategic alternatives.”
Chief Financial Officer Ralph Salamone further commented: “COVID-19 presents the industry with loss reserving challenges. In our Q1 results, Sirius Group set reserves for the estimated ultimate losses associated with the pandemic based on all readily available information, rather than recognizing these losses into the income statement in subsequent quarters.”
