Bermuda-based SiriusPoint Ltd. has announced a Q2 2023 consolidated combined ratio of 81.9%, showing almost a 14% improvement year over year, as consolidated underwriting income rose from $38.8 million to $127.3 million. On a core basis, non-GAAP financial measures, the combined ratio improved to 87.7% from 98.3% a year earlier.
The firm attributes the improved underwriting performance to better favourable prior-year loss reserve development of $33 million for Q2 2023, compared to $6.4 million for Q2 2022, mostly a result of favourably reported loss emergence.
Additionally, there were no property catastrophe losses for Q2 2023 compared to $16.2 million in Q2 2022.
Overall, core results (the sum of Reinsurance and Insurance & Services as non-GAAP financial measures) for Q2 2023 generated income of $85.3 million compared to $20.2 million for Q2 2022.
Income for the period consists of underwriting income of $81.7 million, compared to an underwriting income of $9.6 million a year earlier.
The improvement in net underwriting results was attributed to increased favourable prior-year loss reserve development, lower catastrophe losses and favourable expense ratios resulting in a higher underwriting gain. Net services income for Q2 2023 included net investment losses from Strategic Investments of $4.1 million compared to losses of $0.5 million for Q2 2022.
The company’s reinsurance segment generated underwriting income of $79.3 million, with a combined ratio of 75.3%, for Q2 2023, compared to an underwriting loss of $0.2 million (100.1% combined ratio) last year. The improvement in net underwriting results is attributed to increased favourable prior-year loss reserve development and lower catastrophe losses.
Reinsurance gross premiums written were $387.1 million for Q2 2023, an increase of $8.8 million, or 2.3%, compared year over year, driven by growth in the property and casualty lines of business in the North American reinsurance business, partially offset by lower writings in International reinsurance, primarily in the property lines, as it executes the Restructuring Plan.
The company’s Insurance & Services segment produced income of $8.8 million for Q2 2023, compared to $20.4 million year over year. Segment income for Q2 2023 consists of an underwriting income of $2.4 million (99.2% combined ratio) compared to an underwriting income of $9.8 million (96.1% combined ratio) last year.
The firm says that the decrease in the underwriting result was driven by decreased favourable prior year loss reserve development from loss emergence from certain strategic partnerships. Additionally, the decrease in services income was primarily due to net investment losses from Strategic Investments of $4.1 million for Q2 2023, compared to $0.5 million for Q2 2022.
The gross premiums written for the insurance segment were $462.7 million for Q2 2023, an increase of $28.8 million, or 6.6%, compared to Q2 2022, driven by growth across Insurance & Services, including growth in premiums from strategic partnerships, mainly Arcadian.
Scott Egan, Chief Executive Officer, said: “This quarter has been a positive one for SiriusPoint with all three areas of our business performing well as we continue our journey to improve the performance of the company. Our underwriting results are strong, with a combined ratio of 84.4% for our core operations. Our investment portfolio remains focused on high-quality, fixed-income instruments and we are tracking to the top end of our full-year 2023 net investment income guidance of $220 million to $240 million.
“Run-rate costs have been reduced by $35 million to $40 million versus the previous year on an underlying basis and we are confident on our target of more than $50 million reduction by the end of 2024. The balance sheet is even stronger now given we have closed the loss portfolio transfer deal, releasing more than $150 million of capital and aligning our balance sheet to the go-forward strategy. Finally, all areas of our business are capital generating and we are on track to hit double-digit ROE this year.”
Egan concluded, “We are also making significant progress to improve culture and employee engagement with the intention to create a high-performing organization. We have great talent across the organization and I am proud of their efforts in delivering these results.
“Exploratory discussions with Mr. Daniel Loeb regarding a potential acquisition began and concluded this quarter, following his 13-D filing, and we appreciate the Special Committee of the Board’s support of our strategy. We welcomed Bronek Masojada to the role of Chair of the Board. He is a proven industry leader with over 30 years of insurance experience, who will further strengthen our Board. Our focus on executing well against our strategy continues and with each quarter that passes, we build more credibility and track record. Our aim is to keep doing this and I look forward to sharing further progress later in the year.”
