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SiriusPoint’s Q1 combined ratio strengthens to 96.6%

11th May 2021 - Author: Luke Gallin

SiriusPoint Ltd. has reported net income of $130.9 million and a combined ratio of 96.6% for the first quarter of 2021, as catastrophe losses reached $5.7 million in the period.

Net income of almost $131 million compares with a net loss of more than $183 million for the prior year quarter.

At the same time, net investment income of $186.5 million for Q1 2021 represents a significant improvement from the $185 million investment loss reported a year earlier.

Gross premiums written (GPW) increased from $125.7 million in Q1 2020 to $366.3 million in Q1 2021, as net premiums written increased to $310.3 million, and net premiums earned jumped by 75% to $256 million for Q1 2021.

SiriusPoint attributes the growth here to an increase in net premiums earned of $115.9 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition.

RMS

All in all, the re/insurer has announced underwriting income of $8.7 million for the opening quarter of the year and a combined ratio of 96.6%, compared with income of $2 million and a combined ratio of 98.6% a year earlier.

Again, SiriusPoint attributes the improved underwriting performance to net underwriting income of $8.1 million from the legacy Sirius Group companies from the date of acquisition.

On February 26th, 2021, the company completed its acquisition of Sirius International Insurance Group, Ltd. and subsequently changed its name from Third Point Re to SiriusPoint.

The carrier explains that these Q1 2021 results are those of Third Point Re and its subsidiaries and do not include the financial conditions and results of operations of legacy Sirius Group and its subsidiaries prior to the acquisition date. The results of operations of Sirius Group are included from the acquisition date forward.

For Q1 2021, SiriusPoint has reported catastrophe losses, net of reinsurance and reinstatement premiums, of $5.7 million, or 2.2 percentage points on the combined ratio, from Winter Storm Uri in the U.S. in February.

Sirius Group’s Uri losses fell into the pre-acquisition period which, when included takes the firm’s Q1 total catastrophe losses to $39.5 million.

Effective January 1st, 2021, SiriusPoint reports four operating segments: Accident & Health (A&H), Specialty, Property, and Runoff & Other.

In Property, GPW increased by 38%, year-on-year, to $62.1 million, primarily as a result of premiums from the legacy Sirius Group companies from the date of acquisition.

The segment produced an underwriting gain of $5.4 million and a combined ratio of 93.3% for the first quarter of 2021, versus income of $9.5 million and a combined ratio of 78.9% for the prior year period.

SiriusPoint says that the decline in underwriting income was primarily a result of higher cat losses, somewhat offset by net underwriting income of $3.9 million as a result of the legacy Sirius Group companies from the date of acquisition.

In the Specialty segment, GPW increased by more than 111% to $167.7 million, driven mostly by an increase in premiums of $49.5 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition, and due to new casualty premium of $28.7 million in the period written by its Bermuda-based MGU, Arcadian Risk.

While premiums grew, the Specialty unit did fall to a $0.3 million underwriting loss for the first quarter of 2021 with a combined ratio of 100.2%. This compares with an underwriting loss of $6 million for Q1 2020.

SiriusPoint attributes the difference to lower COVID-19 losses and a net underwriting loss of $0.7 million as result of the legacy Sirius Group companies from the date of acquisition.

In A&H, GPW reached $134.8 million in Q1 2021, representing growth of $133.5 million from the prior year period. This was driven by an increase in premiums of $135.0 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition.

SiriusPoint’s A&H unit has reported underwriting income of $5.3 million for the opening quarter of 2021 and a combined ratio of 84.9%, compared to a minimal underwriting loss for Q1 2020. Again, this was driven by net underwriting income from the legacy Sirius Group companies from the date of acquisition.

In Runoff and Other, GPW reached $2 million as the segment fell to a $1.7 million underwriting loss for Q1 2021, compared with a loss of $1.5 million for same period a year earlier.

Sid Sankaran, Chairman and Chief Executive Officer (CEO) of SiriusPoint, commented: “I am delighted in our launch of SiriusPoint in the first quarter. We believe our combined company has the platform, capabilities and expertise to take advantage of changing market conditions and compete in a differentiated and effective fashion in the global (re)insurance marketplace.

“I am extremely proud that by the closing of our transaction we added world-class talent to our team, strengthened the quality of our balance sheet and refocused our underwriting strategy allowing us to benefit from a strong 1/1 renewal season. We are creating an entrepreneurial and innovative company that is just at the beginning of its transformation.

“SiriusPoint produced an underwriting profit of $9 million and a combined ratio of 96.6% this quarter, reflecting our focus on writing a profitable and more balanced book of business. We benefited from a focus on underwriting discipline and positive rate improvement across classes of business at January 1. We made great strides in refining our property cat portfolio, reducing catastrophe volatility through modest additional retro reinsurance purchases and rebalancing the overall portfolio to non-cat lines, including Accident and Health, Credit, Aviation, and niche U.S. Casualty lines.

“Through the rest of 2021, we plan to continue to execute on our underwriting strategy and be disciplined in our approach to managing risk. We are focused on better managing our catastrophe exposure and return on capital. We also plan to be disciplined in reducing classes which have been unprofitable. We believe our global platform and entrepreneurial culture will give us flexibility and culture to adapt to market conditions and be responsive to opportunities. While there is much work ahead we are confident we are making progress in our execution.

“We intend to remain nimble and optimize our global platform by partnering with and investing in innovative businesses and teams in the (re)insurance industry. We see these strategic partnerships as a key differentiator and a means by which we can add value and drive disruptive change in the industry. We aspire to be great allocators of capital to the best underwriting risks to drive returns.

“Investment results in the quarter were strong and above trend with notable contributions from the Third Point Enhanced Fund and legacy Sirius Group strategic investments. In rebalancing our portfolio, we increased the allocation to fixed income and cash from TPRe’s position at year end. Third Point LLP also reduced leverage in the TP Enhanced fund.

“We expect the steps we have taken this quarter towards refining our business to achieve underwriting excellence and establishing a high quality balance sheet will result in less volatility going forward. We are confident the path of sustained higher underwriting returns, less volatile investment results and growth in book value will translate into long-term value creation for our shareholders.”

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