Reinsurance News

Typhoons & riots push Sirius to heavy Q4 loss

6th March 2020 - Author: Matt Sheehan

Sirius International Insurance Group has reported a net loss of $150.3 million for the fourth quarter of 2019 and a net loss of $45.6 million for the full year, caused by Typhoon Hagibis and the Chilean riots in Q4, as well as Typhoon Faxai and Hurricane Dorian earlier in the year.

Sirius_logga_Group_flatThese results compare with a net loss of $130.5 million in Q4 2018 and a net loss of $16.7 million for the full-year 2018.

Ralph Salamone, Executive Vice President and Chief Financial Officer of Sirius Group, explained that the Group’s Q4 2019 result was negatively impacted by losses in its Global Property segment, including $65 million from Typhoon Hagibis as well as $20 million of losses from riots in Chile.

Rating agency AM Best announced recently that it had downgraded Sirius International’s ratings and placed them under review with negative implications, due to concerns about Sirius’ independence from its controlling shareholder, China Minsheng Investment Group Corp., Ltd.

Sirius’s combined ratio was 121% in Q4 2019, compared to 127% for the same period in 2018, due to lower catastrophe losses of $75 million, versus $114 million previously.

Liberty Mutual Reinsurance

The Global Property segment specifically posted a combined ratio of 143% for the quarter after incurring $65 million of catastrophe losses from Typhoon Hagibis, and $8 million from Typhoon Lekima.

And the Specialty & Casualty segment also produced an underwriting loss of $15 million for the quarter and a combined ratio of 115%, driven mainly by Aviation losses, including $8 million from the Q1 Ethiopian Airlines flight crash.

Looking at the whole year, Sirius Group’s combined ratio was 111% compared to 103% in 2018, with the increase driven by unfavourable prior year loss reserve development and higher losses in the Global Property and Specialty & Casualty segments.

Pre-tax catastrophe losses, net of reinsurance and reinstatement premiums, amounted to $194 million last year, which is the same loss figure posted by the Group in 2018.

Global Property produced an underwriting loss of $129 million and a 120% combined ratio, driven by $65 million of losses from Typhoon Hagibis, $53 million from Typhoon Faxai, and $40 million from Hurricane Dorian, as well as $92 million of prior year reserve development.

Specialty & Casualty similarly reported an underwriting loss of $51 million and a combined ratio of 114%, driven mainly by higher Casualty and Aviation losses, including $12 million from Ethiopian Airlines crash.

Gross written premiums increased by 25% to $380 million for the fourth quarter of 2019 and by 5% to $1.90 billion for the full year.

The total investment result was $37 million in Q4 2019, compared to a loss of $42 million in Q4 2018, and was $178 million for the full year, compared to a loss of $46 million previously.

“Although we made substantial progress on our global reorganization during the year, our 2019 financial results were overwhelmed by underwriting losses mainly in our Property lines,” said Kip Oberting, President and Chief Executive Officer of Sirius Group.

“Regarding our ownership situation, we have been working hard in developing actionable alternatives. This includes, but is not limited to, alternatives that could enhance the Company’s capital position and demonstrate financial flexibility,” he continued.

“We recently announced that we have engaged Barclays to assist in a path forward. We have a 75-year history in this business, and we’ve successfully managed through past storms and transitions. We are confident that this time will be no different.”

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