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SiriusPoint reduces risk as it reports $403m full-year loss

Confident but not complacent: Scott Egan, CEO of SiriusPoint Ltd

Bermuda-headquartered re/insurer SiriusPoint chief executive Scott Egan is “confident but not complacent” about the outlook for 2023 after cutting its underwriting losses last year.

SiriusPoint reported a full-year net loss of $403 million, with a net loss in the fourth quarter of $27 million.

That compared with a net profit of $44 million for the full year in 2021 and a loss of $140 million in the fourth quarter.

2022 earnings were hit by $220 million in realised and unrealised earnings compared with a $17 million loss the year before.

The firm’s combined ratio for the year sat at 96.4 per cent, down from 109.1 per cent in 2021, while full-year underwriting income was $83 million, compared to an underwriting loss of $156.1 million in 2021.

Catastrophe losses for the full year were $138 million, with the firm adding that Hurricane Ian’s loss estimate was stable at $81 million.

In an earnings call on Friday, Mr Egan said: “We have the ingredients to be an outstanding organisation but we recognise we’re not there now.

“The vision for SiriusPoint is to be a high-performing underwriter and I am confident that we have the right elements in our business required to execute against that strategy and deliver. However, I recognise we are in the early stages.”

He said the company was reducing its exposure to catastrophe and property risk, which were sources of volatility and said it had already exited around $300 million of property premiums.

“Property now only accounts for around 18 per cent of the group gross premiums versus 31 per cent last year,” he said. “ The reduction in property cat portfolio benefited us at our January 1 renewals as it significantly lowered our reliance on the retro market.”

He said SiriusPoint had also taken a more conservative approach to investments. He said it had reduced its investment in Third Point Enhanced fund, which was mainly a hedge fund-focused strategy, from 18 per cent of its overall portfolio in the second quarter of 2021 to two per cent, or $100 million, now.

SiriusPoint will also be less active in building partnerships with managing general agencies, he said.

He said: “Premium growth via our MGA partnerships has been strong at more than 50 per cent during the last year, predominantly through organic growth in existing partnerships while we also developed some new ones. Within this segment, we have five MGAs which we consolidate in our accounts and believe they have significant value and are underappreciated.

“These businesses, namely Arcadian, Armada, Alta Signa, Banyan and IMG, generated $662 million of premiums for SiriusPoint in 2022 and had more than 25 per cent premium growth last year.

“These MGAs also generated $36 million of capital-light net services fee income during 2022. Their book value at the end of 2022 was only $85 million, well below market valuations.”

However, he said SiriusPoint had a total of 36 equity stakes in MGAs, insurtechs [ph] and other investments which was “too high to manage for the size of our group”.

“We are reviewing our options to optimise the number of equity stakes we have with the aim of having fewer and deeper. We will be happy owners or investors in MGAs where it complements our underwriting. And we do not expect to be active acquirers in this space in the near term.”

In its earning report, SiriusPoint said reinsurance incurred a segment loss of $71 million (105.6 per cent combined ratio) for the year ended 2022, compared to $186.4 million (115.4 per cent combined ratio) for 2021.

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Published February 27, 2023 at 7:57 am (Updated February 27, 2023 at 7:33 am)

SiriusPoint reduces risk as it reports $403m full-year loss

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