8-K: SiriusPoint Reports Strong FY24 Results, Completes Major Reshaping

SiriusPoint announces its ninth consecutive quarter of underwriting profits, with a full-year Core combined ratio of 91.0% and significant progress in strategic reshaping.

Summary

• SiriusPoint reported a Core combined ratio of 90.2% for Q4 2024, improving from 93.4% in Q4 2023, leading to a full-year 2024 Core combined ratio of 91.0%.
• The company achieved $200 million in Core underwriting income for the full year 2024.
• Gross premiums written for continuing lines grew by 21% in Q4 and 10% for the full year, excluding exited programs from 2023.
• SiriusPoint reported a net loss of $21 million for Q4, impacted by the CM Bermuda repurchase transaction, the Enstar LPT, and a write-down of an MGA investment.
• Underlying net income reached $44 million in Q4 and $304 million for the full year, a 14% increase year-over-year.
• The return on equity for 2024 was 9.1%, or 14.6% on an underlying basis, at the upper end of the target range of 12-15%.
• Book value per diluted common share (ex. AOCI) increased by 2.7% in Q4 and 9.8% year-to-date to $14.64.
• The BSCR estimate for Q4 2024 is 214%, reflecting a strong balance sheet post CM Bermuda transaction.
• The company plans to permanently retire the 45.7 million common shares repurchased from CM Bermuda, expected to drive greater than 20% earnings per share accretion.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong underwriting results, strategic improvements, and capital management. While there are some negative impacts from one-off items, the overall tone is optimistic and indicates a company on a positive trajectory.

Positives

• The company has achieved nine consecutive quarters of underwriting profit.
• The Core combined ratio improved to 91.0% for FY24.
• Continuing lines business experienced strong growth in gross premiums written.
• Underlying ROE reached the upper end of the target range.
• Diluted BVPS (ex. AOCI) showed significant growth.
• Net investment income exceeded guidance.
• The company is simplifying its shareholder and governance structure through the CMIG transaction.
• The company has a strong capital position and healthy balance sheet producing target returns.
• The company has a continued prudent approach to reserving and managing volatility.
• The company has expanded distribution through the addition of 19 new programs via MGA Centre of Excellence in the year.

Negatives

• The company reported a net loss of $21 million for Q4, impacted by one-off items.
• The total investment result was lower at $225m (vs. $273m at FY 23) largely due to strategic MGA actions taken in the second and fourth quarter.
• Common shareholders' equity decreased by 25% since FY 23 due to CMIG transaction.

Risks

• The company faces risks related to unpredictable catastrophic events, including uncertainties with respect to current and future COVID-19 losses.
• Inadequacy of loss and loss adjustment expense reserves could impact financial results.
• The performance of financial markets, impact of inflation and interest rates, and foreign currency fluctuations pose risks.
• Technology breaches or failures, including those resulting from a malicious cyber-attack, could disrupt operations.
• Geopolitical uncertainty, including ongoing conflicts, could affect the business.
• The company's significant deferred tax assets could become devalued if future taxable income is not generated or applicable corporate tax rates are reduced.

Future Outlook

The company expects to grow further into Insurance over Reinsurance in 2025, targeting lower volatility business profiles with attractive pricing. They also foresee growth from programs cultivated over the last few years and expect continued growth across many specialty lines.

Management Comments

• Scott Egan, Chief Executive Officer, said: 2024 has been a remarkable year of delivery for SiriusPoint.
• Scott Egan noted that the Core combined ratio has improved meaningfully to 91.0%, excluding the impact from the loss portfolio transfer in 2023.
• Scott Egan stated that the underlying return on equity of 14.6% is at the upper end of the 12-15% target range.
• Scott Egan mentioned that the company has returned over $1 billion to investors during 2024 while maintaining robust capital ratios.
• Scott Egan sees 2024 as the end of the repositioning and reshaping of the Company.

Industry Context

The announcement reflects a trend in the insurance and reinsurance industry towards improving underwriting performance and reducing volatility. SiriusPoint's strategic actions, such as exiting non-core programs and de-risking its investment portfolio, align with this trend.

Comparison to Industry Standards

• SiriusPoint's catastrophe loss ratio has shifted from being the second highest in its peer group in 2022 to the second lowest for both 2023 and 2024.
• The company compares its catastrophe loss ratio to peers such as American Financial Group, Arch Capital Group, AXIS Capital Holdings, Chubb, Everest Group, Markel Group, Selective Insurance Group, Travelers, and W. R. Berkley Corporation.
• The company's post-retirement Price/Earnings ratio of 5.4x is compared to a peer average of 10.1x, including companies like American Financial Group, Arch Capital Group, AXIS Capital Holdings, Everest Group, Fidelis Insurance Holdings, Hamilton Insurance Group, Markel Group, RenaissanceRe Holdings, RLI Corp., Skyward Specialty Insurance Group, and W. R. Berkley Corporation.

Corporate Governance

Stakeholder Impact

• Shareholders will benefit from increased earnings per share and return on equity.
• The company's strategic actions aim to improve long-term value for shareholders.
• Customers and partners can expect continued service and solutions from a financially strong underwriter.

Next Steps

• The company will permanently retire the 45.7 million common shares repurchased from CM Bermuda.
• The company will continue capital optimization in 2025.
• The company will focus on growing the business and continuing to enhance performance.

Key Dates