SiriusPoint core UW gain up 52% to $56 million with $70 million net LA wildfire losses “shielded by retro”

By James Thaler

Feb 19 - (The Insurer) - SiriusPoint grew its fourth quarter underwriting gain by 52.0% to $56 million, boosted by a core loss ratio that improved by 660 basis points to 59.0% and $58 million in reserve releases, which more than offset $39 million in catastrophe losses.

The period marked the Bermuda-based firm’s ninth consecutive quarter of underwriting profits and 15th straight quarter of favourable reserve releases.

The company also disclosed that it expects to record between $60 million and $70 million in net cat losses from the recent California wildfires with its first quarter results, but it expressed confidence that that figure would be “shielded from deterioration” by its retro program.

SiriusPoint’s fourth quarter core combined ratio improved by 320 basis points to 90.2%, while the full-year combined ratio nudged up by 190 basis points to 91.0% Core underwriting income for the year dipped to $200 million from $250 million in 2023.

Gross premiums written on continuing lines, excluding classes exited in 2023, grew by 21%, while overall core GPW rose by 5.9% to $763 million, driven by a 24% surge in reinsurance to $312 million from $251 million.

The insurance lines SiriusPoint discontinued in the last year include its capacity relationship with cyber insurtech Corvus and a workers’ compensation program.

Insurance and services GPW dropped by 3.8% to $450 million from $468 million.

INSURANCE & SERVICES UW Q4 GAIN MORE THAN DOUBLES

The reinsurance division posted an $18 million underwriting gain for the fourth quarter, down from $27.8 million the year before, while the same figure for insurance and services jumped to $38 million from $17 million.

Underlying net income improved to $43.5 million in the fourth quarter, up 14% year on year from $36.6 million, while the company posted a 14.6% underlying return on equity for the year, and 9.1% overall. The company has previously said it is targeting a 12% to 15% annual return on equity.

SiriusPoint also said it delivered 9.8% book value growth per diluted common share to $14.64 in 2024.

The company said it generated a $21 million fourth quarter net loss, which was materially affected by three significant items linked to its efforts to reposition the business.

Those include its CM Bermuda repurchase transaction announced last year, the closure of previously announced loss portfolio transfer deal with Enstar and the write-down of a single MGA investment.

“This marks the end of the significant reshaping of the company,” SiriusPoint said in its results announcement.

SiriusPoint also said that the permanent retirement of the 45.7 million common shares repurchased from CM Bermuda on closure of the transaction will drive greater than 20% earnings per share accretion.

The transaction is expected to close at the end of this month.

FY24 NET INVESTMENT INCOME AHEAD OF UPDATED GUIDANCE

Net investment income in the quarter fell slightly to $68.9 million from $78.4 million in the prior-year period. Full-year net investment income grew to $303.6 million from $283.7 million in 2023, which SiriusPoint said was ahead of its updated guidance.

Core net income in the quarter grew to $66.7 million from $46.3 million in the same period of 2023. Net service fee income from its 100%-owned accident and health MGAs, which SiriusPoint says have a carrying book value of $89 million, was up 36% to $42 million for the full year.

As of year-end 2024, SiriusPoint has trimmed its number of stakes in MGAs and insurtech firms to 20, down from 36 at the start of 2023.

Catastrophe losses for the year grew to $49.5 million from $12.2 million in 2023, though reserve releases for the full year fell to $75.0 million from $140.3 million, which was largely driven by a loss portfolio transfer deal the company agreed to in 2023.

SiriusPoint said the fourth quarter reserve release came after an external reserve review completed during the quarter, which it said further validated its reserves as “prudent”.

In an effort to lower the volatility of its results, the company said it has reduced its PMLs by more than 40% since Q2 2021, and also de-risked its investment portfolio through asset reallocation to be more in line with peers.

EGAN: ‘REMARKABLE YEAR OF DELIVERY’

“2024 has been a remarkable year of delivery for SiriusPoint,” CEO Scott Egan said in a statement.

“Despite increased catastrophe activity, our core combined ratio has improved meaningfully from last year to 91.0%, excluding the impact from the loss portfolio transfer in 2023,” he continued.

“Our 4.2 point improvement in attritional loss ratio demonstrates our focus on improving the quality of our underwriting. We saw 21% growth of gross premiums written for the quarter and 10% for the full year for our continuing lines business,” he added.

Egan said that as part of the firm’s capital optimisation strategy, it returned more than $1 billion to shareholders in 2024, while maintaining “robust capital ratios, due to our strong performance, reshaping actions, and capital generation over the past two years”.

“We have strengthened our underlying business performance year-over-year, providing a strong basis for 2025,” he added.

“While this quarter our net income was impacted by several one-off items, we see 2024 as the end of the repositioning and reshaping of the company,” he continued.

“Our efforts are now fully focused on both growing the business and continuing to enhance performance,” Egan went on.

The CEO said he takes “great pride” in the accomplishments of his colleagues, who he said have worked with commitment and dedication to produce improvements in the firm’s underlying results, quarter after quarter.

“I am immensely grateful for all that they do every day for our customers, partners and shareholders,” he concluded.