SiriusPoint Q1 profit plummets despite strong start to 2024
Bermuda-based specialty re/insurer SiriusPoint’s net profit plummeted in the first quarter as losses in the reinsurance book and loss adjustment expenses rose. The company had warned it would see some slowdown in growth following the restructuring which took place in 2022 and 2023.
The re/insurer recorded a sixth consecutive profitable quarter with net profit available to SiriusPoint common shareholders of $90.8 million in Q1 2024, a decrease from $131.9 million in the prior year.
The net premiums earned edged down to $593.8 million from $595.5 million in the prior year although net investment income improved from $61.7 million to $78.8 million.
Gross premiums written in its core segments (reinsurance and insurance & services) combined decreased by $179.5 million, or 16.9%, to $880.7 million in Q1, compared with $1,06 billion in the prior year.
Underwriting profit for the first three months of 2024 fell from $156.5 million to $89.6 million, largely due to losses in the reinsurance book rising from $85.6 million to $124.6 million.
SiriusPoint chief executive officer Scott Egan said: “Building on the momentum from 2023, we report our sixth consecutive quarter of positive underwriting result. Combined ratio for the Core operations is 91.4%, a 5% improvement over prior year, while net income is $90.8 million for the quarter.
"We also saw improvement in our Investment and Fee results. Net investment income was strong at $78.8 million and tracking higher than our FY 2024 guidance. Net service fee income from our Consolidated MGAs increased by 8.2% with an improved service margin of 30.1%.
"We continued to rationalise our equity stakes in MGAs which are now down to 24 compared to 36 at the start of 2023. We have also added five new distribution partnerships since the start of 2024 providing further evidence of our intent to grow in our targeted areas during the year and into 2025."
Egan said the company made “significant progress” in reducing its debt: "We refinanced $400 million of legacy senior notes and redeemed $115 million of legacy senior notes. "Together these transactions will reduce our financial leverage by approximately 2.5 points and improve our Q4’23 BSCR estimate of 255% by a further c.20 points. This will make our balance sheet even stronger.
"Overall, we are seeing good progress as we continue to execute strongly against our strategic priorities. Our first quarter performance is on track to meet our improved ROE guidance of 12%-15%. Our focus is to maintain this momentum and continue to improve our performance throughout the year.”
The company said the decrease in consolidated underwriting income was driven by lower favourable prior year loss reserve development.
"Favourable prior year loss reserve development for the three months ended March 31, 2023 included $101.6 million driven by reserving analyses performed in connection with the 2023 loss portfolio transfer.
"Excluding the favourable development linked to the 2023 LPT, net underwriting income increased by $33.9 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
"This increase was primarily driven by a lower other underwriting expense ratio resulting from our cost savings program and lower attritional losses, as well as no catastrophe losses for the three months ended March 31, 2024 compared to $12.9 million for the three months ended March 31, 2023."
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