Sirius to go ahead with sale process; takes $140m COVID-19 hit in Q1

Bermuda-based  Sirius International Insurance Group has decided to continue with its previously announced strategic review and sales process despite the challenges created by the global COVID-19 pandemic. The re/insurer suffered $140 million COVID-19 losses in the first quarter of 2020 and has set reserves for all expected losses going forward.

Sirius reported a net loss of $98 million for the quarter, down from a profit of $95 million recorded in the same period of 2019.

Gross written premiums were $818 million in Q1 2020, a 31 percent increase from Q1 2019. The quarter included $70 million from a loss portfolio transfer Sirius completed in the period. Excluding that, gross written premiums increased 20 percent compared to Q1 2019.

The re/insurers combined ratio was 124 percent for Q1 2020, compared with 91 percent in Q1 2019.

Majority of its $140 million COVID-19 pandemic losses stemmed from the reinsurance segment ($126 million), while the remaining $14 million came from the global A&H segment.

Sirius' reinsurance segment produced a $99 million underwriting loss and a 142 percent combined ratio.

Kip Oberting, president and chief executive officer of Sirius Group, said: "COVID-19 impacted both our underwriting and investment results in the quarter. Despite the challenges of running a strategic process during the pandemic, we continue to pursue our previously announced strategic review and sales process. This process is providing the Company with an ongoing opportunity to evaluate various strategic alternatives."

Chief financial officer Ralph Salamone added: "COVID-19 presents the industry with loss reserving challenges. In our Q1 results, Sirius Group set reserves for the estimated ultimate losses associated with the pandemic based on all readily available information, rather than recognizing these losses into the income statement in subsequent quarters. For example, in our small contingency business line, we have modeled out the impact of the pandemic on the postponement and cancellation of events on our remaining in-force portfolio, and established $55 million of losses. We took a similar approach to our other lines of businesses."