Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SiriusPoint Ltd (SPNT, Financial) reported its seventh consecutive quarter of underwriting profit, demonstrating consistent earnings improvement.
- The company saw a 22% growth in core premium for Q2, excluding lines exited in 2023, and a 6% year-on-year growth for the half-year.
- SiriusPoint Ltd (SPNT) achieved a strong half-year combined ratio of 92.5% for its core business, indicating disciplined and profitable growth.
- The MGA Center of Excellence is gaining a market reputation as a leading platform for program administrators and managing general agents.
- Net investment income guidance for the full year 2024 has been increased to between $275 million and $285 million, reflecting strong investment performance.
Negative Points
- The combined ratio for the core business deteriorated by 2.4 points compared to the prior year, primarily due to lower favorable prior year development and catastrophe losses.
- Gross premium written in the reinsurance segment decreased by 6%, driven by reductions in U.S. casualty lines.
- The company experienced a $4 million foreign exchange loss and an $11 million impact from mark-to-market on liability-classified capital instruments.
- Despite a strong quarter, the core MGA revenue decreased by $2 million compared to the prior year.
- The attritional loss ratio improvement was partially offset by an increase in acquisition costs of 3.7 points due to loss-sensitive features and a change in the business mix.
Q & A Highlights
Q: Can you provide more details on the premium growth and the factors driving it?
A: Scott Egan, CEO: We've seen excellent premium growth in our continuing lines while maintaining underwriting discipline. Our Q2 core premium growth, excluding lines exited in 2023, was up 22%, and half-year growth is up 6% year-on-year. This growth is driven by our North American programs, international, and London business.
Q: How are the recent loss events, such as Crowdstrike and Hurricane Beryl, impacting SiriusPoint?
A: Scott Egan, CEO: We do not expect these events to have a significant impact on SiriusPoint.
Q: Can you elaborate on the actions taken regarding MGA equity stakes?
A: Scott Egan, CEO: We've taken multiple actions to unlock value and simplify our balance sheet. The deconsolidation of Arcadian allowed us to recognize the value of our share at market value without impacting our go-forward P&L. Our remaining three consolidated MGAs have a book value of $94 million and generated $24 million of net service fee income for the first half of 2024.
Q: What are the key highlights of your investment performance this quarter?
A: Jim McKinney, CFO: We reported another excellent investment result for Q2, reflecting strong rate performance and ongoing portfolio optimization. As a result, we increased our net investment income guidance for the full year 2024 to between $275 and $285 million, up from $250 million to $265 million.
Q: Can you discuss the capital actions announced and their implications?
A: Scott Egan, CEO: We have agreed with CMIG to repurchase approximately 9.1 million shares for $125 million and settle the Series A preference shares in cash. Additionally, the board has authorized repurchase authorizations of approximately $300 million. These actions demonstrate our flexibility to use our balance sheet to further improve and simplify the company while being prudent custodians of capital.
Q: How has employee engagement evolved, and what impact does it have on the company?
A: Scott Egan, CEO: Our annual employee engagement survey showed a significant step up in overall engagement levels, moving from 75% to 80%. Employee engagement is a big lever of organizational success, and we are committed to acting on the results.
Q: What are the key financial metrics for the second quarter and half-year?
A: Jim McKinney, CFO: For Q2, we reported a combined ratio of 93.3% for the core business, gross written premium growth of 22% for continuing lines, and net income of $110 million. For the half-year, we reported a combined ratio of 92.5% for the core business, net income of $201 million, and diluted book value per share growth of 7%.
Q: How is SiriusPoint positioned in terms of solvency and capital ratios?
A: Jim McKinney, CFO: Our Q2 Bermuda solvency capital ratio of 284% is the strongest it has ever been. We have significant liquidity, with $2.5 billion of common shareholders' equity and a total capital of $3.4 billion. Our debt-to-capital ratio decreased to 19.3%, now within our target range.
Q: What are the future projections for SiriusPoint's return on equity?
A: Scott Egan, CEO: Our headline return on equity for the half-year is 16.7%, with an underlying return on equity trending within our recently updated guidance of 12% to 15%. We aim to deliver a 12% to 15% return on average common equity through the cycle.
Q: What are the strategic focuses for SiriusPoint moving forward?
A: Scott Egan, CEO: We are focused on underwriting performance, driving profitable growth, and leveraging our MGA Center of Excellence. We aim to continue building on our strong results and improving our business in every regard.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
