SiriusPoint Ltd. — Q1 2023 Form 10-Q
Business context and period. Bermuda-based global multiline insurer and reinsurer. This unaudited filing covers the three months ended March 31, 2023, with balance-sheet comparisons to December 31, 2022. Results are not necessarily indicative of the full year.
Financial performance
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Net premiums earned | $595.5 million | $529.3 million |
| Total revenues | $684.9 million | $361.4 million |
| Income (loss) before tax | $170.8 million | $(203.6) million |
| Net income (loss) | $145.0 million | $(213.3) million |
| Net income (loss) available to common shareholders | $138.6 million | $(217.0) million |
| Diluted earnings (loss) per share | $0.78 | $(1.36) |
| Operating cash flow | $94.2 million | $0.1 million |
Total investment gains, losses and net investment income were $73.6 million, versus a $205.1 million loss in Q1 2022. Net investment income alone was $61.5 million, up from $7.8 million. The comparison also reflects much smaller investment losses in related-party funds than in the prior-year quarter.
Underwriting and segments. Total underwriting income was $156.5 million, compared with $33.5 million; the reported combined ratio improved to 73.8% from 93.7%. Core underwriting income, a non-GAAP measure, was $107.4 million versus $12.7 million, and the Core combined ratio improved to 80.5% from 97.5%.
- Reinsurance segment income was $79.9 million versus $3.1 million; gross written premiums fell 24.4% to $396.2 million, reflecting the restructuring and lower Property and Casualty writings.
- Insurance & Services segment income rose to $40.3 million from $23.6 million; gross written premiums increased 37.3% to $664.0 million, including growth in A&H and strategic partnerships.
- Net services income was $12.8 million versus $14.0 million, including $3.9 million of strategic-investment losses.
Book value per common share was $12.54, up 8.5% from year-end; diluted book value was $12.31. Tangible book value per diluted share, a non-GAAP measure, was $11.41.
Financial position, liquidity and debt
- Total assets were $11.81 billion and total shareholders’ equity was $2.25 billion at March 31, 2023, compared with $11.04 billion and $2.08 billion, respectively, at year-end.
- Cash and cash equivalents were $763.6 million; restricted cash was $211.0 million. Cash, cash equivalents and restricted cash totaled $974.6 million. Total investments were $5.76 billion.
- Debt carrying value was $779.2 million. The company reported compliance with debt covenants and no borrowings outstanding under its $300 million revolving credit facility.
- Letters of credit issued totaled $1.268 billion. Cash and debt securities pledged as collateral totaled $1.4155 billion. Restricted cash and investments limit access to some reported assets.
- Net cash increased $60.9 million during the quarter. Financing cash use included $38.5 million to settle contingent value rights and $4.0 million of Series B preference dividends.
Material changes, outlook and risks
- Net favorable prior-year reserve development was $105.4 million, compared with $5.5 million in Q1 2022. Management attributed it to favorable reported loss emergence across property and casualty and A&H lines; the filing says $101.6 million was associated with the 2023 loss portfolio transfer pricing.
- The company agreed to a funds-withheld loss portfolio transfer with Pallas Re covering approximately $1.3 billion of reserves at September 30, 2022. It was expected to close around June 30, 2023, subject to approvals and other conditions. Management expected a gain, deferred and amortized over claims payments, and projected a net increase of more than $150 million in group capital. Actual terms and gain depend on reserve development and claim payments.
- Management is restructuring its underwriting platform, including closing or reducing certain international offices and reducing property-catastrophe underwriting locations. No formal earnings guidance is provided in the supplied filing text.
- Management cited inflation, catastrophe exposure, reserve adequacy, interest-rate and investment-market movements, currency risk, credit exposure, reliance on MGAs, regulatory constraints and rating changes among material risks. It said inflation assumptions were incorporated into pricing and reserves but that uncertainty remained.
- On April 12, 2023, the company acknowledged Dan Loeb and affiliates’ indication of interest in exploring an acquisition of all or substantially all common shares. A board special committee was formed; no definitive proposal or transaction was assured. Fitch revised its outlook from negative to stable on March 22; AM Best affirmed its rating and outlook on April 19.
- The company reported effective disclosure controls at quarter-end. It implemented a new accounting and financial reporting system during the quarter and adjusted controls for the new general ledger.
Key facts for investors to verify
- How much of Q1 underwriting improvement is repeatable versus driven by favorable prior-year reserve releases, particularly the $101.6 million associated with LPT pricing?
- Whether the Pallas Re LPT closed, its final ceded reserves and premium, the recognized gain, and the realized capital benefit.
- Whether current reserve estimates remain adequate as claims develop and inflation, catastrophe losses and other uncertainties evolve.
- How much liquidity is genuinely available after accounting for restricted assets, collateral requirements, regulatory limits and letter-of-credit commitments.
- Developments in the potential acquisition interest, including any formal proposal, committee process or resulting transaction.