SiriusPoint Ltd. — FY2022 Form 10-K
Business context and reporting period
SiriusPoint is a Bermuda-based global insurer and reinsurer, with Reinsurance and Insurance & Services segments and additional earnings from investments and MGA service fees. This filing covers the fiscal year ended December 31, 2022; it is an annual report, not a standalone fourth-quarter report. The 2021 comparison includes Sirius Group only from its February 26, 2021 acquisition date, limiting year-over-year comparability.
Key financial metrics
| Metric | 2022 | 2021 |
|---|---|---|
| Total revenues | $2,105.6 million | $2,180.7 million |
| Net premiums earned | $2,318.1 million | $1,717.0 million |
| Net income (loss) | $(386.0) million | $55.8 million |
| Net income (loss) available to common shareholders | $(402.8) million | $44.6 million |
| Diluted EPS | $(2.51) | $0.27 |
| Consolidated combined ratio | 96.4% | 109.1% |
| Core combined ratio (non-GAAP) | 101.6% | 109.5% |
| Core underwriting income (loss) (non-GAAP) | $(34.8) million | $(163.4) million |
| Core net services income (non-GAAP) | $31.3 million | $11.0 million |
| Net cash from operating activities | $293.3 million | $1.6 million |
Net premiums written rose 43.2% to $2,549.2 million; gross premiums written rose 51.5% to $3,409.7 million. Insurance & Services gross premiums written more than doubled to $1,884.2 million, while Property’s share of total gross premiums written fell to 17.3% from 27.8%.
Investment results shifted to a $322.7 million loss from a $312.5 million gain. The 2022 loss included $210.5 million of losses from related-party investment funds and losses on debt securities amid rising rates and wider credit spreads. Net investment income was $113.3 million, compared with $25.4 million in 2021.
At year-end, total assets were $11.04 billion, total shareholders’ equity $2.08 billion, and common shareholders’ equity attributable to SiriusPoint $1.87 billion. Cash and cash equivalents were $705.3 million, restricted cash $208.4 million, and total invested assets and cash $6.57 billion. Carrying-value debt was $778.0 million; the $300 million revolving facility had no borrowings outstanding. The company had $1.27 billion of letters of credit issued, backed by pledged cash and investments.
Material changes versus the prior comparable period
- Net loss replaced prior-year net income, primarily reflecting investment losses and catastrophe losses, including Hurricane Ian. Catastrophe losses net of reinsurance were $137.9 million in 2022 versus $329.0 million in 2021.
- Underwriting improved: the Core underwriting loss narrowed to $34.8 million from $163.4 million, and the Core combined ratio improved to 101.6% from 109.5%. Reinsurance remained loss-making, with a 105.6% segment combined ratio; Insurance & Services recorded a 97.0% ratio and $32.1 million underwriting income.
- Common book value per share declined 18.8% to $11.56; tangible book value per diluted share fell 21.4% to $10.43, primarily due to the net loss.
- The investment portfolio was repositioned: the Third Point Enhanced Fund holding declined to $100.3 million from $878.2 million after $581.3 million of withdrawals. Debt securities classified as available for sale increased to $2.64 billion from none in 2021.
- Operating cash flow increased to $293.3 million, while investing activities used $1.30 billion, primarily reflecting purchases of debt securities. Cash, cash equivalents and restricted cash ended the year at $913.7 million, down from $1.95 billion.
Outlook, management commentary, risks and unusual items
Management described 2023 as a transitional year and expects significant profitability improvement, with full run-rate benefits from strategic actions expected in 2024. These are expectations, not guarantees. Management said rate improvement remained ahead of loss-cost trends in most Insurance & Services lines, while property reinsurance pricing and terms tightened after elevated catastrophe losses. It also cited strong growth in MGA program business and casualty and specialty markets.
- The transformation focuses on tighter underwriting, lower property-catastrophe exposure, a less volatile investment portfolio, and growth in Insurance & Services. The company is closing offices in Hamburg, Miami and Singapore and reducing its Liege and Toronto presence. It incurred approximately $30 million of restructuring costs, primarily severance, in Q4 2022.
- Russia/Ukraine-related underwriting losses were estimated at $17.5 million in management’s outlook discussion; the segment discussion reports $12.2 million of Core losses and $5.3 million in Corporate. Management said the ultimate impact remains uncertain. Estimated investment exposure to cryptocurrencies was $9.1 million, with minimal underwriting impact.
- Loss reserves are a major estimation risk: gross loss and loss adjustment expense reserves were $5.27 billion. The auditor identified reserve valuation as a critical audit matter, citing management judgment, actuarial assumptions and reliance on cedents, MGAs and brokers. 2022 included $21.3 million of favorable prior-year reserve development, partly offset by inflation-related strengthening and adverse catastrophe development.
- Other material risks include catastrophe and climate exposure, inflation and social inflation, reserve inadequacy, investment-market and interest-rate volatility, reinsurance recoverability, delegated MGA oversight, foreign exchange, cyber risk, regulatory constraints, and execution of the transformation. Rating outlooks from S&P and Fitch were negative; AM Best’s outlook was stable.
- The Lloyd’s managing-agency sale to Mosaic Insurance was terminated in November 2022; management said Lloyd’s remains core to the business. The filing reports no individual litigation or arbitration expected to have a material adverse effect.
Most important facts for investors to verify
- Whether underwriting improvement continues, especially in Reinsurance, and whether the consolidated 96.4% combined ratio is representative of continuing operations; compare it with the 101.6% Core ratio.
- How investment results, available-for-sale unrealized losses and related-party investment exposures evolve after the portfolio shift.
- Whether reserve estimates remain adequate as catastrophe claims, inflation and long-tail casualty losses develop.
- Whether the company achieves its stated 2023 improvement and 2024 run-rate expectations, including the costs and premium effects of restructuring.
- Liquidity and capital available after collateral requirements, $778.0 million of debt, preference-share dividends and regulatory limits on subsidiary distributions; common dividends are not expected for the foreseeable future.