Q3 2022 Siriuspoint Ltd Earnings Call

Over volatility and operating complexity.

<unk> addresses an underperforming part of our business.

Our plan is to have a property cat portfolio, which has lower volatility.

Less reliance on retro reinsurance on more flexibility.

The announcement made yesterday about the change has not been taken lightly.

I am confident as a result of the actions. We're taking note serious point will emerge as a stronger more focused company than we were before.

Looking forward our business will be built around four strategic priorities.

These are number one our focus on profitable underwriting and performance in both insurance and reinsurance.

Number two leveraging our strong and complementary distribution footprint.

Number three leveraging of specialisms across our insurance reinsurance and distribution businesses.

And finally number four having a customer focused organization that operates efficiently.

When we presented our full year results next year.

Plan to discuss these areas of focus under our plans in more detail.

The strength of city point lies in our people and I have complete confidence system as we navigate this period of transition.

Drive the business towards higher levels of performance, we are all working incredibly hard to achieve this.

To this end I'd like to focus on a few changes that were alternating with regard to my executive team.

Firstly Monica came upon him to lead today's points International business has made the decision to retire.

Monica will remain in her role of <unk> and international reinsurance and CEO City point International and continued to be an active member of the executive leadership team as she walks with me constantly to appoint a successor.

Monica has played a hugely significant role in the company over a 40 year career and I am incredibly grateful to her for.

For her continued leadership as we navigate the change in our international platform.

Secondly, David Goldman has assumed the expanded role of global President of serious point and Chief underwriting officer.

David has outstanding experience and credentials in insurance and reinsurance and has been instrumental in driving the improved underwriting performance across the company.

In addition, we welcomed two new hires externally to the company.

Drew galliot, who joined as head of Investor Relations and Chief strategy Officer.

On cutting Capex will join the company as our Chief Human Resources Officer.

And finally, the general who is beside me and have only joined the business three days ago.

Has joined us as our Chief Financial Officer.

And with our profit growth to Steve to both introduce himself and take you through the results in detail Steve.

Thank you Scott and good morning, everyone.

I'm pleased to be here and Im looking forward to working with Scott and the entire serious point team to deliver profitable growth and stability.

Scott said I have 25 years' experience in the industry. Most recently as managing director of Guy Carpenter, Canada.

Prior to that I served as CFO and COO at the RSA, Canada group, where he was responsible for setting in driving the company's performance and long term strategic priorities.

He was also a member of RSA, Canada group's board of directors and the RSA Insurance Agency Board of Directors I look forward to meeting you all.

Turning to serious points Q3 financials for.

For the third quarter, we generated a net loss of $98 million or <unk> 61.

Diluted share versus a net loss of $48 million or <unk> 34 per diluted share in the same quarter a year ago. Our annualized return on average common equity in the quarter was negative 21%, we had a consolidated underwriting loss of $47 million with a combined ratio of 100.

Seven, 7%, reflecting a $191 million or 40% improvement as compared to the prior year quarter.

Core loss was $75 million for the third quarter 2022, including an underwriting loss of $88 million and a combined ratio of 114, 5%, which compares to a 245 billion loss and a combined ratio of 152% in the third quarter of 2000.

'twenty one.

Our third quarter results include a $115 million of catastrophe losses net of reinstatement premiums or $18 seven percentage points of which hurricane and accounts for $80 million, reflecting at $60 billion industry loss estimate.

The remainder of catch catastrophic losses are largely driven by France, Hale and Asia typhoons for.

For the Russia, Ukraine conflict and Covid, our reserving approach of recognizing bad news quickly and good news slowly is holding with no change to our original currency ultimate loss pics, and hence very limited financial impact in the quarter.

We continue to take a cautious approach to the reserving for our growing insurance and services segment holding most ratios at original loss picks despite positive actual versus expected trends as we wait for this book to season.

With respect to inflation, we have evaluated the expected impact of the elevated level of current and expected inflation to our pricing and reserving as.

As was covered in last quarter's update.

We have taken action earlier, this year to adjust trend assumptions and our pricing to allow for this elevated level of inflation.

We have concluded that the impact is within our established reserves given the existing allowances for uncertainty that were already established.

This is without question a dynamic situation with a relatively high degree of uncertainty and we will continue to monitor and analyze the inflationary environment and its impact on our portfolio in order to maintain adequate pricing and reserve estimates.

Core gross premiums written for the third quarter were $843 million compared to $636 million in the same quarter, a year ago, which is growth of $207 million or 33% the.

The growth year over year is driven by our insurance and services segment and reflects our business strategy of shifting our business mix from reinsurance to insurance to reduce earnings volatility and improve underwriting profitability.

Turning to the individual segment results in more detail.

Insurance and services produced income of $1 million, consisting of $9 million net services income and an underwriting loss of $9 million with an associated combined ratio of 102, 8%.

Net services income primarily benefited from Ing's stronger revenue, which outpaced expenses contributing to margin expansion along with the continued performance from our Canadian and Armada.

Net services income included $53 million of services revenue versus $38 million in the prior year predominantly from growth in <unk> core travel medical products.

Insurance and services underwriting profit included adverse prior year development, which was driven by strengthening of workers' compensation reserves based on reported loss emergence.

Excluding adverse prior year loss development the accident year combined ratio was 96, 6%.

Insurance and services gross premiums written in the segment were $525 million compared to $241 million in the prior year with both our accident and health and property and casualty portfolios continuing the organic growth trend from prior quarters.

With legacy and new relationships are providing meaningful topline growth in 2022.

Looking forward, we brought on four new partners in the period with early successes, writing new business in their markets.

For the foreseeable future management plans to continue to be opportunistic where we feel we can provide a service to the marketplace with aligned interests from our potential partners.

Reinsurance gross premiums written in the segment were $318 million compared to $395 million in the prior year, primarily due to our strategic reduction in property cat business.

The segment had an underwriting loss of $80 million and an associated combined ratio of 126, 1% impacted by a 115 million of cat losses in the quarter contributing 37 five points to the combined ratio.

The results continue to reflect the improvements of the dramatic reshaping of the portfolio undertaken over the last 18 plus months, including significant reductions in our property cat exposure.

We reduced our <unk> across the entire curve and as we entered the third quarter U S. Wind season, our southeast <unk> was down 45% year over year.

However, we continue to have more volatility in property than we want in the long term and continue to re underwrite property with globally.

Outside of property or casualty reinsurance focus remains on niche specialty lines, while our other specialty books are targeted for growth within our underwriting appetite.

Core underwriting expenses were $43 million for the third quarter of 2022, or seven 1% underwriting expense ratio.

While we continue to invest in our insurance and services business efficiency gains continue to keep track with investments to improve operational capabilities.

Corporate expenses, excluding services expenses were $24 million in the quarter inclusive of a management change related expense severance and professional fees. Excluding these items corporate expenses were $16 million for the quarter in line with previous quarters.

The net investment loss for the third quarter was $28 million driven by a related party investment funds of $8 million offset by $7 million positive return on other long term investments and debt securities of $9 million, which includes FX driven investment losses of $26 million and roughly one.

Losses in the portfolio.

FX losses in our investment results are more than offset by gains from our foreign currency denominated liabilities and debt.

The loss on the related party investment funds was primarily due to the third point enhanced fund with a negative return of three 2% in the quarter.

As you may recall in the second quarter, we took action to shift from a trading portfolio to an available for sale portfolio for new fixed income investments as.

As of September 30, the <unk>.

<unk> of fixed income securities held under <unk> with $1 3 billion and the other comprehensive loss on this portfolio was $40 million for the three months ended September 30, including $2 million from FX.

Despite the rising rates and widening spreads our fixed income portfolio outperformed benchmarks and peers due to its shorts positioning and duration and defensive credit posture we.

We intend to capture higher market yields going forward.

Actively extend the duration of our portfolio.

As we deploy our investment strategy and reinvest cash and short term investments. We expect the portion of <unk> securities to continue to grow and go forward investment income volatility to continue decreasing.

Our balance sheet remains strong ending the quarter with $2 1 billion of shareholders' equity.

<unk> capital, including debt with $2 9 billion issued debt was unchanged in the quarter, except for FX changes in our Swedish kronor denominated sub debt and our debt to total capital ratio is 27% tangible.

Tangible book value per diluted share fell seven 6% in the quarter.

And now I'd like to hand, it back to Scott for his concluding remarks, thank you very much.

Thanks, Steve.

I hope on the call you guys sales at the level of energy and activity of the company focused on improving performance.

Much has been done but we are clear there is much there.

My ambition is high for the organization, we can and should be a high performing company.

We are working hard to develop plans to achievements.

Look forward to achieving these in more detail as part of our full year results presentation.

Thank you again for your time this morning, and I'll turn the call back over to the operator.

Thank you Bob.

Thank you for attending today's presentation you may now disconnect.