Q2 2025 SiriusPoint Ltd Earnings Call
Good morning, ladies and gentlemen, and welcome to Serious points. Second quarter 2025 earnings conference call.
During today's presentation, all parties will be in a listen-only mode. Following the conclusion of prepared remarks, management will host a question and answer session, and instructions will be given at that time.
As a reminder, this conference call is being recorded, and a replay is available through 11:59 p.m. Eastern Time until August 18, 2025.
With that, I would like to turn the call over to Liam Blackledge, Investor Relations and Strategy Manager. Please go ahead.
Thank you for a and good morning or good afternoon to everyone listening. I welcome you to the serious Point earnings call for the 2025 second quarter and a half year results.
Earlier this morning, we released our earnings press release, 10-Q, and financial supplement, which are available on our website.
Additionally, a webcast presentation will coincide with today's discussion and is available on our website.
Joining me on the call today are Scott Egan our chief executive officer and Jim McKinney our Chief Financial Officer.
Statements based on management's current expectations and actual results may differ.
Certain non-GAAP financial measures will also be discussed.
Management uses the non-GAAP financial measures in its internal analysis of our results of operations and believes that they may be informative to investors engaging with the quality of our financial performance and identifying trends in our results. However, these measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.
Please refer to page 2 of our investor presentation and the company's latest public filings with the Security and Exchange Commission for additional information.
I will now turn the call over to Scott.
Thanks, Liam and good morning. Good afternoon, everyone. Thanks for joining our second quarter and half your 2025 results call.
The second quarter has seen cities Point. Deliver continued, strong performance.
Our underlying return on equity for the quarter was 17%, 2 points ahead of our across-the-cycle target range of 12% to 15%, driven by strong underwriting and targeted growth.
Year to date, our underlying return on equity of 15.4% is at the upper end of our target range, despite heightened first-half losses in aviation and first-quarter losses from California wildfires.
The second quarter core combined ratio of 89.5% is a 3.8 point improvement year-over-year.
Over focus on producing consistently strong and improving results.
This marks our 11th consecutive quarter of underwriting profit.
We also grew our growth rate in premiums by 10%, representing a fifth straight quarter of double-digit gross premium growth, as we continue to allocate capital selectively towards attractive opportunities in the markets that we operate within.
Premium growth is strong on a net basis as well, increasing 8% in the quarter and 14% in the first half of the year.
Within our insurance and services business, we saw net premium growth of 15% in the quarter.
This is at a faster Pace than gross premiums as we deliberately retain more premiums on our own balance sheet, from our NGA partners.
this is in line with The Prudent strategy of increasing, our retention, as these relationships season and mature, and as we get increasing confidence with the performance and underwriting margin,
This approach is an important proof point of our underwriting discipline in the first half. We've seen double-digit growth in accident and health property and other Specialties lines of business, whilst decreasing our premiums within casualty as we remain deliberately cautious,
We can continue to expect our insurance business to grow more than reinsurance.
In the quarter, we entered 4 new MGA Partnerships.
3 of the 4 new opportunities were expansions with existing, long-term Partners who we know, well, and share a commitment to underwriting Excellence with
Deepening long-term, proven relationships is a key part of our MGA strategy.
Our selection of new partners is also a key part of our process and we continue to reject over 80% of all opportunities. We see in this distribution Channel.
We're excited by the pipeline of opportunities. We see and are proud of our increasingly strengthening reputation as a partner of choice for NGAS.
This was recognized during the quarter at the program manager Awards, in New York where supported by our partners, we won program insurer of the year.
Coming now to our underwriting performance, we delivered a combined ratio for our Core Business of 89.5% for the second quarter, contributing to our year-to-date combined ratio of 92.4%.
As I said our second quarter result is a 3.8 Point Improvement year-over-year and of this Improvement. 1.8 comes from improvement, in our attritional loss ratio in line with our recent Trend marking the sixth consecutive quarter of year-over-year. Attritional loss ratio Improvement.
The quarter's results contain no catastrophe losses versus 1 point. In the second quarter of last year whilst favorable prior year development continued to be strong.
looking at Reserve development on a Consolidated basis which includes the development of a runoff business, this marked our 17th consecutive quarter of favorable releases
From a Consolidated mgas service revenues from our 2 100 ANH mgas increased by 16% in the quarter with year-to-date revenues up 13%.
For the half year, the service margin is a healthy and improved 23.6% which is generating net service fee, income of 28 million.
Touching on investments which Jim will cover in more detail. Net investment income for the quarter was 68 million and is tracking in line with the full year. Guidance of 265 to 275 million. There were no significant movements on the valuations in our strategic, MGA investments in the quarter.
Finally, our Capital remains strong and our second quarter. Bscr ratio was 223% and within our target range, as we continue to lower our Capital, to support the organic growth opportunities of the business.
Before I conclude, I wanted to take a moment to talk about our people, the real engine of our business.
During the quarter, we undertook our annual engagement survey, which showed another year of significant improvements across the metrics. We've included some of the details in appendix 4 of our presentation.
Our Net Promoter Score increased by 16 points year-over-year and 53 points over the past two years. We now sit in the very good category.
I highlight this because this business has always been about our people and our culture, and I'm incredibly proud and immensely grateful for the job that they do for our customers and shareholders every single day.
The survey highlights that there is a feel-good factor within the company, with staff turnover down to 15%.
This is a key ingredient for a continued future success.
It is also helping us attract talent to the company and the quarter saws again.
Attract top talent from across the industry, including two new members of my executive leadership team.
To end, I'll go back to where I started this quarter. This provides us another opportunity to show our progress in becoming a best-in-class specialty underwriter.
We continue to consistently deliver strong underwriting profits.
Targeted and disciplined premium growth and stable investment results.
We are committed to, and relentlessly focus on, value creation.
We value for The Limited share has increased 4% in the quarter and 10% year to date.
Our underlying earnings per share for the quarter of $0.66 represents an increase of over 100% versus the prior year.
And our year to date underlying return on Equity is at the top end of our 12, to 15% target range.
We've made great progress in the first half of this year, but it's only half time in 2025—there's all to play for in the second half.
We're more than ready.
With that, I'll pass across to Jim. Who will take you through the financials in more detail.
Thank you, Scott.
Turning to our second quarter results on slide 13. Let me Begin by saying we are pleased with our financial results, this quarter, and for the half year, we meaningfully improve both the reported and core combined ratios. In addition, we generated higher growth and net written and earned premiums
At 89.5% the core combined ratio improved 3.8 points versus the prior year, the combination of higher premiums, a strong core traditional loss ratio and favorable prior year development produced core underwriting income of 68 million. This is an 83% increase from the second quarter of 2024 and our 11th consecutive quarter of positive income. These items are a testament to the team's strong execution, disciplined underwriting and focused Capital Management.
Moving to net service fee income. As a reminder, the decals' profits are reported through other revenues to normalize for this change. We focus on comparison to the 100% owned ANH Consolidated MGA businesses. This view highlights a 16% increase in year-over-year service revenues, as well as net service fee income, increasing 6% to $9 million.
The investment result is $69 million. It includes the full impact of the actions taken during the first quarter to support our repurchase activities. Net investment income continues to benefit from a supportive yield environment. We continue to see reinvestment rates greater than 4.5 percent.
On recurring items such as foreign exchange losses year-over-year. This is up 35%
Net income for the quarters. 59 million resulting in diluted earnings per share of 50 cents. This includes 17 million in foreign exchange losses. A significant portion of which are non-cash items related to period over period. Valuation changes with corresponding offsets within our Investment Portfolio that are recognized through other comprehensive income, these items are recognized in our income statement. When realized this is consistent with our approach to economically hedge exposures
In summary our second quarter results, demonstrate our ability to profitably, grow, and create value for our shareholders.
Moving to our half-year results on slide 14, the themes are consistent with the second quarter. Strong execution, disciplined underwriting, and focused capital management produced profitable growth.
Underwriting income for the period. Is 96 million? This includes solid gross premiums, written net premiums, written and net premiums earned growth of 11% 14% And 19% respectively. The core combined ratio was 92.4% this represents a slight year-on-year Improvement, despite elevated catastrophe losses, incurred within the first quarter.
Net service fee income was $28 million, representing a slight decrease from the prior year period. Our 100% owned ANH Consolidated produced $28 million of net service fee income, which is up 14% versus the first half of 2024.
Net investment income for the first half of the year was $139 million, down slightly from the prior year period as a result of the lower asset base.
Lastly, common shareholders Equity increased 168 million to 1.9 billion. Resulting in diluted book value per share X, aoci growing 7% or a dollar to $15.64.
Moving to slide 15 and double-clicking into our underlying earnings quality. Our underwriting first focus continues to deliver strong underlying margin improvement. The attritional combined ratio chart on the left-hand side of the page strips out the impact from catastrophe losses and prior year development, as these inherently vary. Over time, we believe this metric is useful to examine the quality of our underwriting income.
Our 90.9% core attritional combined ratio in the first half of the year represents a 2.3-point improvement versus the prior year period of 93.2%.
All facets of the ratio improved. The attritional loss ratio improved 1.1 points. The acquisition costs improved, 0.6 points and the oue ratio improved, 0.6 points.
It's important to note that we continue to benefit from scale due to our earned premium growth for the full year. We remain comfortable with an expense ratio expectation of 6.5% to 7%.
The right-hand side provides a bridge from our underlying earnings quality to our core combined ratio. This displays 3.8 points of favorable prior year development in the first half, partially offsetting 5.3 points of catastrophe losses that relate entirely to California wildfires.
Turning to our insurance and services, segment, results, on slide 16.
Gross written premiums increase, 70 million, or 14% to 560 million in the quarter driven by strong growth within our A&H, other Specialties and property lines for the half year gross, written premiums, increase to 181 million or 18%, to 1.2 billion. We expect to see existing growth Trends persist throughout the remainder of the year.
The insurance and services segment achieved a combined ratio of 89.3% a 6.7 Point improvement from the prior year quarter. This was driven by an 8-point decrease in the loss ratio, partly offset by a 1 Point increase in the acquisition cost ratio and a 0.3 Point increase in the other underwriting expenses.
The Improvement in the loss ratio is largely due to a 4-point Improvement in the attritional loss ratio from our North American PMC, business the quarter. Also saw no catastrophe losses representing a 0.9 point Improvement, year-over-year and favorable prior year development of 10 million representing a 3.1 Point Improvement, year-over-year,
Is strong with the combined ratio improving 5.5 points to 91.6%. This result was driven by a 6.3 Point decrease in the loss ratio. And a 0.4 Point, decrease in the oue ratio, partially offset by a 1.2 Point increase in the acquisition cost ratio.
Similar to the second quarter, a traditional losses for the half year, represent the majority of the Improvement down 4.1 points versus prior year. Largely driven by our North American Business.
Represented 6.3 points of the combined ratio compared to 3.3 points in the first half of last year, and was driven largely by favorable movement within accident and health.
Our accident and health book of business, has provided us with a stable source of underwriting profit through the cycle. And is a key offering that adds diversification to our portfolio and produces consistently strong results.
Premium in this specialism are up 14% in the first half of the year and represent roughly half of the business, mix and insurance and services.
Rates in the U.S. continue to rise at or above loss trends, while personal accident lines continue to see single-digit rate softening.
Pricing in life insurance continues to trend back towards pre-COVID pricing. The pricing environment within ANH meets our risk and return profile, and we continue to see growth opportunities within this specialism.
Within casualty premiums, for the first half of the year, have decreased by 10% as we continue to allocate capital towards opportunities to have a more attractive underlying margin.
The book continues to benefit from positive rate movements. Exceeding Trend, particularly in excess Casualty that has seen mid double digit rate increases rates continue to hold firm, due to Lost cost to runs with industry-wide reserved, strengthening litigation financing and nuclear verdict pressures. We are never afraid to take. Decisive action to protect the bottom line within our Autobook. We continue to reduce underwriting and exit businesses where rate is not giving
Keeping Pace with lost cost trends.
Other specialties continue to see strong growth, with Surety and Environmental both showing strong year-over-year increases in premiums. Within Aviation, major airline renewals continued to see 5% to 10% increases, with performance mixed between subsequent months.
Most Airline renewals are not due until the fourth quarter at which point the Air, India incident will be better, reflected in pricing space, continue to see double digit price in the significant losses experienced in the market in 2023 and resultant capacity exits.
With energy rates being a bit of a mixed bag, energy liability rates remain positive and average 5%.
Our rates are experiencing mid- to low-single-digit rate pressures. Despite this, we believe power remains rate adequate within upstream energy, small to medium. Risks pricing is roughly flat to down. Single-digit rate decreases for larger risks are down by around 10%.
Turning to marine rates, we continue to see softening in the board cargo segment, with whole generally experiencing single-digit rate decreases. Rates for marine liability and ports and terminals remain firm, with a range of low single-digit rises to low single-digit reductions.
Premiums from our property, specialism, grew double digit in the quarter and first half. This is driven by growth from MGA programs within our international business and from Partnerships entered in 2023 and 2024,
Our primary property, portfolios predominantly non-catastrophe and continues to experience rate accuracy.
Moving to our reinsurance segment, results on slide 17 this quarter, the segment saw gross premiums written increase by $17 million, or 5%, to $370 million. Double-digit growth in Other Specialties was partially offset by reductions in property reinsurance premiums.
On a half year basis, growth premiums written increase by 2% on a net thesis premiums, written decreased by 1% in the quarter and 4% in the first half.
The combined ratio for the quarter improved, 0.4 points to 89.8%. The result was driven by a 0.7 Point Improvement, in the acquisition cost ratio and a 0.2 Point Improvement in the oue ratio. Partly offset by a 0.5 Point increase in the loss ratio.
The loss ratio increased to 56.6% partly as a result of a 9 million large loss, from the Air. India cross driving at traditional losses up. 0.9 points versus the prior year
Half of your combined ratio of 93.5% contains 2.6 points of improvement in the acquisition cost ratio and 0.6 points of improvement in the loss ratio. The loss ratio increased 9.5 points from the prior year, driven largely by the California wildfires from the first quarter.
Other specialties saw 22% gross premiums written growth this quarter and 6% growth in net premiums written. Within credit, bond pricing is under pressure stemming from strong performance and ample capacity. The second quarter saw credit spread tightening, which impacted premium levels, while terms remain firm.
On the incident occurred.
For casualty reinsurance, gross premiums written increased by a modest 2% in the quarter, but are down 6% at the half-year. Casualty reinsurance continued to benefit from positive rate increases that exceeded trend. However, as we guided since the fourth quarter of 2024, we reduced exposures on structured deals and certain casualty classes at 1-1, such as Commercial Auto, as underwriting discipline led us to reallocate capital to protect underwriting margins.
Within property, reinsurance premiums, decrease 5% in the quarter in line with the tougher market conditions in this specialism.
For the first half premiums are roughly, flat driven by reinstatement premiums from the California wildfires. We continue to monitor rate, adequacy and property, reinsurance particularly following the heightened catastrophe activity and the last 12 months. Important to note, we will only grow premiums where we believe the margins are within our risk and profitability profile with competitive. Pressures persisting across reinsurance markets.
Catastrophe excess of loss placements have seen the greatest pressure with double digits in cross non-limiting. These accounts had previously seen the greatest rate increases over the prior few years. Proportional business is also competitive, but we have seen opportunities, particularly for structured deals; margins are tightening. However, there is still potential in loss-affected segments as improved rate adequacy, legal changes, and increased reinsurance availability.
Ability to support both new and existing carriers entering the market.
By 18, we show our catastrophe losses versus peers and the reduction in volatility of our portfolio following the portfolio actions taken in 2022. We have materially decreased our catastrophe exposure in order to deliver more consistent returns to our shareholders. The charts show how we reduced our catastrophe losses in 2023 and 2024, and have continued on this path in 2025.
It's as we lost in the first half, represent 5.3 points of our combined ratio and were driven by the California wildfires in the first quarter with no losses in the second quarter during the second quarter, our loss estimate for California, wildfires decreased by less than a million dollars. Of course, it is more useful to view the loss, ratios on an annual basis. But our half year 2025 figure already shows a comparatively low loss ratio amongst peers and demonstrates the benefits of our highly Diversified portfolio.
Moving to reserving, our strong history of prudence is shown on slide 19.
Favorable prior year development in the quarter stood at $14 million for the Core Business versus $4 million in the prior year quarter. It is important to consider our consolidated result here. As this includes the business we have put into runoff, we have favorable prior year development on a consolidated basis of $9 million, marking the 17th consecutive quarter of favorable prior year development.
Our track record of consecutive favorable releases while exceeds the average duration of our insurance liabilities of 3.1 years highlighting, our prudent approach to reserving. Additionally, we show here the strong level of protection, we have on each of our 3 Los portfolio transfers that were completed in 2021 2023 and 2024
earning our strong investment result.
On slide 20, net investment income for the first half of the year was 139 million down slightly from the prior year period, as a result of lower asset base. Following the settlement of the CM Bermuda transaction. In the first quarter, we reinvested over 300 million. This quarter with new money yields and excess of 4.5%. The portfolio continues to perform well and there were no defaults across our fixed income portfolio. We remain committed to our investment strategy which focuses on high-quality fixed income securities. 79% of our Investment Portfolio, is fixed income of which 97% is investment grade with an average credit rating of double A minus,
Our overall portfolio duration remained at 3 years. While assets, backing loss reserves remain fully matched and are at 3.1 years.
Moving on to our slide 21, looking at our strong and diversified Capital base.
Our second quarter, estimated bscr ratio stands at 223% decreasing by 2 points versus the end of the first quarter. Our Capital position continues to be robust and contain sufficient Prudence as shown by the stress test scenario of a 1 in 250 year PML event.
Issued in Corona, our debt to Capital levels remain within our targets.
We continue to have strong liquidity levels including 682 million of liquidity available to the hold Co following the final payment of 483 million to see in Bermuda in the first quarter.
As a reminder in the first half of the Year, both A and B and Fitch revise. Our Outlook deposit from stable whilst Moody's and S&P affirmed our ratings Fitch. Highlighted the significant underwriting Improvement in 202023 and 2024 and the completion of the CM Bermuda by that while embass called out the balance sheet. When making their upgrade, we believe our balance sheet continues to be undervalued. There remains significant off-balance sheet value in the Consolidated mgas, which we own, this was demonstrated, When we deck Consolidated, Arcadian last year and generated almost 100 million of Book, value to carrying value on our balance sheet of the 3 remaining mgas is 83 million with net service fee income for the trailing 12 months of 45 million. This equates, to an earnings multiple of just over 2 times, the earnings versus the double-digit earnings multiple use by the market.
With this, we conclude the financial section of our presentation. This quarter saw a continuation of strong double-digit growth in our Top Line, while delivering a 3.8, Point improvement, in our core combined ratio of which 1.8 points came from attritional loss ratio Improvement.
Underlying return on equity for the quarter of 17% contributes to a first half underlying return on Equity of 15.4% this delivery, at half-year means we are on track to deliver another year with return on Equity within our 12, to 15% across the cycle. Target, we have built a strong track record of delivery and this quarter's result, further validates, the significant progress we have made on our journey to becoming a best-in-class specialty, underwriter.
And with that, I will hand the call back over to the operator, and we can now open the lines for any questions.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad,
The confirmation tone will indicate your line is in the question queue.
May press star 2, to remove yourself from the queue for participants using speaker equipment, and may be necessary to pick up your handset. Before pressing, the star Keys 1 moment, please while we pull for your questions.
Our first questions come from the line of Michael Phillips with Oppenheimer and Company, please proceed with your questions.
Uh thanks. Good morning everybody. Um, trust question is on kind of the new programs, you've done that, I guess this year, not just this quarter, but this year um, thinking about the impact of those on the top line over the next, maybe 18 months of those specific programs, um, on a difference between the growth and the net premiums, um, and I think it it sort of goes to your philosophy, but also some of the comments that Scott's made about that difference between taking the net over time, but can you, can you speak to the impact of those specific programs? This year might have on both the gross and net, uh, premiums over the next 18 months?
Yeah, thanks mate. Thanks for the question. I appreciate it. Nice to speak to you. Uh, look, Mike, I, I would say we, we sort of take them on a program by program basis, which I know isn't a helpful comment for you, but I think, uh, you know, we don't sort of forecast ahead. So, number 1, we choose very carefully, which I know is not the question you're asking, but, but we keep reinforcing that point. We reject sort of, 80% of the, the opportunities that present themselves. And I think our philosophy is very much. We take gross and then lean into it. And so, if you look at the outline of opportunities and I would say not just this year, I would go back into sort of last year as well, where we reported quite a lot of new Partnerships coming on. I think the way that we look at that is we season them. Yeah. In terms of Leaning into the net as and when we feel comfortable, so there isn't really a ready-made formula per se uh, but but I think
Direction of travel is we want to take more risk risk, net risk with Partners, who we feel more comfortable with. So so, you know, I I would say we've got a strong Tailwind of overall growth, uh, as evidenced by our sort of, you know, performance over the last 5, quarters in particular, and I think that trend of sort of net potentially outstripping. Gross might be something that emerges, but as I say, we don't predict it per se uh, and we take it as it comes. So, so look at Jim. Anything you want to add to that?
Uh, to further growth on both, you know, the growth and the net Through Time.
Okay, no, no, thank you. I'm appreciate that. I I I on your insurance, uh, segment. I think of pieces of that, that help your growth over time um, despite what's happening in the external PNC Market because they're kind of non. And when I think of that I think of the biggest 1 would be A&H. I guess I want to make sure that's accurate and then it if so could you maybe highlight some others within their that might have the similar characteristics besides ANH.
Yeah, so so, uh, you're right to think of it that way. Mike. So so, uh, let me just kind of step back in position, ah, probably. So obviously we've seen growth in, ah,
25% of that comes from.
Fully owned, uh, mgas which is, which is IMG. So, actually, when we see growth in our revenue from A&H owned, uh, uh, sort of ngas, then ultimately that, that manifests itself as well, in our, in our sort of, uh,
In a premium levels. Uh, look, look for me in h. The way that we think about that within the portfolio is obviously. It's our volatility shock absorber. I think that's a phase I've used across the market before. So if A&H is growing, it allows us to take more risk in other areas of the business and still maintain our overall lower volatility.
Approach to the portfolio. And that's something that we manage sort of very carefully and very, very well. And, as I say, we feel very confident in the position of our A&H business. I would say, if you look across the other areas, I think we are happy uh Mike to take on risk as long as it aligns with our areas of expertise. And specialism, I think obviously each 1 has a slightly different Dynamic, so just to try and be helpful to you. I think on property, uh, obviously we manage our approach to Peril quite tightly. Uh, uh, obviously, that's important when we have a sort of lower volatility aspiration, so property, depending on where we're at, on a kind of PML, allocations to Peril means that we will talk a lot toggle down. I think casualty where, where thoughtful and and sort of cautious about not, not because of any specific reason, just because
I think that's the sort of prudent approach to casualty. We're not scared of it, and we've got some very, uh, good lines that we write, but but I think we're, we're very thoughtful and and, you know, careful about it. And then, in our other Specialties, like, whether it be shity, whether it be marine and energy, whether it be the credits, I think these are opportunities that we can lean into both in sort of General market space, but also through MGA Partners as well. Uh, so yeah, look for for for me. Uh, I think we feel pretty positive. There are certain areas that we probably wouldn't lean into so commercial Lotto would be a good example of that at the moment for us.
Where we just don't think the environment out. There is something that we would feel that excited about. I think some programming MGA Partnerships, give us the opportunity to have an edge there. But in general terms that might be 1 that we would be sort of filing back dialing down but but the rest I would say on balance we feel reasonably positive about so a long answer to your question but Jim anything you want to add?
Yeah. Mike 1 thing I would add is really um what you've seen from a pipeline growth perspective, uh within you know, our North American franchise. Um, we've obviously
Established a bunch of strategic Partnerships, uh, over the last couple of years. Um, and the result of those Partnerships is that there's going to be, you know, a good Tailwind of prudence, uh, you know, profitable growth that we would expect to come through. There are similar to what you're kind of, you know, the
Stability that A&A provides is something that's a little bit unique. In terms of where we're at from a franchise perspective, it's not that we're not subject to some of the market trends or other factors, but just from where that segment of our business, or that line of business sub-segments, if you will, is within our overall framework.
Franchise and, and its life cycle, uh, kind of growth maturity perspective. Um, that's going to be a nice stable force or I would expect it to be a nice stable force, uh, from a growth. And from a profitability perspective as we look forward,
Okay, well, thank you both. Um, last one for me, for now, a little bit higher level actually, um, is Enterprise release. You've talked about the international business and specifically, the lower London MGAs. Um, could you characterize a difference between MGAs in London versus what we see here in the United States?
As you call them out specifically there, so you know, kind of what is the difference and why they're more growth than what you see in the U.S. That's why I'm asking.
Yeah, no, no. But look, let me step back. I mean, obviously, in in London, uh, make if you go back a few years, uh, strategically, when I came here, uh, that London was declining overall for us and given the assets that we hold their IE Lloyds Syndicate. Managing General agent, etc, etc. We decided to invest in Lloyds, uh, we don't obviously just access business in the London Market versus Lloyd. We've also got their own paper and because we've got our own paper that also makes us attractive, uh, to sort of mgas in the sort of London, space and given the wider expertise that we've got across the group. We can leverage that from us into London and in 1 cents that that the Hallmarks are not that different. But what we are actually seeing is the pickup as we win, uh, as we win business in the London space, which is obviously an area of the business that we would like to invest in and grow. And that's exactly what we're doing. Mike uh today.
On us. So hopefully that answers your question.
Yeah, that's no. Thank you very much, and congrats.
Okay. Super, thanks. Thanks for your questions. Okay, Operator, next.
Thank you. Our next question has come from the line of Randy Bender with B. Riley Securities. Please proceed with your questions.
Uh, hey, good morning. Thank you. I just have a couple of questions. I think the first one for me is just on net investment income. It's trending.
ahead of your full, your guy, I believe and and
I think you you're putting money to work at at a higher rate as as the year goes on.
Is there just some conservatism in keeping the guide for the year? You know, can you share kind of where you're putting new money to work? So we can just understand that line item a little bit better.
yep, I'm happy to
yep.
Um, thanks, Randy. Um, I would say slightly, uh, we're largely, um.
Online with the plan that we had. And if it's the beginning of the year, it does.
Include uh, potential. Um
You know uh an interest rate cut in the back half uh to 2 cuts. Um so at the moment I think we're largely in the past. I would have expected uh the front part of the year to be a little bit above kind of the back half if effectively some of the Federal Reserve um projected kind of Market Cuts were to come through and so really no change from that perspective. Um we do tend to be
You know, if we think about our range, um, we do tend to have a range, uh, in particular for this item. And to the extent that, you know, there's something that would take us outside of that range or that we would see that coming down, we would then update our guidance, uh, at that stage. But I think it's fair to say at this point, you know, as you've noticed, we're kind of at the midpoint, if not slightly higher than that from a range perspective. And, you know, we'll continue to work through what is, uh, really largely a favorable environment. Uh, with, again, uh, items kind of being replaced, uh, with a yield greater than 4.5 percent. So, I feel pretty good about that.
Okay, great. That's helpful. And then I have one on reserves. Clearly, the reserve profile is looking good with the continued redundancies.
And A and H.
I guess it'd be helpful maybe, just maybe to learn a little bit more about how the tail on that book develops because it's you you it seems like you're getting the majority of the reserve development from from there and kind of going through the queue. I'm not, I'm not seeing that broken out.
Specifically for the quarter, and maybe I'm just not catching it yet, but like how...
you know how long does a you know a reserve their season kind of versus like casually lines because it's mostly what we look at when we look at reserves as analysts of how that's developing
Date of caution for the current year. So we would tend to reserve slightly higher for the for the current year and let the older year season. And so what you'll see in our ANH portfolio, if you went back through time is a pretty uh, stable and solid track record of continual prior year releases given the profile as I've just described it. And, and as I say, that's all because it's a, you know, largest area of our business, it obviously operates within our portfolio. Really importantly, in terms of volatility risk management as I outlined earlier on, uh, but but I think we feel very confident about the quality of that business and and the way that we, uh, reserved for it, but Jim anything you want to add to that?
Yeah, so um, you know, building on what Scott said. Uh, we tend to know the amh portfolio results or have, you know, a large degree of conclusion, within a 2 to 3 year uh, time frame. Which means that, you know, from an 18 to 24 months, uh, perspective, we generally have reasonably seasoned trends that, you know, obviously, we continue to kind of follow through there, but that highlights, um, a component where we would, you know, once we're more confident at that point in time. Um, then we can begin to kind of think about that. From, uh, a perspective of, uh, essentially enhancing kind of our estimates at that point in time the casualty, uh, areas tend to be more for
4 to 5 years. Um, and so we're really thinking about components. Um, when you're looking at that just mechanically, uh, you're not really generally looking, um, at updates, uh, unless you're seeing something either negative or other, um, within kind of a 3 to 4 year time period. So, just from a natural course of business, you're going to see, um, Ascot noted, you know, an initial reaction or an earlier reaction from an ANH just because of when, um, you kind of have a real solid indication and kind of know, you know, the answer where it's a little bit longer again for those casualty. And then, you know, we'll begin to react through time either way. Uh, what I would take away from it is that we have a prudent, uh, reserving philosophy as demonstrated by the 17 quarters of favorable prior year development.
And highlighting, kind of the nature of nothing has changed in relation to that. And, you know, that would be something that I think you'll find. There's a Hallmark of us. And, and something that would be, uh, when you think about how we look at it, um, we try to be prudent and thoughtful, uh, both on the initial setup of picks and then, um, the picks that we have, as we go through time.
Okay, great. That's really helpful. Appreciate the answers.
Super, thanks for your questions, Rhonda.
Thank you. Our next questions come from the line of Andrew Anderson with Jefferies. Please proceed with your questions.
Hey, good morning. Just on the casualty within insurance, I think it's about 25% of the premium mix there, and you mentioned it was down 10%. But at the same time, you're getting rates in excess of trend, and it sounds like the pricing environment is good there. So, can you just talk about the decision to write less business there and perhaps remind us when this started so we can think about when we lap the non-renewal here?
Yeah, but no, thanks Andrew. Thanks for the questions. Nice to speak. Uh, look, we're not uncomfortable with casualty. We, we just cautious on casualties. And so we've got some very mature MGA relationships, uh, you know, Arcadia and being a great example of that we're, uh, you know, we feel very confident in both the rating and the performance. But I think for us, you know, there are certain segments of casualty. I I highlighted Commercial Auto earlier on where, you know, for us and we're probably just just not really signaling as a, as a sort of go forward trend for us. I don't think we're signaling here. Any big sort of rectifications in casualty? There's nothing. That's not what we're flagging. We're just in general saying that we're cautious. And we're we're cautious, we we'll trim at the edges if we feel we have to but
Jim, anything you want to add on casualty in general?
No, I think, uh, what I would highlight is similar to you, that we remain disciplined. And, you know, this is an indication more of how we're allocating capital to what we see as the most profitable areas in the market, uh, that are within our volatility corridors. And as, you know, we've kind of moved forward over the last 12 to 18 months, we've seen opportunities in other areas of the book.
I lie, you know, allocate capital accordingly, and so I'd really view it as us looking at the market.
Seeing what we think is attractive um and being disciplined about that and not simply, you know out saying hey we have X amount allocated. So we're going to allocate, you know, that much going forward. Uh it's really an indication of how um we are committed to, you know, writing profitable business and and allocating our Capital to the areas that we think will produce the best returns for our stakeholders.
Thanks. And then, you know, sticking with primary insurance, I think you mentioned double digit growth in property, can you maybe just give us some more color on what the primary property book consists of cuz I guess I'm a little surprised to hear a double digit growth just given the the rating environment there. But perhaps this is not, you know, ens it's not cat exposed but just maybe any color would be helpful.
Yeah. So, so back to the earlier question on London as well. Uh, Andrew, so we've obviously picked up some mgas in London as well. So it's not all us uh, exposed business. So some of it will be exposed to other sort of pedals, uh, in Europe, like European wind flood Etc. But it's back to what I said earlier on. WE manage our the pedal exposures very tightly, uh, and and obviously want to make sure that we don't overexpose uh, to any of them in particular. We're also looking at property mgas which
Potentially don't have that type of exposure or where we can exclude, certain exposures, uh, from, uh, from those. Uh, so, look, I, I would say in general, it's more of a diversification play as opposed to anything, uh, specific and and it's something we manage, you know, very, very tightly given our ambition to be lower volatility, but, but Jim. Do you want to add anything on the mgas?
No, I think that just represents, as you've highlighted, a little bit of a smaller base, but also just where, again, from an opportunity perspective, and...
Um, you know, as we've kind of further developed, um, our presence and Market in the London MGA space that, you know, we've had a benefit there that has come through from a property perspective, in terms of, you know, an area where we think that there's attractive Returns on Capital and, and that, you know, is good for our financials.
Thanks, and maybe, lastly, just any change in pmls at at midyear renewals. We should be thinking about into kind of hurricane season here.
No, nothing.
At all, we've been pretty stable, Andrew. Since we went through the restructuring.
A while ago. Very stable. Uh, and obviously key will be, I think, 1-1 renewal next year in property, which I guess everyone is looking at. Nothing of any significance in terms of what we do, just sort of normal bow.
Thank you.
Thank you.
Thank you. As a reminder, if you would like to ask a question, please press *1 on your telephone keypad.
Our next questions come from the line of Anthony, Mis, with Dialing and Partners. Please proceed with your question.
Hey good morning, Scott and Jim. Uh thanks for the answer so far uh with all these questions. Um I I did have a follow-up on the insurance and services
Seeing that net growth is outpacing, uh, relative to that growth basis. Could you elaborate on what sort of performance you need to see or needs to be achieved for that decision to retain more on that partnership business? And then, were there any particular partnerships worth calling out that would have seen notable success and contributed to the net growth?
Yeah, so it's a really important question. Anthony, thanks for it. Look, the...
Position, uh, too quickly. And we don't feel under any pressure to do that, uh, to be frank, which is also really important. We will only grow, and I think Jim said earlier on, like we'll only grow where we believe we feel confident to grow, and it's a function of, you know, how the partnerships work and how the data is flowing, how, you know, how the chemistry between the underwriters, the philosophies working, etc., etc. And remember that for the majority of...
Our MGA relationships, we actually, uh, have profit sharing Arrangements in place, and so there's actually skin in the game for them as well. We think that's a really important part of the overall, sort of mix and formula. It's not the only part, but but really important part as well. So, you know, for us, uh, that's how we think about and, and back to what Jim was alluding to, and I was alluding to as well. We've brought on a lot of new, MGA relationships over the past. Let's call it 18 months or so. We feel really positive that there's a good strong Tailwind behind us, but we feel no pressure to do that. And I think, you know, in terms of your specific on on lines. I think in the first half of the year we've lent into shity right with 1 particular partner, just to use that as an example. And actually for the first, I probably get the slightly wrong. But for the first sort of year, to 2 years of that relationship, we took a very very small net position. Uh, and therefore it was sort of 2 years of of almost getting used to seasoning.
Etc, before we started to lean into the net. So a pretty full some answer but it's the heart of our philosophy Anthony and how we approach these. And it's a really important part where I think people uh, need to, uh, need to get confidence in our approach to the that distribution Channel.
Yeah, I appreciate all the color there. Um, and then I just have one other question, bigger picture. Um, we've seen sort of an emerging trend of consolidation of MGAs. And I'm just curious, has this trend had any impact?
On serious points, model partnering with MGAs, or any effect to that pipeline of potential partnerships that you've seen. Nothing, nothing. Nothing material, okay, Anthony? No, no, no, no, nothing to do.
All right. Thank you.
Thank you.
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