SiriusPoint Ltd

Good morning, ladies and gentlemen, and welcome to the Serious Point Limited third quarter 2021 earnings conference call. During today's presentation, all parties will be in a listen-only mode. As a reminder, this conference call is being recorded. I would now like to turn the call over to Ms. Claire Kerrigan, Head of Investor Relations for Serious Point. Please go ahead.

Thank you, operator. Welcome to the Sirius Point Limited earnings call for the third quarter of 2021. Last night, we issued our third quarter Form 10Q, an earnings press release and financial supplement, which are available on our website, www.siriuspt.com. With me here today are Sid Sankaran, our Chairman and Chief Executive Officer, and David Junius, our chief financial officer. Before we begin, I would like to remind you that many of the remarks today will contain forward-looking statements based on current expectations. Actual results may differ materially from those projected as a result of certain risks and uncertainties. Please refer to the earnings press release and the company's other public filings. including the recent Form 10Q and the Form 10Q for the period ended March 31, 2021 and June 30, 2021, where you will find risk factors that could cause actual results to differ materially from these forward-looking statements. In addition, management will refer to certain non-GAAP financial measures, which management believes allow for a more complete understanding of the company's financial results. A reconciliation of these non-GAAP measures to the most comparable GAAP measure is presented in the company's earnings press release that is available on our website. At this time, I will turn the call over to Sid.

Thank you, Claire, and good morning, everyone. It's been an eventful third quarter for the industry and for Serious Point. I'm going to share my perspective on the market, our results this quarter, and the work we've undertaken to position Serious Point for sustainable and profitable growth. This includes working to shift the mix between the insurance and reinsurance portions of our portfolio, applying changes to our legacy books by addressing lines of business that no longer fit our risk appetite, our continued and growing investment in our insurance and services platform, and our planned rebalancing of our investment portfolio. We believe all of this will shape our future growth and create value for our stakeholders. To begin, the third quarter exacerbated what has been another significant catastrophe year, highlighting the frequency and severity of secondary perils impacts on market losses. Serious points losses for Hurricane Ida and the European floods are based on estimated insured market losses of $40 billion and $14 billion, respectively. Damon will address our lost position, our robust approach to reserving, and the significant strength of our balance sheet in his remarks. The losses the industry has reported, not just this quarter, but in the past few years, serve to validate our focus on managing the volatility of our property business as we continue to implement the changes identified by our line-by-line business review. While we have a strong balance sheet to absorb these losses, we're making strong progress managing our books to de-risk by exiting risks that no longer fit our risk profile or where we do not see attractive risk-adjusted returns. With the close of the merger in February, we made strides reducing our catastrophe exposure through modest additional reinsurance purchases and rebalancing the overall portfolio to non-cap lines, including accident and health, credit, aviation, and niche U.S. casualty lines. A reduction of met PMLs over the last year reflects execution of the purchase of additional retrocessional reinsurance protection, a reduction of the legacy third-point reproperty catastrophe book, and exiting risks that failed to meet stringent risk hurdles. However, these actions were insufficient in our minds to manage exposures down to acceptable levels on the enforced book acquired in the merger. We remain committed to property reinsurance, although we've been clear in our intention to reduce our exposure, and we and the industry need to reprice large parts of the business to generate acceptable net returns. We'll reduce our exposure to property in general, and property cat in particular, through three key actions. First, by repricing businesses or risks where we do not believe the historically priced margin is adequate, such as cat-exposed property pro rata business. Second, by applying a broad reduction in gross and net limits, and in particular, outsized individual lines, particularly in geographies where low pricing for broad coverage presents potential over-reliance on imprecise risk assessment. And finally, by structuring our reinsurance protections to manage our net limits within the company's risk appetite. As we've said on prior calls, we anticipate that reshaping our portfolio would take a full year to accomplish, even though the majority of our coverages renew at 1.1. Importantly, market conditions are improving due to the heavy industry losses from catastrophes this quarter. As a result, we expect to see better terms and conditions and pricing in the property market, although our focus remains on balancing our portfolio to reduce risk and the associated volatility. We've also seen hardening broadly in other lines, including cyber and large portions of the casualty and specialty markets in both primary insurance and reinsurance across most geographies. We believe the market is maintaining underwriting discipline, and we don't expect a deterioration in terms. Through our remediation efforts, we expect to see an improvement in underwriting profitability with the lower volatility going forward. While we experienced underwriting losses this quarter, our relationship with Third Point LLP and the impact of their expertise on our investment portfolio helped to mitigate those losses and continues to be a differentiator for Serious Point. We saw very strong returns this quarter, which were predominantly from our investment in the TP Enhanced Fund and was primarily attributable to long-event fundamental and activist equities. In particular, strong performance from the fund's largest positions. Equity markets continue to rebound with technology-oriented stocks leading out performance globally. As we execute our strategy to reduce overall volatility, we also anticipate remixing the asset portfolio over time. This will focus on the reallocation of investments from the TP Enhanced Fund into lower volatility asset classes, which we expect will be material in reducing risk and capital consumption going forward. Moving on to insurance and services, our current business portfolio consists of the established A&H business and our primary P&C platforms. We seek to shift our business mix and drive future growth in insurance and services through incubation of and partnership with MGA and tech companies that provide access to unique specialty primary insurance business. This will allow us to grow premiums in the primary space with the flexibility to adjust the volume of business based on market cycles. Across ANH and PNC, we have more than 30 MGAs and partnerships on our platform today. Being nimble means we can allocate capital to areas where we see market dislocations and demand supply gaps, such as DNO and cyber. Travel and the digital economy present other opportunities. Strategic partnerships allow us to access business with attractive risk-adjusted returns in return for equity participation, our paper, and industry expertise. There's early days on the majority of these investments, but we do see signs of success and promise. Some examples of these investments are Cormis, which provides cyber insurance for small and mid-sized companies. Rhino, which offers security deposit insurance for renters sold through landlords. Vouch, providing SME insurance for startups via partnerships with entrepreneurial investing and funding platforms. And Outdoorsy, offering auto, travel, and other insurance products for RV renters. We're seeing strong contributions from our MGAs, which we're incubating on our platform, such as Arcadian and Pi. Let me touch upon Arcadian in particular. We co-founded this MGA, which writes E&O and D&O business in September 2020. Market dislocation D&O provides an attractive opportunity, and the business is led and underwritten by strong entrepreneurial talent, John Boylan and the team he's built. The business is performing very well with great market reception. As of the end of the third quarter, Arcadian has written approximately $150 million in premium and is on track to add about $200 million in premium by the end of 2021. We're excited about the market interest in Arcadian and our strategic partnerships in general, and anticipate that they will increasingly contribute to our bottom line in the future. In our runoff segment, our transaction with the Comp 3 Group closed at the end of October and underscores our focus on optimizing capital allocation and rebalancing towards insurance at higher margin and growth lines. It also provides further certainty on Series Point's reserve position. Following the completion of the transaction, runoff will not be actively acquiring new runoff lots, and the LPT reduces our net reserve position in this segment by approximately half. We've made great additions in underwriting talent and leadership this quarter. We've added to our international leadership team, hiring Bobby Hearsing as head of international strategic business development. This is a new role created to help us identify new organic and inorganic growth opportunities internationally and shift our business mix from reinsurance to insurance and services, particularly non-CAT-exposed business. Patrick Charles joined our North American business this quarter as head of America's property and casualty insurance. Patrick leads PNC insurance business in the Americas, driving relationships with PNC managing general underwriters and supporting the build and launch of new products. We're delighted with our ability to attract outstanding industry talent. To conclude, we're undertaking a transformational business plan to focus on growth and improving company profitability. This will result in reallocating capital away from property cap and investment risk and into our insurance and services platform. We aim to better manage our risk, grow higher margin differentiating businesses, and invest in technology. We expect our actions and improvements each quarter to deliver progress towards value creation. I will now hand the call over to David to take us through the financials.