SiriusPoint Ltd

Good morning, ladies and gentlemen, and welcome to Serious Point, fourth quarter and full year 2021 earnings conference call. During today's presentation, all parties will be in a listen-only mode. As a reminder, this 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 Serious Point Limited earnings call for the fourth quarter of 2021. Last night we issued our earnings press release and financial supplement, which are available on our website, www.seriouspt.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 10Qs for the period ended September 30th, 2021, where you will find risk factors that could cause actual results to differ materially from these forwarding statements. In addition, management will refer to certain non-GAAP financial measures, which management believe allows 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 terrific to be speaking with you on the first anniversary of Serious Points Formation. At the end of February last year, we created a company that has enormous potential with a global platform, strong long-term relationships, and outstanding talent. Our strategy is focused on a comprehensive re-underwriting of our property, casualty, and specialty reinsurance portfolios, building value in our insurance and services segment, including our robust and growing MGE platform, and repositioning our capital allocation within our investment portfolio. The team has been relentless this year in their dedication to positive change and profitable growth. And I couldn't be more proud of the talented people who make up Serious Point. Some of our milestones this year include launching on the New York Stock Exchange on February 26th, 2021 under the ticker symbol SPNT with a new management team who bring a wealth of diverse experience and expertise. Creating our insurance and services division and developing our brand as the go-to partner for entrepreneurs in the insurance industry. We've evaluated over 200 partnership opportunities and have launched strategic partnerships with over 20 companies, bringing our total portfolio to over 30 relationships. We've recruited significant new hires in key growth areas and functional support with unique skills and expertise to build on our outstanding talent and drive our business forward. We've made significant progress over the last year. dramatically reshaping our company with the single-minded focus on our goals of optimizing our capital allocation, reducing our volatility profile, and leveraging our global platform to build long-term differentiated value for our shareholders, partners, and clients. Our focus remains on continuing to shift to a more balanced business mix between insurance and reinsurance, in particular away from property cap, and on reducing equity exposure in our investment portfolio. As part of our underwriting review, we've materially reduced our property exposure, eliminated float-driven transactions, and re-underwritten our global reinsurance book. Recent property reinsurance market conditions have reinforced our decision to shift to a more diversified portfolio across reinsurance and insurance. Our investment portfolio had superior returns in the first three quarters of the year. The fourth quarter results reflect poor performance in the broader equity markets. During the quarter, we completed a redemption of $450 million from the Third Point Enhanced Fund to be deployed in cash and fixed income, with an additional $100 million redemption at the end of January 2022. We've amended the investment management agreement with Third Point LLC to facilitate the transformation of our investment portfolio from equity to fixed income that's in line with our risk appetite and the strategic direction of the company. Our plan is to reduce capital intensity and volatility on the asset side. This frees up capital to support the growth of our insurance and services business. More disclosure on our revised investment management agreement will be included as part of our 10-K. As part of our overall transformation, we have resegmented our business into two reporting lines effective in the fourth quarter, which are reinsurance and insurance and services. Previously, we managed our business in four reportable segments, specialty, accident and health, property, and runoff and other. This change better reflects the management structure of Serious Point, provides greater transparency into the growing contribution from our fee businesses, and reflects our decision to exit the runoff business. Ultimately, this will allow investors to better track our progress as we build our insurance and services business and work to accelerate growth and improve our profitability. Starting with our reinsurance segment, we're pleased with the material shift in our book over the last three quarters and with the significant reduction in our volatility profile resulting from our January 1 renewals, which decreased our gross and gross net exposures by 35%. As well as reducing our volatility profile, this decrease reflects our view of price adequacy across global property reinsurance. Rate increases in property cap reinsurance have been underwhelming following yet another near record year of global property cap losses. There is still excess supply in the market, dampening price adequacy. In particular, pricing at 1.1 was under our expectations and averaged an approximate 10% increase for property cap excess of loss, less for loss-free accounts, and 15% to 25% for loss-affected European geographies. In general, the market did not experience demand supply imbalances. New entrants and some existing companies gained market share or access to programs, with other insurers and reinsurers re-evaluating their positions in property, reducing aggregates, and moving away from ground-up exposures following heavy losses. Even with significant changes in our property portfolio, we retained our key clients, sustaining our long-held and greatly valued client and broker relationships. We have been clear that our overall limit profile is going to decrease quite dramatically and that pricing will have to change in the upcoming renewals, and our clients understand that. We've engaged clients that respect our point of view on risk and pricing and have worked with us over many years. I'm confident that will continue to be the case, and I'm appreciative of their ongoing support. As part of the continuing management of our CAT exposure, we've also increased our levels of retrocession protection. This includes favorable placement of our Outwards Quota Share program, which is based on longstanding relationships and where we have added some new markets and treaties. we've also fully placed our excess of loss retrocession, providing us significantly more protection than we had in place in 2021. As a result of our actions, we have a materially reduced global property book and a re-underwritten and more differentiated specialty and casualty portfolio. In some books, such as U.S. Casualty, we turned over more than half of the portfolio, resulting in a position where we have a better, more specialized client mix. We'll continue to refine our appetite and optimize capital allocation to ensure we are responsive to market conditions. Turning to our insurance and services segment, we are underwriting primary insurance in a growing number of business lines, where we offer insurance solutions to meet the changing requirements of our partners. We have a steady A&H portfolio and a fast-growing P&C portfolio. The A&H MGA platform includes our wholly-owned subsidiaries, our Medicare International Medical Group, also known as IMG, and a carefully curated portfolio of MGAs writing employer stop-loss. The P&C platform includes partnerships with disruptive MGAs offering differentiated insurance products. We've also incubated several MGAs, including Arcadian and Banyan, which underwrite excess casualty, E&O, D&O, and ETLI products generally for large clients, and Join, a tech-enabled mid-market underwriter. Our partner MGAs cover a range of products, including workers' compensation, cyber, small commercial, consumer, credit, aviation, and weather derivatives. We're very selective and partner with MGAs that are building a strong competitive mode by addressing customer needs with a technological and underwriting advantage. I'll return to our partnership strategy shortly. Insurance and services delivered strong results in 2021 with segment income of $34 million and a combined ratio of 95.5%. Across P&C insurance lines, we're seeing products at different stages of the pricing cycle. Rate increases are slowing in lines such as D&O, while other lines such as cyber are seeing an acceleration in rates. Additionally, casualty seating commissions have reached unacceptable levels from a reinsurance perspective, but are quite attractive from an insurance angle. Our MGA strategy allows us to play in the profitable portion of the risk-value chain. COVID tempered loss trends on the A&H side, while restraining sales through much of the year. Our travel business was slow in the first three quarters, but saw a significant rebound in Q4. And we entered 2022 with strong momentum. We're investing in our travel medical businesses to take advantage of the positive tailwinds. We continue to monitor our MGAs to deliver underwriting results in the year ahead and expect to build and grow our portfolio of partner businesses. The associated revenues allow us to diversify away from our traditional reinsurance portfolio. The combination of service income and underwriting income in this segment requires less capital. We also believe the underwriting cycles are less volatile on the insurance side in comparison to reinsurance. We're seeing entrepreneurs launch MGAs with a particular interest in casualty and specialty lines. These disruptive MGAs are being launched by market talent moving from the traditional reinsurance and insurance We are offering an alternative to these entrepreneurs to whom we can provide not just backing and distribution, but also expertise to help to manage the paper and balance sheets, offering underwriting advice and growth capital, much more than a typical reinsurance relationship. In many cases, we establish multi-year partnerships which create value for the MGA as well as ourselves through the alignment of interests through our investment in the MGAs. We clearly understand that third-party delegated authority, coupled with rapid growth, is the main risk in this segment. We address that risk by clearly defining our underwriting guidelines, exercising ongoing underwriting oversight, and constructing deal structures to align incentives and mitigate exposure to serious points balance sheets. I'm greatly encouraged by the market reception to our differentiating insurance and services strategy and excited by the momentum for generating profitable growth in our insurance and services segment. I will now hand the call over to David to take us through the financials.