SiriusPoint Ltd

Good morning, ladies and gentlemen, and welcome to the Serious Point Limited Second Quarter 2022 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 Carrigan, Head of Investor Relations for Serious Point. Please go ahead.

Thank you, Operator. Welcome to the Sirius Point Limited earnings call for the second quarter of 2022. Last night, we issued our earnings press release and financial supplement, which are available on our website, www.siriuspt.com. With me here today are Dan Malloy, our interim chief executive officer, and David Junius, our 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 Form 10-K for the period ended December 31st, 2021 and Form 10-Q for the period ended June 30th, 2022. 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 Dan.

Thank you, Claire, and good morning, everybody. I'm very pleased to be speaking with you this morning, given the opportunity that lies ahead for Sirius Point, our employees, and our shareholders. As many of you know, I've spent the last 10 years at Sirius Point and our predecessor company, Third Point Re, where I was CEO prior to the merger. As President, Global Distribution, Following the launch of Serious Point, it was my pleasure to help establish a new company and support our strategy with my colleagues on the executive leadership team. I am now very pleased to rejoin Serious Point as interim CEO. I was asked to do so by our board of directors, given my experience and history with the company and my familiarity with our team, our strategy and goals, and the value we bring to our insurance and reinsurance partners. Our board is focused on appointing a permanent CEO to continue the transformation of our company. They are committed to completing this within the shortest possible timeframe while taking the necessary time to ensure this is a thorough and thoughtful process. In the meantime, I'm working closely with my colleagues and the board of directors to build on the progress that has been made since Serious Points founding in February of 2021. My role is to provide stability and oversight, to allow our global talent to continue their work as we refine our strategy and operational priorities, and to continue building a high-performing business. This morning, I'd like to outline our progress for you and share some detail on Serious Point's areas of strategic focus for their business. I'll go on to cover our second quarter and half year results. including how we see some of the wider market and global economic issues impacting our business, before I hand over to David to discuss those numbers in greater detail. For the last 16 months, we have been re-underwriting our property, casualty, and specialty reinsurance portfolios, de-risking our investment portfolio, and building our insurance and services segment, which is our growing managing general agent or MGA platform and investments in insurance services companies. These three areas continue to be the core of our strategy with the disciplined and prudent management of our expenses and platform as key operational objectives. As part of our reinsurance strategy to de-emphasize property catastrophe, we are concentrating on those areas that complement our insurance and services business. a differentiated portfolio based on our market views, such as U.S. casualty reinsurance, where we have focused on specialty programs, or unique franchise, such as our Bermuda Credit portfolio and Zurich Aviation. Our focus is on improving the segment's profitability, reducing risk, and ensuring our operational model is aligned with our overall strategic approach. allowing us to be nimble in our capital allocation and disciplined and data-driven in our risk management. We believe that the combination of a refocused reinsurance business and our growing insurance and services segment can together deliver consistent profitable results and positive shareholder returns. We have continued to develop the insurance and services segment Through our partnerships, we are accessing new insurance products, often in underserved markets. We have now established over 30 strategic relationships across our businesses and geographies with recent new partnerships in our U.S. and international businesses, including Alta Sigma, a European financial and professional lines insurance MGA, Guarantee, another European MGA which provides digital home rental insurance, Samos, a Canadian surgical accidental death insurer, and Avenue, an underwriting platform leveraging technology to directly underwrite an appropriate price for semi-autonomous and autonomous motor usage. We are working with truly differentiated partners who pass our due diligence screening for operational underwriting compatibility and offering them a combination of paper, capital, and expertise in exchange for, among other potential benefits, distribution opportunities in niche and specialized area of the market. We expect this investment of time, capital, and expertise in turn to create margin. We have strong competitive position and a robust pipeline of deal activity and we aim to drive disciplined growth with a focus on partnerships that hold real franchise value for our company. We believe that this partnership approach, the value we bring to partners, and the underwriting value created are differentiators for Serious Point. We have also made progress in our approach to managing the ongoing volatility in our investment portfolio. We have reduced our exposure to the Third Point Enhance Fund a long-short equity strategy by over $850 million in the last three quarters, and allocated the funds toward alpha seeking credit strategies. And our assets in the third point optimized credit portfolio now stands at $415 million as of June 30th. We continue to reduce our exposure to legacy serious group alternatives position, and additionally, we have elected available for sale accounting on new fixed income positions starting in the second quarter, which, though neutral to book value compared to the fair market value approach, will reduce headline net income volatility. The combination of these actions has and will continue to reduce the volatility of our investment results. Now, turning to our results for this quarter, we continue to see positive momentum. We achieved consolidated underwriting income of $39 million with a combined ratio of 93.1%. We reported a net loss of $61 million in the quarter, primarily driven by investment losses, which I'll return to shortly. Our overall top line has been steadily growing over the past year with growth of 48% year over year. Our second quarter 2022 consolidated gross written premiums were $813 million, and earned premium has grown for five consecutive quarters since the merger. Our production growth reflects the success of our strategic shift toward insurance to focus on the growth in A&H and MGA partnerships and to improve underwriting profitability. The premium split for the quarter is 53% insurance, 47% reinsurance, and I am pleased with the progress we are seeing in the insurance and services segment. Segment income was $20 million for the quarter, with significant improvement in underwriting results year on year, including a strong contribution from Serious Points strategic partnerships. Reinsurance delivered gross written premium of over $378 million, and a modest segment loss of $200,000 for the quarter. Both numbers are reflective of a business mix shift away from a volatile historical property book for its casualty business, in line with our strategy, which we expect to bring the benefit of stability of our earnings over the longer term. Two natural catastrophe events in the quarter had modest negative impact on our results. Those are the South African floods and Midwest U.S. storms. We are pleased to report no material development during the quarter on the Russia-Ukraine conflict losses. We have had minimal claims notifications, and we believe we have been prudent in our reserving to take into account our view of the ultimate losses in these events. There has not been any development during the quarter to our COVID reserving estimates, although overall trends are positive. We will continue to monitor and analyze the inflationary environment and its impact on our portfolio in order to maintain adequate reserving and pricing estimates. In light of the impact on the economy of both core and social inflation, the investment environment over the quarter and half year has been volatile. We evaluated the expected impact of the elevated level of current and expected inflation on our pricing and reserving and took action earlier this year to adjust trend assumptions in our pricing to allow for this elevated level of inflation. We reported net investment losses of $347 million year-to-date, driven by losses from related party investment funds, debt securities marked to market from rising interest rates and widening spreads, and FX impact on foreign denominated assets. Having assets shorter than our liability profile put us in a good position to capitalize on the rising rate environment with a strong and stable balance sheet. While we continue to monitor volatility carefully, we do see a return to a higher interest rate environment as having the potential to improve future investment earnings. To conclude, we have made substantial progress since forming Sirius Point in February of 2021 and have a clear strategy for executing on the work ahead. In responding to our recent S&P credit watch, the Serious Point board and I are confident our business remains well capitalized and our balance sheet and prospects remain strong. The board is actively seeking a permanent CEO. Serious Point has an impressive executive leadership team and global underwriting expertise, and we are focused on generating returns and book value growth which accurately reflect the potential of our company and the progress that has been made. We believe that it will be well positioned to continue to execute on our strategy, transform our business and deliver profitable growth. Our goal is clear, continue to drive transformation and operational improvement as we accelerate the momentum across our global operations. I will now hand the call over to David Take us through our second quarter financial results.