SiriusPoint Ltd

During today's presentation, all parties will be in a listen-only mode. As a reminder, this conference call is being recorded and a replay is available through 11.59 p.m. Eastern Time on March 5th, 2025. With that, I would like to turn the call over to Liam Blackledge, Senior Associate, Investor Relations and Strategy. Please go ahead.

Thank you, Operator, and good morning or good afternoon to everybody listening. I welcome you to the series point earning call for the 2024 full year and fourth quarter results. Last night we issued our earnings press release and financial supplement, which are available on our website www.seriouspt.com. 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. Before we start, I would like to remind you that today's remarks contain forward-looking statements based on management's current expectations. 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 results and believes that they may be informative to investors engaging 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 preferred in accordance with GAAP. Please refer to page two of our investor presentation for additional information on the company's latest public filings. I will now turn the call over to Scott.

Thanks, Liam, and good morning. Good afternoon, everyone. Thanks for joining our fourth quarter and full year 2024 results call. The fourth quarter was a very busy one for Sirius Point, not just due to business as usual and market events such as Hurricane Milton, but also because of the strong execution on many actions as part of reshaping the company for the future. In the quarter, we completed the previously announced lost portfolio transfer on the workers' compensation business with Enstar. We agreed the transaction with CMIG to repurchase all of their outstanding shares and warrants. and we further de-risked our balance sheet by reducing the carrying value of a legacy MGA investment. I do appreciate that the impact of these type of actions creates noise in our results, but I'm confident that all of the actions we have taken both last year as part of the performance turnaround and this year as part of our wider reshaping have really helped drive strong performance improvement as well as positioning us strongly for the future. The improvement in performance across all of the business is stark versus 2022. And most importantly, our underwriting performance has never been stronger. Our aim through both this call and our disclosures is to transparently help you separate the one-off reshaping from the underlying performance. That said, I'm pleased to say that 2024 marks the end of our major reshaping and that going forward, the entire focus of the company is improving our business performance further. That said, in a year that has seen significant reshaping, we have successfully outperformed on our operational and strategic objectives. During the second half of the year, we announced the repurchase of CMIG's entire common shareholding, the repurchase and surrender of their merger warrants, and the settlement of their Series A preference shares, all for cash, and today we are pleased to announce that all of these common shares will be retired upon completion of the transaction. The transaction is immediately accretive to book value by 4% and will be meaningfully accretive to our go-forward return on equity and earnings per share going forward. As a reminder, earlier in the year, we refinanced $400 million of senior debt to gain capital credit, and we also retired $115 million of senior debt to improve leverage. And we unlocked $96 million of MGA off-balance sheet capital through the deconsolidation of Arcadian, in which we had a 49% stake. We have returned over $1 billion to investors this year, a remarkable number when considering the size of the company and where we started at the end of 2022. Each of these items alone creates a significant impact, but taken together means we have significantly improved our balance sheet and structure to be healthier, less complex and more able to support the business going forward. I am delighted with the progress that we've made in this regard. On top of these strategic balance sheet reshaping actions, more importantly, we have achieved strong operational performance. This has led to a 14% improvement in our underlying net income versus prior year to approximately $300 million. Underlying income reflects the adjustments for some of the one-off items I have already mentioned, and for transparency, there is a full breakdown of the bridge to this number in Appendices 2 and 3 of the presentation. Our core combined ratio for 2024 was 91%, a 2.4 point improvement versus prior year, excluding the impact of the LPT in 2023. This was despite seeing an additional 1.9 points of catastrophe losses versus 2023. We have done this while also growing our continuing lines business by 10% over the year. This strong performance has driven an underlying return on equity for 2024 of 14.6%, which is at the upper end of the 12 to 15% across the cycle target we set only last year. Let me comment briefly on our discrete fourth quarter underwriting performance. We delivered a combined ratio for our core business of 90.2%, marking the ninth consecutive quarter of underwriting profit. This includes 6.6 points of catastrophe losses relating primarily to Hurricane Milton, which remained a previously disclosed estimate of $40 million. This combined ratio is a 3.2 point improvement versus the fourth quarter of 2023, with the improvement coming from both the loss ratio and the operating expense ratio. Normalising for the catastrophe losses, the year-on-year improvement was 9.8 points, a very strong proof point of our underwriting focus and culture across the company. Growing the top line is our aim, but we will only do this where we believe it matches our capabilities and aspirations for underwriting discipline. In the fourth quarter, our continuing lines, gross premiums written, grew 21%. On a net basis, growth was even stronger, with net premiums written growing 28%, reflecting our strategy of taking more risks where we have maturing relationships and therefore historical experience. We achieved double-digit growth in the fourth quarter within our accident and health, property and specialty lines of business, while we remained roughly flat within casualty. Our growth is targeted and disciplined and we only grow in areas where we see opportunities meeting our profitability and risk targets. On a full year basis, our continuing lines growth stands at 10%, comprising of 14% growth within insurance and services and 5% growth within reinsurance. The impact of the previously taken underwriting decisions on the top line comparatives will have a greatly reduced impact going forward, as these were taken in 2023. Looking now at the catastrophe losses for the fourth quarter, these were $39 million, which primarily relate to Hurricane Milton. This event contributed to our overall cap losses for the year, which amounted to 2.4% of our common shareholders' equity. As a reminder, we took decisive repositioning actions in relation to our property cap portfolio in 2022 and have reduced our volatility from cap losses significantly as a result. We are pleased that these actions have resulted in us going from having a cap loss ratio amongst the highest for our peer group in 2022 to being in the lowest quartile for the same peer group in 2023 and 2024, as shown on slide 18 of our investor deck. a clear proof point to a lower volatility risk appetite. Further evidence is that our reinsurance segment delivered a strong standalone full year performance, achieving a combined ratio of 88% despite worldwide cat activity in 2024. Unfortunately, and before 2025 had barely begun, we once again saw very visible and upsetting scenes of devastation. this time in California with the wildfires which occurred there last month. As we previously ensured for our customers in Florida following Hurricane Milton, we are totally committed to ensuring all wildfire claims are paid as quickly as possible. One of the main reasons we exist is to help those impacted rebuild their lives after terrible events like this, and we will be doing our best to ensure we fully support our customers throughout this process. On behalf of all at Sirius Point, our thoughts go out to those who have been affected. The California wildfires look set to be the most costly wildfires in history, with industry loss estimates ranging from 30 to 50 billion. At present, the estimate for our net pre-tax losses relating to wildfires is $60 to $70 million. As we did for Helen and Milton, this estimate has been arrived at by doing a bottom-up evaluation of our exposure on an account-by-account basis and not relying on market share linked to industry estimates. The range, which is net of reinsurance and includes reinstatement premiums, will take us into a retrocession cover. This is there to prevent us from this type of earnings volatility. We are very comfortable in our retro and contract limits, providing protection against further downside on property claims in this range. The wildfires in California are a devastating reminder of why the re-rating occurred and was necessary within property catastrophe reinsurance during the 2023 renewals. This event once again serves as a strong reminder to reinsurance participants not to unwind from the rates and terms which were hard fought for in 2023. We expect that the high single-digit rate decreases seen at 1.1 will now moderate for the remainder of renewals in 2025. Collectively, we have a duty as reinsurers to try and reduce the cyclical nature of the property catastrophe reinsurance industry for our investors and for our customers. During the quarter, we also completed our external reserve review, validating our lost reserves as prudent. This coincides with our 15th consecutive quarter of favourable prior year development, with our favourable development track record now longer than the duration of our insurance liabilities, which was three years at the end of 2024. During the quarter, we completed on the lost portfolio transfer with NSTAT relating to $400 million of workers' compensation reserves, as I mentioned earlier in the call. This had a £20 million impact to income in the quarter in line with the previous guidance and has freed up capital to be used on our continuing lines growth. It is also important to note that for each of these three loss portfolio transfers that we've completed since 2021, we continue to have over 95% of our limit remaining. Turning now to MGAs. Our MGA distribution strategy continues to strengthen, with 19 new or expanded distribution partnerships entered into during 2024 through our MGA Centre of Excellence, over double the amount from 2023 as we develop our platform and propositions. We believe our approach and the infrastructure and capabilities we are building in both underwriting and the MGA Centre of Excellence means we are making good progress towards our ambition to become the prepared partner for delegated business. Business being written under delegated authority continues to increase in its market share as MGA has become an increasingly important link in the insurance ecosystem. The capabilities we are developing aim to put us firmly front and centre to capitalise and benefit from this distribution channel in the underwriting areas where we have expertise. As I have said many times before, we continue to rationalise the number of equity stakes we have in MGAs. We do not need to own distribution to be a good underwriting partner. We have 20 equity stakes remaining in these investments, down from 36 at the start of 2023. We will continue to try and reduce the number further in 2025. As at the year end 2024, we consolidate the results for three of these MGAs, having deconsolidated Arcadian midway through the year. There are two where we own 100% of the equity and these align to our accident and health division. These two MGAs generated $42 million of net service fee income in 2024. Their performance continues to improve with net service fee income increasing 56% over the prior year. I continue to make the point every quarter that there is significant off-balance sheet value in these consolidated MGAs, as we saw when we deconsolidated Arcadian and generated almost $100 million of book value. The carrying value on our balance sheet of the three remaining MGAs is $90 million with net service fee income of $42 million in 2024, equating to an earnings multiple of approximately two times the earnings. As a reminder, when I joined in September 22, the value of the non consolidated MGA investments on our balance sheet was around $265 million. Whilst there is still work to be done in rationalising these equity stakes, the progress so far means that the value of these investments on our balance sheet is now down to $105 million. In the fourth quarter, we took a $35 million write down on one particular MGA investment which impacted our net income. We had previously taken a write down on this specific investment earlier in the year as well. Appendix 4 of our fourth quarter investor deck shows more detailed analysis of our MGA stakes. We have taken this decisive action to further de-risk the balance sheet and ensure going forward the focus is on the future and not the past. These remaining stakes are all individually small in nature and are valued, as I said, at $105 million in total. Looking now at the investment portfolio, we've reported another strong result for the fourth quarter. Net investment income for the quarter was $69 million, contributing to a fourth quarter investment result of $29 million, reflecting the strong fixed income rates we've been able to lock in. Full year 2024, our net investment income was $304 million, outperforming slightly against our net investment income guidance of $295 to $300 million as rates continued to remain elevated in the fourth quarter. I want to briefly talk further on the transaction with CMIG that I mentioned at the start of the call. Upon close of the deal, on or before February 28, 2025, we are pleased to confirm today that we will permanently retire all 45.7 million of the common shares previously held by CMIG. As a result, our price to earnings ratio reduces significantly post-deal to well below the peer average. We believe there is strong upside potential in our share price for investors. As part of the deal, we also agreed the surrender and cancellation of the merger warrants held by CMIG. The overall agreement is immediately accretive, with diluted book value per share increasing by 4%. Our earnings per share is expected to meaningfully increase by greater than 20%, and our return on equity is anticipated to increase by over 200 basis points. We have utilised our excess capital in a beneficial way for remaining shareholders, and our resulting position also leaves us with a simplified corporate governance structure, with CMIG relinquishing their board seat and board observer upon close of the deal. Crucially, we've retained our financial strength following these transactions with a BSCR capital ratio at 214% and our debt-to-capital ratio at 24.8%, similar to its level a year ago following the $150 million debt retirement during 2024. I will end where I started. This has been a busy quarter for Sirius Points. but more importantly, a very strong year. Strong underwriting profits, premium growth, strong investment income, major reshaping items executed, boot value growth of 10% and underlying return on equity of 14.6% at the top end of our range. We are pleased to present these results and actions to the market. Most importantly, I'm incredibly proud of my colleagues. for their determination and commitment in delivering these results. They do not happen by accident and it takes everyone in the company pulling together to achieve them. That is a one-series-point culture in action. We do not see these results as a destination and we are determined to push ourselves to be a best-in-class operator in our sector. These results show we are closing the gap. With that, I will pass across to Jim, who will take you through the financials in more detail.