SiriusPoint ratings affirmed by Fitch with positive outlook

Investing.com -- Fitch Ratings has affirmed the ratings of SiriusPoint Ltd. (SPNT), including its Long-Term Issuer Default Rating (IDR) at ’BBB’, senior debt rating at ’BBB-’ and Insurer Financial Strength (IFS) rating at ’A-’ for SPNT’s operating subsidiaries on March 5, 2025. The outlook for the company has been revised to positive from stable.

The positive outlook is attributed to a significant improvement in underwriting performance in 2024 and 2023 due to repositioning of the insurance portfolio and exiting non-core lines to enhance profitability and reduce volatility.

SPNT recently completed transactions for the full repurchase of all outstanding common shares, preference shares and settlement of warrants held by CM Bermuda Limited (CMB) for a total purchase price of USD994 million. This has resulted in CMB having no remaining ownership interest in SPNT and no representation on SPNT’s board of directors. Fitch views these transactions favorably as they simplify the corporate governance structure and improve financial flexibility.

In terms of underwriting profitability, SPNT posted solid results in both 2024 and 2023, with core combined ratios of 91.0% and 89.1%, respectively. These ratios improved from 101.6% in 2022, reflecting underlying underwriting improvement and a favorable market environment.

SPNT posted net income of USD184 million for 2024, with strong operating income from underwriting profits, increased investment income and a gain on the deconsolidation of its managing general agent, Arcadian Risk Capital Ltd. Nonrecurring costs associated with the exit of CMB ownership dampened these profits.

Fitch views SPNT’s business profile as ’Moderate’ compared with all other U.S./Bermuda non-life insurance-focused organizations. In 2024, its insurance and services segment accounted for 53% of core net premiums written (NPW), with the reinsurance reporting segment at 47% of NPW.

However, SPNT’s shareholders’ equity declined by 23% in 2024 to USD1.9 billion at the end of the year from USD2.5 billion at the end of 2023. This was due to the repurchase of common shares with existing capital and retired in connection with the buyout of CMB. As a result, SPNT’s financial leverage ratio (FLR) increased to 27.5% at the end of 2024 from 25.6% at the end of 2023.

SPNT scored in the ’Strong’ category on Fitch’s Prism capital model at the end of 2024, compared to ’Very Strong’ at the end of 2023 and 2022. The lower score reflects a 20% drop in available capital in 2024 due to the decline in shareholders’ equity.

Fitch has adjusted SPNT’s total capital and FLR to include SiriusPoint International Insurance Corporation’s safety reserve balance without any provision for deferred taxes. This adjustment did not result in a different rating than had the adjustment not been made, but it is material in how Fitch views capital and financial leverage.

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