SiriusPoint is on the march

SiriusPoint CEO Scott Egan is a proud supporter of English Premier League team Tottenham Hotspur, so it is perhaps not surprising that he falls back on a sports analogy when describing the progress his company has made this year. 

“We’re really, really pleased about the half-year results whilst recognising it is half-time and you don't win a match at half-time,” he says. 

As a fan of Tottenham, a team for which a new word – spursy – was invented, he knows better than most that no half-time lead is safe.  

If Egan was the Spurs manager, you could see him in the dressing room telling his players that they have played well in the first half and they need to keep executing the game plan, but more importantly, keep getting the basics right – making the tackles, closing down opponents, protecting the ball and completing passes.

That’s the sporting equivalent of what Egan calls chasing the one percents – the incremental gains that taken together, deliver solid results.

Speaking after the release of second quarter and half year results that built on the turnaround Bermuda-based SiriusPoint executed in 2023, Egan told Bermuda:Re+ILS: “You know, what's really clear is that we have a very strong determination in the organisation and a very clear ambition to try and operate at best in class levels, and we are not there yet. 

“I think that what our results show is that chasing the one percents matters. Marginal gains are what will drive the improvement from this point on.”   

Indeed, Egan, a veteran insurance CEO who was brought in when the company’s struggles following the merger of Third Point Re and Sirius International combined with the annus miserabilis of 2022 to send it into a spiral, bridles when asked, slightly tongue in cheek, what his next trick will be following the turnaround. 

“There are no tricks,” he says firmly, before turning to talk about the progress the company has made in reorganising its MGA relationships. 

Instead, it is clear that Egan is focused on getting the details right and building the company to meet his vision of an underwriting business that can compete with the best in the business. 

So far, it seems to be working. 

SiriusPoint had net income of $114 million in the second quarter, up from $60 million in the same period in 2023, while first half income rose to $210 million from $200 million in 2023. 

But Egan is quick to point out that much of the second quarter income was boosted by recognition of the increase in value of some of the MGAs in which SiriusPoint has an equity stake and were one -off gains. 

If one-off gains and gains from the business in which SirusPoint last year agreed a loss portfolio transfer are excluded, the company  still recorded its seventh consecutive quarter of positive underwriting results – on stark contrast to the period before – and also saw growth in its continuing business for the first time since the new management team came in. 

In addition, the company’s combined ratio excluding the LPT also improved by one percentage point to 92.8%. 

“The fact that this is now our seventh consecutive quarter of underwriting profit is really beginning to give us a credibility that's meaningful,” he said. “Are we doing better than we did at this point last year? If you remove the noise, the headline is yes we are. And that's a really important message, because we're an underwriting company, and our combined ratio, therefore, is the most important measure of performance and improvement. 

“The second headline under our underwriting results is that for the first time in quarter two, on the business that is our go forward business, our continuing lines, we've shown year on year growth of 22%. That's the first time in a quarter that we've shown growth year over year since I've been here. 

"That's important because it's another proof point that the seeds we've been planting in new MGAs and expanding existing MGAs, and all the work that we've been doing, is beginning to bear some fruit, and so it's a really important inflection point for the organisation. 

”Our ambition is to have a business that is both best in class from a profit perspective, but also a growing business, because that reflects that we're doing the right thing for customers and I think that's incredibly important.” 

Egan also noted that the company is making tangible progress on rationalising its approach to managing general agencies. 

When he joined SiriusPoint he said he wanted to reduce the number of MGAs in which the company had equity investments, but also to expand the number of relationships overall. 

“We started with 36 equity relationships with MGAs and that's now down to 22 and our ambition is it will reduce further. So we're making good progress. The other thing that we've focused on is unrealised value of what I would call our consolidated MGAs. 

“In quarter two, we were able to recognise just under a $50 million gain right for a update to the market value of our consolidated MGAs, and that's a really important proof point that demonstrates that the value that we carry them on our balance sheet is less than their market value. That's a really important message to the marketplace. So we're really pleased about that.” 

Egan also noted that the company had raised its investment income guidance for the year to $275-285 million from $250-265 million while also raising its Bermuda solvency capital ratio to a record 284%. It was less than 200% two years ago.  

Egan notes that the stronger capital position also means the company can return some capital to investors, and it has authorized a $300 million share repurchase programme. 

It has also been able to settle the sale of shares by its largest single shareholder, CM Bermuda, which is owned by CMIH, a Singapore-based investment company which went into receivership last December and was the owner of Sirius International before its merger. 

SiriusPoint will buy back $125 million of its shares and will also redeem convertible preference shares held by the company for cash. In all, the $261 million agreement reduces CM Bermuda’s shareholding from 33% to 28%. 

Egan is also proud that the company, which had struggled to develop a single corporate culture after its merger, has a high level of employee engagement, as shown in a survey which showed an average engagement score of 80, when anything over 70 is considered to be positive. Perhaps more importantly, all segments of the survey, from leadership ratings to wellbeing, showed improvement from 2023.  

“In truth, I have a very simple philosophy, which is that we cannot drive these levels of performance without the team and the people, and I am hugely grateful to them for everything that they do and for everything that they give to SiriusPoint and to our customers,” he said.  

“The engagement scores show that they are absolutely with us and that they're rowing in the same direction. And more importantly, there's a sense of pride in SiriusPoint, and I think that's something that we should celebrate.” 

Employees matter, but so do investors, and the stock market seems to like what SiriusPoint is doing as well. Its shares, which plumbed the depths in July 2022 when they were priced at $4.38, valuing the company at $700 million, have now risen to $14.15 as of August 7, valuing it at almost $2.5 billion. 

 “The truth is we're outperforming the market today, and I think that's evidence that these results and also the structural actions that we're taking have been perceived really well,” he said. “I would also say we're really developing a strong reputation for execution. When we say we'll do something, we do it.”

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