SiriusPoint shares jump on buyback news

SiriusPoint will spend $733 million to buy out its troubled single largest shareholder, a subsidiary of Singapore-based China Minsheng Investment Group (CMIG). 

The Bermuda-based re/insurer said this week it would repurchase all SiriusPoint common shares and warrants held by CMIG unit CM Bermuda, with the company spending $250 million this Monday with the $438 million balance to be paid by February 28. 

The purchase means that CMIG will have no ownership interest in SiriusPoint and will cease to have board representation. 

Investors responded positively to the news on Monday. SiriusPoint’s shares opened at $14.12 on the New York Stock Exchange were trading at $16.40 by the market close on Tuesday. 

CMIG was the owner of Sirius International, which merged with Third Point Re in 2020 in a $788 million deal. It was taken into receivership by its lenders in December, 2023. CM Bermuda held 33% of SiriusPoint's shares and 9.9% of its voting rights. CMIG bought Sirius International in 2016 and subsequently floated it. 

Specialty re/insurer SiriusPoint said it had financed the transaction entirely through its existing capital. Its proforma Bermuda Solvency Capital Ratio at the end of Q3 remains strong at 218% after the payments.

SiriusPoint CEO, Scott Egan (pictured), said: “Today’s announcement to repurchase all shares and warrants owned by CM Bermuda is a significant development for SiriusPoint. Our financial position, driven by our strengthening profitability and performance, has empowered us to execute this transaction.

“The transaction will be meaningfully accretive to earnings per share and return on equity, and accretive to book value per share. The closing of the transaction positions SiriusPoint well for the future. We enter 2025 with great momentum and remain focused on driving further value creation for all shareholders.”

The company has agreed to repurchase 45.7 million common shares at $14.25 per share. It also agreed to repurchase and surrender 21 million warrants at $3.56 per warrant (strike price of $11 per warrant). As of September 30, 2024, SiriusPoint’s diluted book value per common share was $14.73, and the 30-day volume-weighted average common share price was $15.16 as of December 27, 2024.

In an investor presentation, SiriusPoint said the deal would reduce volatility due to the removal of the warrants held by CM Bermuda while the reduction in outstanding shares would improve the value of the remaining outstanding shares while simplifying the company’s corporate structure. 

CM Bermuda originally held 33% of the company’s shares. A previous $261 million buyback in August reduced its holding to 28%.   

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