SiriusPoint strategy wins support from ratings agency
AM Best has affirmed Bermuda-based SiriusPoint’s A- financial strength rating, saying its move to de-risk its asset base had improves its risk-adjusted capitalisation.
The ratings agency also credited the specialty re/insurer’s move to reduce the volatility of its underwriting portfolio as it shifted away from property catastrophe re/insurance to accident and health and other specialty lines.
AM Best said the outlook for the rating was stable.
“SiriusPoint’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2023, as measured by Best’s Capital Adequacy Ratio (BCAR),” AM Best said.
“This assessment also considers the significant de-risking of SiriusPoint’s asset base over the course of 2022 and 2023, following the redemption of more than $600 million from related party investment funds and the reinvestment of the proceeds into high quality fixed income securities.
“Consequently, at year-end 2023, cash and fixed income securities comprised 94% of SiriusPoint's investment portfolio, up from 79% in 2021.
“A partially offsetting rating factor is the group's limited capital fungibility due to a significant, albeit reducing, portion of consolidated available capital being held as a safety reserve in the group’s Sweden subsidiary.”
The ratings agency noted SiriusPoint, led by chief executive officer Scott Egan, had improved its underwriting, improving its combined ration from 107% to 93%, adding: “AM Best expects SiriusPoint’s prospective underwriting results to remain profitable with reduced volatility as its management continues to rebalance the business mix away from catastrophe-exposed property business toward less volatile accident and health and specialty lines.
“SiriusPoint reported a robust pre-tax profit of $319 million in 2023, benefitting from a rebound in both underwriting and investment income, the release of $105 million of reserves following the completion of a loss portfolio transfer, as well as a one-time deferred tax benefit of $101 million attributable to the enactment of the Bermuda corporate income tax.”
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