Earnings Document

SiriusPoint reports 84.4% Combined ratio for its Core operations at Q2'23 with Net Income up $483m

from half year 2022

HAMILTON, Bermuda, August 2, 2023 - SiriusPoint Ltd. ("SiriusPoint" or the "Company") (NYSE:SPNT) today announced results for its second quarter ended June 30, 2023.

• Building on the progress made during the last three quarters as we report positive capital generation across all business areas and deliver on key strategic priorities
• Capital position is even stronger following the closure of the loss portfolio transfer, asset and financial leverage remains stable while our investment portfolio remains defensively positioned
• Targeting double-digit retuon average common equity in 2023, reiterating guidance on 2024 cost savings of >$50 million and 2023 net investment income of $220-240 million

Scott Egan, Chief Executive Officer, said: "This quarter has been a positive one for SiriusPoint with all three areas of our business performing well as we continue our journey to improve the performance of the company.

Our underwriting results are strong, with a combined ratio of 84.4% for our core operations. Our investment portfolio remains focused on high quality, fixed income instruments and we are tracking to the top-end of our full year 2023 net investment income guidance of $220 million to $240 million. Run-rate costs have been reduced by $35 million to $40 million versus previous year on an underlying basis and we are confident on our target of more than $50 million reduction by the end of 2024. The balance sheet is even stronger now given we have closed the loss portfolio transfer deal, releasing more than $150 million of capital and aligning our balance sheet to the go forward strategy. Finally, all areas of our business are capital generating and we are on track to hit double-digit ROE this year.

We are also making significant progress to improve culture and employee engagement with the intention to create a high performing organization. We have great talent across the organization and I am proud of their efforts in delivering these results.

Exploratory discussions with Mr. Daniel Loeb regarding a potential acquisition began and concluded this quarter, following his 13-D filing, and we appreciate the Special Committee of the Board's support of our strategy. We welcomed Bronek Masojada to the role of Chair of the Board. He is a proven industry leader with over 30 years of insurance experience, who will further strengthen our Board.

Our focus on executing well against our strategy continues and with each quarter that passes, we build more credibility and track record. Our aim is to keep doing this and I look forward to sharing further progress later in the year."

Second Quarter 2023 Highlights

• Net income available to SiriusPoint common shareholders of $66 million, or $0.37 per diluted common share
• Consolidated combined ratio of 81.9%, underwriting income of $127 million
• Core income of $85 million, which includes underwriting income of $82 million, Core combined ratio of 87.7%
• Net investment income of $69 million and total investment result of $66 million
• Tangible book value per diluted common share remained relatively stable from March 31, 2023
• Annualized retuon average common equity of 13.0%
• Asset duration increased to 2.5 years, from 2.1 years at March 31, 2023

Half Year 2023 Highlights

• Net income available to SiriusPoint common shareholders of $205 million, or $1.14 per diluted common share
• Consolidated combined ratio of 78.2%, underwriting income of $284 million
• Core income of $206 million, which includes underwriting income of $189 million, Core combined ratio of 84.4%
• Core net services fee income of $28 million, up 9.5% from the six months ended June 30, 2022, with service margin stable at 22.5%
• Net investment income of $130 million and total investment result of $140 million
• Tangible book value per diluted common share increased $0.96, or 9.2%, from December 31, 2022 to $11.39 per share
• Annualized retuon average common equity of 20.9%

Key Financial Metrics

The following table shows certain key financial metrics for the three and six months ended June 30, 2023 and 2022:

1. Core underwriting income, Core net services income, Core income and Core combined ratio are non-GAAP financial measures. See definitions in "Non- GAAP Financial Measures" and reconciliations in "Segment Reporting." Tangible book value per diluted common share is a non-GAAP financial measure. See definition and reconciliation in "Non-GAAP Financial Measures."
2. Prior year comparatives represent amounts as of December 31, 2022.

Second Quarter 2023 Summary

Consolidated underwriting income for the three months ended June 30, 2023 was $127.3 million compared to $38.8 million for the three months ended June 30, 2022. The improvement in net underwriting results was driven by improved favorable prior year loss reserve development of $33.0 million for the three months ended June 30, 2023 compared to $6.4 million for the three months ended June 30, 2022. This increase in favorable prior year loss reserve development was primarily the result of management reflecting the continued favorable reported loss emergence through June 30, 2023 in its best estimate of reserves, which was further validated by the pricing of the loss portfolio transfer transaction ("2023 LPT") from external reinsurers, including $16.6 million resulting from a reduction in unallocated loss adjustment expenses related to the claims that will no longer be managed by SiriusPoint under the terms of the 2023 LPT. In addition, there were no property catastrophe losses for the three months ended June 30, 2023 compared to $16.2 million for the three months ended June 30, 2022.

Consolidated underwriting income for the six months ended June 30, 2023 was $283.8 million compared to $72.3 million for the six months ended June 30, 2022. The improvement in net underwriting results was driven by improved favorable prior year loss reserve development of $138.4 million for the six months ended June 30, 2023 compared to $11.9 million for the six months ended June 30, 2022. This increase in favorable prior year loss reserve development was primarily the result of management reflecting the continued favorable reported loss emergence through June 30, 2023 in its best estimate of reserves, which was further validated by the pricing of the 2023 LPT from external reinsurers, which represents $118.2 million of the favorable prior year loss reserve development. In addition, catastrophe losses, net of reinsurance and reinstatement premiums, were $12.9 million, or 1.0 percentage points on the combined ratio, for the six months ended June 30, 2023, compared to $23.1 million, or 2.1 percentage points on the combined ratio, for the six months ended June 30, 2022. The lower catastrophe losses were a result of the Company's significant reduction in catastrophe exposed business.

Reportable Segments

The determination of our reportable segments is based on the manner in which management monitors the performance of our operations, which consist of two reportable segments - Reinsurance and Insurance & Services.

Core Underwriting Results

Collectively, the sum of our two segments, Reinsurance and Insurance & Services, constitute our "Core" results. Core underwriting income, Core net services income, Core income and Core combined ratio are non-GAAP financial measures. See reconciliations in "Segment Reporting". We believe it is useful to review Core results as it better reflects how management views the business and reflects our decision to exit the runoff business. The sum of Core results and Corporate results are equal to the consolidated results of operations.

Three months ended June 30, 2023and 2022

Core results for the three months ended June 30, 2023 included income of $85.3 million compared to income of $20.2 million for the three months ended June 30, 2022. Income for the three months ended June 30, 2023 consists of underwriting income of $81.7 million (87.7% combined ratio) and net services income of $3.6 million, compared to underwriting income of $9.6 million (98.3% combined ratio) and net services income of $10.6 million for the three months ended June 30, 2022. The improvement in net underwriting results was primarily driven by increased favorable prior year loss reserve development, lower catastrophe losses and favorable expense ratios (both commission and other underwriting expense ratios), which results in a higher underwriting gain. Net services income for the three months ended June 30, 2023 included net investment losses from Strategic Investments of $4.1 million compared to losses of $0.5 million for the three months ended June 30, 2022.

Losses incurred included $25.2 million of favorable prior year loss reserve development for the three months ended June 30, 2023, compared to $1.5 million for the three months ended June 30, 2022. For the three months ended June 30, 2023, favorable prior year loss reserve development was driven by decreases in the domestic and international property and casualty lines of business in the Reinsurance segment, partially offset by loss emergence in the property and casualty business lines in the Insurance & Service segment. This increase in favorable prior year loss reserve development was primarily the result of management reflecting the continued favorable reported loss emergence through June 30, 2023 in its best estimate of reserves, which was further validated by the pricing of the 2023 LPT from external reinsurers, in addition to a reduction in unallocated loss adjustment expense reserves related to the claims that will no longer be managed by SiriusPoint under the terms of the 2023 LPT.

For the three months ended June 30, 2023, there were no significant catastrophe losses compared to $16.2 million, or 2.9 percentage points on the combined ratio, for the three months ended June 30, 2022.

Six months endedJune 30, 2023 and 2022

Core results for the six months ended June 30, 2023 included income of $205.5 million compared to income of $46.9 million for the six months ended June 30, 2022. The income for the six months ended June 30, 2023 consists of an underwriting income of $189.1 million (84.4% combined ratio) and net services income of $16.4 million, compared to an underwriting income of $22.3 million (98.0% combined ratio) and net services income of $24.6 million for the six months ended June 30, 2022. The improvement in net underwriting results was primarily driven by favorable prior year loss reserve development, lower catastrophe losses, and favorable expense ratios (both commission and other underwriting expense ratios), which results in a higher underwriting gain. Net services income for the six months ended June 30, 2023 included net investment losses from Strategic Investments of $8.0 million compared to losses of $0.8 million for the six months ended June 30, 2022.

Losses incurred included $117.1 million of favorable prior year loss reserve development for the six months ended June 30, 2023 compared to favorable prior year loss reserve development of $6.5 million for the six months ended June 30, 2022. This increase in favorable prior year loss reserve development was primarily the result of management reflecting the continued favorable reported loss emergence through June 30, 2023 in its best estimate of reserves, which was further validated by the pricing of the 2023 LPT from external reinsurers, in addition to a reduction in unallocated loss adjustment expense reserves related to the claims that will no longer be managed by SiriusPoint under the terms of the 2023 LPT.

For the six months ended June 30, 2023, catastrophe losses, net of reinsurance and reinstatement premiums, were $7.0 million, or 0.6 percentage points on the combined ratio, compared to $23.1 million, or 2.1 percentage points on the combined ratio for the six months ended June 30, 2022. For the six months ended June 30, 2022, losses from the Russia/ Ukraine conflict, including losses from the political risk, trade credit, and aviation lines of business, were $13.2 million, or 1.2 percentage points on the combined ratio.

Reinsurance Segment

Three months ended June 30, 2023and 2022

Reinsurance generated underwriting income of $79.3 million (75.3% combined ratio) for the three months ended June 30, 2023, compared to an underwriting loss of $0.2 million (100.1% combined ratio) for the three months ended June 30, 2022. The improvement in net underwriting results was primarily due to increased favorable prior year loss reserve development and lower catastrophe losses.

Reinsurance gross premiums written were $387.1 million for the three months ended June 30, 2023, an increase of $8.8 million, or 2.3%, compared to the three months ended June 30, 2022, driven by growth in the property and casualty lines of business in the North America reinsurance business, partially offset by lower writings in International reinsurance, primarily in the property lines, as we execute the Restructuring Plan.

Six months endedJune 30, 2023 and 2022

Reinsurance generated underwriting income of $156.4 million (72.5% combined ratio) for the six months ended June 30, 2023, compared to $2.9 million (99.6% combined ratio) for the six months ended June 30, 2022. The improvement in net underwriting results for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily due to higher favorable prior year loss reserve development and lower catastrophe losses.

Reinsurance gross premiums written were $783.3 million for the six months ended June 30, 2023, a decrease of $119.2 million, or 13.2%, compared to the six months ended June 30, 2022, driven by lower writings in International reinsurance, primarily in the property lines, as we execute the Restructuring Plan.

Insurance & Services Segment

Three months ended June 30, 2023and 2022

Insurance & Services generated segment income of $8.8 million for the three months ended June 30, 2023, compared to $20.4 million for the three months ended June 30, 2022. Segment income for the three months ended June 30, 2023 consists of underwriting income of $2.4 million (99.2% combined ratio) and net services income of $6.4 million, compared to underwriting income of $9.8 million (96.1% combined ratio) and net services income of $10.6 million for the three months ended June 30, 2022. The decrease in underwriting results was primarily due to decreased favorable prior year loss reserve development from loss emergence from certain strategic partnerships. The decrease in services income was primarily due to net investment losses from Strategic Investments of $4.1 million for the three months ended June 30, 2023 compared to $0.5 million for the three months ended June 30, 2022.

Insurance & Services gross premiums written were $462.7 million for the three months ended June 30, 2023, an increase of $28.8 million, or 6.6%, compared to the three months ended June 30, 2022, primarily driven by growth across Insurance & Services, including growth in premiums from strategic partnerships, mainly Arcadian.

Six months endedJune 30, 2023 and 2022

Insurance & Services generated segment income of $49.1 million for the six months ended June 30, 2023, compared to $44.0 million for the six months ended June 30, 2022. Segment income for the six months ended June 30, 2023 consists of underwriting income of $30.1 million (95.2% combined ratio) and net services income of $19.0 million, compared to underwriting income of $19.4 million (95.8% combined ratio) and net services income of $24.6 million for the six months ended June 30, 2022. The increase in underwriting results was primarily driven by the increased favorable prior loss reserve development from better than expected reported loss emergence in A&H. The decrease in services income was primarily due to net investment losses from Strategic Investments of $8.0 million for the six months ended June 30, 2023 compared to $0.8 million for the six months ended June 30, 2022.

Insurance & Services gross premiums written were $1,126.7 million for the six months ended June 30, 2023, an increase of $209.3 million, or 22.8%, compared to the six months ended June 30, 2022, primarily driven by growth across Insurance & Services, including growth in premiums from strategic partnerships, mainly Arcadian and Corvus Insurance, and A&H.

Investments

Three months ended June 30, 2023and 2022

Total realized and unrealized investment gains (losses) and net investment income was $65.8 million for the three months ended June 30, 2023, compared to $(141.5) million for the three months ended June 30, 2022.

Total realized and unrealized investment gains and net investment income for the three months ended June 30, 2023 was primarily attributable to investment results from our debt and short-term investment portfolio of $64.9 million. These fixed income positions returned 0.1% in U.S. dollars and an original currency basis, inclusive of marked to market losses on available for sale securities of $52.7 million. Investment results were driven by dividend and interest income primarily on U.S. treasury bills and corporate debt positions which make up 46.6% of our total investments as of June 30, 2023, compared to 28.5% of our portfolio as of June 30, 2022.

Investment results for the three months ended June 30, 2022 were primarily attributable to the net investment loss of $57.3 million from our investment in the TP Enhanced Fund, corresponding to a (12.5)% return.

Six months endedJune 30, 2023 and 2022

Total realized and unrealized investment gains (losses) and net investment income was $139.6 million for the six months ended June 30, 2023, compared to $(346.6) million for the six months ended June 30, 2022.

Total realized and unrealized investment gains and net investment income for the six months ended June 30, 2023 was primarily attributable to net investment income related to interest income from our debt and short-term investment portfolio of $137.5 million. Increased dividend and investment income is due to the ongoing re-positioning of the portfolio to focus on investing in high grade fixed income securities.

Investment results for the six months ended June 30, 2022 were primarily attributable to the net investment loss of $185.6 million from our investment in the TP Enhanced Fund, corresponding to a (25.9)% return.

SiriusPoint International Loss Portfolio Transfer

On March 2, 2023, the Company agreed, subject to applicable regulatory approvals and other closing conditions, to enter into a loss portfolio transfer transaction ("2023 LPT"), on a funds withheld basis, with Pallas Reinsurance Company Ltd., a subsidiary of the Compre Group, an insurance and reinsurance legacy specialist. The transaction covered loss reserves ceded initially estimated at $1.3 billion as of the valuation date of September 30, 2022, which were reduced to $905.6 million as of June 30, 2023, as a result of paid losses and favorable prior accident year reserve development recognized during the interim period. Upon closing, the Company recorded funds held payable of $884.4 million and an initial estimate of a deferred gain of $21.2 million, which will be amortized over the claim payout period of the subject business. The 2023 LPT comprises several classes of business from 2021 and prior underwriting years. The aggregate limit under the 2023 LPT is 130% of the booked reserves as of the inception of the contract.

Indication of Interest

On April 12, 2023, the Company acknowledged that Dan Loeb, and certain of his affiliates, disclosed in a Schedule 13D/A filing an indication of interest to explore a potential acquisition of all, or substantially all, of the outstanding common shares of the Company ("Indication of Interest").

On May 12, 2023, the Company acknowledged that Dan Loeb, and certain of his affiliates, disclosed in a Schedule 13D/A filing the decision to conclude discussions regarding a potential transaction to acquire the Company.

Webcast Details

The Company will hold a webcast to discuss its second quarter 2023 results at 8:30 a.m. EasteTime on August 3, 2023. The webcast of the conference call will be available over the Internet from the Company's website at www.siriuspt.com under the "Investor Relations" section. Participants should follow the instructions provided on the website to download and install any necessary audio applications. The conference call will be available by dialing 1-877-451-6152 (domestic) or 1-201-389-0879 (international). Participants should ask for the SiriusPoint Ltd. second quarter 2023 earnings call.

The online replay will be available on the Company's website immediately following the call at www.siriuspt.com under the "Investor Relations" section.

Safe Harbor Statement Regarding Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company's control. The Company cautions you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "believes," "intends," "seeks," "anticipates," "aims," "plans," "targets," "estimates," "expects," "assumes," "continues," "should," "could," "will," "may" and the negative of these or similar terms and phrases. Actual events, results and outcomes may differ materially from the Company's expectations due to a variety of known and unknown risks, uncertainties and other factors. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements are the following: our ability to execute on our strategic transformation, including re-underwriting to reduce volatility and improving underwriting performance, de-risking our investment portfolio, and transforming our business, including re-balancing our portfolio and growing the Insurance & Services segment; the impact of unpredictable catastrophic events including uncertainties with respect to current and future COVID-19 losses across many classes of insurance business and the amount of insurance losses that may ultimately be ceded to the reinsurance market, supply chain issues, labor shortages and related increased costs, changing interest rates and equity market volatility; inadequacy of loss and loss adjustment expense reserves, the lack of available capital, and periods characterized by excess underwriting capacity and unfavorable premium rates; the performance of financial markets, impact