Fewer MGAs, growth in primary: SiriusPoint CEO on a year of transition
2023 will be a year of transition for re/insurer SiriusPoint, as it improves its underwriting and scales back on its commitment to MGAs. But it is on the right track to post much-improved results this year and target growth on the primary side of the business, its CEO Scott Egan (pictured) told Intelligent Insurer.
“Our results have not been good enough. We made progress in the second half of last year, but we are action orientated. Talk is cheap, we are about action and execution,” he told Intelligent Insurer in the aftermath of the company releasing its 2022 results.
“We have set the direction for the group now including a lot of specific guidance. Moving from 22 into 23, we are really happy with our flight path; we are confident but not complacent. We expect 2023 to show significant progress but it is also a transition. We believe we will build on that further in 2024.”
SiriusPoint posted a net loss of $403 million last year, a big swing on the $42 million profit it made the year before. This was despite a much better combined ratio of 96.4% compared with 109.1% a year earlier.
Part of the reason for the swing is the way the value of its investments, which showed a net investment loss of $323 million, are treated. Unlike most re/insurers, SiriusPoint reports these in its profit and loss account, as opposed to its balance sheet – something its CEO has vowed to change.
“Every company has seen similar movements in their investments. We are unusual: for historical reasons, it flows through our P&L. In future, it will be shown on our balance sheet,” he said. The company has also repositioned its investment portfolio, reducing its volatility.
In the company’s post-results investor call Friday (February 24), Egan said shareholders appreciated the company setting out a clear strategy and specific guidance. He said the three pillars of its strategy (underwriting, distribution through MGAs, and investment) are understood and considered almost unique.
But he also plans changes to the balance of its business mix.
Firstly, he will reduce the number of MGAs it is involved with. It currently owns or has stakes in 36 different MGAs. While stressing these remain an important part of its strategy, he confirms he expects this number to reduce.
“We are happy owners of distribution where it complements our underwriting. We see MGAs as an important part of our group strategy. But we are drawing a line in the sand. We will not be aggressive in this space in the near term. You don’t have to own an MGA to have a relationship with them. To be good stewards of these takes time and focus – and 36 is a lot.”
Secondly, he anticipates its reinsurance book will remain stable, having made the strategic decision to exit the international property space in Q3 last year. This means its property cat book is now mainly US focused.
“We have no plans to change that. Market conditions have improved but we think they need to improve even more in the international space. There will be no reversal. We are really happy with our US portfolio. We are a happy risk taker in that space; the challenge is to do even better,” he said. “We will not aggressively grow the reinsurance business, but it remains a core part of our strategy.”
Instead, on the underwriting side, he is eyeing growth on the primary side of the business: in North America and in the London Market, where he highlights the strong infrastructure it has in place through a syndicate and MGA – and an abundance of talent. “We have some terrific talent in some areas of specialism. We see growth in that space,” he said.
To read more about SiriusPoint’s full year 2022 results, click here.
Here’s what the company’s top officials have said on progress after two years of Sirius and Third Point merger.
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