Sirius net income plummets by 93% in second quarter 2019 results after Typhoon Jebi loss creep
Bermuda-based Sirius International Insurance Group's results were negatively impacted in the second quarter and first half of 2019 due to unfavourable prior year loss reserves relating to Typhoon Jebi.
The company posted a net income of just $7 million in Q2 2019, significantly down (92.8 percent) from $98 million in the same quarter a year ago. Similarly, its net income in H1 2019 was down at $102 million, compared with $138 million in H1 2018.
Gross written premiums (GWP) for the quarter were $487 million, a decrease of 4 percent compared to the second quarter of 2018. The GWP for the six months ended June 30, 2019 were $1,109 million, a decrease of 1 percent compared to the same period in 2018.
Sirius Group's combined ratio rose to 105 percent for the second quarter of 2019, compared to 83 percent for the quarter last year. For H1 2019 it reported a combined ratio of 99 percent, compared to 85 percent in H1 2018.
The company said that the increase in the combined ratio was driven by higher net unfavourable prior year loss reserve development mainly in the global property segment.
"Our bottom line results continued to be positive due to the strong investment environment in the second quarter. However, we experienced adverse development on prior year property reinsurance reserves, driven primarily by 2018 Japanese events, which weighed on our earnings for the quarter," said Kip Oberting, president and chief executive officer of Sirius Group.
Oberting added: "Changes in pricing and terms are mixed, as we continue to shed underperforming accounts, but note positive movement, primarily in loss affected areas. There are also incremental growth opportunities in Global A&H, Specialty & Casualty, and our run-off Solutions business."
The company's chief financial officer Ralph Salamone said: "Our Operating income, and more specifically our Global Property underwriting results were negatively impacted in the quarter by additions to net prior year loss reserves. Most of the additions relate to prior year catastrophe losses with the largest increase being Typhoon Jebi, where industry loss estimates have increased dramatically since the event occurred.
"Offsetting this on a bottom line basis, our investments performed well as did our Global A&H segment, which continues to produce nice, steady profits. Overall, net premium volume was more than 10% higher for the six months compared to last year, with growth coming in Accident & Health and Casualty lines."
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