Fitch Ratings Enhances SiriusPoint’s Outlook
Fitch Ratings, a globally recognized ratings agency, has revised its outlook for SiriusPoint, a Bermuda-domiciled insurer and reinsurer, from stable to positive. The Long-Term Issuer Default Rating (IDR) has been affirmed at ‘BBB’, with the senior debt rating at ‘BBB-‘, and the Insurer Financial Strength (IFS) rating at ‘A-‘ (Strong) for SiriusPoint’s operating subsidiaries.
Reasons for Positive Outlook
- Significant improvements in underwriting performance observed in 2023 and anticipated for 2024.
- Strategic repositioning of the re/insurance portfolio.
- Exiting non-core lines to enhance profitability and reduce volatility.
In 2024, SiriusPoint reported a remarkable core income of $244.6 million. CEO Scott Egan described 2024 as a “remarkable year of delivery” in a conversation with Reinsurance News.
Recent Transactions and Financial Implications
Recently, SiriusPoint completed several significant transactions, including the full repurchase of all outstanding common shares, preference shares, and the settlement of warrants held by CM Bermuda Limited (CMB) for a total purchase price of $994 million. Fitch views these transactions favorably, noting they simplify the corporate governance structure and enhance financial flexibility.
Despite a 23% decline in shareholders’ equity in 2024, from $2.5 billion at the end of 2023 to $1.9 billion by December 31, 2024, due to $0.8 billion in common shares repurchased and retired during the CMB buyout, SiriusPoint’s financial leverage ratio (FLR) increased to 27.5% at year-end 2024 compared to 25.6% at year-end 2023. Fitch anticipates this FLR will decrease as earnings help recover shareholders’ equity.
Capital Model and Future Expectations
Fitch noted that SiriusPoint had a strong prism capital model at the end of 2024, a slight downgrade from ‘very strong’ seen in 2023 and 2022, largely due to a 20% reduction in available capital in 2024 attributed to the decline in shareholders’ equity. Nonetheless, Fitch expects SiriusPoint to regain a ‘very strong’ prism score as its capital base grows. Although the company’s operating leverage ratios increased in 2024 due to lower written premiums being offset by the decline in shareholders’ equity, they are still considered robust.
