SiriusPoint(SPNT) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section details the company's financial statements, management's analysis, market risk disclosures, and internal control effectiveness Item 1. Financial Statements The company reported a significant net loss in Q1 2022, primarily due to investment losses, despite slight asset growth Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2022 (in millions) | December 31, 2021 (in millions) | | :--- | :--- | :--- | | Total investments | $4,731.3 | $4,529.9 | | Cash and cash equivalents | $826.1 | $999.8 | | Total assets | $10,916.3 | $10,618.3 | | Loss and loss adjustment expense reserves | $4,936.0 | $4,841.4 | | Total liabilities | $8,628.8 | $8,115.0 | | Total shareholders' equity | $2,287.5 | $2,503.3 | - Total shareholders' equity decreased from $2.50 billion at the end of 2021 to $2.29 billion as of March 31, 2022, primarily due to a net loss during the quarter[10] Consolidated Statements of Income (Loss) This section outlines the company's revenues, expenses, and resulting net income or loss over the reporting period Consolidated Income Statement Summary (in millions, except per share data) | Metric | Q1 2022 (in millions) | Q1 2021 (in millions) | | :--- | :--- | :--- | | Net premiums earned | $529.3 | $245.2 | | Total realized and unrealized investment gains (losses) | $(205.1) | $186.5 | | Total revenues | $361.4 | $488.6 | | Loss and loss adjustment expenses incurred, net | $340.1 | $146.9 | | Total expenses | $565.0 | $308.9 | | Net income (loss) | $(213.3) | $169.9 | | Diluted EPS available to common shareholders | $(1.36) | $1.35 | - The company experienced a significant swing from a net income of $169.9 million in Q1 2021 to a net loss of $213.3 million in Q1 2022, largely due to investment performance. Net premiums earned more than doubled year-over-year, reflecting the full-quarter impact of the Sirius Group acquisition[13] Consolidated Statements of Cash Flows This section details the company's cash inflows and outflows from operating, investing, and financing activities Consolidated Cash Flow Summary (in millions) | Activity | Q1 2022 (in millions) | Q1 2021 (in millions) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $0.1 | $(48.8) | | Net cash provided by (used in) investing activities | $(128.4) | $624.0 | | Net cash provided by (used in) financing activities | $(21.2) | $54.6 | | Net increase (decrease) in cash | $(149.5) | $629.8 | - Cash from investing activities was a net use of $128.4 million in Q1 2022, driven by investment purchases, compared to a net provision of $624.0 million in Q1 2021, which included cash acquired from the Sirius Group acquisition[21] Notes to the Consolidated Financial Statements This section provides detailed explanations of significant accounting policies, acquisitions, segment reporting, and other financial disclosures - On February 26, 2021, the company completed its acquisition of Sirius International Insurance Group, Ltd. ("Sirius Group") and changed its name from Third Point Reinsurance Ltd. to SiriusPoint Ltd. The results of Sirius Group are included from the acquisition date forward[24] - In Q4 2021, the company re-segmented its business into two operating segments: Reinsurance and Insurance & Services. Prior period figures have been revised to conform to this new presentation[27] - The company recorded $5.5 million of net favorable prior year loss reserve development in Q1 2022, driven by a $23.5 million reduction in COVID-19 reserves, partially offset by strengthening in property lines due to inflation[170] - During Q1 2022, the company repurchased 645,047 of its common shares for $4.7 million. As of March 31, 2022, $56.6 million remained authorized for repurchases of common shares, CVRs, and warrants[193][194] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Q1 2022 net loss, attributing it to investment performance and outlining strategic shifts in portfolio management - The company is repositioning its investment portfolio to better align with its underwriting strategy, aiming for lower volatility and improved risk-adjusted returns. The majority of fixed income investments are now outsourced to third-party managers, while Third Point LLC continues to manage most alternative investments[238][239] - The Russia/Ukraine conflict resulted in an estimated underwriting loss of $18.6 million for the company in Q1 2022. The ultimate impact remains uncertain[241][243] Key Performance Indicators | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Combined ratio | 93.7% | 96.5% | | Core income (Non-GAAP) | $26.7 million | $57.9 million | | Annualized return on avg. common equity | (39.5)% | 33.9% | | Basic book value per share (Non-GAAP) | $13.05 | $14.46 (at 12/31/21) | - The significant decrease in Core income to $26.7 million from $57.9 million in the prior year was primarily driven by investment losses from Strategic Investments within the Insurance & Services segment[245][291] Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, including interest rate, equity price, and foreign currency fluctuations Interest Rate Risk Sensitivity on Debt Securities (as of March 31, 2022) | Change in Interest Rate | Estimated Pre-tax Change in Fair Value (in millions) | | :--- | :--- | | +100 bp | $(69.0) | | -100 bp | $67.7 | - A hypothetical 10% adverse change in the value of equity securities and other long-term investments would decrease their carrying value by approximately $44.1 million before tax[361] - A hypothetical 10% adverse change in the value of investments in related party funds would decrease their carrying value by approximately $67.9 million before tax[362] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period, March 31, 2022[365] - No changes occurred in the company's internal control over financial reporting during the first quarter of 2022 that have materially affected, or are reasonably likely to materially affect, these controls[366] PART II. OTHER INFORMATION This section provides information on legal proceedings, risk factors, equity sales, and required exhibits Legal Proceedings The company is involved in various legal and regulatory actions, none of which are expected to materially impact its financial condition - The company is not currently involved in any formal or informal dispute resolution procedures that it considers to be material[218][368] Risk Factors No material changes to the previously disclosed risk factors were reported for the current quarter - No material changes to the risk factors disclosed in the 2021 Form 10-K were reported for the quarter ended March 31, 2022[369] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased common shares during Q1 2022, with a remaining authorization for further repurchases Share Repurchases in Q1 2022 | Period | Total Shares Purchased | Average Price Paid ($) | Total Cost (approx.) (in millions) | | :--- | :--- | :--- | :--- | | Jan 2022 | — | $— | $— | | Feb 2022 | — | $— | $— | | Mar 2022 | 645,047 | $7.26 | $4.7 million | | Total Q1 | 645,047 | $7.26 | $4.7 million | - As of March 31, 2022, the maximum amount that may yet be purchased under the company's repurchase plans is $56.6 million, which can be used for common shares, CVRs, and warrants[370][372] Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements and required certifications