SiriusPoint(US:SPNT)2019-02-28 16:09Financial Data and Key Metrics Changes - The company reported a net loss of $298 million for Q4 2018, driven by a negative investment return of 11.4%, resulting in a net investment loss of $277 million [7] - For the full year 2018, the company generated a net loss of $318 million [7] - The diluted book value per share decreased to $12.98, down $2.62 or 16.8% from September 30, 2018, and down $2.67 or 17.1% from December 31, 2017 [25] - Gross premiums written for Q4 2018 were $120 million, a decrease of $44 million from the prior year's Q4 [25] - The combined ratio for Q4 2018 was 111.6%, compared to 107.1% in the prior year [26] Business Line Data and Key Metrics Changes - The company generated a net underwriting loss of $24 million for Q4 2018 [26] - Catastrophe losses of $18.5 million in Q4 2018 contributed 8.8 percentage points to the combined ratio, primarily related to California wildfires [26] - The company expects to target $45 million to $50 million of premium in the cat portfolio for 2019, focusing on higher-margin peak exposure zones [11] Market Data and Key Metrics Changes - The reinsurance market remains challenging with significant underwriting capacity available, despite substantial losses in 2017 and 2018 [8] - Improvements in cap raising on loss-impacted programs have been modest, while pricing for non-loss impacted contracts has remained broadly flat [8] Company Strategy and Development Direction - The company is gradually shifting its underwriting portfolio to higher-margin business to drive down the combined ratio below 100 [10] - A strategy to make small investments in insurance companies and managing general agents is being developed to access attractive reinsurance premiums [13] - The company has added experienced senior underwriters to enhance its market relationships and accelerate the shift to higher-margin business [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2018 was a disappointing year but expressed optimism about future opportunities and improvements in financial results [18] - The company expects volatility to reemerge and plans to benefit from being providers of liquidity during market fluctuations [23] - Management believes that the current positioning is appropriate for the market and anticipates better results moving forward [23] Other Important Information - The company reduced share repurchases due to significant net losses, purchasing only 526,000 shares for approximately $5 million [30] - General and administrative expenses for Q4 2018 were $8 million, down from $14 million in the prior year [29] Q&A Session Summary Question: Clarification on property cat business premium for 2019 - Management confirmed that the target for property cat business is slightly higher than previously indicated, but still within the expected range [32][34] Question: Impact on acquisition ratio due to business mix changes - Management stated that the overall composite and combined ratio is expected to decrease as new higher-margin business is written [36][37] Question: Details on the type of business being written and pricing trends - Management provided insights into the eclectic portfolio being targeted, including workers comp cat, cyber, and commercial auto, with expectations of improved pricing and terms [38][39] Question: Inquiry about PML as of January 1 - Management indicated that their PML is expected to be about half of the average reinsurance company [42] Question: Update on ceding commissions - Management noted continued improvement in ceding commissions, with no increases observed in renewals [45]