Fitch Ratings Revises SiriusPoint’s Outlook to Positive
Fitch Ratings, a leading global ratings agency, has upgraded the outlook for Bermuda-based insurer and reinsurer SiriusPoint to positive from stable. The agency reaffirmed SiriusPoint’s Long-Term Issuer Default Rating (IDR) at ‘BBB’, senior debt rating at ‘BBB-‘, and its Insurer Financial Strength (IFS) rating at ‘A-‘ (Strong) for its operating subsidiaries.
The revised outlook is attributed to substantial improvements in underwriting performance expected in 2024 and 2023. These enhancements are due to strategic repositioning of the re/insurance portfolio and exiting non-core lines to boost profitability and reduce overall volatility.
SiriusPoint reported a robust full-year core income of $244.6 million for 2024. CEO Scott Egan hailed 2024 as a “remarkable year of delivery” in an interview with Reinsurance News.
Recently, SiriusPoint completed several strategic transactions, fully repurchasing all outstanding common and preference shares and settling warrants held by CM Bermuda Limited (CMB) for an aggregate purchase price of $994 million. Fitch views these transactions as beneficial, simplifying the corporate governance structure and enhancing financial flexibility.
Despite these advances, SiriusPoint’s shareholders’ equity declined by 23% in 2024, falling to $1.9 billion on December 31st from $2.5 billion at the end of 2023. This decrease was primarily due to the $0.8 billion used for share repurchases as part of the CMB buyout. Consequently, SiriusPoint’s financial leverage ratio (FLR) increased to 27.5% at the end of 2024, up from 25.6% at the end of 2023. However, the FLR is expected to decline as shareholders’ equity rebounds through earnings.
According to Fitch, SiriusPoint maintained a strong prism capital model at the close of 2024, compared to a ‘very strong’ rating at the end of 2023 and 2022. The lower score reflects a 20% reduction in available capital in 2024 due to the decline in shareholders’ equity. Fitch anticipates SiriusPoint will return to a ‘very strong’ prism score as capital accumulates. The firm’s operating leverage ratios increased in 2024, as lower written premiums were offset by the equity decline, but they remain robust.
