Quarterly financial results

9 Months Ended

Sep. 30, 2023

Accounting Changes and Error Corrections [Abstract]

19. Quarterly financial results

Revision of Q2 and Q1 2023 interim financial statements

In connection with the preparation of its third quarter 2023 financial statements, the Company identified certain immaterial errors in its previously issued 2023 interim financial statements, primarily relating to a manual calculation in our property catastrophe business, and also an overnight data transfer error. This resulted in the incorrect recognition of Net premiums earned. The Company performed an analysis in accordance with the guidance set forth in SEC Staff Bulletin 99, Materiality, and SEC Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and concluded that the errors were not material, both individually and in the aggregate, to any previously issued financial statements, and were not intentional. Although not required to do so, but in an effort to provide transparency and in line with good practice, Management has elected to revise the previously issued 2023 interim financial statements when they are next presented. The impacts on those financial statements of these future revisions are presented below. The financial statements for the three and nine months ended September 30, 2023 reflect the correction of these errors in the manner described above.

Notwithstanding, the consolidated financial statements included in this report on Form 10-Q fairly represent in all material respects the financial condition, results of operations and cash flows of the Company for the periods presented.

The impacts of the future revisions on the Company’s previously issued consolidated financial statements as of and for the periods indicated are as follows:


	Three months ended June 30, 2023						Three months ended March 31, 2023
	As previously reported		Revision		As revised		As previously reported		Revision		As revised
Revenues
Net premiums earned	$	703.8	$	(64.1)	$	639.7	$	595.5	$	—	$	595.5
Net realized and unrealized investment losses	(1.8)		—		(1.8)		11.3		—		11.3
Net realized and unrealized investment losses from related party investment funds	(0.9)		—		(0.9)		0.8		—		0.8
Net investment income	68.5		—		68.5		61.7		—		61.7
Net realized and unrealized investment losses and net investment income	65.8		—		65.8		73.8		—		73.8
Other revenues	(1.7)		7.0		5.3		15.8		(7.0)		8.8
Total revenues	767.9		(57.1)		710.8		685.1		(7.0)		678.1
Expenses
Loss and loss adjustment expenses incurred, net	407.0		(31.3)		375.7		267.1		—		267.1
Acquisition costs, net	126.2		(14.4)		111.8		119.7		—		119.7
Other underwriting expenses	43.3		—		43.3		52.2		—		52.2
Net corporate and other expenses	70.3		—		70.3		60.0		—		60.0
Intangible asset amortization	2.9		—		2.9		2.4		—		2.4
Interest expense	11.7		—		11.7		12.8		—		12.8
Foreign exchange gains	17.4		—		17.4		0.1		—		0.1
Total expenses	678.8		(45.7)		633.1		514.3		—		514.3
Income before income tax expense	89.1		(11.4)		77.7		170.8		(7.0)		163.8
Income tax expense	(16.8)		1.0		(15.8)		(25.8)		0.3		(25.5)
Net income	72.3		(10.4)		61.9		145.0		(6.7)		138.3
Net income attributable to noncontrolling interests	(2.0)		—		(2.0)		(2.4)		—		(2.4)
Net income available to SiriusPoint	70.3		(10.4)		59.9		142.6		(6.7)		135.9
Dividends on Series B preference shares	(4.0)		—		(4.0)		(4.0)		—		(4.0)
Net income available to SiriusPoint common shareholders	$	66.3	$	(10.4)	$	55.9	$	138.6	$	(6.7)	$	131.9
Earnings per share available to SiriusPoint common shareholders
Basic earnings per share available to SiriusPoint common shareholders	$	0.38	$	(0.06)	$	0.32	$	0.80	$	(0.04)	$	0.76
Diluted earnings per share available to SiriusPoint common shareholders	$	0.37	$	(0.06)	$	0.31	$	0.78	$	(0.04)	$	0.74
Weighted average number of common shares used in the determination of earnings per share
Basic	162,027,831				162,027,831		160,905,860				160,905,860
Diluted	166,708,932				166,708,932		164,130,946				164,130,946


	Six months ended June 30, 2023
	As previously reported		Revision		As revised
Revenues
Net premiums earned	$	1,299.3	$	(64.1)	$	1,235.2
Net realized and unrealized investment gains	9.5		—		9.5
Net realized and unrealized investment losses from related party investment funds	(0.1)		—		(0.1)
Net investment income	130.2		—		130.2
Net realized and unrealized investment gains (losses) and net investment income	139.6		—		139.6
Other revenues	14.1		—		14.1
Total revenues	1,453.0		(64.1)		1,388.9
Expenses
Loss and loss adjustment expenses incurred, net	674.1		(31.3)		642.8
Acquisition costs, net	245.9		(14.4)		231.5
Other underwriting expenses	95.5		—		95.5
Net corporate and other expenses	130.3		—		130.3
Intangible asset amortization	5.3		—		5.3
Interest expense	24.5		—		24.5
Foreign exchange gains	17.5		—		17.5
Total expenses	1,193.1		(45.7)		1,147.4
Income before income tax (expense) benefit	259.9		(18.4)		241.5
Income tax expense	(42.6)		1.3		(41.3)
Net income	217.3		(17.1)		200.2
Net income attributable to noncontrolling interests	(4.4)		—		(4.4)
Net income available to SiriusPoint	212.9		(17.1)		195.8
Dividends on Series B preference shares	(8.0)		—		(8.0)
Net income available to SiriusPoint common shareholders	$	204.9	$	(17.1)	$	187.8
Earnings per share available to SiriusPoint common shareholders
Basic earnings per share available to SiriusPoint common shareholders	$	1.18	$	(0.10)	$	1.08
Diluted earnings per share available to SiriusPoint common shareholders	$	1.14	$	(0.09)	$	1.05
Weighted average number of common shares used in the determination of earnings per share
Basic	161,473,011				161,473,011
Diluted	165,997,198				165,997,198

The following tables provide a summary of the corrections to the impacted financial statement line items on the Company’s consolidated balance sheet, consolidated statement of comprehensive income, and consolidated statement of cash flows.

Condensed consolidated balance sheet


	June 30, 2023
	As previously reported		Revision		As revised
Insurance and reinsurance balances receivable, net	$	2,252.1	$	(32.5)	$	2,219.6
Deferred acquisition costs, net	340.3		2.3		342.6
Unearned premiums ceded	481.3		3.5		484.8
Loss and loss adjustment expenses recoverable, net	2,276.7		(0.1)		2,276.6
Deferred tax assets	164.3		(0.4)		163.9
Total assets	12,622.8		(27.2)		12,595.6

Loss and loss adjustment expense reserves	5,338.8		(31.4)		5,307.4
Unearned premium reserves	1,819.2		23.0		1,842.2
Total liabilities	10,355.1		(8.4)		10,346.7

Retained earnings	467.1		(17.1)		450.0
Accumulated other comprehensive loss, net of tax	(74.2)		(1.7)		(75.9)
Total shareholders’ equity	$	2,267.7	$	(18.8)	$	2,248.9


	March 31, 2023
	As previously reported		Revision		As revised
Deferred tax assets	$	175.7	$	0.3	$	176.0
Total assets	11,807.2		0.3		11,807.5

Accounts payable, accrued expenses and other liabilities	275.7		7.0		282.7
Total liabilities	9,559.2		7.0		9,566.2

Retained earnings	400.8		(6.7)		394.1
Total shareholders’ equity	$	2,248.0	$	(6.7)	$	2,241.3

Condensed consolidated statement of comprehensive income


	Three months ended June 30, 2023						Six months ended June 30, 2023
	As previously reported		Revision		As revised		As previously reported		Revision		As revised
Net income	$	72.3	$	(10.4)	$	61.9	$	217.3	$	(17.1)	$	200.2
Unrealized losses from debt securities held as available for sale investments	(54.9)		(1.7)		(56.6)		(32.0)		(1.7)		(33.7)
Comprehensive income available to SiriusPoint	$	19.1	$	(12.1)	$	7.0	$	183.7	$	(18.8)	$	164.9

Condensed consolidated statement of cash flows


	Six months ended June 30, 2023
	As previously reported		Revision		As revised
Net income	$	217.3	$	(17.1)	$	200.2
Net realized and unrealized loss on investments and derivatives	(12.6)		(1.7)		(14.3)
Insurance and reinsurance balances receivable, net	(370.4)		32.5		(337.9)
Deferred acquisition costs, net	(45.4)		(2.3)		(47.7)
Unearned premiums ceded	(132.5)		(3.5)		(136.0)
Loss and loss adjustment expenses recoverable, net	(900.5)		0.1		(900.4)
Deferred tax asset/ liability	37.2		0.4		37.6
Loss and loss adjustment expense reserves	70.1		(31.4)		38.7
Unearned premium reserves	298.1		23.0		321.1
Net cash provided by operating activities	$	206.3	$	—	$	206.3


	Three months ended March 31, 2023
	As previously reported		Revision		As revised
Net income	$	145.0	$	(6.7)	$	138.3
Deferred tax asset/ liability	24.2		(0.3)		23.9
Accounts payable, accrued expenses and other liabilities	3.9		7.0		10.9
Net cash provided by operating activities	$	94.2	$	—	$	94.2

Revised operating segment results for the three and six months ended June 30, 2023 are as follows:


	Three months ended June 30, 2023
	As revised
	Reinsurance			Insurance & Services			Core			Eliminations (2)		Corporate		Segment Measure Reclass		Total
Gross premiums written	$	357.7		$	447.5		$	805.2		$	—	$	37.3	$	—	$	842.5
Net premiums written	311.9			276.4			588.3			—		37.3		—		625.6
Net premiums earned	271.8			324.4			596.2			—		43.5		—		639.7
Loss and loss adjustment expenses incurred, net	146.7			216.7			363.4			(1.5)		13.8		—		375.7
Acquisition costs, net	51.3			80.7			132.0			(35.9)		15.7		—		111.8
Other underwriting expenses	12.0			25.5			37.5			—		5.8		—		43.3
Underwriting income	61.8			1.5			63.3			37.4		8.2		—		108.9
Services revenues	(2.8)			62.2			59.4			(36.9)		—		(22.5)		—
Services expenses	—			50.0			50.0			—		—		(50.0)		—
Net services fee income (loss)	(2.8)			12.2			9.4			(36.9)		—		27.5		—
Services noncontrolling income	—			(1.7)			(1.7)			—		—		1.7		—

Net services income (loss)	(2.8)			10.5			7.7			(36.9)		—		29.2		—
Segment income	59.0			12.0			71.0			0.5		8.2		29.2		108.9
Net realized and unrealized investment losses												(1.8)		—		(1.8)
Net realized and unrealized investment losses from related party investment funds												(0.9)		—		(0.9)
Net investment income												68.5		—		68.5
Other revenues												(17.2)		22.5		5.3
Net corporate and other expenses												(20.3)		(50.0)		(70.3)
Intangible asset amortization												(2.9)		—		(2.9)
Interest expense												(11.7)		—		(11.7)
Foreign exchange losses												(17.4)		—		(17.4)
Income before income tax expense	$	59.0		$	12.0		71.0			0.5		4.5		1.7		77.7
Income tax expense							—			—		(15.8)		—		(15.8)
Net income (loss)							71.0			0.5		(11.3)		1.7		61.9
Net income attributable to noncontrolling interest							—			—		(0.3)		(1.7)		(2.0)
Net income (loss) available to SiriusPoint							$	71.0		$	0.5	$	(11.6)	$	—	$	59.9

Underwriting Ratios: (1)
Loss ratio	54.0		%	66.8		%	61.0		%							58.7		%
Acquisition cost ratio	18.9		%	24.9		%	22.1		%							17.5		%
Other underwriting expenses ratio	4.4		%	7.9		%	6.3		%							6.8		%
Combined ratio	77.3		%	99.6		%	89.4		%							83.0		%

(1)Underwriting ratios are calculated by dividing the related expense by net premiums earned. Prior to the revision, the reported Core and consolidated combined ratios were 87.7% and 81.9%, respectively.

(2)Insurance & Services MGAs recognize fees for service using revenue from contracts with customers accounting standards, whereas insurance companies recognize acquisition expenses using insurance contract accounting standards. While ultimate revenues and expenses recognized will match, there will be recognition timing differences based on the different accounting standards.


	Six months ended June 30, 2023
	As revised
	Reinsurance			Insurance & Services			Core			Eliminations (2)		Corporate		Segment Measure Reclass		Total
Gross premiums written	$	753.9		$	1,111.5		$	1,865.4		$	—	$	87.6	$	—	$	1,953.0
Net premiums written	622.9			729.0			1,351.9			—		65.4		—		1,417.3
Net premiums earned	531.3			615.6			1,146.9			—		88.3		—		1,235.2
Loss and loss adjustment expenses incurred, net	232.3			389.2			621.5			(2.8)		24.1		—		642.8
Acquisition costs, net	117.3			152.4			269.7			(68.4)		30.2		—		231.5
Other underwriting expenses	40.2			44.8			85.0			—		10.5		—		95.5
Underwriting income	141.5			29.2			170.7			71.2		23.5		—		265.4
Services revenues	(2.6)			125.8			123.2			(71.3)		—		(51.9)		—
Services expenses	—			95.5			95.5			—		—		(95.5)		—
Net services fee income (loss)	(2.6)			30.3			27.7			(71.3)		—		43.6		—
Services noncontrolling income	—			(3.3)			(3.3)			—		—		3.3		—

Net services income (loss)	(2.6)			27.0			24.4			(71.3)		—		46.9		—
Segment income	138.9			56.2			195.1			(0.1)		23.5		46.9		265.4
Net realized and unrealized investment gains												9.5		—		9.5
Net realized and unrealized investment losses from related party investment funds												(0.1)		—		(0.1)
Net investment income												130.2		—		130.2
Other revenues												(37.8)		51.9		14.1
Net corporate and other expenses												(34.8)		(95.5)		(130.3)
Intangible asset amortization												(5.3)		—		(5.3)
Interest expense												(24.5)		—		(24.5)
Foreign exchange losses												(17.5)		—		(17.5)
Income before income tax expense	$	138.9		$	56.2		195.1			(0.1)		43.2		3.3		241.5
Income tax expense							—			—		(41.3)		—		(41.3)
Net income							195.1			(0.1)		1.9		3.3		200.2
Net income attributable to noncontrolling interest							—			—		(1.1)		(3.3)		(4.4)
Net income available to SiriusPoint							$	195.1		$	(0.1)	$	0.8	$	—	$	195.8

Underwriting Ratios: (1)
Loss ratio	43.7		%	63.2		%	54.2		%							52.0		%
Acquisition cost ratio	22.1		%	24.8		%	23.5		%							18.7		%
Other underwriting expenses ratio	7.6		%	7.3		%	7.4		%							7.7		%
Combined ratio	73.4		%	95.3		%	85.1		%							78.4		%

(1)Underwriting ratios are calculated by dividing the related expense by net premiums earned. Prior to the revision, the reported Core and consolidated combined ratios were 84.4% and 78.2%, respectively.