SiriusPoint - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered a clean underwriting beat: Core combined ratio improved 3.8 pts YoY to 89.5% and consolidated combined ratio was 86.1% as catastrophe losses were minimal and prior-year development was favorable.
• Revenue and normalized EPS exceeded S&P Global consensus: revenue $748.2M vs $720.1M est., and normalized EPS $0.66 vs $0.57 est. (3 estimates)*; GAAP diluted EPS was $0.50 as FX losses and interest expense partially offset underwriting strength.
• Mix shift and operating execution continued: GPW grew 10% in Core (5th consecutive quarter of double-digit growth) led by Insurance & Services, while BVPS ex-AOCI rose 3.2% QoQ to $15.64 and BSCR stood at an estimated 223%.
• Management tone remained confident—reiterating the 12–15% across-the-cycle ROE framework—citing lower volatility, underwriting discipline, and talent additions as catalysts for sustained performance.

What Went Well and What Went Wrong

• What Went Well

  • Underwriting outperformance: Core combined ratio improved to 89.5% (−3.8 pts YoY), with underwriting income up 83% YoY to $67.6M; consolidated combined ratio was 86.1%.
  • Top-line momentum: Core GPW +10% YoY with strength in Insurance & Services; Core NPE +16.7% YoY, marking the fifth straight quarter of double-digit Core GPW growth.
  • Management confidence and culture: “Our second quarter results reflect the strength of our disciplined underwriting strategy...another purposeful step towards our goal of becoming a best-in-class underwriter.” — CEO Scott Egan.

• What Went Wrong

  • Investment and FX headwinds: Net investment income decreased YoY due to a smaller asset base; FX losses were $16.7M in the quarter.
  • Services margin compression: Service margin declined to 14.7% vs 16.9% in Q2’24 as mix and normalization weighed on margins.
  • Higher interest burden: Interest expense increased to $21.1M in Q2; management flagged a portion relates to LPTs.

Transcript

Speaker 6

Good morning, ladies and gentlemen, and welcome to SiriusPoint Ltd. second quarter 2025 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the conclusion of prepared remarks, management will host a question and answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded, and a replay is available through 11:59 P.M. Eastern Time until August 18, 2025.

Speaker 1

With that, I would like to turn.

Speaker 6

The call over to Liam Blackledge, Investor Relations and Strategy Manager. Please go ahead.

Speaker 7

Thank you, Operator, and good morning or good afternoon to everyone listening. I welcome you to the SiriusPoint Ltd. earnings call for the 2025 second quarter.

Speaker 3

Half year results.

Speaker 7

Early this morning we released our Earnings Press Release, 10-Q, and Financial Supplement, which are available on our website www.siriuspt.com. Additionally, a webcast presentation will coincide with today's discussion and is available on our website. Joining me on the call today are Scott Egan, our Chief Executive Officer, and Jim McKinney, our Chief Financial Officer. Before we start, I would like to remind you that today's remarks contain forward-looking statements based on management's current expectations. Actual results may differ. Certain non-GAAP financial measures will also be discussed. Management uses the non-GAAP financial measures in its internal analysis of our results or operations and believes that they may be informative to investors engaged in the quality of our financial performance and identifying trends in our results.

Speaker 3

However, these measures should not be considered.

Speaker 7

As a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. Please refer to page 2 of our investor presentation and the company's latest public filings with the Securities and Exchange Commission for additional information. I will now turn the call over to Scott.

Speaker 3

Thanks Liam and good morning. Good afternoon everyone. Thanks for joining our second quarter and half year 2025 results call. The second quarter has seen SiriusPoint Ltd. deliver continued strong performance. Our underlying return on equity for the quarter was 17%, two points ahead of our across the cycle 12% to 15% target range, driven by strong underwriting and targeted growth year to date. Our underlying return on equity of 15.4% is at the upper end of our target range despite heightened first half losses in aviation and first quarter losses from California wildfires. The second quarter core combined ratio of 89.5% is a 3.8 point improvement year over year, further evidence of our focus on producing consistently strong and improving results. This marks our 11th consecutive quarter of underwriting profit.

We also grew our gross written premiums by 10%, representing our fifth straight quarter of double digit gross premium growth as we continue to allocate capital selectively towards attractive opportunities in the markets that we operate within. Premium growth is strong on a net basis as well, increasing 8% in the quarter and 14% in the first half of the year. Within our insurance and services business, we saw net premium growth of 15% in the quarter.

This is at a faster pace than.

Gross premiums as we deliberately retain more premiums on our own balance sheet from our MGA partnerships. This is in line with a prudent strategy of increasing our retention as these relationships season and mature and as we get increasing confidence with the performance and underwriting margin. This approach is an important proof point of our underwriting discipline. In the first half we've seen double-digit growth in Accident & Health, property, and other specialty lines of business, whilst decreasing our premiums within casualty. As we remain deliberately cautious, we continue to expect our insurance business to grow more than reinsurance. In the quarter we entered four new MGA partnerships. Three of the four new opportunities were expansions with existing long-term partners who.

We know well and share a commitment.

To underwriting excellence with deepening long term proven relationships is a.

Key part of our MGA partnerships strategy.

Our selection of new partners is also.

A key part of our process.

We continue to reject over 80% of all opportunities we see in this distribution channel. We're excited by the pipeline of opportunities we see and are proud of our increasingly strengthening reputation as a partner of choice for MGAs. This was recognized during the quarter at the Programme Manager Awards in New York where, supported by our partners, we won Programme Insurer of the Year. Turning now to our underwriting performance, we delivered a combined ratio for our core business of 89.5% for the second quarter, contributing to our year-to-date core combined ratio of 92.4%. As I said, our second quarter result is a 3.8 point improvement year over year, and of this improvement, 1.8 point comes from improvement in an attritional loss ratio.

In line with the recent trend marking the sixth consecutive quarter of year-over-year attritional loss ratio improvement, the quarter's results contain no catastrophe losses versus one point in the second quarter of last year, while favorable prior year development continued to be strong. Looking at reserve development on a consolidated basis, which includes the development of our run-off business, this marked our 17th consecutive quarter of favorable releases. Turning briefly to our fee-driven profits from our consolidated MGA service, revenues from our two 100% owned A&H MGAs increased by 16% in the quarter, with year-to-date revenues up 15% for the half year. The service margin is a healthy and improved 23.6%, which is generating net service fee income of $28 million.

Touching on investments, which Jim will cover in more detail, net investment income for the quarter was $68 million and is tracking in line with the full year guidance of $265 to $275 million. There were no significant movements on the valuations in our strategic MGA investments in the quarter. Finally, our capital remains strong and our second quarter BSCR ratio was 223% and within our target range as we continue to deploy our capital to support the organic growth opportunities of the business. Before I conclude, I wanted to take a moment to talk about our people, the real engine of our business. During the quarter, we undertook our annual engagement survey, which showed another year of significant improvements across the metrics. We've included some of the details in Appendix 4 of our presentation. Our Net Promoter Score increased by 16 points year over year and 53 points.

Over the past two years.

We now sit in the very good category. I highlight this because this business has always been about our people and our culture and I'm incredibly proud and immensely grateful for the job that they do for our customers and shareholders every single day. The survey highlights that there is a feel good factor within the company with staff turnover down to 15%. This is a key ingredient for our continued future success. It is also helping us attract talent to the company and the quarter saw us again top talent from across the industry including two new members of my executive leadership team. To end I'll go back to where I started. This quarter provided us another opportunity to show our progress to becoming a best in class specialty underwriter. We continue to consistently deliver strong underwriting profits, targeted and disciplined premium growth, and stable investment results.

We are committed to and relentlessly focus on value creation. Book value per diluted share has increased 4% in the quarter and 10% year to date. Our underlying earnings per share for the quarter of $0.66 represents an increase of over 100% versus prior year and our year to date underlying return on equity is at the top end of our 12% to 15% target range. We've made great progress in the first half of this year, but it's only half time in 2025, all to play for in the second half. We're more than ready. With that I'll pass across to Jim who will take you through the financials in more detail.

Speaker 1

Thank you, Scott. Turning to our second quarter results on Slide 13, let me begin by saying we are pleased with our financial results this quarter and for the half year. We meaningfully improved both the reported and core combined ratios. In addition, we generated higher gross and net written and earned premiums. At 89.5%, the core combined ratio improved 3.8 points.

Versus the prior year.

The combination of higher premiums, a strong core attritional loss ratio, and favorable prior year development produce core underwriting income of $68 million. This is an 83% increase from the second quarter of 2024 and our 11th consecutive quarter of positive income. These items are a testament to the team's strong execution, disciplined underwriting, and focused capital management. Moving to net service fee income, as a reminder, following the deconsolidation of Arcadian in the second quarter of 2024, our share of Arcadian's profits are reported through other revenues. To normalize for this change, we focus comparison to the 100% owned Accident & Health consolidated MGA businesses. This view highlights a 16% increase in year-over-year service revenues as well as net service fee income increasing 6% to $9 million. The investment result is $69 million.

It includes the full impact of the actions taken during the first quarter to support our repurchase activities. Net investment income continues to benefit from a supportive yield environment. We continue to see reinvestment rates greater than 4.5%. Underlying net income is $78 million. This excludes non-recurring items such as foreign exchange losses year over year. This is up 35%. Net income for the quarter is $59 million, resulting in diluted earnings per share of $0.50. This includes $17 million in foreign exchange losses, a significant portion of which are non-cash items related to period-over-period valuation changes with corresponding offsets within our investment portfolio that are recognized through other comprehensive income. These items are recognized in our income statement when realized. This is consistent with our approach to economically hedge exposures. In summary, our second quarter results demonstrate our ability to profitably grow and create value for our shareholders.

Moving to our half year results on Slide 14, themes are consistent with the second quarter. Strong execution, disciplined underwriting, and focused capital management produced profitable growth. Underwriting income for the period is $96 million. This includes solid gross premiums written, net premiums written, and net premiums earned growth of 11%, 14%, and 19% respectively. The core combined ratio was 92.4%. This represents a slight year-on-year improvement despite elevated catastrophe losses incurred within the first quarter. Net service fee income was $28 million, representing a slight decrease from the prior year period. Our 100% owned Accident & Health consolidated MGA partnerships produced $28 million of net service fee income, which is up 14% versus half year 2024. Net investment income for the first half of the year was $139 million, down slightly from the prior year period as a result of the lower asset base.

Lastly, common shareholders' equity increased $168 million to $1.9 billion, resulting in diluted book value per share excluding AOCI growing 7% or a dollar to $15.64. Moving to slide 15 and double clicking into our underlying earnings quality, our underwriting-first focus continues to deliver strong underlying margin improvement. The attritional combined ratio chart on the left-hand side of the page strips out the impact from catastrophe exposures and prior year development. As these inherently vary over time, we believe this metric is useful to examine the quality of our underwriting income. Our 90.9% core attritional combined ratio in the first half of the year represents a 2.3 point improvement versus the prior year period of 93.2%. All facets of the ratio improved. The attritional loss ratio improved 1.1 points, the acquisition cost improved 0.6 points, and the OUE ratio improved 0.6 points.

Important to note, we continue to benefit from scale from our earned premium growth for the full year. We remain comfortable with an expense ratio expectation of 6.5% to 7%. The right-hand side provides a bridge from our underlying earnings quality to our core combined ratio. This displays 3.8 points of favorable prior year development in the first half, partially offsetting 5.3 points of catastrophe exposures that relate entirely to California wildfires. Turning to our insurance and services segment results on slide 16, gross written premiums increased $70 million or 14% to $560 million in the quarter, driven by strong growth within our Accident & Health, other specialties, and property lines. For the half year, gross written premiums increased $181 million or 18% to $1.2 billion. We expect to see existing growth trends persist throughout the remainder of the year.

The insurance and services segment achieved a combined ratio of 89.3%, a 6.7 point improvement from the prior year quarter. This was driven by an 8 point decrease in the loss ratio, partly offset by a 1 point increase in the acquisition cost ratio and a 0.3 point increase in the other underwriting expenses. The improvement in the loss ratio is largely due to a 4 point improvement in the attritional loss ratio from our North American P&C business. The quarter also saw no catastrophe losses, representing a 0.9 point improvement year over year, and favorable prior year development of $10 million, representing a 3.1% point improvement year over year. The half year result is strong, with the combined ratio improving 5.5 points to 91.6%.

This result was driven by a 6.3 point decrease in the loss ratio and a 0.4 point decrease in the OUE ratio, partially offset by a 1.2 point increase in the acquisition cost ratio. Similar for the second quarter, attritional losses for the half year represent the majority of the improvement, down 4.1 points versus prior year, largely driven by our North American business. Favorable prior year development represented 6.3 points of the combined ratio compared to 3.3 points in the first half of last year and was driven largely by favorable movement within Accident & Health. Our Accident & Health book of business has provided us with a stable source of underwriting profit through the cycle and is a key offering that adds diversification to our portfolio and produces consistently strong results.

Premium in this specialism are up 14% in the first half of the year and represent roughly half of the business mix in insurance and services. Rates in U.S. Medical continue to rise at or above loss trend, while personal accident lines continue to see single digit rate softening. Pricing in life insurance continues to trend back towards pre-COVID pricing. The pricing environment within A&H continues to meet our risk and return profile, and we continue to see growth opportunities within this specialism. Within casualty, premiums for the first half of the year have decreased by 10% as we continue to allocate capital towards opportunities that have more attractive underlying margin. The book continues to benefit from positive rate movements exceeding trend, particularly in excess casualty that has seen mid double digit rate increases.

Rates continue to hold firm due to loss cost trends, with industry wide reserve strengthening, the litigation, financing, and nuclear verdict pressures. We are never afraid to take decisive.

Action to protect the bottom line.

Within our auto book, we continue to reduce underwritings and exit businesses where rate is not keeping pace with loss cost trends. Other specialties continue to see strong growth, with surety and environmental both seeing strong year-over-year increases in premiums. Within aviation, major airline renewals continue to see 5% to 10% increases, with performance mixed between subsegments. Most airline renewals are not due until the fourth quarter, at which point the Air India incident will be better reflected in pricing space. Continue to see double-digit price increases given the significant losses experienced in the market in 2023 and resultant capacity exits. Within energy, rates are a bit of a mixed bag. Energy liability rates remain positive and average 5%. CL power rates are experiencing mid to low single-digit rate pressures. Despite this, we believe power remains rate adequate within upstream energy.

Small to medium risk pricing is roughly flat to down. Single-digit rate decreases for larger risk are down by around 10%. Turning to marine, rates continue to soften across the board. Cargo and hull generally saw single-digit rate decreases. Rates for marine liability and ports and terminals remained firmer, with a range of low single-digit rises to low single-digit reductions. Premiums from our property specialism grew double-digit in the quarter and first half. This is driven by growth from MGA partnerships within our international business and from partnerships entered in 2023 and 2024. Our primary property portfolio is predominantly non-catastrophe and continues to experience rate accuracy. Moving to our reinsurance segment results on Slide 17, this quarter the segment saw a gross written premiums increase of $17 million, or 5%, to $370 million. Double-digit growth in other specialties was partially offset by reductions in property reinsurance premiums.

On a half-year basis, gross written premiums increased by 2%. On a net basis, premiums written decreased by 1% in the quarter and 4% in the first half. The combined ratio for the quarter improved 0.4 points to 89.8%. The result was driven by a 0.7 point improvement in the acquisition cost ratio and a 0.2 point improvement in the OUE ratio, partly offset by a 0.5 point increase in the loss ratio. The loss ratio increased to 56.6%, partly as a result of a $9 million large loss from the Air India cross by driving attritional losses up 0.9 points.

Versus the prior year.

The half year combined ratio of 93.5% contains 2.6 points of improvement in the acquisition cost ratio and 0.6 points of improvement in the OUE ratio. The loss ratio increased 9.5 points from the prior year period, driven largely by the California wildfires from the first quarter. Other specialties saw 22% gross written premiums growth this quarter and 6% growth in net premiums written within. Credit and bond pricing is under pressure stemming from strong performance and ample capacity. The second quarter saw credit spread tightening, which impacted premium levels while terms remained firm within aviation. Reinsurance pricing within excess of loss and pro rata was generally flat. Although it is worth noting that the Air India incident is not yet reflected in pricing as the majority of 7/1 renewals.

Were already priced when the incident occurred.

Curve for Casualty reinsurance. Gross premiums written increased by a modest 2% in the quarter but are down 6% at the half year. Casualty reinsurance continued to benefit from positive rate that exceeded trend, but as we guided since the fourth quarter of 2024, we reduced exposures on structured deals and certain casualty classes at 1:1 such as commercial auto as underwriting discipline led us to reallocate capital to protect underwriting margins. Within property reinsurance, premiums decreased 5% in the quarter in line with the tougher market conditions in this specialism. For the first half, premiums are roughly flat driven by reinstatement premiums from the California wildfires. We continue to monitor rate adequacy in property reinsurance, particularly following the heightened catastrophe activity in the last 12 months.

It is important to note, we will only grow premiums where we believe the margins are within our risk and profitability profile with competitive pressures persisting across reinsurance markets. Catastrophe excess of loss placements have seen the greatest pressure with double-digit decreases across non-loss impacted placements. These accounts had previously seen the greatest rate increases over the prior few years. Proportional business is also competitive but has seen opportunities, particularly for structured deals. Margins are tightening, however, there is still potential in loss-affected segments as improved rate adequacy, legal changes, and increased reinsurance availability support both new and existing carriers entering the market. Slide 18 shows our catastrophe losses versus peers and the reduction in volatility of our portfolio following portfolio actions taken in 2022. We have materially decreased our catastrophe exposure in order to deliver more consistent returns to our shareholders.

The charts show how we reduced our catastrophe losses in 2023 and 2024 and have continued on this path. Catastrophe losses in the first half represent 5.3 points of our combined ratio and were driven by the California wildfires in the first quarter with no losses in the second quarter. During the second quarter, our loss estimate for California wildfires decreased by less than $1 million. Of course, it is more useful to view the loss ratios on an annual basis, but our half year 2025 figure already shows a comparatively low loss ratio amongst peers and demonstrates the benefits of our highly diversified portfolio. Moving to Reserving. Our strong history of prudence is shown on slide 19. Prior year development in the quarter stood at $14 million for the core business versus $4 million in the prior year quarter.

It is important to consider our consolidated result here as this includes the business we have put into runoff. We have favorable prior year development on a consolidated basis of $9 million, marking the 17th consecutive quarter of favorable prior year development. Our track record of consecutive favorable releases well exceeds the average duration of our insurance liabilities of 3.1 years, highlighting our prudent approach to reserving. Additionally, we show here the strong level of protection we have on each of our 3 loss portfolio transfers that were completed in 2021, 2023, and 2024. Starting our strong investment result on slide 20, net investment income for the first half of the year was $139 million, down slightly from the prior year period as a result of lower asset base.

Following the settlement of the CM Bermuda transaction in the first quarter, we reinvested over $300 million this quarter with new money yields in excess of 4.5%. The portfolio continues to perform well and there were no defaults across our fixed income portfolio. We remain committed to our investment strategy, which focuses on high quality fixed income securities. 79% of our investment portfolio is fixed income, of which 97% is investment grade with an average credit rating of AA minus. Our overall portfolio duration remained at 3 years while assets backing loss reserves remain fully matched and are at 3.1 years. Moving on to our slide 21, looking at our strong and diversified capital base, our second quarter estimated BSCR ratio stands at 223%, decreasing by 2 points versus the end of the first quarter.

Our capital position continues to be robust and contains sufficient prudence as shown by the stress test scenario of a 1 in 250 year PML event. Moving on to our balance sheet on slide 22, we continue to have a strong balance sheet with ample capital and liquidity. During the quarter, the debt to capital ratio fell again to 24.4%, driven by an increase in shareholders' equity from the level of retained earnings, partially offset by weakening of the U.S. dollar Swedish krona exchange rate increasing the value of our debt issued in krona. Our debt to capital levels remain within our targets. We continue to have strong liquidity levels, including $682 million of liquidity available to the Holdco following the final payment of $483 million to CM Bermuda in the first quarter.

As a reminder, in the first half of the year both AM Best and Fitch revised our outlook to positive from stable, whilst Moody's and S&P affirmed our ratings. Fitch highlighted the significant underwriting improvement in 2023 and 2024 and the completion of the CM Bermuda buyback. While AM Best called out the strength of our balance sheet when making their upgrade, we believe our balance sheet continues to be undervalued. There remains significant off-balance sheet value in the consolidated MGA partnerships which we own. This was demonstrated when we deconsolidated Arcadian last year and generated almost $100 million of book value. The carrying value on our balance sheet of the three remaining MGA partnerships is $83 million, with net service fee income for the trailing 12 months of $45 million. This equates to an earnings multiple just over two times the earnings versus the.

Double digit earnings multiple used by the market.

With this, we conclude the financial section of our presentation. This quarter saw a continuation of strong double-digit growth in our top line, while delivering a 3.8 point improvement in our core combined ratio, of which 1.8 points came from attritional loss ratio improvement. Underlying return on equity for the quarter of 17% contributes to a first half underlying return on equity of 15.4%. This delivery at half year means we are on track to deliver another year with return on equity within our 12 to 15% range.

Across the cycle target, we have built.

A strong track record of delivery, and this quarter's result further validates the significant progress we have made on our journey to becoming a best-in-class specialty underwriter. With that, I will hand the call back over to the operator, and we can now open the lines for any questions.

Thank you.

Speaker 6

We will now be conducting the question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press Star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for your questions. Our first questions come from the line of Michael Phillips with Oppenheimer and Company.

Please proceed with your questions.

Thanks.

Speaker 1

Good morning everybody. First question is on kind of the.

New programs you've done, I guess this.

Year, not just this quarter but this year.

Thinking about the impact of those on the top line over the next maybe 18 months of those specific programs on a difference between the growth and the net premiums? I think it sort of goes to your philosophy, but also some of the comments that Scott's made about that difference between taking the net over time. Can you speak to the impact those specific programs this year might have on both the gross and net premiums over the next 18 months?

Yeah, thanks, Mike.

Speaker 3

Thanks for the question. Appreciate it.

Nice to speak to you.

Look, Mike, I would say we sort.

Take them on a program by.

Program basis, which I know isn't a helpful comment for you, but I think we don't sort of forecast ahead. Number one, we choose very carefully, which I know is not the question you're asking, but we are reinforcing that point. We reject sort of 80% of the opportunities that present themselves. I think our philosophy is very much we take gross and then lean into net. If you look at the pipeline of opportunities, and I would say not just this year, I would go back into last year as well where we reported quite a lot of new partnerships coming on. I think the way that we look at that is we season them in terms of leaning into the net as and when we feel comfortable.

There isn't really a lot of.

I think our direction of travel is we want to take more risk, net risk with partners who we feel more comfortable with. I would say we've got a strong tailwind of overall growth as evidenced by our sort of performance over the last five quarters in particular. I think that trend of sort of net initially outstripping growth might be something that emerges, but as I say we don't predict it per se and we take it as it is. Jim, anything you want to add to that?

Speaker 1

Yeah, I think that was well said.

I do think on both sides it'll be a tailwind in terms of total growth, but it'll really depend on the partnerships, kind of the seasoning at each of those levels, some seasonality with each of those things. It won't be an exact linear component, but it is, Mike, a tailwind to further growth on both, you know, the gross and the net through time.

No, thank you.

Speaker 3

I appreciate that.

On your insurance segment, I think of pieces of that that help your growth over time despite what's happening in the external P and T market because they're.

Speaker 1

Kind of non-cyclical, and when I think of that, I think of the.

Biggest one would be A&H. I guess I'm going to make sure that's accurate, and then if so, could you maybe highlight some others within there that might have the similar characteristics besides A&H.

Speaker 3

Yeah, you're right to think of it that way, Mike. Let me just step back and position A&H public. We've seen growth in A&H. 25% of that comes from one of our only owned MGAs, which is IMG. When we see growth in our revenue from EH owned sort of MGAs, that ultimately manifests itself as well in our premium levels.

Look for me and the way that.

We think about that within the portfolio, it's obviously a volatility shock absorber. I think that's a phrase I've used across the market before. If Accident & Health (A&H) is growing, it allows us to take more risk in other areas of the business and still maintain our overall lower volatility approach to the portfolio. That's something that we manage very carefully and very well. As I said, we feel very confident in the position of our A&H business.

I would say if you look across.

Other areas, I think we are happy, Mike, to take on risk as long as it aligns with their areas of expertise and specialism. I think obviously each one has a slightly different dynamic. Just to try and be helpful to you, I think on property, obviously we manage our approach to peril quite tightly. Obviously that's important when we have a sort of lower volatility aspiration. Still property, depending on where we're at on our kind of PML allocations to peril means that we will toggle up, toggle down. I think casualty, we are thoughtful and sort of cautious about, not because of any specific reason, just because I think that's the sort of prudent approach to casualty. We're not scared of it and we've got some very good lines that we write, but I think we're very thoughtful and careful about it.

In our other specialties, whether it be surety, whether it be marine and energy, whether it be credit, I think these are opportunities that we can lean into, both in the general market space, but also through MGA partnerships as well. Yeah, look for me, I think we feel pretty positive there are certain areas that we probably wouldn't lean into. Commercial Auto would be a good example of that at the moment for us where we just don't think the environment out there is something that we would feel that excited about. I think some program and MGA partnerships give us the opportunity to have an edge there. In general terms that might be one that we would be sort of dialing back, dialing down. The rest I would say on balance, we feel reasonably positive about.

A long answer to your question, but Jim, anything you want to add?

Speaker 1

Yeah, Mike, one thing I would add.

Is really what you've seen from a pipeline growth perspective within our North American franchise. We've obviously established a bunch of strategic partnerships over the last couple of years, and the result of those partnerships is that there's going to be a good tailwind of prudent, profitable growth that we would expect to.

Come through there, similar to what you're.

You know, the stability that Accident & Health provides. That's something that's a little bit.

Unique in terms of where we're at from a franchise perspective.

It's not that we're not subject to.

Some of the market trends or other.

From where that segment of our business or that line of business subsegment, if you will, is within our overall franchise and its life cycle kind of growth maturity perspective, that's going to be a nice stable force or I would expect it to be a nice stable force from a growth and from a profitability perspective as we look forward.

Okay, no, thank you both.

Last one for me for now, a little bit higher level actually. In your press release, you've talked about international business and specifically the London MGA partnerships. Could you characterize the difference between MGA partnerships in London versus what we see here?

Speaker 3

In the U.S.?

I asked because you called them out specifically there.

Speaker 1

You know, kind of what it is.

The difference and why they're more growth.

Speaker 3

Than what you see in the U.S., that's why I'm asking.

Yeah, let me step back. I mean, obviously in London, Mike.

If you go back a few years, strategically when I came here, London was declining overall for us, and given the assets that we hold there, i.e., Lloyd's Syndicate, Managing General Agent, etc., we decided to invest in Lloyd's. We don't obviously just access business in the London market versus Lloyd's. We've also got our own paper, and because we've got our own paper, that also makes us attractive to sort of MGAs in the London space. Given the wider expertise that we've got across the group, we can leverage that from us into London. In one sense, the hallmarks are not that different. What we are actually seeing is the pickup as we win business in the London space, which is obviously an area of the business that we would like to invest in and grow. That's exactly what we're doing, Mike, to be honest.

Hopefully that answers your question.

Speaker 1

Yeah, no, thank you very much. Congrats.

Speaker 3

Okay, super, thanks.

Speaker 7

Thanks for your questions.

Speaker 3

Okay, operator, next.

Thank you.

Speaker 6

Our next question has come from the line of Randy Vinner with B. Riley Securities.

Speaker 1

Please proceed with your questions.

Speaker 6

Hey, good morning.

Thank you. I just have a couple. I think the first one for me is just on net investment income. It's trending ahead of your full year guide, I believe. I think you're putting money to work at a higher rate as the year goes on.

Speaker 1

Is there just some conservatism keeping the.

Guide for the year? Can you just share kind of where.

You're putting new money to work so we can just understand that line item a little bit better?

Speaker 3

Jim, do you want to take that one up?

Speaker 1

I'm happy to, thanks, Randy.

I would say slightly, we're largely online.

With the plan that we had at the beginning of the year, it does include potential, you know, an interest rate cut in the back half to two cuts.

At the moment I think we're largely impasse.

I would have expected the front part of the year to be a little bit above kind of the back half if effectively some of the Federal Reserve projected kind of market cuts were to come through.

There is really no change from that perspective.

We do tend to be, you know, if we think about our range, we do tend to have a range in particular for this item. To the extent that there's something that would take us outside of that range or that we would see that coming down, we would then update our guidance at that stage. I think it's fair to say at this point, as you've noticed, we're kind of at the midpoint, if not slightly higher than that from a range perspective. We'll continue to work through what is really largely a favorable environment with, again, items kind of being replaced with a yield greater than 4.5%. I feel pretty good about that.

Okay, great, that's helpful. I have one on reserves.

Clearly the reserve profile is looking good with the continued redundancies on A&H. I guess it'd be helpful just maybe to learn a little bit more about how the tail on that book develops because it seems like you're getting the majority of the reserve development from there, kind of going through the queue. I'm not seeing that broken out specifically for the quarter and maybe I'm just not catching it yet.

How long?

Does a bullet reserve there season kind of versus like casualty.

Lines, which is mostly what we look.

At SiriusPoint Ltd., we look at reserves as.

Speaker 6

Analysts.

Of how that's developing.

Speaker 3

Yeah, good question, Randy, and thanks for it.

Let's step back on A.

& Health. It's, I would say, most seasoned business. It has a long track record of growth, profitable growth. It's got an eight-year track record of delivering strong returns. That's not perfect in every single year. Of course not.

It really therefore points towards our.

Philosophy in Accident & Health. Accident & Health is the business that we write. It is pretty short tail and therefore on average a couple of years, two or three years is really what we're looking at when we look at it. We tend to err on the side of caution for the current year. We would tend to reserve slightly higher for the current year and let the older years season. What you'll see in our Accident & Health portfolio if you embark through time is a pretty stable and solid track record of continued prior year releases given the profile as I've just described it. That's all because it's our largest area of our business. It obviously operates within our portfolio really importantly in terms of volatility risk management as I outlined earlier on.

I think we feel very confident about the quality of that business and the way that we reserve for it. Jim, anything you want to add to that?

Yeah.

Speaker 1

You know, building on what Scott said, we tend to know the A&H portfolio results or have a large degree of conclusion within a two.

To three-year timeframe, which means that, you know, from an.

18 to 24 month perspective, we generally have reasonably seasoned trends that, you know, we continue to follow through there. That highlights a component where we would, once we're more confident at that point in time, then we can begin to think about that from a perspective of essentially enhancing our estimates at that point in time.

The casualty areas tend to be more.

Four to five years. We're really thinking about components. When you're looking at that just mechanically, you're not really generally looking at updates.

Unless you're seeing something either negative.

Other within kind of a three to four year time period.

Just from a natural course of.

Business, you're going to see, as Scott noted, an initial reaction or an earlier reaction from Accident & Health just because of when you kind of have a real solid indication and kind of know the answer where it's a little bit longer against almost casualty and then you know, we'll begin to react in time either way. What I would take away from it is that we have a prudent reserving philosophy as demonstrated by the $17.4 million of favorable prior year development and highlighted kind of the nature. Nothing has changed in relation to that. That would be something that I think you'll find as a hallmark of us and something that would be when you think about how we look at it.

We try to be prudent and thoughtful both on the initial setup of picks and then the picks that we have as we go through time.

Okay, great. That's really helpful. Appreciate the answers.

Speaker 3

Thanks for the question, Randy.

Thank you.

Speaker 6

Our next questions come from the line of Andrew Anderson with Jefferies.

Speaker 1

Please proceed with your questions.

Hey, good morning. Just on the casualty within insurance, I think it's about 25% of the premium mix there, and you mentioned it was down 10%, but at the same time you're getting rate in excess of trend, and it sounds like the pricing environment is good there. Can you maybe just talk about the decision to write less business there and perhaps remind us when this started so we can think about when we lap the non-renewal here?

Yeah, not.

Speaker 3

Thanks, Andrew. Thanks for the question. It's nice to speak.

Look, we're not uncomfortable with casualty.

Just cautious on casualty. We've got some very mature MGA partnerships, Arcadian being a great example of that where we feel very confident in both the rating and the performance. I think for us there are certain segments of casualty. I highlighted commercial auto earlier on where for us we're probably just not really signaling as a sort of go forward trend. For us, I don't think we're signaling here any big sort of rectifications in casualty. That's not what we're flagging. We're just in general saying that we're cautious and where we're cautious we'll trim at the edges if we feel we have to. Jim, anything you want to add on casualty in general?

Speaker 1

No, I think what I would highlight is that we remain.

Disciplined, and this is an indication more of how we're allocating capital to what we see as the most profitable areas in the market that are within our volatility quarters. As you know, we've kind of moved forward over the last 12, 18 months. We've seen opportunities in other areas of the book and have appropriately allocated capital to those areas. If we were to see trends or other components in particular that are attractive, we'll obviously allocate capital accordingly. I'd really view it as us looking at the market, seeing what we think is attractive, and being disciplined about that, not simply saying, hey, we have X amount allocated so we're going to allocate that much going forward. It's really an indication of how we are committed to writing profitable business and allocating our capital to the areas that we think will produce the best returns for our stakeholders.

Thanks.

Sticking with primary insurance, I think you mentioned double digit growth in property.

Speaker 3

Can you maybe just give us some.

More color on what the primary property book consists of? I'm a little surprised to hear double digit growth just given the rating environment there. Perhaps this is not cat exposed, but just maybe any color would be helpful.

Back to the earlier question on London as well, Andrew. We've obviously picked up some MGA partnerships in London as well. It's not all U.S. exposed business. Some of it will be exposed to other sort of perils in Europe like European wind, flood, etc. It's back to what I said earlier on. We manage our apparel exposures very tightly and obviously want to make sure that we don't overexpose to any of them. In particular, we're also looking at property MGA partnerships which potentially don't have that type of exposure or where we can exclude certain exposures from those. I would say in general it's more of a diversification play as opposed to anything specific and it's something we manage very tightly given our ambition to be lower volatility. Jim, do you want to add anything on the MGA partnerships?

Speaker 1

No, I think that just represents, as.

You highlighted a little bit of a smaller base, but also just where, again from an opportunity perspective, as we've kind of further developed our presence and market in the London MGA space, we've had a benefit there that has come through from a property perspective in terms of an area where we think that there's attractive returns on capital, and that is good for our franchise.

Thanks.

Lastly, just any change in PML at midyear renewals we should be thinking about into kind of hurricane season here.

Speaker 3

Nothing at all. We've been pretty stable, Andrew, since we went through the restructuring a while ago. Very stable. Obviously, key will be, I think, 1/1 renewals next year in property, which I guess everyone is looking at, but nothing of any significance in terms of what we do. Just sort of normal BAU.

Thank you. Thank you. Thank you.

Speaker 6

As a reminder, if you would like to ask a question, please press Star one on your telephone keypad. Our next questions come from the line of Anthony Modelis with Dowling & Partners, please proceed with your questions.

Hey, good morning Scott and Jim, thanks for the answer so far with all these questions. I did have a follow up on the insurance and services. Seeing that net growth outpacing relative to that gross basis, could you elaborate on what sort of performance you need to see or needs to be achieved for that decision to retain more on that partnership business? Were there any particular partnerships worth calling out that would have seen this notable success and contribute to the net growth?

Speaker 3

Yeah, it's a really important question.

Anthony, and thanks, thanks for it. Look, I think I said earlier on there's no sort of ready-made formula, but let me be really simplistic. If it doesn't hit our ROE targets, don't expect us to lean in. Right. I think that's very clear and I know that sounds potentially flippant, but ultimately that's what we're managing our overall return profile to. If we feel like the financial profile is able to sort of get into that space where degree of confidence, then that's what we aim for. I think the confidence part of that is also really important because for us we won't just jump there because someone has told us that. I think for us we want to get really comfortable with the data flows, we want to get really comfortable with the data, we want to get to know people over time.

It's very rare that we jump to a sort of, let's call it aggressive net position, perhaps that's the wrong phraseology, but an aggressive net position too quickly and we don't feel under any pressure to do that, to be frank, which is also really important. We will only grow, and I think Jim said it earlier on, we'll only grow where we believe we feel confident to grow. It's a function of how the partnerships work and how the data is flowing, how the chemistry between the own directors, the philosophy is working, etc. etc. Remember that for the majority of our MGA relationships, we actually have profit share arrangements in place and so there's actually skin in the game for them as well. We think that's a really important part of the overall sort of mix and formula.

It's not the only part, but really important part as well. For us that's how we think of it. Back to what Jim was alluding to and I was alluding to as well, we brought on a lot of new MGA relationships over the past, let's call it 18 months or so. We feel really positive that there's a good strong tailwind behind us, but we feel no pressure to do that. I think, in terms of your specific on lines, I think in the first half of this year we've lent into surety.

Right.

With one particular partner, just to use that as an example. For the first, I probably get this slightly wrong, but for the first sort of year to two years of that relationship, we took a very, very small net position and therefore it was sort of two years of almost getting used to seasoning, et cetera, before we started to lean into the net. A pretty fulsome answer, but it's the heart of our philosophy, Anthony, and how we approach these and it's a really important part where I think people need to get confidence in our approach to the distribution channel.

Yeah, I appreciate all the color there. I just have one other question, bigger picture. We've seen sort of an emerging trend of consolidation of MGA partnerships. I'm just curious, has this trend had any impact on SiriusPoint Ltd.'s model partnering with MGA partnerships or any effect to that pipeline of potential partnerships that you've seen?

Nothing.

Nothing material, Anthony? No, no.

Speaker 6

Great.

Speaker 3

No.

Nothing material.

All right, thank you.

Thank you.

Thank you.

Speaker 6

We have reached the end of our question and answer session. I would now like to hand the call back over to Liam Blackledge for any closing comments.

Speaker 1

Thank you everyone for joining us today.

Speaker 7

If you have any follow up questions, we will be around to take your call or you can email us on [email protected]. Thank you for your ongoing support and I hope you enjoy the remainder of the day. I will now turn the call back over to the operator.

Thank you.

Speaker 6

This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.