SiriusPoint targets path to improved rating: Sankaran
SiriusPoint chairman and CEO Sid Sankaran has welcomed the AM Best affirmation this week that resolved the ratings overhang on the two pre-merger companies and said that if the newly formed (re)insurer executes its strategy it should set itself on a trajectory towards an upgrade over time.
AM Best removed from under review and affirmed the A- financial strength rating and “a-” long-term issuer credit rating of the $3bn+ capitalised Bermudian carrier that was formed with the merger of Third Point Re and Sirius Group.
Sirius had been downgraded from A to A- last March over parental concerns, while Third Point Re had a negative outlook on its A- rating as it overhauled its management, repositioned its underwriting and de-risked its investments towards a fixed income portfolio.
The affirmation and stable outlooks now held on the ratings of the combined entity reflect its “very strong” balance sheet, as the ratings agency also said it expects actions by SiriusPoint’s management to rebalance its underwriting portfolio to lead to “improved and more stable technical profitability”.
In an interview with The Insurer, former AIG CFO Sankaran said: “We’re pleased with the resolution of the ratings overhang of the two companies and we feel this is a combined company with a lot of capital and solid ratings on a good footing.
“But we are not where we intend to be in the long term. If we execute [on our strategy] I’m highly confident that the trajectory for the ratings is going to be an improving one.”
The executive said SiriusPoint has to “strive for excellence” in everything it does, which includes a commitment to underwriting profit.
“The two companies have not delivered that historically and we have an absolute commitment to get it there,” he added.
Sankaran said that his strategy coming into the newly created business is “renewal”, with a core pillar of its approach to focus and stabilise underwriting, accessing business where it is best accessed and zeroing in on profitability.
The recent 1 January renewal season for both companies had been a “terrific start” ahead of the close of the deal, he said.
Global platform
AM Best in its note also highlighted the benefit to the combined group of its global platforms, including Europe, the US, Bermuda and Lloyd’s.
And Sankaran said that while the combined company’s $3bn capital base was attractive, making SiriusPoint big enough to be meaningful in the marketplace, it was its platform and paper that will give it the edge over start-ups and rebooted entities targeting opportunities in the sector.
“Strategically we have admitted and non-admitted paper in the US, Bermuda, Lloyd’s and our European branch network. We have what every new entrant wants strategically, so there’s a lot for us to do and we don’t have a lot of channel conflict in our business,” he told this publication.
He said that SiriusPoint would look to “revitalise and grow” over the combined platform, as the second pillar of his three pillared strategy.
Lloyd’s commitment
Market speculation in the last few months had suggested that pre-merger Sirius had been considering a strategic review of its Lloyd’s platform.
But while he wouldn’t comment on the speculation, Sankaran praised initiatives driven by Lloyd’s management to improve discipline and focus on profitability, as he pointed to a “relentless path to profitability” at the group’s own syndicate.
“We’ll continue to evaluate, but we think having a presence in Lloyd’s is important to the overall franchise in some form or other, so our priority with Lloyd’s is on underwriting profitability,” he said.
E&S opportunity
The executive also highlighted the opportunity in the US insurance sector, including the E&S market, which continues to show strong pricing momentum in 2021.
This publication revealed last year that pre-merger Sirius was launching an E&S insurance platform, which began writing travel and health policies in September and was expected to add environmental business at the start of this year as it looked to build out a book of business.
Sankaran said that SiriusPoint would consider partnering with top tier underwriters – similar to its approach to support the John Boylan liability MGA Arcadian Risk – as well as building out in-house underwriting capabilities for the E&S platform.
“One of the advantages of our platform is that we don’t have a lot of channel conflict. So we have a lot of platform, paper and capital, but we don’t yet have a lot of business. Everything is on the table and it’s a market we like, given where it is in the cycle,” he commented.
Tech-enabled insurance division
More broadly in the insurance space, the executive indicated that there would be a greater focus as SiriusPoint looks to shift its mix of business to get better balance and diversification.
He pointed to the formation of the group’s new tech-enabled Insurance and Services division led by Prashanth Gangu, who has been brought in from Oliver Wyman, where he was most recently head of Americas P&C insurance.
The division will house a “technology-enabled insurance business”
It will include the combined operation’s global accident and health business, SiriusPoint’s Lloyd’s platform, MGUs international Medical Group and ArmadaCare, MGAs including Arcadian Risk Capital, and SiriusPoint’s insurtech portfolio, including investments in Rhino, Pie Insurance and Noblr.
The division will be at the heart of Sankaran’s third pillar of strategy: to “modernise and break out”.
The approach could see SiriusPoint incubate its own alternative tech-driven business models as well as partnering with insurtechs as investors with aligned economic interest.
“We’re creating a combined company that will be a different form of insurer and reinsurer. I’m very passionate about the mission, vision and values of the company. It’s a place that’s going to be externally focused, entrepreneurial, creative, and smart risk takers. There’s just so much potential,” Sankaran concluded.