AM Best Affirms Credit Ratings Of SiriusPoint

April 21, 2023

AM Best has affirmed the Financial Strength Rating of A- [Excellent] and the Long-Term Issuer Credit Ratings [Long-Term ICR] of “a-” [Excellent] of the rated operating subsidiaries of SiriusPoint Ltd.

Additionally, AM Best has affirmed the Long-Term ICR of “bbb-” [Good] of SiriusPoint, which is a non-operating holding company. Concurrently, AM Best has affirmed the Long-Term Issue Credit Rating of “bbb-” [Good] on USD 115 million, 7% senior unsecured notes, due 2025, of SiriusPoint. The outlook of these Credit Ratings [ratings] is stable.

The ratings agency said, “The ratings reflect SiriusPoint’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings of the group’s operating subsidiaries factor in their strategic importance to SiriusPoint.

“SiriusPoint’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2022, as measured by Best’s Capital Adequacy Ratio. The assessment also considers the significant de-risking of SiriusPoint’s asset base in 2022, owing to the redemption of USD 0.6 billion from related party investment funds and reinvestment of the proceeds into high quality fixed income securities. As a result, cash and fixed income investments comprised 92% of SiriusPoint’s investment portfolio at year-end 2022, up from 78% at year-end 2021. A partially offsetting rating factor is the group’s somewhat limited capital fungibility due to a significant portion of consolidated available capital being held as a safety reserve in the group’s Swedish subsidiary.

“SiriusPoint is expected to report adequate operating performance over the underwriting cycle. However, recent technical performance has been weak, demonstrated by combined ratios of 120% and 107% [as calculated by AM Best] in 2021 and 2022, respectively. Underwriting profitability is expected to improve and be more stable as SiriusPoint’s management continues to rebalance the group’s business mix away from catastrophe-exposed property business toward less volatile accident and health and specialty lines.

“SiriusPoint’s neutral business profile assessment reflects its market position as a midtier global [re]insurer, which operates from platforms in Europe, the United States, Bermuda and at Lloyd’s. The group has a good level of diversification by line of business, which is expected to improve further as it executes its business plan.”

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