HAMILTON, Bermuda, May 13, 2020 /PRNewswire/ -- Sirius International
Insurance Group, Ltd. (Nasdaq: SG) ("Sirius Group", the "Company",
or the "Group") today reported results for the first quarter ended
March 31, 2020. The Company reported a comprehensive (loss) of
$(185) million for the first quarter
of 2020 compared to comprehensive income of $76 million for the first quarter of 2019. The
Group recorded $140 million of
pre-tax losses in its Global Reinsurance ($126 million) and Global A&H ($14 million) segments associated with the novel
coronavirus ("COVID-19") pandemic, net of reinsurance. Book value
per common share was $12.78 as of
March 31, 2020 compared to $14.23 as of December 31, 2019, a decrease
of 10.2% for the three months.
"Over the course of our seventy-five year history - since the
end of World War II - Sirius's business approach has been to find,
develop and serve long-term client partners across the globe," said
Kip Oberting, President and Chief
Executive Officer of Sirius Group. "Nearly a third of our clients
have been with us for longer than twenty years, and two-thirds in
excess of ten years. Our employees have generated this loyalty by
doing 'whatever it takes' to find solutions and serve as a steady
hand and honest partner. It is humbling to intimately witness a
global organization of over one thousand employees, comprised of a
diverse mix of local cultures, norms and values, come together and
support one another at times of crisis like the current
pandemic."
Kip added, "COVID-19 impacted both our underwriting and
investment results in the quarter. Despite the challenges of
running a strategic process during the pandemic, we continue to
pursue our previously announced strategic review and sales process.
This process is providing the Company with an ongoing opportunity
to evaluate various strategic alternatives."
- Net (loss) attributable to common shareholders for the first
quarter of 2020 was $(98) million.
Basic earnings per common share was $(0.85) and diluted earnings per common share was
$(0.96). This compares to net income
attributable to common shareholders of $95
million and basic earnings per common share of $0.75 and diluted earnings per common share of
$0.74 for the first quarter of
2019.
- For the first quarter of 2020, Operating (loss) attributable to
common shareholders(1) was $(100)
million compared to Operating income attributable to common
shareholders of $19 million for the
first quarter of 2019.
Chief Financial Officer, Ralph
Salamone further commented, "COVID-19 presents the industry
with loss reserving challenges. In our Q1 results, Sirius Group set
reserves for the estimated ultimate losses associated with the
pandemic based on all readily available information, rather than
recognizing these losses into the income statement in subsequent
quarters. For example, in our small contingency business line, we
have modeled out the impact of the pandemic on the postponement and
cancellation of events on our remaining in-force portfolio, and
established $55 million of losses. We
took a similar approach to our other lines of businesses."
(1)
|
Operating (loss)
income attributable to common shareholders is a non-GAAP financial
measure. See accompanying Reconciliation of Non-GAAP Financial
Measures.
|
First Quarter 2020 Summary
Underwriting
Sirius Group's combined ratio was 124%
for the first quarter of 2020 compared to 91% for the first quarter
of 2019. Our underwriting results in the quarter were significantly
impacted with 32 loss ratio points from COVID-19. We reviewed our
in-force (re)insurance portfolios to estimate our ultimate losses
that in order recognize all currently projected losses in the
quarter. As a result, we recorded $140
million of estimated ultimate losses in our underwriting
results, which includes losses from Contingency, Trade Credit,
Property, and to a lesser extent Accident & Health and
Casualty. This best estimate of ultimate loss was based on our
evaluation of the information readily available at this time,
including an analysis of reported claims, an underwriting review of
in-force contracts, industry estimates of ultimate losses, and
other factors requiring considerable judgment. The first
quarter of 2020 included 2 points of current year catastrophe
losses, net of reinsurance and reinstatement premiums, compared to
1 point for the first quarter of 2019. The first quarter of 2020
also included 1 point of net unfavorable prior year loss reserve
development compared to 5 points for the first quarter of 2019.
- Gross written premiums for the first quarter of 2020 were
$818 million and increased 31%
compared to the first quarter of 2019. The first quarter of 2020
included $70 million from a loss
portfolio transfer completed by Sirius Global Solutions during the
quarter. Excluding the loss portfolio transfer, gross written
premiums increased 20% compared to the first quarter of 2019.
- Pre-tax catastrophe losses, net of reinsurance and
reinstatement premiums, amounted to $9
million for the first quarter of 2020 compared to
$2 million for the first quarter of
2019.
- Highlights by reportable segment(2) for the first
quarter of 2020 include the following:
-
- Global Reinsurance produced a $(99)
million underwriting (loss) and a 142% combined ratio driven
mainly by $126 million of losses from
the COVID-19 pandemic. COVID-19 losses contributed 54 points to the
combined ratio. Current year catastrophe losses, net of reinsurance
and reinstatement premiums, were $9
million. Net unfavorable prior year development for the
quarter of $9 million was primarily
from the Q1 2019 Lion Air crash in the Aviation & Space line of
business.
- Global A&H produced $10
million of underwriting income, including net service fee
income from Armada and IMG of $11
million, and a combined ratio of 100%. These results
included $14 million of losses from
the COVID-19 pandemic. Within the segment, underwriting profits
from the primary medical and reinsurance books were partially
offset by underwriting losses in worldwide travel. In addition,
there was $4 million of net favorable
prior year loss reserve development and $2
million of drag from the Group's build out of Armada
Health.
Investments and Other
- During the first quarter of 2020, the investment portfolio
returned (1.8)% in original currencies and (2.6)% in U.S.
Dollars.
-
- Total investment results for the first quarter of 2020, which
includes the sum of net investment income, net realized and
unrealized investment gains (losses) in net income, and change in
foreign currency translation on investments recognized through
other comprehensive income, was $(105)
million, compared to $61
million in the first quarter of 2019, a decrease of
$166 million. Included in the first
quarter investment results are foreign exchange (losses) of
$(31) million in 2020 compared to
$(6) million in 2019.
- Losses from weather derivatives for the first quarter of 2020
were $(20) million driven mainly by a
relatively warm U.S. and European winter, which affected open
positions in the U.S., United
Kingdom and Central Europe,
and higher energy costs in Australia.
- Common shareholders' equity ended the first quarter of 2020 at
$1,474 million compared to
$1,640 million at December 31, 2019. The decrease is primarily due
to a comprehensive (loss) of $(185)
million.
(2)
|
Effective January 1,
2020 Sirius Group effectuated an internal reorganization which
changed its reportable segments. Where applicable, all prior
periods presented have been revised to conform to this new
presentation.
|
Supplemental Materials
In addition to this press release, we have provided supplemental
financial information relating to first quarter results. Readers
are encouraged to visit the "Financial Information" section of
Sirius Group's website located at http://ir.siriusgroup.com to view
the supplemental financial information.
Non-GAAP Financial Measures
In presenting Sirius Group's results, management has included
and discussed non-GAAP financial measures: Operating (loss)
income attributable to common shareholders, Adjusted book value,
Adjusted book value per share, Adjusted tangible book value, and
Adjusted tangible book value per share. The Company believes that
these non-GAAP financial measures, which may be defined and
calculated differently by other companies, better explain and
enhance the understanding of the Company's results of operations.
However, these measures should not be viewed as a substitute for
those determined in accordance with generally accepted accounting
principles in the United States of
America (''GAAP''). A reconciliation of Operating (loss)
income attributable to common shareholders, Adjusted book value,
Adjusted book value per share, Adjusted tangible book value, and
Adjusted tangible book value per share, to the most comparable GAAP
measures is included in the attached financial information in
accordance with Regulation G.
About Sirius Group
Sirius Group, with $2.3 billion of
total capital and roots dating back to 1945, is a global multi-line
(re)insurer headquartered in Bermuda with a unique global branch network,
including offices in Stockholm,
New York and London. Sirius
Group's success over the years has come from working with honest,
capable partners. Sirius Group provides a fully diversified
set of tailored risk products to clients in approximately 150
countries, including health and travel products to consumers
through its two managing general underwriters, ArmadaCorp Capital,
LLC and IMG, Inc. Sirius Group has been publicly traded since
November 2018. You can learn more by visiting
www.siriusgroup.com.
Cautionary Note Regarding Forward-Looking Statements
We have made statements in this press release that are
forward-looking statements within the meaning of the federal
securities laws, including the Private Securities Litigation Reform
Act of 1995, including statements about the ongoing strategic
review and sales process and estimated ultimate COVID-19 losses.
You can identify forward-looking statements by the use of
forward-looking terminology such as "plan," "believe," "expect,"
"anticipate," "intend," "outlook," "estimate," "forecast,"
"project," "target," "continue," "could," "may," "might," "will,"
"possible," "potential," "predict," "should," "would," "seeks,"
"likely," and other similar words and expressions, but the absence
of these words does not mean that a statement is not
forward-looking. The forward-looking statements are based on the
current expectations of the management of Sirius Group and speak
only as of the date of this document. There can be no assurance
that future developments will be those that have been anticipated.
These forward-looking statements involve a number of risks,
uncertainties or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, the continued impact
of the COVID-19 pandemic on Sirius Group's business, operations and
its loss reserve estimates; the uncertainty as to the estimate of
ultimate industry loss claims; the effect of judicial, legislative,
and regulatory actions to address and contain the impact of
COVID-19; the general economic conditions and market conditions in
the markets in which Sirius Group operates; Sirius Group's exposure
to unpredictable catastrophic and casualty events and unexpected
accumulations of attritional losses; increased competition from
existing insurers and reinsurers and from alternative capital
providers, such as insurance-linked funds and collateralized
special purpose insurers; decreased demand for Sirius Group's
insurance or reinsurance products, consolidation and cyclical
changes in the insurance and reinsurance industry; the inherent
uncertainty of estimating loss and loss adjustment expenses
reserves, including asbestos and environmental reserves, and the
possibility that such reserves may be inadequate to cover Sirius
Group's ultimate liability for losses; a decline in or withdrawal
of Sirius Group's operating subsidiaries' ratings with rating
agencies; the exposure of Sirius Group's investments to interest
rate, credit, equity risks and market volatility, which may limit
Sirius Group's net income and may affect the adequacy of its
capital and liquidity; losses related to cyber-attacks on Sirius
Group's information technology systems; the impact of various risks
associated with transacting business in foreign countries,
including foreign currency exchange-rate risk and political risks
on investments in, and revenues from, Sirius Group's operations
outside the U.S.; the possibility that Sirius Group may become
subject to additional onerous governmental or regulatory
requirements or fail to comply with applicable regulatory and
solvency requirements; Sirius Group's significant deferred tax
assets may become materially impaired as a result of insufficient
taxable income or a reduction in applicable corporate tax rates or
other change in applicable tax law; a decrease in the fair value of
Global A&H and/or Sirius Group's intangible assets may result
in future impairments; the limited liquidity and trading of Sirius
Group's securities; CMIG International Holding Pte. Ltd.'s status
as a majority shareholder, including its affiliates' liquidity
issues, and actions taken by CMIG International Holding Pte. Ltd or
any other parties in interest in connection with such liquidity
issues including ownership changes; Sirius Group's status as a
publicly traded company, foreign private issuer and controlled
company; the consequences of the written resolution of Sirius
Group's majority shareholder which may prohibit the Board of Sirius
Group from issuing any form of equity without shareholder approval;
the impact of lawsuits initiated by minority shareholders,
including lawsuits claiming that they are being unfairly oppressed
by Sirius Group's majority shareholder or lawsuits claiming a right
of redemption of the Series B preference shares; and other risks
identified in Sirius Group's Annual Report on Form 10-K for the
year ended December 31, 2019 and
other filings with the U.S. Securities and Exchange Commission.
Should one or more of these risks or uncertainties materialize, or
should any of the assumptions made by the management of Sirius
Group prove incorrect, actual results may vary in material respects
from those projected in these forward-looking statements. Except as
required by applicable law or regulation, we disclaim any
obligation to publicly update or revise any forward-looking
statement to reflect changes in underlying assumptions or factors,
or new information, data or methods, future events or other
circumstances after the date of this release.
Sirius
International Insurance Group, Ltd.
|
Consolidated
Balance Sheets
|
As at
March 31, 2020 and December 31, 2019
|
|
(Expressed in
millions of U.S. dollars, except share information)
|
March 31,
2020
|
|
December 31,
2019
|
|
Unaudited
|
|
|
Assets
|
|
|
|
Fixed maturity
investments, trading, at fair value (Amortized cost 2020: $1,705.0;
2019: $1,656.6)
|
$
|
1,732.1
|
|
$
|
1,681.0
|
Short-term
investments, at fair value (Amortized cost 2020: $1,032.7; 2019:
$1,090.8)
|
1,041.8
|
|
1,085.2
|
Equity securities,
trading, at fair value (Cost 2020: $409.5; 2019: $379.2)
|
366.6
|
|
405.2
|
Other long-term
investments, at fair value (Cost 2020: $323.2; 2019:
$315.4)
|
355.5
|
|
346.8
|
Cash
|
140.5
|
|
136.3
|
Restricted
cash
|
15.3
|
|
14.3
|
Total investments and
cash
|
3,651.8
|
|
3,668.8
|
Accrued investment
income
|
10.9
|
|
11.2
|
Insurance and
reinsurance premiums receivable
|
964.2
|
|
730.1
|
Reinsurance
recoverable on unpaid losses
|
444.2
|
|
410.3
|
Reinsurance
recoverable on paid losses
|
85.7
|
|
73.9
|
Funds held by ceding
companies
|
260.5
|
|
293.9
|
Ceded unearned
insurance and reinsurance premiums
|
245.5
|
|
162.0
|
Deferred acquisition
costs
|
168.2
|
|
148.2
|
Deferred tax
asset
|
171.0
|
|
166.7
|
Accounts receivable
on unsettled investment sales
|
35.2
|
|
6.7
|
Goodwill
|
400.8
|
|
400.8
|
Intangible
assets
|
175.9
|
|
179.8
|
Other
assets
|
143.7
|
|
161.4
|
Total
assets
|
$
|
6,757.6
|
|
$
|
6,413.8
|
Liabilities
|
|
|
|
Loss and loss
adjustment expense reserves
|
$
|
2,519.6
|
|
$
|
2,331.5
|
Unearned insurance
and reinsurance premiums
|
979.2
|
|
708.0
|
Ceded reinsurance
payable
|
332.8
|
|
244.7
|
Funds held under
reinsurance treaties
|
148.0
|
|
169.1
|
Deferred tax
liability
|
183.5
|
|
205.9
|
Debt
|
664.8
|
|
685.2
|
Accounts payable on
unsettled investment purchases
|
53.0
|
|
2.3
|
Other
liabilities
|
200.4
|
|
201.3
|
Total
liabilities
|
5,081.3
|
|
4,548.0
|
Commitments and
contingencies
|
|
|
|
Mezzanine
equity
|
|
|
|
Series B
preference shares
|
199.6
|
|
223.0
|
Common
shareholders' equity
|
|
|
|
Common shares (shares
issued and outstanding, 2020 & 2019: 115,299,341)
|
1.2
|
|
1.2
|
Additional paid-in
surplus
|
1,100.1
|
|
1,098.2
|
Retained
earnings
|
673.7
|
|
778.5
|
Accumulated other
comprehensive (loss)
|
(300.9)
|
|
(237.5)
|
Total common
shareholders' equity
|
1,474.1
|
|
1,640.4
|
Non-controlling
interests
|
2.6
|
|
2.4
|
Total
equity
|
1,476.7
|
|
1,642.8
|
Total liabilities,
mezzanine equity, and equity
|
$
|
6,757.6
|
|
$
|
6,413.8
|
Sirius
International Insurance Group, Ltd.
|
Consolidated
Statements of (Loss) Income (Unaudited)
|
For the three
months ended March 31, 2020 and 2019
|
|
|
Three months ended
March 31,
|
(Expressed in
millions of U.S. dollars, except share and per share
information)
|
2020
|
|
2019
|
Revenues
|
|
|
|
Net earned insurance
and reinsurance premiums
|
$
|
434.7
|
|
$
|
311.9
|
Net investment
income
|
13.5
|
|
20.1
|
Net realized
investment gains
|
20.3
|
|
9.0
|
Net unrealized
investment (losses) gains
|
(43.8)
|
|
74.0
|
Net foreign exchange
gains
|
18.5
|
|
5.1
|
Other
revenue
|
4.5
|
|
19.6
|
Total
revenues
|
447.5
|
|
439.7
|
Expenses
|
|
|
|
Loss and loss
adjustment expenses
|
427.1
|
|
$
|
183.9
|
Insurance and
reinsurance acquisition expenses
|
74.7
|
|
63.3
|
Other underwriting
expenses
|
38.0
|
|
35.3
|
General and
administrative expenses
|
32.1
|
|
24.4
|
Intangible asset
amortization expenses
|
3.9
|
|
3.9
|
Interest expense on
debt
|
7.8
|
|
7.6
|
Total
expenses
|
583.6
|
|
318.4
|
Pre-tax (loss)
income
|
(136.1)
|
|
121.3
|
Income tax benefit
(expense)
|
14.8
|
|
(17.2)
|
Net (loss)
income
|
(121.3)
|
|
104.1
|
Income attributable
to non-controlling interests
|
(0.2)
|
|
(0.4)
|
(Loss) income
attributable to Sirius Group
|
(121.5)
|
|
103.7
|
Change in carrying
value of Series B preference shares
|
23.4
|
|
(8.4)
|
Net (loss) income
attributable to Sirius Group's common shareholders
|
$
|
(98.1)
|
|
$
|
95.3
|
|
|
|
|
Net (loss) income
per common share and common share equivalent
|
|
|
|
Basic earnings per
common share and common share equivalent
|
$
|
(0.85)
|
|
$
|
0.75
|
Diluted earnings per
common share and common share equivalent
|
$
|
(0.96)
|
|
$
|
0.74
|
Weighted average
number of common shares and common share equivalents
outstanding:
|
|
|
|
Basic weighted
average number of common shares and common share equivalents
outstanding
|
115,262,302
|
|
115,182,331
|
Diluted weighted
average number of common shares and common share equivalents
outstanding
|
127,163,972
|
|
127,335,314
|
Sirius
International Insurance Group, Ltd.
|
Consolidated
Statements of Comprehensive (Loss) Income
(Unaudited)
|
For the three
months ended March 31, 2020 and 2019
|
|
|
Three months ended
March 31,
|
(Expressed in
millions of U.S. dollars)
|
2020
|
|
2019
|
Comprehensive
(loss) income
|
|
|
|
Net (loss)
income
|
$
|
(121.3)
|
|
$
|
104.1
|
Other
comprehensive (loss)
|
|
|
|
Change in foreign
currency translation, net of tax
|
(63.4)
|
|
(27.8)
|
Total other
comprehensive (loss)
|
(63.4)
|
|
(27.8)
|
Comprehensive
(loss) income
|
(184.7)
|
|
76.3
|
Net (income)
attributable to non-controlling interests
|
(0.2)
|
|
(0.4)
|
Comprehensive
(loss) income attributable to Sirius Group
|
$
|
(184.9)
|
|
$
|
75.9
|
Sirius
International Insurance Group, Ltd.
|
Consolidated
Underwriting Results by Segment
|
|
|
Three months ended
March 31, 2020
|
(Expressed in
millions of U.S. dollars)
|
Global
Reinsurance
|
Global
A&H
|
U.S.
Specialty
|
Runoff &
Other
|
Corporate
Elimination
|
Total
|
Gross written
premiums
|
$
|
465.3
|
|
$
|
262.1
|
|
$
|
20.8
|
|
$
|
69.4
|
$
|
—
|
$
|
817.6
|
|
Net written
premiums
|
$
|
345.4
|
|
$
|
200.7
|
|
$
|
15.2
|
|
$
|
68.6
|
$
|
—
|
$
|
629.9
|
|
Net earned insurance
and reinsurance premiums
|
$
|
235.0
|
|
$
|
117.9
|
|
$
|
12.8
|
|
$
|
69.0
|
$
|
—
|
$
|
434.7
|
|
Loss and allocated
LAE
|
(257.2)
|
|
(80.3)
|
|
(7.7)
|
|
(68.9)
|
—
|
(414.1)
|
|
Insurance and
reinsurance acquisition expenses
|
(50.9)
|
|
(30.8)
|
|
(3.0)
|
|
(0.4)
|
10.4
|
(74.7)
|
|
Technical (loss)
profit
|
(73.1)
|
|
6.8
|
|
2.1
|
|
(0.3)
|
10.4
|
(54.1)
|
|
Unallocated
LAE
|
(5.0)
|
|
(1.7)
|
|
(0.1)
|
|
(0.8)
|
(5.4)
|
(13.0)
|
|
Other underwriting
expenses
|
(21.3)
|
|
(5.6)
|
|
(5.2)
|
|
(0.9)
|
(5.0)
|
(38.0)
|
|
Underwriting
(loss) income
|
(99.4)
|
|
(0.5)
|
|
(3.2)
|
|
(2.0)
|
—
|
(105.1)
|
|
Service fee
revenue
|
—
|
|
35.9
|
|
—
|
|
—
|
(11.0)
|
24.9
|
|
Managing general
underwriter unallocated LAE
|
—
|
|
(6.0)
|
|
—
|
|
—
|
6.0
|
—
|
|
Managing general
underwriter other underwriting expenses
|
—
|
|
(5.0)
|
|
—
|
|
—
|
5.0
|
—
|
|
General and
administrative expenses, MGU + Runoff & Other
|
—
|
|
(14.2)
|
|
—
|
|
(1.5)
|
—
|
(15.7)
|
|
Underwriting
(loss) income, including net service fee income
|
$
|
(99.4)
|
|
$
|
10.2
|
|
$
|
(3.2)
|
|
$
|
(3.5)
|
$
|
—
|
$
|
(95.9)
|
|
|
|
|
|
|
|
|
Underwriting
Ratios (1) (2)
|
|
|
|
|
|
|
Loss ratio
|
111.6
|
%
|
69.6
|
%
|
60.9
|
%
|
NM
|
NM
|
98.3
|
%
|
Acquisition expense
ratio
|
21.7
|
%
|
26.1
|
%
|
23.4
|
%
|
NM
|
NM
|
17.2
|
%
|
Other underwriting
expense ratio
|
9.1
|
%
|
4.7
|
%
|
40.6
|
%
|
NM
|
NM
|
8.7
|
%
|
Combined
ratio
|
142.4
|
%
|
100.4
|
%
|
124.9
|
%
|
NM
|
NM
|
124.2
|
%
|
|
|
|
|
|
|
|
(1) Underwriting ratios are
calculated by dividing the related expense by net earned insurance
and reinsurance premiums.
|
(2) Ratios considered not meaningful
("NM") to Runoff & Other and Corporate Eliminations.
|
Sirius
International Insurance Group, Ltd.
|
Consolidated
Underwriting Results by Segment
|
|
|
Three months ended
March 31, 2019
|
(Expressed in
millions of U.S. dollars)
|
Global
Reinsurance
|
Global
A&H
|
U.S.
Specialty
|
Runoff &
Other
|
Corporate
Elimination
|
Total
|
Gross written
premiums
|
$
|
435.0
|
|
$
|
169.3
|
|
$
|
16.6
|
|
$
|
1.4
|
$
|
—
|
$
|
622.3
|
|
Net written
premiums
|
$
|
335.9
|
|
$
|
134.9
|
|
$
|
13.6
|
|
$
|
0.4
|
$
|
—
|
$
|
484.8
|
|
Net earned insurance
and reinsurance premiums
|
$
|
211.3
|
|
$
|
96.1
|
|
$
|
4.1
|
|
$
|
0.4
|
$
|
—
|
$
|
311.9
|
|
Loss and allocated
LAE
|
(107.8)
|
|
(63.2)
|
|
(2.4)
|
|
(1.1)
|
—
|
(174.5)
|
|
Insurance and
reinsurance acquisition expenses
|
(45.6)
|
|
(26.6)
|
|
(0.7)
|
|
(0.7)
|
10.3
|
(63.3)
|
|
Technical (loss)
profit
|
57.9
|
|
6.3
|
|
1.0
|
|
(1.4)
|
10.3
|
74.1
|
|
Unallocated
LAE
|
(4.0)
|
|
(1.5)
|
|
—
|
|
(0.5)
|
(3.4)
|
(9.4)
|
|
Other underwriting
expenses
|
(21.6)
|
|
(6.1)
|
|
(2.8)
|
|
(2.1)
|
(2.7)
|
(35.3)
|
|
Underwriting
(loss) income
|
32.3
|
|
(1.3)
|
|
(1.8)
|
|
(4.0)
|
4.2
|
29.4
|
|
Service fee
revenue
|
—
|
|
36.3
|
|
—
|
|
—
|
(11.0)
|
25.3
|
|
Managing general
underwriter unallocated LAE
|
—
|
|
(4.1)
|
|
—
|
|
—
|
4.1
|
—
|
|
Managing general
underwriter other underwriting expenses
|
—
|
|
(2.7)
|
|
—
|
|
—
|
2.7
|
—
|
|
General and
administrative expenses, MGU + Runoff & Other
|
—
|
|
(16.2)
|
|
—
|
|
(0.8)
|
—
|
(17.0)
|
|
Underwriting
(loss) income, including net service fee income
|
$
|
32.3
|
|
$
|
12.0
|
|
$
|
(1.8)
|
|
$
|
(4.8)
|
$
|
—
|
$
|
37.7
|
|
|
|
|
|
|
|
|
Underwriting
Ratios (1) (2)
|
|
|
|
|
|
|
Loss ratio
|
52.9
|
%
|
67.3
|
%
|
58.5
|
%
|
NM
|
NM
|
59.0
|
%
|
Acquisition expense
ratio
|
21.6
|
%
|
27.7
|
%
|
17.1
|
%
|
NM
|
NM
|
20.3
|
%
|
Other underwriting
expense ratio
|
10.2
|
%
|
6.3
|
%
|
68.3
|
%
|
NM
|
NM
|
11.3
|
%
|
Combined
ratio
|
84.7
|
%
|
101.3
|
%
|
143.9
|
%
|
NM
|
NM
|
90.6
|
%
|
|
|
|
|
|
|
|
(1) Underwriting ratios are
calculated by dividing the related expense by net earned insurance
and reinsurance premiums.
|
(2) Ratios considered not meaningful
("NM") to Runoff & Other and Corporate Eliminations.
|
Sirius International Insurance Group,
Ltd.
Reconciliation of Non-GAAP Financial
Measures
Operating (loss) income attributable to common
shareholders
The Company uses Operating (loss) income attributable to common
shareholders as a measure to evaluate the underlying fundamentals
of its operations and believes it to be a useful measure of its
core performance. Operating (loss) income attributable to common
shareholders as used herein differs from net (loss) income
attributable to common shareholders, which the Company believes is
the most directly comparable GAAP measure, by the exclusion of net
realized and unrealized gains and losses on investments, net
foreign exchange gains (losses) and the associated income tax
expense or benefit. The Company's management believes that
Operating (loss) income attributable to common shareholders is
useful to investors because it is more reflective of the Company's
core business, as it removes the variability arising from
fluctuations in the Company's fixed maturity investment portfolio,
equity investments trading, investments-related derivatives, and
net foreign exchange gains and the associated income tax expense or
benefit of those fluctuations. The following is a reconciliation of
net (loss) income attributable to common shareholders to Operating
(loss) income attributable to common shareholders:
|
Three months ended
March 31,
|
(Expressed in
millions of U.S. dollars)
|
2020
|
|
2019
|
Net (loss) income
attributable to common shareholders
|
$
|
(98.1)
|
|
$
|
95.3
|
Adjustment for net
realized and unrealized losses (gains) on investments
|
23.5
|
|
(83.0)
|
Adjustment for net
foreign exchange (gains)
|
(18.5)
|
|
(5.1)
|
Adjustment for income
tax (benefit) expense (1)
|
(7.2)
|
|
11.7
|
Operating (loss)
income attributable to common shareholders
|
$
|
(100.3)
|
|
$
|
18.9
|
|
|
(1)Adjustment for income tax (benefit)
expense represents the income tax (benefit) expense associated with
the adjustment for net realized and unrealized gains on investments
and the income tax (benefit) expense associated with the adjustment
for net foreign exchange gains. The income tax impact is estimated
by applying the statutory rates of applicable jurisdictions, after
consideration of other relevant factors.
|
Adjusted book value, Adjusted book value per share, Adjusted
tangible book value, and Adjusted tangible book value per
share
Adjusted book value, Adjusted book value per share, Adjusted
tangible book value, and Adjusted tangible book value per share are
non-GAAP financial measures. Adjusted book value and Adjusted book
value per share are used to show the Company's total worth on a
per-share basis and are useful to management and investors in
analyzing the intrinsic value of the Company. Adjusted tangible
book value and Adjusted tangible book value per share are useful to
investors because they measure the realizable value of shareholder
returns, excluding the impact of goodwill, intangible assets, and
net deferred liability on intangible assets.
Adjusted shares outstanding is derived by summing Common shares
outstanding, Series B preference shares outstanding, and the earned
portion of share-based compensation awards. Adjusted book value is
derived by summing Total common shareholders' equity, the Series B
preference share amount reflected in mezzanine equity, and the
Earned portion of future proceeds from stock option awards.
Outstanding warrants are excluded as they are anti-dilutive as of
the respective reporting dates. Adjusted tangible book value is
derived by subtracting Goodwill, Intangible assets and Net deferred
tax liability on intangible assets from Adjusted book value.
At March 31, 2020, Adjusted book value, Adjusted book value
per share, Adjusted tangible book value, and Adjusted tangible book
value per share include the earned effects of share-based
compensation awards issued during 2019.
Adjusted book value per share is derived by dividing the
Adjusted book value by the Adjusted shares outstanding. Adjusted
tangible book value per share is derived by dividing Adjusted
tangible book value by the Adjusted shares outstanding.
The reconciliation to Total common shareholders' equity and Book
value per common share, the most directly comparable GAAP measures,
are presented in the table below.
|
March
31,
|
|
December
31,
|
(Expressed in
millions of U.S. dollars, except share and per share
amounts)
|
2020
|
|
2019
|
Common shares
outstanding
|
115,299,341
|
|
115,299,341
|
Series B preference
shares outstanding
|
11,901,670
|
|
11,901,670
|
Earned share-based
compensation awards, excluding stock options
|
785,297
|
|
629,716
|
Earned portion of
Stock option awards issued
|
496,508
|
|
381,929
|
Adjusted shares
outstanding
|
128,482,816
|
|
128,212,656
|
|
|
|
|
Total common
shareholders' equity
|
$
|
1,474.1
|
|
$
|
1,640.4
|
Series B preference
shares
|
199.6
|
|
223.0
|
Earned portion of
future proceeds from stock option awards
|
6.3
|
|
4.9
|
Adjusted book
value
|
$
|
1,680.0
|
|
$
|
1,868.3
|
Goodwill
|
(400.8)
|
|
(400.8)
|
Intangible
assets
|
(175.9)
|
|
(179.8)
|
Net deferred tax
liability on intangible assets
|
21.2
|
|
22.8
|
Adjusted tangible
book value
|
$
|
1,124.5
|
|
$
|
1,310.5
|
|
|
|
|
Book value per
common share
|
$
|
12.78
|
|
$
|
14.23
|
Adjusted book
value per share
|
$
|
13.08
|
|
$
|
14.57
|
Adjusted tangible
book value per share
|
$
|
8.75
|
|
$
|
10.22
|
Category: ER
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SOURCE Sirius Group