Only six weeks into his new role as CEO of SiriusPoint, Scott Egan (pictured) is dedicating himself to forming a big-picture view of the global (re)insurer - its proposition, its team and its market relationships.
With this limited timeframe in mind, the finer details of the firm’s strategic development are still being cemented and he will look to deliver a full market update as part of its full-year results presentation. In the meantime, however, Egan addressed SiriusPoint’s 9M 2022 results, noting that the group’s year-to-date performance reveals that it is not yet performing at the level that it needs to, can and should.
Spotlighting some key figures, he highlighted the impact of Hurricane Ian, for which SiriusPoint has reserved on the basis of a $60 billion market event – a figure on the more prudent end of market estimates. Here the impact of the ongoing strategic restructuring that SiriusPoint has done around its underwriting and exposure management becomes clear, he said, as seen from the performance of SiriusPoint relative to its peers.
“Hurricane Ian, for us, was about 3.5% impact on book value,” he said, “while I think the peer average is along the lines of about 6-6.5%. So relative to the market average, we’ve performed incredibly strongly. And in addition to that, we’ve taken a very strong approach to credit management with some of the insurers and reinsurers – particularly for Florida-based ones – so, we don’t have any credit exposure in that regard as well.
“While the hurricane has had a huge impact on our numbers, I think it's been a really good evidence point of the hard work that we've undertaken.”
Amid the reporting of its year-to-date results, SiriusPoint announced several of the changes that will result from the restructuring of its underwriting platform – including the closure of three offices in Hamburg, Miami, and Singapore, and the reduction of its footprint in Liege and Toronto. Touching on this, Egan emphasised that these decisions were not taken lightly, and noted that the “number one priority” for him and his executive management team is to ensure that those affected by the decision are treated fairly and with respect.
Offering context to the decision, he noted that while the overall premium impacted is only about 10% of its global portfolio, the move will see SiriusPoint reducing its international property portfolio by about 75%. As a consequence of that, he said, the group will be doing international property reinsurance on a smaller scale – consolidating those operations down from five offices globally into its Stockholm office.
“Off the back of that decision-making, we're also making what I think is a very sensible operational change that will see our international property reinsurance done from Stockholm, and will see our US business done from Bermuda,” he said. “So I think it will be a much easier hub-and-spoke model in terms of our operations.
“But to be clear, globally, we will continue to have appetite for property reinsurance… and we’ll continue to have appetite for cat XL through our Bermuda office. And we will still have an appetite through our international platform as well, much more focused on cat XL, but albeit on a much more limited scale.”
The “why” behind the decision is simply that the portfolio has not performed at the level SiriusPoint has wanted and needed it to for a period of time. This isn’t a decision that has been taken lightly, Egan said, and it’s something the group has decided only after significant deliberation over a period of time. Simply put, the time has come to take portfolio action instead of individual risk underwriting action.
Read more: SiriusPoint announces new CEO Scott Egan
Egan also highlighted that among the key figures announced by SiriusPoint for the year-to-date is the news that on an ex-cat basis, its combined ratio has improved 4% year-on-year – in evidence of the momentum that’s beginning to set in at SiriusPoint. It’s very much a work in progress, he said, but looking into 2023, even from the early-doors position that he’s viewing it from – he feels excited about that growing momentum and the step-changes in performance to be delivered going forward.
While it’s too soon to talk to specifics, he said, SiriusPoint will be building its strategy around several key priorities.
“Number one, we're an underwriting business, and therefore, we need to focus on that and we need to improve our performance in that regard - across both our primary insurance businesses and reinsurance businesses,” he said. “The second thing is that we enjoy some very successful distribution ownership.
“And obviously, we're looking to leverage our distribution footprint, especially when it complements our underwriting risk appetite. I think that's really where we can be incredibly strong and so we're looking to leverage that. I think the third thing is that we're looking to leverage our specialisms across all areas of our business i.e. distribution, insurance, and reinsurance. We really see those specialisms cutting right across all the areas in a very complete and joined up way.”
The fourth area of focus for SiriusPoint is its drive to ensure it is organised in a manner which enables it to deliver agile responsiveness to its customers. For a company of this shape and size, that should be a competitive advantage, he said, and he wants to make sure the firm is structured optimally to deliver that.
These four elements give a strong flavour of the group’s strategic alignment and the direction of travel that it’s looking to pursue, and Egan highlighted how he and his team are actively working to build out these strategies in order to roll them out to market as efficiently and effectively as possible.
Underpinning it all, he said, is the power of creating, maintaining and nurturing strong market relationships – and he has been delighted by the opportunity to reacquaint himself with peers across the market he hasn’t worked with for a while as well as the chance to meet new people. And what has been especially fantastic, is the feedback he has received from the wider marketplace regarding the quality of his new colleagues and how well they respected they are across the industry.
“They've earned that respect through their capability,” he said. “And my job as the CEO is to make sure that I can try and bring together that capability, loyalty, enthusiasm, and drive it towards better performance… Because we have to be honest and say that the overall level of performance over the last few years - for a company with this potential - has not been good enough. And I absolutely believe it can and it should be better. I'm determined to play my part in making us get there and it's 100% the reason why I'm so excited to be here.”
