SiriusPoint Ltd’s de-risking of its asset base over the last two years was among the reasons cited by AM Best, as it affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit ratings of “a-” (Excellent) of the company’s rated operating subsidiaries.

Additionally, AM Best affirmed the long-term ICR of “bbb-” (Good) of Bermudian-based SiriusPoint, which is a non-operating holding company.

The outlook of these credit ratings is stable.

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, AM Best said.

SiriusPoint’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2023, as measured by Best’s capital adequacy ratio.

AM Best said this assessment also considers the significant de-risking of SiriusPoint’s asset base over the course of 2022 and 2023, following the redemption of more than $600 million from related party investment funds and the reinvestment of the proceeds into high quality fixed income securities.

The ratings agency said: “Consequently, at year-end 2023, cash and fixed income securities comprised 94 per cent of SiriusPoint's investment portfolio, up from 79 per cent in 2021.

“A partially offsetting rating factor is the group's limited capital fungibility due to a significant, albeit reducing, portion of consolidated available capital being held as a safety reserve in the group’s Sweden subsidiary.”

For year-end 2023, SiriusPoint recorded a profitable underwriting result, evidenced by a 93 per cent combined ratio (as calculated by AM Best), a material improvement against the previous year of 107 per cent.

AM Best said it expects SiriusPoint’s prospective underwriting results to remain profitable with reduced volatility as its management continues to rebalance the business mix away from catastrophe-exposed property business towards less volatile accident and health and specialty lines.

It said SiriusPoint reported a robust pre-tax profit of $319 million in 2023, benefiting from a rebound in both underwriting and investment income, the release of $105 million of reserves following the completion of a loss portfolio transfer, as well as a one-time deferred tax benefit of $101 million attributable to the enactment of the Bermuda corporate income tax.

AM Best added: “SiriusPoint’s neutral business profile assessment reflects its market position as a mid-tier global [insurer and reinsurer], 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.”

The FSR of A- (Excellent) and the long-term ICRs of “a-” (Excellent) have been affirmed, with stable outlooks for the following subsidiaries of SiriusPoint Ltd: SiriusPoint America Insurance Company; SiriusPoint Bermuda Insurance Company Ltd; SiriusPoint International Insurance Corporation (publ); and SiriusPoint Specialty Insurance Corporation.