2020 Consolidated Balance Sheets at June 30, Consolidated Consolidated Statements of Comprehensive Income for the three and six months ended June 30, Consolidated Statements of Shareholders' Equity for the three and six months ended June 30, Consolidated Statements of Cash Flows for the three and six months ended June 30, Notes to Consolidated Financial Statements (Expressed in millions of U.S. dollars, except share information) Assets Fixed maturity investments, trading, at fair value (Amortized cost 2019: $1,774.2; 2018: $1,952.9) Short-term investments, at fair value (Amortized cost 2019: $881.3; 2018: $716.1) Equity securities, trading, at fair value (Cost 2019: $376.2; 2018: $409.4) Other long-term investments, at fair value (Cost 2019: $349.9; 2018: $337.6) Cash Restricted cash Total investments and cash Accrued investment income Insurance and reinsurance premiums receivable Reinsurance recoverable on unpaid losses Reinsurance recoverable on paid losses Funds held by ceding companies Ceded unearned insurance and reinsurance premiums Deferred acquisition costs Deferred tax asset Accounts receivable on unsettled investment sales Goodwill Intangible assets Other assets Total assets Liabilities Loss and loss adjustment expense reserves Unearned insurance and reinsurance premiums Ceded reinsurance payable Funds held under reinsurance treaties Deferred tax liability Debt Accounts payable on unsettled investment purchases Other liabilities Total liabilities Commitments and contingencies (see Note 18) Mezzanine equity Series B preference shares Common shareholders' equity Common shares (shares issued and outstanding, 2019: 115,296,918; 2018: 115,151,251) Additional paid-in surplus Retained earnings Accumulated other comprehensive (loss) Total common shareholders' equity Non-controlling interests Total equity Total liabilities, mezzanine equity, and equity (Expressed in millions of U.S. dollars, except share and per share information) 2019 2018 2019 2018 Revenues Net earned insurance and reinsurance premiums Net investment income Net realized investment gains Net unrealized investment gains Net foreign exchange (losses) gains Other revenue Total revenues Expenses Loss and loss adjustment expenses Insurance and reinsurance acquisition expenses Other underwriting expenses General and administrative expenses Intangible asset amortization expenses Interest expense on debt Total expenses Pre-tax income Income tax expense Net income Income attributable to non-controlling interests Income attributable to Sirius Group Change in carrying value of Series B preference shares Accrued dividends on Series A redeemable preference shares Net income attributable to Sirius Group's common shareholders Net income per common share and common share equivalent Basic earnings per common share and common share equivalent Diluted earnings per common share and common share equivalent Weighted average number of common shares and common share equivalents outstanding: Basic weighted average number of common shares and common share equivalents outstanding Diluted weighted average number of common shares and common share equivalents outstanding (Expressed in millions of U.S. dollars) 2019 2018 2019 2018 Comprehensive income Net income Other comprehensive income (loss) Change in foreign currency translation, net of tax Total other comprehensive income (loss) Comprehensive income Net (income) attributable to non-controlling interests Comprehensive income attributable to Sirius Group Share-based compensation Capital contribution from former parent Other, net Cumulative effect of an accounting change Net income Income attributable to non-controlling interests Change in carrying value of Series B preference shares Accrued dividends on Series A redeemable preference shares Other, net Accumulated net foreign currency translation (losses) Balance at beginning of period Net change in foreign currency translation Balance at the end of period 2019. Casualty Reinsurance: Trade Credit—Sirius Group writes credit and bond reinsurance worldwide. The bulk of the business is traditional short-term commercial credit insurance, covering pre-agreed domestic and export sales of goods and services with typical coverage periods of 60 to 120 days. Losses under these policies are correlated to adverse changes in a respective country's gross national product. —Sirius Group is an insurer of accident and health business in the United States and internationally, on either an admitted or surplus lines basis, as well as a reinsurer of medical expense, travel and personal accident on a treaty or facultative basis worldwide. The MGU unit writes health insurance business worldwide through IMG and within the United States via Armada. For the three months ended June 30, 2019 (Millions) Gross written premiums Net written premiums Net earned insurance and reinsurance premiums Loss and allocated LAE(1) Insurance and reinsurance acquisition expenses Technical profit Unallocated LAE(2) Other underwriting expenses Underwriting income Service fee revenue(3) Managing general underwriter unallocated LAE Managing general underwriter other underwriting expenses General and administrative expenses, MGU + Runoff & Other(4) Underwriting income (loss), including net service fee income Net investment income Net realized investment (losses) gains Net unrealized investment (losses) gains Net foreign exchange gains (losses) Other revenue(5) General and administrative expenses(6) Intangible asset amortization expenses Interest expense on debt Pre-tax income Underwriting Ratios Loss ratio Acquisition expense ratio Other underwriting expense ratio Combined ratio(7) Goodwill and intangible assets(8) (1)Loss and allocated loss adjustment expenses ("LAE") are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income). (1)Loss and allocated (1)Loss and allocated (1)Loss and allocated Investment Income Net investment income for the three Unrealized Investment Gains (Losses) (1)Includes Holdings (1)Credit ratings are assigned based on the following hierarchy: 1) Standard & Poor's ("S&P") and 2) Moody's Investors Service ("Moody's"). The following table summarizes investments in hedge funds and private equity interests by investment objective and sector as of June 30, Notice Period Redemption Frequency Monthly Quarterly Semi-annual Annual Total Certain of the hedge fund and private equity fund investments in which Sirius Group is invested are no longer active and are in the process of disposing of their underlying investments. Distributions from such funds are remitted to investors as the fund's underlying investments are liquidated. As of June 30, In addition, certain private equity funds provide an option to extend the lock-up period at either the sole discretion of the fund manager or upon agreement between the fund and the investors. (Millions) Private Equity Funds – expected lock up period remaining Collateral The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety factors including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. Investments Net Asset Value Level (1)Sirius Group engaged in short selling of certain equity securities for which settlement was pending as of June 30, 2020. (1)Excludes fair value of For the three months ended June 30, 2019 (Millions) Balance at March 31, 2019 Total realized and unrealized gains (losses) Foreign currency gains (losses) through Other Comprehensive Income Purchases Sales/Settlements Balance at June 30, 2019 (1)Excludes fair value of $289.9 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient. For the three months ended June 30, 2018 (Millions) Balance at March 31, 2018 Total realized and unrealized gains (losses) Foreign currency gains (losses) through Other Comprehensive Income Purchases Sales/Settlements Balance at June 30, 2018 The following tables present changes in Level 3 for financial instruments measured at fair value for the six months ended June 30, For the six months ended June 30, 2019 (Millions) Balance at December 31, 2018 Total realized and unrealized gains (losses) Foreign currency gains (losses) through Other Comprehensive Income Purchases Sales/Settlements Balance at June 30, 2019 Fair value measurements – transfers between levels Unobservable Inputs (1)As of June 30, 2020, each asset type consists of one security. (1)Fair value estimated by internal pricing and considered a Level 3 measurement. Unamortized issuance costs 2017 SEK Subordinated Notes, carrying value Unamortized discount Unamortized issuance costs 2016 SIG Senior Notes, carrying value (1)Effective rate considers the effect of the debt issuance costs. standards. Credit Facility Credit Facility Covenants For the three-month period ended June 30, 2020, Sirius Group reported an income tax expense (benefit) of 2019. Jurisdictions with a projected loss for the full year where no tax benefit can be recognized are excluded from the calculation of the estimated annual effective tax rate. In addition, jurisdictions were excluded in the calculation of the annual estimated effective tax rate if their inclusion would not provide a reliable estimate of such rate (more specifically, if small changes in the estimated annual income recognized in a jurisdiction would result in significant changes in the annual estimated effective tax rate). 2019. Sirius Group records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, Sirius Group considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset. It is possible that certain planning strategies or projected earnings in certain subsidiaries may not be feasible to utilize the entire deferred tax asset, which could result in material changes to Sirius Group's deferred tax assets and tax expense. at the end of each period. Currency Risk Derivatives foreign currency risk derivatives. Derivatives Contracts Equity Warrants (Millions) Derivatives not designated as hedging instruments Interest rate cap Foreign currency swaps Foreign currency forwards Weather derivatives Equity futures contracts Equity put options Equity warrants (1)Asset derivatives are classified within Other assets within the Company's Consolidated Balance Sheets at June 30, The Series B preference shares rank senior to common shares with respect to dividend rights, rights of liquidation, winding-up, or dissolution of the Company and junior to all of the Company's existing and future policyholder obligations and debt obligations. Without the consent of the holders of the Series B preference shares, the Company may not issue any class or series of shares that rank senior or pari passu with the Series B preference shares as to the payment of dividends or as to distribution of assets upon any voluntary or involuntary liquidation, winding-up or dissolution of the Company, if the aggregate gross proceeds from the issuance of all such senior or pari passu shares equals or exceeds $100 million. (1)For the three months ended June 30, 2020, there were a total of 27,825,191 potentially dilutive securities excluded from the calculation of Diluted earnings per share. For the three months ended June 30, 2019, there were 30,933,781 potentially dilutive securities excluded from the calculation of Diluted earnings per share. For the six months ended June 30, 2020, there were a total of (1)Includes Other long-term investments that are not equity method eligible. (1) The following table presents total assets of unconsolidated VIEs in which Sirius Group holds a variable interest, as well as the maximum exposure to loss associated with these VIEs: (1)Comprised primarily of hedge funds and private equity funds. affiliates of $0.9 million. Reportable Segments 2019 2019. Six Months Ended June 30, 2019 2019. 2020 compared to 1 point for the six months ended June 30, 2019. 2019. 2020. results, partially offset by lower net service income from IMG and lower net investment income. 2020. 2019 Gross written premiums Net written premiums Net earned insurance and reinsurance premiums Net investment income Net realized investment gains Net unrealized investment gains Net foreign exchange (losses) gains Other revenue Total revenues Loss and loss adjustment expenses ("LAE") Insurance and reinsurance acquisition expenses Other underwriting expenses General and administrative expenses Intangible asset amortization expenses Interest expense on debt Total expenses Income tax expense Income attributable to non-controlling interests Change in carrying value of Series B preference shares Accrued dividends on Series A redeemable preference shares Combined ratio(4) (1)The loss ratio is calculated by dividing loss and LAE expenses by net earned insurance and reinsurance premiums. (2)The acquisition expense ratio is calculated by dividing insurance and reinsurance acquisition expenses by net earned insurance and reinsurance premiums. (1) 2019 Net earned insurance and reinsurance premiums – Net earned insurance and reinsurance premiums for the three months ended June 30, 2019. Loss and loss adjustment expenses increased discussion. A summary of Sirius Group's total pre-tax net investment results and performance metrics for the three and six months ended June 30, (1)Includes foreign exchange (losses) gains for the three months ended June 30, 2020 and 2019 In U.S. dollars In local currencies Bloomberg Barclays US Agg 1-3 Year Total Return Value Unhedged USD OMX Stockholm OMRX Total Bond Index Bloomberg Barclays Pan-European Aggregate: Corp 1-3 Years Total Return In U.S. dollars In local currencies S&P 500 Index (total return) In U.S. dollars In local currencies 2019 The six month currency loss was generated mainly from our CAD holdings as the currency continues to weaken against the U.S. dollar. The result for the six months ended June 30, 2019 was not impacted by currency. lower yielding short-term investments. Net realized and unrealized investment (losses) gains on investments, excluding foreign currency, were $(11) million for the six months ended June 30, 2020 compared to $76 million for the six months ended June 30, 2019. The decrease was driven by unrealized investment losses consistent with overall market performance for the first half of 2020. For the six months ended June 30, 2020, a lower duration in a decreasing interest rate environment adversely impacted our return versus the indices. The fixed income portfolio gained 2.4% on a U.S. dollar basis and 2.5% in local currencies for the six months ended June 30, 2019. Our U.S. portfolio returned 2.8% versus the 6.5% on a local currency basis. The S&P 500 returned 20.5% for the same period. For the three months ended June 30, 2019, the equity portfolio gained 3.0% on a U.S. dollar basis and gained 2.7% in local currencies. The S&P 500 gained 4.3% for the same period. a large portion of our equity and other long-term investments portfolio. For the six months ended June 30, 2019, the equity portfolio returned 9.0% on a U.S. dollar basis and 8.5% in original currencies versus the S&P 500 of 18.5%. Performance lagged the S&P 500 due to the market neutral strategy of a large portion of our equity and other long-term investments portfolio. . A summary of the impact of foreign currency translation on Sirius Group's consolidated financial results for the three and six months ended June 30, 2020 and 2019 (Millions) Net realized investment gains - foreign currency(1) Net unrealized investment (losses) gains - foreign currency(2) Net realized and unrealized investment gains - foreign currency Net foreign exchange gains - foreign currency translation gains(3) Net foreign exchange gains - currency swaps(3) Net foreign exchange (losses) - currency forwards(3) Net foreign exchange (losses) - other(3) Income tax benefit (expense) Total foreign currency remeasurement gains recognized through net income, after tax Change in foreign currency translation on investments recognized through other comprehensive income, after tax Change in foreign currency translation on non - investment net liabilities recognized through other comprehensive income, after tax Total foreign currency translation gains (losses) recognized through other comprehensive income, after tax Total foreign currency gains recognized in comprehensive income, after tax (1)Component of Net realized investment gains on the Consolidated Statements of (Loss) Income Set forth below is the carrying value of our Reinsurance Technical profit (1)The loss ratio is calculated by dividing the sum of loss and allocated LAE and 2019. : : fronting arrangement did not impact net earned insurance and reinsurance premiums for either the 2020 or 2019 periods. : Technical profit Underwriting income (1)The loss ratio is calculated by dividing the sum of loss and allocated LAE and the gross written premiums decrease. 2019. ArmadaHealth, LLC. : the gross written premiums increase. 2019. Specialty & Casualty (Millions) 2019 2018 2019 2018 Gross written premiums Net written premiums Net earned insurance and reinsurance premiums Loss and allocated LAE Insurance and reinsurance acquisition expenses Technical profit Unallocated LAE Other underwriting expenses Underwriting (loss) income Ratios: Loss ratio(1) Acquisition expense ratio(2) Other underwriting expense ratio(3) Combined ratio(4) (1)The loss ratio is calculated by dividing the sum of loss and allocated LAE and : Six months ended June 30, through Pie Insurance. Specialty & Casualty (Millions) 2019 2018 2019 2018 Casualty Aviation & Space Trade Credit Marine Environmental Surety Contingency Total Specialty & Casualty (Millions) 2019 2018 2019 2018 Casualty Aviation & Space Trade Credit Marine Surety Contingency Environmental Total Runoff & Other Runoff & Other (Millions) 2019 2018 2019 2018 Gross written premiums Net written premiums Net earned insurance and reinsurance premiums Loss and allocated LAE Insurance and reinsurance acquisition expenses Technical (loss) profit Unallocated LAE Other underwriting expenses Underwriting (loss) income General and administrative expenses Underwriting (loss) income 2019. : (Expressed in Millions, except share information) As of As of Common shares outstanding Series B preference shares outstanding Earned share-based compensation awards, excluding stock options Earned portion of Stock option awards issued Adjusted shares outstanding Total common shareholders' equity Series B preference shares Earned portion of future proceeds from stock option awards Adjusted book value Book value per common share Adjusted book value per share (Expressed in Millions) 2019 2018 2019 2018 Net income attributable to common shareholders Adjustment for net realized and unrealized gains on investments Adjustment for net foreign exchange gains Adjustment for income tax expense(1) Operating (loss) income attributable to common shareholders (1)Adjustment for income tax expense (benefits) represents the income tax expense (benefits) associated with the adjustment for net realized and unrealized prior to 2018. $239 million. The following table illustrates Sirius Group's consolidated insurance float position as of June 30, (Millions) Loss and LAE reserves Unearned insurance and reinsurance premiums Ceded reinsurance payable Funds held under reinsurance treaties Deferred tax liability on safety reserve Float liabilities Cash Reinsurance recoverable on paid and unpaid losses Insurance and reinsurance premiums receivable Funds held by ceding companies Deferred acquisition costs Ceded unearned insurance and reinsurance premiums Float assets Insurance float Insurance float as a multiple of total capital(1) Insurance float as a multiple of Sirius Group's common shareholders' equity (1)See calculation of total capital voting rights. (Millions) 2017 SEK Subordinated Notes 2016 SIG Senior Notes Total debt Series B preference shares Common shareholders' equity Total capital Total debt to total capital Total debt and Series B preference shares to total capital 2017 SEK Subordinated Notes notified the Preference Share Investors that they are not entitled at this time to elect a redemption of any of their Series B preference shares. Sirius International has other secured letter of credit and trust arrangements with various financial institutions to support its insurance operations. As of June 30, In addition, as previously disclosed, Sirius Group has access to the $300 million Facility that provides access to loans for working capital and general corporate purposes, and letters of credit to support obligations under insurance and reinsurance agreements and retrocessional agreements. (1)Refer to Consolidated Statements of Cash Flows included in Sirius Group's Unaudited Consolidated Financial Statements included in "Part I, Item 1. Financial Statements." 2019 discussion. 2019 $6 million of interest on the 2017 SEK Subordinated Notes. Use these links to rapidly review the document2019Title of each class Trading symbol Name of each exchange on which registered Common shares, par value $0.01 per share SG Nasdaq Global Select Market 2019,2020, there were 115,296,918115,299,341 Common Shares, $0.01 par value per share, of the registrant outstanding.SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.INDEX TO FORM 10-QPagePart IFinancial Information 1Page 20192020 and December 31, 2018 StatementsStatement of Income for the three and six months ended June 30, 20192020 and 2018 20192020 and 2018 20192020 and 2018 20192020 and 2018 Item 5.Other Information92Item 6.Exhibits93Signatures94., including impacts of the COVID-19 pandemic on its business, operations and loss reserve estimates. Forward-looking statements are typically identified by words 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 the Company and speak only as of the date of this Quarterly Report on Form 10-Q. 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 following:•••••the Company'sor withdrawal of Sirius Group's operating subsidiaries' ratings with rating agencies;••••••CMIG International Holding Pte. Ltd.'s status as a controlling shareholder;•••20182019 and in the Company's other filings with the U.S. Securities and Exchange Commission.20192020 and December 31, 2018
2019 June 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019 Unaudited Unaudited $ 1,815.7 $ 1,949.2 882.9 715.5 387.8 380.0 379.9 365.0 Fixed maturity investments, trading, at fair value (Amortized cost 2020: $1,877.7; 2019: $1,656.6) $ 1,904.7 $ 1,681.0 Short-term investments, at fair value (Amortized cost 2020: $1,044.5; 2019: $1,090.8) 1,038.8 1,085.2 Equity securities, trading, at fair value (Cost 2020: $178.1; 2019: $379.2) 149.9 405.2 Other long-term investments, at fair value (Cost 2020: $324.7; 2019: $315.4) 368.1 346.8 116.8 119.4 186.7 136.3 13.7 12.8 18.0 14.3 3,596.8 3,541.9 3,666.2 3,668.8 13.3 14.1 11.0 11.2 861.3 630.6 871.7 730.1 357.4 350.2 442.2 410.3 69.8 55.0 106.1 73.9 237.6 186.8 254.7 293.9 188.1 159.8 201.9 162.0 158.8 141.6 159.1 148.2 174.4 202.5 179.7 166.7 2.0 5.0 34.4 6.7 400.6 400.6 400.8 400.8 187.7 195.6 171.9 179.8 171.4 124.0 153.8 161.4 Assets held for sale 10.5 — $ 6,419.2 $ 6,007.7 $ 6,664.0 $ 6,413.8 $ 2,023.3 $ 2,016.7 $ 2,515.1 $ 2,331.5 879.5 647.2 874.5 708.0 256.9 206.9 314.9 244.7 126.6 110.6 145.3 169.1 229.7 237.4 207.9 205.9 685.9 696.8 684.9 685.2 2.6 3.2 11.3 2.3 186.3 150.5 181.7 201.3 4,390.8 4,069.3 4,935.6 4,548.0 Commitments and contingencies (see Note 19) 241.3 232.2 206.2 223.0 1.2 1.2 1.2 1.2 1,093.5 1,089.1 1,102.4 1,098.2 918.5 816.6 660.0 778.5 (229.1 ) (202.4 ) (243.9 ) (237.5 ) 1,784.1 1,704.5 1,519.7 1,640.4 3.0 1.7 2.5 2.4 1,787.1 1,706.2 1,522.2 1,642.8 $ 6,419.2 $ 6,007.7 $ 6,664.0 $ 6,413.8 months and six months ended June 30, 20192020 and 2018
2019 Three months ended June 30, Six months ended June 30, Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 $ 370.7 $ 308.9 $ 682.6 $ 593.4 $ 369.8 $ 370.7 $ 804.5 $ 682.6 24.4 19.2 44.5 30.0 14.8 24.4 28.3 44.5 15.6 7.8 24.6 4.1 7.1 15.6 27.4 24.6 15.5 24.7 89.5 40.7 Net unrealized investment gains (losses) 8.7 15.5 (35.1 ) 89.5 (0.6 ) 25.6 4.5 22.1 (16.1 ) (0.6 ) 2.4 4.5 15.4 55.6 35.0 79.0 10.2 15.4 14.5 35.0 441.0 441.8 880.7 769.3 394.5 441.0 842.0 880.7 278.0 151.4 461.9 292.4 240.3 278.0 667.4 461.9 77.0 66.8 140.3 129.8 78.1 77.0 152.8 140.3 35.5 38.2 70.8 81.4 36.3 35.5 74.3 70.8 28.2 24.2 52.6 38.5 23.9 28.2 56.0 52.6 4.0 4.0 7.9 7.9 4.0 4.0 7.9 7.9 8.0 7.8 15.6 15.5 7.9 8.0 15.7 15.6 430.7 292.4 749.1 565.5 390.5 430.7 974.1 749.1 10.3 149.4 131.6 203.8 (2.1 ) (51.2 ) (19.3 ) (62.3 ) 8.2 98.2 112.3 141.5 (0.8 ) (0.4 ) (1.2 ) (0.6 ) 7.4 97.8 111.1 140.9 Pre-tax income (loss) 4.0 10.3 (132.1 ) 131.6 Income tax (expense) benefit (11.2 ) (2.1 ) 3.6 (19.3 ) Net (loss) income (7.2 ) 8.2 (128.5 ) 112.3 Loss (income) attributable to non-controlling interests 0.2 (0.8 ) — (1.2 ) (Loss) income attributable to Sirius Group (7.0 ) 7.4 (128.5 ) 111.1 (0.8 ) - (9.2 ) - (6.6 ) (0.8 ) 16.8 (9.2 ) - - - (2.6 ) $ 6.6 $ 97.8 $ 101.9 $ 138.3
Net (loss) income attributable to Sirius Group's common shareholders $ (13.6 ) $ 6.6 $ (111.7 ) $ 101.9 Net (loss) income per common share and common share equivalent $ 0.05 $ 0.78 $ 0.80 $ 1.11 $ (0.12 ) $ 0.05 $ (0.97 ) $ 0.80 $ 0.05 $ 0.78 $ 0.80 $ 1.11 $ (0.12 ) $ 0.05 $ (1.01 ) $ 0.80 115,243,685 120,000,000 115,212,772 120,000,000 115,278,176 115,243,685 115,269,720 115,212,772 115,796,367 120,000,000 127,542,402 120,000,000 115,278,176 115,796,367 127,171,390 127,542,402 months and six months ended June 30, 20192020 and 2018
2019 Three months ended
June 30, Six months ended
June 30, $ 8.2 $ 98.2 $ 112.3 $ 141.5 1.1 (48.5 ) (26.7 ) (61.9 ) 1.1 (48.5 ) (26.7 ) (61.9 ) 9.3 49.7 85.6 79.6 (0.8 ) (0.4 ) (1.2 ) (0.6 ) $ 8.5 $ 49.3 $ 84.4 $ 79.0 Three months ended June 30, Six months ended June 30, (Expressed in millions of U.S. dollars) 2020 2019 2020 2019 Comprehensive (loss) income Net (loss) income $ (7.2 ) $ 8.2 $ (128.5 ) $ 112.3 Other comprehensive income (loss) Change in foreign currency translation, net of tax 57.0 1.1 (6.4 ) (26.7 ) Total other comprehensive income (loss) 57.0 1.1 (6.4 ) (26.7 ) Comprehensive income (loss) 49.8 9.3 (134.9 ) 85.6 Net loss (income) attributable to non-controlling interests 0.2 (0.8 ) — (1.2 ) Comprehensive income (loss) attributable to Sirius Group $ 50.0 $ 8.5 $ (134.9 ) $ 84.4 Three months ended June 30, Six months ended June 30, (Expressed in millions of U.S. dollars) 2020 2019 2020 2019 Common shares Balance at beginning and end of period $ 1.2 $ 1.2 $ 1.2 $ 1.2 Additional paid-in surplus Balance at beginning of period 1,100.1 1,090.2 1,098.2 1,089.1 Share-based compensation 2.3 3.3 4.2 4.5 Other, net — — — (0.1 ) Balance at end of period 1,102.4 1,093.5 1,102.4 1,093.5 Retained earnings Balance at beginning of period 673.7 911.8 778.5 816.6 Cumulative effect of an accounting change — — (6.8 ) — Balance at beginning of period, as adjusted 673.7 911.8 771.7 816.6 Net (loss) income (7.2 ) 8.2 (128.5 ) 112.3 Loss (income) attributable to non-controlling interests 0.2 (0.8 ) — (1.2 ) Change in carrying value of Series B preference shares (6.6 ) (0.8 ) 16.8 (9.2 ) Other, net (0.1 ) 0.1 — — Balance at end of period 660.0 918.5 660.0 918.5 Accumulated other comprehensive (loss) Balance at beginning of period (300.9 ) (230.2 ) (237.5 ) (202.4 ) Accumulated net foreign currency translation (losses) Balance at beginning of period (300.9 ) (230.2 ) (237.5 ) (202.4 ) Net change in foreign currency translation 57.0 1.1 (6.4 ) (26.7 ) Balance at the end of period (243.9 ) (229.1 ) (243.9 ) (229.1 ) Balance at the end of period (243.9 ) (229.1 ) (243.9 ) (229.1 ) Total common shareholders' equity $ 1,519.7 $ 1,784.1 $ 1,519.7 $ 1,784.1 Non-controlling interests 2.5 3.0 2.5 3.0 Total equity $ 1,522.2 $ 1,787.1 $ 1,522.2 $ 1,787.1 20192020 and 2018
2019 Three months ended
June 30, Six months ended
June 30, (Expressed in millions of U.S. dollars) 2019 2018 2019 2018 Common shares Balance at beginning and end of period $ 1.2 $ 1.2 $ 1.2 $ 1.2 Additional paid-in surplus Balance at beginning of period 1,090.2 1,197.9 1,089.1 1,197.9 3.3 - 4.5 - - 1.4 - 1.4 - - (0.1 ) - Balance at end of period 1,093.5 �� 1,199.3 1,093.5 1,199.3 Retained earnings Balance at beginning of period 911.8 900.4 816.6 858.4 - - - 1.6 Balance at beginning of period, as adjusted 911.8 900.4 816.6 860.0 8.2 98.2 112.3 141.5 (0.8 ) (0.4 ) (1.2 ) (0.6 ) (0.8 ) - (9.2 ) - - - - (2.6 ) 0.1 - - (0.1 ) Balance at end of period 918.5 998.2 918.5 998.2 Accumulated other comprehensive (loss) Balance at beginning of period (230.2 ) (153.9 ) (202.4 ) (140.5 ) (230.2 ) (153.9 ) (202.4 ) (140.5 ) 1.1 (48.5 ) (26.7 ) (61.9 ) (229.1 ) (202.4 ) (229.1 ) (202.4 ) Balance at the end of period (229.1 ) (202.4 ) (229.1 ) (202.4 ) Total common shareholders' equity $ 1,784.1 $ 1,996.3 $ 1,784.1 $ 1,996.3 Non-controlling interests 3.0 1.0 3.0 1.0 Total equity $ 1,787.1 $ 1,997.3 $ 1,787.1 $ 1,997.3 Six months ended June 30, (Expressed in millions of U.S. dollars) 2020 2019 Cash flows from operations: Net (loss) income $ (128.5 ) $ 112.3 Adjustments to reconcile net income to net cash provided from operations: Net realized and unrealized investment losses (gains) 7.7 (114.1 ) Amortization of premium on fixed maturity investments 2.0 (3.2 ) Amortization of intangible assets 7.9 7.9 Depreciation and other amortization 3.3 4.3 Share-based compensation 4.2 4.5 Revaluation of contingent consideration 0.3 — Other operating items: Net change in loss and loss adjustment expense reserves 184.0 46.6 Net change in reinsurance recoverable on paid and unpaid losses (64.4 ) (36.0 ) Net change in funds held by ceding companies 38.4 (54.7 ) Net change in unearned insurance and reinsurance premiums 162.0 252.6 Net change in ceded reinsurance payable 61.8 50.4 Net change in ceded unearned insurance and reinsurance premiums (37.3 ) (35.8 ) Net change in insurance and reinsurance premiums receivable (138.9 ) (252.0 ) Net change in deferred acquisition costs (11.0 ) (20.2 ) Net change in funds held under reinsurance treaties (23.0 ) 18.4 Net change in current and deferred income taxes, net (1.5 ) 4.2 Net change in other assets and liabilities, net 5.4 29.8 Net cash provided from operations 72.4 15.0 Cash flows from investing activities: Net change in short-term investments 61.7 (160.2 ) Sales of fixed maturities and convertible fixed maturity investments 309.9 241.9 Maturities, calls, and paydowns of fixed maturity and convertible fixed maturity investments 132.8 154.7 Sales of common equity securities 663.7 152.2 Distributions, redemptions, and maturities of other long-term investments 19.6 33.6 Return of principal on loan participations 0.1 — Contributions to other long-term investments (26.0 ) (41.3 ) Purchases of common equity securities (473.4 ) (125.8 ) Purchases of fixed maturities and convertible fixed maturity investments (673.1 ) (270.9 ) Purchases of loan participation (7.4 ) — Net change in unsettled investment purchases and sales (19.7 ) 2.4 Other, net (1.6 ) 0.6 Net cash (used for) investing activities (13.4 ) (12.8 ) Cash flows from financing activities: Payment of contingent consideration (5.5 ) — Change in collateral held on Interest Rate Cap — (0.1 ) Net cash (used for) financing activities (5.5 ) (0.1 ) Effect of exchange rate changes on cash 0.8 (3.8 ) Net increase (decrease) in cash during period 54.3 (1.7 ) Cash, restricted cash, and cash held for sale balance at beginning of period 150.6 132.2 Cash, restricted cash, and cash held for sale balance at end of period $ 204.9 $ 130.5 Consolidated Statements of Cash FlowsFor the six months ended June 30, 2019 and 2018Unaudited Six months ended June 30, (Expressed in millions of U.S. dollars) 2019 2018 Cash flows from operations: Net income $ 112.3 $ 141.5 Adjustments to reconcile net income to net cash provided from operations: Net realized and unrealized investment (gains) (114.1 ) (44.7 ) Amortization of premium on fixed maturity investments (3.2 ) 5.6 Amortization of intangible assets 7.9 7.9 Depreciation and other amortization 4.3 4.8 Share-based compensation 4.5 - Other operating items: Net change in loss and loss adjustment expense reserves 46.6 18.6 Net change in reinsurance recoverable on paid and unpaid losses (36.0 ) (69.1 ) Net change in funds held by ceding companies (54.7 ) (18.9 ) Net change in unearned insurance and reinsurance premiums 252.6 348.1 Net change in ceded reinsurance payable 50.4 141.1 Net change in ceded unearned insurance and reinsurance premiums (35.8 ) (123.4 ) Net change in insurance and reinsurance premiums receivable (252.0 ) (320.0 ) Net change in deferred acquisition costs (20.2 ) (38.2 ) Net change in funds held under reinsurance treaties 18.4 4.7 Net change in current and deferred income taxes, net 4.2 50.5 Net change in other assets and liabilities, net 29.8 (73.5 ) Net cash provided from operations 15.0 35.0 Cash flows from investing activities: Net change in short-term investments (160.2 ) (218.6 ) Sales of fixed maturities and convertible fixed maturity investments 241.9 945.0 Maturities, calls, and paydowns of fixed maturity and convertible fixed maturity investments 154.7 58.0 Sales of common equity securities 152.2 189.0 Distributions and redemptions of other long-term investments 33.6 60.2 Contributions to other long-term investments (41.3 ) (94.8 ) Purchases of common equity securities (125.8 ) (317.3 ) Purchases of fixed maturities and convertible fixed maturity investments (270.9 ) (753.2 ) Net change in unsettled investment purchases and sales 2.4 6.7 Other, net 0.6 (1.7 ) Net cash (used for) investing activities (12.8 ) (126.7 ) Cash flows from financing activities: Change in collateral held on Interest Rate Cap (0.1 ) - Capital contribution from former parent - 1.4 Net cash (used for) provided from financing activities (0.1 ) 1.4 Effect of exchange rate changes on cash (3.8 ) (10.3 ) Net (decrease) in cash during period (1.7 ) (100.6 ) Cash and restricted cash balance at beginning of period 132.2 230.6 Cash and restricted cash balance at end of period $ 130.5 $ 130.0 See Notes to Consolidated Financial Statements(the "Company"("the Company") is a Bermuda exempted company whose principal businesses are conductedthat provides multi-line insurance and reinsurance on a worldwide basis through its wholly and majority owned insurance subsidiaries (collectively with the Company, "Sirius Group"). Sirius Group provides insurance, reinsurance, and insurance services on a worldwide basis.2019,2020, have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial information. The accompanying Unaudited Consolidated Financial Statements present the consolidated results of operations, financial condition, and cash flows of the Company and its subsidiaries and those entities in which the Company has control and a majority economic interest as well as those variable interest entities ("VIEs") that meet the requirements for consolidation. All significant intercompany transactions have been eliminated in consolidation.2018.2019. The consolidated financial information as of December 31, 20182019 included herein has been derived from the Audited Consolidated Financial Statements as of December 31, 2018.Leases2019,2020, Sirius Group adopted Accounting Standards Update ("ASU") 2016-02,2016-13, Leases (Accounting Standards Codification ("ASC") 842) which requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under previous guidance, recognition of lease assets and liabilities was not required for operating leases. The new guidance requires that lease assets and liabilities to be recognized and measured initially based on the present value of the lease payments. Sirius Group adopted the new guidance using the simplified transition option that allows companies to apply the new lease standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Sirius Group also made the following elections:•Sirius Group elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases upon transition.•Sirius Group did not elect the hindsight practical expedient upon transition, for all leases.•Sirius Group elected the short-term lease measurement and recognition exemption, resulting in lease payments being recorded as an expense on a straight-line basis over the lease term.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited•Sirius Group elected to include both lease and non-lease components as a single component for all leases.•Sirius Group did not elect the land easement practical expedient as it was not applicable.As a result of the adoption of the new guidance, Sirius Group recognized a lease liability of $36.8 million, which represents the present value of our remaining lease payments and a right-of-use asset of $34.4 million as of January 1, 2019. The adoption of this guidance did not materially impact our results of operations or cash flows. Due to the adoption of the standard using the retrospective cumulative-effect adjustment method, there are no changes to our previously reported results prior to January 1, 2019. Lease expense is not expected to change materially as a result of the adoption of the new guidance. (SeeNote 18.)Premium amortization on callable debt securitiesEffective January 1, 2019, Sirius Group adopted ASU 2017-08,Premium Amortization on Purchased Callable Debt Securities (ASC 310-20), which changes the amortization period for certain purchased callable debt securities. Under the new guidance, for investments in callable debt securities held at a premium, the premium will be amortized over the period to the earliest call date. The new guidance does not change the amortization period for callable debt securities held at a discount. The adoption of this guidance did not have a significant effect on our financial statements. Recent accounting pronouncementsCredit lossesIn June 2016, the Financial Accounting Standards Board issued ASU 2016-13,Measurement of Credit Losses on Financial Instruments (ASC 326), which establishes new guidance for the recognition of credit losses for financial assets measured at amortized cost.cost ("current expected credit losses" or "CECL"). The new guidance which applies to financial assets that have the contractual right to receive cash, including reinsurance receivables and recoverables and requires reporting entities to estimate the credit losses expected over the life of a credit exposure using historical information, current information and reasonable and supportable forecasts that affect the collectability of the financial asset. The expected credit losses, and subsequent adjustments to such losses, are recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected. Sirius Group adopted the new guidance is effective for annual and interim periods beginning after December 15, 2019.using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings.is evaluating the expected impactestimated a total CECL allowance of $14.9 million. The adoption of this new guidance.guidance did not materially impact our results of operations or cash flows. Due to the adoption of the standard using the retrospective cumulative-effect adjustment method, the Company recorded $(6.8) million cumulative-effect adjustment net of taxes to its opening retained earnings. (See Note 7.)November 5, 2018,July 7, 2020, Sirius Group sold 100% of the common shares of Empire Insurance Company completed(“Empire”) to Physicians' Reciprocal Insurers (the “Empire Transaction”). As of June 30, 2020, the transactions contemplated byassets related to Empire have been classified as held for sale in the definitive AgreementConsolidated Balance Sheets. The following table summarizes the major categories of assets classified as held for sale related to the Empire Transaction as of June 30, 2020 and Plan of Merger ("Merger Agreement").December 31, 2019:(Millions) June 30, 2020 December 31, 2019 Short-term investments, at fair value $ 9.3 $ — Cash 0.2 — Accounts receivable on unsettled investment sales 1.0 — Total assets held for sale $ 10.5 $ — terms of the Merger Agreement, Easterly Acquisition Corp. ("Easterly") merged with Sirius Acquisitions Holding Company III and became a wholly-owned subsidiary of the Company (the "Merger"). Upon the closing of the Merger, Easterly's common stock was exchanged for the Company's common shares at an exchange ratio (the "Exchange Ratio") calculated as (i) the amount of cash per public share of Easterly common stock in Easterly's trust account (the "Trust Account") immediately prior to the closing of the Merger divided by (ii) (x) 1.05 multiplied by (y) Sirius Group's adjusted diluted book value per common share as of September 30, 2018 ("agreement, Sirius Group September 30 Adjusted DBVPS"received $69.7 million in cash and assumed net undiscounted loss and loss adjustment expenses ("LAE"). Based on reserves with the same value. In addition, Sirius Group September 30 Adjusted DBVPS, estimated as of September 30, 2018,recognized Gross written premium and funds in the Trust Account on November 5, 2018, the Exchange Ratio was equal to 0.609. Following the Merger, the Company's common shares are traded on the Nasdaq Global Select Market under the symbol "SG."Loss and loss adjustment expenses for $69.7 million.Easterly held a special meeting of Easterly stockholders on November 2, 2018 to approve the completion of the transactions contemplated by the Merger Agreement. Easterly Acquisition Sponsor, LLC (the "Sponsor") and Easterly's other stockholders approved each of the proposals presented at the special meeting. After the special meeting, but prior to the consummation of the Merger, certain Easterly public stockholders exercised their redemption rights as provided for by Easterly's charter. In total, out of the Trust Account balance of $149.0 million, there were $109.7 million of redemptions by Easterly public stockholders, which decreased the amount of cash in the Trust Account available for general corporate purposes following the Merger. After the redemption of shares held by Easterly's public stockholders, there was $39.3 million in the Trust Account. This resulted in the issuance of 2,280,241 common shares to Easterly public stockholders.Pursuant to the letter agreement among Easterly, the Sponsor and the Company (the "Sponsor Letter"), the private placement warrants issued to the Sponsor at the closing of the Merger were cancelled. Pursuant to the Merger Agreement, each issued and outstanding public warrant was converted into a warrant exercisable for Company common shares. The number of Company common shares subject to converted warrants was equal to the number of shares of Easterly common stock subject to each Easterly warrant immediately prior to the closing of the Merger multiplied by the Exchange Ratio, and each converted warrant had an exercise price per Company common share equal to the exercise price per share of Easterly common stock subject to such Easterly warrant immediately prior to the closing of the Merger divided by the Exchange Ratio. This resulted in the issuance of 6,088,535 converted warrants.Sirius Group Private PlacementIn connection with the closing of the Merger, the Company completed a private placement of Series B preference shares, common shares, and warrants (the "Sirius Group Private Placement") at a price per share equal to (i) 1.05 multiplied by (ii) the Sirius Group September 30 Adjusted DBVPS, or $17.22447. Investors in the Sirius Group Private Placement included affiliated funds of Gallatin Point Capital, The Carlyle Group, Centerbridge Partners, L.P. and Bain Capital Credit (the "Preference Share Investors"), together with certain employees, directors and "friends & family". The Sirius Group Private Placement raised proceeds of $226.1 million, resulting in the purchase of:•11,901,670 Series B preference shares with a cost basis of $195.8 million,•1,225,954 of Common shares with a cost basis of $20.8 million,•5,418,434 warrants that are exercisable for common shares for a period of five years after the Merger at a strike price equal to 125% of the per share purchase price, or $21.53 with a cost basis of $9.6 million.•Issuance costs of $2.0 millionESPPIn connection with the Merger, Sirius Group implemented the Employee Share Purchase Plan ("ESPP"), which provided all employees of Sirius Group with a one-time opportunity to purchase between 100 and 1,000 Company common shares at a price equal to 85% of market value for the first 100 shares and 100% of market value for the next 900 shares. For this purpose, market value of the Company common shares was equal to 1.05 times the Sirius Group September 30 Adjusted DBVPS. Employees had the option of paying for the shares upfront or, in the case of employees who are not executive officers, through a loan that is repaid over a two-year period through payroll deductions. Through the ESPP, 405 employees purchased 149,236 Company common shares prior to the consummation of the Merger, with a cost basis of $2.6 million.Gross proceeds of the cash in the Easterly Trust Account assumed by Sirius Group upon the closing of the Merger, the Sirius Group Private Placement, and the ESPP sum to $268.0 million.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedCommon shares redemption agreementIn connection with the Merger, the Company and CM Bermuda Ltd. ("CM Bermuda"), the sole holder of the Company's common shares prior to the Merger, entered into a redemption agreement, dated November 2, 2018 (the "CM Bermuda Redemption Agreement"), pursuant to which, effective as of the closing of the Merger, the Company redeemed 9,519,280 of the Company's common shares at a price per share equal to $17.22447 for $164.0 million, which was paid on November 16, 2018.Also in connection with the Merger, on November 16, 2018 the Company completed a post-closing adjustment of $1.6 million that was settled in cash with CM Bermuda based on the reported book value per share of $16.44 as of September 30, 2018, pursuant to the Merger Agreement.Sirius Group incurred certain contractual costs associated with the Merger of $9.0 million and $7.1 million of various legal, advisory, and other consulting costs for the Merger and the Private Placement that were charged to Additional paid-in surplus.Series A preference shares redemption agreementIn connection with the Merger, the Company, IMG Acquisition Holdings, LLC ("IMGAH") and Sirius Acquisitions Holding Company II completed the transactions contemplated by its previously announced redemption agreement and the Company redeemed all of the outstanding Series A redeemable preference shares, which were held by IMGAH, for $95.0 million in cash. Effective as of the completion of the redemption, the parties terminated the registration rights agreement and the shareholder's agreement between the Company and IMGAH. In addition, the parties agreed that any remaining contingent consideration in respect of the IMG acquisition, will be paid in cash, not in Series A redeemable preference shares as previously contemplated in the agreement in respect of the IMG acquisition. WRM America Indemnity Company, Inc.On August 16, 2018, Sirius Group acquired 100% ownership of WRM America Indemnity Company, Inc. ("WRM America") from WRM America Indemnity Holding Company, LLC for $16.9 million in cash. WRM America is a New York-domiciled insurer with a run-off book of business mainly comprised of general liability, educator's legal liability, automobile liability and physical damage, property and excess catastrophe liability. purchaseloss portfolio transfer, an estimate of WRM America,net paid losses was included. Sixty days after the closing, actual net paid losses were determined and Sirius Group acquired $3.1paid back $0.4 million of indefinite lived intangible assets relatedin cash to insurance licenses.Pacific Re, Inc. and reduced assumed net undiscounted loss and LAE reserves by the same value. In addition, Sirius Group adjusted Gross written premium and Loss and loss adjustment expenses by $(0.4) million.classifies its business intocompleted an internal reorganization and beginning on January 1, 2020, Sirius Group's reportable segments consist of four reportable segments – Global Property,Reinsurance, Global A&H, SpecialtyAccident & Casualty,Health ("Global A&H"), U.S. Specialty, and Runoff & Other. The accounting policies of the reportable segments are the same as those used for the preparation of the Company's consolidated financial statements.Property,Reinsurance, Global A&H, U.S. Specialty, & Casualty, and Runoff & Other reportable segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company's chief operating decision maker, the Chief Executive Officer ("CEO") of the Company. The CEO assesses segment operating performance, allocates capital, and makes resource allocation decisions based on Technical profitincome (loss), Underwriting profitincome (loss), and Underwriting profit (loss), including net service fee revenue.profitincome (loss) and consolidated Underwriting profitincome (loss), including net service fee revenue.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedPropertyReinsurancePropertyReinsurance consists of Sirius Group's underwriting lines of business that offer other property insuranceOther Property, Property Catastrophe Excess Reinsurance, Agriculture Reinsurance, Aviation & Space, Marine & Energy, Trade Credit, Contingency, and reinsurance, property catastrophe excess reinsurance, and agriculture reinsurance on a worldwide basis: Global A&HThe Global A&H operating segment consists of Sirius Group's insurance, reinsurance, and managing general underwriting ("MGU") units (which include Armada and IMG) that offer accident and health products on a worldwide basis:Accident and Health insurance and reinsuranceAviation & Space—Sirius Group is an insurer of accident and health insurance business in the United States, either on an admitted or surplus lines basis, as well as international business written through wholly-owned IMG. Armada business is written on an admitted basis. Sirius Group also writes proportional and excess reinsurance treaties covering employer medical stop-loss for per person (specific) and per employer (aggregate) exposures. In addition, Sirius Group writes some medical, health, travel and personal accident coverages written on a treaty, facultative and primary basis.Specialty & Casualty consists of Sirius Group's insurance and reinsurance underwriting units which offer specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten. Because specialty lines tend to be the more unusual or higher risks, much of the market is characterized by a high degree of specialization:Aviation & Space provides aviation insurance that covers loss of or damage to an aircraft and the aircraft operations' liability to passengers, cargo and hull as well as to third parties. Additionally, liability arising out of non-aircraft operations such as hangars, airports and aircraft products can be covered. Space insurance primarily covers loss of or damage to a satellite during launch and in orbit. The book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business.Table of ContentsSirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited underwrites—Sirius Group underwrote a contingency insurance book primarily for event cancellation and non-appearance, primarily on a primary policy and facultative reinsurance basis.non-appearance. Additionally, coverage for liabilities arising from contractual bonus,probability based risks with prize redemption and over-redemption iswas also offered. The contingency portfolio is diversified across many countries and regions.insurance business was exited in 2018; however, Sirius Group continues to offer this class on a treaty reinsurance basis on a selective basis for a few key clients.primary basis.Surety underwrites commercial surety bonds, including non-construction contract bonds, in a broad range ofreinsurance business, segmentsand the managing general underwriting (“MGU”) units (which include ArmadaCorp Capital, LLC ("Armada") and International Medical Group, Inc. ("IMG")). Armada’s products are offered in the United States.States while IMG and the insurance and reinsurance business write accident and health products on a worldwide basis:Unaudited20192020 and 2018: Global
Property Global
A&H Specialty &
Casualty Runoff &
Other Corporate
Elimination Total $ 236.2 $ 152.8 $ 96.9 $ 1.2 $ - $ 487.1 $ 191.6 $ 120.6 $ 89.2 $ 0.3 $ - $ 401.7 $ 164.3 $ 118.8 $ 87.3 $ 0.3 $ - $ 370.7 (131.3 ) (71.8 ) (61.3 ) (2.4 ) - (266.8 ) (27.2 ) (36.0 ) (24.6 ) (1.8 ) 12.6 (77.0 ) 5.8 11.0 1.4 (3.9 ) 12.6 26.9 (2.6 ) (2.0 ) (2.2 ) (0.2 ) (4.2 ) (11.2 ) (17.0 ) (5.9 ) (6.7 ) (1.1 ) (4.8 ) (35.5 ) (13.8 ) 3.1 (7.5 ) (5.2 ) 3.6 (19.8 ) - 30.3 - - (13.7 ) 16.6 - (5.3 ) - - 5.3 - - (4.8 ) - - 4.8 - - (15.0 ) - (1.0 ) - (16.0 ) $ (13.8 ) $ 8.3 $ (7.5 ) $ (6.2 ) $ - $ (19.2 ) 24.4 15.6 15.5 (0.6 ) (1.2 ) (12.2 ) (4.0 ) (8.0 ) $ 10.3 81.5 % 62.1 % 72.7 % NM NM 75.0 % 16.6 % 30.3 % 28.2 % NM NM 20.8 % 10.3 % 5.0 % 7.7 % NM NM 9.6 % 108.4 % 97.4 % 108.6 % NM NM 105.4 % $ - $ 580.2 $ - $ 8.1 $ - $ 588.3 For the three months ended June 30, 2020 (Expressed in millions of U.S. dollars) U.S. Specialty Total Gross written premiums $ 213.5 $ 83.7 $ 25.5 $ (0.1 ) $ — $ 322.6 Net written premiums $ 220.5 $ 62.0 $ 23.8 $ (0.3 ) $ — $ 306.0 Net earned insurance and reinsurance premiums $ 240.9 $ 113.2 $ 15.2 $ 0.5 $ — $ 369.8 (148.5 ) (69.6 ) (10.4 ) 0.5 — (228.0 ) Insurance and reinsurance acquisition expenses (53.7 ) (31.5 ) (3.4 ) 0.3 10.2 (78.1 ) Technical profit (loss) 38.7 12.1 1.4 1.3 10.2 63.7 (5.2 ) (0.6 ) (0.1 ) (1.7 ) (4.7 ) (12.3 ) Other underwriting expenses (20.5 ) (6.7 ) (2.9 ) (1.5 ) (4.7 ) (36.3 ) Underwriting income (loss) 13.0 4.8 (1.6 ) (1.9 ) 0.8 15.1 — 23.1 — — (11.7 ) 11.4 Managing general underwriter unallocated LAE — (6.2 ) — — 6.2 — Managing general underwriter other underwriting expenses — (4.7 ) — — 4.7 — — (11.0 ) — (1.4 ) — (12.4 ) Underwriting income (loss), including net service fee income 13.0 6.0 (1.6 ) (3.3 ) — 14.1 Net investment income 14.8 Net realized investment gains 7.1 Net unrealized investment gains 8.7 Net foreign exchange (losses) (16.1 ) (1.2 ) (11.5 ) Intangible asset amortization expenses (4.0 ) Interest expense on debt (7.9 ) Pre-tax income $ 4.0 Loss ratio 63.8 % 62.0 % 69.1 % NM NM 65.0 % Acquisition expense ratio 22.3 % 27.8 % 22.4 % NM NM 21.1 % Other underwriting expense ratio 8.5 % 5.9 % 19.1 % NM NM 9.8 % 94.6 % 95.7 % 110.6 % NM NM 95.9 % $ — $ 564.6 $ — $ 8.1 $ — $ 572.7 a change in contingent consideration (seeNote 9) and gains (losses)losses from derivatives (seeNote 12Note 11) (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).Elimination.Eliminations.Unaudited For the three months ended June 30, 2018 (Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other Corporate
Elimination Total Gross written premiums $ 325.4 $ 112.3 $ 60.9 $ 6.4 $ - $ 505.0 Net written premiums $ 177.0 $ 82.8 $ 55.1 $ 5.4 $ - $ 320.3 Net earned insurance and reinsurance premiums $ 167.5 $ 80.8 $ 55.5 $ 5.1 $ - $ 308.9 Loss and allocated LAE(1) (68.2 ) (40.9 ) (31.7 ) (0.3 ) - (141.1 ) Insurance and reinsurance acquisition expenses (34.1 ) (26.4 ) (14.6 ) (1.5 ) 9.8 (66.8 ) Technical profit 65.2 13.5 9.2 3.3 9.8 101.0 Unallocated LAE(2) (2.5 ) (1.0 ) (1.7 ) - (5.1 ) (10.3 ) Other underwriting expenses (18.1 ) (6.3 ) (7.9 ) (2.4 ) (3.5 ) (38.2 ) Underwriting income 44.6 6.2 (0.4 ) 0.9 1.2 52.5 Service fee revenue(3) - 27.4 - - (9.8 ) 17.6 Managing general underwriter unallocated LAE - (5.1 ) - - 5.1 - Managing general underwriter other underwriting expenses - (3.5 ) - - 3.5 - General and administrative expenses, MGU + Runoff & Other(4) - (14.2 ) - (1.0 ) - (15.2 ) Underwriting income (loss), including net service fee income 44.6 10.8 (0.4 ) (0.1 ) - 54.9 Net investment income 19.2 Net realized investment (losses) gains 7.8 Net unrealized investment (losses) gains 24.7 Net foreign exchange gains (losses) 25.6 Other revenue(5) 38.0 General and administrative expenses(6) (9.0 ) Intangible asset amortization expenses (4.0 ) Interest expense on debt (7.8 ) Pre-tax income $ 149.4 Underwriting Ratios Loss ratio 42.2 % 51.9 % 60.2 % NM NM 49.0 % Acquisition expense ratio 20.4 % 32.7 % 26.3 % NM NM 21.6 % Other underwriting expense ratio 10.8 % 7.8 % 14.2 % NM NM 12.4 % Combined ratio(7) 73.4 % 92.4 % 100.7 % NM NM 83.0 % Goodwill and intangible assets(8) $ - $ 604.2 $ - $ 5.0 $ - $ 609.2 For the three months ended June 30, 2019 (Expressed in millions of U.S. dollars) U.S. Specialty Total Gross written premiums $ 317.1 $ 152.8 $ 16.0 $ 1.2 $ — $ 487.1 Net written premiums $ 266.7 $ 120.6 $ 14.1 $ 0.3 $ — $ 401.7 Net earned insurance and reinsurance premiums $ 244.9 $ 118.8 $ 6.7 $ 0.3 $ — $ 370.7 (188.5 ) (71.8 ) (4.1 ) (2.4 ) — (266.8 ) Insurance and reinsurance acquisition expenses (50.0 ) (36.0 ) (1.8 ) (1.8 ) 12.6 (77.0 ) Technical profit (loss) 6.4 11.0 0.8 (3.9 ) 12.6 26.9 (4.7 ) (2.0 ) (0.1 ) (0.2 ) (4.2 ) (11.2 ) Other underwriting expenses (21.6 ) (5.9 ) (2.1 ) (1.1 ) (4.8 ) (35.5 ) Underwriting income (loss) (19.9 ) 3.1 (1.4 ) (5.2 ) 3.6 (19.8 ) — 30.3 — — (13.7 ) 16.6 Managing general underwriter unallocated LAE — (5.3 ) — — 5.3 — Managing general underwriter other underwriting expenses — (4.8 ) — — 4.8 — — (15.0 ) — (1.0 ) — (16.0 ) Underwriting income (loss), including net service fee income (19.9 ) 8.3 (1.4 ) (6.2 ) — (19.2 ) Net investment income 24.4 Net realized investment gains 15.6 Net unrealized investment gains 15.5 Net foreign exchange (losses) (0.6 ) (1.2 ) (12.2 ) Intangible asset amortization expenses (4.0 ) Interest expense on debt (8.0 ) Pre-tax income $ 10.3 Loss ratio 78.9 % 62.1 % 62.7 % NM NM 75.0 % Acquisition expense ratio 20.4 % 30.3 % 26.9 % NM NM 20.8 % Other underwriting expense ratio 8.8 % 5.0 % 31.3 % NM NM 9.6 % 108.1 % 97.4 % 120.9 % NM NM 105.4 % $ — $ 580.2 $ — $ 8.1 $ — $ 588.3 LAEloss adjustment expenses ("LAE") are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).the right of indemnificationa change in contingent consideration (seeNote 109), and gains (losses) from derivatives (seeNote 1112), and the termination of the call option to purchase The Phoenix Holdings, Ltd. (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).Elimination.Eliminations.Unaudited20192020 and 2018: For the six months ended June 30, 2019 (Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other Corporate
Elimination Total Gross written premiums $ 566.9 $ 322.1 $ 217.8 $ 2.6 $ - $ 1,109.4 Net written premiums $ 432.9 $ 255.5 $ 197.4 $ 0.7 $ - $ 886.5 Net earned insurance and reinsurance premiums $ 304.0 $ 214.9 $ 163.0 $ 0.7 $ - $ 682.6 Loss and allocated LAE(1) (193.9 ) (135.0 ) (108.9 ) (3.5 ) - (441.3 ) Insurance and reinsurance acquisition expenses (53.0 ) (62.6 ) (45.1 ) (2.5 ) 22.9 (140.3 ) Technical profit 57.1 17.3 9.0 (5.3 ) 22.9 101.0 Unallocated LAE(2) (4.7 ) (3.5 ) (4.1 ) (0.7 ) (7.6 ) (20.6 ) Other underwriting expenses (33.2 ) (12.0 ) (14.9 ) (3.2 ) (7.5 ) (70.8 ) Underwriting income (loss) 19.2 1.8 (10.0 ) (9.2 ) 7.8 9.6 Service fee revenue(3) - 66.6 - - (24.7 ) 41.9 Managing general underwriter unallocated LAE - (9.4 ) - - 9.4 - Managing general underwriter other underwriting expenses - (7.5 ) - - 7.5 - General and administrative expenses, MGU + Runoff & Other(4) - (31.2 ) - (1.8 ) - (33.0 ) Underwriting income (loss), including net service fee income $ 19.2 $ 20.3 $ (10.0 ) $ (11.0 ) $ - $ 18.5 Net investment income 44.5 Net realized investment (losses) gains 24.6 Net unrealized investment (losses) gains 89.5 Net foreign exchange gains (losses) 4.5 Other revenue(5) (6.9 ) General and administrative expenses(6) (19.6 ) Intangible asset amortization expenses (7.9 ) Interest expense on debt (15.6 ) Pre-tax income $ 131.6 Underwriting Ratios Loss ratio 65.3 % 64.4 % 69.3 % NM NM 67.7 % Acquisition expense ratio 17.4 % 29.1 % 27.7 % NM NM 20.6 % Other underwriting expense ratio 10.9 % 5.6 % 9.1 % NM NM 10.4 % Combined ratio(7) 93.6 % 99.1 % 106.1 % NM NM 98.7 % Goodwill and intangible assets(8) $ - $ 580.2 $ - $ 8.1 $ - $ 588.3 For the six months ended June 30, 2020 (Expressed in millions of U.S. dollars) U.S. Specialty Total Gross written premiums $ 678.8 $ 345.8 $ 46.3 $ 69.3 $ — $ 1,140.2 Net written premiums $ 565.9 $ 262.7 $ 39.0 $ 68.3 $ — $ 935.9 Net earned insurance and reinsurance premiums $ 475.9 $ 231.1 $ 28.0 $ 69.5 $ — $ 804.5 (405.7 ) (149.9 ) (18.1 ) (68.4 ) — (642.1 ) Insurance and reinsurance acquisition expenses (104.6 ) (62.3 ) (6.4 ) (0.1 ) 20.6 (152.8 ) Technical profit (loss) (34.4 ) 18.9 3.5 1.0 20.6 9.6 (10.2 ) (2.3 ) (0.2 ) (2.5 ) (10.1 ) (25.3 ) Other underwriting expenses (41.8 ) (12.3 ) (8.1 ) (2.4 ) (9.7 ) (74.3 ) Underwriting (loss) income (86.4 ) 4.3 (4.8 ) (3.9 ) 0.8 (90.0 ) — 59.0 — — (22.7 ) 36.3 Managing general underwriter unallocated LAE — (12.2 ) — — 12.2 — Managing general underwriter other underwriting expenses — (9.7 ) — — 9.7 — — (25.2 ) — (2.9 ) — (28.1 ) Underwriting (loss) income, including net service fee income (86.4 ) 16.2 (4.8 ) (6.8 ) — (81.8 ) Net investment income 28.3 Net realized investment gains 27.4 Net unrealized investment (losses) (35.1 ) Net foreign exchange gains 2.4 (21.8 ) (27.9 ) Intangible asset amortization expenses (7.9 ) Interest expense on debt (15.7 ) Pre-tax (loss) income $ (132.1 ) Loss ratio 87.4 % 65.9 % 65.4 % NM NM 83.0 % Acquisition expense ratio 22.0 % 27.0 % 22.9 % NM NM 19.0 % Other underwriting expense ratio 8.8 % 5.3 % 28.9 % NM NM 9.2 % 118.2 % 98.2 % 117.2 % NM NM 111.2 % $ — $ 564.6 $ — $ 8.1 $ — $ 572.7 LAEloss adjustment expenses ("LAE") are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).a change in contingent consideration (seeNote 9) and gains (losses)losses from derivatives (seeNote 12Note 11) (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).Elimination.Eliminations.Unaudited For the six months ended June 30, 2018 (Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other Corporate
Elimination Total Gross written premiums $ 672.0 $ 257.9 $ 176.4 $ 13.9 $ - $ 1,120.2 Net written premiums $ 424.2 $ 198.3 $ 155.7 $ 11.5 $ - $ 789.7 Net earned insurance and reinsurance premiums $ 303.6 $ 168.8 $ 109.9 $ 11.1 $ - $ 593.4 Loss and allocated LAE(1) (138.6 ) (86.7 ) (53.3 ) 2.1 - (276.5 ) Insurance and reinsurance acquisition expenses (63.4 ) (55.6 ) (28.7 ) (2.2 ) 20.1 (129.8 ) Technical profit 101.6 26.5 27.9 11.0 20.1 187.1 Unallocated LAE(2) (4.4 ) (2.6 ) (2.9 ) (0.9 ) (5.1 ) (15.9 ) Other underwriting expenses (35.5 ) (14.3 ) (15.9 ) (3.8 ) (11.9 ) (81.4 ) Underwriting income 61.7 9.6 9.1 6.3 3.1 89.8 Service fee revenue(3) - 60.2 - - (20.1 ) 40.1 Managing general underwriter unallocated LAE - (5.1 ) - - 5.1 - Managing general underwriter other underwriting expenses - (11.9 ) - - 11.9 - General and administrative expenses, MGU + Runoff & Other(4) - (23.7 ) - (2.1 ) - (25.8 ) Underwriting income (loss), including net service fee income 61.7 29.1 9.1 4.2 - 104.1 Net investment income 30.0 Net realized investment (losses) gains 4.1 Net unrealized investment (losses) gains 40.7 Net foreign exchange gains (losses) 22.1 Other revenue(5) 38.9 General and administrative expenses(6) (12.7 ) Intangible asset amortization expenses (7.9 ) Interest expense on debt (15.5 ) Pre-tax income $ 203.8 Underwriting Ratios Loss ratio 47.1 % 52.9 % 51.1 % NM NM 49.3 % Acquisition expense ratio 20.9 % 32.9 % 26.1 % NM NM 21.9 % Other underwriting expense ratio 11.7 % 8.5 % 14.5 % NM NM 13.7 % Combined ratio(7) 79.7 % 94.3 % 91.7 % NM NM 84.9 % Goodwill and intangible assets(8) $ - $ 604.2 $ - $ 5.0 $ - $ 609.2 For the six months ended June 30, 2019 (Expressed in millions of U.S. dollars) U.S. Specialty Total Gross written premiums $ 752.1 $ 322.1 $ 32.6 $ 2.6 $ — $ 1,109.4 Net written premiums $ 602.6 $ 255.5 $ 27.7 $ 0.7 $ — $ 886.5 Net earned insurance and reinsurance premiums $ 456.2 $ 214.9 $ 10.8 $ 0.7 $ — $ 682.6 (296.3 ) (135.0 ) (6.5 ) (3.5 ) — (441.3 ) Insurance and reinsurance acquisition expenses (95.6 ) (62.6 ) (2.5 ) (2.5 ) 22.9 (140.3 ) Technical profit (loss) 64.3 17.3 1.8 (5.3 ) 22.9 101.0 (8.7 ) (3.5 ) (0.1 ) (0.7 ) (7.6 ) (20.6 ) Other underwriting expenses (43.2 ) (12.0 ) (4.9 ) (3.2 ) (7.5 ) (70.8 ) Underwriting (loss) income 12.4 1.8 (3.2 ) (9.2 ) 7.8 9.6 — 66.6 — — (24.7 ) 41.9 Managing general underwriter unallocated LAE — (9.4 ) — — 9.4 — Managing general underwriter other underwriting expenses — (7.5 ) — — 7.5 — — (31.2 ) — (1.8 ) — (33.0 ) Underwriting (loss) income, including net service fee income 12.4 20.3 (3.2 ) (11.0 ) — 18.5 Net investment income 44.5 Net realized investment gains 24.6 Net unrealized investment (losses) 89.5 Net foreign exchange gains 4.5 (6.9 ) (19.6 ) Intangible asset amortization expenses (7.9 ) Interest expense on debt (15.6 ) Pre-tax (loss) income $ 131.6 Loss ratio 66.9 % 64.4 % 61.1 % NM NM 67.7 % Acquisition expense ratio 21.0 % 29.1 % 23.1 % NM NM 20.6 % Other underwriting expense ratio 9.5 % 5.6 % 45.4 % NM NM 10.4 % 97.4 % 99.1 % 129.6 % NM NM 98.7 % $ — $ 580.2 $ — $ 8.1 $ — $ 588.3 LAEloss adjustment expenses ("LAE") are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).the right of indemnificationa change in contingent consideration (seeNote 109), and gains (losses) from derivatives (seeNote 1112), and the termination of the call option to purchase The Phoenix Holdings, Ltd. (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).Elimination.Eliminations.Unaudited20192020 and 2018: For the three months ended June 30, 2019
(Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other
Total Net written premiums by client location: United States $ 103.2 $ 102.5 $ 63.5 $ 0.3 $ 269.5 Europe 15.1 5.0 13.4 - 33.5 Canada, the Caribbean, Bermuda and Latin America 14.6 2.0 2.2 - 18.8 Asia and Other 58.7 11.1 10.1 - 79.9 Total net written premium by client location for the three months ended June 30, 2019 $ 191.6 $ 120.6 $ 89.2 $ 0.3 $ 401.7 Net written premiums by underwriting location: United States $ 4.4 $ 58.7 $ 12.7 $ 0.3 $ 76.1 Europe 70.1 58.4 34.5 - 163.0 Canada, the Caribbean, Bermuda and Latin America 99.0 3.3 41.7 - 144.0 Asia and Other 18.1 0.2 0.3 - 18.6 Total written premiums by underwriting location for the three months ended June 30, 2019 $ 191.6 $ 120.6 $ 89.2 $ 0.3 $ 401.7 For the three months ended June 30, 2020 (Expressed in millions of U.S. dollars) U.S. Specialty Total Total net written premiums by client location: United States $ 106.9 $ 50.7 $ 23.8 $ (0.5 ) $ 180.9 Europe 42.7 5.2 — 0.1 48.0 Canada, the Caribbean, Bermuda and Latin America 18.9 1.3 — — 20.2 Asia and Other 52.0 4.8 — 0.1 56.9 Total net written premiums by client location for the three months ended June 30, 2020 $ 220.5 $ 62.0 $ 23.8 $ (0.3 ) $ 306.0 Total net written premiums by underwriting location: United States $ 83.2 $ 25.4 $ 23.8 $ (0.4 ) $ 132.0 Europe 83.2 36.5 — — 119.7 Canada, the Caribbean, Bermuda and Latin America 36.6 — — — 36.6 Asia and Other 17.5 0.1 — 0.1 17.7 Total net written premiums by underwriting location for the three months ended June 30, 2020 $ 220.5 $ 62.0 $ 23.8 $ (0.3 ) $ 306.0 For the three months ended June 30, 2018
(Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other
Total Net written premiums by client location: United States $ 91.6 $ 70.6 $ 37.0 $ 5.4 $ 204.6 Europe 19.3 6.1 9.9 - 35.3 Canada, the Caribbean, Bermuda and Latin America 21.8 1.2 2.0 - 25.0 Asia and Other 44.3 4.9 6.2 - 55.4 Total net written premium by client location for the three months ended June 30, 2018 $ 177.0 $ 82.8 $ 55.1 $ 5.4 $ 320.3 Net written premiums by underwriting location: United States $ 10.9 $ 32.3 $ 3.6 $ 5.4 $ 52.2 Europe 73.7 43.2 24.7 - 141.6 Canada, the Caribbean, Bermuda and Latin America 80.4 7.1 26.3 - 113.8 Asia and Other 12.0 0.2 0.5 - 12.7 Total written premiums by underwriting location for the three months ended June 30, 2018 $ 177.0 $ 82.8 $ 55.1 $ 5.4 $ 320.3 For the three months ended June 30, 2019 (Expressed in millions of U.S. dollars) U.S. Specialty Total Total net written premiums by client location: United States $ 152.7 $ 102.5 $ 14.1 $ 0.2 $ 269.5 Europe 28.5 5.1 — — 33.6 Canada, the Caribbean, Bermuda and Latin America 16.7 2.0 — — 18.7 Asia and Other 68.8 11.0 — 0.1 79.9 Total net written premiums by client location for the three months ended June 30, 2019 $ 266.7 $ 120.6 $ 14.1 $ 0.3 $ 401.7 Total net written premiums by underwriting location: United States $ 104.9 $ 62.1 $ 14.1 $ 0.2 $ 181.3 Europe 102.6 58.4 — — 161.0 Canada, the Caribbean, Bermuda and Latin America 40.7 — — — 40.7 Asia and Other 18.5 0.1 — 0.1 18.7 Total net written premiums by underwriting location for the three months ended June 30, 2019 $ 266.7 $ 120.6 $ 14.1 $ 0.3 $ 401.7 Unaudited20192020 and 2018: For the six months ended June 30, 2019
(Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other
Total Net written premiums by client location: United States $ 165.2 $ 213.6 $ 131.8 $ 0.3 $ 510.9 Europe 139.7 13.1 38.3 0.2 191.3 Canada, the Caribbean, Bermuda and Latin America 39.1 7.0 6.6 - 52.7 Asia and Other 88.9 21.8 20.7 0.2 131.6 Total net written premium by client location for the six months ended June 30, 2019 $ 432.9 $ 255.5 $ 197.4 $ 0.7 $ 886.5 Net written premiums by underwriting location: United States $ 12.5 $ 99.1 $ 25.1 $ 0.3 $ 137.0 Europe 224.7 122.0 89.1 0.2 436.0 Canada, the Caribbean, Bermuda and Latin America 161.3 34.0 81.8 - 277.1 Asia and Other 34.4 0.4 1.4 0.2 36.4 Total written premiums by underwriting location for the six months ended June 30, 2019 $ 432.9 $ 255.5 $ 197.4 $ 0.7 $ 886.5 For the six months ended June 30, 2020 (Expressed in millions of U.S. dollars) U.S. Specialty Total Total net written premiums by client location: United States $ 211.2 $ 231.4 $ 39.0 $ 67.6 $ 549.2 Europe 215.5 12.4 — 0.4 228.3 Canada, the Caribbean, Bermuda and Latin America 48.3 7.8 — — 56.1 Asia and Other 90.9 11.1 — 0.3 102.3 Total net written premiums by client location for the six months ended June 30, 2020 $ 565.9 $ 262.7 $ 39.0 $ 68.3 $ 935.9 Total net written premiums by underwriting location: United States $ 155.8 $ 156.6 $ 39.0 $ 67.6 $ 419.0 Europe 291.4 106.0 — 0.4 397.8 Canada, the Caribbean, Bermuda and Latin America 84.7 — — — 84.7 Asia and Other 34.0 0.1 — 0.3 34.4 Total net written premiums by underwriting location for the six months ended June 30, 2020 $ 565.9 $ 262.7 $ 39.0 $ 68.3 $ 935.9 For the six months ended June 30, 2018
(Millions) Global
Property Global
A&H Specialty &
Casualty Runoff &
Other
Total Net written premiums by client location: United States $ 178.6 $ 158.1 $ 74.3 $ 11.5 $ 422.5 Europe 125.6 17.7 60.2 - 203.5 Canada, the Caribbean, Bermuda and Latin America 45.0 6.0 4.6 - 55.6 Asia and Other 75.0 16.5 16.6 - 108.1 Total net written premium by client location for the six months ended June 30, 2018 $ 424.2 $ 198.3 $ 155.7 $ 11.5 $ 789.7 Net written premiums by underwriting location: United States $ 16.2 $ 53.3 $ 3.5 $ 11.5 $ 84.5 Europe 210.2 111.8 96.7 - 418.7 Canada, the Caribbean, Bermuda and Latin America 170.2 32.8 53.8 - 256.8 Asia and Other 27.6 0.4 1.7 - 29.7 Total written premiums by underwriting location for the six months ended June 30, 2018 $ 424.2 $ 198.3 $ 155.7 $ 11.5 $ 789.7 For the six months ended June 30, 2019 (Expressed in millions of U.S. dollars) U.S. Specialty Total Total net written premiums by client location: United States $ 269.3 $ 213.6 $ 27.7 $ 0.4 $ 511.0 Europe 178.0 13.1 — 0.1 191.2 Canada, the Caribbean, Bermuda and Latin America 45.7 7.0 — — 52.7 Asia and Other 109.6 21.8 — 0.2 131.6 Total net written premiums by client location for the six months ended June 30, 2019 $ 602.6 $ 255.5 $ 27.7 $ 0.7 $ 886.5 Total net written premiums by underwriting location: United States $ 180.6 $ 133.1 $ 27.7 $ 0.4 $ 341.8 Europe 309.6 122.0 — 0.1 431.7 Canada, the Caribbean, Bermuda and Latin America 76.6 — — — 76.6 Asia and Other 35.8 0.4 — 0.2 36.4 Total net written premiums by underwriting location for the six months ended June 30, 2019 $ 602.6 $ 255.5 $ 27.7 $ 0.7 $ 886.5 Unauditedmonths and six months ended June 30, 20192020 and 2018: Three months ended
June 30, Six months ended
June 30, Three months ended June 30, Six months ended June 30, (Millions) 2019 2018 2019 2018 2020 2019 2020 2019 Gross beginning balance $ 1,976.3 $ 1,875.9 $ 2,016.7 $ 1,898.5 $ 2,519.6 $ 1,976.3 $ 2,331.5 $ 2,016.7 Less beginning reinsurance recoverable on unpaid losses (349.3 ) (327.8 ) (350.2 ) (319.7 ) (444.2 ) (349.3 ) (410.3 ) (350.2 ) Net loss and LAE reserve balance 1,627.0 1,548.1 1,666.5 1,578.8 2,075.4 1,627.0 1,921.2 1,666.5 Losses and LAE incurred relating to: Current year losses 214.1 161.8 381.4 305.3 239.1 214.1 662.0 381.4 Prior years losses 63.9 (10.4 ) 80.5 (12.9 ) 1.2 63.9 5.4 80.5 ��� Total net incurred losses and LAE 278.0 151.4 461.9 292.4 240.3 278.0 667.4 461.9 Foreign currency translation adjustment to net loss and LAE reserves 3.4 (22.2 ) - (15.5 ) 13.2 3.4 (8.6 ) — Accretion of fair value adjustment to net loss and LAE reserves 0.1 - 0.1 - — 0.1 — 0.1 Loss and LAE paid relating to: Current year losses 120.9 40.7 157.1 72.0 24.5 120.9 67.6 157.1 Prior years losses 121.7 167.8 305.5 314.9 231.5 121.7 439.5 305.5 Total loss and LAE payments 242.6 208.5 462.6 386.9 256.0 242.6 507.1 462.6 Net ending balance 1,665.9 1,468.8 1,665.9 1,468.8 2,072.9 1,665.9 2,072.9 1,665.9 Plus ending reinsurance recoverable on unpaid losses 357.4 358.3 357.4 358.3 442.2 357.4 442.2 357.4 Gross ending balance $ 2,023.3 $ 1,827.1 $ 2,023.3 $ 1,827.1 $ 2,515.1 $ 2,023.3 $ 2,515.1 $ 2,023.3 PropertyReinsurance ($55.661.6 million), Specialty & Casualty ($6.0 million), and Runoff & Other ($3.0 million). The.The unfavorable loss reserve development in Global PropertyReinsurance was primarily attributable to higher prior year catastrophe events, including $46.4 million from Typhoon Jebi.ThreeSix Months Ended June 30, 20182020threesix months ended June 30, 2018,2020, Sirius Group had net unfavorable loss reserve development of $5.4 million. Increases in loss reserve estimates for Global Reinsurance ($13.6 million) were partially offset by favorable loss reserve development of $10.4 million. The major reductions in loss reserve estimates were recorded in Global A&H ($4.6 million), Specialty & Casualty ($3.1 million), and Runoff & Other ($3.17.5 million). These reductions were partially offset by increases inWithin Global PropertyReinsurance, net unfavorable loss reserve development of $0.6 million resultingwas recorded primarily in Aviation & Space ($8.8 million) and Casualty Reinsurance ($5.6 million). The unfavorable loss reserve development in Aviation & Space was mainly from higher than expected reporting from recent accident years.a loss on the Lion Air crash.UnauditedPropertyReinsurance ($67.2 million), Specialty & Casualty ($4.671.8 million), Global A&H ($4.5 million), and Runoff & Other ($4.2 million). The unfavorable loss reserve development in Global PropertyReinsurance was primarily attributable to higher prior year catastrophe events, including $46.4 million from Typhoon Jebi, $7.3 million from Hurricane Florence, $7.2 million from Hurricane Irma, and $6.3 million from Hurricane Michael.Loss and LAE development - Six Months Ended June 30, 2018For the six months ended June 30, 2018, Sirius Group had net favorable loss reserve development of $12.9 million. The major reductions in loss reserve estimates were recorded in Runoff & Other ($12.0 million), Specialty & Casualty ($10.4 million), and Global A&H ($8.4 million). Favorable loss reserve development for Runoff & Other included reduction in World Trade Center claims in response to revised information received by the Company. These reductions were partially offset by increases in Global Property loss reserve development of $17.9 million resulting from higher than expected reporting from recent accident years, including $4.6 million of increases from natural catastrophes, including the 2017 North American natural catastrophes. Also, in Other Property, there was loss deterioration from recent accident years reported in client account statements received in the first quarter, which accounted for the remainder of Global Property unfavorable loss development in the six months ended June 30, 2018.reinsurance recoverablesReinsurance recoverable on paid losses of $69.8$73.9 million and reinsurance recoverables of $357.4 millionReinsurance recoverable on unpaid losses. At December 31, 2018, Sirius Group had reinsurance recoverables on paid losses of $55.0 million and reinsurance recoverables of $350.2 million on unpaid losses.$410.3 million. Because retrocessional reinsurance contracts do not relieve Sirius Group of its obligation to its insureds, the collectability of balances due from Sirius Group's reinsurers is important to its financial strength. Sirius Group monitors the financial strength and ratings of retrocessionaires on an ongoing basis. Uncollectible amounts historically have not been significant. (See Note 7.)(in millions) Gross Assets in Scope Allowance for Expected Credit Losses Premiums receivable & Funds held by ceding companies $ 1,126.4 $ 10.6 Reinsurance recoverable on unpaid and paid loss 548.3 3.9 22.8 0.4 Total as of June 30, 2020 $ 1,697.5 $ 14.9 7.8. Investment securitiesinvestment incomeSirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedmonths and six months ended June 30, 20192020 and 20182019 consisted of the following: For the three months
ended June 30, For the six months
ended June 30, For the three months ended June 30, For the six months ended June 30, (Millions) 2019 2018 2019 2018 2020 2019 2020 2019 Fixed maturity investments $ 13.1 $ 13.7 $ 27.2 $ 23.6 $ 11.1 $ 13.1 $ 21.4 $ 27.2 Short-term investments 4.8 0.5 7.9 1.3 1.3 4.8 4.6 7.9 Equity securities 7.1 7.1 9.8 8.3 2.1 7.1 4.7 9.8 Other long-term investments 3.2 1.3 7.1 2.5 3.1 3.2 3.3 7.1 Total investment income 28.2 22.6 52.0 35.7 17.6 28.2 34.0 52.0 Investment expenses (3.8 ) (3.4 ) (7.5 ) (5.7 ) (2.8 ) (3.8 ) (5.7 ) (7.5 ) Net investment income $ 24.4 $ 19.2 $ 44.5 $ 30.0 $ 14.8 $ 24.4 $ 28.3 $ 44.5 realizedRealized and unrealized investment gains (losses)months and six months ended June 30, 20192020 and 20182019 consisted of the following: For the three months
ended June 30, For the six months
ended June 30, (Millions) 2019 2018 2019 2018 Gross realized gains $ 26.9 $ 12.0 $ 41.0 $ 20.4 Gross realized (losses) (11.3 ) (4.2 ) (16.4 ) (16.3 ) Net realized gains (losses) on investments(1)(2) 15.6 7.8 24.6 4.1 Net unrealized gains (losses) on investments(3)(4) 15.5 24.7 89.5 40.7 Net realized and unrealized gains (losses) on investments $ 31.1 $ 32.5 $ 114.1 $ 44.8 For the three months ended June 30, For the six months ended June 30, (Millions) 2020 2019 2020 2019 Gross realized gains $ 57.4 $ 26.9 $ 99.4 $ 41.0 Gross realized (losses) (50.3 ) (11.3 ) (72.0 ) (16.4 ) 7.1 15.6 27.4 24.6 8.7 15.5 (35.1 ) 89.5 Net realized and unrealized gains (losses) on investments $ 15.8 $ 31.1 $ (7.7 ) $ 114.1 $9.7$5.4 and $7.1$9.7 of realized gains due to foreign currency for the three months ended June 30, 2020 and 2019, and 2018, respectively.$20.5$16.5 and $6.0$20.5 of realized gains due to foreign currency for the six months ended June 30, 2020 and 2019, and 2018, respectively.$(7.2)$(65.7) and $29.7$(7.2) of unrealized gains (losses) gains due to foreign currency for the three months ended June 30, 2020 and 2019, and 2018, respectively.$17.8$(13.1) and $48.6$17.8 of unrealized gains (losses) due to foreign currency for the six months ended June 30, 2020 and 2019, and 2018, respectively.Unaudited(losses)Net realized investment gains (losses) for the three months and six months ended June 30, 20192020 and 20182019 consisted of the following: For the three months
ended June 30, For the six months
ended June 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ 8.1 $ 3.6 $ 14.9 $ 0.8 Equity securities (1.2 ) 1.7 (1.8 ) 0.2 Short-term investments 3.1 - 3.2 - Derivative instruments (0.2 ) - (0.8 ) - Other long-term investments 5.8 2.5 9.1 3.1 Net realized investment gains (losses) $ 15.6 $ 7.8 $ 24.6 $ 4.1 For the three months ended June 30, For the six months ended June 30, (Millions) 2020 2019 2020 2019 Fixed maturity investments $ 9.9 $ 8.1 $ 17.7 $ 14.9 Equity securities (6.5 ) (1.2 ) (6.0 ) (1.8 ) Short-term investments 1.0 3.1 3.8 3.2 Derivative instruments 0.2 (0.2 ) 8.5 (0.8 ) Other long-term investments 2.5 5.8 3.4 9.1 Net realized investment gains $ 7.1 $ 15.6 $ 27.4 $ 24.6 months and six months ended June 30, 20192020 and 20182019 consisted of the following: For the three months
ended June 30, For the six months
ended June 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ 11.0 $ 17.8 $ 40.7 $ 20.8 Equity securities 13.3 (5.2 ) 38.4 1.2 Short-term investments (0.9 ) - 1.8 - Derivative instruments (0.1 ) - (0.7 ) - Other long-term investments (7.8 ) 12.1 9.3 18.7 Net unrealized investment (losses) gains $ 15.5 $ 24.7 $ 89.5 $ 40.7 For the three months ended June 30, For the six months ended June 30, (Millions) 2020 2019 2020 2019 Fixed maturity investments $ (3.7 ) $ 11.0 $ 3.2 $ 40.7 Equity securities 16.9 13.3 (52.2 ) 38.4 Short-term investments (15.8 ) (0.9 ) (0.1 ) 1.8 Derivative instruments 2.1 (0.1 ) 2.2 (0.7 ) Other long-term investments 9.2 (7.8 ) 11.8 9.3 Net unrealized investment gains (losses) $ 8.7 $ 15.5 $ (35.1 ) $ 89.5 months and six months ended June 30, 20192020 and 2018: For the three months
ended June 30, For the six months
ended June 30, (Millions) 2019 2018 2019 2018 Fixed maturity investments $ - $ (2.1 ) $ - $ (2.1 ) Other long-term investments - 7.3 8.8 7.7 Total unrealized investment gains (losses) – Level 3 investments $ - $ 5.2 $ 8.8 $ 5.6 For the three months ended June 30, For the six months ended June 30, (Millions) 2020 2019 2020 2019 Fixed maturity investments $ — $ — $ 0.3 $ — Other long-term investments (4.2 ) — (5.1 ) 8.8 Total unrealized investment (losses) gains – Level 3 investments $ (4.2 ) $ — $ (4.8 ) $ 8.8 holdings20192020 and December 31, 2018,2019, were as follows: June 30, 2019 (Millions) Cost or
amortized
cost Gross
unrealized
gains Gross
unrealized
(losses) Net foreign
currency
gains
(losses) Fair value Corporate debt securities $ 588.8 $ 5.0 $ (1.1 ) $ 13.9 $ 606.6 Residential mortgage-backed securities 381.5 9.9 (1.7 ) 8.3 398.0 Asset-backed securities 510.9 1.0 (1.8 ) 3.5 513.6 Commercial mortgage-backed securities 106.3 0.8 (0.5 ) 1.2 107.8 Non-U.S. government and government agency 27.9 - - 0.6 28.5 U.S. government and government agency 155.1 1.1 (0.1 ) 1.3 157.4 Preferred stocks 1.1 0.1 - - 1.2 U.S. States, municipalities and political subdivision 2.6 - - - 2.6 Total fixed maturity investments $ 1,774.2 $ 17.9 $ (5.2 ) $ 28.8 $ 1,815.7 June 30, 2020 (Millions) Fair value Corporate debt securities $ 468.2 $ 9.8 $ (0.8 ) $ 6.5 $ 483.7 Asset-backed securities 737.4 5.2 (18.5 ) (0.9 ) 723.2 Residential mortgage-backed securities 403.6 22.3 (0.8 ) 3.1 428.2 U.S. government and government agency 105.5 1.2 (0.1 ) (2.1 ) 104.5 Commercial mortgage-backed securities 96.2 2.5 (2.3 ) 0.1 96.5 Non-U.S. government and government agency 50.4 0.3 (0.2 ) (0.4 ) 50.1 Preferred stocks 14.8 2.3 (0.3 ) — 16.8 U.S. States, municipalities and political subdivision 1.6 0.1 — — 1.7 Total fixed maturity investments $ 1,877.7 $ 43.7 $ (23.0 ) $ 6.3 $ 1,904.7 December 31, 2018 December 31, 2019 (Millions) Cost or
amortized
cost Gross
unrealized
gains Gross
unrealized
(losses) Net foreign
currency
gains
(losses) Fair value Fair value Corporate debt securities $ 694.1 $ 1.4 $ (7.3 ) $ 7.6 $ 695.8 $ 458.6 $ 5.2 $ (1.2 ) $ 11.5 $ 474.1 Asset-backed securities 496.3 0.1 (3.8 ) 1.9 494.5 489.4 1.4 (3.9 ) (0.1 ) 486.8 Residential mortgage-backed securities 413.0 1.7 (7.1 ) 5.9 413.5 426.2 10.5 (1.4 ) 3.6 438.9 U.S. government and government agency 163.9 0.3 (0.5 ) 4.2 167.9 111.5 0.7 (0.4 ) (1.3 ) 110.5 Commercial mortgage-backed securities 117.7 0.2 (2.7 ) 0.7 115.9 88.5 0.9 (0.6 ) 0.2 89.0 Non-U.S. government and government agency 50.6 - (0.2 ) (0.1 ) 50.3 63.7 — (0.7 ) — 63.0 Preferred stocks 14.5 0.6 (6.8 ) 0.2 8.5 17.0 — — — 17.0 U.S. States, municipalities and political subdivision 2.8 - - - 2.8 1.7 — — — 1.7 Total fixed maturity investments $ 1,952.9 $ 4.3 $ (28.4 ) $ 20.4 $ 1,949.2 $ 1,656.6 $ 18.7 $ (8.2 ) $ 13.9 $ 1,681.0 20192020 was approximately 1.5 years,1 year, including short-term investments, and approximately 2.21.5 years excluding short-term investments.Unaudited20192020 and December 31, 20182019 are presented below by contractual maturity. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties. June 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019 (Millions) Cost or
amortized cost Fair value Cost or
amortized cost Fair value Fair value Fair value Due in one year or less $ 197.9 $ 202.9 $ 249.6 $ 254.6 $ 127.3 $ 131.4 $ 85.0 $ 88.4 Due after one year through five years 523.5 538.7 635.6 636.4 446.3 456.2 479.1 490.3 Due after five years through ten years 52.9 53.4 26.2 25.7 43.9 44.3 46.3 46.0 Due after ten years 0.1 0.1 0.1 0.1 8.2 8.1 25.1 24.6 Mortgage-backed and asset-backed securities 998.7 1,019.4 1,026.9 1,023.9 1,237.2 1,247.9 1,004.1 1,014.7 Preferred stocks 1.1 1.2 14.5 8.5 14.8 16.8 17.0 17.0 Total $ 1,774.2 $ 1,815.7 $ 1,952.9 $ 1,949.2 $ 1,877.7 $ 1,904.7 $ 1,656.6 $ 1,681.0 20192020 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019 AAA $ 597.8 $ 602.0 $ 785.6 $ 559.8 AA 746.8 818.0 716.8 724.3 A 278.2 290.5 217.4 219.0 BBB 133.5 167.4 102.5 95.8 Other 59.4 71.3 82.4 82.1 Total fixed maturity investments(1) $ 1,815.7 $ 1,949.2 $ 1,904.7 $ 1,681.0 2019,2020, the above totals included $51.6$41.2 million of sub-prime securities. Of this total, $22.4$21.8 million was rated AAA, $17.4$16.1 million rated AA, $7.1$3.2 million rated A and $4.7$0.1 million classified as Other. At December 31, 2018,2019, the above totals included $42.6$43.3 million of sub-prime securities. Of this total, $17.1$21.7 million was rated AAA, $9.8$18.4 million rated AA, $6.0$3.1 million rated A $4.7 million rated BBB and $5.0$0.1 million classified as Other.losses, and fair values of Sirius Group's equity securities and other long-term investments as of June 30, 20192020 and December 31, 2018,2019, were as follows: June 30, 2019 (Millions) Cost or
amortized
cost Gross
unrealized
gains Gross
unrealized
losses Net foreign
currency
gains Fair value Equity securities $ 376.2 $ 38.6 $ (36.7 ) $ 9.7 $ 387.8 Other long-term investments $ 349.9 $ 44.2 $ (24.6 ) $ 10.4 $ 379.9 June 30, 2020 (Millions) Fair value Equity securities $ 178.1 $ 40.1 $ (69.1 ) $ 0.8 $ 149.9 Other long-term investments $ 324.7 $ 61.3 $ (28.8 ) $ 10.9 $ 368.1 December 31, 2019 (Millions) Fair value Equity securities $ 379.2 $ 55.6 $ (37.3 ) $ 7.7 $ 405.2 Other long-term investments $ 315.4 $ 49.9 $ (29.3 ) $ 10.8 $ 346.8 Unaudited December 31, 2018 (Millions) Cost or
amortized
cost Gross
unrealized
gains Gross
unrealized
losses Net foreign
currency
gains Fair value Equity securities $ 409.4 $ 17.8 $ (50.8 ) $ 3.6 $ 380.0 Other long-term investments $ 337.6 $ 32.6 $ (13.5 ) $ 8.3 $ 365.0 20192020 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 Investment grade fixed income mutual funds $ 151.9 $ 157.7 Common stocks 233.4 222.3 Other 2.5 - Total Equity securities $ 387.8 $ 380.0 (Millions) June 30, 2020 December 31, 2019 Fixed income mutual funds $ 1.7 $ 175.3 Common stocks 161.5 228.1 (13.3 ) 1.8 Total Equity securities $ 149.9 $ 405.2 20192020 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 Hedge funds and private equity funds $ 291.9 $ 301.4 Limited liability companies and private equity securities 88.0 63.6 Total other long-term investments $ 379.9 $ 365.0 (Millions) June 30, 2020 December 31, 2019 Hedge funds and private equity funds $ 289.9 $ 269.0 Limited liability companies and private equity securities 78.2 77.8 Total other long-term investments $ 368.1 $ 346.8 otherOther long-term investments. The fair value of these investments has been estimated using the net asset value of the funds. As of June 30, 2019,2020, Sirius Group held investments in 9 hedge funds and 2933 private equity funds. The largest investment in a single fund was $49.6$64.2 million as of June 30, 20192020 and $54.8$51.6 million as of December 31, 2018.2019.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited20192020 and December 31, 2018: June 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019
(Millions)
Fair Value Unfunded
Commitments
Fair Value Unfunded
Commitments Fair value Fair value Hedge funds: Long/short multi-sector $ 47.7 $ - $ 41.0 $ - $ 51.0 $ — $ 53.0 $ — Distressed mortgage credit 49.6 - 54.8 - 64.2 — 51.6 — Private Credit 20.8 - 20.0 Private credit 21.8 — 21.5 — Other 2.3 - 2.5 - 1.1 — 1.4 — Total hedge funds 120.4 - 118.3 - 138.1 — 127.5 — Private equity funds: Energy infrastructure & services 74.8 41.9 93.7 54.2 54.1 32.8 53.6 34.6 Multi-sector 6.5 0.7 9.0 0.7 16.2 7.8 8.7 7.8 Healthcare 35.6 11.7 31.7 15.6 28.4 6.3 25.9 10.4 Life settlement 24.8 - 23.7 - 22.8 — 23.9 — Manufacturing/Industrial 27.5 4.0 23.6 10.4 27.2 — 27.6 3.9 Private equity secondaries 0.8 0.8 1.1 1.1 0.6 0.8 0.6 0.8 Real estate 0.3 - 0.3 - Other 1.2 2.6 - - 2.5 1.7 1.2 2.6 Total private equity funds 171.5 61.7 183.1 82.0 151.8 49.4 141.5 60.1 Total hedge and private equity funds included in other long-term investments $ 291.9 $ 61.7 $ 301.4 $ 82.0 Total hedge and private equity funds included in Other long-term investments $ 289.9 $ 49.4 $ 269.0 $ 60.1 20192020 fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds:
(Millions) 30-59 days
notice 60-89 days
notice 90-119 days
notice 120+ days
notice Total $ - $ 32.3 $ - $ - $ 32.3 0.8 - - - 0.8 - 0.7 - - 0.7 - 15.4 50.4 20.8 86.6 $ 0.8 $ 48.4 $ 50.4 $ 20.8 $ 120.4 Notice Period Redemption Frequency
(Millions)Total Monthly $ — $ 28.8 $ — $ — $ 28.8 Quarterly 0.6 22.2 64.2 — 87.0 Semi-annual — 0.2 — — 0.2 Annual — — 0.2 21.9 22.1 Total $ 0.6 $ 51.2 $ 64.4 $ 21.9 $ 138.1 Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited2019,2020, no distributions were outstanding from these investments.2019,2020, investments in private equity funds were subject to lock-up periods as follows: 1 - 3 years 3 – 5 years 5 – 10 years Total $ 10.6 $ 4.2 $ 156.7 $ 171.5 (Millions) 1 - 3 years 3 – 5 years 5 – 10 years Total Private Equity Funds – expected lock up period remaining $ 54.6 $ 1.8 $ 95.4 $ 151.8 heldHeld on depositDeposit or as collateral20192020 and December 31, 20182019 investments of $802.8$1,037.4 million and $792.4$1,309.5 million, respectively, were held in trusts required to be maintained in relation to various reinsurance agreements. Sirius Group's reinsurance operations are required to maintain deposits with certain insurance regulatory agencies in order to maintain their insurance licenses. The fair value of such deposits that are included within total investments totaled $814.4$1,057.2 million and $801.2$1,315.5 million as of June 30, 20192020 and December 31, 2018,2019, respectively.2019,2020, Sirius Group held $0.2 million of collateral in the form of short-term investments associated with Interest Rate Cap agreements. (SeeNote 1112.)20192020 and December 31, 20182019 Sirius Group reported $2.6$11.3 million and $3.2$2.3 million, respectively, in Accounts payable on unsettled investment purchases.20192020 and December 31, 2018,2019, Sirius Group reported $2.0$34.4 million and $5.0$6.7 million, respectively, in Accounts receivable on unsettled investment sales.8.9. Fair value measurementsSirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedUnauditedinvestmentsUnauditednet asset valueUnauditedvalue measurementsValue Measurements by level20192020 and December 31, 20182019 by level: June 30, 2019 June 30, 2020 (Millions) Fair
Value Level 1
Inputs Level 2
Inputs Level 3
Inputs Assets measured at fair value Fixed maturity investments: U.S. Government and government agency $ 157.4 $ 156.0 $ 1.4 $ - $ 104.5 $ 103.5 $ 1.0 $ — Corporate debt securities 606.6 - 606.6 - 483.7 — 483.7 — Residential mortgage-backed securities 398.0 - 398.0 - 428.2 — 428.2 — Asset-backed securities 513.6 - 513.6 - 723.2 — 723.2 — Commercial mortgage-backed securities 107.8 - 107.8 - 96.5 — 96.5 — Non-U.S. government and government agency 28.5 28.5 - - 50.1 28.5 21.6 — Preferred stocks 1.2 - 1.2 - 16.8 — 14.2 2.6 U.S. States, municipalities, and political subdivision 2.6 - 2.6 - 1.7 — 1.7 — Total fixed maturity investments 1,815.7 184.5 1,631.2 - 1,904.7 132.0 1,770.1 2.6 Equity securities: Investment grade fixed income mutual funds 151.9 151.9 - - Fixed income mutual funds 1.7 1.7 — — Common stocks 233.4 233.4 - - 161.5 161.5 — — Other 2.5 - 2.5 - (13.3 ) (16.3 ) 3.0 — Total equity securities 387.8 385.3 2.5 - 149.9 146.9 3.0 — Short-term investments 882.9 845.6 37.3 - Other long-term investments(1) 88.0 - - 88.0 1,048.1 1,000.2 47.9 — 78.2 — — 78.2 Total investments $ 3,174.4 $ 1,415.4 $ 1,671.0 $ 88.0 $ 3,180.9 $ 1,279.1 $ 1,821.0 $ 80.8 Loan participation 27.3 — — 27.3 Derivative instruments 2.9 0.8 - 2.1 7.0 4.5 — 2.5 Total assets measured at fair value $ 3,177.3 $ 1,416.2 $ 1,671.0 $ 90.1 $ 3,215.2 $ 1,283.6 $ 1,821.0 $ 110.6 Liabilities measured at fair value Contingent consideration liabilities $ 30.8 $ - $ - $ 30.8 $ 22.9 $ — $ — $ 22.9 Derivative instruments 6.0 0.3 - 5.7 1.4 0.4 — 1.0 Total liabilities measured at fair value $ 36.8 $ 0.3 $ - $ 36.5 $ 24.3 $ 0.4 $ — $ 23.9 $291.9$289.9 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient.Unaudited December 31, 2018 December 31, 2019 (Millions) Fair
value Level 1
inputs Level 2
inputs Level 3
inputs Assets measured at fair value Fixed maturity investments: U.S. Government and government agency $ 167.9 $ 164.7 $ 3.2 $ - $ 110.5 $ 109.1 $ 1.4 $ — Corporate debt securities 695.8 - 695.8 - 474.1 — 474.1 — Asset-backed securities 494.5 - 494.5 - 486.8 — 486.8 — Residential mortgage-backed securities 413.5 - 413.5 - 438.9 — 438.9 — Commercial mortgage-backed securities 115.9 - 115.9 - 89.0 — 89.0 — Non-U.S. government and government agency 50.3 42.9 7.4 - 63.0 31.7 31.3 — Preferred stocks 8.5 - 3.1 5.4 17.0 — — 17.0 U.S. States, municipalities, and political subdivision 2.8 - 2.8 - 1.7 — 1.7 — Total fixed maturity investments 1,949.2 207.6 1,736.2 5.4 1,681.0 140.8 1,523.2 17.0 Equity securities: Fixed income mutual funds 175.3 175.3 — — Common stocks 228.1 228.1 — — Other equity securities 1.8 — 1.8 — Total equity securities 405.2 403.4 1.8 — Short-term investments 715.5 679.3 36.2 - 1,085.2 1,073.7 11.5 — Equity securities: Investment grade fixed income mutual funds 157.7 157.7 - - Common stocks 222.3 222.3 - - Total equity securities 380.0 380.0 - - Other long-term investments(1) 63.6 - - 63.6 77.8 — — 77.8 Total investments $ 3,108.3 $ 1,266.9 $ 1,772.4 $ 69.0 $ 3,249.2 $ 1,617.9 $ 1,536.5 $ 94.8 Loan participation 20.0 — — 20.0 Derivative instruments 4.1 - - 4.1 11.4 1.3 — 10.1 Total assets measured at fair value $ 3,112.4 $ 1,266.9 $ 1,772.4 $ 73.1 $ 3,280.6 $ 1,619.2 $ 1,536.5 $ 124.9 Liabilities measured at fair value Contingent consideration liabilities $ 28.8 $ - $ - $ 28.8 $ 28.2 $ — $ — $ 28.2 Derivative instruments 5.1 0.5 - 4.6 9.5 0.2 — 9.3 Total liabilities measured at fair value $ 33.9 $ 0.5 $ - $ 33.4 $ 37.7 $ 0.2 $ — $ 37.5 $301.4$269.0 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient.20192020 and June 30, 2018: Fixed
Maturities Other
long-term
investments(1) Derivative
instruments
assets &
(liabilities) Contingent
consideration
(liabilities) $ - $ 88.0 $ (4.8 ) $ (28.8 ) - - (0.6 ) (2.0 ) - - - - - - - - - - 1.8 - $ - $ 88.0 $ (3.6 ) $ (30.8 ) For the three months ended June 30, 2020 (Millions) Loan Participation Balance as of March 31, 2020 $ 2.6 $ 75.9 $ 19.9 $ (8.9 ) $ (28.3 ) Total realized and unrealized gains (losses) — (4.2 ) — (5.7 ) (0.1 ) Foreign currency gains (losses) through Other Comprehensive Income — 1.0 — — — Purchases — 5.5 7.4 — — Sales/Settlements — — — 16.1 5.5 Balance as of June 30, 2020 $ 2.6 $ 78.2 $ 27.3 $ 1.5 $ (22.9 ) For the three months ended June 30, 2019 (Millions) Loan Participation Balance as of March 31, 2019 $ — $ 88.0 $ — $ (4.8 ) $ (28.8 ) Total realized and unrealized gains (losses) — — — (0.6 ) (2.0 ) Foreign currency gains (losses) through Other Comprehensive Income — — — — — Purchases — — — — — Sales/Settlements — — — 1.8 — Balance as of June 30, 2019 $ — $ 88.0 $ — $ (3.6 ) $ (30.8 ) Fixed
Maturities Other
long-term
investments(1) Derivative
instruments
assets &
(liabilities) Contingent
consideration
(liabilities) $ 8.6 $ 64.9 $ (6.1 ) $ (42.8 ) (2.1 ) 8.5 5.6 - - (1.3 ) - - - 0.5 - - (0.5 ) (3.6 ) (5.3 ) - $ 6.0 $ 69.0 $ (5.8 ) $ (42.8 ) (1)Excludes fair value of $247.6 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited20192020 and June 30, 2018: Fixed
Maturities Other
long-term
investments(1) Derivative
instruments
assets &
(liabilities) Contingent
consideration
(liabilities) $ 5.4 $ 63.6 $ (0.5 ) $ (28.8 ) - 9.3 (5.8 ) (2.0 ) - (0.7 ) - - - 15.8 - - (5.4 ) - 2.7 - $ - $ 88.0 $ (3.6 ) $ (30.8 ) For the six months ended June 30, 2020 (Millions) Loan Participation Balance as of January 1, 2020 $ 17.0 $ 77.8 $ 20.0 $ 0.8 $ (28.2 ) Total realized and unrealized gains (losses) 2.6 (5.1 ) — (19.0 ) (0.2 ) Foreign currency gains (losses) through Other Comprehensive Income — — — — — Purchases — 5.5 7.4 — — Sales/Settlements (17.0 ) — (0.1 ) 19.7 5.5 Balance as of June 30, 2020 $ 2.6 $ 78.2 $ 27.3 $ 1.5 $ (22.9 ) For the six months ended June 30, 2019 (Millions) Loan Participation Balance as of January 1, 2019 $ 5.4 $ 63.6 $ — $ (0.5 ) $ (28.8 ) Total realized and unrealized gains (losses) — 9.3 — (5.8 ) (2.0 ) Foreign currency gains (losses) through Other Comprehensive Income — (0.7 ) — — — Purchases — 15.8 — — — Sales/Settlements (5.4 ) — — 2.7 — Balance as of June 30, 2019 $ — $ 88.0 $ — $ (3.6 ) $ (30.8 ) For the six months ended June 30, 2018 (Millions) Fixed
Maturities Other
long-term
investments(1) Derivative
instruments
assets &
(liabilities) Contingent
consideration
(liabilities) Balance at December 31, 2017 $ 8.0 $ 64.2 $ (6.1 ) $ (42.8 ) Total realized and unrealized gains (losses) (2.1 ) 9.3 5.6 - Foreign currency gains (losses) through Other Comprehensive Income - (1.6 ) - - Purchases 0.6 0.9 - - Sales/Settlements (0.5 ) (3.8 ) (5.3 ) - Balance at June 30, 2018 $ 6.0 $ 69.0 $ (5.8 ) $ (42.8 ) (1)Excludes fair value of $247.6 associated with hedge funds and private equity funds which fair value is measured using NAV practical expedient.months ended June 30, 2019 and 2018. There were no transfers between Level 3 and Level 2 measurements during the six months ended June 30, 2020 and 2019, and 2018.respectively.unobservable inputs20192020 and December 31, 2018,2019, and includes only those instruments for which information about the inputs is reasonably available to Sirius Group, such as data from independent third-party valuation service providers and from internal valuation models. (Millions, except share prices) June 30, 2019 June 30, 2020 Description Valuation Technique(s) Fair value Unobservable input Valuation Technique(s) Fair value Unobservable input Share price of recent transaction $ 32.5 Purchase share price 40.63 Purchase price of recent transaction $ 19.9 Comparable yields Range - 4.46% - 7.82%
Median - 5.58%Share price of recent transaction $ 19.9 Purchase price 7.74 Multiple of GAAP book value $ 13.2 Book value multiple Range - 0.73x-0.91x
Median - 0.82xPurchase price of recent transaction $ 7.4 Purchase price $ 7.4 Discounted cash flow $ 6.2 Discount yield Range - 11.87% - 12.32%
Median - 12.08%Private equity securities(1) Share price of recent transaction $ 32.5 Purchase share price $ 40.63 Purchase price of recent transaction $ 4.7 Purchase price 7.74 Preferred stock(1) Share price of recent transaction $ 17.5 Purchase price $ 7.74 Purchase price of recent transaction $ 1.9 Purchase price $ 1.9 Private equity securities(1) Multiple of GAAP book value $ 16.8 Book value multiple 1.0 X Private debt instrument(1) Purchase price of recent transaction $ 7.8 Purchase price $ 9.0 Private debt instrument(1) Purchase price of recent transaction $ 6.0 Purchase price $ 6.0 Unit price of recent transaction $ 1.4 Purchase price 7.74 Third party appraisal $ 1.2 Broker quote $ 1.2 Third party appraisal $ 0.7 Broker quote $ 0.7 Purchase price of recent transaction $ 0.7 Purchase price $ 0.7 Option pricing model $ 0.6 Strike price $ 0.2 Private equity securities(1) Share price of recent transaction $ 5.1 Purchase price $ 7.74 Purchase price of recent transaction $ 0.3 Purchase price $ 0.3 Weather derivatives(2) Third party appraisal $ 1.7 Broker quote $ 1.7 Third party appraisal $ (1.0 ) Broker quote $ (1.0 ) Private equity securities(1) Purchase price of recent transaction $ 1.0 Purchase price $ 10.0 Private equity securities(1) Purchase price of recent transaction $ 0.8 Purchase price $ 0.8 Equity warrants Option pricing model $ 0.4 Strike price $ 0.2 Private equity securities(1) Purchase price of recent transaction $ 0.3 Purchase price $ 0.3 Private debt instrument(1) Purchase price of recent transaction $ 0.2 Purchase price $ 0.2 Currency forwards(2) Third party appraisal $ 0.2 Broker quote $ 0.2 Currency swaps(2) Third party appraisal $ (3.8 ) Broker quote $ (3.8 ) Contingent consideration External valuation model $ (30.8 ) Discounted future payments $ (30.8 ) External valuation model $ (22.9 ) Discounted future payments $ (22.9 ) (Millions, except share prices) December 31, 2019 Description Valuation Technique(s) Fair value Unobservable input Share price of recent transaction $ 32.5 Purchase share price $ 40.6 Purchase price of recent transaction $ 20.0 Purchase price 20.0 Share price of recent transaction $ 17.5 Purchase price $ 7.74 Multiple of GAAP book value $ 14.2 Book value multiple 0.9 Purchase price of recent transaction $ 12.2 Purchase price $ 12.2 Purchase price of recent transaction $ 7.2 Purchase price $ 9.0 Third party appraisal $ 7.0 Broker quote $ 7.0 Purchase price of recent transaction $ 5.1 Purchase price $ 7.74 Purchase price of recent transaction $ 4.8 Purchase price $ 4.80 Third party appraisal $ 2.7 Broker quote $ 2.7 Purchase price of recent transaction $ 1.0 Purchase price $ 10.0 Option pricing model $ 0.4 Strike price $ 0.2 Purchase price of recent transaction $ 0.3 Purchase price $ 0.3 Third party appraisal $ (3.6 ) Broker quote $ (3.6 ) Third party appraisal $ (5.7 ) Broker quote $ (5.7 ) Contingent consideration External valuation model $ (28.2 ) Discounted future payments $ (28.2 ) 1112for discussion of derivative instruments. �� (Millions, except share prices) December 31, 2018 Description Valuation Technique(s) Fair value Unobservable input Private equity securities(1) Share price of recent transaction $ 32.5 Purchase share price $ 40.63 Private equity securities(1) Multiple of GAAP book value $ 14.7 Book value multiple 0.9 X Private debt instrument(1) Purchase price of recent transaction $ 9.0 Purchase price $ 9.0 Private debt instrument(1) Purchase price of recent transaction $ 6.0 Purchase price $ 6.0 Preferred stock(1) Share price of recent transaction $ 4.6 Purchase price $ 1.88 Weather derivatives(2) Third party appraisal $ 3.9 Broker quote $ 3.9 Private equity securities(1) Purchase price of recent transaction $ 0.9 Purchase price $ 1.88 Preferred stock(1) Share price of recent transaction $ 0.8 Purchase price $ 0.8 Private equity securities(1) Share price of recent transaction $ 0.3 Purchase price $ 10.0 Private debt instrument(1) Purchase price of recent transaction $ 0.2 Purchase price $ 0.2 Interest rate cap(2) Third party appraisal $ 0.2 Broker quote $ 0.2 Currency swaps(2) Third party appraisal $ (4.6 ) Broker quote $ (4.6 ) Contingent consideration External valuation model $ (28.8 ) Discounted future payments $ (28.8 ) (1)As of December 31, 2018, each asset type consists of one security.(2)SeeNote 11 for discussion of derivative instruments.Unaudited20192020 and December 31, 2018,2019, due to their respective short maturities. As these financial instruments are not actively traded, their respective fair values are classified within Level 3. The following table includes financial instruments for which the carrying value differs from the estimated fair values at June 30, 20192020 and December 31, 2018: June 30, 2019 December 31, 2018 (Millions) Fair Value(1) Carrying Value Fair Value(1) Carrying Value Liabilities, Mezzanine equity, and Non-controlling interest: 2017 SEK Subordinated Notes $ 297.0 $ 292.3 $ 309.5 $ 303.6 2016 SIG Senior Notes $ 386.9 $ 393.6 $ 347.6 $ 393.2 Series B preference shares $ 205.2 $ 241.3 $ 191.7 $ 232.2 June 30, 2020 December 31, 2019 (Millions) Carrying Value Carrying Value Liabilities, Mezzanine equity, and Non-controlling interest: 2017 SEK Subordinated Notes $ 268.7 $ 290.5 $ 294.5 $ 291.2 2016 SIG Senior Notes $ 367.4 $ 394.4 $ 394.5 $ 394.0 Series B preference shares $ 179.5 $ 206.2 $ 186.4 $ 223.0 9.10. Debt and standby letters of credit facilities20192020 and December 31, 20182019 consisted of the following: (Millions) June 30,
2019 Effective
Rate(1) December 31, 2018 Effective
Rate(1) June 30, 2020 December 31, 2019 2017 SEK Subordinated Notes, at face value $ 296.2 3.9 % $ 307.6 3.8 % $ 294.2 4.4 % $ 295.0 4.0 % (3.9 ) (4.0 ) (3.7 ) (3.8 ) 292.3 303.6 290.5 291.2 2016 SIG Senior Notes, at face value 400.0 4.7 % 400.0 4.7 % 400.0 4.7 % 400.0 4.7 % (2.5 ) (2.6 ) (2.2 ) (2.3 ) (3.9 ) (4.2 ) (3.4 ) (3.7 ) 393.6 393.2 394.4 394.0 Total debt $ 685.9 $ 696.8 $ 684.9 $ 685.2 Unaudited20192020 and 2018,2019, Sirius Group recognized $0.3$(19.8) million and $27.8$0.3 million, respectively, of foreign currency exchange (losses) gains on the remeasurement of the 2017 SEK Subordinated Notes into USD from SEK. For the six months ended June 30, 20192020 and 2018,2019, Sirius Group recognized $11.3$0.8 million and $27.8$11.3 million, respectively, of foreign currency exchange gains on the remeasurement of the 2017 SEK Subordinated Notes into USD from SEK.4.1%4.4% and 3.5%4.1% annualized for the three months ended June 30, 20192020 and 2018,2019, respectively. The effective rate for the six months ended June 30, 2020 and 2019 were 4.3% and 2018 were 3.9% and 3.5% annualized, respectively. Sirius Group recorded $3.2$3.1 million and $3.0$3.2 million of interest expense, inclusive of amortization of issuance costs on the 2017 SEK Subordinated Notes for the three months ended June 30, 20192020 and 2018,2019, respectively. Sirius Group recorded $6.0$6.1 million and $5.9$6.0 million of interest expense, inclusive of amortization of issuance costs on the 2017 SEK Subordinated Notes for the six months ended June 30, 2020 and 2019, and 2018, respectively.20192020 and 2018.2019. Sirius Group recorded $9.6 million, of interest expense, inclusive of amortization of issuance costs on the 2016 SIG Senior Notes, for both the six monthsmonth periods ended June 30, 2020 and 2019.and 2018.
Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedStandby letterCorporation ("Sirius International"), a wholly owned subsidiary of credit facilitiesOn November 9, 2018, Sirius Internationalthe Company, renewed two standby letter of credit facility agreements totaling $160$125 million to provide capital support for Lloyd's Syndicate 1945. The first letter of credit is a renewal of a $125$90 million facility with Nordea Bank Finland Abp, London Branch, which is issued on an unsecured basis. The second letter of credit is a $35 million facility with DNB Bank ASA, Sweden Branch, $25 million of which is issued on an unsecured basis. Each facility is renewable annually. The above referenced facilities are subject to various affirmative, negative and financial covenants that the Company considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards, and change in control provisions.20192020 and December 31, 2018,2019, these secured letter of credit and trust arrangements were collateralized by pledged assets and assets in trust of SEK 3.03.5 billion and SEK 2.93.4 billion, respectively, or $319.0$369.1 million and $321.3$363.3 million, respectively (based on the June 30, 20192020 and December 31, 20182019 SEK to USD exchange rates). As of June 30, 20192020 and December 31, 2018,2019, Sirius America Insurance Company's trust arrangements were collateralized by pledged assets and assets in trust of $57.2$47.6 million and $56.2$57.7 million, respectively. As of June 30, 20192020 and December 31, 2018,2019, Sirius Bermuda's letters of credit and trust arrangements were collateralized by pledged assets and assets in trust of $349.6$518.1 million and $319.7$784.0 million, respectively.credit facility2019,2020, there were no outstanding borrowings under the Facility.standby letterStandby Letter of credit facility covenants2019,2020, Sirius Group was in compliance with all of the covenants under the 2017 SEK Subordinated Notes, the 2016 SIG Senior Notes, the Nordea Bank Finland Abp, London Branch facility, and the DNB Bank ASA, Sweden Branch facility. In addition, as of June 30, 2019,2020, Sirius Group was in compliance with all of the covenants under the Facility.and 2018 was $8.0$7.9 million and $7.8$8.0 million, respectively. Total interest expense incurred by Sirius Group for its indebtedness for the six months ended June 30, 2020 and 2019 and 2018 was $15.6$15.7 million and $15.5$15.6 million, respectively. Total interest paid by Sirius Group for its indebtedness for the three months ended June 30, 2020 and 2019 and 2018 was $12.2$12.4 million and $12.1$12.2 million, respectively. Total interest paid by Sirius Group for its indebtedness for the six months ended June 30, 2020 and 2019 was $15.2 million and 2018 was $14.9 million, and $15.0 million, respectively.10.11. Income taxes the Netherlands, Shanghai (China), Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited$2.1$11.2 million on pre-tax income (loss) of $4.0 million. The difference between the effective tax rate on income from continuing operations and $51.2 million during the three monthsSwedish statutory tax rate of 21.4% (the rate at which the majority of Sirius Group's worldwide operations are taxed) is primarily attributable to the exclusion of jurisdictions in the calculation of the annual estimated effective tax rate if their inclusion would not provide a reliable estimate of such rate (more specifically, if small changes in the estimated annual income recognized in a jurisdiction would result in significant changes in the annual estimated effective tax rate).2019 and 2018, respectively, on pre-tax income of $10.3 million and $149.4 million, respectively.2020, Sirius Group reported an income tax expense (benefit) of $19.3$(3.6) million and $62.3 million duringon pre-tax income (loss) of $(132.1) million. The difference between the effective tax rate for the six months ended June 30, 2020 and the Swedish statutory rate of 21.4% was primarily attributable to valuation allowance recorded against certain deferred tax assets, the exclusion of jurisdictions with pretax losses for which no tax benefit can be recognized, and the exclusion of jurisdictions if their inclusion would not provide a reliable estimate of such rate.and 2018, respectively,Sirius Group reported an income tax expense (benefit) of $2.1 million on pre-tax income (loss) of $10.3 million. The effective tax rate on income from continuing operations did not materially differ from the statutory tax rate of 21.4%.million and $203.8 million, respectively.million. The effective tax rate for the six months ended June 30, 2019 was 14.5%, which was lower than the Swedish statutory rate of 21.4% (the rate at which the majority of Sirius Group's worldwide operations are taxed) primarily because of income recognized in jurisdictions with lower rates than Sweden. The2018 was 30.6%, which was higher than the Swedish statutory rate of 22% (the rate at which the majority of Sirius Group's worldwide operations are taxed) primarily because of non-recurring adjustments to Sirius Group's deferred tax assets which resulted from various internal restructurings2020 and changes in Sirius Group's accounting for uncertain tax positions. In arriving at the effective tax rate for the six month periods ended June 30, 2019, and 2018, Sirius Group forecasted all income and expense items including the change in unrealized investment gains (losses) and realized investment gains (losses) for the years ending December 31, 20192020 and 2018.(the "TCJA"("TCJA") was enacted into law in the U.S. in December 2017. The Company previously applied Staff Accounting Bulletin 118 ("SAB 118"), which provided guidance on accounting for the tax effects of the TCJA. SAB 118 addresses situations where accounting for certain income tax effects of the TCJA under ASC 740, Income Taxes ("ASC 740"), may be incomplete upon issuance of an entity's financial statements and provides a one-year measurement period from the enactment date to complete the accounting under ASC 740. The Company has completed its accounting for all material tax effects of the TCJA and recognized adjustments as of December 31, 2018.The TCJA includes a new Base Erosion and Anti-Abuse Minimum Tax ("BEAT") provision, which is essentially a minimum tax that is potentially applicable to certain otherwise deductible payments made by U.S. entities to non-U.S. affiliates, including cross-border interest payments and reinsurance premiums. The statutory BEAT rate is 10% in 2019-2025, and then rises to 12.5% in 2026 and thereafter. The TCJA also includes provisions for Global Intangible Low-Taxed Income ("GILTI") under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries. Consistent with accounting guidance, Sirius Group will treat BEAT as an in period tax charge when incurred in future periods for which no deferred taxes need to be provided and has made an accounting policy election to treat GILTI taxes in a similar manner. No provision for income taxes related to BEAT or GILTI was recorded as of June 30, 20192020 and December 31, 2018.20192020 is $55.3$28.2 million. Of the $55.3$28.2 million, $32.7$25.9 million relates to net deferred tax assets in U.S. subsidiaries, $130.5$137.9 million relates to net deferred tax assets in Luxembourg subsidiaries, $12.9 million relates to net deferred tax assets in United Kingdom subsidiaries, $229.7$207.9 million relates to net deferred tax liabilities in Sweden subsidiaries, and $1.7$15.9 million relates to other net deferred tax liability.asset.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited2019,2020, the total reserve for unrecognized tax benefits is $63.3$45.9 million. If Sirius Group determines in the future that its reserves for unrecognized tax benefits on permanent differences and interest and penalties are not needed, the reversal of $63.2$45.7 million of such reserves as of June 30, 20192020 would be recorded as an income tax benefit and would impact the effective tax rate. If Sirius Group determines in the future that its reserves for unrecognized tax benefits on temporary differences are not needed, the reversal of $0.1$0.2 million of such reserves as of June 30, 20192020 would not impact the effective tax rate due to deferred tax accounting but would accelerate the payment of cash to the taxing authority. The vast majorityMost of Sirius Group's reserves for unrecognized tax benefits on temporarypermanent differences relate to interest deductions for loss reserves wheredenied by the timing of the deductions is uncertain.The Swedish Tax Authority ("STA"), as described further below.2019,2020, the total amount of such reserve was $60.4$45.0 million.2014.2015.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited11.12. Derivatives20192020 and December 31, 2018.2019. Collateral held is recorded within short-term investments with an equal amount recognized as a liability to return collateral. Sirius Group's liability to return that collateral is based on the amounts provided by the counterparties and investment earnings thereon. As at June 30, 20192020 and December 31, 2018,2019, Sirius Group held collateral balances of $0.2 million and $0.3 million, respectively.currency swapsswaps have not been designated or accounted for under hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within Net foreign exchange gains (losses). The fair value of the foreign currency swaps has been estimated using a single broker quote and, accordingly, has been classified as a Level 3 measurement as of June 30, 2019 and December 31, 2018. Sirius Group does not provide or hold any collateral associated with the swaps.Foreign currency forwardSirius Group executes foreign currency forwards to manage currency exposure against a foreign currency investment. The foreign currency forwardsrisk derivatives are not designated or accounted for under hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within Net foreign exchange gains (losses).gains. The fair value of the foreign currencyswaps and forwards are estimated using a single broker quote and accordingly, classified as a Level 3 measurement. The fair value of the futures is widely available and have quoted prices in active markets and accordingly, were classified as a Level 1 measurement. Sirius Group did not provide or hold any collateral associated with the forwards.derivatives20192020 and December 31, 2018.2019. Sirius Group does not provide or hold any collateral associated with the weather derivatives.futures contracts long positions in Common equities. The equity futures contracts are not designated or accounted for under hedge accounting. Changes in fair value are presented within Net realized investment gains (losses). The fair value of the equity put options is widely available and have quoted prices in active markets and accordingly, were classified as a Level 1 measurement.Equity put optionsSirius Group executes trades in equity put options to hedge against long positions in Common equities. The equity put options are not designated or accounted for under hedge accounting. Changes in fair value are presented within Net unrealized investment (losses) gains. The fair value of the equity put optionscontracts is widely available and have quoted prices in active markets and accordingly, were classified as a Level 1 measurement.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditedwarrants20192020 and December 31, 2018: June 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019 Notional
Value Asset
derivative
at fair
value(1) Liability
derivative
at fair
value(2) Notional
Value Asset
derivative
at fair
value(1) Liability
derivative
at fair
value(2) $ 250.0 $ - $ - $ 250.0 $ 0.2 $ - $ 250.0 $ — $ — $ 250.0 $ — $ — $ 90.0 $ - $ 4.9 $ 45.0 $ - $ 4.6 $ 40.0 $ 1.2 $ — $ 90.0 $ — $ 3.6 $ 10.0 $ - $ 0.8 $ - $ - $ - $ 215.2 $ 0.7 $ — $ (30.0 ) $ 2.7 $ 5.7 $ 53.4 $ 1.7 $ - $ 150.5 $ 3.9 $ - $ 54.1 $ — $ 1.0 $ 110.7 $ 7.0 $ — $ (8.1 ) $ - $ - $ - $ - $ - $ (2.8 ) $ — $ — $ 34.5 $ — $ — Foreign currency futures contracts $ 21.5 $ — $ — $ — $ — $ — Equity call options $ 49.8 $ 3.2 $ — $ — $ — $ — $ 14.7 $ 0.8 $ 0.3 $ 6.2 $ - $ 0.5 $ (2.4 ) $ — $ 0.4 $ 31.0 $ 1.3 $ 0.2 Foreign currency call options $ 50.6 $ 1.3 $ — $ — $ — $ — $ 0.4 $ 0.4 $ - $ - $ - $ - $ 0.6 $ 0.6 $ — $ 0.4 $ 0.4 $ — 20192020 and December 31, 2018.2019.20192020 and December 31, 2018.2019.months and six months ended June 30, 20192020 and 2018:
(Millions) For the three months ended June 30, For the six months ended June 30, For the three months
ended June 30, For the six months
ended June 30, Derivatives not designated as
hedging instruments Classification of gains
(losses) recognized
in earnings 2019 2018 2019 2018 Classification of gains (losses) recognized in earnings 2020 2019 2020 2019 Interest rate cap Other revenues $ (0.1 ) $ (0.1 ) $ (0.2 ) $ 0.2 Other revenues $ — $ (0.1 ) $ — $ (0.2 ) Foreign currency swaps Net foreign exchange gains $ 1.6 $ 4.3 $ 2.4 $ 3.0 Net foreign exchange (losses) gains $ (3.4 ) $ 1.6 $ 2.6 $ 2.4 Foreign currency forwards Net foreign exchange gains (losses) $ (3.2 ) $ - $ (3.0 ) $ - Net foreign exchange (losses) gains $ (1.0 ) $ (3.2 ) $ (0.5 ) $ (3.0 ) Weather derivatives Other revenues $ 0.6 $ 1.4 $ (5.5 ) $ 2.4 Other revenues $ (1.0 ) $ 0.6 $ (21.4 ) $ (5.5 ) Equity futures contracts Net realized investment gains (losses) $ (0.2 ) $ - $ (0.8 ) $ - Net realized investment gains $ (0.3 ) $ (0.2 ) $ 2.6 $ (0.8 ) Equity futures contracts Net unrealized investment gains $ - $ - $ (0.2 ) $ - Net unrealized investment gains (losses) $ 1.5 $ — $ 0.5 $ (0.2 ) Foreign currency futures contracts Net foreign exchange (losses) gains $ (0.7 ) $ — $ (0.7 ) $ — Equity put options Net unrealized investment gains $ (0.1 ) $ 1.4 $ (0.5 ) $ 2.4 Net realized investment gains $ 0.4 $ — $ 5.9 $ — Equity put options Net unrealized investment gains (losses) $ 0.9 $ (0.1 ) $ 1.4 $ (0.5 ) Foreign currency call options Net foreign exchange (losses) gains $ (0.1 ) $ — $ (0.1 ) $ — Equity warrants Net unrealized investment gains $ 0.4 $ - $ 0.4 $ - Net unrealized investment gains (losses) $ (0.3 ) $ 0.4 $ 0.2 $ 0.4 Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited12.13. Share-based compensation employee compensation plans include grants for various types of share-based and non share-basednon-share-based compensation awards to key employees and directors of Sirius Group. As atof June 30, 2019,2020, Sirius Group's share-based compensation awards consist of performance shares units ("PSUs"), restricted share units ("RSUs"), restricted stock and options.(Millions) June 30, 2020 PSUs - IPO Incentive Awards PSUs - 2019 Long Term Incentive (LTI) RSUs Stock Options 2018 Long Term Incentive Plan (LTIP) Unrecognized compensation cost related to unvested awards $ 2.1 $ 1.0 $ 8.0 $ 1.6 $ 0.2 Weighted average recognition period (years) 1.5 years 1.5 years 1.5 years 1.7 years 0.5 years Number of Shares Three months ended June 30, 2020 PSUs - IPO Incentive Awards PSUs - 2019 LTI RSUs Stock Options 2018 Long Term Incentive Plan (LTIP) Unvested, beginning of period 543,196 382,327 1,320,837 1,374,945 856,099 Granted — — — — — Vested — — — — — Forfeited — 4,824 46,085 — 9,942 Unvested, end of period 543,196 377,503 1,274,752 1,374,945 846,157 Number of Shares Six months ended June 30, 2020 PSUs - IPO Incentive Awards PSUs - 2019 LTI RSUs Stock Options 2018 Long Term Incentive Plan (LTIP) Unvested, beginning of period 555,163 391,136 1,353,852 1,374,945 870,471 Granted — — — — — Vested — — — — — Forfeited 11,967 13,633 79,100 — 24,314 Unvested, end of period 543,196 377,503 1,274,752 1,374,945 846,157 performance share units,PSUs, 1,411,714 restricted share units,RSUs, 1,374,944 officer stock options and 34,615 of restricted shares.During For the three and six months ended June 30, 2019, Sirius GroupGroup's employees forfeited 14,335 performance share unitsPSUs and 46,052 RSUs.share units.As atshares that are payable in cash. Phantom performance shares compound through the end of the three-year award period based on the performance metrics during the period. The performance goals were determined by the Compensation Committee of the Board of Directors upon granting of awards. During the three and six months ended June 30, 2020, the Company recognized an expense of $1.5 million and $3.1 million, respectively, related to this award.thereSirius Group issued retention awards to certain key employees of the Company that vest and are paid in equal proportions on or prior to March 15, 2020 and on or prior to March 15, 2021, subject to continued employment on the applicable vesting date. In total the retention awards issued under this retention program were $31.8$13.8 million, of unrecognized share-based compensation costs, which, are expected to be recognized over$6.9 million was paid on March 15, 2020. During the next two to three years. There were no unrecognized share-based compensation costs as atand six months ended June 30, 2018.2020, the Company recognized an expense of $1.4 million and $7.7 million, respectively, in General and administrative expenses.as offor the three and six months ended June 30, 2020 and 2019, and 2018, respectively: Three months ended June 30, Six months ended June 30, (Millions) 2019 2018 2019 2018 Common shares: Shares issued and outstanding, beginning of period 115,262,303 120,000,000 115,151,251 120,000,000 Issuance of shares to directors and employees 34,615 - 145,667 - Shares issued and outstanding, end of period 115,296,918 120,000,000 115,296,918 120,000,000 Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Common shares: Shares issued and outstanding, beginning of period 115,299,341 115,262,303 115,299,341 115,151,251 Issuance of shares to directors and employees — 34,615 — 145,667 Shares issued and outstanding, end of period 115,299,341 115,296,918 115,299,341 115,296,918 20192020 and 2018.On November 5, 2018, in connection with the closing of the Merger, share, as part of the Sirius Group Private Placement. (SeeNote 3.)share.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited20192020 and December 31, 2018,2019, the balance of the Series B preference shares was $241.3$206.2 million and $232.2$223.0 million, respectively.Series A Redeemable Preference SharesIn connection with the acquisition of IMG, the Company issued mandatorily convertible stock in the form of Series A redeemable preference shares as a portion of the consideration paid. The Company issued 100,000 of the 150,000 authorized Series A redeemable preference shares to the seller of IMG. Each Series A redeemable preference share has a liquidation preference per share of $1,000.On November 5, 2018, in connection with the closing of the Merger, the Company redeemed the 100,000 outstanding shares of Series A redeemable preference shares for $95.0 million. Sirius Group recorded a $13.8 million gain on the redemption of the Series A redeemable preference shares.20192020 and December 31, 20182019, Sirius Group's balance sheet included $3.0$2.5 million and $1.7$2.4 million, respectively, in non-controlling interests.months and six months ended June 30, 20192020 and 2018: (Millions) For the three
months ended
June 30, 2019 For the three
months ended
June 30, 2018 Non-controlling interests, beginning of the period $ 2.2 $ 0.5 Net income attributable to non-controlling interests 0.8 0.4 Other, net - 0.1 Non-controlling interests, end of the period $ 3.0 $ 1.0 (Millions) For the three months ended June 30, 2020 For the three months ended June 30, 2019 Non-controlling interests, beginning of the period $ 2.6 $ 2.2 Net income (loss) attributable to non-controlling interests (0.2 ) 0.8 Other, net 0.1 — Non-controlling interests, end of the period $ 2.5 $ 3.0 (Millions) For the six
months ended
June 30, 2019 For the six
months ended
June 30, 2018 Non-controlling interests, beginning of the period $ 1.7 $ 0.2 Net income attributable to non-controlling interests 1.2 0.6 Other, net 0.1 0.2 Non-controlling interests, end of the period $ 3.0 $ 1.0
Sirius International Insurance Group, Ltd.Unaudited(Millions) For the six months ended June 30, 2020 For the six months ended June 30, 2019 Non-controlling interests, beginning of the period $ 2.4 $ 1.7 Net income attributable to non-controlling interests — 1.2 Other, net 0.1 0.1 Non-controlling interests, end of the period $ 2.5 $ 3.0 20192020 and December 31, 2018,2019, Sirius Group recorded non-controlling interest of $2.7$2.3 million and $1.7 million, respectively, in Alstead Re Insurance Company ("Alstead Re"). (SeeNote 1617.)14.15. Earnings per share and the Series A redeemable preference shares both qualify as participating securities, which requires the application of the two-class method to compute both basic and diluted earnings per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common shareholders. The Series B preference shares and the Series A redeemable preference shares have no obligation to absorb losses of the Company in periods of net loss.Unauditedmonths and six months ended June 30, 20192020 and 2018: For the three months
ended June 30, For the six months ended
June 30, For the three months ended June 30, For the six months ended June 30, (Millions, except share and per share information) 2019 2018 2019 2018 2020 2019 2020 2019 Basic earnings per share Numerator: Net income $ 8.2 $ 98.2 $ 112.3 $ 141.5 $ (7.2 ) $ 8.2 $ (128.5 ) $ 112.3 Less: Income attributable to non-controlling interests (0.8 ) (0.4 ) (1.2 ) (0.6 ) 0.2 (0.8 ) — (1.2 ) Less: Change in carrying value of Series B preference shares (0.8 ) - (9.2 ) - (6.6 ) (0.8 ) 16.8 (9.2 ) Less: Accrued dividends on Series A redeemable preference shares - - - (2.6 ) Net income available for dividends out of undistributed earnings $ 6.6 $ 97.8 $ 101.9 $ 138.3 $ (13.6 ) $ 6.6 $ (111.7 ) $ 101.9 Less: Earnings attributable to Series B preference shares (0.6 ) - (9.5 ) - — (0.6 ) — (9.5 ) Less: Earnings attributable to Series A redeemable preference shares - (4.0 ) - (5.7 ) Net income available to Sirius Group common shareholders $ 6.0 $ 93.8 $ 92.4 $ 132.6 $ (13.6 ) $ 6.0 $ (111.7 ) $ 92.4 Denominator: Weighted average shares outstanding for basic earnings per share 115,243,685 120,000,000 115,212,772 120,000,000 115,278,176 115,243,685 115,269,720 115,212,772 Basic earnings per share $ 0.05 $ 0.78 $ 0.80 $ 1.11 $ (0.12 ) $ 0.05 $ (0.97 ) $ 0.80 Diluted earnings per share Numerator: Net income available to Sirius Group common shareholders $ 6.0 $ 93.8 $ 92.4 $ 132.6 $ (13.6 ) $ 6.0 $ (111.7 ) $ 92.4 Add: Change in carrying value of Series B preference shares - - 9.2 - — — (16.8 ) 9.2 Net income available to Sirius Group common shareholders on a diluted basis $ 6.0 $ 93.8 $ 101.6 $ 132.6 $ (13.6 ) $ 6.0 $ (128.5 ) $ 101.6 Denominator: Weighted average shares outstanding for basic earnings per share 115,243,685 120,000,000 115,212,772 120,000,000 115,278,176 115,243,685 115,269,720 115,212,772 Add: Series B preference shares - - 11,901,670 - — — 11,901,670 11,901,670 Add: Unvested performance share units and restricted share units 552,682 - 427,960 - — 552,682 — 427,960 Weighted average shares outstanding for diluted earnings per share(1) 115,796,367 120,000,000 127,542,402 120,000,000 115,278,176 115,796,367 127,171,390 127,542,402 Diluted earnings per share $ 0.05 $ 0.78 $ 0.80 $ 1.11 $ (0.12 ) $ 0.05 $ (1.01 ) $ 0.80 30,933,78115,923,521 potentially dilutive securities excluded from the calculation of Diluted earnings per share. For the six months ended June 30, 2019, there were a total of 19,156,833 potentially dilutive securities excluded from the calculation of Diluted earnings per share. As at June 30, 2018, there were no potentially dilutive securities excluded from the calculation of Diluted earnings per share.Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited15.16. Investments in unconsolidated entities20192020 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 Equity method eligible unconsolidated entities, at fair value $ 156.3 $ 169.4 Other unconsolidated investments, at fair value(1) 223.6 195.6 Total Other long-term investments(2) $ 379.9 $ 365.0 (Millions) June 30, 2020 December 31, 2019 Equity method eligible unconsolidated entities, at fair value $ 157.5 $ 151.9 210.6 194.9 $ 368.1 $ 346.8 20192020 and December 31, 2018.2019.20192020 and December 31, 2018 with ownership interest greater than 20%: Ownership interest at Investee June 30,
2019 December 31,
2018 Instrument Held BE Reinsurance Limited 25.0 % 25.0 % Common shares BioVentures Investors (Offshore) IV LP 73.0 % 73.0 % Units Camden Partners Strategic Fund V (Cayman), LP 39.4 % 36.4 % Units NEC Cypress Buyer LLC 13.3 % 13.3 % Units New Energy Capital Infrastructure Credit Fund LP(1) 18.3 % 22.9 % Units New Energy Capital Infrastructure Offshore Credit Fund LP(1) 12.2 % 54.9 % Units Scion G7, LP 28.3 % 28.8 % Units Tuckerman Capital V LP 48.3 % 47.6 % Units Tuckerman Capital V Co-Investment I LP 49.5 % 47.7 % Units Ownership interest as of Investee June 30, 2020 December 31, 2019 Instrument Held BE Reinsurance Limited 24.9 % 24.9 % Common shares BioVentures Investors (Offshore) IV LP 73.0 % 73.0 % Units Camden Partners Strategic Fund V (Cayman), LP 39.4 % 39.4 % Units Diamond LS I LP 15.6 % 16.0 % Units Gateway Fund LP 22.9 % 15.0 % Units Monarch 12.8 % 12.8 % Units New Energy Capital Infrastructure Credit Fund LP 29.3 % 30.5 % Units New Energy Capital Infrastructure Offshore Credit Fund LP 29.3 % 30.5 % Units 30.1 % 30.1 % Preferred shares 22.5 % 22.4 % Preferred shares Quintana Energy Partners 21.8 % 21.8 % Units Tuckerman Capital V LP 48.3 % 48.3 % Units Tuckerman Capital V Co-Investment I LP 48.2 % 48.1 % Units The ownership percentageSirius Group holds investments in several financing instruments of New Energy Capital Infrastructure Credit Fund LP and New Energy Capital Infrastructure Offshore Credit Fund LP was greater than 20% at December 31, 2018 but was less than 20% at June 30, 2019 and is included in the table for comparative purposes.Pie Insurance Holdings, Inc.16.17. Variable interest entitiesUnauditedatof June 30, 20192020 and December 31, 2018: (Millions) June 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019 Assets: Fixed maturity investments, trading at fair value $ 3.9 $ 4.0 Short-term investments, at fair value 0.5 0.3 Fixed maturity investments $ 3.7 $ 3.9 Short-term investments 0.5 0.5 Cash 0.1 0.2 1.0 0.1 Total investments 4.5 4.5 5.2 4.5 Insurance and reinsurance premiums receivable 0.2 0.1 (0.6 ) (0.3 ) Funds held by ceding companies 4.7 3.7 2.3 3.4 Deferred acquisition costs 0.3 5.2 — 0.3 Other assets - 0.9 — — Total assets $ 9.7 $ 14.4 $ 6.9 $ 7.9 Liabilities Loss and loss adjustment expense reserves $ 1.7 $ 4.6 $ 0.4 $ 0.5 Unearned insurance and reinsurance premiums 0.7 3.7 — 0.6 Other liabilities - - 0.1 0.1 Total liabilities $ 2.4 $ 8.3 $ 0.5 $ 1.2 Sirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnaudited Maximum Exposure to Loss (Millions) Total VIE
Assets On-Balance
Sheet Off-Balance
Sheet Total June 30, 2019 Other long-term investments(1) $ 266.3 $ 120.2 $ 18.3 $ 138.5 Total at June 30, 2019 $ 266.3 $ 120.2 $ 18.3 $ 138.5 December 31, 2018 Other long-term investments(1) $ 209.1 $ 103.1 $ 32.0 $ 135.1 Total at December 31, 2018 $ 209.1 $ 103.1 $ 32.0 $ 135.1 Maximum Exposure to Loss (Millions) Total VIE Assets On-Balance Sheet Off-Balance Sheet Total June 30, 2020 $ 261.1 $ 107.8 $ 8.3 $ 116.1 Total at June 30, 2020 $ 261.1 $ 107.8 $ 8.3 $ 116.1 December 31, 2019 $ 257.8 $ 102.6 $ 16.3 $ 118.9 Total at December 31, 2019 $ 257.8 $ 102.6 $ 16.3 $ 118.9 17.18. Transactions with related partiesDuring the three and six months endedAs of June 30, 2018, these contracts resulted in gross written premiums of $18.9 million and $38.2 million, respectively. As at June 30, 20192020 and December 31, 2018,2019, Sirius Group had total receivables due from affiliates of $23.2$31.6 million and $14.3$16.1 million, respectively. As atof both June 30, 20192020 and December 31, 2018,2019, Sirius Group did not have anyhad total payables due to affiliates.Interim Chairman of the boardBoard of directorsDirectors and iswas also Vice Chairman of Nasdaq, Inc. ("Nasdaq") until December 2019. On January 1, 2020, Mr. Frucher concluded his tenure as Vice Chairman of Nasdaq and assumed the role of Strategic Advisor to Nasdaq. The Company is traded on the Nasdaq Global Select Market and has business transactions that are related to its listing on the exchange under the normal course of business. (SeeNote 3.)GroupGroup's estimates of the costs of settling matters routinely encountered in claims activity are reflected in the reserves for unpaid loss and LAE. (SeeNote 5.)itif there is a reasonable possibility that a loss may have been incurred. Management has considered all pending and/or threatened non-claims related litigation and has not identified any matters triggering disclosure under ASC 450.
LeasesSirius International Insurance Group, Ltd.Notes to Consolidated Financial StatementsUnauditednoncancellablenoncancelable operating lease agreements. The average life of the office leases is 7 years and the equipment leases is 3 years.atof June 30, 2020 and December 31, 2019, Sirius Group had $31.5$28.8 million and $27.4 million of operating lease right-of-use assets, respectively, included in Other assets. As atof June 30, 2020 and December 31, 2019, Sirius Group had $33.5$30.5 million and $29.3 million of operating lease liability, respectively, included in Other liabilities.atof June 30, 2020 and December 31, 2019: (millions)Balance Sheet ClassificationJune 30, 2019 Operating lease right-of-use assetsOther assets$31.5Current lease liabilitiesOther liabilities$8.9Non-current lease liabilitiesOther liabilities$24.6 (millions) Balance Sheet Classification June 30, 2020 December 31, 2019 Operating lease right-of-use assets Other assets $28.8 $27.4 Current lease liabilities Other liabilities $9.1 $8.3 Non-current lease liabilities Other liabilities $21.4 $21.0 atof June 30, 2019: Weighted average lease term (years) as at June 30, 2019:2020 Leased offices 7 years 7.0 yearsLeased equipment 3 years 3.0 yearsWeighted average discount rate: Leased offices 3.3 3.7%%Leased equipment 3.4 3.4% %atof June 30, 2019: (Millions) Future Payments 2019 $ 5.0 2020 9.2 2021 7.9 2022 7.0 2023 4.3 2024 and after 2.8 Total future annual minimum rental payments as at June 30, 2019 36.2 Less: present value discount (2.7 ) Total lease liability as at June 30, 2019 $ 33.5 (Millions) Future Payments 2020 $ 4.5 2021 9.6 2022 9.4 2023 5.6 2024 2.3 2025 and after 1.1 Total future annual minimum rental payments as of June 30, 2020 32.5 Less: present value discount (2.0 ) Total lease liability as of June 30, 2020 $ 30.5 2019,2020, the Company's future operating lease obligations that have not yet commenced are immaterial.20192020 and 20182019 and the Company's consolidated financial condition, liquidity and capital resources as of June 30, 20192020 and December 31, 2018.2019. This discussion and analysis should be read in conjunction with our historical consolidated financial statements and the related notes appearing in our Annual Report on Form 10-K for the year ended December 31, 20182019 (our "2018"2019 Annual Report"), filed with the U.S. Securities and Exchange Commission ("SEC") on March 14, 2019,5, 2020, and the Company's Unaudited Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Page Overview52Specialty & CasualtySirius Groupwhose principal businesses are conductedthat provides multi-line insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries. Sirius Group's key insurance and reinsurance subsidiaries and other affiliates. Sirius Group's subsidiaries, includinginclude Sirius Bermuda Insurance Company Ltd. ("Sirius Bermuda"), Sirius International Insurance Corporation ("Sirius International"), Sirius America Insurance Company ("Sirius America"), Sirius International Corporate Member Limited, a Lloyd's of London ("Lloyd's") Corporate Member, and Sirius Global Solutions Holding Company ("Sirius Global Solutions"). In addition, Sirius International sponsors Lloyd's Syndicate 1945 ("Syndicate 1945"), provide insurance, reinsurance and insurance services on a worldwide basis. Sirius Group writes treaty and facultative reinsurance, as well as primary insurance. In recent years, Sirius Group expanded its accident and health primary business capabilitiesInternational Corporate Member participates in the U.S. viaLloyd's market, which in turn provides underwriting capacity to Syndicate 1945. In addition to the acquisitions ofkey insurance and reinsurance subsidiaries, we own two managing general underwriters ("MGUs"), International Medical Group, Acquisition, Inc. ("IMG") and ArmadaCorp Capital, LLC ("Armada").2017.a manner and to a degree that cannot be predicted” included in Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q.growingnet unrealized investment losses, primarily due to the impact of changes in accidentfair value on our equity investments and, healthto a lesser extent, change in unrealized losses in our fixed-income investment portfolio.further expanded its primary insurance platform launching its primary Surety and Environmental insurance platformssold 100% of the common shares of Empire Insurance Company (“Empire”) to Physicians' Reciprocal Insurers. As of June 30, 2020, the assets related to Empire have been classified as held for sale in the U.S. in late 2017. In mid-2018,Consolidated Balance Sheets.began writing primary Casualty insurance through Pie Insurancepaid $18 million to IMG Acquisition Holdings, Inc.LLC ("Pie Insurance"IMGAH"), a start-up specializing for the contingent consideration payment for the 2019 calendar year, which represents the final contingent consideration payment. See Note 3 "Significant Transactions" in a data driven approachSirius Group's audited financial statements included in our 2019 Annual Report for further details and discussion with respect to workers compensation insurance.the IMGAH contingent consideration.also hasentered into a minority investmentloss portfolio transfer (the "LPT") with Pacific Re, Inc. Under the agreement, Sirius Group received $70 million in Pie Insurancecash and carrier relationship.assumed net undiscounted loss and loss adjustment expenses ("LAE") reserves with the same value. In addition, to these primary insurance platforms, Sirius Group re-entered the U.S. Casualty reinsurance market in early 2017.recognized Gross written premium and Loss and loss adjustment expenses for $70 million.provides insurancecompleted an internal reorganization to optimize the Company's operations, better serve its clients and reinsurance products for property linesmake the Company more nimble and agriculture ("efficient. Beginning on January 1, 2020, Sirius Group's reportable segments consist of four reportable segments – Global Property"), accident and health ("Reinsurance, Global A&H"),&H, U.S. Specialty, and specialty lines including Aviation & Space, Marine, Trade Credit, Contingency, Casualty, Surety, and Environmental ("Specialty & Casualty"), which together with Runoff & Other, constitute its four reportable segments.•Property—The Global Property segmentReinsurance consists of Sirius Group's underwriting lines of business that offer other property insuranceOther Property, Property Catastrophe Excess Reinsurance, Agriculture Reinsurance, Aviation & Space, Marine & Energy, Trade Credit, Contingency, and reinsurance, property catastrophe excess reinsurance and agriculture reinsurance on a worldwide basis.•Global A&H—The Casualty Reinsurance; segment consists of Sirius Group's Global A&Hglobal accident and health insurance and reinsurance underwriting unitbusiness along with two managing general underwriters ("MGUs") (IMGIMG and Armada). As part of Global A&H, Sirius Group providesArmada, which provide supplemental healthcare and medical travel insurance products as well as related administration services through its MGU subsidiaries.• & Casualty—The Specialty & Casualty segment offers insurance and reinsurance specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten. Because specialty lines tend to be the more unusual or high risks, much of the market is characterized by a higher degree of specialization. Specialty & Casualty consists of Aviation & Space, Marine, Trade Credit, Contingency, Casualty,Sirius Group's specialty insurance product offerings, which includes Environmental, Surety, and Environmental specialty lines.•Runoff & Other—The Workers’ Compensation. In April 2020, the Company decided to exit the Surety business due to competitive market conditions in that business line and the recent economic downturn which presented new risks and challenges for this line of business; andsegment includesconsists of the results of Sirius Global Solutions, Holding Company ("Sirius Global Solutions"), which specializes in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the U.S.United States and internationally, as well as asbestos risks environmental risks and other long-tailed liability exposures.20192020 and 201820192020 with a net (loss) attributable to common shareholders of $(14) million and basic earnings per common share of $(0.12) and diluted earnings per share of $(0.12). This compares to net income attributable to common shareholders of $7 million and basic earnings per common share of $0.05. This compares to net income attributable to common shareholders of $98 million$0.05 and basicdiluted earnings per common share of $0.78$0.05 for the second quarter of 2018.three months ended June 30, 2019. The decrease was driven primarily due toby lower realized and unrealized net investment gains as a result of unfavorable foreign exchange losses, higher non-investment related net underwriting (loss) recorded for the second quarter of 2019 driven mainlyforeign exchange losses, and COVID-19 losses ($13 million), partially offset by lower net unfavorable prior year loss reserve development. The three months ended June 30, 20192020 results included $64$1 million of net unfavorable prior year loss reserve development compared to $10$64 million of net favorableunfavorable prior year loss reserve development for the three months ended June 30, 2018.2019. During the three months ended June 30, 2019,2020, Sirius Group recorded catastrophe losses, net of $8reinsurance and reinstatement premiums, of $10 million compared to $1$8 million for the three months ended June 30, 2018.2019 compared to 83% for the three months ended June 30, 2018.2019. The increaseimprovement in the combined ratio was driven primarily bydue to lower net unfavorable prior year loss reserve development. Thedevelopment, partially offset by COVID-19 losses, net of reinsurance, of $13 million (4 points). Sirius Group's combined ratio for the three months ended June 30, 20192020 was impacted by 17 pointsless than 1 point of net unfavorable prior year loss reserve development compared to 317 points of net favorableunfavorable prior year loss reserve development for the three months ended June 30, 2018. Sirius Group's2019. The combined ratio included 23 points of catastrophe losses for the three months ended June 30, 20192020 compared to less than 1 point2 points for the three months ended June 30, 2018.2019.20192020 and 201820192020 with a net (loss) attributable to common shareholders of $(112) million and basic earnings per common share of $(0.97) and diluted earnings per share of $(1.01). This compares to net income attributable to common shareholders of $102 million and basic earnings per common share of $0.80. This compares to net income attributable to common shareholders of $138 million$0.80 and basicdiluted earnings per common share of $1.11$0.80 for the six months ended June 30, 2018.2019. The decrease was driven primarily due toby $153 million from COVID-19 losses, net of reinsurance, in Global Reinsurance ($130 million) and Global A&H ($22 million) and net unrealized investment losses, partially offset by lower net unfavorable prior year loss reserve development, partially offset by higher net realized and unrealized investment gains.development. The six months ended June 30, 20192020 results included $81$5 million of net unfavorable prior year loss reserve development compared to $13$81 million of net favorableunfavorable prior year loss reserve development for the six months ended June 30, 2018.2019. During the six months ended June 30, 2019,2020, Sirius Group recorded catastrophe losses, net of $10reinsurance and reinstatement premiums, of $19 million compared to $3$10 million for the six months ended June 30, 2018.2019 compared to 85% for the six months ended June 30, 2018.2019. The increase in the combined ratio from the prior period was driven primarily by $153 million of COVID-19 losses (19 points), partially offset by lower net unfavorable prior year loss reserve development. TheSirius Group's combined ratio for the six months ended June 30, 20192020 was impacted by 12 points1 point of net unfavorable prior year loss reserve development compared to 212 points of net favorableunfavorable prior year loss reserve development for the six months ended June 30, 2018. Sirius Group's2019. The combined ratio included 1 point2 points of catastrophe losses for each of the six months ended June 30, 2019 and 2018.Sirius Group ended the first six months2019 withJune 30, 2020 compared to book value per common share of $15.47 compared to $14.80$12.78 as of DecemberMarch 31, 2018,2020, an increase of 4.5%3.1% due to comprehensive income of $84$50 million recognized for the three months ended June 30, 2020.2019. 2020.shareholders'shareholders’ equity at the end of the second quarter of 20192020 was $1,784$1,520 million compared to $1,704$1,474 million as of March 31, 2020 and $1,640 million as of December 31, 2018.The returnnetEquity ("ROE"), calculated by dividing Net (loss) income attributable to Sirius Group's common shareholders onfor the period by beginning common shareholders' equity, was (0.9)% for the three months ended June 30, 2020 compared to 0.4% for the three months ended June 30, 2019 compareddue to 5.0%the net (loss) recognized.threesix months ended June 30, 2018 due2020 compared to lower net income recognized.The return on net income attributable to common shareholders on beginning common shareholders' equity was 6.0% for the six months ended June 30, 2019 due to the net (loss) recognized.7.2%$7.97 as of March 31, 2020, an increase of 5.3% due to comprehensive income of $50 million recognized for the three months ended June 30, 2020.2018 due to lower net income recognized.Adjusted Book Value Per ShareSirius Group ended the first six months of 2019 with Adjusted book value per share, which assumes that the Series B preference shares will convert into common shares on a one-for-one basis, and also incorporates the impact of dilution arising from share-based compensation programs, of $15.87 compared to $15.24 as of December 31, 2018, an increase of 4.1%, due to the comprehensive income recognized. For June 30, 2019, Adjusted book value and Adjusted book value per share include the earned effects of share-based compensation awards issued during 2019.AdjustedTangible book value and AdjustedTangible book value per common share.income(loss) attributable to common shareholders2019,2020, Operating (loss) income attributable to common shareholders was $(19)$(17) million compared to $41$(19) million for the three months ended June 30, 2018,2019 primarily due to thehigher net underwriting (loss) recorded in the second quarter of 2019.2019,2020, Operating (loss) income attributable to common shareholders was $(1)$(117) million compared to $71$(1) million for the six months ended June 30, 2018,2019 primarily due to lowerthe net underwriting gains and a loss on(loss) recognized for the change in fair valuefirst six months of weather derivatives.income(loss) attributable to common shareholders.20192020 and 2018 Three months ended
June 30, Six months ended
June 30, 2019 2018 2019 2018 Revenues $ 487.1 $ 505.0 $ 1,109.4 $ 1,120.2 $ 401.7 $ 320.3 $ 886.5 $ 789.7 $ 370.7 $ 308.9 $ 682.6 $ 593.4 24.4 19.2 44.5 30.0 15.6 7.8 24.6 4.1 15.5 24.7 89.5 40.7 (0.6 ) 25.6 4.5 22.1 15.4 55.6 35.0 79.0 441.0 441.8 880.7 769.3 Expenses 278.0 151.4 461.9 292.4 77.0 66.8 140.3 129.8 35.5 38.2 70.8 81.4 28.2 24.2 52.6 38.5 4.0 4.0 7.9 7.9 8.0 7.8 15.6 15.5 430.7 292.4 749.1 565.5 Pre-tax income 10.3 149.4 131.6 203.8 (2.1 ) (51.2 ) (19.3 ) (62.3 ) Net income 8.2 98.2 112.3 141.5 (0.8 ) (0.4 ) (1.2 ) (0.6 ) Net income attributable to Sirius Group 7.4 97.8 111.1 140.9 (0.8 ) - (9.2 ) - - - - (2.6 ) Net income attributable to Sirius Group's common shareholders $ 6.6 $ 97.8 101.9 $ 138.3 ��� Comprehensive income Net income $ 8.2 $ 98.2 $ 112.3 $ 141.5 Other comprehensive income (loss), net of tax Change in foreign currency translation, net of tax 1.1 (48.5 ) (26.7 ) (61.9 ) Total other comprehensive income (loss) 1.1 (48.5 ) (26.7 ) (61.9 ) Comprehensive income 9.3 49.7 85.6 79.6 Income attributable to non-controlling interests (0.8 ) (0.4 ) (1.2 ) (0.6 ) Comprehensive income attributable to Sirius Group $ 8.5 $ 49.3 $ 84.4 $ 79.0 Ratios: Loss ratio(1) 75.0 % 49.0 % 67.7 % 49.3 % Acquisition expense ratio(2) 20.8 % 21.6 % 20.6 % 21.9 % Other underwriting expense ratio(3) 9.6 % 12.4 % 10.4 % 13.7 % 105.4 % 83.0 % 98.7 % 84.9 % Selected financial data: Basic earnings per common share and common shares equivalent $ 0.05 $ 0.78 $ 0.80 $ 1.11 Diluted earnings per common share and common shares equivalent $ 0.05 $ 0.78 $ 0.80 $ 1.11 Basic weighted average number of common shares and common share equivalents outstanding 115,243,685 120,000,000 115,212,772 120,000,000 Diluted weighted average number of common shares and common share equivalents outstanding 115,796,367 120,000,000 127,542,402 120,000,000 Return on equity(5) 0.4 % 5.0 % 6.0 % 7.2 % Operating (loss) income attributable to common shareholders(6) $ (19.4 ) $ 40.5 $ (0.5 ) $ 71.4 Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Revenues Gross written premiums $ 322.6 $ 487.1 $ 1,140.2 $ 1,109.4 Net written premiums $ 306.0 $ 401.7 $ 935.9 $ 886.5 Net earned insurance and reinsurance premiums $ 369.8 $ 370.7 $ 804.5 $ 682.6 Net investment income 14.8 24.4 28.3 44.5 Net realized investment gains 7.1 15.6 27.4 24.6 Net unrealized investment gains (losses) 8.7 15.5 (35.1 ) 89.5 Net foreign exchange (losses) gains (16.1 ) (0.6 ) 2.4 4.5 Other revenue 10.2 15.4 14.5 35.0 Total revenues 394.5 441.0 842.0 880.7 Expenses Loss and loss adjustment expenses 240.3 278.0 667.4 461.9 Insurance and reinsurance acquisition expenses 78.1 77.0 152.8 140.3 Other underwriting expenses 36.3 35.5 74.3 70.8 General and administrative expenses 23.9 28.2 56.0 52.6 Intangible asset amortization expenses 4.0 4.0 7.9 7.9 Interest expense on debt 7.9 8.0 15.7 15.6 Total expenses 390.5 430.7 974.1 749.1 Pre-tax income (loss) 4.0 10.3 (132.1 ) 131.6 Income tax (expense) benefit (11.2 ) (2.1 ) 3.6 (19.3 ) Net (loss) income (7.2 ) 8.2 (128.5 ) 112.3 Loss (income) attributable to non-controlling interests 0.2 (0.8 ) — (1.2 ) (Loss) income attributable to Sirius Group (7.0 ) 7.4 (128.5 ) 111.1 Change in carrying value of Series B preference shares (6.6 ) (0.8 ) 16.8 (9.2 ) Net (loss) income attributable to Sirius Group's common shareholders $ (13.6 ) $ 6.6 $ (111.7 ) $ 101.9 Comprehensive income (loss) Net (loss) income $ (7.2 ) $ 8.2 $ (128.5 ) $ 112.3 Other comprehensive income (loss) Change in foreign currency translation, net of tax 57.0 1.1 (6.4 ) (26.7 ) Total other comprehensive income (loss) 57.0 1.1 (6.4 ) (26.7 ) Comprehensive income (loss) 49.8 9.3 (134.9 ) 85.6 Net loss (income) attributable to non-controlling interests 0.2 (0.8 ) — (1.2 ) Comprehensive income (loss) attributable to Sirius Group $ 50.0 $ 8.5 $ (134.9 ) $ 84.4 Ratios: 65.0 % 75.0 % 83.0 % 67.7 % 21.1 % 20.8 % 19.0 % 20.6 % 9.8 % 9.6 % 9.2 % 10.4 % 95.9 % 105.4 % 111.2 % 98.7 % Selected financial data: Basic earnings per common share and common shares equivalent $ (0.12 ) $ 0.05 $ (0.97 ) $ 0.80 Diluted earnings per common share and common shares equivalent $ (0.12 ) $ 0.05 $ (1.01 ) $ 0.80 Basic weighted average number of common shares and common share equivalents outstanding 115,278,176 115,243,685 115,269,720 115,212,772 Diluted weighted average number of common shares and common share equivalents outstanding 115,278,176 115,796,367 127,171,390 127,542,402 (0.9 )% 0.4 % (6.8 )% 6.0 % $ (17.1 ) $ (19.4 ) $ (117.4 ) $ (0.5 ) netNet (loss) income attributable to Sirius Group's common shareholders for the period by the beginning common shareholders' equity. income attributable to common shareholders is a non-GAAP financial measure. See "Non-GAAP Financial Measures" for an explanation and calculation of Operating (loss) income attributable to common shareholders. As of
June 30, 2019 As of
December 31, 2018 Selected balance sheet data: Common shares outstanding 115,296,918 115,151,251 Series B preference shares outstanding 11,901,670 11,901,670 Earned share-based compensation awards, excluding stock options 374,912 - Earned portion of Stock option awards issued 152,772 - Adjusted shares outstanding(1) 127,726,272 127,052,921
Total common shareholders' equity
$
1,784.1
$
1,704.5
Series B preference shares 241.3 232.2 Earned portion of future proceeds from stock option awards 1.9 - Adjusted book value(1) $ 2,027.3 $ 1,936.7
Book value per common share
$
15.47
$
14.80
Adjusted book value per share(1) $ 15.87 $ 15.24 Selected balance sheet data: $ 13.18 $ 12.78 $ 14.23 $ 8.39 $ 7.97 $ 9.39 AdjustedBook value per common share is calculated by dividing Total common shareholders' equity by the total number of Common shares outstanding, Adjusted book value, and Adjustedoutstanding.areis a non-GAAP financial measures.measure. See "Non-GAAP Financial Measures" for an explanation and calculation of Adjusted share outstanding, Adjusted book value, and AdjustedTangible book value per common share.20192020 and 20182019 was $4872020 were $323 million, a decrease of $18$164 million or 4%34% compared to gross written premiums of $505$487 million for the three months ended June 30, 2018,2019, with Specialty & Casualty up 59%, Global A&H up 37%down 45%, Global Reinsurance down 32%, and Global Property down 27%U.S. Specialty up 63%. AbsentThe most significant reason for the effect ofdecline in Gross written premiums is lower volume from a single fronting arrangement within the Global Property segment, gross written premiums increased 20% compared to the prior period.arrangement. See "Results of Reportable Segments" below.2019 was $1,1092020 were $1,140 million, a decreasean increase of $11$31 million or 1%3% compared to gross written premiums of $1,120$1,109 million for the six months ended June 30, 2018,2019, with U.S. Specialty up 39%, Global A&H up 25%, Specialty & Casualty up 24%7%, and Global PropertyReinsurance down 16%10%. Absent the effect of a single fronting arrangement within the Global Property segment,Runoff & Other gross written premiums increased 7% comparedto $69 million for the six months ended June 30, 2020 from $3 million for the six months ended June 30, 2019 due to the prior period.LPT. See "Results of Reportable Segments" below.2019 was $4022020 were $306 million, an increasea decrease of $82$96 million or 26%24% compared to net written premiums of $320$402 million for the three months ended June 30, 2018,2019, with Specialty & Casualty up 62%, Global A&H up 46%down 49%, Global Reinsurance down 17%, and Global PropertyU.S. Specialty up 8%71%. See "Results of Reportable Segments" below.2019 was $8872020 were $936 million, an increase of $97$49 million or 12%6% compared to net written premiums of $790$887 million for the six months ended June 30, 2018,2019, with U.S. Specialty up 39%, Global A&H up 29%, Specialty & Casualty up 26%3%, and Global Property upReinsurance down 6%. Runoff & Other net written premiums increased to $68 million for the six months ended June 30, 2020 from less than $1 million for the six months ended June 30, 2019 due to the LPT. Absent the effect of the LPT within the Runoff & Other segment, net written premiums decreased 2%. compared to the prior period. See "Results of Reportable Segments" below.2019 was $3712020 were $370 million, an increasea decrease of $62$1 million or 20%less than 1% compared to net earned insurance and reinsurance premiums of $309$371 million for the three months ended June 30, 2018,2019 with U.S. Specialty & Casualty up 55%114%, Global A&H up 47%down 5% and Global PropertyReinsurance down 2%. See "Results of Reportable Segments" below.2019 was $6832020 were $805 million, an increase of $90$122 million or 15%18% compared to net earned insurance and reinsurance premiums of $593$683 million for the six months ended June 30, 2018,2019, with U.S. Specialty & Casualty up 48% and155%, Global A&H up 27%7% and Global Reinsurance up 4%. Runoff & Other net earned insurance and reinsurance premiums increased to $70 million for the six months ended June 30, 2020 from $1 million for the six months ended June 30, 2019 due to the LPT. See "Results of Reportable Segments" below.increased 26%decreased to $15 million for the three months ended June 30, 2020 from $24 million for the three months ended June 30, 2019 from $19primarily due to lower dividends on equity securities, lower interest rates, and increased investments in lower yielding short-term investments. Sirius Group reported net realized investment gains of $7 million for the three months ended June 30, 2018 due primarily2020, which included $5 million of net realized foreign currency gains, compared to a higher interest rate environment. Sirius Group reported net realized investment gains of $16 million for the three months ended June 30, 2019, which included $10 million of net realized foreign currency gains, compared to net realizedgains. Net unrealized investment gains of $8were $9 million for the three months ended June 30, 2018,2020, which included $7$(66) million of net realizedunrealized foreign currency gains. Net(losses), compared to net unrealized investment gains wereof $16 million for the three months ended June 30, 2019, which included $(7) million of net unrealized foreign currency (losses), compared to net unrealized investment gains. See "Summary of $25Investment Results" below. Additionally, Sirius Group recorded $(16) million of non-investment related foreign exchange (losses) for the three months ended June 30, 2018, which included $30 million of net unrealized foreign currency gains. See "Summary of Investment Results" below. Additionally, Sirius Group recorded2020 compared to $(1) million of non-investment related foreign exchange (losses) for the three months ended June 30, 2019 compared to $26 million of non-investment related foreign exchange gains for the three months ended June 30, 2018.2019. Included in the amount for the three months ended June 30, 20192020 is $20 million of unfavorable currency movement on the 2017 SEK Subordinated Notes (as defined herein) compared to less than $1 million of favorable currency movement compared to $28 million of favorable currency movement for the three months ended June 30, 2018 on the 2017 SEK Subordinated Notes.2019. See "Foreign Currency Translation" below.increased 50%decreased to $28 million for the six months ended June 30, 2020 from $45 million for the six months ended June 30, 2019 from $30primarily due to lower income on other long-term investments and equity securities, lower interest rates and balances on fixed maturity investments, and increased investments in lower yielding short-term investments. Sirius Group reported net realized investment gains of $27 million for the six months ended June 30, 2018 due primarily2020, which included $17 million of foreign currency gains, compared to a higher interest rate environment. Sirius Group reported net realized investmentinvestments gains of $25 million for the six months ended June 30, 2019, which included $21 million of net realized foreign currency gains, compared to net realized investment gains of $4gains. Net unrealized (losses) were $(35) million for the six months ended June 30, 2018,2020, which included $6$(13) million of net realizedunrealized foreign currency gains. Net(losses), compared to net unrealized investment gains wereof $90 million for the six months ended June 30, 2019, which included $18 million of net unrealized foreign currency gains, compared to net unrealized investment gainsgains. See "Summary of $41Investment Results" below. Additionally, Sirius Group recorded $2 million of non-investment related foreign exchange gains for the six months ended June 30, 2018, which included $49 million of net unrealized foreign currency gains. See"Summary of Investment Results" below. Additionally, Sirius Group recorded2020 compared to $5 million of non-investment related foreign exchange gains for the six months ended June 30, 2019 compared to $22 million of non-investment related foreign exchange gains2019. Included in the amount for the six months ended June 30, 2018. Included in the six months ended June 30, 2019 amount2020 is $11$1 million of favorable currency movement on the 2017 SEK Subordinated Notes (as defined herein) compared to $28$11 million of favorable foreign currency movement for the six months ended June 30, 2018 on the 2017 SEK Subordinated Notes.2019. See "Foreign Currency Translation" below.$56the Global A&H segment.threesix months ended June 30, 2018.2020 from $35 million for the six months ended June 30, 2019. The decrease in other revenue was primarily attributable to management's estimate of a right of indemnification against a third party in connection with an uncertain tax position that was recorded in other revenue$(21) million (loss) on the change in the second quarterfair value of 2018.Other revenue decreasedweather derivatives compared to $35a $(6) million (loss) for the six months ended June 30, 2019 from $79 million for the six months ended June 30, 2018. The decrease in other revenue was primarily attributable to management's estimate of a right of indemnification against a third party in connection with an uncertain tax position that was recorded in other revenue in the second quarter of 2018.increased 84%decreased 14% to $240 million for the three months ended June 30, 2020 from $278 million for the three months ended June 30, 2019 from $151 million for the three months ended June 30, 2018, primarily due to lower net unfavorable prior year loss reserve development, higher catastrophepartially offset by COVID-19 losses and increased net earned insurance and reinsurance premiums for the three months ended June 30, 2019.of $13 million. See "Results of Reportable Segments" below.58%44% to $667 million for the six months ended June 30, 2020 from $462 million for the six months ended June 30, 2019 from $292 million for the six months ended June 30, 2018, primarily due to net unfavorable prior year loss reserve development, higher catastropheCOVID-19 losses and increased net earned insurance and reinsurance premiums, partially offset by lower net unfavorable prior year loss reserve development. In addition, Runoff & Other loss and loss adjustment expenses increased to $71 million for the six months ended June 30, 2019.2020 from $4 million for the six months ended June 30, 2019 due to the LPT. See "Results of Reportable Segments" below.15%9% to $77$153 million for the threesix months ended June 30, 2020 from $140 million for the six months ended June 30, 2019 from $67 million for the three months ended June 30, 2018,primarily due to an increase in net earned insurance and reinsurance premiums and higher acquisition expenses for U.S. Specialty, & CasualtyGlobal Reinsurance, and Global A&H partially offset by lower acquisition expenses for Global Property, primarily due to business mix, for the threesix months ended June 30, 2020 as well as business mix. See "Results of Reportable Segments" below.Insurance and reinsurance acquisitionOther underwriting expenses increased 8%4% to $140$74 million for the six months ended June 30, 20192020 from $130 million for the six months ended June 30, 2018, due to an increase in net earned insurance and reinsurance premiums and higher acquisition expenses for Specialty & Casualty and Global A&H partially offset by lower acquisition expenses for Global Property, primarily due to business mix, for the six months ended June 30, 2019. See "Results of Reportable Segments" below.Other underwriting expenses – Other underwriting expenses decreased 5% to $36 million for the three months ended June 30, 2019 from $38 million for the three months ended June 30, 2018. See "Results of Reportable Segments" below.Other underwriting expenses decreased 12% to $71 million for the six months ended June 30, 2019 from $81 million for the six months ended June 30, 2018, primarily due to lowerhigher variable incentive compensation expense. In addition, higher operating expenses were included in other underwriting expense for the MGUs for the six months ended June 30, 2018, representing costs associated with the support of the Global A&H underwriting team.expenses. See "Results of Reportable Segments" below.increased 17%decreased 14% to $24 million for the three months ended June 30, 2020 from $28 million for the three months ended June 30, 2019 from $24 million for the three months ended June 30, 2018 primarily due to an increase inlower expenses from the MGUs, partially offset by expenses related to IMGretention awards that were issued to key employees in November 2019. See Note 13 "Share-based compensation" in Sirius Group's unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details and professional fees.discussion.36%6% to $56 million for the six months ended June 30, 2020 from $53 million for the six months ended June 30, 2019 from $39 million for the six months ended June 30, 2018, primarily due to an increaseretention awards that were issued to key employees in November 2019, partially offset by lower expenses related to IMGfrom the MGUs. See Note 13 "Share-based compensation" in Sirius Group's unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details and professional fees.election and net income or loss in investments in unconsolidated affiliates.election. Total return is calculated on a pre-tax basis and includes the impact of investment related foreign exchange gains or losses whether reflected in pre-tax income or other comprehensive income, unless otherwise noted. Returns are calculated on average investments for the period displayed and presented gross of separately managed account fees as well as internal expenses in order to produce a better comparison to benchmark returns whichthat exclude an expense load.and/or swaps.options, and /or futures.20192020 and 2018,2019, respectively, follows: Three months ended June 30, Six months ended June 30, (Millions) 2020 2019 2020 2019 Pre-tax investment results Net investment income $ 14.8 $ 24.4 $ 28.3 $ 44.5 15.8 31.1 (7.7 ) 114.1 93.6 (0.1 ) (1.0 ) (41.8 ) Net pre-tax investment gains $ 124.2 $ 55.4 $ 19.6 $ 116.8 For the Three Months Ended
June 30, For the Six Months Ended
June 30, (Millions) 2019 2018 2019 2018 Pre-tax investment results Net investment income $ 24.4 $ 19.2 $ 44.5 $ 30.0 Net realized and unrealized investment gains(1) 31.1 43.8 114.1 58.5 Change in foreign currency translation on investments recognized through other comprehensive income(2) (0.1 ) (78.1 ) (41.8 ) (99.0 ) Net pre-tax investment gains (losses) $ 55.4 $ (15.1 ) $ 116.8 $ (10.5 ) and 2018 of $2.4$(60.4) million and $48.2$2.4 million, respectively, and for the six months ended June 30, 2020 and 2019 of $3.4 million and 2018 of $38.3 million, and $68.3 million, respectively.and 2018 of $(0.6)$(16.1) million and $29.6$(0.6) million, respectively, and for the six months ended June 30, 2020 and 2019 of $2.4 million and 2018 of $4.5 million, and $37.1 million, respectively. For the Three Months Ended
June 30, For the Six Months Ended
June 30, 2019 2018 2019 2018 Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Performance metrics Total fixed income investment returns: 1.4 % (0.4 )% 2.4 % (0.5 )% 2.2 % 1.4 % 0.9 % 2.4 % 1.3 % 0.4 % 2.5 % 0.4 % 1.6 % 1.3 % 1.1 % 2.5 % 1.5 % 0.3 % 2.7 % 0.1 % Bloomberg Barclays U.S. Agg 1-3 Year Total Return Value Unhedged USD 0.9 % 1.5 % 2.7 % 2.7 % 1.1 % 0.6 % 2.0 % 1.1 % 0.4 % 1.1 % 1.0 % 2.0 % 0.1 % (0.1 )% 1.4 % 0.1 % Total equity securities and other long-term investments returns: 3.0 % (0.5 )% 9.0 % 1.6 % 7.0 % 3.0 % (2.4 )% 9.0 % 2.7 % 1.0 % 8.5 % 2.7 % 6.5 % 2.7 % (2.1 )% 8.5 % 4.3 % 3.4 % 18.5 % 2.6 % 20.5 % 4.3 % (3.1 )% 18.5 % Total consolidated portfolio 1.7 % (0.4 )% 3.6 % (0.2 )% 3.0 % 1.7 % 0.4 % 3.6 % 1.5 % 0.5 % 3.6 % 0.7 % 2.4 % 1.5 % 0.5 % 3.6 % 20192020 and 2018Group'sGroup’s pre-tax total gross return on invested assets was 3.0% for the three months ended June 30, 2020 compared to 1.7% for the three months ended June 30, 2019 compared to (0.4)%2019. The result for the three months ended June 30, 2018.2020included foreign currency gains on investments, which increased the total pre-tax return by 0.6%. The currency gains for the second quarter of 2020 were generated from our Swedish kronor (“SEK”), Canadian dollar (“CAD”), and Euro (“EUR”) holdings as these currencies strengthened against the U.S. dollar. The result for the three months ended June 30, 2019 included foreign currency gains on investments, which increased the total pre-tax return by 0.2%. The 2018 result included foreign currency losses on investments, which decreased the total pre-tax return by (0.9)%. The currency gains for the second quarter of 2019 were generated mainly from our Euro, Canadian dollar,EUR, CAD, and Israeli shekel ("ILS") holdings as these currencies strengthened 1.4%, 1.9%, and 1.8%, respectively, versus the U.S. dollar. The currency losses for the second quarter of 2018 were generated mainly from our Swedish kronor, Euro, and Israeli shekel holdings as these currencies weakened 7.2%, 5.7%, and 4.3%, respectively, versus the U.S. dollar.For the six months ended June 30, 2019, Sirius Group'sGroup’s pre-tax total gross return on invested assets was 3.6% versus (0.2)%0.4% for the same period in 2018. Currency did not impact our six month 2019 investments result whilemonths ended June 30, 2020 compared to 3.6% for the investmentsix months ended June 30, 2019. The result for the six months ended June 30, 20182020 was adversely impacted by the strengtheningongoing concern of the U.S. dollarCOVID-19 pandemic and included foreign currency losses on investments, which reduced ourdecreased the total pre-tax return by (0.9)(0.1)%.comparedprimarily due to $19lower dividends on equity securities, lower interest rates, and increased investments in lower yielding short-term investments. Net investment income was $28 million for the threesix months ended June 30, 2018. Net investment income was2020 compared to $45 million for the six months ended June 30, 2019 comparedprimarily due to $30 million for the six months ended June 30, 2018. The increase in both periods was driven by higher earnedlower income from ouron other long-term investments and equity securities, lower interest rates and other long term investments;balances on fixed maturity investments, and increased investments in addition, the increase for the six months ended June 30, 2019 was driven by a higher interest rate environment at the time of reinvestment.(losses),on investments, excluding foreign currency, were $76 million for the three months ended June 30, 2020 compared to $29 million for the three months ended June 30, 2019 compared to $(4) million for the three months ended June 30, 2018. For the six months ended June 30, 2019, net realized and unrealized investment gains (losses), excluding foreign currency, were $76 million compared to $(10) million for the six months ended June 30, 2018.2019. The increase in both periods was driven by unrealized investment gains consistent with overall market performance.compared to 1.7 years as of December 31, 2018.respectively. The average credit quality of the fixed income portfolio, including short termshort-term investments, was AA+ and AA atas of June 30, 2019 which is unchanged from2020 and December 31, 2018.2019, respectively. As of June 30, 20192020 and December 31, 2018,2019, Sirius Group held $357$446 million and $361$341 million, respectively, of non-U.S. denominated fixed income securities.Barclays 1-3 Year Aggregate ("BarcAg1-3")BarcAgg1-3 of 1.5%. Our non-U.S. portfolio returned 0.3% in original currencies, which compares to the OMX Stockholm OMRX Total Return Bond Index ("OMRX") of 1.1% and the Bloomberg Barclays Pan-European Aggregate: Corp 1-3 Years Total Return ("BarcAg1-3 EUR") of 0.1%.lost (0.4)%returned 0.9% on a U.S. dollar basis and returned 0.4%1.1% in local currencies for the threesix months ended June 30, 2018.2020. Our U.S. portfolio returned 0.3%1.1% versus the BarcAg1-3BarcAgg1-3 of 0.3%2.7%. Our non-U.S. portfolio returned 0.6% in original currencies which comparescompared to the OMRX of 0.6%1.0%.BarcAg1-3BarcAgg1-3 of 2.7%. Our non-U.S. portfolio returned 0.7% in original currencies which compares to the OMRX of 2.0% and the BarcAg1-3 EUR of 1.4%. The lower duration of our portfolio adversely impacted our return versus the indices due to the decreasing interest rate environment. The return for the six months ended June 30, 2018 was (0.5)% on a U.S. dollar basis and 0.4% in original currencies. Our U.S. portfolio returned 0.3% versus the BarcAg1-3 of 0.1%. The outperformance was due to a lower concentration in treasuries in our portfolio compared to the BarcAg1-3. Our non-U.S. portfolio returned 0.8% in original currencies which compares to the OMRX of 1.1% due to a market driven negative return in our euro denominated fixed income investments.$475$482 million of U.S. dollar denominated securities compared to $439and $187 million of non-U.S. dollar denominated securities.denominated securities as of December 31, 2018. As of June 30, 2019basis and December 31, 2018, Sirius Group held $187 million and $149 million, respectively, of non-U.S. denominated equity and other long-term investments.threesix months ended June 30, 2018,2020, the equity portfolio lost (0.5)returned (2.4)% on a U.S. dollar basis but gained 1.0% inand (2.1)% on a local currencies.currency basis. The S&P 500 gained 3.4%returned (3.1)% for the same period. For the six months ended June 30, 2018, the equity portfolio returned 1.6% on a U.S. dollar basis and 2.7% in local currencies versus the S&P 500 of 2.6%.under the caption Otherand in Accumulated other comprehensive (loss). As of June 30, 20192020 and December 31, 2018,2019, Sirius Group had net unrealized foreign currency translation (losses) of $(229)$(244) million and $(202)$(238) million, respectively, recorded in Accumulated other comprehensive (loss) on its Consolidated Balance Sheets.netNet income (loss) in the period in which they arise within Net realized investment gains (losses), Net unrealized investment gains (losses), and Net foreign exchange gains (losses) gains.20192020 and December 31, 2018: Currency Closing Rate
June 30, 2019 Closing Rate
December 31, 2018 Swedish kronor 9.2838 8.9397 9.3465 9.3210 British pound 0.7866 0.7850 0.8129 0.7568 Euro 0.8786 0.8734 0.8922 0.8912 Canadian dollar 1.3097 1.3614 1.3672 1.3003 income.income (loss). When Sirius Group consolidates Sirius International, it translates Sirius International's stand-alone GAAP financial statements to U.S. dollars and recognizes the related foreign currency translation gains or losses through other comprehensive income (loss). Since Sirius Group reports its financial statements in U.S. dollars, there is no net effect to book value per common share or to investment returns from foreign currency translation on its U.S. dollar-denominated investments at Sirius International. However, net realized and unrealized investment gains (losses), other revenues, net income (loss), earnings per share, and other comprehensive income (loss) can be significantly affected during periods of high volatility in the foreign exchange rate between the U.S. dollar and other currencies, especially the SEK.and 2018 follows: Three Months
Ended June 30, Six Months
Ended June 30, 2019 2018 2019 2018 $ 9.6 $ 7.1 $ 20.5 $ 6.0 (7.2 ) 29.7 17.8 48.6 2.4 36.8 38.3 54.6 0.9 21.5 5.0 19.4 1.4 4.3 2.4 3.0 (3.0 ) - (3.0 ) - - (0.1 ) - (0.2 ) 1.1 - 0.9 (0.5 ) 2.8 62.5 43.6 76.3 (0.1 ) (78.6 ) (41.8 ) (99.0 ) 1.2 30.1 15.1 37.1 1.1 (48.5 ) (26.7 ) (61.9 ) $ 3.9 $ 14.0 $ 16.9 $ 14.4 (Millions) Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 $ 5.4 $ 9.6 $ 16.5 $ 20.5 (65.8 ) (7.2 ) (13.1 ) 17.8 Net realized and unrealized investment (losses) gains - foreign currency (60.4 ) 2.4 3.4 38.3 (10.9 ) 0.9 1.1 5.0 (3.3 ) 1.4 2.7 2.4 (1.0 ) (3.0 ) (0.5 ) (3.0 ) (0.1 ) — (0.1 ) — (0.7 ) — (0.7 ) — Income tax benefit 3.5 1.1 2.1 0.9 Total foreign currency remeasurement (losses) gains recognized through net (loss) income, after tax (72.9 ) 2.8 8.0 43.6 Change in foreign currency translation on investments recognized through other comprehensive income (loss), after tax 93.6 (0.1 ) (1.0 ) (41.8 ) Change in foreign currency translation on non - investment net liabilities recognized through other comprehensive income (loss), after tax (36.6 ) 1.2 (5.4 ) 15.1 Total foreign currency translation gains (losses) recognized through other comprehensive income (loss), after tax 57.0 1.1 (6.4 ) (26.7 ) Total foreign currency (losses) gains recognized in comprehensive income (loss), after tax $ (15.9 ) $ 3.9 $ 1.6 $ 16.9 Swedish kronor 5%Japanese Yen 9% (short) and the Israeli shekel 1%SEK 3% (long). As of December 31, 2018, the following currencies represented the largest exposure to foreign currency risk as a percentage of Sirius Group's common shareholders' equity: the Swedish kronor 13% (short) and the Israeli shekel 4% (long).20192020 and December 31, 2018,2019, Sirius Group's investment portfolio included approximately $487$514 million and $468$484 million of non-U.S. dollar denominated investments, most of which is denominated in Swedish kronor, Canadian dollar, Euro, Israeli shekel, Canadian dollar, and British pound. The investment values in this portfolio are impacted by changes in the exchange rate between the U.S. dollar and those currencies. cash and investment holdings in U.S. dollars and foreign currencies as of June 30, 20192020 and December 31, 2018: Carrying Value at
June 30, 2019 Carrying Value at
December 31, 2018 Currency (Millions) Local Currency USD Local Currency USD Carrying Value at June 30, 2020 Carrying Value at December 31, 2019 Local Currency USD Local Currency USD U.S. Dollar 2,979.3 $ 2,979.3 2,941.6 $ 2,941.6 2,956.6 $2,956.6 3,034.1 $3,034.1 Swedish kronor 1,473.3 158.7 1,348.1 150.8 1,473.0 157.6 1,513.7 162.4 Canadian dollar 113.6 83.1 113.1 87.0 Euro 87.9 100.0 105.2 120.5 64.6 72.4 78.2 87.7 Israeli shekel 273.2 76.5 232.7 62.1 158.9 45.8 264.8 76.6 Canadian dollar 88.5 67.6 84.0 61.7 British pound 6.1 7.8 8.2 10.4 11.9 14.7 8.5 11.2 Other - 76.4 - 62.6 — 140.6 — 59.2 Total investments $ 3,466.3 $ 3,409.7 $3,470.8 $3,518.2 PropertyPropertyReinsurance consists of Sirius Group's underwriting lines of business that offer other property insuranceOther Property, Property Catastrophe Excess Reinsurance, Agriculture Reinsurance, Aviation & Space, Marine & Energy, Trade Credit, Contingency, and reinsurance, property catastrophe excess reinsurance, and agriculture reinsurance on a worldwide basis. Three months ended
June 30, Six months ended
June 30, Global Property(Millions) 2019 2018 2019 2018 Gross written premiums $ 236.2 $ 325.4 $ 566.9 $ 672.0 Net written premiums 191.6 177.0 432.9 424.2 Net earned insurance and reinsurance premiums 164.3 167.5 304.0 303.6 Loss and allocated LAE (131.3 ) (68.2 ) (193.9 ) (138.6 ) Insurance and reinsurance acquisition expenses (27.2 ) (34.1 ) (53.0 ) (63.4 ) $ 5.8 $ 65.2 $ 57.1 $ 101.6 Unallocated LAE (2.6 ) (2.5 ) (4.7 ) (4.4 ) Other underwriting expenses (17.0 ) (18.1 ) (33.2 ) (35.5 ) Underwriting (loss) income $ (13.8 ) $ 44.6 $ 19.2 $ 61.7 Ratios: Loss ratio(1) 81.5 % 42.2 % 65.3 % 47.1 % Acquisition expense ratio(2) 16.6 % 20.4 % 17.4 % 20.9 % Other underwriting expense ratio(3) 10.3 % 10.8 % 10.9 % 11.7 % Combined ratio(4) 108.4 % 73.4 % 93.6 % 79.7 % Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Gross written premiums $ 213.5 $ 317.1 $ 678.8 $ 752.1 Net written premiums 220.5 266.7 565.9 602.6 Net earned insurance and reinsurance premiums 240.9 244.9 475.9 456.2 Loss and allocated LAE (148.5 ) (188.5 ) (405.7 ) (296.3 ) Insurance and reinsurance acquisition expenses (53.7 ) (50.0 ) (104.6 ) (95.6 ) Technical profit (loss) $ 38.7 $ 6.4 $ (34.4 ) $ 64.3 Unallocated LAE (5.2 ) (4.7 ) (10.2 ) (8.7 ) Other underwriting expenses (20.5 ) (21.6 ) (41.8 ) (43.2 ) Underwriting income (loss) $ 13.0 $ (19.9 ) $ (86.4 ) $ 12.4 Ratios: 63.8 % 78.9 % 87.4 % 66.9 % 22.3 % 20.4 % 22.0 % 21.0 % 8.5 % 8.8 % 8.8 % 9.5 % 94.6 % 108.1 % 118.2 % 97.4 % Unallocatedunallocated LAE expenses by net earned insurance and reinsurance premiums.27%32% to $236$214 million for the three months ended June 30, 2020 from $317 million for the three months ended June 30, 2019 primarily due to a decrease in Other Property ($80 million) from $325lower premiums on a fronting arrangement. Absent the effect of the fronting arrangement, gross written premiums decreased 9% compared to the prior period. This was primarily due to decreases in Aviation & Space ($11 million) and Property Catastrophe Excess Reinsurance ($9 million). Net written premiums decreased 17% to $221 million for the three months ended June 30, 2018, due to a decrease in Other Property ($118 million). Absent the effect of a single fronting arrangement, gross written premiums increased 3% compared to the prior period. This was due to an increase in Property Catastrophe Excess ($33 million), partially offset by lower Other Property writings due to reduced treaty participations and non-renewals of certain accounts. Net written premiums increased 8% to $1922020 from $267 million for the three months ended June 30, 2019 from $177 million for the three months ended June 30, 2018primarily due primarily to an increasedecreases in Property Catastrophe Excess Reinsurance ($3828 million), partially offset by a decrease in Other Property ($198 million), and Agriculture Reinsurance ($8 million). The reduction in Property Catastrophe Excess Reinsurance was due to increased retrocessional protections as the Company took actions to reduce catastrophic risk. The Other Property fronting arrangement did not impact Global Property's net written or earned insurance and reinsurance premiums for either the 2020 or 2019 or 2018 periods.PropertyReinsurance produced a net combined ratio of 108%95% for the three months ended June 30, 20192020 compared to 73% for the three months ended June 30, 2018. The increase in the combined ratio was driven by higher net unfavorable prior year loss reserve development and higher catastrophe losses, partially offset by lower net commissions, primarily due to business mix.Global Property recorded an underwriting (loss) of $(14) million for the three months ended June 30, 2019 compared to underwriting income of $45 million for the three months ended June 30, 2018. Net unfavorable prior year loss reserve development was $56 million (34 points) primarily related to Property Catastrophe Excess ($39 million) and Other Property ($14 million)108% for the three months ended June 30, 2019. The decrease in the combined ratio was driven primarily by lower net unfavorable prior year loss reserve development, partially offset by higher attritional losses.GlobalOther Property ($8 million) and Casualty Reinsurance ($5 million) was partially offset by favorable prior year loss reserve development in Property Catastrophe Excess Reinsurance ($8 million). Net unfavorable prior year loss reserve development was $62 million (25 points) for the three months ended June 30, 2019 mainly due to unfavorable prior year loss reserve development in Property Catastrophe Excess Reinsurance ($39 million) and Other Property ($14 million) primarily driven by higher losses from recent accident years, including $46 million from Typhoon Jebi. Net unfavorable prior year loss reserve development was $1 million (less than 1 point)Catastrophe losses, net of reinsurance and reinstatement premiums, for the three months ended June 30, 2018. The three months ended June 30, 2019 included catastrophe losses, net of reinsurance and reinstatement premiums, of $72020 were $10 million (4 points) compared to $1$8 million (less than 1 point)(3 points) for the three months ended June 30, 2018. Catastrophe losses for the three months ended June 30, 2019 were primarily from Cyclone Fani ($3 million), the North Queensland Monsoon ($1 million), and Windstorm Alfrida ($1 million).20192020 and 2018201916%10% to $567$679 million for the six months ended June 30, 2020 from $752 million for the six months ended June 30, 2019 primarily due to a decrease in Other Property ($78 million) from $672lower premiums on a fronting arrangement. Absent the effect of the fronting arrangement, gross written premiums increased 2% compared to the prior period due to an increase in Casualty Reinsurance ($19 million), partially offset by decreases in Agriculture Reinsurance ($8 million) and Trade Credit ($6 million). Net written premiums decreased 6% to $566 million for the six months ended June 30, 2018. Absent the effect of a single fronting arrangement, gross written premiums decreased 5% compared to the prior period. This was due to a decrease in Other Property primarily driven by reduced treaty participations and non-renewals of certain accounts, partially offset by an increase in Property Catastrophe Excess ($32 million). Net written premiums increased 2% to $4332020 from $603 million for the six months ended June 30, 2019 from $424 million for the six months ended June 30, 2018primarily due primarily to an increasedecreases in Property Catastrophe Excess Reinsurance ($5543 million), Agriculture Reinsurance ($9 million), and Trade Credit ($6 million), partially offset by a decreasean increase in OtherCasualty Reinsurance ($19 million). The reduction in Property ($47 million).Catastrophe Excess Reinsurance was due to increased retrocessional protections as the Company took actions to reduce catastrophic risk. The Other Property fronting arrangement did not impact Global Property's net written or earned insurance and reinsurance premiums for either the 2020 or 2019 or 2018 periods.PropertyReinsurance produced a net combined ratio of 94%118% for the six months ended June 30, 20192020 as compared to 80%97% for the six months ended June 30, 2018.2019. The increase in the combined ratio was driven by COVID-19 and higher attritional losses, partially offset by lower net unfavorable prior year loss reserve development and higher catastrophe losses, partially offset by lower net commissions, primarily due to business mix.development.TableGlobal Reinsurance recorded an underwriting (loss) of ContentsGlobal Property recorded underwriting income of $19 million and $62$(86) million for the six months ended June 30, 2019 and 2018, respectively. Net unfavorable prior year loss reserve development was $672020 compared to underwriting income of $12 million (22 points) primarily related to Other Property ($39 million) and Property Catastrophe Excess ($28 million) for the six months ended June 30, 2019. The six months ended June 30, 2020 included COVID-19 losses, net of reinsurance, of $130 million (27 points) in Contingency ($48 million), Other Property ($30 million), Property Catastrophe Excess Reinsurance ($27 million), Trade Credit ($20 million), Casualty Reinsurance ($4 million), and Marine ($1 million). Net unfavorable prior year loss reserve development was $14 million (3 points) for the six months ended June 30, 2020 as unfavorable prior year loss reserve development in GlobalOther Property ($21 million), Aviation & Space ($9 million), and Casualty Reinsurance ($6 million) was drivenpartially offset by favorable prior year loss reserve development in Property Catastrophe Excess Reinsurance ($21 million). Net unfavorable prior year loss reserve development was $72 million (16 points) for the six months ended June 30, 2019 mainly due to unfavorable prior year loss reserve development in Other Property ($39 million) and Property Catastrophe Excess Reinsurance ($28 million) primarily due to higher losses from recent accident years mainly Typhoon Jebi and Hurricanes Irma, Michael, and Florence. A portionCatastrophe losses, net of this unfavorable loss reserve development is duereinsurance and reinstatement premiums, for the six months ended June 30, 2020 were $19 million (4 points) compared to projected increased costs for claims adjusting associated with insureds' assignment of benefits to third parties, primarily associated with Hurricanes Irma and Michael exposures. Net unfavorable prior year loss reserve development was $18$10 million (6(2 points) for the six months ended June 30, 2018. The six months ended June 30, 2019 included catastrophe losses, net of reinsurance and reinstatement premiums, of $8 million (3 points) compared to $3 million (1 point) for the six months ended June 30, 2018.2019. Catastrophe losses for the six months ended June 30, 20192020 were primarily from Cyclone FaniAmphan ($4 million), Canadian Hailstorms ($4 million), the Zagreb Earthquake ($3 million), and the North Queensland MonsoonPuerto Rican Earthquake ($23 million), and Windstorm Alfrida ($2 million).PropertyReinsurance gross written premiums Three months ended June 30, Six months ended June 30, Global Property (Millions) 2019 2018 2019 2018 Other property $ 114.8 $ 232.5 $ 267.6 $ 405.2 Property catastrophe excess 78.8 45.6 244.1 212.2 Agriculture 42.6 47.3 55.2 54.6 Total $ 236.2 $ 325.4 $ 566.9 $ 672.0 Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Property Catastrophe Excess Reinsurance $ 70.1 $ 78.8 $ 239.8 $ 244.1 Casualty Reinsurance 50.4 45.4 115.2 96.1 Agriculture Reinsurance 35.2 42.6 46.5 55.2 Other Property 34.7 115.0 190.0 268.3 Marine & Energy 7.7 6.5 26.0 20.9 Aviation & Space 6.4 17.1 30.2 34.4 Trade Credit 5.5 10.3 23.8 30.0 Contingency 3.5 1.4 7.3 3.1 Total $ 213.5 $ 317.1 $ 678.8 $ 752.1 20192020 and 20182019Property'sReinsurance's gross written premiums decreased 27%32% to $236$214 million for the three months ended June 30, 2020 from $317 million for the three months ended June 30, 2019. The decrease in Other Property ($80 million) was due to lower premium volume on a fronting arrangement. Absent the effect the fronting arrangement, gross written premiums decreased 9% compared to the prior period due primarily to decreases in Aviation & Space ($11 million) and Property Catastrophe Excess Reinsurance ($9 million). Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Other Property $ 84.3 $ 90.8 $ 171.2 $ 181.4 Casualty Reinsurance 52.6 45.6 106.9 81.5 Property Catastrophe Excess Reinsurance 46.8 51.9 94.2 96.0 Agriculture Reinsurance 21.3 22.1 25.9 27.3 Aviation & Space 15.3 14.3 34.6 28.9 Trade Credit 11.1 11.2 23.8 22.0 Marine & Energy 6.5 7.7 13.5 16.2 Contingency 3.0 1.3 5.8 2.9 Total $ 240.9 $ 244.9 $ 475.9 $ 456.2 from $325 million for the three months ended June 30, 2018. The decreaseprimarily due to decreases in Other Property was due to lower premium volume on an Other($7 million) and Property fronting arrangementCatastrophe Excess Reinsurance ($955 million), reduced treaty participations, and non-renewals of certain accounts. This decrease was partially offset by an increase in Casualty Reinsurance ($7 million). The Other Property Catastrophe Excess ($33 million).20192020 and 20182019Property's gross writtenReinsurance's net earned insurance and reinsurance premiums decreased 16%increased 4% to $567$476 million for the six months ended June 30, 2020 from $456 million for the six months ended June 30, 2019 from $672 million for the six months ended June 30, 2018. Theprimarily due to an increase in Casualty Reinsurance ($25 million) partially offset by a decrease in Other Property was due to lower premium volume on an($10 million). The Other Property fronting arrangement ($77 million), reduced treaty participations, and non-renewals of certain accounts. This decrease was partially offset by an increase in Property Catastrophe Excess ($32 million). Global Property net earned insurance and reinsurance premiums Three months ended
June 30, Six months ended
June 30, Global Property (Millions) 2019 2018 2019 2018 Other property $ 90.3 $ 103.1 $ 180.7 $ 196.4 Property catastrophe excess 51.9 42.0 96.0 84.4 Agriculture 22.1 22.4 27.3 22.8 Total $ 164.3 $ 167.5 $ 304.0 $ 303.6 Three months ended June 30, 2019 and 2018Global Property's net earned insurance and reinsurance premiums decreased 2% to $164 million for the three months ended June 30, 2019 from $168 million for the three months ended June 30, 2018. The Other Property fronting treaty did not impact Global Property's net earned insurance and reinsurance premiums for either the 2020 or 2019 or 2018 periods.Six months ended June 30, 2019 and 2018Global Property's net earned insurance and reinsurance premiums was $304 million for each of the six months ended June 30, 2019 and 2018. The Other Property fronting treaty did not impact Global Property's net earned insurance and reinsurance premiums for either the 2019 or 2018 periods.unitbusiness along with two MGUs (IMGIMG and Armada). Three months ended
June 30, Six months ended
June 30, Three months ended June 30, Six months ended June 30, Global A&H (Millions) 2019 2018 2019 2018 2020 2019 2020 2019 Gross written premiums $ 152.8 $ 112.3 $ 322.1 $ 257.9 $ 83.7 $ 152.8 $ 345.8 $ 322.1 Net written premiums 120.6 82.8 255.5 198.3 62.0 120.6 262.7 255.5 Net earned insurance and reinsurance premiums 118.8 80.8 214.9 168.8 113.2 118.8 231.1 214.9 Loss and allocated LAE (71.8 ) (40.9 ) (135.0 ) (86.7 ) (69.6 ) (71.8 ) (149.9 ) (135.0 ) Insurance and reinsurance acquisition expenses (36.0 ) (26.4 ) (62.6 ) (55.6 ) (31.5 ) (36.0 ) (62.3 ) (62.6 ) $ 11.0 $ 13.5 $ 17.3 $ 26.5 $ 12.1 $ 11.0 $ 18.9 $ 17.3 Unallocated LAE (2.0 ) (1.0 ) (3.5 ) (2.6 ) (0.6 ) (2.0 ) (2.3 ) (3.5 ) Other underwriting expenses (5.9 ) (6.3 ) (12.0 ) (14.3 ) (6.7 ) (5.9 ) (12.3 ) (12.0 ) $ 3.1 $ 6.2 $ 1.8 $ 9.6 $ 4.8 $ 3.1 $ 4.3 $ 1.8 Service fee revenue 30.3 27.4 66.6 60.2 23.1 30.3 59.0 66.6 MGU unallocated LAE (5.3 ) (5.1 ) (9.4 ) (5.1 ) (6.2 ) (5.3 ) (12.2 ) (9.4 ) MGU other underwriting expenses (4.8 ) (3.5 ) (7.5 ) (11.9 ) (4.7 ) (4.8 ) (9.7 ) (7.5 ) MGU general and administrative expenses (15.0 ) (14.2 ) (31.2 ) (23.7 ) (11.0 ) (15.0 ) (25.2 ) (31.2 ) Underwriting income, including net service fee income $ 8.3 $ 10.8 $ 20.3 $ 29.1 $ 6.0 $ 8.3 $ 16.2 $ 20.3 Ratios: Loss ratio(1) 62.1 % 51.9 % 64.4 % 52.9 % 62.0 % 62.1 % 65.9 % 64.4 % Acquisition expense ratio(2) 30.3 % 32.7 % 29.1 % 32.9 % 27.8 % 30.3 % 27.0 % 29.1 % Other underwriting expense ratio(3) 5.0 % 7.8 % 5.6 % 8.5 % 5.9 % 5.0 % 5.3 % 5.6 % Combined ratio 4) 97.4 % 92.4 % 99.1 % 94.3 % 95.7 % 97.4 % 98.2 % 99.1 % Unallocatedunallocated LAE expenses by net earned insurance and reinsurance premiums.increased 37%decreased 45% to $84 million for the three months ended June 30, 2020 from $153 million for the three months ended June 30, 2019 from $112due to reduced premium volume for travel medical and trip cancellation insurance. Net written premiums decreased 49% to $62 million for the three months ended June 30, 2018 due to higher writings for risks primarily originating2020 from the U.S. Net written premiums increased 46% to $121 million for the three months ended June 30, 2019 from $83 million for the three months ended June 30, 2018 due to higher writings for risks primarily originating from the U.S.same reasons as well as higher retentions.2019 compared to 92%2019. The three months ended June 30, 2020 included COVID-19 losses, net of reinsurance, of $8 million (7 points). Net favorable prior year loss reserve development was $3 million (3 points) for the three months ended June 30, 2018. Net2020 compared to net favorable prior year loss reserve development wasof $1 million (1 point) for the three months ended June 30, 2019 compared to net favorable prior year loss reserve development of $5 million (6 points) for the three months ended June 30, 2018. The decrease in the acquisition expense ratio from the prior period was due to business mix as increased primary insurance writings for risks originating from the U.S. are recorded at lower net commission ratios.2019, compared to $112019. The decrease of $2 million was driven by COVID-19 losses and lower net service fee income, partially offset by higher favorable loss reserve development for the three months ended June 30, 2018. The decrease2020. For each of $3 million was primarily driven by lowerthe three months ended June 30, 2020 and 2019, underwriting income, dueincluding net service fee income, included net losses of $1 million relating to the change in favorable loss reserve development compared to the prior period.20192020 and 2018201925%7% to $346 million for the six months ended June 30, 2020 from $322 million for the six months ended June 30, 2019 from $258 million for the six months ended June 30, 2018 due to higher writings for risks primarily originating from the U.S., partially offset by reduced premium volume for travel medical and trip cancellation insurance. Net written premiums increased 29%3% to $263 million for the six months ended June 30, 2020 from $256 million for the six months ended June 30, 2019 from $198 million for the six months ended June 30, 2018 due to higher writings for risks primarily originating from the U.S.same reasons as well as higher retentions.2019 compared to 94%2019. The six months ended June 30, 2020 included COVID-19 losses, net of reinsurance, of $22 million (10 points). Net favorable prior year loss reserve development was $8 million (3 points) for the six months ended June 30, 2018. The increase in the combined ratio was due2020 compared to net unfavorable prior year loss reserve development of $5 million (2 points) for the six months ended June 30, 2019 compared to $8 million (5 points) of net favorable prior year loss reserve development for the six months ended June 30, 2018. The net unfavorable loss reserve development recorded for the six months ended June 30, 2019 was due to higher than expected claims activity.2019, compared to $292019. The decrease of $4 million was driven by COVID-19 losses and lower net service fee income, partially offset by favorable loss reserve development for the six months ended June 30, 2018. The decrease2020. For each of $9 million was primarily driven by lower underwriting income due to the net unfavorable loss reserve development recorded for the six months ended June 30, 2020 and 2019, comparedunderwriting income, including net service fee income, included net losses of $3 million relating to the prior period.ArmadaHealth, LLC. & Casualty & Casualty consists of Sirius Group's specialty insurance product offerings, which includes Environmental, Surety, and reinsurance underwriting units,Workers’ Compensation. In April 2020, the Company decided to exit the Surety business due to competitive market conditions in that business line and the recent economic downturn which offer specialty & casualty product lines on a worldwide basis. Three months ended
June 30, Six months ended
June 30, $ 96.9 $ 60.9 $ 217.8 $ 176.4 89.2 55.1 197.4 155.7 87.3 55.5 163.0 109.9 (61.3 ) (31.7 ) (108.9 ) (53.3 ) (24.6 ) (14.6 ) (45.1 ) (28.7 ) $ 1.4 $ 9.2 $ 9.0 $ 27.9 (2.2 ) (1.7 ) (4.1 ) (2.9 ) (6.7 ) (7.9 ) (14.9 ) (15.9 ) $ (7.5 ) $ (0.4 ) $ (10.0 ) $ 9.1 72.7 % 60.2 % 69.3 % 51.1 % 28.2 % 26.3 % 27.7 % 26.1 % 7.7 % 14.2 % 9.1 % 14.5 % 108.6 % 100.7 % 106.1 % 91.7 % Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Gross written premiums $ 25.5 $ 16.0 $ 46.3 $ 32.6 Net written premiums 23.8 14.1 39.0 27.7 Net earned insurance premiums 15.2 6.7 28.0 10.8 Loss and allocated LAE (10.4 ) (4.1 ) (18.1 ) (6.5 ) Insurance acquisition expenses (3.4 ) (1.8 ) (6.4 ) (2.5 ) Technical profit $ 1.4 $ 0.8 $ 3.5 $ 1.8 Unallocated LAE (0.1 ) (0.1 ) (0.2 ) (0.1 ) Other underwriting expenses (2.9 ) (2.1 ) (8.1 ) (4.9 ) Underwriting (loss) $ (1.6 ) $ (1.4 ) $ (4.8 ) $ (3.2 ) Ratios: 69.1 % 62.7 % 65.4 % 61.1 % 22.4 % 26.9 % 22.9 % 23.1 % 19.1 % 31.3 % 28.9 % 45.4 % 110.6 % 120.9 % 117.2 % 129.6 % Unallocatedunallocated LAE expenses by net earned insurance and reinsurance premiums.and reinsurance acquisition expenses by net earned insurance and reinsurance premiums.and reinsurance premiums.20192020 and 2018201959%63% to $97$26 million for the three months ended June 30, 2020 from $16 million for the three months ended June 30, 2019 from $61primarily due to an increase in Workers' Compensation ($10 million). Net written premiums increased 71% to $24 million for the three months ended June 30, 2018 due primarily to increases in Casualty ($28 million), Aviation & Space ($6 million), and Trade Credit ($4 million). Net written premiums increased 62% to $892020 from $14 million for the three months ended June 30, 2019 from $55due to an increase in Workers' Compensation ($10 million). The increase in Workers' Compensation is due to business written through Pie Insurance Holdings, Inc. ("Pie Insurance"), a start-up specializing in a data driven approach to workers' compensation insurance, where we also have a minority investment and carrier relationship.2018 due2020 compared to the same linesan underwriting (loss) of business as the gross written premiums increase.Specialty & Casualty produced a net combined ratio of 109%$(1) million for the three months ended June 30, 2019.101%an underwriting (loss) of $(3) million for the six months ended June 30, 2019. Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Workers' Compensation $ 20.7 $ 10.7 $ 35.5 $ 21.8 Environmental 3.6 3.9 8.7 8.3 Surety 1.2 1.4 2.1 2.5 Total $ 25.5 $ 16.0 $ 46.3 $ 32.6 2018. The higher net combined ratio was due to a higher Loss ratio driven by net unfavorable prior year loss reserve development and higher current accident year losses in Aviation & Space, which included $1 million of loss development2020 from the Ethiopian Airlines plane crash.Specialty & Casualty recorded an underwriting (loss) of $(8)$16 million for the three months ended June 30, 2019 comparedprimarily due to an underwriting loss of $(0.4)increase in Workers' Compensation ($10 million). The increase in Workers' Compensation is due to business written through Pie Insurance. Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Workers' Compensation $ 11.9 $ 4.6 $ 21.7 $ 7.1 Environmental 1.6 0.8 3.0 1.4 Surety 1.7 1.3 3.3 2.3 Total $ 15.2 $ 6.7 $ 28.0 $ 10.8 2018. Specialty & Casualty had $62020 from $7 million (7 points) of net unfavorable prior year loss reserve development for the three months ended June 30, 2019 primarily driven by Marinedue to an increase in Workers' Compensation ($47 million) and Aviation & Space ($3 million) compared. The increase in Workers' Compensation is due to $3 million (5 points) of net favorable prior year loss reserve development for the three months ended June 30, 2018, primarily driven by Aviation & Space ($1 million).business written through Pie Insurance.20192020 and 20182019Gross written:24%155% to $218$28 million for the six months ended June 30, 2020 from $11 million for the six months ended June 30, 2019 from $176 million for the six months ended June 30, 2018primarily due primarily to an increase in CasualtyWorkers' Compensation ($63 million), partially offset by a decrease in Trade Credit ($1715 million). Net written premiums increased 26% to $197 million for the six months ended June 30, 2019 from $156 million for the six months ended June 30, 2018The increase in Workers' Compensation is due to the same lines of business as the gross written premiums increase.Specialty & Casualty produced a net combined ratio of 106% for the six months ended June 30, 2019 compared to 92% for the six months ended June 30, 2018. The higher net combined ratio was due to a higher Loss ratio driven by net unfavorable prior year loss reserve development and higher current accident year losses in Aviation & Space, which included $4 million from the Ethiopian Airlines plane crash.Specialty & Casualty recorded an underwriting (loss) of $(10) million for the six months ended June 30, 2019 compared to underwriting income of $9 million for the six months ended June 30, 2018. Specialty & Casualty had $5 million (3 points) of net unfavorable prior year loss reserve development for the six months ended June 30, 2019, primarily driven by unfavorable loss reserve development in Aviation & Space ($4 million), Marine ($3 million), and Casualty ($2 million), partially offset by favorable loss reserve development in Trade Credit ($3 million). For the six months ended June 30, 2018, Specialty & Casualty had $10 million (9 points) of favorable prior year loss reserve development, primarily driven by Aviation & Space ($11 million). Specialty & Casualty gross written premiums Three months
ended June 30, Six months ended
June 30, $ 56.1 $ 28.1 $ 117.9 $ 55.2 17.1 10.8 34.4 31.9 10.3 6.2 30.0 47.2 6.5 8.5 20.9 26.1 3.9 2.4 8.3 2.8 1.6 1.4 3.2 2.8 1.4 3.5 3.1 10.4 $ 96.9 $ 60.9 $ 217.8 $ 176.4 Three months ended June 30, 2019 and 2018Gross written premiums increased 59% to $97 million for the three months ended June 30, 2019 from $61 million for the three months ended June 30, 2018. Increases in gross written premiums were primarily driven by increases in Casualty ($28 million), Aviation & Space ($6 million), and Trade Credit ($4 million).Six months ended June 30, 2019 and 2018Gross written premiums increased 24% to $218 million for the six months ended June 30, 2019 from $176 million for the six months ended June 30, 2018. Increases in gross written premiums were primarily driven by increases in Casualty ($63 million), partially offset by a decrease in Trade Credit ($17 million). Specialty & Casualty Net Earned Insurance and Reinsurance Premiums Three months ended
June 30, Six months ended
June 30, $ 50.2 $ 16.8 $ 88.6 $ 27.5 14.3 15.3 28.9 30.1 11.2 9.5 22.0 20.6 7.7 9.6 16.2 23.0 1.8 0.5 3.0 0.4 1.3 3.7 2.9 8.2 0.8 0.1 1.4 0.1 $ 87.3 $ 55.5 $ 163.0 $ 109.9 Three months ended June 30, 2019 and 2018:Net earned insurance and reinsurance premiums increased 55% to $87 million for the three months ended June 30, 2019 from $56 million for the three months ended June 30, 2018. Casualty ($33 million) was the main driver for the increase from the prior period.Six months ended June 30, 2019 and 2018:Net earned insurance and reinsurance premiums increased 48% to $163 million for the six months ended June 30, 2019 from $110 million for the six months ended June 30, 2018. Casualty ($59 million) was the main driver for the increase from the prior period.includesconsists of the results of Sirius Global Solutions, which specializes in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the U.S.United States and internationally, as well as asbestos risks, environmental risks and other long-tailed liability exposures. Three months ended
June 30, Six months ended
June 30, $ 1.2 $ 6.4 $ 2.6 $ 13.9 0.3 5.4 0.7 11.5 0.3 5.1 0.7 11.1 (2.4 ) (0.3 ) (3.5 ) 2.1 (1.8 ) (1.5 ) (2.5 ) (2.2 ) $ (3.9 ) $ 3.3 $ (5.3 ) $ 11.0 (0.2 ) - (0.7 ) (0.9 ) (1.1 ) (2.4 ) (3.2 ) (3.8 ) $ (5.2 ) $ 0.9 $ (9.2 ) $ 6.3 (1.0 ) (1.0 ) (1.8 ) (2.1 ) $ (6.2 ) $ (0.1 ) $ (11.0 ) $ 4.2 Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Gross written premiums $ (0.1 ) $ 1.2 $ 69.3 $ 2.6 Net written premiums (0.3 ) 0.3 68.3 0.7 Net earned insurance and reinsurance premiums 0.5 0.3 69.5 0.7 Loss and allocated LAE 0.5 (2.4 ) (68.4 ) (3.5 ) Insurance and reinsurance acquisition expenses 0.3 (1.8 ) (0.1 ) (2.5 ) Technical profit (loss) $ 1.3 $ (3.9 ) $ 1.0 $ (5.3 ) Unallocated LAE (1.7 ) (0.2 ) (2.5 ) (0.7 ) Other underwriting expenses (1.5 ) (1.1 ) (2.4 ) (3.2 ) Underwriting (loss) $ (1.9 ) $ (5.2 ) $ (3.9 ) $ (9.2 ) General and administrative expenses (1.4 ) (1.0 ) (2.9 ) (1.8 ) Underwriting (loss), including net service fee income $ (3.3 ) $ (6.2 ) $ (6.8 ) $ (11.0 )
Underwriting Results20192020 compared to $6$1 million of gross written premiums for the three months ended June 30, 2018. Gross written premiums for the three months ended June 30, 2018 relate primarily to premiums from a quota share.$(6) million and $(0.1)$(3) million for the three months ended June 30, 2019 and 2018, respectively.2020 compared to an underwriting (loss), including net service fee income, of $(6) million for the three months ended June 30, 2019. Runoff & Other recorded less than $1 million of net unfavorable prior year loss reserve development for the three months ended June 30, 2020 compared to $3 million of net unfavorable prior year loss reserve development for the three months ended June 30, 2019 compared to $3 million of net favorable prior year loss reserve development for the three months ended June 30, 2018.2019. The net unfavorable prior year loss reserve development for the three months ended June 30, 2019 was primarily due primarily to an increase in reserves for a disputed Latin American Facultative Surety claim in arbitration.20192020 and 201820192019 compared2019. The increase from the prior period was due to $14premiums from the LPT. The LPT did not have an impact on net underwriting results as net earned insurance and reinsurance premiums were offset by a corresponding losses incurred amount. See "Overview - Background and Recent Developments, Loss Portfolio Transfer" for further details on the LPT. of gross written premiums for the six months ended June 30, 2018. Gross written premiums for the six months ended June 30, 2018 relate primarily2020 compared to premiums from a loss portfolio transfer and quota share.Runoff & Other recorded an underwriting (loss), including net service fee income, of $(11) million for the six months ended June 30, 2019 compared to an underwriting gain2019. Runoff & Other recorded less than $1 million of $4 millionnet unfavorable prior year loss reserve development for the six months ended June 30, 2018. Runoff & Other recorded2020 compared to $4 million of net unfavorable prior year loss reserve development for the six months ended June 30, 2019 compared to $12 million of net favorable prior year loss reserve development for the six months ended June 30, 2018.2019. The net unfavorable prior year loss reserve development for the six months ended June 30, 2019 was primarily due primarily to an increase in reserves for a disputed Latin American Facultative Surety claim in arbitration. The net favorable prior year loss reserve development for the six months ended June 30, 2018 was due primarily to reductions in World Trade Center claims in response to revised information received by the Company and runoff Casualty reserves.20192020 and 2018 Three months ended June 30, 2019 Global Property Global A&H Specialty & Casualty Total Three months ended June 30, 2020 Global Reinsurance Global A&H U.S. Specialty Total Gross ratios: Loss ratio 67.8% 59.7% 89.3% 71.0% 70.2% 66.7% 71.6% 70.1% Acquisition expense ratio 20.4% 28.7% 26.4% 22.1% 20.2% 23.9% 24.2% 19.4% Other underwriting expense ratio 7.8% 3.8% 6.8% 7.5% 8.2% 3.3% 31.7% 8.5% Gross Combined ratio 96.0% 92.2% 122.5% 100.6% 98.6% 93.9% 127.5% 98.0% Ceded ratios: Loss ratio 26.6% 51.7% 220.8% 56.4% 157.3% 74.1% 95.7% 94.1% Acquisition expense ratio 32.1% 23.7% 11.8% 26.9% (7.5)% 16.1% 41.9% 11.0% Ceded Combined ratio 58.7% 75.4% 232.6% 83.3% 149.8% 90.2% 137.6% 105.1% Net ratios: Loss ratio 81.5% 62.1% 72.7% 75.0% 63.8% 62.0% 69.1% 65.0% Acquisition expense ratio 16.6% 30.3% 28.2% 20.8% 22.3% 27.8% 22.4% 21.1% Other underwriting expense ratio 10.3% 5.0% 7.7% 9.6% 8.5% 5.9% 19.1% 9.8% Net Combined ratio 108.4% 97.4% 108.6% 105.4% 94.6% 95.7% 110.6% 95.9% Three months ended June 30, 2019 Global Reinsurance Global A&H U.S. Specialty Total Gross ratios: Loss ratio 74.9% 59.7% 56.5% 71.0% Acquisition expense ratio 22.0% 28.7% 32.3% 22.1% Other underwriting expense ratio 7.0% 3.8% 26.1% 7.5% Gross Combined ratio 103.9% 92.2% 114.9% 100.6% Ceded ratios: Loss ratio 59.9% 51.7% 27.3% 56.4% Acquisition expense ratio 28.0% 23.7% 62.2% 26.9% Ceded Combined ratio 87.9% 75.4% 89.5% 83.3% Net ratios: Loss ratio 78.9% 62.1% 62.7% 75.0% Acquisition expense ratio 20.4% 30.3% 26.9% 20.8% Other underwriting expense ratio 8.8% 5.0% 31.3% 9.6% Net Combined ratio 108.1% 97.4% 120.9% 105.4% Property. Within Specialty & Casualty, the lower net combined ratio was primarily due to high ceded loss recoveries in Aviation & Space.Reinsurance. Three months ended June 30, 2018 Global Property Global A&H Specialty & Casualty Total Six months ended June 30, 2020 Global Reinsurance Global A&H U.S. Specialty Total Gross ratios: Loss ratio 45.5% 52.5% 56.6% 49.9% 90.3% 65.0% 65.7% 84.8% Acquisition expense ratio 25.7% 29.0% 24.3% 24.3% 21.0% 25.7% 24.1% 18.7% Other underwriting expense ratio 6.5% 5.7% 12.6% 10.2% 7.5% 5.2% 33.5% 8.3% Gross Combined ratio 77.7% 87.2% 93.5% 84.4% 118.8% 95.9% 123.3% 111.8% Ceded ratios: Loss ratio 50.5% 54.4% 23.5% 51.6% 108.1% 24.6% 65.1% 101.6% Acquisition expense ratio 33.7% 18.5% 16.3% 30.3% 15.2% 15.0% 35.0% 15.8% Ceded Combined ratio 84.2% 72.9% 39.8% 81.9% 123.3% 39.6% 100.1% 117.4% Net ratios: Loss ratio 42.2% 51.9% 60.2% 49.0% 87.4% 65.9% 65.4% 83.0% Acquisition expense ratio 20.4% 32.7% 26.3% 21.6% 22.0% 27.0% 22.9% 19.0% Other underwriting expense ratio 10.8% 7.8% 14.2% 12.4% 8.8% 5.3% 28.9% 9.2% Net Combined ratio 73.4% 92.4% 100.7% 83.0% 118.2% 98.2% 117.2% 111.2% one1 point lower than the gross combined ratio primarily due to higher loss recoveries exceeding the costs of retrocessional protections for the threesix months ended June 30, 2018.Six2020, driven mainly by Global Reinsurance. An Other Property fronting arrangement, which records offsetting gross and ceded loss and commission results, less a margin to Sirius Group, also impacted the gross and ceded loss and commission ratios for the six months ended June 30, 2019 and 2018 Six months ended June 30, 2019 Global Property Global A&H Specialty & Casualty Total Six months ended June 30, 2019 Global Reinsurance Global A&H U.S. Specialty Total Gross ratios: Loss ratio 56.1% 64.6% 76.7% 64.4% 62.4% 64.6% 56.4% 64.4% Acquisition expense ratio 21.4% 27.5% 25.8% 21.9% 22.7% 27.5% 22.5% 21.9% Other underwriting expense ratio 8.0% 4.2% 8.3% 8.0% 7.4% 4.2% 37.9% 8.0% Gross Combined ratio 85.5% 96.3% 110.8% 94.3% 92.5% 96.3% 116.8% 94.3% Ceded ratios: Loss ratio 30.8% 65.2% 147.4% 52.9% 46.5% 65.2% 31.2% 52.9% Acquisition expense ratio 32.1% 22.4% 8.1% 26.7% 29.0% 22.4% 22.5% 26.7% Ceded Combined ratio 62.9% 87.6% 155.5% 79.6% 75.5% 87.6% 53.7% 79.6% Net ratios: Loss ratio 65.3% 64.4% 69.3% 67.7% 66.9% 64.4% 61.1% 67.7% Acquisition expense ratio 17.4% 29.1% 27.7% 20.6% 21.0% 29.1% 23.1% 20.6% Other underwriting expense ratio 10.9% 5.6% 9.1% 10.4% 9.5% 5.6% 45.4% 10.4% Net Combined ratio 93.6% 99.1% 106.1% 98.7% 97.4% 99.1% 129.6% 98.7% Property. Within Specialty & Casualty, the lower net combined ratio was primarily due to high ceded loss recoveries in Aviation & Space.Reinsurance. Six months ended June 30, 2018 Global Property Global A&H Specialty & Casualty Total Gross ratios: Loss ratio 47.5% 53.8% 49.3% 49.7% Acquisition expense ratio 23.8% 29.9% 24.2% 23.0% Other underwriting expense ratio 7.7% 6.4% 12.8% 10.0% Gross Combined ratio 79.0% 90.1% 86.3% 82.7% Ceded ratios: Loss ratio 48.4% 56.7% 35.0% 50.9% Acquisition expense ratio 29.5% 20.2% 9.9% 26.0% Ceded Combined ratio 77.9% 76.9% 44.9% 76.9% Net ratios: Loss ratio 47.1% 52.9% 51.1% 49.3% Acquisition expense ratio 20.9% 32.9% 26.1% 21.9% Other underwriting expense ratio 11.7% 8.5% 14.5% 13.7% Net Combined ratio 79.7% 94.3% 91.7% 84.9% Sirius Group's net combined ratio was 2 points higher than the gross combined ratio primarily due to the costs of retrocessional protections with limited ceded loss recoveries for the six months ended June 30, 2018.Group'sGroup’s results, management has included and discussed the following non-GAAP financial measures: AdjustedTangible book value, AdjustedTangible book value per common share, and Operating (loss) income attributable to common shareholders. 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'sCompany’s results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP.AdjustedAdjustedTangible book value per common share are non-GAAP financial measures used to show the Company's total worth on a per-share basismeasures. Tangible book value and isTangible book value per common share are useful to management and investors in analyzingbecause they measure the intrinsicrealizable value of common shareholder returns, excluding the Company.Adjusted shares outstanding is derived by summing Common shares outstanding, Series B preference shares outstanding (which were issued to the cornerstone investors),impact of goodwill, intangible assets, and the Earned portion of share-based compensation awards. Adjustednet deferred liability on intangible assets.summing Total common shareholders' equity, the Series B preference share amount reflected in mezzanine equity,subtracting Goodwill, Intangible assets and the Earned portion of future proceedsNet deferred tax liability on intangible assets from stock option awards. Outstanding warrants are excluded as they are anti-dilutive as of the respective reporting dates.As of June 30, 2019, Adjusted book value and Adjustedvalue. Tangible book value per share include the earned effects of share-based compensation awards issued during 2019.Adjusted book value percommon share is derived by dividing the AdjustedTangible book value by the Adjustedtotal number of Common shares outstanding.reconciliationreconciliations to Total common shareholders'shareholders’ equity and Book value per common share, the most directly comparable GAAP measures, are presented in the table below.
June 30, 2019
December 31, 2018 115,296,918 115,151,251 11,901,670 11,901,670 374,912 - 152,772 - 127,726,272 127,052,921 $ 1,784.1 $ 1,704.5 241.3 232.2 1.9 - $ 2,027.3 $ 1,936.7 $ 15.47 $ 14.80 $ 15.87 $ 15.24 June 30, March 31, December 31, (Expressed in millions of U.S. dollars, except share and per share amounts) 2020 2020 2019 Common shares outstanding 115,299,341 115,299,341 115,299,341 Total common shareholders’ equity $ 1,519.7 $ 1,474.1 $ 1,640.4 Goodwill (400.8 ) (400.8 ) (400.8 ) Intangible assets (171.9 ) (175.9 ) (179.8 ) Net deferred tax liability on intangible assets 20.1 21.2 22.8 Tangible book value $ 967.1 $ 918.6 $ 1,082.6 Book value per common share $ 13.18 $ 12.78 $ 14.23 Tangible book value per common share $ 8.39 $ 7.97 $ 9.39 income attributable to common shareholders 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 (losses)and losses on investments, net foreign exchange gains (losses) and the associated income tax expense or benefit. The Company'sCompany’s management believes that Operating (loss) income attributable to common shareholders is useful to investors because it is more reflective of the Company'sCompany’s core business, as it removes the variability arising from fluctuations in the Company'sCompany’s fixed maturity investment portfolio, equity investments trading, investments-related derivatives, and net foreign exchange gains (losses) and the associated income tax expense or benefit of those fluctuations. The following is a reconciliation of netNet (loss) income attributable to common shareholders to Operating (loss) income attributable to common shareholders: Three months
ended June 30, Six months
ended June 30, $ 6.6 $ 97.8 $ 101.9 $ 138.3 (31.1 ) (32.5 ) (114.1 ) (44.8 ) - (25.6 ) (5.1 ) (22.1 ) 5.1 0.8 16.8 - $ (19.4 ) $ 40.5 $ (0.5 ) $ 71.4 (Expressed in millions of U.S. dollars) Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Net (loss) income attributable to common shareholders $ (13.6 ) $ 6.6 $ (111.7 ) $ 101.9 Adjustment for net realized and unrealized (gains) losses on investments (15.8 ) (31.1 ) 7.7 (114.1 ) Adjustment for net foreign exchange (gains) losses 16.1 — (2.4 ) (5.1 ) (3.8 ) 5.1 (11.0 ) 16.8 Operating (loss) attributable to common shareholders $ (17.1 ) $ (19.4 ) $ (117.4 ) $ (0.5 ) gainslosses (gains) on investments and the income tax expense (benefits) associated with the adjustment for net foreign exchange gains.gains (losses). The income tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors. the short-term and long-term cash requirements of its business operations. Sirius Group's insurance and reinsurance operations are subject to regulation and supervision in each of the jurisdictions where they are domiciled and licensed to conduct business. Generally, regulatory authorities have broad supervisory and administrative powers over such matters as licenses, standards of solvency, premium rates, policy forms, investments, security deposits, methods of accounting, form and content of financial statements, reserves for unpaid loss and LAE, reinsurance, minimum capital and surplus requirements, dividends and other distributions to shareholders, periodic examinations and annual and other report filings. In general, such regulation is for the protection of policyholders rather than shareholders. Sirius Group manages its liquidity needs primarily through the maintenance of a short duration and high quality fixed income portfolio.2018,2019, Sirius Bermuda could pay approximately $539$524 million to its parent company, Sirius International Group, Ltd., during 2019.2020. Sirius Bermuda indirectly owns Sirius International, Sirius America and Sirius Group's other insurance and reinsurance operating companies, each of which are limited in their ability to pay dividends by the insurance laws of their relevant jurisdictions. CMIG International, Holding Pte. Ltd. ("CMIG International"), which is approximately 82% owned by China Minsheng Investment Group Corp., Ltd. ("CMIG"), indirectly holdsshares approximately 87% of the voting and dispositive controlpower over the Sirius Group common sharesequity securities as of June 30, 2019, through2020, with CMIG, and CMIG International's wholly-owned Bermuda holding company, CM Bermuda Ltd. ("CM Bermuda"). During 2019, CMIG has made several public announcements relating to defaults and cross-defaults on certain bonds and other debt obligations issued by certain subsidiaries of CMIG (the "CMIG Defaults"), the failure and uncertainty of CMIG's subsidiaries to repay their debt obligations as they become due and the existence of certain asset freeze orders relating to the equity interests of CMIG in certain Chinese subsidiaries not within the chain of control of Sirius Group. On May 3, 2019, in connection with the CMIG Defaults, Sirius Bermuda and Sirius Group entered into a voluntary undertaking with the BMA to provide further comfort to the BMA as the group supervisor of Sirius Group and primary regulator of Sirius Bermuda, the designated insurer for group supervisory purposes regarding the potential risks to Sirius Group in connection with the CMIG Defaults. On March 27, 2020, Sirius Group extended the voluntary undertaking for an additional year. Pursuant to the voluntary undertaking, each of Sirius Group and Sirius Bermuda have agreed, until May 3, 2020,2021, (a) to provide ten days prior written notice to the BMA prior to declaring any dividend or capital distribution, which notice shall include an affidavit confirming that the declaration and payment of such dividend would not be in breach of (i) the provisions of section 54 of the Companies Act 1981 in the case of Sirius Bermuda, (ii) the Minimum Liquidity Ratio as defined in the Insurance Act 1978 in the case of Sirius Bermuda; and (iii) the Target Capital Level of 120% of the Enhanced Capital Requirement as defined by the Bermuda Solvency Capital Requirement promulgated by the BMA for Sirius Group and Sirius Bermuda, and a summary description of the use proceeds from such declaration or dividend or capital distribution within Sirius Group or Sirius Bermuda; (b) not to enter into any guarantees, keepwells, loans or other financial arrangements between Sirius Group and CMIG, or provide any credit support with respect to any obligations of CMIG; and (c) not to enter into any related party transaction with CMIG.CMIG without the BMA's consent. For the six months ended June 30, 2020, Sirius Bermuda paid $70 million of dividends to its immediate parent.Sirius Bermudaits immediate parent subject to the availability of unrestricted equity, calculated in accordance with the Swedish Act on Annual Accounts in Insurance Companies and the Swedish Financial Supervisory Authority (the "SFSA"). Unrestricted equity is calculated on a consolidated group account basis and on a parent account basis. Differences between the two include but are not limited to accounting for goodwill, subsidiaries (with parent accounts stated at original foreign exchange rates), taxes and pensions. Sirius International's ability to pay dividends is limited to the "lower of" unrestricted equity as calculated within the group and parent accounts. As of December 31, 2018,2019, Sirius International had $373$402 million (based on the December 31, 20182019 SEK to USD exchange rate) of unrestricted equity on a parent account basis (the lower of the two approaches) available to pay dividends in 2019.2020. The amount of dividends available to be paid by Sirius International in any given year is also subject to cash flow and earnings generated by Sirius International's business, the maintenance of adequate solvency capital ratios for Sirius International and the consolidated Sirius International UK Holdings Ltd. group, as well as dividends received from its subsidiaries, including Sirius America.subsidiaries. Earnings generated by Sirius International's business that are allocated to the Safety Reserve are not available to pay dividends (see "Safety Reserve" below). For the six months ended June 30, 2019,2020, Sirius International did not declare a dividend and paid an insignificant amountless than $1 million of dividends declared in 2017.2019,2020 without prior regulatory approval. As of December 31, 2018,2019, Sirius America had $522 million of statutory surplus and $108$89 million of earned surplus.surplus and could pay approximately $52 million to its parent company, Sirius International Holding Company, during 2020. For the six months ended June 30, 2019,2020, Sirius America did not pay any dividends to its immediate parent.2019,2020, Sirius Group did not pay any dividends. As of June 30, 2019,2020, Sirius Group had $76$75 million of net unrestricted cash, short-term investments, and fixed maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.Capital MaintenanceThere is a capital maintenance agreement between Sirius International and Sirius America, which obligates Sirius International to make contributions to Sirius America's surplus in order for Sirius America to maintain surplus equal to at least 125% of the company action level risk-based capital as defined in the National Association of Insurance Commissioners' Property/Casualty Risk-Based Capital Report. The agreement provides for a maximum contribution to Sirius America of $200 million. For the six months ended June 30, 2019, Sirius International did not make any contributions to the surplus of Sirius America.an untaxeda reserve referred to as a "Safety Reserve." Under local statutory requirements, an amount equal to the deferred tax liability on Sirius International's Safety Reserve is included in Solvency Capital. Access to the Safety Reserve is restricted to cover insurance and reinsurance losses and to cover a breach of the Solvency Capital Requirement. Access for any other purpose requires the approval of Swedish regulatory authorities. Similar to the approach taken by Swedish regulatory authorities, most major rating agencies generally include the balance of the Safety Reserve, without any provision for deferred taxes, in Sirius International's regulatory capital when assessing Sirius International and Sirius Group's financial strength.2019,2020, Sirius International's Safety Reserve amounted to SEK 10.710.2 billion, or $1.2$1.1 billion (based on the June 30, 20192020 SEK to USD exchange rate). Under GAAP, an amount equal to the Safety Reserve, net of a related deferred tax liability established at the Swedish tax rate, is classified as common shareholders' equity. Generally, this deferred tax liability ($225 million based on the June 30, 2020 SEK to USD exchange rate) is only required to be paid by Sirius International if it fails to maintain prescribed levels of premium writings and loss reserves in future years. As a result of the indefinite deferral of these taxes, the related deferred tax liability is not taken into account by Swedish regulatory authorities apply no taxes to the Safety Reserve whenfor purposes of calculating solvency capitalSolvency Capital under Swedish insurance regulations.enacted in Sweden in June 2018,effective as of January 1, 2019, the tax rate applicable to Swedish corporations decreased to 21.4% effective as of January 1, 2019,, and then will further reduce to 20.6% starting in 2021. The tax legislation also introduced an annual tax on the Safety Reserve effective as of January 1, 2019. This provision adds additional taxable income for the Company annually. The calculation applies the Government Borrowing Rate (with a floor rate of +0.5%) to the Safety Reserve balance at the beginning of the year. At the current year tax rate of 21.4% the additional tax expense for the six months ended June 30, 2020 is SEK 6 million, or $1 million (based on the June 30, 2020 SEK to USD exchange rate).new provision and Sirius International's positive effectSafety Reserve balance as of the decreased tax rate on the deferred tax liability is offset byJune 30, 2020, Sirius International has recorded an additional deferred tax liability as of June 30, 2020 in the amount of $15SEK 126 million, as of December 31, 2018.Under local statutory requirements, an amount equalor $14 million (based on the June 30, 2020 SEK to theUSD exchange rate) for a total deferred tax liability on Sirius International's Safety Reserve ($251 million as of June 30, 2019) is included in solvency capital. Access to the Safety Reserve is restricted to coverage of insurance and reinsurance losses and to coverage of a breach of the Solvency Capital Requirement. Access for any other purpose requires the approval of Swedish regulatory authorities. Similar to the approach taken by Swedish regulatory authorities, most major rating agencies generally include the $1.2 billion balance of the Safety Reserve, without any provision for deferred taxes, in Sirius International's regulatory capital when assessing Sirius International and Sirius Group's financial strength. Subject to certain limitations under Swedish law, Sirius International is permitted to transfer certain portions of its pre-tax income to its Swedish parent companies to minimize taxes (referred to as a group contribution). For the six months ended June 30, 2019, Sirius International did not transfer any of its 2019 pre-tax income via group contributions to its Swedish parent companies.preferredpreference share issuances and repurchases and dividends paid to shareholders are all activities that do not change insurance float but can meaningfully impact operational leverage metrics that are calculated using insurance float. Insurance float increased by $128 million from December 31, 2019 mainly due to losses incurred from COVID-19 for the six months ended June 30, 2020.20192020 and December 31, 2018:
June 30, 2019
December 31, 2018 (Expressed in millions of U.S. dollars, except multiples) June 30, 2020 December 31, 2019 $ 2,023.3 $ 2,016.7 $ 2,515.1 $ 2,331.5 879.5 647.2 874.5 708.0 256.9 206.9 314.9 244.7 126.6 110.6 145.3 169.1 251.4 261.1 238.8 239.4 3,537.7 3,242.5 4,088.6 3,692.7
116.8
119.4 186.7 136.3 427.2 405.2 548.3 484.2 861.3 630.6 871.7 730.1 237.6 186.8 254.7 293.9 Ceded unearned insurance and reinsurance premiums 201.9 162.0 158.8 141.6 159.1 148.2 188.1 159.8 1,989.8 1,643.4 2,222.4 1,954.7 $ 1,547.9 $ 1,599.1 $ 1,866.2 $ 1,738.0
0.6
x
0.6
x0.8 x 0.7 x 0.9 x 0.9 x 1.2 x 1.1 x below in the "Financingtable below under "Financing."table.Sirius Group anticipates that it will have the flexibility and capacity to obtain funds externally as needed through debt or equity financing on both a short-term and long-term basis. However, duein our 2019 Annual Report, the CMB Resolution (as defined therein) may prohibit our Board of Directors from issuing any common or preference shares, warrants, options or other forms of share equity, or to confer any new share rights or implement any rights plan, or to amend or vary or alter any rights attaching to any existing shares, in each case without the prior approval of holders of the common shares of the Company representing at least 75% of the shareholder voting rights. The approval of holders of the common shares of the Company representing at least 75% of the shareholder voting rights cannot be assured. As such, the CMB Resolution may prevent Sirius Group from performing a number of matters necessary to the CMIG Defaults, CMIG International's statusoperation of its business, including raising capital, even if necessary to meet regulatory or rating agency capital requirements, to finance its operations or to increase its public float, as a controllingwell as incentivizing employees using shares of the Company, and completing equity-based financing of transactions without the prior approval of holders of the common shares of the Company representing at least 75% of the shareholder could limit Sirius Group's ability to raise new equity and debt capital or execute on strategic objectives, including bolt-on acquisitions and strategic mergers & acquisitions.20192020 and December 31, 2018:
June 30, 2019
December 31, 2018 $ 292.3 $ 303.6 393.6 393.2 685.9 696.8 241.3 232.2 1,784.1 1,704.5 $ 2,711.3 $ 2,633.5 25 % 26 % 34 % 35 % (Expressed in millions of U.S. dollars, except ratios) June 30, 2020 December 31, 2019 2017 SEK Subordinated Notes $ 290.5 $ 291.2 2016 SIG Senior Notes 394.4 394.0 Total debt 684.9 685.2 Series B preference shares 206.2 223.0 Common shareholders' equity 1,519.7 1,640.4 Total capital $ 2,410.8 $ 2,548.6 Total debt to total capital 28 % 27 % Total debt and Series B preference shares to total capital 37 % 36 % Swedish kronor ("SEK")SEK in the amount of SEK 2,750 million (or $346 million on date of issuance) at a 100% issue price ("2017 SEK Subordinated Notes"). The 2017 SEK Subordinated Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933 (the "Securities Act"). The 2017 SEK Subordinated Notes bear interest on their principal amount at a floating rate equal to the applicable Stockholm Interbank Offered Rate ("STIBOR") for the relevant interest period plus an applicable margin, payable quarterly in arrears on March 22, June 22, September 22, and December 22 in each year commencing on December 22, 2017, until maturity in September 2047.Group incurred $5 millionGroup's unaudited financial statements included elsewhere in expenses relatedthis Quarterly Report on Form 10-Q for further details and discussion with respect to the issuance of the 2017 SEK Subordinated Notes (including SEK 27.5 million, or $4 million, in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the 2017 SEK Subordinated Notes.Taking into effect the amortization of all underwriting and issuance expenses, and applicable STIBOR, the 2017 SEK Subordinated Notes yielded an effective rate of approximately 3.9% and 3.5% annualized for the six months ended June 30, 2019 and 2018, respectively. Sirius Group recorded $6 million of interest expense, inclusive of amortization of issuance costs, on the 2017 SEK Subordinated Notes for each of the six months ended June 30, 2019 and 2018, respectively.$392.4$392 million after taking into effect both deferrable and non-deferrable issuance costs. The 2016 SIG Senior Notes were issued in an offering that was exempt from the registration requirements of the Securities Act. The 2016 SIG Senior Notes bear an annual interest rate of 4.6%, payable semi-annually in arrears on May 1, and November 1, in each year commencing on May 1, 2017, until maturity in November 2026.Group incurred $5 millionGroup's audited financial statements included elsewhere in expenses relatedthis Quarterly Report on Form 10-Q for further details and discussion with respect to the issuance of the 2016 SIG Senior Notes (including $3Notes.underwriting fees), whichcontrol of Sirius Group within the meaning of the Certificate of Designation of the Series B preference shares and demanding the redemption of all of their Series B preference shares. The Company has reviewed the Notices of Redemption and related attachments, and continued its inquiry into the matters asserted therein. In connection with that inquiry, the Company received a letter from CMIG International confirming that (i) CMIG International continues to own 100% of the outstanding equity of CM Bermuda, and there have been deferredno transfers of any shares of CM Bermuda (or CMIG International) and are being recognized into interest expense over the life(ii) there have been no transfers of the 2016 SIG Senior Notes.Taking into effectshares owned by CM Bermuda, in each case since the amortizationinitial listing of the original issue discountCompany’s common shares in November 2018. In addition, the Company received a secretary’s certificate from CM Bermuda identifying CMIG International as CM Bermuda’s sole shareholder. CM Bermuda also provided a letter from its lead facility agent confirming on behalf of the lenders under CM Bermuda’s facility agreement that no default or event of default has been declared under the facility agreement and all underwriting and issuance expenses,that the 2016 SIG Senior Notes yieldedfacility agent has not exercised any of the rights that may be available it under an effective rateevent of approximately 4.7% per annum.default. The letter further confirms that at no time has any lender or any trustee appointed on behalf of a lender acquired direct or indirect beneficial ownership of any of the shares of Sirius Group, recorded $10 millionCM Bermuda, CMIG International or China Minsheng Investment Group Corp., Ltd. As a result of interest expense, inclusivesuch inquiry, Sirius Group responded to the Preference Share Investors that it is not aware of amortization of issuance costs onany facts that would support the 2016 SIG Senior Notes, for eachconclusion that an event has occurred that would result in a change in beneficial ownership of the six months ended June 30, 2019shares of the Company owned by CM Bermuda that would give rise to a redemption right by the Preference Share Investors. As such, Sirius Group concluded and 2018, respectively.9, 2018,6, 2019, Sirius International renewedagreed to renew two standby letter of credit facility agreements totaling $160$125 million to provide capital support for Lloyd's Syndicate 1945. The first letter of credit is a renewal of a $125$90 million facility with Nordea Bank Finland Abp, London Branch, which is issued on an unsecured basis. The second letter of credit is a $35 million facility with DNB Bank ASA, Sweden Branch, $25 million of which is issued on an unsecured basis. Each facility is renewable annually. The above referenced facilities are subject to various affirmative, negative and financial covenants that the Company considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards and change in control provisions.standards.20192020 and December 31, 2018,2019, these secured letter of credit and trust arrangements were collateralized by pledged assets and assets in trust of SEK 3.03.5 billion and SEK 2.93.4 billion, respectively, or $319$369 million and $321$363 million, respectively (based on the June 30, 20192020 and December 31, 20182019 SEK to USD exchange rates). As of June 30, 20192020 and December 31, 2018,2019, Sirius America Insurance Company's trust arrangements were collateralized by pledged assets and assets in trust of $57$48 million and $56$58 million, respectively. As of June 30, 20192020 and December 31, 2018,2019, Sirius Bermuda's letters of credit and trust arrangements were collateralized by pledged assets and assets in trust of $350$518 million and $320$784 million, respectively.Sirius International Group, Ltd.,SIG entered into a three-year, $300 million senior unsecured revolving credit facility (the "Facility"). The Facility provides access to loans for working capital and general corporate purposes, and letters of credit to support obligations under insurance and reinsurance agreements and retrocessional agreements. The Facility is subject to various affirmative, negative and financial covenants that Sirius Group considers to be customary for such borrowings, including certain minimum net worth, maximum debt to capitalization and financial strength rating standards and change in control provisions.standards. As of June 30, 2019,2020, there were no outstanding borrowings under the Facility.2019,2020, Sirius Group was in compliance with all of the covenants under the 2017 SEK Subordinated Notes, the 2016 SIG Senior Notes, the Nordea Bank Finland Abp, London Branch facility, and the DNB Bank ASA, Sweden Branch facility. In addition, as of June 30, 2019,2020, Sirius Group was in compliance with all of the covenants under the Facility.20182019 in our 20182019 Annual Report. We consider these contractual obligations when assessing our liquidity requirements. During the six months ended June 30, 2019,2020, other than as disclosed in "NoteNote 5. "Reserves for unpaid losses and loss adjustment expenses" in the Notes to Consolidated Financial StatementsSirius Group's unaudited financial statements included within "Part I, Item 1. Financial Statements."elsewhere in this Quarterly Report on Form 10-Q with respect to a decreasean increase in our reserve for loss and LAE reserves, and "Note 9. Note 10. "Debt and standby letters of credit facilities" in the Notes to Consolidated Financial StatementsSirius Group's unaudited financial statements included within "Part I, Item 1. Financial Statements."elsewhere in this Quarterly Report on Form 10-Q with respect to our long term debt obligations, there were no other material changes in our contractual obligations as disclosed in the table of contractual obligations, and related footnotes, included in our 2019 Annual Report.primarily derives cash primarily from the net inflow of premiums less claim payments related to underwriting activities, from fee income, and from net investment income. The insurance and reinsurance business inherently provides liquidity, as premiums are received in advance of the time claims are paid. However, the amount of cash required to fund claim payments can fluctuate significantly from period to period, due to the low frequency and high severity nature of certain types of business we write. Sirius Group's remaining cash flows are generally reinvested in our investment portfolio.20192020 and 2018. Six Months Ended (Millions) June 30, 2019 June 30, 2018 Net cash provided from (used for)(1) Operations $ 15.0 $ 35.0 Investing activities (12.8 ) (126.7 ) Financing activities (0.1 ) 1.4 Effect of exchange rate changes on cash (3.8 ) (10.3 ) (Decrease) increase in cash during year $ (1.7 ) $ (100.6 ) Six months ended (Millions) June 30, 2020 June 30, 2019 Operations $ 72.4 $ 15.0 Investing activities (13.4 ) (12.8 ) Financing activities (5.5 ) (0.1 ) Effect of exchange rate changes on cash 0.8 (3.8 ) Increase (decrease) in cash during year $ 54.3 $ (1.7 ) 20192020 and 2018 flows provided from operations was $15$72 million and $35$15 million for the six months ended June 30, 20192020 and 2018,2019, respectively. Cash flows from operations decreased $20increased $57 million for the six months ended June 30, 20192020 compared to the six months ended June 30, 2018 as2019 due to higher amounts of net premiums collected which were more thanpartially offset by higher net paid losses.During20192020 and 2018,2019, Sirius Group made long-term incentive payments totaling less than $1 million and $2 million, respectively.$6 million, respectively.20192020 and 2018$(127)2019.20192020 and 2018, respectively. The current period reflected lower net purchases of common equity securities, partially offset by lower net sales of fixed maturity investments.Cash flows (used for) provided from financing activities were insignificant for the six months ended June 30, 2019.$1 million fordiscussion with respect to the Armada Earnout.2018, respectively.Financing2020, Sirius Group paid $9 million of interest on the 2016 Senior Notes and other capital activitiesDuring the six months ended June 30, 2018, Sirius Group paid $9 million of interest on the 2016 Senior Notes and $6 million of interest on the 2017 SEK Subordinated Notes.During the six months ended June 30, 2018, as stipulated in the stock purchase agreement between CMIG International and White Mountains Insurance Group ("White Mountains"), White Mountains paid Sirius Group $1 million for certain long-term incentive payments that Sirius Group paid to its employees.20182019 Annual Report, we believe that the material items requiring such subjective and complex estimates are our: and Intangible AssetsEarnout Obligations2019.2020. For additional information regarding our critical accounting estimates, refer to our 20182019 Annual Report.There have been no materialthe information aboutSirius Group's market risk set forth in our 2018 Annual Report.dueto the COVID-19 pandemic.2019.2020. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that Sirius Group's disclosure controls and procedures are effective in allowing information required to be disclosed in reports filed under the Exchange Act to be recorded, processed, summarized and reported within time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to Sirius Group's management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.20182019 Annual Report, except as set forth below.Sirius Groupbecome aware of recent announcements by CMIG regarding the CMIG Defaults. The CMIG Defaults may have financial, legal, regulatory, contractualadversely affected our business. Epidemics, pandemics, and other implications thatpublic health threats, including the ongoing COVID-19 pandemic, could have a material adverse effect on Sirius Group’s business, including our results of operations, financial position and/or liquidity, in a manner and to a degree that cannot be predicted.business, prospects, financial condition,business. Beginning in March 2020, COVID-19 began to impact the global economy and the results from operations, liquidity and share price.CMIG International, which is approximately 82% owned by CMIG, indirectly holds approximately 87%of our operations. Because of the votingsize and dispositive control overduration of this pandemic, all of the Sirius Group common shares asdirect and indirect consequences of June 30, 2019, through CMIG International's wholly-owned Bermuda holding company, CM Bermuda. In April 2019, subsidiariesCOVID-19 are not yet known and may not emerge for some time. The future impact of CMIG announced the existencepandemic on us is highly uncertain and cannot be predicted, but it could have a material adverse impact on the future results of certain asset freeze orders relating to CMIG's Chinese subsidiaries and cross-defaults of approximately US$300 million and US$500 million on certain of CMIG's subsidiaries' bonds not within the chain of controloperations, financial position and/or liquidity of Sirius Group. Since then,The extent of the US$300 million bonds were subsequently accelerated and repaid in full; however, the US$500 million bonds were unableimpact, if any, will depend on future developments, including actions taken to be repaid at its original maturity date of August 2, 2019 contain COVID-19and the CMIG subsidiary is currently soliciting consent from its bondholders to extenduncertain impact of potential judicial, legislative and regulatory actions by local, state and national governmental and regulatory bodies. Risks presented by the maturity dateongoing effects of COVID-19 include the following:waiveduration of the default. In addition, CMIG has also publicly announcedeconomic contraction. As a result of the uncertaintyanticipated impact of CMIG to timely repaythe pandemic on our earned premiums, we expect an increase in full certain commercial paper obligationsour underwriting expense ratio in the amountnear term. Sirius Group may also experience lower gross written premiums for travel medical and trip cancellation insurance.approximately US$220 million which were eventually repaidLoss. Sirius Group has experienced and may continue to experience an increased risk of loss in full five days after the maturity date,certain lines of business, including contingency, accident and the delay of payment by a CMIG subsidiary of a previously declared US$30 million dividendhealth, workers ' compensation, trade credit, casualty and its property (re)insurance due to concerns regarding cash shortfall followingbusiness interruption and global supply chains disruptions. For example, Sirius Group previously reported that we recorded $140 million of estimated ultimate losses in our underwriting losses related to the paymentCOVID-19 pandemic. During the second quarter 2020, we reviewed our inforce (re)insurance portfolios to reevaluate our estimate of ultimate losses from the dividend. The public announcements disclosed that an onshore creditors committee had been formed to stabilize the current situationCOVID-19 pandemic, and maintain the operations of CMIG.Risks and uncertainties associated with the CMIG Defaults include the actions that CMIG may take to resolve its liquidity issues (such as a saleresult of Sirius Group)new information and potential oppositionmore detailed modeling, we increased our estimates by $13 million. We have currently recorded losses of $57 million in its other property and property catastrophe excess reinsurance lines of business due to such actions from CMIG's creditorsbusiness interruption, and other parties in interest, as well as the actions that CMIG's creditors may take (such as additional freezes on CMIG's assets, including directlyhas experienced losses of $48 million pertaining to actual and projected canceled or indirectly thepostponed major events. Sirius Group common shares heldmay also experience elevated frequency and severity in its workers’ compensation lines related to compensable claims by CM Bermuda,workers who have suffered from injury or involuntary bankruptcy or liquidation proceedingsillness in the course of CMIG).Furthermore, certaintheiruncertainties identifiedexposure related to unpredictable catastrophic events, see “Sirius Group is exposed to unpredictable catastrophic events that could adversely affect its results of operations and financial condition” included in Part I, Item 1A. "Risk Factors” in the Company’s 2019 Annual Report.2018 Annual Report have been heightenedoperating performance has further deteriorated as a result of the CMIG Defaults, including those related to:•reliancefinancial strength ratings which could have a material adverse effect on our results of operations, financial position and/or liquidity. For additional discussion on how a ratings downgrade can impact Sirius Group, see"Sirius Group is reliant on financial strength and creditworthiness ratings. Following the April 2016 acquisitionratings, and any downgrade or withdrawal of Sirius Group by CMIG International, A.M. Best temporarily issued a negative outlook in its rating of Sirius Group. The negative outlook reflected A.M. Best's concern over the credit profile of CMIG, represented by CMIG's high financial leverage. Fitch similarly lowered Sirius Group's rating by one notch due to its concern over CMIG's short operating history, rapid business growth and high and increasing leverage. The CMIG Defaults may prompt rating agencies to take additional actions to downgraderatings and/or place a negative watch/change in outlook on Sirius Group's ratings, which may have a material adverse effect on Sirius Group's business, prospects, financial condition and results from operations. On April 23,operations" included in Part I, Item 1A. "Risk Factors” in the Company’s 2019 as a resultAnnual Report.deepening debt and liquidity difficulties at CMIG evidenced byCOVID-19 pandemic or the CMIG Defaults, Fitch placed Sirius Group's ratings on negative watch. A.M. Best and Standard & Poor's have left Sirius Group's ratings unchanged. A downgrade, withdrawalgeneral effects of economic recession may increase the risk that policyholders or negative watch/outlook in Sirius Group's credit ratings, includingintermediaries, such as insurance brokers, may not pay a result of the CMIG Defaults, could result in higher borrowing costs, termination of certain reinsurance contracts, posting of collateral, more limited means to access capital and volatility in our stock price.•Compliance with the regulatory framework under which Sirius Group operates. Sirius Group is subject to certain legal and regulatory restrictions concerning its ownership and control. One such restriction is that no person or entity may acquire direct or indirect control of Sirius Group (which in some jurisdictions could occur with a person or entity, directly or indirectly, acquiring 10% or more of the voting securities of Sirius Group), without first obtaining the consent of the various regulatory authorities that have jurisdiction over Sirius Group. The CMIG Defaults could result in a situation in which CMIG, its affiliates or their respective creditors elect or are required to sell or otherwise transfer, directly or indirectly, their holdings of Sirius Group. Any direct or indirect change of control of Sirius Group (or CMIG entities that directly or indirectly hold Sirius Group shares) without the prior approval of applicable insurance regulatory authorities could result in the transaction being enjoined, the assessment of fines or penalties, the takeover of the applicable insurers by such insurance regulatory authorities, the revocation of applicable insurance licenses, and criminal penalties for willful violations of applicable insurance laws. In addition, a change in control could result in the terminationpart of or the postingfull amount of collateral under certainpremiums owed to us, despite an obligation to do so. The terms of our contracts, or actions by our regulators, may not permit us to cancel our policies even though we have not received payment. We may further decide (or be obliged by regulation) to refund premiums already paid where it is judged that the COVID-19 pandemic has reduced the customer need for coverage. The COVID-19 pandemic could impact our ability to obtain reinsurance contracts. Certain U.S. states also prohibitand retrocessional arrangements on favorable terms which could limit the controlamount of insurers by state-ownedbusiness we are willing to write or state-controlled entities (such as state-owned banks), which may include certain of CMIG's creditors. A violation of such prohibitions could resultreduce our reinsurance protection for large loss events. For a further discussion, see “Sirius Group’s reliance on intermediaries subjects it to the intermediaries’ credit risk” included in Part I, Item 1A. "Risk Factors” in the revocationCompany’s 2019 Annual Report.insurance licenses held bythe COVID-19 pandemic that may adversely affect Sirius Group's U.S.-domiciled insurers, whichGroup. For example, we are necessary for Sirius Group to operate its business. In addition, a change of control of CMIG or Sirius Group that results in non-U.S. persons (including CMIG's creditors) acquiring direct or indirect control of Sirius Group's U.S. businesses may be subject to review by the Committee on Foreign Investment in the United States (CFIUS), potentially resulting in enforcement actions by CFIUS to enjoin or unwind the transaction.•Future sales of Sirius Group common shares by CM Bermuda. Pursuant to the Registration Rights Agreement, dated as of November 5, 2018, between the Company, CM Bermuda and Easterly Acquisition Sponsor, LLC, all of the common shares owned by CM Bermuda are eligible to be registered under the Securities Act of 1933, as amended, subject to certain limitations set forth in the Registration Rights Agreement, and may be offered and sold to the public from time to time after the effectiveness of the related registration statement. CM Bermuda could at any time elect to require Sirius Group to file a registration statement to register any or all of its common shares, including in order to gain liquidity following the CMIG Defaults. Upon effectiveness of such registration statement, CM Bermuda may sell large amounts of Sirius Group common shares in the open market or in privately negotiated transactions, which could have the effect of substantially increasing the volatility in Sirius Group common share price or putting significant downward pressure on the price of Sirius Group common shares. Sales of substantial amounts of Sirius Group common shares in the public market, or the perception that such sales will occur, could materially adversely affect the market price.•The volatility in the trading price of Sirius Group's common shares and potential securities litigation related thereto. The pendency of the CMIG Defaults, and actions taken by CMIG or its creditors in relation thereto, may result in significant volatility in the trading price of Sirius Group's common shares. Securities class action litigation is often brought against a public company following periods of volatility in the market price of its securities. Due to volatility in Sirius Group's share price, including any such volatility that may occur as a result of the announcement of the CMIG Defaults and the actions taken in connection therewith, Sirius Group may be the target of securities litigation in the future. Securities litigation could result in substantial uninsured costs and divert management's attention and Sirius Group's resources, and result in unexpected outcomes that may materially impact Sirius Group's business or operations.•Sirius Group's ability to utilize its tax attributes in the U.S. and possibly other countries. The CMIG Defaults could result in a situation in which CM Bermuda elects or is required to sell or otherwise transfer its holdings of Sirius Group. If any sale or transfer, including by CM Bermuda, results in an "ownership change", as defined in Section 382 of the Internal Revenue Code of 1986, as amended, it is possible that a significant portion of Sirius Group's tax lossgovernment and/or credit carryforwards in the United States would expire before they can be used. Sirius Group also has a significant amount of tax loss carryforwards and other tax attributes in other countries, including Luxembourg, the UK, and Sweden. While Sirius Group does not currently expect such tax attributes to be restricted upon a transfer by CM Bermuda of its holdings of Sirius Group, the actual consequences will depend on the facts and the law in effect at the time, no assurance can be maderegulatory action that Sirius Group's non-U.S. tax attributes will not be restricted if CM Bermuda transfers its holdings of Sirius Group in the future.In addition, as a result of these heightened risks and uncertainties, Sirius Group may be unable to enter into new relationships or preserve its existing relationships with third parties that are critical to maintaining its business. Clients and other business partners may seek to engage withretroactively mandate coverage for losses which our (re)insurance policies were not designed or priced to cover. Currently, in some countries there is proposed legislation to require (re)insurers to cover business interruption claims irrespective of terms, exclusions or other conditions included in the policies that would otherwise preclude coverage. Should such proposed regulations and or legislation be implemented, our (re)insurance contracts may be interpreted to provide coverage for these business interruption losses, notwithstanding the fact that such losses fall outside of the terms and reinsurance companies that are not experiencingconditions of the same degree of uncertainty as Sirius Group.underlying contracts. These circumstancesand other future judicial, legislative or regulatory actions could have a material adverse impact on our results of operations, financial position and/ or liquidity and make it difficult to predict the total amount of losses we could incur as a result of the COVID-19 pandemic. In addition, a number of states in the United States have instituted, and others are considering instituting, changes designed to effectively expand workers' compensation coverage by creating presumptions of compensability of claims for certain types of workers. Regulatory restrictions or requirements could also impact pricing, risk selection and our rights and obligations with respect to our policies and insureds, including Sirius Group'sGroup’s ability to cancel policies or Sirius Group’s right to collect premiums. In the United States, at least one state regulator has issued an order requiring insurers to issue premium refunds, and regulators in other states could take similar actions.its existingour business to generaterelationships with our current clients and develop new client relationships and business or to identify future partners to develop and expand its business. Sirius Group'swhich may impact our ability to hirewrite new insurance or reinsurance business and retain qualified personnelmarket our products and services as anticipated prior to COVID-19 pandemic. In addition, the interruption of our, or third party, system capabilities could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. Having shifted to remote working arrangements, we also face a heightened risk of cybersecurity attacks or data security incidents and are more dependent on internet and telecommunications access and capabilities. An extended period of remote work arrangements could strain our business continuity plans and could negatively affect our internal control over financial reporting as most of our employees are required to work from home. As a result, new processes, procedures and controls could be and have been required to respond to changes in our business environment. For a further discussion, see “Sirius Group may be similarly affected.Althoughunable to adequately maintain its systems and safeguard the CMIG Defaults dosecurity of the data it holds or the data held by its business partners and service providers, which may adversely impact Sirius Group’s ability to operate its business and cause reputational harm and financial losstrigger any defaults under Sirius Group's credit facilities, a change of control oflimited to, risks that can impact Sirius Group as a result of an economic downturn; potential litigation claims brought against the CMIG DefaultsCompany; further losses from event cancellations in our contingency portfolio and other coverages from our reinsurance and insurance contracts; negative impact to revenues and earnings; and impairment of goodwill and intangible assets and potential valuation allowances on deferred tax assets. Since the COVID-19 pandemic is continuously evolving, the potential impacts to the risks related to our business that are further described in the Company's 2019 Annual Report remain uncertain and new and potentially unforeseen risks beyond those described above and in the Company's 2019 Annual Report may arise. Even after the COVID-19 pandemic subsides, the U.S. and world economies may experience a prolonged economic recession, in which event our results of operations, financial position and/ or liquidity may be materially and adversely affected.trigger defaultsadversely affect the combined company or the expected benefits of such proposed merger transaction).Sirius Group's credit facilities.the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and any other applicable antitrust laws, (iv) the receipt of certain approvals under applicable insurance laws, (v) the absence of any effective order issued by any governmental authority or court of competent jurisdiction or other legal restraint prohibiting or preventing the consummation of the Merger, (vi) in the case of each party’s obligation to effect the Merger, the absence of a material adverse effect with respect to the other party and its subsidiaries, taken as a whole, since the date of the Merger Agreement, (vii) in the case of each party’s obligation to effect the Merger, subject to certain materiality exceptions, the accuracy of the representations and warranties made by the other party, and compliance by the other party in all material respects with such party’s respective obligations under the Merger Agreement and (viii) other customary closing conditions.accelerationthe Merger, the outcome of the lawsuits could be uncertain, and we may not be successful in defending against any such claims. Prior to the announcement of the Merger, Sirius Group received correspondence from shareholders, including the Series B preference shareholders, asserting various claims against the Board of Directors of the Company including, among other things, that the Board violated its fiduciary duties, and breached Sirius Group’s obligations pursuant to the Certificate of Designation and Shareholders Agreement. While the shareholders have not filed a lawsuit, the shareholders have reserved their rights to pursue all available remedies, including without limitation, claims for breaches of the Certificate of Designation and the Shareholders Agreement, shareholder oppression, fraud and all other legal and equitable remedies and forms of relief under Bermuda, New York, Delaware and other applicable law. While we will defend against any such lawsuits, as appropriate, the costs of the defense of such actions and other effects of such litigation could have an adverse effect on our business, financial condition, operating results and trading price of the Company's common shares, and could ultimately delay, prevent or otherwise adversely impact the Merger or the combined company.debt obligations under and the terminationfinancial strength ratings which could have a material adverse effect on our results of its credit facilities,operations, financial position and/or liquidity. For additional discussion on how a ratings downgrade can impact Sirius Group, may face challengessee"Sirius Group is reliant on financial strength and creditworthiness ratings, and any downgrade or withdrawal of ratings and/or change in refinancing its indebtedness on acceptable terms or at all, andoutlook may be unable to raise additional capital to support its business, particularly if Sirius Group's credit ratings are placed on a negative watch/outlook or are downgraded.In addition, due to the CMIG Defaults, CMIG International's status as a controlling shareholder could limit Sirius Group's ability to raise new equity and debt capital or execute on strategic objectives, including bolt-on acquisitions and strategic mergers & acquisitions.Any of the foregoing events could have a material adverse effect on Sirius Group's business, prospects, financial condition and results from operations liquidity2.1 3.1
3.2
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31.110.9.1 10.9.2 10.9.3 31.1
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32.1
32.2
101.INS99.1 99.2 99.3 99.4 99.5 99.6 99.7 99.8 101.INS XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the Securities and Exchange Commission. † Management contract or compensatory plan or arrangement Date: August 9, 201912, 2020
By:By:
/s/KERNAN "KIP" V. OBERTINGDate: August 9, 201912, 2020
By:By:
/s/ RALPH A. SALAMONE