Exhibit 99.2
Sirius International Insurance Group, Ltd.
Investor Financial Supplement
December 31, 2018
(Unaudited)
This financial supplement is for informational purposes only. It should be read in conjunction with documents filed with the Securities and Exchange Commission by Sirius International Insurance Group, Ltd., including its Annual Report on Form 10-K for the year ended December 31, 2018.
Sirius International Insurance Group, Ltd.
Table of Contents
| Page |
Basis of Presentation | 1 |
| |
Key Performance Indicators | 3 |
| |
Consolidated Financial Statements | |
Consolidated Statements of (Loss) Income | 4 |
Consolidated Statements of Comprehensive (Loss) Income | 5 |
Consolidated Balance Sheets | 6 |
Consolidated Statements of Shareholders’ Equity | 7 |
| |
Segment Information | |
Consolidated Statements of (Loss) Income — Segment Results Format | 8 |
Consolidated Underwriting Results by Segment | 9 |
Segment Data - Quarterly | |
Global Property | 11 |
Global A&H | 12 |
Specialty & Casualty | 13 |
Runoff & Other | 14 |
Gross Written Premiums by Segment | 15 |
Net Earned Insurance and Reinsurance Premiums by Segment | 16 |
| |
Investment Information | |
Net Investment Income | 17 |
Investment Holdings - Cost to Fair Value Reconciliation | 18 |
Investment Holdings - Quarterly | |
Investment Type | 19 |
Credit Quality and Maturity Profile | 20 |
Impact of Foreign Currency Translation | 21 |
Net Realized and Unrealized Investment (Losses) Gains | 22 |
| |
Other | |
Book Value Per Share and Adjusted Book Value Per Share | 23 |
Basic and Diluted Earnings Per Share | 24 |
Return on Common Shareholders’ Equity - Consecutive Quarters | 25 |
Reserves for Unpaid Losses and Loss Adjustment Expenses | 26 |
| |
Reconciliation of Non-GAAP Financial Measures | 27 |
Sirius International Insurance Group, Ltd.
Basis of Presentation
BASIS OF PRESENTATION AND NON-GAAP FINANCIAL MEASURES:
Sirius International Insurance Group, Ltd. (the “Company”) is a Bermuda exempted company whose principal businesses are conducted through its wholly- and majority-owned insurance subsidiaries (collectively with the Company, “Sirius Group”, “we,” “our” and “us”). Sirius Group provides insurance, reinsurance and insurance services on a worldwide basis.
We have made rounding adjustments to reach some of the figures included in this financial supplement and, unless otherwise indicated, percentages presented in this financial supplement are approximate.
In presenting the Company’s results, management has included and discussed certain non-GAAP financial measures. The Company believes that these non-GAAP measures, which may be defined and calculated differently by other companies, better explain and enhance the understanding of the Company’s results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This financial supplement contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about Sirius Group’s exposure to catastrophe losses and catastrophe modeling. Forward-looking statements are typically identified by use of forward-looking statements such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “target,” “continue,” “could,” “may,” “might,” “will,” “possible,” “potential,” “predict,” “should,” “would” 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 document. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following:
· Sirius Group’s exposure to unpredictable catastrophic and casualty events and unexpected accumulations of attritional losses;
· increased competition from existing insurers and reinsurers and from alternative capital providers, such as insurance-linked funds and collateralized special purpose insurers;
· decreased demand for Sirius Group’s insurance or reinsurance products, consolidation and cyclical changes in the insurance and reinsurance industry;
· the inherent uncertainty of estimating loss and loss adjustment expenses reserves, including asbestos and environmental reserves, and the possibility that such reserves may be inadequate to cover Sirius Group’s ultimate liability for losses;
· a decline in the Company’s operating subsidiaries’ ratings with rating agencies;
· the risk that Sirius Group’s reinsurance underwriting is dependent upon the underlying ceding companies’ evaluation of risk;
· the risk that managing general underwriters and other agents acting on Sirius Group’s behalf may act based on inaccurate or incomplete information regarding the accounts Sirius Group underwrites, or such agents may exceed their authority or commit fraud when binding policies on Sirius Group’s behalf;
· the inherent uncertainty of modeling, pricing for, and managing insurance and reinsurance risk, including with respect to catastrophe and attritional losses that may be different than actual losses;
· the risk that Sirius Group may not adequately assess and price for the increased frequency and severity of catastrophes resulting from global climate change;
· the exposure of Sirius Group’s investments to interest rate, credit, equity risks and market volatility, which may limit Sirius Group’s net income and may affect the adequacy of its capital;
· the effects of volatility in the global economy and capital markets, which may impair Sirius Group’s investment portfolio and affect the primary insurance market;
· the impact of various risks associated with transacting business in foreign countries, including foreign currency exchange-rate risk and political risks on investments in, and revenues from, Sirius Group’s operations outside the U.S.;
· unexpected volatility or illiquidity associated with Sirius Group’s investments;
1
· Sirius Group’s ability to obtain reinsurance and retrocessional protection at reasonable prices or on terms that adequately protect it;
· the potential volatility in its quarterly results;
· the potential effects on Sirius Group’s business of emerging claim and coverage issues;
· Sirius Group’s dependence on a small number of brokers and managing general underwriters for a large portion of its revenues;
· Sirius Group’s exposure to the credit risk of reinsurance counterparties and intermediaries;
· risks relating to the inability of Sirius Group’s operating subsidiaries to declare and pay dividends;
· the possibility that Sirius Group may become subject to additional onerous governmental or regulatory requirements or fail to comply with applicable regulatory requirements;
· uncertainties relating to the Eurozone, including the effects of the United Kingdom’s referendum to leave the European Union, and U.S. health care legislation;
· operational risks, including system or human failures or cyber-attacks, which could result in Sirius Group incurring material losses;
· risks associated with potential for loss of services of any one of Sirius Group’s key personnel, and the risk that Sirius Group fails to attract or retain the executives and employees necessary to manage its business;
· unforeseen liabilities or asset impairments arising from possible acquisitions and dispositions of businesses or difficulties integrating acquired businesses;
· risks that Sirius Group may require additional capital in the future, which may not be available or may be available only on unfavorable terms;
· risks that Sirius Group’s significant deferred tax assets may become materially impaired as a result of insufficient taxable income or a reduction in applicable corporate tax rates or other change in applicable tax law;
· risks relating to changes in regulatory regimes and/or accounting rules, which could result in significant changes to Sirius Group’s financial results;
· the seasonality of Sirius Group’s insurance and reinsurance business;
· risks relating to Sirius Group’s indebtedness;
· the risk that the Company will fail to comply with Nasdaq’s continued listing standards;
· the limited liquidity and trading of the Company’s securities;
· risks related to the Company’s status as a foreign private issuer and controlled company; and
· risks identified in the Company’s filings with the Securities and Exchange Commission.
Should one or more of these risks or uncertainties materialize, or should any of the assumptions made by the management of the Company prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Except to the extent required by applicable law or regulation, Sirius Group undertakes no obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, or new information, data or methods, future events or other circumstances after the date of this financial supplement.
2
Sirius International Insurance Group, Ltd.
Key Performance Indicators
| | Three months ended December 31, | | Years ended December 31, | |
(Expressed in millions of U.S. dollars, except share and per share information) | | 2018 | | 2017 | | 2018 | | 2017 | |
Key Underwriting Metrics: | | | | | | | | | |
Underwriting (loss) income (1) | | $ | (94.9 | ) | $ | 26.9 | | $ | (39.3 | ) | $ | (79.2 | ) |
Combined ratio(2) | | 127.3 | % | 90.5 | % | 103.1 | % | 107.6 | % |
| | | | | | | | | |
Key Investment Return Metrics: | | | | | | | | | |
Net investment income | | $ | 19.6 | | $ | 12.6 | | $ | 71.4 | | $ | 56.8 | |
Total return on investments: | | | | | | | | | |
U.S. dollars | | -1.2 | % | 0.7 | % | -0.9 | % | 4.1 | % |
Local currencies | | -1.0 | % | 0.6 | % | 0.3 | % | 2.9 | % |
| | | | | | | | | |
Selected Financial Data: | | | | | | | | | |
Basic earnings per common share and common share equivalent | | $ | (1.31 | ) | $ | 0.13 | | $ | (0.36 | ) | $ | (1.30 | ) |
Diluted earnings per common share and common share equivalent | | $ | (1.31 | ) | $ | 0.13 | | $ | (0.36 | ) | $ | (1.30 | ) |
Weighted average number of common shares and common share equivalents outstanding | | 117,040,026 | | 120,000,000 | | 119,253,924 | | 120,000,000 | |
Operating (loss) income attributable to common shareholders (3) | | $ | (106.4 | ) | $ | 7.7 | | $ | (56.4 | ) | $ | (128.4 | ) |
Return on equity(4) | | -7.8 | % | 0.8 | % | -2.3 | % | -7.9 | % |
Growth in Adjusted book value per share | | -7.3 | % | 0.8 | % | -4.6 | % | -3.6 | % |
(1) Underwriting (loss) income is calculated as net earned insurance and reinsurance premiums less loss and loss adjustment expenses, insurance and reinsurance acquisition expenses, and other underwriting expenses.
(2) The combined ratio is calculated by combining the loss ratio, the acquisition expense ratio, and the other underwriting expense ratio.
(3) Operating (loss) income attributable to common shareholders is a non-GAAP financial measure. There is no comparable GAAP measure. See the accompanying Reconciliation of non-GAAP Financial Measures for an explanation and calculation of Operating (loss) income attributable to common shareholders.
(4) Return on equity is calculated by dividing net (loss) income attributable to Sirius Group’s common shareholders for the period by the beginning common shareholders’ equity.
| | December 31, 2018 | | September 30, 2018 | | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | |
Selected Balance Sheet Data: | | | | | | | | | | | |
Book value per common share | | $ | 14.80 | | $ | 16.44 | | $ | 16.64 | | $ | 16.23 | | $ | 15.98 | |
Adjusted book value per share (1) | | $ | 15.24 | | $ | 16.44 | | $ | 16.64 | | $ | 16.23 | | $ | 15.98 | |
(1) Adjusted book value per share is a non-GAAP financial measure. There are no comparable GAAP measures. See the accompanying Reconciliation of non-GAAP Financial Measures for an explanation and calculation of Adjusted book value per share.
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Sirius International Insurance Group, Ltd.
Consolidated Statements of (Loss) Income
For the Three Months and Years Ended December 31, 2018 and 2017
| | Three months ended December 31, | | Years ended December 31, | |
(Expressed in millions of U.S. dollars) | | 2018 | | 2017 | | 2018 | | 2017 | |
Revenues | | | | | | | | | |
Net earned insurance and reinsurance premiums | | $ | 347.8 | | $ | 284.7 | | $ | 1,262.3 | | $ | 1,035.3 | |
Net investment income | | 19.6 | | 12.6 | | 71.4 | | 56.8 | |
Net realized investment (losses) gains | | (5.7 | ) | (0.3 | ) | 2.3 | | (27.2 | ) |
Net unrealized investment (losses) gains | | (52.2 | ) | 14.7 | | (23.2 | ) | (10.5 | ) |
Net foreign exchange gains (losses) | | 1.0 | | (7.8 | ) | 22.7 | | 9.2 | |
Gain on revaluation of contingent consideration | | 9.6 | | 48.8 | | 9.6 | | 48.8 | |
Other revenue | | 16.7 | | 9.9 | | 112.7 | | 21.7 | |
Total revenues | | 336.8 | | 362.6 | | 1,457.8 | | 1,134.1 | |
Expenses | | | | | | | | | |
Loss and loss adjustment expenses | | 347.2 | | 184.6 | | 900.0 | | 811.2 | |
Insurance and reinsurance acquisition expenses | | 66.4 | | 53.7 | | 255.4 | | 197.2 | |
Other underwriting expenses | | 29.1 | | 19.5 | | 146.2 | | 106.1 | |
General and administrative expenses | | 19.9 | | 31.3 | | 77.9 | | 91.9 | |
Intangible asset amortization expenses | | 4.0 | | 3.9 | | 15.8 | | 10.2 | |
Impairment of intangible assets | | 8.0 | | 5.0 | | 8.0 | | 5.0 | |
Interest expense on debt | | 7.7 | | 7.8 | | 30.8 | | 22.4 | |
Total expenses | | 482.3 | | 305.8 | | 1,434.1 | | 1,244.0 | |
Pre-tax (loss) income | | (145.5 | ) | 56.8 | | 23.7 | | (109.9 | ) |
Income tax benefit (expense) | | 15.0 | | (37.7 | ) | (40.4 | ) | (26.4 | ) |
Net (loss) income | | (130.5 | ) | 19.1 | | (16.7 | ) | (136.3 | ) |
Less: Income attributable to non-controlling interests | | (0.5 | ) | (0.5 | ) | (1.4 | ) | (13.7 | ) |
Net (loss) income attributable to Sirius Group | | (131.0 | ) | 18.6 | | (18.1 | ) | (150.0 | ) |
Less: Accrued dividends on Series A redeemable preference shares | | — | | (2.6 | ) | (2.6 | ) | (6.1 | ) |
Less: Change in carrying value of Series B preference shares | | (36.4 | ) | — | | (36.4 | ) | — | |
Add: Gain on redemption of Series A redeemable preference shares | | 13.8 | | — | | 13.8 | | — | |
Net (loss) income attributable to Sirius Group’s common shareholders | | $ | (153.6 | ) | $ | 16.0 | | $ | (43.3 | ) | $ | (156.1 | ) |
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Sirius International Insurance Group, Ltd.
Consolidated Statements of Comprehensive (Loss) Income
For the Three Months and Years Ended December 31, 2018 and 2017
| | Three months ended December 31, | | Years ended December 31, | |
(Expressed in millions of U.S. dollars) | | 2018 | | 2017 | | 2018 | | 2017 | |
Comprehensive (loss) income | | | | | | | | | |
Net (loss) income | | $ | (130.5 | ) | $ | 19.1 | | $ | (16.7 | ) | $ | (136.3 | ) |
Other comprehensive (loss) income | | | | | | | | | |
Change in foreign currency translation, net of tax | | (4.7 | ) | (1.8 | ) | (61.9 | ) | 71.7 | |
Total other comprehensive (loss) income | | (4.7 | ) | (1.8 | ) | (61.9 | ) | 71.7 | |
Comprehensive (loss) income | | (135.2 | ) | 17.3 | | (78.6 | ) | (64.6 | ) |
Net (income) attributable to non-controlling interests | | (0.5 | ) | (0.5 | ) | (1.4 | ) | (13.7 | ) |
Comprehensive (loss) income attributable to Sirius Group | | $ | (135.7 | ) | $ | 16.8 | | $ | (80.0 | ) | $ | (78.3 | ) |
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Sirius International Insurance Group, Ltd.
Consolidated Balance Sheets
(Expressed in millions of U.S. dollars, except share information) | | December 31, 2018 | | September 30, 2018 | | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | |
Assets | | | | | | | | | | | |
Fixed maturity investments, trading at fair value | | $ | 1,949.2 | | $ | 1,979.6 | | $ | 1,885.4 | | $ | 2,059.0 | | $ | 2,180.0 | |
Short-term investments, at fair value | | 715.5 | | 760.0 | | 819.6 | | 801.0 | | 625.0 | |
Equity securities, trading at fair value | | 380.0 | | 430.4 | | 415.1 | | 369.7 | | 299.2 | |
Other long-term investments, at fair value | | 365.0 | | 349.0 | | 316.6 | | 286.8 | | 269.5 | |
Cash | | 119.4 | | 106.5 | | 114.1 | | 174.9 | | 215.8 | |
Restricted cash | | 12.8 | | 15.0 | | 15.9 | | 16.6 | | 14.8 | |
Total investments and cash | | 3,541.9 | | 3,640.5 | | 3,566.7 | | 3,708.0 | | 3,604.3 | |
Accrued investment income | | 14.1 | | 12.1 | | 12.5 | | 13.6 | | 14.1 | |
Insurance and reinsurance premiums receivable | | 630.6 | | 762.5 | | 807.4 | | 723.7 | | 543.6 | |
Reinsurance recoverable on unpaid losses | | 350.2 | | 349.0 | | 358.3 | | 327.8 | | 319.7 | |
Reinsurance recoverable on paid losses | | 55.0 | | 29.8 | | 17.8 | | 21.2 | | 17.5 | |
Funds held by ceding companies | | 186.8 | | 180.0 | | 157.4 | | 162.3 | | 153.2 | |
Ceded unearned insurance and reinsurance premiums | | 159.8 | | 191.2 | | 207.3 | | 173.0 | | 106.6 | |
Deferred acquisition costs | | 141.6 | | 152.8 | | 151.4 | | 151.0 | | 120.9 | |
Deferred tax asset | | 202.5 | | 197.7 | | 197.9 | | 217.6 | | 244.1 | |
Accounts receivable on unsettled investment sales | | 5.0 | | 0.1 | | — | | 0.2 | | 0.3 | |
Goodwill | | 400.6 | | 400.7 | | 400.8 | | 401.3 | | 401.0 | |
Intangible assets | | 195.6 | | 207.5 | | 208.4 | | 212.3 | | 216.3 | |
Other assets | | 124.0 | | 134.8 | | 124.2 | | 92.6 | | 82.0 | |
Total assets | | $ | 6,007.7 | | $ | 6,258.7 | | $ | 6,210.1 | | $ | 6,204.6 | | $ | 5,823.6 | |
Liabilities | | | | | | | | | | | |
Loss and loss adjustment expense reserves | | $ | 2,016.7 | | $ | 1,891.0 | | $ | 1,827.1 | | $ | 1,875.9 | | $ | 1,898.5 | |
Unearned insurance and reinsurance premiums | | 647.2 | | 766.9 | | 800.5 | | 765.9 | | 506.8 | |
Ceded reinsurance payable | | 206.9 | | 239.2 | | 254.2 | | 182.8 | | 139.1 | |
Funds held under reinsurance treaties | | 110.6 | | 105.4 | | 72.6 | | 82.5 | | 73.4 | |
Deferred tax liability | | 237.4 | | 256.9 | | 255.7 | | 253.1 | | 282.2 | |
Debt | | 696.8 | | 697.7 | | 695.9 | | 717.6 | | 723.2 | |
Accounts payable on unsettled investment purchases | | 3.2 | | 18.1 | | 6.2 | | 97.3 | | 0.3 | |
Other liabilities | | 150.5 | | 200.6 | | 191.8 | | 173.2 | | 176.8 | |
Total liabilities | | 4,069.3 | | 4,175.8 | | 4,104.0 | | 4,148.3 | | 3,800.3 | |
Mezzanine equity | | | | | | | | | | | |
Series A redeemable preference shares | | — | | 108.8 | | 108.8 | | 108.8 | | 106.1 | |
Series B preference shares | | 232.2 | | — | | — | | — | | — | |
Total mezzanine equity | | 232.2 | | 108.8 | | 108.8 | | 108.8 | | 106.1 | |
Common shareholders’ equity | | | | | | | | | | | |
Common shares | | 1.2 | | 1.2 | | 1.2 | | 1.2 | | 1.2 | |
Additional paid-in surplus | | 1,089.1 | | 1,199.3 | | 1,199.3 | | 1,199.3 | | 1,197.9 | |
Retained earnings | | 816.6 | | 970.2 | | 998.2 | | 900.4 | | 858.4 | |
Accumulated other comprehensive (loss) | | (202.4 | ) | (197.7 | ) | (202.4 | ) | (153.9 | ) | (140.5 | ) |
Total common shareholders’ equity | | 1,704.5 | | 1,973.0 | | 1,996.3 | | 1,947.0 | | 1,917.0 | |
Non-controlling interests | | 1.7 | | 1.1 | | 1.0 | | 0.5 | | 0.2 | |
Total equity | | 1,706.2 | | 1,974.1 | | 1,997.3 | | 1,947.5 | | 1,917.2 | |
Total liabilities, mezzanine equity, and equity | | $ | 6,007.7 | | $ | 6,258.7 | | $ | 6,210.1 | | $ | 6,204.6 | | $ | 5,823.6 | |
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Sirius International Insurance Group, Ltd.
Consolidated Statements of Shareholders’ Equity
| | Year to date for the period ended, | |
(Expressed in millions of U.S. dollars) | | December 31, 2018 | | September 30, 2018 | | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | |
Common shares | | | | | | | | | | | |
Balance at beginning of period | | $ | 1.2 | | $ | 1.2 | | $ | 1.2 | | $ | 1.2 | | $ | 1.2 | |
Issue of common shares | | 0.1 | | — | | — | | — | | — | |
Share repurchase from CM Bermuda | | (0.1 | ) | — | | — | | — | | — | |
Balance at end of period | | 1.2 | | 1.2 | | 1.2 | | 1.2 | | 1.2 | |
Additional paid-in surplus | | | | | | | | | | | |
Balance at beginning of period | | 1,197.9 | | 1,197.9 | | 1,197.9 | | 1,197.9 | | 1,184.6 | |
Issuance of common shares and warrants, net of expenses | | 52.7 | | — | | — | | — | | — | |
Share compensation expense | | 2.5 | | — | | — | | — | | — | |
Share repurchase from CM Bermuda | | (163.9 | ) | — | | — | | — | | — | |
Return of capital to CM Bermuda | | (1.6 | ) | — | | — | | — | | — | |
Capital contribution from former parent | | 1.4 | | 1.4 | | 1.4 | | 1.4 | | 13.3 | |
Other, net | | 0.1 | | — | | — | | — | | — | |
Balance at end of period | | 1,089.1 | | 1,199.3 | | 1,199.3 | | 1,199.3 | | 1,197.9 | |
Retained earnings | | | | | | | | | | | |
Balance at beginning of period | | 858.4 | | 858.4 | | 858.4 | | 858.4 | | 1,014.5 | |
Cumulative effect of an accounting change | | 1.6 | | 1.6 | | 1.6 | | 1.6 | | — | |
Balance at beginning of period, as adjusted | | 860.0 | | 860.0 | | 860.0 | | 860.0 | | 1,014.5 | |
Net income | | (16.7 | ) | 113.8 | | 141.5 | | 43.3 | | (136.3 | ) |
Income attributable to non-controlling interest | | (1.4 | ) | (0.9 | ) | (0.6 | ) | (0.2 | ) | (13.7 | ) |
Accrued dividends on Series A redeemable preference shares | | (2.6 | ) | (2.6 | ) | (2.6 | ) | (2.6 | ) | (6.1 | ) |
Change in carrying value of Series B preference shares | | (36.4 | ) | — | | — | | — | | — | |
Redemption of Series A redeemable preference shares | | 13.8 | | — | | — | | — | | — | |
Other, net | | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | — | |
Balance at end of period | | 816.6 | | 970.2 | | 998.2 | | 900.4 | | 858.4 | |
Accumulated other comprehensive (loss) income | | | | | | | | | | | |
Balance at beginning of period | | (140.5 | ) | (140.5 | ) | (140.5 | ) | (140.5 | ) | (212.2 | ) |
Accumulated net foreign currency translation (losses) | | | | | | | | | | | |
Balance at beginning of period | | (140.5 | ) | (140.5 | ) | (140.5 | ) | (140.5 | ) | (212.2 | ) |
Net change in foreign currency translation | | (61.9 | ) | (57.2 | ) | (61.9 | ) | (13.4 | ) | 71.7 | |
Balance at end of period | | (202.4 | ) | (197.7 | ) | (202.4 | ) | (153.9 | ) | (140.5 | ) |
Balance at the end of period | | (202.4 | ) | (197.7 | ) | (202.4 | ) | (153.9 | ) | (140.5 | ) |
Total common shareholders’ equity | | 1,704.5 | | 1,973.0 | | 1,996.3 | | 1,947.0 | | 1,917.0 | |
Non-controlling interests | | 1.7 | | 1.1 | | 1.0 | | 0.5 | | 0.2 | |
Total equity | | $ | 1,706.2 | | $ | 1,974.1 | | $ | 1,997.3 | | $ | 1,947.5 | | $ | 1,917.2 | |
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Sirius International Insurance Group, Ltd.
Consolidated Statements of (Loss) Income — Segment Results Format
For the Three Months and Years Ended December 31, 2018 and 2017
| | Three months ended December 31, | | Years ended December 31, | |
(Expressed in millions of U.S. dollars) | | 2018 | | 2017 | | 2018 | | 2017 | |
Underwriting Results: | | | | | | | | | |
Gross written premiums | | $ | 302.8 | | $ | 272.9 | | $ | 1,821.0 | | $ | 1,439.3 | |
Net written premiums | | $ | 261.7 | | $ | 215.5 | | $ | 1,357.1 | | $ | 1,090.2 | |
Net earned insurance and reinsurance premiums | | $ | 347.8 | | $ | 284.7 | | $ | 1,262.3 | | $ | 1,035.3 | |
Loss and allocated loss adjustment expenses (“LAE”) | | (338.2 | ) | (183.1 | ) | (863.1 | ) | (785.1 | ) |
Insurance and reinsurance acquisition expenses | | (66.4 | ) | (53.7 | ) | (255.4 | ) | (197.2 | ) |
Technical (loss) profit | | (56.8 | ) | 47.9 | | 143.8 | | 53.0 | |
Unallocated LAE | | (9.0 | ) | (1.5 | ) | (36.9 | ) | (26.1 | ) |
Other underwriting expenses | | (29.1 | ) | (19.5 | ) | (146.2 | ) | (106.1 | ) |
Underwriting (loss) income | | (94.9 | ) | 26.9 | | (39.3 | ) | (79.2 | ) |
Service fee revenue | | 15.5 | | 9.1 | | 71.0 | | 23.0 | |
General and administrative expenses, MGU + Runoff & Other | | (16.3 | ) | (16.2 | ) | (56.7 | ) | (48.8 | ) |
Underwriting (loss) income, including net service fee income | | (95.7 | ) | 19.8 | | (25.0 | ) | (105.0 | ) |
Net investment income | | 19.6 | | 12.6 | | 71.4 | | 56.8 | |
Net realized investment (losses) gains | | (5.7 | ) | (0.3 | ) | 2.3 | | (27.2 | ) |
Net unrealized investment (losses) gains | | (52.2 | ) | 14.7 | | (23.2 | ) | (10.5 | ) |
Net foreign exchange gains (losses) | | 1.0 | | (7.8 | ) | 22.7 | | 9.2 | |
Gain on revaluation of contingent consideration | | 9.6 | | 48.8 | | 9.6 | | 48.8 | |
Other revenue | | 1.2 | | 0.8 | | 41.7 | | (1.3 | ) |
General and administrative expenses | | (3.6 | ) | (15.1 | ) | (21.2 | ) | (43.1 | ) |
Intangible asset amortization expenses | | (4.0 | ) | (3.9 | ) | (15.8 | ) | (10.2 | ) |
Impairment of intangible assets | | (8.0 | ) | (5.0 | ) | (8.0 | ) | (5.0 | ) |
Interest expense on debt | | (7.7 | ) | (7.8 | ) | (30.8 | ) | (22.4 | ) |
Pre-tax (loss) income | | (145.5 | ) | 56.8 | | 23.7 | | (109.9 | ) |
Income tax benefit (expense) | | 15.0 | | (37.7 | ) | (40.4 | ) | (26.4 | ) |
Net (loss) income | | (130.5 | ) | 19.1 | | (16.7 | ) | (136.3 | ) |
Less: Income attributable to non-controlling interests | | (0.5 | ) | (0.5 | ) | (1.4 | ) | (13.7 | ) |
Net (loss) income attributable to Sirius Group | | (131.0 | ) | 18.6 | | (18.1 | ) | (150.0 | ) |
Less: Accrued dividends on Series A redeemable preference shares | | — | | (2.6 | ) | (2.6 | ) | (6.1 | ) |
Less: Change in carrying value of Series B preference shares | | (36.4 | ) | — | | (36.4 | ) | — | |
Add: Gain on redemption of Series A redeemable preference shares | | 13.8 | | — | | 13.8 | | — | |
Net (loss) income attributable to Sirius Group’s common shareholders | | $ | (153.6 | ) | $ | 16.0 | | $ | (43.3 | ) | $ | (156.1 | ) |
8
Sirius International Insurance Group, Ltd.
Consolidated Underwriting Results by Segment
| | Three months ended December 31, 2018 | |
(Expressed in millions of U.S. dollars) | | Global
Property | | Global A&H | | Specialty &
Casualty | | Runoff &
Other | | Corporate
Elimination | | Total | |
Gross written premiums | | $ | 86.7 | | $ | 125.6 | | $ | 72.2 | | $ | 18.3 | | $ | — | | $ | 302.8 | |
Net written premiums | | $ | 85.9 | | $ | 93.6 | | $ | 64.4 | | $ | 17.8 | | $ | — | | $ | 261.7 | |
Net earned insurance and reinsurance premiums | | $ | 159.7 | | $ | 99.2 | | $ | 71.2 | | $ | 17.7 | | $ | — | | $ | 347.8 | |
Loss and allocated LAE | | (206.4 | ) | (51.0 | ) | (55.5 | ) | (25.3 | ) | — | | (338.2 | ) |
Insurance and reinsurance acquisition expenses | | (27.6 | ) | (27.4 | ) | (20.6 | ) | (0.5 | ) | 9.7 | | (66.4 | ) |
Technical (loss) profit | | (74.3 | ) | 20.8 | | (4.9 | ) | (8.1 | ) | 9.7 | | (56.8 | ) |
Unallocated LAE | | (2.8 | ) | (1.6 | ) | (1.4 | ) | — | | (3.2 | ) | (9.0 | ) |
Other underwriting expenses | | (15.2 | ) | (6.7 | ) | (3.9 | ) | (1.1 | ) | (2.2 | ) | (29.1 | ) |
Underwriting (loss) income | | (92.3 | ) | 12.5 | | (10.2 | ) | (9.2 | ) | 4.3 | | (94.9 | ) |
Service fee revenue | | — | | 26.2 | | — | | — | | (10.7 | ) | 15.5 | |
Managing general underwriter unallocated LAE | | — | | (4.2 | ) | — | | — | | 4.2 | | — | |
Managing general underwriter other underwriting expenses | | — | | (2.2 | ) | — | | — | | 2.2 | | — | |
General and administrative expenses, MGU + Runoff & Other | | — | | (16.1 | ) | — | | (0.2 | ) | — | | (16.3 | ) |
Underwriting (loss) income, including net service fee income | | $ | (92.3 | ) | $ | 16.2 | | $ | (10.2 | ) | $ | (9.4 | ) | $ | — | | $ | (95.7 | ) |
| | | | | | | | | | | | | |
Underwriting ratios (1) (2) | | | | | | | | | | | | | |
Loss ratio | | 131.0 | % | 53.0 | % | 79.9 | % | NM | | NM | | 99.8 | % |
Acquisition expense ratio | | 17.3 | % | 27.6 | % | 28.9 | % | NM | | NM | | 19.1 | % |
Other underwriting expense ratio | | 9.5 | % | 6.8 | % | 5.5 | % | NM | | NM | | 8.4 | % |
Combined ratio | | 157.8 | % | 87.4 | % | 114.3 | % | NM | | NM | | 127.3 | % |
(1) Underwriting ratios are calculated by dividing the related expense by net earned insurance and reinsurance premiums.
(2) Ratios considered not meaningful (“NM”) to Runoff & Other and Corporate Eliminations.
9
Sirius International Insurance Group, Ltd.
Consolidated Underwriting Results by Segment (Continued)
| | Year ended December 31, 2018 | |
(Expressed in millions of U.S. dollars) | | Global
Property | | Global A&H | | Specialty &
Casualty | | Runoff &
Other | | Corporate
Elimination | | Total | |
Gross written premiums | | $ | 962.4 | | $ | 500.6 | | $ | 325.1 | | $ | 32.9 | | $ | — | | $ | 1,821.0 | |
Net written premiums | | $ | 655.0 | | $ | 379.8 | | $ | 292.7 | | $ | 29.6 | | $ | — | | $ | 1,357.1 | |
Net earned insurance and reinsurance premiums | | $ | 636.0 | | $ | 357.6 | | $ | 239.5 | | $ | 29.2 | | $ | — | | $ | 1,262.3 | |
Loss and allocated LAE | | (518.2 | ) | (189.0 | ) | (142.9 | ) | (13.0 | ) | — | | (863.1 | ) |
Insurance and reinsurance acquisition expenses | | (121.1 | ) | (109.7 | ) | (65.5 | ) | (2.8 | ) | 43.7 | | (255.4 | ) |
Technical (loss) profit | | (3.3 | ) | 58.9 | | 31.1 | | 13.4 | | 43.7 | | 143.8 | |
Unallocated LAE | | (10.5 | ) | (5.9 | ) | (5.9 | ) | (1.6 | ) | (13.0 | ) | (36.9 | ) |
Other underwriting expenses | | (68.2 | ) | (27.4 | ) | (28.2 | ) | (6.3 | ) | (16.1 | ) | (146.2 | ) |
Underwriting (loss) income | | (82.0 | ) | 25.6 | | (3.0 | ) | 5.5 | | 14.6 | | (39.3 | ) |
Service fee revenue | | — | | 115.7 | | — | | — | | (44.7 | ) | 71.0 | |
Managing general underwriter unallocated LAE | | — | | (14.0 | ) | — | | — | | 14.0 | | — | |
Managing general underwriter other underwriting expenses | | — | | (16.1 | ) | — | | — | | 16.1 | | — | |
General and administrative expenses, MGU + Runoff & Other | | — | | (53.6 | ) | — | | (3.1 | ) | — | | (56.7 | ) |
Underwriting (loss) income, including net service fee income | | $ | (82.0 | ) | $ | 57.6 | | $ | (3.0 | ) | $ | 2.4 | | $ | — | | $ | (25.0 | ) |
| | | | | | | | | | | | | |
Underwriting ratios (1) (2) | | | | | | | | | | | | | |
Loss ratio | | 83.1 | % | 54.5 | % | 62.1 | % | NM | | NM | | 71.3 | % |
Acquisition expense ratio | | 19.0 | % | 30.7 | % | 27.3 | % | NM | | NM | | 20.2 | % |
Other underwriting expense ratio | | 10.7 | % | 7.7 | % | 11.8 | % | NM | | NM | | 11.6 | % |
Combined ratio | | 112.8 | % | 92.9 | % | 101.2 | % | NM | | NM | | 103.1 | % |
(1) Underwriting ratios are calculated by dividing the related expense by net earned insurance and reinsurance premiums.
(2) Ratios considered not meaningful (“NM”) to Runoff & Other and Corporate Eliminations.
10
Sirius International Insurance Group, Ltd.
Segment Data — Quarterly
Global Property
(Expressed in millions of U.S. dollars) | | Q4 2018 | | Q3 2018 | | Q2 2018 | | Q1 2018 | | Q4 2017 | |
Gross written premiums | | $ | 86.7 | | $ | 203.7 | | $ | 325.4 | | $ | 346.6 | | $ | 125.5 | |
Net written premiums | | 85.9 | | 144.9 | | 177.0 | | 247.2 | | 105.4 | |
Net earned insurance and reinsurance premiums | | 159.7 | | 172.7 | | 167.5 | | 136.1 | | 152.3 | |
Loss and allocated LAE | | (206.4 | ) | (173.2 | ) | (68.2 | ) | (70.4 | ) | (111.9 | ) |
Insurance and reinsurance acquisition expenses | | (27.6 | ) | (30.1 | ) | (34.1 | ) | (29.3 | ) | (30.8 | ) |
Technical (loss) profit | | (74.3 | ) | (30.6 | ) | 65.2 | | 36.4 | | 9.6 | |
Unallocated LAE | | (2.8 | ) | (3.3 | ) | (2.5 | ) | (1.9 | ) | (0.2 | ) |
Other underwriting expenses | | (15.2 | ) | (17.5 | ) | (18.1 | ) | (17.4 | ) | (11.7 | ) |
Underwriting (loss) income | | $ | (92.3 | ) | $ | (51.4 | ) | $ | 44.6 | | $ | 17.1 | | $ | (2.3 | ) |
| | | | | | | | | | | |
Underwriting ratios (1) | | | | | | | | | | | |
Loss ratio | | 131.0 | % | 102.2 | % | 42.2 | % | 53.1 | % | 73.6 | % |
Acquisition expense ratio | | 17.3 | % | 17.4 | % | 20.4 | % | 21.5 | % | 20.2 | % |
Other underwriting expense ratio | | 9.5 | % | 10.1 | % | 10.8 | % | 12.8 | % | 7.7 | % |
Combined ratio | | 157.8 | % | 129.7 | % | 73.4 | % | 87.4 | % | 101.5 | % |
(1) Underwriting ratios are calculated by dividing the related expense by net earned insurance and reinsurance premiums.
11
Sirius International Insurance Group, Ltd.
Segment Data — Quarterly
Global A&H
(Expressed in millions of U.S. dollars) | | Q4 2018 | | Q3 2018 | | Q2 2018 | | Q1 2018 | | Q4 2017 | |
Gross written premiums | | $ | 125.6 | | $ | 117.1 | | $ | 112.3 | | $ | 145.6 | | $ | 113.2 | |
Net written premiums | | 93.6 | | 87.9 | | 82.8 | | 115.5 | | 81.4 | |
Net earned insurance and reinsurance premiums | | 99.2 | | 89.6 | | 80.8 | | 88.0 | | 92.7 | |
Loss and allocated LAE | | (51.0 | ) | (51.3 | ) | (40.9 | ) | (45.8 | ) | (51.5 | ) |
Insurance and reinsurance acquisition expenses | | (27.4 | ) | (26.7 | ) | (26.4 | ) | (29.2 | ) | (27.9 | ) |
Technical profit | | 20.8 | | 11.6 | | 13.5 | | 13.0 | | 13.3 | |
Unallocated LAE | | (1.6 | ) | (1.7 | ) | (1.0 | ) | (1.6 | ) | (1.0 | ) |
Other underwriting expenses | | (6.7 | ) | (6.4 | ) | (6.3 | ) | (8.0 | ) | (5.1 | ) |
Underwriting income | | 12.5 | | 3.5 | | 6.2 | | 3.4 | | 7.2 | |
Service fee revenue | | 26.2 | | 29.3 | | 27.4 | | 32.8 | | 25.3 | |
MGU unallocated LAE | | (4.2 | ) | (4.7 | ) | (5.1 | ) | — | | — | |
MGU other underwriting expenses | | (2.2 | ) | (2.0 | ) | (3.5 | ) | (8.4 | ) | — | |
MGU General and administrative expenses | | (16.1 | ) | (13.8 | ) | (14.2 | ) | (9.5 | ) | (16.3 | ) |
Underwriting income, including net service fee income | | $ | 16.2 | | $ | 12.3 | | $ | 10.8 | | $ | 18.3 | | $ | 16.2 | |
| | | | | | | | | | | |
Underwriting ratios (1) | | | | | | | | | | | |
Loss ratio | | 53.0 | % | 59.2 | % | 51.9 | % | 53.9 | % | 56.6 | % |
Acquisition expense ratio | | 27.6 | % | 29.8 | % | 32.7 | % | 33.2 | % | 30.1 | % |
Other underwriting expense ratio | | 6.8 | % | 7.1 | % | 7.8 | % | 9.1 | % | 5.5 | % |
Combined ratio | | 87.4 | % | 96.1 | % | 92.4 | % | 96.2 | % | 92.2 | % |
(1) Underwriting ratios are calculated by dividing the related expense by net earned insurance and reinsurance premiums.
12
Sirius International Insurance Group, Ltd.
Segment Data — Quarterly
Specialty & Casualty
(Expressed in millions of U.S. dollars) | | Q4 2018 | | Q3 2018 | | Q2 2018 | | Q1 2018 | | Q4 2017 | |
Gross written premiums | | $ | 72.2 | | $ | 76.5 | | $ | 60.9 | | $ | 115.5 | | $ | 33.9 | |
Net written premiums | | 64.4 | | 72.6 | | 55.1 | | 100.6 | | 28.5 | |
Net earned insurance and reinsurance premiums | | 71.2 | | 58.4 | | 55.5 | | 54.4 | | 39.5 | |
Loss and allocated LAE | | (55.5 | ) | (34.1 | ) | (31.7 | ) | (21.6 | ) | (25.5 | ) |
Insurance and reinsurance acquisition expenses | | (20.6 | ) | (16.2 | ) | (14.6 | ) | (14.1 | ) | (10.4 | ) |
Technical (loss) profit | | (4.9 | ) | 8.1 | | 9.2 | | 18.7 | | 3.6 | |
Unallocated LAE | | (1.4 | ) | (1.6 | ) | (1.7 | ) | (1.2 | ) | 0.2 | |
Other underwriting expenses | | (3.9 | ) | (8.4 | ) | (7.9 | ) | (8.0 | ) | (3.0 | ) |
Underwriting (loss) income | | $ | (10.2 | ) | $ | (1.9 | ) | $ | (0.4 | ) | $ | 9.5 | | $ | 0.8 | |
| | | | | | | | | | | |
Underwriting ratios (1) | | | | | | | | | | | |
Loss ratio | | 79.9 | % | 61.1 | % | 60.2 | % | 41.9 | % | 64.1 | % |
Acquisition expense ratio | | 28.9 | % | 27.7 | % | 26.3 | % | 25.9 | % | 26.3 | % |
Other underwriting expense ratio | | 5.5 | % | 14.4 | % | 14.2 | % | 14.7 | % | 7.6 | % |
Combined ratio | | 114.3 | % | 103.2 | % | 100.7 | % | 82.5 | % | 98.0 | % |
(1) Underwriting ratios are calculated by dividing the related expense by net earned insurance and reinsurance premiums.
13
Sirius International Insurance Group, Ltd.
Segment Data — Quarterly
Runoff & Other
(Expressed in millions of U.S. dollars) | | Q4 2018 | | Q3 2018 | | Q2 2018 | | Q1 2018 | | Q4 2017 | |
Gross written premiums | | $ | 18.3 | | $ | 0.7 | | $ | 6.4 | | $ | 7.5 | | $ | 0.3 | |
Net written premiums | | 17.8 | | 0.3 | | 5.4 | | 6.1 | | 0.2 | |
Net earned insurance and reinsurance premiums | | 17.7 | | 0.4 | | 5.1 | | 6.0 | | 0.2 | |
Loss and allocated LAE | | (25.3 | ) | 10.2 | | (0.3 | ) | 2.4 | | 5.8 | |
Insurance and reinsurance acquisition expenses | | (0.5 | ) | (0.1 | ) | (1.5 | ) | (0.7 | ) | (0.8 | ) |
Technical (loss) profit | | (8.1 | ) | 10.5 | | 3.3 | | 7.7 | | 5.2 | |
Unallocated LAE | | — | | (0.7 | ) | — | | (0.9 | ) | (0.5 | ) |
Other underwriting expenses | | (1.1 | ) | (1.4 | ) | (2.4 | ) | (1.4 | ) | 0.3 | |
Underwriting (loss) income | | (9.2 | ) | 8.4 | | 0.9 | | 5.4 | | 5.0 | |
Service fee revenue | | — | | — | | — | | — | | — | |
General and administrative expenses | | (0.2 | ) | (0.8 | ) | (1.0 | ) | (1.1 | ) | 0.1 | |
Underwriting (loss) income, including net service fee income | | $ | (9.4 | ) | $ | 7.6 | | $ | (0.1 | ) | $ | 4.3 | | $ | 5.1 | |
14
Sirius International Insurance Group, Ltd.
Gross Written Premiums by Segment
| | Three months ended | | Years ended | |
(Expressed in millions of U.S. dollars) | | December 31,
2018 | | September 30,
2018 | | June 30,
2018 | | March 31,
2018 | | December 31,
2017 | | December 31,
2018 | | December 31,
2017 | |
Global Property | | | | | | | | | | | | | | | |
Other Property | | $ | 79.0 | | $ | 138.8 | | $ | 232.5 | | $ | 172.7 | | $ | 92.0 | | $ | 623.0 | | $ | 405.2 | |
Property Catastrophe Excess | | 7.8 | | 55.3 | | 45.6 | | 166.6 | | 10.0 | | 275.3 | | 255.3 | |
Agriculture | | (0.1 | ) | 9.6 | | 47.3 | | 7.3 | | 23.5 | | 64.1 | | 71.6 | |
Total | | 86.7 | | 203.7 | | 325.4 | | 346.6 | | 125.5 | | 962.4 | | 732.1 | |
| | | | | | | | | | | | | | | |
Global A&H | | 125.6 | | 117.1 | | 112.3 | | 145.6 | | 113.2 | | 500.6 | | 494.6 | |
| | | | | | | | | | | | | | | |
Specialty & Casualty | | | | | | | | | | | | | | | |
Casualty | | 39.8 | | 41.4 | | 28.1 | | 27.1 | | 15.0 | | 136.4 | | 38.2 | |
Aviation & Space | | 27.1 | | 13.5 | | 10.8 | | 21.1 | | 14.8 | | 72.5 | | 65.7 | |
Trade Credit | | (9.8 | ) | 10.7 | | 6.2 | | 41.0 | | (5.7 | ) | 48.1 | | 39.7 | |
Marine | | 7.1 | | 1.5 | | 8.5 | | 17.6 | | 7.3 | | 34.7 | | 56.1 | |
Contingency | | 3.4 | | 2.8 | | 3.5 | | 6.9 | | 2.5 | | 16.6 | | 18.4 | |
Environmental | | 3.4 | | 3.9 | | 2.4 | | 0.4 | | — | | 10.1 | | — | |
Surety | | 1.2 | | 2.7 | | 1.4 | | 1.4 | | — | | 6.7 | | — | |
Total | | 72.2 | | 76.5 | | 60.9 | | 115.5 | | 33.9 | | 325.1 | | 218.1 | |
| | | | | | | | | | | | | | | |
Runoff & Other | | 18.3 | | 0.7 | | 6.4 | | 7.5 | | 0.3 | | 32.9 | | (5.5 | ) |
| | | | | | | | | | | | | | | |
Total | | $ | 302.8 | | $ | 398.0 | | $ | 505.0 | | $ | 615.2 | | $ | 272.9 | | $ | 1,821.0 | | $ | 1,439.3 | |
15
Sirius International Insurance Group, Ltd.
Net Earned Insurance and Reinsurance Premiums by Segment
| | Three months Ended | | Years ended | |
(Expressed in millions of U.S. dollars) | | December 31,
2018 | | September 30,
2018 | | June 30,
2018 | | March 31,
2018 | | December 31,
2017 | | December 31,
2018 | | December 31,
2017 | |
Global Property | | | | | | | | | | | | | | | |
Other Property | | $ | 101.7 | | $ | 98.6 | | $ | 103.1 | | $ | 93.3 | | $ | 83.0 | | $ | 396.7 | | $ | 337.5 | |
Property Catastrophe Excess | | 45.2 | | 50.9 | | 42.0 | | 42.4 | | 40.4 | | 180.5 | | 159.6 | |
Agriculture | | 12.8 | | 23.2 | | 22.4 | | 0.4 | | 28.9 | | 58.8 | | 67.3 | |
Total | | 159.7 | | 172.7 | | 167.5 | | 136.1 | | 152.3 | | 636.0 | | 564.4 | |
| | | | | | | | | | | | | | | |
Global A&H | | 99.2 | | 89.6 | | 80.8 | | 88.0 | | 92.7 | | 357.6 | | 306.8 | |
| | | | | | | | | | | | | | | |
Specialty & Casualty | | | | | | | | | | | | | | | |
Casualty | | 30.1 | | 23.2 | | 16.8 | | 10.7 | | 7.7 | | 80.8 | | 15.0 | |
Aviation & Space | | 16.2 | | 14.1 | | 15.3 | | 14.8 | | 11.7 | | 60.4 | | 53.8 | |
Trade Credit | | 10.2 | | 11.7 | | 9.5 | | 11.1 | | 7.5 | | 42.5 | | 32.6 | |
Marine | | 9.2 | | 4.0 | | 9.6 | | 13.4 | | 9.8 | | 36.2 | | 46.6 | |
Contingency | | 3.7 | | 3.1 | | 3.7 | | 4.5 | | 2.8 | | 15.0 | | 15.2 | |
Surety | | 1.4 | | 1.9 | | 0.5 | | (0.1 | ) | — | | 3.7 | | — | |
Environmental | | 0.4 | | 0.4 | | 0.1 | | — | | — | | 0.9 | | — | |
Total | | 71.2 | | 58.4 | | 55.5 | | 54.4 | | 39.5 | | 239.5 | | 163.2 | |
| | | | | | | | | | | | | | | |
Runoff & Other | | 17.7 | | 0.4 | | 5.1 | | 6.0 | | 0.2 | | 29.2 | | 0.9 | |
| | | | | | | | | | | | | | | |
Total | | $ | 347.8 | | $ | 321.1 | | $ | 308.9 | | $ | 284.5 | | $ | 284.7 | | $ | 1,262.3 | | $ | 1,035.3 | |
16
Sirius International Insurance Group, Ltd.
Net Investment Income
| | Three months ended, | | Years ended, | |
(Expressed in millions of U.S. dollars) | | December 31,
2018 | | September 30,
2018 | | June 30,
2018 | | March 31,
2018 | | December 31,
2017 | | December 31,
2018 | | December 31,
2017 | |
Fixed maturity investments | | $ | 15.4 | | $ | 14.2 | | $ | 13.7 | | $ | 9.9 | | $ | 10.9 | | $ | 53.2 | | $ | 51.5 | |
Short-term investments | | 1.4 | | 2.4 | | 0.5 | | 0.8 | | 1.4 | | 5.1 | | 1.5 | |
Equity securities | | 2.3 | | 5.9 | | 7.1 | | 1.2 | | 1.2 | | 16.5 | | 5.1 | |
Other long-term investments | | 2.7 | | 2.7 | | 1.3 | | 1.2 | | 1.2 | | 7.9 | | 8.5 | |
Total investment income | | 21.8 | | 25.2 | | 22.6 | | 13.1 | | 14.7 | | 82.7 | | 66.6 | |
Investment expenses | | (2.2 | ) | (3.4 | ) | (3.4 | ) | (2.3 | ) | (2.1 | ) | (11.3 | ) | (9.8 | ) |
Net investment income | | $ | 19.6 | | $ | 21.8 | | $ | 19.2 | | $ | 10.8 | | $ | 12.6 | | $ | 71.4 | | $ | 56.8 | |
17
Sirius International Insurance Group, Ltd.
Investment Holdings — Cost to Fair Value Reconciliation
| | December 31, 2018 | |
(Expressed in millions of U.S. dollars) | | Cost or
amortized cost | | Gross
unrealized
gains | | Gross unrealized
losses | | Net foreign
currency gains
(losses) | | Fair value | | Percentage | |
Fixed Maturity Investments | | | | | | | | | | | | | |
Corporate debt securities | | $ | 694.1 | | $ | 1.4 | | $ | (7.3 | ) | $ | 7.6 | | $ | 695.8 | | 20.4 | % |
Asset-backed securities | | 496.3 | | 0.1 | | (3.8 | ) | 1.9 | | 494.5 | | 14.5 | % |
Residential mortgage-backed securities | | 413.0 | | 1.7 | | (7.1 | ) | 5.9 | | 413.5 | | 12.1 | % |
U.S. government and government agency | | 163.9 | | 0.3 | | (0.5 | ) | 4.2 | | 167.9 | | 4.9 | % |
Commercial mortgage-backed securities | | 117.7 | | 0.2 | | (2.7 | ) | 0.7 | | 115.9 | | 3.4 | % |
Non-U.S. government and government agency | | 50.6 | | — | | (0.2 | ) | (0.1 | ) | 50.3 | | 1.5 | % |
Preferred stocks | | 14.5 | | 0.6 | | (6.8 | ) | 0.2 | | 8.5 | | 0.2 | % |
U.S. States, municipalities and political subdivision | | 2.8 | | — | | — | | — | | 2.8 | | 0.1 | % |
Total fixed maturity investments | | 1,952.9 | | 4.3 | | (28.4 | ) | 20.4 | | 1,949.2 | | 57.1 | % |
Equity securities | | 409.4 | | 17.8 | | (50.8 | ) | 3.6 | | 380.0 | | 11.1 | % |
Total equity securities | | 409.4 | | 17.8 | | (50.8 | ) | 3.6 | | 380.0 | | 11.1 | % |
Total fixed maturity and equity securities | | 2,362.3 | | 22.1 | | (79.2 | ) | 24.0 | | 2,329.2 | | 68.2 | % |
Other long-term investments | | | | | | | | | | | | | |
Hedge funds and private equity funds | | 281.9 | | 23.9 | | (10.4 | ) | 6.0 | | 301.4 | | 8.9 | % |
Limited liability companies and private equity securities | | 55.7 | | 8.7 | | (3.1 | ) | 2.3 | | 63.6 | | 1.9 | % |
Total other long-term investments | | 337.6 | | 32.6 | | (13.5 | ) | 8.3 | | 365.0 | | 10.8 | % |
Short-term investments | | 716.1 | | — | | (0.1 | ) | (0.5 | ) | 715.5 | | 21.0 | % |
Total investments | | $ | 3,416.0 | | $ | 54.7 | | $ | (92.8 | ) | $ | 31.8 | | $ | 3,409.7 | | 100.0 | % |
18
Sirius International Insurance Group, Ltd.
Investment Holdings — Quarterly
Investment Type
| | December 31, 2018 | | September 30, 2018 | | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | |
| | Fair Value % | | Fair Value % | | Fair Value % | | Fair Value % | | Fair Value % | |
Cash and investment holdings | | | | | | | | | | | |
Fixed maturity investments | | | | | | | | | | | |
Corporate debt securities | | 19.6 | % | 21.8 | % | 21.9 | % | 24.1 | % | 28.1 | % |
Asset-backed securities | | 14.0 | % | 11.4 | % | 8.9 | % | 8.3 | % | 13.2 | % |
Residential mortgage-backed securities | | 11.7 | % | 12.2 | % | 12.2 | % | 12.4 | % | 8.1 | % |
U.S. government and government agency | | 4.7 | % | 3.2 | % | 2.7 | % | 2.2 | % | 2.4 | % |
Commercial mortgage-backed securities | | 3.3 | % | 4.2 | % | 4.7 | % | 5.7 | % | 5.3 | % |
Non-U.S. government and government agency | | 1.4 | % | 1.3 | % | 2.3 | % | 2.5 | % | 3.0 | % |
Preferred stocks | | 0.2 | % | 0.3 | % | 0.2 | % | 0.3 | % | 0.3 | % |
U.S. States, municipalities and political subdivision | | 0.1 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % |
Total fixed maturity investments | | 55.0 | % | 54.4 | % | 52.9 | % | 55.5 | % | 60.5 | % |
Equity securities | | 10.7 | % | 11.8 | % | 11.6 | % | 10.0 | % | 8.3 | % |
Total fixed maturity and equity securities | | 65.7 | % | 66.2 | % | 64.5 | % | 65.5 | % | 68.8 | % |
Other long-term investments | | | | | | | | | | | |
Hedge funds and private equity funds | | 8.6 | % | 7.7 | % | 7.0 | % | 6.0 | % | 5.7 | % |
Limited liability companies and private equity securities | | 1.8 | % | 1.9 | % | 1.9 | % | 1.7 | % | 1.8 | % |
Total other long-term investments | | 10.4 | % | 9.6 | % | 8.9 | % | 7.7 | % | 7.5 | % |
Short-term investments | | 20.2 | % | 20.9 | % | 23.0 | % | 21.6 | % | 17.3 | % |
Total investments | | 96.3 | % | 96.7 | % | 96.4 | % | 94.8 | % | 93.6 | % |
Cash and restricted cash | | 3.7 | % | 3.3 | % | 3.6 | % | 5.2 | % | 6.4 | % |
Total cash and invested assets | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
19
Sirius International Insurance Group, Ltd.
Investment Holdings — Quarterly
Credit Quality and Maturity Profile
| | December 31, 2018 | | September 30, 2018 | | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | |
| | Fair Value % | | Fair Value % | | Fair Value % | | Fair Value % | | Fair Value % | |
Credit Quality of Fixed Maturities | | | | | | | | | | | |
AAA | | 30.9 | % | 28.9 | % | 27.9 | % | 25.4 | % | 31.7 | % |
AA | | 42.0 | % | 38.8 | % | 37.3 | % | 37.7 | % | 29.1 | % |
A | | 14.9 | % | 17.7 | % | 17.6 | % | 17.9 | % | 19.1 | % |
BBB | | 8.6 | % | 10.0 | % | 11.0 | % | 13.1 | % | 15.3 | % |
Other | | 3.6 | % | 4.6 | % | 6.2 | % | 5.9 | % | 4.8 | % |
Total fixed maturity investments | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
| | | | | | | | | | | |
Maturity Profile of Fixed Maturities | | | | | | | | | | | |
Due in one year or less | | 13.2 | % | 12.1 | % | 9.4 | % | 7.2 | % | 5.0 | % |
Due after one year through five years | | 32.6 | % | 35.0 | % | 37.0 | % | 41.6 | % | 46.2 | % |
Due after five years through ten years | | 1.3 | % | 1.3 | % | 4.1 | % | 2.3 | % | 3.2 | % |
Due after ten years | | 0.0 | % | 0.0 | % | 0.4 | % | 1.0 | % | 1.2 | % |
Mortgage-backed and asset-backed securities | | 52.5 | % | 51.0 | % | 48.7 | % | 47.4 | % | 44.0 | % |
Preferred Stocks | | 0.4 | % | 0.6 | % | 0.4 | % | 0.5 | % | 0.4 | % |
Total | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
20
Sirius International Insurance Group, Ltd.
Impact of Foreign Currency Translation
| | Three months ended | | Years ended | |
(Expressed in millions of U.S. dollars) | | December 31,
2018 | | September 30,
2018 | | June 30,
2018 | | March 31,
2018 | | December 31,
2017 | | December 31,
2018 | | December 31,
2017 | |
Net realized investment gains (losses) - foreign currency(1) | | $ | 6.6 | | $ | 4.7 | | $ | 7.1 | | $ | (1.1 | ) | $ | 1.1 | | $ | 17.3 | | $ | (19.1 | ) |
Net unrealized investment (losses) gains - foreign currency(2) | | (7.4 | ) | (5.5 | ) | 29.7 | | 18.9 | | 6.6 | | 35.7 | | (51.7 | ) |
Net realized and unrealized investment (losses) gains - foreign currency | | (0.8 | ) | (0.8 | ) | 36.8 | | 17.8 | | 7.7 | | 53.0 | | (70.8 | ) |
Net foreign exchange (losses) gains - foreign currency translation (losses) gains(3) | | (3.0 | ) | (0.4 | ) | 21.5 | | (2.1 | ) | (6.8 | ) | 16.0 | | 20.7 | |
Net foreign exchange gains (losses) - currency swaps(3) | | 4.0 | | (0.1 | ) | 4.3 | | (1.3 | ) | (1.1 | ) | 6.9 | | (11.3 | ) |
Net foreign exchange (losses) gains - other(3) | | — | | — | | (0.1 | ) | (0.1 | ) | 0.1 | | (0.2 | ) | (0.2 | ) |
Income tax expense (benefit) | | 2.4 | | 0.1 | | — | | (0.5 | ) | 0.4 | | 2.0 | | 3.3 | |
Total foreign currency remeasurement gains (losses) recognized through net (loss) income, after tax | | 2.6 | | (1.2 | ) | 62.5 | | 13.8 | | 0.3 | | 77.7 | | (58.3 | ) |
Change in foreign currency translation on investments recognized through other comprehensive (loss) income, after tax | | (4.0 | ) | 6.4 | | (78.6 | ) | (20.4 | ) | (9.9 | ) | (96.6 | ) | 83.9 | |
Change in foreign currency translation on non-investment net liabilities recognized through other comprehensive (loss) income, after tax | | (0.7 | ) | (1.7 | ) | 30.1 | | 7.0 | | 8.1 | | 34.7 | | (12.2 | ) |
Total foreign currency translation (losses) gains recognized through other comprehensive income (loss), after tax | | (4.7 | ) | 4.7 | | (48.5 | ) | (13.4 | ) | (1.8 | ) | (61.9 | ) | 71.7 | |
Total foreign currency gains recognized in comprehensive (loss) income, after tax | | $ | (2.1 | ) | $ | 3.5 | | $ | 14.0 | | $ | 0.4 | | $ | (1.5 | ) | $ | 15.8 | | $ | 13.4 | |
(1) Component of Net realized investment gains (losses) on the Consolidated Statements of (Loss) Income
(2) Component of Net unrealized investment (losses) gains on the Consolidated Statements of (Loss) Income
(3) Component of Net foreign exchange (losses) gains on the Consolidated Statements of (Loss) Income
21
Sirius International Insurance Group, Ltd.
Net Realized and Unrealized Investment (Losses) Gains
| | Three months ended | | Years ended | |
(Expressed in millions of U.S. dollars) | | December 31,
2018 | | September 30,
2018 | | June 30,
2018 | | March 31,
2018 | | December 31,
2017 | | December 31,
2018 | | December 31,
2017 | |
Gross realized gains (losses) | | $ | 10.6 | | $ | 11.3 | | $ | 12.0 | | $ | 8.4 | | $ | (14.8 | ) | $ | 42.3 | | $ | 24.4 | |
Gross realized (losses) gains | | (16.3 | ) | (7.4 | ) | (4.2 | ) | (12.1 | ) | 14.5 | | (40.0 | ) | (51.6 | ) |
Net realized (losses) gains on investments(1)(2) | | (5.7 | ) | 3.9 | | 7.8 | | (3.7 | ) | (0.3 | ) | 2.3 | | (27.2 | ) |
Net unrealized (losses) gains on investments(3)(4) | | (52.2 | ) | (11.7 | ) | 24.7 | | 16.0 | | 14.7 | | (23.2 | ) | (10.5 | ) |
Net realized and unrealized (losses) gains on investments | | $ | (57.9 | ) | $ | (7.8 | ) | $ | 32.5 | | $ | 12.3 | | $ | 14.4 | | $ | (20.9 | ) | $ | (37.7 | ) |
(1) Includes $6.6 million, $4.7 million, $7.1 million, $(1.1) million and $1.1 million of realized gains (losses) due to foreign currency for the three months ended December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018 and December 31, 2017, respectively.
(2) Includes $17.3 million and $(19.1) million of realized gains (losses) due to foreign currency for the years ended December 31, 2018 and 2017, respectively.
(3) Includes $(7.4) million, $(5.5) million, $29.7 million, $18.9 million and $6.6 million of unrealized (losses) gains due to foreign currency for the three months ended December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018 and December 31, 2017, respectively.
(4) Includes $35.7 million and $(51.7) million of unrealized gains (losses) due to foreign currency for the years ended December 31, 2018 and 2017, respectively.
22
Sirius International Insurance Group, Ltd.
Book Value Per Share and Adjusted Book Value Per Share
(Expressed in millions of U.S. dollars except for share and per share amounts) | | December 31,
2018 | | September 30,
2018 | | June 30,
2018 | | March 31,
2018 | | December 31,
2017 | |
Numerator: | | | | | | | | | | | |
Total common shareholders’ equity (A) | | $ | 1,704.5 | | $ | 1,973.0 | | $ | 1,996.3 | | $ | 1,947.0 | | $ | 1,917.0 | |
Series B preference shares | | 232.2 | | — | | — | | — | | — | |
Adjusted book value (1) numerator (B) | | $ | 1,936.7 | | $ | 1,973.0 | | $ | 1,996.3 | | $ | 1,947.0 | | $ | 1,917.0 | |
| | | | | | | | | | | |
Denominator: | | | | | | | | | | | |
Common shares outstanding (C) | | 115,151,251 | | 120,000,000 | | 120,000,000 | | 120,000,000 | | 120,000,000 | |
Series B preference shares outstanding | | 11,901,670 | | — | | — | | — | | — | |
Total shares outstanding (D) | | 127,052,921 | | 120,000,000 | | 120,000,000 | | 120,000,000 | | 120,000,000 | |
| | | | | | | | | | | |
Basic book value per share (A)/(C) | | $ | 14.80 | | $ | 16.44 | | $ | 16.64 | | $ | 16.23 | | $ | 15.98 | |
| | | | | | | | | | | |
Adjusted book value per share (1) (B)/(D) | | $ | 15.24 | | $ | 16.44 | | $ | 16.64 | | $ | 16.23 | | $ | 15.98 | |
(1) Adjusted book value and Adjusted book value per share are non-GAAP financial measures. There are no comparable GAAP measures. See the accompanying Reconciliation of Non-GAAP Financial Measures for an explanation and calculation of Adjusted book value and Adjusted book value per share. Outstanding warrants are excluded as they are anti-dilutive.
23
Sirius International Insurance Group, Ltd.
Basic and Diluted Earnings Per Share
| | Three months ended, | | Years ended, | |
(Expressed in millions of U.S. dollars except for share and per share amounts) | | December 31, 2018 | | December 31, 2017 | | December 31, 2018 | | December 31, 2017 | |
Numerator: | | | | | | | | | |
Net (loss) income | | $ | (130.5 | ) | $ | 19.1 | | $ | (16.7 | ) | $ | (136.3 | ) |
Less: Income attributable to non-controlling interests | | (0.5 | ) | (0.5 | ) | (1.4 | ) | (13.7 | ) |
Less: Accrued dividends on Series A redeemable preference shares | | — | | (2.6 | ) | (2.6 | ) | (6.1 | ) |
Add: Redemption of Series A preference shares below carrying value | | 13.8 | | — | | 13.8 | | — | |
Less: Adjustment of Series B preference carrying value | | (36.4 | ) | — | | (36.4 | ) | — | |
Net (loss) income available for dividends out of undistributed earnings | | (153.6 | ) | 16.0 | | (43.3 | ) | (156.1 | ) |
Less: Earnings attributable to Series A redeemable preference shares | | — | | (0.6 | ) | — | | — | |
Net (loss) income available to Sirius Group’s common shareholders | | $ | (153.6 | ) | $ | 15.4 | | $ | (43.3 | ) | $ | (156.1 | ) |
| | | | | | | | | |
Denominator: | | | | | | | | | |
Weighted average shares outstanding for basic and diluted earnings per share | | 117,040,026 | | 120,000,000 | | 119,253,924 | | 120,000,000 | |
| | | | | | | | | |
Earnings per share | | | | | | | | | |
Basic earnings per share | | $ | (1.31 | ) | $ | 0.13 | | $ | (0.36 | ) | $ | (1.30 | ) |
Diluted earnings per share | | $ | (1.31 | ) | $ | 0.13 | | $ | (0.36 | ) | $ | (1.30 | ) |
24
Sirius International Insurance Group, Ltd.
Return on Common Shareholders’ Equity — Consecutive Quarters
| | Three months ended | | Years ended | |
(Expressed in millions of U.S. dollars) | | December 31,
2018 | | September 30,
2018 | | June 30,
2018 | | March 31,
2018 | | December 31,
2017 | | December 31,
2018 | | December 31,
2017 | |
Beginning common shareholders’ equity | | $ | 1,973.0 | | $ | 1,996.3 | | $ | 1,947.0 | | $ | 1,917.0 | | $ | 1,901.0 | | $ | 1,917.0 | | $ | 1,988.1 | |
Net (loss) income attributable to common shareholders | | $ | (153.6 | ) | $ | (28.0 | ) | $ | 97.8 | | $ | 40.5 | | $ | 16.0 | | $ | (43.3 | ) | $ | (156.1 | ) |
Return on beginning common shareholders’ equity | | -7.8 | % | -1.4 | % | 5.0 | % | 2.1 | % | 0.8 | % | -2.3 | % | -7.9 | % |
25
Sirius International Insurance Group, Ltd.
Reserves for Unpaid Losses and Loss Adjustment Expenses
| | Three months ended | | Years ended | |
(Expressed in millions of U.S. dollars) | | December 31, 2018 | | December 31, 2017 | | December 31, 2018 | | December 31, 2017 | |
Gross beginning balance | | $ | 1,891.0 | | $ | 1,916.7 | | $ | 1,898.5 | | $ | 1,620.1 | |
Less: beginning reinsurance recoverable on unpaid losses | | (349.0 | ) | (334.9 | ) | (319.7 | ) | (291.5 | ) |
Net loss and LAE reserve balance | | 1,542.0 | | 1,581.8 | | 1,578.8 | | 1,328.6 | |
Losses and LAE incurred relating to: | | | | | | | | | |
Current year losses | | 331.5 | | 189.3 | | 907.3 | | 811.8 | |
Prior years losses | | 15.7 | | (4.7 | ) | (7.3 | ) | (0.6 | ) |
Total net incurred losses and LAE | | 347.2 | | 184.6 | | 900.0 | | 811.2 | |
Foreign currency translation adjustment to net loss and LAE reserves | | — | | 3.7 | | (20.9 | ) | 36.8 | |
Acquisitions | | — | | — | | 0.2 | | 14.3 | |
Accretion of fair value adjustment to net loss and LAE reserves | | — | | — | | 0.1 | | 0.1 | |
Loss and LAE paid relating to: | | | | | | | | | |
Current year losses | | 98.9 | | 106.5 | | 251.4 | | 222.8 | |
Prior years losses | | 123.8 | | 84.9 | | 540.3 | | 389.5 | |
Total loss and LAE payments | | 222.7 | | 191.4 | | 791.7 | | 612.3 | |
Net ending balance | | 1,666.5 | | 1,578.8 | | 1,666.5 | | 1,578.8 | |
Plus ending reinsurance recoverable on unpaid losses | | 350.2 | | 319.7 | | 350.2 | | 319.7 | |
Gross ending balance | | $ | 2,016.7 | | $ | 1,898.5 | | $ | 2,016.7 | | $ | 1,898.5 | |
26
Sirius International Insurance Group, Ltd.
Reconciliation of Non-GAAP Financial Measures
Sum of Total common shareholders’ equity and Series B preference shares (Adjusted book value) and Adjusted book value per common and preference shares outstanding, including Series B preference shares (Adjusted book value per share)
In connection with the closing of the Easterly Acquisition Corp. Merger (the “Merger”), the Company completed the private placement of Series B preference shares and common shares (the “Private Placement”). The price per share of $17.22447 for the common shares and Series B preference shares issued in the Private Placement was the same. Sirius Group believes that the Merger and the Private Placement were parts of an overall integrated capitalization strategy for the Company, which should be assessed on a combined basis, not as separate transactions.
Adjusted book value and Adjusted book value per share are non-GAAP financial measures used to show the Company’s total worth on a per-share basis and is useful to management and investors in analyzing the intrinsic value of the Company.
Total shares outstanding is derived by summing common shares and Series B preference shares outstanding. Adjusted book value is derived by summing common shareholders’ equity and the Series B preference share amount reflected in mezzanine equity. Outstanding warrants are excluded as they are anti-dilutive. Adjusted book value per share is derived by dividing the Adjusted book value by the total shares outstanding. The reconciliation to Total common shareholders’ equity and book value per common share, the most directly comparable GAAP measures, are presented in the table below.
| | As at December 31, | |
(Expressed in millions of U.S. dollars, except share information) | | 2018 | | 2017 | |
Common shares outstanding | | 115,151,251 | | 120,000,000 | |
Series B preference shares outstanding | | 11,901,670 | | — | |
Total shares outstanding | | 127,052,921 | | 120,000,000 | |
| | | | | |
Total common shareholders’ equity | | $ | 1,704.5 | | $ | 1.917.0 | |
Series B preference shares | | 232.2 | | — | |
Adjusted book value | | $ | 1,936.7 | | $ | 1,917.0 | |
| | | | | |
Book value per common share | | $ | 14.80 | | $ | 15.98 | |
Adjusted book value per share | | $ | 15.24 | | $ | 15.98 | |
27
Sirius International Insurance Group, Ltd.
Reconciliation of Non-GAAP Financial Measures
Operating (loss) income attributable to common shareholders
The Company uses Operating (loss) income attributable to common shareholders as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. Operating (loss) income attributable to common shareholders as used herein differs from net (loss) income attributable to common shareholders, which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized and unrealized gains and losses on investments, net foreign exchange gains (losses) and the associated income tax expense or benefit. The Company’s management believes that Operating (loss) income attributable to common shareholders is useful to investors because it more accurately measures and predicts the Company’s results of operations by removing the variability arising from fluctuations in the Company’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 net (loss) income attributable to common shareholders to Operating (loss) income attributable to common shareholders:
| | Three months ended December 31, | | Years ended December 31, | |
(Expressed in millions of U.S. dollars) | | 2018 | | 2017 | | 2018 | | 2017 | |
Net (loss) income attributable to common shareholders | | $ | (153.6 | ) | $ | 16.0 | | $ | (43.3 | ) | $ | (156.1 | ) |
Adjustment for net realized and unrealized losses (gains) on investments | | 57.9 | | (14.4 | ) | 20.9 | | 37.7 | |
Adjustment for net foreign exchange (gains) losses | | (1.0 | ) | 7.8 | | (22.7 | ) | (9.2 | ) |
Adjustment for income tax (benefit) expenses (1) | | (9.7 | ) | (1.7 | ) | (11.3 | ) | (0.8 | ) |
Operating (loss) income attributable to common shareholders | | $ | (106.4 | ) | $ | 7.7 | | $ | (56.4 | ) | $ | (128.4 | ) |
(1) Adjustment for income tax (benefit) expense represents the income tax benefit (expense) associated with the adjustment for net realized and unrealized losses (gains) on investments. The income tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors.
28
