Chasing the 1% – SiriusPoint’s Scott Egan

After a busy 2023, this year is a transitional period for Scott Egan’s SiriusPoint, the CEO told the Voice of Insurance podcast, as the re/insurer improves underwriting profitability and moves from surgical changes towards something nearer what cyclists call “marginal gains”.

SiriusPoint improved its combined ratio by 10 percentage points in the past year, in what its CEO, Scott Egan, calls “a quantum leap” and “the end of the turnaround”, speaking to Mark Geoghegan on the latest episode of the Voice of Insurance podcast.

The turnaround is dramatic. Egan remarked that the company had performed “below average” and that “major surgery” and “tougher underwriting decisions” were required after underwriting losses in 2022. Some of its notable underwriting exits under Egan’s leadership have included quitting the property catastrophe international market.

Rather than gunning for growth this year, as some rivals might be, 2024 is “a transition year”, Egan stressed. Next year, the top line can begin grow more in overall terms, due to many steps already taken, he suggested.

“If I’d said 12 months ago, we’re going to grow 20% I think people would have run for the trees,” he quipped. “The truth is, we will always be compared to our competitors, and rightly so…but we’re on a journey. Ultimately, by 2025, we want to have an organisation that is both profitable and performing up there amongst the best in class.”

Egan’s ambition is to be among the best at execution “as a differentiator in the market”. This, he explained, above all else, means prioritisation and attention to detail.

“We moved from what I would term surgical interventions, to a phrase I use within the company of, we now need to chase the 1%. Because it’s that series of incremental improvements in everything that we do, that differentiates, in my view, the best in class performers, to the average performers,” Egan said.

Today, SiriusPoint underwrites almost two thirds insurance to one third reinsurance business, Egan suggested, and is more likely to grow more on the insurance side, although “agility” means this might change due to customer demand and market dynamics.

SiriusPoint remains a strong participant in casualty markets, with no shortage of risk appetite there, he emphasised. Egan also pointed to beneficial changes experienced as a buyer in the retrocessional market at the end of 2023, with SiriusPoint purchasing lower attachment points and higher limits for the same spend.

In the London market, Egan said SiriusPoint wants to “grow into its skin” to get the most efficiency from its presence, emphasising the market’s strengths in attracting risks that require sophisticated underwriting solutions. London’s high expense costs have historically meant smaller underwriting businesses have been less efficient, making it important to reach critical mass.

“I wouldn’t be overly scientific, but if you want to play in that market, and have the infrastructure like a managing agent, you want to have your syndicate etc, then I think a degree of scale helps you spread that fixed costs. And certainly that’s true for us. If we were bigger, we would be more profitable, not because of our underwriting, but because we would be spreading our fixed costs further,” he said.

Alongside improving underwriting results, the re/insurer has a focus on distribution agreements with many managing general agents (MGAs), while reducing its ownership stakes within MGAs – 25 at least – which had previously tied up a lot of the company’s time and investments. At the onboarding phase he is keen to refocus future MGA relationships as complementary partnerships.

“One of the things when we do step into those relationships is we’ve just created a new centre of excellence for onboarding MGAs,” he said. “That sounds very grand. What does it mean? It means that we want to bring the two companies together in a thoughtful, joined-up way, whether it be on data, oversight, governance, or day-to-day trading. And if you do that really well, you feel as one, and that, for me, is a raw ingredient of success in that type of relationship.”