SiriusPoint (SPNT) risk factors, FY2024 10-K

Other

1. 01SiriusPoint’s insurance and reinsurance subsidiaries’ ability to pay dividends and other distributions to SiriusPoint, and losses from unfavorable outcomes from litigation and other legal proceedings

Risks Relating to Our Business

1. 02We may not successfully implement our strategic transformation or fully realize the anticipated benefits from the transformation
2. 03Our results of operations fluctuate from period to period and may not be indicative of our long-term prospects
3. 04We may continue to be adversely impacted by inflation
4. 05Technology breaches or failures, including those resulting from a malicious cyber-attack on us or our business partners and service providers, could disrupt or otherwise negatively impact our business
5. 06Competitors with greater resources may make it difficult for us to effectively market our products
6. 07Consolidation in the insurance and reinsurance industry could adversely impact us
7. 08If actual renewals of our existing contracts do not meet expectations, our premiums written in future years and our future results of operations could be materially adversely affected
8. 09We may experience issues with outsourcing and third-party relationships which may impact our ability to conduct business in a prudent manner and could negatively impact our operations, results and financial condition
9. 10Given the inherent uncertainty of models and software, their usefulness as a tool to evaluate risk is subject to a high degree of uncertainty that could result in actual losses that are materially different than our estimates including PMLs, and our financial results may be adversely impacted, perhaps significantly
10. 11perils for which we write business. Catastrophe modeling is inherently uncertain due to process risk (the probability and magnitude of the underlying event) and parameter risk (the probability of making inaccurate model assumptions)
11. 12Our claims and claim expense reserves are subject to inherent uncertainties, which could cause our losses to exceed our loss reserves
12. 13We are exposed to unpredictable catastrophic events that have adversely affected, and may in the future affect our results of operations and financial condition
13. 14Similar exposures to losses caused by the same types of catastrophic events occur in other lines of business such as aviation, casualty, contingency, credit, marine, and accident and health (including trip cancellation), including pandemic risk
14. 15We have exposure to potential terrorist acts that can materially and adversely affect our business, results of operations and/or financial condition
15. 16Global climate change may have a material adverse effect on our business, operating results and financial condition
16. 17We are exposed to unpredictable casualty insurance risks that could adversely affect our results of operations and financial condition
17. 18The property and casualty insurance and reinsurance industry is highly cyclical, and we expect to continue to experience periods characterized by excess underwriting capacity and unfavorable premium rates
18. 19The effect of emerging claim and coverage issues on our business is uncertain and as a result, we may suffer losses from unfavorable outcomes from litigation and other legal proceedings
19. 20Recent or future U.S. federal or state legislation may impact the private markets and decrease the demand for our property insurance and reinsurance products, which would adversely affect our business and results of operations
20. 21We are reliant on financial strength and credit ratings, and any downgrade or withdrawal of ratings and/or change in outlook may have a material adverse effect on our business, prospects, financial condition and results from operations
21. 22A significant decrease in our capital or surplus would enable certain clients to terminate reinsurance agreements or to require additional collateral
22. 23We have significant foreign operations that expose us to certain additional risks, including foreign currency risks and legal, political and operational risks
23. 24If we do not successfully manage transitions associated with key management changes, it may be viewed negatively by our rating agencies and shareholders and could have an adverse impact on our business
24. 25We are dependent on key executives, the loss of whom could adversely affect our business
25. 26Our inability to provide collateral to certain counterparties on commercially acceptable terms as we grow could significantly and negatively affect our ability to implement our business strategy
26. 27secure our obligations under the facility. Our ability to provide collateral, and the costs at which we provide collateral, is primarily dependent on the composition of our collateral assets
27. 28Our ability to pay dividends may be constrained by our holding company structure and certain regulatory and other factors
28. 29Inability to service our indebtedness could adversely affect our liquidity and financial condition and could potentially result in a downgrade or withdrawal of our credit ratings, any of which could adversely affect our financial condition and results of operations
29. 30Our indebtedness may limit cash flow available to invest in the ongoing needs of our business and may otherwise place us at a competitive disadvantage compared to our competitors
30. 31At maturity, the entire outstanding principal amount of our 2017 SEK Subordinated Notes and 2024 Senior Notes, plus any accrued and unpaid interest, will become due and payable. We must pay interest in cash on the notes quarterly, or semi-annually as applicable
31. 32We may need additional capital in the future in order to operate our business, and such capital may not be available to us or may not be available to us on acceptable terms. Furthermore, additional capital raising could dilute your ownership interest in the Company and may cause the value of your shares to decline
32. 33We depend on our clients’ evaluations of the risks associated with their insurance underwriting, which may subject us to reinsurance losses
33. 34We market our reinsurance worldwide primarily through reinsurance brokers. Loss of all or a substantial portion of the business provided by one or more of significant reinsurance brokers could have a material adverse effect on our business
34. 35We may be unable to purchase reinsurance for the liabilities we reinsure, and if we successfully purchase such reinsurance, we may be unable to collect, which could adversely affect our business, financial condition and results of operations
35. 36We face risks arising from any strategic transactions such as acquisitions, dispositions, investments, mergers or joint ventures or entry into new lines of business
36. 37If we fail to maintain an effective system of internal controls over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
37. 38future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate
38. 39We may incur losses as we execute on our strategy to develop our relationships with MGAs
39. 40Damage to our reputation could have a material adverse effect on our business, financial condition and operating results
40. 41Increasing scrutiny and changing expectations from third parties with respect to our environmental, social and governance (“ESG”) practices may impose additional costs on us or expose us to new or additional risks

Risks Relating to Our Investment Strategy

1. 42Conflicts of interest among Third Point LLC and its principals and SiriusPoint may adversely affect us; potential conflicts of interest may also arise or exist due to the compensation arrangements and other aspects of our investment arrangements with Third Point LLC and its affiliates
2. 43Daniel S. Loeb’s service to both companies may create, or may create the appearance of, conflicts of interest
3. 44We face risks associated with joint ventures and investments in which we share ownership or management with third parties

Risks Relating to Insurance and Other Regulations

1. 45The regulatory framework under which SiriusPoint operates and potential changes thereto could have a material adverse effect on its business
2. 46SiriusPoint's activities are subject to extensive regulation under the laws and regulations of the U.S., the U.K., Bermuda, Sweden and the E.U. and its member states and the other jurisdictions in which SiriusPoint operates
3. 47We face risks related to changes in Bermuda law and regulations, and the political environment in Bermuda
4. 48We are subject to the risk of becoming an investment company under U.S. federal securities law
5. 49Risks associated with changes in U.S. healthcare legislation could negatively affect our accident and health business
6. 50Post Brexit developments could negatively impact SiriusPoint’s investment portfolio, business and results of operations
7. 51Our operating subsidiaries are subject to minimum capital and surplus requirements, and our failure to meet these requirements could subject us to regulatory action
8. 52Bermuda insurance laws regarding the change of control of insurance companies may limit the acquisition of our shares and the voting rights of certain shareholders

Risks Relating to Taxation

1. 53In addition to the risk factors discussed below, we advise you to read “Certain Tax Considerations” and to consult your own tax advisor regarding the tax consequences to you of your investment in our shares
2. 54We have significant deferred tax assets, which may become devalued if either SiriusPoint does not generate sufficient future taxable income or applicable corporate tax rates are reduced (or applicable tax laws otherwise change)
3. 55Certain of our non-U.S. entities may become subject to United States federal income taxation
4. 56Certain of our intra-group transactions could become subject to the U.S. Base Erosion and Anti-Abuse Minimum Tax (“BEAT”), which could have a material adverse impact on operating results and make it difficult to forecast our effective tax rate
5. 57Intra-group distributions and other payments of cash or other assets could become subject to incremental income or withholding taxes

Risks Relating to Our Common Shares

1. 58Future sales of shares by existing shareholders could cause our share price to decline, even if our business is performing well
2. 59Only one industry analyst covers our Company and the publication of negative research or reports, or the failure to publish reports about our business, could impact our share price and our trading volume could decline
3. 60If the ownership of our common shares continues to be concentrated, it could prevent you and other shareholders from influencing significant corporate decisions
4. 61We do not intend to pay dividends on our common shares and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common shares
5. 62We may repurchase our common shares without our shareholders’ consent
6. 63Holders of our shares may have difficulty effecting service of process on us or enforcing judgments against us in the United States
7. 64Provisions in our bye-laws may reduce or increase the voting rights of our shares
8. 65Our bye-laws also contain a provision that will cap the total voting power of CM Bermuda, its affiliates and related persons in SiriusPoint at 9.9% for so long as CM Bermuda, its affiliates and related persons hold more than 9.9% of our common shares
9. 66Our bye-laws include certain provisions that could have the effect of delaying, deterring, preventing or rendering more difficult a change in control of us that our shareholders might consider in their best interests
10. 67The market price of our common shares may fluctuate significantly