SPNT

Good morning, ladies and gentlemen, welcome to SiriusPoint's first quarter 2026 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the conclusion of prepared remarks, management will host a question and answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded, and a replay is available through 11:59 P.M. Eastern Time on May 22nd, 2026. With that, I would like to turn the call over to Liam Blackledge, Investor Relations and Strategy Manager. Please go ahead.

Good morning. Thank you for joining us for SiriusPoint's first quarter 2026 earnings call. Last night, we released our earnings press release, Form 10-Q, and financial supplement, all available on our website at investors.siriuspt.com, along with the slides that will accompany today's discussion. Joining you on the call are Scott Egan, our Chief Executive Officer, and Jim McKinney, our Chief Financial Officer. Before we begin, I'd like to remind you that today's remarks contain forward-looking statements based on current expectations, and actual results may differ materially. We will also reference certain non-GAAP financial measures which we believe are useful in evaluating the performance of the business. Reconciliations can be found in the presentation and our SEC filings. Please refer to our earnings release and accompanying materials for a more complete discussion of forward-looking statements and non-GAAP measures. With that, I'll turn the call over to Scott.

Thank you, Liam, and welcome everyone to our first quarter of 2026 results call. We've started the year with a strong first quarter, continuing to build on our performance momentum. We have delivered strong underwriting profits, disciplined growth, and attractive capital returns, and I'm pleased with our delivery. Let me start with our headline results. We delivered a core combined ratio of 88.9%, the lowest we've reported in six quarters. We grew our insurance and services gross written premiums by 8%. Our operating return on equity of 15.3% puts us at the top end once again of our 12%-15% across the cycle target range. Our GAAP return on equity was higher at 17.4%, reflecting the closure of the Arcadian sale we announced last year.

Our balance sheet is very strong with a BSCR ratio of 242% for the first quarter. We have redeemed $200 million of preference shares, and as of earlier this week, have bought back over $40 million of common shares. We are announcing today that we're increasing our $100 million buyback intention, we announced at full year results, by the remainder of our existing authorization, which is another $74 million. Our book value per share is up 5%. Finally, our financial strength ratings have been upgraded to A over the past three months by S&P, Fitch, and AM Best. These results continue to reinforce the progress we're making in building a best-in-class specialty underwriter with a diversified low volatility portfolio.

Turning to some of our headlines in more detail and starting with our top line, there's no question that certain parts of the P&C market are softening. In those areas, we will be disciplined. However, we believe that our product and distribution strategy and our nimble capital allocation model will allow us to grow top line and make attractive underwriting returns. Our first quarter gross written premium showed both of these dynamics. Our insurance and services gross written premium grew again by 8%, driven by the continued momentum in specialty lines with accident and health growing by 9%. Our reinsurance gross written premium declined 10% as we remained disciplined, particularly in areas such as property cat, where some risks did not offer adequate returns.

Overall, our headline core gross written premiums grew 1%, although in Q1, this was impacted by some one-off noise, including reinstatement premiums in the prior year. The same was true for our net written premiums, which also includes the impact of the aggregate programs we announced at the year-end and a one-time surety item from the prior year. Adjusting for these items, both our gross and net written premiums grew around 4% year-over-year. As a reminder, the aggregate programs we purchased are part of our lower volatility return strategy and support our 12%-15% across the cycle ROE target. As I look ahead to the rest of the year, we remain positive about our growth prospects. We have a strong pipeline of MGA opportunities that we are rigorously evaluating, and we have the agility to deploy capital in reinsurance should we see opportunities.

We expect our overall gross written premium growth to be between 5%-10% for the full year, with strong growth in insurance and services. Our growth will be more weighted to the second half of the year, primarily driven by the shift in mix to insurance from reinsurance. Turning to underwriting performance, the results this quarter continue to reflect the benefits of the diversified portfolio we've been reshaping over the past few years. We have improved the quality of the portfolio and materially reduced volatility. The consistency of our core combined ratio over the past few years is a clear demonstration of this. In the first quarter, we delivered a core combined ratio of 88.9% and underwriting profits of $71 million. This marks our 14th consecutive quarter of underwriting profitability, an important proof point on the execution of our underwriting strategy.

In reinsurance, our combined ratio of 84.2% improved by around 13 points, driven by lower catastrophe losses. This was partially offset by lower PYD and modestly higher acquisition costs and expenses. We remain opportunistic for the right risks, priced appropriately with a focus on lower volatility outcomes. In insurance and services, the combined ratio improved to 92%, with the ex-CAT combined ratio improving by just over 0.5 point. Favorable prior year development reflects our conservative reserving approach in general, but particularly for newer MGA relationships, where we reserve at higher than priced loss ratios in the early years. An improving attritional loss ratio and higher prior year releases resulted in higher profit commission accruals for our MGA partners, lifting acquisition costs. We structurally design our MGA partnerships in this way, where we ensure an alignment of interest to underwriting performance.

The higher acquisition cost simply reflects strong partner performance. We are happy to pay enhanced commissions for superior performance. Important to note, these are mostly accruals and not cash payments. Many of our profit commission structures include a carry-forward feature, allowing profit and losses to be offset across accident years. Our other underwriting expenses were elevated in the quarter due mostly to timing items, and we reaffirm our full-year guidance range of 6.5%-7%. This quarter, we've introduced some additional slides enhancing our disclosures as we try and give further insight into our business. First, we've introduced a new return on equity metric focused on our go-forward business. As a reminder, we label this our core business. Important to note that nothing has changed from a definition perspective.

Our core business definition has been stable since the beginning of 2024 after the major underwriting reshaping that took place in late 2022 and during 2023. The reason for introducing the measure is to try and give people a better indication of the performance of our ongoing business without the impact of historically exited business. Eventually, run-off will run off, and I will come back to that later. Over the last nine quarters, the core portfolio has generated strong ROE, as you can see from the graph on slide 9. For the first quarter, it was 17.9%, reflecting a strong trend and reinforcing the earnings power embedded in the go-forward portfolio today. Our second area of enhanced disclosure is around our approach to MGA partnering, an area we are often asked questions on.

We strongly believe in the strength of the distribution channel, its growth, and most importantly, our approach to it. Slide 15 shows some metrics linked to how we think about MGAs. From our selection process, where we choose less than 10% of partners we evaluate, to our onboarding, where we typically take six to nine months in getting to know potential partners, to our deal structuring, where there are no volume incentives in any of our relationships and where almost 90% of our partners have incentivization linked to underwriting profits. Finally, our prudent financial management, where we typically reserve above pricing level for new partners and prudently in general. It is this mix of measures and approach that we believe makes our strategy compelling and sustainable. It's not just one way.

We are also a partner of choice for many MGAs, and as a reminder, last year we won the US Program Carrier of the Year. We hope this slide's helpful. Finally, we've added a page on run-off, which I touched on earlier. Run-off performance sits outside of our core metrics. Again, just to reinforce, nothing has been added to the run-off portfolio since the end of 2023, an important discipline. We did see some losses here in the first quarter, like we have seen over the past few years. There's nothing noteworthy to draw any specific comment on. Importantly, our net run-off reserves are now under $500 million, down from just over $1 billion at the end of 2023, and the portfolio should be 90% reported by mid-2027. Ending with our balance sheet.

Our disciplined approach to capital management is a key part of our strategy. Our prudent approach to reserving saw our 20th consecutive quarter of prior year releases. It's also worth noting that we have minimal claims from the conflict in the Middle East, and there has been no significant impact on our loss reserves from the change in market estimate relating to the Baltimore Bridge collapse. As I said earlier, so far in 2026, we've returned over $240 million of capital to shareholders, including the redemption of $200 million of preference shares and the buyback of over $40 million of common shares as part of our $100 million commitment we announced at year-end 2025.

Supported by a stronger-than-expected year-end capital position, continued performance momentum, and a BSCR capital ratio of 242%. We are pleased to deploy additional capital by increasing our $100 million buyback commitment to the full pre-authorization amount of $174 million. Our leverage of 23% is at a historic low, and since our full year results in February, S&P, AM Best, and Fitch have upgraded our financial strength ratings to A, citing consistent earnings and balance sheet strength, a long way from where we started. To close, before I pass across to Jim, who will take you through the financials in more detail, I will leave you with a few key takeaways. Our strong underwriting focus and capability continues to show itself meaningfully through our results.

Our approach in building a low volatility, diversified specialty platform focused on niche distribution means we can perform strongly during softer market conditions. We are positive about our growth opportunities for the remainder of the year and expect strong growth in our insurance and services business. Our prudent reserving and capital management, coupled with our rating agency upgrades, position us strongly in the market. Finally, our drive, ambition, and attention to detail across the company is a key differentiator in our journey to be a leading specialty player. My final comment, as always, goes to our biggest asset, our people. I am deeply grateful again to all of my colleagues for another strong quarter and for their continuing levels of energy and commitment. I'm immensely proud to lead them on this journey. With that, I'll turn over to Jim to walk through the financials in more detail.

Thank you, Scott, and good morning or good afternoon, everyone. I'll start with our first quarter financial results, then cover underwriting, investments, capital, and the balance sheet. We delivered a strong first quarter reflecting disciplined underwriting, lower catastrophe volatility, and continued progress in reshaping the portfolio towards higher return, lower volatility specialty insurance. Gross written premium was $1 billion, up 1% year-over-year. Net written premium declined 7%, driven by the pre-announced aggregate cover and a one-time surety item in the prior year. Net earned premium increased 2%, with growth in insurance and services more than offsetting deliberate pullback in reinsurance. Most importantly, underwriting performance significantly enhanced. Core combined ratio improved 6.5 points to 88.9%, driven primarily by lower catastrophe activity and continued improvement in attritional loss performance despite 1.2 points of mixed headwind.

We generated $71 million of underwriting income, a 149% increase year-over-year, which marks our 14th consecutive quarter of underwriting profitability. Operating performance followed directly from our underwriting discipline. Operating net income was $86 million or $0.70 per diluted share, up 37% year-over-year. Operating ROE for the quarter was 15.3% and core operating ROE was 17.9%, comfortably within and above our 12%-15% across the cycle target. Net service fee income reached $8 million, with service revenues at $54 million at a 14.6% margin. Excluding the Arcadian sale, net service revenues rose 26%. Net fee income increased 34% and margins improved by 80 basis points. Net investment income totaled $66 million, leading to an overall investment result of $78 million.

The fixed income portfolio's average credit quality remains AA-. Book value per diluted share, excluding AOCI, increased 5% sequentially to $18.98, reflecting both earnings and disciplined capital management. Turning to our core specialty lines with details available on page 11. A&H. Our largest line at approximately 28% of the premium mix continues to perform well. Premiums grew 9% year-over-year, driven by strong opportunities in travel and U.S. medical. Importantly, this remains a low capital intensity, low correlation line that enhances portfolio resilience. Employer stop-loss has been challenged for several years, with premiums generally flat since 2021. We maintain a strong book and based on available U.S. statutory data, our loss ratio has run more than 10 points favorable to the market average for multiple years.

The market is showing early signs of hardening, and given our underwriting expertise, we may selectively lean back in as conditions improve. General liability conditions are mixed. Competition is intensifying as the E&S market continues to expand, with early and selective softening emerging in terms and conditions. Primary and umbrella pricing remain technically adequate, while excess continues to achieve double-digit, though moderating rate increases that exceed loss cost trends. We are underwriting cautiously and maintaining strict return thresholds. In other property, pro-rata reinsurance pricing has softened, particularly in commercial lines, and we adjusted accordingly. Property insurance niches continue to offer attractive opportunities. While premiums were flat this quarter, we expect selective growth through the remainder of the year, driven primarily by insurance. Financial and professional lines remain competitive, particularly in D&O and professional. We believe the cycle is nearing a bottom and we are underwriting selectively.

In transactional liability, which is bucketed here, pricing remains competitive and we continue to prioritize risk selection over volume. Within other casualty, auto remains challenged with loss cost inflation running ahead of rate. We have and continue to pull back exposure accordingly. Surety continues to be an attractive diversifying line with disciplined growth. In aviation, we remain cautious. Major airline pricing has improved, and we continue to reduce exposure where returns do not meet our criteria. Credit remains well-priced with great adequacy intact. Marine and energy market conditions are mixed. We see attractive opportunities in energy liability and select niche segments, while upstream remains competitive. Marine, particularly cargo and haul, continues to experience elevated competitive pressure. Finally, property catastrophe reinsurance, now approximately 4% of the portfolio, saw rate declines of about 15%.

Gross written premium declined 31%, reflecting lower reinstatement premiums, as well as a deliberate pullback consistent with our continued focus on capital discipline over top line growth. Slide 19 highlights the impact of the deliberate actions we've taken since 2022 to reduce catastrophe exposure. In the first quarter, catastrophe losses were $63 million lower year-over-year and represented just 0.8 points on the combined ratio, compared to 10.9 points in the first quarter of last year. The enhancements we've made materially improve the stability and predictability of earnings, a central objective of our portfolio reshaping. Turning to reserving on slide 20. We reported favorable prior year development of $32 million within core and $18 million consolidated, marking 20 consecutive quarters of favorable development.

This track record exceeds the average duration of our liabilities and reflects a consistently prudent reserving approach supported by quarterly bottom-up actuarial reviews, independent external validation, and the continued benefit of our Loss portfolio transfers, all of which retain significant protection and excess of booked reserves. Investment performance, found on slide 21, remains strong and stable. Net investment income was $66 million, contributing to a $78 million total investment result. We experienced no defaults in the quarter. 99% of the fixed income portfolio remains investment grade with an average credit rating of double A minus. Portfolio duration remains steady at 3.1 years, and reinvestment yields continue to exceed 4.5%. We continue to prioritize quality, liquidity, and downside protection in the investment portfolio. Slides 22 and 23 provide capital and balance sheet details. Our capital position remains a clear strength.

The estimated BSCR ratio was 242%, even after the preference share redemption, and includes net capital generation during the quarter. We continue to operate the business against a capital framework consistent with S&P's triple-A model assumptions. Leverage declined further. Debt to capital decreased to 22.8%, the lowest level in several years. Liquidity increased to over $1 billion, driven by upstream dividends and holding company investments. Importantly, we continue to believe the balance sheet undervalues our MGA platform, particularly IMG. In the quarter, book value increased by $25 million from the completion of the Arcadian sale. This is in addition to the $96 million uplift recorded upon Arcadian's deconsolidation in 2024. To summarize, this quarter reflects the results of a multi-year strategy focused on underwriting excellence, capital discipline, and volatility reduction.

We delivered strong underwriting profitability, continued improvement in attritional loss performance, returns within and above our through-the-cycle targets, continued capital strength, and balance sheet flexibility. While we're pleased with the progress, our focus remains on execution as we continue building a best-in-class specialty insurance franchise. With that, I'll turn the call back to the operator, and we'll open the lines for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Michael Phillips with Oppenheimer & Co. Inc. Please proceed with your question.

Thank you. Good morning, everybody. I want to start with the comments in the press release about the areas of growth. Then I heard some of Jim's comments when you went through the lines of business. Specifically, you mentioned in the press release growth in general liability, and you know, that's an area where there is some concern. We even had a CEO just yesterday say anybody growing in general liability is crazy. I'm paraphrasing. You know, maybe you can talk about that line, given the comments that Jim made about intensifying competition, and you know, where you're seeing growth in GL and why anyone shouldn't be concerned about that. Thanks.

Hey. Hi, Mike. Thanks for your question. As always, thanks for joining the call. Look, let me make a couple of general comments on growth, Mike, if you don't mind, just before we dive into the details. Look, I think for us in Q1, we were pretty pleased with the sort of position. Obviously a tale of two different dynamics, as I said in my overview, between insurance and reinsurance.

If you look at our growth in Q1, you know, we're pretty pleased with where the insurance business has grown, and we're very happy with both the relationships and the pockets, and I'll come back specifically to GL in a second. Look, in reinsurance, I think for us, Q1 is probably the most extreme shrinkage that we'll see, probably due to the sort of property cat 1s. We probably expect it to be stronger, you know, year-over-year in the remainder of the year. Ultimately, we're just gonna remain very disciplined in that marketplace. Obviously, property cat being the dominant line. Look, in terms of how we're thinking about the growth, look, for us, the momentum that we have in insurance, I think remains strong. We brought on two new relationships in Q1 and we remain with a strong pipeline.

You know, we think double-digit growth in insurance is actually, you know, our aim for the year and we think we're well-positioned for that. In terms of the areas, maybe just to dive in there now. Look, GL, I think I'm not a fan of big ticket statements, right, on stuff. I think for me, we're very alert in GL and so we are absolutely seeing competition intensifying, particularly as E&S continues to expand. We're seeing some sort of selective T&C softening. We don't see it as a, as a sort of banner headline panacea, but we're seeing we're staying disciplined. We're very happy with the carrier, with the MGAs that we're working to access the market.

Excess casualty, for example, our largest segment, continues to place ahead the loss cost trends, and it's the largest portion of the portfolio. Look, I think, and I'll pass across to Jim 'cause obviously you commented on it, Jim. Look, I think for us in GL, we're very sort of disciplined. We're very alert and awake, I think. There's no such thing as big banner general headlines. I think there are areas, pockets, and one of the advantages of the MGA distribution strategy is we believe we get access to sort of niche business, niche markets, and we do always think that's a complete strength of the group.

Listen, be really clear, if we don't see price, you know, sort of match the, the risk that we're taking, then we're not frightened to move capital around the group, which we've said many times. Jim, I'll you commented on it in your overview. Why don't you add anything to that that you want to?

Just a couple of things. In terms of the comment, I'd re-highlight what Scott had mentioned about us really being a specialty underwriter. So there's going to be times where we're not going to follow some of the more broad general trends across the market because we are writing very specialized risk when we're going in through here. We are working with people who are experts in their particular area. Again, we're not trying to do kind of the broad commoditized particular products that are in the market. We're really focused in the specialty areas, have, you know, requisite knowledge to do that. Again, we remain very price disciplined on that point.

The second thing that I would just call out, in terms of the broad kind of growth component, Scott highlighted kind of the change in the property cat down 31% on, you know, kind of a year-over-year basis. What you're seeing is as we have shifted, to more insurance, and especially the components in reinsurance, 'cause that would be the biggest component that would have a real seasonality trend to it within reinsurance. The book of business is now much less seasonally weighted, and so you're gonna see much more stability, in terms of what those gross written and those net written premiums are gonna be throughout the year.

What that means is some of that growth that you saw in the second half of last year, you're gonna continue to see that that has stabilized the net total of the book. You should be thinking about a much more even weight from a premium distribution perspective, at least relative to what we saw kind of based on Q1 kind of playing out through the remainder of the year.

Mike, look, I hope that gives you I know we give you a sort of pretty fulsome answer that covered more than GL, but hopefully that gives you a flavor on how we're thinking about overall growth, which is really strong in insurance, disciplined in reinsurance, and we expect it to sort of close year-over-year beyond the kind of key 1/1 property cat date for us. But disciplined in every respect and we'll move capital around. The great news is lots of opportunities and a strong pipeline. Mike, does that answer your question?

Yeah, sure does. Thanks both for the details. That's helpful. That's what I was getting at. The second question is maybe more on the modeling specifically, but it has higher level implications, I guess. In insurance because of the higher acquisition costs, 'cause your profitability. Your profitability is strong and likely gonna continue, I would think. Should we expect that higher acquisition cost to sort of continue over the foreseeable future?

Yeah. Look, Mike, it's a great question and we've tried to be explicit in it in the voiceover and stuff. The answer you may, you may not like isn't a perfect one, right? Which is sometimes it depends on what relationships, for example, come out through the prior years. It sort of depends. That and what I mean by that, to give it some color, is obviously if you've got sort of, you know, historical losses, then a prior year release wouldn't necessarily mean an automatic profit share accrual. If you've got prior year profits and then you add to that with prior year releases, then in effect, your accrual can go up.

We see that actually as a strength of the deal structures that we put in place, which I think we've talked about before, where, you know, it's not just sort of one year and done. Be really clear, these are accruals, they're not cash payments. It's one thing that we've been agonizing over sort of how we help through their disclosures, and I think we'll continue to be thoughtful with that. I don't think you can just purely take the PYD line and the acquisition line in quarter one and extrapolate it out 'cause there is a sophistication unfortunately on a partner by partner basis that sits behind that.

Not a great answer back to you, but I think you understand the strategic logic, which is the business is performing well and at a high level of ROE. We're at a point now where in the round PYD will mean more profit share accruals. It's not sort of exact science if that makes sense.

Mike, what I might add is I would generally, you know, we continue from a composite ratio to generally improve. Sometimes you got to add in that prior year development. If you're thinking about the prior year development in the insurance and services and some of the breakouts that we give you from a supplement perspective, you're seeing 3.3 points of prior year development, right? Then you're seeing a little bit of an offset there on that A&O component, right? Where we're paying out profit commissions in relation to that. When you look in total, right, and you add up those combined ratios to that, you continue to see about a year on a year-over-year basis, another 1 point improvement, right, from an underlying perspective.

We might have some geography elements that kind of come in up or down, right, relative to those areas. I would be thinking about it in terms of that net total and thinking about the equation being solved in total, right? Because if we have a little bit more favorability in prior year development or other in that segment, we might pay out a little bit more in profit commissions, as Scott said. Overall, we're seeing a continued trend of strong underwriting profit coming in through there.

Okay. No, thanks, Jim. That's helpful. Then maybe just lastly, a little more higher level. You've done some, I guess the phrase restructuring a bit recently to, in part to focus more on the Lloyd's market. I guess maybe just want to hear from you kind of, you know, what you expect to get out of that, the new focus of the London Market Specialty division that you created, when we might see some impact to what we model in the next couple of years, or is that too soon, you know, initial strategies there and expectations for longer term?

Very good question, Mike, again. Look, let me talk about this one. I see this as much more a strategic journey. Just because we've kind of relabeled it and relaunched it London Market Specialty, it doesn't mean it didn't exist in the organization, Mike, which I know you know, but I just want to reinforce for clarity. When I joined here sort of three years ago, I have to be frank, and I think I was upfront about it. Our Lloyd's syndicate and managing agent, we had to do some remediation work to improve our underwriting, improve our processes, and quite frankly, improve our sort of standing and reputation with Lloyd's.

Actually, in the recent sort of syndicate announcements, we've moved over those three years from sort of fourth quartile performance to now second quartile performance. We want to try and be first for that, but that's, I would say, look, demonstrable improvement. Actually, good timing in asking the question, Mike, which is we had our group board across in London this week, where actually we had a market event which was sort of relaunching London Market Specialty with much more of a profile now that we've sorted out the sort of some of the behind-the-scenes stuff. We were very lucky that Patrick Tiernan, the CEO of Lloyd's, actually joined us at the event as well, which actually sort of reaffirmed, you know, their commitment to us, our commitment to them.

I would say it's something that we find attractive as a marketplace because it's a huge specialty market. You know, not quite as big as the U.S., but not far off it. We think, you know, a U.S. specialty market and for me, a London Specialty Market, are very attractive strategically, and we think that diversification gives us an edge. Look, that's how we view it, Michael, strategically. Hopefully a bit of honesty there in terms of the journey we've been on. Part of the rebadging of it is us now pulling it out from slightly below the bed covers and giving it a profile that we think it now merits as opposed to when we were doing the remediation work. Does that help?

Hopefully, as if it starts to sort of snowball for us, we will of course give, we'll be very open about it and give disclosure on these calls. Hopefully that gives you a better flavor, Mike.

No, it certainly does. Yeah. Thanks, guys. That's all I have for now, so I appreciate you both and all the best.

Okay. Thank you, Mike. Appreciate the questions.

Thank you. Our next question comes from the line of Gregory Peters with Raymond James. Please proceed with your question.

Well, good morning or good afternoon. I'm not sure where you guys are. I think the first question would be, I know you're targeting, you know, this profitable, low profitability, low volatility type of result for the company. You know, listening to some of the other calls, it seems like war risk and political violence, it seems like those markets in the Middle East are on a tear, at least from a pricing perspective.

I'm not saying you're looking at that market, but when we hear anecdotally of certain markets where the rate is going up substantially, maybe you can talk to us a little bit about how you view that because, you know, some of those opportunities may, you know, be an intersection and work against the low volatility target you have in mind.

Hey, Greg, I think it's a great question. Thank you for your question. Just so you know where we are, we're in Zurich. Yeah. We've had a busy week. We dragged our group board from London to Zurich to visit our employees over here as well. That's where we are. It's good afternoon for us over here. Look, I think your point is a good one and it's sometimes the banner headline, low volatility is sometimes misunderstood. That does not mean we don't have higher volatility areas. You know, property cat is probably the most obvious one. P-PBT, I think you're right, is another one. It's just another form of cat to some extent.

You know, we are alive to where we see opportunity in the marketplace, and we're not afraid to take volatility. The lower volatility comment comes from how we manage the overall portfolio and effectively how we buy some of our sort of, you know, reinsurance, retro protection or aggregate covers, et cetera. We are not afraid to take volatility. You know, do I agree with what you've just said on PBT in terms of the rate and potentially there's good moments to get into markets with higher volatility? Yes, I do agree, right? I wouldn't rule that out for us. I think we'll manage it within an envelope overall of much lower volatility overall, which is how we manage the book.

Obviously things like A&H and the growth in A&H, which I've said many times before, when A&H grows, that effectively means we can take more volatility, yet somehow overall make sure that the portfolio remains at the same level of volatility pre the growth, if that isn't too wordy. Look, I think not afraid to do it. You know, if we do, we'll certainly tell you, not just in PBT, but in other areas. I don't want lower volatility to be misconstrued to us not taking risks, 'cause that would be wrong, right? Hopefully that clarifies it, Greg.

Yeah. Thanks. The other question I had is just coming at the MGA piece from a different angle. The angle is, you know, if you're an MGA in the marketplace in North America or elsewhere, it seems like you have a lot of different options at this moment in time on which carriers to partner up with. It seems like there's a number of companies out there that are willing to sponsor MGAs. Most of them say we only sponsor great MGAs, not the bad ones. I don't know how to figure that one out. From the perspective of as you're going through the process going forward of identifying other MGAs, just wondering how you win that narrative, because I'm sure if it's a good MGA, they have other alternatives that they can consider.

Yeah. Completely agree with you. We're not arrogant enough to say, "Oh, you know, they all come to us because we are the best." That's not true. There are certain lines of business, certain areas that we're really good at, Gregory, and there's others where quite frankly, they'll go and find other carriers. Some of it, I think, is product and expertise choice. I think though some of this is about behavioral choice as well. I think what people find when they come to us and they see our people, what they see is people who are sort of nimble, agile, quick responsive, are happy to kind of listen and work with our partners to try and work out what they're trying to do, whether that be around product flexibility, design, et cetera.

Those things matter because some people in the marketplace, you sort of get what's in the box, and if you don't like that, then you have to, you know, you have to walk on and find someone else. You know, equally, we don't win every single relationship that comes in. What I can say is this, and I keep reinforcing it, we've had double-digit growth in our insurance and MGA business now for, you know, the best part of 2 years. For us, therefore, that talks to we must be doing something right. The second thing is, which I mentioned actually in my overview, you know, we're very careful about who we work with.

To your point, you know, about bad MGAs or good MGAs or whatever phraseology people want to use, we don't think of it that way. We know the attributes that we're looking for and that's why we added the extra slide this quarter to try and give you a sense. It's not exhaustive, but hopefully tries to give you a sense as to how we think about the type of partners that we wanna work with. Then look, the final comment, which we're not in any way being egotistical, I promise you, but you don't win US Program Manager of the Year if actually you're not sort of doing the right things for your customers. Therefore that award for us, given our strategic focus, is really important.

Ultimately, we have to make money as well, and that's why Jim's comment earlier on about the continuing performance improvement in our insurance business is really important. We're not a charity. We're here to make money. That's why we love in our design that when we make money, when they make money, we make money. When we make money, they make money. We think that's a pretty smart design. They seem to like it. We like it. Our pipeline's strong. Honestly, for the rest of the year, we're feeling pretty upbeat about our sort of top line and bottom line performance.

Got it. The answers make sense. Thanks.

Thank you. Our next question comes from the line of Andrew Andersen with Jefferies. Please proceed with your question.

Hi, guys. Good afternoon. This is Charlie on for Andrew. I was just wondering if you guys could provide a little bit more color on the attritional loss trends that you're seeing in insurance lines, and whether you're seeing kind of early signs of changes in the spread of rate versus loss cost trend.

Yeah, no, thank you. Big picture-wise, what I would tell you is, we continue to see enhancement in our attritional. You're seeing a 30-40 basis point kind of net improvement. When you double-click underneath that, what you're seeing is about 1.2-1.3 points of mixed headwind that is being offset. When I say mixed headwind, that's not a negative component per se. When you bring down property cat, that tends to run at a much lower attritional loss ratio than some other It's being replaced by things that run at, you know, a higher potential attritional loss ratio, but at a very strong ROE perspective.

Even with that, though, we improved on a year-over-year basis, by about 40 basis points, and that's because of the continued underwriting enhancements in our selection and that we continue to bring to bear, as well as the insight that we share with our partners and others that help them to continue to underwrite, you know, at a really strong basis.

Okay, thanks. Just on the guide for the 6.5%-7% other underwriting expense, could you guys just talk a little bit about what the underlying levers to pull there are and what's kind of embedded in the outlook?

Yeah. When you think about, like, the quarter, there are a couple of things that I would point to. There's some positive things. There's a little bit of variable compensation that is in there because of our continued outperformance, you know, from a company perspective and from an underwriting perspective. A secondary component that is inside there is really just a timing element in terms of, you know, hiring and just kind of the net basis for when premium and other elements come on. When we think about where we're at, we were thinking we would be again in that 6.5%-7%. We're a little bit higher at that 7.2% range today.

Just the natural kind of growth of the business, the natural hiring elements and the seasonality that kind of comes with that, our internal view is we are expected to be lower in the second half of the year. You know, when you take those two things, that kind of averages out to, you know, we're going to be in a range of 6.5%-7% for the year. At least we remain pretty confident in that. There's nothing that's fundamentally changed from our underlying assumptions or levers that we have to pull to get there. It's just us continuing to be disciplined on our expense lines, which we will be and always are, and for us to continue to, you know, underwrite with where we're expected to be.

Charlie, look, it's Scott here. The other thing I'd add, and it's not for now, probably a later call, is we're investing in the organization and data transfer between ourselves and the MGAs. With a view of industrializing that process, we've already got about 10% of our MGAs on that, and obviously we're at the gremlin stage and making sure that it works properly. We do see both, you know, a huge advantage from a data and speed perspective. Ultimately linked to that, there will be, you know, cost advantages as well if you can sort of send, you know, claims, premium, underwriting data down pipes as opposed to having to sort of rekey it, et cetera. Those are topics for future calls.

Just to be very clear, we're making investments in the organization that we think can be a sort of a tailwind with regards to our cost ratio, and of course, will benefit from, you know, economies of scale like other people as we grow the business and have done over the past few years. Those would just be a couple additional points I would add to Jim's answer.

Great. Thank you.

Thank you. Our next question comes from the line of Timothy D'Agostino with B. Riley Securities. Please proceed with your question.

Yeah. Hi. Thanks for taking the questions today. Apologies if I stutter on any again. I'm joining a little bit late here. I guess in terms of, you know, returning capital to shareholders, obviously you guys have done a great job with prep buyback, you know, $42 million of common share repurchases and then increasing the share repurchase commitment by $74 million back to the fully authorized $174 million. I guess as we think towards the end of 2026, you know, are share buybacks, you know, the main kind of source and avenue of returning capital to shareholders? As we think to 2027 and 2028, if performance keeps up, I mean, have conversations of a potential dividend or special dividend come up?

Just understanding, you know, once you're kind of at the point where you feel your shares are adequately priced and you've done a bunch of share repurchases, does the dividend then become more in focus? Thank you.

No, thanks for your question, Tim. I'll kick off and Jim can jump in as well. Look, I think I would hope anyway that as we've gone through this journey, you could say we've returned a lot of capital to shareholders, and that includes obviously the very significant buying out of China Minsheng, et cetera, over time, as well as a couple of the things that you mentioned. I think just to be clear on our buyback. We obviously went through sort of the truing up of our year-end capital, and we thought given the strength of our balance sheet, that it was a real signal of strength to further increase that to our pre-authorization levels.

I think, and I'm looking at Jim, we've got about, as we sit here today, about 135 of that, in inverted commas, 174 left to deploy, just to give the people in the call a data point. Obviously, you know, that changes every day, but it gives you an order of magnitude in that regard. With regards to capital sort of deployment in the future, number 1, we always decide when we get there, not in advance. I would say look, we're pretty agnostic as to what the different mechanisms may be to return capital to shareholders. I think obviously we've focused on the buyback, given, you know, our valuation and share price. We think it's good use of capital and for shareholders.

I think ultimately as we mature, you know, we will engage with shareholders and investors over time. There's no sort of reason why if we wanted to do a dividend, we wouldn't do it or a special dividend, you know. I think all options are on the table, Tim, would be what I would describe. Ultimately, we've still got quite a lot of firepower to do in the buyback that we've just announced. Jim, anything you wanna add to that?

Yeah. Similar, just build on what you said, Scott. You know, we'll decide when we get there. When you think through kind of the levers that we looked at that point in time, one, we're looking at kind of the attractiveness of the insurance markets, our specialties, where pricing is relative to that and our expectations there. We start first and foremost with kind of making sure that we've got the right amount of capital reserved and deployed to there, where we see that profitability, you know, from an organic growth perspective. The second thing then becomes from an investment perspective, you know, how are valuations inside the market? What are other opportunities that we have to strengthen kind of the overall organization? You know, where do they sit from a return on capital perspective from that perspective.

If you see really strong opportunities, really strong returns, you know, we'll look to, you know, build and increase that value for our shareholders at that stage. If we don't see that, then we would look at the attractiveness from a market perspective, from buybacks, to dividends. You know, what we're committed to doing is the elements that are in the best interest of our shareholders, and ensuring that we execute very thoughtfully against that.

I think hopefully that gives you flexibility, Tim. Nothing on or off the table, but hopefully answers your question.

Yes, it does. I appreciate the color. If I could ask a second one. Just on the core specialty lines, I guess as you talk about, you know, growth and I look at maybe some of your smaller specialty lines, aviation, credit, marine and energy, kind of looking at slide 11. I guess could you maybe walk us through across maybe the smaller lines? Is there anything that's sticking out to you that's interesting in terms of pricing, whether that be, you know, by line such as aviation or credit or maybe by, you know, region being, you know, Europe, the U.S.? Just any more color on maybe those smaller specialty lines. Thank you.

Yeah. Look, I'll kick off and give a couple of higher level remarks and Jim jump in on the pricing and stuff like that. I think when we said on the full year results call aviation, we said, you know, we agreed that the market needed to price. I think, you know, Lloyd's had said that last year. We would agree with that. I don't think there's anyone who's in the aviation market that wouldn't say that it needed rates. We were really pleased in Q4, which is when we do our sort of major renewals on airlines, that we got sort of, you know, high double digit teens rate. That was really important for us.

I think for us in aviation, we've seen for us anyway, we've seen rates start to come back in, and we would expect that to emerge more in our top line as the year goes on, for obvious reasons. You know, but I think it still needs some more rate. We would expect to keep our foot down on aviation rates. The principles that I talked about earlier on of, you know, having reward for appropriate risk. I think in aviation there's still more to do, but I think Q4 for us was a good start. I think marine and energy, sort of, you know, different for us. I think marine in particular, and particularly in the London market, has softened and softened quickly. That said, therefore we're very selective.

Doesn't mean to say we can't find good risks and good opportunities, but we're very careful in the marine and energy book, given its price softening over the past sort of, you know, particular 12 months. As I say, look, we are finding pockets, but you know, we have to go looking for them. Look, I think credit for us, we've long established in credit, it's been a very profitable line for us. In fact, we had sort of prior year releases from our credit book in Q1. We're very cautious and careful and around sort of our reserving for credit.

I think, you know, for us, look, we just take a very prudent approach to our reserving on it, and we'd rather, you know, reserve prudently and then have PYD on our credit book. I would say our credit book is sort of small-ish, perfectly formed. We're not trying to sort of punch the lights out in terms of, you know, growth. If we see opportunities, we'll take it. You know, we're more in the sort of reinsurance space in credit as opposed to the primary space. Although we've just taken on some MGAs in the credit space as well, as we take those sort of first steps down that path. Smaller lines, each with their own dynamics. Hopefully that gives you, Tim, a little bit of color.

I promise you this, the size doesn't make any difference to the detail orientation and focus that we have. We've got deep specialists within the company who every single day wake up worrying and caring about those lines. Jim, I'm sure I've missed something else. Anything you wanna add?

Just build on inside the credit market as we highlight, we think it remains well-priced. Couple of areas I might call out underneath that might be trade credit, political risk, international mortgage. Again, we continue to be really prudent and disciplined there, but feel good about the shape of those markets. I might also highlight energy liability. We continue to see rate strength there, especially coming in through U.S. risk.

Hopefully that gives you a bit of color, Tim.

Yes, it definitely does. Thank you for taking the questions today.

Okay. Thank you. Appreciate your question.

Thank you. Just as a reminder, if anyone has any questions, you may press star one on your telephone keypad to join the queue. Our next question comes from the line of Michael Phillips with Oppenheimer. Please proceed with your question.

Yeah, thanks. Just a quick numbers question. Scott, when you mentioned the repayment premium on core moved it up to about 4% for gross. What would the impact?

Yeah.

if you could say on insurance?

It moved it from a into double-digit. Mike, look, what we didn't wanna do is sort of have lots of underlying numbers and stuff like that. I promise you the underlying performance of insurance and services in Q1, was double-digit and we expect it to be double-digit for the rest of the year. Hopefully that gives you the right message.

Yeah, that does. Okay, cool. Just wanna make sure. Thank you.

Okay. Thank you.

Thank you. We have reached the end of the question and answer session. Therefore, I'll turn the call back over to management for closing remarks.

Well, as always, thank you so much for joining the call. We do appreciate your questions as well. Look, I would say in summary, a good and strong first quarter. Again, the momentum that we have within the business is continuing and we are feeling in a very good position for the rest of the year. With that, I wish you all a good weekend, and we'll speak soon. Thank you very much.

Thank you. This concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.