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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-36052
SIRIUSPOINT LTD.
(Exact name of registrant as specified in its charter)
Bermuda 98-1599372
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
Point House
3 Waterloo Lane
Pembroke HM 08, Bermuda
+1 441 542-3300
(Address of Principal Executive Offices) (Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common Shares, $0.10 par value SPNT New York Stock Exchange
8.00% Resettable Fixed Rate Preference Shares,
 Series B, $0.10 par value,
$25.00 liquidation preference per share 		SPNT PRB New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    ☒    No    ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes    ☒    No    ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     ☐
As of November 1, 2021, the registrant had 161,935,588 common shares issued and outstanding.


SiriusPoint Ltd.
INDEX
Page
PART I. FINANCIAL INFORMATION
1
  Item 1. Financial Statements
1
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
55
  Item 3. Quantitative and Qualitative Disclosures About Market Risk
88
  Item 4. Controls and Procedures
89
PART II. OTHER INFORMATION
89
  Item 1. Legal Proceedings
90
  Item 1A. Risk Factors
90
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
90
  Item 3. Defaults Upon Senior Securities
90
  Item 4. Mine Safety Disclosures
90
  Item 5. Other Information
90
  Item 6. Exhibits
91


PART I - Financial Information
ITEM 1. Financial Statements
SIRIUSPOINT LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of September 30, 2021 and December 31, 2020
(expressed in millions of U.S. dollars, except per share and share amounts)
September 30,
2021 		December 31, 2020
Assets
Investments in related party investment funds, at fair value (cost - $891.9; 2020 - $891.9) $ 1,456.8  $ 1,055.6 
Debt securities, trading, at fair value (cost - $2,111.3; 2020 - $91.4) 2,100.9  101.3 
Short-term investments, at fair value (cost - $1,057.9; 2020 - N/A) 1,057.9  — 
Equity securities, trading, at fair value (cost - $4.9; 2020 - N/A) 3.4  — 
Other long-term investments, at fair value (cost - $400.7; 2020 - $4.0) 454.5  4.0 
Total investments 5,073.5  1,160.9 
Cash and cash equivalents 701.2  526.0 
Restricted cash and cash equivalents 1,482.3  1,187.9 
Due from brokers 51.4  94.9 
Interest and dividends receivable 8.6  0.9 
Insurance and reinsurance balances receivable, net 1,621.4  441.9 
Deferred acquisition costs, net and value of business acquired 220.2  68.6 
Unearned premiums ceded 248.3  20.5 
Loss and loss adjustment expenses recoverable, net 843.5  14.4 
Deferred tax asset 194.2  0.4 
Intangible assets 173.7  — 
Other assets 97.0  18.8 
Total assets $ 10,715.3  $ 3,535.2 
Liabilities
Loss and loss adjustment expense reserves $ 4,862.3  $ 1,310.1 
Unearned premium reserves 1,215.4  284.8 
Reinsurance balances payable 596.4  78.1 
Deposit liabilities 154.0  153.0 
Securities sold, not yet purchased, at fair value 2.9  12.0 
Due to brokers 9.6  — 
Accounts payable, accrued expenses and other liabilities 154.1  17.6 
Deferred tax liability 152.2  — 
Liability-classified capital instruments 103.4  — 
Debt 827.0  114.3 
Total liabilities 8,077.3  1,969.9 
Commitments and contingent liabilities
Shareholders’ equity
Series B preference shares (par value $0.10; authorized and issued: 8,000,000) 200.0  — 
Common shares (issued and outstanding: 161,949,037; 2020 - 95,582,733) 16.2  9.6 
Additional paid-in capital 1,654.3  933.9 
Retained earnings 767.8  620.4 
Accumulated other comprehensive loss (0.3) — 
Shareholders’ equity attributable to SiriusPoint shareholders 2,638.0  1,563.9 
Noncontrolling interests —  1.4 
Total shareholders’ equity 2,638.0  1,565.3 
Total liabilities, noncontrolling interests and shareholders’ equity $ 10,715.3  $ 3,535.2 
The accompanying Notes to the Condensed Consolidated Financial Statements are
an integral part of the Condensed Consolidated Financial Statements.

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SIRIUSPOINT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)
For the three and nine months ended September 30, 2021 and 2020
(expressed in millions of U.S. dollars, except per share and share amounts)
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Revenues
Net premiums earned $ 512.1  $ 141.7  $ 1,234.4  $ 428.9 
Net realized and unrealized investment gains (losses) (11.7) 7.0  43.7  54.6 
Net investment income from investments in related party investment funds 202.4  110.6  401.2  8.3 
Other net investment income 9.1  4.4  18.8  11.2 
Net investment income 199.8  122.0  463.7  74.1 
Other revenues 20.7  —  47.1  — 
Total revenues 732.6  263.7  1,745.2  503.0 
Expenses
Loss and loss adjustment expenses incurred, net 581.7  110.5  984.9  287.4 
Acquisition costs, net 106.9  54.8  281.5  147.7 
Other underwriting expenses 89.3  6.1  191.8  21.1 
Net corporate and other expenses 19.5  14.9  113.5  30.2 
Intangible asset amortization 2.0  —  4.1  — 
Interest expense 9.7  2.1  24.4  6.2 
Foreign exchange (gains) losses (16.1) 5.9  (16.5) (3.1)
Total expenses 793.0  194.3  1,583.7  489.5 
Income (loss) before income tax (expense) benefit (60.4) 69.4  161.5  13.5 
Income tax (expense) benefit 13.0  (0.7) (6.4) (4.4)
Net income (loss) (47.4) 68.7  155.1  9.1 
Net loss attributable to noncontrolling interests 3.4  —  1.8  — 
Net income (loss) available to SiriusPoint (44.0) 68.7  156.9  9.1 
Dividends on Series B preference shares (4.0) —  (9.5) — 
Net income (loss) available to SiriusPoint common shareholders $ (48.0) $ 68.7  $ 147.4  $ 9.1 
Earnings (loss) per share available to SiriusPoint common shareholders
Basic earnings (loss) per share available to SiriusPoint common shareholders $ (0.30) $ 0.74  $ 0.94  $ 0.10 
Diluted earnings (loss) per share available to SiriusPoint common shareholders $ (0.34) $ 0.73  $ 0.92  $ 0.10 
Weighted average number of common shares used in the determination of earnings (loss) per share
Basic 159,225,772  92,613,393  145,095,270  92,466,813 
Diluted 160,240,888  92,969,646  147,597,964  92,877,674 
The accompanying Notes to the Condensed Consolidated Financial Statements are
an integral part of the Condensed Consolidated Financial Statements.
    

2

SIRIUSPOINT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
For the three and nine months ended September 30, 2021 and 2020
(expressed in millions of U.S. dollars)

Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Comprehensive income (loss)
Net income (loss) $ (47.4) $ 68.7  $ 155.1  $ 9.1 
Other comprehensive loss
Change in foreign currency translation, net of tax (1.8) —  (0.3) — 
Total other comprehensive loss (1.8) —  (0.3) — 
Comprehensive income (loss) (49.2) 68.7  154.8  9.1 
Net loss attributable to noncontrolling interests 3.4  —  1.8  — 
Comprehensive income (loss) available to SiriusPoint $ (45.8) $ 68.7  $ 156.6  $ 9.1 
The accompanying Notes to the Condensed Consolidated Financial Statements are
an integral part of the Condensed Consolidated Financial Statements.

3

SIRIUSPOINT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
For the three and nine months ended September 30, 2021 and 2020
(expressed in millions of U.S. dollars)
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Series B preference shares
Balance, beginning of period $ 200.0  $ —  $ —  $ — 
Issuance of preference shares, net —  —  200.0  — 
Balance, end of period 200.0  —  200.0  — 
Common shares
Balance, beginning of period 16.2  9.5  9.6  9.4 
Issuance of common shares, net —  —  0.2  0.1 
Issuance of common shares for Sirius Group acquisition —  —  5.8  — 
Issuance of common shares to related party —  —  0.6  — 
Balance, end of period 16.2  9.5  16.2  9.5 
Additional paid-in capital
Balance, beginning of period 1,646.6  930.5  933.9  927.7 
Issuance of common shares, net —  —  65.7  (0.4)
Issuance of common shares for Sirius Group acquisition —  —  589.7  — 
Issuance of common shares to related party —  —  48.0  — 
Share compensation expense 7.7  1.5  17.0  4.7 
Balance, end of period 1,654.3  932.0  1,654.3  932.0 
Retained earnings
Balance, beginning of period 815.8  417.3  620.4  476.9 
Net income (loss) (47.4) 68.7  155.1  9.1 
Net loss attributable to noncontrolling interests 3.4  —  1.8  — 
Dividends on preference shares (4.0) —  (9.5) — 
Balance, end of period 767.8  486.0  767.8  486.0 
Accumulated other comprehensive income (loss)
Accumulated net foreign currency translation
Balance, beginning of period 1.5  —  —  — 
Net change in foreign currency translation (1.8) —  (0.3) — 
Balance, end of period (0.3) —  (0.3) — 
Shareholders’ equity attributable to SiriusPoint shareholders 2,638.0  1,427.5  2,638.0  1,427.5 
Noncontrolling interests —  1.0  —  1.0 
Total shareholders’ equity $ 2,638.0  $ 1,428.5  $ 2,638.0  $ 1,428.5 
The accompanying Notes to the Condensed Consolidated Financial Statements are
an integral part of the Condensed Consolidated Financial Statements.


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SIRIUSPOINT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended September 30, 2021 and 2020
(expressed in millions of U.S. dollars)
2021 2020
Operating activities
Net income $ 155.1  $ 9.1 
Adjustments to reconcile net income to net cash provided by operating activities:
Share compensation expense 17.0  4.7 
Net interest (income) expense on deposit liabilities 3.9  (0.1)
Net realized and unrealized gain on investments and derivatives (52.9) (56.8)
Net realized and unrealized gain on investment in related party investment funds (401.2) (8.3)
Net foreign exchange gains (16.5) (3.1)
Other revenues (47.1) — 
Gain from sale of consolidated subsidiary (5.8) — 
Amortization of premium and accretion of discount, net 9.4  (2.0)
Amortization of intangible assets 4.1  — 
Depreciation and other amortization 4.5  — 
Changes in assets and liabilities:
Insurance and reinsurance balances receivable 27.4  37.4 
Deferred acquisition costs, net and value of business acquired (3.7) 22.8 
Unearned premiums ceded (38.8) (9.7)
Loss and loss adjustment expenses recoverable (368.4) (8.1)
Deferred tax asset/liability (0.2) 4.3 
Other assets 63.6  (3.6)
Interest and dividends receivable, net 0.3  0.3 
Loss and loss adjustment expense reserves 626.1  77.8 
Unearned premium reserves 30.6  (50.2)
Reinsurance balances payable 130.1  36.6 
Accounts payable, accrued expenses and other liabilities (110.9) (5.8)
Net cash provided by operating activities 26.6  45.3 
Investing activities
Purchases of investments (2,275.1) (444.1)
Proceeds from sales and maturities of investments 1,995.0  441.6 
Purchases of investments to cover short sales (12.5) (0.1)
Proceeds from short sales of investments 4.7  15.7 
Change in due to/from brokers, net 45.5  (81.2)
Acquisition of Sirius Group, net (cash and restricted cash acquired of $740.3) 631.9  — 
Proceeds from sale of consolidated subsidiary, net of cash sold 20.5  — 
Net cash provided by (used in) investing activities 410.0  (68.1)
Financing activities
Proceeds from issuance of SiriusPoint common shares, net of costs 50.8  — 
Taxes paid on withholding shares (0.3) (0.3)
Cash dividends paid to preference shareholders (8.2) — 
Net payments on deposit liability contracts (9.4) (16.4)
Change in total noncontrolling interests, net 0.1  1.0 
Net cash provided by (used in) financing activities 33.0  (15.7)
Net increase (decrease) in cash, cash equivalents and restricted cash 469.6  (38.5)
Cash, cash equivalents and restricted cash at beginning of period 1,713.9  1,654.0 
Cash, cash equivalents and restricted cash at end of period $ 2,183.5  $ 1,615.5 
 The accompanying Notes to the Condensed Consolidated Financial Statements are
 an integral part of the Condensed Consolidated Financial Statements.

5

SiriusPoint Ltd.
Notes to the Condensed Consolidated Financial Statements (UNAUDITED)
(Expressed in United States Dollars)
1. Organization
SiriusPoint Ltd. (together with its consolidated subsidiaries, “SiriusPoint” or the “Company”) was incorporated under the laws of Bermuda on October 6, 2011. Through its subsidiaries, the Company is a provider of global multi-line reinsurance and insurance products. 
On February 26, 2021, the Company completed the acquisition of Sirius International Insurance Group, Ltd. (“Sirius” or “Sirius Group”) and changed its name from Third Point Reinsurance Ltd. to SiriusPoint Ltd. (“SiriusPoint”). The results of operations and cash flows of Sirius Group are included from the acquisition date of February 26, 2021 forward. All references to SiriusPoint throughout this Form 10-Q for periods prior to the acquisition date refer to legacy Third Point Reinsurance Ltd., unless otherwise indicated. For additional information, see Note 3 to our condensed consolidated financial statements.
On May 27, 2021, in connection with an internal reorganization, Sirius International Group, Ltd. (“SIG”), Sirius International Holdings Ltd. and Sirius International Insurance Group, Ltd., wholly-owned subsidiaries of the Company, merged with and into the Company, with the Company being the surviving entity. In addition, on May 27, 2021, Third Point Reinsurance Company Ltd. (“Third Point Re BDA”) merged with and into Sirius Bermuda Insurance Company Ltd. (“Sirius Bermuda”), with Sirius Bermuda being the surviving entity. Upon the effectiveness of the merger, Sirius Bermuda changed its name to SiriusPoint Bermuda Insurance Company Ltd. (“SiriusPoint Bermuda”). All references to SiriusPoint Bermuda for periods prior to the merger date refer to legacy Third Point Re BDA and Sirius Bermuda, unless otherwise indicated.
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 in Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual financial statements. In addition, the year-end condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. This Quarterly Report should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 23, 2021 (the “2020 Form 10-K”) and revised sections of the 2020 Form 10-K included in the Company’s Current Report on Form 8-K filed with the SEC on June 17, 2021.
In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of the Company’s financial position and results of operations as at the end of and for the periods presented. All significant intercompany accounts and transactions have been eliminated.
Effective January 1, 2021, the Company changed its reportable segments to: Accident & Health (“A&H”), Specialty, Property, and Runoff & Other. This reflects our larger and expanded operations subsequent to the acquisition of Sirius Group. The change in reportable segments had no impact on the Company’s historical consolidated financial positions, results of operations or cash flows as previously reported. Where applicable, all prior periods presented have been revised to conform to this new presentation.
The results for the nine months ended September 30, 2021 are not necessarily indicative of the results expected for the full calendar year.
Tabular amounts are in U.S. Dollars in millions, except share amounts, unless otherwise noted.
2. Significant accounting policies
Other than described below, there have been no material changes to the Company’s significant accounting policies as described in its 2020 Form 10-K.
Written premium recognition
Effective January 1, 2021, the Company changed its accounting policy for assumed written premium recognition. Previously, the Company estimated ultimate premium written for the entire contract period and recorded this estimate at inception of the
6



contract. For contracts where the full premium written was not estimable at inception, the Company recorded premium written for the portion of the contract period for which the amount was estimable.
The Company changed its accounting policy to recognize premiums written ratably over the term of the related policy or reinsurance treaty consistent with the timing of when the ceding company has recognized the written premiums. Premiums written include amounts reported by brokers and ceding companies, supplemented by the Company's own estimates of premiums where reports have not been received. The determination of premium estimates requires a review of the Company's experience with the ceding companies, managing general underwriters, familiarity with each market, the timing of the reported information, an analysis and understanding of the characteristics of each class of business and management's judgment of the impact of various factors, including premium or loss trends, on the volume of business written and ceded to the Company. On an ongoing basis, the Company's underwriters review the amounts reported by these third parties for reasonableness based on their experience and knowledge of the subject class of business, taking into account the Company's historical experience with the brokers or ceding companies.
The change in policy has been made because it is management’s opinion that the revised policy reflects the timing of when premiums are written by the cedent and reduces uncertainty regarding the assets and liabilities recorded.
The following tables provide a summary of the retrospective impact from the change in accounting policy on the Company’s condensed consolidated financial statements:
Condensed consolidated balance sheet
December 31, 2020
As previously reported Adjustment As adjusted
Insurance and reinsurance balances receivable, net $ 559.4  $ (117.5) $ 441.9 
Deferred acquisition costs, net and value of business acquired 134.3  (65.7) 68.6 
Unearned premiums ceded 27.7  (7.2) 20.5 
Total assets 3,725.6  (190.4) 3,535.2 
Reinsurance balances payable 80.4  (2.3) 78.1 
Unearned premium reserves 472.9  (188.1) 284.8 
Total liabilities 2,160.3  (190.4) 1,969.9 
Shareholders’ equity attributable to SiriusPoint common shareholders $ 1,563.9  $ —  $ 1,563.9 
Condensed consolidated statement of income (loss)
Three months ended September 30, 2020 Nine months ended September 30, 2020
As previously reported Adjustment As adjusted As previously reported Adjustment Restated amount
Gross premiums written $ 60.8  $ 63.9  $ 124.7  $ 422.5  $ (24.3) $ 398.2 
Gross premiums ceded 0.2  (8.5) (8.3) (30.0) 0.8  (29.2)
Net premiums written 61.0  55.4  116.4  392.5  (23.5) 369.0 
Change in net unearned premium reserves 80.7  (55.4) 25.3  36.4  23.5  59.9 
Net premiums earned $ 141.7  $ —  $ 141.7  $ 428.9  $ —  $ 428.9 
Net income available to SiriusPoint common shareholders $ 68.7  $ —  $ 68.7  $ 9.1  $ —  $ 9.1 
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Condensed consolidated statement of cash flows
Nine months ended September 30, 2020
As previously reported Adjustment As adjusted
Insurance and reinsurance balances receivable $ 22.9  $ 14.5  $ 37.4 
Deferred acquisition costs, net and value of business acquired 11.9  10.9  22.8 
Unearned premiums ceded (10.5) 0.8  (9.7)
Unearned premium reserves (25.9) (24.3) (50.2)
Reinsurance balances payable 38.5  (1.9) 36.6 
Net cash provided by operating activities $ 45.3  $ —  $ 45.3 
The change in accounting policy had no impact on the previously reported net income (loss) or shareholders’ equity attributable to SiriusPoint common shareholders.
While not part of the change in written premium accounting policy described above, premiums earned also include service fee revenue from the Company’s managing general underwriting (“MGU”) subsidiaries.
Business combinations and intangible assets
The Company accounts for business combinations in accordance with Accounting Standards Codification ("ASC") Topic 805 Business Combinations, and intangible assets that arise from business combinations in accordance with ASC Topic 350 Intangibles – Goodwill and Other.
The difference between the fair value of net assets acquired and the purchase price is recorded as a bargain purchase gain in other revenues in the condensed consolidated statements of income (loss).
Intangible assets arising from our business acquisitions are classified as either finite or indefinite-lived intangible assets. Finite-lived intangible assets are amortized over their useful lives with the amortization expense being recognized in the condensed consolidated statements of income (loss). The amortization periods approximate the period over which the Company expects to generate future net cash inflows from the use of these assets. All of these assets are subject to impairment testing for the impairment or disposal of long-lived assets when events or conditions indicate that the carrying value of an asset may not be fully recoverable from future cash flows. Indefinite-lived intangible assets are however not subject to amortization. The carrying values of intangible assets are reviewed for indicators of impairment at least annually. The Company initially evaluates indefinite-lived intangible assets using a qualitative approach to determine whether it is more likely than not that the fair value is greater than its carrying value. If the results of the qualitative evaluation indicate that it is more likely than not that the carrying value exceeds its fair value, the Company performs the quantitative test for impairment. If indefinite-lived intangible assets are impaired, such assets are written down to their fair values with the related expense recognized in the condensed consolidated statements of income (loss).
Liability-classified capital instruments
As part of the consideration transferred in the acquisition of Sirius Group, the Company issued various instruments that were classified as liabilities based on their terms, notably the settlement features for each and any potential adjustments to the exercise price for the warrants issued. Liability-classified capital instruments reported in the condensed consolidated balance sheets include Series A preference shares, Merger warrants, Private warrants, Sirius Group Public Warrants, Upside Rights and Contingent Value Rights. See Note 3 for additional information on each of these instruments. The liability-classified capital instruments are carried at fair value with changes in fair value included in other revenues in the condensed consolidated statements of income (loss).
Defined benefit plans
Certain SiriusPoint employees in Europe participate in defined benefit plans. The liability for the defined benefit plans that is reported on the condensed consolidated balance sheets is the current value of the defined benefit obligation at the end of the period, reduced by the fair value of the plan's assets, with adjustments for actuarial gains and losses. The defined benefit pension plan obligation is calculated annually by independent actuaries. The current value of the defined benefit obligation is determined through discounting of expected future cash flows, using interest rates determined by current market interest rates. The service costs and actuarial gains and losses on the defined benefit obligation and the fair value on the plan assets are recognized in the condensed consolidated statements of income (loss).
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Deferred software costs
The Company capitalizes costs related to computer software developed for internal use during the application development stage of software development projects. These costs generally consist of certain external, payroll, and payroll-related costs. The Company begins amortization of these costs once the project is completed and ready for its intended use. Amortization is on a straight-line basis and over a useful life of three to five years.
Loan participations
Loan participations that qualify for sale accounting under ASC Topic 860 Transfers and Servicing of Financial Assets, are carried at fair value. The fair value of loan participations is estimated using discounted cash flow analysis. The Company includes loan participations in other assets in the condensed consolidated balance sheets.
Foreign currency exchange
The U.S. dollar is the functional currency for the Company’s businesses except for the Canadian reinsurance operations of SiriusPoint America Insurance Company. The Company invests in securities denominated in foreign currencies. Assets and liabilities recorded in these foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, and revenues and expenses are translated using the average exchange rates for the period. Net foreign exchange gains and losses arising from the translation of functional currencies are reported in shareholders’ equity, in accumulated other comprehensive loss. As of September 30, 2021, the Company had net unrealized foreign currency translation losses of $0.3 million recorded in accumulated other comprehensive loss on its condensed consolidated balance sheet.
Assets and liabilities relating to foreign operations are translated into the functional currency using current exchange rates; revenues and expenses are remeasured into the functional currency using the average exchange rate for the period. The resulting exchange gains and losses are reported as a component of net income (loss) in the period in which they arise within net realized and unrealized gains (losses) and net foreign exchange gains (losses).
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no impact on the previously reported net income (loss) or shareholders’ equity attributable to SiriusPoint common shareholders.
Short-term investments
The Company previously included short-term investments within debt securities on the condensed consolidated balance sheets. As a result of the acquisition of Sirius Group, these balances have significantly grown and are now disclosed as a separate line item in the condensed consolidated balance sheets in accordance with Rule 7-03 of Regulation S-X. Short-term investments consist of U.S. treasury bills, certificates of deposit and other securities, which, at the time of purchase, mature within a period of greater than three months but less than one year. This balance sheet reclassification had no impact on the previously reported total investments, total assets or shareholders’ equity attributable to SiriusPoint common shareholders.
Recently issued accounting standards
Issued and effective as of September 30, 2021
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company has fully adopted all provisions of the guidance with consideration of the various transition methods. The Company also adopted all other provisions in the guidance, including the requirement for an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax through a cumulative-effect adjustment to retained earnings. These provisions did not have a material impact on the Company’s condensed consolidated financial statements or were not applicable to the Company.
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In January 2020, the FASB issued Accounting Standards Update 2020-01, Investments—Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) (“ASU 2020-01”). The amendments in ASU 2020-01 clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the guidance in Topic 815, which could change how an entity accounts for an equity security under the measurement alternative for a forward contract or purchased option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance with Topic 825, Financial Instruments. These amendments improve current U.S. GAAP by reducing diversity in practice and increasing comparability of the accounting for these interactions. ASU 2020-01 is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Adoption of ASU 2020-01 did not have a material impact on the Company’s condensed consolidated financial statements.
In October 2020, the FASB issued Accounting Standards Update 2020-09, Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762 (“ASU 2020-09”). The amendments in ASU 2020-09 amend and supersede SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Release No. 33-10762 related to financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities and affiliates whose securities are pledged as collateral for registered securities. SEC Release No. 33-10762 simplifies the disclosure requirements related to certain registered securities under Rules 3-10 and 3-16 of Regulation S-X, permitting registrants to provide certain alternative financial disclosures and non-financial disclosures in lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities if certain conditions are met. The amendments in ASU 2020-09 are generally effective for filings on or after January 4, 2021, with early application permitted. The Company adopted the new disclosure requirements permitted under ASU 2020-09 effective for the quarter ended March 31, 2021.
Issued but not yet effective as of September 30, 2021
In May 2021, the FASB issued Accounting Standards Update 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). The amendments in ASU 2021-04 affect all entities that issue freestanding written call options that are classified in equity. Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange. ASU 2021-04 is effective for public business entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. This new pronouncement is not expected to have a material impact on the Company’s condensed consolidated financial statements.
Other accounting pronouncements issued during the nine months ended September 30, 2021 were either not relevant to the Company or did not impact the Company’s condensed consolidated financial statements.
3. Acquisition of Sirius Group
Overview
On February 26, 2021, the Company completed its acquisition of Sirius Group. Prior to the closing of the acquisition, Sirius Group was a publicly listed company and traded on the Nasdaq Global Select Market under the symbol “SG”. Sirius Group, through its wholly owned subsidiaries, provides multi-line insurance and reinsurance on a worldwide basis. The acquisition of Sirius Group is expected to benefit the Company through expanded underwriting capabilities, geographic footprint and product offerings.
Pursuant to the terms of the acquisition, each common share, par value $0.01 per share, of Sirius Group (each, a “Sirius Share”) that was issued and outstanding immediately prior to the closing date of the acquisition was canceled and converted into the right to receive one of the following three consideration options at the shareholder’s election:
•$9.50 in cash;
•a combination of common shares, par value $0.10 per share, of the Company (“Company shares”), and CVR consideration comprising (1) 0.743 of a Company share and (2) one contractual contingent value right (each, a “CVR”), which represents the right to receive a contingent cash payment, which, taken together with the fraction of the Company share received, guarantee that on the second anniversary of the acquisition, the electing shareholder will have received equity and cash valued at least $13.73 per Sirius Share; should SiriusPoint shares trade at or
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above $18.50 over any 14 consecutive trading day period up to the second anniversary of the acquisition, the CVR component will be automatically extinguished (4.7 million CVRs were issued under this consideration option); or
•a combination of cash, Company shares, Series A preference shares, warrants and Upside Rights (a “Mixed Election”) comprising (1) $0.905 in cash, (2) 0.496 Company shares, (3) 0.106 Series A preference shares, par value $0.10 per share, of the Company (the “Series A preference shares”), (4) 0.190 of a warrant (each, a “Merger warrant”) and (5) $0.905 aggregate principal amount of an “upside right” issued by the Company (collectively, the “Upside Rights”). Pursuant to the Company Voting and Support Agreement, CM Bermuda Limited (“CM Bermuda”), whose parent company is CMIG International Holdings Pte. Ltd. (“CMIG International”), made the Mixed Election.
The aggregate consideration for the transaction included the issuance of 58,331,196 SiriusPoint common shares valued at $595.6 million and $100.4 million of cash. In addition to the SiriusPoint common shares and the cash, the aggregate consideration for the transaction also consisted of the issuance of preference shares, warrants, and other contingent value components, as discussed below. The cash consideration portion was funded from available cash resources and $48.6 million from the issuance of SiriusPoint common shares pursuant to the equity commitment letter between the Company, Third Point Opportunities Master Fund Ltd. and Daniel S. Loeb, pursuant to which Third Point Opportunities Master Fund Ltd. committed to purchase up to 9.5% of the Company’s shares in connection with closing of the acquisition of Sirius Group.
Series A Preference Shares
On February 26, 2021, certain holders of Sirius Group shares elected to receive Series A preference shares with respect to the consideration price of the Sirius Group acquisition. The Company issued 11,720,987 of designated Series A preference shares, with a par value of $0.10 per share. The Series A preference shares rank pari passu with the Company’s common shares with respect to the payment of dividends or distributions. Each Series A preference share has voting power equal to the number of Company shares into which it is convertible, and the Series A preference shares and Company shares shall vote together as a single class with respect to any and all matters.
During the nine months ended September 30, 2021, the Company did not declare or pay dividends to Series A preference shareholders.
Upon the third anniversary of the closing date of the Sirius Group acquisition, as described in the Series A Certificate of Designation and pursuant to the analysis of an independent actuarial team, the Company will calculate the total amount of Third Point Reinsurance Ltd.’s (“TPRE”) COVID-19 losses in excess of $51.1 million (the “TPRE Net COVID Loss”) and the total amount of Sirius Group’s COVID-19 losses in excess of $150.0 million (the “Sirius Net COVID Loss”). If TPRE’s COVID-19 losses are less than or equal to $51.1 million, the TPRE Net COVID Loss will equal $0, and if Sirius Group’s COVID-19 losses are less than or equal to $150.0 million, the Sirius Net COVID Loss will equal $0. Should the Sirius Net COVID Loss be greater than the TPRE Net COVID Loss, then a number of Series A preference shares will be forfeited equal to (x) the lesser of (i) the Sirius Net COVID Loss minus the TPRE Net COVID Loss and (ii) $100.0 million divided by (y) the volume weighted average price (“VWAP”) measured over the 30 business day (where normal trading occurs on U.S. national and regional exchanges) (“Trading Day”) period prior to the date five business days after the calculation of the TPRE Net COVID Loss and Sirius Net COVID Loss (the “Final Adjustment Determination Date”). Should the TPRE Net COVID Loss be greater than the Sirius Net COVID Loss, then a number of Series A preference shares will be issued equal to (x) the TPRE Net COVID Loss minus the Sirius Net COVID Loss divided by (y) the 30-Trading Day VWAP during the period prior to the Final Adjustment Determination Date. After either such adjustment occurs, the Series A preference shares will convert into common shares based on the conversion ratio of one Series A preference share to one common share, subject to the adjustment as set forth in the Series A Certificate of Designation.
Series A preference shares are recorded at fair value in the liability-classified capital instruments line of the condensed consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recorded gains of $7.2 million and $9.6 million, respectively, from the change in fair value of the Series A preference shares. As of September 30, 2021, the fair value of the Series A preference shares is estimated to be $31.2 million.
Merger Warrants
On February 26, 2021, the Company entered into a warrant agreement (the “Warrant Agreement”) with respect to the consideration price of the Sirius Group acquisition. Pursuant to the Warrant Agreement, each warrant (“Merger warrant”) permits the holder thereof to purchase one common share for $11.00, subject to adjustment as set forth in the Warrant Agreement. The warrants are exercisable at any time after February 26, 2021 through the fifth anniversary of the closing date
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of the acquisition of Sirius Group. If the warrants are not exercised prior to the fifth anniversary, the warrants will expire without value. As of September 30, 2021, the Company had reserved for issuance common shares underlying warrants to purchase, in the aggregate, up to 21,009,324 common shares, to previous Sirius Group common shareholders.
The Merger warrants are recorded at fair value in the liability-classified capital instruments line of the condensed consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recorded gains of $10.3 million and $13.3 million, respectively, from the change in fair value of the Merger warrants. As of September 30, 2021, the estimated fair value of the Merger warrants is $40.1 million.
Sirius Group Private Warrants
On February 26, 2021, the Company entered into an assumption agreement (the “Assumption Agreement”) by and among (i) the Company, (ii) Bain Capital Special Situations Asia, L.P., a Cayman Islands limited partnership (“Bain”), (iii) CCOF Master, L.P., a Delaware limited partnership (“Carlyle”), (iv) Centerbridge Credit Partners Master, LP, a Delaware limited partnership, and Centerbridge Special Credit Partners III, LP, a Delaware limited partnership (collectively, “Centerbridge”), and (v) GPC Partners Investments (Canis) LP, a Delaware limited partnership (“Gallatin” and, together with Bain, Carlyle and Centerbridge, collectively, the “Sirius Warrant Holders”). Pursuant to the terms of the Assumption Agreement, the Company agreed to assume all of the warrants issued on November 5, 2018 and November 28, 2018 (the “Private warrants”) by Sirius Group to the Sirius Warrant Holders.
Prior to February 26, 2021, the Private warrants were exercisable for an aggregate of 5,418,434 Sirius Group shares. On February 26, 2021, each Private warrant ceased to represent the right to purchase Sirius Group shares and each Sirius Warrant Holder was instead granted the right to receive, upon exercise of a Private warrant, a contingent cash payment which, taken together with the fraction of the Company common share received, guarantees that on the second anniversary of February 26, 2021, the electing shareholder will have received equity and cash valued at least $13.73 per Private warrant. The exercise price was also adjusted in accordance with the terms of the merger and the Private warrants to $13.00.
The Private warrants are recorded at fair value in the liability-classified capital instruments line of the condensed consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recorded gains of $1.9 million and $2.9 million, respectively, from the change in fair value of the Private warrants. As of September 30, 2021, the estimated fair value of the Private warrants is $4.4 million.
Sirius Group Public Warrants
Under the merger agreement between Sirius Group and Easterly Acquisition Corporation, each of Easterly’s existing issued and outstanding public warrants was converted into a warrant exercisable for Sirius Group common shares (“Sirius Group Public Warrants”). From February 26, 2021, holders of the Sirius Group Public Warrants have the right to receive the merger consideration that the holder of the Sirius Group Public Warrants would have received if such holder had exercised his, her or its warrants immediately prior to February 26, 2021. Because the exercise price of such Sirius Group Public Warrants of $18.89 was greater than the per share merger consideration, no such warrants were exercised prior to the completion of the merger and therefore no merger consideration was paid to holders of such warrants. The Sirius Group Public Warrants are no longer listed on any public exchange and will terminate in accordance with their terms.
The Sirius Group Public Warrants are recorded at fair value in the liability-classified capital instruments line of the condensed consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recorded gains of $1.0 million from the change in fair value of the Sirius Group Public Warrants. As of September 30, 2021, the estimated fair value of the Sirius Group Public Warrants is $1.6 million.
Upside Rights
On February 26, 2021, the Company issued Upside Rights with respect to the consideration price of the Sirius Group acquisition. Pursuant to the Upside Rights, if (i) the last reported sales price of the Company’s common shares for each of 30 consecutive trading days exceeds the target price of $20.00 (the “Target Price”), subject to adjustment, prior to the first anniversary of February 26, 2021, or (ii) the Company enters into a definitive agreement to consummate a change of control transaction and the per share consideration in such transaction exceeds the Target Price, the principal amount of the Upside Rights will become immediately due and payable. Settlement of the Upside Rights will be in a number of Company common shares equal to $100,070,726 divided by the Company’s average share price determined using a 30-day VWAP, or in the case of a change of control transaction, the lesser of the per share consideration being offered in such change of control transaction and the Company’s average share price determined using a 30-day VWAP.
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The Upside Rights are recorded at fair value in the liability-classified capital instruments line of the condensed consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recorded gains of $1.6 million and $6.5 million, respectively, from the change in fair value of the Upside Rights. As of September 30, 2021, the estimated fair value of the Upside Rights is $nil.
Contingent Value Rights
On February 26, 2021, the Company entered into a contingent value rights agreement (the “CVR Agreement”) with respect to the consideration price of the Sirius Group acquisition. Pursuant to the CVR Agreement, the Company issued CVRs representing the right to receive a contingent cash payment of (1) in the case of acceleration upon certain breaches of the CVR Agreement, $13.73 minus the VWAP of the Company shares measured over the 14 consecutive trading day period beginning on the date a breach is declared, multiplied by 0.743, (2) on the second anniversary (the “Maturity Date”) of the merger, $13.73 minus the VWAP of the Company’s common shares measured over the 14 consecutive trading day period prior to the Maturity Date multiplied by 0.743 and (3) in the case of redemption by the Company prior to the Maturity Date, the discounted present value of $13.73, discounted from the Maturity Date to the last day of the 14 consecutive trading day period beginning on the date of the redemption notice (“Redemption Valuation Period”), minus the VWAP of the Company shares measured over the Redemption Valuation Period multiplied by 0.743.
The CVRs are recorded at fair value in the liability-classified capital instruments line of the condensed consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recorded losses of $3.2 million and gains of $0.9 million, respectively, from the change in fair value of the CVRs. As of September 30, 2021, the fair value of the CVRs is $26.1 million. The CVRs became publicly traded on the OTCQX Best Market during the quarter ended June 30, 2021.
Purchase Price
The components of the Company's total purchase price for Sirius Group at February 26, 2021 were as follows:
Cash consideration
Sirius Group shares acquired for cash $ 100.4 
Common Shares
Common Shares issued by SiriusPoint 58,331,196 
SiriusPoint share price as of February 26, 2021 $ 10.21  595.6 
Preference Shares
Series A Preference Shares issued, at fair value 40.8 
Series B Preference Shares issued, at fair value (1)
200.0 
Warrants
Merger warrants issued, at fair value 53.4 
Private warrants issued, at fair value 7.3 
Sirius Group Public Warrants, at fair value 2.6 
Upside Rights
Upside Rights issued, at fair value 6.5 
Contingent value rights (CVRs)
CVRs issued, at fair value 27.0 
CVR waiver restricted shares 0.7 
Other
Fair value of the replaced Sirius Group equity awards attributable to pre-combination services 37.5 
Transaction fee reimbursement 8.0 
Total purchase price $ 1,079.8 
(1)See Note 17 for additional information.
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Fair Value of Net Assets Acquired and Liabilities Assumed
The following table summarizes the estimated fair values of major classes of identifiable assets acquired and liabilities assumed of Sirius Group as of February 26, 2021, the date the transaction closed:
Identifiable net assets:
     Cash and investments $ 3,944.1 
     Insurance and reinsurance balances receivable, net 1,201.0 
     Reinsurance assets 649.7 
     Value of business acquired 147.9 
     Deferred tax asset 228.0 
     Intangible assets 178.8 
     Other assets 181.9 
     Loss and loss adjustment expense reserves (2,928.5)
     Unearned premium reserves (900.0)
     Deferred tax liability (186.8)
     Debt (728.2)
     Other liabilities (695.2)
Total identifiable net assets acquired 1,092.7 
Total purchase price 1,079.8 
Bargain purchase gain $ 12.9 
The bargain purchase gain represents the excess of the fair value of the underlying net assets acquired and liabilities assumed over the purchase price. The gain from bargain purchase is included in other revenues in the condensed consolidated statements of income (loss). The bargain purchase determination is consistent with the fact that Sirius Group’s shares traded at a discount to book value and the need for Sirius Group to quickly diversify its ownership base.
An explanation of the significant fair value adjustments is as follows:
•Goodwill and intangibles - to eliminate the goodwill and intangible assets in Sirius Group net assets acquired as part of the purchase accounting;
•Loss and loss adjustment expense reserves - to record loss and loss adjustment expense reserves at fair value, reflecting an increase for a market based risk margin, which represents the cost of capital required by a market participant to assume the loss and loss adjustment expense reserves of Sirius Group, partially offset by a deduction which represents the discount due to the present value calculation of the loss and loss adjustment expense reserves based on the expected payout of the net unpaid loss and loss adjustment expense reserves. In addition, management increased certain casualty loss reserves by $70.0 million in order to reflect a consistent reserving approach between the two companies. The increase was in response to accumulated loss experience and the broader industry trends of social inflation;
•Deferred acquisition costs - to eliminate Sirius Group’s deferred acquisition costs asset;
•Value of business acquired (“VOBA”) - the expected future losses and expenses associated with the policies and contracts that were in-force as of the closing date of the transaction were estimated and compared to the future premium remaining expected to be earned. The difference between the risk-adjusted future loss and expenses, discounted to present value and the unearned premium reserve, was estimated to be the VOBA;
•Finite-lived insurance intangible assets - to establish the fair value of identifiable finite-lived insurance intangible assets acquired, including customer and other relationships, trade names and technology. The Company recognized identifiable finite lived intangible assets of $130.0 million, which will be amortized over their estimated useful lives;
•Indefinite-lived insurance intangible assets - to establish the fair value of identifiable indefinite-lived insurance intangible assets acquired (Lloyd’s capacity and insurance licenses). The Company recognized identifiable indefinite lived intangible assets of $48.8 million; and
•Deferred tax - to reflect adjustments to net deferred tax assets and liabilities related to the fair value adjustments above.
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Identifiable intangible assets at February 26, 2021 and at September 30, 2021, consisted of the following, and are included in intangible assets on the Company’s condensed consolidated balance sheet:
Amount Economic Useful Life
Distribution relationships $ 75.0  17 years
MGA relationships 34.0  13 years
Lloyd’s Capacity - Syndicate 1945 41.8  Indefinite
Insurance licenses 7.0  Indefinite
Trade name 16.0  16 years
Internally developed and used computer software 5.0  5 years
Identifiable intangible assets, before amortization, at February 26, 2021 178.8 
Insurance licenses sold (1)
(1.0)
Amortization (from February 26, 2021 through September 30, 2021)
(4.1)
Net identifiable intangible assets at September 30, 2021 related to the acquisition of Sirius Group
$ 173.7 
(1)See Note 4 for additional information.
An explanation of the identifiable intangible assets is as follows:
•Distribution relationships - refers to the relationships Sirius Group has established with external independent distributors and brokers to facilitate the distribution of its products in the marketplace. As a result of owning the distribution relationships, management will not have to duplicate historical marketing, training, and start-up expenses to redevelop comparable relationships to support business operations;
•MGA relationships - refers to relationships with managing general agents on the direct insurance business. Through the MGA relationships, Sirius Group generates a predictable and recurring stream of service fee revenue;
•Lloyd’s Capacity - Syndicate 1945 - relates to relationships associated with the right to distribute and market policies underwritten through Lloyd’s Syndicate 1945;
•Insurance licenses - Sirius Group, like other insurance providers, is required to maintain licenses to produce and service insurance contracts. Insurance licenses are estimated to have an indefinite life and are therefore not amortized but will be subject to periodic impairment testing;
•Trade name - represents the value of the Sirius Group brand acquired; and
•Internally developed and used computer software - represents the value of internally developed and used computer software to be utilized by the Company.
Financial results
The following table summarizes the results of Sirius Group since February 26, 2021 that have been included in the Company's condensed consolidated statements of income:
Three months ended September 30, 2021
For the period from
February 26, 2021 to September 30, 2021
Total revenues $ 396.9  $ 933.4 
Net loss $ (242.9) $ (161.5)
Supplemental Pro Forma Information
Sirius Group’s results have been included in the Company's condensed consolidated financial statements from February 26, 2021 to September 30, 2021. The following table presents unaudited pro forma consolidated financial information for the three and nine months ended September 30, 2021 and 2020 and assumes the acquisition of Sirius Group occurred on January 1, 2020. The unaudited pro forma consolidated financial information is provided for informational purposes only and is not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transaction been completed as of January 1, 2020 or that may be achieved in the future. The unaudited pro forma consolidated financial information does not give consideration to the impact of possible revenue enhancements, expense efficiencies, synergies or asset dispositions that may result from the acquisition of Sirius Group. In addition, unaudited pro forma consolidated financial information does not include the effects of costs associated with any restructuring or integration activities resulting from the acquisition of Sirius Group, as such costs cannot be determined at this time.
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Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Total revenues $ 732.6  $ 681.2  $ 1,958.8  $ 1,760.1 
Net income (loss) $ (47.8) $ (16.2) $ 187.7  $ (338.7)
Among other adjustments, and in addition to the fair value adjustments and recognition of identifiable intangible assets noted above, other material nonrecurring pro forma adjustments directly attributable to the acquisition of Sirius Group principally included certain adjustments to recognize transaction related costs, align reserving approach, amortize fair value adjustments, amortize identifiable indefinite lived intangible assets and recognize related tax impacts.
4. Significant transactions
Cedar Insurance Company
On August 5, 2021, the Company sold 100% of the common shares of Cedar Insurance Company (“Cedar”) to Grandview Risk Holdings Ltd. Cedar is a New York-domiciled insurer with a run-off book of business mainly comprised of the following lines of business: general liability, educators’ legal liability, automobile liability and physical damage, property and excess catastrophe liability. The Company received $20.5 million of proceeds and recognized a $5.8 million gain from the sale, which is included in net corporate and other expenses in the condensed consolidated statements of income (loss). As part of the sale of Cedar, the Company disposed of $1.0 million of insurance licenses related to the indefinite-lived intangible assets recognized as part of the Sirius Group acquisition.
5. Segment reporting
The determination of the Company’s business segments is based on the manner in which management monitors the performance of its operations. The Company reports four operating segments: Accident & Health (“A&H”), Specialty, Property, and Runoff & Other. Non-underwriting income and expenses are presented as a reconciliation to the Company’s income (loss) before income tax expense (benefit). The Company does not manage its assets by segment; accordingly, total assets are not allocated to the segments.
Accident & Health (“A&H”)
A&H consists of the Company’s insurance, reinsurance, and wholly-owned MGUs (which include ArmadaCorp Capital, LLC ("Armada") and International Medical Group, Inc. (“IMG”) that offer accident and health products on a worldwide basis):
Accident and Health insurance and reinsurance
The Company is an insurer of accident and health insurance business in the United States and internationally, on either an admitted or surplus lines basis, as well as a reinsurer of medical expense, travel and personal accident on a treaty or facultative basis worldwide. The MGU unit writes health insurance business worldwide through IMG and within the United States via Armada.
Specialty
Specialty consists of the Company’s insurance and reinsurance underwriting units which offer specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten, and much of the market is characterized by a high degree of specialization. The following provides details of Specialty by product line:
Aviation & Space
Aviation insurance covers loss of or damage to an aircraft and the aircraft operations' liability to passengers, cargo and hull as well as to third parties. Additionally, liability arising out of non-aircraft operations such as hangars, airports and aircraft products can be covered. Space insurance primarily covers loss of or damage to a satellite during launch and in orbit. The book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business.
Marine & Energy
The Company provides marine & energy reinsurance, primarily written on an excess of loss and proportional basis. Coverage offered includes damage to ships and goods in transit, marine liability lines, and offshore energy industry insurance. The
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Company also writes yacht business, both on reinsurance and a primary basis. The marine & energy portfolio is diversified across many countries and regions.
Credit
The Company writes credit and bond reinsurance worldwide. The bulk of the business is traditional short-term commercial credit insurance, covering pre-agreed domestic and export sales of goods and services with typical coverage periods of 60 to 120 days. Losses under these policies are correlated to adverse changes in a respective country's gross national product.
Contingency
The Company’s contingency insurance book covers event cancellation and non-appearance. The Company offers this class on a treaty reinsurance basis on a selective basis for a few key clients.
Casualty
Casualty represents a cross section of all casualty lines, including general liability, umbrella, auto, workers compensation, professional liability, and other specialty classes, written on a proportional and excess of loss basis.
Environmental
The Company underwrites a pure environmental insurance book in the U.S. consisting of four core products that revolve around pollution coverage, which are premises pollution liability, contractor's pollution liability, contractor's pollution and professional liability.
Mortgage
The Company underwrites mortgage risks both as reinsurance and by retrocession. Mortgage insurance is an insurance policy that compensates lenders or investors for losses arising from the default of a mortgage loan. Mortgage insurance can refer to private mortgage insurance, mortgage life insurance or insurance provided under the credit risk sharing transactions from Fannie Mae and Freddie Mac.
Property
Property consists of the Company’s underwriting lines of business which offer Property Catastrophe Excess Reinsurance, Agriculture Reinsurance and Property Risk and Pro Rata on a worldwide basis. The following provides details of Property by product line:
Property Catastrophe Excess Reinsurance
Property catastrophe excess of loss reinsurance treaties cover losses from catastrophic events. The Company writes a worldwide book with the largest concentration of exposure in Europe and the United States. The U.S. book has a national account focus supporting principally the lower and/or middle layers of large capacity programs and also consists of select small regional and standard lines carriers. The exposures written in the international book are diversified across many countries, regions, perils and layers.
Agriculture Reinsurance
The Company provides stop-loss reinsurance coverage to companies writing U.S. government-sponsored multi-peril crop insurance ("MPCI"). The Company’s participation is net of the government's stop-loss reinsurance protection. The Company also provides coverage for crop-hail and certain named perils when bundled with MPCI business. The Company also writes agriculture business outside of the United States.
Property Risk and Pro Rata
The Company participates in the broker market for property reinsurance treaties written on a proportional and excess of loss basis. For the Company’s international business, the book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business, primarily in Europe, Asia and Latin America. In the United States, the book predominantly centers on significant participations on proportional and excess of loss treaties mostly in the excess and surplus lines of the market.
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Runoff & Other
Runoff & Other consists of asbestos risks, environmental risks and other long-tailed liability exposures, and results from SiriusPoint Global Solutions, including the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the United States and internationally. Runoff & Other also includes retroactive reinsurance contracts consisting of loss portfolio transfers, adverse development covers and other forms of reserve reinsurance providing indemnification of loss and loss adjustment expense reserves with respect to past loss events. See Note 24 for additional information.
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The following is a summary of the Company’s operating segment results for the three and nine months ended September 30, 2021 and 2020:
Three months ended September 30, 2021
A&H Specialty Property Runoff &
Other 		Total
Gross premiums written (1)
$ 118.1  $ 350.9  $ 182.0  $ 2.7  $ 653.7 
Net premiums written (1)
88.4  306.8  91.0  5.1  491.3 
Net premiums earned (1)
111.7  240.6  150.8  9.0  512.1 
Loss and loss adjustment expenses incurred, net (2)
55.8  155.6  362.5  7.8  581.7 
Acquisition costs, net 10.5  65.8  30.9  (0.3) 106.9 
Other underwriting expenses (2)
30.2  25.6  22.1  11.4  89.3 
Net underwriting income (loss) $ 15.2  $ (6.4) $ (264.7) $ (9.9) (265.8)
Other revenues 20.7 
Net investment income 199.8 
Net corporate and other expenses (19.5)
Intangible asset amortization (2.0)
Interest expense (9.7)
Foreign exchange gains 16.1 
Loss before income tax benefit $ (60.4)
Underwriting Ratios: (3)
Loss ratio 50.0  % 64.7  % 240.4  % NM 113.6  %
Acquisition cost ratio 9.4  % 27.3  % 20.5  % NM 20.9  %
Other underwriting expenses ratio 27.0  % 10.6  % 14.7  % NM 17.4  %
Combined ratio (4)
86.4  % 102.6  % 275.6  % NM 151.9  %
Three months ended September 30, 2020
A&H Specialty Property Runoff &
Other 		Total
Gross premiums written (1)
$ 0.2  $ 79.0  $ 42.6  $ 2.9  $ 124.7 
Net premiums written (1)
0.2  76.7  36.6  2.9  116.4 
Net premiums earned (1)
0.6  87.7  49.8  3.6  141.7 
Loss and loss adjustment expenses incurred, net (2)
0.4  67.9  62.2  (20.0) 110.5 
Acquisition costs, net 0.1  18.0  13.0  23.7  54.8 
Other underwriting expenses (2)
—  3.1  1.6  1.4  6.1 
Net underwriting income (loss) $ 0.1  $ (1.3) $ (27.0) $ (1.5) (29.7)
Net investment income 122.0 
Net corporate and other expenses (14.9)
Interest expense (2.1)
Foreign exchange losses (5.9)
Income before income tax expense $ 69.4 
Underwriting Ratios: (3)
Loss ratio 66.7  % 77.4  % 124.9  % NM 78.0  %
Acquisition cost ratio 16.7  % 20.5  % 26.1  % NM 38.7  %
Other underwriting expenses ratio —  % 3.5  % 3.2  % NM 4.3  %
Combined ratio (4)
83.4  % 101.4  % 154.2  % NM 121.0  %
(1)Includes service fee revenue from the Company’s MGUs of $12.5 million for the three months ended September 30, 2021 (2020 - $nil).
(2)Loss and loss adjustment expenses incurred, net and other underwriting expenses include expenses associated with the Company’s MGUs of $3.6 million and $24.5 million, respectively, for the three months ended September 30, 2021 (2020 - $nil and $nil, respectively).
(3)Underwriting ratios are calculated by dividing the related expense by net premiums earned.
(4)Ratios considered not meaningful ("NM") to Runoff & Other.
(5)In the first quarter of 2021, the Company modified the presentation of its operating segments to better align with the manner in which management monitors the performance of its operations. This change was primarily due to the Company’s acquisition of Sirius Group (See Note 3 for additional information). Prior period segment results have been adjusted to conform to the current period presentation.
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Nine months ended September 30, 2021
A&H Specialty Property Runoff &
Other 		Total
Gross premiums written (1)
$ 343.5  $ 807.9  $ 457.3  $ (25.7) $ 1,583.0 
Net premiums written (1)
267.8  692.4  324.6  (24.2) 1,260.6 
Net premiums earned (1)
250.4  610.7  385.4  (12.1) 1,234.4 
Loss and loss adjustment expenses incurred, net (2)
121.9  393.9  482.2  (13.1) 984.9 
Acquisition costs, net 35.4  168.9  79.7  (2.5) 281.5 
Other underwriting expenses (2)
69.5  54.7  52.6  15.0  191.8 
Net underwriting income (loss) $ 23.6  $ (6.8) $ (229.1) $ (11.5) (223.8)
Other revenues 47.1 
Net investment income 463.7 
Net corporate and other expenses (113.5)
Intangible asset amortization (4.1)
Interest expense (24.4)
Foreign exchange gains 16.5 
Income before income tax expense $ 161.5 
Underwriting Ratios: (3)
Loss ratio 48.7  % 64.5  % 125.1  % NM 79.8  %
Acquisition cost ratio 14.1  % 27.7  % 20.7  % NM 22.8  %
Other underwriting expenses ratio 27.8  % 9.0  % 13.6  % NM 15.5  %
Combined ratio (4)
90.6  % 101.2  % 159.4  % NM 118.1  %
Nine months ended September 30, 2020
A&H Specialty Property Runoff &
Other 		Total
Gross premiums written (1)
$ 2.8  $ 232.2  $ 160.2  $ 3.0  $ 398.2 
Net premiums written (1)
2.8  224.3  138.9  3.0  369.0 
Net premiums earned (1)
2.5  285.6  135.9  4.9  428.9 
Loss and loss adjustment expenses incurred, net (2)
3.7  203.1  99.5  (18.9) 287.4 
Acquisition costs, net 0.3  85.3  38.8  23.3  147.7 
Other underwriting expenses (2)
0.1  12.4  4.7  3.9  21.1 
Net underwriting loss $ (1.6) $ (15.2) $ (7.1) $ (3.4) (27.3)
Net investment income 74.1 
Net corporate and other expenses (30.2)
Interest expense (6.2)
Foreign exchange gains 3.1 
Income before income tax expense $ 13.5 
Underwriting Ratios: (3)
Loss ratio 148.0  % 71.1  % 73.2  % NM 67.0  %
Acquisition cost ratio 12.0  % 29.9  % 28.6  % NM 34.4  %
Other underwriting expenses ratio 4.0  % 4.3  % 3.5  % NM 4.9  %
Combined ratio (4)
164.0  % 105.3  % 105.3  % NM 106.3  %
(1)Includes service fee revenue from the Company’s MGUs of $37.3 million for the nine months ended September 30, 2021 (2020 - $nil).
(2)Loss and loss adjustment expenses incurred, net and other underwriting expenses include expenses associated with the Company’s MGUs of $8.0 million and $55.4 million, respectively, for the nine months ended September 30, 2021 (2020 - $nil and $nil, respectively).
(3)Underwriting ratios are calculated by dividing the related expense by net premiums earned.
(4)Ratios considered not meaningful ("NM") to Runoff & Other.
(5)In the first quarter of 2021, the Company modified the presentation of its operating segments to better align with the manner in which management monitors the performance of its operations. This change was primarily due to the Company’s acquisition of Sirius Group (See Note 3 for additional information). Prior period segment results have been adjusted to conform to the current period presentation.
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6. Cash, cash equivalents, restricted cash and restricted investments
The following table provides a summary of cash and cash equivalents, restricted cash and restricted investments as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31, 2020
Cash and cash equivalents $ 701.2  $ 526.0 
Restricted cash securing letter of credit facilities (1) 577.1  306.0 
Restricted cash securing reinsurance contracts (2) 889.2  881.9 
Restricted cash held by managing general underwriters 16.0  — 
Total cash, cash equivalents and restricted cash (3) 2,183.5  1,713.9 
Restricted investments securing reinsurance contracts and letter of credit facilities (1) (2) 997.1  86.4 
Total cash, cash equivalents, restricted cash and restricted investments $ 3,180.6  $ 1,800.3 
(1)Restricted cash and restricted investments securing letter of credit facilities primarily pertains to letters of credit that have been issued to the Company’s clients in support of our obligations under reinsurance contracts. The Company will not be released from the obligation to provide these letters of credit until the reserves underlying the reinsurance contracts have been settled. The time period for which the Company expects each letter of credit to be in place varies from contract to contract but can last several years.
(2)Restricted cash and restricted investments securing reinsurance contracts pertain to trust accounts securing the Company’s contractual obligations under certain reinsurance contracts that the Company will not be released from until the underlying risks have expired or have been settled. Restricted investments include certain investments in debt securities, short-term investments and limited partnership interests in Third Point Enhanced LP. The time period for which the Company expects these trust accounts to be in place varies from contract to contract, but can last several years.
(3)Cash, cash equivalents and restricted cash as reported in the Company’s condensed consolidated statements of cash flows.
7. Investments
The Company’s invested assets consist of investment securities and other long-term investments held for general investment purposes. The portfolio of investment securities includes debt securities, short-term investments, equity securities, and other-long term investments which are all classified as trading securities. Realized and unrealized investment gains and losses on trading securities are reported in pre-tax revenues.
Debt securities
The following tables provide the cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and fair value of the Company's debt securities as of September 30, 2021 and December 31, 2020:
September 30, 2021
Cost or
amortized
cost 		Gross
unrealized
gains 		Gross
unrealized
losses 		Net foreign
currency
gains
(losses) 		Fair value
Asset-backed securities $ 493.0  $ 1.9  $ (0.3) $ —  $ 494.6 
Residential mortgage-backed securities 350.6  0.9  (2.3) —  349.2 
Commercial mortgage-backed securities 122.8  0.9  (1.8) —  121.9 
Corporate debt securities 614.1  1.3  (1.0) (6.2) 608.2 
U.S. government and government agency (1) 369.3  0.3  (0.7) —  368.9 
Non-U.S. government and government agency 138.3  0.1  (0.5) (3.1) 134.8 
U.S. states, municipalities and political subdivision 0.5  —  —  —  0.5 
Preferred stocks 22.7  0.1  —  —  22.8 
Total debt securities $ 2,111.3  $ 5.5  $ (6.6) $ (9.3) $ 2,100.9 
(1)The Company had $2.9 million of short positions in long duration U.S. Treasuries as of September 30, 2021. These amounts are included in securities sold, not yet purchased in the condensed consolidated balance sheets.
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December 31, 2020
Cost or
amortized
cost 		Gross
unrealized
gains 		Gross
unrealized
losses 		Net foreign
currency
gains
(losses) 		Fair value
Asset-backed securities $ 1.2  $ 0.1  $ —  $ —  $ 1.3 
Residential mortgage-backed securities 8.1  0.6  —  —  8.7 
Bank debt 0.3  0.1  —  —  0.4 
Corporate debt securities 29.4  8.4  (0.1) —  37.7 
U.S. government and government agency (1) 52.4  1.7  (0.9) —  53.2 
Total debt securities $ 91.4  $ 10.9  $ (1.0) $ —  $ 101.3 
(1)The Company had $12.0 million of short positions in long duration U.S. Treasuries as of December 31, 2020. These amounts are included in securities sold, not yet purchased in the condensed consolidated balance sheets.
The weighted average duration of the Company's debt securities as of September 30, 2021 was approximately 1.6 years, including short-term investments, and approximately 2.2 years excluding short-term investments (December 31, 2020 - 10.5 years and 10.5 years, respectively).
The following table provides the cost or amortized cost and fair value of the Company's debt securities as of September 30, 2021 and December 31, 2020 by contractual maturity. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.
September 30, 2021 December 31, 2020
Cost or
amortized cost 		Fair value Cost or
amortized cost 		Fair value
Due in one year or less $ 143.9  $ 143.9  $ 50.0  $ 50.6 
Due after one year through five years 838.3  829.7  2.8  3.0 
Due after five years through ten years 105.4  104.4  —  — 
Due after ten years 34.6  34.4  29.4  37.7 
Mortgage-backed and asset-backed securities 966.4  965.7  9.2  10.0 
Preferred stocks 22.7  22.8  —  — 
Total debt securities $ 2,111.3  $ 2,100.9  $ 91.4  $ 101.3 
The following table summarizes the ratings and fair value of debt securities held in the Company's investment portfolio as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31, 2020
AAA $ 661.8  $ 53.2 
AA 901.5  — 
A 281.0  9.1 
BBB 157.7  37.7 
Other 98.9  1.3 
Total debt securities (1) $ 2,100.9  $ 101.3 
(1)Credit ratings are assigned based on the following hierarchy: 1) Standard & Poor's ("S&P") and 2) Moody's Investors Service.
As of September 30, 2021, the above totals included $35.0 million of sub-prime securities. Of this total, $15.1 million was rated AAA, $10.4 million rated AA and $9.5 million rated A. As of December 31, 2020, the above totals included $8.7 million of A rated sub-prime securities.
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Equity securities and other long-term investments
The cost or amortized cost, gross unrealized investment gains and losses, net foreign currency gains, and fair values of the Company’s equity securities and other long-term investments as of September 30, 2021 and December 31, 2020, were as follows:
September 30, 2021
Cost or
amortized
cost 		Gross
unrealized
gains 		Gross
unrealized
losses 		Net foreign
currency
gains 		Fair value
Equity securities $ 4.9  $ 0.1  $ (1.6) $ —  $ 3.4 
Other long-term investments $ 400.7  $ 55.0  $ (1.7) $ 0.5  $ 454.5 
December 31, 2020
Cost or
amortized
cost 		Gross
unrealized
gains 		Gross
unrealized
losses 		Net foreign
currency
gains 		Fair value
Other long-term investments $ 4.0  $ —  $ —  $ —  $ 4.0 
Equity securities at fair value consisted of the following as of September 30, 2021:
September 30,
2021
Fixed income mutual funds $ 1.9 
Common stocks 1.5 
Total equity securities $ 3.4 
Other long-term investments at fair value consisted of the following as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31, 2020
Hedge funds and private equity funds (1)
$ 212.3  $ — 
Limited liability companies and private equity securities (2)
242.2  4.0 
Total other long-term investments $ 454.5  $ 4.0 
(1)Includes $126.2 million of investments valued at NAV and $86.1 million of investments valued at Level 3.
(2)As of September 30, 2021, the Company had $13.8 million of unfunded commitments relating to investments in limited liability companies and private equity securities.
Hedge funds and private equity funds
The Company holds investments in hedge funds and private equity funds, which are included in other long-term investments. As of September 30, 2021, the Company held investments in 8 hedge funds and 20 private equity funds. The largest investment in a single fund was $35.6 million as of September 30, 2021.
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The following table summarizes investments in hedge funds and private equity interests by investment objective and sector as of September 30, 2021:
September 30, 2021
Fair value Unfunded
commitments
Hedge funds
Long/short multi-sector $ 23.2  $ — 
Distressed mortgage credit 35.6  — 
Private credit 24.2  — 
Other 1.3  — 
Total hedge funds 84.3  — 
Private equity funds
Energy infrastructure & services 54.0  22.0 
Multi-sector 5.1  6.4 
Healthcare 30.0  2.2 
Life settlement 13.3  — 
Manufacturing/Industrial 18.1  — 
Private equity secondaries 0.6  0.7 
Other 6.9  0.8 
Total private equity funds 128.0  32.1 
Total hedge and private equity funds included in other long-term investments $ 212.3  $ 32.1 
Redemption of investments in certain hedge funds is subject to restrictions including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency, and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period.
The following summarizes the September 30, 2021 fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds:
Notice Period
Redemption Frequency 1-29 days
notice 		30-59 days
notice 		60-89 days
notice 		90-119 days
notice 		120+ days
notice 		Total
Quarterly $ —  $ 0.6  $ 23.2  $ 35.6  $ —  $ 59.4 
Semi-annual —  —  0.3  —  —  0.3 
Annual —  —  —  0.3  24.3  24.6 
Total $ —  $ 0.6  $ 23.5  $ 35.9  $ 24.3  $ 84.3 
Certain of the hedge fund and private equity fund investments in which the Company is invested are no longer active and are in the process of disposing of their underlying investments. Distributions from such funds are remitted to investors as the fund's underlying investments are liquidated. As of September 30, 2021, $11.9 million in distributions were outstanding from these investments.
Investments in private equity and other investment funds may be subject to a lock-up"or commitment period during which investors may not request a redemption prior to the expected termination date. Distributions prior to the expected termination date of the fund may be limited to dividends or proceeds arising from the liquidation of the fund's underlying investments. In addition, certain private equity funds provide an option to extend the lock-up or commitment periods at either the sole discretion of the fund manager or upon agreement between the fund and the investors.
As of September 30, 2021, investments in private equity funds were subject to lock-up periods as follows:
1 - 3 years 3 – 5 years 5 – 10 years Total
Private equity funds – expected lock-up or commitment period remaining $ 48.4  $ 33.5  $ 46.1  $ 128.0 
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Investment in related party investment funds
The following table provides the cost and fair value of the Company's investments in related party investment funds as of September 30, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Cost Fair value Cost Fair value
Third Point Enhanced LP $ 867.9  $ 1,430.4  $ 891.9  $ 1,055.6 
Third Point Venture Offshore Fund I LP 24.0  26.4  —  — 
Investment in related party investment funds, at fair value $ 891.9  $ 1,456.8  $ 891.9  $ 1,055.6 
Investment in Third Point Enhanced LP
On August 6, 2020, SiriusPoint, SiriusPoint Bermuda and Third Point Reinsurance (USA) Ltd. (“Third Point Re USA”) entered into the Third Amended and Restated Exempted Limited Partnership Agreement (“2020 LPA”) of Third Point Enhanced LP (“TP Enhanced Fund”) which became effective on February 26, 2021, except for the amendment to the calculation of the loss recovery account which became effective on December 31, 2020. In accordance with the 2020 LPA, Third Point Advisors LLC (“TP GP”) serves as the general partner of TP Enhanced Fund.
The TP Enhanced Fund investment strategy, as implemented by Third Point LLC, is intended to achieve superior risk-adjusted returns by deploying capital in both long and short investments with favorable risk/reward characteristics across select asset classes, sectors and geographies. Third Point LLC identifies investment opportunities via a bottom-up, value-oriented approach to single security analysis supplemented by a top-down view of portfolio and risk management. Third Point LLC seeks dislocations in certain areas of the capital markets or in the pricing of particular securities and supplements single security analysis with an approach to portfolio construction that includes sizing each investment based on upside/downside calculations, all with a view towards appropriately positioning and managing overall exposures.
Under the 2020 LPA, the Company has the right to withdraw funds monthly from TP Enhanced Fund to meet capital adequacy requirements and to satisfy financing obligations. The Company may also withdraw its investment upon the occurrence of certain events specified in the 2020 LPA, including to meet capital adequacy requirements, to prevent a negative credit rating action, for risk management purposes or to satisfy financing obligations, subject to certain limitations on such withdrawals as specified in the 2020 LPA, and may withdraw its investment in full on the first quarter end date after the five-year anniversary of the closing date of the acquisition of Sirius Group (i.e. March 31, 2026) and each successive two-year anniversary of such date. The Company is also entitled to withdraw funds from the TP Enhanced Fund in order to satisfy its risk management guidelines, upon prior written notice to TP GP, in an amount not to exceed 20% of the sum of (x) the aggregate opening balances of our capital account and (y) the aggregate amount of capital contributions credited to our capital account.
As of September 30, 2021, the Company had no unfunded commitments related to TP Enhanced Fund.
Investment in Third Point Venture Offshore Fund I LP
On March 1, 2021, SiriusPoint Bermuda entered into the Amended and Restated Exempted Limited Partnership Agreement (“2021 Venture LPA”) of Third Point Venture Offshore Fund I LP (“TP Venture Fund”) which became effective on March 1, 2021. In accordance with the 2021 Venture LPA, Third Point Venture GP LLC (“TP Venture GP”) serves as the general partner of TP Venture Fund.
The TP Venture Fund investment strategy, as implemented by Third Point LLC, is to generate attractive risk-adjusted returns through a concentrated portfolio of investments in privately-held companies, primarily in the expansion through late/pre-IPO stage. The TP Venture Fund may also invest in early stage companies. Due the nature of the fund, withdrawals are not permitted. Distributions prior to the expected termination date of the fund include, but are not limited to, dividends or proceeds arising from the liquidation of the fund's underlying investments.
As of September 30, 2021, the Company had $16.0 million of unfunded commitments related to TP Venture Fund.
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8. Fair value measurements
U.S. GAAP disclosure requirements establish a framework for measuring fair value, including a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. The three-level hierarchy of inputs is summarized below:
•Level 1 – Quoted prices available in active markets/exchanges for identical investments as of the reporting date.
•Level 2 – Observable inputs to the valuation methodology other than unadjusted quoted market prices for identical assets or liabilities in active markets. Level 2 inputs include, but are not limited to, prices quoted for similar assets or liabilities in active markets/exchanges, prices quoted for identical or similar assets or liabilities in markets that are not active and fair values determined through the use of models or other valuation methodologies.
•Level 3 – Inputs are based all or in part on significant unobservable inputs for the investment, and include situations where there is little, if any, market activity for the investment. The inputs applied in the determination of fair value require significant management judgment and estimation.
Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. For example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable.
Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources other than those of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and considers factors specific to the investment.
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The following tables present the Company’s investments, categorized by the level of the fair value hierarchy as of September 30, 2021 and December 31, 2020:
September 30, 2021
 Quoted prices in active markets  Significant other observable inputs  Significant unobservable inputs  Total
 (Level 1)  (Level 2)  (Level 3)
Assets
Asset-backed securities $ —  $ 494.6  $ —  $ 494.6 
Residential mortgage-backed securities —  349.2  —  349.2 
Commercial mortgage-backed securities —  121.9  —  121.9 
Corporate debt securities —  608.2  —  608.2 
U.S. government and government agency 355.0  13.9  —  368.9 
Non-U.S. government and government agency 17.0  117.8  —  134.8 
U.S. states, municipalities and political subdivision —  0.5  —  0.5 
Preferred stocks —  —  22.8  22.8 
Total debt securities 372.0  1,706.1  22.8  2,100.9 
Fixed income mutual funds 1.9  —  —  1.9 
Common stocks 1.5  —  —  1.5 
Total equity securities 3.4  —  —  3.4 
Short-term investments 1,054.5  3.4  —  1,057.9 
Other long-term investments —  —  328.1  328.1 
Derivative assets —  —  2.5  2.5 
$ 1,429.9  $ 1,709.5  $ 353.4  3,492.8 
Investments in funds valued at NAV 1,583.0 
Total assets $ 5,075.8 
Liabilities
U.S. Government and government agency $ —  $ 2.9  $ —  $ 2.9 
Total securities sold, not yet purchased —  2.9  —  2.9 
Liability-classified capital instruments —  26.1  77.3  103.4 
Derivative liabilities —  —  2.8  2.8 
Total liabilities $ —  $ 29.0  $ 80.1  $ 109.1 
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December 31, 2020
 Quoted prices in active markets  Significant other observable inputs  Significant unobservable inputs  Total
 (Level 1)  (Level 2)  (Level 3)
Assets
Asset-backed securities $ —  $ 1.3  $ —  $ 1.3 
Residential mortgage-backed securities —  8.7  —  8.7 
Bank debt —  0.4  —  0.4 
Corporate debt securities —  37.7  —  37.7 
U.S. Government and government agency —  53.2  —  53.2 
Total debt securities —  101.3  —  101.3 
Short-term investments —  —  —  — 
Other long-term investments —  —  4.0  4.0 
Derivative assets —  —  1.2  1.2 
$ —  $ 101.3  $ 5.2  106.5 
Investments in funds valued at NAV 1,055.6 
Total assets $ 1,162.1 
Liabilities
U.S. Government and government agency $ —  $ 12.0  $ —  $ 12.0 
Total securities sold, not yet purchased —  12.0  —  12.0 
Derivative liabilities —  —  1.0  1.0 
Total liabilities $ —  $ 12.0  $ 1.0  $ 13.0 
During the nine months ended September 30, 2021, the Company made $nil (December 31, 2020 - $nil) of reclassifications of assets or liabilities between Levels 2 and 3.
Valuation techniques
The Company uses outside pricing services to assist in determining fair values for its investments. For investments in active markets, the Company uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services the Company uses have indicated that they will only provide prices where observable inputs are available. In circumstances where quoted market prices are unavailable or are not considered reasonable, the Company estimates the fair value using industry standard pricing models and observable inputs such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, prepayment speeds, reference data including research publications, and other relevant inputs. Given that many debt securities do not trade on a daily basis, the outside pricing services evaluate a wide range of fixed maturity investments by regularly drawing parallels from recent trades and quotes of comparable securities with similar features. The characteristics used to identify comparable debt securities vary by asset type and take into account market convention.
The techniques and inputs specific to asset classes within the Company’s debt securities and short-term investments for Level 2 securities that use observable inputs are as follows:
Asset-backed and mortgage-backed securities
The fair value of mortgage and asset-backed securities is primarily priced by pricing services using a pricing model that uses information from market sources and leveraging similar securities. Key inputs include benchmark yields, reported trades, underlying tranche cash flow data, collateral performance, plus new issue data, as well as broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including issuer, vintage, loan type, collateral attributes, prepayment speeds, default rates, recovery rates, cash flow stress testing, credit quality ratings and market research publications.
28



Corporate debt securities
Corporate debt securities consist primarily of investment-grade debt of a wide variety of U.S. and non-U.S. corporate issuers and industries. The corporate fixed maturity investments are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources regarding the issuer of the security and obtain credit data, as well as other observations, from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The pricing services also consider the specific terms and conditions of the securities, including any specific features which may influence risk.
U.S. government and government agency
U.S. government and government agency securities consist primarily of debt securities issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association. Fixed maturity investments included in U.S. government and government agency securities are primarily priced by pricing services. When evaluating these securities, the pricing services gather information from market sources and integrate other observations from markets and sector news. Evaluations are updated by obtaining broker dealer quotes and other market information including actual trade volumes, when available. The fair value of each security is individually computed using analytical models which incorporate option adjusted spreads and other daily interest rate data.
Non-U.S. government and government agency
Non-U.S. government and government agency securities consist of debt securities issued by non-U.S. governments and their agencies along with supranational organizations (also known as sovereign debt securities). Securities held in these sectors are primarily priced by pricing services who employ proprietary discounted cash flow models to value the securities. Key quantitative inputs for these models are daily observed benchmark curves for treasury, swap and high issuance credits. The pricing services then apply a credit spread for each security which is developed by in-depth and real time market analysis. For securities in which trade volume is low, the pricing services utilize data from more frequently traded securities with similar attributes. These models may also be supplemented by daily market and credit research for international markets.
U.S. states, municipalities, and political subdivisions
The U.S. states, municipalities and political subdivisions portfolio contains debt securities issued by U.S. domiciled state and municipal entities. These securities are generally priced by independent pricing services using the techniques for U.S. government and government agency securities.
Preferred stocks
The fair value of preferred stocks is generally priced by independent pricing services using an evaluated pricing model that calculates the appropriate spread over a comparable security for each issue. Key inputs include exchange prices (underlying and common stock of same issuer), benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including sector, coupon, credit quality ratings, duration, credit enhancements, early redemption features and market research publications.
Short-term investments
Short-term investments consist of U.S. treasury bills, certificates of deposit and other securities, which, at the time of purchase, mature within a period of greater than three months but less than one year. These investments are generally priced by independent pricing services using the techniques described for U.S. government and government agency securities and Corporate debt securities described above.
Investments measured using Net Asset Value
The Company values its investments in limited partnerships, including its investments in related party investment funds, at fair value. The Company has elected the practical expedient for fair value for these investments which is estimated based on the Company’s share of the net asset value (“NAV”) of the limited partnerships, as provided by the independent fund administrator, as the Company believes it represents the most meaningful measurement basis for the investment assets and liabilities. The NAV represents the Company’s proportionate interest in the members’ equity of the limited partnerships.
29



The fair value of the Company's investments in certain hedge funds and certain private equity funds are also determined using NAV. The hedge fund's administrator provides quarterly updates of fair value in the form of the Company's proportional interest in the underlying fund's NAV, which is deemed to approximate fair value, generally with a three month delay in valuation. The private equity funds provide quarterly or semi-annual partnership capital statements with a three or six month delay which are used as a basis for valuation. These private equity investments vary in investment strategies and are not actively traded in any open markets. Due to a lag in reporting, some of the fund managers, fund administrators, or both, are unable to provide final fund valuations as of the Company's reporting date. In these circumstances, the Company estimates the return of the current period and uses all credible information available. This includes utilizing preliminary estimates reported by its fund managers and using other information that is available to the Company with respect to the underlying investments, as necessary.
In order to assess the reasonableness of the NAVs, the Company performs a number of monitoring procedures on a monthly, quarterly and annual basis, to assess the quality of the information provided by the investment manager and fund administrator underlying the preparation of the NAV. These procedures include, but are not limited to, regular review and discussion of the fund’s performance with the investment manager.
These investments are included in investment in funds valued at NAV and excluded from the presentation of investments categorized by the level of the fair value hierarchy.
Level 3 Investments
Level 3 valuations are generated from techniques that use assumptions not observable in the market. These unobservable assumptions reflect the Company's assumptions, that market participants would use in valuing the investment. Generally, certain securities may start out as Level 3 when they are originally issued but as observable inputs become available in the market, they may be reclassified to Level 2.
The Company employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing the audited annual financial statements of hedge funds and private equity funds and periodically discussing each fund's pricing with the fund manager. However, since the fund managers do not provide sufficient information to evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable.
The fair values of the Company's investments in private equity securities, private debt instruments, certain private equity funds, and certain hedge funds have been classified as Level 3 measurements. They are carried at fair value and in the case of private equity securities and private debt instruments are initially valued based on transaction price and their valuation is subsequently estimated based on available evidence such as a market transaction in similar instruments and other financial information for the issuer.
See Note 9 for additional information on the fair values of derivative financial instruments used for both risk management and investment purposes.
Underwriting-related derivatives
The Company has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value with changes in fair value of the embedded derivative reported in other expenses. The Company’s embedded derivatives relate to interest crediting features in certain reinsurance and deposit contracts that vary based on the Company’s investment returns. The Company determines the fair value of the embedded derivatives using models developed by the Company.
Other underwriting-related derivatives include reinsurance contracts that are accounted for as derivatives. These derivative contracts are initially valued at cost which approximates fair value. In subsequent measurement periods, the fair values of these derivatives are determined using internally developed discounted cash flow models. As the significant inputs used to price these derivatives are unobservable, the fair values of these contracts are classified as Level 3.

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The following table presents the reconciliation of all investments measured at fair value using Level 3 inputs for the three and nine months ended September 30, 2021 and 2020:
July 1,
2021 		Transfers in to (out of) Level 3 Purchases
Assets Acquired (1)
Sales
Realized and Unrealized Gains (Losses) (2)
September 30,
2021
Assets
Preferred stocks $ 12.8  $ —  $ 10.0  $ —  $ —  $ —  $ 22.8 
Other long-term investments 322.1  —  7.0  —  (3.5) 2.5  328.1 
Derivative assets 5.2  (0.7) —  —  —  (2.0) 2.5 
Loan participations 36.5  —  5.2  —  (42.7) 1.0  — 
Total assets $ 376.6  $ (0.7) $ 22.2  $ —  $ (46.2) $ 1.5  $ 353.4 
Liabilities
Liability-classified capital instruments $ (99.3) $ —  $ —  $ —  $ —  $ 22.0  $ (77.3)
Contingent consideration (1.5) —  —  —  1.9  (0.4) — 
Derivative liabilities (3.7) 0.7  (0.1) —  —  0.3  (2.8)
Total liabilities $ (104.5) $ 0.7  $ (0.1) $ —  $ 1.9  $ 21.9  $ (80.1)
January 1,
2021 		Transfers in to (out of) Level 3 Purchases
Assets Acquired (1)
Sales
Realized and Unrealized Gains (Losses) (2)
September 30,
2021
Assets
Preferred stocks $ —  $ —  $ 20.0  $ 2.8  $ —  $ —  $ 22.8 
Other long-term investments 4.0  —  34.7  259.0  (9.4) 39.8  328.1 
Derivative assets 1.2  (1.2) —  0.3  —  2.2  2.5 
Loan participations —  —  9.0  32.8  (42.8) 1.0  — 
Total assets $ 5.2  $ (1.2) $ 63.7  $ 294.9  $ (52.2) $ 43.0  $ 353.4 
Liabilities
Liability-classified capital instruments $ —  $ 27.0  $ (137.6) $ —  $ —  $ 33.3  $ (77.3)
Contingent consideration liabilities —  —  —  (0.7) 1.9  (1.2) — 
Derivative liabilities (1.0) 1.2  (0.4) (2.0) —  (0.6) (2.8)
Total liabilities $ (1.0) $ 28.2  $ (138.0) $ (2.7) $ 1.9  $ 31.5  $ (80.1)
July 1,
2020 		Transfers in to (out of) Level 3 Purchases Assets Acquired Sales
Realized and Unrealized Gains (Losses) (2)
September 30,
2020
Assets
Asset-backed securities $ 1.2  $ (1.2) $ —  $ —  $ —  $ —  $ — 
Other long-term investments 4.0  —  —  —  —  —  4.0 
Total assets $ 5.2  $ (1.2) $ —  $ —  $ —  $ —  $ 4.0 
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January 1,
2020 		Transfers in to (out of) Level 3 Purchases Assets Acquired Sales
Realized and Unrealized Gains (Losses) (2)
September 30,
2020
Assets
Asset-backed securities $ —  $ (5.6) $ 5.5  $ —  $ —  $ 0.1  $ — 
Other long-term investments 4.0  —  —  —  —  —  4.0 
Total assets $ 4.0  $ (5.6) $ 5.5  $ —  $ —  $ 0.1  $ 4.0 
(1)Includes amounts acquired as a result of the Sirius Group acquisition.
(2)Total change in realized and unrealized gains (losses) recorded on Level 3 financial instruments is included in net investment income in the condensed consolidated statements of income (loss). Realized and unrealized gains (losses) related to underwriting-related derivative assets and liabilities are included in other underwriting expenses, net of foreign exchange (gains) losses, in the condensed consolidated statements of income (loss).
For assets and liabilities that were transferred into Level 3 during the period, gains (losses) are presented as if the assets or liabilities had been transferred into Level 3 at the beginning of the period; similarly, for assets and liabilities that were transferred out of Level 3 during the period, gains (losses) are presented as if the assets or liabilities had been transferred out of Level 3 at the beginning of the period.
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Significant unobservable inputs
The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments as of September 30, 2021, and includes only those instruments for which information about the inputs is reasonably available to the Company, such as data from independent third-party valuation service providers and from internal valuation models.
September 30, 2021
Assets (Liability) Fair Value Valuation Technique Unobservable input
Private equity securities (4) $ 152.0  Subject company transaction approach Share price range
19.84 - 23.34
Private equity funds (3) 86.1  Net asset value discount Discount range
50% - 95%
Private equity securities (1) 39.6  Share price of recent transaction Purchase share price 50.79 
Private equity securities (1) 15.3  Multiple of GAAP book value Book value multiple
Range - 0.73x-0.91x
Median - 0.82x
Preferred stock (1) 10.0  Purchase price of recent transaction Purchase price 10.0 
Preferred stock (1) 10.0  Purchase price of recent transaction Purchase price 10.0 
Common stock (1) 10.0  Purchase price of recent transaction Purchase price 10.0 
Partnership interest (1) 6.1  Purchase price of recent transaction Purchase price 6.1 
Private debt instrument (1) 6.1  Discounted cash flow Discount yield
Range - 4.74%-5.70%
Median - 5.14%
Preferred stock (1) 5.0  Purchase price of recent transaction Purchase price 5.0 
Preferred stock (1) 4.3  Share price of recent transaction Purchase price 4.3 
Preferred stocks (5) 2.8  Share price of recent transaction Share price 2.8 
Weather derivatives (2) 1.1  Third party appraisal Broker quotes 1.1 
Preferred stock (1) 1.1  Purchase price of recent transaction Purchase price 1.1 
Promissory note (1) 1.0  Purchase price of recent transaction Purchase price 1.0 
Membership Interest (1) 1.0  Purchase price of recent transaction Purchase price 1.0 
Private equity securities (1) 0.3  Purchase price of recent transaction Purchase price 0.3 
Equity warrants (2) 0.2  Option pricing model Strike price 0.3 
Promissory note (1) 0.2  Purchase price of recent transaction Purchase price 0.2 
Currency forwards (2) (0.7) Third party appraisal Broker quotes (0.7)
Public warrants (1) (1.6) Black Scholes pricing model Share price 0.43 
Currency swaps (2) (1.8) Third party appraisal Broker quotes (1.8)
Private warrants (1) (4.4) Black Scholes pricing model Share price 1.09 
Series A preference shares (1) (31.2) External valuation model Share price (31.2)
Merger warrants (1) $ (40.1) External valuation model Share price 1.91 
(1)Each asset type consists of one security except as indicated below.
(2)See Note 9 for discussion of derivative instruments.
(3)Represents multiple private equity funds where a discount on net asset value was taken.
(4)Represents various tranches of the Company's investment in Pie Insurance Holdings, Inc. (“Pie Insurance”).
(5)Represents multiple securities held under the same Investment Management Agreement.
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Financial instruments disclosed, but not carried at fair value
The Company uses various financial instruments in the normal course of its business. The carrying values of cash, accrued investment income, certain other assets, certain other liabilities, and other financial instruments not included in the table below approximated their fair values at September 30, 2021 and December 31, 2020, due to their respective short maturities. The following table includes financial instruments for which the carrying value differs from the estimated fair values at September 30, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Fair Value Carrying Value Fair Value Carrying Value
2017 SEK Subordinated Notes (1)
$ 312.7  $ 306.3  n/a n/a
2016 SIG Senior Notes (1)
408.2  406.3  n/a n/a
2015 TPRUSA Senior Notes (1)
119.2  114.4  117.8  114.3 
Series B preference shares (1)
$ 227.0  $ 200.0  n/a n/a
(1)Fair value based on observable inputs and considered a Level 2 measurement.
9. Derivatives
As a result of the acquisition of Sirius Group, the Company now holds derivative financial instruments for both risk management and investment purposes.
Interest rate cap
The Company entered into an interest rate swap ("Interest Rate Cap") with two financial institutions where it paid an upfront premium and in return receives a series of quarterly payments based on the 3-month London Interbank Offered Rate (“LIBOR”) at the time of payment. The 3-month LIBOR will cease as a benchmark rate in June 2023; accordingly, the Company is exploring alternatives for replacement when applicable, including the secured overnight financing rate published by the New York Federal Reserve Bank. The Interest Rate Cap does not qualify for hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within other revenues. The fair value of the Interest Rate Cap has been estimated using a single broker quote and, accordingly, has been classified as a Level 3 measurement as of September 30, 2021. Collateral held is recorded with an equal amount recognized as a liability to return collateral. The Company’s liability to return that collateral is based on the amounts provided by the counterparties and investment earnings thereon. As of September 30, 2021, the Company held collateral balances of $0.1 million.
Foreign currency risk derivatives
The Company executes foreign currency forwards, call options, swaps, and futures to manage foreign currency exposure. The foreign currency risk derivatives are not designated or accounted for under hedge accounting. Changes in fair value are recognized as unrealized gains or losses and are presented within foreign exchange (gains) losses. The fair value of the swaps and forwards are estimated using a single broker quote, and accordingly, are classified as a Level 3 measurement. The fair value of the futures is widely available and have quoted prices in active markets, and accordingly, were classified as a Level 1 measurement. The Company did not provide or hold any collateral associated with the foreign currency risk derivatives.
Equity warrants
The Company holds restricted equity warrants as part of its investment strategy. The equity warrants are not designated or accounted for under hedge accounting. Changes in fair value are presented within net realized and unrealized investment gains (losses). The fair value of the equity warrants is estimated using a single broker quote and accordingly, classified as a Level 3 measurement. The Company did not provide or hold any collateral associated with the equity warrants.
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The following table summarizes information on the classification and amount of the fair value of derivatives not designated as hedging instruments within the Company's condensed consolidated balance sheets as at September 30, 2021:
September 30, 2021
Derivatives not designated as hedging instruments
Derivative assets
at fair value(1)(3)
Derivative liabilities
at fair value(2)(3)
Notional Value
Interest rate cap $ —  $ —  $ 250.0 
Foreign currency swaps —  (1.8) 40.0 
Foreign currency forwards —  (0.6) 85.3 
Weather derivatives 1.1  —  20.4 
Foreign currency futures contracts —  —  115.4 
Equity warrants $ 0.2  $ —  $ 0.2 
(1)Derivative assets are classified within other assets in the Company's condensed consolidated balance sheets at September 30, 2021.
(2)Derivative liabilities are classified within accounts payable, accrued expenses and other liabilities in the Company's condensed consolidated balance sheets at September 30, 2021.
(3)The Company did not hold the above derivative instruments as of December 31, 2020.
The following table summarizes information on the classification and net impact on earnings, recognized in the Company's condensed consolidated statements of income (loss) relating to derivatives during the three and nine months ended September 30, 2021:
Three months ended Nine months ended
Derivatives not designated as hedging instruments Classification of gains (losses) recognized in earnings September 30, 2021 September 30, 2021
Foreign currency swaps Foreign exchange (gains) losses $ 1.1  $ — 
Foreign currency forwards Foreign exchange (gains) losses (0.7) (0.6)
Weather derivatives Net corporate and other expenses (0.1) 1.4 
Foreign currency futures contracts Foreign exchange (gains) losses (2.8) (4.7)
Foreign currency call options Foreign exchange (gains) losses —  0.4 
Equity warrants Net realized and unrealized investment gains (losses) $ (0.2) $ (0.1)
Underwriting-related derivatives
The following tables identify the listing currency, fair value and notional amounts of underwriting-related derivatives included in the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Derivative assets
Listing currency (1)
Fair Value
 Notional Amounts (2)
Fair Value
 Notional Amounts (2)
Reinsurance contracts accounted for as derivative assets GBP $ 1.2  $ 22.6  $ 1.2  $ 4.2 
$ 1.2  $ 22.6  $ 1.2  $ 4.2 
September 30, 2021 December 31, 2020
Derivative liabilities
Listing currency (1)
 Fair Value
 Notional Amounts (2)
 Fair Value
 Notional Amounts (2)
Reinsurance contracts accounted for as derivative liabilities GBP $ 0.3  $ 34.0  $ 1.0  $ 15.7 
$ 0.3  $ 34.0  $ 1.0  $ 15.7 
(1)GBP = British Pound.
(2)The absolute notional exposure represents the Company’s derivative activity as of September 30, 2021 and December 31, 2020, which is representative of the volume of derivatives held during the period.
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10. Loss and loss adjustment expense reserves
The following table represents the activity in the loss and loss adjustment expense reserves for the nine months ended September 30, 2021 and 2020:
September 30, 2021 September 30, 2020
Gross reserves for loss and loss adjustment expenses, beginning of period $ 1,310.1  $ 1,111.7 
Less: loss and loss adjustment expenses recoverable, beginning of period (14.4) (5.5)
Less: deferred charges on retroactive reinsurance contracts (6.0) (6.7)
Net reserves for loss and loss adjustment expenses, beginning of period 1,289.7  1,099.5 
Increase (decrease) in net loss and loss adjustment expenses incurred in respect of losses occurring in:
     Current year 1,010.8  302.3 
     Prior years (25.9) (14.9)
Total incurred loss and loss adjustment expenses 984.9  287.4 
Net loss and loss adjustment expenses paid in respect of losses occurring in:
     Current year (162.1) (43.5)
     Prior years (543.9) (173.4)
Total net paid losses (706.0) (216.9)
Foreign currency translation (19.5) (3.4)
Amounts acquired as a result of Sirius Group acquisition (1)
2,467.8  — 
Net reserves for loss and loss adjustment expenses, end of period 4,016.9  1,166.6 
Plus: loss and loss adjustment expenses recoverable, end of period 843.5  13.6 
Plus: deferred charges on retroactive reinsurance contracts (2)
1.9  6.0 
Gross reserves for loss and loss adjustment expenses, end of period $ 4,862.3  $ 1,186.2 
(1)Represents the fair value of Sirius Group’s reserves for claims and claim expenses, net of reinsurance recoverables, acquired at February 26, 2021. See Note 3 for additional information related to the acquisition of Sirius Group.
(2)Deferred charges on retroactive contracts are recorded in other assets on the Company’s condensed consolidated balance sheets.
The Company's prior year reserve development arises from changes to estimates of losses and loss adjustment expenses related to loss events that occurred in previous calendar years.
For the three months ended September 30, 2021, the Company recorded $16.2 million of net favorable prior year loss reserve development. The change from the prior period was driven by net favorable loss reserve development of $15.0 million from the legacy Sirius Group companies, primarily due to favorable loss reserve development of $6.1 million and $5.5 million relating to the A&H and Property segments, respectively, based on better than expected loss reserve emergence.
For the nine months ended September 30, 2021, the Company recorded $25.9 million of net favorable prior year loss reserve development. The change from the prior period was driven by net favorable loss reserve development of $27.0 million from the legacy Sirius Group companies, primarily due to favorable loss reserve development relating to the Property segment of $15.6 million as a result of better than expected loss reserve emergence on European-related exposures covering multiple accident years, and favorable loss reserve development relating to the A&H segment of $6.9 million.
The Company underwrites reinsurance contracts that have sliding scale or profit commissions whereby loss reserve development could be offset by changes in acquisition costs that vary inversely with loss experience, which are not reflected in these loss reserve-related amounts.
For the three months ended September 30, 2020, the Company recorded $15.1 million of net favorable prior year loss reserve development. The $15.1 million net decrease in prior years’ reserves for the three months ended September 30, 2020 includes $20.3 million of net favorable reserve development related to decreases in loss reserve estimates, partially offset by a $5.2 million increase in loss reserves resulting from increases in premium earnings estimates on certain contracts. In total, the change in net underwriting results for prior periods due to loss reserve development and adjustments to premium earnings estimates, after the impact of any offsetting changes in acquisition costs as a result of sliding scale or profit commissions, resulted in a minimal improvement in the net underwriting results for the three months ended September 30, 2020.
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For the nine months ended September 30, 2020, the Company recorded $14.9 million of net favorable prior year loss reserve development. The $14.9 million net decrease in prior years’ reserves for the nine months ended September 30, 2020 includes $30.4 million of net favorable reserve development related to decreases in loss reserve estimates, partially offset by a $15.5 million increase in loss reserves resulting from increases in premium earnings estimates on certain contracts. In total, the change in net underwriting results for prior periods due to loss reserve development and adjustments to premium earnings estimates, after the impact of any offsetting changes in acquisition costs as a result of sliding scale or profit commissions, resulted in a $3.4 million improvement in the net underwriting results for the nine months ended September 30, 2020.
11. Third party reinsurance
In the normal course of business, the Company seeks to protect its businesses from losses due to concentration of risk and losses arising from catastrophic events by reinsuring with third-party reinsurers. Additionally, retrocession can be used as a mechanism to share the risks and rewards of business written and therefore can be used as a tool to align the Company’s interests with those of its counterparties. The Company remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts.
Premiums ceded for the three and nine months ended September 30, 2021 were $162.4 million and $322.4 million, respectively (2020 - $8.3 million and $29.2 million, respectively). Loss and loss adjustment expenses recoverable from the retrocessionaire are recorded as assets. As of September 30, 2021, the Company had loss and loss adjustment expenses recoverable of $843.5 million (December 31, 2020 - $14.4 million).
Because retrocessional reinsurance contracts do not relieve the Company of its obligation to its insureds, the collectability of balances due from the Company's reinsurers is important to its financial strength. The Company monitors the financial strength and ratings of retrocessionaires on an ongoing basis. See Note 12 for additional information.
12. Allowance for expected credit losses
The Company is exposed to credit losses primarily through sales of its insurance and reinsurance products and services. The financial assets in scope of the current expected credit losses impairment model primarily include the Company’s insurance and reinsurance balances receivable and loss and loss adjustment expenses recoverable. The Company pools these amounts by counterparty credit rating and applies a credit default rate that is determined based on the studies published by the rating agencies (e.g., AM Best, S&P). In circumstances where ratings are unavailable, the Company applies an internally developed default rate based on historical experience, reference data including research publications, and other relevant inputs.
The Company's assets in scope of the current expected credit loss assessment as of September 30, 2021 and December 31, 2020 are as follows:
September 30,
2021 		December 31, 2020
Insurance and reinsurance balances receivable, net $ 1,621.4  $ 441.9 
Loss and loss adjustment expenses recoverable, net 843.5  14.4 
Other assets (1)
17.6  — 
Total assets in scope $ 2,482.5  $ 456.3 
(1)Relates to MGU trade receivables included in other assets in the Company’s condensed consolidated balance sheets.
The Company’s allowance for expected credit losses was $15.9 million and $0.6 million as of September 30, 2021 and December 31, 2020, respectively. For the three and nine months ended September 30, 2021, the Company recorded current expected credit (gains) losses of $(0.3) million and $15.3 million, respectively (2020 - $0.3 million and $0.5 million, respectively). The Company recognized the allowance for credit losses in accordance with ASC 326 upon initial recognition of the Sirius Group assets within the scope of the standard. An allowance of $16.8 million was re-established in the first quarter ended March 31, 2021 as related to Sirius Group assets. These amounts are included in net corporate and other expenses in the condensed consolidated statements of income (loss).
The Company monitors counterparty credit ratings and macroeconomic conditions, and considers the most current AM Best and S&P credit ratings to determine the allowance each quarter. As of September 30, 2021, approximately 65% of the total gross assets in scope were balances with counterparties rated by either AM Best or S&P and, of the total rated, 82% were rated A- or better.    
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13. Deposit accounted contracts
The following table represents activity for the deposit contracts for the nine months ended September 30, 2021 and year ended December 31, 2020:
September 30,
2021 		December 31, 2020
Balance, beginning of period $ 153.0  $ 172.3 
Consideration received 0.4  0.5 
Consideration receivable 6.9  — 
Net investment expense allocation 3.9  0.9 
Payments (9.8) (20.8)
Foreign currency translation (0.4) 0.1 
Balance, end of period $ 154.0  $ 153.0 
14. Debt and letter of credit facilities
Debt obligations
The following table represents a summary of the Company’s debt obligations on its condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020:
September 30, 2021 December 31, 2020
Amount
Effective rate (1)
Amount
Effective rate (1)
2017 SEK Subordinated Notes, at face value (2)
$ 313.4  4.2  % n/a n/a
Unamortized discount (7.1) n/a
2017 SEK Subordinated Notes, carrying value 306.3  n/a
2016 SIG Senior Notes, at face value (2)
400.0  4.5  % n/a n/a
Unamortized premium 6.3  n/a
2016 SIG Senior Notes, carrying value
406.3  n/a
2015 TPRUSA Senior Notes, at face value 115.0  7.0  % 115.0  7.0  %
Unamortized issuance costs (0.6) (0.7)
2015 TPRUSA Senior Notes, carrying value 114.4  114.3 
Total debt $ 827.0  $ 114.3 
(1)Effective rate considers the effect of the debt issuance costs, discount, and premium.
(2)In connection with the acquisition of Sirius Group, SiriusPoint assumed the outstanding debt of Sirius Group.
2017 SEK Subordinated Notes
On September 22, 2017, Sirius Group, through SIG, issued floating rate callable subordinated notes denominated in Swedish kronor ("SEK") in the amount of SEK 2,750.0 million (or $346.1 million on date of issuance) at a 100% issue price ("2017 SEK Subordinated Notes"). The 2017 SEK Subordinated Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933 (the "Securities Act"). The 2017 SEK Subordinated Notes bear interest on their principal amount at a floating rate equal to the applicable Stockholm Interbank Offered Rate for the relevant interest period plus an applicable margin, payable quarterly in arrears on March 22, June 22, September 22 and December 22 of each year until maturity in September 2047. Beginning on September 22, 2022, the 2017 SEK Subordinated Notes may be redeemed, in whole or in part, at the Company’s option.
As a result of the Company’s merger with SIG, the Company assumed the existing and outstanding aggregate principal amount of the 2017 SEK Subordinated Notes pursuant to the First Supplemental Subordinated Indenture, dated May 27, 2021, among SIG, the Company and The Bank of New York Mellon, as trustee (the “Trustee”). The Company was in compliance with all debt covenants as of and for the period ended September 30, 2021.
For the three and nine months ended September 30, 2021, the Company recorded $3.3 million and $7.9 million, respectively, of interest expense, inclusive of amortization of discount, on the 2017 SEK Subordinated Notes. For the three and nine
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months ended September 30, 2021, the Company also recognized $9.2 million and $15.1 million, respectively, of foreign exchange gains on the translation of the 2017 SEK Subordinated Notes into USD from SEK.
2016 SIG Senior Notes
On November 1, 2016, Sirius Group, through SIG, issued $400.0 million face value of senior unsecured notes ("2016 SIG Senior Notes") at an issue price of 99.2% for net proceeds of $392.4 million after taking into effect both deferrable and non-deferrable issuance costs. The 2016 SIG Senior Notes were issued in an offering that was exempt from the registration requirements of the Securities Act. The 2016 SIG Senior Notes bear an annual interest rate of 4.6%, payable semi-annually in arrears on May 1 and November 1 of each year until maturity in November 2026.
As a result of the Company’s merger with SIG, the Company assumed the existing and outstanding aggregate principal amount of the 2016 SIG Senior Notes pursuant to the Third Supplemental Senior Indenture, dated May 27, 2021, among SIG, the Company and the Trustee. The Company was in compliance with all debt covenants as of and for the period ended September 30, 2021.
For the three and nine months ended September 30, 2021, the Company recorded $4.3 million and $10.3 million, respectively, of interest expense, inclusive of amortization of premium, on the 2016 SIG Senior Notes.
2015 TPRUSA Senior Notes
As of September 30, 2021, Third Point Re (USA) Holdings, Inc. (“TPRUSA”) had outstanding debt obligations consisting of an aggregate principal amount of $115.0 million of senior unsecured notes (the “2015 TPRUSA Senior Notes”) due February 13, 2025. The 2015 TPRUSA Senior Notes bear interest at 7.0% and interest is payable semi-annually on February 13 and August 13 of each year. The 2015 TPRUSA Senior Notes are fully and unconditionally guaranteed by SiriusPoint and, in certain circumstances specified in the indenture governing the 2015 TPRUSA Senior Notes, certain existing or future subsidiaries of the Company may be required to guarantee the 2015 TPRUSA Senior Notes. The Company was in compliance with all debt covenants as of and for the periods ended September 30, 2021 and December 31, 2020.
For the three and nine months ended September 30, 2021, the Company recorded $2.1 million and $6.2 million, respectively, of interest expense, inclusive of amortization of issuance costs, on the 2015 TPRUSA Senior Notes (2020 - $2.1 million and $6.2 million, respectively).
Interest expense
Total interest expense incurred by the Company for its indebtedness for the three and nine months ended September 30, 2021 was $9.7 million and $24.4 million, respectively (2020 - $2.1 million and $6.2 million, respectively).
Standby letter of credit facilities
As of September 30, 2021, the Company had entered into the following letter of credit facilities:
Letters of Credit Collateral
Committed Capacity Issued Cash and Cash Equivalents Debt securities
Committed - Secured letters of credit facilities $ 330.0  $ 199.3  $ 105.0  $ — 
Uncommitted - Secured letters of credit facilities n/a 854.7  472.1  597.0 
$ 1,054.0  $ 577.1  $ 597.0 
The Company’s secured letter of credit facilities are bilateral agreements that generally renew on an annual basis. The letters of credit issued under the secured letter of credit facilities are fully collateralized. The above referenced facilities are subject to various affirmative, negative and financial covenants that the Company considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards. See Note 6 for additional information.
Revolving credit facility
Effective February 26, 2021, the Company entered into a three-year, $300.0 million senior unsecured revolving credit facility (the “Facility”) with JPMorgan Chase Bank, N.A. as administrative agent. The Facility includes an option, subject to satisfaction of certain conditions including agreement of lenders representing greater than a majority of commitments, for the Company to request an extension by such lenders of the maturity date of the Facility by an additional 12 months. The Facility
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provides access to loans for working capital and general corporate purposes, and letters of credit to support obligations under insurance and reinsurance agreements, retrocessional agreements and for general corporate purposes. Loans and letters of credit under the Facility will become available, subject to customary conditions precedent. As of September 30, 2021, there were no outstanding borrowings under the Facility.
15. Net investment income
Net investment income for the three and nine months ended September 30, 2021 and 2020 consisted of the following:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Debt securities $ 2.4  $ 6.1  $ 12.6  $ 65.0 
Short-term investments (5.6) —  (4.2) — 
Equity securities (1.4) —  (1.4) — 
Other long-term investments 11.5  —  73.4  — 
Net investment income from investments in related party investment funds 202.4  110.6  401.2  8.3 
Net investment income before other investment expenses and investment income (loss) on cash and cash equivalents 209.3  116.7  481.6  73.3 
Other investment expenses (7.8) (0.3) (12.3) (1.1)
Net investment income (loss) on cash and cash equivalents (1.7) 5.6  (5.6) 1.9 
Net investment income $ 199.8  $ 122.0  $ 463.7  $ 74.1 
Net realized and unrealized gains (losses) on investments
Net realized and unrealized investment gains (losses) for the three and nine months ended September 30, 2021 and 2020 consisted of the following:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Gross realized gains $ 8.3  $ 10.5  $ 29.4  $ 58.2 
Gross realized losses (2.6) (7.0) (6.4) (13.8)
Net realized gains on investments (1) 5.7  3.5  23.0  44.4 
Net unrealized gains (losses) on investments (2) (17.4) 3.5  20.7  10.2 
Net realized and unrealized gains (losses) on investments (3) $ (11.7) $ 7.0  $ 43.7  $ 54.6 
(1)Includes realized gains due to foreign currency of $2.6 million and $1.1 million for the three and nine months ended September 30, 2021, respectively (2020 - $nil and $1.3 million, respectively).
(2)Includes unrealized gains (losses) due to foreign currency of $(11.2) million and $(17.4) million for the three and nine months ended September 30, 2021, respectively (2020 - $5.3 million and $(4.0) million, respectively).
(3)Excludes realized and unrealized gains (losses) on the Company’s investments in related party investment funds.
Net realized investment gains
Net realized investment gains for the three and nine months ended September 30, 2021 and 2020 consisted of the following:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Debt securities $ 5.3  $ 3.5  $ 13.4  $ 42.6 
Short-term investments (1.6) —  (1.8) — 
Equity securities —  —  (0.1) — 
Other long-term investments 1.2  —  11.8  — 
Net investment income (loss) on cash and cash equivalents 0.8  —  (0.3) 1.8 
Net realized investment gains $ 5.7  $ 3.5  $ 23.0  $ 44.4 
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Net unrealized investment gains (losses)
Net unrealized investment gains (losses) for the three and nine months ended September 30, 2021 and 2020 consisted of the following:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Debt securities $ (15.2) $ (1.8) $ (23.5) $ 14.2 
Short-term investments (6.8) —  (10.7) — 
Equity securities (1.4) —  (1.4) — 
Other long-term investments 4.9  —  53.5  — 
Net investment income (loss) on cash and cash equivalents 1.1  5.3  2.8  (4.0)
Net unrealized investment gains (losses) $ (17.4) $ 3.5  $ 20.7  $ 10.2 
The following table summarizes the amount of total gains (losses) included in earnings attributable to unrealized investment gains (losses) – Level 3 investments for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Debt securities $ —  $ (0.1) $ —  $ 0.1 
Other long-term investments 2.0  —  40.4  — 
Total unrealized investment gains (losses) – Level 3 investments $ 2.0  $ (0.1) $ 40.4  $ 0.1 
16. Income taxes
The Company provides for income tax expense or benefit based upon pre-tax income or loss reported in the condensed consolidated statements of income (loss) and the provisions of currently enacted tax laws. The Company and its Bermuda subsidiaries are incorporated under the laws of Bermuda and are subject to Bermuda law with respect to taxation. Under current Bermuda law, the Company and its Bermuda subsidiaries are not subject to any income or capital gains taxes in Bermuda. In the event that such taxes are imposed, the Company and its Bermuda subsidiaries would be exempted from any such taxes until March 2035 under the Tax Assurance Certificates issued to such entities pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966, as amended.
Prior to the acquisition of Sirius Group on February 26, 2021, the Company had one operating subsidiary incorporated in Bermuda, Third Point Re USA, which made an election to pay tax in the United States of America under Section 953(d) of the U.S. Internal Revenue Code of 1986, as amended. Subsequent to the acquisition of Sirius Group, the Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which the Company's subsidiaries and branches are subject to tax are Australia, Belgium, Canada, Germany, Hong Kong (China), Ireland, Luxembourg, Malaysia, Singapore, Sweden, Switzerland, the United Kingdom, and the United States.
For the three and nine months ended September 30, 2021, the Company recorded income tax expense (benefit) of $(13.0) million and $6.4 million, respectively (2020 - $0.7 million and $4.4 million, respectively) on pre-tax income (loss) of $(60.4) million and $161.5 million, respectively (2020 - $69.4 million and $13.5 million, respectively). The effective tax rate for the three and nine months ended September 30, 2021 was 21.5% and 4.0%, respectively. The difference between the effective tax rate on income from continuing operations and the Swedish statutory tax rate of 20.6% (the rate at which the majority of the Company's worldwide operations are taxed after the acquisition of Sirius Group) is primarily because of income recognized in jurisdictions with lower tax rates than Sweden, adjustments in valuation allowances against certain deferred tax assets, and adjustments required under applicable U.S. GAAP guidance, which are based on the annual estimated effective tax rate.
In arriving at the estimated annual effective tax rate for the nine months ended September 30, 2021 and 2020, the Company took into consideration all year-to-date income and expense items including the change in unrealized investment gains (losses) and realized investment gains (losses) and such items on a forecasted basis for the remainder of each year. Based on applicable U.S. GAAP guidance, jurisdictions with a projected loss for the full year where no tax benefit can be recognized are excluded from the estimation of the annual effective tax rate.
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The Tax Cuts and Jobs Act ("TCJA") includes a Base Erosion and Anti-Abuse Minimum Tax ("BEAT") provision, which is essentially a minimum tax on certain otherwise deductible payments made by U.S. entities to non-U.S. affiliates, including cross-border interest payments and reinsurance premiums paid or ceded. The statutory BEAT rate is 10% through 2025, and then rises to 12.5% in 2026 and thereafter. The TCJA also includes provisions for Global Intangible Low-Taxed Income ("GILTI") under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries. Consistent with accounting guidance, the Company will treat BEAT as an in period tax charge when incurred in future periods for which no deferred taxes need to be provided and has made an accounting policy election to treat GILTI taxes in a similar manner. No provision for income taxes related to BEAT or GILTI was recorded as of September 30, 2021 and December 31, 2020.
The Company has capital and liquidity in many of its subsidiaries, some of which may reflect undistributed earnings. If such capital or liquidity were to be paid or distributed to the Company or to one of its intermediary subsidiaries as dividends or otherwise, they may be subject to withholding tax by the source country and/or income tax by the recipient country. The Company generally intends to operate, and manage its capital and liquidity, in a tax-efficient manner. However, the applicable tax laws in relevant countries are still evolving, including in connection with guidance and proposals from the Organisation for Economic Cooperation and Development (OECD). Accordingly, such payments or distributions may be subject to income or withholding tax in jurisdictions where they are not currently taxed or at higher rates of tax than currently taxed, and the applicable tax authorities could attempt to apply income or withholding tax to past earnings or payments.
Deferred tax asset, net of valuation allowance
As of September 30, 2021, the Company has recorded net deferred tax asset, net of valuation allowance, of $42.0 million. $66.2 million relates to net deferred tax assets in U.S. subsidiaries, $136.8 million relates to net deferred tax assets in Luxembourg subsidiaries, $3.9 million relates to net deferred tax liabilities in UK subsidiaries, $156.3 million relates to net deferred tax liabilities in Sweden subsidiaries, and $0.8 million relates to other net deferred tax liabilities.
The Company records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, the Company considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset. It is possible that certain planning strategies or projected earnings in certain subsidiaries may not be feasible to utilize the entire deferred tax asset, which could result in material changes to the Company's deferred tax assets and tax expense. Based on this approach, for the quarter ended September 30, 2021, the Company recorded a net increase of $11.8 million in the valuation allowance applicable to deferred tax assets in Swedish and UK subsidiaries.
Uncertain tax positions
Recognition of the benefit of a given tax position is based upon whether a company determines that it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. In evaluating the more likely than not recognition threshold, the Company must presume that the tax position will be subject to examination by a taxing authority with full knowledge of all relevant information. If the recognition threshold is met, then the tax position is measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement.
As of September 30, 2021, the total reserve for unrecognized tax benefits is $3.2 million. If the Company determines in the future that its reserves for unrecognized tax benefits on permanent differences and interest and penalties are not needed, the reversal of $2.5 million of such reserves as of September 30, 2021 would be recorded as an income tax benefit and would impact the effective tax rate. If the Company determines in the future that its reserves for unrecognized tax benefits on temporary differences are not needed, the reversal of $0.7 million of such reserves as of September 30, 2021 would not impact the effective tax rate due to deferred tax accounting but would accelerate the payment of cash to the taxing authority.
With few exceptions, which are not material, the Company is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2016.
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17. Shareholders' equity
Common shares
The following table presents a summary of the common shares issued and outstanding as of and for the nine months ended September 30, 2021 and 2020:
2021 2020
Common shares issued, beginning of period 95,582,733  94,225,498 
Options exercised 220,000  — 
Issuance of common shares, net of forfeitures and shares withheld 3,185,798  745,099 
Performance restricted shares granted, net of forfeitures and shares withheld (1,464,532) 344,296 
Issuance of common shares for Sirius Group acquisition 58,331,196  — 
Issuance of common shares to related party 6,093,842  — 
Common shares issued, end of period 161,949,037  95,314,893 
The Company’s authorized share capital consists of 300,000,000 common shares with a par value of $0.10 each. During the nine months ended September 30, 2021 and 2020, the Company did not pay any dividends to its common shareholders.
Preference shares
The Company’s authorized share capital also consists of 30,000,000 preference shares with a par value of $0.10 each.
Series B preference shares
On February 26, 2021, the previous Sirius Group preference shareholders exchanged their existing Series B preference shares of Sirius Group in return for 8,000,000 new Series B preference shares, par value $0.10, of the Company. Dividends on the Series B preference shares will be cumulative and payable quarterly in arrears at an initial rate of 8.0% per annum. The preference shareholders will have no voting rights with respect to the Series B preference shares unless dividends have not been paid for six dividend periods, whether or not consecutive, in which case the holders of the Series B preference shares will have the right to elect two directors.
The dividend rate will reset on each five-year anniversary of issuance at a rate equal to the five-year U.S. treasury rate at such time plus 7.298%. The Series B preference shares are perpetual and have no fixed maturity date. The Series B preference shares will provide for redemption rights by the Company (i) in whole, or in part, on each five-year anniversary of issuance at 100%, (ii) in whole, but not in part, (a) upon certain rating agency events, at 102%, (b) upon certain capital disqualification events, at 100%, and (c) upon certain tax events, at 100%.
On June 28, 2021 and August 12, 2021, the Company entered into Underwriting Agreements with the Series B preference shareholders (the “Selling Shareholders”) pursuant to which the Selling Shareholders sold to the public market an aggregate of 8,000,000 Series B preference shares. The Company did not receive any proceeds from the sale of the Series B preference shares by the Selling Shareholders. The transaction did not change the underlying conditions of the Series B preference shares. The Series B preference shares are listed on the New York Stock Exchange under the symbol “SPNT PRB”.
During the three and nine months ended September 30, 2021, the Company declared and paid dividends of $4.0 million and $8.1 million to the Series B preference shareholders, respectively.
18. Share-based compensation
As of September 30, 2021, the Company’s share-based awards consisted of Restricted Share Units (“RSUs”), Performance Share Units (“PSUs”), restricted share awards with service condition and options.
As part of the 2021-2023 annual long-term incentive award cycle, the Company granted to its employees a number of RSUs and PSUs pursuant to the terms and conditions of the SiriusPoint Ltd. 2013 Omnibus Incentive Plan. The RSUs vest over three years in equal, one-third installments on each anniversary of the award grant date subject to continued provision of services through the applicable vesting date. The PSUs are subject to a service condition as well as a performance condition.
The total share-based compensation expense incurred during the three and nine months ended September 30, 2021 and 2020 was $7.7 million and $17.0 million, respectively, and $1.5 million and $4.7 million, respectively.
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As of September 30, 2021, the Company had $45.4 million (December 31, 2020 - $14.2 million) of unamortized share compensation expense, which is expected to be amortized over a weighted average period of 2.6 years (December 31, 2020 - 1.9 years).
Restricted share awards with service condition
Restricted share award activity for the nine months ended September 30, 2021 and year ended December 31, 2020 was as follows:
Number of non-
vested restricted
shares 		Weighted
average grant
date fair value
Balance as of January 1, 2020 340,767  $ 11.83 
Granted 1,029,373  8.30 
Forfeited (16,434) 9.77 
Vested (182,648) 10.10 
Balance as of January 1, 2021 1,171,058  8.80 
Granted 2,123,811  10.32 
Forfeited (81,646) 10.31 
Vested (525,611) 10.03 
Balance as of September 30, 2021 2,687,612  $ 9.98 
During the quarter ended June 30, 2021, the Company modified its 2019 and 2020 restricted share awards with service and performance conditions to convert them at the most recent forecasted performance percentage to restricted shares with a service condition only. Further, the Company supplemented these awards with additional restricted shares with extended vesting periods.
Restricted share awards with service condition vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment or service and transferability.
Restricted Share Units
RSU activity for the nine months ended September 30, 2021 was as follows:
Number of non-
vested restricted
shares 		Weighted
average grant
date fair value
Balance as of January 1, 2021 —  $ — 
Granted 6,083,318  10.24 
Forfeited (115,624) 10.27 
Vested (2,327,159) 10.21 
Balance as of September 30, 2021 3,640,535  $ 10.26 
As a result and at the time of the acquisition of Sirius Group, Sirius Group's outstanding restricted share units were converted to Company RSUs.
RSUs with service condition vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment or service and transferability.
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Performance Share Units
PSU activity for the nine months ended September 30, 2021 was as follows:
Number of non-
vested PSUs 		Number of non-
vested PSUs probable of vesting 		Weighted average grant date fair value of PSUs probable of vesting
Balance as of January 1, 2021 —  —  $ — 
Granted 1,154,863  1,154,863  10.39 
Forfeited (30,818) (30,818) 10.44 
Vested (4,653) (4,653) 10.44 
Balance as of September 30, 2021 1,119,392  1,119,392  $ 10.42 
PSUs vest over four distinct performance periods subject to participant’s continued provision of services to the Company until the vesting date.
Options
The options activity for the nine months ended September 30, 2021 was as follows:
Number of
options 		Weighted average
exercise price
Balance as of January 1, 2021 8,255,810  $ 13.45 
Granted 2,772,215  10.69
Exercised (220,000) 10.00
Balance as of September 30, 2021 10,808,025  $ 12.81 
The share options issued to management under the Share Incentive Plan are subject to a service condition. The fair value of share options issued were estimated on the grant date using the Black-Scholes option-pricing model.
The following table summarizes information about the Company’s management share options outstanding and exercisable as of September 30, 2021:
Options outstanding Options exercisable
Range of exercise prices Number of
options 		Weighted average
exercise price 		Remaining contractual life Number of
options 		Weighted average
exercise price
$9.83 - $10.89 6,896,401  $ 10.01  1.7 years 6,308,039  $ 9.98 
$15.00 - $16.89 2,190,696  15.75  2.2 years 1,790,696  15.92 
$20.00 - $25.05 1,720,928  20.28  0.5 years 1,720,928  20.28 
10,808,025  $ 12.81  1.6 years 9,819,663  $ 12.87 
19. Variable interest entities
The Company consolidates the results of operations and financial position of every voting interest entity ("VOE") in which it has a controlling financial interest and variable interest entities (“VIE”) in which it is considered to be the primary beneficiary in accordance with guidance in ASC 810, Consolidation. The consolidation assessment, including the determination as to whether an entity qualifies as a VOE or VIE, depends on the facts and circumstances surrounding each entity.
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Consolidated variable interest entities
Alstead Re
As a result of the acquisition of Sirius Group, the Company has consolidated the results of Alstead Re Insurance Company (“Alstead Re”) in its condensed consolidated financial statements beginning February 26, 2021. Alstead Re is considered a VIE as it has insufficient equity capital to finance its activities without additional financial support. The Company determined that Alstead Re is a VIE for which the Company is the primary beneficiary as it has power over the activities that most significantly impact the economic performance. As of September 30, 2021, Alstead Re’s assets and liabilities included in the Company’s condensed consolidated balance sheets were $10.0 million and $5.4 million, respectively.
Arcadian
In September 2020, the Company co-founded Arcadian Risk Capital Ltd. (“Arcadian”), a managing general agent incorporated in Bermuda writing business on behalf of the Company. Arcadian commenced operations on October 1, 2020. The Company’s ownership in Arcadian as of September 30, 2021 was 49%, representing 980,000 common shares at $1.00 par value. Arcadian is considered a VIE as it has insufficient equity capital to finance its activities without additional financial support. The Company concluded that it is the primary beneficiary of Arcadian as it has power over the activities that most significantly impact the economic performance of Arcadian. As a result, the Company has consolidated the results of Arcadian in its condensed consolidated financial statements. The Company’s financial exposure to Arcadian is limited to its investment in Arcadian’s common shares and other financial support up to $18.0 million through an unsecured promissory note. As of September 30, 2021, Arcadian’s assets and liabilities, after intercompany eliminations, included in the Company’s condensed consolidated balance sheets were $6.2 million and $4.9 million, respectively (December 31, 2020 - $3.3 million and $0.6 million, respectively).
Joyn
In July 2021, the Company announced a strategic insurance partnership with Joyn Insurance Services Inc. (“Joyn”), a Delaware-domiciled managing general agent, pursuant to which it will write business on behalf of the Company. Joyn commenced operations on July 1, 2021. The Company’s ownership in Joyn as of September 30, 2021 was 50%, on a fully diluted basis, representing 1,175,000 preferred shares. Joyn is considered a VIE as it has insufficient equity capital to finance its activities without additional financial support. The Company concluded that it is the primary beneficiary of Joyn as it has power over the activities that most significantly impact the economic performance of Joyn. As a result, the Company has consolidated the results of Joyn in its condensed consolidated financial statements. The Company’s financial exposure to Joyn is limited to its investment in Joyn’s preferred shares and other financial support up to $16.5 million through a term loan. As of September 30, 2021, Joyn’s assets and liabilities, after intercompany eliminations, included in the Company’s condensed consolidated balance sheets were $10.1 million and $4.0 million, respectively.
Non-controlling interests
Non-controlling interests represent the portion of equity in consolidated subsidiaries not attributable, directly or indirectly, to the Company. The following table is a reconciliation of the beginning and ending carrying amount of noncontrolling interests for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Balance, beginning of period $ 3.3  $ —  $ 1.4  $ — 
Sirius Group acquisition (1)
—  —  0.3  — 
Net loss attributable to noncontrolling interests (3.4) —  (1.8) — 
Contributions 0.1  1.0  0.1  1.0 
Balance, end of period $ —  $ 1.0  $ —  $ 1.0 
(1)See Note 3 for additional information related to the acquisition of Sirius Group.
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Non-consolidated variable interest entities
As a result of the acquisition of Sirius Group, the Company is a passive investor in certain third-party-managed hedge and private equity funds, some of which are VIEs. The Company is not involved in the design or establishment of these VIEs, nor does it actively participate in the management of the VIEs. The exposure to loss from these investments is limited to the carrying value of the investments at the balance sheet date.
The Company calculates maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where the Company has also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE. The Company does not have any VIEs that it sponsors nor any VIEs where it has recourse to it or has provided a guarantee to the VIE interest holders.
The following table presents total assets of unconsolidated VIEs in which the Company holds a variable interest, as well as the maximum exposure to loss associated with these VIEs as of September 30, 2021:
September 30, 2021
Maximum Exposure to Loss
Total VIE Assets On-Balance Sheet Off-Balance Sheet Total
Other long-term investments (1)
$ 322.4  $ 216.6  $ 2.2  $ 218.8 
$ 322.4  $ 216.6  $ 2.2  $ 218.8 
(1)Comprised primarily of hedge funds and private equity funds.
Third Point Enhanced LP
TP Enhanced Fund meets the definition of a variable interest entity principally because of the existence of disproportionate rights in the partnership compared to the obligations to absorb the expected losses and right to receive the expected residual returns of TP Enhanced Fund’s results. As of September 30, 2021, the Company and TP GP hold interests of approximately 88.5% and 11.5%, respectively, of the net asset value of TP Enhanced Fund. As a result, both entities hold significant financial interests in TP Enhanced Fund. However, TP GP controls all of the investment decision-making authority and the Company does not have the power to direct the activities which most significantly impact the economic performance of TP Enhanced Fund. As a result, the Company is not considered the primary beneficiary and does not consolidate TP Enhanced Fund. The Company’s maximum exposure to loss corresponds to the value of its investments in TP Enhanced Fund.
As a result of the Company’s holding in TP Enhanced Fund and its contribution to the Company’s overall financial results, the Company includes the following summarized income statement of the TP Enhanced Fund for the three and nine months ended September 30, 2021 and 2020, and summarized balance sheet as of September 30, 2021 and December 31, 2020.
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This summarized income statement of TP Enhanced Fund reflects the main components of total investment income and expenses of TP Enhanced Fund. This summarized income statement is not a breakdown of the Company’s proportional investment income in TP Enhanced Fund as presented in the Company’s condensed consolidated statements of income (loss).
Three months ended Nine months ended
TP Enhanced Fund summarized income statement September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Investment income
Net realized gain (loss) from securities, derivative contracts and foreign currency translations $ 38.3  $ (7.0) $ 298.4  $ 11.1 
Net change in unrealized gain on securities, derivative contracts and foreign currency translations 244.2  151.5  268.4  13.3 
Net income (loss) from currencies 0.4  1.5  —  1.3 
Dividend and interest income 8.1  10.0  22.8  23.5 
Other income —  —  —  0.7 
Total investment income 291.0  156.0  589.6  49.9 
Expenses
Management fees 4.1  3.5  12.1  10.6 
Interest 1.5  1.3  4.4  5.8 
Dividends on securities sold, not yet purchased 1.5  1.0  4.5  3.3 
Administrative and professional fees 0.6  1.3  2.0  2.2 
Other expenses 1.3  0.8  4.7  1.7 
Total expenses 9.0  7.9  27.7  23.6 
Net income $ 282.0  $ 148.1  $ 561.9  $ 26.3 
The following table is a summarized balance sheet of TP Enhanced Fund as of September 30, 2021 and December 31, 2020 and reflects the underlying assets and liabilities of TP Enhanced Fund. This summarized balance sheet is not a breakdown of the Company’s proportional interests in the underlying assets and liabilities of TP Enhanced Fund.
TP Enhanced Fund summarized balance sheet September 30,
2021 		December 31, 2020
Assets
Total investments in securities and affiliated funds $ 2,616.7  $ 2,200.9 
Cash and cash equivalents 40.3  40.1 
Due from brokers 117.3  124.6 
Derivative assets, at fair value 43.1  37.0 
Interest and dividends receivable 3.4  3.2 
Other assets 1.5  3.9 
Total assets $ 2,822.3  $ 2,409.7 
Liabilities
Accounts payable and accrued expenses $ 1.6  $ 1.0 
Securities sold, not yet purchased, at fair value 385.9  183.0 
Securities sold under agreement to repurchase 12.0  5.5 
Due to brokers 699.3  894.0 
Derivative liabilities, at fair value 8.2  23.7 
Withdrawals payable to General Partner —  75.0 
Interest and dividends payable 0.7  0.7 
Management fee payable 0.2  0.2 
Total liabilities 1,107.9  1,183.1 
Total partners' capital $ 1,714.4  $ 1,226.6 
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20. Investments in unconsolidated entities
The Company’s investments in unconsolidated entities are included within other long-term investments and consist of investments in common equity securities or similar instruments, which give the Company the ability to exert significant influence over the investee's operating and financial policies ("equity method eligible unconsolidated entities"). Such investments may be accounted for under either the equity method or, alternatively, the Company may elect to account for them under the fair value option.
The following table presents the components of other long-term investments as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31, 2020
Equity method eligible unconsolidated entities, at fair value $ 274.5  $ — 
Other unconsolidated investments, at fair value (1)
180.0  4.0 
Total other long-term investments (2)
$ 454.5  $ 4.0 
(1)Includes other long-term investments that are not equity method eligible.
(2)There were no investments accounted for using the equity method as of September 30, 2021 and December 31, 2020.
The Company has elected the fair value option to account for its equity method eligible investments accounted for as part of other long-term investments for consistency of presentation with the rest of its investment portfolio. The following table presents the Company’s voting ownership interests in investments in equity method eligible unconsolidated entities as of September 30, 2021:
September 30, 2021
Investee Fair value Voting interest Instrument held
BE Reinsurance Limited $ 15.2  24.9  % Common shares
BioVentures Investors (Offshore) IV LP 16.6  73.0  % Units
Camden Partners Strategic Fund V (Cayman), LP —  39.4  % Units
Diamond LS I LP 7.1  15.3  % Units
Gateway Fund LP 4.4  22.9  % Units
Monarch 6.2  12.8  % Units
New Energy Capital Infrastructure Credit Fund LP 25.4  29.7  % Units
New Energy Capital Infrastructure Offshore Credit Fund LP 16.7  29.7  % Units
Pie Common Stock (1) 34.4  4.3  % Common shares
Pie Preferred Stock (1) 63.3  9.6  % Preferred shares
Pie Series B Preferred Stock (1) 51.2  6.9  % Preferred shares
Pie Series C Preferred Stock (1) 3.1  0.5  % Preferred shares
Quintana Energy Partners 0.3  21.8  % Units
Tuckerman Capital V LP 10.7  45.7  % Units
Tuckerman Capital V Co-Investment I LP 7.5  47.7  % Units
A-Star Partners Fund I, LP (2) 2.5  —  % Units
SABR Class A Common Stock $ 10.0  10.2  % Units
(1)The Company holds investments in several financing instruments of Pie Insurance. Common stock interest is non-voting.
(2)The Company does not hold voting rights and exercises significant influence via an Advisory Board seat.
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21. Earnings (loss) per share available to SiriusPoint common shareholders
The following sets forth the computation of basic and diluted earnings (loss) per share available to SiriusPoint common shareholders for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Weighted-average number of common shares outstanding:
Basic number of common shares outstanding 159,225,772  92,613,393  145,095,270  92,466,813 
Dilutive effect of options —  —  196,414  — 
Dilutive effect of warrants —  —  38,525  — 
Dilutive effect of restricted share units —  356,253  1,252,639  410,861 
Dilutive effect of Series A preference shares 1,015,116  —  1,015,116  — 
Diluted number of common shares outstanding 160,240,888  92,969,646  147,597,964  92,877,674 
Basic earnings (loss) per common share:
Net income (loss) available to SiriusPoint common shareholders $ (48.0) $ 68.7  $ 147.4  $ 9.1 
Net income allocated to SiriusPoint participating common shareholders —  (0.5) (11.0) — 
Net income (loss) allocated to SiriusPoint common shareholders $ (48.0) $ 68.2  $ 136.4  $ 9.1 
Basic earnings (loss) per share available to SiriusPoint common shareholders $ (0.30) $ 0.74  $ 0.94  $ 0.10 
Diluted earnings (loss) per common share:
Net income (loss) available to SiriusPoint common shareholders $ (48.0) $ 68.7  $ 147.4  $ 9.1 
Net income allocated to SiriusPoint participating common shareholders —  (0.5) (2.2) — 
Change in carrying value of Series A preference shares (7.2) —  (9.6) — 
Net income (loss) allocated to SiriusPoint common shareholders $ (55.2) $ 68.2  $ 135.6  $ 9.1 
Diluted earnings (loss) per share available to SiriusPoint common shareholders $ (0.34) $ 0.73  $ 0.92  $ 0.10 
For the three and nine months ended September 30, 2021, options of 10,808,025 and 4,487,807, respectively, warrants of 34,618,734 and 31,123,755, respectively, and Upside Rights of 10,000,000 and 10,000,000, respectively, were excluded from the computation of diluted earnings (loss) per share as the average share price for the quarter was below the exercise price or reference price for the respective security.
For the three and nine months ended September 30, 2020, anti-dilutive options of 3,741,266 and 3,741,266, respectively, and warrants of 3,494,979 and 3,494,979, respectively, were excluded from the computation of diluted earnings per share.
22. Related party transactions
In addition to the transactions disclosed in Notes 7, 15 and 19 to these condensed consolidated financial statements, the following transactions are classified as related party transactions, as the counterparties have either a direct or indirect shareholding in the Company or the Company has an investment in such counterparty.
(Re)insurance contracts
Subsequent to the Sirius Group acquisition, insurance and reinsurance contracts with certain of the Company’s insurance and MGU affiliates resulted in gross written premiums of $69.3 million and $151.3 million during the three and nine months ended September 30, 2021, respectively. As of September 30, 2021, the Company had total receivables from affiliates of $65.3 million and no payables.
Equity Commitment Letter
Pursuant to the equity commitment letter by and among the Company, Third Point Opportunities Master Fund L.P. and Daniel S. Loeb, entered into on August 6, 2020, Third Point Opportunities Master Fund L.P. purchased 6,093,842 of the Company’s common shares at a price of $7.9828 per share upon closing of the Company’s acquisition of Sirius Group.
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Transaction Matters Letter Agreement
On August 6, 2020, CM Bermuda, Sirius Group, the Company and CMIG International entered into a Transaction Matters Letter Agreement (the “Transaction Matters Agreement”), pursuant to which, among other things and subject to the terms and conditions thereof, Sirius Group agreed to pay for and reimburse CMIG International and CM Bermuda for certain legal expenses incurred in connection with the Sirius Group sales process or other discussions between CMIG International, CM Bermuda and the Sirius Group occurring on or after March 6, 2020, and the Company has agreed to assume such remaining payment obligations of Sirius Group following the closing of the acquisition of Sirius Group. The Company has also agreed to pay for the fees and expenses payable by CMIG International and CM Bermuda to its financial advisor, Goldman Sachs (Asia) L.L.C., relating to the acquisition of Sirius Group. During the three and nine months ended September 30, 2021, the Company did not pay any legal expenses incurred by CM Bermuda and CMIG International in connection with the Transaction Matters Agreement.
Management and performance fees to related parties
The total management and performance fees to related parties for the three and nine months ended September 30, 2021 and 2020 were as follows:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Management fees $ 5.3  $ 3.5  $ 14.1  $ 10.6 
Performance fees - fixed income and other investments (1)
—  12.5  —  12.5 
Performance fees (before loss carryforward) 50.3  25.3  99.7  4.9 
Performance fees - loss carryforward utilized —  (20.9) —  (0.5)
Total management and performance fees to related parties $ 55.6  $ 20.4  $ 113.8  $ 27.5 
(1)Pursuant to the terms of the 2020 LPA, the performance of certain fixed income and other investments managed by Third Point LLC were subject to 20% performance fees for the year ended December 31, 2020 only.
Management fees
Third Point Enhanced LP
Effective January 1, 2019, SiriusPoint, SiriusPoint Bermuda and Third Point Re USA entered into the Second Amended and Restated Exempted Limited Partnership Agreement (the “2019 LPA”) of TP Enhanced Fund. Pursuant to the 2019 LPA, Third Point LLC is entitled to receive monthly management fees. Management fees are charged at the TP Enhanced Fund level and are calculated based on 1.25% of the investment in TP Enhanced Fund and multiplied by an exposure multiplier computed by dividing the average daily investment exposure leverage of the TP Enhanced Fund by the average daily investment exposure leverage of the Third Point Offshore Master Fund L.P. (“Offshore Master Fund”). Third Point LLC also serves as the investment manager for the Offshore Master Fund.
The 2020 LPA, effective February 26, 2021, removed the adjustment for investment exposure leverage in the management fee calculation, as previously adjusted for under the 2019 LPA. The 2020 LPA did not amend the management fee rate of 1.25% per annum.
Third Point Venture Offshore Fund I LP
No management fees are payable by the Company under the 2021 Venture LPA.
Third Point Insurance Portfolio Solutions
Effective February 26, 2021, Third Point LLC, Third Point Insurance Portfolio Solutions (“TPIPS”) and the Company entered into an Investment Management Agreement (the “TPIPS IMA”), pursuant to which TPIPS will serve as investment manager to the Company and provide investment advice with respect to the investable assets of the Company, other than assets that the Company may withdraw from time to time as working capital. The Amended and Restated Collateral Assets Investment Management Agreement was terminated at the effective date of the TPIPS IMA.
Pursuant to the TPIPS IMA, the Company will pay Third Point LLC a fixed management fee, payable monthly in advance, equal to 1/12 of 0.06% of the fair value of assets managed (other than assets invested in TP Enhanced Fund).
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Performance fees
Third Point Enhanced LP
Pursuant to the 2019 LPA, TP GP receives a performance fee allocation equal to 20% of the Company’s investment income in the related party investment fund. The performance fee is included as part of “Investment in related party investment fund” on the Company’s condensed consolidated balance sheet since the fees are charged at the TP Enhanced Fund level.
The performance fee is subject to a loss carryforward provision pursuant to which TP GP is required to maintain a loss recovery account, which represents the sum of all prior period net loss amounts and not subsequently offset by prior year net profit amounts, and that is allocated to future profit amounts until the loss recovery account has returned to a positive balance. Until such time, no performance fees are payable, provided that the loss recovery account balance shall be reduced proportionately to reflect any withdrawals from TP Enhanced Fund. The 2019 LPA preserves the loss carryforward attributable to our investment in TP Enhanced Fund when contributions to TP Enhanced Fund are made within nine months of certain types of withdrawals from TP Enhanced Fund.
Pursuant to the 2020 LPA, the performance of certain fixed income and other investments managed by Third Point LLC were included when calculating the performance fee allocation and loss recovery account amounts under the terms of the 2019 LPA for the year ended December 31, 2020 only. There are no other changes to the performance fee calculation under the 2020 LPA.
Third Point Venture Offshore Fund I LP
Pursuant to the 2021 Venture LPA, TP Venture GP receives a performance fee allocation equal to 20% of the Company’s investment income in the related party investment fund.
Third Point Insurance Portfolio Solutions
No performance-based compensation is payable by the Company under the TPIPS IMA.
23. Commitments and contingencies
Financing
See Note 14 for additional information related to the Company’s debt obligations.
Letters of credit
See Note 14 for additional information related to the Company’s letter of credit facilities.
Liability-classified capital instruments
See Note 3 for additional information related to the contingent value consideration components of the Sirius Group acquisition.
Founder and Advisor Warrants
As of September 30, 2021, the Company had reserved for issuance common shares underlying warrants to purchase, in the aggregate, up to 3,494,979 common shares, to founding investors and advisors. The warrants expire on December 22, 2021, and are exercisable at a price per share of $10.00.
Promissory Note & Loan Agreement
On September 16, 2020, the Company entered into an Unsecured Promissory Note agreement with Arcadian, pursuant to which the Company has committed to loan up to $18.0 million. Interest shall accrue and be computed on the aggregate principal amount drawn and outstanding at a rate of 8.0% per annum. No amounts were drawn as of September 30, 2021.
On July 2, 2021, the Company entered into a loan and security agreement with Joyn, pursuant to which the Company has lent Joyn $11.5 million. Interest shall accrue and be computed on the aggregate principal amount drawn and outstanding at a rate of 8.0% per annum. Joyn may request to increase the initial loan amount by up to an additional $5.0 million.
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Litigation
From time to time in the normal course of business, the Company may be involved in formal and informal dispute resolution procedures, which may include arbitration or litigation, the outcomes of which determine the rights and obligations under the Company’s reinsurance contracts and other contractual agreements. In some disputes, the Company may seek to enforce its rights under an agreement or to collect funds owed to it. In other matters, the Company may resist attempts by others to collect funds or enforce alleged rights. The Company may also be involved, from time to time in the normal course of business, in formal and informal dispute resolution procedures that do not arise from, or are not directly related to, claims activity. The Company is not currently involved in any formal or informal dispute resolution procedures that it considers to be material.
Leases
Subsequent to the acquisition of Sirius Group, the Company now operates in new locations with additional facilities, including the United States, Canada, Europe and Asia. The Company leases office space under various non-cancelable operating lease agreements.     
During the three and nine months ended September 30, 2021, the Company recognized operating lease expense of $3.1 million and $7.6 million, respectively, (2020 - $0.2 million and $0.7 million, respectively), including property taxes and routine maintenance expense as well as rental expenses related to short term leases. As of September 30, 2021 and December 31, 2020, the Company had $14.6 million and $0.8 million of operating lease right-of-use assets, respectively, included in other assets. As of September 30, 2021 and December 31, 2020, the Company had $20.1 million and $0.8 million, respectively, of operating lease liabilities included in accounts payable, accrued expenses and other liabilities.
The following table presents the lease balances within the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31, 2020
Operating lease right-of-use assets $ 14.6  $ 0.8 
Operating lease liabilities $ 20.1  $ 0.8 
Weighted average lease term (years) 3.0 1.0
Weighted average discount rate 3.3  % 7.0  %
Future minimum rental commitments as of September 30, 2021 under these leases are expected to be as follows:
Future Payments
Remainder of 2021 $ 2.5 
2022 9.1 
2023 5.8 
2024 2.4 
2025 and thereafter 1.3 
Total future annual minimum rental payments 21.1 
Less: present value discount (1.0)
Total lease liability as of September 30, 2021 $ 20.1 
The above table does not include future minimum rental commitments of one material lease that has not yet commenced as of September 30, 2021. The minimum rental commitment under this lease is approximately $11.8 million.
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24. Subsequent event
Loss portfolio transfer
On July 30, 2021, the Company agreed, subject to applicable regulatory approvals and other closing conditions, to enter into a loss portfolio transfer transaction with Pallas Reinsurance Company Ltd., a subsidiary of the Compre Group, an insurance and reinsurance legacy specialist, and on October 29, 2021, the Company executed definitive agreements in respect of the loss portfolio transfer and the services to be provided in connection therewith (collectively, the “LPT”). The LPT covers $369 million of the Company’s loss reserves for the subject business, including much of the legacy Sirius Group runoff portfolio, including asbestos and environmental lines, for a premium of $388 million. The Company will recognize an estimated net charge of $23 million, including approximately $4 million of federal excise tax expense, in the fourth quarter of 2021, subject to post-closing adjustments.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with our unaudited condensed consolidated financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q. The terms “we,” “our,” “us,” and the “Company,” as used in this report, refer to SiriusPoint Ltd. (“SiriusPoint”) and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated or where it is clear that the terms mean only SiriusPoint exclusive of its subsidiaries.
Acquisition of Sirius International Insurance Group, Ltd.
On February 26, 2021, we completed the acquisition of Sirius International Insurance Group, Ltd. (“Sirius Group”) and changed our name from Third Point Reinsurance Ltd. to SiriusPoint Ltd. See “Recent Developments” below and Note 3 “Acquisition of Sirius Group” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the Sirius Group acquisition.
Our results of operations and financial condition for the nine months ended September 30, 2021 include Sirius Group for the period from February 26, 2021 through September 30, 2021. The following discussion and analysis of our results of operations for the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, as well as our liquidity and capital resources as of September 30, 2021, should be read in that context. In addition, the results of operations for the three and nine months ended September 30, 2021 and financial condition as of September 30, 2021 may not be reflective of the ultimate ongoing business of the combined entities.
The statements in this discussion regarding business outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, and “Special Note Regarding Forward-Looking Statements”. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Special Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding prospects for our industry, our business strategy, plans, goals and expectations concerning our market position, international expansion, investment portfolio, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other non-historical financial and operating information. When used in this discussion, the words “believes,” “intends,” “seeks,” “anticipates,” “plans,” “estimates,” “expects,” “assumes,” “continues,” “should,” “could,” “will,” “may” and the negative of these or similar terms and phrases are intended to identify forward-looking statements.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following:
•the costs, expenses and difficulties of the integration of the operations of Sirius Group;
•the impact of the novel coronavirus (COVID-19) pandemic or other unpredictable catastrophic events including uncertainties with respect to current and future COVID-19 losses across many classes of insurance business and the amount of insurance losses that may ultimately be ceded to the reinsurance market, supply chain issues, labor shortages and related increased costs, continued low interest rates, equity market volatility and ongoing business and financial market impacts of COVID-19 associated economic downturn;
•fluctuations in our results of operations;
•a downgrade or withdrawal of our financial ratings;
•inadequacy of loss and loss adjustment expense reserves;
•the effects of global climate change and/or periods characterized by excess underwriting capacity and unfavorable premium rates;
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•reduced returns or losses in SiriusPoint’s investment portfolio;
•legal restrictions on certain of SiriusPoint’s insurance and reinsurance subsidiaries’ ability to pay dividends and other distributions to SiriusPoint;
•SiriusPoint’s significant deferred tax assets, which could become devalued if either SiriusPoint does not generate future taxable income or applicable corporate tax rates are reduced;
•the lack of availability of capital;
•future strategic transactions such as acquisitions, dispositions, investments, mergers or joint ventures;
•technology breaches;
•our concentrated exposure in Third Point Enhanced LP (“TP Enhanced Fund”), whose investment strategy may bear substantial investment risks;
•    our lack of control of the TP Enhanced Fund and Third Point LLC, who invest and manage our capital accounts, and we have limited ability to withdraw our capital accounts;
•    conflicts of interest among various members of Third Point Advisors LLC (“TP GP”), TP Enhanced Fund, Third Point LLC and SiriusPoint; and
•other risks and uncertainties included in Part II, Item 1A. “Risk Factors” of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and any subsequent reports filed with the Securities and Exchange Commission (the “SEC”).
Any one of these factors or a combination of these factors could materially affect our financial condition or future results of operations and could influence whether any forward-looking statements contained in this report ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
In addition, while we do, from time to time, communicate with security analysts, it is against our policy to disclose to them any material non-public information or other confidential information. Accordingly, shareholders should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts, or opinions, such reports are not our responsibility.
Overview
We are a holding company domiciled in Bermuda. Through our subsidiaries, we provide multi-line insurance and reinsurance on a worldwide basis. SiriusPoint plans to create a highly diversified portfolio with expanded underwriting capabilities, geographic footprint and product offerings. SiriusPoint expects to offer enhanced scale and a global platform, with access to admitted and non-admitted paper in Europe, the United States, Bermuda and Lloyd’s of London ("Lloyd's"). We believe that refocused underwriting strategies will position SiriusPoint to capitalize on market opportunities with a proven management team to focus on underwriting profitability. SiriusPoint plans to reposition its investment portfolio to better align with its underwriting strategy, while leveraging its strategic partnership with Third Point LLC. We believe that this repositioning will result in lower volatility, while taking advantage of opportunities to improve risk-adjusted returns across asset classes.
On May 27, 2021, in connection with an internal reorganization, Sirius International Group, Ltd. (“SIG”), Sirius International Holdings Ltd. and Sirius International Insurance Group, Ltd., wholly-owned subsidiaries of the Company, merged with and into the Company, with the Company being the surviving entity. In addition, on May 27, 2021, Third Point Reinsurance Company Ltd. (“Third Point Re BDA”) merged with and into Sirius Bermuda Insurance Company Ltd. (“Sirius Bermuda”), with Sirius Bermuda being the surviving entity. Upon the effectiveness of the merger, Sirius Bermuda changed its name to SiriusPoint Bermuda Insurance Company Ltd. (“SiriusPoint Bermuda”). All references to SiriusPoint Bermuda prior to the merger date refer to legacy Third Point Re BDA and Sirius Bermuda, unless otherwise indicated.
Our key insurance and reinsurance subsidiaries include SiriusPoint Bermuda Insurance Company Ltd. (“SiriusPoint Bermuda”), Third Point Reinsurance (USA) Ltd. (“Third Point Re USA”), SiriusPoint International Insurance Corporation ("SiriusPoint International"), SiriusPoint America Insurance Company ("SiriusPoint America"), Sirius International Corporate Member Limited, a Lloyd's Corporate Member, and SiriusPoint Global Solutions. In addition, Sirius International sponsors Lloyd's Syndicate 1945 ("Syndicate 1945") and Sirius International Corporate Member participates in the Lloyd's market, which in turn provides underwriting capacity to Syndicate 1945. In 2020, SiriusPoint Specialty Insurance
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Corporation, a New Hampshire domiciled surplus lines underwriter, was established to focus primarily on accident and health and environmental risks.
In addition to the key insurance and reinsurance subsidiaries, we own two managing general underwriting ("MGU") subsidiaries, International Medical Group, Inc. ("IMG") and ArmadaCorp Capital, LLC ("Armada"). IMG is a full service MGU that has been an award-winning provider of global health and travel insurance benefits and assistance service for over 25 years. IMG offers a full, innovative line of international medical insurance products, trip cancellation programs, medical management services and 24/7 emergency medical and travel assistance. Armada, through ArmadaCare and ArmadaHealth, serves as a supplemental medical insurance MGU that markets and underwrites its signature UltimateHealth supplemental health product designed for C Suite executives, as well as PlenaHealth and ComplaMed, which are targeted towards broader segments of the workforce.
In September 2020, we announced an investment in Arcadian Risk Capital Ltd. (“Arcadian”). In addition to capitalizing Arcadian, we also provide insurance paper and meaningful net capacity. Arcadian has been established as a managing general agent (“MGA”) and incorporated in Bermuda where Arcadian will initially operate. Arcadian commenced operations on October 1, 2020 with a Bermuda-only platform, with a plan to expand to multiple offices over time where it will underwrite various lines of insurance business, via established broker networks.
In July 2021, we launched Banyan Risk Ltd. (“Banyan Risk”) and also announced a strategic insurance partnership and investment in Joyn Insurance Services Inc. (“Joyn”). Banyan Risk and Joyn both operate as MGAs and commenced underwriting in July 2021.
Products and Services
We provide reinsurance products to insurance and reinsurance companies, government entities, and other risk bearing vehicles. Contracts are written on an excess of loss or quota share basis. In addition, we write contracts on both a prospective and a retroactive basis. Prospective reinsurance contracts cover losses incurred as a result of future insurable events. Retroactive reinsurance contracts cover the potential for changes in estimates of loss and loss adjustment expense reserves related to loss events that have occurred in the past. Retroactive reinsurance contracts can generate an underwriting profit should the ultimate loss and loss adjustment expenses settle for less than the initial estimate of reserves while the premiums received at the inception of the contract generate insurance float.
In addition to our reinsurance product offerings, we write primary insurance business, predominantly by several MGUs in the accident and health space. SiriusPoint employs a detailed selection process for these MGU partners and has narrowly defined underwriting standards in place that are closely monitored by the SiriusPoint staff. In addition to these A&H product offerings, we write primary Casualty insurance through Arcadian as well as through Pie Insurance Holdings, Inc. (“Pie Insurance”), a start-up specializing in a data driven approach to workers compensation insurance. We also have a minority investment and carrier relationship with Pie Insurance.
Reportable Segments
The acquisition of Sirius Group created a highly diversified portfolio with expanded underwriting capabilities, geographical footprint and product offerings. As a result, starting in 2021, we began classifying our business into four reportable segments - Accident & Health (“A&H”), Specialty, Property, and Runoff & Other. Where applicable, all prior periods presented have been revised to conform to this new presentation. Each segment is described below.
•A&H consists of our A&H insurance and reinsurance underwriting business along with our two MGUs, IMG and Armada, which provide supplemental healthcare and medical travel insurance products as well as related administration services;
•Specialty consists of our specialty insurance and reinsurance underwriting units, which includes Aviation & Space, Marine & Energy, Credit, Contingency, Casualty, Environmental and Mortgage;
•Property consists of our underwriting lines of business that offer Property Catastrophe Excess Reinsurance, Agriculture Reinsurance and Property Risk and Pro Rata;
•Runoff & Other consists of the results of SiriusPoint Global Solutions, which specializes in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the United States and internationally, as well as asbestos risks, environmental risks and other long-tailed liability exposures, and our legacy reserve-based transactions. Runoff & Other also includes retroactive reinsurance contracts consisting of loss
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portfolio transfers, adverse development covers and other forms of reserve reinsurance providing indemnification of loss and loss adjustment expense reserves with respect to past loss events. Refer to “Loss Portfolio Transfer” below for additional information.
Investment Management
As a result of the acquisition of Sirius Group, we repositioned our investment portfolio to better align with our underwriting strategy, while leveraging our strategic partnership with Third Point LLC. We believe that this repositioning will result in lower volatility, while taking advantage of opportunities to improve risk-adjusted returns across asset classes.
Under our investment strategy, our fixed income investments, which comprise the majority of our portfolio, are outsourced to a diversified range of third-party asset managers. Third Point LLC continues to manage the majority of our alternative investment allocation, specialty asset classes as well as working with us on tailored asset-liability management strategies. We believe that this will be a strategic differentiator on our returns while also reducing volatility and creating a portfolio mix more in line with peer property/casualty reinsurers. Our investment objective is to maximize total return, including yield income and gains and losses, over the long-term, without assuming risk to a degree which could jeopardize the vitality of our insurance franchise.
We seek to operate our investment portfolio in a way that will allow us to demonstrate to internal and external constituents that we are able, and will remain able, to pay insurance claims during, and after, periods of extreme volatility whether such volatility arises from within its insurance business operations or investment portfolio. Such constituents include numerous regulatory regimes, rating agencies, shareholders and SiriusPoint's risk management framework.
We now have subsidiaries and branches located throughout the world and our global footprint requires us to transact in numerous currencies. Where practical, we aim to generally match material liabilities with assets and in many cases investable assets. From time to time, we may utilize third party tools such as currency forwards or swaps to mitigate unmatched exposure or may choose to leave such exposure unmatched.
Recent Developments
Acquisition of Sirius International Insurance Group, Ltd.
On February 26, 2021, the Company completed the acquisition of Sirius Group. We accounted for the acquisition of Sirius Group under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic Business Combinations. The total deal consideration was $1,079.8 million, which was comprised of stock, cash, and other contingent value components. The associated bargain purchase gain from the Sirius Group acquisition was $12.9 million, which represents the excess of the fair value of the underlying net assets acquired and liabilities assumed over the total deal consideration. The gain from bargain purchase is included in other revenues in the condensed consolidated statements of income (loss). The bargain purchase determination is consistent with the fact that Sirius Group’s shares traded at a discount to book value and the need for Sirius Group to quickly diversify its ownership base.
We believe that our operating subsidiaries, following the acquisition of Sirius Group, have adequate capital resources in the aggregate, and the ability to produce sufficient cash flows to meet expected claims payments and operational expenses, including but not limited to interest payments.
During the nine months ended September 30, 2021, the Company has recorded $49.5 million of corporate expenses associated with the acquisition of Sirius Group, comprised of $29.7 million of professional and advisory fees and $19.8 million of compensation-related expenses.
See Note 3 “Acquisition of Sirius Group” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the Sirius Group acquisition.

COVID-19 Pandemic
The COVID-19 pandemic has had and is expected to continue to have a significant effect on the (re)insurance industry. The industry has been impacted by a number of factors including: uncertainties with respect to current and future COVID-19 losses across many classes of insurance business and the amount of insurance losses that may ultimately be ceded to the reinsurance market, supply chain issues, labor shortages and related increased costs, continued low interest rates, equity market volatility and ongoing business and financial market impacts of COVID-19 associated economic downturn. The insurance industry and Sirius Group, prior to our acquisition of Sirius Group, have already sustained material losses resulting
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from COVID-19, with potentially more to come, which will reduce available capital and help sustain the upward pricing trend for (re)insurers that we were seeing across many lines of business before the impacts of COVID-19.
We continue to maintain a strong capital position despite the uncertainty associated with COVID-19. We will continue to prudently assess the investment opportunities presented to us, and believe that we are well positioned to continue to deploy our capital efficiently. The ultimate impact of COVID-19 on current business in force as well as risks and potential opportunities on future business remains highly uncertain.
For the three and nine months ended September 30, 2021, we recorded $2.4 million and $8.1 million, respectively (2020 - $15.6 million and $35.0 million, respectively) of COVID-19 losses, as a result of recognition of losses incurred related to unearned premium converting to earned premium, while our ultimate loss incurred estimates remained unchanged.
Recent Strategic Investments
During 2021, we announced a number of strategic (re)insurance partnerships.
In April 2021, we announced a strategic partnership with Hestia Capital. Hestia Capital is a Texas-based advisory start-up and will focus on sourcing and developing structured specialty insurance and reinsurance transactions and insurance-related investments in underserved or specialized markets. We made an investment in the company and will provide (re)insurance paper and capacity for the new venture.
In June 2021, we made an equity investment in Outdoorsy, a global online RV rental and outdoor travel marketplace. Outdoorsy plans to use the capital it has raised to drive its growth and expansion of Roamly, Outdoorsy’s innovative insurtech business. Our strategic partnership with Outdoorsy will enable us to support the development of insurance products that serve their customers' needs. Furthermore, our partnership will allow us to deliver on a key strategic goal of identifying and making investments in insurtech companies and aligns with our plans to revitalize and grow our business.
In July 2021, we announced a strategic insurance partnership and investment in Joyn. Our partnership will allow us to work together to transform small and mid-market U.S. commercial insurance through digital technology, data analytics, and automation. Joyn will operate as a MGA and began underwriting on July 1, 2021. We are a founding investor in the venture and will provide insurance capacity, backed by a strong reinsurer panel. We will also assist in the strategic direction of Joyn, helping to shape its growth trajectory.
In July 2021, we launched Banyan Risk. Banyan Risk will operate as a MGA and is headquartered and regulated in Bermuda. Banyan Risk commenced operations in July and will underwrite directors and officers insurance, focusing on tailored solutions for areas such as life sciences, global initial public offerings, the technology sector, and special purpose acquisition companies. In addition to capitalizing Banyan Risk, we will also provide insurance paper and meaningful net capacity.
In September 2021, we announced a strategic partnership with Vouch Insurance (“Vouch”). Vouch is a new kind of insurance platform for startups, offering fully-digital, tailored coverage that takes minutes to activate. The company provides comprehensive property and casualty insurance to meet the unique and fast changing needs of startups. We made an investment in the company and will provide multi-year underwriting capacity.
In September 2021, we announced a strategic investment and multi-year underwriting capacity partnership with Corvus Insurance that will support existing and future commercial insurance product offerings.
In October 2021, we announced a strategic partnership with Parameter Climate, a full-service climate underwriting and distribution advisory firm. As part of the transaction, we purchased a significant ownership stake in Parameter Climate in addition to providing multiyear capacity and paper. Additional capacity has been secured from another leading global reinsurer.
We intend to remain nimble and optimize our global platform by continuing to partner with and invest in innovative businesses and teams in the (re)insurance industry. We see these strategic partnerships as a key differentiator and a means by which we can add value and drive disruptive change in the industry.
Loss Portfolio Transfer
On July 30, 2021, we agreed, subject to applicable regulatory approvals and other closing conditions, to enter into a loss portfolio transfer transaction with Pallas Reinsurance Company Ltd., a subsidiary of the Compre Group, an insurance and reinsurance legacy specialist, and on October 29, 2021, we executed definitive agreements in respect of the loss portfolio
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transfer and the services to be provided in connection therewith (collectively, the “LPT”). The LPT covers $369 million of the Company’s loss reserves for the subject business, including much of the legacy Sirius Group runoff portfolio, including asbestos and environmental lines, for a premium of $388 million. We will recognize an estimated net charge of $23 million, including approximately $4 million of federal excise tax expense, in the fourth quarter of 2021, subject to post-closing adjustments.
Our transaction with the Compre Group underscores the ongoing transformation of SiriusPoint, our focus on optimizing capital allocation and rebalancing towards insurance and higher margin and growth lines, and provides further certainty on SiriusPoint’s reserve position. Following the completion of the LPT, our net loss reserves from Runoff business were reduced by 46%.
Key Performance Indicators
We believe that the following key financial indicators are the most important in evaluating our performance:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
($ in millions, except for per share data and ratios)
Annualized return on average common shareholders’ equity attributable to SiriusPoint common shareholders (7.8) % 19.7  % 9.8  % 0.9  %
Net underwriting loss (1) $ (265.8) $ (29.7) $ (223.8) $ (27.3)
Combined ratio (1)
151.9  % 121.0  % 118.1  % 106.3  %
Basic book value per share (2) (4)
$ 15.31  $ 16.88  $ 15.31  $ 16.88 
Tangible basic book value per share (2) (4)
$ 14.22  $ 16.88  $ 14.22  $ 16.88 
Diluted book value per share (2) (3) (4)
$ 15.14  $ 16.71  $ 15.14  $ 16.71 
Tangible diluted book value per share (2) (4)
$ 14.07  $ 16.71  $ 14.07  $ 16.71 
(1)See Note 5 “Segment reporting” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a calculation of net underwriting loss and combined ratio.
(2)Basic book value per share, tangible basic book value per share, diluted book value per share and tangible diluted book value per share are non-GAAP financial measures. See reconciliations in “Non-GAAP Financial Measures”.
(3)In the first quarter of 2021, we changed the method for calculating the dilutive effect of restricted shares, restricted share units and options to calculate the dilutive impact in a manner consistent with how dilution is calculated using the treasury stock method for earnings per share. See “Non-GAAP Financial Measures” for additional information.
(4)Prior year comparatives represent amounts as of December 31, 2020.
Annualized Return on Average Common Shareholders’ Equity Attributable to SiriusPoint Common Shareholders
Annualized return on average common shareholders’ equity attributable to SiriusPoint common shareholders is calculated by dividing annualized net income (loss) available to SiriusPoint common shareholders for the period by the average common shareholders’ equity determined using the common shareholders' equity balances at the beginning and end of the period.
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Annualized return on average common shareholders’ equity attributable to SiriusPoint common shareholders for the three and nine months ended September 30, 2021 and 2020 was calculated as follows:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
($ in millions)
Net income (loss) available to SiriusPoint common shareholders $ (48.0) $ 68.7  $ 147.4  $ 9.1 
Common shareholders’ equity attributable to SiriusPoint common shareholders - beginning of period $ 2,480.1  $ 1,357.3  $ 1,563.9  $ 1,414.1 
Common shareholders’ equity attributable to SiriusPoint common shareholders - end of period 2,438.0  1,427.6  2,438.0  1,427.6 
Average common shareholders’ equity attributable to SiriusPoint common shareholders $ 2,459.1  $ 1,392.5  $ 2,001.0  $ 1,420.9 
Annualized return on average common shareholders’ equity attributable to SiriusPoint common shareholders (7.8) % 19.7  % 9.8  % 0.9  %
The decrease in annualized return on average common shareholders’ equity attributable to SiriusPoint common shareholders for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to higher underwriting losses due to third quarter catastrophe losses from the European floods and Hurricane Ida, mainly offset by improved investment results.
The increase in annualized return on average common shareholders’ equity attributable to SiriusPoint common shareholders for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to an increase in net income in the current year period driven by improved investment results, partially offset by higher underwriting losses due to third quarter catastrophe losses and $49.5 million of costs associated with the Sirius Group acquisition.
The average common shareholders’ equity attributable to SiriusPoint common shareholders for the nine months ended September 30, 2021 was impacted by the additional equity issued related to the Sirius Group acquisition.
Net Underwriting Income (Loss)
We measure segment performance for our underwriting segments based on net underwriting income or loss. Net underwriting income is a pre-tax measure of underwriting profitability that takes into account net premiums earned as revenues, including service fee revenue from the Company’s managing general underwriting subsidiaries, and loss and loss adjustment expenses incurred, net, acquisition costs, net, and other underwriting expenses as expenses. Other underwriting expenses include those operating expenses that are incremental and/or directly attributable to our individual underwriting operations. See “Segment Results” and Note 5 “Segment reporting” to our unaudited condensed consolidated financial statements for additional details.
Combined Ratio
Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and other underwriting expenses by net premiums earned. This ratio is a key indicator of a company’s underwriting profitability. See “Segment Results” and Note 5 “Segment reporting” to our unaudited condensed consolidated financial statements for additional details.
Basic and Tangible Basic Book Value Per Share
Basic book value per share and tangible basic book value per share are non-GAAP financial measures and there are no comparable GAAP measures. See “Non-GAAP Financial Measures” for an explanation and calculation.
As of September 30, 2021, basic book value per share was $15.31, representing a decrease of $0.28 per share, or 1.8%, from $15.59 per share as of June 30, 2021. As of September 30, 2021, tangible basic book value per share was $14.22, representing a decrease of $0.26 per share, or 1.8%, from $14.48 per share as of June 30, 2021. The decreases were primarily due to a net loss in the current period.
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As of September 30, 2021, basic book value per share was $15.31, representing a decrease of $1.57 per share, or 9.3%, from $16.88 per share as of December 31, 2020. As of September 30, 2021, tangible basic book value per share was $14.22, representing a decrease of $2.66 per share, or 15.8%, from $16.88 per share as of December 31, 2020. The decreases were primarily due to the dilutive impact of shares and other securities issued in conjunction with the acquisition of Sirius Group, partially offset by net income in the current year period.
Diluted and Tangible Diluted Book Value Per Share
Diluted book value per share and tangible diluted book value per share are non-GAAP financial measures and there are no comparable GAAP measures. In the first quarter of 2021, we changed the method for calculating the dilutive effect of restricted shares, restricted share units and options to calculate the dilutive impact in a manner consistent with how dilution is calculated using the treasury stock method for earnings per share. See “Non-GAAP Financial Measures” for an explanation and reconciliations.
As of September 30, 2021, diluted book value per share was $15.14, representing a decrease of $0.23 per share, or 1.5%, from $15.37 per share as of June 30, 2021. As of September 30, 2021, tangible diluted book value per share was $14.07, representing a decrease of $0.23 per share, or 1.6%, from $14.30 per share as of June 30, 2021. The decreases were primarily due to a net loss in the current period.
As of September 30, 2021, diluted book value per share was $15.14, representing a decrease of $1.57 per share, or 9.4%, from $16.71 per share as of December 31, 2020. As of September 30, 2021, tangible diluted book value per share was $14.07, representing a decrease of $2.64 per share, or 15.8%, from $16.71 per share as of December 31, 2020. The decreases were primarily due to the dilutive impact of shares and other securities issued in conjunction with the acquisition of Sirius Group, including the acquisition of intangible assets, partially offset by net income in the current year period.
Consolidated Results of Operations—Three and nine months ended September 30, 2021 and 2020:
The following table sets forth the key items discussed in the consolidated results of operations section, and the period over period change, for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 Change September 30, 2021 September 30, 2020 Change
($ in millions)
Net underwriting loss $ (265.8) $ (29.7) $ (236.1) $ (223.8) $ (27.3) $ (196.5)
Other revenues 20.7  —  20.7  47.1  —  47.1 
Net investment income 199.8  122.0  77.8  463.7  74.1  389.6 
Net corporate and other expenses (19.5) (14.9) (4.6) (113.5) (30.2) (83.3)
Intangible asset amortization (2.0) —  (2.0) (4.1) —  (4.1)
Interest expense (9.7) (2.1) (7.6) (24.4) (6.2) (18.2)
Foreign exchange gains (losses) 16.1  (5.9) 22.0  16.5  3.1  13.4 
Income tax (expense) benefit 13.0  (0.7) 13.7  (6.4) (4.4) (2.0)
Net income (loss) $ (47.4) $ 68.7  $ (116.1) $ 155.1  $ 9.1  $ 146.0 
The key changes in our consolidated results for the three and nine months ended September 30, 2021 compared to the prior year periods are discussed below.
Net Underwriting Loss
The increase in net underwriting loss for the three and nine months ended September 30, 2021 was primarily driven by third quarter catastrophe losses from the European floods and Hurricane Ida. In addition, the Runoff & Other Segment recorded $7.1 million of accelerated expenses related to interest crediting features in certain reinsurance contracts. Refer to “Segment Results” for additional information.
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Other Revenues
For the three months ended September 30, 2021, other revenues consist of $18.8 million of changes in the fair value of liability-classified capital instruments issued as part of the aggregate consideration for the Sirius Group acquisition and a bargain purchase gain of $1.9 million. The decline in value of the liability-classified capital instruments was primarily attributable to shorter life to maturity and a decrease in the Company’s share price during the three months ended September 30, 2021.
For the nine months ended September 30, 2021, other revenues consist of $34.2 million of changes in the fair value of liability-classified capital instruments issued as part of the aggregate consideration for the Sirius Group acquisition and a bargain purchase gain of $12.9 million. The bargain purchase gain represents the excess of the fair value of the underlying net assets acquired and liabilities assumed over the purchase price. The bargain purchase determination is consistent with the fact that Sirius Group’s shares traded at a discount to book value and the need for Sirius Group to quickly diversify its ownership base.
See Note 3 “Acquisition of Sirius Group” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the bargain purchase gain recognized as a result of the Sirius Group acquisition and the components of the aggregate consideration.
Investments
Investment Portfolio
The following is a summary of our total investments, cash and cash equivalents and restricted cash and cash equivalents as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31, 2020 Change
($ in millions)
Investments in related party investment funds (1)
$ 1,456.8  $ 1,055.6  $ 401.2 
Debt securities 2,100.9  101.3  1,999.6 
Short-term investments 1,057.9  —  1,057.9 
Equity securities 3.4  —  3.4 
Other long-term investments 454.5  4.0  450.5 
Total investments 5,073.5  1,160.9  3,912.6 
Cash and cash equivalents 701.2  526.0  175.2 
Restricted cash and cash equivalents (2)
1,482.3  1,187.9  294.4 
Total invested assets and cash $ 7,257.0  $ 2,874.8  $ 4,382.2 
(1)Consists of our investments in TP Enhanced Fund and TP Venture Fund.
(2)Primarily consists of cash and fixed income securities such as U.S. Treasuries, money markets funds, and sovereign debt, securing the Company’s contractual obligations under certain (re)insurance contracts that the Company will not be released from until the underlying risks have expired or have been settled.
The main driver for the increase in total investments was the acquisition of Sirius Group on February 26, 2021. In addition, the increase in total investments was driven by the performance of the TP Enhanced Fund and our strategic investment portfolio.
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Investment Results
The following is a summary of the results from investments and cash for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 Change September 30, 2021 September 30, 2020 Change
($ in millions)
Net realized and unrealized investment gains (losses) $ (11.7) $ 7.0  $ (18.7) $ 43.7  $ 54.6  $ (10.9)
Net investment income from investments in related party fund 202.4  110.6  91.8  401.2  8.3  392.9 
Other net investment income 9.1  4.4  4.7  18.8  11.2  7.6 
Net investment income $ 199.8  $ 122.0  $ 77.8  $ 463.7  $ 74.1  $ 389.6 
The following is a summary of net investment income (loss) by investment classification, for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 Change September 30, 2021 September 30, 2020 Change
($ in millions)
Debt securities $ 2.4  $ 6.1  $ (3.7) $ 12.6  $ 65.0  $ (52.4)
Short-term investments (5.6) —  (5.6) (4.2) —  (4.2)
Equity securities (1.4) —  (1.4) (1.4) —  (1.4)
Other long-term investments 11.5  —  11.5  73.4  —  73.4 
Net investment income from investments in related party investment funds 202.4  110.6  91.8  401.2  8.3  392.9 
Net investment income before other investment expenses and investment income (loss) on cash and cash equivalents 209.3  116.7  92.6  481.6  73.3  408.3 
Other investment expenses (7.8) (0.3) (7.5) (12.3) (1.1) (11.2)
Net investment income (loss) on cash and cash equivalents (1.7) 5.6  (7.3) (5.6) 1.9  (7.5)
Net investment income $ 199.8  $ 122.0  $ 77.8  $ 463.7  $ 74.1  $ 389.6 
Investment Returns
The following is a summary of the net investment returns for our total net investments on a U.S. Dollar basis for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
TP Enhanced Fund 16.3  % 14.6  % 38.3  % 1.0  %
Collateral and other investments managed by Third Point LLC (0.1) % 0.6  % 0.2  % 3.8  %
Fixed income investments acquired as part of Sirius acquisition (1)
(0.1) % —  % 0.5  % —  %
Equity securities and other long-term investments acquired as part of Sirius acquisition (2)
1.2  % —  % 14.4  % —  %
(1)Fixed income investment returns in original currencies for investments acquired as part of the Sirius Group acquisition were 0.2% and 0.6% for the three and nine months ended September 30, 2021, respectively.
(2)Equity securities and other long-term investment returns in original currencies for investments acquired as part of the Sirius Group acquisition were 1.2% and 14.5% for the three and nine months ended September 30, 2021, respectively.
Net investment income for the three months ended September 30, 2021 was primarily attributable to net investment income of $201.0 million from our investment in the TP Enhanced Fund, corresponding to a 16.3% return. The return was primarily attributable to long event/fundamental and activist equities, in particular strong performance from the fund’s largest positions:
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Upstart Holdings Inc., SentinelOne Inc., and Prudential PLC. In addition, the Company recognized net investment income of $6.9 million on fixed maturity, short term, equity and alternative investments. This was mainly attributable to unrealized gains of $4.9 million resulting from market appreciation on alternative investments and offset by unfavorable foreign exchange developments.
Net investment income for the nine months ended September 30, 2021 was primarily attributable to net investment income of $398.8 million from our investment in the TP Enhanced Fund, corresponding to a 38.3% return. The return was primarily attributable to long event/fundamental equities, in particular Upstart Holdings Inc. and SentinelOne Inc. In addition, the Company recognized an unrealized gain of $35.4 million from our investment in Pie Insurance and $18.1 million in unrealized gains in other private equity and hedge fund investments for the nine months ended September 30, 2021.
Net investment income for the three months ended September 30, 2020 was primarily attributable to net investment income of $110.6 million from our investment in the TP Enhanced Fund, corresponding to a 14.6% return. Equity markets continued to rebound with technology-oriented stocks leading out-performance globally.
Net investment income for the nine months ended September 30, 2020 was primarily attributable to investment income from our credit portfolio, with strong contributions from investments in investment grade corporate credit and residential mortgage backed securities.
Refer to “Part I, Item 3. Quantitative and Qualitative Disclosures about Market Risks” of this Quarterly Report on Form 10-Q for a discussion of certain risks and factors that could adversely impact our investments results.
Net Corporate and Other Expenses
Net corporate and other expenses include costs associated with operating as a publicly-traded company and non-underwriting activities. In addition, for the three and nine months ended September 30, 2021, net corporate and other expenses included costs related to the acquisition of Sirius Group, expected credit losses from the Company’s insurance and reinsurance balances receivable and loss and loss adjustment expenses recoverable, and a gain from the sale of Cedar Insurance Company (“Cedar”).
The increase in net corporate and other expenses for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to compensation-related expenses associated with the acquisition of Sirius Group and expenses from the legacy Sirius Group companies, partially offset by a gain from the sale of Cedar.
The increase in net corporate and other expenses for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to professional and advisory fees and compensation-related expenses associated with the acquisition of Sirius Group, expected credit losses from the Company’s insurance and reinsurance balances receivable and loss and loss adjustment expenses recoverable, and expenses from the legacy Sirius Group companies from the date of acquisition.
For the three months ended September 30, 2021, we recorded $3.1 million of compensation-related expenses associated with the acquisition of Sirius Group. For the nine months ended September 30, 2021, we recorded $49.5 million of corporate expenses associated with the acquisition of Sirius Group, comprised of $29.7 million of professional and advisory fees and $19.8 million of compensation-related expenses.
For the three and nine months ended September 30, 2021, we recorded current expected credit (gains) losses of $(0.3) million and $15.3 million, respectively (2020 - $0.3 million and $0.5 million, respectively). The increase in current expected credit losses for the nine months ended September 30, 2021, was primarily a result of the acquisition of Sirius Group. We recorded an expense to re-establish the acquired company’s current expected credit losses provision. See Note 12 “Allowance for expected credit losses” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the credit loss methodology.
For the three and nine months ended September 30, 2021, we recognized a $5.8 million gain from the sale of Cedar to Grandview Risk Holdings Ltd. See Note 4 “Significant transactions” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the sale of Cedar.
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Amortization of Intangible Assets
The amortization of intangible assets for the three and nine months ended September 30, 2021 was due to intangible assets recognized as a result of the Sirius Group acquisition. See Note 3 “Acquisition of Sirius Group” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the intangible assets recognized as a result of the Sirius Group acquisition.
Interest Expense
In February 2015, Third Point Re (USA) Holdings, Inc. (“TPRUSA”) issued $115.0 million of senior notes bearing 7.0% interest. In November 2016, Sirius Group issued $400.0 million of senior notes bearing 4.6% interest and in September 2017, Sirius Group issued SEK 2,750.0 million floating rate callable subordinated notes. As a result, our consolidated results of operations include interest expense related to the senior and subordinated notes.
The increase in interest expense for the three and nine months ended September 30, 2021 was due to $7.6 million and $18.2 million, respectively, of interest expense from the senior notes and the SEK subordinated notes, from the legacy Sirius Group companies from the date of acquisition.
Foreign Currency Translation
Except for the Canadian reinsurance operations of SiriusPoint America, the U.S. dollar is the functional currency for SiriusPoint’s business. Assets and liabilities are remeasured into the functional currency using current exchange rates; revenues and expenses are remeasured into the functional currency using the average exchange rate for the period. The remeasurement process results in foreign exchange gains (losses) in the consolidated results of operations.
The foreign exchange gains of $16.1 million and $16.5 million for the three and nine months ended September 30, 2021, respectively, were primarily due to the Company’s international operations and from the foreign currency effects of the SEK subordinated notes.
The foreign exchange losses for the three months ended September 30, 2020 were primarily due to the revaluation of foreign currency loss and loss adjustment expense reserves denominated in British pounds to the United States dollar, which weakened as compared to the pound in the prior period.
The foreign exchange gains for the nine months ended September 30, 2020 were primarily due to the revaluation of foreign currency loss and loss adjustment expense reserves denominated in British pounds to the United States dollar, which strengthened as compared to the pound in the prior period.
Income Tax (Expense) Benefit
The increase in income tax benefit for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 primarily reflects the Company’s recognition of proportionally more operating losses in taxable jurisdictions.
The increase in income tax expense for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 primarily reflects the Company’s recognition of proportionally more operating income in taxable jurisdictions. Subsequent to the acquisition of Sirius Group, the Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which the Company's subsidiaries and branches are subject to tax are Australia, Belgium, Canada, Germany, Hong Kong (China), Ireland, Luxembourg, Malaysia, Singapore, Sweden, Switzerland, the United Kingdom and the United States.
Segment Results — Three and nine months ended September 30, 2021 and 2020
The determination of our reportable segments is based on the manner in which management monitors the performance of our operations. Effective January 1, 2021, our business comprises four operating segments, Accident & Health (“A&H”), Specialty, Property, and Runoff & Other.
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In addition, effective January 1, 2021, the Company changed its accounting policy for assumed written premium recognition. Previously, the Company estimated ultimate premium written for the entire contract period and recorded this estimate at inception of the contract. The Company changed its accounting policy to recognize premiums written ratably over the term of the related policy or reinsurance treaty. The change in accounting policy had no impact on the previously reported net income (loss) or shareholders’ equity attributable to SiriusPoint common shareholders. See Note 2 “Significant accounting policies” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion.

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The following table sets forth net underwriting results and ratios for the segment results for the three months ended September 30, 2021 and 2020:
Three months ended September 30, 2021
A&H Specialty Property Runoff &
Other 		Total
($ in millions)
Gross premiums written (1)
$ 118.1  $ 350.9  $ 182.0  $ 2.7  $ 653.7 
Net premiums written (1)
88.4  306.8  91.0  5.1  491.3 
Net premiums earned (1)
111.7  240.6  150.8  9.0  512.1 
Loss and loss adjustment expenses incurred, net (2)
55.8  155.6  362.5  7.8  581.7 
Acquisition costs, net 10.5  65.8  30.9  (0.3) 106.9 
Other underwriting expenses (2)
30.2  25.6  22.1  11.4  89.3 
Net underwriting income (loss) $ 15.2  $ (6.4) $ (264.7) $ (9.9) $ (265.8)
Underwriting ratios (3):
Loss ratio 50.0  % 64.7  % 240.4  % NM 113.6  %
Acquisition cost ratio 9.4  % 27.3  % 20.5  % NM 20.9  %
Other underwriting expense ratio 27.0  % 10.6  % 14.7  % NM 17.4  %
Combined ratio (4)
86.4  % 102.6  % 275.6  % NM 151.9  %
Three months ended September 30, 2020
A&H Specialty Property Runoff &
Other 		Total
($ in millions)
Gross premiums written (1)
$ 0.2  $ 79.0  $ 42.6  $ 2.9  $ 124.7 
Net premiums written (1)
0.2  76.7  36.6  2.9  116.4 
Net premiums earned (1)
0.6  87.7  49.8  3.6  141.7 
Loss and loss adjustment expenses incurred, net (2)
0.4  67.9  62.2  (20.0) 110.5 
Acquisition costs, net 0.1  18.0  13.0  23.7  54.8 
Other underwriting expenses (2)
—  3.1  1.6  1.4  6.1 
Net underwriting income (loss) $ 0.1  $ (1.3) $ (27.0) $ (1.5) $ (29.7)
Underwriting ratios (3):
Loss ratio 66.7  % 77.4  % 124.9  % NM 78.0  %
Acquisition cost ratio 16.7  % 20.5  % 26.1  % NM 38.7  %
Other underwriting expense ratio —  % 3.5  % 3.2  % NM 4.3  %
Combined ratio (4)
83.4  % 101.4  % 154.2  % NM 121.0  %
(1)Includes service fee revenue from the Company’s MGUs of $12.5 million for the three months ended September 30, 2021 (2020 - $nil).
(2)Loss and loss adjustment expenses incurred, net and other underwriting expenses include expenses associated with the Company’s MGUs of $3.6 million and $24.5 million, respectively, for the three months ended September 30, 2021 (2020 - $nil and $nil).
(3)Underwriting ratios are calculated by dividing the related expense by net premiums earned.
(4)Ratios considered not meaningful ("NM") to Runoff & Other.
(5)In the first quarter of 2021, we modified the presentation of our operating segments to better align with the manner in which management monitors the performance of our operations. This change was primarily due to our acquisition of Sirius Group (See Note 3 “Acquisition of Sirius Group”). Prior period segment results have been adjusted to conform to the current period presentation.
Gross premiums written
Gross premiums written increased by $529.0 million, or 424.2%, to $653.7 million for the three months ended September 30, 2021 from $124.7 million for the three months ended September 30, 2020, primarily driven by an increase in gross premiums written of $473.3 million as a result of new premiums from the legacy Sirius Group companies.
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Net premiums written
Net premiums written increased by $374.9 million, or 322.1%, to $491.3 million for the three months ended September 30, 2021 from $116.4 million for the three months ended September 30, 2020, primarily driven by an increase in net premiums written of $339.4 million as a result of new premiums from the legacy Sirius Group companies.
Net premiums earned
Net premiums earned increased by $370.4 million, or 261.4%, to $512.1 million for the three months ended September 30, 2021 from $141.7 million for the three months ended September 30, 2020, primarily driven by an increase in net premiums earned of $390.6 million as a result of new premiums from the legacy Sirius Group companies.
Underwriting results
We generated a net underwriting loss of $265.8 million and a combined ratio of 151.9% for the three months ended September 30, 2021, compared to a net underwriting loss of $29.7 million and a combined ratio of 121.0% for the three months ended September 30, 2020. The change in net underwriting results was primarily driven by the Property segment as a result of catastrophe losses from the European floods and Hurricane Ida.
Catastrophe losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2021 were $286.5 million, or 55.9 percentage points on the combined ratio, including $132 million for the European floods and $100 million for Hurricane Ida, based on our ground-up assessment of client exposed business to each event and a top-down estimate, based on industry loss for each event and an estimate of our market share.
Catastrophe losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2020 were $29.6 million, or 20.9 percentage points, related to Hurricane Laura and other third quarter catastrophes.
Net favorable prior year loss reserve development was $16.2 million for the three months ended September 30, 2021. The change was primarily driven by net favorable prior year loss reserve development of $15.0 million from the legacy Sirius Group companies, primarily due to favorable loss reserve development of $6.1 million and $5.5 million relating to the A&H and Property segments, respectively, based on better than expected loss reserve emergence. The change in net underwriting results for the three months ended September 30, 2020 for prior period loss reserve development and adjustments to premium earnings estimates, after the impact of any offsetting changes in acquisition costs, resulted in a minimal improvement in the net underwriting results.
COVID-19 losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2021 were $2.4 million compared to $15.6 million for the three months ended September 30, 2020, from the earn in of losses on unearned premium converting to earned premium in our Specialty segment.
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The following table sets forth net underwriting results and ratios for the segment results for the nine months ended September 30, 2021 and 2020:
Nine months ended September 30, 2021
A&H Specialty Property Runoff &
Other 		Total
($ in millions)
Gross premiums written (1)
$ 343.5  $ 807.9  $ 457.3  $ (25.7) $ 1,583.0 
Net premiums written (1)
267.8  692.4  324.6  (24.2) 1,260.6 
Net premiums earned (1)
250.4  610.7  385.4  (12.1) 1,234.4 
Loss and loss adjustment expenses incurred, net (2)
121.9  393.9  482.2  (13.1) 984.9 
Acquisition costs, net 35.4  168.9  79.7  (2.5) 281.5 
Other underwriting expenses (2)
69.5  54.7  52.6  15.0  191.8 
Net underwriting income (loss) $ 23.6  $ (6.8) $ (229.1) $ (11.5) $ (223.8)
Underwriting Ratios: (3)
Loss ratio 48.7  % 64.5  % 125.1  % NM 79.8  %
Acquisition cost ratio 14.1  % 27.7  % 20.7  % NM 22.8  %
Other underwriting expenses ratio 27.8  % 9.0  % 13.6  % NM 15.5  %
Combined ratio (4)
90.6  % 101.2  % 159.4  % NM 118.1  %
Nine months ended September 30, 2020
A&H Specialty Property Runoff &
Other 		Total
($ in millions)
Gross premiums written (1)
$ 2.8  $ 232.2  $ 160.2  $ 3.0  $ 398.2 
Net premiums written (1)
2.8  224.3  138.9  3.0  369.0 
Net premiums earned (1)
2.5  285.6  135.9  4.9  428.9 
Loss and loss adjustment expenses incurred, net (2)
3.7  203.1  99.5  (18.9) 287.4 
Acquisition costs, net 0.3  85.3  38.8  23.3  147.7 
Other underwriting expenses (2)
0.1  12.4  4.7  3.9  21.1 
Net underwriting income (loss) $ (1.6) $ (15.2) $ (7.1) $ (3.4) $ (27.3)
Underwriting Ratios: (3)
Loss ratio 148.0  % 71.1  % 73.2  % NM 67.0  %
Acquisition cost ratio 12.0  % 29.9  % 28.6  % NM 34.4  %
Other underwriting expenses ratio 4.0  % 4.3  % 3.5  % NM 4.9  %
Combined ratio (4)
164.0  % 105.3  % 105.3  % NM 106.3  %
(1)Includes service fee revenue from the Company’s MGUs of $37.3 million for the nine months ended September 30, 2021 (2020 - $nil).
(2)Loss and loss adjustment expenses incurred, net and other underwriting expenses include expenses associated with the Company’s MGUs of $8.0 million and $55.4 million, respectively, for the nine months ended September 30, 2021 (2020 - $nil and $nil).
(3)Underwriting ratios are calculated by dividing the related expense by net premiums earned.
(4)Ratios considered not meaningful ("NM") to Runoff & Other.
(5)In the first quarter of 2021, we modified the presentation of our operating segments to better align with the manner in which management monitors the performance of our operations. This change was primarily due to our acquisition of Sirius Group (See Note 3 “Acquisition of Sirius Group”). Prior period segment results have been adjusted to conform to the current period presentation.
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Gross premiums written
Gross premiums written increased by $1,184.8 million, or 297.5%, to $1,583.0 million for the nine months ended September 30, 2021 from $398.2 million for the nine months ended September 30, 2020, primarily driven by an increase in gross premiums written of $1,128.8 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition.
Net premiums written
Net premiums written increased by $891.6 million, or 241.6%, to $1,260.6 million for the nine months ended September 30, 2021 from $369.0 million for the nine months ended September 30, 2020, primarily driven by an increase in net premiums written of $869.9 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition.
Net premiums earned
Net premiums earned increased by $805.5 million, or 187.8%, to $1,234.4 million for the nine months ended September 30, 2021 from $428.9 million for the nine months ended September 30, 2020, primarily driven by an increase in net premiums earned of $866.4 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition.
Underwriting results
We generated a net underwriting loss of $223.8 million and a combined ratio of 118.1% for the nine months ended September 30, 2021, compared to a net underwriting loss of $27.3 million and a combined ratio of 106.3% for the nine months ended September 30, 2020. The change in net underwriting results was primarily driven by the Property segment as a result of catastrophe losses from the European floods and Hurricane Ida.
Catastrophe losses, net of reinsurance and reinstatement premiums, for the nine months ended September 30, 2021 were $304.9 million, or 24.7 percentage points on the combined ratio, including $132 million for the European floods and $100 million for Hurricane Ida, based on our ground-up assessment of client exposed business to each event and a top-down estimate, based on industry loss for each event and an estimate of our market share, and also includes $40 million from June windstorms and winter storm Uri. Sirius Group’s Uri losses fell into the pre-acquisition period and, if included in the Company’s results, total catastrophe losses would have been $341 million.
Catastrophe losses, net of reinsurance and reinstatement premiums, for the nine months ended September 30, 2020 were $29.6 million, or 6.9 percentage points on the combined ratio, related to Hurricane Laura and other third quarter catastrophes.
Net favorable prior year loss reserve development was $25.9 million for the nine months ended September 30, 2021. The change was driven by net favorable prior year loss reserve development of $27.0 million from the legacy Sirius Group companies, primarily due to favorable loss reserve development relating to the Property segment of $15.6 million as a result of better than expected loss reserve emergence on European-related exposures covering multiple accident years, and favorable loss reserve development relating to the A&H segment of $6.9 million. The change in net underwriting results for the nine months ended September 30, 2020 for prior period loss reserve development and adjustments to premium earnings estimates, after the impact of any offsetting changes in acquisition costs, resulted in a $3.4 million improvement in the net underwriting results.
COVID-19 losses for the nine months ended September 30, 2021 were $8.1 million compared to $35.0 million for the nine months ended September 30, 2020, from the earn in of losses on unearned premium converting to earned premium in our Specialty segment.
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A&H
A&H, which consists of the A&H insurance and reinsurance underwriting unit along with our two MGUs, IMG and Armada, which provide supplemental healthcare and medical travel insurance products as well as related administration services. The following table sets forth net underwriting results and ratios, and the period over period changes for the A&H segment for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 Change September 30, 2021 September 30, 2020 Change
($ in millions)
Gross premiums written (1)
$ 118.1  $ 0.2  $ 117.9  $ 343.5  $ 2.8  $ 340.7 
Net premiums written (1)
88.4  0.2  88.2  267.8  2.8  265.0 
Net premiums earned (1)
111.7  0.6  111.1  250.4  2.5  247.9 
Loss and loss adjustment expenses incurred, net (2)
55.8  0.4  55.4  121.9  3.7  118.2 
Acquisition costs, net 10.5  0.1  10.4  35.4  0.3  35.1 
Other underwriting expenses (2)
30.2  —  30.2  69.5  0.1  69.4 
Net underwriting income (loss) $ 15.2  $ 0.1  $ 15.1  $ 23.6  $ (1.6) $ 25.2 
Underwriting ratios (3):
Loss ratio 50.0  % 66.7  % (16.7) % 48.7  % 148.0  % (99.3) %
Acquisition cost ratio 9.4  % 16.7  % (7.3) % 14.1  % 12.0  % 2.1  %
Other underwriting expense ratio 27.0  % —  % 27.0  % 27.8  % 4.0  % 23.8  %
Combined ratio 86.4  % 83.4  % 3.0  % 90.6  % 164.0  % (73.4) %
(1)Includes service fee revenue from the Company’s MGUs of $12.5 million and $37.3 million in the three and nine months ended September 30, 2021, respectively (2020 - $nil and $nil).
(2)Loss and loss adjustment expenses incurred, net and other underwriting expenses include expenses associated with the Company’s MGUs for the three and nine months ended September 30, 2021 were $3.6 million and $24.5 million, and $8.0 million and $55.4 million, respectively (2020 - $nil and $nil).
(3)Underwriting ratios are calculated by dividing the related expense by net premiums earned.
Underwriting Results
Three months ended September 30, 2021 and 2020
Gross premiums written in the A&H segment increased by $117.9 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily driven by an increase in premiums of $118.1 million as a result of new premiums from the legacy Sirius Group companies.
The A&H segment generated net underwriting income of $15.2 million and a combined ratio of 86.4% for the three months ended September 30, 2021, compared to net underwriting income of $0.1 million and a combined ratio of 83.4% for the three months ended September 30, 2020. The change in net underwriting results for the three months ended September 30, 2021, compared to the three months ended September 30, 2020, was primarily driven by net underwriting income from the legacy Sirius Group companies. Our A&H segment continues to benefit from favorable loss ratio trends in its healthcare products due to the recognition of lower healthcare utilization rates that we attribute to the COVID-19 global pandemic.
Net favorable prior year loss reserve development was $7.2 million for the three months ended September 30, 2021 compared to minimal net prior year loss reserve development for the three months ended September 30, 2020. The change from the prior period was driven by net favorable reserve development from the legacy Sirius Group companies as a result of better than expected loss reserve emergence.
Nine months ended September 30, 2021 and 2020
Gross premiums written in the A&H segment increased by $340.7 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily driven by an increase in premiums of $343.7 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition.
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The A&H segment generated net underwriting income of $23.6 million and a combined ratio of 90.6% for the nine months ended September 30, 2021, compared to a net underwriting loss of $1.6 million for the nine months ended September 30, 2020. The change in net underwriting results for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, was primarily driven by net underwriting income from the legacy Sirius Group companies from the date of acquisition. Our A&H segment continues to benefit from favorable loss ratio trends in its healthcare products due to the recognition of lower healthcare utilization rates that we attribute to the COVID-19 global pandemic.
Net favorable prior year loss reserve development was $7.9 million for the nine months ended September 30, 2021 compared to minimal adverse prior year loss reserve development for the nine months ended September 30, 2020. The change from the prior period was driven by net favorable reserve development from the legacy Sirius Group companies as a result of better than expected loss reserve emergence.
Specialty
Specialty consists of our specialty insurance and reinsurance product offerings, which includes Aviation & Space, Marine & Energy, Credit, Contingency, Casualty, Environmental and Mortgage.
These lines of business represent unique risks where the more difficult and unusual risks are underwritten, and much of the market is characterized by a high degree of specialization. The following table sets forth net underwriting results and ratios, and the period over period changes for the Specialty segment for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 Change September 30, 2021 September 30, 2020 Change
($ in millions)
Gross premiums written $ 350.9  $ 79.0  $ 271.9  $ 807.9  $ 232.2  $ 575.7 
Net premiums written 306.8  76.7  230.1  692.4  224.3  468.1 
Net premiums earned 240.6  87.7  152.9  610.7  285.6  325.1 
Loss and loss adjustment expenses incurred, net 155.6  67.9  87.7  393.9  203.1  190.8 
Acquisition costs, net 65.8  18.0  47.8  168.9  85.3  83.6 
Other underwriting expenses 25.6  3.1  22.5  54.7  12.4  42.3 
Net underwriting loss $ (6.4) $ (1.3) $ (5.1) $ (6.8) $ (15.2) $ 8.4 
Underwriting ratios (1):
Loss ratio 64.7  % 77.4  % (12.7) % 64.5  % 71.1  % (6.6) %
Acquisition cost ratio 27.3  % 20.5  % 6.8  % 27.7  % 29.9  % (2.2) %
Other underwriting expense ratio 10.6  % 3.5  % 7.1  % 9.0  % 4.3  % 4.7  %
Combined ratio 102.6  % 101.4  % 1.2  % 101.2  % 105.3  % (4.1) %
(1)Underwriting ratios are calculated by dividing the related expense by net premiums earned.
Underwriting Results
Three months ended September 30, 2021 and 2020
Gross premiums written in the Specialty segment increased by $271.9 million, or 344.2%, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily driven by an increase in premiums of $181.5 million as a result of new premiums from the legacy Sirius Group companies, and due to an increase in casualty premium written of $56.0 million in the period from our Bermuda incorporated MGU, Arcadian, in which we invest capital and expertise.
The Specialty segment generated a net underwriting loss of $6.4 million and a combined ratio of 102.6% for the three months ended September 30, 2021, compared to a net underwriting loss of $1.3 million and a combined ratio of 101.4% for the three months ended September 30, 2020.
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COVID-19 losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2021 were $2.4 million compared to $5.8 million for the three months ended September 30, 2020, from the earn in of losses on unearned premium converting to earned premium.
Net favorable prior year loss reserve development was $3.8 million for the three months ended September 30, 2021 compared to minimal prior year loss reserve development for the three months ended September 30, 2020.
Nine months ended September 30, 2021 and 2020
Gross premiums written in the Specialty segment increased by $575.7 million, or 247.9%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily driven by an increase in premiums of $381.6 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition, and due to an increase in casualty premium written of $144.5 million in the period from Arcadian.
The Specialty segment generated a net underwriting loss of $6.8 million and a combined ratio of 101.2% for the nine months ended September 30, 2021, compared to a net underwriting loss of $15.2 million and a combined ratio of 105.3% for the nine months ended September 30, 2020. The change in net underwriting results for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, was primarily driven by lower COVID-19 losses in 2021, partially offset by a net underwriting loss of $4.6 million as result of the legacy Sirius Group companies from the date of acquisition.
COVID-19 losses, net of reinsurance and reinstatement premiums, for the nine months ended September 30, 2021 were $8.1 million compared to $25.2 million for the nine months ended September 30, 2020, from the earn in of losses on unearned premium converting to earned premium.
Net favorable prior year loss reserve development was $4.0 million for the nine months ended September 30, 2021 compared to net favorable prior year loss reserve development of $1.9 million, after the impact of any offsetting changes in acquisition costs for the nine months ended September 30, 2020.
Property
Property consists of our underwriting lines of business which offer Property Catastrophe Excess Reinsurance, Agriculture Reinsurance and Property Risk and Pro Rata insurance and reinsurance on a worldwide basis. The following table sets forth net underwriting results and ratios, and the period over period changes for the Property segment for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 Change September 30, 2021 September 30, 2020 Change
($ in millions)
Gross premiums written $ 182.0  $ 42.6  $ 139.4  $ 457.3  $ 160.2  $ 297.1 
Net premiums written 91.0  36.6  54.4  324.6  138.9  185.7 
Net premiums earned 150.8  49.8  101.0  385.4  135.9  249.5 
Loss and loss adjustment expenses incurred, net 362.5  62.2  300.3  482.2  99.5  382.7 
Acquisition costs, net 30.9  13.0  17.9  79.7  38.8  40.9 
Other underwriting expenses 22.1  1.6  20.5  52.6  4.7  47.9 
Net underwriting loss $ (264.7) $ (27.0) $ (237.7) $ (229.1) $ (7.1) $ (222.0)
Underwriting ratios (1):
Loss ratio 240.4  % 124.9  % 115.5  % 125.1  % 73.2  % 51.9  %
Acquisition cost ratio 20.5  % 26.1  % (5.6) % 20.7  % 28.6  % (7.9) %
Other underwriting expense ratio 14.7  % 3.2  % 11.5  % 13.6  % 3.5  % 10.1  %
Combined ratio 275.6  % 154.2  % 121.4  % 159.4  % 105.3  % 54.1  %
(1)Underwriting ratios are calculated by dividing the related expense by net premiums earned.
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Underwriting Results
Three months ended September 30, 2021 and 2020
Gross premiums written in the Property segment increased by $139.4 million, or 327.2%, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily driven by an increase in premiums of $173.2 million as a result of new premiums from the legacy Sirius Group companies. Excluding the premiums from the Sirius Group legacy companies, the decrease in gross premiums written was due to a reduction in Property Catastrophe Excess Reinsurance premiums to reduce catastrophic risk exposures in anticipation of the Sirius Group acquisition.
The Property segment generated a net underwriting loss of $264.7 million and a combined ratio of 275.6% for the three months ended September 30, 2021, compared to a net underwriting loss of $27.0 million and a combined ratio of 154.2% for the three months ended September 30, 2020. The change in net underwriting results for the three months ended September 30, 2021, compared to the three months ended September 30, 2020, was primarily driven by increased catastrophe losses from the European floods and Hurricane Ida.
Catastrophe losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2021 in the Property segment were $284.6 million, including $132 million for the European floods and $100 million for Hurricane Ida, based on our ground-up assessment of client exposed business to each event and a top-down estimate, based on industry loss for each event and an estimate of our market share.
Catastrophe losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2020 in the Property segment were $29.6 million related to Hurricane Laura and other third quarter catastrophes.
COVID-19 losses, net of reinsurance and reinstatement premiums, for the three months ended September 30, 2021 in the Property segment were $nil compared to $9.8 million for the three months ended September 30, 2020, driven by property business interruption losses.
Net favorable prior year loss reserve development was $4.5 million for the three months ended September 30, 2021 as a result of better than expected loss reserve experience on attritional losses and small historical catastrophe event losses, compared to minimal favorable prior year loss reserve development for the three months ended September 30, 2020.
Nine months ended September 30, 2021 and 2020
Gross premiums written in the Property segment increased by $297.1 million, or 185.5%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily driven by an increase in premiums of $399.8 million as a result of new premiums from the legacy Sirius Group companies from the date of acquisition. Excluding the premiums from the Sirius Group legacy companies, the decrease in gross premiums written was due to a reduction in Property Catastrophe Excess Reinsurance premiums to reduce catastrophic risk exposures in anticipation of the Sirius Group acquisition.
The Property segment generated a net underwriting loss of $229.1 million and a combined ratio of 159.4% for the nine months ended September 30, 2021, compared to a net underwriting loss of $7.1 million and a combined ratio of 105.3% for the nine months ended September 30, 2020. The change in net underwriting results for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, was primarily driven by increased catastrophe losses from the European floods and Hurricane Ida.
Catastrophe losses, net of reinsurance and reinstatement premiums, for the nine months ended September 30, 2021 in the Property segment were $303.0 million, including $132 million for the European floods and $100 million for Hurricane Ida, based on our ground-up assessment of client exposed business to each event and a top-down estimate, based on industry loss for each event and an estimate of our market share, and also includes $40 million from June windstorms and winter storm Uri.
Catastrophe losses, net of reinsurance and reinstatement premiums, for the nine months ended September 30, 2020 in the Property segment were $29.6 million related to Hurricane Laura and other third quarter catastrophes.
COVID-19 losses, net of reinsurance and reinstatement premiums, for the nine months ended September 30, 2021 in the Property segment were $nil compared to $9.8 million for the nine months ended September 30, 2020, driven by property business interruption losses.
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Net favorable prior year loss reserve development was $13.6 million for the nine months ended September 30, 2021 compared to minimal prior year loss reserve development for the nine months ended September 30, 2020. The change was driven by net favorable loss reserve development from the legacy Sirius Group companies, primarily due to favorable loss reserve development of $15.6 million relating to the Property segment based on better than expected loss reserve emergence, primarily on European-related exposures covering multiple accident years.
Runoff & Other
Runoff & Other consists of the results of SiriusPoint Global Solutions, which specializes in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the United States and internationally, as well as asbestos risks, environmental risks and other long-tailed liability exposures, and our legacy reserve-based transactions. Runoff & Other also includes retroactive reinsurance contracts consisting of loss portfolio transfers, adverse development covers and other forms of reserve reinsurance providing indemnification of loss and loss adjustment expense reserves with respect to past loss events. The following table sets forth net underwriting results, and the period over period changes for the Runoff & Other segment for the three and nine months ended September 30, 2021 and 2020:
Three months ended Nine months ended
September 30, 2021 September 30, 2020 Change September 30, 2021 September 30, 2020 Change
($ in millions)
Gross premiums written $ 2.7  $ 2.9  $ (0.2) $ (25.7) $ 3.0  $ (28.7)
Net premiums written 5.1  2.9  2.2  (24.2) 3.0  (27.2)
Net premiums earned 9.0  3.6  5.4  (12.1) 4.9  (17.0)
Loss and loss adjustment expenses incurred, net 7.8  (20.0) 27.8  (13.1) (18.9) 5.8 
Acquisition costs, net (0.3) 23.7  (24.0) (2.5) 23.3  (25.8)
Other underwriting expenses 11.4  1.4  10.0  15.0  3.9  11.1 
Net underwriting loss $ (9.9) $ (1.5) $ (8.4) $ (11.5) $ (3.4) $ (8.1)
Underwriting Results
Three months ended September 30, 2021 and 2020
Gross premiums written in the Runoff & Other segment decreased by $0.2 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.
The Runoff & Other segment generated a net underwriting loss of $9.9 million for the three months ended September 30, 2021, compared to a net underwriting loss of $1.5 million for the three months ended September 30, 2020. For the three months ended September 30, 2021, other underwriting expenses include $9.8 million of expenses, of which $7.1 million were accelerated during the third quarter of 2021, relating to interest crediting features in certain reinsurance and deposit contracts, compared to $1.3 million for the three months ended September 30, 2020. We will reassess capacity to underwrite these risks in the future as a result of the LPT.
Nine months ended September 30, 2021 and 2020
Gross premiums written in the Runoff & Other segment decreased by $28.7 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily driven by reduction of $30.0 million from the impact of restructuring one retroactive reinsurance contract that was previously written and fully earned. The decrease in net premiums earned from the reduction in retroactive exposures in this reinsurance contract was offset by a similar decrease in loss and loss adjustment expenses incurred and acquisition costs.
The Runoff & Other segment generated a net underwriting loss of $11.5 million for the nine months ended September 30, 2021, compared to a net underwriting loss of $3.4 million for the nine months ended September 30, 2020. For the nine months ended September 30, 2021, other underwriting expenses include $13.5 million of expenses, of which $7.1 million were accelerated during the third quarter of 2021, relating to interest crediting features in certain reinsurance and deposit contracts compared to $3.7 million for the nine months ended September 30, 2020.
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Non-GAAP Financial Measures
We have included certain financial measures that are not calculated under standards or rules that comprise U.S. GAAP. Such measures, including basic book value per share, tangible basic book value per share, diluted book value per share and tangible diluted book value per share, are referred to as non-GAAP financial measures. These non-GAAP financial measures may be defined or calculated differently by other companies. We believe these measures allow for a more complete understanding of our underlying business. These measures are used by management to monitor our results and should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Reconciliations of non-GAAP measures to the most comparable U.S. GAAP measures are included below.
Basic Book Value Per Share, Tangible Basic Book Value Per Share, Diluted Book Value Per Share, Tangible Diluted Book Value Per Share
In the first quarter of 2021, we changed the method for calculating the dilutive effect of restricted shares, restricted share units and options to calculate the dilutive impact in a manner consistent with how dilution is calculated using the treasury stock method for earnings per share. This change had no impact on previously presented basic book value per share. The following table shows the revised diluted book value per share compared to the diluted book value per share as previously presented:
December 31, 2020 September 30, 2020 June 30,
2020 		March 31,
2020 		December 31, 2019
Diluted book value per share $ 16.71  $ 15.37  $ 14.62  $ 13.30  $ 15.19 
Diluted book value per share, as previously presented 16.42  15.06  14.37  13.05  15.04 
Difference $ 0.29  $ 0.31  $ 0.25  $ 0.25  $ 0.15 
Basic book value per share, as presented, is a non-GAAP financial measure and is calculated by dividing common shareholders’ equity attributable to SiriusPoint common shareholders by the number of common shares outstanding, excluding the total number of issued unvested restricted shares, at period end.
Tangible basic book value per share, as presented, is a non-GAAP financial measure and is calculated by dividing tangible common shareholders’ equity attributable to SiriusPoint common shareholders by the number of common shares outstanding, excluding the total number of unvested restricted shares, at period end. Tangible book value per share is useful to investors because it measures the realizable value of shareholder returns, excluding the impact of intangible assets.
Diluted book value per share and tangible diluted book value per share, as presented, are non-GAAP financial measures and are calculated using the treasury stock method. Under the treasury stock method, we assume that proceeds received from in-the-money options and/or warrants exercised are used to repurchase common shares in the market. The dilutive effect of restricted shares, restricted share units and options are calculated in a manner consistent with how dilution is calculated using the treasury stock method for earnings per share. We have also followed a similar approach for calculating dilution for warrants, Series A preference shares, Upside Rights and other potentially dilutive securities issued as part of our acquisition of Sirius Group.
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The following table sets forth the computation of basic book value per share, tangible basic book value per share, diluted book value per share and tangible diluted book value per share as of September 30, 2021 and December 31, 2020:
September 30,
2021 		December 31, 2020
Basic and diluted book value per share numerator: ($ in millions, except share and per share amounts)
Shareholders' equity attributable to SiriusPoint shareholders $ 2,638.0  $ 1,563.9 
Less: Series B preference shares (200.0) — 
Common shareholders’ equity attributable to SiriusPoint common shareholders - basic 2,438.0  1,563.9 
Plus: carrying value of Series A preference shares issued in merger 31.2  — 
Common shareholders’ equity attributable to SiriusPoint common shareholders - diluted 2,469.2  1,563.9 
Less: intangible assets (173.7) — 
Tangible common shareholders' equity attributable to SiriusPoint common shareholders - basic 2,264.3  1,563.9 
Tangible common shareholders' equity attributable to SiriusPoint common shareholders - diluted $ 2,295.5  $ 1,563.9 
Basic and diluted book value per share denominator:
Common shares outstanding 161,949,037 95,582,733
Unvested restricted shares (2,687,612) (2,933,993)
Basic book value per share denominator 159,261,425 92,648,740
Effect of dilutive Series A preference shares issued in merger 1,015,116 — 
Effect of dilutive warrants(1)
—  — 
Effect of dilutive stock options, restricted shares and restricted share units issued to directors and employees
2,825,401 969,386
Diluted book value per share denominator 163,101,942 93,618,126
Basic book value per share $ 15.31  $ 16.88 
Tangible basic book value per share $ 14.22  $ 16.88 
Diluted book value per share $ 15.14  $ 16.71 
Tangible diluted book value per share $ 14.07  $ 16.71 
(1)As of September 30, 2021 and December 31, 2020, there was no dilution as a result of the Company’s share price being under the lowest exercise price for warrants.
Liquidity and Capital Resources
Impact of Sirius Acquisition on Liquidity and Capital Resources
On February 26, 2021, we completed the acquisition of Sirius Group. We believe that our operating subsidiaries, following the acquisition of Sirius Group, have adequate capital resources in the aggregate, and the ability to produce sufficient cash flows to meet expected claims payments and operational expenses, including but not limited to interest payments, for the next twelve months from cash flows generated from operating activities and investment income. We may incur additional indebtedness in the future if we determine that it would be an efficient part of our capital structure.
Liquidity Requirements
Liquidity is a measure of a company’s ability to generate cash flows sufficient to meet short-term and long-term cash requirements of its business operations. SiriusPoint’s insurance and reinsurance operations are subject to regulation and supervision in each of the jurisdictions where they are domiciled and licensed to conduct business. Generally, regulatory authorities have broad supervisory and administrative powers over such matters as licenses, standards of solvency, premium rates, policy forms, investments, security deposits, methods of accounting, form and content of financial statements, reserves for unpaid loss and loss adjustment expenses, reinsurance, minimum capital and surplus requirements, dividends and other distributions to shareholders, periodic examinations and annual and other report filings. In general, such regulation is for the protection of policyholders rather than shareholders. SiriusPoint manages its liquidity needs primarily through the maintenance of a short duration and high quality fixed income portfolio.
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SiriusPoint is a holding company and has no substantial operations of its own. Its cash needs primarily consist of the payment of corporate expenses. Its assets consist primarily of its investments in subsidiaries. SiriusPoint’s ability to pay expenses or dividends or return capital to shareholders will depend upon the availability of dividends or other statutorily permissible distributions from those subsidiaries. Cash at the subsidiaries is used primarily to pay loss and loss adjustment expenses, reinsurance premiums, acquisition costs, interest expense, taxes, operating expenses and to purchase investments.
To date, the COVID-19 pandemic has not materially impacted our ability to meet liquidity, regulatory capital requirements or other contractual commitments.
Dividend Capacity
Refer to “Overview” above for additional details on the internal reorganization of various entities within SiriusPoint, effective on May 27, 2021.
We are subject to regulatory and other constraints that affect our ability to pay dividends. For the three and nine months ended September 30, 2021, SiriusPoint did not pay any dividends to its common shareholders.
As of December 31, 2020, Third Point Re BDA and Third Point Re USA could pay dividends to SiriusPoint of approximately $316.7 million and $47.4 million, respectively. Third Point Re USA is subject to a Net Worth Maintenance Agreement that further restricts the amount of capital and surplus it has available for the payment of dividends. For a further discussion of the various restrictions on Third Point Re BDA and Third Point RE USA’s ability to pay dividends, see Part I, Item 1 “Business - Regulation” in our 2020 Form 10-K. During the three and nine months ended September 30, 2021, Third Point Re USA paid $nil and $4.0 million of dividends, respectively, to its immediate parent.
As of December 31, 2020, Sirius Bermuda could pay dividends of approximately $464.0 million to its immediate parent company, SIG. Sirius Bermuda indirectly owns SiriusPoint International, SiriusPoint America, and SiriusPoint’s other insurance and reinsurance operating companies, each of which are limited in their ability to pay dividends by the insurance laws of their relevant jurisdictions. During the three and nine months ended September 30, 2021, SiriusPoint Bermuda paid dividends of $45.0 million and $54.0 million, respectively, to its immediate parent.
SiriusPoint International has the ability to pay dividends to its immediate parent subject to the availability of unrestricted equity, calculated in accordance with the Swedish Act on Annual Accounts in Insurance Companies and the Swedish Financial Supervisory Authority (SFSA). Unrestricted equity is calculated on a consolidated group account basis and on a parent account basis. Differences between the two include but are not limited to accounting for goodwill, subsidiaries (with parent accounts stated at original foreign exchange rates), taxes and pensions. SiriusPoint International's ability to pay dividends is limited to the "lower of" unrestricted equity as calculated within the group and parent accounts. As of December 31, 2020, SiriusPoint International had $386.9 million (based on the December 31, 2020 SEK to USD exchange rate) of unrestricted equity on a parent account basis (the lower of the two approaches) available to pay dividends in 2021. The amount of dividends available to be paid by SiriusPoint International in any given year is also subject to cash flow and earnings generated by SiriusPoint International's business, the maintenance of adequate solvency capital ratios for SiriusPoint International and the consolidated Sirius International UK Holdings Ltd. group, as well as to dividends received from its subsidiaries. Earnings generated by SiriusPoint International's business that are allocated to the Safety Reserve are not available to pay dividends (see "Safety Reserve" below). During both the three and nine months ended September 30, 2021, SiriusPoint International paid $9.8 million of dividends to its immediate parent.
Under the normal course of business, SiriusPoint America has the ability to pay dividends to its immediate parent during any twelve-month period without the prior approval of regulatory authorities in an amount set by a formula based on the lesser of net investment income, as defined by statute, or 10% of statutory surplus, in both cases as most recently reported to regulatory authorities, subject to the availability of earned surplus and subject to dividends paid in prior periods. Based on this formula, as of December 31, 2020, SiriusPoint America had $559.6 million of statutory surplus and $92.6 million of earned surplus, and could pay approximately $38.7 million to its parent company without prior regulatory approval. During the three and nine months ended September 30, 2021, SiriusPoint America did not pay dividends to its immediate parent.
In addition to the regulatory and other contractual constraints to paying dividends, we manage the capital of the group and each of our operating subsidiaries to support our current ratings from AM Best, Fitch, and Standard & Poor’s. This could further reduce the ability and amount of dividends that could be paid from subsidiaries to SiriusPoint.
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Other Liquidity Requirements
SiriusPoint fully and unconditionally guarantees the $115.0 million of debt obligations issued by TPRUSA, a wholly owned subsidiary. See Note 14 “Debt and letter of credit facilities” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information on the fully and unconditional guarantees.
For additional commitments and contingencies that may affect our liquidity requirements see Note 23 “Commitments and contingencies” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Safety Reserve
Subject to certain limitations under Swedish law, SiriusPoint International is permitted to transfer pre-tax income amounts into a reserve referred to as a "Safety Reserve." Under local statutory requirements, an amount equal to the deferred tax liability on SiriusPoint International's Safety Reserve is included in Solvency Capital. Access to the Safety Reserve is generally restricted to cover insurance and reinsurance losses and to cover a breach of the Solvency Capital Requirement. Similar to the approach taken by Swedish regulatory authorities, most major rating agencies generally take into account the Safety Reserve in SiriusPoint International's regulatory capital when assessing SiriusPoint International and SiriusPoint's financial strength.
As of September 30, 2021, SiriusPoint International's Safety Reserve was SEK 9.7 billion, or $1.1 billion (based on the September 30, 2021 SEK to USD exchange rate). Under Swedish GAAP, an amount equal to the Safety Reserve, net of a related deferred tax liability established at the Swedish tax rate, is classified as common shareholders' equity. Generally, this deferred tax liability ($227.6 million based on the September 30, 2021 SEK to USD exchange rate) is required to be paid by SiriusPoint International if it fails to maintain prescribed levels of premium writings and loss reserves in future years. As a result of the indefinite deferral of these taxes, the related deferred tax liability is not taken into account by Swedish regulatory authorities for purposes of calculating Solvency Capital under Swedish insurance regulations.
Pursuant to tax legislation effective as of January 1, 2019, the tax rate applicable to Swedish corporations decreased to 20.6%. The tax legislation also introduced an annual tax on the Safety Reserve effective as of January 1, 2019. This provision adds additional taxable income for the Company annually. The calculation applies the Government Borrowing Rate (with a floor rate of +0.5%) to the Safety Reserve balance at the beginning of the year. At the current year tax rate of 20.6%, the additional tax expense is SEK 7.5 million, or $0.9 million for the nine months ended September 30, 2021 (based on the September 30, 2021 SEK to USD exchange rate).
Further, the enacted legislation also included a new provision treating an amount equal to 6% of the Safety Reserve balance as of January 1, 2021, as additional taxable income in tax year 2021 only, subject to tax at the applicable 20.6% rate. Based on this provision and SiriusPoint International's Safety Reserve balance as of January 1, 2021, SiriusPoint International has recorded a current tax liability of SEK 89.9 million, or $10.6 million (based on the September 30, 2021 SEK to USD exchange rate) and an additional deferred tax liability as of September 30, 2021 in the amount of SEK 30.0 million, or $3.4 million (based on the September 30, 2021 SEK to USD exchange rate).
Sources of Liquidity
Our sources of funds have primarily consisted of premiums written, reinsurance recoveries, investment income and proceeds from sales and redemptions of investments.
We believe the liquidity profile of the net investments underlying the TP Enhanced Fund, the Company’s rights under the Third Amended and Restated Exempted Limited Partnership Agreement among SiriusPoint, SiriusPoint Bermuda and Third Point Re USA effective February 26, 2021 (the “2020 LPA”) to withdraw from the TP Enhanced Fund and the operating cash on hand will provide us with sufficient liquidity to manage our operations. TP Enhanced Fund’s investment portfolio is concentrated in tradable securities and is marked to market each day. Pursuant to the investment guidelines as specified in the 2020 LPA, at least 60% of our portfolio must be invested in securities of publicly traded companies and governments of Organization of Economic Co-operation and Development high income countries, asset-backed securities, cash, cash equivalents and gold and other precious metals. Under the 2020 LPA, the Company has the right to withdraw funds monthly from TP Enhanced Fund to meet capital adequacy requirements and to satisfy financing obligations. The Company may also withdraw its investment upon the occurrence of certain events specified in the 2020 LPA, including to meet capital adequacy requirements, to prevent a negative credit rating, for risk management purposes or to satisfy financing obligations, subject to
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certain limitations on such withdrawals as specified in the 2020 LPA, and may withdraw its investment in full on the first quarter end date after the five-year anniversary of the closing date of the acquisition of Sirius Group (i.e. March 31, 2026) and each successive two-year anniversary of such date. The Company is also entitled to withdraw funds from the TP Enhanced Fund in order to satisfy its risk management guidelines, upon prior written notice to TP GP, in an amount not to exceed 20% of the sum of (x) the aggregate opening balances of our capital account and (y) the aggregate amount of capital contributions credited to our capital account.
Effective February 26, 2021, the Company entered into a 3-year, $300.0 million senior unsecured revolving credit facility (the “Facility”) with JPMorgan Chase Bank, N.A. as administrative agent. The Facility includes an option, subject to satisfaction of certain conditions including agreement of lenders representing greater than a majority of commitments, for the Company to request an extension by such lenders of the maturity date of the Facility by an additional 12 months. The Facility provides access to loans for working capital and general corporate purposes, and letters of credit to support obligations under insurance and reinsurance agreements, retrocessional agreements and for general corporate purposes. Loans and letters of credit under the Facility will become available, subject to customary conditions precedent. As of September 30, 2021, there were no outstanding borrowings under the Facility. In addition, as of September 30, 2021, SiriusPoint was in compliance with all of the covenants under the Facility.
Financing
We expect that our cash and cash equivalents on the balance sheet and cash flow from operations will provide us with the financial flexibility to execute our strategic objectives. Our ability to generate cash, however, is subject to our performance, general economic conditions, industry trends and other factors. To the extent cash and cash equivalents on the balance sheet, investment returns and cash flow from operations are insufficient to fund our future activities and requirements, we may need to raise additional funds through public or private equity or debt financing. If we issue equity securities in order to raise additional funds, substantial dilution to existing shareholders may occur. If we raise cash through the issuance of additional indebtedness, we may be subject to additional contractual restrictions on our business. There is no assurance that we would be able to raise the additional funds on favorable terms or at all.
Our debt and equity instruments as of September 30, 2021 and December 31, 2020 are summarized below.
2017 SEK Subordinated Notes
On September 22, 2017, Sirius Group, through SIG, issued floating rate callable subordinated notes denominated in SEK in the amount of SEK 2,750.0 million (or $346.1 million on date of issuance) at a 100% issue price ("2017 SEK Subordinated Notes"). The 2017 SEK Subordinated Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933 (the "Securities Act"). The 2017 SEK Subordinated Notes bear interest on their principal amount at a floating rate equal to the applicable Stockholm Interbank Offered Rate for the relevant interest period plus an applicable margin, payable quarterly in arrears on March 22, June 22, September 22, and December 22 in each year commencing on December 22, 2017, until maturity in September 2047. The 2017 SEK Subordinated Notes are listed on the Euronext Dublin exchange.
As a result of the Company’s merger with SIG, the Company acquired the existing and outstanding aggregate principal amount of the 2017 SEK Subordinated Notes pursuant to the First Supplemental Subordinated Indenture, dated May 27, 2021, among SIG, the Company and The Bank of New York Mellon, as trustee (the “Trustee”).
As of September 30, 2021, the carrying value of the 2017 SEK Subordinated Notes was $306.3 million and reflected as debt in the in the condensed consolidated balance sheets.
For further details and discussion with respect to the 2017 SEK Subordinated Notes, see Note 14 “Debt and letter of credit facilities” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
2016 SIG Senior Notes
On November 1, 2016, Sirius Group, through SIG, issued $400.0 million face value of senior unsecured notes ("2016 SIG Senior Notes") at an issue price of 99.209% for net proceeds of $392.4 million after taking into effect both deferrable and non-deferrable issuance costs. The 2016 SIG Senior Notes were issued in an offering that was exempt from the registration requirements of the Securities Act. The 2016 SIG Senior Notes bear an annual interest rate of 4.6%, payable semi-annually
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in arrears on May 1, and November 1, in each year commencing on May 1, 2017, until maturity in November 2026. The 2016 SIG Senior Notes are listed on the Bermuda Stock Exchange.
As a result of the Company’s merger with SIG, the Company acquired the existing and outstanding aggregate principal amount of the 2016 SIG Senior Notes pursuant to the Third Supplemental Senior Indenture, dated May 27, 2021, among SIG, the Company and the Trustee. The Company was in compliance with all debt covenants as of and for the period ended September 30, 2021.
As of September 30, 2021, the carrying value of the 2016 SIG Senior Notes was $406.3 million and reflected as debt in the in the condensed consolidated balance sheets.
For further details and discussion with respect to the 2016 SIG Senior Notes, see Note 14 “Debt and letter of credit facilities” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
2015 TPRUSA Senior Notes
On February 13, 2015, TPRUSA issued $115.0 million of senior unsecured notes (the “2015 TPRUSA Senior Notes”) due February 13, 2025. The 2015 TPRUSA Senior Notes bear interest at 7.0% and interest is payable semi-annually on February 13 and August 13 of each year. The 2015 TPRUSA Senior Notes are fully and unconditionally guaranteed by SiriusPoint and, in certain circumstances specified in the indenture governing the 2015 TPRUSA Senior Notes, certain existing or future subsidiaries of the Company may be required to guarantee the 2015 TPRUSA Senior Notes.
As of September 30, 2021 and December 31, 2020, the carrying value of the 2015 TPRUSA Senior Notes was $114.4 million and $114.3 million, respectively, and reflected as debt in the in the condensed consolidated balance sheets.
For further details and discussion with respect to the 2015 TPRUSA Senior Notes, see Note 14 “Debt and letter of credit facilities” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Series A Preference Shares
On February 26, 2021, certain holders of Sirius Group shares elected to receive Series A preference shares as consideration with respect to the Sirius Group acquisition. The Company issued 11,720,987 of designated Series A preference shares, with a par value of $0.10 per share. The Series A preference shares rank pari passu with the Company’s common shares with respect to the payment of dividends or distributions. Each Series A preference share has voting power equal to the number of Company shares into which it is convertible, and the Series A preference shares and Company shares vote together as a single class with respect to any and all matters.
As of September 30, 2021, the estimated fair value of the Series A preference shares was $31.2 million and is reflected in liability-classified capital instruments in the condensed consolidated balance sheets. During the nine months ended September 30, 2021, the Company did not declare or pay dividends to Series A preference shareholders.
For further details and discussion with respect to the Series A preference shares, see Note 3 “Acquisition of Sirius Group” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Series B Preference Shares
On February 26, 2021, the previous Sirius Group preference shareholders exchanged their existing Series B preference shares of Sirius Group in return for 8,000,000 new Series B preference shares, par value $0.10, of the Company. Dividends on the Series B preference shares will be cumulative and payable quarterly in arrears at an initial rate of 8.0%. The preference shareholders will have no voting rights with respect to the Series B preference shares unless dividends have not been paid for six dividend periods, whether or not consecutive, in which case the holders of the Series B preference shares will have the right to elect two directors.
On June 28, 2021 and August 12, 2021, the Company entered into Underwriting Agreements with the Series B preference shareholders (the “Selling Shareholders”) pursuant to which the Selling Shareholders sold to the public market an aggregate of 8,000,000 Series B preference shares. The Company did not receive any proceeds from the sale of the Series B preference shares by the Selling Shareholders. The transaction did not change the underlying conditions of the Series B preference shares. The Series B preference shares are listed on the New York Stock Exchange under the symbol “SPNT PRB”.
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As of September 30, 2021, the carrying value of the Series B preference shares was $200.0 million and reflected in shareholders’ equity attributable to SiriusPoint shareholders in the condensed consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company declared and paid dividends of $4.0 million and $8.1 million to the Series B preference shareholders, respectively.
For further details and discussion with respect to the Series B preference shares, see Note 17 “Shareholders' equity” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Debt Covenants
As of September 30, 2021, SiriusPoint was in compliance with all of the covenants under the 2017 SEK Subordinated Notes, the 2016 SIG Senior Notes, and the 2015 TPRUSA Senior Notes.
Letter of Credit Facilities
As of September 30, 2021, $1,054.0 million of letters of credit had been issued. Each of the facilities contain customary events of default and restrictive covenants, including but not limited to, limitations on liens on collateral, transactions with affiliates, mergers and sales of assets, as well as solvency and maintenance of certain minimum pledged equity requirements and a minimum rating from rating agencies. Each restricts issuance of any debt without the consent of the letter of credit provider. Additionally, if an event of default exists, in any of the letter of credit facilities, we could be prohibited from paying dividends. We were in compliance with all of the covenants under the aforementioned letters of credit facilities as of September 30, 2021.
For further details and discussion with respect to letter of credit facilities, see Note 14 “Debt and letter of credit facilities” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Cash Secured Letter of Credit Agreements
Under the cash secured letter of credit facilities, we provide collateral that consists of cash and cash equivalents and debt securities. As of September 30, 2021, total cash and cash equivalents and debt securities with a fair value of $1,174.1 million were pledged as collateral against the letters of credit issued.
We believe that we have adequate capacity between our existing cash secured letter of credit agreements as well as available investments to post in reinsurance trusts to meet our collateral obligations under our existing and future reinsurance business.
For further details and discussion with respect to cash secured letter of credit agreements, see Note 14 “Debt and letter of credit facilities” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Cash, Restricted Cash and Cash Equivalents and Restricted Investments
Cash and cash equivalents consist of cash held in banks and other short-term, highly liquid investments with original maturity dates of ninety days or less. We invest a portion of the collateral securing certain reinsurance contracts in U.S. treasury securities and sovereign debt. This portion of the collateral is included in debt securities in the consolidated balance sheets and is disclosed as part of restricted investments. In addition, restricted investments also pertain to limited partnership interests in TP Enhanced Fund securing the Company’s contractual obligations under certain reinsurance contracts that the Company will not be released from until the underlying risks have expired or have been settled.
Restricted cash and cash equivalents and restricted investments increased by $1,205.1 million, or 94.6%, to $2,479.4 million as of September 30, 2021 from $1,274.3 million as of December 31, 2020. The increase was primarily due to an increase in the number of reinsurance contracts that required collateral as a result of the acquisition of Sirius Group.
For additional information on restricted cash, cash equivalents and investments, see Note 6 “Cash, cash equivalents, restricted cash and restricted investments” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Cash Flows
Our cash flows from operations generally represent the difference between: (1) premiums collected and investment income and (2) loss and loss expenses paid, reinsurance purchased, underwriting and other expenses paid. Cash flows from operations may differ substantially from net income (loss) and may be volatile from period to period depending on the
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underwriting opportunities available to us and other factors. Due to the nature of our underwriting portfolio, claim payments can be unpredictable and may need to be made within relatively short periods of time. Claim payments can also be required several months or years after premiums are collected. In addition, as discussed above, SiriusPoint has access to the $300.0 million Facility that provides access to loans for working capital and general corporate purposes, and letters of credit to support obligations under insurance and reinsurance agreements and retrocessional agreements.
Operating, investing and financing cash flows for the nine months ended September 30, 2021 and 2020 were as follows:
2021 2020
($ in millions)
Net cash provided by operating activities $ 26.6  $ 45.3 
Net cash provided by (used in) investing activities 410.0  (68.1)
Net cash provided by (used in) financing activities 33.0  (15.7)
Net increase (decrease) in cash, cash equivalents and restricted cash 469.6  (38.5)
Cash, cash equivalents and restricted cash at beginning of period 1,713.9  1,654.0 
Cash, cash equivalents and restricted cash at end of period $ 2,183.5  $ 1,615.5 
Operating Activities
Cash provided by operating activities can fluctuate due to timing differences between the collection of premiums and reinsurance recoverables and the payment of losses and loss expenses, and the payment of premiums to reinsurers. The decrease in cash flows from operating activities for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to transaction related payments for professional and advisory fees relating to the Sirius Group acquisition and an increase in payments of losses and loss expenses, partially offset by an increase in premiums received.
Investing Activities
Cash flows provided by investing activities for the nine months ended September 30, 2021 primarily relates to the acquisition of Sirius Group, which comprised of $740.3 million of cash and restricted cash acquired, partially offset by $108.4 million of cash consideration. Cash flows used in investing activities for the nine months ended September 30, 2020 primarily relates to investment activity from the opportunistic credit portfolio.
Financing Activities
Cash flows provided by financing activities for the nine months ended September 30, 2021 primarily consisted of cash receipts of $48.6 million from the issuance of SiriusPoint common shares pursuant to the equity commitment letter between the Company, Third Point Opportunities Master Fund Ltd. and Daniel S. Loeb in connection with closing of the acquisition of Sirius Group. Cash flows used in financing activities for the nine months ended September 30, 2020 primarily consisted of $16.4 million from payments on deposit liability contracts.
See Note 3 “Acquisition of Sirius Group” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the Sirius Group acquisition.
Financial Condition
As of September 30, 2021, total shareholders’ equity was $2,638.0 million, compared to $1,565.3 million as of December 31, 2020. The increase was primarily due to the acquisition of Sirius Group. See Note 3 “Acquisition of Sirius Group” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the Sirius Group acquisition.
Contractual Obligations
During the three and nine months ended September 30, 2021, other than as disclosed in Note 10 "Loss and loss adjustment expense reserves" in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q with respect to an increase in our reserve for loss and loss adjustment expense reserves, Note 14 "Debt and letter of credit facilities" in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q with respect to our long term debt obligations and Note 23 "Commitments and contingencies" in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q with
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respect to lease agreements, there were no other material changes in our contractual obligations as disclosed in the table of contractual obligations, and related footnotes, included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2020 Form 10-K.
Supplemental Guarantor Financial Information
In March 2020, the SEC issued Rule Release No. 33-10762, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities ("Release 33-10762”). Release 33-10762 simplifies the disclosure requirements related to certain registered securities under Rules 3-10 and 3-16 of SEC Regulation S-X, permitting registrants to provide certain alternative financial disclosures and non-financial disclosures in lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities if certain conditions are met. The amendments in Release 33-10762 are generally effective for filings on or after January 4, 2021, with early application permitted. We adopted the new disclosure requirements permitted under Release 33-10762 effective for the first quarter ended March 31, 2021.
On February 13, 2015, TPRUSA (“Subsidiary Issuer”) issued the 2015 TPRUSA Senior Notes in the aggregate principal amount of $115.0 million. The 2015 TPRUSA Senior Notes bear interest at 7.0% and interest is payable semi-annually on February 13 and August 13 of each year. The 2015 TPRUSA Senior Notes are fully and unconditionally guaranteed by SiriusPoint (“Parent Guarantor”), and, in certain circumstances specified in the indenture governing the Notes, certain existing or future subsidiaries of the Company may be required to guarantee the Notes, as described in the indenture governing the Notes. See Note 14 “Debt and letter of credit facilities” included elsewhere in this Quarterly Report on Form 10-Q for additional information.
The following tables present supplemental summarized financial information for SiriusPoint and TPRUSA (the “Obligor group”):
SiriusPoint (1)
TPRUSA
September 30,
2021 		December 31, 2020 September 30,
2021 		December 31, 2020
($ in millions)
Assets
Total investments in securities $ 16.6  $ 4.0  $ —  $ — 
Cash and cash equivalents 14.3  0.2  0.4  0.2 
Deferred tax asset —  —  9.5  8.5 
Amounts due from affiliates —  96.6  —  — 
Other assets 15.7  4.9  —  — 
Total assets $ 46.6  $ 105.7  $ 9.9  $ 8.7 
Liabilities
Accounts payable, accrued expenses and other liabilities $ 30.5  $ 1.7  $ 1.0  $ 3.0 
Deferred tax liability 12.7  —  —  — 
Amounts due to affiliates 2.5  —  4.0  — 
Liability-classified capital instruments 103.4  —  —  — 
Debt 712.6  —  114.4  114.3 
Total liabilities 861.7  1.7  119.4  117.3 
Total shareholders’ equity (2)
(815.1) 104.0  (109.5) (108.6)
Total liabilities and shareholders’ equity $ 46.6  $ 105.7  $ 9.9  $ 8.7 
(1)Excludes investment in Subsidiary Issuer (presented separately).
(2)Total shareholders' equity of Parent Guarantor excludes $3,453.1 million and $1,459.9 million of investment in subsidiaries, including Subsidiary Issuer, at September 30, 2021 and December 31, 2020, respectively. Total shareholders' equity of Subsidiary Issuer excludes $314.3 million and $297.4 million of investment in subsidiaries at September 30, 2021 and December 31, 2020, respectively.

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SiriusPoint (1)
TPRUSA
Three Months Ended September 30, Three Months Ended September 30,
2021 2020 2021 2020
($ in millions)
Revenues
Other revenues $ 20.7  $ —  $ —  $ — 
Total revenues 20.7  —  —  — 
Expenses
Net corporate and other expenses 18.3  13.9  —  — 
Interest expense 7.6  —  2.1  2.1 
Foreign exchange gains (10.2) —  —  — 
Total expenses 15.7  13.9  2.1  2.1 
Loss before income tax (expense) benefit 5.0  (13.9) (2.1) (2.1)
Income tax (expense) benefit (3.0) —  0.4  0.4 
Net income (loss) 2.0  (13.9) (1.7) (1.7)
Dividends on Series B preference shares (4.0) —  —  — 
Net loss attributable to Obligor group (2)
$ (2.0) $ (13.9) $ (1.7) $ (1.7)
SiriusPoint (1)
TPRUSA
Nine months ended September 30, Nine months ended September 30,
2021 2020 2021 2020
($ in millions)
Revenues
Net investment income $ 1.3  $ —  $ —  $ — 
Other revenues 47.1  —  —  — 
Total revenues 48.4  —  —  — 
Expenses
Net corporate and other expenses 85.4  20.7  —  — 
Interest expense 18.2  —  6.2  6.2 
Foreign exchange gains (7.7) —  —  — 
Total expenses 95.9  20.7  6.2  6.2 
Income before income tax (expense) benefit (47.5) (20.7) (6.2) (6.2)
Income tax (expense) benefit (12.5) —  1.3  1.3 
Net loss (60.0) (20.7) (4.9) (4.9)
Dividends on Series B preference shares (9.5) —  —  — 
Net loss attributable to Obligor group (2)
$ (69.5) $ (20.7) $ (4.9) $ (4.9)
(1)Excludes investment in Subsidiary Issuer (presented separately).
(2)Net income (loss) of Parent Guarantor excludes equity in earnings (losses) from investment in subsidiaries, including Subsidiary Issuer, of $(46.0) million and $216.9 million for the three and nine months ended September 30, 2021, respectively (2020 - $82.6 million and $29.8 million, respectively). Net income of Subsidiary Issuer excludes equity in earnings from investment in subsidiaries of $9.2 million and $20.9 million for the three and nine months ended September 30, 2021, respectively (2020 - $3.7 million and $21.1 million, respectively).
Off-Balance Sheet Commitments and Arrangements
We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
Critical Accounting Policies and Estimates
For a summary of our significant accounting and reporting policies, please refer to Note 2 “Significant accounting policies”, of Item 8. “Financial Statements and Supplementary Data” included in our 2020 Form 10-K. Effective January 1, 2021, the Company changed its accounting policy for assumed written premium recognition. Previously, the Company estimated
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ultimate premiums for the entire contract period and recorded this estimate at inception of the contract. For contracts where the full premium written was not estimable at inception, the Company recorded premium written for the portion of the contract period for which the amount was estimable. Refer to Note 2 “Significant accounting policies” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion.
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions. As of December 31, 2020, the accounting policies that required the most significant judgments and estimations by management were: (1) premium revenue recognition, including evaluation of risk transfer, (2) loss and loss adjustment expense reserves and (3) fair value measurements related to our investments. If actual events differ significantly from the underlying judgments or estimates used by management in the application of these accounting policies, there could be a material adverse effect on our results of operations and financial condition. Refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2020 Form 10-K and revised sections of the 2020 Form 10-K for premium revenue recognition included in the Company’s Current Report on Form 8-K filed with the SEC on June 17, 2021.
Due to the acquisition of Sirius Group on February 26, 2021, there are two additional items that require significant judgments and estimations by management which are: (1) intangible assets and (2) income taxes. If actual events differ significantly from the underlying judgments or estimates used by management in the application of these accounting policies, there could be a material adverse effect on our results of operations and financial condition.
Intangible Assets
As part of the acquisition of Sirius Group, SiriusPoint recognized identifiable intangible assets. As of September 30, 2021, these identifiable intangible assets had a carrying value of $173.7 million and consisted of the following, and are included in intangible assets on the Company’s condensed consolidated balance sheet:
•Distribution relationships - refers to the relationships Sirius Group has established with external independent distributors and brokers to facilitate the distribution of its products in the marketplace. As a result of owning the distribution relationships, management will not have to duplicate historical marketing, training, and start-up expenses to redevelop comparable relationships to support business operations;
•MGA relationships - refers to relationships with managing general agents on the direct insurance business. Through the MGA relationships, Sirius Group generates a predictable and recurring stream of service fee revenue;
•Lloyd’s Capacity - Syndicate 1945 - relates to relationships associated with the right to distribute and market policies underwritten through Lloyd’s Syndicate 1945;
•Insurance licenses - Sirius Group, like other insurance providers, is required to maintain licenses to produce and service insurance contracts. Insurance licenses are estimated to have an indefinite life and are therefore not amortized, but will be subject to periodic impairment testing;
•Trade name - represents the value of the Sirius Group brand acquired; and
•Internally developed and used computer software - represents the value of internally developed and used computer software to be utilized by the Company.
See Note 3 “Acquisition of Sirius Group” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the critical accounting estimates for the identifiable intangible assets acquired as part of the Sirius Group transaction.
Income Taxes
Prior to the acquisition of Sirius Group on February 26, 2021, the Company had one operating subsidiary incorporated in Bermuda, Third Point Re USA, which made an election to pay tax in the United States of America under Section 953(d) of the U.S. Internal Revenue Code of 1986, as amended. Subsequent to the acquisition of Sirius Group, the Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which the Company's subsidiaries and branches are subject to tax are Australia, Belgium, Canada, Germany, Hong Kong (China), Ireland, Luxembourg, Malaysia, Singapore, Sweden, Switzerland, the United Kingdom, and the United States.
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See Note 16 “Income taxes” in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a more detailed discussion on the critical accounting estimates for income taxes.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Our condensed consolidated balance sheets include a substantial amount of assets and liabilities whose fair values are subject to market risk. The term market risk refers to the risk of loss arising from adverse changes in interest rates, credit spreads, equity markets prices, and other relevant market rates and prices. Due to our sizable investment portfolio, market risk can have a significant effect on our consolidated financial position.
We believe we are principally exposed to the following types of market risk:
▪interest rate risk;
▪equity securities and other investments price risk; and
▪foreign currency exchange risk.
Interest Rate Risk
Interest rate risk is the price sensitivity of a security to changes in interest rates. Our investment portfolio includes fixed income investments, whose fair values will fluctuate with changes in interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of fixed income investments, respectively. Additionally, fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, relative values of alternative investments, the liquidity of the instrument, and other market factors.
We generally manage the interest rate risk associated with our portfolio of fixed income investments by monitoring the average of investment-grade corporate securities; U.S. government and agency securities; foreign government, agency and provincial obligations; preferred stocks; asset-backed and mortgage-backed securities; and municipal obligations.
The following table summarizes the estimated effects of hypothetical increases and decreases in market interest rates on our debt securities as of September 30, 2021:
Fair value Assumed change in interest rate Estimated fair value after change in interest rate Pre-tax increase (decrease) in carrying value
($ in millions)
Debt securities $ 2,100.9  300 bp decrease $ 2,242.7  $ 141.8 
200 bp decrease 2,195.4  94.5 
100 bp decrease 2,148.2  47.3 
50 bp decrease 2,124.6  23.7 
50 bp increase 2,078.3  (22.6)
100 bp increase 2,055.7  (45.2)
200 bp increase 2,010.5  (90.4)
300 bp increase $ 1,965.3  $ (135.6)
The magnitude of the fair value decrease in rising rates scenarios may be more significant than the fair value increase in comparable falling rates scenarios. This can occur because (i) the analysis floors interest rates at a de minimis level in falling rate scenarios, muting price increases, (ii) portions of the fixed income investment portfolio may be callable, muting price increases in falling interest rate scenarios and/or (iii) portions of the fixed income investment portfolio may experience cash flow extension in higher interest rate environments, which generally results in lower fixed income asset prices.
Equity Securities and Other Investments Price Risk
Equity Securities and Other Long-term Investments Price Risk
The carrying values of our equity securities and other long-term investments are based on quoted market prices or management's estimates of fair value as of the balance sheet date. Market prices of equity securities, in general, are subject to fluctuations. These fluctuations could cause the amount realized upon sale or exercise of these instruments to differ significantly from the current reported value. The fluctuations may result from perceived changes in the underlying economic characteristics of the investment, the relative price of alternative investments, supply and demand imbalances for a particular
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security, or other market factors. Assuming a hypothetical 10% and 30% increase or decrease in the value of our equity securities and other long-term investments as of September 30, 2021, the carrying value of our equity securities and other long-term investments would have increased or decreased by approximately $45.8 million and $137.4 million, pre-tax, respectively.
Investment in related party investment funds
The carrying values of our investments in related party investment funds, including TP Enhanced Fund and TP Venture Fund, are valued at fair value. We have elected the practical expedient for fair value for these investments which is estimated based on our share of the net asset value of the respective limited partnership, as provided by the independent fund administrator. Market prices of the underlying investment securities, in general, are subject to fluctuations. Assuming a hypothetical 10% and 30% increase or decrease in the value of our investments in related party investment funds as of September 30, 2021, the carrying value of these investments would have increased or decreased by approximately $145.7 million and $437.0 million, pre-tax, respectively.
Foreign Currency Exchange Risk
In the ordinary course of business, we hold non-U.S. dollar denominated assets and liabilities, which are valued using period-end exchange rates. Non-U.S. dollar denominated foreign revenues and expenses are valued using average exchange rates over the period. Foreign currency exchange-rate risk is the risk that we will incur losses on a U.S. dollar basis due to adverse changes in foreign currency exchange rates.
The following table summarizes the estimated effects of a hypothetical 10% increase and decrease in the value of the U.S. dollar against select foreign currencies would have had on the carrying value of our net assets as of September 30, 2021:
10% increase 10% decrease
($ in millions)
British Pound to U.S. dollar $ 2.6  $ (2.6)
Japanese Yen to U.S. dollar (1.7) 1.7 
Euro to U.S. dollar 6.5  (6.5)
Swedish Krona to U.S. dollar (0.5) 0.5 
Swiss Franc to U.S. dollar 4.0  (4.0)
Canadian Dollar to U.S. dollar $ (2.6) $ 2.6 
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) (the “Exchange Act”) as of September 30, 2021. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2021.
Changes in Internal Control Over Financial Reporting
The acquisition of Sirius resulted in material changes to our internal control over financial reporting in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On February 26, 2021, we completed the acquisition of Sirius Group. As of September 30, 2021, Sirius Group represented approximately 66% and 64% of the Company’s total assets and liabilities, respectively. For the three and nine months ended September 30, 2021, Sirius Group represented approximately 54% and 53%, respectively, of the Company’s total revenues. We currently exclude, and are in the process of working to incorporate, Sirius Group in our evaluation of internal control over financial reporting and related disclosure controls and procedures.

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PART II - Other Information
ITEM 1. Legal Proceedings
We anticipate that, similar to the rest of the insurance and reinsurance industry, we will be subject to litigation and arbitration from time to time in the ordinary course of business. The estimate of the costs of settling matters routinely encountered in claims activity are reflected in the reserves for unpaid loss and LAE.
If we are subject to disputes in the ordinary course of our business, we anticipate engaging in discussions with the parties to the applicable contract to seek to resolve the matter. If such discussions are unsuccessful, we anticipate invoking the dispute resolution provisions of the relevant contract, which typically provide for the parties to submit to arbitration or litigation, as applicable, to resolve the dispute.
There are currently no material legal proceedings to which we or our subsidiaries are a party.
ITEM 1A. Risk Factors     
There have been no material changes to the risk factors disclosed in Part II, Item 1A. “Risk Factors” of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes our repurchase of common shares during the three months ended September 30, 2021:
(a) Total number of shares purchased (b) Average price paid per share (1) (c) Total number of shares purchased as part of publicly announced plans or programs (d) Maximum number of shares that may yet be purchased under the plans or programs (2)
July 1, 2021 - July 31, 2021 —  $ —  —  $ 61,295,462 
August 1, 2021 - August 31, 2021 —  —  —  61,295,462 
September 1, 2021 - September 30, 2021 —  —  —  61,295,462 
Total —  $ —  —  $ 61,295,462 
(1) Including commissions.
(2) On February 28, 2018, the Company’s Board of Directors authorized the repurchase of an additional $148.3 million common shares, which, together with the amount remaining under the share repurchase program previously authorized on May 4, 2016, will allow the Company to repurchase up to $200.0 million of the Company’s outstanding common shares in the aggregate.
On August 5, 2021, the Company’s Board of Directors expanded the scope of the prior authority to include the repurchase of outstanding contingent value rights ("CVRs") and warrants, which will allow the Company to repurchase up to $61.3 million of the Company’s outstanding common shares, CVRs and warrants.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information

Not applicable.
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ITEM 6. Exhibits
10.1*
10.2
31.1
31.2
32.1**
32.2**
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
*    Management contracts or compensatory plans or arrangements
**    This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SiriusPoint Ltd.
Date: November 3, 2021
/s/ Sid Sankaran
Sid Sankaran
Chief Executive Officer
(Principal Executive Officer)
/s/ David W. Junius
David W. Junius
Chief Financial Officer
(Principal Financial Officer)
/s/ Anthony L. LeHan
Anthony L. LeHan
Chief Accounting Officer
(Principal Accounting Officer)

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SIRIUSPOINT LTD. 2013 OMNIBUS INCENTIVE PLAN
(As Amended and Restated effective as of February 26, 2021)
SECTION 1.
PURPOSE
The purposes of the SiriusPoint Ltd. 2013 Omnibus Incentive Plan (the “Plan”) are to promote the interests of SiriusPoint Ltd. and its shareholders by (i) attracting and retaining executive personnel and other key employees and directors of outstanding ability; (ii) motivating executive personnel and other key employees and directors by means of performance-related incentives, to achieve longer-range performance goals; and (iii) enabling such individuals to participate in the long-term growth and financial success of SiriusPoint Ltd.
The Plan has been amended and restated, effective as of February 26, 2021, to (i) reflect the renaming of the Plan from the Third Point Reinsurance Ltd. 2013 Omnibus Incentive Plan to the SiriusPoint Ltd. 2013 Omnibus Incentive Plan in connection with the consummation of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of August 6, 2020, by and among the Company, Sirius International Insurance Group, Ltd., a Bermuda exempted company limited by shares (“Sirius Group”), and Yoga Merger Sub Limited, a Bermuda exempted company limited by shares and a wholly owned subsidiary of the Company (the “Merger”); and (ii) reserve for issuance under the Plan 11,114,376 Shares that, prior to the consummation of the Merger, were reserved for issuance under the Sirius Group 2018 Omnibus Incentive Plan, which such additional Shares, as permitted by the listing standards of the New York Stock Exchange, may be issued only in respect of Awards granted to Legacy Sirius Group Employees without further shareholder approval (the “Legacy Sirius Group Shares”).
SECTION 2.
DEFINITIONS
(a)Certain Definitions. Capitalized terms used herein without definition shall have the respective meanings set forth below:
“Adjustment Event” has the meaning given in Section 4(c).
“Affiliate” means, (i) for purposes of Incentive Share Options, any corporation that is a “parent corporation” (as defined in Section 424(e) of the Code) or a “subsidiary corporation” (as defined in Section 424(e) of the Code) of the Company, and (ii) for all other purposes, with respect to any person, any other person that (directly or indirectly) is controlled by, controlling or under common control with such person.
“Alternative Award” has the meaning given in Section 13(b).
“Applicable Law” means the requirements related to or implicated by the administration of the Plan under Bermuda law, United States federal and state laws, the Code, applicable securities laws, any stock exchange or quotation system on which the shares of Common Stock



are listed or quoted, and the applicable laws of any other foreign country or jurisdiction where Awards are granted under the Plan, including, in each case, the applicable rules, regulations and guidance promulgated thereunder.
“Award” means any Performance Award, Restricted Shares, Restricted Share Unit, Option, Share Appreciation Right, Deferred Share Unit, Dividend Equivalent or other Share-Based Award granted to a Participant pursuant to the Plan, including an Award combining two or more types in a single grant.
“Award Agreement” means any written agreement, contract or other instrument or document evidencing an Award granted under the Plan.
“Board” means the Board of Directors of the Company.
“Cause” with respect to a Participant shall mean (i) the refusal or neglect of the Participant to perform substantially his or her employment-related duties; (ii) the Participant’s personal dishonesty, incompetence, willful misconduct, or breach of fiduciary duty; (iii) the Participant’s conviction of or entering a plea of guilty or nolo contendere (or any applicable equivalent thereof) to a crime constituting a felony (or a crime or offense of equivalent magnitude in any jurisdiction) or his or her willful violation of any other law, rule, or regulation (other than a traffic violation or other offense or violation outside of the course of employment that in no way adversely affects the Company or any Subsidiary or its reputation or the ability of the Participant to perform his or her employment related duties or to represent the Company or any Subsidiary); (iv) the Participant’s material violation of the Company’s policies or standards or of any statutory or common law duty of loyalty or good faith to the Company; or (v) the material breach by the Participant of any covenant or agreement with the Company or any Subsidiary, or any written policy of the Company or any Subsidiary, not to disclose any information pertaining to the Company or any Subsidiary or not to compete or interfere with the Company or any Subsidiary; provided that with respect to any Participant who is party to an employment agreement with the Company or any Subsidiary that contains a definition of “Cause”, “Cause” shall have the meaning specified in such Participant’s employment agreement.
“Change in Control” shall mean the first to occur of the following:
(i)    the acquisition (whether by purchase, merger, amalgamation, consolidation, or other similar transaction) by any person, entity, or “group” (as defined in Section 13(d) of the U.S. Securities Exchange Act of 1934, as amended) of beneficial ownership of all or substantially all of the combined voting power of the Company’s then outstanding voting securities, other than any such acquisition by the Company, any of its Subsidiaries, any employee benefit plan of the Company or any of its Subsidiaries, or by the Sponsors, or any affiliates of any of the foregoing;
(ii)    the sale, transfer, or other disposition of all or substantially all of the assets of the Company and the Subsidiaries, taken as a whole, to one or more persons or entities that are not, immediately prior to such sale, transfer, or other disposition, affiliates of the Company or any Sponsor; or
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(iii)    within any 24-month period, the persons who were directors of the Company at the beginning of such period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board, provided that any director nominated for election to the Board by a majority of the Incumbent Directors still in office shall be deemed to be an Incumbent Director for purpose of this clause (iii);
in each case, provided that, as to Specified Awards, such event also constitutes a “change in control” within the meaning of Section 409A of the Code.
“Change in Control Price” means the price per Share offered in conjunction with any transaction resulting in a Change in Control. If any part of the offered price is payable other than in cash, or if more than one price per Share is paid in conjunction with such transaction, the Change in Control Price shall be determined in good faith by the Committee as constituted immediately prior to the Change in Control.
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.
“Committee” means the Compensation Committee of the Board or such other committee of the Board as the Board shall designate from time to time.
“Company” means SiriusPoint Ltd., a Bermuda exempted company, and any successor thereto.
“Consultant” means consultants and advisors who are natural persons who provide bona fide services to the Company and its Subsidiaries (other than services in connection with the offer or sale of securities in a capital raising transaction or that promote or maintain a market for the Company’s securities).
“Deferred Annual Amount” shall have the meaning set forth in Section 9(a).
“Deferred Award” shall have the meaning set forth in Section 9(a).
“Deferred Share Unit” means a unit credited to a Participant’s account on the books of the Company under Section 9 that represents the right to receive Shares or cash with a value equal to the Fair Market Value of one Share on settlement of the account.
“Designated Beneficiary” means the beneficiary designated by the Participant, in a manner determined by the Committee, to receive amounts due the Participant in the event of the Participant’s death. In the absence of an effective designation by the Participant, Designated Beneficiary shall mean the Participant’s estate.
“Disability” means, unless another definition is incorporated into the applicable Award Agreement, Disability as specified under the Company’s long-term disability insurance policy and any other termination of a Participant’s employment or service under such circumstances that the Committee determines to qualify as a Disability for purposes of this Plan; provided, that if a Participant is a party to an employment or individual severance agreement with an Employer that defines the term “Disability” then, with respect to any Award made to such Participant,
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“Disability” shall have the meaning set forth in such agreement; provided, further, that in the case of any Award subject to Section 409A of the Code, Disability shall have the meaning set forth in Section 409A of the Code.
“Dividend Equivalent” means the right, granted under Section 11 of the Plan, to receive payments in cash or in Shares, based on dividends paid with respect to Shares.
“Effective Date” means August 2, 2013, which was the date following adoption of this Plan by the Board on which this Plan was approved by a majority of the votes cast at a duly constituted meeting of the shareholders of the Company or by a duly effective written consent of the shareholders in lieu thereof.
“Elective Deferred Share Unit” shall have the meaning set forth in Section 9(a).
“Eligible Director” means a member of the Board who is not an Employee.
“Employee” means any officer or employee of the Company, any Subsidiary or any other Employer (as determined by the Committee in its sole discretion).
“Employer” means the Company and any Subsidiary, and, in the discretion of the Committee, may also mean any business organization designated as an Employer; provided that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of voting securities of such entity.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Executive Officer” means any “officer” within the meaning of Rule 16(a)-1(f) promulgated under the Act or any Covered Employee.
“Fair Market Value” means,
(i)    If the Shares are listed on any established stock exchange or a national market system, the closing sales price for a Share (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported in The Wall Street Journal or, if not so reported, such other source as the Committee deems reliable;
(ii)    If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Shares on the last market trading day prior to the day of determination;
(iii)    If the Shares are not listed on an established stock exchange or national market system, its Fair Market Value shall be determined in good faith by the Committee pursuant to a reasonable valuation method in accordance with Section 409A of the Code, including without limitation by reliance on an independent appraisal completed within the preceding 12 months.
4


“Freestanding SAR” means a Share Appreciation Right granted independently of any Options.
“Good Reason” shall have the meaning, if any, set forth in a Participant’s Award Agreement. If a Participant’s Award Agreement does not contain a definition of Good Reason, then the terms of the Plan relating to Good Reason shall not be operative with respect to such Participant.
“Incentive Share Option” means an option to purchase Shares granted under Section 7 of the Plan that is designated as an Incentive Share Option that meets the requirements of Section 422 of the Code.
“IPO” means the first day as of which (i) sales of Shares are made to the public in the United States pursuant to an underwritten public offering of the Shares pursuant to an effective registration statement under the U.S. Securities Act of 1933, as amended that covers (together with prior effective registrations) (A) not less than 25% of the then issued and outstanding Shares, on a fully diluted basis, or (B) Shares that, after the closing of such public offering, will be traded on the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers Automated Quotation System, or an equivalent internationally recognized securities exchange or quotation system, or (ii) the Committee has determined that the Shares otherwise have become publicly traded for this purpose.
“Legacy Sirius Group Employee” means any Employee who, prior to the consummation of the Merger, was an officer or employee of Sirius Group or any of its Subsidiaries.
“Legacy Sirius Group Shares” has the meaning given in the preamble to this Plan.
“Merger” has the meaning given in the preamble to this Plan.
“New Employer” means, after a Change in Control, a Participant’s employer, or any direct or indirect parent or any direct or indirect majority-owned subsidiary of such employer.
“Non-Statutory Share Option” means an option to purchase Shares granted under Section 7 of the Plan that is not intended to be an Incentive Share Option.
“Non-U.S. Award(s)” has the meaning given in Section 3(f).
“Option” means an Incentive Share Option or a Non-Statutory Share Option.
“Participant” means an Employee, Eligible Director or Consultant who is selected by the Committee to receive an Award under the Plan.
“Performance Award” means an Award of Restricted Shares, Restricted Share Units, Options, Performance Shares, Deferred Shares, Deferred Share Units, Performance Units, SARs, other Equity-Based Awards or other Awards, the grant, exercise, voting or settlement of which is subject (in whole or in part) to the achievement of specified Performance Goals.
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“Performance Cycle” means the period of time selected by the Committee during which performance is measured for the purpose of determining the extent to which a Performance Award has been earned or vested.
“Performance Goals” means the objectives established by the Committee for a Performance Cycle pursuant to Section 5(c) for the purpose of determining the extent to which a Performance Award has been earned or vested.
“Performance Share” means a Performance Award that is a contractual right to receive a Share (or the cash equivalent thereof) granted pursuant to Section 5 of the Plan.
“Performance Unit” means a Performance Award that is a dollar denominated unit (or a unit denominated in the Participant’s local currency) granted pursuant to Section 5 of the Plan.
“Permitted Transferees” has the meaning given it in Section 15(b).
“Plan” has the meaning given it in the preamble to this Plan.
“Preexisting Plan” means the Third Point Reinsurance Ltd. Share Incentive Plan.
“Preexisting Plan Award” means an award of share options previously granted to a Participant pursuant to the Preexisting Plan.
“Restriction Period” means the period of time selected by the Committee during which a grant of Restricted Shares, Restricted Share Units or Deferred Share Units, as the case may be, is subject to forfeiture and/or restrictions on transfer pursuant to the terms of the Plan.
“Restricted Shares” means Shares contingently granted to a Participant under Section 6 of the Plan.
“Restricted Share Unit” means a Share denominated unit contingently awarded under Section 6 of the Plan.
“Retirement” means a termination of a Participant’s employment, other than for Cause, on or after the Participant’s attainment of age 65.
“Section 409A of the Code” means Section 409A of the Code and the applicable rules, regulations and guidance promulgated thereunder.
“Service” means, with respect to Employees and Consultants, continued employment with the Company and its Subsidiaries and Affiliates or, with respect to Eligible Directors, service on the Board of Directors.
“Service Award” means an Award that vests solely based on the passage of time or continued Service over a fixed period of time.
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“Share Appreciation Right” or “SAR” means the right to receive a payment from the Company in cash and/or Shares equal to the product of (i) the excess, if any, of the Fair Market Value of one Share on the exercise date over a specified price fixed by the Committee on the grant date, multiplied by (ii) a stated number of Shares.
“Share-Based Awards” has the meaning given in Section 10(a).
“Shares” means the common shares of the Company, par value US$0.10 per share.
“Sirius Group” has the meaning given in the preamble to this Plan.
“Specified Award” means an Award of non-qualified deferred compensation within the meaning of and that is subject to Section 409A of the Code, and which may include other Awards granted pursuant to the Plan (including, but not limited to, Restricted Share Units and Deferred Awards) that do not otherwise qualify for an exemption from Section 409A of the Code.
“Sponsors” means collectively, Daniel S. Loeb, KEP TP Holdings, L.P., KIA TP Holdings, L.P. and Pine Brook LVR, L.P.
“Subplan” has the meaning given in Section 3(f).
“Subsidiary” means any business entity in which the Company owns, directly or indirectly, fifty percent (50%) or more of the total combined voting power of all classes of shares entitled to vote, and any other business organization, regardless of form, in which the Company possesses, directly or indirectly, 50% or more of the total combined equity interests in such organization.
“Ten Percent Holder” has the meaning given in Section 7(b).
“Termination of Service” means with respect to an Eligible Director, the date upon which such Eligible Director ceases to be a member of the Board, with respect to an Employee, the date the Participant ceases to be an Employee and, with respect to a Consultant, the date the Consultant ceases to provide services to the Company or any Employer, in each case as determined by the Committee; provided, that, with respect to any Specified Award, Termination of Service shall mean “separation from service”, as defined in Section 409A of the Code and the rules, regulations and guidance promulgated thereunder.
“Voting Power” when used in the definition of Change in Control shall mean such specified number of the Voting Securities as shall enable the holders thereof to cast such percentage of all the votes which could be cast in an annual election of directors and “Voting Securities” shall mean all securities of a company entitling the holders thereof to vote in an annual election of directors.
(b)Gender and Number. Except when otherwise indicated by the context, words in the masculine gender used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular.
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SECTION 3.
POWERS OF THE COMMITTEE
(a)Eligibility. Participants in the Plan shall consist of such Employees (including any officer of the Company), Consultants and Eligible Directors as the Committee in its sole discretion may select from time to time.
(b)Power to Grant and Establish Terms of Awards. The Committee shall have the discretionary authority, subject to the terms of the Plan, to determine the Participants, if any, to whom Awards shall be granted, the type or types of Awards to be granted, and the terms and conditions of any and all Awards including, without limitation, the number of Shares subject to an Award, the time or times at which Awards shall be granted, and the terms and conditions of the Awards and the applicable Award Agreements. The Committee may establish different terms and conditions for different types of Awards, for different Participants receiving the same type of Award, and for the same Participant for each type of Award such Participant may receive, whether or not granted at the same or different times.
(c)Administration. The Plan shall be administered by the Committee. The Committee shall have sole and complete authority and discretion to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time deem advisable, and to interpret the terms and provisions of the Plan. The Committee’s decisions (including any failure to make decisions) shall be binding upon all persons, including but not limited to the Company, shareholders, Employers and each Employee, Director, Consultant, Participant, Designated Beneficiary and such person’s heirs, successors or assigns, and shall be given deference in any proceeding with respect thereto.
(d)Delegation by the Committee. The Committee may delegate to the chief executive officer of the Company the power and authority to make Awards to Participants who are not Executive Officers or Covered Employees, pursuant to such conditions and limitations as the Committee may establish. The Committee may also appoint agents (who may be officers or employees of the Company) to assist in the administration of the Plan and may grant authority to such persons to execute agreements, including Award Agreements, or other documents on its behalf. All expenses incurred in the administration of the Plan, including, without limitation, for the engagement of any counsel, consultant or agent, shall be paid by the Company.
(e)Restrictive Covenants and Other Conditions. Without limiting the generality of the foregoing, the Committee may condition the grant of any Award under the Plan upon the Participant to whom such Award would be granted agreeing in writing to certain conditions (such as restrictions on the ability to transfer the underlying Shares) or covenants in favor of the Company and/or one or more Affiliates thereof (including, without limitation, covenants not to compete, not to solicit employees and customers and not to disclose confidential information, that may have effect following the Termination of Service and after the Shares subject to the Award have been transferred to the Participant), including, without limitation, the requirement that the Participant disgorge any profit, gain or other benefit received in respect of the Award prior to any breach of any such covenant.
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(f)Participants Based Outside the United States. To conform with the provisions of local laws and regulations, or with local compensation practices and policies, in foreign countries in which the Company or any of its Subsidiaries or Affiliates operate, but subject to the limitations set forth herein regarding the maximum number of shares issuable hereunder and the maximum award to any single Participant, the Committee may (i) modify the terms and conditions of Awards granted to Participants employed outside the United States (“Non-US Awards”), (ii) establish subplans with modified exercise procedures and such other modifications as may be necessary or advisable under the circumstances (“Subplans”), and (iii) take any action which it deems advisable to obtain, comply with or otherwise reflect any necessary governmental regulatory procedures, exemptions or approvals with respect to the Plan. The Committee’s decision to grant Non-US Awards or to establish Subplans is entirely voluntary, and at the complete discretion of the Committee. The Committee may amend, modify or terminate any Subplans at any time, and such amendment, modification or termination may be made without prior notice to the Participants. The Company, Subsidiaries, Affiliates and members of the Committee shall not incur any liability of any kind to any Participant as a result of any change, amendment or termination of any Subplan at any time. The benefits and rights provided under any Subplan or by any Non-US Award (i) are wholly discretionary and, although provided by either the Company, a Subsidiary or Affiliate, do not constitute regular or periodic payments and (ii) are not to be considered part of the Participant’s salary or compensation under the Participant’s employment with the Participant’s local employer for purposes of calculating any severance, resignation, redundancy or other end of service payments, vacation, bonuses, long-term service awards, indemnification, pension or retirement benefits, or any other payments, benefits or rights of any kind. If a Subplan is terminated, the Committee may direct the payment of Non-US Awards (or direct the deferral of payments whose amount shall be determined) prior to the dates on which payments would otherwise have been made, and, in the Committee’s discretion, such payments may be made in a lump sum or in installments.
SECTION 4.
MAXIMUM AMOUNT AVAILABLE FOR AWARDS
(a)Number. Subject in all cases to the provisions of this Section 4, the maximum number of Shares that are available for issuance under the Plan shall be (i) 21,627,906 Shares in respect of Awards (including Preexisting Plan Awards) which may be granted to any Employee, Eligible Director or Consultant, and (ii) 11,114,376 Legacy Sirius Group Shares in respect of Awards which may be granted solely to Legacy Sirius Group Employees. Notwithstanding the provisions of Section 4(b), the maximum number of Shares that may be issued in respect of Incentive Share Options shall not exceed 21,627,906 shares. Shares may be made available from Shares held in treasury or authorized but unissued shares of the Company not reserved for any other purpose.
(b)Canceled, Terminated, or Forfeited Awards, etc. Any Shares subject to an Award (or Preexisting Plan Award) which for any reason expires without having been exercised, is canceled or terminated or otherwise is settled without the issuance of any Shares shall again be available for grant under the Plan; provided, however, that (i) vested Shares that are repurchased after being issued from the Plan (or Preexisting Plan), (ii) Shares otherwise issuable or issued in
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respect of, or as part of, any Award (or Preexisting Plan Award) that are repurchased, equal to the amount necessary to cover applicable taxes, (iii) Shares that are tendered to exercise outstanding Options or other Awards (or Preexisting Plan Awards) or to cover applicable taxes and (iv) the Legacy Sirius Group Shares shall not be available for future issuance under the Plan. If a Share Appreciation Right is granted in tandem with an Option so that only one may be exercised with the other being surrendered in such exercise in accordance with Section 8(b), the number of shares subject to the tandem Option and Share Appreciation Right shall only be taken into account once (and not as to both Awards). Shares subject to Awards that are assumed, converted or substituted pursuant to an Adjustment Event will not further reduce the maximum limitation set forth in Section 4(a).
(c)Adjustment in Capitalization. The number and kind of Shares available for issuance under the Plan and the number, class, exercise price, Performance Goals or other terms of any outstanding Award shall be adjusted by the Committee to reflect any extraordinary dividend or distribution, share dividend, bonus issue, share split or share consolidation or any reorganization, recapitalization, business combination, merger, amalgamation, consolidation, spin-off, exchange of shares, liquidation or dissolution of the Company or other similar transaction or event affecting the Shares (any such transaction or event, an “Adjustment Event”) in such manner as it determines in its sole discretion.
(d)Prohibition Against Repricing. From and after an IPO, except to the extent (i) approved in advance by holders of a majority of the shares of the Company entitled to vote generally in the election of directors or (ii) as a result of any Adjustment Event, the Committee shall not have the power or authority to reduce, whether through amendment or otherwise, the exercise price of any outstanding Option or base price of any outstanding Share Appreciation Right or to grant any new Award, or make any cash payment, in substitution for or upon the cancellation of Options or Share Appreciation Rights previously granted.
SECTION 5.
PERFORMANCE AWARDS
(a)Generally. The Committee shall have the authority to determine the Participants who shall receive Performance Awards, the number and type of Performance Awards and the number of Shares and/or value of Performance Units or other cash-based Performance Award each Participant receives for each or any Performance Cycle, and the Performance Goals applicable in respect of such Performance Awards. Any adjustments to such Performance Goals shall be approved by the Committee. The Committee shall determine the duration of each Performance Cycle (the duration of Performance Cycles may differ from each other), and there may be more than one Performance Cycle in existence at any one time. Performance Awards shall be evidenced by an Award Agreement that shall specify the kind of Award, the number of Shares and/or value of Awards awarded to the Participant, the Performance Goals applicable thereto, and such other terms and conditions not inconsistent with the Plan as the Committee shall determine. No Shares will be issued at the time an Award of Performance Shares is made, and the Company shall not be required to set aside a fund for the payment of Performance Shares, Performance Units or other Performance Awards.
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(b)Earned Performance Awards. Performance Awards shall become earned, in whole or in part, based upon the attainment of specified Performance Goals or the occurrence of any event or events, including a Change in Control, as the Committee shall determine, either before, at or after the grant date. In addition to the achievement of the specified Performance Goals, the Committee may, at the grant date, condition payment of Performance Awards on such conditions as the Committee shall specify. The Committee may also require the completion of a minimum period of service (in addition to the achievement of any applicable Performance Goals) as a condition to the vesting of any Performance Award.
(c)Performance Goals. The Committee shall in its discretion establish the Performance Goals that must be satisfied in order for a Participant to receive a Performance Award for a Performance Period or for a Performance Award to be earned or vested. At the discretion of the Committee, the Performance Goals for a Performance Period may be based upon one or more of the following criteria (alone or in combination, whether gross or net, before or after taxes, and/or before or after other adjustments, as determined by the Committee): (a) gross, net or operating income (before or after taxes); (b) earnings before interest and taxes (c) earnings before taxes, interest, depreciation, and/or amortization (“EBITDA”); (d) EBITDA excluding charges for share compensation, management fees, restructurings, impairments and/or other specified items (“Adjusted EBITDA”); (e) EBITDA excluding capital expenditures; (f) basic or diluted earnings per share or improvement in basic or diluted earnings per share; (g) revenues (including, but not limited to, total revenues, net revenues or revenue growth); (h) net operating profit; (i) growth in basic or diluted book value; (j) financial return measures (including, but not limited to, return on assets, capital, invested capital, investments, investment income generated by underwriting or other operations or on the float from such operations, equity, or revenue) including or excluding negative returns, and with or without compounding; (k) cash flow measures (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment); (1) productivity ratios (including but not limited to measuring liquidity, profitability or leverage); (m) enterprise value; (n) share price (including, but not limited to, growth measures and total shareholder return, inclusive or exclusive of dividends); (o) expense/cost management targets (including but not limited to improvement in or attainment of expense levels, capital expenditure levels, and/or working capital levels); (p) margins (including, but not limited to, operating margin, underwriting margins, net income margin, cash margin, gross, net or operating profit margins, EBITDA margins, Adjusted EBITDA margins); (q) operating efficiency; (r) market share or market penetration; (s) customer targets (including, but not limited to, customer growth or customer satisfaction); (t) working capital targets or improvements; (u) profit measures (including but not limited to gross profit, net profit, operating profit, investment profit and/or underwriting profit), including or excluding charges for share compensation, fee income, underwriting losses incurred in prior periods, changes in IBNR reserves and/or other specified items; (v) economic value added; (w) balance sheet metrics (including, but not limited to, inventory, inventory turns, receivables turnover, net asset turnover, debt reduction, retained earnings, year-end cash, cash conversion cycle, ratio of debt to equity or to EBITDA); (x) workforce targets (including but not limited to diversity goals, employee engagement or satisfaction, employee retention, and workplace health and safety goals); (y) implementation, completion or attainment of measurable objectives with respect to risk management, research and development, key products or key
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projects, lines of business, acquisitions and divestitures and strategic plan development and/or implementation; or (z) comparisons with various stock market indices, peer companies or industry groups or classifications with regard to one more of these criteria. Performance Goals may be established on a Company-wide basis or with respect to one or more business units, divisions, Subsidiaries, or products and may be expressed in absolute terms, or relative or comparative to (i) current internal targets or budgets, (ii) the past performance of the Company (including the performance of one or more Subsidiaries, divisions, or operating units), (iii) the performance of one or more similarly situated companies, (iv) the performance of an index covering multiple companies, or (v) other external measures of the selected performance criteria. Any performance objective may measure performance on an individual basis, as appropriate. The Committee may provide for a threshold level of performance below which no Shares or compensation will be granted or paid in respect of Performance Awards, and a maximum level of performance above which no additional Shares or compensation will be granted or paid in respect of Performance Awards, and it may provide for differing amounts of Shares or compensation to be granted or paid in respect of Performance Awards for different levels of performance. Unless otherwise determined by the Committee at the time Performance Goals for a Performance Cycle are established, to the maximum extent possible, performance criteria shall be determined excluding any or all “unusual or infrequently occurring items” as determined under U.S. generally accepted accounting principles and as identified in the financial statements, notes to the financial statements or management’s discussion and analysis in the annual report, including, without limitation, the charges or costs associated with restructurings of the Company or any Subsidiary, discontinued operations, unusual or infrequently occurring items, capital gains and losses, dividends, Share repurchase, other unusual, infrequently occurring or non-recurring items, and the cumulative effects of accounting changes. The Committee may also adjust the Performance Goals for any Performance Cycle as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. The Committee may also adjust the Performance Goals for any Performance Cycle as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine (including, without limitation, any adjustments that would result in the Company paying non-deductible compensation to a Participant).
(d)Negative Discretion. Notwithstanding anything in this Section 5 to the contrary, the Committee shall have the right, in its absolute discretion, (i) to reduce or eliminate the amount otherwise payable to any Participant under Section 5(h) based on individual performance or any other factors that the Committee, in its discretion, shall deem appropriate and (ii) to establish rules or procedures that have the effect of limiting the amount payable to each Participant to an amount that is less than the maximum amount otherwise authorized.
(e)Affirmative Discretion. Notwithstanding any other provision in the Plan to the contrary, subject to the maximum number of shares available for issuance under Section 4(a) of the Plan, (i) the Committee shall have the right, in its discretion, to grant an Award in cash, in Shares or other Awards or in any combination thereof, to any Participant, in a greater amount than would apply under the applicable Performance Codes, based on individual performance or
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any other criteria that the Committee deems appropriate and (ii) in connection with the hiring of any person who is or becomes a Covered Employee, the Committee may provide for a minimum bonus amount or Award payment in any Performance Cycle, regardless of whether performance objectives are attained.
(f)Certification of Attainment of Performance Goals. As soon as practicable after the end of a Performance Cycle and prior to any payment or vesting in respect of such Performance Cycle, the Committee shall certify in writing the number of Performance Shares or other Performance Awards and the number and value of Performance Units which have been earned or vested on the basis of performance in relation to the established Performance Goals.
(g)Payment of Awards. Except as provided otherwise in an Award Agreement, payment or delivery of Shares with respect to earned Performance Awards shall be distributed to the Participant or, if the Participant has died, to the Participant’s Designated Beneficiary, as soon as practicable after the expiration of the Performance Cycle and the Committee’s certification under paragraph 5(g) above (and in any event within 2 ½ months after the end of the Performance Cycle), provided that payment or delivery of Shares with respect to earned Performance Awards shall not be distributed to a Participant until any other conditions on payment of such Awards established by the Committee have been satisfied. The Committee shall determine whether earned Performance Awards are distributed in the form of cash, Shares or in a combination thereof, with the value or number of shares payable to be determined based on the Fair Market Value of the Shares on the date of the Committee’s certification under paragraph 5(g) above. The Committee shall have the right to impose whatever conditions it deems appropriate with respect to the award or delivery of Shares, including conditioning the vesting of such shares on the performance of additional service.
(h)Newly Eligible Participants. Notwithstanding anything in this Section 5 to the contrary, the Committee shall be entitled to make such rules, determinations and adjustments as it deems appropriate with respect to any Participant who becomes eligible to receive Performance Awards after the commencement of a Performance Cycle.
SECTION 6.
RESTRICTED SHARES AND RESTRICTED SHARE UNITS
(a)Grant. Restricted Shares and Restricted Share Units may be granted to Participants at such time or times as shall be determined by the Committee. The grant date of any Restricted Shares or Restricted Share Units under the Plan will be the date on which such Restricted Shares or Restricted Share Units are awarded by the Committee, or on such other date as the Committee shall determine. Restricted Shares and Restricted Share Units shall be evidenced by an Award Agreement that shall specify (i) the number of shares of Restricted Shares and/or the number of Restricted Share Units to be granted to each Participant, (ii) the Restriction Period(s) and (iii) such other terms and conditions, including rights to dividends or Dividend Equivalents, not inconsistent with the Plan as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters. Grants of Restricted Shares shall be evidenced by issuance of certificates representing the shares registered in the name of the Participant or a bookkeeping entry in the Company’s records (or by
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such other reasonable method as the Company shall determine from time to time). No Shares will be issued at the time an Award of Restricted Share Units is made and the Company shall not be required to set aside a fund for the payment of any such Awards.
(b)Vesting. Restricted Shares and Restricted Share Units granted to Participants under the Plan shall be subject to a Restriction Period. Except as otherwise determined by the Committee at or after grant, and subject to the Participant’s continued employment with the Company on such date, the Restriction Period shall lapse in accordance with the schedule provided in the Participant’s Award Agreement. In its discretion, the Committee may also establish performance-based vesting conditions with respect to Awards of Restricted Shares and Restricted Share Units (in lieu of, or in addition to, time-based vesting) based on one or more of the Performance Goals listed in Section 5(c) or other performance goal.
(c)Settlement of Restricted Shares and Restricted Share Units. At the expiration of the Restriction Period for any Restricted Share Awards, the Company shall remove the restrictions applicable to share certificates or the entry in the Company’s register of members evidencing the Restricted Share Awards, and shall, upon request, deliver the share certificates evidencing such Restricted Share Awards to the Participant or the Participant’s legal representative (or otherwise evidence the issuance of such shares free of any restrictions imposed under the Plan). At the expiration of the Restriction Period for any Restricted Share Units, for each such Restricted Share Unit, the Participant shall receive, in the Committee’s discretion, (i) a cash payment equal to the Fair Market Value of one Share as of such payment date, (ii) one Share or (iii) any combination of cash and Shares.
(d)Restrictions on Transfer. Except as provided herein or in an Award Agreement, Restricted Shares and Restricted Share Units may not be sold, assigned, transferred, pledged, charged, hedged or otherwise encumbered during the Restriction Period. Any such attempt by the Participant to sell, assign, transfer, pledge, charge, hedge or encumber Restricted Shares and Restricted Share Units without complying with the provisions of the Plan shall be void and of no effect.
SECTION 7.
SHARE OPTIONS
(a)Grant. The Committee may, in its discretion, grant Options to purchase Shares to such eligible persons as may be selected by the Committee. Each Option, or portion thereof, that is not an Incentive Share Option shall be a Non-Statutory Share Option. An Incentive Share Option may not be granted to any person who is not an employee of the Company or any parent or subsidiary (as defined in Section 424 of the Code). Each Incentive Share Option shall be granted within ten years of the date this Plan is adopted by the Board. The aggregate Fair Market Value of the Shares with respect to which Incentive Share Options are exercisable for the first time by a Participant during any calendar year shall not exceed $100,000 or such higher limit as may be permitted under Section 422 of the Code. To the extent that the aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which Options designated as Incentive Share Options are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the Company or any parent or subsidiary as defined in
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Section 424 of the Code) exceeds $100,000 or such higher limit established by the Code, such Options shall constitute Non-Statutory Share Options. Each Option shall be evidenced by an Award Agreement that shall specify the number of Shares subject to such Option, the exercise price associated with the Option, the time and conditions of exercise of the Option and all other terms and conditions of the Option.
(b)Number of Shares and Purchase Price. The number of Shares subject to an Option and the purchase price per Share purchasable upon exercise of the Option shall be determined by the Committee; provided, however, that the purchase price per Share purchasable upon exercise of an Option shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option; provided further, that if an Incentive Share Option shall be granted to any person who, at the time such Option is granted, owns capital shares possessing more than ten percent of the total combined voting power of all classes of capital shares of the Company (or of any parent or subsidiary as defined in Section 424 of the Code) (a “Ten Percent Holder”), the purchase price per Share shall be the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Share Option.
(c)Exercise Period and Exercisability. The period during which an Option may be exercised shall be determined by the Committee; provided, however, that no Option shall be exercised later than ten years after its date of grant; and provided further, that if an Incentive Share Option shall be granted to a Ten Percent Holder, such Option shall not be exercised later than five years after its date of grant. The Committee shall determine whether a Share Option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. The Committee may require that an exercisable Option, or portion thereof, be exercised only with respect to whole Shares.
(d)Method of Exercise. An Option may be exercised (i) by giving written notice to the Company specifying the number of Shares to be purchased and by accompanying such notice with a payment therefor in full (or by arranging for such payment to the Company’s satisfaction) and (ii) by executing such documents as the Company may reasonably request. If the Company’s Shares are not listed on an established stock exchange or national market system at the time an Option is exercised, then the optionholder shall pay the exercise price of such Option in cash. If the Company’s Shares are listed on an established stock exchange or national market system at the time an option is exercised, then the optionholder may pay the exercise price of such Option either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of Shares having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Company to repurchase whole Shares which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, and withhold the proceeds thereof, provided that the Committee determines that such repurchase of shares does not cause the Company to recognize an increased compensation expense under applicable accounting principles, (D) in cash by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) a combination of (A), (B), (C) and (D), in each case to the extent set forth in the Award Agreement relating to the Option. The Company shall have sole discretion to
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disapprove of an election pursuant to any of clauses (B) through (E). Any fraction of a Share which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No certificate representing Shares shall be delivered until the full purchase price therefor and any withholding taxes (as determined, pursuant to Section 15(a)), have been paid (or arrangement made for such payment to the Company’s satisfaction).
SECTION 8.
SHARE APPRECIATION RIGHTS
(a)Grant. Share Appreciation Rights may be granted to Participants at such time or times as shall be determined by the Committee. Share Appreciation Rights may be granted in tandem with Options which, unless otherwise determined by the Committee at or after the grant date, shall have substantially similar terms and conditions to such Options to the extent applicable, or may be granted on a freestanding basis, not related to any Option (“Freestanding SARs”). The grant date of any Share Appreciation Right under the Plan will be the date on which the Share Appreciation Right is awarded by the Committee or such other future date as the Committee shall determine in its sole discretion. No Share Appreciation Right shall be exercisable on or after the tenth anniversary of its grant date. Share Appreciation Rights shall be evidenced by an Award Agreement, whether as part of the Award Agreement governing the terms of the Options, if any, to which such Share Appreciation Right relates or pursuant to a separate Award Agreement with respect to Freestanding SARs, in each case containing such provisions not inconsistent with the Plan as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters.
(b)Exercise Period and Exercisability. The period during which a Share Appreciation Right may be exercised shall be determined by the Committee; provided, however, that no Share Appreciation Right shall be exercised later than ten years after its date of grant. The Committee shall determine whether a Share Appreciation Right shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. Share Appreciation Rights granted in tandem with an Option shall become exercisable on the same date or dates as the Options with which such Share Appreciation Rights are associated become exercisable. Share Appreciation Rights that are granted in tandem with an Option may only be exercised upon the surrender of the right to exercise such Option for an equivalent number of Shares, and may be exercised only with respect to the Shares for which the related Option is then exercisable.
(c)Settlement. Subject to Section 13, upon exercise of a Share Appreciation Right, the Participant shall be entitled to receive payment in the form, determined by the Committee, of cash or Shares having a Fair Market Value equal to such cash amount, or a combination of Shares and cash having an aggregate value equal to such amount, determined by multiplying:
(i)any increase in the Fair Market Value of one Share on the exercise date over the price fixed by the Committee on the grant date of such Share Appreciation Right, which may not be less than the Fair Market Value of a Share on the grant date of such Share Appreciation Right, by
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(ii)the number of Shares with respect to which the Share Appreciation Right is exercised;
provided, however, that on the grant date, the Committee may establish, in its sole discretion, a maximum amount per share which will be payable upon exercise of a Share Appreciation Right.
SECTION 9.
DEFERRED SHARE UNITS
(a)Grant. Freestanding Deferred Share Units may be granted to Participants at such time or times as shall be determined by the Committee without regard to any election by the Participant to defer receipt of any compensation or bonus amount payable to him. The grant date of any freestanding Deferred Share Unit under the Plan will be the date on which such freestanding Deferred Share Unit is awarded by the Committee or on such other future date as the Committee shall determine in its sole discretion. In addition, on fixed dates established by the Committee and subject to such terms and conditions as the Committee shall determine, the Committee may permit a Participant to elect to defer receipt of all or a portion of his or her annual compensation and/or annual incentive bonus (“Deferred Annual Amount”) payable by the Company or a Subsidiary and any other Award (“Deferred Award”) and receive in lieu thereof an Award of elective Deferred Share Units (“Elective Deferred Share Units”) equal to, in the case of a Deferred Annual Amount, the greatest whole number which may be obtained by dividing (i) the amount of the Deferred Annual Amount, by (ii) the Fair Market Value of one Share on the date of payment of such compensation and/or annual bonus or, in the case of a Deferred Award under the Plan, the number of Shares subject to the Deferred Award. Each Award of Deferred Share Units shall be evidenced by an Award Agreement that shall specify (x) the number of Shares to which the Deferred Share Units pertain, (y) the time and form of payment of the Deferred Share Units and (z) such terms and conditions not inconsistent with the Plan as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters and such provisions as may be required pursuant to Section 409A of the Code. Upon the grant of Deferred Share Units pursuant to the Plan, the Company shall establish a notional account for the Participant and will record in such account the number of Deferred Share Units awarded to the Participant. No Shares will be issued to the Participant at the time an award of Deferred Share Units is granted. Deferred Share Units may become payable on a Change in Control, Termination of Service or on a specified date or dates set forth in the Award Agreement evidencing such Deferred Share Units.
(b)Rights as a Shareholder. The Committee shall determine whether and to what extent Dividend Equivalents will be credited to the account of, or paid currently to, a Participant receiving an Award of Deferred Share Units. Unless otherwise provided by the Committee at or after the grant date, (i) any cash dividends or distributions credited to the Participant’s account shall be deemed to have been invested in additional Deferred Share Units on the record date established for the related dividend or distribution in an amount equal to the greatest whole number which may be obtained by dividing (A) the value of such dividend or distribution on the record date by (B) the Fair Market Value of one Share on such date, and such additional Deferred Share Unit shall be subject to the same terms and conditions as are applicable in respect
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of the Deferred Share Unit with respect to which such dividends or distributions were payable, and (ii) if any such dividends or distributions are paid in Shares or other securities, such shares and other securities shall be subject to the same vesting, performance and other restrictions as apply to the Deferred Share Unit with respect to which they were paid. A Participant shall not have any rights as a shareholder in respect of Deferred Share Units awarded pursuant to the Plan (including, without limitation, the right to vote on any matter submitted to the Company’s shareholders) until such time as the Shares attributable to such Deferred Share Units have been issued to such Participant or his beneficiary.
(c)Vesting. Unless the Committee provides otherwise at or after the grant date, the portion of each Award of Deferred Share Units that consists of freestanding Deferred Share Units, together with any Dividend Equivalents credited with respect thereto, will be subject to a Restriction Period. Except as otherwise determined by the Committee at the time of grant, and subject to the Participant’s continued Service with his or her Employer on such date, the Restriction Period with respect to Deferred Share Units shall lapse as provided in the Participant’s Award Agreement. In its discretion, the Committee may establish performance-based vesting conditions with respect to Awards of Deferred Share Units (in lieu of, or in addition to, time-based vesting) based on one more of the Performance Goals listed in Section 5(c) or other performance goal. The portion of each Award of Deferred Share Units that consists of Elective Deferred Share Units, together with any Dividend Equivalents credited with respect thereto, need not be subject to any Restriction Period and may be non-forfeitable.
(d)Further Deferral Elections. A Participant may elect to further defer receipt of Shares issuable in respect of Deferred Share Units or other Award (or an installment of an Award) for a specified period or until a specified event, subject in each case to the Committee’s approval and to such terms as are determined by the Committee, all in its sole discretion. Subject to any exceptions adopted by the Committee, such election must generally be made at least 12 months before the prior settlement date of such Deferred Share Units (or any such installment thereof) whether pursuant to this Section 9 or Section 13 and must defer settlement for at least five years. A further deferral opportunity is not required to be made available to all Participants, and different terms and conditions may apply with respect to the further deferral opportunities made available to different Participants.
(e)Settlement. Subject to this Section 9 and Section 13, upon the date specified in the Award Agreement evidencing the Deferred Share Units for each such Deferred Share Unit the Participant shall receive, in the Committee’s discretion, (i) a cash payment equal to the Fair Market Value of one Share as of such payment date, (ii) one Share or (iii) any combination of cash and Shares.
SECTION 10.
OTHER SHARE-BASED AWARDS
(a)Generally. The Committee is authorized to make Awards of other types of equity-based or equity-related awards (“Share-Based Awards”) not otherwise described by the terms of the Plan in such amounts and subject to such terms and conditions as the Committee shall determine. All Share -Based Awards shall be evidenced by an Award Agreement. Such Share -
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Based Awards may be granted as an inducement to enter the employ of the Company or any Subsidiary or in satisfaction of any obligation of the Company or any Subsidiary to an officer or other key employee, whether pursuant to this Plan or otherwise, that would otherwise have been payable in cash or in respect of any other obligation of the Company. Such Share-Based Awards may entail the transfer of actual Shares, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States. The terms of any other Share-Based Award need not be uniform in application to all (or any class of) Participants, and each other Share -Based award granted to any Participant (whether or not at the same time) may have different terms.
SECTION 11.
DIVIDEND EQUIVALENTS
(a)Generally. Dividend Equivalents may be granted to Participants at such time or times as shall be determined by the Committee. Dividend Equivalents may be granted in tandem with other Awards, in addition to other Awards, or freestanding and unrelated to other Awards. The grant date of any Dividend Equivalents under the Plan will be the date on which the Dividend Equivalent is awarded by the Committee, or such other date as the Committee shall determine in its sole discretion. Dividend Equivalents may be paid in cash or in Shares or any compensation thereof as determined by the Committee in its sole discretion. Dividend Equivalents shall be evidenced in writing, whether as part of the Award Agreement governing the terms of the Award, if any, to which such Dividend Equivalent relates, or pursuant to a separate Award Agreement with respect to freestanding Dividend Equivalents, in each case, containing such provisions not inconsistent with the Plan as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters.
SECTION 12.
TERMINATION OF EMPLOYMENT OR SERVICE AND FORFEITURE
(a)Termination for Cause. Unless otherwise determined by the Committee at the grant date and set forth in the Award Agreement covering the Award (or otherwise in writing), or determined thereafter in a manner more favorable to the Participant, if a Participant’s employment or service terminates for Cause, all Options and SARs, whether vested or unvested, and all other Awards that are unvested or unexercisable or otherwise unpaid (or were unvested or unexercisable or unpaid at the time of occurrence of Cause) shall be immediately forfeited and canceled, effective as of the date of the Participant’s termination of service.
(b)Termination Due to Death or Disability. Unless otherwise determined by the Committee at the grant date and set forth in the Award Agreement covering the Award (or otherwise in writing), or determined thereafter in a manner more favorable to the Participant, if a Participant’s employment or service terminates due to the death or Disability of the Participant:
(i)All Service Awards that are unvested or unexercisable that would have become vested at any time prior to the first anniversary of the Participant’s Termination
19


of Service, had the Participant continued to be employed by the Company through such date, shall immediately become vested and exercisable as of the date of termination;
(ii)Performance Awards that are unvested or unexercisable shall, subject to the achievement of the applicable Performance Goals, be deemed vested and/or exercisable to the extent of the number of Performance Awards that would have vested and/or become exercisable had the Participant’s Service continued until the first anniversary of the Participant’s Termination of Service;
(iii)All Options and SARs that are vested shall remain outstanding until (y) the one year anniversary of the Participant’s termination of employment or (z) the Award’s normal expiration date, whichever is earlier, after which date any unexercised Options and SARs shall immediately terminate;
(iv)All Awards other than Options and SARs that are vested shall be treated as set forth in the applicable Award Agreement (or in any more favorable manner determined by the Committee); and
(v)All Awards that are unvested or unexercisable (and do not become vested pursuant to Section 12(b) (ii or (ii))) shall immediately terminate as of the date of the Participant’s Termination of Service.
(c)Termination for Any Other Reason. Unless otherwise determined by the Committee at the grant date and set forth in the Award Agreement covering the Award (or otherwise in writing), or determined thereafter in a manner more favorable to the Participant, if a Participant’s employment or service terminates for any reason other than Cause or due to the death or Disability of the Participant:
(i)All Awards that are unvested or unexercisable shall be immediately be forfeited and canceled, effective as of the date of the Participant’s Termination of Service;
(ii)All Options and SARs that are vested shall remain outstanding until (x) in the case of Retirement, the one year anniversary of the date of the Participant’s Termination of Service, (y) the three-month anniversary of the effective date of the Participant’s Termination of Service for any reason other than Retirement or (z) the Award’s normal expiration date, whichever is earlier, after which any unexercised Options and SARs shall immediately terminate; and
(iii)All Awards other than Options and SARs that are vested shall be treated as set forth in the applicable Award Agreement (or in any more favorable manner determined by the Committee).
(d)Termination in Connection with a Change in Control. Notwithstanding anything to the contrary in this Section 12, Section 13 shall determine the treatment of Awards upon a Change in Control.
20


(e)Forfeiture, Cancellation and “Clawback” of Awards. The Participant shall forfeit and disgorge to the Company any Awards granted or vested and any gains earned or accrued due to the exercise of Options or SARs or the sale of any Shares or the settlement of any Award to the extent required by Applicable Law or regulations in effect on or after the Effective Date, including Section 304 of the U.S. Sarbanes-Oxley Act of 2002 and Section 10D of the Exchange Act. For the avoidance of doubt, the Committee shall have full authority to implement any policies and procedures necessary to comply with Section 10D of the Exchange Act and any rules promulgated thereunder. The implementation of policies and procedures pursuant to this Section 12(e) and any modification of the same shall not be subject to any restrictions on amendment or modification of Awards. Awards granted under this Plan (and gains earned or accrued in connection with Awards) shall also be subject to such generally applicable policies as to forfeiture and recoupment (including, without limitation, upon the occurrence of material financial or accounting errors, financial or other misconduct or Competitive Activity) as may be adopted by the Administrator or the Board from time to time and communicated to Participants. Any such policies may (in the discretion of the Administrator or the Board) be applied to outstanding Awards at the time of adoption of such policies, or on a prospective basis only.
SECTION 13.
CHANGE IN CONTROL
(a)Accelerated Vesting and Payment.
(i)In General. Except as otherwise provided in an Award Agreement, upon the occurrence of a Change in Control, (i) all Options and Share Appreciation Rights shall become immediately exercisable, (ii) the Restriction Period on all Restricted Shares, Restricted Share Units and Deferred Share Units shall lapse immediately prior to such Change in Control and (iii) Shares underlying Awards of Restricted Share Units and Deferred Share Units shall be issued to each Participant then holding such Award immediately prior to such Change in Control; provided, that, at the discretion of the Committee (as constituted immediately prior to the Change in Control), each such Option, Share Appreciation Right, Restricted Share Unit and/or Deferred Share Unit may be canceled in exchange for an amount equal to the product of (A)(I) in the case of Options and Share Appreciation Rights, the excess, if any, of the product of the Change in Control Price over the exercise price for such Award, and (II) in the case of other such Awards, the Change in Control Price multiplied by (B) the aggregate number of Shares covered by such Award. Notwithstanding the foregoing, the Committee may, in its discretion, instead terminate any outstanding Options or Share Appreciation Rights if either (x) the Company provides holders of such Options and Share Appreciation Rights with reasonable advance notice to exercise their outstanding and unexercised Options and Share Appreciation Rights or (y) the Committee reasonably determines that the Change in Control Price is equal to or less than the exercise price for such Options or Share Appreciation Rights.
21


(ii)Performance Awards. Performance Awards that are outstanding in the event of a Change in Control shall be treated as provided in the individual Award Agreement governing such Performance Awards.
(b)Timing of Payments. Payment of any amounts calculated in accordance with Section (i) shall be made in cash or, if determined by the Committee (as constituted immediately prior to the Change in Control), in common shares of the New Employer having an aggregate fair market value equal to such amount and shall be payable in full, as soon as reasonably practicable, but in no event later than 30 days, following the Change in Control. For purposes hereof, the fair market value of one common share of the New Employer shall be determined by the Committee (as constituted immediately prior to the consummation of the transaction constituting the Change in Control), in good faith.
(c)Termination Without Cause Prior to a Change in Control. Unless otherwise determined by the Committee at or after the time of grant, any Participant whose employment or service is terminated without Cause within three (3) months prior to the occurrence of a Change in Control shall be treated, solely for the purposes of this Plan (including, without limitation, this Section 13) as continuing in the Company’s employment or service until the occurrence of such Change in Control, and to have been terminated immediately thereafter.
(d)Waiver of Benefits. Notwithstanding anything contained in this Plan or any Award Agreement to the contrary, to the extent that any of the payments and benefits provided for under this Plan, any Award Agreement, or any other agreement or arrangement between the Company or any Subsidiary and a Participant (collectively, the “Payments”) would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, such Participant shall be entitled to waive any or all of such Payments to the extent necessary to avoid the application of the excise tax under Section 4999 of the Code.
SECTION 14.
EFFECTIVE DATE, AMENDMENT, MODIFICATION,
AND TERMINATION OF THE PLAN
The Plan shall be effective on the Effective Date, and shall continue in effect, unless sooner terminated pursuant to this Section 14, until the tenth anniversary of the Effective Date. The Board or the Committee may at any time in its sole discretion, for any reason whatsoever, terminate or suspend the Plan, and from time to time, subject to obtaining any regulatory approval, including that of a stock exchange on which the Shares are then listed, if applicable, may amend or modify the Plan; provided that without the approval by a majority of the votes cast at a duly constituted meeting of shareholders of the Company, no amendment or modification to the Plan may (i) materially increase the benefits accruing to Participants under the Plan, (ii) except as otherwise expressly provided in Section 4(c), increase the number of Shares subject to the Plan, (iii) modify the class of persons eligible for participation in the Plan, (iv) allow Options or Share Appreciation Rights to be issued with an exercise price or reference price below Fair Market Value on the date of grant (v) extend the term of any Award granted under the Plan beyond its original expiry date or (vi) materially modify the Plan in any other way that would require shareholder approval under any regulatory requirement that the Committee
22


determines to be applicable, including, without limitation, the rules of any exchange on which the Shares are then listed. Notwithstanding any provisions of the Plan to the contrary, neither the Board nor the Committee may, without the consent of the affected Participant, amend, modify or terminate the Plan in any manner that would adversely affect any Award theretofore granted under the Plan or result in the imposition of an additional tax, interest or penalty under Section 409A of the Code.
SECTION 15.
GENERAL PROVISIONS
(a)Withholding. The Employer shall have the right to deduct from all amounts paid to a Participant in cash (whether under this Plan or otherwise) any amount of taxes required by law to be withheld in respect of Awards under this Plan as may be necessary in the opinion of the Employer to satisfy tax withholding required under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gains taxes, transfer taxes, and social security contributions that are required by law to be withheld. In the case of payments of Awards in the form of Shares, at the Committee’s discretion, the Participant shall be required to either pay to the Employer the amount of any taxes required to be withheld with respect to such Shares or, in lieu thereof, the Employer shall have the right to retain and repurchase from the Participant (or the Participant may be offered the opportunity to elect to tender for repurchase by the Company) the number of Shares whose Fair Market Value equals such amount required to be withheld and withhold the proceeds of such sale; and provided, further, that with respect to any Specified Award, in no event shall Shares or other amounts receivable under a Specified Award be repurchased pursuant to this Section 15(a) (other than upon or immediately prior to settlement in accordance with the Plan and the applicable Award Agreement) other than to pay taxes imposed under the U.S. Federal Insurance Contributions Act (FICA) and any associated U.S. federal withholding tax imposed under Section 3401 of the Code and in no event shall the value of such Shares or other amounts receivable under a Specified Award (other than upon or immediately prior to settlement) exceed the amount of the tax imposed under FICA and any associated U.S. federal withholding tax imposed under Section 3401 of the Code. The Participant shall be responsible for all withholding taxes and other tax consequences of any Award granted under this Plan.
(b)Nontransferability of Awards. Except as provided herein or in an Award Agreement, no Award may be sold, assigned, transferred, pledged, charged or otherwise encumbered except by will or the laws of descent and distribution; provided that the Committee may permit (on such terms and conditions as it shall establish) a Participant to transfer an Award for no consideration to the Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests (“Permitted Transferees”). A Participant may not enter into any transaction which hedges or otherwise transfers the risk of price movements with regard to the Shares subject to any unvested or
23


unearned Award. No amendment to the Plan or to any Award shall permit transfers other than in accordance with the preceding sentence. Any attempt by a Participant to sell, assign, transfer, pledge, charge, hedge or encumber an Award without complying with the provisions of the Plan shall be void and of no effect. Except to the extent required by law, no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant. All rights with respect to Awards granted to a Participant under the Plan shall be exercisable during the Participant’s lifetime only by such Participant or, if applicable, his or her Permitted Transferee(s). The rights of a Permitted Transferee shall be limited to the rights conveyed to such Permitted Transferee, who shall be subject to and bound by the terms of the agreement or agreements between the Participant and the Company.
(c)No Limitation on Compensation. Nothing in the Plan shall be construed to limit the right of the Company to establish other plans or to pay compensation to its Employees, in cash or property, in a manner which is not expressly authorized under the Plan.
(d)No Right to Employment. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Employer. The grant of an Award hereunder, and any future grant of Awards under the Plan is entirely voluntary, and at the complete discretion of the Company. Neither the grant of an Award nor any future grant of Awards by the Company shall be deemed to create any obligation to grant any further Awards, whether or not such a reservation is explicitly stated at the time of such a grant. The Plan shall not be deemed to constitute, and shall not be construed by the Participant to constitute, part of the terms and conditions of employment and participation in the Plan shall not be deemed to constitute, and shall not be deemed by the Participant to constitute, an employment or labor relationship of any kind with the Company. The Employer expressly reserves the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein and in any agreement entered into with respect to an Award. The Company expressly reserves the right to require, as a condition of participation in the Plan, that Award recipients agree and acknowledge the above in writing. Further, the Company expressly reserves the right to require Award recipients, as a condition of participation, to consent in writing to the collection, transfer from the Employer to the Company and third parties, storage and use of personal data for purposes of administering the Plan.
(e)No Rights as Shareholder. Subject to the provisions of the applicable Award contained in the Plan and in the Award Agreement, no Participant, Permitted Transferee or Designated Beneficiary shall have any rights as a shareholder with respect to any Shares to be distributed under the Plan until he or she has become the holder thereof
(f)Construction of the Plan. The validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of Bermuda (without reference to the principles of conflicts of law or choice of law that might otherwise refer the construction or interpretation of this Plan to the substantive laws of another jurisdiction).
24


(g)Rules of Construction. Whenever the context so requires, the use of the masculine gender shall be deemed to include the feminine and vice versa, and the use of the singular shall be deemed to include the plural and vice versa. That this plan was drafted by the Company shall not be taken into account in interpreting or construing any provision of this Plan.
(h)Compliance with Legal and Exchange Requirements. The Plan, the granting and exercising of Awards thereunder, and any obligations of the Company under the Plan, shall be subject to all applicable federal, state, and foreign country laws, rules, and regulations, and to such approvals by any regulatory or governmental agency as may be required, and to any rules or regulations of any exchange on which the Shares are listed. The Company, in its discretion, may postpone the granting and exercising of Awards, the issuance or delivery of Shares under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Shares or other required action under any federal, state or foreign country law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules, and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or to otherwise sell or issue Shares in violation of any such laws, rules, or regulations, and any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards. Neither the Company nor its directors or officers shall have any obligation or liability to a Participant with respect to any Award (or Shares issuable thereunder) that shall lapse because of such postponement.
(i)Deferrals. Subject to the requirements of Section 409A of the Code, the Committee may postpone the exercising of Awards, the issuance or delivery of Shares under, or the payment of cash in respect of, any Award or any action permitted under the Plan, upon such terms and conditions as the Committee may establish from time to time. Subject to the requirements of Section 409A of the Code, a Participant may electively defer receipt of the Shares or cash otherwise payable in respect of any Award (including, without limitation, any Shares issuable upon the exercise of an Option other than an Incentive Share Option) upon such terms and conditions as the Committee may establish from time to time.
(j)Limitation on Liability; Indemnification. No member of the Board or Committee, and none of the chief executive officer or any other delegate or agent of the Committee shall be liable for any act, omission, interpretation, construction or determination made in connection with the Plan in good faith, and each person who is or shall have been a member of the Board or Committee, the chief executive officer and each delegate or agent of the Committee shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be made a party or in which he or she may be involved in by reason of any action taken or failure to act under the Plan to the full extent permitted by law, except as otherwise provided in the Company’s Memorandum of Association and Bye-laws, and under any directors’ and officers’ liability insurance that may be in effect from time to time. The foregoing right of
25


indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such persons may be entitled under the Company’s Memorandum of Association or Bye-laws, by contract, as a matter of law, or otherwise.
(k)Amendment of Award. In the event that the Committee shall determine that such action would, taking into account such factors as it deems relevant, be beneficial to the Company, the Committee may affirmatively act to amend, modify or terminate any outstanding Award at any time prior to payment or exercise in any manner not inconsistent with the terms of the Plan, including without limitation, change the date or dates as of which (A) an Option or Share Appreciation Right becomes exercisable, (B) a Performance Share or Performance Unit is deemed earned, or (C) Restricted Share, Restricted Share Units, Deferred Share Units and other Share -Based Awards becomes nonforfeitable, except that no outstanding Option may be amended or otherwise modified or exchanged (other than in connection with a transaction described in Section 4(c)) in a manner that would have the effect of reducing its original exercise price or otherwise constitute repricing. Any such action by the Committee shall be subject to the Participant’s consent if the Committee determines that such action would adversely affect the Participant’s rights under such Award, whether in whole or in part. The Committee may, in its sole discretion, accelerate the exercisability or vesting or lapse of any Restriction Period with respect to all or any portion of any outstanding Award at any time. Notwithstanding any provisions of the Plan to the contrary, the Committee may not, without the consent of the affected Participant, amend, modify or terminate an outstanding Award or exercise any discretion in any manner that would result in the imposition of an additional tax, interest or penalty under Section 409A of the Code.
(l)409A Compliance. The Plan is intended to be administered in a manner consistent with the requirements, where applicable, of Section 409A of the Code. Where reasonably possible and practicable, the Plan shall be administered in a manner to avoid the imposition on Participants of immediate tax recognition and additional taxes pursuant to Section 409A of the Code. In the case of any Specified Award that may be treated as payable in the form of “a series of installment payments,” as defined in U.S. Treasury Regulation Section 1.409A-2(b)(2)(iii), a Participant’s or Designated Beneficiary’s right to receive such payments shall be treated as a right to receive a series of separate payments for purposes of such Treasury Regulation. Notwithstanding the foregoing, neither the Company nor the Committee, nor any of the Company’s directors, officers or employees shall have any liability to any person in the event Section 409A of the Code applies to any such Award in a manner that results in adverse tax consequences for the Participant or any of his beneficiaries or transferees. Notwithstanding any provision of this Plan or any Award Agreement to the contrary, the Board or the Committee may unilaterally amend, modify or terminate the Plan or any outstanding Award, including but not limited to changing the form of Award or the exercise price of any Option or SAR, if the Board or Committee determines, in its sole discretion, that such amendment, modification or termination is necessary or advisable to comply with applicable U.S. law, as a result of changes in law or regulation or to avoid the imposition of an additional tax, interest or penalty under Section 409A of the Code.
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(m)Certain Provisions Applicable to Specified Employees. Notwithstanding the terms of this Plan or any Award Agreement to the contrary, if at the time of Participant’s Termination of Service he or she is a “specified employee” within the meaning of Section 409A of the Code, any payment of any “nonqualified deferred compensation” amounts (within the meaning of Section 409A of the Code and after taking into account all exclusions applicable to such payments under Section 409A of the Code) required to be made to the Participant upon or as a result of the Termination of Service (as defined in Section 409A) shall be delayed until after the six-month anniversary of the Termination of Service to the extent necessary to comply with and avoid the imposition of taxes, interest and penalties under Section 409A of the Code. Any such payments to which he or she would otherwise be entitled during the first six months following his or her Termination of Service will be accumulated and paid without interest on the first payroll date after the six-month anniversary of the Termination of Service (unless another Section 409A-compliant payment date applies) or within thirty days thereafter. These provisions will only apply if and to the extent required to avoid the imposition of taxes, interest and penalties under Section 409A of the Code.
(n)No Impact on Benefits. Except as may otherwise be specifically stated under any employee benefit plan, policy or program, no amount payable in respect of any Award shall be treated as compensation for purposes of calculating a Participant’s right under any such plan, policy or program.
(o)No Constraint on Corporate Action. Nothing in this Plan shall be construed (a) to limit, impair or otherwise affect the Company’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge, amalgamate or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets or (b) to limit the right or power of the Company, or any Subsidiary, to take any action which such entity deems to be necessary or appropriate.
(p)Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan.
27










LOSS PORTFOLIO TRANSFER
REINSURANCE AGREEMENT


by and among


SIRIUSPOINT AMERICA INSURANCE COMPANY

SIRIUSPOINT BERMUDA INSURANCE COMPANY LTD.

and


PALLAS REINSURANCE COMPANY LTD.






ARTICLES
TABLE OF CONTENTS PAGE
1 BACKGROUND 1
2 DEFINITIONS 2
3
LPT COVERAGE; ADMINISTRATION OF REINSURED LIABILITIES
12
4 REPORTS AND REVIEW 13
5
TERM OF THIS AGREEMENT
14
6 CONSIDERATION AND RECONCILIATION 16
7 COLLATERAL AND PREMIUM ADJUSTMENT 18
8
REPRESENTATIONS AND WARRANTIES
25
9 NOTIFICATION 29
10 INDEMNIFICATION 29
11 CONFIDENTIALITY 33
12 ACCESS TO RECORDS 34
13 NOTICES 35
14 MISCELLANEOUS 36
15
DISCLAIMERS
40
16
ARBITRATION
41
17
EXPEDITED DISPUTE RESOLUTION AND INDEPENDENT ACTUARIAL FIRM
DISPUTE RESOLUTION
42
18
GOVERNING LAW
42
19
INSOLVENCY
43
20
SERVICE OF SUIT
44
ATTACHMENTS
SCHEDULE A
 INFORMATION TO BE INCLUDED IN QUARTERLY STATEMENTS
47
SCHEDULE B
 INITIAL RECONCILIATION STATEMENT
48
SCHEDULE C
INVESTMENT GUIDELINES
49
SCHEDULE D
FUNDS WITHHELD ACCOUNT 60
EXHIBIT A
FORM OF SERVICES AGREEMENT 61
EXHIBIT B
FORM OF TRUST AGREEMENTS 62
EXHIBIT C
SUBJECT BUSINESS 63
EXHIBIT D
MATERIALS REINSURED CONTRACTS 66
EXHIBIT E
LIST OF EMPLOYEES 70
EXHIBIT F
EXCLUSION FROM COLLECTED THIRD PARTY REINSURANCE 71
EXHIBIT G
FORM OF SECURITY AND CONTROL AGREEMENT 72
EXHIBIT H
PREMIUM INCREASE CALCULATION 73




LOSS PORTFOLIO TRANSFER
REINSURANCE AGREEMENT
(hereinafter referred to as the “Agreement”)

by and among

SIRIUSPOINT AMERICA INSURANCE COMPANY
(hereinafter referred to as “SiriusPoint America”),

SIRIUSPOINT BERMUDA INSURANCE COMPANY LTD.
(hereinafter referred to as “SiriusPoint Bermuda”, and together with SiriusPoint America, the “Company”),

and

PALLAS REINSURANCE COMPANY LTD.
(a Bermuda exempted company registered as a Class 3A insurer under the Bermuda Insurance Act 1978, as amended, and its related regulations and as a segregated accounts company under the Bermuda Segregated Accounts Companies Act 2000, as amended, and hereinafter referred to as the “Reinsurer”)

(the Company and the Reinsurer are each referred to herein as a “Party” and collectively the “Parties”)
ARTICLE 1 - BACKGROUND
A.The Company and the Reinsurer entered into that certain Master Agreement dated July 30, 2021 (the “Master Agreement”).
B.The Company and the Reinsurer shall enter into this Agreement, whereby the Company shall cede to the Reinsurer, and the Reinsurer shall assume from the Company, the Reinsured Liabilities of the Company pursuant to the terms of this Agreement.
C.The Reinsurer shall provide the Services to the Company and shall have authority and responsibility for the handling and administration of claims arising under the Subject Business pursuant to the Services Agreement being entered into as of the date hereof between the Company and the Reinsurer in the form attached hereto as Exhibit A (the “Services Agreement”).
D.The Reinsurer shall establish and maintain collateral as follows for its obligations to the Company under this Agreement:

1.SiriusPoint America, the Reinsurer, and The Bank of New York Mellon as the trustee (the “Trustee”) shall enter into a trust agreement in the form attached hereto as Exhibit B (the “Reg 114 Trust Agreement”; and the trust account established and maintained under Reg 114 Trust Agreement, the “Reg 114 Trust Account”), pursuant to which the Trustee shall hold assets as security for the

Page 1

satisfaction of the obligations of the Reinsurer to SiriusPoint America under this Agreement.

2.The Company, the Reinsurer, and the Trustee shall enter into a trust agreement in the form attached hereto as Exhibit B (the “Non-Reg 114 Trust Agreement”; and the trust account established and maintained under Non-Reg 114 Trust Agreement, the “Non-Reg 114 Trust Account”), pursuant to which Trustee shall hold assets as security for the satisfaction of the obligations of the Reinsurer to the Company under this Agreement.

3.The Company, the Reinsurer, and The Bank of New York Mellon shall enter into that certain security and account control agreement in the form attached hereto as Exhibit G (the “Security and Control Agreement”), pursuant to which a first priority security interest shall be granted in favor of the Company in the Administrative Account and all assets credited thereto.

4.The Funds Withheld Account shall serve as collateral in addition to the Funded Accounts (as defined herein).
ARTICLE 2 - DEFINITIONS
In this Agreement:
“Administrative Account” has the meaning given to it in the Services Agreement.
“Affiliate” means, in relation to any Party, any Person under the control of or under common control with the Party.
“Aggregate Limit” means the sum of $645,000,000 USD, less UNL payments made by the Company on or after the Valuation Date and prior to the Effective Date in respect of the Subject Business.
“Aggregate Limit Exhaustion Corridor” means, as of any date during the term of this Agreement, when the remaining Aggregate Limit is $50,000,000 or less, after taking into account the aggregate amount of UNL paid or payable by the Reinsurer hereunder on an incurred basis to such date.
“Applicable Law(s)” means any domestic or foreign, federal, state or local statute, law, ordinance or code, or any written rules, regulations or administrative interpretations issued by any Governmental Authority pursuant to any of the foregoing, in each case applicable to any Party, and any order of a court of competent jurisdiction applicable to the Parties.
“Backstop” has the meaning given to it in the Miscellaneous Article.
“Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks in New York City or Bermuda are required or authorized by law to be closed. Wherever a time limit in the Agreement references Business Days, the Parties

Page 2

may mutually agree in writing to alter the number of Business Days. Any such mutual agreement is only applicable to the one issue or circumstance addressed and is not meant to apply broadly to the Agreement nor to all instances regarding the same issue, unless explicitly also agreed in writing.
“Cause” has the meaning given to it in the Services Agreement.
“Closing” has the meaning given to it in the Master Agreement.
“Collected Third-party Reinsurance” means all reinsurance recoverables actually collected in cash with respect to the Subject Business, net of any collection costs; provided that “Collected Third-party Reinsurance” shall not include reinsurance recoveries accrued or booked prior to the Valuation Date and therefore not reflected in the Net Subject Reserves as at the Valuation Date whether or not such recoveries are collected after the Valuation Date, including, but not limited to, the reinsurance recoveries described on Exhibit F attached hereto.
“Commutation Amount” has the meaning given to it in the Term of this Agreement Article.
“Commutation Effective Time” has the meaning given to it in the Term of this Agreement Article.
“Commutation Events” has the meaning given to it in the Term of this Agreement Article.
“Commutation Settlement Statement” has the meaning given to it in the Term of this Agreement Article.
“Company Authorized Representative” means Dan Malloy, or any other Person appointed by the Company to that role from time to time as notified in writing to the Reinsurer.
“Company Indemnified Person(s)” has the meaning given to it in the Indemnification Article.
“Confidential Information” has the meaning given to it in the Confidentiality Article.
“Declaratory Judgment Expenses” means all attorneys’ fees, expenses and other litigation costs attributable to coverage analysis or declaratory judgment actions or other coverage dispute resolution procedures brought to determine defense and/or indemnification or payment obligations for any Reinsured Liabilities, whether or not a loss has been paid, that are allocable to specific Policies or claims with respect to the Subject Business and ceded to this Agreement. Declaratory Judgment Expenses shall be deemed to have been incurred on the date of the actual or alleged loss giving rise to the action.

Page 3

“Deductible” has the meaning given to it in the Indemnification Article.
“Dispute Notice” has the meaning given to it in Article 7 of this Agreement.
“Disputed Item” has the meaning given to it in Consideration and Reconciliation Article.
“Effective Date” means the actual date and time on which the Closing occurs.
“Expedited Dispute Resolution Expiration Period” has the meaning given to it in the Expedited Dispute Resolution and Independent Actuarial Firm Dispute Resolution Article.
“Extra Contractual Obligations” (“ECO”) means liabilities which arise from the handling of the Subject Business as a result of:
1.    Actual or alleged breach of contract, negligence, fraud, bad faith in the handling of the Subject Business or the failure to settle within the limits of the Policies of the Subject Business or rejecting an offer of settlement or in the preparation of the defense or in a trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such action; and/or
2.    Compensatory, consequential, exemplary, punitive damages or fines on a particular claim, or similar extra contractual damages which are awarded against the Company arising because of but not limited to the failure by the Reinsurer or the Company (as applicable) to settle within the limits of the Policies of the Subject Business.
Any ECO shall be deemed to have occurred on the same date as the loss covered or alleged to be covered under the Subject Business.
“Final Reconciliation Statement” has the meaning given to it in the Consideration and Reconciliation Article.
“Final Reinsurance Premium” means the final reinsurance premium to be paid by the Company to the Reinsurer in accordance with the Consideration and Reconciliation, Article.
“Funded Accounts” has the meaning given to it in the Collateral and Premium Adjustment Article.
“Funds Withheld Account” means the amount retained by SiriusPoint America from the reinsurance premium payable to the Reinsurer under this Agreement, which is currently withheld by the ceding company reinsured by SiriusPoint America as a notional account under the reinsurance contract(s) identified on Schedule D.

“Gen and Prod Liab PR Premium Refund” has the meaning given to it in the Collateral and Premium Adjustment Article.


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“Governmental Authority” means any government, political subdivision, court, arbitrator, arbitration panel, mediator, mediation panel, board, commission, regulatory or administrative agency or other instrumentality thereof, whether federal, state, provincial, territorial, local or foreign and including any regulatory authority which may be partly or wholly autonomous.

“Gross Subject Reserves” has the meaning given to it in the Collateral and Premium Adjustment Article.
“Independent Actuarial Firm” means a nationally recognized independent actuarial firm mutually agreed between the Parties in writing.
“Indemnified Person” means a Company Indemnified Person or a Reinsurer Indemnified Person, as the case may be.
“Indemnifying Person” means the Company or the Reinsurer, as applicable, when providing indemnification in accordance with the Indemnification Article.
“Interim Reconciliation Statement” has the meaning given to it in the Consideration and Reconciliation Article.

    “Initial Reconciliation Statement” means an estimated reconciliation statement as of the month preceding the Effective Date, or as of such date as may be agreed in writing by the Parties, substantially in the form contained in Schedule B attached hereto and provided by the Company to the Reinsurer ten (10) Business Days prior to the Effective Date (or such other period as may be agreed in writing by the Parties) in accordance with Section 2.5 of the Master Agreement.
“Initial Reinsurance Premium” has the meaning given to it in the Consideration and Reconciliation Article.
“Knowledge” means, as it relates to any fact or other matter, the actual knowledge of the employees of the Company or the Reinsurer, as applicable, set forth on Exhibit E attached hereto, after reasonable inquiry and due diligence of such fact or matter or as reasonably obtained in the ordinary course performance of each such employee’s duties at the Company or the Reinsurer, as applicable.
“Loss Adjustment Expense(s)” (“LAE”) means costs and expenses paid or payable on or after the Valuation Date in connection with any investigation, appraisal, adjustment, settlement, litigation, defense or appeal that is allocable to claims with respect to the Subject Business, including the following:
1.    Court costs;
2.    Costs of supersedeas and appeal bonds;
3.    Monitoring counsel expenses;    

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4.    External defense costs for the adjustment, appraisal, defense, resistance, investigation, audit, negotiation, settlement, payment or appeal, including arbitration, mediation, or other dispute resolution costs, attorneys’ fees, expenses and pre- and post-judgment interest;
5.    Legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including Declaratory Judgment Expenses;
6.    Expenses associated with obtaining subrogation, salvage and recoveries; and
7.    Fees and expenses incurred for claims handling services by third-party administrators including, for the avoidance of doubt, any fees and expenses paid to Golden State Claims Adjusters, LLC on or after the Valuation Date pursuant to the Claims Administration Agreement between SiriusPoint America, Golden State Claims Adjusters, LLC and Pacific Re, Inc. dated January 23, 2020.
LAE does not include Retained ULAE or ULAE.
“Loss in Excess of Policy Limits” (“XPL”) means any loss in excess of the limit of the Policies with respect to the Subject Business, such loss in excess of the limit having been incurred because of failure to settle within the limits of the Policies to the Subject Business or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation of an appeal consequent upon such action. Any XPL shall be deemed to have occurred on the same date as the loss covered or alleged to be covered under the Subject Business.
“Master Agreement” has the meaning given to it in the Background Article.
“Market Value” has the meaning given to it in the Trust Agreements.
“Market Value Dispute Valuation Firm” means one of Bank of America, N.A., Morgan Stanley, JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Credit Suisse Group AG, or successors of any of the foregoing, including any affiliates or subsidiaries thereof.
“Material Reinsured Contract” means those insurance policies or contracts identified in Exhibit D.
“Minimum Collateral Requirement” means the sum of SAIC Minimum Collateral Requirement plus SBIC Minimum Collateral Requirement.
“NAMIC” means the National Association of Mutual Insurance Companies.
“NAMIC Recoverables” means reimbursement of defense or indemnity cost and expense incurred on ECO claims that initially were paid out-of-pocket and later reimbursed by NAMIC pursuant to the insurance policies it issued to PCIC for ECO liability.

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“Net Subject Reserves” means the Company’s reserves in respect of the UNL hereunder, including incurred but not reported UNL; reserves for UNL paid but not recovered from the Reinsurer; and reserves for UNL reported and outstanding.
“Non-Reg 114 Eligible Collateral” means cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), investments of the types permitted by the Applicable Laws of New York for domestic insurers, or any combinations of the above; provided, that such investments are issued by an institution that is not the parent, subsidiary, or other Affiliate of the Company or the Reinsurer and such investments comply with the Non-Reg 114 Investment Guidelines.
“Non-Reg 114 Investment Guidelines” means the investment guidelines for the Non-Reg 114 Trust Account attached hereto as Schedule C2.
“Non-Reg 114 Minimum Collateral Requirement” means, at the quarter-end (or portion thereof) after the Effective Date and quarterly thereafter, an amount adjusted at the beginning of each quarter to equal the sum of (i) eighteen percent (18%) multiplied by the SAIC Net Subject Reserves as of the most recent quarter’s end; plus (ii) one hundred twenty percent (120%) multiplied by the SBIC Net Subject Reserves as of the most recent quarter’s end.
“Non-Reg 114 Trust Account” has the meaning given to in the Background Article.
“Non-Reg 114 Trust Agreement” has the meaning given to in the Background Article.
“Notice” has the meaning given to it in the Notices Article.
“Notice of Disagreement” has the meaning given to it in the Consideration and Reconciliation Article.
“Paid Gross UNL” has the meaning given to it in the Collateral and Premium Adjustment Article.
“PCIC” means Preferred Contractors Insurance Company Risk Retention Group, LLC.
“PCIC Premium Refund” has the meaning given to it in the Collateral and Premium Adjustment Article.
“Permits” has the name given to it in the Representations and Warranties Article.
“Person” means an individual, corporation, partnership, joint venture, limited liability company, association, trust, unincorporated organization, Governmental Authority, or other entity.

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“Policies” means insurance and reinsurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance or reinsurance, including supplements, riders, and endorsements issued or written in connection therewith and extensions thereto written, assumed, issued or reinsured by the Company.
“Premium Adjustment” means either Premium Increase or Premium Refund.
“Premium Increase” has the meaning given to it in the Collateral and Premium Adjustment Article.
“Premium Refund” has the meaning given to it in the Collateral and Premium Adjustment Article.
“Reg 114 Eligible Collateral” means cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), investments of the types permitted by the Applicable Laws of New York for domestic insurers, or any combinations of the above; provided, that such investments are issued by an institution that is not the parent, subsidiary, or other Affiliate of the Company or the Reinsurer and such investments comply with the Reg 114 Investment Guidelines.
“Reg 114 Investment Guidelines” means the investment guidelines for the Reg 114 Trust Account attached hereto as Schedule C1.
“Reg 114 Minimum Collateral Requirement” means, at the quarter-end (or portion thereof) after the Effective Date and quarterly thereafter, an amount adjusted at the beginning of each quarter to equal to one hundred two percent (102%) multiplied by the SAIC Net Subject Reserves as of the most recent quarter’s end.
“Reg 114 Trust Agreement” has the meaning given to in the Background Article.
“Reg 114 Trust Account” has the meaning given to in the Background Article.
“Reinsured Liabilities” means, the sum of all UNL and ULAE incurred, awarded, payable, paid or assessed on or after the Valuation Date in respect of the Subject Business and any unearned premium associated therewith.
For the avoidance of doubt:
1.The Reinsurer takes responsibility for ULAE with respect to Reinsured Liabilities from the Effective Date.
2.The Company is responsible for Retained ULAE.
“Reinsurer Authorized Representative” means Daniel W. Gerber, Esq., Gerber Ciano Kelly Brady LLP, 228 Park Avenue South, Suite 97572, New York, NY 10003-1502, (T) 01.646.650.5155; email: dgerber@gerberciano.com, or any other Person appointed by the Reinsurer to that role from time to time as notified in writing to the Company.

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“Reinsurer Indemnified Person(s)” has the meaning given to it in the Indemnification Article.

“Resolution Period” has the meaning given to it in the Consideration and Reconciliation Article.
“Retained ECO/XPL” means ECO or XPL (a) attributable to the conduct of the Company before the Effective Date or (b) attributable to the conduct of the Company after the Effective Date only where such ECO or XPL arises due to any actions or omissions of the Company not authorized, instructed or ratified by the Reinsurer. Retained ECO/XPL is expressly not reinsured by Reinsurer. After the Effective Date, ECO or XPL attributable to the conduct or instruction of or authorization or ratification by Reinsurer is not Retained ECO/XPL, and is reinsured by the Reinsurer.
“Retained ULAE” means those costs and expenses incurred by the Company that are associated with the Subject Business. The Reinsurer takes responsibility for its ULAE from the Effective Date, and the ULAE of the Reinsurer is not in any way to be included in the Retained ULAE. The Administrative Charge (as defined in the Services Agreement) shall be paid in accordance with the terms of the Services Agreement.

“SAIC Minimum Collateral Requirement” means one hundred twenty percent (120%) of the SAIC Net Subject Reserves.
“SAIC Net Subject Reserves” means SiriusPoint America’s Net Subject Reserves.
“SBIC Minimum Collateral Requirement” means one hundred twenty percent (120%) of the SBIC Net Subject Reserves.
“SBIC Net Subject Reserves” means SiriusPoint Bermuda’s Net Subject Reserves.
“Security and Control Agreement” has the meaning given to it in the Background Article.
“Senior Executive” has the meaning given to it in the Expedited Dispute Resolution Article.
“Services” has the meaning given to it in the Services Agreement.
“Services Agreement” has the meaning given to it in the Background Article.
“Sirius Indemnified Persons” has the meaning given to it in Article 10.

“Solvency Reports” has the meaning given to it in the Representations and Warranties Article.

“Statement” means the report prepared in accordance with paragraph A of the Reports and Review Article.

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“Subject Business” means:
(1) the “reserving classes” identified on Exhibit C attached hereto as comprised on the Effective Date;
(2) all liabilities arising after Effective Date under asbestos & environmental exposures on any Policies underwritten before 2011 not included within the “reserving classes” identified on Exhibit C, subject to an aggregate sub-limit of $2,500,000 (within the Aggregate Limit) for such asbestos & environmental exposures (provided, however, that the foregoing aggregate sub-limit shall in no way apply to any asbestos & environmental exposures included within the “reserving classes” identified on Exhibit C); and
(3) the Policies listed in the ‘SYSTEM DATA BY TREATY 4Q20_Addm’ sheet within the Excel spreadsheet entitled ‘Runoff and Other list of Treates 4Q20 with rec w Addendum_To SEND.xlsx’, provided by Neal Wasserman to Connie Tregidga and Chris Riseborough at 16.51 EST on 10 August 2021, subject to an aggregate sub-limit of $37,500,000 (within the Aggregate Limit) for such exposures (provided, however, that the foregoing aggregate sub-limit shall in no way apply to any exposures included within paragraphs (1) and (2) above for the definition of “Subject Business”). The Parties shall exchange a PDF of the Excel file referenced herein on the Effective Date via email.
For the avoidance of doubt, any:
1. commuted Policies; and
2. liabilities or exposures that have been notified to the Company before the Effective Date (whether as a loss reserve, precautionary advice or any other advice or notification) and not included within the paragraphs (1) and (3) above “;
are excluded from the Subject Business; and any unused portion of the sub-limits under paragraphs (2) and/or (3) above shall remain available as part of the Aggregate Limit for exposures that constitute the Subject Business.
“Subrogation and Salvage Recoverables” means all subrogation and salvage recoverables actually collected in cash by the Reinsurer on behalf of the Company under the terms of the Services Agreement with respect to the Subject Business, net of any collection costs; provided that “Subrogation and Salvage Recoverables” shall not include subrogation and salvage recoveries accrued or booked prior to the Valuation Date, and therefore, not reflected in the Net Subject Reserves as at the Valuation Date. “Subrogation and Salvage Recoverables” includes any Workers Compensation second injury fund and NAMIC Recoverables.
“Systems” means all computer hardware (including network and telecommunications equipment) and software (including associated preparatory materials, user manuals and other related documentation) owned, used, leased or licensed by the Company.

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“Third Party Rights” has the meaning given to it in Article 8.
“Third-party Reinsurance” means those contracts of reinsurance pursuant to which the Company has reinsured any portion of the Subject Business.
“Third-party Reinsurance Recovery” has the meaning given to it in the Collateral and Premium Adjustment Article.
“Third-party Reinsurance Reserves” has the meaning given to it in Collateral and Premium Adjustment Article
“Transaction Agreements” means collectively the Master Agreement, the Trust Agreements, the Services Agreement, the Security and Control Agreement, and this Agreement.
“Transition Date” has the meaning given to it in the Services Agreement.
“Trust Accounts” means the Reg 114 Trust Account and the Non-Reg 114 Trust Account, collectively.
“Trust Agreements” means the Reg 114 Trust Agreement and the Non-Reg 114 Trust Agreement, collectively.
“Trustee” has the meaning given to in the Background Article.
“Ultimate Net Loss” (“UNL”) means all amounts paid or payable in respect of the Subject Business after the Valuation Date, being the following:
1.Losses, LAE, ECO and XPL with respect to the Subject Business; less
2.    Collected premium on assumed reinsurance Policies of the Subject Business but excluding any reinstatement premiums under any such Policies accrued by the Company prior to the Valuation Date, it being understood by the Parties that such reinstatement premiums shall be for the benefit of the Company; less
3.    Collected Third-party Reinsurance; less
4.    other recoverables, Subrogation and Salvage Recoverables, and any other recoverables with respect to the Subject Business, but only to the extent actually recovered and paid to the Reinsurer.
For the avoidance of doubt, UNL shall exclude any Retained ECO/XPL and any commissions under the Subject Business including but not limited to any profit sharing for the Subject Business under arrangements entered into by the Company prior to the Effective Date, except profit sharing, if any, due the ceding company under the PCIC LPT which shall be included in the UNL.
Nothing in the foregoing shall be construed as implying that amounts are not recoverable hereunder by the Company until a final determination of UNL.

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“Unallocated Loss Adjustment Expenses” (“ULAE”) means those costs and expenses associated with the Reinsurer’s service and management of the Subject Business and that are not LAE such as, for example, personnel costs, overhead, or similar internal costs. For the avoidance of doubt, whether or not the Company or the Reinsurer reflect an expense as an ULAE on their financial statements or other books and records shall not affect whether such expense qualifies as ULAE for purposes of this Agreement.
“Unresolved Items” has the meaning given to it in Consideration and Reconciliation Article.
“Valuation Date” means January 1, 2021. This is the date that the Parties designate as the start of valuations and calculations as set out further herein.
For all purposes of this Agreement, whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.
ARTICLE 3 - LPT COVERAGE; ADMINISTRATION OF REINSURED LIABILITIES
A.    Subject to the Initial Reinsurance Premium being paid by the Company to the Reinsurer in accordance with the Initial Reconciliation Statement, the Company hereby cedes, and the Reinsurer hereby accepts and agrees to reinsure, one hundred percent (100%) of all UNL on or after the Valuation Date; provided, however, that in no event shall the aggregate amount of UNL paid by the Reinsurer hereunder exceed the Aggregate Limit.
The Reinsurer’s liabilities under this Agreement are calculated as set forth herein on and after the Valuation Date (unless otherwise specified), shall commence on the Effective Date, and shall be subject in all respects to the same terms, conditions, interpretations, waivers, modifications, alterations, and cancellations as the Subject Business. The Reinsurer shall be bound, without limitation, by all payments and settlements entered into by or on behalf of the Company or the Reinsurer, as applicable, subject to the terms, conditions and limitations of this Agreement.
B.    The Reinsurer shall be liable for ECO, XPL and ULAE, including any LAE associated with ECO and XPL. The Company shall be liable for Retained ECO/XPL and Retained ULAE. The Reinsurer shall be liable for its ULAE from the Effective Date.
C.    Beginning on the Transition Date and in accordance with the Services Agreement, the Company grants to the Reinsurer the authority and responsibility for the handling and administration of claims and Third-party Reinsurance applicable to the Reinsured Liabilities, subject to the Company’s notice, approval, and other rights specified in the Services Agreement and in this Agreement.
D.    [Intentionally omitted.]
E.    Beginning on the Transition Date, or forty-five (45) days after the Effective date, whichever shall come first, and in accordance with the Services Agreement, the Reinsurer shall be responsible for pursuing all claims for salvage or subrogation allocable to specific Policies and claims with respect to the Subject Business and ceded to this

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Agreement. From the Effective Date until forty-five (45) days thereafter or the Transition Date, whichever comes first, the Parties agree to work cooperatively in claims oversight. The Parties will establish a joint claims committee to discuss any claims with reserves raised or set at $100,000 USD and the Reinsurer shall have the right to control in claims settlements which exceed a $100,000 USD threshold.
F.    All Subrogation and Salvage Recoverables (i.e., reimbursement obtained or recovery made by or on behalf of the Company, less the actual cost of obtaining such reimbursement or making such recovery) on account of claims and settlements received after the Transition Date involving reinsurance hereunder, regardless of when such claims and liabilities arose, after such salvage and subrogation is first applied to any insurers or reinsurers under any Collected Third-party Reinsurance in accordance with the applicable terms of such Third-party Reinsurance and Applicable Law, shall reduce the amount of UNL and shall be payable to the Parties as set forth herein. For the avoidance of doubt, all Subrogation and Salvage Recoverables, NAMIC Recoverables, and any other recoverables with respect to the Subject Business, but only to the extent actually recovered and paid to the Reinsurer, shall be credited to the Reinsurer.
G.    Commutation of Assumed and Third-party Reinsurance:
Any commutation of assumed reinsurance and Third-party Reinsurance is subject to the control and discretion of the Reinsurer; provided, however, that once the Aggregate Limit Exhaustion Corridor has been reached on an incurred basis, the Reinsurer shall only enter into any such commutation after obtaining the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned, or delayed. Any commutation of Third-party Reinsurance will be done in accordance with the provisions of the Services Agreement. The Reinsurer will provide reasonable Notice to the Company in advance of any commutation of Third-party Reinsurance pursuant to this paragraph.
H.     Respective Responsibilities for payables and receivables.
Any payable or receivable that is not within the Net Subject Reserves on the Valuation Date is for the Company’s account. Any payable or receivable that is within the Net Subject Reserves on the Valuation Date is for the Reinsurer’s account.
ARTICLE 4 - REPORTS AND REVIEW
A.    Within thirty (30) days of the end of each quarter after the Effective Date (or part thereof as respects the first quarter), the Company, or the Reinsurer after the Transition Date, shall prepare a statement (“Statement”) which shall be sent to the other Party. The Statement shall be mutually agreed between the Parties and shall include or be provided together with the information set out in Schedule A of this Agreement.
B.    If the Statement reflects a payment owed to the Company, the Company may withdraw such amount from the applicable Funded Accounts to reimburse itself. If the balance of the applicable Funded Accounts is insufficient, the Reinsurer shall make such payment to the Company within fifteen (15) Business Days following the date of delivery of the Statement. If the Statement reflects a payment owed to the Reinsurer, any such payment

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shall be made within fifteen (15) Business Days following the date of delivery of the Statement, by the Company depositing such amount into the Trust Accounts to reimburse the Reinsurer.
C.    Either Party shall notify the other Party as soon as reasonably practicable in writing if it becomes aware of any material error in the Statement and promptly issue a revised Statement correcting it. Any unresolved dispute between the Parties with respect to an error so notified pursuant to this Article 4(C) shall be submitted to the Independent Actuarial Firm for resolution in accordance with Article 17(B).
ARTICLE 5 - TERM OF THIS AGREEMENT
A.    This Agreement is effective at 12:01 a.m. New York City time on the Effective Date and shall remain in force until the earliest of:
1.    The date on which all Reinsured Liabilities expire or are extinguished in accordance with the terms and conditions as well as the Applicable Law that apply to the Subject Business;
2.    The date on which the Aggregate Limit hereunder is exhausted; or
3.    The effective date of commutation of this Agreement in accordance with Article 5(B).
B.    The Company shall have the right, but not the obligation, upon not less than three (3) Business Days’ prior written Notice to the Reinsurer, to commute the Subject Business upon the occurrence of any of the following (“Commutation Events”):
1.    at any time with the agreement of the Reinsurer;
2.    as may be required by the Company as provided in paragraph K of the Collateral and Premium Adjustment Article;
3.    upon any material breach of the terms, conditions, provisions, representations or warranties of this Agreement or the Services Agreement by the Reinsurer, which breach is not cured within thirty (30) days following the Company’s written Notice to the Reinsurer of such breach, which Notice shall in reasonable detail describe the nature of such breach, or, if such breach shall not be reasonably susceptible to cure within such thirty (30) day period, such additional reasonable time as necessary to cure such breach not exceeding an additional thirty (30) days (unless agreed between the Parties otherwise in writing);
4.    if the Reinsurer becomes insolvent, makes an assignment for the benefit of creditors or becomes the subject of any voluntary or involuntary supervision, conservation, rehabilitation, liquidation or other similar proceeding;
5.    if the Reinsurer becomes merged with, acquired by or relinquishes control of itself to any other non-affiliated company, corporation or individual (for the avoidance of doubt, the Parties do not intend that this applies to the existing shareholders of the Reinsurer’s parent company as of the Effective Date);

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6.    if the Reinsurer has its authority to transact any relevant classes of reinsurance or insurance withdrawn or suspended;
7.    if any applicable statutory regulations restrict or prohibit the Reinsurer’s performance of any or all of its material obligations under this Agreement, or
8.    following any termination of the Service Agreement for Cause.
Any Notice of commutation provided by the Company pursuant to this Section 5(B) shall state the effective date and time of the commutation (the “Commutation Effective Time”). In the event this Agreement is commuted, the Company shall prepare a settlement statement (the “Commutation Settlement Statement”) setting forth the settlement amount for the commutation (the “Commutation Amount”) within thirty (30) Business Days of the Commutation Effective Time. Within ten (10) Business Days of receipt by the Reinsurer of the Commutation Settlement Statement, the Reinsurer may elect to dispute the calculation of the Commutation Amount. If the Reinsurer does not elect to dispute the calculation of the Commutation Amount set forth in the Commutation Settlement Statement, the Commutation Amount shall be final and binding on the Parties. In the event that the Reinsurer elects to dispute the calculation of the Commutation Amount set forth in the Commutation Settlement Statement, the Parties shall retain the Independent Actuarial Firm to review such calculation within fifteen (15) Business Days of any Notice of intent to dispute the Commutation Amount. The Parties shall direct such Independent Actuarial Firm to review the calculation of the Commutation Amount in the Commutation Settlement Statement, and based on such review, to confirm its agreement with the Commutation Settlement Statement or to provide any proposed changes to the Commutation Settlement Statement and the Commutation Amount set forth therein to the Parties no later than thirty (30) Business Days from its receipt of the Commutation Settlement Statement and all information necessary to complete such review as determined by the Independent Actuarial Firm. Each Party shall provide its proposed Commutation Amount to the Independent Actuarial Firm. Each Party shall use commercially reasonable efforts to furnish to the Independent Actuarial Firm such work papers, books, records and documents and other information pertaining to the Commutation Amount as the Independent Actuarial Firm may request. Any such determination of the Independent Actuarial Firm, which shall include the Independent Actuarial Firm’s determination of the Commutation Amount, shall be considered final and binding on the Parties. The Party whose proposed Commutation Amount is closer to the Independent Actuarial Firm’s determination of the Commutation Amount has no responsibility for the costs and expenses of the Independent Actuarial Firm. All costs and expenses of the Independent Actuarial Firm shall be borne by the Party whose Proposed Commutation Amount has greater difference from the Independent Actuarial Firm’s determination of the Commutation Amount.
C.    In the event this Agreement is commuted in accordance with paragraph B above, the Company shall withdraw cash from the Funded Accounts equal to the Commutation Amount, and, to the extent the Commutation Amount exceeds the balance therein, the Reinsurer shall pay any shortfall directly to the Company within thirty (30) Business Days of its receipt of the Commutation Settlement Statement or the final review report from the Independent Actuarial Firm, whichever date is later. After the effective date of

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any such commutation, the outstanding liabilities for the Subject Business shall be transferred back to the Company or as otherwise mutually agreed, and the Services Agreement shall be terminated (unless already previously terminated for Cause).
D.    Following a commutation pursuant to this Article, including the payment of any valid amounts due under such commutation, both the Company and the Reinsurer will be fully and finally released from all rights and obligations under this Agreement, other than any payment obligations due hereunder prior to the commutation date but still unpaid on such date.
E.    For so long as this Agreement remains in effect, the Parties agree that (1) upon any termination of the Services Agreement other than termination for Cause, the Company and the Reinsurer shall each be liable for half of all costs, fees and expenses incurred in connection with the transition to, and use and activities of, all providers reasonably necessary to replace Services under the Services Agreement; and (2) upon any termination of the Services Agreement for Cause, the Reinsurer shall be solely liable for all costs, fees and expenses incurred in connection with the transition to, and use and activities of, all providers reasonably necessary to replace the Services provided under the Service Agreement, and in the case of both of the foregoing clauses (1) and (2), the Reinsurer shall, at the election of the Company, reimburse the Company and its respective Affiliates, no less frequently than monthly for such costs, fees and expenses (or, in the case of clause (1), the Reinsurer’s proportionate share of such costs, fees and expenses) or pay the replacement service providers directly, at such intervals as are required by such service providers, for such costs, fees and expenses; provided, that the Reinsurer shall only be liable for such costs, fees and expenses to the extent it has consented to the use of such replacement service provider (such consent to not be unreasonably withheld, conditioned or delayed).
ARTICLE 6 - CONSIDERATION AND RECONCILIATION
A.    As consideration for the transactions contemplated by the Transaction Agreements, the Company shall pay to the Reinsurer in accordance with Section 6(E) below an amount equal to the following (the “Initial Reinsurance Premium”):
1.    $442,360,000 USD; less
2.    the amount of the Funds Withheld Account; less
3.    UNL payments made by the Company on or after the Valuation Date and prior to the Effective Date.
The Initial Reinsurance Premium shall be set forth in the Initial Reconciliation Statement, which shall reconcile the balances owed between the Company and the Reinsurer as of the Effective Date and set forth the aggregate net payment due to the Reinsurer, which amount will be deposited in the Trust Accounts directly by the Company on the Effective Date.
B.    The Final Reinsurance Premium shall be determined in accordance with the mutual agreement of the Final Reconciliation Statement following the procedure set forth in

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paragraphs C and D below and any return or additional amounts due either Party shall be paid in accordance with paragraph E below within fifteen (15) Business Days after the Final Reconciliation Statement is agreed.
C.    The Company and the Reinsurer will follow the following procedure in achieving fully and finally reconciled amounts of these balances: Within thirty (30) Business Days following the Effective Date, the Company will provide to the Reinsurer a reconciliation statement substantially in the form contained in Schedule B attached hereto (the “Interim Reconciliation Statement”) setting forth the adjusted aggregate net payment calculated as of the Effective Date.
D.    After the receipt by the Reinsurer of the Interim Reconciliation Statement and until such time as the Final Reconciliation Statement is final and binding on the Parties, the Reinsurer and the Reinsurer Authorized Representative will have, upon prior written Notice, reasonable electronic access during normal business hours to the working papers of the Company and the Company Authorized Representative relating to the Interim Reconciliation Statement and the calculations set forth thereon.
E.     Final Reconciliation Statement. A final reconciliation statement substantially in the form contained in Schedule B attached hereto (the “Final Reconciliation Statement”) shall be determined in accordance with the following process:
1.     The Reinsurer will have the right to review the Interim Reconciliation Statement and comment thereon for a period of forty-five (45) Business Days after receipt thereof. The Parties may mutually agree prior to such forty-five (45) Business Days that the Interim Reconciliation Statement is adopted as the Final Reconciliation Statement or may mutually agree to changes to be incorporated into the Interim Reconciliation in which case the resulting amended Interim Reconciliation Statement shall be adopted as the Final Reconciliation Statement.
2.    In the event the Reinsurer disputes the Interim Reconciliation Statement within the forty-five (45) Business Day review period, the Reinsurer shall deliver a notice of disagreement (a “Notice of Disagreement”) to the Company which specifies in reasonable detail each item that the Reinsurer in good faith disputes (each, a “Disputed Item”) and the amount in dispute for each such Disputed Item. If the Reinsurer does not deliver a Notice of Disagreement within such forty-five (45) Business Day review period, the Interim Reconciliation Statement shall be final, binding and conclusive on the Company and the Reinsurer, and shall be deemed to be the Final Reconciliation Statement.
F.    If a Notice of Disagreement is timely delivered pursuant to Section 7(E), the Company and the Reinsurer shall, during the fifteen (15) days following the receipt of such Notice of Disagreement (the “Resolution Period”), use their commercially reasonable efforts to reach agreement on the Disputed Items. If, by the end of the Resolution Period, the Company and the Reinsurer are unable to reach such agreement with respect to all of the Disputed Items, they shall promptly thereafter engage and submit the unresolved Disputed Items (the “Unresolved Items”) to the Independent Actuarial Firm in accordance with Article 17(B) of this Agreement; provided, however, that notwithstanding the allocation of costs and expenses under Article 17(B), the fees,

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expenses and costs of the Independent Actuarial Firm incurred in rendering any determination pursuant to this Section shall be split equally between the Company and the Reinsurer. The Independent Actuarial Firm shall determine each of the Unresolved Items, and giving effect to such determination, calculate the adjusted aggregate net payment as of the Effective Date. Each Party shall use commercially reasonable efforts to furnish to the Independent Actuarial Firm such work papers, books, records and documents and other information pertaining to the Unresolved Items as the Independent Actuarial Firm may request. The determination of the Independent Actuarial Firm shall be final, binding and conclusive on the Company and the Reinsurer. Judgment may be entered upon the determination by the Independent Actuarial Firm in accordance with Article 17.
G.    For any payments due under the Interim Reconciliation Statement or the Final Reconciliation Statement, subject to any offset provisions in this Agreement, (1) the Company shall transfer any amounts due to the Reinsurer by depositing Reg 114 Eligible Collateral in the Reg 114 Trust Account and/or Non-Reg 114 Eligible Collateral in the Non-Reg 114 Trust Account, respectively; and (2) the Company shall transfer any amounts due to the Company by withdrawing Reg 114 Eligible Collateral from the Reg 114 Trust Account and/or Non-Reg 114 Eligible Collateral from the Non-Reg 114 Trust Account, respectively.
ARTICLE 7 - COLLATERAL AND PREMIUM ADJUSTMENT
A.The Reinsurer shall establish and maintain, at all times during the Term of this Agreement, collateral for its obligations to the Company under this Agreement as follows and in accordance with the terms of this Article and the terms of the Trust Agreements or the Security and Control Agreement as applicable:
1.SiriusPoint America, the Reinsurer and the Trustee shall enter into the Reg 114 Trust Agreement on or prior to the Effective Date, pursuant to which the Reinsurer shall establish and maintain the Reg 114 Trust Account and the Trustee shall hold assets deposited into the Reg 114 Trust Account as security for the satisfaction of the obligations of the Reinsurer to SiriusPoint America under this Agreement. On the Effective Date, the Reinsurer shall deposit Reg 114 Eligible Collateral in the Reg 114 Trust Account in accordance with paragraph C of this Article, and thereafter the Reinsurer shall at all times during the term of this Agreement maintain Reg 114 Eligible Collateral in the Reg 114 Trust Account at or above the Reg 114 Minimum Collateral Requirement. Among the other provisions more specifically set forth in the Reg 114 Trust Agreement, the Parties agree that as respects the Reg 114 Trust Account, upon the written direction from the Company, the Reinsurer will execute assignments, endorsements in blank, or transfer legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that the Company, or the Trustee upon the direction of the Company, may whenever necessary negotiate any such assets without consent or signature from the Reinsurer or any other entity.


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2.The Company, the Reinsurer and the Trustee shall enter into the Non-Reg 114 Trust Agreement on or prior to the Effective Date, pursuant to which the Reinsurer shall establish and maintain the Non-Reg 114 Trust Account and the Trustee shall hold assets deposited into the Non-Reg 114 Trust Account as security for the satisfaction of the obligations of the Reinsurer to the Company under this Agreement. On the Effective Date, the Reinsurer shall deposit Non-Reg 114 Eligible Collateral in the Non-Reg 114 Trust Account in accordance with paragraph C of this Article, and thereafter the Reinsurer shall at all times during the term of this Agreement maintain Non-Reg 114 Eligible Collateral in the Non-Reg 114 Trust Account at or above an amount equal to the Non-Reg 114 Minimum Collateral Requirement.

3.The Company, the Reinsurer, and Trustee shall enter into the Security and Control Agreement, pursuant to which a first priority security interest shall be granted in favor of the Company in the Administrative Account and all assets credited thereto.

Notwithstanding the foregoing, the Minimum Collateral Requirement shall not exceed the sum of the Aggregate Limit less paid UNL.

    In addition, SiriusPoint America shall establish the Funds Withheld Account in connection with this Agreement on its books and records. The Funds Withheld Account shall serve as partial collateral for the payment of the Reinsured Liabilities by the Reinsurer under this Agreement. The Funds Withheld Account shall be clearly designated as a segregated account on the books, records and information Systems of SiriusPoint America. The Funds Withheld Account assets represent a portion of the Final Reinsurance Premium payable by the Company to the Reinsurer. The Company will indemnify and hold the Reinsurer harmless to the extent of unavailability of the Funds Withheld Account for the Reinsurance Premium or Collateral.
B.    The Parties intend that the Company will receive full statutory credit for reinsurance provided under this Agreement. The Parties agree to use best efforts to ensure that such credit will remain available to the Company. In the event any of the provisions of this Agreement conflict with or otherwise fail to satisfy the requirements of the appropriate credit for reinsurance statute or regulation, this Agreement shall be deemed amended to conform to the Applicable Law. Without limiting the foregoing, to the extent that the Company or a Governmental Authority determines that terms of this Agreement or the Trust Agreements are insufficient to permit the Company to take full credit on its statutory financial statements for the reinsurance provided by this Agreement or to comply with the Applicable Laws, the Reinsurer agrees to undertake such action that is acceptable to the Company and such Governmental Authority as is required for the Company to obtain full credit on its statutory financial statements. Subject to and in accordance with Section 2.4 of the Master Agreement, the Company may, in its sole discretion, consider and agree to a request from the Reinsurer to restructure collateral.
C.    On the Effective Date, the Reinsurer will deposit initial collateral into the Trust Accounts equal to the calculation below:

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1.    The Company’s held reserves on the Subject Business as of December 31, 2020 in the amount of $403,284,000 less UNL payments made by the Company on or after the Valuation Date and prior to the Effective Date; multiplied by
2.    one hundred twenty percent (120%); less
3.    The Initial Reinsurance Premium as calculated in the Consideration and Reconciliation Article deposited by the Company into the Trust Accounts on the Effective Date.
The allocation of the deposit of the initial collateral between the Reg 114 Trust Account and the Non-Reg 114 Trust Account shall be specified in the Initial Reconciliation Statement.
D.    On or before the Transition Date, the Reinsurer will establish the Administrative Account and deposit therein cash (United States legal tender) in the amount set forth in the Initial Reconciliation Statement. The Administrative Account together with the Trust Accounts and Funds Withheld Account shall be referred to herein as the “Funded Accounts.” The amounts deposited in the Administrative Account accordance with this paragraph D shall be part of the collateral amount set forth in paragraph A above, and not in addition to such amount, and shall be transferred from the Non-Reg 114 Trust Account on or before the Transition Date as specified in the Initial Reconciliation Statement.
E.     Premium Adjustment
The Company and the Reinsurer will follow the procedure set forth below in calculating whether a Premium Adjustment (either a Premium Increase or Premium Refund, as defined below) is due based on the Premium Adjustment Statement the Reinsurer provides to the Company showing calculations of the amounts set forth below as of September 30, 2026 (or a date otherwise mutually agreed by the Parties in writing). The Reinsurer shall deliver the Premium Adjustment Statement (including the information set forth in Exhibit H for the Premium Increase calculation) to the Company no later than November 15, 2026 (or a date otherwise mutually agreed by the Parties in writing).
1.Where, in relation to the ‘Asbestos Fac’ reserving cohort, the (x) Third-party Reinsurance Reserves plus Collected Third-party Reinsurance (that amount in dollars being the “Third-party Reinsurance Recovery”), as a percentage of (y) the Gross Subject Reserves plus Paid Gross UNL is less than 34.63%, the Company will pay the Reinsurer the difference between:
a.34.63% of the Gross Subject Reserves plus Paid Gross UNL in (y) above; and
b.the Third-party Reinsurance Recovery,

capped at $7,000,000 USD (the “Premium Increase”), provided that no Premium Increase shall be due if the Gross ‘Asbestos Fac’ Subject Reserves plus Paid Gross UNL as of 30 September 2026 is greater than $138,000,000.
2.    In relation to the ‘PCIC’ reserving cohort, if the UNL for the ‘PCIC’ reserving cohort as of September 30, 2026 (or a date otherwise mutually agreed by the

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Parties in writing) is less than $54,788,000, then the Reinsurer will pay the Company a “PCIC Premium Refund” in an amount equal to 75% of the difference between (a) the UNL as of September 30, 2026 for the ‘PCIC’ cohort, and (b) $54,788,000; provided that the no PCIC Premium Refund will be payable to the Company should the UNL for the ‘PCIC’ reserving cohort be greater than $54,788,000.

3.    In relation to the ‘Gen and Prod Liab PR’ reserving cohort, if the UNL as of September 30, 2026 (or a date otherwise mutually agreed by the Parties in writing) for the ‘Gen and Prod Liab PR’ reserving cohort is less than $16,361,000, then the Reinsurer will pay the Company a “Gen and Prod Liab PR Premium Refund” (and along with PCIC Premium Refund, the “Premium Refund”) an amount equal to 75% of the difference between (a) the UNL as of September 30, 2026 for the ‘Gen and Prod Liab PR’ cohort, and (b) $16,361,000; provided that the no Gen and Prod Liab PR Premium Refund will be payable to the Company should the UNL for the ‘Gen and Prod Liab PR’ reserving cohort be greater than $16,361,000.

For the purposes of the calculations in 1, 2 and 3 above, Paid Gross UNL and UNL shall not include fees and expenses incurred for claims handling services by third-party administrators.
If the Company disputes anything contained in the Premium Adjustment Statement within thirty (30) Business Days following receipt by the Company of the Premium Adjustment Statement, the Company and the Reinsurer shall instruct the Independent Actuarial Firm to review the dispute and provide its calculation of the disputed Premium Adjustment in accordance with Article 17(B).
Any Premium Refund amounts due to the Company from the Reinsurer shall be paid no later than the earlier of (x) thirty (30) days after the delivery of the Premium Adjustment Statement by the Reinsurer to the Company or (y) if the Company disputes any amount or calculation shown on the Premium Adjustment Statement, thirty (30) days after the issuance of the final decision of the Independent Actuarial Firm in accordance with Article 17(B).
In relation to this Paragraph E, 1 for the ‘Asbestos Fac’ reserving cohort:
“Paid Gross UNL” means the losses, LAE, ECO and XPL paid after the Valuation Date in respect of the applicable Subject Business.    
“Gross Subject Reserves” means the losses, LAE, ECO and XPL reserves in respect of the applicable Subject Business.
“Third-party Reinsurance Reserves” means the reserves in respect of the applicable Third-party Reinsurance.

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For the avoidance of doubt, Paid Gross UNL and Gross Subject Reserves shall be calculated before the application of any Third-party Reinsurance.
F.     For any payments due under Article 7(E), subject to any offset provisions in this Agreement, (1) the Company shall transfer any amounts due to the Reinsurer by depositing Reg 114 Eligible Collateral in the Reg 114 Trust Account and/or Non-Reg 114 Eligible Collateral in the Non-Reg 114 Trust Account, respectively; and (2) the Company shall transfer any amounts due to the Company by withdrawing Reg 114 Eligible Collateral from the Reg 114 Trust Account and/or Non-Reg 114 Eligible Collateral from the Non-Reg 114 Trust Account, respectively.
G.    Quarterly, during the term of this Agreement, the Company and the Reinsurer shall jointly instruct the Trustee of the Non-Reg 114 Trust Account in writing to transfer funds to the Administrative Account in accordance with the provisions of the Services Agreement, unless otherwise mutually agreed and acknowledged in writing between the Company and the Reinsurer. In addition, the Company and the Reinsurer shall jointly instruct the Trustee in writing to transfer additional amounts from the Non-Reg 114 Trust Account to the Administrative Account from time to time to provide interim funding due to shortfalls in the Administrative Account within three (3) Business Days upon receipt of any reasonable request from either Party. To the extent that the Trust Accounts are exhausted, then the Reinsurer shall fund the Administrative Account directly. Prior to the Transition Date, to the extent not already paid by the Reinsurer, the Company may withdraw amounts from the Trust Accounts mutually agreed and confirmed in writing to reimburse itself for amounts due to it as a result of any payments or funding with respect to the Net Subject Reserves.
H.    Within thirty (30) days after the end of each calendar quarter, beginning with the quarter (or portion thereof) ending after the Effective Date, the Reinsurer will determine the Net Subject Reserves, the SAIC Minimum Collateral Requirement, the SBIC Minimum Collateral Requirement, the total Minimum Collateral Requirement, the Reg 114 Minimum Collateral Requirement and the Non-Reg 114 Minimum Collateral Requirement for the subsequent quarter and provide written Notice thereof to the Company. It is understood and agreed that at all times the Net Subject Reserves will be determined by the Reinsurer in accordance with standard accounting and actuarial practices consistently applied for reserving and the preparation of quarterly and annual statutory financial statements, subject to right of inspection by the Company. Upon such review by the Company, the Company has the right to request an adjustment to such Net Subject Reserves.
I.    No more frequently than bi-annually, the Company may require that the Parties retain the Independent Actuarial Firm to evaluate the calculation of the Net Subject Reserves, the SAIC Minimum Collateral Requirement, the SBIC Minimum Collateral Requirement, the total Minimum Collateral Requirement, the Reg 114 Minimum Collateral Requirement and/or the Non-Reg 114 Minimum Collateral Requirement by the Reinsurer in accordance with paragraph H above. The cost of such Independent Actuarial Firm shall be shared equally between the Parties. Each Party shall use commercially reasonable efforts to furnish to the Independent Actuarial Firm such work papers, books, records and documents and other information pertaining to the disputed amounts as the Independent

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Actuarial Firm may request. Any resulting determination of the Independent Actuarial Firm, which shall include the Independent Actuarial Firm’s determination of the disputed amounts, shall be considered final and binding on the Parties.
J.    Deposits and Withdrawals.
1.     If the Market Value of the Reg 114 Eligible Collateral held in the Reg 114 Trust Account is less than the Reg 114 Minimum Collateral Requirement, the Reinsurer shall deposit into the Reg 114 Trust Account additional Reg 114 Eligible Collateral with a Market Value equal to such deficiency within fifteen (15) Business Days of its calculation of the Reg 114 Minimum Collateral Requirement or the determination of such amount by the Independent Actuarial Firm in accordance with Paragraph I above. If the Market Value of the Reg 114 Eligible Collateral held in the Reg 114 Trust Account is in excess of the Reg 114 Minimum Collateral Requirement, so long as the Reinsurer is not in default of any of its obligations under this Agreement or any Transaction Agreement, the Reinsurer may request such excess funds be returned to the Reinsurer within fifteen (15) Business Days as set forth in the Reg 114 Trust Agreement, subject to the Reinsurer’s obligation to maintain at all times in the Reg 114 Trust Account the Reg 114 Minimum Collateral Requirement.
2.    If the Market Value of the Non-Reg 114 Eligible Collateral held in the Non-Reg 114 Trust Account is less than the Non-Reg 114 Minimum Collateral Requirement, the Reinsurer shall deposit into the Non-Reg 114 Trust Account additional Non-Reg 114 Eligible Collateral with a Market Value equal to such deficiency within fifteen (15) Business Days of its calculation of the Non-Reg 114 Minimum Collateral Requirement or the determination of such amount by the Independent Actuarial Firm in accordance with paragraph I above. If the Market Value of the Non-Reg 114 Eligible Collateral held in the Non-Reg 114 Trust Account is in excess of the Non-Reg 114 Minimum Collateral Requirement, so long as the Reinsurer is not in default of any of its obligations under this Agreement or any Transaction Agreement, the Reinsurer may request such excess funds be returned to the Reinsurer within fifteen (15) Business Days as set forth in the Non-Reg 114 Trust Agreement, subject to the Reinsurer’s obligation to maintain at all times in the Non-Reg 114 Trust Account the Non-Reg 114 Minimum Collateral Requirement.
3.    (A)    The Company shall notify the Reinsurer in writing of any dispute concerning the calculation of the Market Value of the assets (the “Dispute Notice”) held in the Trust Accounts. In the event of such a dispute:
(i)    The Parties’ respective chief financial offers shall first confer to resolve the dispute in good faith;
(ii)    If the action set forth in (i) above does not resolve the dispute within ten (10) Business Days of the Dispute Notice, then the Parties’ respective chief executive offers shall confer to resolve the dispute in good faith; and

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(iii)    If the actions set forth in (i) and (ii) above do not resolve the dispute within twenty (20) Business Days of the Dispute Notice, then the Parties shall submit the dispute to (x) a Market Value Dispute Valuation Firm (as mutually agreed in writing between the Parties), or (y) another such third-party internationally recognized asset management firm with prior experience in valuing the types of assets held in the Trust Accounts as mutually agreed between the Parties.
(iv)    The Parties shall direct such firm selected in accordance with clause (iii) above to provide its calculation of the Market Value of the Trust Assets (or the relevant assets, as may be the case) no later than thirty (30) days from its receipt of the request from the Parties. The Parties agree that the resulting determination of such firm shall be final and binding on the Parties. The Parties shall share the costs and expenses of the Market Value Dispute Valuation Firm
(B)    In the case that (i) the Company has delivered a Dispute Notice and the Parties have not achieved resolution (as provided in paragraph (A) above) and (ii) a quarterly collateral adjustment is due pursuant to Article 7, paragraph H, then solely until final resolution of the Dispute Notice (pursuant to the process provided in paragraph (A) above), the quarterly collateral adjustment to Market Value for the disputed assets shall be made in accordance with the valuation of the collateral as determined by a Market Value Dispute Valuation Firm as selected by the Company in its sole discretion. The Company shall pay the costs and expenses of any Market Value Dispute Valuation Firm (or other such third-party valuation firm) incurred solely in connection with the provisions of this paragraph (B).
    (C)    The terms of this paragraph 3 apply separately to each such Dispute Notice delivered, and must be satisfied separately and independently in each separate instance unless otherwise mutually agreed by the Parties in writing.
    K.    In the event:
1.    The Reinsurer fails to deposit and maintain the required collateral in accordance with this Article within the timeframes specified; or
2.    The Reinsurer is in material breach of this Agreement or the Services Agreement (other than as a result of any act or omission by the Company, except for any act or omission that is directed or ratified by the Reinsurer); or
3.    The Reinsurer has become merged with, been acquired by or relinquished control of itself to any other non-affiliated company, corporation or individual. For the avoidance of doubt, the Parties do not intend that this applies to the existing shareholders of the Reinsurer’s parent company as of the Effective Date; or

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4.    The Reinsurer has its authority to transact any classes of reinsurance or insurance withdrawn or suspended; or
5.    Any applicable statutory regulations restrict or prohibit the Reinsurer’s performance of any or all of its material obligations under this Agreement,
the Company, in addition to any other remedies it has under the terms of this Agreement or otherwise, may provide Notice to the Reinsurer of such default and may, if the Reinsurer fails to cure such default within twenty (20) Business Days from receipt of the Notice of default, in the Company’s reasonable discretion:
1.    Withdraw all collateral deposited in the Funded Accounts (including any interest gained thereupon) whereupon all rights, title and interest in such collateral will be conveyed to the sole custody and control of the Company to cover liabilities related to the Subject Business, and whereby the Reinsurer’s continuing obligations with respect to the Subject Business ceases and the Company will resume all responsibility for managing the Subject Business. Any excess funds upon settlement of all Net Subject Reserves shall be returned to the Reinsurer; and/or
2.    Opt to either:
a.    Commute this Agreement pursuant to the Term of this Agreement Article; or
b.    Keep this Agreement in force, withholding the amounts in the Funded Accounts. Any excess funds upon settlement of all Net Subject Reserves shall be returned to the Reinsurer.
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES
A.    As of the Effective Date, the Company hereby represents and warrants to the Reinsurer as follows:
1.    SiriusPoint America and SiriusPoint Bermuda are duly incorporated and validly existing under the laws of the State of New York and Bermuda, respectively, and have the requisite corporate power and authority to: (a) enter into and consummate the transactions contemplated by, and carry out their obligations under, this Agreement; and (b) execute and deliver the Transaction Agreements, perform their obligations under the Transaction Agreements and consummate the transactions contemplated under the Transaction Agreements.
2.    The transactions contemplated under the Transaction Agreements have been or will be duly authorized by all requisite corporate action on the part of the Company prior to the Effective Date according to governing bylaws and Applicable Law. Assuming due authorization, execution and delivery by the Reinsurer, the Transaction Agreements constitute the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms except to the extent such enforceability may be subject to, and limited by,

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applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, receivership and similar law affecting the enforcement of creditors’ rights generally, and general equitable principles (regardless of whether enforceability is considered a proceeding at law or in equity). The execution, delivery and performance by the Company of the Transaction Agreements to which it is a party does not, and the consummation of the transactions contemplated hereunder will not: (a) conflict with, be prohibited by, or require any approval that has not already been obtained under, any of the provisions of the organizational documents of the Company; (b) conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, be prohibited by, require any consent or other action under, or give rise to a right of termination, amendment or acceleration under, of any material contract or instrument to which the Company is a party, except as set forth on Exhibit D; or (c) contravene any requirements of law applicable to the Company in any material respect.
3.    To the Company’s Knowledge, as of the Effective Date, consistent with past practice, the Company has paid all undisputed claims and undisputed loss with respect to the Subject Business since the Valuation Date in the ordinary course of business, without regard to the reinsurance effected hereunder or as to unduly apportion loss to the Reinsurer.
4.    To the Company’s Knowledge, all relevant information relating to the Subject Business and Third-party Reinsurance was provided to the Reinsurer and no relevant information provided in response to requests made by the Reinsurer has been withheld or misstated in any way. To the Company’s Knowledge, the Company is not in possession of relevant information which renders the information provided to the Reinsurer inaccurate or misleading.
5.    The Company has all material licenses, certificates of authority or other similar certificates, registrations, franchises, permits, approvals or other similar authorizations issued by Governmental Authorities (collectively, “Permits”) necessary to conduct the Subject Business as currently conducted. All Permits that are material to the conduct of the Subject Business are valid and in full force and effect. The Company is not subject to any pending action or, to the Company’s Knowledge, any threatened action that seeks the revocation, suspension, termination, modification or impairment of any Permit that is material to the conduct of the Subject Business.
6.    To the Company’s Knowledge, there are no other contracts between the Company or any of its Affiliates, on the one hand, and any other Person, on the other hand, that would reasonably be expected to increase, reduce, limit, mitigate or otherwise affect any actual or potential loss to the Parties under the Reinsured Liabilities.
7.     To the Company’s Knowledge, the records pertaining to the Subject Business which have been or will be furnished to the Reinsurer by the Company are and will be the true, correct and complete records in the possession of the Company, subject to the Company’s record retention policy, pertaining to the Subject

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Business in all material respects and fairly present the condition of the Subject Business.
8.     To the Company’s Knowledge, and except as previously disclosed to the Reinsurer, with respect to Third-party Reinsurance and any material third-party contracts with respect to the Subject Business, (a) all Third-party Reinsurance is a legal, valid and binding obligation of the parties thereto, and is enforceable against each party thereto in accordance with its terms; (b) no party to any Third-party Reinsurance is in material default or material breach or has failed to perform any material obligation thereunder, and there does not exist any event, condition or omission that would constitute such a material breach or material default (whether by lapse of time or notice or both); (c) the Company has not received from or given notice to any party to any Third-party Reinsurance of any dispute or default with respect thereto or notice of termination, recapture, rescission or acceleration; (d) no reinsurer under any Third-party Reinsurance agreement has sought to deny or limit coverage under any Third-party Reinsurance; (e) there are no pending threatened actions, suits, arbitrations, mediations or other proceedings with respect to any Third-party Reinsurance agreement; (f) no party to any Third-party Reinsurance has given written notice that remains in effect (1) of cancellation, termination (provisional or otherwise) or recapture in respect of any Third-party Reinsurance; (2) that any amount of reinsurance ceded or assumed by it will be uncollectible or otherwise defaulted upon or (3) that there is a dispute that is unresolved with respect to any material amounts recoverable or payable pursuant thereto; (g) no party to any Third-party Reinsurance (1) is a party, or subject, to an insolvency proceeding or (2) if financially impaired to the extent that a default thereunder is reasonably anticipated; and (h) there are no uncollectible Third-party Reinsurance recoverables, and there does not exist any event, condition or omission that would result in any reinsurance recoverable becoming uncollectible.
9.    To the Knowledge of the Company, as of the Effective Date, the Company has timely processed all claims, recorded notifications and precautionaries relating to the Subject Business in accord with customary and ordinary practices of the Company.
10.    Certain of the Reinsured Liabilities arise under or out of contracts or other agreements relating to the Subject Business, including but not limited to administration agreements relating to the Subject Business, which contain notice, consent, or other requirements inuring to the benefit of third parties (collectively, “Third Party Rights”) which could potentially impact the ability of SiriusPoint to (i) cede portions of the Subject Business to Pallas Re, and/or (ii) assign rights under such contracts or related agreements to Pallas Re, and/or (iii) fulfill all of its obligations under the Transaction Agreements. Pallas Re acknowledges that, prior to the date of this Agreement, SiriusPoint has made available to Pallas Re examples of such Third Party Rights. To the Knowledge of SiriusPoint, no

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Material Reinsured Contract contains any such Third Party Rights; provided, that if any Material Reinsured Contract does contain Third Party Rights, SiriusPoint will, or will cause its Affiliates to, undertake commercially reasonable efforts to satisfy its or their relevant obligations with respect to such Third Party Rights under any affected Material Reinsured Contract promptly.
B.    As of the Effective Date, the Reinsurer represents and warrants to the Company as follows:
1.    The Reinsurer is duly incorporated, validly existing and in good standing under the laws of Bermuda and has the requisite corporate power and authority to (a) own its properties and assets and to carry on its business as currently conducted, (b) enter into and consummate the transactions contemplated by, and carry out its obligations under, this Agreement; and (c) execute and deliver the Transaction Agreements, perform its obligations under the Transaction Agreements and consummate the transactions contemplated under the Transaction Agreements. The Reinsurer is duly qualified as a foreign corporation or other organization to do business, and is in good standing, in each jurisdiction where the character of its owned, operated or leased assets or properties or the nature of its activities makes such qualification and good standing necessary.
2.    The execution and delivery by the Reinsurer of the Transaction Agreements, the performance by the Reinsurer of its obligations under the Transaction Agreements and the consummation by the Reinsurer, as applicable, of the transactions contemplated under the Transaction Agreements, have been or will be duly authorized by all requisite corporate action on the part of the Reinsurer prior to the Effective Date. Assuming due authorization, execution and delivery by the Company, the Transaction Agreements constitute the legal, valid and binding obligation of the Reinsurer, enforceable against it in accordance with its terms except to the extent such enforceability may be subject to, and limited by, applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, receivership and similar law affecting the enforcement of creditors’ rights generally, and general equitable principles (regardless of whether enforceability is considered a proceeding at law or in equity). The execution, delivery and performance by the Reinsurer of the Transaction Agreements to which it is a party does not, and the consummation of the transactions contemplated hereunder will not: (a) conflict with, be prohibited by, or require any approval that has not already been obtained under any of the provisions of the organizational documents of the Reinsurer; (b) conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, be prohibited by, require any consent or other action under, or give rise to a right of termination, amendment or acceleration under, of any material contract or instrument to which the Reinsurer is a party, or (c) contravene any requirements of law applicable to the Reinsurer in any material respect.
3.    No consent, approval or authorization of, or declaration or filing with, or Notice to, any Governmental Authority is required to be made by or with respect to the Reinsurer in connection with the execution, delivery and performance of the

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Transaction Agreements by the Reinsurer or the consummation by the Reinsurer of any of the transactions contemplated hereunder, other than such consent, approval, or authorization from any Governmental Authority that has already been obtained by the Reinsurer or any declaration, filing with or Notice to any Governmental Authority that has already been made by the Reinsurer.
4.    The Reinsurer will have good and marketable title, free and clear of all liens and other encumbrances to all Reg 114 Eligible Collateral and Non-Reg 114 Eligible Collateral immediately prior to the deposit thereof into the Trust Account.
5.    Prior to the Effective Date hereof, the Reinsurer has made such due inquiry into the Subject Business and the Net Subject Reserves, as the Reinsurer deems appropriate in its independent judgment and, based on representations made by and materials presented by the Company, believes it has received adequate information in order to enter into the transactions contemplated under the terms of this Agreement and the other Transaction Agreements.
6.    The Reinsurer has previously delivered to the Company copies of the solvency reports relating to the calculation of the Commercial Insurer Solvency Self-Assessment (“CISSA”) and Bermuda Solvency Capital Requirement (“BSCR”) of Pallas Re (the CISSA and BSCR of Pallas Re, the “Solvency Reports”). The Solvency Reports delivered to the Company were prepared pursuant to the Applicable Laws of Bermuda and fairly represents the view of the financial position of the Reinsurer as at the dates, and the results of operations and changes in financial position of the Reinsurer for the periods, in respect of which they have been prepared. Since the dates of the last Solvency Reports, there has been no change to the information set out therein (nor any development or event involving a prospective change of which the Reinsurer is, or might reasonably be expected to be, aware) which is materially adverse to the condition (financial or other), prospects, results of operations or general affairs of the Reinsurer.
7.    There shall have been no change in the information set out in the certificate of compliance from the Bermuda Monetary Authority to be provided by the Reinsurer to the Company in relation to the Reinsurer, since the date on which such certificate was issued, and the Reinsurer is not aware of anything that is or might become prejudicial to maintaining full compliance with the requirements of the Bermuda Monetary Authority described therein.
8.    The Reinsurer is not insolvent or unable to pay its debts or could not be deemed by a court of competent jurisdiction to be insolvent, and the Reinsurer will not become so as a consequence of entering into the Transaction Agreements and/or performing the transactions contemplated thereby; has not taken any action, nor, to the Reinsurer’s knowledge and belief, have any steps been taken or legal proceedings been commenced or threatened against it, for its winding-up, dissolution or re-organization, for the enforcement of any security over its assets or for the appointment of a receiver, receiver and manager, liquidator, bankruptcy trustee or similar officer in respect of it, in respect of any of its assets or any

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equivalent process applicable to it; and has not proposed or entered into any arrangement or composition with its creditors or any class thereof.
9.    The Reinsurer is and has been in compliance in all material respects with all Applicable Laws, its memorandum of association and Bye-laws or other organizational documents and all material permits and licenses issued to the Reinsurer by any Governmental Authority, except for any non-compliance which would not, individually or in the aggregate, reasonably be expected to impair the ability of the Reinsurer to consummate the transactions contemplated by the Transaction Agreements or perform its obligations thereunder.
ARTICLE 9 – NOTIFICATION
The Company shall promptly notify the Reinsurer (or any other person, as directed by Reinsurer, including its Affiliates or any third-party administrator engaged by the Reinsurer) of any claims and forward all written communication received by it with respect thereto.
ARTICLE 10 – INDEMNIFICATION
A.Survival of Representations, Warranties and Covenants.

1.The representations and warranties of the Parties contained in this Agreement shall survive the Closing solely for purposes of this Article 10 and shall terminate and expire on the second (2nd) anniversary of the Transition Date; provided that the representations and warranties made by the Company in paragraphs A(1) and A(2) of Article 8 other than (b) of paragraph A(2) of Article 8 and by the Reinsurer in paragraphs B(1) and B(2) of Article 8 other than (b) of paragraph B(2) of Article 8 shall survive until the expiration of the applicable statute of limitations. Any claim for indemnification in respect of any representation or warranty that is not asserted by notice given as required herein prior to the expiration of the applicable survival period specified in this Article 10 shall not be valid and any right to indemnification is hereby irrevocably waived after the expiration of such period of survival. Any claim properly made for an Indemnifiable Loss in respect of such a breach asserted within such period of survival as herein provided will be timely made for purposes hereof.
2.To the extent that it is to be performed after the Closing, each covenant in this Agreement will, for purposes of this Article 10, survive and remain in effect in accordance with its terms plus a period of six (6) months thereafter, after which no claim for indemnification with respect thereto may be brought hereunder. All covenants in this Agreement that by their terms are required to be fully performed prior to the Closing will not survive the Closing, after which time no claim for indemnification with respect thereto may be brought hereunder.
B.The Reinsurer shall indemnify, defend and hold harmless, the Company and its Affiliates and their respective directors, officers, employees, agents, successors and permitted assigns (“Sirius Indemnified Persons”) from and against any and all disputes, demands,

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claims, actions, damages or other liability actually incurred by a Sirius Indemnified Person to the extent arising from or relating to:
(1)     any breach of any representation or warranty of the Reinsurer made in Article 8 of this Agreement;
(2)     any breach or nonfulfillment of any agreement or covenant of the Reinsurer under this Agreement;

(3)    Third Party Reinsurance and Subrogation and Salvage Recoverables that were accrued or booked prior to the Valuation Date and therefore not reflected in the Net Subject Reserves as at the Valuation Date; or

(4)     any successful enforcement of this indemnity;
provided, in any case, the foregoing shall not apply to the extent such damages arose out of or relate to (a) actions, errors or omissions of any Sirius Indemnified Person or (b) the gross negligence, fraud, or intentional misconduct of any Sirius Indemnified Person.
Consequential, special, punitive, exemplary, treble or similar damages are wholly outside the scope of this indemnification provision except when such damages are awarded to a third-party (that is not a Sirius Indemnified Person) against a Sirius Indemnified Person.
C.The Company shall indemnify, defend and hold harmless the Reinsurer and its Affiliates and their respective directors, officers, employees, agents, successors and permitted assigns (“Reinsurer Indemnified Persons”) from and against any and all disputes, demands, claims, actions, damages or other liability actually incurred by a Reinsurer Indemnified Person to the extent arising from or relating to:

(1)     any Retained ECO/XPL;
(2)     any breach of any representation or warranty of the Company made in Article 8 of this Agreement;
(3)    any breach or nonfulfillment of any agreement or covenant of the Company under this Agreement;
(4)    Any payable or receivable that is not within the Net Subject Reserves on the Valuation Date is for the Company’s account (provided, however, that any payable or receivable that is within the Net Subject Reserves on the Valuation Date is for the Reinsurer’s account); or
(4)     any successful enforcement of this indemnity;

provided, in any case, the foregoing shall not apply to the extent such damages arose out of or relate to (a) actions, errors or omissions of any Reinsurer Indemnified Person or (b) the gross negligence, fraud or intentional misconduct of any Reinsurer Indemnified Person.


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Consequential, special, punitive, exemplary, treble or similar damages are wholly outside the scope of this indemnification provision except when such damages are awarded to a third-party (that is not a Reinsurer Indemnified Person) against a Reinsurer Indemnified Person.

D.Certain Limitations.
1.An Indemnifying Person shall not be obligated to indemnify and hold harmless any Indemnified Person under paragraph B or C of this Article with respect to any claim, unless and until the aggregate amount of all indemnifiable losses sought from such Indemnifying Person under paragraph B or C of this Article, as applicable (the “Indemnifiable Losses”) by all Indemnified Persons exceeds USD 1 million (the “Deductible”), at which point the Indemnifying Person shall be liable to all the Indemnified Persons for the value of all Indemnifiable Losses, that is in excess of the Deductible, subject to the limitations set forth in this Article 10; provided that the maximum aggregate liability of an Indemnifying Person to all the Indemnified Persons for any or all Indemnifiable Losses under this Agreement shall not exceed USD 7 million.

2.An Indemnified Person shall not be entitled to indemnification pursuant to this Article 10 for Indemnifiable Losses to the extent (i) such Indemnified Person could have, with commercially reasonable efforts, mitigated or prevented such Indemnifiable Losses upon and after becoming aware of any facts or circumstances that would reasonably be expected to result in any Indemnifiable Losses that are indemnifiable hereunder, or (ii) such Indemnifiable Losses result from or are magnified by the action or inaction of such Indemnified Person after the Closing. In the event an Indemnified Person fails to use commercially reasonable efforts to mitigate or prevent Indemnifiable Losses as provided herein, then notwithstanding anything to the contrary contained herein, the Indemnifying Person shall not be required to indemnify the Indemnified Person for that portion of Indemnifiable Losses that could reasonably have been expected to have been avoided if the Indemnified Person had taken such commercially reasonable efforts.

3.No Reinsurer Indemnified Person shall be entitled to indemnification with respect to any particular Indemnifiable Loss to the extent the related damages, losses, liabilities, obligations, costs, or expenses were reflected or provided for or reserved against in the calculation of the Initial Reinsurance Premium and the Net Subject Reserves at the Closing.

4.Any liability for indemnification under this Agreement shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement. For the avoidance of doubt, no party shall be entitled to claim indemnification with respect to the same underlying subject matter more than once. No breach of any representation or warranty shall be a basis

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for indemnification pursuant to this Article 10 by a Party if the breach or the facts giving rise to such breach was disclosed or otherwise known to such Party prior to (i) the date hereof or (ii) if such representation or warranty is made as of any particular future date, such date.

5.The Parties acknowledge and agree that their sole and exclusive remedy following the Closing at law or equity with respect to any alleged breach of any representation or warranty of the other Party made in this Agreement or any other Transaction Agreements, in each case regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract or in tort, whether at law or in equity, or otherwise, shall be pursuant to the provisions set forth in this Article 10.

6.Upon making any payment for an Indemnified Loss, the Indemnifying Person will, to the extent of such payment, be subrogated to all rights of Indemnified Person against any third Person in respect of the Indemnifiable Loss to which the payment related.

7.For the avoidance of doubt, nothing contained in this Article is intended to alter the obligations of the Reinsurer to reinsure the Subject Business in accordance with the terms and conditions of this Agreement.

E.Promptly after an Indemnified Person entitled to seek indemnification under this Article 10 receives service of notice of any claim or service of process by any third person in any matter in respect of which indemnity may be sought from the applicable Indemnifying Person, the Indemnified Person shall promptly notify the Indemnifying Person of the receipt thereof. The Indemnifying Person shall have the right to participate in or assume, each at its own expense, the defense of any such claim or process or settlement thereof. After notice from the Indemnifying Person of its election to assume the defense thereof, the Indemnifying Person shall not be liable to the Indemnified Party for any legal or other expense in connection with such defense. Such defense shall be conducted expeditiously (but with due regard for obtaining the most favorable outcome reasonably likely under the circumstances taking into account costs and expenditures) and the Indemnified Person shall be advised promptly of all developments. Notwithstanding the foregoing, with respect to any matter that is the subject of any such claim and as to which the Indemnified Person fails to give the Indemnifying Person such notice as aforesaid, and such failure adversely affects the ability of the Indemnifying Person to defend such claim or materially increases the amount of damages that the Indemnifying Person is obligated to pay under this Agreement, the amount of damages that the Indemnified Person shall be entitled to receive shall be reduced to an amount that the Indemnified Person would have been entitled to receive had such notice been timely given. No settlement of any such claim as to which the Indemnifying Person has not elected to assume the defense thereof shall be made without the prior written consent of the Indemnifying Person, which consent shall not be unreasonably withheld or delayed. In addition, the Indemnifying Person shall not settle any claim without the prior written consent of the Indemnified Person if such settlement would result in (a) injunctive or other nonmonetary relief against the Indemnified Person or any of its Affiliates, including the imposition of a

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consent order, injunction or decree that would restrict the future activity or conduct of the Indemnified Person or any of its Affiliates, (b) a finding or admission of a violation of Applicable Law or violation of the rights of any Person by the Indemnified Person or any of its Affiliates or (c) any monetary liability of the Indemnified Person that will not promptly be paid or reimbursed by the Indemnifying Person.
ARTICLE 11 - CONFIDENTIALITY
A.    The Reinsurer and Company hereby acknowledges that the terms and conditions of this Agreement, any materials provided in the course of audit or inspection and any documents, information and data provided by one Party to it by the other, whether directly or through an authorized agent, in connection with the placement and execution of this Agreement or after the Effective Date, and any submission or other materials related to any renewal hereof (hereinafter referred to as “Confidential Information”) are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that either Party can show:
1.    Is, or comes to be, public domain other than by any act of the Recipient in violation of the terms of this Agreement; or
2.    Have been rightfully received from third parties lawfully possessing such information not by virtue of any confidential relationship with Disclosing party; or
3.     Is received from a third party not bound and not in breach of confidentiality obligations; or
3.    Were known by the other Party prior to the placement of this Agreement without an obligation of confidentiality.
B.    Absent the written consent of the other Party, neither the Company, nor the Reinsurer shall not disclose any Confidential Information to any third parties, except:
1.    When required by retrocessionaires as respects the business ceded to this Agreement;
2.    When required by regulators performing an audit of the Company’s or Reinsurer’s records and/or financial condition;
3.    When required by external auditors performing an audit of the Company’s or Reinsurer’s records in the normal course of business; or
4.    When required by attorneys, courts or arbitrators in connection with an actual or potential dispute hereunder.
Notwithstanding the foregoing, prior to disclosure of Confidential Information to any third party under this paragraph B, the Reinsurer and Company shall advise such third party that it shall be bound by the obligations and provisions of this Article.
C.    Further, the Company and Reinsurer agree not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Agreement.

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D.    Notwithstanding the above, in the event the Reinsurer or Company is required by court order, other legal process or any Governmental Authority to release or disclose any or all of the Confidential Information, the Parties agree to provide each other with written Notice of same at least ten (10) days prior to such release or disclosure, unless otherwise prohibited by law, and to use its best efforts to assist each other in maintaining the confidentiality provided for in this Article. The Company and Reinsurer will take all reasonable measures to obtain confidentiality agreements with third parties and protective orders, while not prejudicing one another’s substantive interests.
E.    The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer, Company and their Affiliates, and shall be binding upon their successors and assigns.
ARTICLE 12 - ACCESS TO RECORDS
A.    The Reinsurer or its duly appointed representative shall have access to the books and records of the Company on matters relating to the Subject Business upon reasonable advance written Notice to the Company and at reasonable times during the regular business hours of the Company, at the location where such books and records are maintained in the ordinary course of business, for the purpose of obtaining information concerning this Agreement or the subject matter thereof. It is understood that reasonable advance written Notice shall not be less than five (5) Business Days. The Reinsurer may make copies of records of the Company related to this Agreement, but at the Reinsurer’s sole expense.
B.    Notwithstanding any other provision of this Agreement to the contrary, the Company shall not be obligated to provide such access to any books and records or other information if the Company determines, in its reasonable judgment, that doing so would violate Applicable Law or a contract, agreement or obligation of confidentiality owing to a third party (other than any claims administrator for the Subject Business), jeopardize the protection of an attorney-client privilege, or expose the Company to liability for disclosure of sensitive or personal information.
ARTICLE 13 - NOTICES
A.    A notice or other communication under or in connection with this Agreement (a “Notice”) shall be:
1.    In writing;
2.    In the English language; and
3.    Either:
a.    Delivered personally or sent by first class post pre-paid recorded delivery (and air mail if overseas) or by courier using an internationally recognized courier company;

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b.    By fax and email to the Party due to receive the Notice to the address set out in paragraph C below; or,
c.    To an alternative address, Person or email specified by that Party under the same manner set forth in subparts A(3)(a) and A(3)(b) of this Article.
B.    Unless there is evidence that it was received earlier, a Notice is deemed given if:
1.    Delivered personally or by courier, when left at the address referred to in paragraph C below or, where left other than on a Business Day or outside normal business hours, on the next Business Day;
2.    Sent by mail, except air mail, three (3) Business Days after posting it;
3.    Sent by air mail, six (6) Business Days after posting it; and
4.    Sent by email, transmitted other than on a Business Day or outside normal business hours, on the next Business Day.
C.    The addresses referred to in this Article are:
If to the Company:
140 Broadway #32nd,
New York, NY 10005
Attention: Robert Kuehn, Esq.
Email: Robert.Kuehn@siriuspt.com
with a copy (which shall not constitute Notice) to:
Clyde & Co US LLP
405 Lexington Avenue, 16th Floor
New York, NY 10174
Attention: Vikram Sidhu
Email: vikram.sidhu@clydeco.us
If to the Reinsurer:
Pallas Reinsurance Company LTD.
C/O Compass Administration Services Ltd
Crawford House, 50 Cedar Avenue,
Hamilton HM11, Bermuda
Attention: Anson Aguiar
Email: anson.aguiar@compre-group.com

with a copy (which shall not constitute Notice) to:

Daniel W. Gerber, Esq.
Gerber Ciano Kelly Brady LLP,

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228 Park Avenue South, Suite 97572
New York, NY 10003-1502
Email: dgerber@gerberciano.com
ARTICLE 14 - MISCELLANEOUS
A.    Amendments
1.    This Agreement may be amended only by mutual consent of the Parties expressed in a written addendum executed by the Parties with the same formalities as this Agreement, and such addendum shall be deemed to be an integral part of this Agreement and binding on the Parties accordingly. The amendment shall include any variation, supplement, deletion or replacement howsoever effected.
2.    Unless expressly agreed, no variation shall constitute a general waiver of any provisions of this Agreement, nor shall it affect any rights, obligations or liabilities under or pursuant to this Agreement which have already accrued up to the date of variation, and the rights and obligations under or pursuant to this Agreement shall remain in full force and effect, except and only to the extent that they are so varied.
B.    Costs
Each of the Parties shall pay its own costs incurred in connection with the negotiation and entering into of this Agreement, unless otherwise agreed or unless otherwise specified in this Agreement.
C.    Counterparts
This Agreement may be executed in any number of counterparts and by each Party on separate counterparts, each of which when executed and delivered is an original and all of which together evidence the same Agreement. Delivery of a counterpart of this Agreement by email attachment or telecopy shall be an effective mode of delivery.
D.    Currency
The sign “$” in this Agreement refers to United States of America dollars, and all payments will be made in that currency.
E.    Entire Agreement
This Agreement and the Transaction Agreements represent the entire agreement between the Company and the Reinsurer with respect to business covered hereunder. There are no understandings between the Parties other than as expressed in this Agreement and the Transaction Agreements. All prior agreements, understandings and representations made by the Company and the Reinsurer, whether oral or written, are superseded by this Agreement and the Transaction Agreements. Any change or modification to this Agreement will be documented by an amendment of this Agreement, signed by the parties to this Agreement.

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F.    Errors and Omissions
Any inadvertent delay, omission, or error does not relieve either Party hereto from any liability, which attaches to it hereunder if such delay, omission or error had not been made, provided such omission or error is rectified immediately upon discovery.
H.    Further Assurances
Each of the Parties shall at any time (and from time to time on being reasonably required by the other Party), execute or procure all acts, deeds, documents and things reasonably necessary and within its power to give effect to the terms of this Agreement and to allow for the effective management by the Reinsurer of claims under the Subject Business. Without limiting the generality of the foregoing, the Company shall at the request and at the expense of the Reinsurer take all such steps as are reasonably required in connection with an application to any body with appropriate jurisdiction to permit the Reinsurer to exercise full claims control over the Subject Business (including on behalf of any relevant co-insurer). Each Party will provide all access to non-privileged records and personnel necessary to defend and claims related to ECO/XPL and in relation to any inquiry by a regulatory body.
I.    Severability
1.    If any provision of this Agreement shall be rendered illegal or unenforceable by the laws, regulations or public policy of any jurisdiction, such provision shall be considered void in such jurisdiction, but this shall not affect the validity or enforceability of any other provision of this Agreement or the validity or enforceability of such provision in any other jurisdiction.
2.    The Parties shall negotiate in good faith to attempt to agree to such provision so that it will comply with the laws, regulations and public policy of the jurisdiction in which it was rendered illegal and unenforceable in order to effectuate the Parties’ original intent.
J.    No Waiver
The failure to exercise or delay in exercising a right or remedy provided by this Agreement or by Applicable Law does not impair or constitute a waiver of the right or remedy or an impairment of or a waiver of other rights or remedies. No single or partial exercise of a right or remedy provided by this Agreement or by Applicable Law presents further exercise of the right or remedy, or the exercise, of another right or remedy.
K.    Offset
The Company or the Reinsurer have and may exercise, at any time and from time to time, the right to offset any balance or balances, whether on account of premiums or on account of losses or otherwise, due from one Party to the other Party hereto, under the terms and within the subject matter of the Transaction Agreements. In the event of an insolvency of a Party hereto, offset shall only be allowed in accordance with the provisions of any Applicable Law governing offset entitlements. In the event of

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insolvency of the Company, to the extent any jurisdiction allows the statutory right of offset to the Reinsurer, then this right is reserved by the Reinsurer.
L.    Parties to this Agreement
The Parties shall not assign, novate, transfer, declare a trust or in any other way alienate any other rights under this Agreement, whether in whole or in part, without the prior written consent of the other Party. This Agreement shall be binding upon all successors, assignees, transferees and legal representatives of the Parties to this Agreement; provided, however, that neither this Agreement nor any rights or obligations under this Agreement may be novated, assigned, charged or otherwise transferred or disposed of by either Party without the prior written consent of the other Party.
M.    Rights and Remedies
No failure or delay by any Party in exercising any right or remedy provided by law or under this Agreement or any Transaction Agreement shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any further exercise of it or the exercise of any other remedy.
N.    Third Party Rights
Nothing will in any manner create any obligations or establish any rights against the Reinsurer in favor of any third parties or any Persons not parties to this Agreement except as previously provided otherwise herein.
O.    Taxes
Any Federal Excise Tax applicable as relates to this transaction and agreement (as imposed under Section 4371 of the Internal Revenue Code) to the extent subject to the Federal Excise Tax will be borne by the Company.
P.    Collection and Assignment of Rights
1.    To the extent there is any change in law or regulation which requires the Reinsurer to pay loss for the Subject Business, and to the extent that any reimbursement fund (“Backstop”) is created to reimburse for loss paid, then the Company assigns all rights and recoveries to the Reinsurer for recoupment and reimbursement from the Backstop to the Reinsurer solely related to loss paid under the Subject Business.
2.    The Company shall, if requested by the Reinsurer, reasonably aid the Reinsurer, at the Reinsurer’s expense, in collection of all amounts due in respect of the Reinsured Liabilities. The collectability of such amounts shall be the ultimate responsibility of the Reinsurer and shall be at the risk and for the account of the Reinsurer in the event such amounts are not collected until such time as the Reinsurer shall have paid to the Company under this Agreement an amount equal to the Aggregate Limit.

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3.    Subject to the terms and conditions of its agreements with any third party service providers and the rights of any such service providers contained therein (or in related agreements), the Company shall assign and transfer any such agreements relating to the Subject Business and its rights thereunder to the Reinsurer.
Q.    Non-Recourse
This Agreement may only be enforced against, and any claim, action, suit or other legal proceeding based upon, arising out of or related to this Agreement, or the negotiation, execution or performance of this Agreement, may only be brought against the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. No past, present or future director, officer, employee, incorporator, manager, member, partner, stockholder, Affiliate, agent, attorney or other Representative of any party hereto or of any Affiliate of any party hereto, or any of their successors or permitted assigns, shall have any liability for any obligations or liabilities of any party hereto under this Agreement or for any claim, action, suit or other legal proceeding based on, in respect of or by reason of the transactions contemplated hereby.
R.    Headings and Schedules
Headings used herein are not a part of this Agreement and shall not affect the terms hereof. The attached Schedules are a part of this Agreement.
ARTICLE 15 – DISCLAIMERS

A.The Reinsurer acknowledges and agrees that neither the Company nor any of its Affiliates, nor any representative of any of them, makes or has made, and the Reinsurer has not relied on, any inducement, promise, representation or warranty, oral or written, express or implied. Without limiting the generality of the foregoing, no Person has made any representation or warranty to the Reinsurer with respect to the Subject Business or any other matter, including with respect to (i) the probable success or profitability of the Subject Business after the Effective Date, or (ii) any information, documents, or material made available to the Reinsurer, its Affiliates, or their respective Representatives in any “data rooms,” information memoranda, management presentations, electronic mails, or in any other form or forum in connection with the transactions contemplated by this Agreement, including any estimation, valuation, appraisal, projection, or forecast. With respect to any such estimation, valuation, appraisal, projection, or forecast (including any confidential information memoranda prepared by or on behalf of the Company in connection with the transactions contemplated by this Agreement), the Reinsurer acknowledges that: (i) there are uncertainties inherent in attempting to make such estimations, valuations, appraisals, projections, and forecasts; (ii) it is familiar with such uncertainties; (iii) it is not acting and has not acted in reliance on any such estimation valuation, appraisal, projection, or forecast delivered by or on behalf of the Company to the Reinsurer, its Affiliates or their respective representatives; (iv) such estimations, valuations, appraisals, projections, and forecasts are not and shall not be deemed to be representations or warranties of the Company or any of its Affiliates; and (v) it shall have

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no claim against any Person with respect to any such valuation, appraisal, projection, or forecast.

B.Except as otherwise set forth herein, the Company makes no express or implied representation or warranty hereby or otherwise under this Agreement as to the future experience, success or profitability of the Subject Business, whether or not conducted in a manner similar to the manner in which such business was conducted prior to the Effective Date, that the reserves held by or on behalf of the Subject Business or the assets supporting such reserves have been or will be adequate or sufficient for the purposes for which they were established, that the reinsurance recoverables taken into account in determining the amount of such reserves will be collectible, or whether such reserves were calculated, established, or determined in accordance with any actuarial, statutory, or other standard, or concerning any financial statement “line item” or asset, liability, or equity amount that would be affected by any of the foregoing.

C.The Reinsurer further acknowledges and agrees that it (i) has made its own inquiry and investigation into and, based thereon, has formed an independent judgment concerning the Subject Business, (ii) has been provided access to such information as it has deemed necessary to enable it to form such independent judgment, (iii) has had such time as it deems necessary and appropriate to fully and completely review and analyze such information, documents, and other materials, and (iv) has been provided an opportunity to ask questions of the Company with respect to such information, documents, and other materials and has received answers to such questions.
ARTICLE 16 - ARBITRATION
A.    Any dispute arising out of the interpretation, performance or breach of this Agreement, including the formation and validity thereof, shall be submitted for decision to a panel of three arbitrators. Notice requesting arbitration shall be in writing and sent certified or registered mail, return receipt requested.
B.    Upon service of notice of arbitration, each Party will follow the procedures set out in the Expedited Dispute Resolution Article of this Agreement.
C.    Upon expiration of the Expedited Dispute Resolution Expiration Period set forth in the Expedited Dispute Resolution Article of this Agreement, one arbitrator shall be chosen by each Party and the two arbitrators shall then choose an impartial third arbitrator who shall preside at the hearing. If either Party fails to appoint its arbitrator within thirty (30) days after service of notice to do so by the other Party (as set forth in the Notice Article), the latter, after ten (10) days’ prior Notice as set forth in the Notices Article, may appoint the second arbitrator.
D.    If the two arbitrators do not agree on a third arbitrator within thirty (30) days of their appointment, the third arbitrator shall be chosen in accordance with the procedures for selecting the third arbitrator in force on the date the arbitration is demanded, established by the AIDA Reinsurance and Insurance Arbitration Society - U.S. (ARIAS). The arbitrators shall be Persons knowledgeable about insurance and reinsurance who have no Personal or financial interest in the result of the arbitration. If a member of the panel

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dies, becomes disabled or is otherwise unwilling or unable to serve, a substitute shall be selected in the same manner as the departing member was chosen and the arbitration shall continue.
E.    Within thirty (30) days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures, and schedules of hearings.
F.    The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. The arbitrators shall interpret this agreement as an honorable engagement. Notwithstanding anything to the contrary in this Agreement, the arbitrators may at their discretion consider underwriting and placement information provided by the Company to the Reinsurer, as well as any correspondence exchanged by the Parties that is related to this Agreement, and any other information it deems relevant. The arbitration shall take place in New York, or at such other place as the Parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant relief as it may deem appropriate; however, in no event will the panel be authorized to award punitive damages.
G.    The panel shall interpret this Agreement as an honorable engagement rather than as merely a legal obligation and shall make its decision considering the custom and practice of the applicable insurance and reinsurance business as promptly as possible after the hearings. Judgment upon an award may be entered in any court having jurisdiction thereof.
H.    Each Party shall bear the expense of its own arbitrator and shall jointly bear with the other Party the cost of the third arbitrator. The remaining costs of the arbitration shall be allocated by the panel. The panel may, at its discretion, award such further costs and expenses as it considers appropriate, including but not limited to attorney’s fees, to the extent permitted by law.
ARTICLE 17 – EXPEDITED DISPUTE RESOLUTION AND INDEPENDENT ACTUARIAL FIRM DISPUTE RESOLUTION
A.    Prior to the commencement of arbitration in accordance with the Arbitration Article, the Parties will utilize an expedited dispute resolution process involving one senior executive from the Company and one senior executive from the Reinsurer (each, a “Senior Executive”). The Party serving notice of arbitration shall identify its Senior Executive in its notice and direct contact information for the executive, including phone and email. Upon receipt of notice, the other Party shall immediately designate its Senior Executive, who shall contact the other Senior Executive as soon as reasonably possible. The Senior Executives must in good faith arrange a time period to confer. If such Senior Executives are unable to resolve the dispute within ten (10) Business Days of the service of notice of arbitration (“Expedited Dispute Resolution Expiration Period”), either Party may seek to resolve the dispute in accordance with the Arbitration Article. The Parties may mutually agree in writing to extend the Expedited Dispute Resolution Expiration Period.
B.    The Parties shall utilize the following dispute resolution where specifically provided for in this Agreement. The Parties shall retain the Independent Actuarial Firm to review the

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dispute within fifteen (15) Business Days of any notice of intent to dispute from either Party. The Parties shall direct such Independent Actuarial Firm to review the calculation of the disputed amount, and based on such review, to provide its calculation of the disputed amount no later than thirty (30) Business Days from its receipt of the request from the Parties and all information necessary to complete such review as determined by the Independent Actuarial Firm. Each Party shall provide its proposed calculation of the disputed amount to the Independent Actuarial Firm. Each Party shall use commercially reasonable efforts to furnish to the Independent Actuarial Firm such work papers, books, records and documents and other information pertaining to the disputed amount as the Independent Actuarial Firm may request. Any resulting determination of the Independent Actuarial Firm, which shall include the Independent Actuarial Firm’s determination of the disputed amount, shall be considered final and binding on the Parties. The Party whose proposed calculation of the disputed amount is closer to the Independent Actuarial Firm’s determination of the disputed amount shall have no responsibility for the costs and expenses of the Independent Actuarial Firm. All costs and expenses of the Independent Actuarial Firm shall be borne by the Party whose proposed calculation of the disputed amount has greater difference from the Independent Actuarial Firm’s determination of the disputed amount.
ARTICLE 18 – GOVERNING LAW
This Agreement, and any dispute, controversy, or claim arising out of or relating to this Agreement, will be governed by and construed according to the laws of the State of New York without regard to its rules with respect to the conflicts of law. Notwithstanding the foregoing, as to rules regarding credit for reinsurance, the rules of all applicable states or other jurisdictions will pertain thereto.
ARTICLE 19 – INSOLVENCY
A.    If more than one reinsured company is referenced within the definition of “Company” in the Preamble to this Agreement, this Article shall apply severally to each such company. Further, this Article and the laws of the domiciliary state shall apply in the event of the insolvency of any company covered hereunder. In the event of a conflict between any provision of this Article and the laws of the domiciliary state of any company covered hereunder, that domiciliary state’s laws shall prevail.
B.    In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by Applicable Law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy reinsured, which claim would involve a possible liability on the part of the Reinsurer

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within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.
C.     As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement, the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, (except as provided by Section 4118(a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have been met, if New York law applies) or except (1) where the Agreement specifically provides another payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees. Then, and in that event only, the Company, with the prior approval of the certificate of assumption on New York risks by the Superintendent of Financial Services of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.
D.     To the extent allowed by Applicable Law, where Policies of the Subject Business:
(1)     permitted original insurers or policyholders to sue the Company directly; and
(2)     required the Company to assign the same right to any reinsurer or retrocessionaires upon any assignment by the Company:
The Reinsurer assumes the same rights and obligations of the Company, but no greater obligations than those set forth in the Policies of the Subject Business. For the avoidance of doubt, with respect the Loss Portfolio Transfer Reinsurance Agreement dated October 31, 2014 by and between Transamerica Casualty Insurance Company and White Shoals Reinsurance, Ltd. (now SiriusPoint Bermuda) (the “Transamerica LPT Agreement”), the Reinsurer and Company hereby agree that in the event of commencement of any insolvency, conservation, rehabilitation or liquidation proceeding against SiriusPoint Bermuda, whether voluntary or involuntary, the Reinsurer shall pay directly to Transamerica Casualty Insurance Company amounts due and payable under the Transamerica LPT Agreement.
E.     Subject only to the exception expressly specified in paragraph D.:
(1)     Third parties and any third-party beneficiaries, actual or alleged, who are not in privity with the Reinsurer have no right nor standing to sue the Reinsurer; and

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(2)     No part of this Agreement conveys any right for original insured or policyholder to the Policies of the Subject Business to sue the Reinsurer directly.
ARTICLE 20 - SERVICE OF SUIT
A.     This Article shall not be read to conflict with or override the obligations of the Parties to arbitrate their disputes as provided for in Article 16. This Article is intended as an aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an alternative to Article 16 for resolving disputes arising out of this Agreement.
B.    In the event of the failure of the Reinsurer to perform its obligations hereunder, the Reinsurer, at the request of the Company, shall submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer’s rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. The Reinsurer, once the appropriate court is selected, whether such court is the one originally chosen by the Company and accepted by the Reinsurer or is determined by removal, transfer, or otherwise, as provided for above, shall comply with all requirements necessary to give said court jurisdiction and, in any suit instituted against the Reinsurer upon this Agreement, shall abide by the final decision of such court or of any appellate court in the event of an appeal.
C.    Service of process in such suit may be made upon Gerber Ciano Kelly Brady, LLP, 228 Park Avenue South, Suite 97572, New York, NY 10003-1502, which is authorized and directed to accept service of process on behalf of the Reinsurer in any such suit.
D.    Further, pursuant to any statute of any state, territory or district of the United States that makes provision therefor, the Reinsurer hereby designates the Superintendent, Commissioner or Director of Insurance, or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Agreement, and hereby designates the above-named as the Person to whom the said officer is authorized to mail such process or a true copy thereof.
(signature page follows)






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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives:
SIRIUSPOINT AMERICA INSURANCE COMPANY

By: /s/ Robert R. Kuehn                    October 29, 2021
_______________________________________        ______________________
Printed Name: Robert R. Kuehn_______________        Date
Title: _President and General Counsel___________


SIRIUSPOINT BERMUDA INSURANCE COMPANY LTD.

By: /s/ Nicholas J.D. Campbell                October 29, 2021
_______________________________________        ______________________
Printed Name: Nicholas J.D. Campbell___________        Date
Title: Chief Executive Officer___________________


PALLAS REINSURANCE COMPANY LTD.

By: /s/ Anson Aguiar                        October 29, 2021
_______________________________________        ______________________
Printed Name: Anson Aguiar___________________        Date
Title: Director_______________________________


By: /s/ Will Bridger                        October 29, 2021
_______________________________________        ______________________
Printed Name: Will Bridger____________________        Date
Title: Director_______________________________



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Exhibit 31.1
SiriusPoint Ltd.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) OF THE EXCHANGE ACT, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Sid Sankaran, certify that:
1.    I have reviewed this Quarterly Report on Form 10-Q of SiriusPoint Ltd.;
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 3, 2021
/s/ Sid Sankaran
Sid Sankaran
Chief Executive Officer
(Principal Executive Officer)





Exhibit 31.2
SiriusPoint Ltd.
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) OF THE EXCHANGE ACT, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David W. Junius, certify that:
1.    I have reviewed this Quarterly Report on Form 10-Q of SiriusPoint Ltd.;
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 3, 2021
/s/ David W. Junius
David W. Junius
Chief Financial Officer
(Principal Financial Officer)




Exhibit 32.1
SiriusPoint Ltd.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Sid Sankaran, Chief Executive Officer of SiriusPoint Ltd. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1)    the Quarterly Report on Form 10-Q of the Company for the fiscal period ended September 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)    the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 3, 2021
/s/ Sid Sankaran
Sid Sankaran
Chief Executive Officer
(Principal Executive Officer)



Exhibit 32.2
SiriusPoint Ltd.
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, David W. Junius, Chief Financial Officer of SiriusPoint Ltd. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1)    the Quarterly Report on Form 10-Q of the Company for the fiscal period ended September 30, 2021 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)    the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 3, 2021

/s/ David W. Junius
David W. Junius
Chief Financial Officer
(Principal Financial Officer)